Weight Watchers International, Inc. Aktie

Thank you. Okay, great. Good afternoon, everyone. Thank you so much for joining us. My name is Nathaniel Feather. I am Morgan Stanley's small and mid-cap internet analyst. I'm just doing one presentation here at the healthcare conference. Pleased to be joined today by Felicia DellaFortuna and Jonathan Volkmann, Weight Watchers Office of the CEO. Thank you so much for joining us today.

Well, thank you for having us. Thank you. Before we begin, a few quick housekeeping items from important disclosures. Please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that, let's kick it off. I think a lot of investors with Weight Watchers as a brand, but not necessarily what the business looks like today. Can you give us an overview of where Weight Watchers is and how that's changed? Infrastructure pretty materially. It went from about $1.6 billion down to approximately $465 million. And so as part of that, we were also able to half our interest expense, and we went from about $100 million to $50 million, and now this year we do expect Weight Watchers to be free cash flow positive, which has allowed us to now start to reinvest in the business and really take shape in terms of, you know, this exciting GLP-1 stage. So just to give a bit of an overview on our products, so we have two business lines, behavioral and clinical. Within our behavioral line, we have two products. So for those of you that aren't familiar with Weight Watchers, we have a Core product and a Core+ product. Our Core product is access to our digital app, and most importantly, our Points nutrition program. So this is the most studied diet program, you know, across the world, and it does incorporate a lot of different factors into one easy points number to allow for more seamless food tracking for members. This is a business that has been in decline and that has been one of the things that has been most material and also an overhang to Weight Watchers. Post-bankruptcy, we did very much focus on our Core+ offering. So historically, people, when they think of Weight Watchers, they think of our Core+ offering, which is individuals going to meet meetings and getting, you know, advice from a coach that sits in a room. We had a hypothesis internally that there was still a need for community and support. It just needed to follow, you know, the new age. And so people were going to be less likely to drive to workshops, but they could maybe attend one virtually. And so we are very proud now that we have launched virtual experiences. And so whether people are looking for emotional support, whether people are looking for more details on GLP-1s or they're looking for just utility, like how to cook for a family of four. If you go on the app at any point in time, you will see that there's like a virtual experience that you can attend. And it's been a fantastic way of us curating community in this day and age. The other thing that we were also interested in is, are people still interested in structured behavioral programs for weight loss? And so what we were able to do is kind of up-level our overall general Points program, and we launched a GLP-1 Success program as well as a Menopause program in our Core+ SKU. So on our GLP-1 Success program, whether you are on meds with or without Weight Watchers, and I'll get to that in a moment, you can engage with our GLP-1 Success program, and that has been a fantastic update across our members. And we also have a Menopause program that more specifically focuses on menopausal weight gain and fiber intake to also assist individuals. The one thing I will mention on Core+, because we have been a business in decline, our Core+ revenue line within our behavioral business has shown now three sequential quarters of growth in our subscriber count, which has happened only one other time in the last 15 years. So we are definitely changing the way that our financial profile looks, and we are so proud of showing the growth in this Core+ SKU overall, and it's very important because it is showing us that, you know, people do still want the accountability and the ease and the support that Weight Watchers has always provided. They just want it to be in this day and age. That's exciting. The last is that we also have a clinical business where we do prescribe GLP-1s. I'll let Jonathan touch on that in just a moment. But this has also been an area of business that has shown accelerated growth. So in Q2 alone, we were able to grow our subscriber count by almost 56%. So I think it was like 55.7%, but very material growth. And this is a business line that has gone from 10% of our revenue in 2024 to an anticipated 25% to 30% of our revenue in 2026. So we now have multiple product lines that state true to Weight Watchers and that diversified support, but are also introducing GLP-1s. And so we are very excited about that. And Jonathan can touch a bit more on our clinical offerings. Thank you.

Sure. So GLP-1s are obviously one of the most significant clinical breakthroughs of our lifetime, and we at Weight Watchers have embraced them, but we've aimed to do so in a way that feels true to our roots. And so we have a telehealth business today that we call Weight Watchers Med+, where we have hundreds of clinicians providing specialized obesity care to patients across the country. And we really feel that it's important to go beyond the prescription and ensure that people are getting a high level, a high level of support and care in order to be successful while they're on that medication. And our members get unlimited access to their clinical team to help guide them through this process, which often can include things like side effects, dose titration. We want to make sure that members and clinicians have a high level of touch and communication as they go through that process. We also do guide people through the insurance process. And these medications have come down in price recently, which is great to see. But they still are very expensive if you're paying out of pocket. And so through our EHR, we're able to file prior authorizations at scale on behalf of our members and help get them covered for medication, such that if they do have insurance coverage, they're paying the lowest possible price out of pocket. And then with all of that clinical care, we pair it with our Weight Watchers behavioral programs to make sure that people are getting the behavioral support they need to build healthy habits to help them be successful, you know, potentially if they ever do transition off of medication. And so they get access to our diet tracking app, they get access to the virtual workshops that Felicia just mentioned. And it's great to see people go through this, something like a new medical offering with the care and the support of other people who are going through the same journey as they are, and they're able to share that experience. And so we're very excited about GLP-1s, and we're very excited about our Med+ business, and we feel like it's going to be important cornerstone for us to build around.

A lot in there I want to unpack, but before we get into the Core business, you just hired a new CEO. Can you break down why was the right fit and how it impacts your strategic direction from here?

Yes. Yes, so we just announced a new CEO, what, last week? I think it was. We are very excited for him to join. What you hear from Jonathan and I is a lot of work that has been done kind of strategically over the past couple of years and really setting Weight Watchers up for a bright future and we're very excited about that. And I think a lot of what he brings to the table is that excellence and subscription revenue growth. And so we are excited for someone to be able to accelerate, you know, what we have been able to set the groundwork for in this next phase for Weight Watchers. Thank you.

Okay. Now, let's dig into the Clinic business. For investors that are unfamiliar with what you offer today in Med+, what do you explicitly offer for consumers, and how does that fit into the broader GLP-1 ecosystem?

Yeah, that's a great question. Yeah, so what we offer is access to a telehealth business, to clinicians who can prescribe GLP-1s and manage care. And as I mentioned during the intro, we also help them go through the insurance process to make sure they're paying the lowest possible price for medication. There are a lot of people that are coming out to play in this space. GLP-1s are obviously very, very popular right now. But a lot of people are focused on just one part of the journey, just on how to onboard people onto medication. And we really feel like there is a bit of a false narrative out there that you can just give someone these medications and send them on their way and have them have a successful journey. And I think that shows up most prominently in the adherence that you hear from Big Pharma, that people on average are staying on these medications for about six months. And, you know, within those averages, there's people that are coming on and stopping right away because they're experiencing side effects. There's people who can't afford to stay on the medication or experience, you know, a work disruption and no longer have insurance coverage. And so what we're really about is providing people with the support they need to be successful while on the program, you know. You know, one stat that we love to talk about is our digital GLP-1 Success program that's included in our Med+ offering, when members engage with that, 72% of them have noted that they've been able to better manage their side effects, and that is really, really impactful. And so we really feel like our, with our Med+ program, we're going beyond the prescription and providing wraparound care so folks can be successful and build successful habits to maintain long-term health benefits.

You touched on a little bit there, but why should a consumer choose your clinical offering over a primary care provider, a different telehealth provider? Incredibly, how do you tell that message to consumers to help open up the top of funnel?

You know, you think about your last primary care appointment. It was probably about 12 to 15 minutes, and the clinician was probably trying to pack in a lot of clinical care on a number of topics within that visit. And then you probably didn't go back to see that person again for another year. What we're providing is really high touch, high quality obesity focused care within a clinical setting. And so our members have unlimited access to their clinician to do the video, the telehealth appointments that they need to do that are solely focused on weight care, and then able to follow up with them. They're able to log side effects. They're able to meet with registered dietitians. So the way you could look at it is it's really an obesity and weight care focused offering in a clinical setting versus just a clinical setting that's meant to get someone a prescription and send them on their way. And so we, in terms of how we tell that message, it is a, I would say, a more nuanced message than, you know, a lot of people are competing on price right now. And if you're trying to reach people through D2C and they're scrolling through a social platform, price is obviously an easy thing to communicate to try to get people interested in your platform. But what we're really trying to do is let people know that we are the place. We've been in business for over 60 years, solely focused on weight care, and that we are the place to come if you want to have a successful and supportive clinical weight care journey.

Now, in terms of the backwards looking, what that's actually translated to from a Clinic net adds perspective is when relatively volatile as you've seen, you know, a competitive and ever changing environment on an ongoing basis. What's the quarterly pace or what's the right way to think about subscriber growth in the clinical segment?

I think overall, you know, we are trying to manage across our portfolio of Weight Watchers. And like I mentioned, we have three product offerings. And, you know, they have differing margin profiles. And it's very important for us to be agnostic to where a member is in their weight loss journey. I do think as like the next wave of individuals who are interested in GLP-1s, GLP-1s start to engage with GLP-1s, you know, they are looking for more information, right? They are hearing stories of, you know, I was not able to drink a glass of wine at dinner because I was having side effects. And I don't want this to impact my social life or, you know, I want to be successful on the meds and, um, I want to be able to like, lose the weight and all of that. And so I do think with all of the things that like Jonathan had mentioned, that is really at the crux of where our model is differentiated, because it is about guided support from experts. And in that, I do think while our subscriber count has been volatile, we have shown consistent increases in our overall revenue. And so just as I mentioned earlier, going from Clinic revenue being about 10% of our total total in 2024 to that being about 25% to 30% of our revenue in terms of expectation for 2026 does show that we are still able to acquire members, you know, kind of in this ever-changing ecosystem, but what really matters is the adherence to the meds and the wraparound of care. And that is really where we are. We feel like our differentiation is.

You spent heavily on marketing the Clinic offering in Q1, really the first time you were able to go. Full thread on that. What are the learnings that you gained from that spend? How does it inform your willingness to apply incremental marketing dollars here going forward?

So overall, I did note, you know, kind of in 2025, we had a debt negotiation. And the way that we were able to effectuate that transaction is we did do a prepackaged Chapter 11 that that was about a month and a half. So we entered into that at the beginning of May, we exited before the end of June in 2025. And so what was coming up in Q1 of 2026 was this was, our first opportunity really to let folks know that like Weight Watchers is still here. And that, you know, GLP-1s didn't kill Weight Watchers. We actually, you know, do prescribe GLP-1s. And so in Q1, we did index more heavily into spend than what we normally do overall for marketing. So we spent around 40% to 45% of our total anticipated spend, where in previous years, we would we would spend about 30% to 35% of that. I think it was really important for us in terms of overall learnings. People know Weight Watchers. People know the brand of Weight Watchers, but just like we're sitting here today, the business has so materially changed that there is an education we need to do of what Weight Watchers today offers versus when people have lost thought of Weight Watchers and what that looks like. And so one of the things that has impacted our business the most is we have very, very high brand awareness, but we don't have a lot of brand awareness that we offer GLP-1s. And we definitely wanted to get that into market in Q1. I think we did it in the traditional sense in that we invested in television and we invested in top-of-funnel marketing. And we were anticipating that that would continue to create halo for us as we moved through the year as more people adopted, you know, our Weight Watchers Med+ offering. And what we had noticed is that that overall brand awareness had stagnated and that we stayed around 30% brand awareness, which is very different from the overall Weight Watchers brand awareness. So what we have learned from that is we do need to be more focused on how we create a steady drumbeat that we do we do offer meds and we do have multiple GLP-1 offerings even if an individual doesn't want to engage with meds with Weight Watchers. And so you see things coming from us along that spectrum. So one thing we just announced is our expansion with Sam's Club in in that being a way our brand awareness to get out there in terms of offering GLP-1s. And we've also done a lot with influencers that are happy to tell their story of how they lost weight with Weight Watchers. And so I think overall it's a great opportunity for Weight Watchers to cut through the noise and to really allow for our model to differentiate relative to others. And I think that's our biggest learning from Q1.

Okay. Great. Well, one more question on the Connect segment. Zooming out, you've grown the Connect business from effectively zero a few years ago to about 200,000 subscribers today. How should we think about translating the program quality and the competitive advantages you do have into the path from growth from here? And what are your levers you're able to pull to continue to drive that revenue growth on a multi-year basis?

I mean, I think one of the levers that we have is, because we've been in business for 60-plus years, we do have a huge database of customers that have engaged previously with Weight Watchers. And so what we had noticed kind of while for Q1 2026 is that overall consumer interest is increasing in GLP-1s, right? That is a fact. And being able to more specifically message to past members of Weight Watchers that we do now have this offering available, I think is a continuation of the way that we are going to be able to scale. I would also say that we have a wide spectrum of product offerings. It's not just important for us, for you to engage with meds with us. We want to be wherever you are on your weight loss journey. And we want you to be able to maintain your weight loss. So we are comfortable, right, if someone was a Weight Watchers Clinic subscriber downgrading to a Weight Watchers Core+ subscriber, if someone was the Core+ subscriber upgrading to that. So I do think overall, we have multiple levers that are available to us, not just in the marketing front, but also in the consumer database, in being able to continue to scale that business.

Yeah, and in addition, we've also, you know, direct-to-consumer is an effective acquisition channel, and it's one where you can add a lot of scale quickly, but during periods of heightened competition, it can be expensive. And so we've taken a lot of steps over the past 12 months to diversify our acquisition channels. And that's come through our B2B offering, which while still is small compared to the rest of our business, does bring in clinical members. Obviously employers want their employees to be healthy and they want to contribute funds to this type of endeavor, but they want to make sure that if they are going to contribute funds to GLP-1 access, that their employees are getting them from a reputable clinician who's going to provide high quality care and ensure that they're building healthy habits. We also went live as a preferred telehealth prescriber on Lilly Direct during the first half of the year, which was really exciting for us as well. So now when patients are Googling ZepBound or Foundayo and going to Lilly Direct, they'll see us on there as a preferred telehealth provider. So direct-to-consumer is always going to be a significant acquisition channel as well as tapping into our existing base of behavioral members, but we've made a lot of strides as well in establishing footing elsewhere to generate, you know, economically viable sign-ups over time.

Okay, great. Really interesting on the Clinic side. Let's switch over to the behavioral piece of the business. It has been an area with larger headwinds, seeing the revenue base contract for the past several years. What would you identify as the key macro headwinds you've been facing, and do you see a path for those to soften over time?

And overall, there has just been a lot of introduction in the space as it relates to nutrition. In our behavioral program, if you just think about Core, it's offering nutrition guidance. And you think about Core+, it's offering nutrition guidance alongside support and accountability. And so we're happy about the trend dynamic that we're showing in Core+ because it does mean a member is willing to pay for that incremental support and accountability. For Core, though, we've always said do-it-yourself has always been a competitor. AI is a competitor. There is a lot of places for people to get information about their nutrition. I think for us, though, it is in the Points program easier to track. One thing versus tracking caloric intake versus protein versus fiber and all of the macros that people are saying is very important. I would also say that one of the ways for us to kind of stem that bleed on Core is we have up-leveled our technology. So one of the, um, one of the hard parts, right, of having a debt burden like we had at Weight Watchers for so long is that we weren't able to invest in the tech. And so the tools became dated. And if you have like a new app that is immediately like giving you all of this information, it's like, why Weight Watchers? Well, the program works, right? That is fantastic and check on that. But we did need to make a lot of the tools more easily, usable. So we have introduced quite a bit, um, in terms of, uh, AI in our app. So now, if you take a photo of your food, we are able to give you the Points value just in one click. So some of the things we talk about, right, it's like very hard to, if you have like a bunch like a salad or whatever to get all of the ingredients in there. I will say our AI is pretty amazing and it can figure that out and give you the points. We've also introduced voice tracking so you can just talk into your phone and that is available to you. We have our code scanning now. So if you are at Trader Joe's and you just want to scan a product, that immediately tells you the Points intake. And so all of these tools we do think are going to be very impactful in getting folks then to track right and then getting the best on their at their weight loss journey.

Digital weight loss has always been a competitive industry. How would you say your behavioral offerings?

Are differentiated from peers, and how can you translate that to stabilizing the revenue base over time? I would say the differentiation point across the spectrum is the fact that the Points are calculated based on scientific research. And so this isn't just necessarily like just about caloric intake. If it was just caloric intake, it would be very easy kind of across the board to figure out what is best for your body and what is best for long-term nutrition guidance. And so this is a program that has has been studied, this is a program that has had a lot of hours of research going into each of the individual Points programs or Points numbers and I think that's one. I also think there's very few places that support the emotional journey of weight loss. A lot of people don't want to tell their friends that they're embarking on a weight loss journey, but they definitely want to tell a friend afterwards when they've lost the weight where to do that. And I do think, you know, just with our millions of members, this is another area where we have locked in and have continued to to to honor our heritage of community. Community support and accountability. And I think there's very few places that provide all of that, which is where I do think we are also differentiated.

Okay. Okay, great. Now, I want to touch on one of the bright points, certainly from your recent results, which has been Core+. Lot of success here in driving adoption. This is the more premium tier with three consecutive quarters to potential growth. What's led to that improvement and how do you continue to expand adoption?

So this one's fun for me. I think overall, you know, when you're thinking about just the amount of information that people can consume, right? Across all of the social platforms, AI, I mean there is no shortage to information being available at your fingertips. And I do think we have community, like creating communities through these virtual experiences that are included in our Core+ offering. So for example, if you're a midnight snacker, and that is where you always go sideways in terms of your weight loss goals, we have an experience for that. So you can meet other midnight snackers and learn tools of the trade from others that are kind of going through something similar. So that for me, just having that available to our consumers and having them select the things that are most important to them. Do you think has been a very important driver of our growth? And I would also say just this up-leveling of what we've been able to do in terms of like behavioral structured programs with our GLP-1 Success program and Menopause, those have also helped as well, drive that growth. And so I do think that that's an area of sustainability for us. And, you know, the proof is in the stats, right? For our GLP-1 Success program, if you do engage with our program, which does focus on protein, you have shown 29% more weight loss than if they didn't engage with the program. And I think that's pretty impactful when you're thinking about why us.

All right. Now, I want to talk a little on your B2B business. It's been something that's evolved a lot over the past few years, giving employers options across the weight loss spectrum. What do you see as the value you can deliver for your employers? Where are you in scaling that business? And when might we start to see greater contribution to the P&L here?

Yes, so I think from a value standpoint, as we talked about before, employers devote a lot of money to the health and the well-being of their employees. And they always want to make sure that those dollars are well spent and are going to drive the outcomes that they want to drive. And so obviously, GLP-1s are something that are still is fairly expensive and the care around them is expensive. And so employers want to make sure that they are driving people towards platforms and towards clinicians where they're going to get proper clinical support and the wraparound care needed to have a successful journey on the medication. And we really feel like that positions us very, very well to be somebody that an employer wants to partner with. We obviously launched a really exciting partnership with UnitedHealthcare last year, and it's been great to see that continue to progress. We obviously had Sam's Club go live recently, which was exciting. And I'd say for the longer term as we look ahead, what we want to do is look for more of these big opportunities to partner, you know, with a large health system, a large company that is like-minded in our approach, that we can look to drive positive results for either their members or employees.

We touched on the Sam's Club partnership. That's a recent launch. Give us an overview of what's happening here, the potential you see for this partnership, and then zooming out, can you help us think more broadly about your partnership strategy and where you think there might be gaps in that portfolio?

Sure, so with Sam's Club, what we're doing with them is essentially all Sam's Club members now will get access to Weight Watchers at a discounted rate. And the discount varies by program, but we're making that available to all Sam's Club members. And what that does is it really aligns two very trusted brands in their space together. And it allows us to offer a benefit to people, many of which fit into our target demo and people that we're used to servicing and that we feel like we can service very well. Sam's Club also has a pharmacy as part of its offering. And so when Sam's Club members sign up and choose our Med+ program, we can make it very easy for them and have it front and center for them to get their prescription fulfilled right at Sam's Club Pharmacy and really just bring more convenience to their day-to-day health and well-being, while getting the Weight Watchers brand name out there to a large group of people. And I think that's something that we're going to look to replicate elsewhere. And it's something that fits neatly into our strategy. So we have the opportunity to not only reach their members digitally through email and through activations on their website, but also to send Weight Watchers coaches and registered dietitians and clinicians to Sam's Club in-person locations. And that's an advantage that we have as a company with the scale that we have and the footprint that we have across the country and across the globe.

Now, you've also been able to significantly reduce the cost, especially SG&A within the business over the past few years. Do you see more room for optimizations here? And if so, where?

I'm the finance person, so yes, I always see room for optimization.

I would say one of the areas that we have really optimized is in our gross margin. As we have three different product lines, all with three different maturities, Core being one of the longer maturities, Core+ initially in its phase being a very, very long, like revenue line. They were three different margin profiles, and so we were trying to manage kind of across the three. Jonathan and his team have done a lot in terms of product improvement and allowing for that execution to be more seamless. And so just as I mentioned, you know, the clinical growth, because we do have to cover the cost of clinicians and they tend to be more expensive, right, than if someone is just engaging with our digital app, we have been able to maintain near record high margins of approximately 73% overall, which I think is pretty remarkable. And it is an area that we have said, this year we do anticipate our adjusted gross margins staying above 72%. With all of the improvements Jonathan and team have made, we can really be agnostic to what, um, to what product offering someone joins and really match the product offering for what is best for that person on their weight loss journey.

Well, we started the conversation with it, but post-restructuring, you've been able to reduce the debt load of the business really substantially by about four times, those notes now due in 2030. Given that, what's the cash generation potential of the business today? How do you plan to tackle that over time? And what are your thoughts on doing potentially more voluntary solicitations use the debt faster like you did earlier this year.

So our guidance for the 2026 year is, you know, $620 million to $635 million of top line revenue and our adjusted EBITDA is $105 million to $115 million. So as I mentioned, our debt burden had reduced from $1.6 billion down to $465 million. And since then we have been very opportunistic about lowering that debt balance further. So right now we're just north of $400 million. We did pay down the debt in a prepayment, and also we did a tender, and we took advantage of where the term loan was trading, and so we were fully subscribed at 68.5% of par. And so this is an area that we are continuing to make sure that we can we can lower the overall debt burden, but I do feel pretty good about where we are and in terms of adjusted EBITDA relative to our net debt. And just for reference, our Q2 cash balance was slightly above $100 million. So overall, we are in a much healthier position than we were just a year ago and very excited about continuing on that path.

It's been a great conversation. One more question to put a bow on things. What are one or two areas you think investors most underappreciate or misunderstand about the Weight Watchers story?

That's a good question. I think with the brand awareness, like I mentioned in the beginning, everybody assumes they know what Weight Watchers is. And the two things that I hear the most are frozen foods, which we haven't been in that business for a while. And the second is I don't want to go to a meeting. Like, I don't want to have to drive to a meeting. And I think the thing that people are missing is that we have always been scientifically led. And we are embracing GLP-1s alongside what has allowed Weight Watchers to exist for 63 years. And so I do I do think that that competitive offering is is missed. I also think just the improvements we've made in overall adjusted gross margin and the sustainability of the cash flow long term is another thing that's missed. And I do think that that is a testament to Jonathan and team in terms of all of the improvements that they've made on that. And that that is sustainable for the go forward as well.

Yes, and I would call out our clinical differentiation. You read headlines every day that this company has GLP-1s or this company now has GLP-1s. And these medications are obviously powerful catalysts for weight loss, but they're not the whole answer. And, you know, it's really, really important for people to get high-quality care while they're on these medications, which are very, very powerful and need to be, you know, taken appropriately. There's also, you know, a multitude of form factors, and there's going to be more coming to the market every day. Obviously, orals were launched. There's two different types of orals out now, each with a differentiated clinical profile. And so it's extremely important that you're working with a clinician who understands you, understands your clinical profile, and can get you the right medication for you to be successful.

Thank you so much both for being here.

Thank you for having us.

Thank you. Thank you.

This live transcript is auto-generated without human intervention or review.

Welcome to the WeightWatchers Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

Please note this event is being recorded. I would now like to turn the conference over to Anna Kate Heller from Investor Relations. Please go ahead.

Thank you for joining us today for the WeightWatchers Second Quarter 2026 Earnings Conference Call. We also released a shareholder letter and press release with our second 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 reports 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 Jonathan Volkmann, Chief Operations Officer. Both are members of the interim office of the Chief Executive.

Thanks, Anna Kate. Good afternoon, everyone. Thank you all for joining us. Before we get started, I encourage everyone to look at our shareholder letter, which we posted on our corporate website. While the market today is increasingly filled with companies offering prescriptions without expert guidance and support, WeightWatchers provides the best of both worlds. Not only do our members have access to the most effective FDA-approved GLP-1 medications, they also benefit from the backing of an extraordinary team of experts who can guide them at every step along the way.

That includes clinicians trained to support people with obesity, who are actively helping members understand and navigate the benefits and challenges of GLP-1 therapy. It includes registered dietitians who help members build tailored nutrition plans that balance caloric goals with protein, fiber and healthy muscle preservation. And it includes expert coaches who lead workshops and experiences where members learn from one another on topics like dining out while on a GLP-1 and exchange practical advice like the best healthy midnight snacks.

And perhaps most important of all, they remind each other, they're not in this alone. Underscoring all of this human guidance is a reimagined digital experience that combines decades of science-led expertise with new technology to give members a clearer, more personalized view of their weight health and help them be more successful in reaching and sustaining their goals. With more than 1 in 10 Americans currently taking GLP-1 medications for weight loss, these therapies have fundamentally redefined our industry and transformed what is possible in obesity care.

And we are continuing to evolve our offering to help expand medication access and remove friction for those eligible for clinical weight loss. Patients can now access WeightWatchers Med+ seamlessly through LillyDirect, creating another meaningful channel for prospective members to discover our offering. In addition, WeightWatchers Med+ now supports eligible beneficiaries through the new Medicare GLP-1 bridge program, unlocking $50 per month branded GLP-1 medication coverage through late 2027.

And we recently launched a new strategic collaboration with Sam's Club, bringing WeightWatchers to one of America's most trusted brands. These initiatives build on our broader commitment to help members find the best medication for them, whether they're using insurance or paying out of pocket. But while medication is a powerful tool, for many, it is not the whole answer. Even with these medications, people still need to eat nutritious foods. They still need to move their bodies, and they still benefit from community, accountability and education to support progress and sustained results.

We believe WeightWatchers' people-first technology-powered offering is more relevant than ever as we support those navigating their journey with medication. WeightWatchers Med+ members prescribed GLP-1 medications reported over 30% more body weight loss on average at 12 months than select industry competitors. In addition, WeightWatchers Med+ members who are prescribed GLP-1 medication and also regularly engage with our GLP-1 success program lose 29% more body weight at 12 months on average than those who use medication without engaging with our structured behavioral support program.

And studies indicate that WeightWatchers members reduce their calories from ultra-processed foods by 29%, a tangible marker of the real behavioral shifts from our approach. These powerful results reinforce our position as the most trusted brand in weight loss. This foundation has enabled us to create an integrated ecosystem that supports members at every stage of their journey on or off medication. For members looking for our proven behavioral program, we offer Core, our base behavioral offering anchored by WeightWatchers Signature Points program.

For members who want more guidance, we offer Core+, our higher-value behavioral offering that adds unlimited workshops, coaching and our GLP-1 success program, which is available to members prescribe GLP-1s through an outside provider. And for members who qualify for clinical care, we offer Med+, our clinical offering that combines the above tools, including our GLP-1 success program with access to clinicians and GLP-1 prescriptions for qualified members. The important point is this, people's needs change over time, and we've built a platform which enables our members to move seamlessly between levels of support, choosing the program that best fits their lives at any given time.

WeightWatchers's unique combination of clinical care, behavioral support and user-friendly technology, all guided by actual people who are experts in the field is becoming an even stronger competitive advantage in this rapidly growing market. We're seeing compelling evidence that this approach is building momentum within our business. And as we look ahead, our opportunity has never been clearer. Losing weight is deeply personal, and it rarely follows a straight line.

People need expertise, they need accountability, they need encouragement. And that is why we're confident in our ability to create lasting value for both our members and our shareholders. We'll continue to invest thoughtfully to make sure that every person who comes to WeightWatchers gets something that's becoming harder and harder to find elsewhere. Real people, real expertise, real support and a partner for the entire journey. With that, I'll turn it over to Felicia to cover the financials.

Thanks, John. Our financial performance in the second quarter demonstrated ongoing progress against our multiyear transformation. Our financial footing continues to improve as 2 of our 3 subscription tiers showed either stable or growing subscriber bases. The company also generated positive meaningful operating cash flow and delivered on last quarter's commitment to reduce our debt load. These results demonstrate the earnings power of our more disciplined operating model and give us confidence in our ability to deliver against our full year guidance.

As we build for the future of WeightWatchers, we are reaffirming our full year guidance for both revenue and adjusted EBITDA. Now let's take a closer look at the numbers, starting with subscribers. Total end-of-period subscribers were 2.5 million. Core+, our higher-value behavioral tier, ended the quarter at 541,000 subscribers, an increase of 13.9% year-over-year. That is our third consecutive quarter of sequential growth in the tier, a trend we have only seen occur one other time in the past 15 years, which offers encouraging signs that our approach is resonating with consumers.

We closed Q2 with 2.3 million end-of-period behavioral subscribers, which reflects a 24.6% decline year-over-year with the decline concentrated in our core tier. However, we continue to see progress towards the higher value mix shift we have been targeting. End-of-period clinical subscribers were 197,000, up 55.7% year-over-year compared to 127,000 in the second quarter of 2025. This number held steady from Q1 following a significant reduction in marketing spend coming out of peak when this spend was more heavily focused on our clinical offering.

In Q2, we deliberately recalibrated our investment allocation across our portfolio. ARPU increased 10.2% year-over-year, reflecting a mix shift in our subscriber base to clinical and Core+ membership tiers. Revenue in Q2 was $162.3 million compared to $189.2 million in the second quarter of 2025. Foreign exchange was about $1 million benefit in the quarter compared with a $4 million benefit in Q1. Clinical subscription revenue grew 30.4% to $39.9 million compared to $30.6 million in the second quarter of 2025, despite Q2 2025, reflecting significant contributions from our former compounded semaglutide offering.

Clinical accounted for 24.6% of total revenue for Q2 2026, an increase from 15.9% for full year 2025 revenue. Behavioral subscription revenue was $121.5 million, down 22.7% compared to $157.3 million a year ago, with the decline concentrated in our core tier. Q2 gross margin was 70.3% and adjusted gross margin was 73.6%, both of which are on par with Q1 and remain near record highs. We are particularly encouraged to hold adjusted gross margin steady despite a shift in revenue mix toward clinical, which requires higher staffing costs.

This success is the result of structural work in both businesses, including workflow automation and operational efficiency. Marketing expense in Q2 2026 was $47.9 million or 29.5% of revenue, which is higher than Q2 2025 as the year ago quarter reflected an intentional pullback in marketing spend during our Chapter 11 financial reorganization. Q2 2026 also reflects a significant decrease from the $92.9 million in Q1 2026 during peak season. In addition to reducing our total investment, we also deliberately recalibrated our spend across our portfolio following elevated clinical investment in Q1 to coincide with the Wegovy pill launch.

Adjusted SG&A was $25.7 million or 15.8% of revenue, consistent with the prior year period in absolute dollars. Adjusted SG&A includes the benefit of our exit from the corporate headquarters lease. On a GAAP basis, SG&A was 31% of revenue, primarily driven by higher depreciation and amortization related to fresh start accounting. Product development expense was $6.4 million or 4% of revenue as we continue to execute on our technology road map with a more focused investment profile. Net income for the quarter was $14.1 million.

That includes a $4.6 million gain on the extinguishment of debt related to the voluntary prepayment of a portion of our term loan at 68.5% of par, and it absorbs $25.9 million of depreciation and amortization, the majority of which relates to fresh start accounting. Adjusted EBITDA was $39.8 million, a 24.5% margin compared with a loss of $1.8 million in Q1 2026 as marketing spend normalized following peak season. The decline from $65.3 million adjusted EBITDA in the second quarter of 2025 reflects lower revenue and higher marketing investment as a percentage of revenue. Now turning to cash and the balance sheet.

We ended the quarter with $101.5 million in cash and cash equivalents compared with $120.9 million at the end of Q1 2026. Operations generated approximately $24.3 million of cash in the quarter, reflecting the cash-generative nature of our business and our continued commitment to maintaining a solid liquidity position as we execute our long-term strategic priorities. We deployed $36.8 million to pay down the term loan and $6.1 million to capitalize software and development. On the debt paydown itself, the $36.8 million was made up of $26.8 million from our annual cash sweep and $10 million from the previously announced voluntary solicitation, which was fully subscribed at 68.5% of par.

That reduced principal by $41.4 million, generated the $4.6 million gain I mentioned and lowers our annual interest expense by approximately $4 million. Our term loan now stands at $423.6 million, a reduction of more than 70% from the $1.6 billion we carried before our financial reorganization. Even as we continue to proactively pay down this loan, we retain the liquidity to invest in the strategic priorities that will define the company's future. Now to our outlook. We are reaffirming our previously provided 2026 guidance for revenue of $620 million to $635 million and adjusted EBITDA of $105 million to $115 million.

We continue to expect clinical subscription revenue to represent 25% to 30% of 2026 total revenue, up from 15.9% for the full year 2025. This growth incorporates moderate declines in clinical subscribers in the remaining quarters, primarily due to lower marketing spend levels, a more balanced allocation of marketing resources across our lines of business following the more concentrated clinical focus in Q1 2026 and the lapping of our 12-month long-term commitment plan introductions. Q3 is our lowest quarter in terms of marketing spend and spending will ramp up in Q4 ahead of peak season, consistent with our typical seasonal cadence.

Within behavioral, we expect continued year-over-year growth in Core+ subscribers and continued moderation in the year-over-year rate of behavioral end-of-period subscriber declines. On gross margin, we continue to expect a modest adjusted gross margin decline in 2026 versus 2025, and we expect to remain above 72% on operating expenses, we expect 2026 marketing expense as a percentage of revenue to increase modestly compared to 2025, with second half spend below first half levels. We expect product development to remain near the Q2 quarterly run rate.

On cash, with peak marketing investment behind us, we are very confident that we will generate cash and expect positive operating cash flow for the full year 2026. We expect approximately $45 million to $50 million of interest costs for the full year, reflecting lower quarterly interest following the Q2 prepayments, quarterly capitalized software and development in line with Q2 run rate and 2026 cash taxes of between $5 million and $10 million. Our second quarter results demonstrate the earnings power of our more disciplined operating model.

We are seeing clear signs of progress towards the higher value mix shift we have been targeting with Core+ delivering its third consecutive quarter of sequential subscriber growth and clinical continuing to grow as a share of total revenue. As Core+ and clinical become a larger share of our business, we see a company built on a stronger financial foundation with a meaningfully smaller debt load and positive operating cash flow supporting strategic investment in our transformation. We head into the second half with confidence in the multiyear plan we have laid out and in the team executing upon it. I will now turn it over to the operator to open it up for Q&A.

[Operator Instructions] At this time, there are no questions. I would like to hand it back over to Felicia for closing remarks.

Thank you all for joining us today. Weight Watchers exists to ensure that no one has to navigate their weight health journey alone, and we remain singularly focused on executing against that mission. We look forward to continuing to update you on our progress. 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 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.