Q4 2023 WW International Inc Earnings Call
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Operator: Hello and welcome to WW International's fourth quarter and full year 2023 Earnings Conference Call. All participants will be in listen-only mode.
Hello, and welcome to the Ww International's fourth fourth quarter and full year 2023 earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after too.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then one, on your telephone keypad.
His presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad and to withdraw from the question queue. Please press Star then two.
Operator: And to withdraw from the question queue, please press star. Then. I would now like to hand the call to Corey Kinger, VP, Investor Relations. Please go ahead.
I would now like to hand, the call to Corey <unk> VP Investor Relations. Please go ahead.
Corey Kinger: Thank you everyone for joining us today for WW International's fourth quarter and full year 2023 conference call. At about 4 pm Eastern time today, we issued a press release reporting our fourth quarter and full year 2023 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 www.corporate.ww.com. Reconciliations and 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.
Thank you everyone for joining us today for Ww International's fourth quarter and full year 2023 conference call at about four P. M. Eastern time today, we issued a press release reporting our fourth quarter and full year 2023 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 Dotcom.
Implemented investor materials are also available on the company's corporate website in the investors section under presentations.
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.
Corey Kinger: 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 uncertainties 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.
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 uncertainties 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.
Corey Kinger: 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 Sima Sistani, CEO, and Heather Stark, CFO. I will now turn the call over to Sima. Thanks, Corey.
Please refer to these filings for a more detailed discussion of forward looking statements and the risks and certainties 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 seamless astony, CEO and Heather Stark CFO I will now turn the call over to Steven.
Thanks, Corey good afternoon, everyone and thank you for joining us today.
Sima Sistani: Good afternoon, everyone, and thank you for joining us today. Last year saw huge shifts in the weight management industry. Weight Watchers is moving quickly and strategically to lead the future of weight health. In addition to being digital first, we believe the weight loss space will be led by the acknowledgement that weight loss is a matter of health care. This is a paradigm shift because weight loss has been, and unfortunately often still is, viewed as a vanity issue versus a health issue. However, the rise of second-generation GLP-1 medications for the treatment of obesity is changing the landscape. While GLP-1s are certainly not for everyone, without a doubt, they are changing the conversation to a broader embrace of medical weight loss. Weight Watchers has multiple pathways of science-backed solutions that improve weight health, and importantly, the FDA states that GLP-1 medications for weight management should only be used in conjunction with a program for behavior modification.
Last year saw huge cash and a weight management industry weight watchers is moving quickly and strategically to lead the future of Whitehouse.
In addition to being digital first we believe the weight loss space will be led by the acknowledgment that weight loss is a matter of health care.
This is a paradigm shift because weight loss has been unfortunately, often still is viewed as a vanity issue versus health issue.
The second generation G. L. P. One medications for the treatment of obesity is changing the landscape of G. L. P ones are certainly not for every way without a doubt they are changing the conversation to a broader embrace of medical weight loss weight watchers has multiple pathways, our science backed solutions that improve weight health and importantly, the EF.
States the G. L. P. One medications for weight management should only be used in conjunction with the program for behavior modification and as a reminder, weight watchers is the number one doctor recommended behavior change program for weight loss.
Sima Sistani: And as a reminder, Weight Watchers is the number one doctor-recommended behavior change program for weight loss. Weight Watchers is creating the category of weight health, and to do so, it requires us to go further in the transformation of our business and expansion of our offerings to deliver the support, services, and treatments that many consumers need to understand and advance their weight loss journeys in an accessible and affordable way. This is a multi-year effort, but one that will strengthen our business both today and tomorrow. More on that, but first, we turn to our 2023 performance.
Weight watchers is creating the category of weight health and you sell requires us to go further in the transformation of our business and expansion of our offerings to deliver a support services and treatments and many consumers need to understand and advance their weight loss journey.
Accessible and affordable way.
This is a multiyear effort, but one that will strengthen our business both today and tomorrow.
More on that but first turning to our 2023 performance.
Sima Sistani: 2023 was a pivotal year marked by a great deal of change as we began transforming our business for the future. At the same time, through a revamped approach to performance marketing and aided by improvements to our product experience, we returned Weight Watchers to year-end subscriber growth for the first time in three years, ending 2023 with 3.8 million subscribers, up 7% year over year.
2023 was a pivotal year marked by a great deal of change as we began transforming our business for the future at the same time through a revamped approach to performance marketing and aided by improvements to our product experience. We returned weight watchers to year end subscriber growth for the first time in three years.
Ending 2023, with $3 8 million subscribers up 7% year over year.
Sima Sistani: Almost a year ago, we announced the acquisition of Sequence, which now operates as Weight Watchers Clinic. We ended the year with 67,000 clinical subscribers, up 47% sequentially and nearly triple the number of subscribers since we announced the acquisition last year. And in just eight months, we reimagined our platform by combining behavioral and medical weight health solutions and launched an integrated member experience. A portfolio of solutions that meet members' specific needs, all operating in one place, all under one brand. We also completely revamped our organizational structure. When I joined Weight Watchers nearly two years ago, I was struck by how much it was organized and operated like a multinational consumer retail company. All be it one with an impressive tech stack and digital capabilities.
Almost a year ago, we announced the acquisition of sequence, which now operates as weight Watchers clinic. We ended the year with 67000 clinical subscribers up 47% sequentially and nearly tripled our subscribers since we announced the acquisition last year.
And in just eight months, we re imagine our platform by combining behavioral and medical weight health solutions and launched an integrated member experience a portfolio of solutions that meet member specific needs all operating in one place all under one brand.
We also completely revamped our organizational structure when I joined weight watchers, nearly two years ago I was struck by how much it was organized and operating like a multinational consumer retail company, albeit one with an impressive tech stack and digital capabilities.
Sima Sistani: So the bones were there, but the organizational structure hampered our ability to innovate and execute effectively. Over the last year, we have established a centralized organization across all key functions, exited non-subscription business lines, and substantially reduced our corporate headcount. With a lean and focused team, we can operate with more agility against shared goals as a digital health company. I'm encouraged by many aspects of our performance, particularly around clinical subscriber growth, which we expect to continue growing sequentially each quarter this year. We are making intentional choices to prioritize the initiatives that we believe will have the greatest benefit for the long-term health of our business. We believe this puts us on the right track to deliver growth and total subscribers, growth in subscription revenue, growth in gross margin, and growth in operating income in 2024. As demonstrated by our year-end subscriber numbers, the winter season got off to a good start with particular strength in clinical signups in late December following the high visibility launch of Weight Watchers Clinic. However, in our research, we are finding that the relevance of the New Year's season has lessened with fewer consumers interested in making resolutions.
So the bones, where there are the organizational structure hampered our ability to innovate and execute effectively.
And the last year, we have established a centralized organization across all key functions exited non subscription business lines and substantially reduced our corporate headcount.
With a lean and focused team we can operate with more agility I guess shared goals as a digital health company.
I'm encouraged by many aspects of our performance, particularly around clinical subscriber growth, which we expect to continue growing sequentially each quarter. This year.
We are making intentional choices to prioritize the initiatives that we believe will have the greatest benefit for the long term health of our business.
We believe this puts us on the right track to deliver growth and total subscribers growth in subscription revenue growth and gross margin and growth in operating income in 2024 as demonstrated by our year end subscriber numbers winter season got off to a good start with.
<unk> strength and clinical sign ups in late December following the high visibility launch of weight Watchers clinic.
In our research we are finding that the relevance of a new year season has lessened with fewer consumers interested in making resolutions.
Sima Sistani: This aligns with the overarching cultural shift happening in weight loss. Not to say that January still isn't a key season for sign-ups, but just not to the degree it once was. Therefore, we are well positioned in our strategic decision to pursue an evergreen product innovation and marketing strategy, reducing the seasonality of our business. This shows up in the Q1 to Q4 seasonal slope of the end-of-period subscribers and also in how signups are distributed throughout the year. In 2022 and prior years, approximately 40% of our annual signups occurred during Q1. In 2023, we intentionally recalibrated our marketing spend to better maximize LTV tax, which shifted several percentage points of signups from Q1 into Q3. We plan to take that same approach again in 2024.
This aligns with the overarching cultural shift happening in weight loss not.
Not to say that January is still isn't the key season for sign ups, but just not just like a degree it once was.
Therefore, we are well positioned and our strategic decision to pursue an evergreen product innovation and marketing strategy, reducing the seasonality of our business. This shows up in the Q1 to Q4 seasonal slope and the end of period subscribers and also in how sign ups are distributed throughout the year.
In 2022 and prior years, approximately 40% of our annual sign ups occurred during Q1.
In 2023, we intentionally recalibrated, our marketing spend to better maximize maximize LTV tax, which shifted several percentage points of sign ups from Q1 into Q3.
We plan to take that same approach in 2024.
Sima Sistani: This is the first Q1 where we also have our clinical offering in addition to our well-known behavior change program. So while our total marketing spend in Q1 is expected to be roughly the same as in the first quarter of 2023, the spend dedicated to driving signups to our core program is expected to be down year over year, as we allocate a portion of our spend toward our clinical offering and B2B-related brand building, which we expect to result in lower total signups year over year for our core offerings. However, with the strong growth we are seeing in clinic, we believe this is the best approach to prioritize our investments in growth areas while still delivering growth in total subscribers and driving greater operating income in 2024.
This is the first Q1, where we also have our clinical offering in addition to our well known behavior change program. So while our total marketing spend in Q1 is expected to be roughly the same as.
In the first quarter of 2023.
<unk> dedicated to driving sign ups to our core program is expected to be down year over year as well as we allocate a portion of our spend toward our clinical offerings and beta be related brand building, which we expect to result in lower total sign ups year over year for our core offerings. However, with the strong growth we are.
Being in clinic. We believe this is the best approach to prioritize our investments in growth areas, while still delivering growth and total subscribers and driving greater operating income in 2024.
Sima Sistani: And with clinical continuing to ramp along with growth in digital core subscribers, we are on a path to deliver year-over-year, end-of-period total subscriber growth in each quarter of 2024. And despite significant declines in workshops, we expect subscription revenue to grow year-over-year in 2024. Our subscriber base is benefiting from improvements in activation and engagement over the past year, which are starting to show green shoots in retention, which ultimately would benefit LTV. Our team has done significant work streamlining our app, and now we are focused on selectively adding capabilities that drive member success. On our core digital product, we are already beginning to better understand and leverage AI.
And with clinical continuing to ramp along with growth in digital core subscribers. We are on a path to deliver year over year end of period total subscriber growth in each quarter of 2024, and despite significant declines in workshops, we expect subscription revenue to grow year over year in 2024.
Our subscriber base is benefiting from improvements in activation and engagement over the past year, which are starting to show green shoots and retention, which ultimately would benefit L. T D.
Our team has done significant work and streamlining our app and now we are focused on selectively adding capabilities that drive member success.
On our core digital product, we are already beginning to better understand and leverage AI and I believe this is just the beginning of how we can add greater value to members and a modernized digital first experience.
Sima Sistani: And I believe this is just the beginning of how we can add greater value to members in a modernized, digital-first experience. Also coming soon are new features and integrations that enhance community, coach connection, and making food decisions, which are foundational to any weight health journey. This is all part of our ongoing digital product strategy to enhance member satisfaction and success, the impact of which builds over time. Now, let's further expand on our clinical performance and the landscape. We continue to drive growth in clinical subscribers that we believe is ahead of the growth rate of new GLP-1 prescriptions dispensed, suggesting that we are taking share in this market and are well positioned to grow alongside the momentum in our category. Supply constraints continue to challenge this category, particularly the availability of GLP-1 starter doses.
Also coming soon our new features and integrations that enhanced community coach connection and making food decisions, which are foundational to any weight health journey.
This is all part of our ongoing digital product strategy to enhance member satisfaction and success the impact of which builds over time.
Now, let's further expand on our clinical performance and the landscape.
We continue to drive growth in clinical subscribers that we believe is ahead of the growth rate of new G. L. P. One prescriptions dispensed.
Suggesting that we are taking share in this market and are well positioned to grow alongside the momentum in our category.
Supply constraints continued to challenge this category, particularly the availability of G. L. P. One starter doses, while many competitors in the market are utilizing compounding pharmacies. We are steadfast in our commitment at weight Watchers clinic will only prescribed F. D. A approved medications to our members.
Sima Sistani: While many competitors in the market are utilizing compounding pharmacies, we are steadfast in our commitment that Weight Watchers Clinic will only prescribe FDA-approved medications to our members and not prescribe compounded medications. We are confident this is the right decision for the clinical safety of our members and our business, both for the immediate and the long term. Our position is aligned with the FDA's guidance, which urges patients to obtain prescription drugs only from state-licensed pharmacies, where the FDA and state authorities can assure the quality of drug manufacturing, packaging, distribution, and labeling. The FDA has received adverse event reports after patients used compounded somaglutide.
And not prescribed compounded medications.
We are confident this is the right decision for the clinical safety of our members and our business both for the immediate and the long term.
Our position is aligned with the Fda's guidance, which urgent patients to obtain prescription drugs only from state licensed pharmacies, where the F. D. A and state authorities can assure the quality of drug manufacturing packaging distribution and labeling.
The FDA has received adverse event reports after patient used compounded somewhat glued tide.
Sima Sistani: While others may choose to be opportunistic at this time and turn to compounding to help boost recruitment and retention, this is an issue that we will not compromise on. We have a 60-plus year track record of science-backed solutions, and we are not hopping onto fads and snake oils for weight loss. Our members and partners trust us, and I plan to respect that trust and maintain our high standards and values, especially around clinical protocols. I am confident that as the supply of GLP-1 medications improves, we are very well positioned to recruit and retain members in our clinic offering at an attractive LTD CAC beyond the success we are already seeing today. In the meantime, we have been educating consumers with top of funnel initiatives about the Weight Watchers evolution and the category evolution.
While others may choose to be opportunistic at this time and turn to compounding to help boost recruitment and retention. This is an issue that we will not compromise on we have a 60 plus year track record of science backed solutions and not hopping onto fab and snake oils for the weight loss.
Our members and partners Trust Us and I plan to respect that trust and maintain our high standards and values, especially around clinical protocols.
I am confident that as the supply of G. L. P. One medications improves we are very well positioned to recruit and retain members in our clinic offering at an attractive LTV CAC beyond the success, we are already seeing today.
In the meantime, we have been educating consumers with top of funnel initiatives about the weight watchers evolution and the category evolution.
Sima Sistani: But as supply returns, we will be adjusting our marketing approach, moving more into performance-based tactics for clinics, and highlighting our sustainable approach to medical weight loss. In addition to providing comprehensive, high-touch, and personalized weight health care, which is the real value of Weight Watchers Clinic, the tech platform supporting it is what makes it scalable and creates a better member experience. 40-45% of clinic members that have prior authorizations submitted get one approved for insurance coverage, which is five to 10 percentage points higher than at the end of June and compared to 22% of US employers, according to the International Foundation of Employee Benefit Plans.
But our supply returns, we will be adjusting our marketing approach moving more in your performance based tactics for clinic and highlighting our sustainable approach to medical weight loss.
In addition to providing comprehensive high touch and personalized weight health care, which is the real value of weight Watchers clinic. The tech platform supporting it is what makes it scalable and creates a better member experience.
40% to 45% of clinic members that have prior authorizations submitted get one approved for insurance coverage, which is 5% to 10 percentage points higher than at the end of June and compared to 22% of U S. Employers. According to the International Foundation of employee benefit plans.
Sima Sistani: Insurance coordination is a frequent pain point for consumers, so to have a solution that makes that process quick and easy is a great differentiator. In 2024, we are focused on building on our differentiators by expanding care, expanding access, and expanding payment options. We call this
Insurance coordination is a frequent pain point for consumers. So to have a solution that makes that process is quick and easy is a great differentiator.
In 2024, we are focused on building on our differentiators by expanding care expanding access and expanding payment options. We call. This project expansion.
Sima Sistani: Project Expansion. These changes will have a real impact on our business model. Importantly, the financial guidance we are providing today does not include any significant revenue benefit from these exciting initiatives.
These changes will have a real impact on our business model importantly, the financial guidance. We are providing today does not include any significant revenue benefit from these exciting initiatives.
Sima Sistani: So first, let's talk about expanded care. I think of Weight Watchers as having one membership. Everyone under our umbrella is a Weight Watchers member. So while we speak to members about being digital, workshops, or clinical, the future is in members having our foundational behavior change offering as a basis, and the ability to add on and move between membership types depending on the level of support needed.
So first let's talk about expanded care.
I think of weight watchers as having one membership everyone under our umbrella is a weight watchers member so while we speak to members being digital workshops are clinical the future is in members, having our foundational behavior change offering as a basis.
And the ability to add on and move between membership types, depending on the level of support needed for instance, and digital subscriber coming in today on a long term commitment for $10 a month can easily become a member at a significantly higher monthly rate down the road. If another one of our solutions is that better fit to their individual needs.
Sima Sistani: For instance, a digital subscriber coming in today on a long-term commitment for $10 a month can easily become a member at a significantly higher monthly rate down the road if another one of our solutions is a better fit to their individual needs. Additionally, approximately 70% of our clinic sign-ups since December are from current or former Weight Watchers. And within that, 20% of the clinical signups were active members of our core program choosing to upgrade to clinical via the new tab in our app. A successful conversion rate from active subscribers at essentially zero CAC both enhances a member's weight loss journey and delivers greater ARPU for those members. This demonstrates how we can effectively leverage our existing member base with an integrated platform.
Approximately 70% of our clinic sign ups since December are from current or lapsed weight watchers members and within that 20% of the clinical sign ups were active members of our core program choosing to upgrade to clinical via the new tab in our App.
The successful conversion rate from active subscribers at essentially zero CAC, both enhances our members' weight loss journey and delivers greater ARPA for those members.
This demonstrates how we can effectively leverage our existing member base with an integrated platform.
Sima Sistani: Our vision is to expand the care options that members can access based on their specific weight health needs, which would include subscription services such as metabolic lab tests and dietician support, as well as specialized care depending on life stage and chronic condition. This helps make their weight health experience less fragmented and more personalized. Now regarding expanding access. Throughout our history, Weight Watchers has been the leading provider and trusted brand name in the weight loss industry. Throughout our history, Weight Watchers has been the leading provider and trusted brand name in the weight loss industry. Our buyer was primarily the individual consumer.
Our vision is to expand the care options that members can access based on their specific weight health need which would include subscription services, such as metabolic lab tests and dietitian support as well as specialized care, depending on life stage and chronic condition.
This helps make their way health experience less fragmented and more personalized.
Now regarding expanding access throughout our history weight watchers has been the leading provider and trusted brand name in the weight loss industry.
Our buyer was primarily the individual consumer because of the massive shift in our category. We know the end buyer is going to evolve today its consumers tomorrow employers payers government. They will all play a larger role.
Sima Sistani: Because of the massive shift in our category, we know the end buyer is going to evolve. Today, it's consumers. Tomorrow, employers, payers, and the government will all play a larger role. We plan on making Weight Watchers a covered benefit, both for our core behavioral program and our clinical offering. This is a process that won't be accomplished overnight, but one I am very enthusiastic about for the mid and longer terms and one we will be pursuing aggressively. Our B2B team is making good progress in expanding the employer business. We recently announced that LabCorp, a leader in lab services, will offer Weight Watchers as a covered benefit to its U.S. employees, as well as their spouses, domestic partners covered under the LabCorp medical plan. This includes the full weight health spectrum from behavior change to clinic. In order to receive prescriptions of GLP-1 weight loss medications through their health benefit, LabCorp employees will need to be using Weight Watchers Behavior Change Program.
We plan on making weight watchers, a covered benefit.
Both for our core behavioral program and our clinical offering this.
This is a process that won't be accomplished overnight, but one I am very enthusiastic about for the mid and longer terms and one we will be pursuing aggressively.
Our b to B team is making good progress in expanding the employer business we.
We recently announced that Labcorp a leader in lab services will offer weight watchers as a covered benefit to its U S employees.
As well as our spouses domestic partners covered under the lab core medical plan.
This includes the full weight health spectrum from behavior change to clinic in order to receive prescriptions of G. L. P. One loss weight loss medications through their health benefit lab core employees will need to be using weight watchers behavior change programs.
Other recent new business wins for offering our weight watchers behavioral program as 100% covered benefit include Deutsche Bank and Bosch health.
The reasons these employers choose to work with US include first our brand equity weight watchers as a trusted partner that their employees see as a choice benefit our brand recognition possesses a rich multi generational history that resonates with consumers.
Sima Sistani: Other recent new business wins for offering our Weight Watchers Behavioral Program as a 100% covered benefit include Deutsche Bank and Bosch Health. The reasons these employers choose to work with us include, first, our brand equity. Weight Watchers is a trusted partner that their employees see as a choice benefit. Our brand recognition has a rich, multi-generational history that resonates with consumers, who are also employers. Second, our science. Weight Watchers is the most studied weight loss program.
Are also employers.
Second our science weight Watchers is the most studied weight loss program. It is clinically proven that we provide better outcomes with our personalized approach and behavior change program. We have the unique ability with our large dataset in clinical studies to inform and recognized phenotypes that can deescalate to more cost effective and sustainable way.
Sima Sistani: It has clinically proven that we provide better outcomes with our personalized approach and behavior change program. We have the unique ability, with our large data set and clinical studies, to inform and recognize phenotypes that can de-escalate to more cost-effective and sustainable weight management. As part of this ongoing effort, we launched a clinical trial in partnership with the Cleveland Clinic and look forward to reporting on these outcomes. And finally, our consumer experience. We operate at a size and cost-effective scale that few other companies in our category can match, and we do so with a powerful and differentiated consumer experience. While no single employer is expected to be a material driver of total subscribers or revenue this year, we are building momentum in this channel and believe it to be a critical growth driver for 2025 and beyond. In addition to expanding access, we intend to expand payment options across our clinical services. Our goal is to allow members to use their insurance whenever possible rather than having to shoulder the cost. Out of pocket.
Management.
As part of this ongoing effort, we launched a clinical trial in partnership with the Cleveland Clinic and look forward to reporting out these outcomes.
And finally, our consumer experience.
We operate out of five and cost effective scale that few other companies in our category can match and we do so with a powerful and differentiated consumer experience.
While no single employer is expected to be a material driver of total subscribers or revenue. This year. We are building momentum in this channel and believe it to be a critical growth driver for 2025 and beyond.
In addition to expanding access we intend to expand payment options across our clinical services. Our goal is to allow members to use their insurance whenever possible rather than having to shoulder the cost.
Out of pocket this will be an ongoing initiative, which we intend to roll out in phases. While it takes time. This is really important because we believe the future of weight health will be predominantly covered by insurance.
We believe the capability to directly process insurance claims for weight Watchers services will have a positive impact to sign ups retention subscribers and arco overtime.
By leveraging and further advancing our technology, including AI for processing claims, we expect to be able to transform our go to market model and a highly scalable and profitable way in.
In summary, 'twenty 'twenty four is shaping up to be another critical year in weight watchers transformation I am proud to say, we have returned the company to a positive trajectory with anticipated growth in subscribers subscription revenue gross margin and operating income and project expansion gives us critical.
Sima Sistani: This will be an ongoing initiative which we intend to roll out in phases. While it takes time, this is really important because we believe the future of weight health will be predominantly covered by insurance. We believe the capability to directly process insurance claims for Weight Watchers services will have a positive impact on sign-ups, retention, subscribers, and ARPU over time. By leveraging and further advancing our technology, including AI, for processing claims, we expect to be able to transform our go-to-market model in a highly scalable and profitable way.
Opportunities to further catalyze our growth and mission as a global leader in White House.
I will now turn the call over to Heather to discuss our financial results and 2024 outlook.
Thank you Steve.
Turning to our 2023 full year results note that all year over year financial comparisons are on a constant currency basis. We ended Q4 with $3 8 million subscribers, including 67000 clinical subscribers, our core weight watchers subscribers grew 5% year over year, marking the first year and with subscriber growth.
Sima Sistani: In summary, 2024 is shaping up to be another critical year in Weight Watchers' transformation. I am proud to say we have returned the company to a positive trajectory with anticipated growth in subscribers, subscription revenue, gross margin, and operating income. And project expansion gives us critical opportunities to further catalyze our growth and mission as the global leader in weight health. I will now turn the call over to Heather to discuss our financial results and 2024 outlook. Thanks, Sima.
Since 2020, ending the year with $3 8 million subscribers represents the best seasonal slope in our history and reflects our actions to reduce the seasonal nature of our subscriber base and improve the efficiency of customer acquisition.
Revenue totaled $890 million, which was in line with our guidance year over year revenue decreased 151 million breaking this down subscription revenues of 823 million, which included $31 million in clinical revenue declined $97 million, primarily driven by the headwind of the lower number of incoming subscribers at the.
Heather Stark: Turning to our 2023 full year results, please note that all year over year financial comparisons are on a constant currency basis. We ended Q4 with 3.8 million subscribers, including 67,000 clinical subscribers. Our core Weight Watchers subscribers grew 5% year over year, marking the first year end with subscriber growth since 2020. Ending the year with 3.8 million subscribers represents the best seasonal slope in our history and reflects our actions to reduce the seasonal nature of our subscriber base and improve the efficiency of customer acquisition. Revenue totaled $890 million, which was in line with our guidance. Year over year, revenue decreased by $151 million.
Beginning of 2023 versus 2022.
Importantly, consumer products and other revenue declined $54 million largely due to the strategic decision to wind down our low margin consumer products business.
Adjusted gross margin of 61, 9% was an annual record high and up 135 basis points from the prior year driven by our actions to reduce our fixed cost base with our workshop real estate restructuring.
Of note the fourth quarter included a one time charge of $5 million within cost of sales for inventory reserves related to the wind down of our consumer products business.
Marketing expenses of $238 million were down 2% year over year, reflecting more efficient spend as we were able to grow 2023 sign ups versus the prior year with less marketing dollars.
Heather Stark: Breaking this down, subscription revenues of $823 million, which included $31 million in clinical revenue, declined $97 million, primarily driven by the headwind of the lower number of incoming subscribers at the beginning of 2023 versus 2022. Importantly, consumer products and other revenue declined $54 million, largely due to the strategic decision to wind down our low-margin consumer products business. Adjusted gross margin of 61.9% was an annual record high and up 135 basis points from the prior year, driven by our actions to reduce our fixed cost base with our workshop real estate restructuring. Of note, the fourth quarter included a one-time charge of $5 million within cost of sales for inventory reserves related to the winding down of our consumer products business. Marketing expenses of $238 million were down 2% year over year, reflecting more efficient spend as we were able to grow 2023 signups versus the prior year with less marketing dollars. Adjusted DNA of $223 million was down 4% versus the prior year, despite the inclusion of clinical DNA expenses due to the benefits of restructuring and expense controls.
Adjusted G&A of $223 million was down 4% versus prior year. Despite the inclusion of clinical G&A expenses due to the benefits of restructuring and expense controls fourth quarter, adjusted G&A was slightly better than our expectations due to lower than anticipated benefit related items.
Adjusted operating income was $89 million, which was above our previously provided guidance range largely due to the lower than anticipated G&A expenses as mentioned.
Restructuring charges totaled $24 million in the quarter and $55 million for the full year fourth quarter restructuring was higher than the previously provided estimate as we continue to centralize and streamline our organizational structure to setup for future investment. These actions drove approximately $50 million of savings in 2023 and are expected to draw.
$50 million of additional savings in 2024, which is allowing for investment in strategic priorities, including clinical expansion.
During the fourth quarter, we reported noncash impairment charges for goodwill and franchise rights acquired balances totaling approximately $4 million.
Income tax was an expense of $39 million, which reflected an increase in the valuation allowance to offset all U S deferred tax assets due to the uncertainty of realizing future tax benefits of the assets.
GAAP EPS was a loss of $1 46, which incorporates the net negative impact of $1 34 of items impacting comparability, including the valuation allowance net restructuring charges acquisition transaction costs and noncash intangible impairment charges.
Heather Stark: Fourth quarter adjusted GNA was slightly better than our expectations due to lower than anticipated benefit-related items. Adjusted operating income was $89 million, which was above our previously provided guidance range, largely due to the lower-than-anticipated G&A expenses, as mentioned. Restructuring charges totaled $24 million in the quarter and $55 million for the full year.
Turning to our clinical line of business we.
We are encouraged by our fourth quarter performance and ongoing integration efforts in the face of the continued challenging supply environment while.
While we are starting to see signs of more availability supply constraints remain prevalent in Q4, and so far in Q1. Additionally, pricing insurance remain critical issues, leading to competitor use of compounded medications as Shimon mentioned, we will not compromise understands to only prescribed F. D. A approved medication, even if it means bringing in fewer subscribers.
Heather Stark: Fourth quarter restructuring was higher than the previously provided estimate as we continue to centralize and streamline our organizational structure to set up for future investment. These actions drove approximately $50 million of savings in 2023 and are expected to drive $50 million of additional savings in 2024, which is allowing for investment in strategic priorities, including clinical expansion. During the fourth quarter, we recorded non-cash impairment charges for Goodwill and Franchise Rights Acquired balances totaling approximately $4 million. Income tax was an expense of $39 million, which reflected an increase in the valuation allowance to offset all U.S. deferred tax assets due to the uncertainty of realizing future tax benefits of the assets. Gap EPS was a loss of $1.46, which incorporates the net negative impact of $1.34 of items impacting comparability, including the valuation allowance, net restructuring charges, acquisition transaction costs, and non-cash intangible impairment charges.
Today than we could otherwise.
While the market continues to evolve and is in its early days. There is no change in our conviction about our strong multi year growth opportunity.
We continue to increase our scaling readiness and integrate operations during this time.
While this negatively impacts near term gross margin we are ready for improvements in supply Q4, adjusted gross margin was north of 30% and we expect to start improving ness with revenue scaling in 2024.
Shifting to our outlook.
We believe 2024 is going to be a year of continued transformation as we adjust to what we believe is the future state of how consumers will take part in the weight health market.
We are focused on meeting consumers, where they are in their weight health journey and to grow our total weight watchers subscribers. We've been encouraged to see that our digital and lap subscribers are converting to clinical subscribers. However, we continue to see a shift away from our workshop business to digital and that more consumers are signing up for longer durations and them higher.
Promotional days, indicating further price sensitivity to our behavioral offerings.
As you heard from FEMA, we're increasingly managing the business on a holistic and integrated basis as we execute our strategic growth initiatives and expand how we engage our members as previously shared we plan to hold total marketing dollars roughly flat to 2023 within which we expect to still drive total subscription revenue growth.
Heather Stark: Turning to our clinical line of business, we are encouraged by our fourth quarter performance and ongoing integration efforts in the face of a continued challenging supply environment. While we are starting to see signs of more availability, supply constraints remain prevalent in Q4 and so far in Q1. Additionally, price and insurance remain critical issues leading to competitor use of compounded medications. As Sima mentioned, we will not compromise on our stance to only prescribe FDA-approved medication, even if it means bringing in fewer subscribers today than we could otherwise.
We continue to leverage longer term commitment offerings in order to optimize the LTV to CAC and maximize total revenue and total subscriber growth in the current environment. We are beginning to see retention expansion with recent product improvements and we anticipate stable subscription LTV year over year in 2024.
Behavioral argue measured as revenue per paid week is expected to be down in the mid single digits in 2024 due to the continued expansion of members and commitment.
Heather Stark: While the market continues to evolve and is in its early days, there is no change in our conviction about our strong multi-year growth opportunity. We continue to increase our scaling readiness and integrate operations during this time. While this negatively impacts near-term gross margin, we are ready for improvements in supply.
To expand behavioral subscriber overtime. It is essential to execute on the strategic initiatives sema highlighted including expanding care through the addition of new premium add on services.
We expect to end the year with total weight watchers subscribers between $3 8 million and $4 million driving a second consecutive year of annual subscriber growth within this we expect end of period clinical subscribers between 140000, 160000, and we expect our core behavioral subscribers to grow year over year.
Heather Stark: Q4 adjusted gross margin was north of 30%, and we expect to start improving this with revenue scaling in 2024. Now, moving to our outlook. We believe 2024 is going to be a year of continued transformation as we adjust to what we believe is the future state of how consumers will take part in the weight health market. We are focused on meeting consumers where they are in their weight health journey and growing our total Weight Watchers subscribers. We're encouraged to see that our digital and lab subscribers are converting to clinical subscribers. However, we continue to see a shift away from our workshop business to digital and that more consumers are signing up for longer durations and on higher promotional days, indicating further price sensitivity to our behavioral offerings.
A steep nearly 15% decline in our workshops subscribers.
Within our weight watchers behavioral offering approximately 75% of sign ups through January chose 10 months and longer commitments compared to approximately 25% in January 2023, and approximately 45% for full year 2023.
Reflecting where we are in the return to subscriber growth and members increasingly choosing longer term plans approximately 55% of subscribers entering 'twenty 'twenty four we're within commitment periods, which we expect to increase in 2024.
Heather Stark: As you heard from Sima, we are increasingly managing the business on a holistic and integrated basis as we execute our strategic growth initiatives and expand how we engage our members. As previously shared, we plan to hold total marketing dollars roughly flat to 2023, within which we expect to still drive total subscription revenue growth. We continue to leverage longer-term commitment offerings in order to optimize LTV to CAC and maximize total revenue and total subscriber growth in the current environment. We are beginning to see retention expansion with recent product improvements, and we anticipate stable subscription LTV year over year in 2024. Behavioral ARPU, measured as revenue per paid week, is expected to be down in the mid-single digits in 2024 due to the continued expansion of members and commitment. To expand behavioral subscriber ARPU over time, it is essential to execute on the strategic initiatives Sima highlighted, including expanding care through the addition of new premium add-on services. We expect to end the year with total Weight Watcher subscribers between 3.8 million and 4 million, driving a second consecutive year of annual subscriber growth.
We expect full year total weight watchers revenue to be 830 to 860 million within this we expect clinical revenue to be between 101 hundred $10 million, excluding the headwind from our exit of our past ecommerce and consumer products business. This reflects a modest increase in subscriber rep.
New year over year.
We expect other revenue, primarily our high margin licensing business to contribute up to $10 million in 2024.
Well this is a $55 million year over year revenue headwind importantly, we expect this to be roughly neutral to operating income.
Gross margin is expected to be approximately 66% for the full year up from adjusted gross margin of 61, 9% in 2023, reflecting a higher mix shift to our digital business and continued read through of workshop actions.
We expect full year marketing spend to be roughly flat with 2023.
G&A expense is expected to be between 210 and $220 million for the year, which is slightly lower than 2023 due to our restructuring efforts and cost discipline and reflecting the strategic investment to expand our clinical offering.
As a reminder, 2024 includes one additional quarter of clinical expenses compared to 2023 there.
Therefore, we expect operating income to be between 101 hundred $10 million of note changes to modernize our technology organization have required us to update capitalized labor rate expectations. All else equal. This change is expected to negatively impact 2020 for operating income by approximately $9 million.
Heather Stark: Within this, we expect end-of-period clinical subscribers between 140,000 and 160,000, and we expect our core behavioral subscribers to grow year over year, despite a steep, nearly 15% decline in our workshop subscribers. Within our Weight Watchers Behavioral Offering, approximately 75% of signups through January chose 10-month and longer commitments, compared to approximately 25% in January 2023 and approximately 45% for full year 2023. Reflecting where we are in the return to subscriber growth and members increasingly choosing longer-term plans, approximately 55% of subscribers entering 2024 were within commitment periods, which we expect to increase in 2024. We expect full-year total Weight Watchers revenue to be $830 to $860 million.
Split between cost of sales of $7 million in G&A of 2 million importantly, this shift in operating methodology does not impact cash.
We expect EBITDA to be between 155 and $165 million.
For the full year, we expect income tax expense to be between 10 to 15 million impacted by an increase in the valuation allowance expected next year.
Excluding the impact of the valuation allowance, we expect an income tax benefit of up to $10 million.
With respect to Q1, we expect to end the quarter with total subscribers of approximately $4 million, including clinical subscribers of approximately 85000.
We expect revenue to be approximately $200 million and to have an operating loss of approximately $15 million as is typical for Q1, we have higher marketing spend compared to the remaining quarters of the year with the benefit of acquired subscribers driving revenue throughout the remainder of the year.
Heather Stark: Within this, we expect clinical revenue to be between $100 and $110 million. Excluding the headwind from our exit of our past e-commerce and consumer products business, this reflects a modest increase in subscriber revenue year over year. We expect other revenue, primarily our high-margin licensing business, to contribute up to $10 million in 2024. While this is a $55 million year-over-year revenue headwind, importantly, we expect this to be roughly neutral to operating income. Gross margin is expected to be approximately 66% for the full year, up from an adjusted gross margin of 61.9% in 2023, reflecting a higher mix shift to our digital business and continued read through of workshop action. We expect full year marketing spend to be roughly flat with 2023.
Turning to our capital structure and cash flows.
We ended Q4 with approximately $109 million of cash plus an undrawn revolver with our cash position plus our revolving credit facility. We believe we have sufficient liquidity for working capital needs, including in your cash outlays related to our restructuring actions and servicing our debt.
Cash from operations was modestly positive for the full year slightly better than the prior expectations of a modest use of cash.
We expect cash from operations in 2024 to increase year over year from 2023.
As a reminder, 2023 included approximately $45 million of cash payments for restructuring and we expect 2024 to include approximately $20 million of restructuring payments associated with the 2023 restructuring plan.
Our first half of the year cash needs are much higher than the second half due to increased marketing compensation timing and the sequence acquisition anniversary payment with cash than expected to build through the balance of the year. Following our recent organizational changes to centralize the business and reduce our fixed cost base. We are confident that we can operate our business.
Heather Stark: G&A expense is expected to be between $210 and $220 million for the year, which is slightly lower than 2023 due to our restructuring efforts and cost discipline and reflecting strategic investment to expand our clinical offering. As a reminder, 2024 includes one additional quarter of clinical expenses compared to 2023. Therefore, we expect operating income to be between $100 million and $110 million.
And execute our strategic plans, all with lower levels of cash on hand requirements compared to prior years in the $40 million range and if needed. We continue to have access to approximately $60 million of cash from the revolver for additional short term cash cushion.
At year end, our net debt to adjusted EBITDA leverage ratio was nine times with our 'twenty 'twenty four outlook, we expect our trailing 12 months leverage ratio to further increase in the coming quarters due to lower EBITDA levels in particular due to the capitalized labor methodology update mentioned earlier before showing you.
Heather Stark: Of note, changes to modernize our technology organization have required us to update capitalized labor rate expectations. All else equal, this change is expected to negatively impact 2024 operating income by approximately $9 million, roughly split between cost of sales of $7 million and GNA of $2 million. Importantly, this shift in operating methodology does not impact cash. We expect EBITDA to be between $155 and $165 million. For the full year, we expect income tax expense to be between $10 and $15 million, impacted by an increase in the valuation allowance expected next year.
Our over year improvement at year end 2024, we.
We have very attractive long term debt agreements with no maturities due until 2028 and 2029, we remain committed to improving our leverage ratio as we execute the sizable turnaround while also opportunistically considering capital structure options.
We expect full year interest expense to be between 105 and $110 million an increase of 10 to 15 million compared to 2023, largely driven by the exploration of our 500 million hedge at the end of Q1 2024.
Heather Stark: Excluding the impact of the valuation allowance, we expect an income tax benefit of up to $10 million. With respect to Q1, we expect to end the quarter with total subscribers of approximately 4 million, including clinical subscribers of approximately 85,000. We expect revenue to be approximately $200 million and to have an operating loss of approximately $15 million. As is typical for Q1, we have higher marketing spend compared to the remaining quarters of the year, with the benefit of acquired subscribers driving revenue throughout the remainder of the year. Turning to our capital structure and cash, we ended Q4 with approximately $109 million of cash plus an undrawn revolver. With our cash position plus our revolving credit facility, we believe we have sufficient liquidity for our working capital needs, including in-year cash outlays related to our restructuring actions and servicing our debt. Cash from operations was modestly positive for the full year, slightly better than the prior expectations of a modest use of cash.
As a reminder, we locked in these hedges in 2018 and 2019 with a weighted average rate of 256%. We are actively considering options to hedge a portion of our variable rate debt to mitigate uncertain market conditions.
However, our prevailing interest rate levels, the interest expense savings would be marginal.
Capex, which was primarily due to capitalized software is expected to be in the $20 million to $25 million range, which is approximately 10 million lower than 2023, reflecting the offset to the capitalized labor change mentioned earlier depreciation and amortization is expected to be in the $40 million range.
In summary, we executed against our 2023 objectives by returning to subscriber growth with a record adjusted gross margin and improved cost structure.
'twenty 'twenty four will be another year of transition. It is one where we are operating more efficiently and are strategically positioning weight watchers for the future. We believe by scaling clinic and executing on our expansion initiatives. We will drive another year of operating income growth in 2025 with momentum and revenue returning to the business.
I will now turn the call back to Sema.
Heather Stark: We expect cash from operations in 2024 to increase year over year from 2023. As a reminder, 2023 included approximately $45 million of cash payments for restructuring, and we expect 2024 to include approximately $20 million of restructuring payments associated with the 2023 restructuring plan. Our first half of the year cash needs are much higher than the second half due to increased marketing, compensation timing, and the sequence acquisition anniversary payment, with cash then expected to build through the balance of the year. Following our recent organizational changes to centralize the business and reduce our fixed cost base, we are confident that we can operate our business and execute our strategic plans, all with lower levels of cash on hand requirements compared to prior years in the $40 million range. And, if needed, we continue to have access to approximately $60 million of cash from the revolver for additional short-term cash cushion. At year-end, our net debt-to-adjusted EBITDAS leverage ratio was nine times.
Thanks, Heather 'twenty 'twenty four is not just a year of transformation, but also expansion there was a lot to be excited about as we execute on our multiyear journey toward expanding care access and payment options all of which will reinvent our business and how people think about not only weight health.
But also weight watchers.
These stigmatizing in the conversation around obesity and amplifying the right care and health equity are critical to addressing bias and public policy for the treatment of weight related disease.
I'm thrilled to announce that in May and together with Oprah Winfrey, we will be hosting an event on white house. The event will feature industry experts coming together unchanged our relationship with weight.
Oprah is an inspiring presence and passionate advocate both for our members and for society at large and elevating the conversation around weight health, well I and the rest of our directors will certainly miss her and our board meetings. Following the end of her current term she remains a strong strategic voice and collaborator with weight watchers.
In addition, she continues to be an incredible adviser and thought partner for me and I could not be more enthusiastic about our upcoming events and her vocal advocacy and addressing this critically important topic.
Thanks for joining us we are now happy to take your questions.
Heather Stark: With our 2024 outlook, we expect our trailing 12-month leverage ratio to further increase in the coming quarters due to lower EBITDAS levels, in particular due to the capitalized labor methodology update mentioned earlier, before showing year-over-year improvement at year-end 2024. We have very attractive long-term debt agreements with no maturities due until 2028 and 2029. We remain committed to improving our leverage ratio as we execute this sizable turnaround, while also opportunistically considering capital structure options. We expect full-year interest expense to be between $105 and $110 million, an increase of $10 to $15 million compared to 2023, largely driven by the expiration of our $500 million hedge at the end of Q1 2024.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if you're using a speakerphone. Please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two.
We will pause momentarily to assemble our roster.
Today's first question comes from Nathan further with Morgan Stanley. Please go ahead.
Hey, everyone. Thanks for taking my question.
Can you provide a bit more color on the incremental traction youre seeing in the clinic business since the mid December launch and the key drivers of that and then how are the slips that come into that channel behaving differently from those that came in through secrets.
Hey, Nathan Thanks for the question.
I'm going to start from the top and I might need a clarification on the second part of your question I'm. So yeah, we're really encouraged with the clinical performance that we saw a strong.
Heather Stark: As a reminder, we locked in these hedges in 2018 and 2019 with a weighted average rate of 2.56%. We are actively considering options to hedge a portion of our variable rate debt to mitigate uncertain market conditions. However, at prevailing interest rate levels, the interest expense savings would be marginal. CapEx, which is primarily due to capitalized software, is expected to be in the $20 to $25 million range, which is approximately $10 million lower than in 2023, reflecting the offset to the capitalized labor change mentioned earlier. Depreciation and amortization is expected to be in the $40 million range.
First year end are with this new offering and 22000 net adds in Q4. So we've nearly tripled the subscribers since we announced the acquisition and there was a lot of visibility from that clinic launch a lot of PR AR that we saw coming into December.
And that continued on through the rest of them that has continued on through Q1.
D. Just just to be clear, though so the weight watchers clinic is is now what sequence. What once was so in terms of the acquisition. It is it is similar the difference is that we now have a tab within.
Heather Stark: In summary, we executed against our 2023 objectives by returning to subscriber growth with a record adjusted gross margin and improved cost structure. While 2024 will be another year of transition, it is one where we are operating more efficiently and are strategically positioning Weight Watchers for the future. We believe by scaling clinic and executing on our expansion initiative, we will drive another year of operating income growth in 2025, with momentum and revenue returning to the business. I will now turn the call back.
The weight watchers, app and that half is accessible to all active members and as we mentioned 20% of the the members that we are acquiring to clinic are from conversion of current core members choosing to.
<unk> to the clinic and I I think that's that's really exciting to see that we can provide this personalized high touch support to people who are realizing that behavior change alone is is not going to be enough for them and we've done all of this in just eight months since we acquire.
Sima Sistani: Thanks, Heather. 2024 is not just a year of transformation but also expansion. There is a lot to be excited about as we execute on a multi-year journey towards expanding care, access, and payment options, all of which will reinvent our business and how people think about not only weight health but also Weight Watchers. De-stigmatizing the conversation around obesity and amplifying the right to care and health equity are critical to addressing bias in public policy for the treatment of weight-related diseases.
Third sequence, we combine behavioral and medical weight loss solutions into one integrated member experience.
And there's a lot more opportunity to make this even more holistic and we plan to.
Execute that as part of the project expansion that I mentioned I'm sure if that answered the second part of your question yes.
Yes, that's very helpful and one more if I may I guess, what is the retention you're seeing on.
On the subs that are now rolling off the 10 month commitment plans from kind of late 'twenty. Two in early 'twenty three are they've shown the L. T D dimer that makes you excited.
Sima Sistani: I'm thrilled to announce that, together with Oprah Winfrey, we will be hosting an event on weight health. The event will feature industry experts coming together to unshame our relationship with food. Oprah is an inspiring presence and passionate advocate both for our members and for society at large in elevating the conversation around weight health. While I and the rest of our directors will certainly miss her in our board meetings following the end of her current term, she remains a strong, strategic voice and collaborator with Weight Watchers.
Thanks for the question Nathan So we are seeing improvement in retention in aggregate as we look at our behavioral members. It's now approaching 11 months from approaching 10 months in the prior year. So yeah. The the longer term commitments are reading through it.
To that improving retention.
And I I, just want to add to that that we you know a lot of the major improvements that we made on the product side as you know rolled out later in the year. So we've had less time with with that cohort, but the green shoots are there and were already see it and seeing it in activation.
Sima Sistani: In addition, she continues to be an incredible advisor and thought partner for me, and I could not be more enthusiastic about our upcoming event and her vocal advocacy for addressing this critically important topic. Thanks for joining us. We are now happy to take your questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the key.
And N P S.
Thank you. The next question will come from Jack Wallace with Guggenheim. Please go ahead.
Hey, guys. Thanks for taking my question, but.
You gave a lot of great information really.
Operator: And to withdraw your question, please press star, then two. We will pause momentarily to assemble our roster. Today's first question comes from Nathan Feather with Morgan Stanley. Please go ahead. Hey, everyone.
Our prepared remarks, and thank you for that.
Wanted to ask about the B to B business, particularly as.
In discussions with your current and perspective customers around plan design.
And just a couple of parts here one.
Nathaniel Jay Feather: Thanks for taking my question. Can you provide a bit more color on the incremental traction you're seeing in the clinic business since the mid-December launch and the key drivers of that? And then how are the subs that come into that channel behaving differently from those that came in through Sequence?
What are your customers, saying in terms of the breadth of services around their members are being able to access weight health programs, and then thinking more specifically about the clinical offering how are those planned partners thinking about covering DLP one category.
Are they almost always.
Sima Sistani: Hey Nathan, thanks for the question. I'm going to start from the top, and I might need a clarification on the second part of your question. So, you know, we're really encouraged by the clinical performance that we saw, a strong first year and are with this new offering and 22,000 net ads in Q4, so we've nearly tripled the subscribers since we announced the acquisition. And there was a lot of visibility from that clinic launch, a lot of PR that we saw coming into December and that continued on through the rest of the year. Just to be clear, though, the Weight Watchers Clinic is now what Sequence once was. So in terms of the acquisition, it is similar; the difference is that we now have a tab in the Weight Watchers app, and that tab is accessible to all active members.
Requiring a gating.
You factor, which would be participation in any clinical or behavior change program or not.
How are those discussions evolving thank you.
Yeah. Thank you so much for the question. So yes, the employers and payers, we're talking to they're looking for partners first of all who can be trusted and recognized by consumers.
I, obviously think that this is a core differentiator for us and on the employer side, particularly.
They're getting a a lot of asks from their employee population that this is an important aspect of benefit that they're looking for we are seeing increased interest in our behavior change program.
And Additionally, our real focus instead of a sort of step care, rather a focus on adherence to improving the outcomes by adopting the behavior change program alongside.
Sima Sistani: And as we mentioned, 20% of the members that we are acquiring for the clinic are from conversion of current core members choosing to upgrade to the clinic. And I think that's really exciting to see that we can provide this personalized, high-tech support to people who are realizing that behavior change alone is not going to be enough for them. And we've done all of this in just eight months since we acquired Sequence.
Medication access so that's what they're looking to really achieve is a higher ROI by combining a best in class behavior change program with high touch clinical care. So they want to include the virtual clinic, but also.
Sima Sistani: We combined behavioral and medical weight loss solutions into one integrated member experience, and there's a lot more opportunity to make this even more holistic. And we plan to do that as part of the project expansion that I mentioned. I'm not sure if that answered the second part of your question.
Keep flexibility to allow their employers employees if they want you to also use their own physicians.
But they they really.
Are are very interested in the behavior change aspect of of our programme now the other thing that I would add is that employers and payers want to ensure eligibility for prescription treatment plan that is based on F. D a criteria.
Heather Stark: Yeah, that's very helpful. And one more question, if I may, what is the retention you're seeing on the subs that are now rolling off the 10 month commitment plans from, you know, kind of late 22 and early 23? Are those showing the LTD dynamics you expected?
And that is something that we are in full agreement with and I guess finally on this point is we are also as you can imagine.
Good thing interest in value based payment models. So yeah, we're really encouraged by the conversations that we're having on this front and more to come.
Heather Stark: Thanks for the question, Nathan. So we are seeing improvement in retention in aggregate as we look at our behavioral members. It's now approaching 11 months from approaching 10 months in the prior year.
Great. That's really helpful. Thank you and then just thinking outside of the PDP market.
Sticking with clinical the patients that you're targeting and Onboarding serving.
Heather Stark: So, yeah, the longer-term commitments are reading through into that improving retention. Yeah, and I just want to add to that that we have made a lot of the major improvements that we made on the product side, as, you know, rolled out later in the year. So we've had less time with that cohort, but the green shoots are there, and we're already seeing them in activation and NPS. Thank you. The next question will come from Jack Wallace with regard to Guggenheim. Please go ahead.
If you were to.
Stratify the market a bit.
Folks that are looking to get convenient or cheap access to medication or rapid weight loss versus those that are.
You may be looking for a more permanent solution that you can be aided by.
The GOP one category.
I always get a better understanding for when you are reaching out and targeting new subscribers.
They typically fall into those two buckets, maybe it's more of a scale.
My hunch is that there's a large enough cohort I wasn't a segment of the market that there is plenty of service both a man that can be sustainable for the D to C clinical business. Thank you.
Jack Dawson Wallace: Hey, thanks for taking my question, and I thought you gave a lot of great information in your prepared remarks, so thank you for that. I wanted to ask about the B2B business, particularly as you're in discussions with your current and prospective customers around plan design, and there are a couple of parts here: one, what are your customers saying in terms of the breadth of services around their members being able to access weight health programs, and then, thinking more specifically about the clinical offering, how are those plan partners thinking about covering the GLP-1 category, and are they... Almost always requiring a gating factor, which would be participation in a clinical or behavior change program. Or, if not, how are those discussions evolving? Yeah, thank you so much for the question.
The D to C portion of our business remains critically important and I think that that is something that where clearly showing our ability to scale and we're really.
I'm encouraged by the progress we're making on that front, then and mostly from our current a membership basis as as we mentioned in the prepared statements 70% of the clinical members.
Have been at one point, a weight watchers member and and I wanted to take a step back because from a from a.
Let's call it reasons to believe or value and what we provide it's not the prescription it's the care.
We're or are dealing with people who have been going to primary caregivers about their weight for years have been told the same thing eat last move more.
Sima Sistani: So, yes, the employers and payers we're talking to are looking for partners, first of all, who can be trusted and recognized by consumers. I obviously think that this is a core differentiator for us, and on the employer side, particularly, they're getting a lot of requests from their employee population that this is an important aspect of the benefit that they're looking for. We are seeing increased interest in our behavior change program and additionally, a real focus instead of sort of step care, rather a focus on adherence to improving outcomes by adopting the behavior change program, alongside medication access. So that's what they're looking to really achieve is a higher ROI by combining a best-in-class behavior change program with high-touch clinical care.
And our clinicians participating in a 12 week specialized onboarding period, which includes regular rigorous training close oversight by our clinical leadership team comprehends that performance reviews to ensure that they have competency and obesity care and nutritional knowledge and empathy to guy.
I'd members on this journey and that's an important differentiator is that we are coming with full spectrum medical weight loss and that is something that is going to require a high touch experience to have the best outcomes and we have.
You know the where we're looking at our customer satisfaction in our M. P. S and that's that's driving a lot of of the acquisition as people just having a great experience with our program and so so that's how we're going to market right. Now is speaking to the fact that what we're all.
Offering is great care and a membership that is going to help them with their weight health.
Sima Sistani: So they want to include the virtual clinic but also keep the flexibility to allow their employers and employees, if they want to, to also use their own physicians, but they really are very interested in the behavior change aspect of our program. Now, the other thing that I would add is that employers and payers want to ensure eligibility for a prescription treatment plan that is based on criteria. And that is something that we are in full agreement with.
Thank you.
The next question comes from Michael Lasser with UBS. Please go ahead.
Good evening. Thank you saw what's for taking my question.
Two part question how are you thinking about as you lap some of the aggressive.
Counting and promotions that have been taken as a way to extend the life of.
The subscribers.
Are you thinking about subscriber growth as you lap that.
Do you expect that you might have to further push promotional.
Actions in order to vote.
Drive subscriber growth and then my second question is what is the longer term vision is it.
Sima Sistani: And I guess, finally, on this point is that we're also, as you can imagine, seeing interest in value-based payment models. So, yeah, we are really encouraged by the conversations that we're having on this front and more to come. Great, that's really helpful.
To get some of these subscribers that you're gaining now from some of the more aggressive action.
Eventually convert them to <unk>.
We watch with clinical members in and that's going to be the the means for me.
The organization can get growth. Thank you.
Thanks, Michael and so yeah, we are making.
Making them.
Sima Sistani: And then you're speaking outside of the B2B market, but you're sticking with clinical. The patients that you're ultimately targeting, onboarding, and serving. If you were to... Stratify the market a bit, you know, folks that are looking to get convenient or cheap access to medication for rapid weight loss versus those that aren't. You may be looking for a more permanent solution that can be aided by the GLP-1 category. You can always get a better understanding of it when you are reaching out and targeting new subscribers. How do they typically fall into those two buckets? Maybe it's more of a scale.
Pricing and promotional decisions to make sure that we're managing total LTV acquired and and and really leaning in on that so.
And we are expecting in our assumptions this year to maintain and similar L. T C.
And promotional activity year over year, and and have them sort of consistency in that in that pricing at year over year. So we expect to M. B a.
Showing stability and potentially growth in our subscriber base as we guided to them from that activity and don't expect to be moving towards deeper discounting.
Sima Sistani: My hunch here is that there's a large enough cohort, a large enough segment of the market, that there's plenty of serviceable demand that can be sustainable for the DTC clinical. The D2C portion of our business remains critically important, and I think that that is something that we are clearly showing our ability to scale, and we're really encouraged by the progress we're making on that front. And mostly from our current membership basis, as we mentioned in the PREPARE statements, 70% of the clinical members have been at one point a Weight Watchers member, and I want to take a step back because from a, let's call it, reasons to believe or value in what we provide, it's not the prescription. It's the care that matters. We are dealing with people who have been going to primary caregivers about their weight for years and have been told the same thing: eat less, move more.
Okay, and then on my phone.
Yeah, Hey, looking at sorry go ahead Bill.
The conversation about the conversion into clinical and as we look to gain and then expand and the subscriber base and importantly from the prepared remarks at the Sema shared the growing core consumer base and provides recruitment into the clinical base as well as.
As we shared 20% were coming from current core subscribers are moving into the clinical part of the business. So we see growth coming from in there.
Yeah.
Okay and my follow up question is.
Given the inputs.
Moderate political subscriber you might have.
Why can screen.
Oh related to the <unk> one drugs.
How do you see that playing out from a competitive standpoint is it your expectation that some of these.
<unk>.
Competitors Theyre going to essentially go away and that'll put weight watchers has been better positioned to.
<unk> clinical subscribers when supply.
Prove it.
The competitive landscape is only growing more intense by the day in fact, obviously some of the.
Sima Sistani: And our clinicians participate in a 12-week specialized onboarding period, which includes rigorous training, close oversight by our clinical leadership team, comprehensive performance reviews to ensure that they have competence in obesity care and nutritional knowledge and empathy to guide members on this journey. And that's an important differentiator, because we are coming with full-spectrum medical weight loss. And that is something that is going to require a high-touch experience to achieve the best outcomes.
Uh huh.
Some of the pharmaceutical companies are.
Going direct to consumer to offer these men.
Thank you.
Yeah. So we I mean, we feel very optimistic about our 'twenty 'twenty four and the supply improvement that we expect to see and and and that has already been noted by some of the pharmaceutical companies and.
And we've been able to really lean in on our wide formulary, even with our focus on from an white house to continue to grow the business, even in a supply constrained environment and so.
Sima Sistani: And we're looking at our customer satisfaction and our MPS, and that's driving a lot of the acquisition, people just having a great experience with our program. And so that's how we're going to market right now, speaking to the fact that What we're offering is great care and a membership that is going to help them with their weight health. Thank you. The next question comes from Michael Lasser with UBS. Please go ahead. Good evening.
Hmm.
Well I think that Oh, it's based on the new scripts dispense then.
And our subscriber growth that we are taking share in this market.
And we're doing that with absolutely no use of compounding and I have every reason to believe that our growth will be aligned to.
Michael Lasser: Thank you so much for taking my question. A two part question. How are you thinking about as you look at some of the aggressive discounting and promotions that have been taken as a way to extend the life of Unknown Attendee, Michael Lasser, Ray Yousefian, Nathaniel Feather, Henry Carr, Ray Yousefian, Drive Subscriber Growth? And my second question is, what is the longer-term vision? Is it to get some of these subscribers that you're gaining now from some of the more aggressive actions to eventually convert them to Weight Watchers clinical members, and that's going to be the means from which the organization can grow? Thank you. Thanks, Michael.
The supply opening up as well and just in general access you know insurability is going to be really important and that is something that is it is really holding people back from being able to get the care that they that they deserve and we are leaning in on our white form.
Malaria in the meantime to help people with medical whaler, two who really need that service for their chronic relapsing condition.
And Michael I, just wanted to add back.
Michael I wanted to add back on your your first question on the the long term commitment and pricing just to put a point on it that were the things. We're doing are we believe are stabilizing the LTV of subscribers with these longer term plans.
Heather Stark: So yeah, we are, you know, making Pricing and Promotional Decisions to make sure that we're managing total LTB acquired and really leaning in on that. We are expecting, in our assumptions this year, to maintain similar LTC and promotional activity year over year and have consistency in that pricing year over year. We expect to be showing stability and potentially growth in our subscriber base as we've guided to from that activity and don't expect to be moving towards deeper discounting. Okay, and then on.
And setting up for the clinic expansion as I said, but I just wanted to share that we do believe that L. T. V has stabilized and you know will be slightly higher even than in later 2024 to <unk>.
Sima Sistani: Sorry, the conversation about the conversion into clinical. As we look to gain and expand the subscriber base, importantly, from the prepared remarks that Sima shared, the growing core consumer base provides recruitment into the clinical base as well. As we shared, 20% were coming from current core subscribers moving into the clinical part of the business. So we see growth coming from there. Okay, my follow-up question is, given the intentional decision to moderate clinical subscribers in light of some of the supply constraints related to GLP-1 drugs, how do you see that playing out from a competitive standpoint?
And is expected to drive the total subscription revenue growth that we've shared starting later in the year.
Thank you very much.
The next question comes from Alex Fuhrman with Craig Hallum. Please go ahead.
Hey, Thanks, guys for taking my question was wondering if you could.
Give us an update on what you're seeing in terms of your incoming members on the clinical side for insurance coverage I think in the past you.
You talked about a little bit fewer maybe been half of your customers or would be customers, rather getting insurance coverage for the name brand G. L. P. One how has that trended over the past few months.
Yeah.
So thanks. Thanks, Alex this is so I believe what you're asking about is our of our insurance engine and so yes, you know look what we're doing we're trying to help where we can for those who do who who are insured and we see 40, 45% of our member.
Michael Lasser: Is it your expectation that some of these, you know, competitors are going to potentially go away, and that will put Weight Watchers in a better position to attract clinical subscribers when supply improves because the competitive landscape is only growing more intense by the day? Obviously, you know, some of the pharmaceutical companies are going direct to consumers to offer these medicines themselves now. Thank you. Yeah, so we, I mean, we feel very optimistic about 2024. And the supply improvements that we expect to see and that have already been noted by some of the pharmaceutical companies. And, and we've been able to really lean in on our wide formula and with our focus on weight health to continue to grow the business even in a supply-constrained environment.
Or is that half prior offs submitted are getting one approved and this is about five to seven percentage points higher than.
And then what we mentioned in our third quarter call and the drivers of that are really that that found coming to market is helping obesity indications get approved the increase since extend our approval rates and then third is really it's our tech platform. It continues to get smarter and we're able to increase the amount of P. As we can file for members.
Okay. That's really helpful. Thanks, very much and then it sounds like you had a tremendous response to the 10 months a $10 a month commitment plans that you were offering throughout most of last year can you give us a little bit of an expectation of what you're expecting in terms of churn when.
Michael Lasser: And so, Look, I think that, based on the new scripts dispensed and our subscriber growth, we're taking share in this market, and we're doing that with absolutely no use of compounding. And I have every reason to believe that our growth will be aligned to the supply opening up as well, and just in general, access, you know, insurability is going to be really important. And that is something that is really holding people back from being able to get the care that they deserve.
Those members start to see their rates go up from $10 to $23, a month, which I imagine is going to be happening.
And in.
One at a time kind of starting in the spring.
Curious if you've seen you know.
Heather Stark: And we are leaning in on our wide formulary in the meantime to help people with medical weight loss who really need that service for their chronic relapsing condition. And Michael, I just wanted to add back on your 1st question on the long-term commitment pricing, just to put a point on it that we're doing things we're not doing. We believe we are stabilizing the LTV of subscribers with these longer-term plans and setting up for the clinic expansion. As I said, but I just wanted to share that.
Any big contingent of members already kind of hitting that rate increase and just what your expectation is in terms of churn through the rest of the year.
Thanks, Alex and yes, so we've had that plan running since earlier in 2023. So we've now got some experience under our belt with people coming off of that plan and as I shared in one of the earlier questions. We're starting to see revenue sorry retention expansion coming from this and it's now approaching.
<unk> 11 months and we're also seeing obviously with such a significant shift in members in commitment that our average committed months are expanding as well. So I think in Q3, we shared our average committed months for about 7.6 months and now it's increasing to $8 six months.
Heather Stark: We do believe that LTV has stabilized and, you know, we'll be slightly higher even in later 2024 too and is expected to drive the total subscription revenue growth that we've shared starting later in the year. Thank you very much. The next question comes from Alex Fuhrman with Craig Hallam. Please go ahead.
So that that expansion is happening.
I don't.
Alex Joseph Fuhrman: Hey, thanks guys for taking my question. I was wondering if you could give us an update on what you're seeing in terms of your incoming members on the clinical side for insurance coverage. I think in the past, you talked about a little bit fewer, maybe more than half of your customers or would-be customers getting insurance coverage for the name brand GLP-1. How has that trended over the past few months?
We plan to have churn, obviously, but we now have enough under our belt with this and experience and that's that I think we've got the rest of the year mapped out well with using this promotional offer.
Terrific that's great to hear thank you very much.
Thank you.
Today's last question comes from Stephanie Davis with Barclays. Please go ahead.
Hey, guys. Thanks for taking my question I wanted to talk a little bit about the beat at the opportunity.
Heather Stark: So thanks. Thanks, Alex. This is so I believe what you're asking about is our insurance engine. And so, yes, you know, look what we're doing. We're trying to help where we can for those who are insured, and we see 4045% of our members that have prior operations submitted are getting one approved. And this is about five to seven percentage points higher than what we mentioned in our third quarter call. And the drivers of that are really that step down coming to market is helping obesity indications get approved, and an increase in sex and approval rates. And then third is really our tech platform. It continues to get smarter, and we're able to increase the amount of PA's we can file for members. That's really helpful. Thanks very much.
There is a lot of employer concern about you know prescription costs with G. O P wines, especially from self insured employers. So how are you positioning your solution so as not to exacerbate them to be fears, while still taking advantage of the need for weight loss solutions within that cohort.
Thank you. So yeah, I mean, we had a third party actuarial firm model that shows that for employers that cover the G. L. P Y medications and implement our full program.
That it would result in 339 times ROI and Oh, I think it's really important to have those lighthouse clients that that we can partner with them and really show these outcomes as proof points and so.
Alex Joseph Fuhrman: It sounds like you had a tremendous response to the $10-a-month commitment plans that you were offering throughout most of last year. Can you give us a little bit of an expectation of what you're expecting in terms of churn when those members start to see their rates go up from $10 to $23 a month, which I imagine is going to be happening one at a time, starting in the spring? I'm curious if you've seen any big contingent of members already hitting that rate increase and just what your expectation is in terms of churn through the rest of the year. Thanks, Alex.
That the employees they are asking for weight house and this is a matter of of of bias to not in in my opinion to not provide that level of care and you're seeing what's happening in North Carolina now with the state plans decision.
It's.
This is something that the employers and the payers are going to have to wrestle with and a way to manage those outcomes is to ensure the that the that the medications are taken in conjunction with lifestyle intervention.
Heather Stark: Yeah, so we've had that plan running since earlier in 2023, so we've now got some experience under our belts with people coming off that plan. And as I shared in 1 of the earlier questions, we're starting to see revenue, sorry, retention expansion coming from this, and it's now approaching 11 months. We're also seeing, obviously, with such a significant shift in members' commitment, that our average committed months are expanding as well. So, I think in Q3, we shared average committed months for about 7.6 months, and now it's increasing to 8.6 months. So that that expansion is happening.
That is what is going to drive the long term R O I and you.
You know as you can imagine we have.
A lot of these these employers and payers really coming in looking for a partner who is trusted and recognize who's going to help them navigate this landscape and and be able they want to provide a.
This benefit and to be able to to do it in a way that as cost efficient and I think that we're the best partner to help them with that.
Heather Stark: And I don't, You know, we plan out churn, obviously, but we now have enough under our belts with this and experience in this that I think we've got the rest of the year mapped out well with using this promotional offer. Terrific, that's great to hear. Thank you very much.
And maybe I guess dovetailing on that last comment is a pretty competitive environment with folks like modern BARDA and calibrate. So how are you differentiating yourself. When you look at these head to head, but I know were there any win rates or any early color you can tell us about the successes you've had on the call.
Stephanie July Davis: Thank you. Today's last question comes from Stephanie Davis with Barclays. Please go ahead.
Well the main things that they that we here at <unk> as I mentioned in the prepared remarks is around the the the science.
Sima Sistani: Hey guys, thanks for taking my question. I wanted to talk a little bit about the B2B opportunity. There is a lot of employer concern about prescription costs with GOP lines, especially from self-insured employers.
The brand equity.
And the engagement on.
On the science, we have a large the largest dataset and it's giving us the ability to then report back with with regard to the phenotypes of their employee population and to really just.
Sima Sistani: So how are you positioning your solution so as not to exacerbate some of these fears while still taking advantage of the need for weight loss solutions within that cohort? Thank you. So yeah, I mean, we had a third-party actuarial firm model that shows that for employers that cover the GLP-1 medications and implement our full program, it would result in 3.9 times ROI. And, you know, I think it's really important to have those lighthouse clients that we can partner with and really show these outcomes as proof points. And so the employees... They are asking for weight health. And this is a matter of bias to not, in my opinion, not provide that level of care. And you're seeing what's happening in North Carolina now with the state plans decision.
Put them into the right pathway mm for the the best success for that employee and then on the brand equity side is really again.
Trust compliance.
These are going to be of Paramount importance to with regard to clinical protocols and that is something that they have come to expect from weight watchers with the 60 plus year track record and then engagement.
We have a great product that works and that there's a ton of brand recognition for and that their employees want to use and provides this level of community care and high touch support.
Sima Sistani: This is something that employers and payers are going to have to wrestle with, and the way to manage those outcomes is to ensure that medications are taken in conjunction with lifestyle interventions. That is what is going to drive the long-term ROI, and as you can imagine, we have a lot of these employers and payers really coming and looking for a partner who is trusted and recognized, who is going to help them navigate this landscape and be able to provide this benefit and be able to do it in a way that is cost efficient, and I think that we're the best partner to help them with that. And maybe, I guess, do So how are you differentiating yourself? when you look at these head-to-hands, and are there any win rates or any early color you can tell us about the successes you've had on the call?
And so ensuring that that if it's if they have to do it in conjunction and say you must use this behavior change alongside them you know medication access that it is a behavior change program that is joyful and that is that is easy to use and that is something that we have proven to do.
And so.
The combination of these three factors I think are really a differentiator for them.
For us not to mention our ability to to scale.
Super helpful. Thank you.
Thank you.
This concludes our question and answer session.
I would now like to turn the call back over to CEO seat MA Sistani for any closing remarks.
To reiterate we are on track to deliver year over year growth in subscribers subscription revenue gross margin and operating income 'twenty 'twenty four will be a critical build here as we work to further catalyze our growth and mission as a global leader in weight health, we are confident in our plan.
Sima Sistani: Well, the main things that we hear, as I mentioned in the prepared remarks, are around the science, the brand equity, and the engagement. On the science, we have a large, the largest data set, and it's giving us the ability to then report back with regard to the phenotypes of their employee population, and to really just... Trust, Compliance. These are going to be of paramount importance with regard to clinical protocols, and that is something that they have come to expect from Weight Watchers with the 60 plus year track record and then engagement. We have a great product that works and that there's a ton of brand recognition for and that their employees want to use, and it provides this level of community care and high-touch support. And so ensuring that if they have to do it in conjunction and say you must use this behavior change alongside, you know, medication access, that it is a behavior change program that is joyful and that it is easy to use.
We feel good that the guidance, we are putting forward, including our investments in growth.
And that we are executing on the right initiatives for the long term health of our business. We look forward to speaking with many of you at upcoming conferences and events, including at the Morgan Stanley TMT Conference in San Francisco next week, and the BMO obesity Summit in New York City. Later this month. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Okay.
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Okay.
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Hum.
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Sima Sistani: And that is something that we have proven to do. And so, the combination of these three factors is, I think, really a differentiator for us, not to mention our ability to scale. Super helpful. Thank you. This concludes our question and answer session. I would now like to turn the call back over to CEO Sima Sistani for any closing remarks. To reiterate, we are on a track to deliver year-over-year growth in subscribers and that we are executing on the right initiatives for the long-term health of our business. We look forward to speaking with many of you at upcoming conferences and events, including the Morgan Stanley TMT Conference in San Francisco next week and the BMO Obesity Summit in New York City later this month. Thank you. The conference has now concluded. Thank you for attending today's presentation.
Hum.
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Hum.
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Operator: You may now disconnect your line. [inaudible] BF-WATCH TV 2021, The Ultimate Parody Site! [inaudible] BF-WATCH TV 2021
Yes.
Yes.
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Sure.