WeightWatchers CEO Sima Sistani recently addressed her employees via an internal memo, aiming to alleviate concerns over the company’s financial health amidst a significant decline in its stock value.
The memo, which was shared with CNBC, emphasized that despite the recent turbulence in the stock market, where shares plummeted to under $150 million in market value, the company’s finances remain strong, particularly highlighting the growth of its clinical business related to GLP-1 weight loss drugs.
Oprah Winfrey Steps Down From The Board
Sistani’s communication came on the heels of distressing market responses, notably after a 20%-plus drop in shares triggered by news on February 28th that Oprah Winfrey was stepping down from the board and donating her shares to a museum’s endowment.
Despite this initial drop, shares stabilized later in the week, only to face further declines, reaching a new 52-week low by Thursday. Over the last month, WW shares have decreased by 58 percent, driven by concerns about the company’s debt and the impact of new weight loss drugs like Novo Nordisk’s Ozempic, Wegovy, and Eli Lilly’s Zepbound.
Internal Memo Release
In her memo, Sistani stated, “These headlines are often just speculation. We have strong liquidity and are not in a cash crunch. We have very attractive, long-term debt agreements, with no maturities due until 2028 and 2029.”
This statement was reinforced by a report from Guggenheim Partners which highlighted their lack of concern regarding WW’s ability to manage its debt, estimated at $945 million on a term loan and $500 million of notes.
Moreover, Sistani conveyed optimism about the WeightWatchers Clinic, previously known as Sequence, which has been rebranded to better confront the competition from GLP-1 drugs through clinical interventions.
She reported that since the earnings call on February 28th, the clinicals business has seen rapid growth, surpassing initial quarterly guidance for Clinic subscribers.
The financial stability and promising growth in new clinical ventures contrast starkly with concerns over the legacy weight loss management business, which analysts believe needs growth for the stock to regain investor confidence.
Sistani Calls for Increased Focused
Despite the struggles, Sistani urged her team to stay focused on delivering value to members, reassuring them that this would ultimately stabilize the stock price. She wrote, “Turning around and totally transforming a business is not for the faint of heart! As we stay focused on delivering for our members, the stock price will take care of itself.”
In the broader scope of public engagement, Oprah Winfrey, who announced her departure from the board, also highlighted her ongoing commitment to destigmatizing obesity and managing it as a chronic condition, underscoring her support by participating in a national primetime weight-loss special on ABC, expected to promote GLP-1 drug therapies alongside behavior modification programs.
This internal memo serves as a testament to the complex challenges faced by WeightWatchers amid fluctuating market sentiments and evolving competitive landscapes. Yet, it also underscores a strategic pivot towards innovative clinical solutions that may well dictate the company’s future trajectory.
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