Personal wellness company WeightWatchers (NASDAQ: WW) reported Q4 CY2024 results topping the market’s revenue expectations, but sales fell by 10.5% year on year to $184.4 million. Its non-GAAP profit of $0.32 per share was significantly above analysts’ consensus estimates.
Is now the time to buy WW? Find out in our full research report (it’s free).
WeightWatchers (WW) Q4 CY2024 Highlights:
- Revenue: $184.4 million vs analyst estimates of $175.7 million (10.5% year-on-year decline, 5% beat)
- Adjusted EPS: $0.32 vs analyst estimates of $0.07 (significant beat)
- Adjusted EBITDA: $49.74 million vs analyst estimates of $46.36 million (27% margin, 7.3% beat)
- Operating Margin: 19.6%, up from -2.9% in the same quarter last year
- Free Cash Flow Margin: 2.4%, down from 3.6% in the same quarter last year
- Members: 3.34 million, down 462,000 year on year
- Market Capitalization: $22.56 million
StockStory’s Take
WeightWatchers’ Q4 results reflected the ongoing transformation in the weight management industry, as the company navigates both subscriber declines and rapid changes in consumer preferences. Management attributed the quarter’s performance to continued headwinds in its traditional behavioral business, partially offset by robust growth in its clinical segment, which benefited from new offerings and improved access to weight loss medications. CEO Tara Comonte noted, “We’re focused on stabilizing and rebuilding for long-term sustainable growth,” highlighting recent product updates and operational changes as leading indicators of future momentum.
Looking ahead, management’s forward guidance centers on stabilizing the subscriber base, integrating clinical and behavioral programs, and addressing challenges related to medication supply and competitive marketing. The company emphasized the need for disciplined investment given high interest expenses and signaled that 2025 will be a year of resetting expectations. Comonte acknowledged, “Transformations take time and they take investments,” while CFO Felicia DellaFortuna stated that ongoing cost controls and product enhancements are expected to help position WeightWatchers for gradual recovery.
Key Insights from Management’s Remarks
WeightWatchers’ leadership focused on the dual challenge of declining traditional subscribers and growing clinical offerings. The company’s fourth quarter was shaped by new product features, deeper integration of its clinical business, and ongoing cost restructuring as it adapts to a changing competitive landscape and evolving consumer demand.
-
Clinical segment momentum: Clinical subscriber growth accelerated, driven by improved access to weight loss medication and the addition of generic and compounded options. Management highlighted that clinical members deliver higher lifetime value and retention rates, and that expanding this business remains a top priority.
-
Product innovation deployment: Several new features were launched, including an AI-powered food scanner, a recipe importer, and macro nutrient tracking. Management reported these updates have led to higher member engagement and reactivation, particularly among previously inactive users.
-
Behavioral business pressure: The traditional behavioral business continued to experience recruitment and retention challenges, with management citing ongoing competitive pressures and shifting consumer preferences toward medication-assisted solutions.
-
Cost reduction efforts: The company has actioned the majority of its $100 million run-rate cost savings target, resulting in increased operating margins and a leaner cost structure. Further operational reviews and AI-driven automation are planned to unlock additional efficiencies.
-
Capital structure constraints: High debt levels and annual interest obligations are limiting the ability to invest aggressively in growth initiatives. Management has engaged advisors to explore options for improving financial flexibility and noted that the balance sheet will remain a key constraint in the near term.
Drivers of Future Performance
Management’s outlook for 2025 is centered on stabilizing the core business, expanding clinical offerings, and balancing growth investments with ongoing financial constraints amid a highly competitive environment.
-
Integration of clinical and behavioral: Deeper integration of clinical (medication) and behavioral (lifestyle change) programs is expected to improve member outcomes and engagement, which management believes will support a gradual return to growth.
-
Product experience enhancements: Ongoing product innovation—including AI-driven personalization and new digital tools—aims to increase engagement and retention, but immediate impacts on subscriber growth may be limited by market dynamics.
-
Marketing and capital discipline: Continued high customer acquisition costs, combined with heavy debt obligations, require careful allocation of resources. Management plans to shift spending toward higher-impact initiatives while maintaining strict cost controls, but acknowledges this may limit near-term subscriber acquisition.
Top Analyst Questions
-
Nathan Feather (Morgan Stanley): Asked about early signs of improved member acquisition and retention following product changes. Management cited higher activation rates but said it is too early to see direct financial impacts.
-
Nathan Feather (Morgan Stanley): Inquired about the role of generic and compounded medications in clinic growth. Donna Boyer, Chief Product Officer, explained that broader access—especially through compounding—drove subscriber gains despite ongoing branded medication shortages.
-
Michael Lasser (UBS): Pressed on how WeightWatchers can avoid a downward spiral of declining subscribers and constrained resources. CEO Tara Comonte emphasized leveraging the brand’s legacy, ongoing product innovation, and careful capital allocation.
-
Michael Lasser (UBS): Asked about the sustainability of clinical subscriber growth and the cash needed to service debt. CFO Felicia DellaFortuna stated that a higher mix of clinical subscribers supports stronger margins, but volume challenges remain in the behavioral segment.
-
Alex Fuhrman (Craig-Hallum): Sought clarity on strategies if compounded medication access is lost. Management said it will pivot to branded and alternative medications where possible and closely monitor developments in supply and regulation.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace of clinical subscriber growth and the impact of expanded medication access, (2) execution on integrating clinical and behavioral offerings to boost engagement and retention, and (3) management’s ability to further reduce costs and improve capital flexibility. Developments in medication supply, regulatory changes, and the effectiveness of new digital features will also be important to track.
WeightWatchers currently trades at a forward EV-to-EBITDA ratio of 0.2×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
