WW International, Inc. Announces First Quarter 2024 Results

• End of Period Subscribers of 4.0 million, including 91 thousand End of Period Clinical Subscribers
• Revenues of $206.5 million
• Gross margin of 66.7%; excluding the net impact of restructuring charges related to prior year restructuring plans, adjusted gross margin of 67.9%
• Operating Loss of $269.3 million primarily due to $258.0 million in non-cash intangible impairment charges for franchise rights acquired; excluding such impairment charges and the net impact of restructuring charges related to prior year restructuring plans, adjusted operating loss of $5.6 million
• Provides update to full year fiscal 2024 guidance

NEW YORK, May 02, 2024 (GLOBE NEWSWIRE) -- WW International, Inc. (NASDAQ: WW) (“WeightWatchers,” “WW,” or the “Company”) today announced its results for the first quarter of fiscal 2024.

“We delivered solid performance in the first quarter with end of period subscribers of 4.0 million, improved retention and engagement in our core business, and continued strong growth in our clinical business with 91 thousand end of period clinical subscribers,” said Sima Sistani, the Company’s CEO. “We continue to expect to end the year with total subscribers in the range of 3.8 million to 4.0 million, including between 140 thousand and 160 thousand subscribers to our new WeightWatchers Clinic. We are executing on our plan by returning WeightWatchers to profitable growth while transforming our business model for the future.”

“We are maintaining our revenue guidance for 2024, including a return to year-over-year growth in subscription revenues,” said Heather Stark, the Company’s CFO. “We are operating more efficiently, demonstrated by record gross margin and our outlook for strong adjusted operating income growth.”

Q1 2024 Consolidated Results

Q1 2024 Business and Financial Highlights

• End of Period Subscribers in Q1 2024 were down 0.4% versus the prior year period. Q1 2024 End of Period Workshops + Digital Subscribers decreased 16.7% versus the prior year period. Q1 2024 End of Period Digital Subscribers increased 0.7% versus the prior year period. Q1 2024 End of Period Clinical Subscribers were 91 thousand.
  
  
• Total Paid Weeks in Q1 2024 were up 1.7% versus the prior year period, driven by the Digital business and the inclusion of 1.1 million Clinical Paid Weeks. Q1 2024 Digital Paid Weeks increased 3.7% versus the prior year period. Q1 2024 Workshops + Digital Paid Weeks decreased 17.0% versus the prior year period.
  
  
• Revenues in Q1 2024 were $206.5 million. On a constant currency basis, Q1 2024 revenues decreased 14.9% versus the prior year period.
  
  
  • Subscription Revenues in Q1 2024 were $204.1 million. On a constant currency basis, these revenues decreased 3.7% versus the prior year period. Subscription Revenues included $18.8 million of Clinical Subscription Revenues.
    
    
  • Other Revenues in Q1 2024 were $2.5 million. On a constant currency basis, these revenues decreased 92.0% versus the prior year period driven by the wind down of the consumer products business.
    
    
• Gross Profit in Q1 2024 was $137.8 million, compared to $119.5 million in the prior year period. Adjusted gross profit in Q1 2024, which excluded the net impact of $2.5 million of restructuring charges related to prior year restructuring plans, was $140.3 million. Adjusted gross profit in Q1 2023, which excluded the net impact of $18.6 million of restructuring charges, was $138.1 million.
  
  
  • Gross Margin in Q1 2024 was 66.7%, as compared to 49.4% in the prior year period. Adjusted gross margin in Q1 2024 was 67.9%, up from an adjusted gross margin of 57.1% in the prior year period, primarily driven by actions to reduce the fixed cost base and mix shift within the business.
    
    
• Non-Cash Intangible Impairment Charges: During Q1 2024, the Company recorded non-cash impairment charges of franchise rights acquired totaling $258.0 million. These impairments were primarily driven by an increase in the Company’s weighted average cost of capital reflecting market factors.
  
  
• Operating Loss in Q1 2024 was $269.3 million, compared to operating loss of $28.6 million in the prior year period. Adjusted operating loss in Q1 2024, which excluded $258.0 million of non-cash intangible impairment charges and the net impact of $5.7 million of restructuring charges related to prior year restructuring plans, was $5.6 million. Adjusted operating loss in Q1 2023, which excluded the net impact of $22.7 million of restructuring charges and the impact of $3.7 million of acquisition transaction costs, was $2.2 million.
  
  
• Income Tax Expense in Q1 2024 was $55.4 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 expense was $67.6 million.
  
  
• Net Loss in Q1 2024 was $347.9 million compared to net loss of $118.7 million in the prior year period.
  
  
• Diluted Net Loss per share in Q1 2024 was $4.39 compared to diluted net loss per share of $1.68 in the prior year period.
  
  
  • Certain items affect year-over-year comparability.
    
    
    • Q1 2024 diluted net loss per share incorporated the net negative impact of $4.33 per diluted share in the aggregate due to the following items:
      • $3.05 per diluted share negative impact of non-cash intangible impairment charges for franchise rights acquired.
      • $1.22 per diluted share negative 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.
      • $0.05 per diluted share net negative impact of restructuring charges related to prior year restructuring plans.
    • Q1 2023 diluted net loss per share incorporated the negative impact of $1.59 per diluted share in the aggregate due to the following items:
      • $0.24 per diluted share net negative impact of restructuring charges.
      • $1.30 per diluted share negative 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.

Other Items

• Cash balance as of March 30, 2024 was $66.6 million. On that same date, the Company had no outstanding borrowings under its revolving credit facility.
• Interest Rate Hedges: The Company’s interest rate swaps in effect as of the end of the first quarter of fiscal 2024 terminated on March 31, 2024. As of May 2, 2024, the Company had no active swaps in place.
• 2023 Restructuring Plan: In connection with the previously announced 2023 restructuring plan, the Company recorded aggregate restructuring charges of $5.5 million in Q1 2024.
• Reportable Segment Update: As previously disclosed, as a result of the continued evolution of the Company’s centralized organizational structure in fiscal 2023, and management’s 2024 strategic planning process, the Company’s reportable segments changed commencing with the first day of fiscal 2024 to one segment.

Full Year Fiscal 2024 Guidance
The Company is providing the following update to full year fiscal 2024 guidance:

• Maintaining previously provided revenue guidance range of $830.0 million to $860.0 million, reflecting a $55 million year-over-year headwind from the strategic decision to wind down the Company’s low-margin consumer products business.
• Operating loss is expected to be in the range of $163.7 million to $153.7 million; excluding the non-cash intangible impairment charges and net impact of restructuring charges recorded in the first quarter of fiscal 2024, adjusted operating income is expected to be in the range of $100.0 million to $110.0 million, which is consistent with previously provided operating income guidance that did not include the above impairment and restructuring charges.

First Quarter 2024 Conference Call and Webcast
The Company has scheduled a conference call today at 5:00 p.m. ET. During the conference call, Sima Sistani, Chief Executive Officer, and Heather Stark, Chief Financial Officer, will discuss the first 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 loss, operating 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 first quarter 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 Company’s previously disclosed 2023 restructuring plan (the “2023 plan”) and the Company’s previously disclosed 2022 restructuring plan (the “2022 plan”); and (ii) the first quarter 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) the reversal of certain of the charges associated with the Company’s previously disclosed 2021 organizational restructuring plan (the “2021 plan”), 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 net impact 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
corey.kinger@ww.com

Media:
media@ww.com