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HomeHealthWhy WeightWatchers Filed for Bankruptcy

Why WeightWatchers Filed for Bankruptcy

WeightWatchers has long been a household name, boosted by celebrity endorsements from Oprah Winfrey and Jennifer Hudson. Jean Nidetch founded the New York City company in her apartment in the early 1960s, and grew it to serve more than 4 million members worldwide. From those humble roots, the company evolved to helping people track their meals via an app and offer live coaching and group support. More recently, it shifted to clinical support by acquiring telehealth company Sequence, which allows it to offer weight-loss drugs. 

But last week, WeightWatchers filed for Chapter 11 bankruptcy in a bid to eliminate $1.15 billion in debt from the company’s balance sheet.

Why?

“The bottom line is that their brand and 60-year history is the poster child for what the new players are rejecting in the market, and there is only so much they can do to fix that,” said Michael Schnell, a director in health consultant West Monroe’s healthcare M&A group. “This is like Blockbuster trying to catch Netflix by getting into streaming – consumers have moved on, and it’s hard to change decades of market perception.”

In other words, it couldn’t adapt fast enough to a rapidly changing weight-loss environment spurred by the rising popularity of GLP-1s.

What led to this?

A spokesperson for WeightWatchers said the company’s crushing debt, as well as the $100 million it pays annually in interest expense, reduces its ability to invest in the business, particularly its telehealth and clinical business that supports those taking GLP-1s.

“WeightWatchers’ debt burden was not the direct result of recent operational or financial performance, but largely the result of strategic financial decisions,” the spokesperson said. “Recent changes in WeightWatchers’ performance—compounded by the Covid-19 crisis and the advent of GLP-1 medications—disrupted forecasting for the company and our financial picture, which impacted our ability to pay off our debt under the previously agreed upon terms.”

The spokesperson noted that filing for bankruptcy will reduce the financial burden thereby freeing up the company to invest in the business.

But a better financial footing may not fully turn around WeightWatchers’ fortunes.

A major challenge for the company has been transitioning to a changing culture around weight loss, according to Schnell. Although the company offers an app, virtual support and access to GLP-1s, it’s still viewed as a traditional weight-loss company. 

“WeightWatcher’s legacy model — centered on in-person workshops, publicly weighing yourself, a points-based system, and storefronts — counters current market trends,” Schnell said. “Consumers want private, digital-first, affirming wellness experiences that are in themselves a rejection of ‘diet culture.’ WW couldn’t adapt fast enough to shifting customer expectations—its brand represented precisely what the new market was leaving behind.”

Schnell added that GLP-1s disrupted the weight-loss market profoundly and that WeightWatchers’ attempt to pivot was a “classic case of the innovator’s dilemma.” Digital-first brands like Hims & Hers and Ro were able to shift to GLP-1s and “wellness-focused language” more quickly, unlike legacy brands.

Another healthcare expert echoed these comments. WeightWatchers’ brand is associated with behavior change support, such as meal and fitness tracking, and not so much as a clinical care delivery service that prescribes medications, explained Ian Chiang, partner at Flare Capital Partners.

Retaining members is also a significant challenge for WeightWatchers “given the episodic nature of their program,” Chiang added. Plus when it comes to prescribing GLP-1s, it’s hard to compete with all of the other direct-to-consumer companies like Hims & Hers and Ro, as well as more clinically-focused companies. This includes Knownwell, which is one of Flare Capital Partner’s portfolio companies.

Further, Oprah Winfrey leaving the WeightWatchers board in 2024 and using GLP-1s was a “cultural nail in the coffin,” Schnell said. 

“When your iconic spokesperson uses GLP-1s and leaves your board, it’s like your star player switching teams,” he argued.

An executive for a weight loss and diabetes company, meanwhile, argued that WeightWatchers’ program simply doesn’t work.

“A system that counts calories and takes an ‘eat less, exercise more’ approach does not work to deliver sustained weight loss, and never has,” declared Sami Inkinen, CEO and co-founder of Virta Health. “Practically, yes, they had too much debt to be able to service it with incoming cash flow and hence the bankruptcy now. But it’s the fundamental problem — that the program doesn’t work — that’s really plagued the company.”

Virta Health, meanwhile, works with payers and employers and offers a “nutrition-first approach” with the ability to prescribe medications if needed, according to Inkinen. 

The WeightWatchers spokesperson noted that the company has more than 180 studies and dozens of clinical trials demonstrating its approach. The randomized controlled trials show “that our members lose a clinically significant amount of weight, while also improving overall diet quality and reducing disordered eating behaviors. Our evidence-based approach ensures that members are supported not just in losing weight, but in building healthier, more sustainable eating habits.”

What does the bankruptcy bode for other weight loss companies? 

Jenny Craig, one of WeightWatchers’ direct competitors, has struggled with its own financial problems. Ultimately, the company shut down in 2023 after more than 40 years in business, partially due to growing demand for GLP-1s, CNN reported. It was later rebooted by health and wellness company Wellful, but purely with an online presence as its weight loss centers weren’t reopened.

The fate of Jenny Craig and WeightWatchers isn’t necessarily representative of the newer generation of tech-enabled weight loss companies.

Take Noom, for example, that started with behavior change support and shifted to also offering clinical care. The company takes a behavioral science approach to weight loss, offering an app and coaching resources. It also provides access to weight loss medications for those who need it. The company’s CEO, Geoff Cook, told MedCity News that it has no debt and has been profitable for a number of years.

He said a difference could be that WeightWatchers transitioned into clinical care by acquiring Sequence, whereas Noom built its clinical program. This allowed Noom to be more nimble when creating the program.

Schnell noted that the closer a company’s brand is to the “traditional, discipline-focused model, the tougher the shift [to clinical care] will be.” Noom is better positioned than WeightWatchers because it is focused on psychology versus counting calories, he said.

“However, they will always be less pure-play than the zero-friction D2C brands like Hims and Ro,” he added.

Chiang, meanwhile, emphasized that “prescription-as-a-service” companies that focus on episodic care like weight loss, such as WeightWatchers, will always struggle with patient retention. In order to succeed, these kinds of companies “need to start figuring out how to actually deliver the highest quality, evidence-based clinical care, and then also to be able to build a brand that the patient can trust.”

Knownwell, which offers weight management services alongside primary care, does this very well and that, in turn, boosts patient loyalty, he pointed out. 

Looking ahead, WeightWatchers plans to “keep evolving alongside science and consumer needs—offering a holistic, personalized experience that blends medical care, behavioral support, and community connection,” the spokesperson said. “As the market grows, particularly around GLP-1s and other clinical interventions, we are committed to expanding our services to support members through every phase of their health journey.”

Photo: santima.studio, Getty Images

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