WW International, Inc. Announces Second Quarter 2024 Results

• End of Period Subscribers of 3.8 million, including 81 thousand End of Period Clinical Subscribers
• Revenues of $202.1 million
• Gross margin of 67.9%
• Operating Income of $35.9 million; excluding the net impact of restructuring charges related to prior year restructuring plans, adjusted operating income of $37.9 million
• Provides update to full year fiscal 2024 guidance
• Announces 2024 Restructuring Plan that is expected to result in $100 million of annual run-rate cost savings related to strategic streamlining of the Company’s operational structure to optimize its clinical and behavioral product portfolio and to its cost-savings initiative

NEW YORK, Aug. 01, 2024 (GLOBE NEWSWIRE) -- WW International, Inc. ( WW) (“WeightWatchers,” “WW,” or the “Company”) today announced its results for the second quarter of fiscal 2024.

"WeightWatchers has the right strategy to return the business to growth. With a rapidly changing landscape, we are taking decisive actions to navigate through this environment and completely reimagining how we operate," said Sima Sistani, the Company’s CEO. "We are executing a significant streamlining of our operational structure, to focus and execute against our strategic pillars to expand care, expand access, and expand payment options for our members. These initiatives enable us to serve a broader population as the leading digital health provider of weight health, catalyzing our return to growth and positioning the Company for long-term success."

"We are refining our operational framework against our product roadmap, concentrating on high impact initiatives to enhance efficiency, accountability and speed. These actions are part of a comprehensive cost reduction plan, targeting $100 million in annualized savings including $20 million of savings currently reflected in our 2024 guidance," said Heather Stark, the Company’s CFO. "We are committed to maximizing profitability and making strategic decisions that will best position the Company for long-term success."

Q2 2024 Consolidated Results

Q2 2024 Business and Financial Highlights

• End of Period Subscribers in Q2 2024 were down 6.1% versus the prior year period, driven by declines in the Digital and Workshops + Digital businesses. Q2 2024 End of Period Digital Subscribers decreased 4.2% versus the prior year period. Q2 2024 End of Period Workshops + Digital Subscribers decreased 21.4% versus the prior year period. Q2 2024 End of Period Clinical Subscribers increased 119.8% versus the prior year period.

• Total Paid Weeks in Q2 2024 were down 4.9% versus the prior year period driven by declines in the Digital and Workshops + Digital businesses. Q2 2024 Digital Paid Weeks decreased 2.9% versus the prior year period. Q2 2024 Workshops + Digital Paid Weeks decreased 21.3% versus the prior year period. Q2 2024 Clinical Paid Weeks increased 205.4% versus the prior year period.
  

• Revenues in Q2 2024 were $202.1 million. On a constant currency basis, Q2 2024 revenues decreased 10.6% versus the prior year period.
  
  
  • Subscription Revenues in Q2 2024 were $200.0 million. On a constant currency basis, these revenues decreased 5.4% versus the prior year period. Subscription Revenues included $19.7 million of Clinical Subscription Revenues.
    
  • Other Revenues in Q2 2024 were $2.1 million. On a constant currency basis, these revenues decreased 85.5% versus the prior year period driven by the discontinuation of the consumer products business.

• Gross Profit in Q2 2024 was $137.3 million, compared to $143.2 million in the prior year period. Adjusted gross profit in Q2 2024, which excluded the reversal of $0.1 million of restructuring charges related to a prior year restructuring plan, was $137.2 million. Adjusted gross profit in Q2 2023, which excluded the net impact of $0.7 million of restructuring charges, was $143.8 million.
  
  
  • Gross Margin in Q2 2024 was 67.9%, as compared to 63.1% in the prior year period. Adjusted gross margin in Q2 2024 was 67.9%, up from an adjusted gross margin of 63.4% in the prior year period, driven primarily by the discontinuation of the lower margin consumer products business at the end of 2023.
• Operating Income in Q2 2024 was $35.9 million, compared to operating income of $26.3 million in the prior year period. Adjusted operating income in Q2 2024, which excluded the net impact of $2.0 million of restructuring charges related to prior year restructuring plans, was $37.9 million. Adjusted operating income in Q2 2023, which excluded the net impact of $2.7 million of restructuring charges and the impact of $4.9 million of acquisition transaction costs, was $33.9 million.
  

• Income Tax Benefit in Q2 2024 was $15.8 million, which reflected the impact of an unusually high negative annual effective tax rate driven by a valuation allowance and small pretax loss reflected in the Company’s full year fiscal 2024 guidance. In the prior year period, income tax benefit was $48.1 million.
  

• Net Income in Q2 2024 was $23.3 million compared to net income of $50.8 million in the prior year period.

• Diluted Earnings per share in Q2 2024 was $0.29 compared to diluted earnings per share of $0.65 in the prior year period.
  
  • Certain items affect year-over-year comparability.
    • Q2 2024 diluted earnings per share incorporated the net positive impact of $0.42 per diluted share in the aggregate due to the following items:
      • $0.44 per diluted share positive tax impact arising from an unusually high negative annual effective tax rate as a result of a valuation allowance and small pretax loss reflected in the Company’s full year fiscal 2024 guidance.
      • $0.02 per diluted share net negative impact of restructuring charges related to prior year restructuring plans.
  • Q2 2023 diluted earnings per share incorporated the positive impact of $0.69 per diluted share in the aggregate due to the following items:
    
    • $0.77 per diluted share positive tax impact arising from an unusually high negative annual effective tax rate as a result of a valuation allowance and small pretax loss reflected in the Company’s full year fiscal 2023 guidance.
    • $0.05 per diluted share negative impact from acquisition transaction costs.
    • $0.03 per diluted share negative net impact of restructuring charges.
      

Other Items

• Cash balance as of June 29, 2024 was $42.7 million. On that same date, the Company had no outstanding borrowings under its revolving credit facility.
• 2024 Restructuring Plan: In connection with the strategic streamlining of its operational structure to optimize its clinical and behavioral product portfolio and its cost-savings initiative, the Company committed to a plan of reduction in force that will result in the elimination of certain positions and the termination of employment for certain employees worldwide (the “2024 Restructuring Plan”). The Company anticipates recording restructuring charges that it currently estimates will range between $12.0 million to $15.0 million in the aggregate in the second half of fiscal 2024.

Full Year Fiscal 2024 Guidance

The Company is providing the following update to its full year fiscal 2024 guidance:

• Revenue is expected to be at least $770.0 million.
• Operating loss is expected to be at most $180.7 million; excluding non-cash intangible impairment charges and the net impact of restructuring charges, adjusted operating income is expected to be at least $100.0 million.

Second Quarter 2024 Conference Call and Webcast
The Company has scheduled a conference call today at 8:30 a.m. ET. During the conference call, Sima Sistani, Chief Executive Officer, and Heather Stark, Chief Financial Officer, will discuss the second quarter of fiscal 2024 results and answer questions from the investment community.

The live webcast of the conference call will be available on the Company’s corporate website, corporate.ww.com, under Events and Presentations. Supplemental investor materials will also be available in the same location prior to the start of the webcast. A replay of the webcast will be available on this site for approximately 90 days.

Statement regarding Non-GAAP Financial Measures
The following provides information regarding non-GAAP financial measures used in this earnings release and today’s scheduled conference call:

To supplement the Company's consolidated results presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company has disclosed non-GAAP financial measures of operating results that exclude or adjust certain items. Gross profit, gross margin, operating income (loss), operating income (loss) margin and selling, general and administrative expenses are discussed both as reported (on a GAAP basis) and as adjusted (on a non-GAAP basis), as applicable, with respect to (i) the second quarter of fiscal 2024 to exclude the impact or net impact, as applicable, of charges associated with the Company's previously disclosed 2023 restructuring plan (the “2023 plan”) and the Company's previously disclosed 2022 restructuring plan (the “2022 plan”); (ii) the first six months of fiscal 2024 to exclude (x) the impact of impairment charges for the Company's franchise rights acquired related to its United States, Australia, New Zealand and United Kingdom units of account and (y) the net impact of charges associated with the 2023 plan and the 2022 plan; and (iii) the second quarter and first six months of fiscal 2023 to exclude (x) the net impact of (a) charges associated with the 2023 plan, (b) charges associated with the 2022 plan or the reversal of certain of the charges associated with the 2022 plan, as applicable, (c) charges associated with the Company's previously disclosed 2021 organizational restructuring plan (the “2021 plan”) or the reversal of certain of the charges associated with the 2021 plan, as applicable, and (d) the reversal of certain of the charges associated with the Company's previously disclosed 2020 organizational restructuring plan (the “2020 plan”) and (y) the impact of certain non-recurring transaction costs in connection with the acquisition of Sequence. The Company generally refers to such non-GAAP measures as excluding or adjusting for the impact of franchise rights acquired impairments, the impact or net impact, as applicable, of restructuring charges, and the impact of acquisition transaction costs, as applicable. The Company also presents in the attachments to this release the non-GAAP financial measures: earnings before interest, taxes, depreciation, amortization and stock-based compensation (“EBITDAS”); earnings before interest, taxes, depreciation, amortization, stock-based compensation, franchise rights acquired and goodwill impairments, net restructuring charges, and certain non-recurring transaction costs in connection with the acquisition of Sequence (“Adjusted EBITDAS”); total debt less unamortized deferred financing costs, unamortized debt discount and cash on hand (i.e., net debt); and a net debt/Adjusted EBITDAS ratio. In addition, the Company presents certain of its financial results on a constant currency basis in addition to GAAP results. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. The Company calculates constant currency by calculating current-year results using prior-year foreign currency exchange rates. A reconciliation of the forward-looking full year EBITDAS outlook to net income cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliation that have not yet occurred, are out of the Company's control, or cannot be reasonably predicted. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results.

Management believes these non-GAAP financial measures provide useful supplemental information for its and investors' evaluation of the Company's business performance and are useful for period-over-period comparisons of the performance of the Company's business. While management believes that these non-GAAP financial measures are useful in evaluating the Company’s business, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies. See "Reconciliation of Non-GAAP Financial Measures" attached to this release and reconciliations, if any, included elsewhere in this release for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.

About WW International, Inc.
WeightWatchers is a human-centric technology company powered by our proven, science-based, clinically effective weight loss and weight management programs. For six decades, we have inspired millions of people to adopt healthy habits for real life. We combine technology and community to help members reach and sustain their goals on our programs. To learn more about the WeightWatchers approach to healthy living, please visit ww.com. For more information about our global business, visit our corporate website at corporate.ww.com.

This news release and any attachments include “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, any guidance and any statements about the Company’s plans, strategies, objectives, initiatives, roadmap and prospects. The Company generally uses the words “may,” “will,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend,” “aim” and similar expressions in this news release and any attachments to identify forward-looking statements. The Company bases these forward-looking statements on its current views with respect to future events and financial performance. Actual results could differ materially from those projected in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: competition from other weight management and health and wellness industry participants or the development of more effective or more favorably perceived weight management methods; the Company's failure to continue to retain and grow its subscriber base; the Company’s ability to be a leader in the rapidly evolving and increasingly competitive clinical weight management and weight loss market; the Company's ability to continue to develop new, innovative services and products and enhance its existing services and products or the failure of its services, products or brands to continue to appeal to the market, or its ability to successfully expand into new channels of distribution or respond to consumer trends or sentiment; the ability to successfully implement strategic initiatives; the Company’s ability to evolve its community offerings to meet the evolving tastes and preferences of its members; the effectiveness and efficiency of the Company's advertising and marketing programs, including the strength of the Company's social media presence; the impact on the Company's reputation of actions taken by its franchisees, licensees, suppliers, affiliated provider entities, PCs’ healthcare professionals, and other partners, including as a result of its acquisition of Weekend Health, Inc., doing business as Sequence (“Sequence”) (the “Acquisition”); the recognition of asset impairment charges; the loss of key personnel, strategic partners or consultants or failure to effectively manage and motivate the Company's workforce; the Company’s ability to successfully make acquisitions or enter into collaborations or joint ventures, including its ability to successfully integrate, operate or realize the anticipated benefits of such businesses, including with respect to Sequence; uncertainties related to a downturn in general economic conditions or consumer confidence, including as a result of the existing inflationary environment, rising interest rates, the potential impact of political and social unrest and increased volatility in the credit and capital markets; the seasonal nature of the Company's business; the Company's failure to maintain effective internal control over financial reporting; the impact of events that impede accessing resources or discourage or impede people from gathering with others; the early termination by the Company of leases; the inability to renew certain of the Company's licenses, or the inability to do so on terms that are favorable to the Company; the impact of the Company's substantial amount of debt, debt service obligations and debt covenants, and its exposure to variable rate indebtedness; the ability to generate sufficient cash to service the Company's debt and satisfy its other liquidity requirements; uncertainties regarding the satisfactory operation of the Company's technology or systems; the impact of data security breaches and other malicious acts or privacy concerns, including the costs of compliance with evolving privacy laws and regulations; the Company’s ability to successfully integrate and use artificial intelligence in its business; the Company's ability to enforce its intellectual property rights both domestically and internationally, as well as the impact of its involvement in any claims related to intellectual property rights; risks and uncertainties associated with the Company's international operations, including regulatory, economic, political, social, intellectual property, and foreign currency risks, which risks may be exacerbated as a result of war and terrorism; the outcomes of litigation or regulatory actions; the impact of existing and future laws and regulations; risks related to the Acquisition, including risks that the Acquisition may not achieve its intended results; risks related to the Company's exposure to extensive and complex healthcare laws and regulations as a result of the Acquisition; and other risks and uncertainties, including those detailed from time to time in the Company's periodic reports filed with the United States Securities and Exchange Commission (the “SEC”) (which are available on the SEC’s EDGAR database at www.sec.gov and via the Company’s website at corporate.ww.com). You should not put undue reliance on any forward-looking statements. You should understand that many important factors, including those discussed herein, could cause the Company’s results to differ materially from those expressed or suggested in any forward-looking statement. Except as required by law, the Company does not undertake any obligation to update or revise these forward-looking statements to reflect new information or events or circumstances that occur after the date of this news release or to reflect the occurrence of unanticipated events or otherwise. Readers are advised to review the Company’s filings with the SEC (which are available on the SEC’s EDGAR database at www.sec.gov and via the Company’s website at corporate.ww.com).

For more information, contact:
Investors:
Corey Kinger
[email protected]

Media:
Kelsey Merkel
[email protected]