(Bloomberg) -- WW International Inc., better known as WeightWatchers, is laying off employees and cutting costs as blockbuster obesity drugs have decimated its business.
The New York company is now “investigating” selling compounded versions of weight-loss drugs made by Eli Lilly & Co. and Novo Nordisk A/S, Chief Executive Officer Sima Sistani said on a conference call with analysts Thursday. The company previously said it was “wholeheartedly against this path” on its website earlier this week.
The company also said it would save $100 million over the next year by streamlining its business and cutting an undisclosed number of jobs, including a 40% reduction of employees at the level of vice president or above.
WeightWatchers shares dropped as much as 16% in early trading. Shares have lost about 90% of their value this year as the escalating popularity of prescription weight-loss treatments have eroded demand for the company’s trademark diet plans.
Rival telehealth companies including Hims & Hers Health Inc. have embraced compounding, which is allowed by US regulators because Lilly and Novo’s drugs are currently in shortage, fueling the growth of a $1 billion market.
WeightWatchers missed analysts’ subscriber estimates in the second quarter, as revenue fell 11% compared to the prior year. The company’s business has been in steady decline since 2019, as the Covid-19 pandemic dramatically reduced the number of subscribers to its in-person meetings.
WeightWatchers’ once-growing online offering has plateaued, and the company is relying on its recently acquired telehealth business to improve its cash flow.
(Updates with share move and CEO comments from call.)
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