Aug. 5, 2023 WW reported its second quarter results yesterday.
- End of Period Subscribers of 4.1 million
- Revenues of $226.8 million
- Operating Income of $26.3 million; excluding the net impact of restructuring charges and acquisition transaction costs, adjusted operating income of $33.9 million
Full Year Fiscal 2023 Guidance: Revenues are expected to be in the range of $890.0 million to $910.0 million
According to management: “Our second quarter results give me further confidence that we are on the right trajectory,” said Sima Sistani, the Company’s CEO. “Sign ups for our WeightWatchers® business, excluding Clinical, were up year-over-year in the second quarter, delivering a return to sign up growth one quarter earlier than previously forecast. We are raising our expectation for year end 2023 total subscribers to be 3.7 million…”
“We ended Q2 with 4.1 million subscribers. This is the first time in the Company’s reporting history that we have achieved an in-year quarter-over-quarter total subscriber step up.” said Heather Stark, the Company’s CFO. “While, as anticipated, revenue was down year-over-year primarily due to the headwinds from 2022’s ending subscriber base, our actions to optimize our real estate footprint and organizational structure drove record high adjusted gross margin.”
End of Period Subscribers in Q2 2023 were down 4.3% versus the prior year period, driven by declines in the Digital and Workshops + Digital businesses.
Total Paid Weeks in Q2 2023 were down 7.2% versus the prior year period, driven by declines in the Digital and Workshops + Digital businesses.
Revenues in Q2 2023 were $226.8 million. On a constant currency basis, Q2 2023 revenues decreased 15.8% versus the prior year period. Subscription Revenues in Q2 2023 were $212.1 million. On a constant currency basis, these revenues decreased 11.7% versus the prior year period. Product Sales and Other in Q2 2023 were $14.7 million. On a constant currency basis, these revenues decreased 49.3% versus the prior year period driven by the planned reductions of the consumer products business.
Gross Margin in Q2 2023 was 63.1%, as compared to 60.5% in the prior year period. WW completed its acquisition of Weekend Health, Inc., d/b/a Sequence, a subscription telehealth platform offering access to healthcare providers specializing in chronic weight management. Sequence results are now reflected in the Company’s financials.
The complete Press Release with financial tables can be found here:
https://corporate.ww.com/news-room/press-releases/news-details/2023/WW-International-Inc.-Announces-Second-Quarter-2023-Results/default.aspx
Conference Call & Marketdata Commentary
Company sales continue to shrink. This is the first time since 2003 that WW revenues are expected to come in less than $1 billion. Wall Street didn’t like what i heard either, sending WW shares down more than 20% in Aug. 5th trading. Management said that it has lowered expectations for it new clinical business (Sequence), from expected revenues from Q2 to Q4 of $45 million to $30 million. GLP-1 drugs shortages due to high demand represent a headwind this year. The company added 37,000 clinical subscribers so far.
WW expects to spend $245 million on marketing this year, flat. It expects to have 3.7 million subscribers by year end 2023.
With just $30 million in additional revenues from the clinical business, this is just a drop in the bucket for a nearly $1 billion company. It reinforces the reality that the move into the prescription diet drugs arena may not be the giant shot in the arm that analysts and others were expecting. Hurdles must still be overcome with insurers and employers, who are still hesitant to cover the cost of these drugs. The benefits may not kick in for WW for years. This may take some time, and Wall Street wants quicker results.
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