Oprah Winfrey revealed she has lost over 60 pounds and is on the path to reaching her weight goal of 167 lbs. She credits this to taking GLP-1 medication and WW International Inc. NYSE: WW (WeightWatchers) principles of nutrition and exercise. Winfrey has been a spokesperson, board member and shareholder since 2015. WW took advantage of the free publicity and announced the launch of its new Weight Watchers GLP-1 Program the following day.
This ringing endorsement helped propel shares over 10%. The clinical approach to weight management with GLP-1 treatments is a trend also embraced by telehealth platforms in the medical sector like Teladoc Health Inc. NYSE: TDOC, Hims & Hers Inc. NYSE: HIMS and LifeMD Inc. NASDAQ: LFMD.
GLP-1 tipping point
2023 was the tipping point for GLP-1 medication that spread like wildfire with the mainstream, similar to the artificial intelligence (AI) trend. It's no longer a secret among celebrities and influencers. Scientists and Oprah exclaim that obesity is a disease, and a clinical approach is proving to be an effective way to take the weight off.
Ozempic and Wegovy accounted for 52% of Novo Nordisk A/S NYSE: NVO revenues of $32.6 billion in the first nine months of 2023. Eli Lilly& Co. NYSE: LLY, maker of Mounjaro and Zepbound, has its shares risen 59.7%, driven by sales of its blockbuster GLP-1 drugs. While these two dominate the market for now, there are many more GLP-1 treatments in the works, like pemvidutide from Altimmune Inc. NASDAQ: ALT, which has shown to have more tolerable side effects than the incumbents.
Off-label usage spurs fast-track FDA approvals for obesity drugs.
GLP-1 drugs are once-a-week injections originally designed for type-2 diabetes patients to control blood sugar levels. However, they also produced an exceptional side effect, causing noticeable weight loss. Doctors prescribed drugs like Ozempic for off-label use to control obesity and weight loss, which prompted the FDA to fast-track approval of a weight-loss version of Ozempic called Wegovy.
They are the same medication, Semaglutide, but Wegovy is a more powerful version specifically tailored for obesity that helps suppress appetites and improve blood sugar levels, resulting in dramatic weight loss ranging from 15% to 20% of total body weight within a year. The downsides are the gastrointestinal side effects of nausea and vomiting and the costs typically over $1,000 a month if you don't have health insurance.
Brilliant synergy from the Sequence acquisition
Sequence is a one-stop weight-management telehealth platform that has clinicians who can prescribe GLP-1 medications. WW acquired them in April 2023 to integrate them with its legacy subscription service. Sequence costs $99 a month for access to its program and prescriptions for GLP-1 drugs. The drug costs are not included, but they will work with patients and health insurers for claims and reimbursement solutions.
The addition of Sequence accessibility to its more than 3 million subscribers was a brilliant move and prompted a Strong Buy upgrade from Goldman Sachs with a $12 price target last year. Sequence has been completely integrated into WW and renamed WeightWatchers Clinic. Check out the sector heatmap on MarketBeat.
Shaping the turnaround
On Nov. 2, 2023, WW released its third-quarter fiscal 2023 results for the quarter ending September 2023. The company reported earnings-per-share (EPS) of 6 cents, matching consensus analyst estimates for 6 cents. Revenues fell 14% YoY to $214.87 million versus $221.62 million analyst estimates. Paid subscribers rose 6% to 4 million, driven by the growth of Digital Subscribers and the addition of 45,000 Clinical Subscribers, up 23% QoQ. Adjusted gross margins were 66.2%. The average monthly WeightWatchers plan is $23, and an additional $99 is charged for access to clinicians who can prescribe GLP-1 treatments.
Reaffirming guidance
The company issued fiscal full-year 2023 revenues of $890 million to $910 million versus $900.84 million consensus analyst estimates. Operating income is expected to be between $31 million and $43 million, down from $39 million to $51 million, from unexpected additional restructuring charges. Adjusted operating income, which excludes the restructuring charges, is expected to be within the previous guidance range of $80 million to $85 million.
CEO comments
WW International CEO Sima Sistani commented, “2023 has been a transformative year for WeightWatchers. We've returned our core business to subscriber growth, quickly positioned our Clinical business as the gold standard in weight health with the ability to scale as supply comes back and launched the next wave of enhancements to our product and program that will provide the foundation for a more engaging digital experience.”
WW International analyst ratings and price targets are at MarketBeat. WW International peers and competitor stocks can be found with the MarketBeat stock screener.
Daily cup pattern with a rounding bottom
The daily candlestick chart for WW illustrates a cup pattern that is completed after forming a rounding bottom. The pullbacks may bottom near the 200-period daily moving average to commence a handle from $8.22. The cup lip line commenced on Oct. 24, 2023, as WW fell to a multiple-bottom low near $6.31.
Shares formed a daily market structure low (MSL) trigger above $7.26. The rounding bottom eventually caused shares to steadily rise in December 2023 towards the lip line to complete the cup pattern on Dec. 22, 2023.
WW shares are in a pullback driven lower by the falling relative strength index (RSI) slipping under the 60-band. Pullback support levels are at $7.93, $7.26, $7.07 and $6.51.
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