Thank you, everyone, for joining us today for WW International's fourth quarter and full year 2023 conference call. At about 4:00 P.M. Eastern Time today, we issued a press release reporting our fourth quarter and full year 2023 results. The purpose of this call is to provide investors with some further details regarding the company's financial results as well as to provide a general update on the company's progress. The press release is available on the company's corporate website located at corporate.ww.com. Supplemental investor materials are also available on the company's corporate website in the Investors section under Presentations and Events. Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measures are also available as part of the press release. Before we begin, let me remind everyone that this call will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's filings with the Securities and Exchange Commission. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. All forward-looking statements are made as of today and except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Joining today's call are Sima Sistani, CEO; and Heather Stark, CFO. I will now turn the call over to Sima.

Thanks, Corey. Good afternoon, everyone and thank you for joining us today. Last year saw huge shifts in the weight management industry. Weight Watchers is moving quickly and strategically to lead the future of weight health. In addition to being digital first, we believe the weight loss space will be led by the acknowledgment that weight loss is a matter of health care. This is a paradigm shift because weight loss has been and unfortunately, often still is viewed as a vanity issue versus a health issue. The rise of second-generation GLP-1 medications for the treatment of obesity is changing the landscape. While GLP-1s are certainly not for everyone, without a doubt, they are changing the conversation to a broader embrace of medical weight loss. Weight Watchers has multiple pathways of science-backed solutions that improve weight health and importantly, the FDA states that GLP-1 medications for weight management should only be used in conjunction with the program for behavior modification. And as a reminder, Weight Watchers is the number one doctor recommended behavior change program for weight loss. Weight Watchers is creating the category of weight health and to do so requires us to go further in the transformation of our business and expansion of our offerings to deliver the support, services and treatments that many consumers need to understand and advance their weight loss journeys in an accessible and affordable way. This is a multi-year effort but one that will strengthen our business both today and tomorrow. More on that but first, turning to our 2023 performance. 2023 was a pivotal year marked by a great deal of change as we began transforming our business for the future. At the same time, through a revamped approach to performance marketing and aided by improvements to our product experience, we returned Weight Watchers to year-end subscriber growth for the first time in 3 years, ending 2023 with 3.8 million subscribers, up 7% year-over-year. Almost a year ago, we announced the acquisition of Sequence which now operates as Weight Watchers Clinic. We ended the year with 67,000 clinical subscribers, up 47% sequentially and nearly triple the subscribers since we announced the acquisition last year. And in just 8 months, we reimagined our platform by combining behavioral and medical weight health solutions and launched an integrated member experience, a portfolio of solutions that meet members' specific needs all operating in one place, all under one brand. We also completely revamped our organizational structure. When I joined Weight Watchers nearly 2 years ago, I was struck by how much it was organized and operating like a multinational consumer retail company, albeit one with an impressive tech stack and digital capabilities. So the bones were there but the organizational structure hampered our ability to innovate and execute effectively. Over the last year, we have established a centralized organization across all key functions, exited non-subscription business lines and substantially reduced our corporate headcount. With a lean and focused team, we can operate with more agility against shared goals as a digital health company. I'm encouraged by many aspects of our performance, particularly around clinical subscriber growth which we expect to continue growing sequentially each quarter this year. We are making intentional choices to prioritize the initiatives that we believe will have the greatest benefit for the long-term health of our business. We believe this puts us on the right track to deliver growth in total subscribers, growth in subscription revenue growth and gross margin and growth in operating income in 2024. As demonstrated by our year-end subscriber numbers, the winter season got off to a good start with particular strength in clinical sign-ups in late December following the high visibility launch of Weight Watchers Clinic. In our research, we are finding that the relevance of a New Year season has lessened with fewer consumers interested in making resolutions. This aligns with the overarching cultural shift happening in weight loss. Not to say that January still isn't a key season for sign-ups but just not to the degree it once was. Therefore, we are well positioned in our strategic decision to pursue an evergreen product innovation and marketing strategy, reducing the seasonality of our business. This shows up in the Q1 to Q4 seasonal slope in the end-of-period subscribers and also in how sign-ups are distributed throughout the year. In 2022 and prior years, approximately 40% of our annual sign-ups occurred during Q1. In 2023, we intentionally recalibrated our marketing spend to better maximize LTV tax which shifted several percentage points of sign-ups from Q1 into Q3. We plan to take that same approach in 2024. This is the first Q1 where we also have our clinical offering in addition to our well-known behavior change program. So while our total marketing spend in Q1 is expected to be roughly the same as in the first quarter of 2023, the spend dedicated to driving sign-ups to our core program is expected to be down year-over-year as well as we allocate a portion of our spend toward our clinical offering and B2B-related brand building which we expect to result in lower total sign-ups year-over-year for our core offerings. However, with the strong growth we are seeing in clinic, we believe this is the best approach to prioritize our investments in growth areas while still delivering growth in total subscribers and driving greater operating income in 2024. And with clinical continuing to ramp along with growth in digital core subscribers, we are on a path to deliver year-over-year end-of-period total subscriber growth in each quarter of 2024. And despite significant declines in workshops, we expect subscription revenue to grow year-over-year in 2024. Our subscriber base is benefiting from improvements in activation and engagement over the past year which are starting to show green shoots in retention which ultimately would benefit LTV. Our team has done significant work in streamlining our app and now we are focused on selectively adding capabilities that drive member success. On our core digital products, we are already beginning to better understand and leverage AI. And I believe this is just the beginning of how we can add greater value to members in a modernized digital-first experience. Also coming soon, our new features and integrations that enhance community, coach connection and making food decisions, which are foundational to any weight health journey. This is all part of our ongoing digital product strategy to enhance member satisfaction and success the impact of which builds over time. Now let's further expand on our clinical performance and the landscape. We continue to drive growth in clinical subscribers that we believe is ahead of the growth rate of new GLP-1 prescriptions dispensed, suggesting that we are taking share in this market and are well positioned to grow alongside the momentum in our category. Supply constraints continue to challenge this category, particularly the availability of GLP-1 starter doses. While many competitors in the market are utilizing compounding pharmacies, we are steadfast in our commitment that Weight Watchers Clinic will only prescribe FDA-approved medications to our members and not prescribe compounded medications. We are confident this is the right decision for the clinical safety of our members and our business, both for the immediate and the long term. Our position is aligned with the FDA's guidance which urges patients to obtain prescription drugs only from state-licensed pharmacies where the FDA and state authorities can assure the quality of drug manufacturing, packaging, distribution and labeling. The FDA has received adverse event reports after patients used compounded semaglutide. While others may choose to be opportunistic at this time and turn to compounding to help boost recruitment and retention, this is an issue that we will not compromise on. We have a 60-plus year track record of science-backed solutions and not hopping on to fad and snake oils for weight loss. Our members and partners trust us and I plan to respect that trust and maintain our high standards and values, especially around clinical protocols. I am confident that as the supply of GLP-1 medications improves, we are very well positioned to recruit and retain members in our clinic offering at an attractive LTV CAC beyond the success we are already seeing today. In the meantime, we have been educating consumers with top-of-funnel initiatives about the Weight Watchers evolution and the category evolution. But as supply returns, we will be adjusting our marketing approach moving more into performance-based tactics for clinic and highlighting our sustainable approach to medical weight loss. In addition to providing comprehensive high-touch and personalized weight health care, which is the real value of Weight Watchers Clinic, the tech platform supporting it is what makes it scalable and creates a better member experience. 40% to 45% of clinic members that have prior authorization submitted get one approved for insurance coverage, which is 5 to 10 percentage points higher than at the end of June and compared to 22% of U.S. employers according to the International Foundation of Employee Benefit Plans. Insurance coordination is a frequent pain point for consumers. So to have a solution that makes that process quick and easy is a great differentiator. In 2024, we are focused on building on our differentiators by expanding care, expanding access and expanding payment options. We call this project expansion. These changes will have a real impact on our business model. Importantly, the financial guidance we are providing today does not include any significant revenue benefit from these exciting initiatives. So first, let's talk about expanded care. I think of Weight Watchers as having one membership. Everyone under our umbrella is a Weight Watchers member. So while we speak to members being digital, workshops or clinical, the future is in members having our foundational behavior change offering as a basis and the ability to add on and move between membership types depending on the level of support needed. For instance, a digital subscriber coming in today on a long-term commitment for $10 a month can easily become a member at a significantly higher monthly rate down the road if another of our solutions is a better fit to their individual needs. Approximately 70% of our clinic sign-ups since December are from current or former Weight Watchers members. And within that, 20% of the clinical sign-ups were active members of our core programs choosing to upgrade to clinical via the new tab in our app. The successful conversion rate from active subscribers at essentially zero customer acquisition cost enhances a member's weight loss journey and delivers greater average revenue per user for those members. This demonstrates how we can effectively leverage our existing member base with an integrated platform. Our vision is to expand the care options that members can access based on their specific weight health needs, which would include subscription services such as metabolic lab tests and dietitian support as well as specialized care depending on life stage and product conditions. This helps make their weight health experience less fragmented and more personalized. Now regarding expanding access. Throughout our history, Weight Watchers has been the leading provider and trusted brand name in the weight loss industry. Our buyer was primarily the individual consumer. Because of the massive shift in our category, we know the end buyer will evolve. Today, it's consumers, tomorrow, employers, and payers; government will all play a larger role. We plan to make Weight Watchers a covered benefit, both for our core behavioral program and our clinical offering. This is a process that won't be accomplished overnight but one I am very enthusiastic about for the mid and longer terms and one we will pursue aggressively. Our B2B team is making good progress in expanding the employer business. We recently announced that LabCorp, a leader in lab services, will offer Weight Watchers as a covered benefit to its U.S. employees as well as their spouses and domestic partners covered under the LabCorp Medical Plan. This includes the full weight health spectrum from behavior change to clinic. In order to receive prescriptions of GLP-1 weight loss medication through their health benefit, LabCorp employees will need to be using Weight Watchers behavior change programs. Other recent new business wins for offering our Weight Watchers behavioral program as a 100% covered benefit include Deutsche Bank and Bosch Health. The reason these employers choose to work with us includes: first, our brand equity. Weight Watchers is a trusted partner that their employees see as a choice benefit. Our brand recognition possesses a rich, multigenerational history that resonates with consumers who are also employers. Second, our science. Weight Watchers is the most studied weight loss program. It is clinically proven that we provide better outcomes with our personalized approach and behavior change program. We have the unique ability with our large data set and clinical studies to inform and recognize phenotypes that can de-escalate to more cost-effective and sustainable weight management. As part of this ongoing effort, we launched a clinical trial in partnership with the Cleveland Clinic and look forward to reporting these outcomes. Finally, our consumer experience. We operate at a size and cost-effective scale that few other companies in our category can match and we do so with a powerful and differentiated consumer experience. While no single employer is expected to be a material driver of total subscribers or revenue this year, we are building momentum in this channel and believe it to be a critical growth driver for 2025 and beyond. In addition to expanding access, we intend to expand payment options across our clinical services. Our goal is to allow members to use their insurance whenever possible rather than having to shoulder the cost out of pocket. This will be an ongoing initiative which we intend to roll out in phases. While it takes time, this is really important because we believe the future of weight health will be predominantly covered by insurance. We believe the capability to directly process insurance claims for Weight Watchers services will have a positive impact on sign-ups, retention, subscribers and average revenue per user over time. By leveraging and further advancing our technology, including AI for processing claims, we expect to be able to transform our go-to-market model in a highly scalable and profitable way. In summary, 2024 is shaping up to be another critical year in Weight Watchers' transformation. I am proud to say we have returned the company to a positive trajectory with anticipated growth in subscribers, subscription revenue, gross margin and operating income, and project expansion gives us critical opportunities to further catalyze our growth and mission as the global leader in weight health. I will now turn the call over to Heather to discuss our financial results and 2024 outlook.

Thanks, Sima. Turning to our 2023 full year results. Note that all year-over-year financial comparisons are on a constant currency basis. We ended Q4 with 3.8 million subscribers, including 67,000 clinical subscribers. Our core Weight Watchers subscribers grew 5% year-over-year, marking the first year-end with subscriber growth since 2020. Ending the year with 3.8 million subscribers represents the best seasonal float in our history and reflects our actions to reduce the seasonal nature of our subscriber base and improve the efficiency of customer acquisition. Revenue totaled $890 million which was in line with our guidance. Year-over-year, revenue decreased $151 million. Breaking this down, subscription revenues of $823 million included $31 million in clinical revenue, declined $97 million primarily driven by the headwind of the lower number of incoming subscribers at the beginning of 2023 versus 2022. Importantly, consumer products and other revenue declined $54 million, largely due to the strategic decision to wind down our low-margin consumer products business. Adjusted gross margin of 61.9% was an annual record high and up 135 basis points from the prior year, driven by our actions to reduce our fixed cost base with our workshop real estate restructuring. Of note, the fourth quarter included a one-time charge of $5 million within cost of sales for inventory reserves related to the wind down of our Consumer Products business. Marketing expenses of $238 million were down 2% year-over-year, reflecting more efficient spending as we were able to grow 2023 sign-ups versus the prior year with less marketing dollars. Adjusted G&A of $223 million was down 4% versus prior year despite the inclusion of clinical G&A expenses due to the benefits of restructuring and expense controls. Fourth quarter adjusted G&A was slightly better than our expectations due to lower-than-anticipated benefit-related items. Adjusted operating income was $89 million which was above our previously provided guidance range, largely due to the lower-than-anticipated G&A expenses, as mentioned. Restructuring charges totaled $24 million in the quarter and $55 million for the full year. Fourth quarter restructuring was higher than the previously provided estimate as we continue to centralize and streamline our organizational structure to set up for future investments. These actions drove approximately $50 million of savings in 2023 and are expected to drive $50 million of additional savings in 2024 which is allowing for investment in strategic priorities, including clinical expansion. During the fourth quarter, we recorded non-cash impairment charges for goodwill and franchise rights acquired balances totaling approximately $4 million. Income tax was an expense of $39 million which reflected an increase in the valuation allowance to offset all U.S. deferred tax assets due to the uncertainty of realizing future tax benefits of the assets. GAAP EPS was a loss of $1.46 which incorporates the net negative impact of $1.34 of items impacting comparability, including the valuation allowance, net restructuring charges, acquisition transaction costs and non-cash intangible impairment charges. Turning to our clinical line of business. We are encouraged by our fourth quarter performance and ongoing integration efforts in the face of the continued challenging supply environment. While we are starting to see signs of more availability, supply constraints remained prevalent in Q4 and so far in Q1. Additionally, price and insurance remain critical issues, leading to competitor use of compounded medications. As Sima mentioned, we will not compromise on our stance to only prescribe FDA-approved medications even if it means bringing in fewer subscribers today than we could otherwise. While the market continues to evolve and is in its early days, there is no change in our conviction about our strong multi-year growth opportunity. We continue to increase our scaling readiness and integrate operations during this time. While this negatively impacts near-term gross margin, we are ready for improvements in supply. Q4 adjusted gross margin was north of 30% and we expect to start improving this with revenue scaling in 2024. Shifting to our outlook. We believe 2024 is going to be a year of continued transformation as we adjust to what we believe is the future state of how consumers will take part in the weight health market. We are focused on meeting consumers where they are in their weight health journey and to grow our total Weight Watcher subscribers. We've been encouraged to see that our digital and lab subscribers are converting to clinical subscribers. However, we continue to see a shift away from our workshop business to digital and that more consumers are signing up for longer durations and on higher promotional days indicating further price sensitivity to our behavioral offerings. As you heard from Sima, we are increasingly managing the business on a holistic and integrated basis as we execute our strategic growth initiatives and expand how we engage our members. As previously shared, we plan to hold total marketing dollars roughly flat to 2023, within which we expect to still drive total subscription revenue growth. We continue to leverage longer-term commitment offerings in order to optimize LTV to CAC and maximize total revenue and total subscriber growth in the current environment. We are beginning to see retention expansion with recent product improvements and we anticipate stable subscription LTV year-over-year in 2024. Behavioral ARPU measured as revenue per paid week is expected to be down in the mid-single digits in 2024 due to the continued expansion of members and commitment. To expand behavioral subscriber ARPU over time, it is essential to execute on the strategic initiatives Sima highlighted, including expanding care through the addition of new premium add-on services. We expect to end the year with total Weight Watcher subscribers between 3.8 million and 4 million, driving a second consecutive year of annual subscriber growth. Within this, we expect end-of-period clinical subscribers between 140,000 and 160,000 and we expect our core behavioral subscribers to grow year-over-year despite a steep nearly 15% decline in our workshop subscribers. Within our Weight Watchers behavioral offering, approximately 75% of sign-ups through January chose 10 months and longer commitments, compared to approximately 25% in January 2023 and approximately 45% for full year 2023, reflecting where we are in the return to subscriber growth and members increasingly choosing longer-term plans. Approximately 55% of subscribers entering 2024 were within commitment periods which we expect to increase in 2024. We expect full-year total Weight Watchers revenue to be $830 million to $860 million. Within this, we expect clinical revenue to be between $100 million and $110 million. Excluding the headwind from our exit of our past e-commerce and consumer products business, this reflects a modest increase in subscriber revenue year-over-year. We expect other revenue primarily our high-margin licensing business to contribute up to $10 million in 2024. While this is a $55 million year-over-year revenue headwind, importantly, we expect this to be roughly neutral to operating income. Gross margin is expected to be approximately 66% for the full year up from adjusted gross margin of 61.9% in 2023, reflecting a higher mix shift to our digital business and continued read-through of workshop actions. We expect full-year marketing spend to be roughly flat with 2023. G&A expense is expected to be between $210 million and $220 million for the year which is slightly lower than 2023 and due to our restructuring efforts and cost discipline reflecting strategic investment to expand our clinical offering. As a reminder, 2024 includes one additional quarter of clinical expenses compared to 2023. Therefore, we expect operating income to be between $100 million and $110 million. Of note, changes to modernize our technology organization have required us to update capitalized labor rate expectations. All else equal, this change is expected to negatively impact 2024 operating income by approximately $9 million, roughly split between cost of sales of $7 million and G&A of $2 million. Importantly, this shift in operating methodology does not impact cash. We expect EBITDA to be between $155 million and $165 million. For the full year, we expect income tax expense to be between $10 million to $15 million, impacted by an increase in the valuation allowance expected next year. Excluding the impact of the valuation allowance, we expect an income tax benefit of up to $10 million. With respect to Q1, we expect to end the quarter with total subscribers of approximately 4 million, including clinical subscribers of approximately 85,000. We expect revenue to be approximately $200 million and to have an operating loss of approximately $15 million. As is typical for Q1, we have higher marketing spending compared to the remaining quarters of the year with the benefit of acquired subscribers driving revenue throughout the remainder of the year. Turning to our capital structure and cash flows. We ended Q4 with approximately $109 million of cash plus an undrawn revolver with our cash position plus our revolving credit facility. We believe we have sufficient liquidity for our working capital needs, including in-year cash outlays related to our restructuring actions and servicing our debt. Cash from operations was modestly positive for the full year, slightly better than the prior expectations of a modest use of cash. We expect cash from operations in 2024 to increase year-over-year from 2023. As a reminder, 2023 included approximately $45 million of cash payments for restructuring, and we expect 2024 to include approximately $20 million of restructuring payments associated with the 2023 restructuring plan. Our first half of the year cash needs are much higher than the second half due to increased marketing, compensation timing and the Sequence acquisition anniversary payment with cash than expected to build through the balance of the year. Following our recent organizational changes to centralize the business and reduce our fixed cost base, we are confident that we can operate our business and execute our strategic plans, all with lower levels of cash on hand requirements compared to prior years, in the $40 million range. And if needed, we continue to have access to approximately $60 million of cash from the revolver for additional short-term cash cushion. At year-end, our net debt to adjusted EBITDA leverage ratio was 9x. With our 2024 outlook, we expect our trailing 12 months leverage ratio to further increase in the coming quarters due to lower EBITDA levels, in particular, due to the capitalized labor methodology update mentioned earlier, before showing year-over-year improvement at year-end 2024. We have very attractive long-term debt agreements with no maturities due until 2028 and 2029. We remain committed to improving our leverage ratio as we execute the sizable turnaround while also opportunistically considering capital structure options. We expect full year interest expense to be between $105 million and $110 million, an increase of $10 million to $15 million compared to 2023, largely driven by the expiration of our $500 million hedge at the end of Q1 2024. As a reminder, we locked in these hedges in 2018 and 2019 with a weighted average rate of 2.56%. We are actively considering options to hedge a portion of our variable rate debt to mitigate uncertain market conditions. However, at prevailing interest rate levels, the interest expense savings would be marginal. CapEx, which is primarily due to capitalized software, is expected to be in the $20 million to $25 million range which is approximately $10 million lower than 2023, reflecting the offset to the capitalized labor change mentioned earlier. Depreciation and amortization is expected to be in the $40 million range. In summary, we executed against our 2023 objectives by returning to subscriber growth with a record adjusted gross margin and improved cost structure. While 2024 will be another year of transition, it is one where we are operating more efficiently and are strategically positioning Weight Watchers for the future. We believe by scaling clinic and executing on our expansion initiatives, we will drive another year of operating income growth in 2025 with momentum in revenue returning to the business.

I will now turn the call back to Sima. Thanks, Heather. 2024 is not just a year of transformation but also expansion. There is a lot to be excited about as we execute on a multi-year journey towards expanding care, access and payment options, all of which will reinvent our business and how people think about not only weight health but also Weight Watchers. Destigmatizing the conversation around obesity and amplifying the right to care and health equity are critical to addressing bias in public policy for the treatment of weight-related disease. I'm thrilled to announce that in May, together with Oprah Winfrey, we will be hosting an event on Wade House. The event will feature industry experts coming together to change our relationship with weight. Oprah is an inspiring presence and passionate advocate both for our members and for society at large and elevating the conversation around weight health. While I and the rest of our directors will certainly miss her in our Board meetings following the end of her current term, she remains a strong strategic voice and collaborator with Weight Watchers. In addition, she continues to be an incredible advisor and thought partner for me and I could not be more enthusiastic about our upcoming event and her vocal advocacy in addressing this critically important topic. Thanks for joining us. We are now happy to take your questions.

Today's first question comes from Nathan Feather with Morgan Stanley.

Can you provide a bit more color on the incremental traction you're seeing in the clinic business since the mid-December launch and the key drivers of that? And then how are the subscribers that come into that channel behaving differently from those that came into your sequence?

Nathan, thanks for the question. I'm going to start from the top and I might need a clarification on the second part of your question. So we're really encouraged with the clinical performance that we've seen, strong first-year net adds in Q4. So we've nearly tripled the subscribers since we announced the acquisition. And there was a lot of visibility from that clinic launch, a lot of PR that we saw coming into December and that has continued on through Q1. Just to be clear though, the Weight Watchers clinic is now what Sequence once was. So in terms of the acquisition, it is similar. The difference is that we now have a tab within the Weight Watchers app. And that tab is accessible to all active members. As we mentioned, 20% of the members that we are acquiring to clinic are from conversion of current core members choosing to upgrade to the clinic. I think that's really exciting to see that we can provide this personalized high-touch support to people who are realizing that behavior change alone is not going to be enough for them. And we've done all of this in just 8 months since we acquired Sequence. We combined behavioral and medical weight loss solutions into one integrated member experience and there's a lot more opportunity to make this even more holistic. And we plan to execute that as part of the project expansion that I mentioned. I'm not sure if that answers the second part of your question.

Yes, that's very helpful. And one more, if I may. I guess what is the retention you're seeing on the subscribers that are now rolling off the 10-month commitment plans from kind of late '22 and early '23? Are those showing the LTV dynamics you expected?

Thanks for the question, Nathan. So we are seeing improvement in retention. In aggregate, as we look at our behavioral members, it's now approaching 11 months from approaching 10 months in the prior year. So yes, the longer-term commitments are reading through into that improving retention.

Yes. And I just want to add to that, that we've made a lot of the major improvements on the product side that rolled out later in the year. So we've had less time with that cohort but the green shoots are there, and we're already seeing it in activation and NPS.

The next question will come from Jack Wallace with Guggenheim.

I thought you gave a lot of great information in the prepared remarks. I wanted to ask about the B2B business, particularly as you're in discussions with your current and prospective customers around plan design. And I guess it's a couple of parts here. One, what are your customers saying in terms of the breadth of services around their members being able to access weight health programs, and then thinking more specifically about the clinical offering, how are those plan partners thinking about covering the GLP-1 category? And are they almost always requiring a gating factor which would be participation in any clinical or behavior change program? Or if not, how are those discussions evolving?

Yes. Thank you so much for the question. So yes, the employers and payers we're talking to are looking for partners, first of all, who can be trusted and recognized by consumers. I obviously think that this is a core differentiator for us. On the employer side, particularly, they're getting a lot of asks from their employee population that this is an important benefit they're looking for. We are seeing increased interest in our behavior change program and additionally a real focus instead of sort of step care, rather a focus on adherence to improve outcomes by adopting the behavior change program alongside medication access. So that's what they're looking to really achieve, a higher ROI by combining a best-in-class behavior change program with high-touch clinical care. They want to include the virtual clinic but also keep flexibility to allow their employees to also use their own physicians but they really are interested in the behavior change aspect of our program. Now the other thing that I would add is that employers and payers want to ensure eligibility for prescription treatment plans based on FDA criteria. That is something that we are in full agreement with. Finally, on this point, we're also seeing interest in value-based payment models. So yes, we are really encouraged by the conversations that we're having on this front and more to come.

Great. That's really helpful. And then just thinking outside of the B2B market, but sticking with clinical, the patients that you're ultimately targeting onboarding and serving, if you were to stratify the market a bit folks that are looking to get convenient or cheap access to medication or a rapid weight loss versus those that are they may be looking for a more permanent solution that you can be aided by the GLP-1 category. Can you just help us get a better understanding for when you are reaching out and targeting new subscribers, how do they typically fall into those two buckets and maybe it's more of a scale. My hunch here is that there's a large enough cohort, a large enough segment of the market that there's plenty of serviceable demand that can be sustainable for the D2C clinical business.

The D2C portion of our business remains critically important. I think that is something that we are clearly showing our ability to scale and we're really encouraged by the progress we're making on that front and mostly from our current membership base. As we mentioned in the prepared statements, 70% of the clinical members have been at one point Weight Watchers members. I want to take a step back because from a let's call it reasons to believe or value and what we provide, it's not the prescription. It's the care. We are dealing with people who've been going to primary caregivers about their weight for years have been told the same thing, eat less, move more. Our clinicians participate in a 12-week specialized onboarding period that includes rigorous training, close oversight by our clinical leadership team, comprehensive performance reviews to ensure that they have competency in obesity care and nutritional knowledge and empathy to guide members on this journey and that's an important differentiator is that we are coming with full spectrum medical weight loss. That is something that is going to require a high-touch experience to have the best outcomes. We're looking at our customer satisfaction, our NPS and that's driving a lot of the acquisition is people just having a great experience with our program. That's how we are going to market right now, speaking to the fact that what we're offering is great care and a membership that will help them with their weight health.

The next question comes from Michael Lasser with UBS.

Two-part question. How are you thinking about as you lap some of the aggressive discounting and promotions that have been taken as a way to extend the life of the subscribers? How are you thinking about subscriber growth as you lap that? Do you expect that you might have to further push promotional actions in order to drive subscriber growth? And then my second question is, what is the longer-term vision? Is it to get some of these subscribers that you're gaining now from some of the more aggressive actions to eventually convert them to Weight Watchers clinical members and that's going to be the means from which the organization can get growth?

Thanks, Michael. Yes, we are making pricing and promotional decisions to make sure that we're managing total lifetime value acquired and really leaning in on that. We are expecting in our assumptions this year to maintain similar LTV promotional activity year-over-year and have sort of consistency in that pricing. So we expect to show stability and potentially growth in our subscriber base as we've guided from that activity and don't expect to be moving towards deeper discounting. Sorry, the conversation about the conversion into clinical as we look to gain and expand the subscriber base importantly from the prepared remarks that Sima shared, the growing core consumer base provides recruitment into the clinical base as well. As we shared, 20% were coming from current core subscribers moving into the clinical part of the business. So we see growth coming from there.

Okay. And my follow-up question is, given the intentional decision to moderate clinical subscribers in light of some of the supply constraints related to the GLP-1 drugs. How do you see that playing out from a competitive standpoint? Is it your expectation that some of these competitors are going to potentially go away and that will put Weight Watchers in a better position to attract clinical subscribers when supply improves because the competitive landscape is only growing more intense by the day? In fact, obviously, some of the pharmaceutical companies are going direct to consumer to offer these medicines themselves now.

Yes. We feel very optimistic about 2024 and the supply improvements that we expect to see. That has already been noted by some of the pharmaceutical companies. We've been able to really lean in on our wide formulary and with our focus on weight health, continuing to grow the business even in a supply-constrained environment. I think it’s based on the new scripts dispensed and our subscriber growth that we are taking share in this market, doing that with absolutely no use of compounding. I have every reason to believe that our growth will be aligned to the supply opening up as well. Access and insurability will be very important and that's holding people back from getting the care that they deserve. We are leaning in on our wide formulary in the meantime to help people with medical weight loss, who really need that service for their chronic relapsing condition.

Michael, I just wanted to add back on your first question on the long-term commitment pricing. Just to put a point on it that we're stabilizing the lifetime value of subscribers with these longer-term plans and setting up for the clinic expansion, as I said. We believe that LTV has stabilized and will be slightly higher even in later 2024 and is expected to drive the total subscription revenue growth that we've shared starting later in the year.

The next question comes from Alex Fuhrman with Craig-Hallum.

I was wondering if you could give us an update on what you're seeing in terms of your incoming members on the clinical side for insurance coverage. I think in the past, you talked about a little bit fewer maybe than half of your customers or would-be customers rather getting insurance coverage for the name brand, GLP-1. How has that trended over the past few months?

Thanks, Alex. This is about our insurance engine. We're trying to help where we can for those who are insured. We see 45% of our members that have prior authorizations submitted are getting one approved. This is about 5 to 10 percentage points higher than what we mentioned in our third quarter call. The drivers of that are the step bound coming to market is helping obesity indications get approved. The increase in TEXENDA approval rates and really our platform, which continues to get smarter and we're able to increase the amount of prior authorizations we can file for members.

Okay. That's really helpful. It sounds like you had a tremendous response to the $10 a month commitment plans offered throughout most of last year. Can you provide some expectations regarding churn as those members start to experience their rates increase from $10 to $23 a month, which I assume will begin happening in the spring? I'm interested to know if you've noticed a significant number of members already facing that rate increase and what your expectations are for churn for the remainder of the year.

Thanks, Alex. We've had that plan running since early in 2023, and we now have some experience with people transitioning off that plan. As I mentioned earlier, we're starting to see an increase in retention revenue, which is approaching 11 months. Additionally, with such a significant shift in members and their commitment, our average committed months are also increasing. In Q3, our average committed months were around 7.6, and now it's up to 8.6. This growth is occurring, and we have effectively planned for churn. Given our experience so far, I believe we have the rest of the year well planned out with this promotional offer.

Today's last question comes from Stephanie Davis with Barclays.

I wanted to talk a little bit about the B2B opportunity. There is a lot of employer concern about prescription costs, with GLP-1s and especially from self-insured employers. So how are you positioning your solution is not to exacerbate any of these fears while still taking advantage of the need for weight loss solutions within that cohort?

Thank you. Yes, I mean, we had a third-party actuarial firm model that shows for employers that cover the GLP-1 medications and implement our full program that it would result in a 3.9x ROI. I think it's really important to have those lighthouse clients that we can partner with and really show these outcomes as proof points. Employees are asking for weight health. This is a matter of bias not to provide that level of care. You're seeing what's happening in North Carolina now with the state plans decision; this is something that employers and payers will wrestle with. The way to manage those outcomes is to ensure that medications are taken in conjunction with lifestyle intervention. That is what is going to drive the long-term ROI. As you can imagine, we have a lot of these employers and payers coming to us looking for a trusted partner who can help navigate this landscape and provide this benefit in a cost-efficient way. I think we're the best partner to help them with that.

And maybe, I guess, dovetailing on that last comment, it is a pretty competitive environment with folks like Amada and Verda and Calibrate. So how are you differentiating yourself when you look at these head to head? Are there any win rates or any early color you can tell us about the success you've had on the call?

Well, the main thing that we hear, as I mentioned in the prepared remarks, is around the science, the brand equity and the engagement. On the science, we have the largest data set giving us the ability to report back on the phenotypes to their employee population and put them into the right pathway for the best success for that employee. On the brand equity side, trust and compliance are paramount with regard to clinical protocols, and that is something that they have come to expect from Weight Watchers with a 60-plus year track record. Then engagement, we have a great product that works, there is a ton of brand recognition for that, and employees want to use it. It provides this level of community care and high-touch support. Ensuring that they have to do this in conjunction and say they must use this behavior change alongside medication access that it is a program that is joyful, easy to use, and something we have proven to do. The combination of these three factors is a real differentiator for us, not to mention our ability to scale.

This concludes our question-and-answer session. I would now like to turn the call back to CEO Sima Sistani for any closing remarks.

To reiterate, we are on track to deliver year-over-year growth in subscribers, subscription revenue, gross margin and operating income. 2024 will be a critical build year as we work to further catalyze our growth and mission as the global leader in weight health. We are confident in our plan. We feel good that the guidance we are putting forward, including our investments in growth, and that we are executing on the right initiatives for the long-term health of our business. We look forward to speaking with many of you at upcoming conferences and events, including at the Morgan Stanley TMT Conference in San Francisco next week and the BMO Obesity Summit in New York City later this month. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.