WW International, the brand more commonly known as Weight Watchers, announced this week that it's set to acquire subscription service Sequence for $106m. The startup helps subscribers organize telehealth appointments with doctors that can prescribe weight-loss drugs like Ozempic and Wegovy.
The yo-yo business
The yo-yo effect in dieting is well documented. People who lose weight quickly often find it easy to put the weight back on which, poetically, is the inverse of Weight Watchers' business. Every year the company quickly adds hundreds of thousands of newly health-conscious subscribers to its weight loss program in the first quarter (new year, new me etc.). Then, in the coming months, the company slowly sheds subscribers who presumably meet, or give up on, their health goals.
Recently, the “jumps” in Q1 have gotten smaller, and the “drops” have gotten larger, sending the company’s subscriber base into reverse. A rebrand to WW, in a bid to position the company as a more holistic “wellness” company rather than one solely focused on weight, has ultimately failed to stop the decline — WW's share price has dropped 90% in the last 5 years.
Spending $106m on Sequence is a bigger strategy shift than the rebrand, giving WW subscribers easier access to weight-loss drugs that are exploding in popularity. Prescriptions for Wegovy were 732% higher in January and February than during the same months last year – a trend that WW is clearly expecting to continue.
