Good day, and welcome to the WeightWatchers Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to David Helderman, Director of Investor Relations. Please go ahead.

Thank you for joining us today for the WeightWatchers Second Quarter Earnings Conference Call. Earlier this morning, we released a shareholder letter and press release with our second quarter 2025 results, which are available on the company's corporate website located at corporate.ww.com. 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. 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 shareholder letter and press release. 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 cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's latest annual report on Form 10-K, quarterly report on Form 10-Q, the earnings release, the shareholder letter and as updated by the company's other filings with the Securities and Exchange Commission. 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 Tara Comonte, President and Chief Executive Officer; and Felicia DellaFortuna, Chief Financial Officer. Jon Volkmann, Chief Operations Officer, will also join for the Q&A.

Thanks, David. The second quarter of 2025 marks a pivotal moment for WeightWatchers. Our strategic reorganization has put us on stronger financial footing, enabling renewed investment and innovation for long-term profitable growth. We reduced our debt by more than 70%, freeing up approximately $50 million of cash annually from lower interest expense and are now relisted on NASDAQ under the ticker WW. We are fully committed to the work ahead and deeply grateful to our members, team, shareholders and lenders for their support over recent months. Today, we're excited to talk about what's next for WeightWatchers. We've been serving members on their weight loss journeys for over 6 decades. Our brand is known and trusted the world over. Our behavioral lifestyle program has been proven and recognized as the best weight loss program by experts for years. Our global community of coaches and members is second to none. And the latest innovation in our field, GLP-1 weight loss medications, are intended to be clinically prescribed with exactly the type of lifestyle change and support that we've spent years building. While others offer fragmented solutions, only WeightWatchers integrates medication access with behavior change, coaching and community, all proven to drive superior and sustainable outcomes. And yet the landscape in which we offer has fundamentally changed years and with it, our path forward. In times of great change, established brands must innovate, adapt and lead. WeightWatchers is no stranger to innovation, having navigated periods of significant change before, emerging each time with greater clarity and strength. In recent years, however, high leverage and interest costs have constrained our ability to invest and evolve with the notable exception of our Sequence acquisition in 2023. With our balance sheet now reset, we are in a position to move forward with focus, flexibility and the…

Thank you, Tara. We are pleased to have completed our reorganization so swiftly. This is a big step for the company, reducing our debt to $1.6 billion to $465 million, setting us on the path to rebuild for a healthy and sustainable future. As a result of the transaction, our lenders and note holders received 91% and of new common equity of the reorganized company and preorganization existing shareholders received 9%. We now have 10 million shares outstanding. Shifting to quarter 2, as we shared in our shareholder letter and earnings release, our reported results for the quarter are split between a predecessor and the successor period and included a shift to a calendar fiscal end moving forward. The predecessor and successor structure is directly as a result of our emergence from on Chapter 11 on June 24, 2025, together with our adoption of fresh start accounting. As combined revenue is in line with pro forma accounting, we believe that the key top line performance metrics for the successor period, June 25th through June 30th, when combined with the predecessor period, March 30 through June 24; provide meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, we will speak today to the combined results for these top line metrics for the 3 months ended June 30, 2025. We will talk to all other cost and profitability metrics as it relates to both periods. Monthly subscription revenues per average subscriber or ARPU increased 12% year-over-year in the second quarter, marking the third consecutive quarter of ARPU expansion. Growth was driven by a continued mix shift towards Clinical subscribers, who generate nearly 5x the ARPU of behavioral subscribers. Total end-of-period subscribers declined 17% year-over-year in quarter 2, ending at 3.2 million. Behavioral member acquisition remains challenged, further…

Thanks, Felicia. The need for sustainable effective weight health solutions has never been greater, and we believe WeightWatchers is uniquely positioned to meet that need. With a stronger financial foundation and renewed ability to invest, we are focused on disciplined execution and meaningful innovation. There's important work ahead, but we are confident in our strategy and in the strength of our integrated model to deliver long-term impact. On behalf of the entire leadership team, I'd like to thank our teams around the world for their commitment and hard work and to our members for their continued trust and support. And with that, I'll turn it over to the operator for Q&A.

[Operator Instructions] The first question today comes from Nathan Feather with Morgan Stanley.

Congrats on completing the restructuring. A few quick questions on Clinic. First, can you provide a bit more color on how material the shutoff of compounding was on clinic subs in 2Q? And then thinking about the shape of that over the remainder of the year, have you returned to growth since the May cutoff either kind of adjusting that out? Or is that expected to be a more durable headwind, especially as the subscribers that may be on longer-term plans that turn off?

It's Tara. Thanks for the question. I'll let Jon talk to the transition or Jon or Felicia talk to the back half. But I think it is worth just reemphasizing a couple of things that we said in the prepared remarks around how complex this clinical landscape is right now, particularly with the inconsistency of adherence and application to FDA compliance as it relates to compounded semaglutide. So just to reinforce WeightWatchers position, which is -- has always been consistent, which is just down by the highest levels of Clinical integrity and to make sure that we are in full compliance with FDA regulations. And so to your point, as such, we -- stops prescribing compounded semaglutide on the 22nd of May and have been transitioning those members. However, others in our fields continue to prescribe at scale under the guise of a personalization exception, and that is making for a challenging landscape for the business, not least in terms of confusion, in the consumer landscape, but also as it relates to the price differential between these compounded meds and the branded cash pay alternative. But Jon, do you want to just jump into how the transition has been going?

Yes, absolutely. Jon Volkmann here. So to provide some additional context on the transition away from compounded semaglutide, so as previously stated, this offering was extremely attractive to a segment of the market and was a significant driver of our subscriber growth from Q3 of '24 to Q1 of this year. And the exercise of transitioning these members is a challenging one, primarily because cash-pay prices for branded GLP-1s, while decreasing overall, are still significantly higher than the compounded alternatives, which are still being aggressively marketed by our competitors. The transition is ongoing, and then we'll extend through August as a portion of our members receive 90-day refills in May. We're currently transitioning these numbers to a variety of Clinical solutions, including oral anti-obesity medications, branded cash-paid GLP-1s and insurance coverage GLP-1s. Important to note that our ability to facilitate insurance coverage has been a key lever in the transition. It has allowed for a portion of these members to transition to branded therapy at a likely lower out-of-pocket cost. Though it is important to note that, that members who initially sought out compounded medications as a cohort are less likely to have insurance coverage than our average member. And therefore, we will -- while we will successfully retain a portion of this group, our operating assumption is that the majority of them will roll off the platform. However, despite the near-term headwinds that we will face, we do remain confident in our long-term Clinical growth strategy, which was built on a foundation of sustainable and differentiated advantages. So in addition to our comprehensive clinical care and support, our insurance navigation technology is a key differentiator, which really provides a best-in-class experience that makes branded medications accessible and affordable to those with coverage. We've also added strategic partnerships with Lilly…

Great. That's helpful. And I guess, just a clarifying point on that. Of the compounding members that you had in 1Q, any way to help quantify what portion of those had already rolled off and kind of the 2Q number versus are expected in 3Q? And then I guess just given a little bit more broadly on the space, given the legal uncertainty we've seen in compounded medication, have those peers who are still primarily offering compounded medication, are you seeing them significantly alter their marketing spend? Or any other kind of commentary you can give on how that marketing lands evolved would be helpful.

I can take the first part of your question, and then I can pass to Jon on your second. So just to help quantify, as Jon had mentioned, the vast majority of our subscriber growth from Q4 2024 to Q1 2025 was from compounding semaglutide. So vast majority of that member growth was associated with compounding. And as Jon had noted, we do anticipate the continued roll-off to exist through August. And so you start to see the sequential decline in our numbers from Q2 -- or Q2 relative to Q1, and we do anticipate a decline in Q3 relative to Q2.

And then from a marketing spend standpoint, we are seeing our competition to remain involved in compounded medications in micro dosing to be extremely aggressive from a marketing standpoint.

Okay. Great. That's helpful. And then one more just on a different note. You talked about the B2B opportunity for some. It's been a continued goal for the company to continue to push into that space. What have been the primary factors that have limited the adoption so far? Interested to know how you're addressing those. And now that you've kind of come out of restructuring, is it possible that you can scale up some enterprise sales teams or any way to kind of further insight that adoption?

Yes. Nathan, it's Tara. Listen, we still believe the B2B channel is a really important part of this market and an important part of our future growth, even more so in a world of GLP-1 medications, where employers are and payers are facing a lot of pressure to offer these solutions, but they need a model that can drive outcome while also managing costs. So it's actually a really interesting next chapter in this part of the market. And with some -- what we said in the prepared remarks, the business was impacted somewhat by the headlines around the Chapter 11 process in the second quarter, but we're really seeing momentum start to pick up again, and we're excited about the opportunity here for our model, particularly one where there will be, over the long-term, growing coverage of GLP-1 medication and with it a requirement to provide behavior change programming, which obviously, we have been building for many years and increasingly focused on that behavior change in partnership with GLP-1 medications with things like our GLP-1 companion program. So longer sales channel or longer sales cycle, obviously, the -- then D2C business. But it allows us to really leverage our existing infrastructure, our existing product innovation today and -- moving forward and to tap into a different market with relatively low cost of acquisition that we believe will be increasingly important over time.

The next question comes from Alex Fuhrman with Lucid Capital Markets.

Congratulations on completing your successful reorganization. Wanted to ask about something you guys have talked about for a little while, kind of transforming into a broader women's health company really leveraging your brand ethos and your large membership file. Can you talk a little bit more about what we could see from you over the next couple of years along those lines? I think you said there's potentially an offering for menopause coming down the line. Can you give us a little bit more sense of how you're trying to position the brand over the next few years?

Alex, it's Tara. Yes, happy to, and thanks for the question. Look, I think our general view is that the opportunity for WeightWatchers is to really continue to evolve the ship within the entire field of weight health and to increasingly meet members where they are on those weight health journeys for the long term. And that means creating programs and solutions that can be curated for different stages of life or different needs and certainly an expansion into women's health. And particularly, the perimenopausal or menopausal stage of a woman's life is a very natural adjacency for us, not least with one of the top symptoms and one of the top complaints of that station being around weight. So yes, we have a lot of exciting ambition around our expansion into women's health. With a women health program coming later in the year that in -- consistent with our weight care programs, will offer a comprehensive program that incorporates behavioral support and programming, nutritional support and a clinical program where appropriate and again, leveraging a lot of the infrastructure and the expertise that we've built over many years but curating it for this segment of the population.

This concludes our question-and-answer session. I would like to turn the conference back over to Tara Comonte, CEO, for any closing remarks.

Just thank you all for joining us today. We're excited to be the other side of our financial reorganization. Thank you again to our team around the world and to our members, our shareholders or lenders for their support throughout the process. And we are extremely excited about the next chapter for WeightWatchers and the opportunity that lies ahead. So thank you, and we'll talk to you all soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.