Weightwatchers heading for bankruptcy after facing competition from Ozempic
The legendary weight loss company, which was founded 1963 and is based in New York City, is set to declare Chapter 11 bankruptcy in the coming months.
Weightwatchers is reportedly preparing to file for bankruptcy after facing stiff competition from popular drugs like Ozempic.
The firm, based in New York City, is setting the stage to enter the chapter 11 process over the next few months, per Wall Street Journal. This will allow it to hand the business to its creditors. It has more than $1.4 billion of loans and bonds that are due in 2028 and 2029.
Weightwatchers operates on a ‘points-based’ system that allows those participating in its programs to track their food intake and reduce their overall size. However, new medical alternatives, like Ozempic, which helps people slim down through injections that mimic a naturally occurring hormone, have proved more alluring for many.
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In recent years, these drugs have reshaped the U.S. health and fitness industries. They have proven successful in eliminating unwanted pounds more quickly and easily than consuming fewer and burning more calories alone.
WeightWatchers, which was founded in 1963, and acquired telehealth provider Sequence in 2023, which enabled members to get prescriptions for slimming loss drugs. It launched virtual clinics that provide customized exercise and nutrition plans, as well as prescription care, for individuals who want to lose 20% of their body weight on average. But the firm stuck with its focus on behavior change as the cornerstone of weight reduction.
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Last year, its latest earnings reports showed slipping profits and costs racked up from restructuring efforts. Its stock has also plummeted over time. Meanwhile, in September, the CEO Sima Sistani, who led the company’s recent moves into the prescription drug weight loss business - particularly with the $106 million acquisition of Sequence - left her post.
Prior to joining WeightWatchers, Sistani co-founded Houseparty, a now-discontinued social networking app that offered group video chatting. In addition to serving as CEO of Houseparty, Sistani was previously a senior leader at Epic Games.
Fitness chains are banking on the idea people on weight loss drugs will lose enough heft to overcome any self-consciousness or physical limits that kept them from exercising. The gym franchise Equinox started a new personal training program in January for prescription-holders who want to preserve or build muscle mass as they shed unwanted pounds.
The world of drug-assisted weight loss is also altering the ambitions of food companies. Sales of SlimFast, a line of meal replacement shakes and snacks sold at supermarkets, have dropped as people turn to weight loss drugs and retailers cut shelf space for diet products, the brand’s parent company, Glanbia, told investors last year.
Since the drugs suppress the appetites of people taking them, Glanbia and other companies are marketing their products as a source of adequate nutrients for people taking GLP-1s. Swiss multinational Nestle SA thinks it can benefit from the drugs’ popularity and is expanding its Lean Cuisine frozen meals and OPTIFAST protein shakes.