WeightWatchers enters Ozempic market with telehealth deal

“This is the biggest innovation in our industry today,” WW CEO Sima Sistani said of the new drugs. “There is real excitement about the health outcomes of these drugs.” Ms Sistani, who has been CEO since 2022, noted that there are also concerns that people taking these drugs also need help making changes to their diet and exercise.

Sequence, whose corporate name is Weekend Health Inc., started in 2021 and had around 24,000 members as of February. WW says it is paying a net purchase price of $106 million and the deal is expected to close in the second quarter of 2023.

WW plans to promote Sequence’s telehealth services to WeightWatchers members. Gary Foster, chief scientific officer of WW, says WeightWatchers plans to create programs for people who use weight-loss drugs that would emphasize strength training and eating high-protein foods because when people lose weight, they often lose significant muscle mass. .

Sequence members pay $99 a month for services that include telehealth appointments with doctors, who can prescribe Ozempic, Wegovy, Mounjaro and other weight-loss drugs. Sequence’s program includes an app to track weight loss and meetings with dietitians and fitness trainers. Potential subscribers first take a quick quiz that asks for their height, weight, and certain medical conditions.

Drugs like Wegovy and Ozempic work by acting like GLP-1, a natural hormone that stimulates insulin production and slows stomach emptying, allowing users to feel full longer. People with a body mass index of 30 or more who took semaglutide, the active ingredient in Wegovy and Ozempic, lost about 15% of their body weight each week, on average, after 17 months of taking the drug. according to a study published in 2021 in the New England Journal of Medicine.

The drugs have recently been the subject of celebrity testimonials online and have grown in popularity leading to drug shortages.

Wegovy is approved by the Food and Drug Administration to treat obesity and Ozempic is approved for diabetes. The FDA approval for Wegovy indicates that the drug is intended for people with a BMI of 30 or greater, or a BMI of 27 or greater plus at least one weight-related condition such as high blood pressure, high cholesterol, or Type 2 diabetes.

Some digital health companies have come under fire for promoting the drugs as a quick approach to weight loss for people who aren’t obese and don’t have diabetes. The drugs can cause side effects, including nausea and vomiting.

WW says it sees the new obesity and diabetes drugs as a complement to its existing offerings, including its Foundational Diet Plan, where users track what they eat and drink and aim to stay in a certain number of daily “points”.

“We have no interest in prescribing drugs to anyone trying to lose 10 pounds for a meeting,” Dr. Foster said. He says WeightWatchers members lose an average of 5-6% of their body weight in six months.

WW said it would pay $106 million in cash and stock for the deal: $65 million in cash and $35 million in newly issued WW common stock upon closing of the transaction, and $16 million cash on the first anniversary and $16 million cash on the second anniversary. WW will assume $26 million of Sequence’s money.

The deal with Sequence comes after several turbulent years at the company. In 2018, WeightWatchers shifted away from its focus on weight loss — changing its name to WW and largely ending its use of the word “diet” — in favor of a broader approach to wellness. be. The company launched and then scaled back several initiatives, including personalized diet plans that many members found confusing. Membership and the company’s share price plummeted.

When Ms Sistani, a tech industry background and founder of social networking app Houseparty, joined the company, she leaned into the company’s weight loss mission.

“We started embracing WeightWatchers because I think it’s important not to be shy about talking about weight loss as important to health,” she said.

Also on Monday, WW announced it had closed to a net loss of $32.5 million or 46 cents per share in the fourth quarter ended Dec. 31, 2022, from net income of $29.9 million or 42 cents. per share in the prior year quarter. Revenue fell 18.8% to $223.9 million from $275.8 million in the prior year quarter. The number of subscribers increased from 4.2 million to 3.5 million.

Write to Andrea Petersen at andrea.petersen@wsj.com