Good morning, and welcome to WeightWatchers International's Third Quarter 2025 Results 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 Third Quarter Earnings Conference Call. Earlier this morning, we released a shareholder letter and press release with our third 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 could 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 CEO; and Felicia DellaFortuna, CFO. Jon Volkmann, Chief Operations Officer, will also join for the Q&A.

Thanks, David. As we close the third quarter of 2025, WeightWatchers is laying the foundation for renewed growth and leadership in the rapidly evolving weight management sector. I encourage everyone to read our shareholder letter, which we distributed earlier this morning and is posted on our Investor Relations site. It details our key strategic priorities, competitive differentiators and what you can expect to see from us over the near and longer term as we build on work already underway to drive growth and long-term value. But first, let me start with some context. In recent years, we've witnessed one of the most profound shifts in the history of health and wellness. The emergence of GLP-1 medications for weight loss has revolutionized the conversations around obesity, bringing hope and in many cases, results to millions who have long struggled to manage their weight. To many, the story was simple. Miracle drugs had arrived and traditional approaches like WeightWatchers proven high-touch science-based program could no longer compete in a changing world. However, we recognized early that this was not the end of an era, but the beginning of a new one. The future of weight management will be built on an integrated approach that pairs clinical care and medication access with structured nutrition, movement and accountability. That's why we acquired Weekend Health, a telehealth business now rebranded to WeightWatchers Clinic that allowed us to integrate medical expertise and prescription access into our program, broadening our proven science-backed model to include clinical care. We're now evolving and tailoring our behavioral offerings to provide the important support needed by members using these life-changing medications, helping them adhere to treatment, manage side effects and achieve lasting results over time. This evolution is not a rejection of our past, but an extension of our legacy as…

Thanks, Tara. We are pleased with the results for the quarter with continued strong adjusted EBITDA margins of nearly 25%, reflecting our focus on cost discipline and timing of spend while investing in future growth initiatives. Acquisition challenges continue to persist in our behavioral business, although slightly improved from last quarter's bankruptcy period and in part supported by brand marketing associated with the launch of our new Menopause program. We ended Q3 with 2.9 million end-of-period behavioral subscribers, a decline of 20% year-over-year as this sector remains challenged. Conversely, we were pleased with the clinic performance in the quarter with clinical end-of-period subscribers of 124,000, an increase of 60% compared to the same quarter last year. As a reminder, we added compounded semaglutide to our prescription formulary in October last year, and we will start to face more challenging comps over the next couple of quarters. Revenue was $172 million, which declined 11% year-over-year. Clinical revenue grew 35% year-over-year and behavioral revenue declined 16% year-over-year. Foreign exchange provided a $2 million benefit to the quarter and fiscal Q3 2025 included 1 extra day compared to fiscal Q3 2024. In the clinic business, we were encouraged by our retention of a greater-than-expected number of members who had been previously prescribed compounded semaglutide, transitioning approximately 20% of those members to branded or oral medications. We expect Q3 2025 to represent the low point in clinical subscribers with this transition largely behind us. Monthly subscription revenues per average subscriber, or ARPU, was $18.52 in the quarter, increasing 9% compared to the prior year quarter, reflecting the continued shift in mix towards higher-value clinical subscribers. However, ARPU declined sequentially in part due to an increase in clinic 12-month commitment plans together with certain promotional activity. Adjusted gross margin was 75.1%. We continue to closely…

Thanks, Felicia. The world of weight management has transformed and WeightWatchers with it. We stand on the precipice of a massive opportunity to build significant value for our business while helping millions of people around the world to live healthier, happier lives, reasserting ourselves as the leading destination for successful weight loss and lasting results. I'll now turn it over to the operator to open it up for Q&A.

[Operator Instructions] And the first question will be from Alex Fuhrman from Lucid Capital Markets.

Congratulations on what looks like a really strong quarter here. Very interesting that you're going to be removing all of the barriers between the 2 programs in the app. I think that makes sense as kind of the natural evolution of the program. I'm curious, when do you think that redesigned app is going to be available to members?

Alex, I'm Tara. So first of all, thanks for the question. So there's a lot more detail. I don't know if you've had a chance to go through our shareholder letter yet, but I would direct you there for a bit more color around certainly this topic and others. But the first version of the new app, we are targeting to launch by early next year in time for peak. So the team is heads down working really hard on that. And then that will be the first release. There will be a number of subsequent releases of the app and our digital platforms over the course of next year. And it's really the app -- the new app experience or the new digital experience for members is it goes beyond just integrating and removing barriers. It will look and feel very modern, very different, much more intuitive than our existing legacy app that we've had for many, many years with sort of code on code, on code. It will be much better suited to highlight different features, different tools, different programs that may be appropriate to you on your weight loss journey that are today really hard to find at best in our app, things like our Registered Dietitian offering, things like our GLP-1 Companion Program that's currently buried within the core program as a setting that you've sort of got to figure out where to find it. This new experience will allow us to better showcase the full breadth of the offering. And then also as we get to know you and as this experience becomes more personalized and more data informed, it will allow us to better drive our members to solutions for them and meet them where they are on their journey. So we're really excited. The team is doing a huge, huge amount of work to get the first version of this out the door by peak. But yes, it should look and feel like a most definitely a different chapter for WeightWatchers for our members around the world.

That's exciting. It'd be great to see when that comes out shortly. So, can you talk about some of the partnerships that you've been doing lately? You mentioned the partnerships you have with Novo, and it seems like you've been striking a number of these kind of deals that you announced recently. You have a partnership with Amazon for drug delivery. Can you talk a little bit more about some of these partnerships? Is that what's driving your growth? And in the case of Amazon, can you tell us a little bit more about what your members are getting as a result of this partnership?

Yes, of course. Listen, I think strategic partnerships are a great lever for us across many different angles as we move forward. And certainly, that can include partners with pharmaceutical players like Lilly and Novo that we have or it can include some on the back end like Amazon. And way beyond that, I think there are strategic partnerships opportunities for the business that can extend our services that can help us expand internationally. And so while I would not say strategic partnerships are where our growth is going to come from, I do think they are a part of our growth strategy. But I'll flip to Jon to talk more specifically maybe about Amazon.

Yes. Thanks, Tara. Jon Volkmann here. So obviously, we're very excited about our partnerships with NovoCare and LillyDirect and very pleased to announce our new collaboration with Amazon Pharmacy. Overall, the theme of all of these is that it's really just another step in making medication access faster, simpler and more affordable for our members. And specifically to the Amazon partnership, by integrating directly with their infrastructure, our members now get access to real-time medication availability from their specific fulfillment center. They also get automatic coupon savings, applied at checkout with no code needed. And then obviously, the Amazon network for free 2-day shipping for Prime members. So again, all of these partnerships are with the theme of just reducing friction in the health care process and for these specifically allowing patients to focus less on pharmacy logistics and more on their health. And then looking at NovoCare, looking ahead to the orals launch here, we are working very closely with them to help support this launch, and it is fast approaching. And so like we've done in the past, we'll be looking for new and really innovative ways to bring both convenience and value to our members on that front.

That's really interesting. And then if I could just kind of squeeze in one more here. WeightWatchers for Menopause, you just launched it. I imagine it's too early to talk about how that's going. But who are you initially targeting for this offering? Is this something that you think is a big opportunity within your current membership? Or is this an opportunity to reengage with former members that you haven't seen in a few years?

I think it's both of the above and new members. So yes, we are really excited to have launched the Menopause program, which is really 2 programs, one with a clinical offering and one without -- with the clinical offering only being available in the U.S. with women's health trained clinicians. So we think this is an exciting market moving into women's health, but with a very clear overlap in terms of weight health. We think it's a global need. There's a lot of demand. It is fast being destigmatized. It's a very nice overlap with our existing customer base and has been much requested from our existing member base for a long time. So it feels like a really nice fit for the company and somewhat of a blueprint in terms of how we think about programming moving forward with leveraging each of our core pillars the most recent pillar being medication access and clinical expertise, but curated community offering, coaching, nutritional guidance, movement, but tailored to win in their perimenopausal and menopausal years. Also really we'll be leveraging new technology moving forward. And again, in the same way as we talked about the app, that app infrastructure and that new intuitive modern connected experience, the first version of that actually really is in menopause, albeit it's not yet fully on the new tech stack. But you'll notice that the barriers that exist in some of the other programming are removed in the Menopause program. So it was -- you're right, it's too early to sort of be conclusive about it in any way other than we're excited, and we think it's an important growth lever moving forward. But it was good to get back out in the market, be loud, be proud. You saw we launched it with Queen Latifah, which was great and provided a much needed sort of positive brand moment coming out of those fairly painful extended bankruptcy headings. So exciting about it moving forward.

And our next question will be from Justin Ages from CJS Securities.

I wanted to ask a question on retention, which was better than expected. Can we just drill down on that and some of the returns that you're seeing in some of the programs? Given the headlines around the compounded GLP-1s, I think myself and everyone else thought that clinical subscribers would be down a little more. So that was impressive to see. So I wanted to get some more information on that.

Yes, sure. So the transition from compounded medications is largely complete, and we're pleased to announce that those results have exceeded our expectations. So we successfully converted approximately 20% of our compounding members directly into our ongoing clinical program. And within that cohort, we saw members transition to really 3 main treatment areas. So insurance covered GLP-1s. And for these members, we were able to successfully help them obtain coverage. And as previously stated, our ability to do so here really remains a key competitive advantage for us. We also saw members transition to cash pay GLP-1s, many of whom are using our direct integrations with NovoCare and LillyDirect and then finally, to our oral medication kits.

We also strategically moved member subscribers towards 12-month LTCs in a very strong effort to retain clients for longer to keep with a more beneficial LTV for us long term. And so while we did see an ARPU decline in Q3, we were very optimistic and positive about that ARPU decline because it did mean better retention for our clinic subscribers. And then on behavioral, we do see that our overall retention is still trending at around 11 months and an area of opportunity for us as well.

Yes, I was just going to add to the retention point as it being an area of opportunity, another perfect example of why a different member experience on the digital platforms, particularly the app is so needed because, again, some of these silos in the existing journey prohibit us from executing against some valuable tools to drive increased share of wallet, but upsell into different programs, particularly the clinic program, but also to drive retention through stickier, more personalized programming for our members. So all tools sort of pointing to the same set of objectives.

Great. And then one more, if I could. And I know it's early in terms of kind of the reorganization and the rebrand, but there's been some new influencer campaigns at the company. Just wanted to know early returns on broadening the subscriber base. Have you seen any changes in the demographics of the company?

Well, I'm glad you're seeing our new influencer campaigns. That will make our marketing team extremely happy. Nothing specific to comment on right now. I mean, hopefully, you got from the prepared remarks, and again, there's a little more color in the shareholder letter. But we're really looking to reassert and reposition and sort of reenter this brand into the weight management market. We've got some pretty dated preconceptions of the brand. We've obviously come off the back of some prolonged bankruptcy headings -- headlines that were very challenging for the business over many months this year. And what you're seeing in the influencer strategy is a shift in how we show up, who we engage with as well as the types of channels that we're going to be leveraging to really execute against that strategy. Over many years, the company has really become quite dependent on, as I mentioned in the prepared remarks, a discounting strategy, heavy bottom of funnel performance marketing. And we are -- we have a high level of conviction that as an iconic global brand of more than 6 decades that we should be deploying a much more of a full funnel strategy, leaning into the strength of that brand and rebuilding that organic flywheel through multiple different channels. But certainly, social, telling real-life member stories, showcasing our clinicians, our coaches and leveraging appropriate influencers helps us do that as well as reach new target audiences.

[Operator Instructions] The next question will be from Nathan Feather from Morgan Stanley.

So compounding has certainly driven a lot of volatility in the clinic subscriber growth over the past year. I guess if we strip that out, how should we think about the underlying growth here? And given that, what's kind of the right run rate of clinic growth now that we're past the churn off here?

Listen, you can't really strip it out, unfortunately. So this is a pretty complex landscape right now, as you know, moving very fast. The business prescribed compounded medications from October last year to the end of May. As Jon mentioned, we have a very robust insurance PA approval engine on the back end. We have non-GLP-1 oral medications, and we are partnering with Novo to bring this new oral Wegovy to market early next year. So there are a lot of moving parts in the clinic business. We have a very high level of conviction in the strength of this integrated holistic medically centered but broader care model, nonetheless, over the long term. We think it is -- it drives superior outcomes. It drives a better member experience. It drives more sustainability in results and really is quite differentiated from just pure-play telehealth. So outside of compounding noise over the course of the year, this is a really important growth engine for us that is only going to receive, I think, more and more demand and adoption of members, particularly as pricing comes down and these medications become more accessible.

Yes. And to that end, obviously, we're monitoring the situation closely, as I'm sure you all are with the recent headlines that appear to be putting a lot of downward pressure on medication prices. And I think important to call out that we view that downward pressure really as a net positive and a significant tailwind for our business. As access expands, we believe that the market is going to increasingly value quality of care, and that plays directly to our strengths. Our model has always been built on -- on really high-touch and holistic clinical support. So our members have access 24/7 to their care teams. And as you saw in our shareholder letter, our customer satisfaction and our patient outcomes are really best-in-class. So like looking more long term and looking ahead as this market matures, we're really confident that the key stakeholders in this industry from regulators to pharma partners will increasingly value providers to ensure patient safety, manage outcomes and drive long-term adherence. And when we think about where we are long term, that's the business that we're in.

Last thing I would mention is that we also stated that we do anticipate Q3 2025 being the trough on end-of-period subscriber for clinic.

Great. That's very helpful. And then heading into peak season shortly, there was a little bit of commentary in the letter, but interested to hear a touch more about your plans across both product and marketing as you work to improve the resonance, especially within the core behavioral business.

Yes, happy to take that, and then you guys can jump in if I miss anything. There's -- hopefully, it is clear the extensive work that is going on across the company right now from a full top to bottom digital rebuild, an extensive brand refresh, a relaunching of our virtual community offerings, a showcasing of programs and solutions that have been somewhat buried up until this point and really a rallying around the need for significant increases in awareness in the market that WeightWatchers is in the medication space and provides medication access and clinical expertise as part of this more holistic offering with the force multipliers, if you like, that the behavioral solutions can also play. So a pretty important reentry, an important peak for us and we're obviously targeting an uptick in subscribers Q1 from Q4 as a result. It's early to tell what that's going to look like, but we're really excited. There is a vast amount going on, and it is bold and impactful. And outside of the tactics, everything we're doing first, second and third is to continue to drive superior results for our members. People are looking to achieve results. They're coming to us on -- to achieve their weight loss and do it in a healthy and sustainable manner and really making sure that we turn up at peak, showing how we are very different with some very impressive data to back that up is key. And then supported by the product. So yes, it's an important couple of months as we run up until that point and then beyond, right? So the difference with this peak versus others is really peak is just the beginning of the launch of many of these things that we're talking about. It's Chapter 1, right, of the brand coming back in. It's Chapter 1 of the -- it's the first version of the new app. It's the first version of the new website. So I'm sure we will have a lot to learn, but we have a lot of exciting things planned on post peak as we continue to roll out various growth initiatives across the ecosystem. So hopefully, that's helpful.

I would also just mention that we do anticipate, as Tara mentioned, the step-up from Q4 to Q1, but we do still have the acquisition challenges on behavioral that albeit has improved relative to the bankruptcy headlines of Q2, it is creating an opening access tailwind on our subscriber model for 2026 and so -- a headwind in 2026. And so a lot of our strategic priorities are to offset that opening access headwind.

Yes. And I think just lastly, to jump in here from a clinical standpoint, a really interesting factor with peak this year is that it happens to coincide with one of the most anticipated things that we've seen in quite a while in the space, and that's the launch of an oral GLP-1, which as Novo Nordisk has stated, is expected to come to market in very early 2026 and then expected with a fast follow-up from Lilly. And we really view that as a significant market catalyst that's going to open up a new top funnel for a large portion of people who are interested in GLP-1s, but resistant to injectables. So in addition to everything that we have planned with our normal peak activities, this also just presents a very interesting and exciting dynamic that we view as an opportunity for our clinical business as well.

And ladies and gentlemen, this concludes today's question-and-answer session. I'd like to turn the conference back over to Tara Comonte for any closing remarks.

Thank you, everyone. Really just appreciate you joining the call. Appreciate your interest in the business and support of the business. This is an exciting time for WeightWatchers. We are running hard to fully leverage all the growth opportunities ahead of us. So look forward to following up in one-on-ones. And if there's something that you wanted to cover that we didn't get to, please just get in touch directly. Thank you.

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