Welcome to the WW International's Q2 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I'll now like to turn the call over to your host, Corey Kinger, VP Investor Relations. You may begin. Thank you, everyone, for joining us today for WW International's Q2 2024 Conference Call. At about 7:00 A.M. Eastern Time today, we issued a press release reporting our Q2 2024 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 investor 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'll now turn the call over to Sima. Thanks, Corey. Good morning, everyone. Thank you for joining us today. Weight Watchers has the right strategy to return the business to growth. In order to win in this dynamic GLP-1 environment, we are completely reimagining how we operate to catalyze our path as the leading digital weight health provider. We have taken decisive actions to navigate through this dynamic landscape. While top line is pressured in the short term, we continue to expect strong adjusted operating income this year, which gives us ample runway for what will be a monumental transformation of not only our business, but also how culture at large treats and cares for people living with overweight and obesity. Weight Watchers has the unique ability to provide a weight health solution that aligns with this major cultural shift. The specialized expertise we offer members and payers is critical to both managing costs and improving health outcomes. Our clinically proven program escalates or de-escalates in intensity based on a consumer's needs at every step along their journey. For instance, a member can start on our core behavioral program, then add on clinic services such as registered dietitian visits or metabolic panel, and if appropriate, a doctor visit and medication access. Alternatively, many of our members want to move from clinic access to a behavioral maintenance program once their medications have been titrated. This is our one-membership strategy, which is made possible by over 60 years of expertise in behavior change and the trusted community we have built over decades, paired with an innovative telehealth service and specialized clinicians who can prescribe a wide formulary. Our progress has been tempered near-term by the complex and rapidly shifting external environment over the last few months. While we continue to experience GLP-1 shortages, we have seen an increasing quantum of compounded and, in certain cases, even counterfeit medications enter the ecosystem. This causes both a more fragmented landscape for consumers to navigate, as well as increasing costs of media for the same audience. With regard to media, we continue to take a performance approach to subscriber acquisition, managing to a prudent LTV-CAC ratio. The increasing CACs resulted in a decision to pull back marketing dollars initially dedicated to clinic acquisition. In addition, we postponed the rollout of our refresh marketing campaign, which was initially planned for Q2, to integrate our latest findings and insights in this evolving environment. Last week, we soft-launched the "Fits You" marketing campaign, celebrating individuality, sharing real member stories, and showcasing our comprehensive support, including clinically proven behavior change and the medication for those who need it. Additionally, despite the fact that obesity is widely recognized as a chronic disease, we are disappointed to see health plans contracting coverage. For instance, Michigan's largest insurance company said it would discontinue coverage of obesity medications in its commercial plans. These trends raise health equity concerns and are a meaningful setback in the effort to destigmatize a vulnerable population, largely women and people of color, who are deserving of equitable care and access to life-saving medications. While our growth trajectory has been affected by the evolving medication supply constraints, our comprehensive approach to weight loss is perfectly positioned for growth. Despite pulling back marketing dollars amid supply shortages, our end-of-period clinical subscribers increased 120% year-over-year, in part due to our existing membership base, with about 30% of May and June clinic signups converting from our behavioral program. In addition, we are seeing 10% of last clinic subscribers move to our behavioral membership, evidence of our one-membership strategy meeting our members' needs along their weight health journeys. With obesity-specialized clinicians, our proven behavioral program, dedicated care team, insurance support, and engaged community, we are the number one doctor-recommended way to lose and maintain weight loss. On average, Weight Watchers Clinic members achieve a 19.4% body weight loss at 12 months. The combination of personalized medication management with our behavior change program is compelling, delivering Weight Watchers Clinic members 11% more weight loss compared to those taking medications alone. These impressive weight loss efficacy results demonstrate that we have a differentiated, proven offering and increase our confidence that the initiatives in our expansion strategy will give us opportunities to catalyze our growth as we transform our business model, make our offerings accessible to more people, and deliver on our mission as the global leader in weight health. We are making progress, hitting early milestones across each of the three pillars of Project Expansion. On the first pillar of expanding care, this summer, we began making insurance-covered nutrition counseling with registered dietitians available to eligible members, starting with a pilot in New Jersey. In this pilot, 24% of new clinic members added on an RD visit. Given the exciting uptake, we have started a phased rollout in 10 more states. Also this week, we expanded our pilot to eligible behavioral members. Over time, we believe such incremental services will expand our pool while providing a value-added experience for members. We also launched a programmatic GLP-1 medication supply tracker to all clinic members. For over a year, Weight Watchers Clinic has been actively assisting members in locating supply. But with this enhancement, we are able to point our members to the pharmacy nearest them with medication in stock immediately after a prescription is written. This service has contributed to an increased retention, now approaching 6.5 months, which is up from last quarter as well as a 12-month high NPS. Other supply trackers in the market depend on crowdsourced medication availability, which is prone to error and puts the onus on the user to find and report medications. Our supply tracker provides up-to-date information on medication shortages directly from our proprietary pharmacy stock database. You may have noticed that we recently refreshed the entire design of the Weight Watchers App to make it a more intuitive and unified user experience, providing members quick and easy access to all of our weight management tools. This revamp is driving improvements to login rates, lifts in tracking, and longer sessions, all of which are positive for engagement, as demonstrated by a 16% surge in NPS last month. For our second pillar, expanding access, we continue to make progress toward making Weight Watchers a covered benefit. Despite some providers pulling back coverage, our B2B team is in active discussions with a large number of potential and existing customers. While an increasing number of vendors are claiming to have the right solution, Weight Watchers offers what the vast majority of them cannot: a comprehensive program addressing cost, member experience, and sustainability. With over 33 years of enterprise experience, more than 500 enterprise clients, and clinically proven results, Weight Watchers is the science-backed leader in the weight health category. At Labcorp, which is one of our most recent B2B wins, the subscriber conversion rate is nearing 10% only six months in, proving that when our program becomes a covered benefit, we have the brand recognition and solutions for sizable enrollment. Scaling our B2B business will take time, but we continue to believe this channel will be a critical driver of growth and momentum in the years ahead, especially when enrolled ARPU generated from each subscriber is substantial, while also delivering health outcomes to the employee and ROI to the employer. And on our third pillar, expanding payment options. In addition to our B2B efforts, our goal is to also enable D2C members to use their insurance to reduce their cost burden and increase their access to incremental services, thereby driving greater ARPU. As mentioned, we are now offering insurance-covered registered dietitian visits to eligible Weight Watchers members in the U.S. The ability to process insurance claims for Weight Watchers services will have a positive impact on signups and retention and is a natural extension of our existing ability to provide insurance support for Weight Watchers Clinic members. While these initiatives will expand our reach and enable us to serve a broader population, catalyzing our return to top line growth, we are maximizing profitability and running a more efficient organization. Today, we are executing a strategic streamlining of our operational structure, which will result in a significantly lower cost base and allow us to focus on a narrow list of high-impact product initiatives, increase our nimbleness and impact across the product roadmap, and bolster profitability and our cash position. Our organizational changes start with revamping our product organization under the leadership of our new Chief Product Officer, Donna Boyer. We are all aligning on cross-functional teams focused on outcomes that enhance collaboration, creativity, and velocity, and ultimately tie to financial outcomes. This simplified structure will allow for agile teamwork and reduced overhead. In a rapidly evolving environment, it's crucial that we operate faster and empower teams to adapt quickly. Weight Watchers is positioned to lead. We are adopting fast, tech-forward operating principles while benefiting from a 60-year track record of proven results with behavior modification. This provides the foundation of member support and trust, which fuels long-term success. I will now turn the call over to Heather to discuss our financial results and outlook. Thanks, Sima. As Sima highlighted, despite current headwinds, we are confident that we have the strategy, positioning, and resources to return the business to growth. In the immediate term, we are laser-focused on profitability and making the right decisions that will best enable the company for the longer term. Turning to our Q2 2024 results, note that all year-over-year financial comparisons are on a constant currency basis. We ended Q2 with 3.8 million subscribers, a decline of 6% year-over-year. Revenue totaled $202 million. Subscription revenues of $200 million declined 5% year-over-year, driven by a higher mix of subscribers within initial lower-priced commitment periods, mix shift from workshops to digital subscriptions, and lower signups for our Weight Watchers behavioral offerings, partially offset by a nearly 120% increase in clinical subscribers year-over-year, driving $20 million in clinical revenue, up $12 million year-over-year. Other revenue declined $13 million due to the discontinuation of our low-margin consumer products business. Adjusted gross margin was a record high of 67.9% and up from 63.4% in the prior year, primarily driven by the discontinuation of the lower-margin consumer products business at the end of 2023. In addition, gross margin reflects our actions in reducing our fixed cost base. Marketing expenses of $54 million were up 5% year-over-year, reflecting higher online advertising, partially offset by lower spend on TV advertising and production and agency fees. Adjusted G&A of $46 million was down 22% versus prior year, primarily due to compensation and related costs. Adjusted operating income was $38 million, an increase of 13%, reflecting our efforts to improve margins and contain costs. Restructuring charges totaled $2 million in the quarter, related to prior year plans. Income tax was a benefit of $16 million, which, consistent with last quarter, reflected the impact of an unusually high negative annual effective tax rate, driven by valuation allowance and a small pre-tax loss reflected in the company's full-year fiscal 2024 guidance. GAAP EPS was $0.29 compared to $0.65 in the year-ago quarter. As Sima discussed, we are streamlining our operational structure to optimize our product portfolio, focusing on high-impact initiatives to enhance efficiency, accountability, and speed. We are reducing our global headcount, primarily in corporate roles, including a 40% reduction in VP and above positions, and resulting in approximately $60 million in annualized cash savings, mainly benefiting G&A. We expect to take a restructuring charge of $12 to 15 million in the second half of the year. Cash outlays for restructuring, including the 2024 plan and remaining payments for prior year actions, are expected to be approximately $30 million in 2024 and $10 million in 2025. Importantly, this action reduces our employee-related cash expenses this year versus our prior expectations. These actions are part of a broader cost reduction initiative targeting $100 million in annualized savings, including $20 million of savings currently reflected in our 2024 guidance. Shifting to our outlook, for the full year 2024, we now expect year-end total subscribers of at least 3.1 million, which, given our subscription business model, will drive a revenue headwind into 2025. Total revenue of at least $770 million, adjusted operating income of at least $100 million, and adjusted EBITDA of at least $150 million. The cost actions we announced today, as well as the actions we have taken thus far, demonstrate our ability to control what we can in this dynamic industry environment. By tightly controlling costs and improving efficiencies, we are focused on maximizing profitability as we manage through a challenging signup environment. For the full year, we expect income tax expense of up to $10 million. Excluding the impact of valuation allowance, Q1 impairment, and other discrete tax items, we continue to expect an income tax benefit of up to $10 million. We continue to expect cash taxes to be between $20 to 30 million for the year. As a reminder, given the small pre-tax loss reflected in the company's full-year fiscal 2024 guidance, any updates to the expected pre-tax loss or income tax expense can result in significant impacts in quarterly income tax results. Full-year interest expense is expected to be between $105 to 110 million, with the year-over-year increase largely driven by the expiration of our $500 million hedge at the start of Q2 2024. Due to lower subscriber and revenue levels than previously anticipated, we expect to have a modest use of cash from operations for the full year 2024. CapEx, which is primarily capitalized software, is expected to be in the $20 to 25 million range. Depreciation and amortization is expected to be around $40 million. Turning to our capital structure, we ended Q2 with approximately $43 million of cash plus an undrawn revolver. Our cash needs in the first half of the year were much higher than our expectations for the second due to increased marketing, compensation timing, and the Sequence acquisition anniversary payment. With our cash position plus our revolving credit facility and bolstered by the cost actions we are taking today, we believe we have sufficient liquidity for our working capital needs, including cash outlays related to our restructuring actions and servicing our debt. At Q2 end, our net debt to adjusted EBITDA leverage ratio was 9.6x. As a reminder, we have very attractive debt terms with no maturities until 2028 and 2029, and we are comfortable with our liquidity profile, which gives us ample time to deliver on our transformation strategy. We will continue to opportunistically evaluate options to reduce our leverage ratio on terms we believe are strategically beneficial. I will now turn the call back to Sima. We are executing against our strategic pillars to expand care, expand access, and expand payment options for our members. These initiatives enable us to serve a broader population as the leading digital health provider of Weight Health, catalyzing our return to growth and positioning Weight Watchers for long-term success. Weight Watchers has an impressive competitive moat and high barriers to entry with our significant subscriber base, extensive database of former members, strong retention, solid NPS, positive customer perception, brand trust, and clinically proven program. A significant opportunity lies before us, and we have the foundation, strategies, and structure to successfully navigate the current environment and emerge stronger. Thanks for joining us. We are now happy to take your questions. At this time, we'll conduct a question-and-answer session. If you would like to ask a question, please press star one on your phone now, and you'll be placed into the queue in the order received. Please limit yourself to one question and one follow-up question. Once again, if you would like to ask a question, please press star one on your phone now. Our first question comes from Jack Wallace from Guggenheim Securities. Please go ahead, Jack. Hey, good morning. Thanks for taking my questions. I want to ask about the clinical business, and it sounds like there were a number of headwinds in the quarter. It sounds like mostly marketing, but can you talk a little bit about whether it's the perceived impact from the compounded GLP-1s? Have you noticed, or have you gotten any feedback on attrition there? Again, recognize the difficult marketing environment and the delay in the marketing refresh. Just thinking about the competitive threat there. Thank you. Thanks, Jack. Yeah, we saw a significant increase in our clinic CAC in the Q2, really driven by the increased number of competitors in programmatic channels such as search. And there's probably about 50% more competitors in 2024 than 2023, many of them offering compounded medications. And I think we're also seeing just the cost of media is going up due to this being an election year and one-offs at the Olympics. And I fully believe that this business is set up to grow. We are seeing increased retention in that business to six and a half months. We're at a 12-month high in NPS, and our general ability to move people between programs and realizing our one membership strategy, we're seeing that. So ultimately, this is about managing to the long-term health of the business, and we decided to pull back marketing dollars given the external turbulence and just take a real performance marketing focus here on the path forward with Clinic. Appreciate that. Makes sense. And then following up on your response there about the one membership and being able to get members to toggle up and down based on their needs, it seems like that's an attractive proposition for employers. You made some comments about the B2B pipeline, prepared remarks. Can you just give us kind of updated thoughts on the materiality of expected contribution next year? And then just also give us a reminder for how we should be expecting once a benefits customer comes online, what the enrollment or utilization trends should look like over the course of the year. Thank you. Yes, thank you for that question. Certainly, the flip side of the popularity and efficacy of these medications is the cost. We were the leaders in this market, and we can enable employers and insurance companies to provide coverage in cost-effective ways that really generate ROI and proven health outcomes. The key to that is you can't generate that ROI without the population actually enrolling and then engaging. That requires a strong brand, a proven program. Nobody comes close to us on that front. We are pleased with our sales momentum. We've seen large players obviously have longer sales cycles, but they're enthusiastic. We closed five deals last quarter. We already have four lined up for this quarter. Look forward to hopefully announcing some of those soon. All these deals represent 10,000+ lives in these larger player categories, but no deal on its own is going to be material to our bottom line in year. We are really pleased with the activity that we are seeing now, even though there is this overall trend of contraction. Employers seem to be picking up where the insurers are contracting. Can I just add on to that, to the sizing question? We are enthusiastic, obviously, about the B2B expansion and opportunity. For a reference point, this year, we're expecting about $30 million of revenue from the business. I would just repeat what Sima said. Singular contracts aren't necessarily material for the total business, but it is encouraging to see traction in the sales motion and as well on conversion we're seeing in our most recently signed contracts that we shared in the prepared remarks. Got it. Appreciate it. Thanks again. Our next question comes from Michael Lasser from UBS. Please go ahead, Michael. Good morning. This is Henry Carr on for Michael Lasser. Thanks a lot for taking our questions this morning. So I wanted to ask about the guidance for end-of-period subscribers of at least 3.1. Last year, in 2023, Weight Watchers made a lot of progress on kind of stopping that subscriber decline from Q1 to the end of the year. This new guidance kind of implies that we're right back to that historical pattern of subscriber leakage. So I guess, is the promotional strategy that's helping aid and drive subscriber growth, is that still being successful, or are you seeing a lot of subscribers end their subscription after that promotional period ends? Thanks. Yeah, thanks for the question, Henry. Yeah, to the question of the long-term commitment plans and their efficacy, we're seeing these still working as expected. We're seeing continued lengthening average commitment. For instance, our digital average commitment length has increased to 8.9 months in Q2 2024, up from 7.6 months this time last year. We're going to continue to leverage LTCs to optimize for LTV/CAC and ultimately maximize our revenue and end-of-period subscribers. I'll say we're always open and always continue to test to find the offer structure that both attracts and retains the most customers over time. Yeah. I'll just add to that. We are seeing that our retention is up 1% quarter-over-quarter. These basis point moves, they compound, and activation rate is up 5% year-over-year. It's really tempting to spend into growth, but we want to spend where it's most effective, when it is most effective. We're making decisions in real time in order to maximize, as Heather said, our LTV CAC. Great. Thanks so much. And just as a follow-up, I think earlier in the call, you said about 10% of lapsed members for clinical instead of just ending their subscription, they're taking out of the behavioral program. I just wanted to understand that metric a little bit better and see what's happening here. Henry, you cut out there for a minute. Can you repeat the—I heard you were asking about, I think, the one membership strategy. Could you just repeat that again? Yeah. I think earlier in the call, you stated a metric of 10% of subscribers are shifting from clinical to behavioral programs. Could you just explain that metric a little bit better or unpack it for me? Oh, sure. Is that clinical members shifting from that clinical subscription to a base behavioral change program? I wanted to understand that better. Thanks. That's exactly what you said. Essentially, the one membership strategy is such that we want to be able to grow and/or de-escalate in intensity based on what the consumer needs. So we are seeing behavioral members decide that whether they've hit a plateau, that they are interested in meeting with a clinician and seeing if medication support is right for them. And then there are those who, once they've been on the plan, we're seeing that 68% of consumers do want and intend to come off medications. And working with a medical professional, we partner with them to help them find the best way to maintain their weight loss. And so part of that is helping them move to the behavioral program, which maintains their lifestyle intervention. And I think this is the path forward. Weight health is complicated. Every journey is unique. And we need to be able to move up and down with a person's unique needs, whether that is somebody who is living with diabetes and needs to wear a CGM so that they can track their A1C, or whether that is somebody who is on a lifestyle intervention on our core behavioral program but decides that they want a registered dietitian's visit to better understand their nutrition and nutrient density. Or obviously, it's somebody who needs to see a doctor, and we help them with the medication as well as the insurance support if appropriate. And they're going to move up and down that spectrum. We are unique in our ability to provide a care model that provides that kind of service. Okay. Great. Thanks so much. Thank you. And our next question comes from Nathan Feather from Morgan Stanley. Please go ahead, Nathan. Hey, everyone. Thanks for taking the question. Just a quick one. How do you return the clinic business to sequential growth in the back half of the year in 2025 if the market remains highly competitive and ad rates stay elevated? Thank you. Thanks for the question, Nathan. We are working on that, and we're working on that within the context of our Weight Watchers as One Platform strategy. We're in an environment where CAC has been challenging. Competition is challenging. We're seeing the GLP-1 impact on our space is pretty dramatic. And we've put forward a prudent plan, and we are expecting to continue to work through that. We're not pulling back on spend. We will be aiming to continue to lean in where it is appropriate and efficient from a marketing perspective. And I would call it we're also doing things that we see expand NPS and retentive behaviors and ultimately ARPU by adding things like registered dietitian visits. The early indicators of the pilot we've put out are promising, and we look forward to sharing more in the next quarter as we continue to grow this. Yeah. And I just want to add that our strategy here is to tell a story in a compelling way, which is going to break through this noise. As we've said, it's a complicated landscape, but that's also impacting consumers who are looking for solutions, who are looking for trusted solutions. We hope our latest campaign, Fit You, is going to drive more CAC efficiency, and it's going to do a better job of telling the story of our entire suite of products. We took a really conservative approach to modeling our CAC outlook given the cost of media, both from new entrants, but also from the one-off driving cost upsells, such as the election. But that's all reflected in our guidance. We are really excited to see this campaign and our one membership strategy come to life. Okay. Great. That's helpful. And then any way to frame how much of the $100 million annualized cost savings is variable versus fixed? And how should we think about those in terms of expense line buckets of savings? Thank you. Thanks, Nathan. So as we shared in the prepared remarks, we are expecting this cost action to deliver about $100 million of total savings, $20 million of that should read through into 2024, and an incremental $80 million into 2025. We haven't guided to the specific P&L items. I would say it's largely fixed and largely impacting G&A. You should expect that. And yeah, it's impactfully improving our ability to sustain our way into the future. And our next question comes from Alex Fuhrman from Craig-Hallum. Please go ahead, Alex. Hey, guys. Thanks for taking my question. It seems like consumers are really demanding more affordable access to medically supported weight loss and just wondering what your plan is in the future to kind of offer that to customers. I know in the past, you've talked about Weight Watchers being certainly against compounded medications. I don't know if there's any scenario maybe in the future if there's more efficacy data that would cause you to rethink that or maybe opportunities to offer generic versions of older GLP-1 because it sounds like insurance coverage is getting worse, not better. Would love to just hear what your strategy is to tap into that demand for more affordable medical weight loss. Thanks for your question, Alex. Look, the members come to us because they trust us. And we're only going to consider medication options that are safe, effective, high quality. So FDA-approved medications are our preferred path. That being said, with shortages expected to persist for some time and coverage being in limbo, we are investigating alternative paths to best serve our members, which is about improving their access, health equity. It's about helping to bring safe solutions to a broader population. Okay. That's really helpful. Thank you, Sima. Thank you. Our next question comes from Stephanie Davis from Barclays. Please go ahead, Stephanie. Hey, folks. Thank you for taking my question. I have, I guess, two on the B2B channel. So first, when we look at your B2B channel, is that all direct sales, or have you established broader partnerships since that's a broker channel? And how are you thinking about that account manager role in direct sales, given the 40% reductions in your VP and above roles? Thank you, Stephanie. Yeah. I mean, it's both. We announced some of our broker relationships like Personify Health and CVS, but we also have a direct sales motion. And I think we're really well-positioned and well-equipped, thanks to our leading brand and 60 years of science-backed evidence, a full suite of integrated services, 3.9 times ROI to employers, which was validated by a third-party actuarial firm. We're really well-positioned here. The number of RFPs just in, I would say, in this last quarter, or at least in the first half of the year submitted, was the same amount of RFPs we did for the entire full year previously. The foundation of our 33 years and over 500 existing clients just makes it such that we can have a leaner, smarter sales motion. We do continue to expect to invest in this area. In fact, we will be adding some sales leadership talent here as well. I would love to hear about the talent, but I also have a question just in the go-to-market motions since that's becoming a bigger part of your strategy. I am hearing, given vendor fatigue for these digital health solutions, that some large employers are putting in more stringent financial and compliance reviews. I get that it's early on. You've just announced the turnaround. But how are you thinking about the impact of the restructuring as you're kind of going to market with these employers, given some of the more stringent requirements? Well, the stringent requirements around—can you be more specific, Stephanie? Are you talking about features, or are you talking about just the market contraction in general? So for example, at a large employer like Barclays or J.P. Morgan, you're going to have a pretty thorough financial review and compliance review. And oftentimes, they'll look at things like leverage or sustainability of the vendor. Oh, okay. Got it. Yes. I mean, we haven't seen that come up. If anything, the fact that we're a public company with a track record has really benefited us. A lot of the other vendors we see in this marketplace have much less sophistication and infrastructure than we do. And I also think just with regards to the market in general, because I did want to talk about that for a minute, that we're seeing some overall contraction in RFPs switching over from full access, full spectrum care, but they're moving to core. There's still an appetite more than ever now for weight health solutions. And it has become apparent that even if the payers aren't willing to cover full spectrum care, the GLP-1s, that they will and are interested and have more appetite to providing our core program as a covered benefit. I mean, ultimately, GLP-1s, this is going to be inevitable. Just this morning, new evidence from Lilly trials showing Tirzepatide reduced the risk of heart failure outcomes by 38%. We're going in this direction. It's a slow burn, but the medications are providing tangible health benefit, treating obesity, multiple comorbidities. And we are best set up with the right infrastructure across account management, support, compliance to help these businesses. Helpful. Thank you. Thank you. And our next question comes from Karru Martinson from Jefferies. Please go ahead, Karru. Good morning. Just trying to understand the year-end sub-count here. Turning to Q4, you're saying you don't want to spend into growth, that it's tempting, but at the same time, saying you're not pulling back on spend where it's efficient. So trying to understand what's driving the reduction. Is it just that we have a different view on clinical? Is it that we feel there will be pressure in our core? What's driving that revision? Thanks for the question, Karru. So look, we experienced a dramatic rise of competition, largely driven by compounding in our space. It's a rapidly evolving space, and we are positioned to win in it. The moment drove an increase in cost to acquire with the crowding in the space. And look, as we looked forward and wanted to project guidance for the balance of the year, we factored that these new realities might worsen through the back half of the year. We've built that into our forward assumptions, and we've been prudent in planning for them. So there is an assumption that this continues and that CACs continue to rise, GLP-1 competition continues. And importantly, we have a cost action that's been designed to preserve our adjusted operating income as we build for the future. And I do recognize that we are short of our prior guidance. And want to ensure that we have provided you with an outlook that we're confident is achievable. We're operating in a dynamic and difficult-to-predict environment, and we are controlling what we can. We're focused on achieving our profitability targets and our costs as appropriate to do so. I just want to add that when we talk about prudent LTV CAC, this is really an outcome of this dynamic market and us optimizing for unit economics that are still attractive. So definitely less attractive than we had thought at the beginning of the year. But with our new campaign, we are looking forward to seeing better CAC efficiency as well as continue to pull into this one membership strategy, which we noted is our ability to move a core member who we can acquire at an attractive LTV CAC and that 30% rate that we are seeing them move over to clinic. And so that's a winning strategy for the long-term health of the business. All right. And just on the compounding front, you mentioned the shortages are expected to continue. Kind of what's the timetable there? And then as you investigate alternatives for yourself, what's the timetable that could potentially be there as well? Yeah. I appreciate the question, Karru, but I don't really have anything further to share at this time on that topic. All right. And then just lastly, you mentioned capital structure. Given where it is today, how are you guys approaching that? We are committed to improving our leverage as we execute this turnaround. We're focused on growing EBITDAs. I will remind you, we have very attractive long-term debt agreements with no maturities until 2028 and 2029. We continue to be comfortable operating with our current cash on hand. We do have access to $61.25 million of revolver for additional cushion. We'll continue to opportunistically evaluate options to reduce our leverage ratio on terms we believe are strategically beneficial. Thank you very much. Appreciate it. At this time, there are no further questions. I would like to turn the call back over to Sima Sistani for closing remarks. Thank you all for the questions. Weight Watchers has a bold transformation strategy to expand access, expand care, and expand payment options. Our operational changes will motivate and strengthen our execution against Project Expansion. It's difficult to part with many talented colleagues. These are employees who have made important contributions to Weight Watchers, helping to make us a great company. I thank each and every one of them for their service and wish them all the best in their future. Thank you for joining us today. I look forward to updating you on our progress. This concludes today's conference call. Thank you for attending. You may now disconnect.