WW International, Inc.

welcome to the ww international's second quarter 2024 earnings conference call at this time all participants are in a listen only mode later we will conduct a question and answer session i will now like to turn the call over to your host corey kinger vp investor relations you may begin thank you everyone for joining us today for ww international second quarter 2024 conference call

At about 7 a.m. Eastern time today, we issued a press release reporting our second quarter 2024 results. 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. The press release is available on the company's corporate website located at corporate.ww.com. Supplemental investor materials are also available on the company's corporate website in the investor section under presentations and events. 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 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 certainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's 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 Seema Sastani, CEO, and Heather Stark, CFO. I'll now turn the call over to Seema.

Thanks, Corey. Good morning, everyone. Thank you for joining us today. Weight Watchers has the right strategy to return the business to growth. In order to win in this dynamic GLP-1 environment, we are completely reimagining how we operate to catalyze our path as the leading digital weight health provider. We have taken decisive actions to navigate through this dynamic landscape. While top line is pressured in the short term, we continue to expect strong adjusted operating income this year, which gives us ample runway for what will be a monumental transformation of not only our business, but also how culture at large treats and cares for people living with overweight and obesity. Weight Watchers has the unique ability to provide a weight health solution that aligns with this major cultural shift. the specialized expertise we offer members and payers is critical to both managing costs and improving health outcomes. Our clinically proven program escalates or de-escalates in intensity based on a consumer's needs at every step along their journey. For instance, a member can start on our core behavioral program, then add on clinic services such as registered dietician visits, or metabolic panel, and if appropriate, a doctor visit and medication access. Alternatively, many of our members want to move from clinic access to a behavioral maintenance program once their medications have been titrated. This is our one membership strategy, which is made possible by over 60 years of expertise in behavior change and the trusted community we have built over decades, paired with an innovative telehealth service and specialized clinicians who can prescribe a wide formulary. Our progress has been tempered near term by the complex and rapidly shifting external environment over the last few months. While we continue to experience GLC1 shortages, we have seen an increasing quantum of compounded and in certain cases even counterfeit medications enter the ecosystem. This causes both a more fragmented landscape for consumers to navigate as well as increasing costs of media for the same audience. With regard to media, we continue to take a performance approach to subscriber acquisition, managing to a prudent LTV CAC ratio. The increase in CACs resulted in a decision to pull back marketing dollars initially dedicated to clinic acquisition. In addition, We postponed the rollout of our Refresh marketing campaign, which was initially planned for Q2, to integrate our latest findings and insights in this evolving environment. Last week, we soft-launched the Fits You marketing campaign, celebrating individuality, sharing real member stories, and showcasing our comprehensive support, including clinically proven behavior change and the medication for those who need it. Additionally, despite the fact that obesity is widely recognized as a chronic disease, we are disappointed to see health plans contracting coverage. For instance, Michigan's largest insurance company said it would discontinue coverage of obesity medications in its commercial plans. These trends raise health equity concerns and are a meaningful setback in the effort to destigmatize a vulnerable population, largely women and people of color, who are deserving of equitable care and access to life-saving medications. While our growth trajectory has been affected by the evolving medication supply constraints, our comprehensive approach to weight loss is perfectly positioned for growth. Despite pulling back marketing dollars amid supply shortages, our end of period clinical subscribers increased 120% year over year, in part due to our existing membership base with about 30% of May and June clinic signups converting from our behavioral program. In addition, we are seeing 10% of lapsed clinic subscribers move to our behavioral membership, evidence of our one membership strategy meeting our members' needs along their weight health journeys. With obesity specialized clinicians, our proven behavioral program, dedicated care team, insurance support, and engaged community, we are the number one doctor recommended way to lose and maintain weight loss. On average, Weight Watchers clinic members achieve a 19.4% body weight loss at 12 months. The combination of personalized medication management with our behavior change program is compelling, delivering Weight Watchers clinic members 11% more weight loss compared to those taking medications alone. These impressive weight loss efficacy results demonstrate that we have a differentiated, proven offering and increase our confidence that the initiatives in our expansion strategy will give us opportunities to catalyze our growth as we transform our business model, make our offerings accessible to more people, and deliver on our mission as a global leader in weight health. We are making progress hitting early milestones across each of the three pillars of project expansion. on the first pillar of expanding care. This summer, we began making insurance-covered nutrition counseling with registered dietitians available to eligible members, starting with a pilot in New Jersey. In this pilot, 24% of new clinic members added on an RD visit. Given the exciting uptake, we have started a phased rollout in 10 more states. Also this week, we expanded our pilot to eligible behavioral members. Over time, we believe such incremental services will expand ARPU while providing a value added experience for members. We also launched a programmatic GLP-1 medication supply tracker to all clinic members. For over a year, Weight Watchers Clinic has been actively assisting members in locating supply. But with this enhancement, we are able to point our members to the pharmacy nearest them with medication in stock immediately after a prescription is written. This service has contributed to an increased retention, now approaching six and a half months, which is up from last quarter, as well as a 12-month high MPS. Other supply trackers in the market depend on crowdsource medication availability, which is prone to error, and puts the onus on the user to find and report medications. Our supply tracker provides up-to-date information on medication shortages directly from our proprietary pharmacy stock database. You may have noticed that we recently refreshed the entire design of the Weight Watchers app to make it a more intuitive and unified user experience, providing members quick and easy access to all of our weight management tools. This revamp is driving improvements to login rates, lists in tracking, and longer sessions, all of which are positive for engagement as demonstrated by a 16% surge in MPS last month. For our second pillar, expanding access, we continue to make progress toward making Weight Watchers a covered benefit. Despite some providers pulling back coverage, our B2B team is in active discussions with a large number of potential and existing customers. While an increasing number of vendors are claiming to have the right solution, Weight Watchers offers what the vast majority of them cannot, a comprehensive program addressing cost, member experience, and sustainability. With over 33 years of enterprise experience, more than 500 enterprise clients, and clinically proven results, Weight Watchers is the science-backed leader in the weight health category. At LabCorp, which is one of our most recent B2B wins, the subscriber conversion rate is nearing 10% only six months in, proving that when our program becomes a covered benefit, we have the brand recognition and solutions for sizable enrollment. Scaling our B2B business will take time, but we continue to believe this channel will be a critical driver of growth and momentum in the years ahead, especially when enrolled ARPU generated from each subscriber is substantial, while also delivering health outcomes to the employee and ROI to the employer. And on our third pillar, expanding payment options. In addition to our B2B efforts, Our goal is to also enable D2C members to use their insurance to reduce their cost burden and increase their access to incremental services, thereby driving greater ARPU. As mentioned, we are now offering insurance-covered registered dietitian visits to eligible Weight Watchers members in the U.S. The ability to process insurance claims for Weight Watchers services will have a positive impact on signups and retention and is a natural extension of our existing ability to provide insurance support for Weight Watchers clinic members. While these initiatives will expand our reach and enable us to serve a broader population, catalyzing our return to top-line growth, we are maximizing profitability and running a more efficient organization. Today, we are executing a strategic streamlining of our operational structure which will result in a significantly lower cost base and allow us to focus on a narrow list of high impact product initiatives, increase our nimbleness and impact across the product roadmap, and bolster profitability and our cash position. Our organizational changes start with revamping our product organization under the leadership of our new Chief Product Officer, Donna Boyer. We are all aligning on cross-functional teams focused on outcomes that enhance collaboration, creativity, and velocity, and ultimately tie to financial outcomes. This simplified structure will allow for agile teamwork and reduced overhead. In a rapidly evolving environment, it's crucial that we operate faster and empower teams to adapt quickly. Weight Watchers is positioned to lead. We are adopting fast tech-forward operating principles while benefiting from a 60-year track record of proven results with behavior modification. This provides the foundation of member support and trust, which fuels long-term success. I will now turn the call over to Heather to discuss our financial results and outlook.