Shares in Weight Watchers owner fall as stakeholder exits

The company reported €193m in first-quarter revenue, an 18% drop, as Weight Watchers saw a sharp fall in subscriber numbers

Thu, 11 May, 2023 - 20:27

Medha Singh

Shares in the Weight Watchers owner slumped as once top-stakeholder Artal Group exited the company

The shares in WW International, also known as Weight Watchers, slumped more than 15% after the weight-loss programme operator said former top shareholder Artal Group had sold its remaining stake in the company.

Market sources said a block of about 14.8m WW shares was being marketed at about a 13% discount.

The shares fell after more than doubling in value this year, partly driven by expectations that the firm's entry into the obesity drug business will help drive a turnaround.

Weight Watchers, which once boasted media mogul Oprah Winfrey among its top shareholders, is now grappling with a severe decline in subscribers at its weight management programme.

The company reported $211m (€193m) in first-quarter revenue last week, an 18% drop from a year earlier, while its net loss widened to $118.7m from $8.2m.

"It just seems to be a secularly declining business and the pivot into prescription medication seems like a Hail Mary pass which may or may not get caught," said Thomas Hayes, chairman and managing member of Great Hill Capital.

They've pivoted into the drug business which is against their historic culture of eating right and losing weight slowly and progressively.

"They are trying to find themselves and investors are getting tired of waiting for them to figure out who they are," Mr Hayes said.

Investment manager Artal, which bought Weight Watchers from then HJ Heinz in 1999 for $735m and maintained a controlling interest from its initial sale of shares in 2001 through 2018, held only an 18.8% stake in the company at the end of last year, according to Refinitiv data.

“We have been privileged to have overseen and participated in the company’s development over the past 24 years, which is one of the longest holdings in our 38 year history,” Artal Group chief executive Ray Debbane said in a press statement, adding that he has full confidence in WW’s current leadership team as they evolve the business.

It’s been a rocky year for the company. Shares surged last month on news of Weight Watchers’ acquisition of Sequence, a telehealth provider that will help the company tap into the growing market for new obesity drugs, but since then it has struggled to hold onto gains.