Overview

Weight Watchers is a global wellness and weight management company utilizing a convenient online and mobile app tracking/recording tool and supportive in-person live group sessions under the guidance of trained coaches. In April 2023, it completed an acquisition of the telehealth company Sequence, with an aim to try and participate in the growing adoption of GLP-1 weight loss medications.

We downgraded from a HOLD to a SELL on the WW Term Loan B and 2029 Senior Secured Notes in September 2023. Since then, the Term Loan has dropped from the high-70s to the low-20s and the Notes have dropped from the low-70s to the high-20s.

In the wake of the announced departure of CEO Sima Sistani in September 2024, we continue our negative outlook on WW. Growth in its core business as well as Sequence/Clinical continue to struggle as liquidity remains tight. The Company has no near-term debt maturities, although the potential for an escalation in the rate of cash burn could lead to a near-term debt restructuring.

Slightly tempering our negative outlook, the Company announced in October 2024 that it would begin offering compounded versions of GLP-1 medications to its Clinical subscribers. In the past, we noted that avoiding GLP-1 drug compounding was reducing demand for WW’s Clinical offering due to potential legal/regulatory issues that could result. While prior management’s decision was understandable given the potential for longer-term risks, embracing compounding seemed inevitable due to competition from telehealth alternatives. However, as a late entrant, WW may struggle to attract subscribers or compete with rivals like Hims and Hers Health. Recent FDA rulings might also impact the growth of compounded GLP-1s. Overall, while this decision is slightly credit positive for WW, it is unlikely to significantly affect bond and loan prices due to ongoing uncertainties.

How We Help

Our team of over 150 analysts, lawyers, and journalists work together to provide our clients with the news and insights that can quickly change the valuation of names like Weight Watchers.