Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

WW International, Inc. is a Virginia corporation with its principal executive offices in New York, New York. In this Quarterly Report on Form 10-Q unless the context indicates otherwise, "we," "us," "our," the "Company," "Weight Watchers" and "WW" refer to WW International, Inc. and all of its operations consolidated for purposes of its financial statements. We have one reportable segment for the purpose of making operational and resource decisions and assessing financial performance. Our "Behavioral" business refers to providing subscriptions to our digital product offerings with the option to add on unlimited access to our workshops. Our "Clinical" business refers to providing subscriptions to our clinical product offerings provided by WeightWatchers Clinic combined with our digital subscription product offerings and unlimited access to our workshops.

Following our emergence from bankruptcy as described below, we changed our previous 52- or 53-week fiscal year ending on the Saturday closest to December 31 to a fiscal year coincident with the calendar year. We made the fiscal year change on a prospective basis and prior periods were not adjusted. The Company's 2025 fiscal year that began on December 29, 2024 will end on December 31, 2025 and fiscal years 2026 and beyond will begin on January 1 and end on December 31 of the applicable year. This Quarterly Report on Form 10-Q for the second quarter of fiscal 2025 covers the period from March 30, 2025 to June 30, 2025; and the Company's Quarterly Report on Form 10-Q for the third quarter of fiscal 2025 will now cover the period from July 1, 2025 to September 30, 2025. The Company's quarterly results for subsequent fiscal years will be for quarterly periods ending March 31, June 30 and September 30 of each year. In this Quarterly Report on Form 10-Q:

The following terms used in this Quarterly Report on Form 10-Q are our trademarks: Weekend HealthTM, Weight Watchers®, and the Weight Watchers logo.

You should read the following discussion in conjunction with our Annual Report on Form 10-K for fiscal 2024 that includes additional information about us, our results of operations, our financial position and our cash flows, and with our unaudited consolidated financial statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q (collectively referred to as the "Consolidated Financial Statements").

Emergence from Bankruptcy

On May 6, 2025 (the "Petition Date"), we and certain of our subsidiaries (the "Debtors") filed voluntary petitions (the "Chapter 11 Cases") under Chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Court"). Subsequently, on May 30, 2025, the Debtors filed with the Court the First Amended Joint Prepackaged Plan of Reorganization of WW International, Inc. and its Debtor Affiliates, Docket No. 143 (as supplemented, the "Plan"), and on June 24, 2025 (the "Emergence Date"), we emerged from the Chapter 11 Cases in accordance with the Plan. Since the Petition Date and through the Emergence Date, we operated our businesses as debtors-in-possession under the jurisdiction of the Court in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court.

On April 13, 2021, we, as borrower, the lenders party thereto and Bank of America, N.A., as administrative agent and an issuing bank, entered into a credit agreement (the "Prepetition Credit Agreement"). The Prepetition Credit Agreement provided for senior secured financing of $1,175.0 million in the aggregate, consisting of (1) $1,000.0 million in aggregate principal amount of senior secured tranche B term loans maturing on April 13, 2028 (the "Prepetition Term Loan Facility") and (2) a $175.0 million senior secured revolving credit facility (which included borrowing capacity available for letters of credit) maturing on April 23, 2026 (the "Prepetition Revolving Credit Facility" and, together with the Prepetition Term Loan Facility, the "Prepetition Credit Facilities"). On April 13, 2021, we issued $500.0 million in aggregate principal amount of its 4.500% Senior Secured Notes due 2029 (the "Notes"). The Notes were issued pursuant to an indenture, dated as of April 13, 2021 (the "Indenture"), among us, the guarantors named therein and The Bank of New York Mellon, as trustee and notes collateral agent.

Upon emergence from bankruptcy, all outstanding liabilities of approximately $1,116.0 million under the Prepetition Credit Facilities and the Prepetition Credit Agreement, and all outstanding obligations of $500.0 million under the Notes and the Indenture were discharged and the liens and mortgages related thereto were released. Additionally, on the Emergence Date we (A) executed the senior secured credit agreement ("the Senior Secured Credit Agreement") providing for a term loan (the "New Term Loan Facility") in an aggregate principal amount of $465.0 million, maturing on June 24, 2030, to (i) refinance first lien claims and (ii) provide working capital and liquidity post-emergence, (B) distributed 9,100,000 shares of Common Stock to the holders of prepetition First Lien Claims and 900,000 shares of Common Stock to the holders of prepetition common stock, and (C) issued four letters of credit of $3.7 million in the aggregate, all maturing in 2026.

Beginning on the Emergence Date, we applied fresh start accounting which resulted in Successor and Predecessor financial statement presentation. References to "Successor" relate to our operations from June 25, 2025 through June 30, 2025 and references to "Predecessor" relate to our operations from March 30, 2025 through June 24, 2025, from December 29, 2024 through June 24, 2025 and for the three and six months ended June 29, 2024. Refer to Note 1 "Basis of Presentation" and Note 3 "Fresh Start Accounting" to our Consolidated Financial Statements for further details.

Recent Developments

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA"). The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing the impact on our Consolidated Financial Statements and will recognize the income tax effects in the Consolidated Financial Statements beginning in the period in which the OBBBA was signed into law.

NON-GAAP FINANCIAL MEASURES

To supplement our consolidated results presented in accordance with accounting principles generally accepted in the United States ("GAAP"), we have disclosed non-GAAP financial measures of operating results that exclude or adjust certain items. We present within this Quarterly Report on Form 10-Q the following non-GAAP financial measures: earnings before interest, taxes, depreciation, amortization and stock-based compensation ("EBITDA"); and EBITDA adjusted for franchise rights acquired impairments, reorganization items, net, transaction costs related to strategic alternatives and Chapter 11 financial reorganization, net restructuring charges, and other items as indicated in the reconciliations below that management believes are not indicative of ongoing operations ("Adjusted EBITDA"). See "-EBITDA and Adjusted EBITDA" for the reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure in each case.

Our management believes these non-GAAP financial measures provide useful supplemental information to investors regarding the performance of our business and are useful for period-over-period comparisons of the performance of our business. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies.

USE OF CONSTANT CURRENCY

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

CRITICAL ACCOUNTING ESTIMATES

Information concerning our critical accounting policies is set forth in "Note 2. Summary of Significant Accounting Policies" of our audited consolidated financial statements contained in our Annual Report on Form 10-K for fiscal 2024. Our critical accounting policies and estimates have not changed since the end of fiscal 2024, except as summarized below.

Franchise Rights Acquired

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

In performing the impairment analysis for indefinite-lived franchise rights acquired, the fair value for franchise rights acquired is estimated using both a relief from royalty methodology and a discounted cash flow approach referred to as the hypothetical start-up approach. The aggregate estimated fair value for these franchise rights is then compared to the carrying value of the unit of account for these rights. We have determined the appropriate unit of account for purposes of assessing impairment to be the rights in the Behavioral business in the country in which the applicable acquisition occurred.

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

Goodwill

In performing the impairment analysis for goodwill, the fair value for our reporting units is estimated using a discounted cash flow approach. This approach involves projecting future cash flows attributable to the reporting unit and discounting those estimated cash flows using an appropriate discount rate. The estimated fair value is then compared to the carrying value of the reporting unit. We have determined the appropriate reporting units for purposes of assessing goodwill impairment to be the Behavioral and Clinical business lines.

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

Goodwill and Other Intangible Assets Impairment Tests

We review goodwill for potential impairment on at least an annual basis or more often if events so require. In performing the annual impairment analyses at May 4, 2025 (Predecessor) and May 5, 2024 (Predecessor), we determined that the carrying values of our goodwill reporting units did not exceed their respective fair values and, therefore, no impairments existed.

We review other intangible assets for potential impairment on at least an annual basis or more often if events so require. Impairment is assessed by examining underlying assumptions used to determine fair value including projections of future cash flows, revenue growth rates, operating income margins and discount rates. We also considered the trading value of both our equity and debt. If we determine that its more likely than not that our intangible assets may be impaired, we use a quantitative approach to assess the asset's fair value and the amount of the impairment, if any. In performing the annual impairment analyses at May 4, 2025 (Predecessor) and May 5, 2024 (Predecessor), we determined that the carrying values of our franchise rights acquired with indefinite-lived units of account did not exceed their respective fair values and, therefore, no impairments existed.

Based on the triggering events indicated during the quarter ended March 30, 2024 (Predecessor) and the quarter ended March 29, 2025 (Predecessor), we performed interim impairment tests for all of our goodwill reporting units and franchise rights acquired with indefinite-lived units of account in the first quarter of fiscal 2024 (Predecessor) and in the first quarter of fiscal 2025 (Predecessor).

In performing the impairment analysis for indefinite-lived franchise rights acquired, the fair value for franchise rights acquired is estimated using both a relief from royalty methodology and a discounted cash flow approach referred to as the hypothetical start-up approach. The aggregate estimated fair value for these franchise rights is then compared to the carrying value of the unit of account for these rights. We have determined the appropriate unit of account for purposes of assessing impairment to be the rights in the Behavioral business in the country in which the applicable acquisition occurred.

Further information regarding the results of our goodwill and other intangible assets annual impairment tests and interim impairment tests for the first quarters of fiscal 2025 and fiscal 2024 can be found in Note 7 "Goodwill and Other Intangible Assets" in the notes to the Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Bankruptcy

The Company applied ASC 852, Reorganizations("ASC 852") in preparing the Consolidated Financial Statements starting on the Petition Date. ASC 852 requires the financial statements, for the periods subsequent to the Petition Date and up to and including the Emergence Date, which includes the period of emergence from Chapter 11 bankruptcy, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain charges incurred during the bankruptcy proceedings, such as legal and professional fees incurred directly as a result of the bankruptcy proceeding, the write-off of deferred financing costs and discount on debt subject to compromise and other related charges are recorded as Reorganization Items, net in the unaudited consolidated statements of operations.

In connection with our emergence from bankruptcy and in accordance with ASC 852, the Company qualified for and adopted fresh start accounting on the Emergence Date. The Company was required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor received less than 50% of the voting shares of the Successor, and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims. In accordance with ASC 852, with the application of fresh start accounting, we allocated the reorganization value to our individual assets and liabilities (except for deferred income taxes) based on their estimated fair values in conformity with ASC 805, Business Combinations. The amount of deferred taxes was determined in accordance with ASC 740, Income Taxes. The Emergence Date fair values of our assets and liabilities differed materially from their recorded values as reflected on the historical balance sheets. Refer to Note 3 "Fresh Start Accounting" of the Consolidated Financial Statements for additional information.

The Company identified intangible assets of $529.0 million, which principally consisted of trade name, developed technology, database, customer/subscribers and customer relationships were estimated based on either the cost approach, direct cost approach, relief from royalty or multi-period excess earnings methods. Significant assumptions for identified intangibles included royalty rates, discount rates, margins, attrition rates, revenue growth rates, and economic lives. Such fair value measurement of intangible assets is considered Level 3 of the fair value hierarchy.

For trade names valued under the relief from royalty income approach, the royalty rate was estimated to be 6.0%. For the developed technology-based intangibles that were valued using the relief from royalty income approach, the royalty rate was estimated to be 4.0% for Behavioral developed technology and 5.0% for Clinical developed technology. For the database intangibles that were valued using the cost approach and direct cost approach, the margin was estimated to be 19.0%. For customer related intangible assets that were valued using the multi-period excess earnings method, the attrition rate was estimated to be 25.0% for Behavioral customer/subscribers and 40% for Clinical customers/subscribers. For B2B customer related intangible assets that were valued using the multi-period excess earnings method, the attrition rate was estimated to be 10.0%. The discount rate applied to all the above models was 17.0%.

PERFORMANCE INDICATORS

Our management team regularly reviews and analyzes a number of financial and operating metrics, including the key performance indicators listed below, in order to manage our business, measure our performance, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and assess the quality and potential variability of our cash flows and earnings. We also believe that these key performance indicators are useful to both management and investors for forecasting purposes and to facilitate comparisons to our historical operating results. These metrics are supplemental to our GAAP results and include operational measures. As of June 30, 2025 and due to our change in fiscal year, we consider these metrics on a fiscal month basis and therefore we will no longer report Paid Weeks and Subscription Revenues Per Paid Weeks, but will now report Monthly Subscription Revenues Per Average Subscriber.

RESULTS OF OPERATIONS

Period from June 25, 2025 through June 30, 2025 (Successor) and Period from March 30, 2025 through June 24, 2025 (Predecessor) Compared with the Three Months Ended June 29, 2024 (Predecessor)

The table below sets forth selected financial information from our consolidated statements of operations for the periods presented:

Note: Totals may not sum due to rounding.

Included within the operating results are the impact of transaction costs related to strategic alternatives and Chapter 11 financial reorganization, the impact of depreciation and amortization expenses, and the net impact of restructuring charges, as applicable, which is further detailed below.

Transaction Costs

Certain non-recurring transaction costs related to strategic alternatives and Chapter 11 financial reorganization are included in applicable line items on the unaudited consolidated statements of operations:

Depreciation and Amortization Expenses

Depreciation and amortization expenses are included in applicable line items on the unaudited consolidated statements of operations:

Restructuring Charges

Restructuring charges consist of expenses associated with the reduction in headcount as a result of certain strategic re-alignments. Restructuring charges include the 2024 Plan, the 2023 Plan and our previously disclosed 2022 restructuring plan (the "2022 Plan"). The restructuring charges are included in applicable line items on the unaudited consolidated statements of operations:

Consolidated Results of Operations

Revenues

Revenues were $12.2 million for the period from June 25, 2025 through June 30, 2025 (Successor), $177.0 million for the period from March 30, 2025 through June 24, 2025 (Predecessor) and $202.1 million for the three months ended June 29, 2024 (Predecessor). Foreign currency positively impacted our revenues for the period from June 25, 2025 through June 30, 2025 (Successor) by $0.2 million and for the period from March 30, 2025 through June 24, 2025 (Predecessor) by $2.3 million. The change in revenues was driven by a decline in Behavioral Subscription Revenues, partially offset by an increase in Clinical Subscription Revenues. The decline in Behavioral Subscription Revenues was primarily due to Behavioral recruitment challenges coupled with the lower number of Incoming Behavioral Subscribers versus the prior year period. The increase in Clinical Subscription Revenues was primarily due to an increase in the number of subscribers, with the majority of the growth due to compounded semaglutide subscriptions.

Cost of Revenues

Cost of revenues were $3.3 million for the period from June 25, 2025 through June 30, 2025 (Successor), $46.5 million for the period from March 30, 2025 through June 24, 2025 (Predecessor) and $64.8 million for the three months ended June 29, 2024 (Predecessor). Foreign currency had a de minimis impact on cost of revenues for the period from June 25, 2025 through June 30, 2025 (Successor) and increased cost of revenues for the period from March 30, 2025 through June 24, 2025 (Predecessor) by $0.3 million. The decrease in cost of revenues was driven by a decrease in revenues, partially offset by actions to reduce the fixed cost base and movement to a more variable cost structure.

Gross Profit

Gross profit was $8.9 million for the period from June 25, 2025 through June 30, 2025 (Successor), $130.5 million for the period from March 30, 2025 through June 24, 2025 (Predecessor) and $137.3 million for the three months ended June 29, 2024 (Predecessor). Foreign currency positively impacted gross profit for the period from June 25, 2025 through June 30, 2025 (Successor) by $0.2 million and for the period from March 30, 2025 through June 24, 2025 (Predecessor) by $2.0 million.

Gross margin was 73.2% for the period from June 25, 2025 through June 30, 2025 (Successor), 73.7% for the period from March 30, 2025 through June 24, 2025 (Predecessor) and 67.9% for the three months ended June 29, 2024 (Predecessor). The gross margin increase was due to the reduction in cost of revenues as a result of actions to reduce the fixed cost base and movement to a more variable cost structure.

Marketing Expenses

Marketing expenses were $2.8 million for the period from June 25, 2025 through June 30, 2025 (Successor), $32.1 million for the period from March 30, 2025 through June 24, 2025 (Predecessor) and $53.7 million for the three months ended June 29, 2024 (Predecessor). Foreign currency had a de minimis impact on marketing expenses for the period from June 25, 2025 through June 30, 2025 (Successor) and increased marketing expenses for the period from March 30, 2025 through June 24, 2025 (Predecessor) by $0.1 million. The change in marketing expenses was primarily due to lower spend on online and TV advertising as well as the strategic decision to reduce marketing spend during our financial reorganization process.

Product Development Expenses

Product development expenses were $0.7 million for the period from June 25, 2025 through June 30, 2025 (Successor), $14.2 million for the period from March 30, 2025 through June 24, 2025 (Predecessor) and $10.7 million for the three months ended June 29, 2024 (Predecessor). Foreign currency had a de minimis impact on product development expenses for the period from June 25, 2025 through June 30, 2025 (Successor) and for the period from March 30, 2025 through June 24, 2025 (Predecessor). The change in product development expenses was primarily due to an increase in consulting services and tech-related maintenance costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $2.9 million for the period from June 25, 2025 through June 30, 2025 (Successor), $42.9 million for the period from March 30, 2025 through June 24, 2025 (Predecessor) and $36.9 million for the three months ended June 29, 2024 (Predecessor). Foreign currency had a de minimis impact on selling, general and administrative expenses for the period from June 25, 2025 through June 30, 2025 (Successor) and increased selling, general and administrative expenses for the period from March 30, 2025 through June 24, 2025 (Predecessor) by $0.2 million. The increase in selling, general and administrative expenses was primarily due to both transaction and reorganization related costs associated with the Chapter 11 financial reorganization of the Company.

Reorganization Items, Net

The net reorganization gain of $1,143.9 million for the period from March 30, 2025 through June 24, 2025 (Predecessor) related to our emergence from Chapter 11 bankruptcy and primarily consisted of the gain on settlement of liabilities subject to compromise and the impacts of fresh start valuation adjustments. See Note 2, "Emergence from Voluntary Reorganization under Chapter 11" of the Consolidated Financial Statements for further information.

Interest Expense

Interest expense was $0.9 million for the period from June 25, 2025 through June 30, 2025 (Successor), $11.1 million for the period from March 30, 2025 through June 24, 2025 (Predecessor) and $28.6 million for the three months ended June 29, 2024 (Predecessor). The change in interest expense was driven by the Chapter 11 financial reorganization and the reduction in Successor debt under the New Term Loan Facility relative to Predecessor debt. The effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing costs and debt discount) and our average borrowings during each of the respective periods, was 11.09% per annum for the period from June 25, 2025 through June 30, 2025 (Successor), 7.12% per annum for the period from March 30, 2025 through June 24, 2025 (Predecessor) and 7.76% per annum for the three months ended June 29, 2024 (Predecessor). Following the emergence from bankruptcy and the restructuring of our debt, we anticipate a significant reduction in interest expense in future periods. See "-Liquidity and Capital Resources-Long-Term Debt" for additional details regarding our debt, including interest rates and payments thereon.

Other Expense (Income), Net

Other expense (income), net, which consists primarily of the impact of foreign currency on intercompany transactions, was $0.9 million of expense for the period from June 25, 2025 through June 30, 2025 (Successor), $4.5 million of expense for the period from March 30, 2025 through June 24, 2025 (Predecessor) and $0.1 million of income for the three months ended June 29, 2024 (Predecessor).

Provision for (Benefit from) Income Taxes

Our effective tax rate was (71.5%) for the period from June 25, 2025 through June 30, 2025 (Successor), (1.8%) for the period from March 30, 2025 through June 24, 2025 (Predecessor) and (213.0%) for the three months ended June 29, 2024 (Predecessor).

The effective tax rate for interim periods is determined using an annualized effective tax rate ("AETR"), adjusted for discrete items. For the Successor Period, we estimated our effective AETR in recording our interim income tax provision for the various jurisdictions in which we operate. The tax effects of statutory rate changes, significant, unusual or infrequently occurring items, and certain changes in the assessment of the realizability of deferred tax assets are excluded from the determination of our estimated AETR, as such, items are recognized as discrete items in the quarter in which they occur. The Predecessor Period was also based on our AETR, including the discrete tax impacts resulting from fresh start accounting. Any changes to our deferred tax assets and liabilities for the Predecessor Period (whether resulting from reorganization adjustments, fresh start adjustments or otherwise) were partially offset with a corresponding adjustment to our valuation allowance.

As part of the Chapter 11 bankruptcy proceedings, our prepetition funded debt was extinguished. Absent an exception, a debtor recognizes cancellation of debt income ("CODI") upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The Internal Revenue Code provides that a debtor in a bankruptcy case may exclude CODI from income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is the adjusted issue price of any indebtedness discharged less the sum of (i) the amount of cash paid, (ii) the issue price of any new indebtedness issued and (iii) the fair market value of any other consideration, including equity, issued. As a result, our U.S. net operating loss carryforward and tax credit carryforwards will be reduced to zero. The reductions in NOL carryforwards for the CODI are expected to be fully offset by a corresponding decrease to our valuation allowance as of December 31, 2025.

For the three months ended June 29, 2024 (Predecessor), the difference between the U.S. federal statutory tax rate and our consolidated effective tax rate was primarily due to an increase in the valuation allowance.

Net Income and Diluted Earnings Per Share

Net income was $1.3 million for the period from June 25, 2025 through June 30, 2025 (Successor), $1,190.7 million for the period from March 30, 2025 through June 24, 2025 (Predecessor) and $23.3 million for the three months ended June 29, 2024 (Predecessor). Foreign currency positively impacted net income for the period from June 25, 2025 through June 30, 2025 (Successor) by $0.2 million and positively impacted net loss for the period from March 30, 2025 through June 24, 2025 (Predecessor) by $1.3 million. The change in net income (loss) primarily related to reorganization items, net and transaction costs during the period from March 30, 2025 through June 24, 2025 (Predecessor) related to the emergence from bankruptcy.

Diluted earnings per fully diluted share ("EPS") was $0.13 for the period from June 25, 2025 through June 30, 2025 (Successor), $14.67 for the period from March 30, 2025 through June 24, 2025 (Predecessor) and $0.29 for the three months ended June 29, 2024 (Predecessor).

Operating Results

Although GAAP requires that we report our results for the period from March 30, 2025 through June 24, 2025 (Predecessor) and the period from June 25, 2025 through June 30, 2025 (Successor) separately, management views certain metric and revenue information for the three months ended June 30, 2025 by combining the results of the applicable Predecessor and Successor Periods because management believes such presentation provides the most meaningful comparison of our results to prior periods. Although the Predecessor and Successor Periods generally are not comparable as they are impacted by fresh start accounting, there are no fresh start adjustments affecting revenues and therefore revenue information has been combined to provide a meaningful understanding of operating trends, which would be consistent with a pro forma calculation under Article 11 of Regulation S-X. Nevertheless, the combined operating results do not reflect the actual results we would have achieved absent our emergence from the Chapter 11 Cases and may not be indicative of future results.

We cannot adequately benchmark the operating results of the period from June 25, 2025 through June 30, 2025 (Successor) against any of the previous periods reported in our Consolidated Financial Statements without combining it with the period from March 30, 2025 through June 24, 2025 (Predecessor) and do not believe that reviewing the results of this period in isolation would be useful in identifying trends in or reaching conclusions regarding our overall operating performance. Management believes that the key performance metrics such as Subscription Revenues, Incoming and End of Period Subscribers and Monthly Subscription Revenues Per Average Subscriber for the Successor Period when combined with the Predecessor Period provides more meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, the tables below present the combined results for the second quarter of fiscal 2025.

Metrics and Business Trends

The following tables set forth key metrics for the second quarter of fiscal 2025 and the percentage change in those metrics versus the prior year period:

Operating Performance

The decline in Behavioral Subscription Revenues was primarily due to Behavioral recruitment challenges coupled with the lower number of Incoming Behavioral Subscribers versus the prior year period. The increase in Clinical Subscription Revenues was primarily due to an increase in the number of subscribers, with the majority of the growth due to compounded semaglutide subscriptions.

The change in Total Monthly Subscription Revenues Per Average Subscriber was driven primarily by a mix shift to the Clinical business.

RESULTS OF OPERATIONS

Period from June 25, 2025 through June 30, 2025 (Successor) and Period from December 29, 2024 through June 24, 2025 (Predecessor) Compared with the Six Months Ended June 29, 2024 (Predecessor)

The table below sets forth selected financial information from our consolidated statements of operations for the periods presented:

Note: Totals may not sum due to rounding.

Included within the operating results are the impact of transaction costs related to strategic alternatives and Chapter 11 financial reorganization, the impact of depreciation and amortization expenses, and the net impact of restructuring charges, as applicable, which is further detailed below.

Transaction Costs

Certain non-recurring transaction costs related to strategic alternatives and Chapter 11 financial reorganization are included in applicable line items on the unaudited consolidated statements of operations:

Depreciation and Amortization Expenses

Depreciation and amortization expenses are included in applicable line items on the unaudited consolidated statements of operations:

Restructuring Charges

Restructuring charges consist of expenses associated with the reduction in headcount as a result of certain strategic re-alignments. Restructuring charges include the 2024 Plan, the 2023 Plan and the 2022 Plan. The restructuring charges are included in applicable line items on the unaudited consolidated statements of operations:

Consolidated Results of Operations

Revenues

Revenues were $12.2 million for the period from June 25, 2025 through June 30, 2025 (Successor), $363.6 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and $408.6 million for the six months ended June 29, 2024 (Predecessor). Foreign currency positively impacted our revenues for the period from June 25, 2025 through June 30, 2025 (Successor) by $0.2 million and for the period from December 29, 2024 through June 24, 2025 (Predecessor) by $0.5 million. The change in revenues was driven by a decline in Behavioral Subscription Revenues, partially offset by an increase in Clinical Subscription Revenues. The decline in Behavioral Subscription Revenues was primarily due to Behavioral recruitment challenges coupled with the lower number of Incoming Behavioral Subscribers versus the prior year. The increase in Clinical Subscription Revenues was primarily due to an increase in the number of subscribers, with the majority of the growth due to compounded semaglutide subscriptions.

Cost of Revenues

Cost of revenues were $3.3 million for the period from June 25, 2025 through June 30, 2025 (Successor), $100.2 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and $133.5 million for the six months ended June 29, 2024 (Predecessor). Foreign currency had a de minimis impact on cost of revenues for the period from June 25, 2025 through June 30, 2025 (Successor) and for the period from December 29, 2024 through June 24, 2025 (Predecessor). The decrease in cost of revenues was driven by a decrease in revenues, partially offset by actions to reduce the fixed cost base and movement to a more variable cost structure.

Gross Profit

Gross profit was $8.9 million for the period from June 25, 2025 through June 30, 2025 (Successor), $263.4 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and $275.1 million for the six months ended June 29, 2024 (Predecessor). Foreign currency positively impacted gross profit for the period from June 25, 2025 through June 30, 2025 (Successor) by $0.2 million and for the period from December 29, 2024 through June 24, 2025 (Predecessor) by $0.5 million.

Gross margin was 73.2% for the period from June 25, 2025 through June 30, 2025 (Successor), 72.4% for the period from December 29, 2024 through June 24, 2025 (Predecessor) and 67.3% for the six months ended June 29, 2024 (Predecessor). The gross margin increase was due to the reduction in cost of revenues as a result of actions to reduce the fixed cost base and movement to a more variable cost structure.

Marketing Expenses

Marketing expenses were $2.8 million for the period from June 25, 2025 through June 30, 2025 (Successor), $110.9 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and $143.9 million for the six months ended June 29, 2024 (Predecessor). Foreign currency had a de minimis impact on marketing expenses for the period from June 25, 2025 through June 30, 2025 (Successor) and decreased marketing expenses for the period from December 29, 2024 through June 24, 2025 (Predecessor) by $0.1 million. The change in marketing expenses was primarily due to lower spend on TV and online advertising as well as the strategic decision to reduce marketing spend during our financial reorganization process.

Product Development Expenses

Product development expenses were $0.7 million for the period from June 25, 2025 through June 30, 2025 (Successor), $25.3 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and $23.2 million for the six months ended June 29, 2024 (Predecessor). Foreign currency had a de minimis impact on product development expenses for the period from June 25, 2025 through June 30, 2025 (Successor) and for the period from December 29, 2024 through June 24, 2025 (Predecessor). The change in product development expenses was primarily due to an increase in consulting services and tech-related maintenance costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $2.9 million for the period from June 25, 2025 through June 30, 2025 (Successor), $78.5 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and $83.4 million for the six months ended June 29, 2024 (Predecessor). Foreign currency had a de minimis impact on selling, general and administrative expenses for the period from June 25, 2025 through June 30, 2025 (Successor) and for the period from December 29, 2024 through June 24, 2025 (Predecessor). The increase in selling, general and administrative expenses was primarily due to both transaction and reorganization related costs associated with the Chapter 11 financial reorganization of the Company.

Franchise Rights Acquired Impairments

In performing our interim impairment analysis as of March 29, 2025 (Predecessor), we determined that the carrying value of our United States indefinite-lived franchise rights acquired unit of account exceeded its respective fair value and, as a result, we recorded an impairment charge for our United States unit of account of $27.5 million in the first quarter of fiscal 2025 (Predecessor).

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

Reorganization Items, Net

The net reorganization gain of $1,143.9 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) related to our emergence from Chapter 11 bankruptcy and primarily consisted of the gain on settlement of liabilities subject to compromise and the impacts of fresh start valuation adjustments. See Note 2, "Emergence from Voluntary Reorganization under Chapter 11" of the Consolidated Financial Statements for further information.

Interest Expense

Interest expense was $0.9 million for the period from June 25, 2025 through June 30, 2025 (Successor), $38.7 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and $53.3 million for the six months ended June 29, 2024 (Predecessor). The change in interest expense was driven by the Chapter 11 financial reorganization and the reduction in Successor debt under the New Term Loan Facility relative to Predecessor debt. The effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing costs and debt discount) and our average borrowings during each of the respective periods and excluding the impact of any applicable interest rate swaps, was 11.09% per annum for the period from June 25, 2025 through June 30, 2025 (Successor), 7.14% per annum for the period from December 29, 2024 through June 24, 2025 (Predecessor) and 7.77% per annum for the six months ended June 29, 2024 (Predecessor), or 7.28% per annum for the six months ended June 29, 2024 (Predecessor) including the impact of any applicable interest rate swaps. Interest expense was impacted by the termination of our interest rate swaps on March 31, 2024. Following the emergence from bankruptcy and the restructuring of our debt, we anticipate a significant reduction in interest expense in future periods. See "-Liquidity and Capital Resources-Long-Term Debt" for additional details regarding our debt, including interest rates and payments thereon.

Other Expense (Income), Net

Other expense (income), net, which consists primarily of the impact of foreign currency on intercompany transactions, was $0.9 million of expense for the period from June 25, 2025 through June 30, 2025 (Successor), $6.7 million of expense for the period from December 29, 2024 through June 24, 2025 (Predecessor) and $1.7 million of income for the six months ended June 29, 2024 (Predecessor).

Provision for Income Taxes

Our effective tax rate was (71.5%) for the period from June 25, 2025 through June 30, 2025 (Successor), 0.1% for the period from December 29, 2024 through June 24, 2025 (Predecessor) and (13.9%) for the six months ended June 29, 2024 (Predecessor).

The effective tax rate for interim periods is determined using an annualized effective tax rate ("AETR"), adjusted for discrete items. For the Successor Period, we estimated our effective AETR in recording our interim income tax provision for the various jurisdictions in which we operate. The tax effects of statutory rate changes, significant, unusual or infrequently occurring items, and certain changes in the assessment of the realizability of deferred tax assets are excluded from the determination of our estimated AETR, as such, items are recognized as discrete items in the quarter in which they occur. The Predecessor Period was also based on our AETR, including the discrete tax impacts resulting from fresh start accounting. Any changes to our deferred tax assets and liabilities for the Predecessor Period (whether resulting from reorganization adjustments, fresh start adjustments or otherwise) were partially offset with a corresponding adjustment to our valuation allowance.

As part of the Chapter 11 bankruptcy proceedings, our prepetition funded debt was extinguished. Absent an exception, a debtor recognizes cancellation of debt income ("CODI") upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The Internal Revenue Code provides that a debtor in a bankruptcy case may exclude CODI from income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is the adjusted issue price of any indebtedness discharged less the sum of (i) the amount of cash paid, (ii) the issue price of any new indebtedness issued and (iii) the fair market value of any other consideration, including equity, issued. As a result, our U.S. net operating loss carryforward and tax credit carryforwards will be reduced to zero. The reductions in NOL carryforwards for the CODI are expected to be fully offset by a corresponding decrease to our valuation allowance as of December 31, 2025.

For the six months ended June 29, 2024 (Predecessor), the difference between the U.S. federal statutory tax rate and our consolidated effective tax rate was primarily due to a valuation allowance established to offset certain non-U.S. deferred tax assets due to the uncertainty of realizing future tax benefits.

Net Income (Loss) and Diluted Earnings (Net Loss) Per Share

Net income was $1.3 million for the period from June 25, 2025 through June 30, 2025 (Successor), net income was $1,118.1 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and net loss was $324.6 million for the six months ended June 29, 2024 (Predecessor). Foreign currency positively impacted net income for the period from June 25, 2025 through June 30, 2025 (Successor) by $0.2 million and positively impacted net loss for the period from December 29, 2024 through June 24, 2025 (Predecessor) by $0.4 million. The change in net income (loss) was primarily due to reorganization items, net and transaction costs during the period from December 28, 2024 through June 24, 2025 (Predecessor) related to the emergence from bankruptcy, partially offset by the franchise rights acquired impairments.

Diluted EPS was $0.13 for the period from June 25, 2025 through June 30, 2025 (Successor), diluted EPS per share was $13.80 for the period from December 29, 2024 through June 24, 2025 (Predecessor) and diluted net loss per share was $4.09 for the six months ended June 29, 2024 (Predecessor).

Operating Results

Although GAAP requires that we report our results for the period from December 29, 2024 through June 24, 2025 (Predecessor) and the period from June 25, 2025 through June 30, 2025 (Successor) separately, management views certain metric and revenue information for the six months ended June 30, 2025 by combining the results of the applicable Predecessor and Successor Periods because management believes such presentation provides the most meaningful comparison of our results to prior periods. Although the Predecessor and Successor Periods generally are not comparable as they are impacted by fresh start accounting, there are no fresh start adjustments affecting revenues and therefore revenue information has been combined to provide a meaningful understanding of operating trends, which would be consistent with a pro forma calculation under Article 11 of Regulation S-X. Nevertheless, the combined operating results do not reflect the actual results we would have achieved absent our emergence from the Chapter 11 Cases and may not be indicative of future results.

We cannot adequately benchmark the operating results of the period from June 25, 2025 through June 30, 2025 (Successor) against any of the previous periods reported in our Consolidated Financial Statements without combining it with the period from December 29, 2024 through June 24, 2025 (Predecessor) and do not believe that reviewing the results of this period in isolation would be useful in identifying trends in or reaching conclusions regarding our overall operating performance. Management believes that the key performance metrics such as Subscription Revenues, Incoming and End of Period Subscribers and Monthly Subscription Revenues Per Average Subscriber for the Successor Period when combined with the Predecessor Period provides more meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, the tables below present the combined results for the first six months of fiscal 2025.

Metrics and Business Trends

The following tables set forth key metrics for the combined first six months of fiscal 2025 and the percentage change in those metrics versus the prior year period:

Operating Performance

The decline in Behavioral Subscription Revenues was primarily due to Behavioral recruitment challenges coupled with the lower number of Incoming Behavioral Subscribers versus the prior year. The increase in Clinical Subscription Revenues was primarily due to an increase in the number of subscribers, with the majority of the growth due to compounded semaglutide subscriptions.

The change in Total Monthly Subscription Revenues Per Average Subscriber was driven primarily by a mix shift to the Clinical business.

LIQUIDITY AND CAPITAL RESOURCES

We voluntarily commenced and completed a prepackaged bankruptcy filing under Chapter 11 of the Bankruptcy Code to restructure our debt and allow increased operating cash flow for funding our operations and strategic initiatives. We have experienced and expect to continue to experience significant disruption and competitive pressures, including shifts in consumer behavior in the weight loss category. There is also a rapid proliferation of GLP-1 and other medications available as weight-loss options, an evolving regulatory landscape, and significantly increased competition from new entrants. These factors have negatively impacted our business. While the Clinical business is growing, it has not yet been able to offset the declines in the Behavioral business, resulting in decreased revenue overall and decreased cash flows from operations. Further, we have historically had recurring net losses. We voluntarily commenced and completed a prepackaged bankruptcy filing under Chapter 11 to restructure our debt and allow increased operating cash flow for funding our operations and strategic initiatives.

On the Emergence Date, all outstanding liabilities under the Prepetition Credit Facilities and the Prepetition Credit Agreement totaling approximately $1,116.0 million and our 4.500% Senior Secured Notes due 2029 of $500.0 million were discharged and the liens and mortgages related thereto were released. Concurrently, we entered into the Senior Secured Credit Agreement dated June 24, 2025 which provided for a five-year term loan (the "New Term Loan Facility") in an aggregate principal amount of $465.0 million maturing on June 24, 2030. Prepayments for excess cash are required annually as further described below. The restructuring of our debt significantly reduces the amount of outstanding debt and ongoing interest payments.

Our principal sources of liquidity are cash and cash equivalents and cash flows from operations. Our primary cash needs are funding our operations and global strategic initiatives, meeting debt service requirements and other financing commitments. We had unrestricted cash on hand of $152.4 million as of June 30, 2025 (of which $30.5 million is maintained at foreign subsidiaries).

Following our emergence from bankruptcy and restructuring of our debt, we believe that our sources of liquidity are sufficient to meet our obligations for at least 12 months following the issuance of the Consolidated Financial Statements found herein.

Balance Sheet Working Capital

The following table sets forth certain relevant measures of our balance sheet working capital deficit, excluding cash and cash equivalents and current portion of long-term debt, net as of:

Note: Totals may not sum due to rounding.

The following table sets forth a summary of the primary factors contributing to our balance sheet working capital deficit, excluding cash and cash equivalents and current portion of long-term debt, net as of:

Note: Totals may not sum due to rounding.

Cash Flows

The following table sets forth a summary of our cash flows for the periods presented:

Operating Activities

Net cash provided by operating activities was $11.5 million for the period from June 25, 2025 through June 30, 2025 (Successor), net cash used for operating activities was $34.4 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and net cash used for operating activities was $38.0 million for the six months ended June 29, 2024 (Predecessor). The change in net cash provided by (used for) operating activities was primarily attributable to a decrease in net loss after excluding the non-cash impact of the reorganization items, net and other non-cash add-back adjustments driven by the decline in franchise rights acquired impairments.

Investing Activities

Net cash used for investing activities was $0.2 million for the period from June 25, 2025 through June 30, 2025 (Successor), $6.3 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and $10.1 million for the six months ended June 29, 2024 (Predecessor). The change in net cash used for investing activities was primarily attributable to a decrease in capitalized software and website development expenditures.

Financing Activities

There was no net cash provided by (used for) financing activities for the period from June 25, 2025 through June 30, 2025 (Successor). Net cash provided by financing activities was $153.9 million for the period from December 29, 2024 through June 24, 2025 (Predecessor) and net cash used for financing activities was $17.1 million for the six months ended June 29, 2024 (Predecessor). The change in net cash provided by (used for) financing activities was primarily attributable to an increase in borrowings on the Prepetition Revolving Credit Facility. On April 10, 2025, we made the second anniversary Sequence acquisition payment of $16.0 million.

Long-Term Debt

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

The following schedule sets forth our long-term debt obligations as of June 30, 2025 (Successor):

(In millions)

Note: Totals may not sum due to rounding.

In the period from June 25, 2025 through June 30, 2025 (Successor), total interest expense on long-term debt, inclusive of amortization of deferred financing costs, amounted to $0.9 million. Total interest expense on long-term debt, inclusive of amortization of deferred financing costs and debt discounts, amounted to $11.1 million and $28.6 million for the period from March 30, 2025 through June 24, 2025 (Predecessor) and for the three months ended June 29, 2024 (Predecessor), respectively. Total interest expense on long-term debt, inclusive of amortization of deferred financing costs and debt discounts, amounted to $38.7 million and $53.3 million for the period ended December 29, 2024 through June 24, 2025 (Predecessor) and for the six months ended June 29, 2024 (Predecessor), respectively.

We have historically entered into interest rate swaps to hedge a portion of the cash flow exposure associated with our variable-rate borrowings. As of June 30, 2025 (Successor), we did not have any interest rate swaps in effect. As of December 28, 2024 (Predecessor), our debt consisted of fixed and/or variable-rate instruments. The weighted average interest rate (which includes amortization of deferred financing costs and debt discount) on our outstanding debt, exclusive of the impact of any applicable interest rate swaps, was approximately 11.09% and 7.75% per annum at June 30, 2025 (Successor) and December 28, 2024 (Predecessor), respectively, or 7.47% per annum at December 28, 2024 (Predecessor) including the impact of any applicable interest rate swaps, based on interest rates on these dates.

Senior Secured Credit Agreement

In connection with our emergence from bankruptcy, on June 24, 2025 we, as borrower, the lenders party thereto, and Wilmington Savings Fund Society, FSB ("WSFS"), as administrative agent, entered into a senior secured credit agreement (the "Senior Secured Credit Agreement") which provides for the New Term Loan Facility.

The New Term Loan Facility bears a variable interest rate based on either (1) the sum of (x) a base rate determined by reference to the highest of (a) 0.50% per annum plus the Federal Funds Effective Rate (as defined in the Senior Secured Credit Agreement), (b) the prime rate announced by WSFS and (c) one-month Term SOFR plus 1.00%; provided that such rate is not lower than a floor of 1.50%, plus (y) 5.80% per annum, or (2) the sum of (x) Term SOFR plus (y) 6.80% per annum, provided that Term SOFR is not lower than a floor of 0.50%.

All obligations under the Senior Secured Credit Agreement are guaranteed by, subject to certain exceptions, each of our current and future material subsidiaries. All obligations under the Senior Secured Credit Agreement, and the guarantees of those obligations, are or will be secured by substantially all of the assets of the Company and each guarantor organized in the United States, the United Kingdom and the Netherlands (each, a "Secured Guarantor").

We are required to prepay (a) 100% of the unrestricted cash held by us and our subsidiaries in excess of $100.0 million, (b) 100% of the proceeds from the sale of certain assets and proceeds of certain casualty events, and (c) 100% of incurrence of any new debt proceeds unless such incurrence is permitted under the credit agreement. Other than the mandatory prepayments of excess unrestricted cash as described above, we are also required to pay a prepayment premium of: (a) for the first eighteen months following the Emergence Date, 2.00% of the aggregate principal amount of prepayments or refinancings of the New Term Loan Facility in excess of $200.0 million, (b) from the eighteen-month anniversary of the Emergence Date to the second anniversary of the Emergence Date, 2.00% of the aggregate principal amount of prepayments or refinancings of the New Term Loan Facility, and (c) from the second anniversary of the Emergence Date to the third anniversary of the Emergence Date, 1.00% of the aggregate principal amount of prepayments or refinancings of the New Term Loan Facility. All prepayments of the principal balance of outstanding loans under the New Term Loan Facility are subject to customary "breakage" costs with respect to Term SOFR loans under the New Term Loan Facility.

Refer to "Emergence from Bankruptcy" for additional information.

Accumulated Other Comprehensive Income (Loss)

Our accumulated other comprehensive income (loss) includes changes in the effects of foreign currency translations and the fair value of derivative instruments, as applicable. At June 30, 2025 (Successor) and June 29, 2024 (Predecessor), the cumulative balance of the effects of foreign currency translations, net of taxes, was income of $1.2 million and a loss of $17.4 million, respectively. At June 29, 2024 (Predecessor), the cumulative balance of changes in the fair value of derivative instruments, net of taxes, was $0.0 million.

Dividends and Stock Transactions

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

On October 9, 2003, our Board of Directors authorized, and we announced, a program to repurchase up to $250.0 million of our outstanding common stock, which allows for shares to be purchased from time to time in the open market or through privately negotiated transactions and has no expiration date. On each of June 13, 2005, May 25, 2006 and October 21, 2010, our Board of Directors authorized, and we announced, the addition of $250.0 million to this program, of which $208.9 million remained unutilized as of June 30, 2025. During the period from June 25, 2025 through June 30, 2025 (Successor), the period from December 29, 2024 through June 24, 2025 (Predecessor) and the six months ended June 29, 2024 (Predecessor), we repurchased no shares of our common stock under this program. Notwithstanding the foregoing terms, the Company does not expect to conduct any repurchases of our common stock under this pre-bankruptcy authorized share repurchase program. The Company expects future share repurchases, if any, to be made under a new or modified share repurchase program authorized by our Board of Directors. Any future determination to enact a share repurchase program will be made at the sole discretion of our Board of Directors, after taking into account our financial condition and results of operations, capital requirements, contractual, legal, tax and regulatory restrictions, the applicable provisions of Virginia law and such other factors our Board of Directors may deem relevant. In addition, our ability to repurchase shares of our common stock may be limited by covenants in our existing indebtedness agreements and may be limited by the agreements governing other indebtedness we or our subsidiaries incur in the future.

EBITDA AND ADJUSTED EBITDA

We define EBITDA, a non-GAAP financial measure, as earnings before interest, taxes, depreciation, amortization and stock-based compensation and Adjusted EBITDA, a non-GAAP financial measure, as EBITDA adjusted for franchise rights acquired impairments, reorganization items, net, transaction costs related to strategic alternatives and Chapter 11 financial reorganization, net restructuring charges, and other items that management believes are not indicative of ongoing operations, as applicable.

The table below sets forth the reconciliations for EBITDA and Adjusted EBITDA, each a non-GAAP financial measure, to net (loss) income, the most comparable GAAP financial measure, for the period from June 25, 2025 through June 30, 2025 (Successor), for the period from March 30, 2025 through June 24, 2025 (Predecessor), for the period from December 29, 2024 through June 24, 2025 (Predecessor) and for the three and six months ended June 29, 2024 (Predecessor):

Note: Totals may not sum due to rounding.

We present EBITDA and Adjusted EBITDA because we consider them to be useful supplemental measures of our performance and useful for period-over-period comparisons. In addition, we believe EBITDA and Adjusted EBITDA are useful to investors and analysts. See "-Non-GAAP Financial Measures" herein for an explanation of our use of these non-GAAP financial measures.

OFF-BALANCE SHEET ARRANGEMENTS

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

SEASONALITY

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

AVAILABLE INFORMATION

Corporate information and our press releases, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments thereto, are available free of charge on our corporate website at corporate.ww.com as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. We also make available at that site the Section 16 reports filed electronically by our officers, directors and 10 percent shareholders.

We use our corporate website at corporate.ww.com and certain social media channels such as our Instagram account (Instagram.com/weightwatchers), corporate Facebook page (www.facebook.com/weightwatchers), X account (@ww_us) and LinkedIn page (www.linkedin.com/company/weightwatchers) as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. The contents of our website and social media channels shall not be deemed to be incorporated herein by reference.