WW International Inc.(WW) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Financial Statements Financial statements reflect the company's June 24, 2025, Chapter 11 emergence and fresh start accounting, making Predecessor and Successor periods non-comparable - The company emerged from Chapter 11 bankruptcy on June 24, 2025, applying fresh start accounting, which renders Predecessor and Successor financial periods non-comparable due to asset and liability revaluation[29][30][32] Consolidated Balance Sheet Highlights (in thousands) | Account | Successor (June 30, 2025) | Predecessor (Dec 28, 2024) | | :--- | :--- | :--- | | Total Assets | $1,033,118 | $550,276 | | Cash and cash equivalents | $152,379 | $53,024 | | Goodwill | $199,053 | $239,583 | | Other intangible assets, net | $527,566 | $115,762 | | Total Liabilities | $652,149 | $1,664,648 | | Long-term debt, net | $465,518 | $1,430,643 | | Total Equity (Deficit) | $380,969 | ($1,114,372) | Consolidated Statement of Operations Highlights (in thousands) | Account | Successor (Jun 25-30, 2025) | Predecessor (Mar 30 - Jun 24, 2025) | Predecessor (Q2 2024) | | :--- | :--- | :--- | :--- | | Revenues, net | $12,167 | $176,997 | $202,073 | | Operating income | $2,586 | $41,404 | $35,933 | | Reorganization items, net | — | ($1,143,918) | — | | Net income | $1,254 | $1,190,688 | $23,269 | Notes to Unaudited Consolidated Financial Statements Notes detail the Chapter 11 reorganization, including emergence on June 24, 2025, fresh start accounting, debt reduction, and impairment charges, with sufficient post-emergence liquidity - The company filed for Chapter 11 bankruptcy on May 6, 2025, emerging on June 24, 2025, with the plan discharging prior debt, issuing a new $465 million term loan, and reallocating equity (91% to first lien holders, 9% to former equity holders)[29][41][42] - Fresh start accounting adoption established a reorganization value of $1.02 billion and an enterprise value of $700 million, leading to significant adjustments including $529 million in new intangible assets, primarily a $320 million trade name[45][47][98] - The company recorded a $27.5 million impairment charge on U.S. indefinite-lived franchise rights in Q1 FY2025 (Predecessor), following a $258.0 million charge in Q1 FY2024[109][108][13] - Post-emergence, the company changed its fiscal year end to December 31 from the Saturday closest to December 31[36] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Chapter 11 emergence, significant debt reduction, declining Behavioral business offset by Clinical growth, and sufficient post-restructuring liquidity - The Chapter 11 reorganization discharged approximately $1.62 billion in prepetition debt, replacing it with a new $465 million Senior Secured Term Loan Facility maturing in 2030[168][247] Combined Key Performance Metrics (Q2 2025 vs. Q2 2024) | Metric | Combined Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Subscription Revenues | | | | | Behavioral | $157.3 M | $180.2 M | (12.7%) | | Clinical | $30.6 M | $19.7 M | 55.1% | | Total | $187.9 M | $200.0 M | (6.1%) | | End of Period Subscribers | | | | | Behavioral | 3,040.5 k | 3,755.5 k | (19.0%) | | Clinical | 126.7 k | 81.0 k | 56.5% | | Total | 3,167.2 k | 3,836.5 k | (17.4%) | - The decline in Behavioral Subscription Revenues resulted from recruitment challenges and a lower subscriber base, while Clinical Subscription Revenues increased due to growth in compounded semaglutide subscriptions[215][196] - Post-emergence, the company held $152.4 million in unrestricted cash, believing its liquidity is sufficient for at least the next 12 months due to reduced debt and interest payments[248][249] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure on its new variable-rate Term Loan Facility, with a hypothetical 1.25% change impacting annual interest expense by $5.8 million - The company's market risk exposure primarily relates to interest rate changes on its new variable-rate Term Loan Facility[276] - A hypothetical 125 basis point (1.25%) change in interest rates would alter annual interest expense by approximately $5.8 million, reflecting reduced risk exposure post-debt restructuring[277] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - As of June 30, 2025, the company's principal executive and financial officers concluded that disclosure controls and procedures were effective[278] - No material changes occurred in internal control over financial reporting during the most recent fiscal quarter[279] PART II—OTHER INFORMATION Legal Proceedings The company's primary legal proceedings involve its Chapter 11 filing and emergence, with other ordinary course actions not expected to materially impact financials - The main legal proceedings are the Chapter 11 Cases, filed on May 6, 2025, and emerged from on June 24, 2025[130][133] - Management anticipates no material adverse effect on financials from other ordinary course legal matters[134] Risk Factors Key risks post-bankruptcy include impacts on business relationships, non-comparable financials due to fresh start accounting, ability to service $465.5 million debt, and risks from discontinued GLP-1 offerings - Emergence from Chapter 11 poses risks to vendor, member, and employee relationships, impacting the company's ability to execute its business plan[282] - Post-emergence financial results are not comparable to historical data due to fresh start accounting, and bankruptcy-filed projections should not be relied upon[284] - The company's ability to service its substantial new debt of $465.5 million depends on future performance, potentially affected by competition from weight management medications and other market factors[286] - The discontinued compounded GLP-1 offering (ended May 22, 2025) exposes the company to litigation, regulatory, and reputational risks, with customer transition potentially creating near-term business headwinds[294] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered equity sales during the quarter, except those related to bankruptcy emergence, and no equity repurchases were made - No unregistered sales of equity securities occurred during the quarter, except as previously disclosed regarding the bankruptcy emergence[302] - The company did not repurchase any of its equity securities during the quarter[303]