Why Weightwatchers filed for a

Weightwatchers has long been a familiar name, stimulated by the celebrity mentions of Oprah Winfrey and Jennifer Hudson. Jean Nidetch founded New York Society In his apartment in the early 1960s, and grew up to serve more than 4 million members worldwide. From these humble roots, the company has evolved to help people follow their meals via an application and offer live coaching and group support. More recently, he moved to clinical support by acquiring the sequence of telehealth companies, which allows him to offer weight loss drugs.

But last week, Weightwatchers filed a bankruptcy file of chapter 11 in order to Eliminate $ 1.15 billion from the company’s balance sheet.

For what?

“The essential is that their brand and their 60 -year history are the poster for what new players reject on the market, and there is little to do to remedy it,” said Michael Schnell, director of the West Monroe health care group and acquisitions. “It’s like blockbuster trying to catch Netflix by embarking on streaming – consumers have evolved, and it is difficult to change decades of market perception.”

In other words, it could not adapt fairly quickly to a rapid weight loss environment stimulated by the growing popularity of GLP-1.

What led to this?

A Weightwatchers spokesperson said that the overwhelming debt of the company, as well as the $ 100 million that she pays every year in charges of interest, reduces her ability to invest in the company, in particular his remote staff and clinical activities that support those who take GLP-1.

“The burden of weight weight debt was not the direct result of recent operational or financial performance, but largely the result of strategic financial decisions,” said the spokesperson. “The recent changes in the performance of the Weightwatchers – made up of the COVVI -19 crisis and the advent of GLP -1 drugs – made it possible to plan the company and our financial point of view, which had an impact on our ability to repay our debt under the conditions previously agreed.”

The spokesperson noted that the bankruptcy will reduce the financial burden, thus releasing the company to invest in the company.

But a better financial sole may not reverse the fortune of the Weightwatchers.

A major challenge for the company was the transition to a changing culture concerning weight loss, according to Schnell. Although the company offers an application, virtual management and access to GLP-1, it is always considered a traditional weight loss company.

“The model inherited from Weightwatcher – focused on workshops in person, weighing you publicly, a system based on points and windows – against current market trends,” said Schnell. “Consumers want private well-being experiences, digital and affirmative, which are in themselves a rejection of” culture of the diet “. WW could not adapt quickly enough to move customer expectations – its brand was precisely what the new market left behind. »»

Schnell added that GLP-1 deeply disturbed the weight loss market and that the swing weight attempt was a “classic case of the innovator dilemma”. Digital brands first like Hims & Hers and RO were able to move more quickly to GLP-1 and “language focused on well-being”, unlike inherited brands.

Another health expert echoes these comments. Weightwatchers’ brand is associated with support for behavior change, such as monitoring meals and physical form, and not as long as a clinical care service that prescribes drugs, said Ian Chiang, partner at Flare Capital Partners.

Members’ retention is also an important challenge for the Weightwatchers “given the episodic nature of their program,” added Chiang. In addition, with regard to the prescription of GLP-1s, it is difficult to compete with all other direct companies to consumers like Hims & Hers and RO, as well as more clinical companies. This includes Knowwell, which is one of the portfolio companies in Flare Capital Partner.

In addition, Oprah Winfrey leaving the weight weight table in 2024 and the use of GLP-1 was a “cultural nail in the coffin,” said Schnell.

“When your emblematic spokesperson uses GLP-1 and leaves your board, it’s as if your star player changes the teams,” he said.

A manager of a weight loss and diabetes company, on the other hand, argued that the Weightwatchers program simply does not work.

“A system that counts calories and takes an” eating less, more “approach does not work to provide sustained weight loss, and never,” said Sami Inkinen, CEO and co-founder of Virta Health. “Practically, yes, they had too many debts to be able to serve it with incoming cash flows and therefore bankruptcy now. But this is the fundamental problem – that the program does not work – it really tormented the business.”

According to Inkinen, Virta Health works with payers and employers and offers a “nutritional approach” with the ability to prescribe drugs if necessary, according to Inkinen.

Weightwatchers spokesperson noted that the company has more than 180 studies and dozens of clinical trials demonstrating its approach. Randomized controlled trials show “that our members lose a clinically significant amount of weight, while improving the overall quality of the diet and reducing the food behavior of disorders.

What is bankruptcy in the process of asserting other weight loss companies?

Jenny Craig, one of Weightwatchers’ direct competitors, fought with his own financial problems. In the end, the company closed in 2023 after more than 40 years of activity, partly due to the growing demand for GLP-1, CNN reported. He was then restarted by the health and well-being wellness company, but only with an online presence because his weight loss centers were not reopened.

The fate of Jenny Craig and Weightwatchers is not necessarily representative of the new generation of weight loss companies in technology.

Take Noom, for example, which started with the support of behavior change and was also moved to clinical care. The company adopts an approach to weight loss behavioral sciences, offering coaching application and resources. It also gives access to weight loss drugs for those who need it. The CEO of the company, Geoff Cook, told Medcity News that she had no debt and had been profitable for several years.

He said that a difference could be that the weight spells were going into clinical care by acquiring a sequence, while Noom has built its clinical program. This allowed Noom to be more agile when creating the program.

Schnell noted that the more the brand of a company is close to the “traditional model and focused on discipline, the more difficult change is [to clinical care] will be. “Noom is better positioned than the Weightwatchers because he focuses on psychology compared to the calories, he said.

“However, they will always be less pure than the D2C zero-friction brands like Hims and RO,” he added.

Chiang, on the other hand, has stressed that companies “prescription as a service” which focuses on episodic care such as weight loss, such as Weightwatchers, will always have trouble with patient retention. In order to succeed, these types of companies “must start to determine how to really offer clinical care based on the highest quality, then to be able to build a brand to which the patient can have confidence.”

Knowwell, which offers weight management services alongside primary care, The fact very well and that, in turn, stimulates the fidelity of the patients, he stressed.

For the future, Weightwatchers plans to “continue to evolve alongside the needs of science and consumers – offering a holistic and personalized experience that mixes medical care, behavioral support and community connection,” said the spokesperson. “As the market develops, in particular around GLP-1 and other clinical interventions, we are committed to extending our services to support members through each phase of their health career.”

Photo: Santima.Studio, Getty Images