Which weight management company is the biggest loser?
Compare the human capital trends at four leading weight management companies.
The weight management industry is on a diet. The combination of a challenging and competitive market, a global pandemic, and shifting consumer trends means that companies across the industry have had to tighten their belts with almost every major player facing loses of human capital in the last three years.
With last week's news that Jenny Craig is facing bankruptcy and shutting down operations after four decades, we took an in depth look at some of the leading weigh management companies to see who is the biggest loser amidst a major industry downturn.
Read on below to see the human capital trends at Jenny Craig, Weight Watchers, Noom, and Nutrisystem.
Jenny Craig, one of the biggest names in the weight management industry, announced that it will be closing its doors after over 40 years.
In recent weeks, Jenny Craig had been scrambling to find a buyer as it ran out of financial resources. Last month, the company was pursuing a sale but all talks fell through. The company cited its inability to secure additional financing as the reason behind the closure, which has resulted in over 1,000 employees losing their jobs.
Jenny Craig employees have been quoted saying that there had been no indications before the past two weeks that the company was spiraling. In fact, less than a month ago, the company was still actively posting job openings on LinkedIn.
All said, the company has been losing human capital at astonishing rates since the start of the COVID-19 pandemic – an early warning sign of dwindling company health.
Jenny Craig was founded in 1983 with the goal of helping people lose weight through a specially designed weight loss program that included menus created by chefs and nutritionists.
Despite years of success, the weight management industry has faced increased competition in recent years as more and more consumers rely on online services to help them achieve their weight loss goals. Additionally, many consumers have turned to the current generation of weight loss drugs, including Wegovy, Rybelsus, and Ozempic.
The closure of Jenny Craig highlights the trials and tribulations of the weight management industry. While many companies have been successful in helping people lose weight, the industry has faced challenges in recent years due to increased competition and changing consumer behavior.
As the weight management industry continues to evolve, it is clear that companies must be willing to adapt to changing consumer behavior if they want to remain competitive. Continue reading below to explore the human capital trends (and indicator of company trajectory) at three remaining weight management companies.
Weight Watchers (and parent company WW) has had a tough run since the start of the pandemic, facing decreasing headcount and decreasing revenue every year since 2019.
To make matters worse, the company caught extra flak for executing a mass firing over Zoom in May 2020 – no points for guessing which bar this is above. The 2020 layoffs were the start of a campaign to reduce costs by over $100 million and to try to revitalize the brand amidst a flood of churning customers.
But the company that has been struggling for years as consumers shift away from diet programs and there is increased competition from free or inexpensive apps, like MyFitnessPal.
The company lost over $250 million dollars in 2022 and is in the process of cutting hundreds of locations (and likely hundreds of employees) nationwide.
However, it may not all be bad for WW who recently acquired Sequence, and has been starting to see increased sales of new weight loss drugs Wegovy and Ozempic.
That said, until headcount stabilizes and a WW reestablishes a strong human capital foundation, the company is likely to continue to struggle to find a new niche within the weight managment industry.
Noom is the "new kid on the block" and has achieved significant success in recent years.
Noom has raised $657 million to date, from investors including big names like Sequoia Capital, Silver Lake, and SoftBank. In 2021, the company raised a $540 million Series F at a $4 billion valuation.
As Noom expanded its business, they went on a hiring spree and in 2020 alone, the company hired over 500 new employees, bringing its total headcount to around 1,700. 2020 revenue was double that of 2019 and Noom seemed to be on a path to disrupt the weight management industry, using the pandemic as a catalyst.
But, it's hard to have your cake and eat it too. Despite the company's app-based approach being particularly well suited to the pandemic, the last three years have been hard and Noom has seen headcount growth slow and more recently turn negative.
Multiple rounds of layoffs in the last 18 months have seen Noom's coaching staff halved and a dramatic number of VP-level or higher departures including the CFO.
The company had been planning a $10 billion IPO late in 2022 but the outflow of human capital and macroeconomic conditions have all but halted these plans.
Will Noom recover and live up to it's unicorn status or is the recent exodus of human capital the beginning of a downward spiral? Likewise, what will this mean for the 113,000 SF lease that Noom signed amidst their pandemic boom?
A legacy company in the weight management space, Nutrisystem has had a hard time maintaining its grip on the weight loss nutrition industry in recent years.
Even prior to the pandemic, the company faced declining headcount for years.
Company value has followed a similar trajectory. The company was bought by Tivity Health in late 2018 for $1.3 billion. Tivity sold Nutrisystem to private equity firm Kainos Capital for $575 million in December 2020.
Like the three companies highlighted above, Nutrisystem is yet another example of the link between human capital and company trajectory.
Human capital is the foundation for financial capital
Employees leaving a company or being laid off is often a leading indicator of a company failing to reach revenue goals, generate profit, and drive success.
Large scale or persistent departures can be a symptom of larger issues within the company. If employees feel that their work is not driving impact or that they are not on a shared path forward, they are likely to seek opportunities elsewhere. For employees with equity stakes in a company, the decision to leave is often dictated by their expectations of a successful exit for that company.
The loss of human capital, institutional knowledge, and talent, often makes it even harder for the company to achieve its goals.
When companies are struggling to generate revenue or turn a profit, they may be forced to lay off employees as a cost-cutting measure. While this may provide some short-term relief, it can also have long-term consequences for the company's success – leading to a downward spiral.
Furthermore, layoffs can also have a negative impact on employee morale and productivity. Employees who are uncertain about their job security often become disengaged or seek other employment opportunities.
The relationship between human capital and company trajectory is inextricably linked. A company is only as good as the employees it hires and retains.
Interested in the human capital at other companies? Reach out below to get detailed employee-level insights.