Good day. Welcome to the WW International, Inc. Q1 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Corey Kinger of Investor Relations. Please go ahead. Thank you, everyone, for joining us today for WW International's Q1 2023 Conference Call. At about 4:05 P.M. Eastern Time today, we issued a press release reporting our Q1 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. 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. Thank you for joining us today. 2023 is shaping up to be a pivotal and transformative year for WeightWatchers. One where our key initiatives and decisive actions will shape the future of our product experience, operating model, our financial trajectory, and most importantly, the member lives we positively impact. As we enter our 60th anniversary and plan for upcoming celebrations with our members, I've been reflecting upon the incredible history of the company and looking back at photos of our founder, Jean Nidetch, and crowds of members at parades, Madison Square Garden, and workshops. WeightWatchers started a movement 60 years ago. That excitement stemmed from a strong sense of community has been the foundation of our longevity. The in-person human connection found in our workshops is what WeightWatchers has been known for. The evolution to digital expanded our subscriber base and sustained the company through the pandemic. 80% of our members now access WeightWatchers via a mobile-first experience. Our digital experience can be so much more. It can bring people together in new ways, expand our reach, and provide members with immediate support and inspiration. It can enhance the in-person experience, better enabling connectivity between members, and members and coaches. The WeightWatchers that our members know and love is our gold standard. With a program that works, millions of members, 60 years of experience and ranking as U.S. News & World Report's number one best diet for weight loss the last 13 years in a row. We have earned trust in a space where new entrants come and go. We are turning that solid foundation into best-in-class experiences for the future, including building new science-backed pathways such as clinical. Turning to our Q1 results. We ended the quarter with just over 4 million subscribers, slightly above our March guidance of approaching 4 million as sign-ups exceeded our forecast. This represents net additions of nearly 500,000 subscribers, up from the 3.5 million subs we had at the year-end. This is a quarter-over-quarter step up of 100,000 more net additions than in the year-ago Q1. Importantly, this was accomplished with $19 million less marketing spend. To reiterate, we achieved more net addition with 18% less marketing spend versus the prior-year Q1. This demonstrates that our new approach to marketing and our improved program are working and driving efficient acquisition. This outperformance in subscriber growth resulted in revenues coming in higher than forecast and combined with greater cost discipline flowed into adjusted operating income results beating our guidance. We are better utilizing data throughout our business from digital engagement and activation to product experience, from LTV/CAC to financial forecasting. This data-informed culture is improving the ways we operate, making the company more agile and results more predictable. Our activation rate, defined by a member's engagement and progress during their first month on the program, has been trending up between 4%-8% year-over-year so far in 2023. As a reminder, activation rate matters because activated members churn at a rate that is roughly half of a non-activated member and are more successful on WeightWatchers over the long term. Driving this metric upward is a key focus across our entire organization. The sustainability of holding this year-over-year improvement in activation rate demonstrates that the changes we have made to the product and our program are working. In addition to our activation rate, which is measured only in a member's first month, our engagement rate, which is measured across our entire membership base, has turned positive and has been trending up between 6%-7% year-over-year. Further indication that our product updates are working for our members. As discussed, our current digital product roadmap is focused on creating community and enabling food decisions as measured by a member's first month activation and resultantly, subscriber retention and member success. One of the key features, member chat, has recently launched in beta. We look forward to learning, iterating, and expanding its rollout in the months ahead. We believe chat will be foundational for enriching our digital community, allowing members to create relationships they are excited about, members with each other, coaches with members, workshop groups, even people in your existing network, if you wish to bring them along your journey. Coming in 2023 will be new streamlined spaces in our app, including a what to eat tab, which will help support members' eating decisions, and a space dedicated to progress and trends, allowing members to better see the connection between core behaviors like food, activity, and weight tracking as it relates to their weight management progress. To improve our coach experience, we plan to launch a new platform for our coaches that will help them better engage with members in real life as well as digitally. The longevity of WeightWatchers brand has sustained because of ongoing innovation to maintain our position as the global leader in sustainable, science-backed weight management. As the world evolves around a new understanding of living with overweight and obesity, we will sustain our leadership by leaning into our heritage while also evolving alongside new interventions with our eye on the North Star of connecting people meaningfully through the shared experience of a weight management journey. With that in mind, we are coining a new term, Weight Health. Similar to how heart health or mental health reframe the conversation around their chronic conditions, reduce stigma, and improve accessibility and standards of care, we believe Weight Health should be the future of our space. We are focused on leading this change, de-stigmatizing and demystifying obesity and weight management, and making evidence-based solutions more achievable and accessible to those in need. Weight Health is the degree to which an individual's weight affects their metabolic health and well-being. Weight Health is impacted by genetic, biological, hormonal, environmental, and behavioral factors unique to each individual. Weight healthy living aims to prevent and better manage the chronic diseases that result from excess body fat, including type 2 diabetes, high cholesterol, and cardiovascular disease, with the ultimate goal of improving health, well-being, and quality of life. WeightWatchers will be synonymous with delivering Weight Health through our pillars of coaching, accountability, and community through evidence-based interventions. Which brings me to our acquisition of Weekend Health, doing business as Sequence. This announcement captured significant attention and generated a lot of excitement, an excitement that we share about the opportunity ahead to impact many more lives with improved health outcomes. Sequence is a subscription digital health platform offering clinical access to prescription chronic weight management medications, jumpstarting our entry into the clinical space. Sequence's technology platform integrates patient and clinician experience, providing eligible members with ongoing access to online clinical care and medication for weight management. We strongly believe the multi-year growth opportunity for Sequence is significant. Importantly, this year, we are carefully balancing the continued strong growth momentum of this business while taking a thoughtful approach to integration and scaling to ensure we continue to deliver a high-quality, differentiated member experience that exceeds expectations with high satisfaction, driving both stickiness and efficient acquisition. Conversation around GLP-1 and WeightWatchers entrance into the clinical market has been widespread, and we now have an opportunity to build upon our position in Weight Health. Encouragingly, our customer is viewing the news positively. In a survey we conducted last month, 60% of our core demographic said the acquisition made them think more positively about WeightWatchers. 80% of those surveyed believe WeightWatchers is keeping up with the latest scientific research with this announcement. At the same time, we need to bring our current members along with the evolution. Our communication is critical. We are focused on educating that pursuing a clinical pathway is a personal choice and not something we are actively pushing them to do. The WeightWatchers they know and love will continue to be the gold standard of what we deliver. At the same time, in our survey, among those who are currently WeightWatchers members, 18% said they are interested in trying weight loss medication. Trusting us to bring credibility to the space so there is an opportunity to better serve these members with an integrated clinical solution. Their top three expectations for our clinical program are: access to GLP-1 medication, insurance coordination, and a program designed for people living on these medications. We are focused on delivering a differentiated experience across these needs and more. To expand on each. First, access to GLP-1 medication. What we deliver through Sequence is a connection with a clinician who is experienced in prescribing chronic weight management medication. In consultation with the patient, the clinician can determine if a GLP-1 or another medication is appropriate. If a medication is prescribed, Sequence has a seamless, easy process for prescription fulfillment and for managing dosing over time. Second, insurance coordination. A prevailing concern about GLP-1s is that they are not widely covered by medical insurance, and therefore are prohibitively expensive for most people. While not covered on all health plans, they are increasingly covered at some level for those who medically qualify and who have previously and are actively participating in a behavior change program. The insurance pre-authorization process is known to be highly manual, slow, error-prone, and a frequent pain point for patients and medical professionals. Sequence has put the insurance process on tech rails to streamline much of this process, adding accuracy, thoroughness, and speed of insurance approvals. Third, a lifestyle program encompassing nutrition, fitness, and coaching, specifically designed for people living on these medications. As we integrate and build out this vertical, we will be learning and creating a behavior change program for this distinct member journey. I believe this will be another key differentiator, particularly for our lapse member base, who know and trust WeightWatchers, but who are also looking for a clinical solution. A behavioral program paired with a clinical intervention is critical and FDA recommended to help people on medications develop and maintain healthy habits. From prioritizing nutrient-dense foods to managing against muscle loss, there are several key areas where WeightWatchers can provide guidance and support to ensure members' weight loss journeys are done in a healthy, sustainable way. Finally, we believe a well-designed community experience will add value to those taking these medications. While community isn't a top driver for members to sign up for a clinical solution, we know from interviews with people using weight management medications that they would appreciate a community of people to learn from and compare notes. Similar to what we see in our principal program, people come for weight loss, but they stay for community, and we look forward to creating a robust community experience for all our members. We will be pairing WeightWatchers' nutrition and behavioral science expertise and community with the Sequence platform to create a comprehensive solution. More to come on our plans as they develop in the quarters ahead. I am encouraged by our early results in 2023, which only further increases my confidence that the initiatives we have underway are working. We continue to be focused on improving our sign-up trends, and for the second half of the year, returning to year-over-year sign-up growth, improving member activation, which would drive gains and retention, exercising strong cost discipline throughout the organization, and executing on a narrow list of objectives, including our entrance into clinical interventions for weight management. Before our financial update, I'm pleased to announce that Heather Stark has been appointed Chief Financial Officer of WeightWatchers. Since taking on the interim role in December, Heather has been an incredible partner to me and the entire leadership team. Her experience, including 12 years at WeightWatchers in operational finance, forecasting, managing teams, and navigating change, have been a tremendous asset to this organization. I look forward to continuing to work with her in this elevated position. I will now turn the call over to Heather and will then come back to further discuss our strategic priorities for 2023. Thanks, Sima. I'm honored to be taking on the Chief Financial Officer role at WeightWatchers. It's rare to work at a company that positively impacts the lives of millions in such a personal and important way. I look forward to continuing to work with Sima and the rest of our leadership team and being part of the next stage of this company's transformation. Turning to our Q1 results. We ended Q1 with 4 million subscribers, with both sign-ups and cancels slightly outperforming our forecast in the quarter. As Sima mentioned, this is a quarter-over-quarter increase of nearly 500,000 subscribers, which is a step-up of approximately 100,000 more than the step-up of nearly 400,000 in the year-ago Q1. Revenue totaled $242 million, which is slightly above our forecast, but down 19% year-over-year or 17% on a constant currency basis versus the prior year period, primarily due to the lower subscriber levels entering the year as well as the planned scale down of our consumer products business. Adjusted gross margin of 57.1% for the quarter was down 335 basis points from the prior year, with overdrive on cost savings resulting in a beat versus our guidance. The year-over-year decline was primarily due to a revenue mix shift from our higher margin digital business, the leverage, as well as the accounting for subscription and consumer product promotional bundles in the quarter. Marketing expenses of $88 million were down 18% year-over-year, reflecting lower spend on TV advertising and lower non-working spends as we optimize our performance marketing approach and drive member acquisition with strong LTV/CAC, subscription lifetime value to customer acquisition cost efficiency. Adjusted G&A of $56 million was down 12% versus the prior year, reflecting savings from our restructuring actions and overall expense discipline, partially offset by $3 million in costs related to the Sequence acquisition. We had an adjusted operating loss of $6 million in the Q1, beating our expectations. Restructuring charges totaled $23 million in the quarter. As previously announced, in 2023, we are further streamlining and centralizing our organizational structure, rationalizing certain non-strategic business lines, and continuing the rebalancing of our real estate portfolio. Income tax expense in Q1 2023 was $68 million, which reflected the impact of an unusually high negative annual effective tax rate, driven by a valuation allowance and small pre-tax loss reflected in the company's full year fiscal 2023 guidance. GAAP net loss per share was $1.68, which incorporates the negative impact of $1.54 of items impacting comparability, including net restructuring charges and the valuation allowance. Turning to Sequence. As we discussed at the time of our announcement in early March, since Sequence's launch in late 2021, the company has quickly grown to serve thousands of members across the U.S. by effectively scaling its technology platform through word of mouth. We closed the acquisition on April 10th, so it will be reflected in our results starting next quarter's earnings report. At closing, Sequence had approximately 27,000 members. At this time, new members to Sequence initially pay a $49 consultation fee. Should they qualify and accept treatment, subscribe for $99 per month thereafter. Only after they begin the $99 monthly plan are they counted as a subscriber. Gross margins for Sequence are north of 40%, so a bit better than those in our workshops business. On an annualized operating income basis, the business is modestly profitable at current revenue levels, but has significant upside opportunity upon achieving greater scale. After transaction expenses are behind us, the acquisition is expected to be accretive to WW's earnings per share by the Q4. Sequence is expected to continue its growth trajectory in 2023, it will take time to integrate and truly scale up this offering. That said, we strongly believe the multi-year growth opportunity is significant. We expect performance trends in our principal WeightWatchers business to improve through the year as we benefit from our data-informed approach to member acquisition, increase operating efficiency from our streamlined operations, and as we deliver on an enhanced member experience following upcoming launches to our product roadmap. In addition, the Sequence acquisition will be reflected in our results starting in Q2. We plan to redeploy our Q1 year-over-year marketing savings primarily into Q3, where we can better maximize LTV to CAC efficiency, essentially driving more sign-ups per dollar spent. We are confident that shifting the timing of this investment will help drive sign-ups year-over-year in Q3. For the full year, we expect to end the year with WeightWatchers subscribers, excluding Sequence subscribers, roughly flat to year-end 2022. Including Sequence for clinical subscribers, total subscribers are expected to approach 3.6 million. The last time we ended a year with flat or higher subscribers year-over-year was 2020, so this will be a notable achievement and a testament to the work our teams are delivering in our product experience and acquisition channels. As a reminder, Q1 is traditionally our annual peak in end of period subscribers, sloping to a Q4 trough with an average decline of 14% over the past five years. Our outlook of ending the year with 3.6 million subscribers represents a Q1 to Q4 decline of only 10%, significantly improved from a decline of 22% in 2022. Full year revenue is expected to be in the range of $910 million-$930 million, reflecting reducing year-over-year declines in subscription revenue as we move through the year. Approximately 40% of our subscribers are currently in the long-term commitment period of their membership, which ranges anywhere from one to 12 months, depending on their joining offer. These offers reduce the average rate per paid week, but lock in subscribers for a longer duration, resulting in higher LTV. In Q1, approximately 80% of global sign-ups chose a six months or longer plan, up from about 70% year ago. Most notably, 41% of total sign-ups are for a nine months or longer plan, up from only 12% a year ago. We now expect consumer products and other to contribute approximately $65 million in revenues during 2023, which is lower than our previous estimates as we simplify our business and focus our consumer products offerings on our best-selling SKUs. Revenues from Sequence are currently expected to contribute $45 million from Q2 to Q4 in aggregate. Adjusted gross margin is expected to be in the range of 61%-62% for the full year as we continue to reduce our fixed cost base. Our workshop restructuring is expected to reduce our cost structure by approximately $40 million on an annualized basis, with approximately $25 million of in-year savings, excluding reinvestments in the organization. We expect full year marketing spend to be flat with 2022 at approximately $245 million. G&A expense is also expected to be approximately $245 million for the year. This includes approximately $50 million in Sequence G&A plus $6 million in transaction costs, including the $3 million we recorded in Q1. We expect adjusted operating income in the range of $80 million-$85 million for the full year 2023. We estimate that the remaining charges related to the 2023 restructuring plan will be up to $10 million. For the full year, excluding the impact of restructuring, we expect income tax expense to be approximately $15 million-$20 million, largely driven by the full year impact of valuation allowance discussed earlier. Given the seasonal nature of our principal business, our Q1 income tax expense is expected to largely reverse in the remaining quarters of fiscal 2023, when we expect to earn pre-tax income. Excluding the impact of the valuation allowance and restructuring, we would expect an income tax benefit of up to $5 million for the full year. Given the small pre-tax loss reflected in the company's full year fiscal 2023 guidance, any updates to the expected pre-tax loss or income tax expense can result in significant impacts in quarterly income tax results. Turning to our capital structure and cash flows. We ended Q1 with approximately $141 million of cash, plus an undrawn revolver. With our cash position, plus our revolving credit facility, we have more than sufficient liquidity for our working capital needs, including in-year cash outlays related to our restructuring actions, servicing our debt, and approximately $40 million in cash for the purchase of Sequence in Q2. Reflecting our assumption that cash from operations will be a modest use of cash for the year. At quarter end, our net debt to adjusted EBITDA's leverage ratio was 6.7 times, up from six times at the end of 2022. We expect our trailing 12 months leverage ratio to further increase in 2023 due to lower EBITDA levels through most of the year. At this time, full year interest expense is expected to be approximately $95 million. Note that we have a $500 million hedge through Q1 2024 to protect against rising interest rates on our variable rate term loan of $945 million and our $500 million notes are fixed rate. Only 31% of our total debt is floating, and we are currently exploring options for forward starting swaps. CapEx, which is primarily due to capitalized software as well as depreciation and amortization, are both expected to be in the $45 million range for the full year 2023. We are stabilizing the business, improving our execution and looking forward to upcoming key milestones on our product roadmap and our entry into clinical. With our lower cost base and increased agility in our organization, we have greater flexibility in our operating model, positioning us well to improve our profitability profile following a return to growth. I'll now turn the call back to Sima. Thanks, Heather. We have significant opportunities for expanding our reach and returning Weight Watchers to growth. To achieve that, we are focused on a narrow list of priorities in order to best execute on the initiatives that will deliver the greatest impact. Across the organization, we are focused on four key areas. One, reinvigorating our principal business and hitting our end of period subscriber targets for the year, which will be achieved through our more efficient acquisition funnel and increased member engagement for both digital and workshop members alike. Two, compounding our head start in the clinical space by continuing to drive efficient member acquisition to Sequence, increasing brand awareness and expanding member retention. Three, leveraging our expertise and enhancing our capabilities to be the partner of choice for self-insured employers and health system payers in delivering end-to-end behavioral and clinical weight management solutions, setting a new standard of care in this space. Four, building community experiences, both in real life and in digital, that will broaden our reach, increase engagement and satisfaction for both behavioral and clinical pathways. In summary, our team's hard work, innovative thinking and strong execution is paying off, and I am confident that we are turning the corner and getting WeightWatchers back on a growth trajectory. With a leaner, more agile organization, we are improving our operating model to drive profitable growth. Thanks for joining us today. We are now happy to take your questions. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Jason English from Goldman Sachs. Please go ahead. Good afternoon, folks. Thanks for slotting me in. Congrats on finding some stability on the core subscriber base. Good to see. On Sequence, your guidance implies you expect to have about 100,000 subs at year-end. Minus. Couple questions. Last time you gave us an update, there were 4,000 on it. Where do we stand today? Whether that be people who've already paid the $99 or just people who have come in and entered the program. What gives you confidence that you can build to that 100? What's the cadence of activation? When should we start to see or expect to see you bring the marketing campaign and activate and start promoting this to try to get the on-ramp going? Hi, Jason, and thanks for your question. This is Heather. Sequence, yes, ramping up through the year. As we said in the comments, we closed the acquisition with 27,000 active subscribers. We are measuring subscribers as a different pace than a typical WeightWatchers subscriber, where you are a sign-up and an active subscriber right on day one. Those 27,000 are people who have come in and qualified for treatment and accepted treatment and moved into the $99 a month monthly subscription plan. There's a bit of a lag there between when someone enters the sign-up flow and actually becomes a subscriber, which is a little different, as I said. In terms of scaling, you know, we're confident that the 2023 expectations that we have, will land us in that range of growth. We recognize that there's a good scalable space in this business and expect to hit the subscriber base that we're targeting. Jason, hey, it's Sima. I just wanted to add to that regarding marketing activation. As you know, Sequence has built up their subscription base primarily on word of mouth, and we're seeing that they are continuing to scale through that channel. On top of that, we have the opportunity to tap into the WeightWatchers labs membership base to really cross-promote, for those obviously where it's medically appropriate. You know, that being said, we did push our marketing budget to the second half of the year, and we're going to be driving that top of funnel across our businesses as a whole. You know, one of the thesis here was that there would be CAC efficiencies, and we believe that will be true. You know, we're going to be looking at where we have the most leverage, whether it's through clinical or our behavioral pathway. Okay. one more question, then I'll pass it on, although I realize I cheated up front with a three part question. Sima, you had some interesting comments to make on insurance coverage. I was wondering, do you have any sense of numbers you can put around that? Like, what% of this population or even better, your current or lapsed users would be covered on this program, just carte blanche with no caveats? How does that percentage change when we rein in the caveat of it must be accompanied with some sort of behavioral modification program? Insurance coverage isn't something that we previously really polled our members regarding, but we know they typically have an above average household income, most do have health insurance through an employer. I think that's a fair assumption. The benefit of Sequence here is that they put the insurance process on tech rail such that it makes navigating the pre-authorization process so much easier, which helps with access, obviously. You know, on top of that, I think we're just have an opportunity to be an indispensable partner to not only members who need help navigating the insurance process, but also employers who are looking to figure out how to provide these critical medications to their population. We're hearing from our B2B population that they're interested in step therapy plans. That's an engagement model that we're designing and navigating through. I think, you know, more to come on that. Yeah. Makes sense. Exciting stuff. I'll pass it on. Thank you. The next question comes from Linda Bolton-Weiser from D.A. Davidson. Please go ahead. Yes. Hi. Based on your comments, it sounds like you're going to start this cross-promotional opportunity by tapping into your former members in the second half of the year. Is there any way to quantify how much of the marketing budget would be put towards that versus the WeightWatchers advertising? At this point, they're not integrated, right? It's still two separate endeavors. Is there any way to quantify the spending you would put toward the Sequence side? The CAC efficiencies are what we're going to be keeping an eye on. The opportunity here is going to really be driven by the product and where we have leverage. Where we're seeing efficient LTV CAC, that's where we will spend. You know, being able to go to market with a portfolio of options, I think is what really differentiates us and sets us apart. We're not specifying any specific part of our budget. What I feel confident about is that, you know, we have around $160 million still earmarked for the rest of the year to drive our top of funnel. You know, no other companies in the space are gonna be near us in terms of the ability to go out and really speak to a D2C platform such as ours. Right. Can you give us some rough estimation as to how long it may take to integrate the two platforms and come up with your integrated marketing message and kind of work that through? Is that like a year from now, or is there any rough timeframe for that? Yeah, we're not really ready to talk too much about that at this point, Linda. I mean, I wanna be more thoughtful and given we just closed a couple weeks ago, we need time to co-create with our new colleagues on how we do this well and how we do this quickly. As I noted, you know, one of the core objectives here for the focus of our company is, you know, taking advantage of this head start that we have in the clinical space. You can imagine that it is absolutely a priority and top of mind for us. The nice thing is, I will add there, is that we just complement very well in terms of the things that we are doing really well and the things that Sequence are doing really well. There's a really good match up there that I think, you know, we look forward to talking and sharing more about in the next few calls. Yes, that sounds great. Just my final question. I know that historically there was some partnership that WeightWatchers did with offering the drug Contrave. I think that's what it's called. I don't know the context of that, and I don't know why it was never too successful. Do you have any history on that and why that wasn't any big deal with that drug offering? Linda, I'm gonna be honest, I don't have too much context there to share with you on that front. Mm-hmm. What I can note is I think that we could all agree that these new next generation medications are unlike anything that have come before it, and the landscape has really shifted. Yes. Thank you. I really appreciate it. Thank you. Our next question comes from Michael Lasser from UBS. Please go ahead. Hi, this is Henry Carr on behalf of Michael Lasser. Thanks a lot for taking our question tonight. If and when Sequence helps a subscriber find an affordable GLP-1 solution, what's stopping them from taking that to their primary care provider? In other words, why stick around when a solution is found? Thanks, Henry. The process with these chronic weight loss medications is that it takes a high support care team around it. You need to titrate your dosages along your weight loss journey. That's really different than, for instance, getting an ED medication and script that you can get and, you know, walk away from. There is a level of support that is needed that is different than other types of medications. Also the pre-authorization process, you're going to continue to need that throughout the journey as these dosages are changed and titrated. What's fascinating is that we actually saw the highest retention during the time when Mounjaro was coupon the most. People were clearly finding value in the program, not just in insurance. Thank you. That's really helpful. Just as a follow-up, you know, when and if these drugs come off the FDA short list and they're more accessible, does that erode the value proposition of the Sequence subscription? In other words, if these drugs become cheaper and more accessible in two to three years as generic versions come to market, how would you look to protect Sequence's subscriber base? That's an interesting point that you've brought up, I don't wanna get too into the weeds here as I'm not a scientist, but I can tell you that because these are biologics, it's not the same sort of, you know, discounting when it comes to generics. That being said, again, this is, we are in the business, the subscription business, not the prescription business. What we are offering is a care team model. That's what we've heard, and where the NPS is so high, such that Sequence has been able to build its business by word of mouth, that they're going to, they're going to a telehealth platform in order to be able to not only acquire these medications when medically appropriate, but then to be able to, alongside of that, get the fitness, nutrition, coaching alongside the medication to be able to have the same type of simple UX that you might even find in, for instance, consumer messaging apps. Then obviously, and this is where the thesis for us acquiring this business just makes so much sense, is you want to build ongoing healthy habits above and beyond being able to take the medications. I think it's worth noting too that there are new drugs in development. Like this is the start of what we're starting to see around these medications where, you know, there's already talk about these, say, medications coming in pill form. Right now they're only injectables. It's still a very nascent market, and there's a lot of evolution to come. Super helpful. Thank you so much. Our next question comes from Lauren Schenk from Morgan Stanley. Please go ahead. Hey. It's Nathan Feather for Lauren. Exciting to see the step-up in net adds despite the lower marketing year-over-year. I guess, can you dig in a bit more what you believe is working on the marketing side and how you can leverage that learning through the year? Then a second one. Can you talk to any early trends with Sequence since the acquisition? I mean, it certainly seemed to get a lot of media attention. I'm not sure if that translated to signups. Thank you. In terms of marketing, if I, if I heard your question correctly, in terms of what's working well, in Q1, we spent $20 million less than in the prior year, 18% less. Year-over-year, our Q1 LTV/CAC improved by about 14%. We can clearly see this read through in our performance trends. As Sima and I both referenced in the call, we see this step up in our active base from Q4 into our Q1 end. If you go from Q4 2022 into Q1 2023 ending subscribers, we saw a step up of 13% in our end of period subs versus 9% in the prior year. We did that on $20 million less of marketing spend. It's, you know, it's reading through in terms of working. Your second question. I mean, you're gonna have to repeat your second question, Nathan. We didn't quite catch it. Oh, sorry. Can you just talk to any early trends with Sequence since the acquisition? You know, it certainly seemed to get a lot of attention in the media, but just wondering if that translated to kind of initial signups and interest? Definitely. We're not speaking specifically to signups or to Sequence in isolation at this point. We did see a huge step-up in interest in Sequence rates at the point of announcing the acquisition and an actual step change in their subscriber volume from the point of that announcement. Yes, definitely increased interest and increased subscriber interest and activation. Great. Thank you. I just wanna add on the marketing point, though, real quick, is that, and I think it's worth noting, is that it's really less about the creative that we're deploying, and it's more about the ways in which we are buying and valuing media, going back to building a data-informed culture. That we're able to then couple that with key brand moments, which are driving immediate response and really putting us back into the consideration set for so many. I would also add that the initial attention on the acquisition and WeightWatchers recognizing the chronic condition around living with overweight and obesity has been positively viewed by the market. Not only is it impacting Sequence signups, but also our core business as well. That's nice to see, and also important why we continue to, you know, help really drive the conversation around Weight Health. Sequence is still a very nascent brand, and it did provide this boost to brand awareness. The association to WeightWatchers, you know, a brand with 60 years of heritage and trust is helping to drive trust for the clinical pathway as well. Our last question comes from Alex Fuhrman from Craig-Hallum. Please go ahead. Hey, guys. Thanks very much for taking my question, and congratulations on closing the Sequence acquisition. Wanted to ask about advertising and customer acquisition in the telehealth space. I think WeightWatchers, of course, has a great reputation in the category. You have a lot of competitors in the telehealth space there that are advertising GLP-1 very aggressively in a way that I imagine WeightWatchers never really would. Can you talk a little bit about, you know, how you're able to kind of get through to customers? Is it mostly about marketing to people in your kind of own ecosystem in terms of members and former members? Curious what you're seeing, I know it's early days, but in terms of customer acquisition costs on the Sequence side of the business. Thanks, Alex. This is when 60 years of brand equity comes to play, when we're talking about our LTV /CAC and the efficiencies that we can drive by, you know, locking in on a brand that people know and trust, and recognize. Yeah, you're right that we could do this more efficiently. I think that there are also synergies in our ability to retarget across our database as well as to former members. Ultimately, the same thing that I said before about our core business applies to the telehealth business, which is that the product needs to market itself. This product has incredibly high NPS, both for consumers and the clinicians, because remember, both the supply and demand side here are important for a best-in-class experience. What we are seeing is that people are telling other people that Sequence is a great product, that it makes the insurance process easy, that it's like a care team in your pocket. On top of that, when we combine with the behavior change program that we anticipate bringing to market, we're going to have a real differentiated offering. You know, I'm very bullish on what that means for our ability to drive the top of funnels. Okay. Thanks, Sima. That's very helpful. Appreciate that. Thanks. This concludes our question and answer session. I would like to turn the conference back over to Sima Sistani for any closing remarks. Thanks, all. I am so confident that we are approaching an inflection point in our business, and we will return the company to a growth trajectory in 2023. As I said earlier, our key initiatives and decisive actions are shaping the future of our product experience, operating model, our financial trajectory, and the lives we positively impact. Thank you for joining us today. I'm looking forward to speaking with many of you at upcoming conferences, including B of A Healthcare Conference and the Goldman Sachs Consumer Staples Conference, and keeping you updated on the initiatives we have underway. May the Fourth be with you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.