Sima Sistani, CEO of WeightWatchers. Credit: Erica Shroeder
New York (CNN) -- WeightWatchers is committed to the end of diet culture.
Welcome to the era of Ozempic. Weight-loss drugs have turned the weight loss business upside down. The number of Americans taking semaglutide has increased 40-fold in the past five years, contrasting with decades of diet and exercise advice to shed pounds.
Wegovy and other drugs like it threaten to forever change the $76 billion diet business and the fabric on which it has amassed its riches. They even have consumer and distribution titans like Coca Cola and Walmart worried.
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Sima Sistani, CEO of WeightWatchers, 44, is aware of this and has acknowledged that WeightWatchers has to evolve, or die. He knows he can't beat Wegovy. That's why he's joined forces with her.
When he joined the company last year, Sistani made sweeping changes. It ended thousands of the company's famous in-person workshops, closed stores, and shifted the company's focus to new weight-management drugs like Wegovy. It also secured a major deal to buy a telehealth company that can issue virtual prescriptions to patients for these weight-loss drugs.
It was a change that threatened to call into question the characteristics for which WeightWatchers was best known, the kind of risk CEOs rarely take unless they see an existential threat just around the corner. But Sistani says the company hasn't lost its footing.
"What we do best is help people manage their weight. That's the anchor," he says. "I think we have to be true and authentic to that and who we are."
And with that anchor, the company has been able to chart a path forward, even as the ground beneath it has moved.
"I think we've taken our evolution very much into account," Sistani told CNN. "We can make sure that all of our stakeholders see the benefit of this transformation and this change."
Sima Sistani, CEO of WeightWatchers. Credit: Erica Shroeder
In-Person Meetings, the Covid Pandemic, and the Culture of Wellbeing
The changes were already underway when he took the reins of a company in crisis in February 2022. The Covid-19 pandemic halted in-person meetings for a while, the company had tried – and failed – body positivity, and the emergence of the semaglutide-driven weight loss phenomenon had just begun.
The diet brand, which has been around for more than half a century, was on track to lose about $250 million in 2022.
The company had been trying to latch onto the growing body positivity movement, randomly switching brands to a holistic wellness brand to keep up with changing attitudes toward body acceptance in 2018. But it didn't work.
"Part of the reason the wellness pivot didn't work is because it was a marketing move. It wasn't a product, and we didn't change enough the way we presented ourselves to really be a wellness company," Sistani said.
An Ozempic (semaglutide) injection pen. Credit: Jaap Arriens/NurPhoto/Shutterstock
The emphasis on face-to-face workshops and the lack of a digital footprint were also hurting the company's bottom line, especially in the era of physical distancing.
"About 80% of the members had moved to the digital age, and yet we still had this app that worked as if it were a complement to face-to-face meetings," he explains.
Sistani immediately implemented sweeping changes, such as ending gatherings, closing shops, and promoting drugs such as semaglutide.
In March, he made an even more radical change to revamp the company. WeightWatchers made a deal worth more than $100 million to buy Sequence, a telehealth business that delivers virtual prescriptions to patients for these weight-loss drugs, if any.
"These drugs have shown, and science has evolved to say it, that living with obesity is a chronic disease. It's important, whatever it means for our business, to be clear about that. It's not just about willpower," he said. "And what we're saying now is that we now know better and it's up to us to do better so that we can help people feel positive and destigmatize this conversation around obesity."
Analysts at Goldman Sachs say the purchase of Sequence and support for semaglutide are preventing the company's collapse. The bank's analysts project that 15 million adults in the U.S. will take these drugs by 2031, or about 13% of all adults in the country, not including diabetic patients.
They believe these changes could generate $455 million in new revenue for WeightWatchers by 2025.
Sistani believes that if it hadn't come in, the company would have followed in the footsteps of competitors like Jenny Craig, the weight management company that filed for bankruptcy in the first quarter of 2023. Parts of the Jenny Craig company were acquired by Wellful, the parent company of Nutrisystem.
The market seems to agree: WeightWatchers shares are up about 78% year-to-date. In 2022, the stock fell 76%.
Fandango's Adam Rockmore, Twitter's Sima Sistani and Twitter's Ged Tarpey in 2015 in Los Angeles. Credit: Angela Weiss/Getty Images for Variety
Sistani says that while weight-loss drugs have become very popular, there is still a lack of expert professionals who prescribe them safely and that's a role that WeightWatchers can fill.
The U.S. Food and Drug Administration (FDA) approved the use of semaglutide to treat type 2 diabetes under the name Ozempic, but it was also used for weight loss. Wegovy, the version that treats weight loss, was approved in 2021. They work by mimicking a hormone that makes users feel full, but their use comes with potential side effects such as gastrointestinal discomfort. Long-term risks are also being studied. These drugs are not stand-alone solutions and require a comprehensive diet and exercise approach for sustained weight management. If you stop taking them, the weight usually comes back.
Most U.S. doctors are not trained in anti-obesity medication, and "there is no clear, safe, and reliable way for people to know whether to take these medications," Sistani says.
According to her, WeightWatchers may be that source. "We are a public company and therefore our operations are transparent. We believe we can offer a much better experience to people taking these medications."
WeightWatchers has doctors and researchers on staff and a scientific advisory board and a medical advisory board to ensure the experience is safe, he said, that any side effects or complications are well managed and that medications go to the people who need them.
Still, WeightWatchers is a company that has changed shape more than once in the last decade in its struggle to find its identity.
Even Oprah Winfrey, a spokeswoman and investor for many years, had to retract earlier comments about weight-loss drugs as an "easy way out" after WeightWatchers started selling them.
- Oprah Winfrey Joins the Ozempic Drug Conversation
Some veteran users of the program feel betrayed by the company's move away from the in-person meeting model and adoption of medication-based solutions.
"WeightWatchers' acquisition of Sequence really shook up a lot of members," said Jamie Yonash, who runs the lifestyle blog Life is Sweeter by Design, which focuses heavily on WeightWatchers-related content.
"The feedback I've received is that they feel a little betrayed by the fact that WeightWatchers promotes weight-loss drugs, because it seems to go against the core values that the company has held for so long," he said.
On in-person meetings, he said, "I think the move to almost entirely digital programming doesn't benefit all members. People need human connections and interactions, and that's not always the case in a digital environment."
Other WeightWatchers influencers were also confused by the changes. Biz Velanti, who runs the popular blog and social media account MyBizzyKitchen, told CNN that "everyone is looking for the quick fix" with the medication. "Unfortunately, they don't want to do the work," she said, of listing foods eaten or exercising to achieve weight loss goals.
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The Future of WeightWatchers
Although the future of WeightWatchers is still being written, Sistani is certain of what it won't be. It won't focus on weekly meetings and weigh-ins. It won't be a consumer packaged goods company that sells diet snacks.
Evolution is inherently difficult, but it's not a risky bet. It's a "bold, data-driven bet infused into every part of what we do," according to Sistani.
Food products from Weight Watchers. Credit: Michael Nagle/Bloomberg/Getty Images
In its most recent corporate earnings report, the company reported net income for the third quarter of 2023 at around $43.7 million. WeightWatchers posted a net loss of $206 million in the same period last year. Operating profit was $30.6 million, compared to an operating loss of $254.5 million in 2022.
Subscriber growth also increased 6% year-over-year to 4 million. Still, the company lost money on subscription revenue and its gross profit declined for the year.
WeightWatchers was a marketing-driven company when Sistani took the reins, he said. Now, with a fresh perspective, it's a consumer-first company.
"We're going to grow in a way that resonates with a more digitally advanced consumer," Sistani said. "There will be community building and workshops, but they won't have to be coach-led. It's more about being in the places where people want to connect. Sunday walks in the park, or even a visit to the supermarket. There are a lot of ways to create those relationships organically and meet people where they are."