NEW YORK, May 10 (Reuters) - Health and wellness

companies are embracing weight-loss drugs and building offerings

around them in an effort to avoid the fate of WeightWatchers,

which declared bankruptcy this week, citing vastly increased use

of the new blockbuster medicines.

But some of WeightWatchers' closest rivals, newer telehealth

companies, face a new challenge of their own as federal

regulators crack down on the cheaper versions of Novo Nordisk's

Wegovy and Eli Lilly's ( LLY ) Zepbound that have

become a big part of the companies' sales. The telehealth

companies' success may ultimately depend on partnering with the

name brand drugmakers, one analyst said.

WeightWatchers filed for bankruptcy on Tuesday, as Americans

shunned its weight management business in favor of the Novo and

Lilly drugs and copies from pharmacies that can cut a person's

weight by 15%-20%. The drugs, from a class of digestion-slowing

medicines known as GLP-1 agonists, have eaten into demand at

some big companies, including Walmart's ( WMT ) food business.

WeightWatchers, when it filed for bankruptcy, said its

weight management system stopped being attractive to customers

given changing views about weight versus wellness, competition

from telehealth companies fully embracing the weight-loss drugs,

and even fitness influencers on TikTok. The company has an

agreement with creditors to restructure its debt and quickly

exit the court process.

Adam McBride, CEO of Telehealth company Eden, said

WeightWatchers, which tried to pivot to telehealth and sell

weight-loss drugs, had an old school system that relied on

points and in-person gatherings that customers didn't like. "I

don't think that they were listening to their members," McBride

said.

Eden and rival Noom both operate weight-focused telehealth

platforms with integrated lifestyle coaching - something

WeightWatchers struggled with.

The newer companies have been selling unbranded versions of

the in-demand weight-loss medications as part of their

offerings.

Clinical subscriptions that provide access to clinicians and

prescription drugs make up over half of Noom's revenue, said CEO

Geoff Cook.

At rival Hims and Hers, compounded weight-loss

drugs accounted for 20% of revenue last year, and even

WeightWatchers relied partly on such revenue.

Noom presents the drugs as a kind of superpower weight-loss

tool, which the company said then drives customers to other

parts of its platform.

"In the last month or two, people who are taking the meds

are actually logging more meals," said Noom's CEO. "They're

weighing in more and they're engaging in the other aspects of

the Noom program at a rate that's even better than the flagship

program."

WEIGHT-LOSS DRUG BANDWAGON

Other health companies see room for products and services

that take advantage of the popularity of new weight-loss drugs,

which some analysts forecast will have annual sales of $150

billion in the next decade.

Health retailer The Vitamin Shoppe has seen a spike in

demand for supplements that could help with loss of appetite,

decreasing muscle tone, and other GLP-1 side effects, said

President Muriel Gonzalez. Sales of a set of supplements

marketed to people taking such drugs jumped more than 20% from a

year ago, a company spokesman said.

Last year, The Vitamin Shoppe launched a telehealth service,

Whole Health Rx, that connects consumers with medical providers

who can prescribe weight-loss drugs and recommend supplements to

give people protein, fiber and multi-vitamins while on them.

Other companies have made similar moves. Supplement-seller

GNC, looking to capitalize on the trend, last year added a

section in stores dedicated to GLP-1 users, selling protein

powder and fiber.

WeightWatchers itself is still trying to pivot. A

spokesperson said in a statement that the GLP-1 drugs for weight

loss are a growing and essential part of its business. It said

its program works, citing an internal study in which its clinic

patients taking GLP-1 drugs lost 21% of their weight and then

transitioned to its behavioral program and lost another 2% after

13 weeks.

But easy sales of cheaper versions of the drugs are ending,

even as lawsuits remain. The U.S. Food and Drug Administration

is blocking sales of cheaper compounded versions of the drugs

now that Wegovy and Zepbound and their related diabetes

medicines -- Ozempic and Mounjaro -- are no longer in shortage.

Selling cheaper versions of the drugs has been a huge profit

driver for these companies, and the loss is an issue, said

Morningstar healthcare analyst Karen Andersen.

One path forward for wellness companies is to work with

brand name drugmakers, Andersen said.

"Companies like Novo, they need partners that have access to

patients," she said. But finding creative ways to partner with

key competitors is no small task, she added. "It will be a rocky

path."