Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with our consolidated financial statements and related notes included in Item 15 of this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, strategies, prospects, objectives, expectations and intentions. The cautionary statements discussed in “Cautionary Notice Regarding Forward-Looking Statements” and elsewhere in this Annual Report on Form 10-K should be read as applying to all forward-looking statements wherever they appear in this Annual Report on Form 10-K. Our actual results could differ materially from those discussed here. Factors that could cause or contribute to these differences include, without limitation, those discussed in “Risk Factors” included in Item 1A of this Annual Report on Form 10-K. For the discussion of the financial condition and results of operations for the year ended December 30, 2023 compared to the year ended December 31, 2022, refer to "Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 filed with the SEC on February 28, 2024, which discussion is incorporated herein by reference.

Overview

We are a global leader in weight management, combining science and community, to help our millions of members live their healthiest lives. With over six decades of weight management experience, expertise and know-how, we are the most recognized brand name in the field of weight loss. Our unique portfolio, including clinical solutions in the United States, empowers people to achieve their weight management goals and sustain their results. We are powered by our proprietary digital platform that provides members with access to our science-backed behavioral weight loss and weight management programs – our Points Program, Diabetes Program and GLP-1 Program – and our virtual and in-person community. We believe our community increases accountability and provides our members with inspiration, human connection, and support. In the United States, our digital platform also provides our members access to a network of licensed, specialized healthcare professionals who can provide clinical weight management support, including prescribing medications to those clinically eligible, through WeightWatchers Clinic-affiliated practices. As the number of people with overweight and obesity worldwide continues to grow, the need for effective, scalable, consumer-friendly and tailored weight management programs and access to weight-loss medication continues to increase. We believe the combination of our effective programs, global presence, active community and brand awareness uniquely position us to attract new and returning members and impact the weight management market.

Our primary sources of revenue are subscriptions for our digital, workshop, and clinical offerings. Our “Digital” business refers to providing subscriptions to our digital product offerings. Our “Workshops + Digital” business refers to providing subscriptions for unlimited access to our workshops combined with our digital subscription product offerings. Our “Clinical” business refers to providing subscriptions to our clinical product offerings provided by WeightWatchers Clinic (formerly referred to as Sequence) combined with our digital subscription product offerings and unlimited access to our workshops. We also refer to our Workshops + Digital business and Digital business collectively as our “Behavioral” business.

We provide services in numerous countries around the world. 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. The segment information presented in this Annual Report on Form 10-K for fiscal 2023 and fiscal 2022 has been updated to reflect this reportable segment structure.

Non-GAAP Financial Measures

To supplement our consolidated results presented in accordance with accounting principles generally accepted in the United States (“GAAP”), we have disclosed non-GAAP financial measures of operating results that exclude or adjust certain items. Gross profit, gross margin, operating (loss) income, operating (loss) income margin and components thereof are discussed in this Annual Report on Form 10-K both as reported (on a GAAP basis) and as adjusted (on a non-GAAP basis), as applicable, with respect to (i) fiscal 2024 to exclude (a) the impact of impairment charges for our franchise rights acquired related to our United States, Australia, United Kingdom and New Zealand units of account, (b) the net impact of (x) charges associated with our previously disclosed 2024 restructuring plan (the “2024 plan”), (y) charges associated with our previously disclosed 2023 restructuring plan (the “2023 plan”) and (z) charges associated with our previously disclosed 2022 restructuring plan (the “2022 plan”) or the reversal of certain of the charges associated with the 2022 plan, as applicable, and (c) the impact of certain non-recurring expenses in connection with the separation from the Company of our former Chief Executive Officer (“CEO”); and (ii) fiscal 2023 to exclude (a) the net impact of (w) charges associated with the 2023 plan, (x) charges associated with the 2022 plan or the reversal of certain of the charges associated with the 2022 plan, as applicable, (y) charges associated with our previously disclosed 2021 organizational restructuring plan (the “2021 plan”) or the reversal of certain of the charges associated with the 2021 plan, as applicable, and (z) the reversal of certain of the charges associated with our previously disclosed 2020 organizational restructuring plan (the “2020 plan”), (b) the impact of certain non-recurring transaction costs in connection with the acquisition of Sequence, and (c) the impact of the impairment charges for our goodwill related to our Republic of Ireland and Northern Ireland reporting units and the impairment charge for our franchise rights acquired related to our Northern Ireland unit of account. We generally refer to such non-GAAP measures as excluding or adjusting for the impact of franchise rights acquired and goodwill impairments, the net impact of restructuring charges, the impact of former CEO separation expenses, and the impact of acquisition transaction costs, as applicable. We also present within this Annual Report on Form 10-K the non-GAAP financial measures: earnings before interest, taxes, depreciation, amortization and stock-based compensation (“EBITDAS”); earnings before interest, taxes, depreciation, amortization, stock-based compensation, franchise rights acquired and goodwill impairments, net restructuring charges, former CEO separation expenses, and acquisition transaction costs (“Adjusted EBITDAS”); total debt less unamortized deferred financing costs, unamortized debt discount and cash on hand (i.e., net debt); and a net debt/Adjusted EBITDAS ratio. See “—Liquidity and Capital Resources—EBITDAS, Adjusted EBITDAS and Net Debt” for the reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure in each case. Our management believes these non-GAAP financial measures provide useful supplemental information to investors regarding the performance of our business and are useful for period-over-period comparisons of the performance of our business. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies.

Use of Constant Currency

As exchange rates are an important factor in understanding period-to-period comparisons, we believe in certain cases the presentation of results on a constant currency basis in addition to reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We use results on a constant currency basis as one measure to evaluate our performance. In this Annual Report on Form 10-K, we calculate constant currency by calculating current-year results using prior-year foreign currency exchange rates. We generally refer to such amounts calculated on a constant currency basis as excluding or adjusting for the impact of foreign currency or being on a constant currency basis. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP and are not meant to be considered in isolation. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.

Components of our Results of Operations

Revenues

We derive our revenues principally from:

•

Subscription Revenues. Our “Subscription Revenues” consist of the aggregate of: (a) “Digital Subscription Revenues”, the fees associated with subscriptions for our Digital offerings; (b) “Workshops + Digital Subscription Revenues”, the fees associated with subscriptions for our Workshops + Digital offerings; and (c) “Clinical Subscription Revenues”, the fees associated with subscriptions for our Clinical offerings. See “—Overview” above for additional details on these offerings.

•

Other Revenues. We license our trademarks and other intellectual property in certain categories of food, beverages and other weight management-relevant consumer products and services. We also co-brand with or endorse carefully selected branded consumer products and services. In addition, we generate revenues from franchise fees with respect to commitment plans and royalties, and publishing. Prior to fiscal 2024, we also sold a range of consumer products, including bars, snacks, cookbooks and kitchen tools, online through our e-commerce platforms, at our studios, and through our trusted partners. Our consumer products business closed at the end of fiscal 2023.

The following table sets forth our revenues by category for the past two fiscal years.

Revenue Sources

(in millions)

Note: Totals may not sum due to rounding.

Total revenues for fiscal 2024 decreased 11.6% versus fiscal 2023 driven by both a decrease in Other Revenues and a decrease in Subscription Revenues. Additional revenue details are as follows:

•

Other Revenues. Other Revenues for fiscal 2024 decreased 86.6% versus fiscal 2023 driven primarily by the closure of our consumer products business at the end of fiscal 2023.

•

Subscription Revenues. Subscription Revenues for fiscal 2024 decreased 5.6% versus fiscal 2023 driven primarily by a decrease in Digital Subscription Revenues and, to a lesser extent, a decrease in Workshops + Digital Subscription Revenues due to a higher mix of Digital subscribers within their initial, lower-priced commitment periods and recruitment declines. Workshops + Digital Subscription Revenues were also negatively impacted by the continued mix shift from our Workshops + Digital business to our Digital business. In addition, the lower number of Incoming Workshops + Digital Subscribers at the beginning of fiscal 2024 versus the beginning of fiscal 2023 contributed to the decrease in Workshops + Digital Subscription Revenues in the year. Subscription Revenues for fiscal 2024 benefited from Clinical Subscription Revenues following our acquisition of Sequence during the second quarter of fiscal 2023. End of Period Subscribers for fiscal 2024 decreased 12.2% versus the prior year. Recruitment and retention continue to be a key strategic focus.

Cost of Revenues

Total cost of revenues primarily consists of expenses to operate our studios and workshops, costs to develop and provide our digital and clinical products and costs to sell consumer products. Operating costs primarily consist of salary expense paid to operations management, commissions and expenses paid to our employees, coaches and guides, clinicians, studio room rent, customer service costs (both in-house and third-party), program material expenses, depreciation and amortization associated with field automation, credit card and fulfillment fees and training and other expenses. Cost to sell products includes costs of products purchased from our third-party suppliers, inventory reserves, royalties, and inbound and outbound shipping and related costs incurred in making our products available for sale or use. Costs to operate our products include salaries and related benefits, depreciation and amortization of capitalized software and website development, credit card processing fees and other costs incurred in developing our offerings, as applicable.

Marketing Expenses

Marketing expenses primarily consist of costs to produce advertising and marketing materials as well as media costs to advertise our brand and products across multiple platforms (e.g., television, YouTube, social media, programmatic, audio, search, affiliate, branded content, electronic customer relationship marketing (eCRM), direct mail and public relations), costs paid to third-party agencies who help us develop our marketing campaigns and strategy, expenses associated with brand ambassadors, expenses in support of market research, as well as costs incurred in connection with local marketing and promotions.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of compensation, benefits and other related costs, including stock-based compensation, third-party consulting, temporary help, audit, legal and litigation expenses as well as facility costs and depreciation and amortization of systems in support of the business infrastructure and offices globally. Selling, general and administrative expenses also include amortization expense of certain of our intangible assets and certain one-time transaction expenses.

Gross Margin

The following table sets forth our gross profit and gross margin for the past two fiscal years, as adjusted for fiscal 2024 and fiscal 2023 to exclude the net impact of restructuring charges. See “Non-GAAP Financial Measures” for additional information.

(in millions except percentages) Fiscal 2024 Fiscal 2023

Adjustments to Reported Amounts (1)

2024 plan restructuring charges 2.5 —

2022 plan restructuring charges 0.0 (0.0 )

2021 plan restructuring charges — 0.1

2020 plan restructuring charges — (0.0 )

Gross Margin impact from above adjustments (1) (0.6 %) (2.4 %)

Gross Margin, as adjusted (1) 68.5 % 61.9 %

Note: Totals may not sum due to rounding.

(1)

The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of operations for fiscal 2024 to exclude the net impact of the $2.5 million ($1.9 million after tax) of 2024 plan restructuring charges, the $2.5 million ($1.9 million after tax) of 2023 plan restructuring charges and the $26 thousand ($19 thousand after tax) of 2022 plan restructuring charges, and for fiscal 2023 to exclude the net impact of the $21.1 million ($15.8 million after tax) of 2023 plan restructuring charges, the reversal of $4 thousand ($3 thousand after tax) of 2022 plan restructuring charges, the $0.1 million ($0.1 million after tax) of 2021 plan restructuring charges and the reversal of $21 thousand ($16 thousand after tax) of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures.

Operating (Loss) Income Margin

The following table sets forth our operating (loss) income and operating (loss) income margin for the past two fiscal years, as adjusted for fiscal 2024 and fiscal 2023 to exclude the impact of franchise rights acquired and goodwill impairments, the net impact of restructuring charges, the impact of former CEO separation costs, and the impact of the acquisition transaction costs, as applicable. See “Non-GAAP Financial Measures” for additional information.

(in millions except percentages) Fiscal 2024 Fiscal 2023

Operating (Loss) Income $ (236.2 ) $ 22.3

Operating (Loss) Income Margin (30.1 %) 2.5 %

Adjustments to Reported Amounts (1)

Franchise rights acquired and goodwill impairments 315.0 3.6

2024 plan restructuring charges 17.0 —

2021 plan restructuring charges — 0.1

2020 plan restructuring charges — (0.0 )

Former CEO separation expenses 3.9 —

Acquisition transaction costs — 8.6

Operating Income, as adjusted (1) $ 104.8 $ 89.5

Operating Income Margin impact from above adjustments (1) (43.4 %) (7.5 %)

Operating Income Margin, as adjusted (1) 13.3 % 10.1 %

Note: Totals may not sum due to rounding.

(1)

The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of operations for fiscal 2024 to exclude the impact of the $315.0 million ($293.2 million after tax) of franchise rights acquired impairments, the net impact of the $17.0 million ($12.8 million after tax) of 2024 plan restructuring charges, the $5.1 million ($3.8 million after tax) of 2023 plan restructuring charges and the $8 thousand ($6 thousand after tax) of 2022 plan restructuring charges, and the impact of the $3.9 million ($2.9 million after tax) of former CEO separation expenses, and for fiscal 2023 to exclude the impact of the $3.6 million ($3.6 million after tax) of franchise rights acquired and goodwill impairments, the net impact of the $53.7 million ($40.3 million after tax) of 2023 plan restructuring charges, the $1.1 million ($0.9 million after tax) of 2022 plan restructuring charges, the $0.1 million ($43 thousand after tax) of 2021 plan restructuring charges and the reversal of $21 thousand ($16 thousand after tax) of 2020 plan restructuring charges, and the impact of the $8.6 million ($7.5 million after tax) of acquisition transaction costs. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures.

Material Trends

Performance Indicators

Our management team regularly reviews and analyzes a number of financial and operating metrics, including the key performance indicators listed below, in order to manage our business, measure our performance, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and assess the quality and potential variability of our cash flows and earnings. We also believe that these key performance indicators are useful to both management and investors for forecasting purposes and to facilitate comparisons to our historical operating results. These metrics are supplemental to our GAAP results and include operational measures.

•

Revenues—Our “Subscription Revenues” consist of the aggregate of: (a) “Digital Subscription Revenues”, the fees associated with subscriptions for our Digital offerings; (b) “Workshops + Digital Subscription Revenues”, the fees associated with subscriptions for our Workshops + Digital offerings; and (c) “Clinical Subscription Revenues”, the fees associated with subscriptions for our Clinical offerings. See “—Overview” above for additional details on these offerings. In addition, “Other Revenues” (formerly known as “product sales and other”) consist of revenues from licensing, franchise fees with respect to commitment plans and royalties, publishing and other revenues. Prior to fiscal 2024, “Other Revenues” included sales of consumer products.

•

Paid Weeks—The “Paid Weeks” metric reports paid weeks by WW customers in Company-owned operations for a given period as follows: (i) “Digital Paid Weeks” is the total paid subscription weeks for our Digital offerings; (ii) “Workshops + Digital Paid Weeks” is the total paid subscription weeks for our Workshops + Digital offerings; (iii) “Clinical Paid Weeks” is the total paid subscription weeks for our Clinical offerings; and (iv) “Total Paid Weeks” is the sum of Digital Paid Weeks, Workshops + Digital Paid Weeks and Clinical Paid Weeks.

•

Incoming Subscribers—“Subscribers” refer to Digital subscribers, Workshops + Digital subscribers and Clinical subscribers who participate in recurring bill programs in Company-owned operations. The “Incoming Subscribers” metric reports Subscribers in Company-owned operations at a given period start as follows: (i) “Incoming Digital Subscribers” is the total number of Digital subscribers; (ii) “Incoming Workshops + Digital Subscribers” is the total number of Workshops + Digital subscribers; (iii) “Incoming Clinical Subscribers” is the total number of Clinical subscribers; and (iv) “Incoming Subscribers” is the sum of Incoming Digital Subscribers, Incoming Workshops + Digital Subscribers and Incoming Clinical Subscribers, as applicable. Given we completed our acquisition of Sequence in April 2023 after the beginning of the second quarter of fiscal 2023, we have incoming subscribers with respect to our Clinical business for fiscal 2024, but not for fiscal 2023. Recruitment and retention are key drivers for this metric.

•

End of Period Subscribers—The “End of Period Subscribers” metric reports Subscribers in Company-owned operations at a given period end as follows: (i) “End of Period Digital Subscribers” is the total number of Digital subscribers; (ii) “End of Period Workshops + Digital Subscribers” is the total number of Workshops + Digital subscribers; (iii) “End of Period Clinical Subscribers” is the total number of Clinical subscribers; and (iv) “End of Period Subscribers” is the sum of End of Period Digital Subscribers, End of Period Workshops + Digital Subscribers and End of Period Clinical Subscribers. Recruitment and retention are key drivers for this metric.

•

Gross profit and operating expenses as a percentage of revenue.

Market Trends

Our revenues and profitability can be sensitive to major trends in the weight management and health and wellness industries. In particular, we believe that our business could be adversely impacted by:

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the development of more effective or more favorably perceived weight management methods or technologies, including by the pharmaceutical, genetics and biotechnology industries;

•

the rapidly evolving and increasingly competitive clinical weight management and weight loss market and increasing consumer interest in weight management medications and the failure of our offerings to compete in such market and environment;

•

the rapidly evolving regulatory landscape applicable to GLP-1s and the implications for our new compounded GLP-1 offering;

•

reduced consumer interest in commercial weight loss and diet programs;

•

increased competition from weight loss and wellness apps;

•

a failure to develop and market new, innovative services and products, to enhance our existing services and products, or to successfully expand into new channels of distribution or respond to consumer trends or sentiment, including the failure of new services or products to appeal to evolving consumer sentiment;

•

a failure to successfully implement new strategic initiatives;

•

a decrease in the effectiveness of our marketing, advertising, and social media programs or an increase in the effectiveness of our competitors’ similar programs;

•

an impairment of our brands and other intellectual property;

•

a failure of our technology or systems to perform as designed;

•

any event or condition that impedes people from accessing resources or discourages or impedes people from gathering with others; and

•

a downturn in general economic conditions or consumer confidence.

Critical Accounting Estimates

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to the impairment analysis for goodwill and other indefinite-lived intangible assets. We base our estimates on historical experience and on various other factors and assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. Based on this criteria, we believe the following accounting policies are most important to the portrayal of our financial condition and results of operations and require our most significant judgments and estimates. In addition, there are other items within our financial statements that require estimation, but are not deemed critical as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.

Franchise Rights Acquired

Finite-lived franchise rights acquired are amortized over the remaining contractual period, which is generally less than one year. Indefinite-lived franchise rights acquired are tested for potential impairment on at least an annual basis or more often if events so require.

In performing the impairment analysis for indefinite-lived franchise rights acquired, the fair value for franchise rights acquired is estimated using a discounted cash flow approach referred to as the hypothetical start-up approach for franchise rights related to our Workshops + Digital business and a relief from royalty methodology for franchise rights related to our Digital business. The aggregate estimated fair value for these franchise rights is then compared to the carrying value of the unit of account for these rights. We have determined the appropriate unit of account for purposes of assessing impairment to be the combination of the rights in both the Workshops + Digital business and the Digital business in the country in which the applicable acquisition occurred. The net book value of franchise rights acquired for the United States unit of account as of the December 28, 2024 balance sheet date was $68.6 million, which represented 100.0% of total franchise rights acquired as of December 28, 2024.

In our hypothetical start-up approach analyses for fiscal 2024, we assumed that the year of maturity was reached after 7 years. Subsequent to the year of maturity, we estimated future cash flows for the Workshops + Digital business in each country based on assumptions regarding revenue growth and operating income margins. In our relief from royalty approach analyses for fiscal 2024, the cash flows associated with the Digital business in each country were based on the expected Digital revenue for such country and the application of a royalty rate based on current market terms. The cash flows for the Workshops + Digital and the Digital businesses were discounted utilizing rates which were calculated using the weighted average cost of capital, which included the cost of equity and the cost of debt.

Goodwill

In performing the impairment analysis for goodwill, the fair value for our reporting units is estimated using a discounted cash flow approach. This approach involves projecting future cash flows attributable to the reporting unit and discounting those estimated cash flows using an appropriate discount rate. The estimated fair value is then compared to the carrying value of the reporting unit. We have determined the appropriate reporting units for purposes of assessing goodwill impairment to be the Behavioral and Clinical business lines. Our “Behavioral” business line consists of our Workshops + Digital business and Digital business. The net book values of goodwill for the Behavioral and Clinical reporting units as of the December 28, 2024 balance sheet date were $149.8 million and $89.7 million, respectively, which represented 62.5% and 37.5%, respectively, of total goodwill as of December 28, 2024.

In performing the impairment analysis for goodwill, for all of our reporting units, we estimated future cash flows by utilizing the historical debt-free cash flows (cash flows provided by operations less capital expenditures) attributable to each of the Behavioral and Clinical reporting units and then applied expected future operating income growth rates for the respective reporting unit. We utilized operating income as the basis for measuring our potential growth because we believe it is the best indicator of the performance of our business. We then discounted the estimated future cash flows utilizing a discount rate which was calculated using the weighted average cost of capital, which included the cost of equity and the cost of debt.

Indefinite-Lived Franchise Rights Acquired and Goodwill Impairment Tests

We review indefinite-lived franchise rights acquired and goodwill for potential impairment on at least an annual basis or more often if events so require. We performed our annual fair value impairment testing as of May 5, 2024 and May 7, 2023, each the first day of fiscal May, on our indefinite-lived franchise rights acquired and goodwill. In addition, based on triggering events, we performed interim impairment tests as of March 30, 2024 and September 28, 2024 on our indefinite-lived franchise rights acquired and goodwill for the first and third quarters of fiscal 2024, respectively.

When determining fair value, we utilize various assumptions, including projections of future cash flows, revenue growth rates, operating income margins and discount rates. A change in these underlying assumptions could cause a change in the results of the impairment assessments and, as such, could cause fair value to be less than the carrying values and result in an impairment of those assets. In the event such a result occurred, we would be required to record a corresponding charge, which would impact earnings. We would also be required to reduce the carrying values of the related assets on our balance sheet. We continue to evaluate these assumptions and believe that these assumptions are appropriate.

In performing our impairment analyses, we also considered the trading value of both our equity and debt. If the trading values of both our equity and debt were to significantly decline from their levels at the time of testing, we may have to take an impairment charge at the appropriate time, which could be material. For additional information on risks associated with our recognizing asset impairment charges, see the risk factor titled “We have in the past and may in the future be required to recognize asset impairment charges for indefinite- and definite-lived assets” found in “Item 1A. Risk Factors” of this Annual Report on Form 10-K.

As a result of the inherent uncertainty associated with forming the estimates within our goodwill and franchise rights acquired impairment tests, actual results could differ from those estimates. Future events and changing market conditions may impact our assumptions as to future revenue and operating margin growth, weighted average cost of capital, and other factors that may result in changes in our estimates of fair value. Although we believe the assumptions used in testing for impairment are reasonable, a lack of recovery or further deterioration in market conditions or financial performance, a lack of recovery or further decline in our share price from current levels for a sustained period, or an increase in the market-based weighted average cost of capital, among other factors, could significantly impact our impairment analysis and may result in future franchise rights acquired or goodwill impairment charges that, if incurred, could have a material adverse effect on our financial condition and results of operations.

Further information regarding the results of our franchise rights acquired and goodwill annual impairment tests and our franchise rights acquired and goodwill interim impairment tests for the first and third quarters of fiscal 2024 can be found in Note 7 “Franchise Rights Acquired, Goodwill and Other Intangible Assets” of the notes to the audited consolidated financial statements, contained in Part IV, Item 15 of this Annual Report on Form 10-K.

Critical Accounting Policies

Information concerning our critical accounting policies is set forth in Note 2 “Summary of Significant Accounting Policies” of the notes to the audited consolidated financial statements, contained in Part IV, Item 15 of this Annual Report on Form 10-K.

RESULTS OF OPERATIONS FOR FISCAL 2024 (52 weeks) COMPARED TO FISCAL 2023 (52 weeks)

The table below sets forth selected financial information for fiscal 2024 from our consolidated statements of operations for fiscal 2024 versus selected financial information for fiscal 2023 from our consolidated statements of operations for fiscal 2023.

Summary of Selected Financial Data

(In millions, except per share amounts)

Fiscal 2024 Fiscal 2023 Increase/(Decrease) %Change % ChangeConstantCurrency

Operating (Loss) Income Margin % (30.1 %) 2.5 %

Weighted average diluted shares outstanding 79.6 76.7 2.9 3.8 % 3.8 %

Note: Totals may not sum due to rounding.

* Note: Percentage in excess of 100.0% and not meaningful.

Certain results for fiscal 2024 are adjusted to exclude the impact of franchise rights acquired impairments, the net impact of restructuring charges, and the impact of former CEO separation expenses. See “Non-GAAP Financial Measures” above. The table below sets forth a reconciliation of certain of those components of our selected financial data for the fiscal year ended December 28, 2024 which have been adjusted.

Operating

Operating (Loss)

Gross Gross (Loss) Income

(in millions except percentages) Profit Margin Income Margin

Adjustments to reported amounts (1)

Franchise rights acquired impairments — 315.0

Former CEO separation expenses — 3.9

Note: Totals may not sum due to rounding.

(1)

Certain results for fiscal 2023 are adjusted to exclude the net impact of restructuring charges, the impact of acquisition transaction costs, and the impact of franchise rights acquired and goodwill impairments. See “Non-GAAP Financial Measures” above. The table below sets forth a reconciliation of certain of those components of our selected financial data for the fiscal year ended December 30, 2023 which have been adjusted.

Operating

Gross Gross Operating Income

(in millions except percentages) Profit Margin Income Margin

Adjustments to reported amounts (1)

2022 plan restructuring charges (0.0 ) 1.1

2020 plan restructuring charges (0.0 ) (0.0 )

Acquisition transaction costs — 8.6

Franchise rights acquired and goodwill impairments — 3.6

Note: Totals may not sum due to rounding.

(1)

The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of operations for fiscal 2023 to exclude the net impact of the $53.7 million ($40.3 million after tax) of 2023 plan restructuring charges, the $1.1 million ($0.9 million after tax) of 2022 plan restructuring charges, the $0.1 million ($43 thousand after tax) of 2021 plan restructuring charges and the reversal of $21 thousand ($16 thousand after tax) of 2020 plan restructuring charges, the impact of the $8.6 million ($7.5 million after tax) of acquisition transaction costs, and the impact of $3.6 million ($3.6 million after tax) of franchise rights acquired and goodwill impairments. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures.

Consolidated Results

Revenues

Revenues for fiscal 2024 were $785.9 million, a decrease of $103.6 million, or 11.6%, versus fiscal 2023. Excluding the impact of foreign currency, which positively impacted our revenues in fiscal 2024 by $0.7 million, revenues for fiscal 2024 would have decreased 11.7% versus the prior year. This decrease was driven by both a decrease in Other Revenues and a decrease in Subscription Revenues. The decrease in Other Revenues for fiscal 2024 versus the prior year was driven primarily by the closure of our consumer products business at the end of fiscal 2023. The decrease in Subscription Revenues for fiscal 2024 versus the prior year was driven primarily by a higher mix of Digital subscribers within their initial, lower-priced commitment periods and Behavioral recruitment declines. Additionally, Subscription Revenues were negatively impacted by the continued mix shift from our Workshops + Digital business to our Digital business. Subscription Revenues included $78.0 million of Clinical Subscription Revenues for fiscal 2024 versus $30.5 million of Clinical Subscription Revenues for fiscal 2023 as a result of our acquisition of Sequence closing during the second quarter of fiscal 2023. See “—Operating Results” for additional details on revenues.

Cost of Revenues

Cost of revenues for fiscal 2024 decreased $107.4 million, or 29.8%, versus fiscal 2023. Excluding the impact of foreign currency, which increased cost of revenues in fiscal 2024 by $0.1 million, cost of revenues for fiscal 2024 would have decreased 29.8% versus the prior year. Excluding the net impact of the $5.0 million of restructuring charges in fiscal 2024 and the net impact of the $21.2 million of restructuring charges in fiscal 2023, cost of revenues for fiscal 2024 would have decreased by 26.9%, both as adjusted and as adjusted on a constant currency basis, versus the prior year as a result of the closure of the consumer products business and cost actions taken to reduce the fixed cost base of the Workshops + Digital business.

Gross Profit

Gross profit for fiscal 2024 increased $3.8 million, or 0.7%, versus fiscal 2023. Excluding the impact of foreign currency, which positively impacted gross profit in fiscal 2024 by $0.6 million, gross profit for fiscal 2024 would have increased 0.6% versus the prior year. Excluding the net impact of the $5.0 million of restructuring charges in fiscal 2024 and the net impact of the $21.2 million of restructuring charges in fiscal 2023, gross profit for fiscal 2024 would have decreased by 2.2%, or 2.3% on a constant currency basis, versus the prior year. Gross margin for fiscal 2024 increased to 67.8%, both as reported and on a constant currency basis, versus 59.5% for fiscal 2023. Excluding the net impact of restructuring charges in fiscal 2024 and the net impact of restructuring charges in fiscal 2023, gross margin for fiscal 2024 would have increased 6.6% to 68.5%, both as adjusted and as adjusted on a constant currency basis, versus the prior year. This gross margin increase was driven primarily by actions to reduce the fixed cost base within our business and the closure of our lower margin consumer products business at the end of fiscal 2023.

Marketing

Marketing expenses for fiscal 2024 decreased $1.9 million, or 0.8%, versus fiscal 2023. Foreign currency had a de minimis impact on marketing expenses for fiscal 2024. This decrease in marketing expenses was primarily due to lower spend on agency fees and TV advertising and production fees, partially offset by higher spend on online advertising. Marketing expenses as a percentage of revenue for fiscal 2024 increased to 30.1% from 26.8% for fiscal 2023 as a result of a decrease in Subscription Revenues due to Behavioral recruitment declines.

Selling, General and Administrative

Selling, general and administrative expenses for fiscal 2024 decreased $47.1 million, or 17.8%, versus fiscal 2023. Excluding the impact of foreign currency, which increased selling, general and administrative expenses in fiscal 2024 by $0.1 million, selling, general and administrative expenses for fiscal 2024 would have decreased 17.8% versus the prior year. Excluding the net impact of the $17.1 million of restructuring charges in fiscal 2024, the $3.9 million of former CEO separation expenses in fiscal 2024, the net impact of the $33.7 million of restructuring charges in fiscal 2023 and the impact of the $8.6 million of acquisition transaction costs in fiscal 2023, selling, general and administrative expenses for fiscal 2024 would have decreased by 11.6%, both as adjusted and as adjusted on a constant currency basis, versus the prior year. This decrease in selling, general and administrative expenses was primarily due to a decline in employee compensation and related costs from continued cost discipline and execution towards our cost savings initiative plan announced in 2024, partially offset by an increase in bad debt expense. Selling, general and administrative expenses as a percentage of revenue for fiscal 2024 decreased to 27.7% from 29.8% for fiscal 2023. Excluding the net impact of restructuring charges in fiscal 2024, the impact of former CEO separation expenses in fiscal 2024, the net impact of restructuring charges in fiscal 2023 and the impact of acquisition transaction costs in fiscal 2023, there would have been no change in selling, general and administrative expenses as a percentage of revenue for fiscal 2024, both as adjusted and as adjusted on a constant currency basis, versus the prior year.

Impairments

In performing our interim impairment analysis as of September 28, 2024, we determined that the carrying values of our United States and United Kingdom franchise rights acquired with indefinite-lived units of account exceeded their respective fair values and, as a result, we recorded impairment charges for our United States and United Kingdom units of account of $54.3 million and $2.8 million, respectively, in the third quarter of fiscal 2024.

In performing our interim impairment analysis as of March 30, 2024, we determined that the carrying values of our United States, Australia, New Zealand and United Kingdom franchise rights acquired with indefinite-lived units of account exceeded their respective fair values and, as a result, we recorded impairment charges for our United States, Australia, New Zealand and United Kingdom units of account of $251.4 million, $4.1 million, $2.3 million and $0.2 million, respectively, in the first quarter of fiscal 2024.

During the fourth quarter of fiscal 2023, we had a shift in future strategic priorities and as a result, a triggering event occurred which required us to impair the remaining (i) goodwill balances for our Republic of Ireland and Northern Ireland reporting units, resulting in goodwill impairment charges of $2.4 million and $1.2 million, respectively, and (ii) franchise rights acquired balance for our Northern Ireland unit of account, resulting in a franchise rights acquired impairment charge of $47 thousand.

Operating (Loss) Income

Operating loss for fiscal 2024 was $236.2 million compared to operating income for fiscal 2023 of $22.3 million. Operating loss for fiscal 2024 was positively impacted by $0.4 million of foreign currency. Excluding the impact of the $315.0 million of franchise rights acquired impairments in fiscal 2024, the net impact of the $22.2 million of restructuring charges in fiscal 2024, the impact of the $3.9 million of former CEO separation expenses in fiscal 2024, the net impact of the $54.9 million of restructuring charges in fiscal 2023, the impact of the $8.6 million of acquisition transaction costs in fiscal 2023, and the impact of the $3.6 million of franchise rights acquired and goodwill impairments in fiscal 2023, operating income would have been $104.8 million, or $104.4 million on a constant currency basis, for fiscal 2024 versus operating income of $89.5 million for fiscal 2023. Operating loss margin for fiscal 2024 was 30.1% compared to operating income margin for fiscal 2023 of 2.5%. Excluding the impact of franchise rights acquired impairments in fiscal 2024, the net impact of restructuring charges in fiscal 2024, the impact of former CEO separation expenses in fiscal 2024, the net impact of restructuring charges in fiscal 2023, the impact of acquisition transaction costs in fiscal 2023, and the impact of the franchise rights acquired and goodwill impairments in fiscal 2023, operating income margin would have been 13.3%, both as adjusted and as adjusted on a constant currency basis, for fiscal 2024 versus operating income margin of 10.1% for fiscal 2023. This increase in operating income margin was driven primarily by an increase in gross margin, partially offset by an increase in marketing expenses as a percentage of revenue, versus the prior year.

Interest Expense

Interest expense for fiscal 2024 increased $13.1 million, or 13.6%, versus fiscal 2023. The increase in interest expense was driven primarily by an increase in the base rate of our Term Loan Facility (as defined below). The effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing costs and debt discount) and our average borrowings during fiscal 2024 and fiscal 2023 and excluding the impact of any applicable interest rate swaps, increased to 7.74% per annum for fiscal 2024 from 7.64% per annum for fiscal 2023. Interest expense was impacted by the termination of our interest rate swaps on March 31, 2024. Including the impact of any applicable interest rate swaps, the effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing costs and debt discount) and our average borrowings during fiscal 2024 and fiscal 2023, increased to 7.50% per annum for fiscal 2024 from 6.73% per annum for fiscal 2023. See “—Liquidity and Capital Resources—Long-Term Debt” for additional details regarding our debt, including interest rates and payments thereon. Further information regarding our use of interest rate swaps can be found in Note 19 “Derivative Instruments and Hedging” of the notes to the audited consolidated financial statements contained in this Annual Report on Form 10-K.

Other (Income) Expense, Net

Other (income) expense, net, which consists primarily of the negative impact of foreign currency on intercompany transactions, changed by $0.1 million for fiscal 2024 to $0.0 million of income as compared to $0.1 million of expense for fiscal 2023.

Tax

Our effective tax rate for fiscal 2024 was (0.2%) compared to (52.5%) for fiscal 2023. The tax expense for fiscal 2024 was impacted by a tax expense due to a valuation allowance and a tax expense related to share-based awards, partially offset by a tax benefit related to state tax and a tax benefit related to foreign-derived intangible income (“FDII”).

In addition, for fiscal 2024, the effective tax rate was impacted by out-of-period income tax adjustments and tax expense from a valuation allowance established to offset certain non-U.S. deferred tax assets due to the uncertainty of realizing future tax benefits. The adoption of the Organization for Economic Cooperation and Development’s global tax reform initiative, which introduces a global minimum tax of 15% applicable to large multinational corporations, impacted our effective tax rate for fiscal 2024 by (0.04%) related to Canadian top up tax.

We continue to evaluate the realizability of our deferred tax assets and based on the weight of the available evidence, we provided a full valuation allowance against the U.S. deferred tax assets.

The tax expense for fiscal 2023 was impacted by a tax expense due to a valuation allowance and a tax expense related to income earned in foreign jurisdictions at rates higher than the U.S., partially offset by a tax benefit related to state tax and a tax benefit related to FDII.

Net Loss and Diluted Net Loss Per Share

Net loss for fiscal 2024 was $345.7 million compared to net loss for fiscal 2023 of $112.3 million. Net loss for fiscal 2024 was positively impacted by $0.3 million of foreign currency. Net loss for fiscal 2024 included a $293.2 million impact from franchise rights acquired impairments, a $16.6 million net impact from restructuring charges, and a $2.9 million impact from former CEO separation expenses. Net loss for fiscal 2023 included a $41.2 million net impact from restructuring charges, a $7.5 million impact from acquisition transaction costs, and a $3.6 million impact from franchise rights acquired and goodwill impairments. Additionally, net loss for fiscal 2023 included a $50.6 million tax expense from the increase in the partial valuation allowance established in fiscal 2022 to a full valuation allowance in fiscal 2023 to offset all U.S. deferred tax assets due to the uncertainty of realizing future tax benefits of the assets.

Diluted net loss per share for fiscal 2024 was $4.34 compared to diluted net loss per share for fiscal 2023 of $1.46. Diluted net loss per share for fiscal 2024 included a $3.68 impact from franchise rights acquired impairments, a $0.21 net impact from restructuring charges, and a $0.04 impact from former CEO separation expenses. Diluted net loss per share for fiscal 2023 included a $0.54 net impact from restructuring charges, a $0.10 impact from acquisition transaction costs, and a $0.05 impact from franchise rights acquired and goodwill impairments. Additionally, diluted net loss per share for fiscal 2023 included a $0.66 tax expense from the increase in the partial valuation allowance established in fiscal 2022 to a full valuation allowance in fiscal 2023 to offset all U.S. deferred tax assets due to the uncertainty of realizing future tax benefits of the assets.

Operating Results

As previously disclosed, effective the first day of fiscal 2024 (i.e., December 31, 2023), as a result of the continued evolution of our centralized organizational structure in fiscal 2023, and management’s 2024 strategic planning process, our reportable segments changed to one segment for the purpose of making operational and resource decisions and assessing financial performance.

Metrics and Business Trends

The following tables set forth key metrics for fiscal 2024 and the percentage change in those metrics versus the prior year, as applicable:

(in millions except percentages and as noted)

GAAP Constant Currency

(in thousands)

(in millions except percentages and as noted)

Digital Subscription Revenues Workshops + Digital Subscription Revenues

(in thousands) (in thousands)

(in millions except percentages and as noted)

Clinical Subscription Revenues

GAAP ClinicalPaidWeeks IncomingClinicalSubscribers EOPClinicalSubscribers

(in thousands)

* Note: Percentage in excess of 100.0% and not meaningful.

** N/A - There were no Incoming Clinical Subscribers in the prior year since our acquisition of Sequence closed during the second quarter of fiscal 2023.

Operating Performance

The decrease in revenues for fiscal 2024 versus the prior year was driven by both a decrease in Other Revenues and a decrease in Subscription Revenues. The decrease in Other Revenues for fiscal 2024 versus the prior year was driven primarily by the closure of our consumer products business at the end of fiscal 2023.

The decrease in Subscription Revenues for fiscal 2024 versus the prior year was driven primarily by a decrease in Digital Subscription Revenues and, to a lesser extent, a decrease in Workshops + Digital Subscription Revenues due to a higher mix of Digital subscribers within their initial, lower-priced commitment periods and recruitment declines. Workshops + Digital Subscription Revenues were also negatively impacted by the continued mix shift from our Workshops + Digital business to our Digital business. In addition, the lower number of Incoming Workshops + Digital Subscribers at the beginning of fiscal 2024 versus the beginning of fiscal 2023 contributed to the decrease in Workshops + Digital Subscription Revenues for the year. Subscription Revenues for fiscal 2024 benefited from Clinical Subscription Revenues following our acquisition of Sequence during the second quarter of fiscal 2023.

The decrease in Total Paid Weeks for fiscal 2024 versus the prior year was driven primarily by Behavioral recruitment declines.

Liquidity and Capital Resources

We have 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 our 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. Our management has continued to execute certain cost-savings initiatives, including the 2024 plan, to proactively manage our liquidity. If the cost-saving initiatives do not provide the expected net benefit, our liquidity, results of operations and financial position may be materially adversely impacted.

We have recurring net losses. During fiscal 2024, we recorded an operating loss of $236.2 million and a net loss of $345.7 million. Operating loss included $315.0 million of franchise rights acquired impairments that were non-cash. Our annual revenues decreased from $889.6 million for fiscal 2023 to $785.9 million for fiscal 2024, in which the closure of the consumer products business resulted in a revenue decline of $55.0 million versus the prior year. Cash used for operating activities for fiscal 2024 was $16.8 million, which included $96.8 million of interest payments and $30.7 million of severance payments. We have a total deficit of $1,114.4 million at December 28, 2024. In addition, we have $1,430.6 million of long-term debt, net at December 28, 2024 and incurred $109.0 million in interest expense for fiscal 2024.

Our principal sources of liquidity are cash and cash equivalents, cash flows from operations and proceeds from the January 2025 borrowings under our Revolving Credit Facility (as defined below). Our primary cash needs for the twelve months following the issuance date of our financial statements contained in this Annual Report on Form 10-K (“issuance date”) are funding our operations and global strategic initiatives, meeting debt service requirements and other financing commitments. We believe that future cash flows from operations, unrestricted cash on hand of $53.0 million at December 28, 2024 (of which $22.0 million is maintained at foreign subsidiaries), proceeds from the January 2025 borrowings under our Revolving Credit Facility and the continued impact of our cost-savings initiatives will provide us with sufficient liquidity to meet our obligations for at least the next twelve months from the issuance date. Our Revolving Credit Facility matures on April 13, 2026. This facility provides a source of liquidity for us.

On January 2, 2025 and January 31, 2025, we increased our outstanding debt by borrowing $50.0 million and $121.3 million, respectively, under our Revolving Credit Facility currently at an interest rate of approximately 7.3%. As a result of these drawdowns and outstanding letters of credit, we have no availability for future borrowings under our Revolving Credit Facility. All outstanding borrowings under the Revolving Credit Facility on April 13, 2025 and thereafter will be reflected as a current liability.

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 $61.3 million, of the amount of the aggregate commitments under the Revolving Credit Facility, we are required to be in compliance with a Consolidated First Lien Leverage Ratio of 5.25:1.00 through and including the first fiscal quarter of 2025 and 5.00:1.00 thereafter. Our Consolidated First Lien Leverage Ratio as of December 28, 2024 was 8.36:1.00. Accordingly, in order to avoid an Event of Default under the Revolving Credit Facility, absent the Company and our lenders agreeing to a change in the existing terms and conditions, we will need to repay Revolving Credit Facility borrowings in excess of $61.3 million by March 29, 2025, the end of the Company's first fiscal quarter of 2025. At December 28, 2024, the Company also had outstanding $1,445.0 million of total debt, consisting of borrowings under the Term Loan Facility (as defined below) of $945.0 million that mature on April 13, 2028 and $500.0 million in aggregate principal amount of Senior Secured Notes (as defined below) that matures on April 15, 2029. The debt facilities pursuant to which such long-term debt was issued contain cross-default and/or cross-acceleration provisions that could result in an acceleration of such indebtedness in the event of an Event of Default under the Revolving Credit Facility. We have the intent and ability to remain in compliance with our obligations under our debt agreements for at least the next twelve months following the issuance date.

We continue to actively evaluate our capital structure and intend to engage with our lenders to explore transactions to strengthen our balance sheet by reducing our leverage and interest expense and extending our existing debt maturities. As of the issuance date, we believe we have sufficient liquidity to meet our obligations, including compliance with covenants under our long-term debt and Revolving Credit Facility obligations, through at least twelve months from the issuance date. However, beyond the period of twelve months from the issuance date, if we do not successfully enter into a transaction(s) to strengthen our balance sheet and increase our financial flexibility, our liquidity, results of operations, cash flows and financial condition may be materially adversely impacted.

We may, from time to time, seek to acquire our outstanding debt securities or loans, including the Senior Secured Notes and borrowings under the Credit Facilities (each as defined below). Such transactions could be privately negotiated or open market transactions, pursuant to tender offers or otherwise. Subject to any applicable limitations contained in the agreements governing, or terms of, our indebtedness, any such purchases made by us may be funded by the issuance of equity, the use of cash on our balance sheet, the incurrence of new secured or unsecured debt or the sale of assets. The amounts involved in any such transactions, individually or in the aggregate, may be material.

Balance Sheet Working Capital

The following table sets forth certain relevant measures of our balance sheet working capital deficit, excluding cash and cash equivalents at:

December 28, December 30, Increase/

(in millions)

Note: Totals may not sum due to rounding.

The following table sets forth a summary of the primary factors contributing to the $11.6 milliondecrease in our working capital deficit, excluding cash and cash equivalents:

Impact to

December 28, December 30, Increase/ Working

(in millions)

Income taxes payable $ 2.3 $ 1.6 $ 0.7 $ 0.7

Derivative receivable $ — $ 3.6 $ (3.6 ) $ 3.6

Working capital deficit change, excluding cash and cash equivalents $ (11.6 )

Note: Totals may not sum due to rounding.

The decrease in operational liabilities and other, net of assets, which includes accrued salaries and wages, was driven primarily by a decrease in accrued liabilities due to a decline in employee compensation and related costs and a decline in accrued marketing costs. The increase in accrued interest was due to the timing of payments. The decrease in prepaid income taxes was primarily due to the timing of tax payments.

Cash Flows

The following table sets forth a summary of our cash flows for the fiscal years ended:

December 28, December 30,

(in millions)

Net cash (used for) provided by operating activities $ (16.8 ) $ 6.7

Net cash used for investing activities $ (16.4 ) $ (74.7 )

Net cash used for financing activities $ (17.3 ) $ (2.7 )

Operating Activities

Cash flows used for operating activities of $16.8 million for fiscal 2024 reflected a change of $23.5 million from $6.7 million of cash flows provided by operating activities for fiscal 2023. This change in cash flows from operating activities was primarily attributable to an increase in net loss and an increase in cash used for operating assets and liabilities, partially offset by an increase in non-cash add-back adjustments driven by the franchise rights acquired impairments in fiscal 2024 as compared to the prior year.

Investing Activities

Net cash used for investing activities totaled $16.4 million for fiscal 2024, a decrease of $58.3 million as compared to fiscal 2023. This decrease was primarily attributable to a decrease in cash paid for acquisitions, net of cash acquired, and a decrease in capitalized software and website development expenditures in fiscal 2024 as compared to the prior year.

Financing Activities

Net cash used for financing activities totaled $17.3 million for fiscal 2024, an increase of $14.6 million as compared to fiscal 2023. This increase was primarily attributable to an increase in cash paid for acquisitions due to the $16.0 million first anniversary Sequence payment in fiscal 2024 as compared to the prior year.

Long-Term Debt

We currently plan to meet our long-term debt obligations by using cash flows provided by operating activities and opportunistically using other means to repay or refinance our obligations as we determine appropriate.

The following schedule sets forth our long-term debt obligations at December 28, 2024:

Long-Term Debt

At December 28, 2024

(in millions)

Less: Current portion —

Unamortized deferred financing costs 6.9

Unamortized debt discount 7.5

Total long-term debt $ 1,430.6

Note: Totals may not sum due to rounding.

In the second quarter of fiscal 2021, in connection with our refinancing of our then-existing credit facilities, we incurred approximately $1,000.0 million in an aggregate principal amount of borrowings under our new credit facilities (as amended from time to time, the “Credit Facilities”) and issued $500.0 million in aggregate principal amount of 4.500% Senior Secured Notes due 2029 (the “Senior Secured Notes”), each as described in further detail below.

Credit Facilities

The Credit Facilities were issued under a credit agreement, dated April 13, 2021 (as amended from time to time, the “Credit Agreement”), among the Company, as borrower, the lenders party thereto, and Bank of America, N.A. (“Bank of America”), as administrative agent and an issuing bank. The Credit Facilities consist of (1) $1,000.0 million in aggregate principal amount of senior secured tranche B term loans due in 2028 (the “Term Loan Facility”) and (2) $175.0 million in an aggregate principal amount of commitments under a senior secured revolving credit facility (which includes borrowing capacity available for letters of credit) due in 2026 (the “Revolving Credit Facility”).

As of December 28, 2024, we had $945.0 million in an aggregate principal amount of loans outstanding under our Credit Facilities, with $173.8 million of availability and $1.2 million in issued but undrawn letters of credit outstanding under the Revolving Credit Facility subject to its terms and conditions as discussed below. There were no outstanding borrowings under the Revolving Credit Facility as of December 28, 2024. In January 2025, we increased our outstanding debt by borrowing $171.3 million in the aggregate under our Revolving Credit Facility. Taking into account these borrowings and outstanding letters of credit, we currently have no availability for future borrowings under our Revolving Credit Facility.

All obligations under the Credit Agreement are guaranteed by, subject to certain exceptions, each of our current and future wholly-owned material domestic restricted subsidiaries. All obligations under the Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the assets of the Company and each guarantor, subject to customary exceptions, including:

•

a pledge of 100% of the equity interests directly held by the Company and each guarantor in any wholly-owned material subsidiary of the Company or any guarantor (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, will not include more than 65% of the voting stock of such first-tier non-U.S. subsidiary), subject to certain exceptions; and

•

a security interest in substantially all other tangible and intangible assets of the Company and each guarantor, subject to certain exceptions.

The Credit Facilities require us to prepay outstanding term loans, subject to certain exceptions, with:

•

50% (which percentage will be reduced to 25% and 0% if we attain certain first lien secured net leverage ratios) of our annual excess cash flow;

•

100% of the net cash proceeds of certain non-ordinary course asset sales by the Company and our restricted subsidiaries (including casualty and condemnation events, subject to de minimis thresholds), and subject to the right to reinvest 100% of such proceeds, subject to certain qualifications; and

•

100% of the net proceeds of any issuance or incurrence of debt by the Company or any of our restricted subsidiaries, other than certain debt permitted under the Credit Agreement.

The foregoing mandatory prepayments will be used to reduce the installments of principal on the Term Loan Facility. We may voluntarily repay outstanding loans under the Credit Facilities at any time without penalty, except for customary “breakage” costs with respect to Term SOFR loans under the Credit Facilities.

In June 2023, in connection with the planned phase-out of LIBOR, we amended our Credit Facilities to replace LIBOR with Term SOFR as the benchmark rate under the Credit Agreement, which is calculated to include a credit spread adjustment of 0.11448%, 0.26161%, 0.42826%, or 0.71513% for 1, 3, 6, or 12 months period, respectively, in addition to the Term SOFR Screen Rate (as defined in the Credit Agreement) and the margin (which was not amended).

Borrowings under the Term Loan Facility bear interest at a rate per annum equal to, at our option, either (1) an applicable margin plus a base rate determined by reference to the highest of (a) 0.50% per annum plus the Federal Funds Effective Rate as determined by the Federal Reserve Bank of New York, (b) the prime rate of Bank of America and (c) the Term SOFR rate determined by reference to the cost of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00%; provided that such rate is not lower than a floor of 1.50% or (2) an applicable margin plus a Term SOFR rate determined by reference to the cost of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, provided that Term SOFR is not lower than a floor of 0.50%. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to an applicable margin based upon a leverage-based pricing grid, plus, at our option, either (1) a base rate determined by reference to the highest of (a) 0.50% per annum plus the Federal Funds Effective Rate as determined by the Federal Reserve Bank of New York, (b) the prime rate of Bank of America and (c) the Term SOFR rate determined by reference to the cost of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00%; provided that such rate is not lower than a floor of 1.00% or (2) a Term SOFR rate determined by reference to the cost of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, provided such rate is not lower than a floor of zero. As of December 28, 2024, the applicable margins for the Term SOFR rate borrowings under the Term Loan Facility and the Revolving Credit Facility were 3.50% and 2.75%, respectively.

On a quarterly basis, we pay a commitment fee to the lenders under the Revolving Credit Facility in respect of unutilized commitments thereunder, which commitment fee fluctuates depending upon our Consolidated First Lien Leverage Ratio (as defined in the Credit Agreement).

The Credit Agreement contains other customary terms, including (1) representations, warranties and affirmative covenants, (2) negative covenants, including limitations on indebtedness, liens, mergers, acquisitions, asset sales, investments, distributions, prepayments of subordinated debt, amendments of material agreements governing subordinated indebtedness, changes to lines of business and transactions with affiliates, in each case subject to baskets, thresholds and other exceptions, and (3) customary events of default. As of December 28, 2024, we were in compliance with the covenants under the Credit Agreement that were in effect on such date.

The availability of certain baskets and the ability to enter into certain transactions are also subject to compliance with certain financial ratios. In addition, if the aggregate principal amount of extensions of credit (inclusive of outstanding letters of credit) under the Revolving Credit Facility as of any fiscal quarter end exceeds 35%, or $61.3 million, of the aggregate revolving commitments, we are required to be in compliance with a Consolidated First Lien Leverage Ratio of 5.25:1.00 through and including the first fiscal quarter of 2025 and 5.00:1.00 thereafter. Our Consolidated First Lien Leverage Ratio as of December 28, 2024 was 8.36:1.00, and we do not expect we will be able to meet the 5.25:1.00 Consolidated First Lien Leverage Ratio as of March 29, 2025. If we have more than $61.3 million outstanding under the Revolving Credit Facility and are not in compliance with the specified leverage ratio at the required time, we would be in default under the Revolving Credit Facility.

Senior Secured Notes

The Senior Secured Notes were issued pursuant to an Indenture, dated as of April 13, 2021 (as amended, supplemented or modified from time to time, the “Indenture”), among the Company, the guarantors named therein and The Bank of New York Mellon, as trustee and notes collateral agent. The Indenture contains customary terms, events of default and covenants for an issuer of non-investment grade debt securities. These covenants include limitations on indebtedness, liens, mergers, acquisitions, asset sales, investments, distributions, prepayments of subordinated debt and transactions with affiliates, in each case subject to baskets, thresholds and other exceptions. As of December 28, 2024, we were in compliance with the covenants under the Indenture that were in effect on such date.

The Senior Secured Notes accrue interest at a rate per annum equal to 4.500% and will mature on April 15, 2029. Interest on the Senior Secured Notes is payable semi-annually on April 15 and October 15 of each year. Commencing April 15, 2024, we may on any one or more occasions redeem some or all of the Senior Secured Notes at a purchase price equal to 102.250% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date, such optional redemption price decreasing to 101.125% on or after April 15, 2025 and to 100.000% on or after April 15, 2026. If a change of control occurs, we must offer to purchase for cash the Senior Secured Notes at a purchase price equal to 101% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the purchase date. Following the sale of certain assets and subject to certain conditions, we must offer to purchase for cash the Senior Secured Notes at a purchase price equal to 100% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the purchase date.

The Senior Secured Notes are guaranteed on a senior secured basis by our subsidiaries that guarantee the Credit Facilities. The Senior Secured Notes and the note guarantees are secured by a first-priority lien on all the collateral that secures the Credit Facilities, subject to a shared lien of equal priority with our and each guarantor’s obligations under the Credit Facilities and subject to certain thresholds, exceptions and permitted liens.

Outstanding Debt

At December 28, 2024, we had $1,445.0 million outstanding under the Credit Facilities and the Senior Secured Notes, consisting of borrowings under the Term Loan Facility of $945.0 million, $0.0 drawn down on the Revolving Credit Facility and $500.0 million in aggregate principal amount of Senior Secured Notes issued and outstanding. In January 2025, we increased our outstanding debt by borrowing $171.3 million in the aggregate under our Revolving Credit Facility. Following this borrowing and taking into account outstanding letters of credit, we had $1,620.0 million outstanding under the Credit Facilities and the Senior Secured Notes, consisting of borrowings under the Term Loan Facility of $945.0 million, $175.0 million drawn down on the Revolving Credit Facility and $500.0 million in aggregate principal amount of Senior Secured Notes issued and outstanding.

At the end of fiscal 2024 and fiscal 2023, our debt consisted of both fixed and variable-rate instruments. We have historically entered into interest rate swaps to hedge a portion of the cash flow exposure associated with our variable-rate borrowings. At December 28, 2024, we did not have any interest rate swaps in effect. Further information regarding our use of interest rate swaps can be found in Part IV, Item 15 of this Annual Report on Form 10-K under Note 19 “Derivative Instruments and Hedging” of the notes to the audited consolidated financial statements. The weighted average interest rate (which includes amortization of deferred financing costs and debt discount) on our outstanding debt, exclusive of the impact of any applicable interest rate swaps, was approximately 7.75% and 7.64% per annum at December 28, 2024 and December 30, 2023, respectively, based on interest rates on these dates. The weighted average interest rate (which includes amortization of deferred financing costs and debt discount) on our outstanding debt, including the impact of any applicable interest rate swaps, was approximately 7.47% and 6.53% per annum at December 28, 2024 and December 30, 2023, respectively, based on interest rates on these dates.

Dividends

We do not currently pay a dividend and we have no current plans to pay dividends in the foreseeable future. Any future determination to declare and pay dividends will be made at the sole discretion of our Board of Directors, after taking into account our financial condition and results of operations, capital requirements, contractual, legal, tax and regulatory restrictions, the provisions of Virginia law affecting the payment of distributions to shareholders and such other factors our Board of Directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants in our existing indebtedness, including the Credit Agreement governing the Credit Facilities and the Indenture governing the Senior Secured Notes, and may be limited by the agreements governing other indebtedness we or our subsidiaries incur in the future.

EBITDAS, Adjusted EBITDAS and Net Debt

We define EBITDAS, a non-GAAP financial measure, as earnings before interest, taxes, depreciation, amortization and stock-based compensation and Adjusted EBITDAS, a non-GAAP financial measure, as earnings before interest, taxes, depreciation, amortization, stock-based compensation, franchise rights acquired and goodwill impairments, net restructuring charges, former CEO separation expenses and acquisition transaction costs.

The table below sets forth the reconciliations for EBITDAS and Adjusted EBITDAS, each a non-GAAP financial measure, to net loss, the most comparable GAAP financial measure, for the fiscal years ended:

(in millions)

Depreciation and amortization 37.8 45.6

Stock-based compensation 6.7 11.3

Franchise rights acquired and goodwill impairments 315.0 3.6

2024 plan restructuring charges 17.0 —

2021 plan restructuring charges — 0.1

2020 plan restructuring charges — (0.0 )

Former CEO separation expenses 3.9 —

Acquisition transaction costs (1) — 8.6

Note: Totals may not sum due to rounding.

(1)

Includes stock-based compensation expense attributable to post-combination vesting of $3.9 million.

(2)

The “Adjusted EBITDAS” measure is a non-GAAP financial measure that (i) adjusts the consolidated statements of operations for fiscal 2024 to exclude the impact of the $315.0 million of franchise rights acquired impairments, the net impact of the $17.0 million of 2024 plan restructuring charges, the $5.1 million of 2023 plan restructuring charges and the $8 thousand of 2022 plan restructuring charges, and the impact of the $3.9 million of former CEO separation expenses; and (ii) adjusts the consolidated statements of operations for fiscal 2023 to exclude the impact of $3.6 million of franchise rights acquired and goodwill impairments, the net impact of the $53.7 million of 2023 plan restructuring charges, the $1.1 million of 2022 plan restructuring charges, the $0.1 million of 2021 plan restructuring charges and the reversal of $21 thousand of 2020 plan restructuring charges, and the impact of $8.6 million of acquisition transaction costs. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures.

Reducing leverage is a capital structure priority for the Company. As of December 28, 2024, our total debt less unamortized deferred financing costs and unamortized debt discount/net loss ratio was (4.1)x. As of December 28, 2024, our net debt/Adjusted EBITDAS ratio was 9.2x.

The table below sets forth the reconciliation for net debt, a non-GAAP financial measure, to total debt, the most comparable GAAP financial measure, for the fiscal year ended:

(in millions)

Less: Unamortized deferred financing costs 6.9

Less: Unamortized debt discount 7.5

Less: Cash on hand 53.0

Note: Totals may not sum due to rounding.

We present EBITDAS, Adjusted EBITDAS and net debt/Adjusted EBITDAS because we consider them to be useful supplemental measures of our performance. In addition, we believe EBITDAS, Adjusted EBITDAS and net debt/Adjusted EBITDAS are useful to investors, analysts and rating agencies in measuring the ability of a company to meet its debt service obligations. See “—Non-GAAP Financial Measures” herein for an explanation of our use of these non-GAAP financial measures.

Contractual Obligations

We are obligated under non-cancelable agreements primarily for office and rent facilities operating leases. Consolidated rent expense charged to operations under all our leases for fiscal 2024 was approximately $15.5 million.

The following table summarizes our future contractual obligations as of the end of fiscal 2024:

Payment Due by Period

Less than More than

Total 1 Year 1-3 Years 3-5 Years 5 Years

(in millions)

Long-Term Debt (1)

Note: Totals may not sum due to rounding.

(1)

Due to the fact that a portion of our debt is variable rate based, we have assumed for purposes of this table that the interest rate on all of our debt as of the end of fiscal 2024 remains constant for all periods presented.

(2)

The provision for income tax contingencies included in other long-term liabilities on the consolidated balance sheet is not included in the table above due to the fact that the Company is unable to estimate the timing of payment for this liability.

Acquisition of Sequence

On April 10, 2023, we completed the Acquisition for an aggregate purchase price of $132.0 million, which was inclusive of (i) approximately $64.2 million in cash and approximately $34.7 million in the form of newly issued shares, (ii) $16.0 million in cash paid on April 10, 2024, and (iii) $16.0 million in cash to be paid on April 10, 2025.

Factors Affecting Future Liquidity

Any future acquisitions, joint ventures or other similar transactions could require additional capital and we cannot be certain that any additional capital will be available on acceptable terms or at all. Our ability to fund our capital expenditure requirements, interest, principal and dividend payment obligations and working capital requirements depends on our future operations, performance and cash flow. These are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control.

Off-Balance Sheet Arrangements

As part of our ongoing business, we do not participate in arrangements that generate relationships with unconsolidated entities or financial partnerships established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes, such as entities often referred to as structured finance or special purpose entities.

Related Parties

For a discussion of related party transactions affecting us, see “Item 13. Certain Relationships and Related Transactions, and Director Independence” in Part III of this Annual Report on Form 10-K.

Seasonality

Our business is seasonal due to the importance of the winter season to our overall member recruitment environment. Historically, we experience our highest level of recruitment during the first quarter of the year, which is supported with the highest concentration of advertising spending. Therefore, our number of End of Period Subscribers in the first quarter of the year has been typically higher than the number in other quarters of the year, historically reflecting a decline over the course of the year.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks relating to interest rate changes and foreign currency fluctuations. All of our market risk sensitive instruments were entered into for purposes other than trading. The Company’s exposure to market risk as of the end of fiscal 2024 is described below.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates to interest expense of variable rate debt, in particular changes in Term SOFR or the base rates which are used to determine the applicable interest rates for borrowings under the Credit Facilities.

As of December 28, 2024, borrowings under the Credit Facilities bore interest at Term SOFR plus an applicable margin of 3.50%. For the Term Loan Facility, the minimum interest rate for Term SOFR applicable to such facility pursuant to the terms of the Credit Agreement was set at 0.50%, referred to herein as the Term SOFR Floor. Accordingly, as of December 28, 2024, based on the amount of variable rate debt outstanding and the then-current Term SOFR rate, after giving consideration to the Term SOFR Floor, a hypothetical 125 basis point increase in interest rates would have increased annual interest expense by approximately $11.8 million and a hypothetical 125 basis point decrease in interest rates would have decreased annual interest expense by approximately $11.8 million. This change in market risk exposure from the end of fiscal 2023 was primarily due to the termination, pursuant to their respective terms, of our then in effect interest rate swaps in the second quarter of fiscal 2024.

Foreign Currency Risk

Other than inter-company transactions between our domestic and foreign entities, we generally do not have significant transactions that are denominated in a currency other than the functional currency applicable to each entity. As a result, substantially all of our revenues and expenses in each jurisdiction in which we operate are in the same functional currency. In general, we are a net receiver of currencies other than the U.S. dollar. Accordingly, changes in exchange rates may negatively affect our revenues and gross margins as expressed in U.S. dollars. In the future, we may enter into forward and swap contracts to hedge transactions denominated in foreign currencies to reduce the currency risk associated with fluctuating exchange rates. Realized and unrealized gains and losses from any of these transactions may be included in net income for the period.

Fluctuations in currency exchange rates, particularly with respect to the euro, canadian dollar and pound sterling, may impact our shareholders’ equity. The assets and liabilities of our non-U.S. subsidiaries are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenues and expenses are translated into U.S. dollars at the average exchange rate for the period. The resulting translation adjustments are recorded in shareholders’ equity as a component of accumulated other comprehensive loss. In addition, exchange rate fluctuations will cause the U.S. dollar translated amounts to change in comparison to prior periods.

Item 8. Financial Statements and Supplementary Data

This information is incorporated by reference to our consolidated financial statements on pages F-1 through F-49 and our financial statement schedule on page S-1, including the report thereon of PricewaterhouseCoopers LLP on pages F-2 to F-4.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our principal executive officer and our principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 28, 2024, the end of fiscal 2024. Based upon that evaluation and subject to the foregoing, our principal executive officer and our principal financial officer concluded that, as of the end of fiscal 2024, the design and operation of our disclosure controls and procedures were effective at the reasonable assurance level.

Internal Control Over Financial Reporting

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Our management assessed the effectiveness of our internal control over financial reporting as of December 28, 2024, the end of fiscal 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on this assessment, our management, under the supervision and with the participation of our principal executive officer and our principal financial officer, concluded that, as of December 28, 2024, our internal control over financial reporting was effective based on those criteria.

The effectiveness of our internal control over financial reporting as of December 28, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on pages F-2 to F-4 to our consolidated financial statements.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

Executive Agreements

On February 26, 2025, the Board appointed Tara Comonte as President and Chief Executive Officer of the Company, removing her interim status effective immediately. In addition, in connection with her appointment to this permanent role, the Compensation and Benefits Committee of the Board (the “Compensation Committee”) recommended, and the Board approved entry into an employment agreement (the “Employment Agreement”) with Ms. Comonte with a term through March 31, 2026, subject to extension by mutual agreement, and a restrictive covenant agreement. Pursuant to the Employment Agreement, Ms. Comonte’s base salary will remain the same and she will receive a cash award of $4.5 million payable as soon as practicable following entry into the Employment Agreement. This award is in lieu of any annual cash bonus with respect to fiscal 2025 or any long-term incentive award in 2025. The award is subject to repayment by Ms. Comonte if prior to the earlier of (i) January 31, 2026 and (ii) 60 days following the consummation of a Change in Control, she is terminated by the Company for Cause, she resigns other than for Modified Good Reason prior to a Change in Control or she resigns other than for Good Reason following a Change in Control (as such terms are defined in the Employment Agreement). Commencing in 2026, Ms. Comonte will be eligible for an annual bonus with a target of 150% of her base salary and a long-term incentive award with a target of 400% of her base salary. The Company will reimburse Ms. Comonte’s legal fees incurred in connection with the negotiation of the Employment Agreement up to $20,000.

If, during the term of the Employment Agreement, Ms. Comonte’s employment is terminated (i) by the Company without Cause, (ii) due to a resignation for Modified Good Reason prior to a Change in Control or (iii) due to a resignation for Good Reason following a Change in Control, subject to her execution of a release and compliance with the restrictive covenants to which she is subject she will not be subject to repayment of the award described above and she will receive: (i) any unpaid annual cash bonus in respect of any completed fiscal year prior to the date of termination; (ii) a prorated target annual cash bonus for the performance year in which the date of termination occurs; and (iii) salary continuation and supplemental health insurance coverage for six months or, if longer, through March 31, 2026.

On February 26, 2025, the Compensation Committee of the Board approved a cash award of $1.0 million to Felicia DellaFortuna, the Company’s Chief Financial Officer, with the same terms as the award granted to Ms. Comonte. In connection with the grant of the award, Ms. DellaFortuna entered into a restrictive covenant agreement of the same form as Ms. Comonte. This award is in lieu of any annual cash bonus with respect to fiscal 2025 or any long-term incentive award in 2025 and serves as the Supplemental Plan (as defined in her offer letter from the Company, effective as of January 1, 2025).

The foregoing descriptions are qualified in their entirety by reference to the text of Ms. Comonte’s Employment Agreement and Ms. DellaFortuna’s award letter, both of which will be filed with the Company’s Quarterly Report on Form 10‐Q for the period ending March 30, 2025.

Board Change

On February 25, 2025, Julie Rice notified the Company’s Secretary of her resignation as a director of the Company, effective as of 11:59 p.m. on that same date, and the size of the Board was reduced from eight members to seven effective February 26, 2025. Her decision was not the result of any disagreement with the Company or the Board.

Insider Arrangements and Policies

From time to time, our directors and officers may engage in open-market transactions with respect to their Company equity holdings for diversification or other personal reasons. All such transactions by directors and officers must comply with the Company’s Amended and Restated Securities Trading Policy, which requires that such transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables directors and officers to prearrange transactions in the Company’s securities in a manner that avoids concerns about initiating transactions while in possession of material nonpublic information.

No contracts, instructions or written plans for the purchase or sale of Company securities were adopted or terminated by our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) during the quarter ended December 28, 2024, that were intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). No “non-Rule 10b5–1 trading arrangements” (as defined by Item 408(c) of Regulation S-K) or other Rule 10b5-1 trading arrangements were entered into or terminated, nor were any such arrangements modified, by our directors or officers during such period.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Information called for by Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated by reference from our definitive Proxy Statement to be filed in connection with our 2025 Annual Meeting of Shareholders pursuant to Regulation 14A, except that (i) certain of the information regarding our directors and executive officers called for by Items 401(a), (b) and (e) of Regulation S-K has been included in Part I of this Annual Report on Form 10-K; (ii) the information regarding certain Company equity compensation plans called for by Item 201(d) of Regulation S-K is set forth below; and (iii) the information regarding our Code of Business Conduct and Ethics called for by Item 406 of Regulation S-K is set forth below.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table summarizes our equity compensation plan information as of December 28, 2024:

Equity Compensation Plan Information

(1)

Consists of 596,662 shares of our common stock issuable upon the exercise of outstanding stock options awarded under our Third Amended and Restated 2014 Stock Incentive Plan (“2014 Plan”); 408,697 shares of our common stock issuable upon the exercise of the Winfrey Option granted pursuant to the Winfrey Option Agreement; 3,276,484 shares of our common stock issuable upon the exercise of the Winfrey Amendment Option granted pursuant to the Winfrey Amendment Option Agreement; 4,087,916 shares of our common stock issuable upon the vesting of restricted stock units (“RSUs”) awarded under our 2014 Plan; and 158,253 shares of our common stock issuable upon the vesting of performance-based stock units (“PSUs”) awarded under our 2014 Plan. The number of shares to be issued in respect of PSUs has been calculated based on the assumption that the maximum level of performance applicable to the PSUs has been achieved. The Winfrey Option was approved by the written consent of Artal Luxembourg S.A. which, as of the date thereof, controlled a majority of the voting power of our outstanding common stock. For additional details on the Winfrey Option, the Winfrey Amendment Option, the Winfrey Option Agreement and the Winfrey Amendment Option Agreement, see “Item 1. Business—History—Winfrey Transaction” of this Annual Report on Form 10-K.

(2)

Reflects the weighted average exercise price of outstanding stock options. This weighted average does not reflect the shares that will be issued upon the vesting of outstanding RSUs and PSUs because such equity awards have no exercise price.

(3)

Consists of shares of our common stock available for future issuance under our 2014 Plan, pursuant to various awards our Board of Directors’ Compensation and Benefits Committee may make, including non-qualified stock options, incentive stock options, stock appreciation rights, RSUs, restricted stock, performance-based awards and other equity-based awards.

(4)

Consists of 750,000 aggregate shares of our common stock issuable upon the exercise of stock options granted on March 21, 2022 to Sima Sistani, our former Chief Executive Officer, in connection with her prior appointment as our Chief Executive Officer. Ms. Sistani's inducement stock options were granted in reliance on the employment inducement exemption provided under the Nasdaq Listing Rule 5635(c)(4). Ms. Sistani's stock options have a seven year term and proportionately vest annually over a four year period which began with the first anniversary of her March 21, 2022 employment commencement date. When Ms. Sistani ceased serving as the Company’s President and Chief Executive Officer effective September 27, 2024, all of her then unvested stock options were immediately cancelled. While such inducement stock options were not awarded pursuant to our 2014 Plan, they are subject to the same terms and conditions of the 2014 Plan.

Code of Business Conduct and Ethics

We have adopted the Code of Business Conduct and Ethics for our officers, including our principal executive officer, principal financial officer, principal accounting officer or controller, and our employees and directors. Our Code of Business Conduct and Ethics is available on our corporate website at corporate.ww.com/govdocs.

In addition to any disclosures required under the Exchange Act, the date and nature of any substantive amendment of our Code of Business Conduct and Ethics or waiver thereof applicable to any of our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, and that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K of the Exchange Act, will be disclosed within four business days of the date of such amendment or waiver on our corporate website at corporate.ww.com/govdocs and corporate.ww.com/corporate-actions, respectively. In the case of a waiver, the name of the person to whom the waiver was granted will also be disclosed on our corporate website within four business days of the date of such waiver.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)

Financial Statements

The financial statements listed in the Index to Financial Statements and Financial Statement Schedule on page F-1 are filed as part of this Annual Report on Form 10-K.

Financial Statement Schedule

The financial statement schedule listed in the Index to Financial Statements and Financial Statement Schedule on page F-1 is filed as part of this Annual Report on Form 10-K.

Exhibits

The exhibits listed in the Exhibit Index are filed as part of this Annual Report on Form 10-K.

WW INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE COVERED BY

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Items 15(a) (1) & (2)

Pages

Consolidated Balance Sheets at December 28, 2024 and December 30, 2023 F-5

Notes to Consolidated Financial Statements F-10

All other schedules are omitted for the reason that they are either not required, not applicable, not material or the information is included in the consolidated financial statements or notes thereto.

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of WW International, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of WW International, Inc. and its subsidiaries (the “Company”) as of December 28, 2024 and December 30, 2023, and the related consolidated statements of operations, of comprehensive loss, of changes in total deficit and of cash flows for each of the three years in the period ended December 28, 2024, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 28, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 28, 2024 and December 30, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Emphasis of Matter

As discussed in Note 1 to the consolidated financial statements, the Company has recurring net losses and has a revolving credit facility that is a source of liquidity that matures on April 13, 2026. Management’s evaluation and plans to mitigate these matters are also described in Note 1.

F-2

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Annual and Interim Impairment Assessments – Goodwill Assessments for the Clinical Reporting Unit and Indefinite-Lived Franchise Rights Acquired (United States) Assessments

As described in Notes 2 and 7 to the consolidated financial statements, management reviews goodwill and indefinite-lived franchise rights acquired for potential impairment on at least an annual basis, in May of the second quarter, or more often if events so require. Based on triggering events, management performed interim impairment tests as of March 30, 2024, and September 28, 2024, on its goodwill and indefinite-lived franchise rights acquired for the first and third quarters of fiscal 2024, respectively. In performing the impairment analysis for goodwill, the fair value of the reporting units is estimated using a discounted cash flow approach. The estimated fair value is then compared to the carrying value of the reporting unit. In performing the impairment analysis for indefinite-lived franchise rights acquired, fair value is estimated using a discounted cash flow approach for franchise rights related to the Workshops + Digital business and a relief from royalty methodology for franchise rights related to the Digital business. The aggregate estimated fair value of the franchise rights is compared to the carrying value of the unit of account for these rights. In performing the interim indefinite-lived franchise rights acquired impairment tests as of March 30, 2024, and September 28, 2024, management determined that the carrying value of its United States franchise rights acquired exceeded the respective fair values, and management recorded impairment charges of $251.4 million and $54.3 million, respectively. There were no goodwill impairments in the year ended December 28, 2024. As of December 28, 2024, the goodwill associated with the Clinical reporting unit was $89.7 million and the indefinite-lived franchise rights acquired (United States) was $68.6 million. As disclosed by management, when determining fair value of the reporting units and indefinite-lived franchise rights acquired, management utilizes various assumptions, including projections of future cash flows, revenue growth rates, operating income margins and discount rates.

The principal considerations for our determination that performing procedures relating to the annual and interim impairment assessments for goodwill (Clinical reporting unit) and the annual and interim impairment assessments for indefinite-lived franchise rights acquired (United States) is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the Clinical reporting unit and indefinite-lived franchise rights acquired (United States); (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, operating income margin, and discount rate for goodwill (Clinical reporting unit) and revenue growth rates and discount rate for indefinite-lived franchise rights acquired (United States); and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

F-3

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s impairment assessments for goodwill and indefinite-lived franchise rights acquired, including controls over the valuation of the Company’s reporting units and indefinite-lived franchise rights acquired. These procedures also included, among others, (i) testing management’s process for developing the fair value estimates of the Clinical reporting unit and indefinite-lived franchise rights acquired (United States); (ii) evaluating the appropriateness of the discounted cash flow approaches and the relief from royalty methodology; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow approaches and relief from royalty methodology; and (iv) evaluating the reasonableness of significant assumptions used by management related revenue growth rates, operating income margin, and discount rate for goodwill (Clinical reporting unit) and revenue growth rates and discount rate for indefinite-lived franchise rights acquired (United States). Evaluating management’s assumptions related to revenue growth rates and operating income margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Clinical business, as well as digital revenues associated with indefinite lived franchise rights acquired (United States) and (ii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow approaches and relief from royalty methodology and (ii) the reasonableness of the discount rate assumptions.

/s/ PricewaterhouseCoopers LLP

New York, New York

February 28, 2025

We have served as the Company’s auditor since 1999.

F-4

WW INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AT

(IN THOUSANDS)

December 28, December 30,

ASSETS

CURRENT ASSETS

Prepaid marketing and advertising 4,969 10,149

Prepaid expenses and other current assets 18,551 19,651

LIABILITIES AND TOTAL DEFICIT

CURRENT LIABILITIES

Portion of operating lease liabilities due within one year $ 8,168 $ 9,613

Long-term operating lease liabilities 44,322 53,461

Commitments and contingencies (Note 16)

TOTAL DEFICIT

Accumulated other comprehensive loss (25,832 ) (11,300 )

The accompanying notes are an integral part of the consolidated financial statements.

F-5

WW INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE FISCAL YEARS ENDED

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

December 28, December 30, December 31,

Other (income) expense, net (1 ) 72 1,691

Net loss per share

Weighted average common shares outstanding

The accompanying notes are an integral part of the consolidated financial statements.

F-6

WW INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE FISCAL YEARS ENDED

(IN THOUSANDS)

December 28, December 30, December 31,

Other comprehensive (loss) gain:

Foreign currency translation (loss) gain, net of taxes (11,816 ) 2,177 (8,432 )

Income tax benefit (expense) on (loss) gain on derivatives 757 2,666 (7,202 )

The accompanying notes are an integral part of the consolidated financial statements.

F-7

WW INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL DEFICIT

(IN THOUSANDS)

Accumulated

Other

Common Stock Treasury Stock Comprehensive Retained

Shares Amount Shares Amount Loss Earnings Total

Compensation expense on share-based awards — — — — — 12,957 12,957

Compensation expense on share-based awards — — — — — 11,303 11,303

Compensation expense on share-based awards — — — — — 7,764 7,764

The accompanying notes are an integral part of the consolidated financial statements.

F-8

WW INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE FISCAL YEARS ENDED

(IN THOUSANDS)

December 28, December 30, December 31,

Operating activities:

Amortization of deferred financing costs and debt discount 5,018 5,018 5,018

Impairment of intangible and long-lived assets 481 1,112 3,455

Foreign currency exchange rate (gain) loss (2,276 ) 263 2,374

Changes in cash due to:

Other long term assets and liabilities, net (14,624 ) (3,598 ) (2,291 )

Cash (used for) provided by operating activities (16,840 ) 6,686 76,646

Investing activities:

Cash paid for acquisitions, net of cash acquired — (38,362 ) (4,350 )

Other items, net (5 ) (33 ) (42 )

Financing activities:

Proceeds from stock options exercised — 718 —

Other items, net (4 ) (48 ) (112 )

The accompanying notes are an integral part of the consolidated financial statements.

F-9

WW INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)

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 (as discussed below). 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, which formerly included Digital 360 (as applicable). 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 (including to former Digital 360 members (as applicable)). 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. In the second quarter of fiscal 2022, the Company ceased offering its Digital 360 product. More than a majority of associated members were transitioned from the Company’s Digital business to its Workshops + Digital business during the second quarter of fiscal 2022, with a de minimis number transitioning during the beginning of the third quarter of fiscal 2022. The cessation of this product offering and these transitions of former Digital 360 members at the then-current pricing for such product impacted the number of End of Period Subscribers in each business as well as the associated Paid Weeks and Revenues for each business.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and 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.

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. Segment data for the fiscal years ended December 30, 2023 and December 31, 2022 has been updated to reflect this reportable segment structure. See Note 17 for disclosures related to segments.

In the fourth quarter of fiscal 2024, the Company identified and recorded an out-of-period adjustment related to an income tax error. The impact of correcting this error, which was immaterial to all current and prior period financial statements and corrected in the fourth quarter of fiscal 2024, resulted in an income tax benefit of approximately $1,963, with a corresponding increase to other comprehensive loss, for the fiscal year ended December 28, 2024.

In the second quarter of fiscal 2024, the Company identified and recorded an out-of-period adjustment related to an income tax error. The impact of correcting this error, which was immaterial to all current and prior period financial statements and corrected in the second quarter of fiscal 2024, resulted in an income tax expense of approximately $2,748, with a corresponding decrease to net income, for the fiscal year ended December 28, 2024.

On April 10, 2023, the Company completed its previously announced acquisition of Weekend Health, Inc., doing business as Sequence (“Sequence”). The accompanying consolidated financial statements include the results of operations of Sequence (now operating as WeightWatchers Clinic) from the date of acquisition. See Note 6 for additional information on the Company’s acquisitions.

Prior period amounts have been reclassified to conform with the current period presentation.

F-10

WW INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)

Liquidity

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 2024 restructuring plan, to proactively manage the Company’s liquidity. If the cost-saving initiatives do not provide the expected net benefit, the Company’s liquidity, results of operations and financial position may be materially adversely impacted.

The Company has recurring net losses. During the fiscal year ended December 28, 2024, the Company recorded an operating loss of $236,222 and a net loss of $345,701. Operating loss included $315,033 of franchise rights acquired impairments that were non-cash. The Company’s annual revenues decreased from $889,551 for the fiscal year ended December 30, 2023 to $785,921 for the fiscal year ended December 28, 2024, in which the closure of the consumer products business resulted in a revenue decline of $54,968 versus the prior year. Cash used for operating activities for the fiscal year ended December 28, 2024 was $16,840, which included $96,844 of interest payments and $30,716 of severance payments. The Company has a total deficit of $1,114,372 at December 28, 2024. In addition, the Company has $1,430,643 of long-term debt, net at December 28, 2024 and incurred $108,954 in interest expense for the fiscal year ended December 28, 2024.

The Company’s principal sources of liquidity are cash and cash equivalents, cash flows from operations and proceeds from the January 2025 borrowings under its Revolving Credit Facility (as defined below). The Company’s primary cash needs for the twelve months following the issuance date of these financial statements (“issuance date”) are funding its operations and global strategic initiatives, meeting debt service requirements and other financing commitments. The Company believes that future cash flows from operations, unrestricted cash on hand of $53,024 at December 28, 2024 (of which $22,024 is maintained at foreign subsidiaries), proceeds from the January 2025 borrowings under its Revolving Credit Facility and the continued impact of its cost-savings initiatives will provide it with sufficient liquidity to meet its obligations for at least the next twelve months from the issuance date. The Company’s Revolving Credit Facility matures on April 13, 2026. This facility provides a source of liquidity for the Company.

On January 2, 2025 and January 31, 2025, the Company increased its outstanding debt by borrowing $50,000 and $121,341, respectively, under its Revolving Credit Facility currently at an interest rate of approximately 7.3%. As a result of these drawdowns and outstanding letters of credit, the Company has no availability for future borrowings under its Revolving Credit Facility. All outstanding borrowings under the Revolving Credit Facility on April 13, 2025 and thereafter will be reflected as a current liability.

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 of 5.25:1.00 through and including the first fiscal quarter of 2025 and 5.00:1.00 thereafter. The Company’s Consolidated First Lien Leverage Ratio as of December 28, 2024 was 8.36:1.00. Accordingly, in order to avoid an Event of Default under the Revolving Credit Facility, absent the Company and its lenders agreeing to a change in the existing terms and conditions, the Company will need to repay Revolving Credit Facility borrowings in excess of $61,250 by March 29, 2025, the end of the Company's first fiscal quarter of 2025. At December 28, 2024, the Company also had outstanding $1,445,000 of total debt, consisting of borrowings under the Term Loan Facility (as defined below) of $945,000 that mature on April 13, 2028 and $500,000 in aggregate principal amount of Senior Secured Notes (as defined below) that matures on April 15, 2029. The debt facilities pursuant to which such long-term debt was issued contain cross-default and/or cross-acceleration provisions that could result in an acceleration of such indebtedness in the event of an Event of Default under the Revolving Credit Facility. The Company has the intent and ability to remain in compliance with its obligations under its debt agreements for at least the next twelve months following the issuance date.

F-11

WW INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)

The Company continues to actively evaluate its capital structure and intends to engage with its lenders to explore transactions to strengthen its balance sheet by reducing its leverage and interest expense and extending its existing debt maturities. As of the issuance date, the Company believes it has sufficient liquidity to meet its obligations, including compliance with covenants under its long-term debt and Revolving Credit Facility obligations, through at least twelve months from the issuance date. However, beyond the period of twelve months from the issuance date, if the Company does not successfully enter into a transaction(s) to strengthen its balance sheet and increase its financial flexibility, the Company’s liquidity, results of operations, cash flows and financial condition may be materially adversely impacted.

Summary of Significant Accounting Policies

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to December 31st and consists of either 52 or 53-week periods. Fiscal 2024, fiscal 2023 and fiscal 2022 each contained 52 weeks.

Use of Estimates

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and judgments, including those related to the impairment analyses for goodwill and other indefinite-lived intangible assets, revenue, share-based compensation, income taxes, tax contingencies and litigation. The Company bases its estimates on historical experience and on various other factors and assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. While all available information has been considered, actual amounts could differ from these 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.

Variable Interest Entity

The Company evaluates its ownership, contractual and other interests in entities to determine if it has any variable interest in a variable interest entity (“VIE”). These evaluations are complex and involve judgment and the use of estimates and assumptions based on available information. If the Company determines that an entity in which it holds a contractual or ownership interest is a VIE and that the Company is the primary beneficiary, such entity is consolidated in the Company’s consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (i) has the power to make decisions that most significantly affect the economic performance of the VIE; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. The Company performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change.

F-12

WW INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)

Through WeightWatchers Clinic, the Company operates certain clinical telehealth groups which are deemed to be Friendly-Physician Entities (“FPEs”) and due to legal requirements, the physician-owners must retain 100% of the equity interest. The Company’s agreements with FPEs generally consist of both an Administrative Services Agreement, which provides for various administrative and management services to be provided by the Company to the FPE, and Share Transfer Agreement (“STA”) with the physician-owners of the FPEs, which provides for the transition of ownership interest of the FPEs under certain conditions. The Company has the right to receive income as an ongoing management fee, which effectively absorbs all of the residual interests, and can also provide financial support through loans to the FPEs. The Company has exclusive responsibility for the provision of all nonmedical services including technology and intellectual property required for the day-to-day operation and management of each of the FPEs. In addition, the STA provides that the Company has the right to designate a person(s) to purchase the equity interest of the FPE for a nominal amount in the event of a succession event at the Company’s discretion. Based on the provisions of these agreements, the Company determined that the FPEs are VIEs due to their equity holder having insufficient capital at risk, and the Company has a variable interest in the FPEs.

The contractual arrangements described above allow the Company to direct the activities that most significantly affect the economic performance of the FPEs. Accordingly, the Company is the primary beneficiary of the FPEs and consolidates the FPEs under the VIE model. Furthermore, as a direct result of nominal initial equity contributions by the physicians, the financial support the Company can provide to the FPEs (e.g., loans) and the provisions of the contractual arrangements and nominee shareholder succession arrangements described above, the interests held by noncontrolling interest holders lack economic substance and do not provide them with the ability to participate in the residual profits or losses generated by the FPEs. Therefore, all income and expenses recognized by the FPEs are consolidated by the Company. The Company does not hold interests in any VIEs for which the Company is not deemed to be the primary beneficiary.

Translation of Foreign Currencies

For all foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated into U.S. dollars using the exchange rate in effect at the end of each reporting period. Income statement accounts are translated at the average rate of exchange prevailing during each reporting period. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss.

Foreign currency gains and losses arising from the translation of intercompany receivables and intercompany payables with the Company’s international subsidiaries are recorded as a component of other expense, net, unless the receivable or payable is considered long-term in nature, in which case the foreign currency gains and losses are recorded as a component of accumulated other comprehensive loss.

Cash and Cash Equivalents

Cash and cash equivalents are defined as highly liquid investments with original maturities of three months or less. Cash balances may, at times, exceed insurable amounts. The Company believes it mitigates this risk by investing in or through major financial institutions. Cash includes balances due from third-party credit card companies.

Receivables

Receivables include amounts that are billed and currently due from customers. The amounts due are stated at their net estimated realizable value. The Company maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be collected, including balances from customers under recur bill commitment plans. The assessment of the likelihood of customer defaults is based on various factors, including length of time the receivables are past due and historical experience, all of which are subject to change. The Company’s credit write offs were $15,080 and $1,241 for the fiscal years ended December 28, 2024 and December 30, 2023, respectively.

F-13

WW INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)

Inventories

Inventories, which consist of finished goods, are stated at the lower of cost or net realizable value on a first-in, first-out basis, net of reserves for obsolescence and shrinkage.

Property and Equipment

Property and equipment are recorded at cost. For financial reporting purposes, equipment is depreciated on the straight-line method over the estimated useful lives of the assets (3 to 10 years). Leasehold improvements are amortized on the straight-line method over the shorter of the term of the lease or the useful life of the related assets. Expenditures for new facilities and improvements that substantially extend the useful life of an asset are capitalized. Ordinary repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the cost and related depreciation are removed from the accounts and any related gains or losses are included in income.

Leases

A lease is defined as an arrangement that contractually specifies the right to use and control an identified asset for a specific period of time in exchange for consideration. Operating leases are included in operating lease assets, portion of operating lease liabilities due within one year, and long-term operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property and equipment, net, other accrued liabilities, and other long-term liabilities in the Company’s consolidated balance sheets. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate commensurate with the lease term, since the Company’s lessors do not provide an implicit rate, nor is one readily available. The incremental borrowing rate is calculated based on the Company’s credit yield curve and adjusted for collateralization, credit quality and economic environment impact, all where applicable. The lease asset includes scheduled lease payments and excludes lease incentives, such as free rent periods and tenant improvement allowances. The Company has certain leases that may include an option to renew and when it is reasonably probable to exercise such option, the Company will include the renewal option terms in determining the lease asset and lease liability. The Company does not have any renewal options that would have a material impact on the terms of the leases and that are also reasonably expected to be exercised as of December 28, 2024. A lease may contain both fixed and variable payments. Variable lease payments that are linked to an index or rate are measured based on the current index or rate at the implementation of the lease accounting standard, or lease commencement date for new leases, with the impact of future changes in the index or rate being recorded as a period expense. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components and has elected not to separate non-lease components from lease components and instead to account for each separate lease component and non-lease component as a single lease component.

The Company has elected the short-term lease exception accounting policy, whereby the recognition requirements of the updated guidance is not applied and lease expense is recorded on a straight-line basis with respect to leases with an initial term of 12 months or less.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying value of the assets may not be fully recoverable.

In fiscal 2024, fiscal 2023 and fiscal 2022, the Company recorded impairment charges of $142, $900 and $714, respectively, related to internal-use computer software and website development costs that were not expected to provide substantive service potential.

In fiscal 2024, fiscal 2023 and fiscal 2022, the Company recorded impairment charges of $339, $212 and $61, respectively, related to property and equipment that were expected to be disposed of before the end of their estimated useful lives.

F-14

WW INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)

In fiscal 2022, the Company recorded lease asset impairment charges of $2,680 in the aggregate. See Note 4 for further information on the Company’s leases.

Franchise Rights Acquired

In performing the impairment analysis for indefinite-lived franchise rights acquired, the fair value for franchise rights acquired is estimated using a discounted cash flow approach referred to as the hypothetical start-up approach for franchise rights related to the Company’s Workshops + Digital business and a relief from royalty methodology for franchise rights related to the Company’s Digital business. The aggregate estimated fair value for these franchise rights is then compared to the carrying value of the unit of account for these rights. The Company has determined the appropriate unit of account for purposes of assessing impairment to be the combination of the rights in both the Workshops + Digital business and the Digital business in the country in which the applicable acquisition occurred. The net book value of franchise rights acquired for the United States unit of account as of the December 28, 2024 balance sheet date was $68,627, which represented100.0% of total franchise rights acquired as of December 28, 2024. The net book values of franchise rights acquired for the United States, Australia, United Kingdom and New Zealand units of account as of the December 30, 2023 balance sheet date were $374,353, $4,232, $2,806 and $2,420, respectively, which represented 97.6%, 1.1%, 0.7% and 0.6%, respectively, of total franchise rights acquired as of December 30, 2023.

In its hypothetical start-up approach analyses for fiscal 2024, the Company assumed that the year of maturity was reached after 7 years. Subsequent to the year of maturity, the Company estimated future cash flows for the Workshops + Digital business in each country based on assumptions regarding revenue growth and operating income margins. In the Company’s relief from royalty approach analyses for fiscal 2024, the cash flows associated with the Digital business in each country were based on the expected Digital revenue for such country and the application of a royalty rate based on current market terms. The cash flows for the Workshops + Digital and the Digital businesses were discounted utilizing rates which were calculated using the weighted average cost of capital, which included the cost of equity and the cost of debt.

Goodwill

In performing the impairment analysis for goodwill, the fair value for the Company’s reporting units is estimated using a discounted cash flow approach. This approach involves projecting future cash flows attributable to the reporting unit and discounting those estimated cash flows using an appropriate discount rate. The estimated fair value is then compared to the carrying value of the reporting unit. The Company has determined the appropriate reporting units for purposes of assessing goodwill impairment to be the Behavioral and Clinical business lines. See Note 7 for further information on the Company’s change in goodwill reporting units. The net book values of goodwill for the Behavioral and Clinical reporting units as of the December 28, 2024 balance sheet date were $149,841 and $89,742, respectively, which represented 62.5% and 37.5%, respectively, of total goodwill as of December 28, 2024.

In performing the impairment analysis for goodwill, for all of the Company’s reporting units, the Company estimated future cash flows by utilizing the historical debt-free cash flows (cash flows provided by operations less capital expenditures) attributable to each of the Behavioral and Clinical reporting units and then applied expected future operating income growth rates for the respective reporting unit. The Company utilized operating income as the basis for measuring its potential growth because it believes it is the best indicator of the performance of its business. The Company then discounted the estimated future cash flows utilizing a discount rate which was calculated using the weighted average cost of capital, which included the cost of equity and the cost of debt.

F-15

WW INTERNATIONAL, INC. AND SUBSIDIARIES

WW US Equity

WW · 10-K · period ended 2024-12-28

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 15. Exhibits and Financial Statement Schedules

WW US Equity☆

WW · 10-K · period ended 2024-12-28

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 15. Exhibits and Financial Statement Schedules

WW US Equity