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Basis of Presentation | 3 Months Ended
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Mar. 29, 2025
Accounting Policies [Abstract] |
Basis of Presentation | 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of WW International, Inc., all of its subsidiaries and the variable interest entities of which WW International, Inc. is the primary beneficiary. The terms “Company” and “WW” as used throughout these notes are used to indicate WW International, Inc. and all of its operations consolidated for purposes of its financial statements. The Company’s “Digital” business refers to providing subscriptions to the Company’s digital product offerings. The Company’s “Workshops + Digital” business refers to providing subscriptions for unlimited access to the Company’s workshops combined with the Company’s digital subscription product offerings. The Company’s “Clinical” business refers to providing subscriptions to the Company’s clinical product offerings provided by WeightWatchers Clinic (formerly referred to as Sequence) combined with the Company’s digital subscription product offerings and unlimited access to the Company’s workshops. The Company also refers to its Workshops + Digital business and Digital business collectively as its “Behavioral” business. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and include amounts that are based on management’s best estimates and assumptions. While all available information has been considered, actual amounts could differ from those estimates. These estimates and assumptions may change as new events occur and additional information is obtained, and such future changes may have an adverse impact on the Company's results of operations, financial position and liquidity. The consolidated financial statements include all of the Company’s majority-owned subsidiaries. All entities acquired, and any entity of which a majority interest was acquired, are included in the consolidated financial statements from the date of acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s operating results for any interim period are not necessarily indicative of future or annual results. The consolidated financial statements are unaudited and, accordingly, they do not include all of the information necessary for a comprehensive presentation of results of operations, financial position and cash flow activity required by GAAP for complete financial statements but, in the opinion of management, reflect all adjustments, including those of a normal recurring nature, necessary for a fair statement of the interim results presented. As previously disclosed, effective the first day of fiscal 2024 (i.e., December 31, 2023), as a result of the continued evolution of the Company’s centralized organizational structure in fiscal 2023, and management’s 2024 strategic planning process, the Company’s reportable segments changed to one segment for the purpose of making operational and resource decisions and assessing financial performance. See Note 11 for disclosures related to segments. Prior period amounts have been reclassified to conform with the current period presentation. These consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for fiscal 2024 filed on February 28, 2025, which includes additional information about the Company, its results of operations, its financial position and its cash flows. Liquidity and Going Concern The Company has experienced significant disruption and competitive pressures, including shifts in consumer behavior in the weight loss category, a rapid proliferation of GLP-1 and other medications available as weight-loss options, and significantly increased competition from new entrants. These factors have negatively impacted the Company’s Behavioral business. While the Clinical business is growing, it has not yet been able to offset the declines in the Behavioral business, resulting in decreased revenue overall and decreased cash flows from operations. The Company’s management has continued to execute certain cost-savings initiatives, including the Company’s previously disclosed restructuring plans, to proactively manage the Company’s liquidity. The Company has recurring net losses. During the three months ended March 29, 2025, the Company recorded an operating loss of $20,201 and a net loss of $72,585. Operating loss included $27,549 of franchise rights acquired impairments that were non-cash. The Company’s revenues decreased from $206,548 for the three months ended March 30, 2024 to $186,571 for the three months ended March 29, 2025. Cash provided by operating activities for the three months ended March 29, 2025 was $14,998, which reflected outflows of $13,693 for interest payments and $4,545 for severance payments. The Company had a total deficit of $1,182,923 at March 29, 2025. The Company’s principal sources of liquidity are cash and cash equivalents, cash flows from operations and proceeds from the January 2025 borrowings under the Revolving Credit Facility (as defined below). The Company’s primary cash needs for the twelve months following the issuance date of the financial statements (the “issuance date”) are funding its operations and global strategic initiatives, meeting debt service requirements and other financing commitments. The Company had unrestricted cash on hand of $236,346 at March 29, 2025 (of which $39,064 is maintained at foreign subsidiaries). At March 29, 2025, the Company had outstanding $1,616,341 of total debt, consisting of borrowings under the Term Loan Facility (as defined below) of $945,000 with a stated maturity of April 13, 2028, $500,000 in aggregate principal amount of Senior Secured Notes (as defined below) with a stated maturity of April 15, 2029, and $171,341 of borrowings under the Revolving Credit Facility with a stated maturity of April 13, 2026. In order to provide flexibility in assessing strategic options and to create financial flexibility, the Company increased its outstanding debt by borrowing $50,000 and $121,341 on January 2, 2025 and January 31, 2025, respectively, under its Revolving Credit Facility, currently at an interest rate of approximately 7.3%. As a result of these drawdowns and $3,659 outstanding letters of credit, the Company has no availability for future borrowings under its Revolving Credit Facility. At the filing of the fiscal 2024 Form 10-K, the Company had the intent and ability to remain in compliance with its obligations under its debt agreements. During March 2025, the Company commenced substantive discussions with an ad hoc group of its lenders and noteholders with the aim of restructuring the Company’s debt in advance of the scheduled maturity dates and materially reducing the aggregate principal amount and corresponding interest payments. The goal of these discussions was to restructure the Company’s debt to allow increased operating cash flow for funding its operations and strategic initiatives. As a result of the negotiations with the ad hoc lender group, the Company reevaluated its intent to repay a portion of the Revolving Credit Facility. If the aggregate principal amount of extensions of credit outstanding under the Revolving Credit Facility, inclusive of outstanding letters of credit, as of any fiscal quarter end exceeds 35%, or $61,250, of the amount of the aggregate commitments under the Revolving Credit Facility, the Company is required to be in compliance with a Consolidated First Lien Leverage Ratio not to exceed 5.25:1.00 through and including the first fiscal quarter of 2025 and not to exceed 5.00:1.00 thereafter. The Company’s Consolidated First Lien Leverage Ratio as of March 29, 2025 was 7.37:1.00. Although the Company had the ability to reduce its borrowings under the Revolving Credit Facility, the Company did not reduce its borrowings under the Revolving Credit Facility to $61,250 as of March 29, 2025 as previously intended. Accordingly, the Company expects an Event of Default, as defined under the Revolving Credit Facility, to occur upon the delivery of the next compliance certificate, due on May 13, 2025, and the expiration of the applicable cure period, which is to occur on or before June 4, 2025. The Company has not requested and does not currently expect to receive a waiver and, as a result, the maturity of borrowings under the Revolving Credit Facility could be accelerated by the Revolving Credit Facility lenders as a result of the anticipated Event of Default. If the Revolving Credit Facility maturity is accelerated as a result of the anticipated Event of Default, the Term Loan Facility and Senior Secured Notes may be accelerated as the Term Loan Facility and Senior Secured Notes contain cross-default and/or cross-acceleration provisions. Based on the potential acceleration of the Revolving Credit Facility, the Term Loan Facility, and Senior Secured Notes, all outstanding borrowings under the Revolving Credit Facility, the Term Loan Facility, and Senior Secured Notes have been classified as current liabilities at March 29, 2025. The Company’s ability to meet its debt service requirements may be impacted by the anticipated Event of Default, as defined under the Revolving Credit Facility, which may result in acceleration of all of its indebtedness upon the delivery of the next compliance certificate, due on May 13, 2025, and the expiration of the applicable cure period, which is to occur on or before June 4, 2025. The Company has been engaged in substantive discussions with an ad hoc group of its lenders and noteholders representing a portion of the Term Loan Facility and Senior Secured Notes lenders and noteholders, including the negotiation of a potential restructuring support agreement. The Company currently expects that these discussions will result in a prepackaged bankruptcy filing under Chapter 11 of the U.S. Bankruptcy Code by WW International, Inc. and certain of its subsidiaries, which the Company anticipates will occur imminently. A bankruptcy filing under Chapter 11 of the U.S. Bankruptcy Code would constitute an Event of Default under the Revolving Credit Facility, Term Loan Facility and Senior Secured Notes. There is no assurance that a prepackaged bankruptcy filing will be successful in restructuring the Company’s outstanding debt. Given the anticipated Event of Default under the Revolving Credit Facility, the potential cross defaults under the Company’s Term Loan Facility and Senior Secured Notes and/or an Event of Default under the Revolving Credit Facility, Term Loan Facility and Senior Secured Notes as a result of a bankruptcy filing under Chapter 11 of the U.S. Bankruptcy Code and the inherent uncertainties associated with the Company’s discussions with lenders and noteholders, any resolution through a restructuring support agreement and bankruptcy process is uncertain and beyond management’s control. Therefore, management has concluded that as of March 29, 2025 there is substantial doubt about the Company’s ability to continue as a going concern and management’s plans at this stage do not alleviate substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not reflect any adjustments related to the recoverability of assets and satisfaction of liabilities that might be necessary should the Company be unable to continue as a going concern.

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