Weight Watchers International, Inc. Aktie

Good day, and welcome to the WeightWatchers First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to David Helderman, Senior Director of Investor Relations. Please go ahead.

Thank you for joining us today for the WeightWatchers First Quarter 2026 Earnings Conference Call. Earlier this morning, we released a shareholder letter and press release with our first quarter 2026 results, which are available on the company's corporate website located at corporate.ww.com. The purpose of this call is to provide investors with some further details regarding the company's financial results as well as to provide a general update on the company's progress. Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measures are also available as part of the shareholder letter and press release.

Before we begin, let me remind everyone that this call will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's latest annual report on Form 10-K, quarterly report on Form 10-Q, the earnings release, the shareholder letter and as updated by the company's other filings with the Securities and Exchange Commission. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. All forward-looking statements are made as of today, and except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Joining today's call are Felicia DellaFortuna, Chief Financial Officer; and Jon Volkmann, Chief Operations Officer. Both are members of the interim office of the Chief Executive.

Thanks, David, and thanks to all of you for joining. Before we get started, I encourage everyone to read our shareholder letter, which we posted on our corporate website earlier this morning. This letter shares our progress as well as key financial trends. Felicia will also provide more color on our results later in the call.

When we last spoke to you in mid-March, we laid out our WeightWatchers strategy to become the preferred destination for weight health in a GLP-1 era by integrating groundbreaking medical advances like GLP-1s with our time-tested behavioral and community programming. We remain confident that this approach can help WeightWatchers create better health outcomes for our members while driving higher lifetime value and return the company to profitable long-term growth.

Before we discuss our business progress, we want to briefly acknowledge the recent transitions on the Board. The Board is committed to WeightWatchers transformation and long-term success. And over the past month, the Board has welcomed 3 highly qualified independent directors who bring valuable expertise in transformation, health care and GLP-1 market dynamics. Felicia and I, along with the Board, are fully focused on executing our strategic plan so we can capture the significant opportunity before us. It's an opportunity that continues to grow.

Through the first 3 months of 2026, demand for GLP-1 has accelerated with the launch of oral versions. We've also seen employers, payers and governments increasingly looking to drive tangible health benefits economic outcomes and returns on investments that come with these new medications. Our industry has never changed faster or drawn more interest than today.

These medications are an important part of our sector's future, which is why we have expanded our clinical capabilities to meet consumer demand and offer our members the best tools available. But even as GLP-1 adoption grows, and benefits become clearer. A growing body of evidence is also illustrating that many people are not staying on GLP-1s long term. And that absent other interventions, patients are likely to regain weight after discontinuing treatment. Comprehensive care models and support systems like ours that go beyond the prescription are critical to maximizing the potential of GLP-1 going forward.

As the global leader in sustainable science-backed weight management for more than 60 years, WeightWatchers is perfectly positioned to meet this need. Our unique portfolio of weight health offerings enables members to choose the right level of support for wherever they are in their weight loss journey with or without medication. The data continues to back our approach.

At 12 months, Med+ members who engaged regularly with our GLP-1 success program lost 29.1% more body weight on average than those who did not engage in structured behavioral support. That is a massive competitive advantage, and we're committed to seizing this opportunity by continuing to transform our company for the future.

And as our members know well, transformations require time and discipline. We are in the early stages of a multiyear reinvention that will require a sustainable approach. That is why as we continue to shift our legacy business to address market realities, we are committed to finding consistent incremental wins that facilitate our long-term ambitions.

During Q1, we drove many of those wins through our Med+ tier. This higher-value membership integrates premium clinical capabilities with the proven community solutions and behavioral tools that have driven results for WeightWatchers members over the last 6 decades. Clinical subscription revenue and end-of-period clinical subscribers grew 32% and 46% year-over-year, respectively, despite lapping our former compounded semaglutide offering which demonstrates our growing strength in this increasingly important vertical. Our clinical capabilities are making inroads with existing members and prospective new members.

During Q1, we saw more than 20,000 existing behavioral members, upgrade to clinical, which has an ARPU over 4x greater than our behavioral offering. This mobility within our ecosystem speaks to the benefits of our tiered service approach and demonstrates how our portfolio of products can drive higher lifetime value. At a time when compounded medications are facing increased scrutiny we continue to expand access to FDA-approved medications, including oral versions, which are growing the total addressable market for GLP-1s and becoming increasingly affordable for our members.

This progress in our clinical business comes as our behavioral business continues to face headwinds. We are focused on stabilizing our behavioral business by recalibrating marketing spend across our portfolio facilitating seamless navigation of members across our ecosystem and continuing to enhance our coaching, community and medically tailed support programs, all of which are available through our Core+ tier.

We are encouraged by the return to growth of Core+, which ended Q1 with 537,000 subscribers, representing a 6% year-over-year increase. This higher value offering doubles down in our community, which continues to be at the heart of the WeightWatchers experience. Our virtual workshop experiences are expanding, including sessions led by registered dietitians and physicians and classes tailored to GLP-1 users and members experiencing menopause.

Members are responding. In Q1, virtual workshop attendance among Core+ members in the U.S. increased nearly 40% year-over-year, with increases in members participating in multiple meetings per week as well. In addition to driving engagement, these workshops are also converting subscribers to higher-value memberships. As we strategically offer complementary virtual experiences to Core members, we found that those who attend are 3 to 4x more likely to upgrade to Core+, which has an ARPU nearly 2x greater than our Core tier. In Q1, nearly 20% of Core+ sign-ups or upgrades for Core.

Core+ also includes our GLP-1 success in menopause programs, 2 medically adjacent offerings tailored to the needs of our members. As the weight health industry embraces medical advances, these programs illustrate how WeightWatchers can combine our tried and true behavioral methods with new evidence-based approaches that drive better results. The future of our industry will be defined by the intersection of scientific innovation, behavioral programming and human support and no company is better prepared to operate at that intersection in WeightWatchers. We have an unparalleled track record of helping our members live healthier, happier lives as well as the plan and the team to return this global brand to long-term growth. As we continue to transform WeightWatchers to prepare for what's next, we believe that 2026 will be an important inflection year that unlocks the potential for sustainable value creation.

With that, I'll turn it over to Felicia to cover the financials.

Thanks, Jon. Our first quarter financial performance demonstrates the solid financial foundation we've built following our successful 2025 reorganization. We are pleased to report that during Q1, we were able to advance short- and long-term business priorities simultaneously. We maintained a near-record adjusted gross margin and drove continued increases in ARPU. At the same time, we made strategic forward-looking investments and build a liquidity position to support our previously announced $37 million of cash utilization to pay down our term loan in Q2.

Additionally, we are reaffirming our previously provided 2026 financial guidance for revenue and adjusted EBITDA, and we expect to generate cash in 2026. Starting with Q1 financial details. While ended period behavioral subscribers were $2.5 million at the end of Q1 2026, reflecting a 25% year-over-year decline we are encouraged with Core+ trends, which represented 537,000 subscribers and grew 6% year-over-year. While core continues to face secular headwinds and saw incremental pressure in Q1 2026, this was due in part to our strategic decision to prioritize awareness for a Med+ tier, also coinciding with the Wegovy pill launch.

Due in large part to these efforts, end-of-period clinical subscribers were 197,000, which grew 51% sequentially. Additionally, we are seeing members shift from Core to our Core+ Core and Med+ peers, a trend that we expect to continue, demonstrating how our integrated weight health approach can drive higher ARPU and lifetime value.

As a result, Q1 ARPU increased 13% year-over-year to $20.59. Clinical ARPU remained over 4x higher than behavioral ARPU in Q1. Within the behavioral business, Core+ had an ARPU of nearly 2x higher than that of our Core subscriber. Revenue in Q1 was $168 million, down 10% year-over-year, reflecting the subscriber dynamics between our subscription tiers which resulted in 32% growth in clinical subscription revenue and a 17% decline in behavioral subscription revenue.

Foreign exchange provided a $4 million benefit in the quarter, while fiscal Q1 2026 included 1 less day compared to fiscal Q1 2025. Adjusted gross margin was 73.6% and which remains near record highs despite an accelerating mix shift towards clinical as we significantly improved the margin profiles within both behavioral and clinical through structural actions and operational efficiencies. While clinical carries a higher cost of service and behavioral primarily due to clinician staffing, clinical gross margins have expanded meaningfully since our acquisition of Sequence in 2023.

Marketing expense in Q1 2026 was $93 million, reflecting front-loaded investment in Q1 to drive awareness of our Med+ positioning, also coinciding with the Wegovy pill launch. Adjusted SG&A was 15% of revenue, slightly lower as a perceptive revenue than Q4 2025, reflecting the exit from our corporate headquarters lease and continued expense discipline. Adjusted product development expense in Q1, which primarily includes personnel costs for engineering, product design and data teams was 5% of revenue. As is typical for the business, Q1 represents our peak marketing investment period ahead of revenue that is recognized across the remainder of the year. Adjusted EBITDA for Q1 was a loss of $1.8 million, and we expect adjusted EBITDA to improve in the remaining quarters of 2026. Our profitability remains supported by the structural cost actions we have taken in recent years, which, along with the financial restructuring, have allowed us to fund strategic growth initiatives while maintaining a disciplined margin profile.

Now shifting to cash on the balance sheet. We ended Q1 with $121 million in cash and cash equivalents compared to $160 million at the end of Q4. The sequential change primarily reflects Q1 2026 adjusted EBITDA, quarterly interest on our term loan of $12 million, capital expenditures of $6 million and the timing of marketing payments.

Our liquidity position supports our previously announced debt pay-down actions, including our voluntary solicitation, which was fully subscribed to 68.5% of par that we expect to take place in Q2. As a result, in Q2, we expect to utilize $37 million in cash to reduce the aggregate principal amount of our term loan by $42 million. The $37 million payment is made up of $27 million from our annual cash suite and $10 million as part of the voluntary solicitation. Based on the interest rate in effect for this term loan, as of March 31, 2026, of 10.5%, we expect the debt pay down to reduce our annualized interest expense by approximately $4 million.

Now shifting to our 2026 outlook. We are reaffirming our previously provided 2026 guidance for revenue to be $620 million to $635 million and adjusted EBITDA to be $105 million to $115 million. While we expect sequential clinical subscriber growth in the remaining quarters of the year, we expect sequential net adds to be lower than Q1, reflecting seasonal normalization, lower levels of marketing spend and a more balanced allocation of that spend. We are expecting clinical subscription revenue to grow to be approximately 25% to 30% of 2026 revenue, up from 16% of 2025 revenue. Within our behavioral business, we are encouraged with the growth we are seeing within Core+, and we expect to grow Core+ subscribers in 2026.

We remain focused on driving efficiencies within gross margin through workflow automation, technology enablement and cost discipline, in particular, as we scale our clinical business. While we expect modest injected gross margin declines in 2026 versus 2025, we expect to remain above 72%.

Now turning to operating expenses. We continue to expect 2026 marketing expense as a percentage of revenue to increase modestly compared to 2025. On product development expenses, we expect to remain at a similar quarterly run rate as Q1 2026 as we continue to execute on our multiyear technology revenue. On SG&A, we continue to expect modest savings in 2026, primarily driven by the exit from our corporate headquarters lease and ongoing operational discipline. As is typical for the business, Q1 represents our peak cash usage quarter. We expect to generate cash through the remainder of the year, and we'll continue to manage liquidity and capital allocation with a focus on durable cash generation.

The main drivers of adjusted EBITDA for our cash generation are interest, CapEx and cash tax. We expect approximately $45 million to $50 million of interest costs, which reflects slightly lower in the interest compared to Q1 2026 following the debt repayments from the cash sweep and voluntary solicitation offer mentioned earlier. We expect 2026 quarterly capital expenditures to remain at a similar run rate as Q1 2026, and we expect 2026 cash taxes to be between $5 million and $10 million.

As we look to the future, we continue to feel confident in our financial footing and the immense opportunity before us. Our first quarter results demonstrate the increasing share of our growing clinical and Core+ businesses as a percent of total end-of-period subscribers and revenue, which supports 2026 as an important step in a multiyear transformation.

I will now turn it over to the operator to open it up for Q&A.

[Operator Instructions] The first question comes from Nathan Feather with Morgan Stanley.

Given the 1Q performance, can you help us think through the shape of both behavioral and clinic subscriber growth through the year, especially as marketing mixes back to a bit more of a balance between segments?

Thanks, Nathan. And of course, so as we look out for the year, there are a couple of pieces of information for 2026 that we do think are helpful. We do think with the balance of core plus and core in our behavioral business for the subscriber declines alongside the recalibration of marketing to stay fairly flat relative to what we've provided in Q1 2026. We do expect that mix shift between Core+ and core to have the continued positive impact that you've seen in our ARPU for Q1. And then with clinical, we are very excited about the growth that we put up in Q1 of 2026, ending the quarter at 197,000 clinical subscribers. we do anticipate with this recalibration that there will be sequential growth, however, significantly muted relative to what we saw from Q4 2025 to Q1 2026. In addition, we will be lapping some of the 12-month long-term commit. That was a big initiative for us in Q3 of 2025. With all of that, however, we do anticipate significant revenue growth on our clinical business, and we do anticipate that ending at around 25% to 30% of our total revenue.

Great. That's helpful. And then I guess just more broadly, we've seen prices, especially cash prices on branded GLP-1 continue to come down, I think especially accelerated by the launch of the new oral medication. Can you talk through how has that impacted the funnel kind of from top of funnel interest all the way down to conversion as you're seeing this greater affordability? And then within 1Q, can you give us any sense of just how important the impact of the oral category has been and how you see that progressing over the course of the year, especially as access to that continues to expand?

Yes. Yes, great question. So as we previously highlighted, our clinical platform empowers our obesity clinicians to work directly with patients and identify the treatment path that's right for them. And that's when new medications come to market, particularly at more affordable price points, it helps open up access both at the top of funnel and helps patients not only get on medication, but stay on medication. So when new medications come to market and particularly what we've seen with these orals, it has been a tailwind for our business, and we expect that to continue moving forward. We really view new medications coming to market as an opportunity for us to really shine.

And an increasing and complex landscape, consumers are looking for that trusted authority to help them navigate treatment options safely and effectively. And with the orals coming to market and particularly with differentiated clinical profiles that gives us an opportunity to really help consumers navigate these options. We also support members who want to pay with cash and insurance for these FDA-approved medications. And our ability to help these patients get covered has been a competitive advantage of ours in the past, and we expect that to continue moving forward. And then just to close, our real-world data, we demonstrated 19.4% weight loss at 12 months, which is significantly higher than competitors. And so when you look at this combination of clinical quality along with these medications, we really feel like that's the winning approach long term to pair that together with our behavioral support and nutritional guidance.

That's helpful. And then one more, if I may. Given where the term loan is trading, what are your thoughts on additional voluntary paydowns maybe on a more regular basis given the success of what you did?

I think for us, it's a constant management of both debt and equity across our profile. And so with the latest voluntary solicitation, we saw where it was trading. We are comfortable in the guidance that we've provided. You've heard that from us reaffirming it as well for 2026, and I'm also comfortable in our overall cash position. So we did see it as an opportunistic moment. And I think as we look out for the business, Q1 2026 and Q1 typically is a cash use quarter. So in looking out for our adjusted EBITDA guidance, we do expect cash accretion for Q2 to Q4. And so I think that's just a factor that we're going to continuously monitor as we balance both investment in the business alongside trying to decrease our debt burden.

The next question comes from Alex Fuhrman with Lucid Capital Markets.

It seems like one of the most surprising things in today's release or at least one of the most impactful is getting back to growth on the Core+ offering. Can you talk a little bit more about what's really driving that mix shift within the core offering to the point where you're back to growth on Core+, what it is that people are really responding to? Have you needed to add more meeting touch points to drive that? Just curious what's driving that and how long you can sustain that momentum.

We are very excited about the Core+ subscriber growth that we were able to put up in Q1 2026. And I would say that there are several factors that have been quite exciting for us that have impacted that growth. We have new virtual experiences that are available. So not necessarily only doing IRL experiences, but having the opportunity to do virtual experiences across the member base. It's also a chance for us to be more focused in the virtual experience. So there's more -- an individual member of Weight Watchers can choose. We are also having the chance to have those workshops and virtual experiences be led by RDs and physicians, which is just helpful in providing more guidance to our members alongside their weight loss journey. We have new coach creators across our ecosystem. And so that has been a fantastic way of getting our message out. And then we are also still very excited about these medically-centric programs like menopause and GLP-1 success that are included in our SKU. So it is very important when we talk about that 537,000 subscriber count that, that 2x ARPU number is the equivalent of almost 1 million core subs. And so this is an area that we see the potential and also the differentiation of WeightWatchers starting to come to light.

Okay. That's really helpful. And then just as we think about kind of our models and what the business could look like throughout the rest of the year and into next year, can you just help us remind us the impact of compounded semaglutide last year? I mean it was a brief period of time that you were offering it, but obviously had a pretty significant impact on the business. Is it fair to assume that you're going to see an acceleration in the year-over-year numbers for clinical in the back half of the year as we kind of get past that. And just trying to remember the economics of branded versus compounded, should we expect the relationship between clinical revenue growth and clinical sub growth to stay more or less the same throughout the rest of the year?

Sure. So in the last call, I think we mentioned that the opening headwind for 2026 associated with our compounded semaglutide offering was approximately $20 million. And as a reminder, we stopped compounding in May of 2025 in accordance with the FDA guidelines that did have a fairly large churn event in Q3 of 2025 last year. We were able to retain about 20% of those compounded semaglutide members. across our ecosystem. So yes, as you look at our revenue for clinical, not necessarily the subscriber count, but for our revenue, we will be lapping easing comps in Q3 of 2026 and Q4 of 2026.

The next question comes from Justin Ages with CJS Securities.

Can you give us a bit more color on the shift in brand strategy or marketing and how that's appealing to different demographics and whether you're gaining traction there?

Yes, of course. I mean we did spend in Q1 of 2026, and that was definitely a strategic focus of ours. And we do look at it as very productive spend, especially as it was the first opportunity kind of post Chapter 11 for us to focus on larger reach. We had multiple goals as we were thinking about Q1 2026 spend. We were thinking about the modernization of our brand, and you see the brand refresh coming through as it relates to Weight Watchers. And we also wanted to increase general brand awareness of our clinical business and our Med+ offering, which includes not only access to meds, but also the behavioral science and the community support that go alongside with Weight Watchers.

And the Wegovy launch was just a big thing that we also specifically wanted to target towards. So what we did see overall as a result of that is we saw a 10-point increase in our general awareness that Weight Watchers has a GLP-1 offering. There's still room to grow, but that was an exciting stat for us internally to allow for folks to know that we do carry GLP-1s. And we also saw 50% of the members who joined clinic during peak coming from new members to Weight Watchers. And so both of those things, we do expect to continue to have a positive tailwind for us as we look out across the 2026 year. But it is important for us at this point and at this juncture to also show that we have more to offer than just access to meds. And so we will be advertising across the portfolio and not just kind of the general awareness and then plus offerings that we did in Q1.

All right. That's helpful. And then one more kind of relatedly. As part of the emergence, you guys highlighted a few initiatives, one of them being the menopause program. Can you give us a sense on what the size of that opportunity is, how you're working towards that? -- any contribution from that initiative towards overall results?

Yes. The menopause offering was our first launch at a medically centric program included in our Core+ SKU. So it is one of the programs that is helping the overall growth of our subscriber base in Q1. And so we are pleased because it has been the first time in years that our Core+ offering has grown and menopause is an important factor of that.

This concludes our question-and-answer session. I would like to turn the conference back over to Felicia DellaFortuna, CFO, for any closing remarks.

Thank you for joining us today. We value your continued interest in our transformation. There is a significant opportunity here, and we are fully committed to execution of the strategy we believe in. While we remain in the early stages, we're confident we are on the right track, and we look forward to providing updates as we go. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the WeightWatchers Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to David Helderman, Senior Director, Investor Relations. Please go ahead.

Thank you for joining us today for the WeightWatchers Fourth Quarter and Full Year 2025 Earnings Conference Call. Earlier this morning, we released a shareholder letter and press release with our fourth quarter and full year 2025 results. which are available on the company's corporate website located at corporate.ww.com.

The purpose of this call is to provide investors with some further details regarding the company's financial results as well as to provide a general update on the company's progress. Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measures are also available as part of the shareholder letter and press release.

Before we begin, let me remind everyone that this call will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's latest annual report on Form 10-K, the earnings release, the shareholder letter, and is updated by the company's other filings with the Securities and Exchange Commission. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements.

All forward-looking statements are made as of today, and except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Joining today's call are Tara Comonte, President and Chief Executive Officer; and Felicia DellaFortuna, Chief Financial Officer; Jon Volkmann, Chief Operations Officer, will also join for the Q&A.

Thanks, David. Before we get started, I encourage everyone to read our shareholder letter, which we posted on our Investor Relations site earlier this morning. In there, we share our progress against our strategic priorities latest exciting efficacy claims and unique differentiators for the company and our programs. We also share key financial trends, including 2025 results, while we were pleased to be previously provided revenue and adjusted EBITDA guidance.

Felicia will also provide more color on our results later in our call. 2 quarters ago, we emerged from Chapter 11 financial reorganization with a mandate to transform our company to lead in a GLP-1 world. There were many legitimate questions to answer at the time, perhaps the longest of which where the Weight Watchers a brand known the world over, could reinvent itself and successfully compete. As we sit here today, reflecting on how we exited 2025 and have started 2026. We answered that question with the resounding yes. Our fourth quarter results and the momentum we've experienced already in the first quarter of 2026, provide us with exciting and additional conviction in our future and all that's possible for WeightWatchers in the years ahead.

Over the last year or so, more dramatically in the month since exiting Chapter 11, wheat watches is beginning to feel different, look different and [indiscernible] difference. We've reduced our legacy debt by more than 70% and freeing capital for investment in the future. We've completely rebuilt the leadership team. We've repositioned and clearly defined our go-forward strategy, refreshed and reintroduced the Weight Watchers brand reset our product and pricing architecture and started the extensive execution against our technology modernization road map.

All of this in service of supporting and growing our member base while returning to sustainable profitable growth. In our call last quarter, I shared that we were entering a transformative new era in Weight Health. In the months since as adoption of GLP-1s continues to accelerate. It's clearer than ever that our sector is undergoing massive generational change. GLP-1 medications represent a permanent structural shift in how the world understands weight, obesity and metabolic health.

Today, about 10 million Americans are estimated to be on GLP-1. By 2030, McKinsey estimates that number will be between GBP 25 million and GBP 50 million. Already, calorie consumption patterns are changing. Cardiovascular risks are declining. And entire industries from food to [indiscernible] to airlines to apparel are recalibrating in real time. This is not a continuation of anything we've seen in our past. This is a category being rebuilt from the inside out. WeightWatchers is being built to. We're fast evolving from a primarily behavioral subscription business that originally grew from in-person meetings to pairing and personal connections with the digital behavioral subscription and now into an integrated weight health ecosystem that includes medication access and clinical care. But we're about so much more than just a prescription.

We are building out decades of providing real human comprehensive weight health support wherever our members need it. That commitment doesn't go away with GLP-1s. Far from it, it becomes all the more important. Signs from leading health authorities like the World Health Organization emphasize that medication alone will not solve the global obesity problem and the GLP-1s works best in combination with healthy habits and community support.

In fact, data we recently published showed that members who regularly engage with the unique behavioral support delivered by our WeightWatchers GLP-1 Success program, whose 29% more body weight at 12 months old average than those who use medication without the structured behavioral support. Additionally, when we look at the results published by competition in our field, our Weight Watchers Med+ members prescribed GLP-1 medications, reported over 30% more body weight loss on average at 12 months from those competitors.

We published these and other exciting results in the GLP-1 report and press release last week, which you can also find on our site, and I encourage you to take a read. Taking a step back, though, the data is planes day. GLP-1 work better with Weight Watchers. And as a result, we have a unique opportunity as we embark on this next chapter. Over the last year or so, and particularly in the few quarters since exiting Chapter 11, we've been focused on reinventing nearly every aspect of our company to execute on our strategic priorities.

We're creating a deeply engaging end-to-end member experience, innovating to capitalize on new technologies that can continue to support better results and deliver a broad range of solutions to our members. On an increasingly personalized basis to meet them wherever they are in their journey. We're growing our new and emerging medical offerings and diversifying our revenue streams, scaling our clinical business, growing our GLP-1 success program our recently launched Manapol program, making registered dietitians more widely accessible and expanding through other channels such as B2B as we work to grow access to new and expanded audiences.

We're revisiting and refreshing our brand shows up, leaning into the trust and scientific credibility for which we've been on for decades, but in a modern, relevant way for today's consumer. Including with a focus on our role in the medication led space. And after decades lacking sufficient technology investments, we're modernizing our tools. systems and platforms to ensure we are building on a robust foundation from which growth and innovation can be both nimble and efficient moving forward. Those are our areas of strategic focus today and moving through this year.

Let's talk about how they show up in our product offerings. We're working to build a connected ecosystem of solutions, one that increasingly facilitates a member's ability to transition across our portfolio based on their specific goals and needs at any point in time. In terms of our programs, members can subscribe to our base level behavioral core program in order to access our tried and true points tracking system within our mobile app, along with new digital tools launched earlier this year.

Core is our premium behavioral offering that provides additional human connection, expert coaching and community support through in-person and virtual workshops as well as our newer GLP-1 success in menopause programs. Our GLP-1 success program allows us to support members on GLP-1 to get their medications outside of WeightWatchers, which typically via their primary care or other specialist physicians.

And Med+ is our clinical offering, that combines all of our behavioral programming and expertise plus access to board certified clinicians who can provide specialist care, including GLP-1 and HRT prescriptions for eligible members in the U.S. This program takes our decades of expertise in behavioral science, lifestyle change and community support and curate it for those on medication. It does say by providing a unique wraparound system to help guide a member be most successful on their medically guided weight loss journey.

Each of these offerings builds on the other. There are foundations for creating an engaged and increasingly retended member base with higher average revenue per member and importantly, the opportunity for superior health outcomes. The work ahead of us is to continue to strengthen and enrich each of these experiences while raising awareness in the marketplace. In just a few short weeks this year, we saw clear proof points that our brand repositioning and awareness efforts were resonating. Our priority of the peak season was to drive a reconsideration of Weight Watchers as a modern relevant leader in the medical weight loss space.

And yes, one has survived an extensively reported bankruptcy process. Our assets also targeted a simple and important message that is central to our go-forward strategy. That among many other things we are known for that Weight Watchers also now provides access to clinicians who can prescribe GLP-1 medications. Awareness that we even have this offering is low and therefore, represents a significant opportunity ahead. The results from our January campaign were exciting. Delivering an increase in awareness of our nets offering of 8 points to 30% while improving our brand modernization perception by 9 beeps.

Completely repositioning a 60-year-old brand takes more than a few weeks. So to see such material shifts in the space in a relatively short time gives us immense confidence in the leadership role, this powerful, trusted global brand can play in this new world moving forward. We also relaunched our mobile experience in January. It's the first iteration of our app on a newly rebuilt foundational infrastructure and modern code base, one that brought with it new tools and programs to market for our members. Like any release of this scale, we moved quickly to incorporate member feedback and address ad hoc performance issues.

As we sit here in March, we've shipped numerous releases since the beginning of the year centered on removing points of friction in the user experience as well as showcasing exciting new additions. These include the new AI body scanner, new personalized modes to support different phases of the wages journey, a proprietary weight health score and expanded coach-led virtual meetings among other ongoing innovations. Nowhere has our commitment to constant improvement been more evident than in the future in store road map we've laid out for the rest of this year.

Our driving motivation is to help members successfully achieve their weight health goals with a build fast iterate mindset. We're fortunate to have attracted incredibly accomplished and proven new leaders to help lead us through this transformation. In science and clinical innovation, technology, marketing, brand, community and so much more. In the last few weeks, we've also filled more specialist in critically important areas such as data, AI, product and user experience among others.

Turnarounds always take time, but the aloe faster and more successfully with the right team in place. and I could not be more proud of the leaders who are overseeing this next chapter for the company. In the run-up to our critical peak season, we executed across the company to reintroduce our brand rebuild our websites and acquisition funnels and relaunched this mobile experience in time for January.

The market is taking note and our strategy is working. We're seeing a level of momentum in our Med offering that is both validating and energizing with member acquisitions reaching accelerated levels as we exited 2025 and new highs as we scaled into the first quarter of 2026, our marketing efforts to reposition the Weight Watchers brand and shift consumer perception are also helping us reach an entirely new audience.

In January, the proportion of first-time WeightWatchers members in the U.S. increased to 35% across all programs and reached even higher levels in Med+ where 50% of all new Med+ members were new to the WeightWatchers brand. We're also successfully reengaging prior Weight Watchers members, many of whom are returning with clear interest in our newer clinically focused offerings. Of course, we are clear eyed that this opportunity and associated pace of change does not come without challenges, particularly to a 10-year established business like us.

As GLP-1 adoption continues to grow, clinically focused solutions will continue to disrupt stand-alone behavioral alternatives. Which is exactly why both our strategy and competitive advantage involves adapting our behavioral business for today's consumers and integrating this curated, tailored programming into our fast scaling clinical capabilities, again, engaging members wherever they are on our [ Waikele ] journey, whether they are new, existing or returning.

Speaking of engagement, in January, we were very pleased to see virtual workshop attendance among core+ members in the U.S., increasing nearly 30% year-over-year. And notably, when our affiliated physician leads sessions, at tenders more than doubled. These metrics represent clear and exciting signals for our business, validating the extent to which our members value the unique integration of medical expertise with human connections. Through our supportive one-of-a-kind Weight Watchers community. As GLP-1s mature, the question is quickly shifting from how do I access these medications to how do I live on the Industry data indicates nearly 1 in 5 patients discontinued use of GLP-1 medication within the first few months, largely due to side effects.

We offer the support that can best help our members succeed on these medications, and it shows. In fact, 72% of our Med+ numbers reported that our GLP-1 success program helps them minimize their side effects.

What's more, Med+ members guided by 1 of our registered dietitians during their first 12 weeks or 30% less likely to discontinue their treatment plan. These are just a couple of clear yet powerful data points that demonstrate the measurable impact the programs and support systems we are building can serve all our members' ability to be successful. They, together with an increasing number of additional proof points give us confidence in the power and unique value of our model as we move forward. This expansive progress across so many parts of our business is without question deeply encouraging and serves our belief in the sizable opportunity ahead but also realistic knowing that we're in the early days of this work.

As is the case with any generational business reinvention, the transition requires both time and careful management. This is all the more critical when managing the balance between exciting and significant growth of new and emerging business lines with ongoing headwinds in a high-margin legacy revenue stream. WeightWatchers exit the first quarter with high levels of conviction in our future. As we deploy capital against our strategic priorities in this fast-evolving market, we will continue to proactively manage the balance between the relative maturities and margin profiles of our different lines of business. We stand at an inflection point.

The industry we helped create is going through males life-affirming change, and we do not plan to stand on the sidelines watching. Our Weight Watchers team has both energy and belief in the large-scale opportunity before us. We have never been more confident in our ability to succeed. But most importantly, we have never been more committed to our mission to help our members the world over live longer, happier and healthier lives. And with that, I'll turn it to Felicia to cover the financials.

Thanks, Tara. Q4 marked the end of one of the most significant financial years in the company's history. Our capital structure was reset through a financial reorganization that eliminated over $1.1 billion of debt, allowing the company to refocus on investment and execution for the future. Q4 results were consistent with our strategic and financial objectives, and we are proud to have over delivered on our previously provided 2025 guidance.

We maintained strong adjusted gross margins with disciplined cost actions while also strategically reinvesting to support targeted growth initiatives. Note that the year-over-year adjusted EBITDA comparison was impacted by a change in our fiscal reporting calendar end. These additional calendar days included about $10 million of marketing spend from the start of peak season. End-of-period clinical subscribers were 130,000 at the end of Q4, returning to sequential growth following the completion of our transition from our former compounded semaglutide offering.

This momentum strengthens further into Q1, even while lapping strong growth from that offering in Q1 2025. We are expecting to end Q1 with approximately 200,000 end-of-period clinical subscribers, which when adjusted for compounded semaglutide last year would be roughly 100% year-over-year growth. In Q1, we leaned into marketing to solidify our Med+ positioning and drive member acquisition during peak season, which was also timed with the [indiscernible] entering the market.

While we expect sequential growth for clinical subscribers in the remaining quarters of the year, we also anticipate seasonally lower demand following peak season, lower levels of overall marketing spend and a rebalancing of our spend allocation across behavioral and clinical for the remainder of the year. End of period behavioral subscribers were $2.6 million at the end of Q4 2025. Our behavioral business is further defined by two increasingly different trajectories. Core faces multiyear ongoing secular headwinds and incremental customer acquisition pressure following our financial reorganization.

While this line of business saw further pressure in Q1 2026. This was due in part to our strategic decision to prioritize awareness and acquisition efforts for a Med+ offering in the U.S. during peak season. We were encouraged, however, with improvements in increasing signs of stabilization in core including member engagement and acquisition trends as we work to position this as our premium behavioral offering. This is particularly true as we increase focus over time on our medically-centric life stage programs, including GLP-1 success, as our data continues to show such encouraging superior health outcomes associated with this offering.

We are expecting to end Q1 with approximately 2.45 million end-of-period behavioral subscribers which would be a decline of approximately 26% year-over-year. An important part of our strategy involves increasing levels of existing member migration across our portfolio alongside reengagement of lapsed behavioral members into Core+ and Med+. Over 2025, we saw approximately 30% of our clinical sign-ups transitioning directly from our behavioral base. A trend that continued into the first quarter, albeit at slightly lower levels within larger overall new member volumes.

Additionally, in Q4, we saw approximately 30% of our core plus sign-ups transitioning directly from Core+. While these dynamics create a further subscriber and revenue headwinds for the core behavioral business, they represent a high-value transition to an accretive ARPU profile and increased lifetime member value. Monthly subscription revenue per average subscriber or ARPU increased 8% year-over-year to $18.73 in Q4.

This growth is anchored by the significant premium of our clinical business, where ARPU remains over 4x higher than our behavioral business. Additionally, within the behavioral business, we expect to see the benefit of core plus which commands a price point nearly 2x higher than our standard core offering and represents around 20% of our behavioral subscriber base. The sequential ARPU improvement was further supported by the normalization of pricing following a clinical promotional period designed to transition our remaining compounded semaglutide members.

Total revenue in Q4 was $163 million, down 12% year-over-year, reflecting the varying dynamics between our lines of business. a 32% growth in clinical revenue and a 17% decline in behavioral revenue. Foreign exchange provided a $3 million benefit in the quarter and fiscal Q4 2025 included one extra day compared to fiscal Q4 2024. Adjusted gross margin remained near record highs at 74.4% in Q4, and but declined slightly compared to Q3, which reflected both the seasonal staffing of clinicians ahead of peak season and the accelerating mix shift towards clinical.

While clinical carries a higher cost of service due to physician staffing, clinical is highly accretive because of its higher ARPU. Marketing expense in Q4 was 40% of revenue, which increased year-over-year, primarily due to the inclusion of 3 calendar days of peak season marketing spend as a result of the change in our fiscal reporting calendar end. Additionally, Q4 2025 reflects our accelerated efforts to raise awareness of our Med+ offering and start of the peak season. Adjusted product development expense in Q4 and which primarily includes personnel costs for engineering, product, design and data teams was 5% of revenue.

Adjusted SG&A in Q4 was 18% of revenue remaining relatively flat despite revenue declines, a result of structural cost actions and continued expense discipline. Q4 adjusted EBITDA was $18 million, reflecting an adjusted EBITDA margin of 11.1%. Our profitability remains supported by the structural cost actions we have taken over the past years, which, along with financial restructuring, have allowed us to fund strategic growth initiatives while maintaining a disciplined margin profile. Now shifting to cash on the balance sheet. We ended Q4 with $160 million in cash and cash equivalents compared to $170 million at the end of Q3.

The sequential change primarily reflects Q4 adjusted EBITDA and quarterly interest on our term loan of $13 million, capital expenditures of $7 million and prepayments associated with Q1 marketing commitments. For the full year 2025, net cash taxes were $10 million, which was lower than full year 2024, reflecting transaction-related deductions from our financial reorganization and the current benefits of tax legislation. Following our Q2 2025 financial reorganization, we have fundamentally transformed our balance sheet.

Our GAAP profile consists of a term loan of $465 million with an interest rate of SOFR plus 680 basis points, with the maturity of June 24, 2030. Now shifting to our 2026 outlook. We enter 2026 managing two distinct realities. Our performance reflects a deliberate evolution of our model as we move from a collection of stand-alone behavior offerings toward a fully integrated wait health ecosystem that includes clinical care, allowing us to proactively support member migration and recapture lapsed behavioral subscribers.

This involves advancing the significant momentum of our clinical Med+ offering while recalibrating our behavioral business across core and core plus offerings following multiyear secular headwinds and the commercial impact of our 2025 Chapter 11 reorganization. Our 2025 end-of-period behavioral subscribers translates into an opening subscription revenue headwinds in 2026 of approximately $50 million. Within clinical, 2025 included approximately $20 million of revenue from our former compounded semaglutide offering, which we exited in full compliance with FDA guidance following the end of medication shortages.

As we focus on a mix shift toward clinical, we also remain focused on our long-term margin profile by leveraging workflow automation, technology enablement and cost discipline to drive further efficiency as we scale. Turning to operating expenses. We expect 2026 marketing expense as a percentage of revenue to increase modestly compared to 2025. We front-loaded approximately 40% to 45% of our full year marketing spend into Q1 as discussed earlier, which results in lower levels of overall marketing spend for the remaining quarters of the year.

It will also see a reallocation across our behavioral and clinical lines business. Due to the subscription nature of our model, this means the impact of this reallocation of spend may not be fully visible in the 2026 P&L. On product development expenses for 2026, we expect to remain at a similar quarterly run rate to the second half of 2025 as we continue to execute on our multiyear technology road map. We expect modest SG&A savings in 2026, primarily driven by the exit from our corporate headquarters lease and ongoing operational discipline.

With these components in mind, for fiscal year 2026, we expect revenue to be in the range of $620 million to $635 million and we expect adjusted EBITDA to be in the range of $105 million to $115 million. With regard to our Q1 cash flow expectations, as is typical for the business, we expect a meaningful use of cash in the first quarter. A deliberate investment fees aligned with our strategic priorities. Q1 represents our peak marketing investment period, and this year includes additional spend to support our brand relaunch and evolving member experience. with Q1 capital expenditures and interest payments expected to remain consistent with Q4 levels.

Per our credit agreement, there are annual prepayments to be made for excess cash above $100 million, based on the last 10 calendar days of the first quarter. In the case of 2026, any excess cash payment would be due on June 24, 2026. We do not expect Q1 cash usage to be indicative of full year trends. As marketing spend moderates significantly following peak season, we will continue to manage liquidity and capital allocation with a focus on durable cash generation. We expect 2026 capital expenditures to begin to return towards historical levels as we continue to invest in product innovation, technology, infrastructure and growth initiatives.

We expect 2026 net cash taxes to be between $5 million and $10 million. We view 2026 as an important inflection year, unlocking the potential for sustainable future growth. With that, I will now turn it over to the operator to open it up for Q&A.

[Operator Instructions]. The first question today comes from Alex Fuhrman with Lucid Capital Markets.

Congratulations on all you accomplished in 2025. Wanted to ask about some of the changes you're seeing in demand for weight loss medication, it seems like you guys really took the long-term approach you're betting on FDA-approved medications, and that really seems to be paying off now, especially with the lower-priced oral medications coming out. Can you talk about what demand has looked like for the week OV pill and just how we should think about the next 3, 6 months now that you're kind of lapping the last of when you had compounded GLP-1s back when that was allowed per FDA rules.

Alex, it's Tara. Thanks for the question. Listen, I think we are seeing a consistent trend of increasing consumer interest increasing consumer openness and increasing consumer adoption of GLP-1 medication. Sure the price comes down, but also more and more people are seeing incredible results on these medications and as new forms come to market. So we are definitely very focused there, as you rightly point out, and as you can see in our Q1, both strategy and subscriber estimates and expectations.

But again, just to reinforce that with this increased demand for medication, our position is not to shift this business to be a prescription-only telehealth business. Our strategy here is very much to lean into this part of the weight loss ecosystem and this part of innovation in the field, but to be building on and integrating everything we've spent 6 years building.

Our focus, #1, 2 and 3 is driving superior long-term member outcomes. And so the more we see data around we've had some of it in the call and then the prepared documents today and in our white paper last week, if you saw the more we have conviction in the power of this model. So yes, leaning in the clinic, yes, we're seeing the consumer do the same thing. But really, our unique positioning is in the form of the power of the integration. But Jon, maybe you want to just touch on [indiscernible].

Yes. Yes. Thanks, Tara. Regarding the [indiscernible], I mean we're incredibly pleased with the launch. So as we previously highlighted, our platform empowers trained obesity clinicians to work directly with patients to identify the treatment path that's right for them. And thus, the addition of a new option and particularly one with such clear clinical differentiation is a significant tailwind for our business. And demand has exceeded our initial projections.

And more importantly, we're seeing as expanding our total addressable market. We're seeing a higher percentage of patients who are entirely new to obesity medicine interested in this treatment option. And this confirms our thesis that a needle-free oral option significantly lowers the psychological barrier to entry for millions of prospective members. And from an operations standpoint, with the launch, we were ready on day 1. So through our integration with Novo Care we were able to onboard interested patients to this new format seamlessly.

And then regarding patient access, the market at launch was primarily cash pay, and that was supported by those lower cash paid prices than previous branded GLP-1 launches that you mentioned. However, we have seen in subsequent weeks a steady increase in prior authorization approval rates as more formularies adopt and our dual track ability to support members, whether they want to cash pay or utilize insurance remains a core competitive advantage of ours. And so overall, we really view this launch as validating our position as the leader in the wait health space.

Our clinical infrastructure is medication agnostic. So we're built to evolve alongside the science. We view moments like these when new medications and new form factors come to market as an opportunity to truly shine in an increasingly complex landscape. Consumers are looking for a trusted authority to help them navigate treatment options safely and effectively. And to bring it back to member outcomes, as Tara said, our real-world data where we've demonstrated 19.4% weight loss at 12 months is significantly higher than competitors. And this proves that the combination of our high-quality clinical support when paired with behavioral support nutritional guidance is really a long-term winning strategy.

I would also just add a couple of points on the first part of your question as well. So, as you know, our ARPU on the clinic is 4x higher than that of behavioral. And last year, in the first half of 2025, we were seeing approximately 50% growth in end-of-period subscribers when we were compounding. If you strip out that impact of compounding in Q1 2025, our estimate for Q1 2026 is showing 100% growth year-over-year.

Okay. That's really helpful. All three of you for that. And then -- Sorry, you mentioned in your prepared remarks that about 50% of the Med+ members that have been joining lately are new to the brand. That sounds pretty high. How does that compare to the last couple of years of growth for clinical and curious how that compares to your new subs on the behavioral side? And what's driving the new interest in the brand from those that are new to it.

Yes. Great question. I mean, 50% is certainly a number that we're pleased about, particularly as we think about this brand coming back to market. We also are bringing more lapsed members back into the Med+ offering, which is really interesting to see. So just continued increases there. And I think, again, some of that goes to here sort of multiple factors. The strength and awareness of the Weight Watchers brand generally. And we have a lot of people around the world who know this brand.

However, we have less who know that we are in the clinical space. and that we offer access to physicians who can prescribe these medications. So as we really think about peak and sort of some of those success metrics repositioning this brand for people who have not engaged before, repositioning this brand as a leader, not just in wait health, but in medically centric weight health. Repositioning this brand is not one that is either behavioral of the past or medication only of the future but really one that is an integrated whole-person support platform that can help you throughout your entire journey and building on everything that we've always sort of led within the market is how we're approaching this sort of next chapter for the company. So it's really twofold.

Yes, we need to be bringing new members to the brand, and that's where things like brand relevance modernization perceptions, all these types of metrics are really important leading indicators and signals, for our conviction that the brands can play and lead in this next chapter, but also the reconsideration of people who have members who have been with us in the past, but it's exciting to see them coming back, but coming back into some of these newer offerings. So early days, but very positive trends across all signs of this of this brand and the shift that we're very intentionally trying to make.

But again, as I also said in my prepared remarks, you don't reposition a 63-year-old brands over 4 weeks in January. So this is just the beginning of this, but Q1 gives us a lot of conviction in our ability to be successful over the long term.

The next question comes from Justin Ages with CJS Securities.

Good morning. So clearly, it looks like the marketing spend is working with the 2000 clinical members. Just wanted to see if we could dig in a little bit and see if the profile of the ads is changing. So is the demographic of new people coming to Weight Watchers. Is that different than the demographic that's been in the past?

It's getting there. Thanks for the question. I mean I think as we talked about -- we are seeing new members come back. We're seeing lapsed members come back. We're also seeing younger members start to come into the brand. So, yes, I think slowly but surely, we are seeing that expand. But again, we're talking about a pretty short period of time here. So I would expect demographics to continue to expand over time as we really continue in these efforts to make this a brand that can truly meet you where you are, whether you are thinking about medication, whether you are on medication but getting it from your physician, whether you are looking for access to medication from one of our clinicians or will come off -- ramp off medication but maintain the weight or none of the above, but do that in an environment where you have human connection, real-life support and all the behavioral and additional tools that can support you. So I think that we would expect to see demographics continue to widen as time goes on, but some interesting early signs.

I would also add this is, as you could see in our Q1 marketing spend, this was us very much focusing on a full funnel marketing strategy. And so we were across a spectrum of offerings as across television and out-of-home as a way of very much expanding our reach with the intent to improve customer acquisition costs overall in the future.

All right. Very helpful. I appreciate that. And then along similar lines and obviously, early days of the whole reorganization. But are you seeing any indications in how members are signing up in terms of length of contract? Are you seeing more longer term? Or is it shifting month-to-month?

I mean, we've mentioned in our previous calls, specifically with clinics that we were seeing greater adoption of 12-month LTCs relative to the other plans. We are also seeing a similar trend in our behavioral business with folks adopting longer plans. So all positive trends as it relates to looking out past 2026.

And just to remind -- yes, we're also sort of in the early stages is going to be a common theme of we reset our pricing product architecture for peak. And you should expect us to continue to test and learn there as it relates to how that product architecture continues to evolve. So as Felicia said, we are continuing to evolve not just the product offerings, but the payment structures, the subscription models to meet those needs in the marketplace. But again, I would just I would just say expect us to continue to be testing and learning as we go.

Yes. And if you're looking specifically at the clinical business, we see both retention and adherence very significantly across the individual patient level. And it's well documented that there are a number of reasons that folks might discontinue or cycle off medication from side effects to cost considerations to just reaching their goals. And that's why we've really taken the approach of providing a high-quality holistic care system. As mentioned, we have 72% of our Med+ members reported that the GLP-1 success program helped them minimize their side effects, which is critical to maintain the adherence.

So we view our goal as supporting people wherever they are in their way health journey. And we don't see that journey ending, particularly when the prescription stops. So our model is built to help members when appropriate. Transition seamlessly from medication-assisted treatment back to our core and behavioral programs to ensure that we can support their long-term health goals and weight management, even if they stop clinical therapy.

The next question comes from William Reuter with Bank of America.

I have two questions. The first, on your general pricing strategy, where are you at this point and thoughts on how promotional you may be in 2026, whether you're going to be pulsing different offerings throughout the year and thoughts upon the importance of average revenue per user versus increased numbers.

Yes. So as we look out to kind of 2026 and specifically as it relates to our pricing and promotional structure, one of the big shifts that we have made kind of leading into the 2026 year was allowing members to renew from a long-term commitment to another long-term commitment. Historically, once the long-term commitment had ended, members would have to wait until the next big promotion to rejoin Weight Watchers.

And so we are very excited about giving folks the opportunity specifically on our behavioral offering to renew from an LTC to LTC. This is one of kind of the first steps. We do anticipate that this has a slight impact to ARPU overall because what we -- as I just mentioned before, do see folks joining the 12-month LTC, which is at a lower price than our 1-month. However, I would note that we are using promotional activity more deliberately in the 2026 year and as well as in the past in the 2025 year.

So for example, in Q3 2025, we provided specific clinical promotional activity as we were moving to try to migrate as many members who are part of our compounding semaglutide offering. To our other branded Med+ that we offer. And so that was a very calculated choice that we have since kind of resumed back to more normal pricing on our clinic offerings. So see us being out there.

And then just to kind of remind on the ARPUs, like overall, the corp less ARPU SKU is about 2x that of the or only SKU. And so as we kind of see the mix shift happening to clinic and also seeing core plus stabilize relative to core, we do anticipate that, that over time will increase ARPU and create for ARPU expansion.

Yes. And with our clinical pricing specifically, we feel very confident looking across the landscape that our price to value for our membership is very strong. We have one of the lower entry points to a clinical telehealth program in the space. And when you consider the holistic support system that we provide with that membership, we feel very strong about our price-to-value ratio.

Got it. That's very helpful. And then my second question, you guys referenced the B2B initiative. I'm wondering if you could share any data points on your success there, the size of the program and what type of growth you might expect or hope for this year?

Yes. So on our B2B business, this was an area that we had discussed having a disproportionate impact by bankruptcy just because it has a much longer sales cycle. And we were going through Chapter 11 during what was prime B2B sales cycle season. However, since then, we are very enthused about our pipeline and pleased about the activity. We have taken a much more active effort in our B2B efforts overall. And so this -- like we do see as a really important initiative for us. It's still a small percentage of total revenue.

However, B2B subscribers are included in our behavioral and clinic business lines in the subscriber counts. But we are pleased with the momentum here and are happy with the diversification that it provides both on acquisition as well as with employer relationships.

Yes. And to speak to a couple of the initiatives on that front, we're really excited about expanding our partnership with UnitedHealth really across multiple lines of business, including their hub, total weight support, UHD store and the pilot for fully insured members and broadly just looking to continue expanding our collaboration with them to meet -- to reach more employers.

And then to speak a little bit to the Rx Flex Fund, which was something that we announced on our last call, I believe. We did that based on the express needs of our clients, and we've seen others fast follow, which we view as evidence of demand for this type of offering. And with that, we offer -- we enable a partial subsidy from employers for GLP-1 costs to reduce the cost burden for members versus paying the full direct-to-consumer medication costs.

And one of the key differentiators for that program are that we embedded that plus offering within the RX Flex 1 solution for comprehensive care in the program that's easy to add and implement. And as a part of that, as we speak to that price to value, members get access to our GLP-1 success program. as part of the overall offering to ensure they're getting wraparound support versus just contributing money to GLP-1.

This concludes our question-and-answer session. I would like to turn the conference back over to Tara Comonte, CEO, for any closing remarks.

Thanks, everyone. I appreciate you all joining us today. Very much appreciate you also your support and continued interest in the company, particularly at this really important time of transition for WeightWatchers. We have a huge opportunity ahead of us, and we are working very hard to deliver on our mandate of transforming this company to meet it. So it's early days.

We know we've got plenty of work ahead but we believe we're very much on the right track, and we have a high level of confidence and conviction in our future. So we look forward to following up with some of you after the call, and thank you again for joining us today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to WeightWatchers International's Third Quarter 2025 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to David Helderman, Director of Investor Relations. Please go ahead.

Thank you for joining us today for the WeightWatchers Third Quarter Earnings Conference Call. Earlier this morning, we released a shareholder letter and press release with our third quarter 2025 results, which are available on the company's corporate website located at corporate.ww.com. The purpose of this call is to provide investors with some further details regarding the company's financial results as well as to provide a general update on the company's progress. Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measures are also available as part of the shareholder letter and press release.

Before we begin, let me remind everyone that this call will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's latest annual report on Form 10-K, quarterly report on Form 10-Q, the earnings release, the shareholder letter and as updated by the company's other filings with the Securities and Exchange Commission.

Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. All forward-looking statements are made as of today, and except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Joining today's call are , Tara Comonte President and CEO; and Felicia DellaFortuna, CFO. Jon Volkmann, Chief Operations Officer, will also join for the Q&A.

Thanks, David. As we close the third quarter of 2025, WeightWatchers is laying the foundation for renewed growth and leadership in the rapidly evolving weight management sector. I encourage everyone to read our shareholder letter, which we distributed earlier this morning and is posted on our Investor Relations site. It details our key strategic priorities, competitive differentiators and what you can expect to see from us over the near and longer term as we build on work already underway to drive growth and long-term value.

But first, let me start with some context. In recent years, we've witnessed one of the most profound shifts in the history of health and wellness. The emergence of GLP-1 medications for weight loss has revolutionized the conversations around obesity, bringing hope and in many cases, results to millions who have long struggled to manage their weight. To many, the story was simple. Miracle drugs had arrived and traditional approaches like WeightWatchers proven high-touch science-based program could no longer compete in a changing world. However, we recognized early that this was not the end of an era, but the beginning of a new one. The future of weight management will be built on an integrated approach that pairs clinical care and medication access with structured nutrition, movement and accountability. That's why we acquired Weekend Health, a telehealth business now rebranded to WeightWatchers Clinic that allowed us to integrate medical expertise and prescription access into our program, broadening our proven science-backed model to include clinical care.

We're now evolving and tailoring our behavioral offerings to provide the important support needed by members using these life-changing medications, helping them adhere to treatment, manage side effects and achieve lasting results over time. This evolution is not a rejection of our past, but an extension of our legacy as the world's leading evidence-based weight management partner. For 62 years, we've led with science. And as GLP-1s redefine what's possible, we're leading with the science again. I want to be clear on this. No company has a deeper commitment to the science of weight loss nor a longer history of helping people manage their weight than ours. Our industry-leading behavioral program serves as an essential foundation for the differentiated weight loss outcomes and significant nonscale results achieved through WeightWatchers Clinic. As you can see in our shareholder letter, the data proves the efficacy of this model.

Studies found that WeightWatchers Clinic members who have prescribed anti-obesity medications, including GLP-1s, achieved an average weight loss of 19% to 23% over 3 years, significantly outperforming our competitors at 12 months. And what's more, 98% of WeightWatchers Clinic members prescribed a weight management medication reached more than 10% weight loss after 12 months and nearly half of them reaching 20% weight loss. Beyond the scale, GLP-1 users who also engaged with the WeightWatchers program experienced a 197% increase in self-esteem, a 78% increase in intimacy, 62% better physical function, a 53% boost in quality of life and 34% reduction in symptoms of depression. The data is clear. In a GLP-1 world, behavioral programs and community support in tandem with medical solutions are forced multipliers for effective, sustainable weight loss and superior health outcomes.

What skeptics once saw as an existential threat to our company has instead become an extraordinary opportunity for us to deliver lasting results for our members and capture a greater share of the growing market we serve. 137 million Americans, over half of U.S. adults are eligible for GLP-1 medications. 12% of adults in the U.S. are now taking a GLP-1 medication with demand continuing to rise. $173 billion in annual medical costs are associated with obesity in the United States and $1.7 trillion in chronic disease costs are linked to overweight and obesity. This isn't just one of the largest health and economic opportunities of our time. It's a chance to help tens of millions around the world live happier, healthier lives. And it's a moment that WeightWatchers is uniquely positioned to lead.

This is particularly true after last quarter's emergence from our financial reorganization. This proactive process aimed at strengthening our balance sheet and freeing up capital to invest in growth also provided the opportunity for a philosophical and strategic rebirth, opening the door for renewed and accelerated innovation. Looking forward, we're focused on 4 key priorities to drive our growth. First, we will deliver an engaging unified end-to-end member experience. WeightWatchers has long been the most trusted weight loss platform. But as the world changes, our digital ecosystem and experience must evolve to match both the scale of our ambition and the expectations of today's consumer. Under the leadership of Helene Causse, who is our new Chief Technology Officer, joining us from FIS, Snap and Amazon.

We've begun modernizing the 2 most critical digital touch points for our members, our app and our website. The WeightWatchers app is being completely replatformed to remove legacy barriers between our clinical and behavioral offerings, ensuring that members can move seamlessly across the full spectrum of our programs while also discovering new tools and solutions that can help them on their journey. Over time, the app will become a personalized companion that leverages AI and behavioral insights to deliver individualized recommendations and curated programs. This will be fueled in part by the vast and constantly growing data set we've collected over more than 6 decades. By modernizing our systems, we can maximize the potential of this information to offer new personalized solutions that meet members where they are, whether that's on or off medication, managing menopause, diabetes or postpartum or in other life stages that deeply affect weight health.

The WeightWatchers website is also being rebuilt on a mobile-first infrastructure designs to guide prospective members to the right starting point for their journey. It will be informative and easy to navigate, serving as both an educational resource and a more effective marketing and CRM engine. This new website will enhance our brand, improve conversion and create a clearer, more connected path from interest to acquisition. Together, these upgrades form the foundation of a full digital transformation. It will create a faster, more intuitive, data-enriched and integrated experience while also improving member outcomes and deepening engagement. The first iterations of our new app and website are expected for peak season early in the new year with ongoing releases throughout 2026. Last but certainly not least, we're reinvigorating the beating heart of WeightWatchers, our community experiences.

Under the leadership of Julie Rice, our new Chief Experience Officer, who co-founded SoulCycle, we're revitalizing the community offerings that remain central to WeightWatchers. We're expanding our team of highly skilled coaches and introducing new virtual communities around shared interests such as GLP-1s, menopause, cooking and more. We'll also be upgrading the actual meeting platform that we use for our workshops to provide a more personal immersive experience for our members. And in addition, in-person workshops will also be refreshed with renewed focus on connection, consistency and brand experience to be strategically aligned with member demand and needs.

Together and over time, all these initiatives will deliver a unified modern WeightWatchers experience that will remove friction between programs, connect digital and human support, produce better outcomes for members and generate expanded opportunities for profitable growth for our business. Second, we're growing our emerging medical business and investing in new diversified revenue streams. The widespread adoption of GLP-1s for weight loss has transformed the weight management landscape and created substantial opportunity for WeightWatchers.

Our immediate priority is to scale what's working. That includes WeightWatchers Clinic, which offers medical access and clinical care. It includes our GLP-1 Companion Program, which provides a behavioral framework to support GLP-1 weight loss regardless of whether you get your prescription from WeightWatchers Clinic or your own care provider. And it includes our cash paid or reimbursable Registered Dietitian Network, which connects members with experts who can help them make curated nutritional choices based on their personal needs.

Moving forward, we plan to invest in, expand and elevate these programs for existing and new prospective members. As innovation in the weight health market continues to advance rapidly, we're positioning ourselves to benefit from strong tailwinds that will boost our telehealth business. New oral medications that will expand treatment options are expected in early 2026. Price points are likely to come down for medication over time and long-term trends point towards broader insurance coverage for medical weight management. Each of these factors will ultimately contribute to expanded medication access and provide significant potential for growth.

We're encouraged by the strong member interest in GLP-1 medication options through direct cash pay channels, including our integrations with NovoCare and LillyDirect. Our ongoing collaboration with Novo Nordisk is particularly meaningful as we work together to expand access to injectable Wegovy and support the upcoming launch of the Wegovy Pill, while exploring new and innovative ways to bring additional convenience and value to our members.

As we continue to expand our medical solutions and capabilities, I will reiterate that patient safety, patient outcomes and regulatory compliance continue to guide our clinical approach. As we expand our GLP-1 medical weight loss program, we are also extending our reach into adjacent areas of weight health. This started with the launch of WeightWatchers for menopause, a new offering launched at the end of the third quarter that offers evidence-based support and medication access to the 1.3 million women in the United States who reach menopause each year, many of whom are managing weight, hormonal and metabolic changes simultaneously.

The phased rollout throughout October has been well received, driving encouraging engagement among existing members and strengthening brand awareness around our evolving position in weight health. We also expect our long-term growth to extend beyond the United States, building on more than 50 years of presence in key international markets. Under the leadership of Alejandro Bethlen, Executive Vice President of International, who joined us in September, we will accelerate efforts to strengthen our position abroad, advancing new clinical capabilities while also recommitting to international growth more broadly across our business.

Our partnership with U.K.-based telehealth provider CheqUp that we launched in May is exceeding expectations, and we will evaluate additional opportunities to extend our integrated model to other priority markets. We're also expanding our relationships with employers, payers and health systems seeking cost-effective outcome-driven solutions. One recent example is our WeightWatchers RxFlexFund. It launched in October and offers an innovative flexible approach for organizations looking to support employee access to GLP-1s while managing overall costs, underscoring the value of our integrated medical and behavioral care model.

Looking ahead, we see meaningful opportunities to thoughtfully extend the WeightWatchers ecosystem into areas that complement our expertise in weight health. Through select partnerships, integrations and service innovations, our focus remains clear: improving member outcomes, expanding solutions and building a more diversified foundation for long-term growth and shareholder value. Third, modernizing the WeightWatchers brand and reclaiming our market leadership. WeightWatchers has been one of the most trusted and effective names in weight management for more than 6 decades.

As the world's understanding of weight health is being rewritten, WeightWatchers is uniquely positioned to lead the future of our industry as a company that is grounded in trust, powered by science and committed to expanding clinical access to deliver meaningful lasting results. This is a forward-looking vision we are eager to communicate. That's why we are executing a comprehensive brand refresh that combines a more contemporary and engaging brand expression with a renewed focus on superior proven outcomes, including our growing medication offerings. The effort will launch for peak early in the new year and extend across our visual design, tone of voice and how and where we show up, presenting a bold, modern WeightWatchers.

In addition, and over time, we'll evolve our marketing strategy from expensive performance-driven channels dominating spend to a go-to-market strategy built on proven results and real people while leveraging our role as the trusted authority in this space and ultimately creating an organic flywheel for growth. We'll lean into social and community-driven storytelling, leveraging the real voices of our doctors, clinicians, coaches and members to expand reach and bring the WeightWatchers experience to life. We're also dealing with the reality of many years of prolonged deep discounting, a tactic that takes time to wean off. Rather, we will shift towards more of a value-based pricing approach that will complement our brand modernization work, the expanding scope of our solutions and importantly, the success of our programs.

Comprehensive pricing and product studies underway across our top global markets will inform this next phase for the business helping us balance access with value and rebuild our product and pricing architecture for durable revenue expansion. This work will all lead into our peak season objectives. That includes breaking through preconceived notions of the WeightWatchers brand and reestablishing ourselves as modern and relevant for an expanding set of target customer segments. It means driving widespread awareness of WeightWatchers' role as a growing provider of GLP-1 medications. And it includes acquiring both net new customers and lapsed rejoiners through compelling product innovation and marketing.

Finally, as a business with a strong EBITDA margin profile, we remain committed to driving ongoing operational improvements as we also invest for growth. At every level of our organization, we're focused on efficiency, disciplined execution and prudent resource management. Following the execution of our previously committed $100 million in run rate savings, we continue to identify new opportunities to enhance productivity and performance across the business. Part of this effort is rooted in new technologies. The implementation of AI-powered voice support has improved member resolution rates and reduced service costs, while new AI tools within our clinical support model being rolled out over coming months will handle increased administrative tasks. These are the first steps in a broader effort to streamline and automate processes across our global operations, improving both speed and quality while reducing cost to serve.

We're also more closely integrating our clinical and behavioral operations, which is vital to our long-term strategy. This integration is improving efficiency, facilitating cross-training of our teams, fostering shared expertise and delivering a more cohesive experience for our members. These efficiencies make our work faster and more cost effective while preserving the high-quality personalized care that defines WeightWatchers. Through this disciplined operational approach, we're building a more agile, efficient and resilient organization, one that enables reinvestment in growth, protects margins and strengthens our foundation for sustainable long-term value creation.

In closing, our work to hone our strategy and streamline our operations has positioned the company for a new chapter of growth and impact during a historic moment. We're leveraging decades of expertise and name recognition with cutting-edge tools to write the next chapter of WeightWatchers, a new story, which redefines the meaning of weight health and positions us for long-term growth and leadership in the industry we created. Much work remains, but as our members know well, hard work can create new beginnings. Our direction is clear and the possibilities are exciting. And with that, I'll turn it over to Felicia to cover the financials.

Thanks, Tara. We are pleased with the results for the quarter with continued strong adjusted EBITDA margins of nearly 25%, reflecting our focus on cost discipline and timing of spend while investing in future growth initiatives. Acquisition challenges continue to persist in our behavioral business, although slightly improved from last quarter's bankruptcy period and in part supported by brand marketing associated with the launch of our new Menopause program.

We ended Q3 with 2.9 million end-of-period behavioral subscribers, a decline of 20% year-over-year as this sector remains challenged. Conversely, we were pleased with the clinic performance in the quarter with clinical end-of-period subscribers of 124,000, an increase of 60% compared to the same quarter last year. As a reminder, we added compounded semaglutide to our prescription formulary in October last year, and we will start to face more challenging comps over the next couple of quarters. Revenue was $172 million, which declined 11% year-over-year. Clinical revenue grew 35% year-over-year and behavioral revenue declined 16% year-over-year.

Foreign exchange provided a $2 million benefit to the quarter and fiscal Q3 2025 included 1 extra day compared to fiscal Q3 2024. In the clinic business, we were encouraged by our retention of a greater-than-expected number of members who had been previously prescribed compounded semaglutide, transitioning approximately 20% of those members to branded or oral medications. We expect Q3 2025 to represent the low point in clinical subscribers with this transition largely behind us. Monthly subscription revenues per average subscriber, or ARPU, was $18.52 in the quarter, increasing 9% compared to the prior year quarter, reflecting the continued shift in mix towards higher-value clinical subscribers. However, ARPU declined sequentially in part due to an increase in clinic 12-month commitment plans together with certain promotional activity.

Adjusted gross margin was 75.1%. We continue to closely manage costs while evolving toward a more variable expense structure with nearly 70% of our cost of revenue variable in Q3. Beginning last quarter, we refined our reporting methodology to align direct revenue-related expenses, primarily technology costs within cost of revenue. This adjustment modestly increased gross margin with an offsetting increase in SG&A, providing a clearer view of the scalability of our model. We expect gross margin to decline modestly in the fourth quarter relative to the third quarter, reflecting the seasonal increase of staffing ahead of January peak season.

Marketing expense was 28% of revenue, more consistent with levels prior to last quarter's financial reorganization period. We expect marketing investment to increase as a percentage of revenue in Q4 with the start of peak season, along with the initial rollout of new brand and product initiatives Tara mentioned. Additionally, following emergence, we updated our accounting policy to expense advertising costs as they are incurred, a change from previous policy, which recorded advertising expense as deferred costs until airing commenced. As a result, certain costs related to peak may be included in the fourth quarter versus the first quarter of next year. However, we still expect Q1 to represent our highest seasonal marketing spend of the year due to new year demand and continued seasonality of the business.

As a reminder, given the timing of our subscription model, there is a lag between marketing investment and related revenue recognition over the duration of a subscription. Adjusted product development expense, which primarily includes personnel-related costs for engineering, design and data teams was 4% of revenue, reflecting an increase in capitalized product and technology initiatives as part of our product road map. Adjusted SG&A was 18% of revenue, reflecting continued cost discipline and the flow-through of executed cost reduction initiatives.

Adjusted EBITDA was $43 million and adjusted EBITDA margin was 24.9%. We expect adjusted EBITDA to decline in Q4 compared to Q3, reflecting the increase in marketing mentioned earlier while still maintaining a strong margin profile. Shifting to cash and the balance sheet. We ended Q3 with $170 million of cash and cash equivalents, up from $152 million at the end of Q2. The increase reflects strong Q3 EBITDA, partially offset by the first interest payment on our new term loan and a lease termination payment associated with the exit of our prior corporate headquarters in New York, which is expected to result in modest run rate SG&A savings moving forward.

Cash flow from operations was a use of $3 million, reflecting the release of escrow funds reserved for professional fees associated with our financial reorganization. Capital expenditures in Q3 totaled $3 million as we increase investment in product, technology, innovation and other growth initiatives, we expect 2026 capital expenditures to begin to return towards historical levels. Cash taxes are expected to be approximately $15 million to $20 million for 2025, lower than historical years, reflecting the higher transaction-related deductions associated with the financial reorganization and the benefits of the One Big Beautiful Bill Act.

WeightWatchers remains a high-margin, highly cash-generative business before debt service, reflecting recurring subscription revenue and low capital intensity. Shifting to our new debt profile, a term loan of $465 million represents a reduction of over 70% following our financial reorganization. The interest rate on the term loan is SOFR plus 680 basis points. It has a maturity of June 24, 2030. As part of the term loan agreement, there are annual prepayments to be made for excess cash above $100 million based on the last 10 calendar days of the first quarter.

Now shifting to our outlook. 2025 has been a pivotal year for WeightWatchers. We reset our balance sheet, transformed our leadership team and defined clear strategic priorities that align with our long-term vision for growth. These actions now enable us to focus squarely on execution, allocating resources towards the initiatives that will drive a return to sustained profitable growth. Behavioral pressures persist, though slightly improved from the second quarter, and the compounded medication landscape remains complex with competitors continuing to offer compounded products at significantly lower prices than FDA-approved medications.

Due to the recurring nature of our subscription model, however, these near-term factors will influence our starting point headed into 2026. At the same time, execution of our strategic plans throughout the year will target a strengthening of member acquisition and engagement and position us for sustained growth over time. We remain focused on maintaining strong adjusted EBITDA margins, while our variable cost structure and cash-generative business model provide the financial foundation and flexibility to continue to invest in key growth initiatives. We are narrowing full year fiscal 2025 guidance to the higher end of previously provided ranges and expect revenue of $695 million to $700 million and adjusted EBITDA of $145 million to $150 million. I'll now turn back over to Tara.

Thanks, Felicia. The world of weight management has transformed and WeightWatchers with it. We stand on the precipice of a massive opportunity to build significant value for our business while helping millions of people around the world to live healthier, happier lives, reasserting ourselves as the leading destination for successful weight loss and lasting results. I'll now turn it over to the operator to open it up for Q&A.

[Operator Instructions] And the first question will be from Alex Fuhrman from Lucid Capital Markets.

Congratulations on what looks like a really strong quarter here. Very interesting that you're going to be removing all of the barriers between the 2 programs in the app. I think that makes sense as kind of the natural evolution of the program. I'm curious, when do you think that redesigned app is going to be available to members?

Alex, I'm Tara. So first of all, thanks for the question. So there's a lot more detail. I don't know if you've had a chance to go through our shareholder letter yet, but I would direct you there for a bit more color around certainly this topic and others. But the first version of the new app, we are targeting to launch by early next year in time for peak. So the team is heads down working really hard on that. And then that will be the first release. There will be a number of subsequent releases of the app and our digital platforms over the course of next year.

And it's really the app -- the new app experience or the new digital experience for members is it goes beyond just integrating and removing barriers. It will look and feel very modern, very different, much more intuitive than our existing legacy app that we've had for many, many years with sort of code on code, on code. It will be much better suited to highlight different features, different tools, different programs that may be appropriate to you on your weight loss journey that are today really hard to find at best in our app, things like our Registered Dietitian offering, things like our GLP-1 Companion Program that's currently buried within the core program as a setting that you've sort of got to figure out where to find it. This new experience will allow us to better showcase the full breadth of the offering.

And then also as we get to know you and as this experience becomes more personalized and more data informed, it will allow us to better drive our members to solutions for them and meet them where they are on their journey. So we're really excited. The team is doing a huge, huge amount of work to get the first version of this out the door by peak. But yes, it should look and feel like a most definitely a different chapter for WeightWatchers for our members around the world.

That's exciting. It'd be great to see when that comes out shortly. So, can you talk about some of the partnerships that you've been doing lately? You mentioned the partnerships you have with Novo, and it seems like you've been striking a number of these kind of deals that you announced recently. You have a partnership with Amazon for drug delivery. Can you talk a little bit more about some of these partnerships? Is that what's driving your growth? And in the case of Amazon, can you tell us a little bit more about what your members are getting as a result of this partnership?

Yes, of course. Listen, I think strategic partnerships are a great lever for us across many different angles as we move forward. And certainly, that can include partners with pharmaceutical players like Lilly and Novo that we have or it can include some on the back end like Amazon. And way beyond that, I think there are strategic partnerships opportunities for the business that can extend our services that can help us expand internationally. And so while I would not say strategic partnerships are where our growth is going to come from, I do think they are a part of our growth strategy. But I'll flip to Jon to talk more specifically maybe about Amazon.

Yes. Thanks, Tara. Jon Volkmann here. So obviously, we're very excited about our partnerships with NovoCare and LillyDirect and very pleased to announce our new collaboration with Amazon Pharmacy. Overall, the theme of all of these is that it's really just another step in making medication access faster, simpler and more affordable for our members. And specifically to the Amazon partnership, by integrating directly with their infrastructure, our members now get access to real-time medication availability from their specific fulfillment center. They also get automatic coupon savings, applied at checkout with no code needed. And then obviously, the Amazon network for free 2-day shipping for Prime members.

So again, all of these partnerships are with the theme of just reducing friction in the health care process and for these specifically allowing patients to focus less on pharmacy logistics and more on their health. And then looking at NovoCare, looking ahead to the orals launch here, we are working very closely with them to help support this launch, and it is fast approaching. And so like we've done in the past, we'll be looking for new and really innovative ways to bring both convenience and value to our members on that front.

That's really interesting. And then if I could just kind of squeeze in one more here. WeightWatchers for Menopause, you just launched it. I imagine it's too early to talk about how that's going. But who are you initially targeting for this offering? Is this something that you think is a big opportunity within your current membership? Or is this an opportunity to reengage with former members that you haven't seen in a few years?

I think it's both of the above and new members. So yes, we are really excited to have launched the Menopause program, which is really 2 programs, one with a clinical offering and one without -- with the clinical offering only being available in the U.S. with women's health trained clinicians. So we think this is an exciting market moving into women's health, but with a very clear overlap in terms of weight health. We think it's a global need. There's a lot of demand. It is fast being destigmatized. It's a very nice overlap with our existing customer base and has been much requested from our existing member base for a long time.

So it feels like a really nice fit for the company and somewhat of a blueprint in terms of how we think about programming moving forward with leveraging each of our core pillars the most recent pillar being medication access and clinical expertise, but curated community offering, coaching, nutritional guidance, movement, but tailored to win in their perimenopausal and menopausal years. Also really we'll be leveraging new technology moving forward.

And again, in the same way as we talked about the app, that app infrastructure and that new intuitive modern connected experience, the first version of that actually really is in menopause, albeit it's not yet fully on the new tech stack. But you'll notice that the barriers that exist in some of the other programming are removed in the Menopause program. So it was -- you're right, it's too early to sort of be conclusive about it in any way other than we're excited, and we think it's an important growth lever moving forward. But it was good to get back out in the market, be loud, be proud. You saw we launched it with Queen Latifah, which was great and provided a much needed sort of positive brand moment coming out of those fairly painful extended bankruptcy headings. So exciting about it moving forward.

And our next question will be from Justin Ages from CJS Securities.

I wanted to ask a question on retention, which was better than expected. Can we just drill down on that and some of the returns that you're seeing in some of the programs? Given the headlines around the compounded GLP-1s, I think myself and everyone else thought that clinical subscribers would be down a little more. So that was impressive to see. So I wanted to get some more information on that.

Yes, sure. So the transition from compounded medications is largely complete, and we're pleased to announce that those results have exceeded our expectations. So we successfully converted approximately 20% of our compounding members directly into our ongoing clinical program. And within that cohort, we saw members transition to really 3 main treatment areas. So insurance covered GLP-1s. And for these members, we were able to successfully help them obtain coverage. And as previously stated, our ability to do so here really remains a key competitive advantage for us. We also saw members transition to cash pay GLP-1s, many of whom are using our direct integrations with NovoCare and LillyDirect and then finally, to our oral medication kits.

We also strategically moved member subscribers towards 12-month LTCs in a very strong effort to retain clients for longer to keep with a more beneficial LTV for us long term. And so while we did see an ARPU decline in Q3, we were very optimistic and positive about that ARPU decline because it did mean better retention for our clinic subscribers. And then on behavioral, we do see that our overall retention is still trending at around 11 months and an area of opportunity for us as well.

Yes, I was just going to add to the retention point as it being an area of opportunity, another perfect example of why a different member experience on the digital platforms, particularly the app is so needed because, again, some of these silos in the existing journey prohibit us from executing against some valuable tools to drive increased share of wallet, but upsell into different programs, particularly the clinic program, but also to drive retention through stickier, more personalized programming for our members. So all tools sort of pointing to the same set of objectives.

Great. And then one more, if I could. And I know it's early in terms of kind of the reorganization and the rebrand, but there's been some new influencer campaigns at the company. Just wanted to know early returns on broadening the subscriber base. Have you seen any changes in the demographics of the company?

Well, I'm glad you're seeing our new influencer campaigns. That will make our marketing team extremely happy. Nothing specific to comment on right now. I mean, hopefully, you got from the prepared remarks, and again, there's a little more color in the shareholder letter. But we're really looking to reassert and reposition and sort of reenter this brand into the weight management market. We've got some pretty dated preconceptions of the brand. We've obviously come off the back of some prolonged bankruptcy headings -- headlines that were very challenging for the business over many months this year.

And what you're seeing in the influencer strategy is a shift in how we show up, who we engage with as well as the types of channels that we're going to be leveraging to really execute against that strategy. Over many years, the company has really become quite dependent on, as I mentioned in the prepared remarks, a discounting strategy, heavy bottom of funnel performance marketing. And we are -- we have a high level of conviction that as an iconic global brand of more than 6 decades that we should be deploying a much more of a full funnel strategy, leaning into the strength of that brand and rebuilding that organic flywheel through multiple different channels. But certainly, social, telling real-life member stories, showcasing our clinicians, our coaches and leveraging appropriate influencers helps us do that as well as reach new target audiences.

[Operator Instructions] The next question will be from Nathan Feather from Morgan Stanley.

So compounding has certainly driven a lot of volatility in the clinic subscriber growth over the past year. I guess if we strip that out, how should we think about the underlying growth here? And given that, what's kind of the right run rate of clinic growth now that we're past the churn off here?

Listen, you can't really strip it out, unfortunately. So this is a pretty complex landscape right now, as you know, moving very fast. The business prescribed compounded medications from October last year to the end of May. As Jon mentioned, we have a very robust insurance PA approval engine on the back end. We have non-GLP-1 oral medications, and we are partnering with Novo to bring this new oral Wegovy to market early next year. So there are a lot of moving parts in the clinic business.

We have a very high level of conviction in the strength of this integrated holistic medically centered but broader care model, nonetheless, over the long term. We think it is -- it drives superior outcomes. It drives a better member experience. It drives more sustainability in results and really is quite differentiated from just pure-play telehealth. So outside of compounding noise over the course of the year, this is a really important growth engine for us that is only going to receive, I think, more and more demand and adoption of members, particularly as pricing comes down and these medications become more accessible.

Yes. And to that end, obviously, we're monitoring the situation closely, as I'm sure you all are with the recent headlines that appear to be putting a lot of downward pressure on medication prices. And I think important to call out that we view that downward pressure really as a net positive and a significant tailwind for our business.

As access expands, we believe that the market is going to increasingly value quality of care, and that plays directly to our strengths. Our model has always been built on -- on really high-touch and holistic clinical support. So our members have access 24/7 to their care teams. And as you saw in our shareholder letter, our customer satisfaction and our patient outcomes are really best-in-class.

So like looking more long term and looking ahead as this market matures, we're really confident that the key stakeholders in this industry from regulators to pharma partners will increasingly value providers to ensure patient safety, manage outcomes and drive long-term adherence. And when we think about where we are long term, that's the business that we're in.

Last thing I would mention is that we also stated that we do anticipate Q3 2025 being the trough on end-of-period subscriber for clinic.

Great. That's very helpful. And then heading into peak season shortly, there was a little bit of commentary in the letter, but interested to hear a touch more about your plans across both product and marketing as you work to improve the resonance, especially within the core behavioral business.

Yes, happy to take that, and then you guys can jump in if I miss anything. There's -- hopefully, it is clear the extensive work that is going on across the company right now from a full top to bottom digital rebuild, an extensive brand refresh, a relaunching of our virtual community offerings, a showcasing of programs and solutions that have been somewhat buried up until this point and really a rallying around the need for significant increases in awareness in the market that WeightWatchers is in the medication space and provides medication access and clinical expertise as part of this more holistic offering with the force multipliers, if you like, that the behavioral solutions can also play.

So a pretty important reentry, an important peak for us and we're obviously targeting an uptick in subscribers Q1 from Q4 as a result. It's early to tell what that's going to look like, but we're really excited. There is a vast amount going on, and it is bold and impactful. And outside of the tactics, everything we're doing first, second and third is to continue to drive superior results for our members. People are looking to achieve results. They're coming to us on -- to achieve their weight loss and do it in a healthy and sustainable manner and really making sure that we turn up at peak, showing how we are very different with some very impressive data to back that up is key. And then supported by the product.

So yes, it's an important couple of months as we run up until that point and then beyond, right? So the difference with this peak versus others is really peak is just the beginning of the launch of many of these things that we're talking about. It's Chapter 1, right, of the brand coming back in. It's Chapter 1 of the -- it's the first version of the new app. It's the first version of the new website. So I'm sure we will have a lot to learn, but we have a lot of exciting things planned on post peak as we continue to roll out various growth initiatives across the ecosystem. So hopefully, that's helpful.

I would also just mention that we do anticipate, as Tara mentioned, the step-up from Q4 to Q1, but we do still have the acquisition challenges on behavioral that albeit has improved relative to the bankruptcy headlines of Q2, it is creating an opening access tailwind on our subscriber model for 2026 and so -- a headwind in 2026. And so a lot of our strategic priorities are to offset that opening access headwind.

Yes. And I think just lastly, to jump in here from a clinical standpoint, a really interesting factor with peak this year is that it happens to coincide with one of the most anticipated things that we've seen in quite a while in the space, and that's the launch of an oral GLP-1, which as Novo Nordisk has stated, is expected to come to market in very early 2026 and then expected with a fast follow-up from Lilly.

And we really view that as a significant market catalyst that's going to open up a new top funnel for a large portion of people who are interested in GLP-1s, but resistant to injectables. So in addition to everything that we have planned with our normal peak activities, this also just presents a very interesting and exciting dynamic that we view as an opportunity for our clinical business as well.

And ladies and gentlemen, this concludes today's question-and-answer session. I'd like to turn the conference back over to Tara Comonte for any closing remarks.

Thank you, everyone. Really just appreciate you joining the call. Appreciate your interest in the business and support of the business. This is an exciting time for WeightWatchers. We are running hard to fully leverage all the growth opportunities ahead of us. So look forward to following up in one-on-ones. And if there's something that you wanted to cover that we didn't get to, please just get in touch directly. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the WeightWatchers Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to David Helderman, Director of Investor Relations. Please go ahead.

Thank you for joining us today for the WeightWatchers Second Quarter Earnings Conference Call. Earlier this morning, we released a shareholder letter and press release with our second quarter 2025 results, which are available on the company's corporate website located at corporate.ww.com.

The purpose of this call is to provide investors with some further details regarding the company's financial results as well as to provide a general update on the company's progress. Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measures are also available as part of the shareholder letter and press release.

Before we begin, let me remind everyone that this call will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that cause actual results to differ materially from those discussed here today.

These risk factors are explained in detail in the company's latest annual report on Form 10-K, quarterly report on Form 10-Q, the earnings release, the shareholder letter and as updated by the company's other filings with the Securities and Exchange Commission. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements.

All forward-looking statements are made as of today. And except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Joining today's call are Tara Comonte, President and Chief Executive Officer; and Felicia DellaFortuna, Chief Financial Officer. Jon Volkmann, Chief Operations Officer, will also join for the Q&A.

Thanks, David. The second quarter of 2025 marks a pivotal moment for WeightWatchers. Our strategic reorganization has put us on stronger financial footing, enabling renewed investment and innovation for long-term profitable growth.

We reduced our debt by more than 70%, freeing up approximately $50 million of cash annually from lower interest expense and are now relisted on NASDAQ under the ticker WW. We are fully committed to the work ahead and deeply grateful to our members, team, shareholders and lenders for their support over recent months.

Today, we're excited to talk about what's next for WeightWatchers. We've been serving members on their weight loss journeys for over 6 decades. Our brand is known and trusted the world over. Our behavioral lifestyle program has been proven and recognized as the best weight loss program by experts for years.

Our global community of coaches and members is second to none. And the latest innovation in our field, GLP-1 weight loss medications, are intended to be clinically prescribed with exactly the type of lifestyle change and support that we've spent years building.

While others offer fragmented solutions, only WeightWatchers integrates medication access with behavior change, coaching and community, all proven to drive superior and sustainable outcomes. And yet the landscape in which we offer has fundamentally changed years and with it, our path forward. In times of great change, established brands must innovate, adapt and lead.

WeightWatchers is no stranger to innovation, having navigated periods of significant change before, emerging each time with greater clarity and strength. In recent years, however, high leverage and interest costs have constrained our ability to invest and evolve with the notable exception of our Sequence acquisition in 2023. With our balance sheet now reset, we are in a position to move forward with focus, flexibility and the renewed ambition.

Moving forward, the most important task at hand is returning this business to profitable growth, with confidence in achieving that and are investing in the strategic framework to make it a reality. It won't be immediate, and we have a lot of work to do over the coming quarters and years, but are energized by the opportunity ahead.

We have an experienced and driven team that we continue to strengthen. In the second quarter, we made meaningful progress across our medical product, community experience, operations and marketing teams, adding new leaders to take us through this next chapter. While our strategic reorganization was a major milestone, we do face near-term headwinds, including residual noise from the bankruptcy process, which was acute in the second quarter.

In addition, following the 22nd of May FDA deadline, prohibiting outsourcing facilities from compounding semaglutide, we've been working to transition impact as Clinical members to alternative medications, albeit these are generally at higher price points and as other telehealth players are continuing to offer compounded GLP-1s under the guise of a personalization exemption.

As we work diligently to offset these headwinds, our immediate focus is executing on our 2025 strategic plan while setting the foundation for the longer-term transformation required to reignite sustainable growth in the years ahead.

We're focused on a plan to restore WeightWatchers' leadership in the category we created and expand our role in long-term weight health. We'll continue to share more detail around our longer-term strategy over the coming quarters.

And our path forward is anchored by four core pillars: building unified and engaging member experience, grow emerging and adjacent revenue streams, revitalize our brand and reclaim market leadership and drive operational excellence and efficiency. These pillars are interconnected and mutually reinforcing. They reflect the enduring strengths that have defined WeightWatchers at its best, while requiring us to modernize, differentiate and extend our reach in a fast-changing landscape.

Starting with building a unified and engaging member experience, our focus must be on strengthening our foundation while also building for the future, and that begins with the member experience. We're clear on what our member experience needs to become, seamless, personalized and connected, not only across digital, virtual and in-person settings, but across the full WeightWatchers ecosystem.

This will require both incremental and foundational improvements to our technology and product infrastructure, much of which was built for a different era. While it will take time, it's essential to unlocking the full value of everything WeightWatchers uniquely delivers across behavior change, nutritional guidance, clinical expertise and community connection.

Data will be a key enabler of our future experience. With one of the largest proprietary data sets in weight management, we have a powerful foundation to build smarter, more personalized tools designed to truly meet members where they are and respond to their evolving needs, goals and health conditions over time.

Behavior change in service of long-term health remains core to our model. Since its launch in 1997, our science-backed Points program has helped millions build sustainable habits, and we're focused on evolving it to reflect the latest in nutritional science and technology.

Looking ahead, we see meaningful opportunity to further enhance this experience by leveraging AI and machine-learning technologies, integrating data from wearables and creating more timely, personalized insights to support members in their daily choices.

Equally important is human connection. Community has always been a core part of the WeightWatchers experience and one of the most powerful drivers of sustained behavior change and better health outcomes. As how people seek connection continues to evolve, we're expanding our virtual formats and programming to offer more scalable and dynamic support.

To help lead this work, we're thrilled to welcome Julie Rice to our team as Chief Experience Officer. A lifelong WeightWatchers member and former Board member, Julie's work, building SoulCycle completely redefines the power of community. She will lead our global Workshops business and brand efforts, working across teams to reimagine how community, coaching and connection show up throughout the member journey and bring the WeightWatchers experience to life in new and meaningful ways.

As part of this new chapter, Peoplehood, the community-driven wellness platform Julie most recently co-founded, will wind down its current operations and WeightWatchers will integrate its curriculum, technology and learnings to evolve key parts of its business and product.

The sum of all this improved member experience work is extensive and won't happen overnight. However, these collective efforts form the cornerstone of our transformation, simplifying and redefining the WeightWatchers member experience, deepening engagement and driving better outcomes.

Shifting to our focus to growing our emerging and adjacent revenue streams, access to Clinical care represents one of the most important opportunities for long-term growth at WeightWatchers and is one where we've already started to show the power of our WeightWatchers clinic offering. We combine access to Clinical care with our trusted behavioral program to deliver a differentiated science-backed solution in an increasingly competitive space.

While scaling this opportunity will take continued investment and focus to fully realize, we believe our integrated approach puts us to lead in a rapidly evolving weight health landscape.

To help lead this next phase, we recently appointed Dr. Kim Boyd as Chief Medical Officer, who comes to us with deep experience across metabolic health, women's health and obesity care as well as leadership experience from a host of innovative health care organizations.

We're also pleased with how our registered dietitian offering of scaling, which launched to our U.S. behavioral members in late '24 and is a natural fit for our holistic weight care model and importantly, demonstrates our ability to expand revenue streams and ARPU, including through insurance billing.

Another area of future focus is our GLP-1 companion program. We're beginning to shape the next phase of this program with the goal of expanding features and support around behavior change, adherence and long-term weight health.

These GLP-1 medications are intended and FDA approved to be prescribed with exactly this type of lifestyle change and support. And in fact, early data shows that we see 11% more weight loss from members who combined weight loss medication, including GLP-1, with our behavioral program after just 4 weeks.

As we expand our Clinical offering, we do so with the highest regard for member safety, building on our long-standing position as the brand [ means ] trust, a healthy, sustainable and safe weight management.

Our agreements with Eli Lilly's Direct via Gifthealth and Novo Nordisk's dispensing pharmacy CenterWell reinforce this commitment. These integrations are designed to provide WeightWatchers clinic members with seamless access to FDA-approved medications through at-home delivery and fulfillment and also create opportunities for future collaboration, including real-world research and strategies to improve long-term outcomes.

These trusted relationships reflect our commitment to Clinical integrity and to operating in full compliance with FDA guidance, federal and state law as well as respecting third-party intellectual property rights. As such, WeightWatchers Clinic provide us ceased prescribing compounded semaglutide on May 22.

Our pharmacy integrations and wide formulary of medication, including branded GLP-1s and oral medications included in our clinic subscription price, are helping support members of this transition, which will continue through August. We also ran targeted savings offers in June to help new patients transition to FDA-approved medication.

While we anticipate near-term headwinds, particularly as others are continuing to offer compounded GLP-1s, we remain confident in the long-term outlook for our Clinic business. Our proprietary AI-enabled software facilitates medication insurance coverage from members at scale, giving us a distinct competitive advantage as much as the market is limited to cash-pay models or struggles with the complexity of facilitating insurance coverage.

And as highlighted in our shareholder letter, our holistic care model that leverages the power of behavioral science and community connections showed stronger results at 6 and 12 months with WeightWatchers Clinic compared to many of our key competitors.

Looking ahead in the obesity market landscape, we see strong tailwinds from ongoing Clinical innovation, improving medication supply, increasing price competition and a growing body of evidence, underscoring the positive health and economic value of these obesity medications.

We're also expanding into adjacent areas of weight health through our upcoming menopause program, a curated science-backed member experience that blends behavior change tools, tailored community support and expert clinical care, including hormonal treatment where appropriate, into a single integrated offering for women in this life stage, who represent a significant segment of our demographic.

Internationally, we see strong potential to grow our impact on our member base. Obesity is a global health crisis, and WeightWatchers has operated in major markets outside of the U.S. for more than 50 years. While we've taken a limited approach to international investment and expansion in recent years, we're excited to better leverage our trusted brand and global footprint moving forward.

As one recent example, our May partnership launch with a U.K.-based telehealth checkup now brings our GLP-1 companion program to all their members, expanding our relevance and reach in one of our largest global markets.

We also continue to see long-term growth opportunities in the B2B channel. Employers and payers are facing increasing pressure to offer obesity solutions, but they need models that drive outcomes and manage cost. WeightWatchers is well positioned to meet that demand through our proven behavioral approach, new pricing models and expanded digital care delivery.

Although this channel experienced some slowdown during our Chapter 11 process, we're regaining momentum and onboarding clients both directly and through our growing channel partners and health plan relationships.

Recent highlights include our collaboration with UnitedHealthcare, both as part of their hub vendor network and as one of two solutions for their total weight support program as well as the recent Florida Department of Health agreement that gives residents in select counties full access to our behavioral program.

Finally, as we look to expand revenue opportunities, we're renewing our focus on licensing, building on decades of brand equity and consumer trust with new agency partnerships now in place in North America and the U.K. This will take time, but we see licensing as a high-margin and long-term growth lever, one that can help extend the brand's reach in new and exciting ways.

Shifting gears, talk briefly about our work ahead to revitalize our brand. WeightWatchers remains a trusted name. But in today's fast-changing and increasingly competitive landscape, awareness alone is not enough. Our priority is to close the gap between familiarity and relevance, helping a new generation of members engage with WeightWatchers and benefit from our holistic care model. In order to do this, we must reassert our leadership as the trusted authority in comprehensive weight health with breakthrough creative and clear and consistent messaging.

Over time, strengthening everything from how we approach customer segmentation, measurement and pricing to conversion and life cycle management can pave the way for stronger performance from our valuable marketing dollars and deliver greater impact across the acquisition funnel.

Content will be a strategic lever for growth, spanning SEO-optimized wellness articles, recipes, fitness resources and expert advice, all delivered by the trusted voices of our community. Our coaches, clinicians and member ambassadors are uniquely positioned to bring this content to life, serving as authentic advocates, who drive word-of-mouth engagement and help build deeper, more connected audiences.

This organic targeted approach supplemented with other top-of-funnel initiatives, is designed to support both acquisition and retention while reducing long-term reliance on paid media.

And finally, beyond everything I've outlined, we're also deeply focused on driving operational excellence across the organization, working smarter, reducing complexity and making full use of best-in-class technology and automation.

We've substantially completed the execution of our previously committed $100 million in run rate cost savings and continue to further optimize our cost base, including the recent downsizing of our new corporate headquarters and expanding our adoption of AI solutions across global member support and internal operations.

We're also integrating our clinical and behavioral operations, transitioning to shared infrastructure, tools and cross-training of our teams to seamless support and resource efficiency.

Ongoing efforts across all areas of the business will assist in the redeployment of capital to address some of the investment needs I've mentioned today. This work, along with continued focus on optimizing high-impact areas like marketing, reflect our commitment to building a stronger and more scalable foundation for long-term profitable growth.

With the stronger foundation and a clear strategic direction, we're well positioned to lead within the expanding weight health ecosystem. Realizing this opportunity will require investment, disciplined execution and sustained effort. We believe this work is both necessary and achievable, and it will set the stage for a return to meaningful sustainable growth over time.

And with that, I'll turn it over to Felicia.

Thank you, Tara. We are pleased to have completed our reorganization so swiftly. This is a big step for the company, reducing our debt to $1.6 billion to $465 million, setting us on the path to rebuild for a healthy and sustainable future.

As a result of the transaction, our lenders and note holders received 91% and of new common equity of the reorganized company and preorganization existing shareholders received 9%. We now have 10 million shares outstanding.

Shifting to quarter 2, as we shared in our shareholder letter and earnings release, our reported results for the quarter are split between a predecessor and the successor period and included a shift to a calendar fiscal end moving forward. The predecessor and successor structure is directly as a result of our emergence from on Chapter 11 on June 24, 2025, together with our adoption of fresh start accounting.

As combined revenue is in line with pro forma accounting, we believe that the key top line performance metrics for the successor period, June 25th through June 30th, when combined with the predecessor period, March 30 through June 24; provide meaningful comparisons to other periods and are useful in identifying current business trends.

Accordingly, we will speak today to the combined results for these top line metrics for the 3 months ended June 30, 2025. We will talk to all other cost and profitability metrics as it relates to both periods.

Monthly subscription revenues per average subscriber or ARPU increased 12% year-over-year in the second quarter, marking the third consecutive quarter of ARPU expansion. Growth was driven by a continued mix shift towards Clinical subscribers, who generate nearly 5x the ARPU of behavioral subscribers.

Total end-of-period subscribers declined 17% year-over-year in quarter 2, ending at 3.2 million. Behavioral member acquisition remains challenged, further impacted in the quarter by extensive bankruptcy-related media coverage that affected consumer sentiment.

In addition, while Clinical subscribers grew year-over-year by 56%, we did experience a sequential quarter-over-quarter decline in subscribers as we started the transition of our Clinical members away from compounded semaglutide to FDA-approved medications in line with FDA compliance requirements.

Revenues of $189 million declined 6% versus the prior year due to the ongoing acquisition challenges in the behavioral business, which declined 13% year-over-year, partially offset by 55% growth in Clinical revenue, with the vast majority due to compounded semaglutide subscription.

Additionally, FX provided a $2 million benefit. And given our change in fiscal calendar reporting, this year's fiscal quarter contains 2 extra days compared to last year, providing a timing benefit of $4 million.

Turning to our profitability metrics, adjusted gross margin in the predecessor period was 74.9%. We continue to exercise strict cost discipline across the execution of our revenue lines as we evolve toward a more variable cost structure.

Beginning this quarter, we've also updated our methodology to attribute direct revenue-related costs, mostly related to technology, at a more granular level in the presentation of our financial statements. This change is expected to result in a modest increase to adjusted gross margin moving forward with a corresponding increase to operating expense that are reflecting the scalability of our revenue model.

Adjusted EBITDA margin, which excludes stock-based compensation, was 34% in the predecessor period versus the second quarter of 2024, up more than 900 basis points year-over-year. This improvement reflects disciplined cost management across the business together with lower marketing spend during the financial reorganization process.

We are also now reporting three categories of operating expenses, marketing, product development and selling, general and administrative, or SG&A, on a GAAP and non-GAAP basis.

Marketing expense as a percentage of revenue in the predecessor period was 18% reflecting an intentional reduction in spend during the financial reorganization to prioritize more efficient spend opportunities aligned with our post-emergence road map.

As a reminder, due to the nature of our subscription billing model, there is typically a lag between marketing investment and its associated impact on revenue.

We are introducing a new expense line on our income statement, product development. These expenses primarily consist of personnel-related costs for engineering, design and data as well as related teams. They also include other product development costs such as software licenses. These expenses were previously reported within SG&A. Adjusted SG&A in the predecessor period was 16%, reflecting continued cost discipline and the flow-through of the previously actioned $100 million in savings.

We ended the second quarter with $152 million in cash and cash equivalents, down from $236 million at the end of Q1, in line with expectations. The decline primarily reflects approximately $45 million in transaction-related costs associated with the reorganization, of which approximately half is recorded as restricted cash. Approximately $30 million interest payments on legacy debt and a final $16 million anniversary payment in the second quarter related to the Sequence acquisition.

As a reminder, our cash needs are typically hard in the first half of the year, reflecting elevated marketing spend in our quarter 1 peak season.

Shifting to our outlook. With our financial reorganization complete, 2025 has been a pivotal year as we reset our balance sheet, giving us the financial foundation to now focus on the stabilization of our business and investment in key initiatives targeted to deliver a return to long-term profitable growth.

We are at the beginning of next chapter. Behavioral pressures persist. And the evolving compounding landscape, not least the inconsistency of approach to mass personalization of compounded semaglutide by select others in our field, is impacting our Clinical business.

In addition, residual noise from bankruptcy-related headlines affected consumer sentiment and acquisition, and we are working to rectify this with second-half marketing activity. Given the nature of our subscription model, these headwinds will influence not only the remainder of this year, but also our starting position heading into 2026.

At the same time, we believe that the long-term opportunity is significant. We have added new talent across the company to help lead this transformation. Our integrated model, which combines behavioral support with clinical care, is increasingly differentiated. This next phase will take time, however, we are committed to the work ahead, laying the foundation for WeightWatchers to return to long-term rows and reaffirm our leadership in sustainable weight health.

Turning to our 2025 guidance, for fiscal 2025, we expect total combined revenues of $685 million to $700 million, adjusted EBITDA of $140 million to $150 million. Although the reorganization and our completion of fresh start accounting will impact our financial statements, we don't expect a material impact on our adjusted EBITDA, which will be our primary non-GAAP earnings measure moving forward.

However, depreciation and amortization will reflect the fair value of our post-emergence balance sheet and is expected to result in amortization of approximately $50 million in the second half of 2025, with the majority recorded in SG&A.

In summary, while we faced revenue headwinds from lower subscriber levels entering 2025, this will also be the case entering 2026, a challenging acquisition environment within behavioral and a complex clinical landscape. Our focus is still clear, gradually stabilize the business while taking decisive action through operational improvements, cost action and disciplined investment to build a foundation for future sustainable growth.

Thanks, Felicia. The need for sustainable effective weight health solutions has never been greater, and we believe WeightWatchers is uniquely positioned to meet that need. With a stronger financial foundation and renewed ability to invest, we are focused on disciplined execution and meaningful innovation.

There's important work ahead, but we are confident in our strategy and in the strength of our integrated model to deliver long-term impact. On behalf of the entire leadership team, I'd like to thank our teams around the world for their commitment and hard work and to our members for their continued trust and support.

And with that, I'll turn it over to the operator for Q&A.

[Operator Instructions] The first question today comes from Nathan Feather with Morgan Stanley.

Congrats on completing the restructuring. A few quick questions on Clinic. First, can you provide a bit more color on how material the shutoff of compounding was on clinic subs in 2Q? And then thinking about the shape of that over the remainder of the year, have you returned to growth since the May cutoff either kind of adjusting that out? Or is that expected to be a more durable headwind, especially as the subscribers that may be on longer-term plans that turn off?

It's Tara. Thanks for the question. I'll let Jon talk to the transition or Jon or Felicia talk to the back half. But I think it is worth just reemphasizing a couple of things that we said in the prepared remarks around how complex this clinical landscape is right now, particularly with the inconsistency of adherence and application to FDA compliance as it relates to compounded semaglutide.

So just to reinforce WeightWatchers position, which is -- has always been consistent, which is just down by the highest levels of Clinical integrity and to make sure that we are in full compliance with FDA regulations. And so to your point, as such, we -- stops prescribing compounded semaglutide on the 22nd of May and have been transitioning those members.

However, others in our fields continue to prescribe at scale under the guise of a personalization exception, and that is making for a challenging landscape for the business, not least in terms of confusion, in the consumer landscape, but also as it relates to the price differential between these compounded meds and the branded cash pay alternative.

But Jon, do you want to just jump into how the transition has been going?

Yes, absolutely. Jon Volkmann here. So to provide some additional context on the transition away from compounded semaglutide, so as previously stated, this offering was extremely attractive to a segment of the market and was a significant driver of our subscriber growth from Q3 of '24 to Q1 of this year.

And the exercise of transitioning these members is a challenging one, primarily because cash-pay prices for branded GLP-1s, while decreasing overall, are still significantly higher than the compounded alternatives, which are still being aggressively marketed by our competitors.

The transition is ongoing, and then we'll extend through August as a portion of our members receive 90-day refills in May. We're currently transitioning these numbers to a variety of Clinical solutions, including oral anti-obesity medications, branded cash-paid GLP-1s and insurance coverage GLP-1s.

Important to note that our ability to facilitate insurance coverage has been a key lever in the transition. It has allowed for a portion of these members to transition to branded therapy at a likely lower out-of-pocket cost.

Though it is important to note that, that members who initially sought out compounded medications as a cohort are less likely to have insurance coverage than our average member. And therefore, we will -- while we will successfully retain a portion of this group, our operating assumption is that the majority of them will roll off the platform.

However, despite the near-term headwinds that we will face, we do remain confident in our long-term Clinical growth strategy, which was built on a foundation of sustainable and differentiated advantages.

So in addition to our comprehensive clinical care and support, our insurance navigation technology is a key differentiator, which really provides a best-in-class experience that makes branded medications accessible and affordable to those with coverage. We've also added strategic partnerships with Lilly and Novo Nordisk to ensure that our members have streamlined access to the most affordable cash-pay options for branded medications.

And all of this has resulted in positive momentum for our core branded business on both a year-over-year and sequential quarterly basis. And our oral AOM offering is on a similar trajectory.

And from a clinical results standpoint, our outcomes are truly superior. And the combination of our holistic approach and world-class medication access has driven real world results. Our members have achieved 19.4% weight loss at 12 months compared to the next highest competitor at 15.8%.

So looking ahead, we really feel from a broader market standpoint, that obesity care is still in its early stages with significant runway for growth. And we see powerful future tailwinds from a robust pipeline of clinical innovation, including oral GLP-1s, which we expect to come to market soon. And as the body of evidence grows around the benefits of these medications, we anticipate a corresponding expansion in experience coverage, which plays directly to our strength.

So I'd say from a holistic standpoint, just to reiterate, while we are navigating short-term headwinds in the back half of this year from the compounding transition, we remain confident in our long-term success and the growth of our Clinical weight care offering.

Great. That's helpful. And I guess, just a clarifying point on that. Of the compounding members that you had in 1Q, any way to help quantify what portion of those had already rolled off and kind of the 2Q number versus are expected in 3Q?

And then I guess just given a little bit more broadly on the space, given the legal uncertainty we've seen in compounded medication, have those peers who are still primarily offering compounded medication, are you seeing them significantly alter their marketing spend? Or any other kind of commentary you can give on how that marketing lands evolved would be helpful.

I can take the first part of your question, and then I can pass to Jon on your second.

So just to help quantify, as Jon had mentioned, the vast majority of our subscriber growth from Q4 2024 to Q1 2025 was from compounding semaglutide. So vast majority of that member growth was associated with compounding. And as Jon had noted, we do anticipate the continued roll-off to exist through August. And so you start to see the sequential decline in our numbers from Q2 -- or Q2 relative to Q1, and we do anticipate a decline in Q3 relative to Q2.

And then from a marketing spend standpoint, we are seeing our competition to remain involved in compounded medications in micro dosing to be extremely aggressive from a marketing standpoint.

Okay. Great. That's helpful. And then one more just on a different note. You talked about the B2B opportunity for some. It's been a continued goal for the company to continue to push into that space.

What have been the primary factors that have limited the adoption so far? Interested to know how you're addressing those. And now that you've kind of come out of restructuring, is it possible that you can scale up some enterprise sales teams or any way to kind of further insight that adoption?

Yes. Nathan, it's Tara. Listen, we still believe the B2B channel is a really important part of this market and an important part of our future growth, even more so in a world of GLP-1 medications, where employers are and payers are facing a lot of pressure to offer these solutions, but they need a model that can drive outcome while also managing costs. So it's actually a really interesting next chapter in this part of the market.

And with some -- what we said in the prepared remarks, the business was impacted somewhat by the headlines around the Chapter 11 process in the second quarter, but we're really seeing momentum start to pick up again, and we're excited about the opportunity here for our model, particularly one where there will be, over the long-term, growing coverage of GLP-1 medication and with it a requirement to provide behavior change programming, which obviously, we have been building for many years and increasingly focused on that behavior change in partnership with GLP-1 medications with things like our GLP-1 companion program.

So longer sales channel or longer sales cycle, obviously, the -- then D2C business. But it allows us to really leverage our existing infrastructure, our existing product innovation today and -- moving forward and to tap into a different market with relatively low cost of acquisition that we believe will be increasingly important over time.

The next question comes from Alex Fuhrman with Lucid Capital Markets.

Congratulations on completing your successful reorganization. Wanted to ask about something you guys have talked about for a little while, kind of transforming into a broader women's health company really leveraging your brand ethos and your large membership file.

Can you talk a little bit more about what we could see from you over the next couple of years along those lines? I think you said there's potentially an offering for menopause coming down the line. Can you give us a little bit more sense of how you're trying to position the brand over the next few years?

Alex, it's Tara. Yes, happy to, and thanks for the question. Look, I think our general view is that the opportunity for WeightWatchers is to really continue to evolve the ship within the entire field of weight health and to increasingly meet members where they are on those weight health journeys for the long term.

And that means creating programs and solutions that can be curated for different stages of life or different needs and certainly an expansion into women's health. And particularly, the perimenopausal or menopausal stage of a woman's life is a very natural adjacency for us, not least with one of the top symptoms and one of the top complaints of that station being around weight.

So yes, we have a lot of exciting ambition around our expansion into women's health. With a women health program coming later in the year that in -- consistent with our weight care programs, will offer a comprehensive program that incorporates behavioral support and programming, nutritional support and a clinical program where appropriate and again, leveraging a lot of the infrastructure and the expertise that we've built over many years but curating it for this segment of the population.

This concludes our question-and-answer session. I would like to turn the conference back over to Tara Comonte, CEO, for any closing remarks.

Just thank you all for joining us today. We're excited to be the other side of our financial reorganization. Thank you again to our team around the world and to our members, our shareholders or lenders for their support throughout the process. And we are extremely excited about the next chapter for WeightWatchers and the opportunity that lies ahead. So thank you, and we'll talk to you all soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.