WW International, Inc. Q2 FY2025 earnings call

• Strategic reorganization has strengthened the financial footing, with debt reduced by over 70% and relisting on NASDAQ. - Focus on four core pillars: building unified member experience, growing emerging/adjacent revenue streams, revitalizing brand, and driving operational excellence. - Appointed Julie Rice as Chief Experience Officer and Dr. Kim Boyd as Chief Medical Officer. - Transitioned away from compounded semaglutide, working to integrate FDA-approved medications through partnerships, with a transition period extending to August. - Planning to expand into women's health with a menopause program, leveraging existing infrastructure and expertise. - Continues to invest in AI and machine-learning for personalized member experiences, and in GLP-1 companion programs to support behavior change and long-term weight health.

In the second quarter, behavioral revenue declined 13% year-over-year, while Clinical revenue grew 55% year-over-year. Monthly subscription revenues per average subscriber (ARPU) increased 12% year-over-year, driven by a mix shift towards Clinical subscribers (generating nearly 5x ARPU of behavioral subscribers). Total end-of-period subscribers declined 17% year-over-year, with Clinical subscribers up 56% but experiencing a sequential quarter-over-quarter decline due to the transition from compounded semaglutide to FDA-approved medications. Revenues totaled $189 million, down 6% versus the prior year, with FX providing a $2 million benefit and a timing benefit of $4 million from the change in fiscal calendar reporting.

• For fiscal 2025, expects total combined revenues of $685 million to $700 million and adjusted EBITDA of $140 million to $150 million. - Acknowledges short-term headwinds from behavioral acquisition challenges and the clinical landscape but remains confident in the long-term opportunity due to the integrated model and new talent added. - Focus is on stabilizing the business through operational improvements, cost actions, and disciplined investment for future sustainable growth.

• Near-term headwinds from residual noise from the bankruptcy process affecting consumer sentiment and behavioral member acquisition. - Evolving compounding landscape with competitors continuing to offer compounded GLP-1s, creating confusion and price differential challenges. - Challenges in B2B adoption due to longer sales cycles and the need for a model that drives outcomes while managing costs.

Q: Can you provide more color on how material the shutoff of compounding was on clinic subs in 2Q and the shape of that over the remainder of the year?

A: Tara M. Comonte notes the complex clinical landscape with competitors continuing to prescribe compounded semaglutide under a personalization exception. Jon Volkmann explains the transition away from compounded semaglutide is ongoing, extending through August, with members transitioning to various Clinical solutions. While near-term headwinds exist, the long-term Clinical growth strategy remains confident.

Q: Can you talk more about transforming into a broader women's health company, specifically the menopause offering?

A: Tara M. Comonte states that the perimenopausal or menopausal stage is a natural adjacency for WeightWatchers. There's an upcoming menopause program that will be a comprehensive offering incorporating behavioral support, nutritional support, and clinical care where appropriate, curating for the women's health segment.