February 22, 2024

Sima Sistani says it’s time for WeightWatchers to embrace Ozempic. Will users agree?

New York

WeightWatchers is betting that diet culture is over.

Welcome to the age of Ozempic. Diet drugs have turned the weight loss industry upside down. The number of Americans taking semaglutide medications has increased 40-fold in the past five years, a contrast to decades of diet and exercise advice on how to lose pounds.

Wegovy and drugs like it threaten to forever change the $76 billion diet industry and the fabric upon which it has piled its wealth. They even have consumer goods and retail giants like Coca Cola and Walmart are concerned.

Sima Sistani, the 44-year-old CEO of WeightWatchers, is aware of this and realized that WeightWatchers had to evolve – or else. She knows she can’t beat Wegovy. That is why she joins forces with it.

When she joined the company last year, Sistani made radical changes, ending thousands of the company’s infamous in-person workshops, closing storefronts and shifting the company’s focus to new weight management drugs like Wegovy. She also made a huge deal to buy a telehealth company that can write virtual prescriptions for these weight-loss drugs to patients.

It was a change that threatened to upend what WeightWatchers was best known for: the kind of risk CEOs rarely take unless they see an existential threat around the corner. But Sistani says the company is not losing its position.

“What we do best is help people with weight management. That is the anchor,” she said. “I think we have to be true and authentic to that and who we are.”

And with that anchor, the company has been able to chart a path forward, even as the ground beneath it has shifted.

“I think we’ve been very intentional about our evolution,” Sistani told CNN. “We can ensure that all our stakeholders see the benefit of this transformation and change.”

In-person meetings, the Covid pandemic and wellness culture

Changes were already underway when she took control of a company in crisis in February 2022. The Covid-19 pandemic put in-person meetings on hold for a while, the company had tried — and failed — at body positivity — and the rise of the semaglutide-fueled weight loss phenomenon was just beginning.

The old diet brand, more than half a century old, was on track to lose about $250 million by 2022.

The company had tried to ride the wave of the growing body positivity movement and haphazardly rebranded as a holistic wellness brand to keep up with changing attitudes towards body acceptance in 2018. That didn’t work.

“Part of the reason the wellness pivot didn’t work is because it was a marketing move. It wasn’t a product, and we didn’t change enough in how we presented ourselves as a true wellness company,” Sistani said.

An Ozempic (semaglutide) injection pen

The emphasis on in-person workshops and lack of a digital footprint also hurt the bottom line, especially in the age of social distancing.

“About 80% of members had moved to digital-only, and yet we still had this app that functioned as if it were a supplement to in-person meetings,” she said.

Sistani immediately made radical changes, including ending meetings, closing stores and promoting semaglutide drugs.

In March, she made an even more radical change to revamp the company: WeightWatchers closed a more than $100 million deal to buy Sequence, a telehealth company that dispenses virtual prescriptions to patients for these weight-loss drugs when needed.

“These drugs have shown, and the science has evolved, that living with obesity is a chronic condition. Regardless of what it means for our company, it is important to be clear about this. It’s not just willpower,” she said. “And what we’re saying now is that we know better and it’s up to us to do better so we can help people feel positive and destigmatize this conversation around obesity.”

Goldman Sachs analysts say buying Sequence and embracing semaglutides will keep the company from collapsing. Analysts at the bank predict that by 2031, 15 million U.S. adults will use these drugs, or about 13% of all adults in the country — not including diabetes patients.

They believe these changes could generate $455 million in new revenue for WeightWatchers by 2025.

Sistani thinks that if she hadn’t come in, the company would have followed in the footsteps of competitors like Jenny Craig, the weight management company that went bankrupt in the spring of 2023. Parts of the Jenny Craig company have now been sold to Wellful, the parent company of Nutrisystem.

The market seems to agree; The company’s shares are up about 78% so far this year. In 2022, the stock fell by about 76%.

Fandango's Adam Rockmore, Twitter's Sima Sistani and Ged Tarpey

Sistani says that although weight loss medications have exploded in popularity, there is still a lack of expert practitioners who can prescribe them safely. That’s a role, she said, that WeightWatchers can fill.

Semaglutide was approved by the U.S. Food and Drug Administration to treat type 2 diabetes as Ozempic, but it was also used off-label for weight loss. Wegovy, the version that deals with weight loss, was approved in 2021. They work by mimicking a hormone that makes users feel full, but their use comes with potential side effects, such as gastrointestinal upset. The long-term risks are also still being investigated. These medications are not standalone solutions and require a comprehensive approach to diet and exercise for sustainable weight management. If you stop taking it, the weight often returns.

Most U.S. doctors are not trained in obesity medications, and “there is no clear, safe, and familiar way for people to understand whether they should take these medications,” Sistani says.

WeightWatchers, she said, can be that source. “We are a listed company and that is why we have transparency about our activities. We believe we can provide a much better experience for people taking these medications.”

WeightWatchers employs doctors and researchers and a scientific advisory board and a medical advisory board to ensure that the experience is safe, she said, that any side effects or complications are managed properly and that the medications get to people who need them.

Yet WeightWatchers is a company that has changed shape more than once over the past decade as it struggles to find its identity.

Even longtime spokesperson and investor Oprah Winfrey had to retract earlier comments that weight-loss drugs were an “easy way out” after WeightWatchers started selling them.

Some longtime users of the program feel betrayed by the shift from in-person meetings to drug-based solutions.

“WeightWatchers’ acquisition of Sequence left many members in an uproar,” says Jamie Yonash, who runs the lifestyle blog Life is Sweeter by Design, which focuses heavily on WeightWatchers-related content. “

The feedback I’ve received is that they feel somewhat betrayed that WeightWatchers is promoting weight loss medications because it seems to go against the core values ​​that the company has held for so long,” she said.

Regarding the loss of in-person meetings, she said, “I believe that moving to almost entirely digital programming is not in the best interests of all members. People need human connections and interactions, and those aren’t always achieved in a digital environment.”

Other WeightWatchers influencers were also confused by the changes. Biz Velanti, who runs the popular blog and social media account MyBizzyKitchen, told CNN that “everyone is looking for the quick fix,” with medications. “Unfortunately, they don’t want to do the work,” she said, of tracking food or exercising to achieve weight-loss goals.

While the future of WeightWatchers continues to be written about, Sistani is sure what it won’t be: It won’t be centered around weekly meetings and weigh-ins. It won’t be a consumer packaged company that sells diet snacks.

Evolution, Sistani said, is inherently difficult. But this isn’t a gamble, she added; it is a “bold gamble that is informed by data and then infused into every part of what we do.”

Weight Watchers Nutrition Products

In its most recent operating earnings report, the company reported third-quarter 2023 net income of approximately $43.7 million. WeightWatchers reported a net loss of $206 million in the same period last year. Operating income came in at $30.6 million, compared to an operating loss of $254.5 million in 2022.

Subscriber growth also increased 6% year-on-year to 4 million. Still, the company lost money on subscription revenue and gross profit fell for the year.

WeightWatchers was a marketing-driven company when she took over, Sistani says. Now, with a new outlook, it is a consumer-centric business.

“We will grow in ways that resonate with a more digitally progressive consumer,” Sistani said. “There will be community building and workshops, but these do not have to be coach-led. It’s more about being in the places where people want to connect. Sunday walks in the park, or maybe even a trip to the supermarket. There are so many ways we can create those relationships organically and meet people where they are.

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