NEW YORK, May 10 (Reuters) - Health and wellness firms are adapting quickly to the rising popularity of weight-loss medications, crafting new services around these treatments in hopes of avoiding the same downturn that led WeightWatchers to declare bankruptcy this week. The surge in demand for these powerful drugs has reshaped the entire industry practically overnight.

While established firms like WeightWatchers falter, newer telehealth startups are facing regulatory headwinds. U.S. authorities are cracking down on less expensive alternatives to Wegovy from Novo Nordisk (NOVOb.CO) and Zepbound by Eli Lilly (LLY.N),—drugs that have become vital revenue sources for telehealth operators. Success, analysts believe, may ultimately require alliances with the original drug manufacturers.

WeightWatchers filed for Chapter 11 on Tuesday, noting a sharp decrease in interest in its traditional weight-management system as Americans increasingly opt for GLP-1 agonists like those from Novo and Lilly, which can help users shed 15%-20% of body weight. These medications, which slow digestion, are even disrupting food sales at large retailers like Walmart (WMT.N).

In its bankruptcy filing, WeightWatchers cited a transformation in consumer attitudes—moving away from weight-centric goals in favor of broader wellness—and intense competition from digital players actively promoting prescription weight-loss drugs. Influencers on platforms like TikTok have only accelerated the shift. The company has reached a deal with creditors to restructure and quickly proceed through the legal process.

Adam McBride, CEO of digital health firm Eden, remarked that despite WeightWatchers trying to adapt by offering telehealth services and medications, its legacy systems based on points and in-person meetings felt outdated. "It seemed like they weren’t really in tune with what their users wanted,” he said.

Companies like Eden and Noom, by contrast, have integrated virtual weight-loss programs with lifestyle coaching—an area where WeightWatchers struggled.

These newer platforms have included off-brand versions of popular medications as part of ongoing subscription models.

Noom CEO Geoff Cook noted that subscriptions granting access to prescribing clinicians now contribute over 50% of his company’s revenue.

At rival Hims and Hers (HIMS.N), compounded versions of these drugs made up 20% of sales in the previous year. Even WeightWatchers relied partly on similar revenue streams.

Noom markets the medications as a transformative tool—encouraging users to engage more with its other wellness features.

“In just the last couple of months, we’ve noticed that users on these treatments are logging meals more frequently, weighing themselves more often, and participating more deeply in our broader health platform,” Cook said.

Other industry players are also seeking to profit from the weight-loss drug boom—expected to drive $150 billion in sales annually within the next decade, analysts estimate.

The Vitamin Shoppe, for instance, has seen strong growth in supplements aimed at offsetting common side effects of GLP-1 drugs, such as reduced appetite and muscle tone issues. According to President Muriel Gonzalez, sales of these products are up more than 20% over last year.

The retailer rolled out Whole Health Rx, a digital health service launched last year that connects consumers to providers who can prescribe GLP-1 medications and suggest dietary supplements to support nutrient intake including protein, vitamins, and fiber.

Other firms are adopting similar strategies. Competitor GNC introduced new in-store spaces targeted specifically at GLP-1 users, offering products like protein powders and fiber supplements to meet changing customer needs.

Despite recent setbacks, WeightWatchers continues to pivot toward a medication-driven model. A representative said the use of GLP-1 drugs is becoming a central element of their business strategy. The company highlighted internal data showing patients on the medications lost 21% of their body weight, and following up with the company’s behavioral tools, lost an additional 2% after just over three months.

However, the landscape is shifting once again. Regulatory clampdowns from the U.S. Food and Drug Administration are limiting the sale of compounded alternatives now that Wegovy, Zepbound, and their diabetes counterparts—Ozempic and Mounjaro—are readily available.

Morningstar healthcare analyst Karen Andersen noted that sales of these lower-cost alternatives had been a major profit engine for telehealth firms, and regulators’ restrictions pose a serious obstacle.

To survive, Andersen suggested wellness companies may need to develop formal partnerships with the big drug manufacturers.

“Novo and others need distribution partners with close ties to their customers,” she said. “But forging those alliances, especially with direct competitors, is going to be challenging. It won't be an easy road.”