Weight Watchers enters telehealth prescription drug space with Sequence acquisition

Photo: Mikolette/Getty Images

Weight Watchers, which now goes by the designation "WW," is entering into the telehealth prescription drug space, having entered into a definitive agreement to acquire Sequence for $132 million. 

The subscription telehealth platform offers access to healthcare providers specializing in chronic weight management to connect patients with doctors who can prescribe weight-loss drugs.

Sequence integrates the patient and clinician experience for ongoing clinical care and medication management while providing support in navigating the insurance approval process.

Calling obesity a complex, chronic condition, WW maintained that prescription medications can be helpful in addressing the biological components, and said long-term weight management can be achieved by pairing those medications with science-backed lifestyle modification.

Launched in late 2021, Sequence has grown into an approximately $25 million annual revenue run-rate business, serving roughly 24,000 members across the U.S.

WHAT'S THE IMPACT?

WW will acquire Sequence in a cash and equity transaction valued at $132 million, inclusive of a minimum of $26 million of Sequence's cash. The effective net purchase price is $106 million.

$100 million will be paid at the closing of the transaction, of which $65 million ($39 million, net of Sequence's cash) will be paid in cash and $35 million in the form of 8.065 million newly issued shares of common stock of WW.

$16 million will be paid in cash on the first anniversary of the closing, and another $16 million on the second anniversary.

The transaction is expected to close during the second quarter of this year.

"As science advances rapidly, we know there is a significant opportunity to improve outcomes for those using medications," said WW CEO Sima Sistani. "Clinical interventions require better education, access, care management, community and the integration of a complementary lifestyle program for best results."

THE LARGER TREND

In its earnings call on Monday, WW CEO Sima Sistani highlighted the company's plan to enter the clinical weight management space. 
"Obesity is a complex chronic condition that includes both biological and behavioral components. There's growing scientific evidence that for some prescription chronic weight management medications can address the biological components of obesity," Sistani said.

The American Hospital Association has come out in support of bipartisan legislation, introduced in the House of Representatives, that would require the Department of Health and Human Services, Medicare Payment Advisory Commission, and Medicaid and CHIP Payment and Access Commission to study expanded telehealth use during the COVID-19 pandemic and recommend potential enhancements to telehealth access and quality.

In October 2022, after three months of relative stability, national telehealth utilization declined 3.7%. Looking at one specific metric, telehealth went from 5.4% of medical claim lines in September, to 5.2% in October, according to FAIR Health's Monthly Telehealth Regional Tracker.

The decline in telehealth utilization was larger than the national average in the South (6.8%), Midwest (4.9%) and West (4.1 %), while there was an increase in utilization of 1.7% in the Northeast.

The data represents the privately insured population, including Medicare Advantage and excluding fee-for-service Medicare and Medicaid.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com