Popular weight loss pills like Ozempic and Wegovy are helping millions of people around the world to wash their unnecessary pounds, but they also seem to be exploiting Weightwatcher's profits.
Formerly known as weight watchers, WW International filed for Chapter 11 bankruptcy protection on Tuesday, protecting itself and cutting debt after a former popular obesity drug overthrew its once-successful business model.
While positioning the company for long-term growth and success, it wants to eliminate more than US$1.1 billion in debt. The type of bankruptcy allows the company to continue its business while it restructures its assets and battles and continues its operation.
The company has accumulated a large debt of approximately $1.6 billion.
WeightWatchers said it will continue to “have no impact on its members” and “operate fully” during the process.
Weight Watchers was formed over 60 years ago and started by offering weekly weight loss support group meetings. The first meeting, which cost New Yorkers $2 to attend, brought in 400 people to lose weight.
A year later, the company began offering franchise options, and soon the weight watchers transformed into famous along with millions of members around the world.
The combination of the rise in popularity of fitness influencers, such as Novo Nordisk's Ozempic and Wegovy, and GLP-1 drugs, is a major threat to traditional weight loss programs.
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In its first quarter results on Tuesday, WW International revealed that subscribers had fallen by more than 14% compared to 3.4 million people compared to last year's same time. Revenues of nearly $187 million plummeted almost 10% compared to the previous year.
The company is expected to be handed over to a group of investors, and shareholders will hold 9% stake upon completion of the process in 45 days as per filing.
The shares of the company, which once boasted Oprah Winfrey as its top shareholder and member of its board, have been trading for less than a dollar since early February.
In after-hours trading on Tuesday, shares plummeted to 39 cents.
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Winfrey resigned from the WW board in February 2024 and told People Magazine he was taking weight loss pills, the company said at the time.
Winfrey, the company's largest private shareholder at the time, has pledged to donate his shares to the National Museum of African American History and Culture in Washington, DC.
File – Oprah Winfrey announced its exit from the WeightWatchers board of directors on February 28, 2024.
John Salangsang/Golden Globes 2024/Golden Globes 2024 Mive Getty Images
In 2023, the company moved to the prescription drug weight loss business. In particular, with the $106 million sequence acquisition, it is now a telehealth service that helps users get prescriptions for drugs such as Ozempic, Wegovy, and Trulicity.
The latest revenue report on Tuesday shared that its clinical subscription revenue (or weight loss drugs) jumped to $29.5 million, 57% year-on-year.
The company estimates assets and liabilities in the range of $1 billion to $10 billion, according to a petition filed with the Delaware Bankruptcy Court.
– Use files from Associated Press
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