Sima Sistani, CEO, WW International, August 16, 2023.
Scott Mlyn | CNBC
WeightWatchers CEO Sima Sistani has sent an internal memo to employees attempting to reassure them that the financial position of the company is solid and its new clinical business related to the threat of GLP-1 weight loss drugs is growing faster than expected.
The memo, shared with CNBC, comes after heavy selling in WW shares that has seen the stock market value of the iconic weight loss company fall to under $150 million amid concerns about the company’s debt load and its core weight loss business growth prospects at a time of new blockbuster drugs like Novo Nordisk‘s Ozempic and Wegovy, and Eli Lilly‘s Zepbound.
In the memo, Sistani told employees she wanted “to take a moment to address some of the breathless media coverage.”
While the news on Feb. 28, concurrent with its earnings, that Oprah Winfrey was planning to leave the company’s board and donate all of her shares in the company to a museum’s endowment had led to a 20%-plus drop on earnings day, shares stabilized later that week. But since then WW shares have suffered heavy selling, dropping to a new 52-week low on Thursday. Over the past one-month period, shares are down 58 percent. The stock, due to its debt load and short interest, as well as the general anxiety about the impact of the new weight loss drugs, is subject to heightened volatility.
Concerns about the company’s significant debt load have made new headlines in recent weeks, however, the issue is not a new one and much of the debt is not due for years.
“These headlines are often just speculation,” Sistani wrote to employees. “We have strong liquidity and are not in a cash crunch. We have very attractive, long-term debt agreements, with no maturities due until 2028 and 2029.”
Guggenheim Partners analysts wrote in a note on Thursday that they are “unconcerned” about WW’s ability to service its debt, which includes roughly $945 million outstanding on a non-amortizing term loan…
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