FitLab, the multi-brand performance lifestyle company behind Nike Studios, has some new capital to play with. The fitness platform has secured a $65 million strategic financing facility from Atlas Credit Partners, made up of approximately $35 million funded at closing and $30 million of remaining availability. 

With the capital, FitLab has acquired what the company calls a “cutting-edge fitness equipment manufacturer,” enhancing its ability to weave together all aspects of a customer’s fitness experience and deliver them in a multitude of ways. 

“Our pursuit of excellence extends beyond fitness and wellness innovation, encompassing strategic partnerships that elevate our company,” said Mike Melby, co-founder and co-CEO of FitLab. “We’re thrilled to secure the financing from Atlas to allow us to accelerate our expansion and offer our integrated platform to a broader audience seeking unparalleled fitness experiences.”

FitLab is no stranger to ambitious growth. The company recently agreed to a partnership with GoSaga, an organization that invests in and scales next-gen lifestyle brands across health, wellness, fitness and beauty to launch a minimum of 250 studios across the Northeastern and Mid-Atlantic regions of the United States. 

Right before that, the company inked a deal with Nike to launch Nike Studios, which will include a network of boutique fitness locations, including Nike Training Studios and Nike Running Studios. FitLab also has rights to brands such as Racked, XPT by Laird Hamilton and Gabrielle Reese, and Fast by Conor McGregor. 

Atlas Credit Partners also comes to the table with an impressive track record. The asset management firm has 80-plus years of combined business experience financing cutting-edge, medium-sized institutions such as SoundHoundAI and AST SpaceMobile. They’ve invested a total of over $950 million to date. Atlas agreed to a similar strategic funding deal with wellness brand Hyperice this past summer. 

“FitLab uniquely integrates every channel of the fitness ecosystem into a single, differentiated platform,” said Andrew Sung, head of research at Atlas Credit Partners. “With this acquisition, combined with the company’s ramp of boutique fitness studios and partnership with a best-in-class global brand, we believe that our investment will help accelerate the pace at which the company continues to innovate the fitness experience.”

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At-home fitness equipment manufacturer BowFlex has filed for Chapter 11 bankruptcy, agreeing to a deal that could see Matrix parent company Johnson Health Tech Retail acquire it for $37.5 million.

Johnson Health Tech will operate as BowFlex’s stalking horse bidder, allowing them to acquire all company assets at the close of the transaction, less closing adjustment amounts for accounts receivable, inventory and certain transfer taxes. Other interested parties will have the chance to submit competing offers, but if none beat the $37.5 million price already agreed upon by BowFlex and Johnson, the sale will go through. 

Subject to court approval, BowFlex will also receive $25 million of debtor-in-possession financing from SLR Credit Solutions and its affiliates. Those funds will enable BowFlex to continue its normal operations and meet its financial obligations to employees, vendors and its continued provision of customer orders during the bankruptcy proceedings and while executing the sale process.

“For decades, BowFlex has empowered healthier living and enabled consumers to reach their fitness goals with our innovative home fitness products and individualized connected fitness experiences,” said Jim Barr, BowFlex CEO. “As a result of the post-pandemic environment and persistent macroeconomic headwinds, we conducted a comprehensive strategic review and determined this was the best path forward for our company. We are fortified by the potential partnership with Johnson Health Tech and encouraged by the multiple parties that have indicated an interest in bidding for our company. Our goal is to maximize value for our stakeholders through this process.”

At-Home Fitness Struggles

BowFlex isn’t the only at-home fitness supplier struggling out of the pandemic gates. Peloton has repeatedly seen share prices drop, including a 23% dip last month after lowering its full-year 2024 revenue forecast.

Still, the writing has been on the wall for BowFlex for some time now. In December, the company received a notice from the New York Stock Exchange (NYSE) alerting them of their failure to comply with listing standards, such as maintaining an average global market capitalization of at least $50 million over a 30-day consecutive trading period. 

A few months before that, the Vancouver, Washington-based company was hit with a non-compliance notice, which flagged the brand for having an average closing price of less than $1.00 per share over a consecutive 30-trading day period. Now, BowFlex will enter bankruptcy with $140 million in assets and $126 million in liabilities according to its newly filed petition. 

What’s Next for BowFlex?

Along with Matrix Fitness, Johnson Health Tech also carries wellness companies Horizon Fitness and Vision Fitness. Whether Johnson or another bidder ends up acquiring BowFlex, the move promises to give the once-popular at-home fitness maker a much-needed sense of redirection after recent struggles. 

BowFlex notably underwent a rebrand last year, changing its name from Nautilus to BowFlex to put more emphasis on its strongest brand. The equipment maker also remodeled its BowFlex line, equipping it with brighter visuals, messaging with goal promotions and a more inclusive approach to fitness to hopefully attract younger fitness consumers.

The post BowFlex Files for Bankruptcy, Eyes Potential Sale to Matrix Parent appeared first on Athletech News.

Shares of Life Time are surging in response to strong fourth quarter and full-year fiscal 2023 results, demonstrating that its member-rich amenities and services are a hit with wellness seekers — so much so that there are membership waitlists at over 20 Life Time clubs, with additional clubs expected to have waitlists by May. 

The luxury fitness and lifestyle operator reported its total revenue increased 18.2% to $558.8 million for the fourth quarter and 21.6% to $2.217 billion for the year, crediting its continued strong growth in membership dues and in-center revenue. Net income also increased to $23.7 million for the fourth quarter and $76.1 million for the year. 

“I am thrilled to report that we achieved our operating and strategic objectives and exceeded our financial goals in 2023,” said Bahram Akradi, Life Time founder, chairman and CEO. “We set record levels of revenue and adjusted EBITDA, improved our balance sheet and further reduced our net debt leverage ratio.”

Akradi emphasized that Life Time expects to be free cash flow positive beginning in the second quarter and plans to open nine to ten new centers in 2024. The fitness operator opened its eighth facility in New Jersey this week.

“We also increased member engagement through our strategic programming initiatives, as highlighted by the increase to 135 average visits per membership compared to 124 in 2022 and, most notably, 108 in 2019 before the pandemic. The increase is a clear indication that our members are more engaged, with higher retention as a key outcome,” Akradi said,

Following Wednesday morning’s earnings call, shares of Life Time shot up over 11% as of Wednesday afternoon.

Resilient & In-Demand

Establishing waitlists for busy Life Time clubs creates a two-fold benefit, noted Akradi: maintaining the brand’s member experience and improving member retention.

“We expect to realize the highest retention rates in the history of Life Time in 2024,” he told investors, adding that, like most high-end leisure brands, the club doesn’t see any weaknesses in traffic.

By comparison, Placer.ai recently reported that traffic to ten leading fitness operators fell flat last month, typically when gyms are bustling with New Year ‘Fitness Resolutioners.’ 

“Right now, we see no reason to suggest the positive trend we’re experiencing today should change going forward,” Akradi added.

Life Time will also continue to invest in programming such as pickleball and small group classes.

Bullish on GLP-1s

Life Time isn’t experiencing any pain from the weight loss medication surge, with Akradi noting that Miora, the brand’s medical wellness and longevity clinic launched last fall, is a “huge opportunity” for the luxury lifestyle operator. The clinic offers popular, non-invasive wellness therapies such as infrared saunas, red light therapy, peptides, hormone replacement therapy, IV therapy, cryotherapy chambers and even GLP-1 weight loss drugs.

“We have exactly the right customer base in our clubs,” he said. “This is going to remain a megatrend. It’s going to stay, and it’s not a negative for exercise because you absolutely need to combine the proper weight training and nutrition with these drugs. The exercise business is going to get a win out of it.”

Further, Akradi points out that weight loss customers spending $500 – $1000 a month on drugs like Ozempic and Wegovy will want the proper facilities, professional personal trainers and nutritionists to support their health investment. He also sees those who have lost weight becoming more comfortable attending Life Time clubs. 

“Lifetime is uniquely positioned because, in every market, we have facilities where we can launch Miora Clinics for longevity, for addressing weight loss, peptides, all of that,” he said. “We look at this as nothing but an upside.”

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Planet Fitness, inching closer to 20 million members and now with 2,575 store locations, reported that total revenue increased from the prior-year period by 1.4% to $285.1 million in its fourth quarter, and for fiscal 2023, its total revenue increased from the prior year by 14.4% to $1.1 billion.

In addition to its fourth quarter and 2023 earnings, Tom Fitzgerald, chief financial officer, has announced his intention to retire at the end of August. 

Providing its 2024 outlook, Planet Fitness expects revenue to increase in the 6%-7% range when compared to 2023, new equipment placement of approximately 120-130 in franchisee-owned locations and system-wide same-store sales in the 5% to 6% percentage range. 

Despite the strong numbers, Planet Fitness shares were down 3% on Thursday morning shortly after the earnings announcement.

The fitness franchisor and operator had kicked off a “New Growth Model” last year to support long-term store growth in the face of post-pandemic macroeconomic challenges, which interim CEO Craig Benson noted reduces capital requirements for owning and maintaining a PF franchise location with additional flexibility to build store portfolios. 

“While we believe that 2024 will be a transition year as our franchisees incorporate the changes into their growth plans, given our consistent and predictable asset-light model, we believe that we can deliver between 10 and 11 percent adjusted EBITDA growth, enabling us to generate significant cash flow to invest in the business and return capital to shareholders via our share repurchase program,” Benson said

“Importantly, we are expanding our total store opportunity to 5,000 in the U.S. based on the results of our recently completed third-party studies, up from the 4,000 total store opportunity we communicated at the time of our initial public offering in 2015,” he added.

Inside the Numbers

In the fourth quarter,  77 new Planet Fitness stores were opened and the fitness operator reported net income of $36.8 million, compared to $36.3 million in the prior-year period. Franchise segment revenue also increased $12.0 million or 13.9% to $98.2 million from $86.3 million in the prior-year period.

For fiscal year 2023, Planet Fitness reported net income was $147.0 million, compared to $110.5 million in the prior year. The fitness brand opened 165 new stores during the year. As for franchise segment revenue, Planet Fitness reports it increased $58.3 million or 17.7% to $387.9 million from $329.6 million in the prior-year period. 

Former CEO Departs Board

Benson has served as interim CEO following the sudden departure of former CEO Chris Rondeau last fall.

Rondeau recently resigned from the company’s board of directors, according to an SEC filing dated February 15. In part, it read that Rondeau didn’t serve on any board committees at the time of his resignation and that the company believes he resigned from the board due to “disagreements” with the company since his separation as CEO — such as the decision to terminate roughly 9% of PF headquarters-based employees this month, Benson’s role in managing Planet Fitness during its search for a permanent CEO and the board’s role in reviewing and approving decisions. 

In response, Planet Fitness wrote that it “respectfully disagrees with Mr. Rondeau’s views on these matters” and noted, “The board has momentum behind the search for a new CEO, and the board is encouraged by the progress to date.”

Last month, Planet Fitness launched a media network for advertisers to target its 18.5 million members, many of whom are Gen Z.

This story has been updated as Planet Fitness issued revised guidance regarding its same-store sales numbers.

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BowFlex is casting “substantial doubt” on its ability to continue operations and is considering filing for bankruptcy, according to a recent quarterly filing. The grim outlook follows a company-wide rebrand last fall that saw Nautilus switch its corporate name BowFlex.

In an SEC filing on February 21, the Vancouver, Washington-based fitness equipment maker cites a challenging retail operating environment, “deteriorating macroeconomic conditions” and a decline in customer demand, resulting in a “significant year-over-year decline” in revenue for the three and nine months ended December 31, 2023. 

BowFlex said it believes “conditions will not improve in the next several quarters,” negatively affecting its liquidity projections. The equipment maker painted a dire picture:

“We have been actively pursuing alternatives to access liquidity or sell the Company or its assets, which may include making a voluntary filing under federal bankruptcy laws,” BowFlex reported. “If we are not able to promptly consummate a transaction or access additional sources of liquidity, we will not be able to maintain compliance with debt covenants in our credit facilities and may not be able to continue to operate our business.”

“Management has determined that under these circumstances, there is substantial doubt about our ability to continue as a going concern for twelve months from the issuance date of this report,” the company added.

BowFlex reports that for the three and nine months ended December 31, 2023, it incurred a net loss of $34.3 million and $51.8 million, respectively, and for the three and nine months ended December 31, 2022, it incurred a net loss of $11.1 million and $84.5 million, respectively. 

Despite its rebrand, which included a colorful marketing campaign and the release of new home-fitness products, BowFlex has continued to struggle. 

The fitness equipment maker received its second notice from the New York Stock Exchange at the close of last year, warning that it wasn’t in compliance with continued listing standards amid its financial issues.

Despite rallying around its “North Star” strategy since 2021 under CEO Jim Barr, the company previously discussed a potential sale and also conducted layoffs, affecting 15% of its staff, in early 2023.

The equipment maker had announced in May that it would sell $13 million in non-core assets, including the Nautilus brand trademark, to boost its balance sheet in response to lackluster net sales. In June, BowFlex, then operating as Nautilus, sold over four million shares of its common stock or equivalents to an institutional investor to raise $5 million for general corporate purposes. 

The post BowFlex Future in ‘Doubt’ as Company Weighs Sale, Bankruptcy appeared first on Athletech News.

As more people head back to the gym, private equity firms are seeing an opportunity to stake their claim in fast-growing fitness franchise groups in 2024. 

Multiple gym franchises, ranging from no-frills fitness centers to children’s gyms have seen an influx of private equity dollars, and that trend stands to continue — just as confidence in at-home workouts like Peloton continue their downward spiral.

“There has been a sizable infusion of private equity cash over the last couple of years in the franchise space. This has been especially evident in subscription-based businesses such as fitness centers,” said Carolyn Collins, franchise fitness vice president of sales, Mitsubishi HC Capital America. 

But with more investment also comes more competition, and fitness franchises will be up against other similar concepts when they’re aiming for private equity attention. How can they stand out as the right franchise to invest in and what’s inspiring private equity firms to invest in fitness right now? Here are five factors that are leading the wave.

Proof of Concept

“PE firms focused on control leveraged buyout (LBO) are generally looking for at least $3 million of earnings before interest, taxes, depreciation, and amortization (EBITDA) achieved through proof of concept across enough locations in different geographies to support management’s forecast,” explained Jon Canarick, managing partner at North Castle Partners. 

Generally, they aren’t looking for a high-risk investment in this space. This is a proven market and, for an investment to be worth their time and funds, it needs to have shown that it can succeed in a crowded marketplace. 

Multiple Revenue Opportunities

Opening new locations generally is not enough to attract serious private equity cash. There have to be other revenue streams available within this opportunity.

“I would like to see a viable path to a minimum of $500 million of system-wide revenue, such that at a 7% royalty there is a minimum of $35 million of recurring royalty revenue supported by other revenue opportunities beyond the initial franchise sale,” said Canarick. He explained that Orangetheory not only has their business model with workout classes, they also make money off of the heart rate monitors they sell. 

“You want to believe a business can generate at least $15mm of EBITDA and be enticing to a consolidator or an exit path,” added Canarick.

Successful Franchisees With Viable Returns

The best way to determine viability to $500 million is to see a proven track record of successful franchisees, with Canarick noting that translates to at least 85% of franchisees as successful. 

“I want to see a strong return on invested capital, which could be making $150,000 per year. This would in theory allow the franchise to hire a new general manager while they open a second location so that they can build a real business,” said Canarick. 

Low average EBITDA models generally won’t tempt private equity investors, and $150,000 is a general minimum to get a meeting. Three hundred thousand dollars is going to be more appealing to most private equity firms, though that is not required. 

What doesn’t count as successful? Canarick noted that spending $250,000 to open a location and making $50-$75,000 a year is not good enough for private equity investment. 

Large Enough Sample Set of Locations

“In terms of locations, we like to see a large enough sample set in enough varied geographies to have confidence that the franchise can continue to grow,” said Mark Grabowski, managing partner at Snapdragon Capital Partners. 

Multiple locations in the same city may not be enough to attract a private equity investor since they can’t be confident this is not a niche product that’s only serving a small geographic region. They want to see proven success across multiple cities, ideally across diverse locations.

Qualitative Validation

Not everything will come down to numbers. Some of the reasons to invest will come from personally believing in the product and hearing that the consumers have also bought in. 

“It all starts with the consumer. Do you have a business that delivers a great value proposition to the consumer? We look for quantitative and qualitative validation of consumer affinity for the brand,” said Grabowski.

He wants to see profitability, of course, but you can’t necessarily measure customer satisfaction and whether they love the experience, franchisee relationships, or a franchisor’s interest in growing — and all of these play a critical role in how successful an investment will be.

“We want to hear what franchisees are saying about the franchisor and their experience with the brand,” added Grabowski.

Bringing It All Together

When all of these factors come together, that’s when a private equity firm will decide it’s worth having a conversation and entertaining the idea of investing in a fitness franchise. And, in 2024, there will be many more of these conversations, but also many more competitors. Those who focus on strengthening each of these areas will rise to the top.

The post What Private Equity Firms Look for in Fitness Franchise Groups appeared first on Athletech News.

Taking on private equity money isn’t always the right move for a fitness business. There are successful businesses that have grown and scaled on their own, without raising money from private equity investors. They’ve opened franchises across the country and even had successful exits. A private equity investor is not a necessity for everyone. 

However, it is a great strategic move for many fitness franchise businesses. The key to making it a successful relationship for you is to know whether or not it’s the right fit before you enter into a partnership and to understand the expectations on both sides. 

What should you expect from a private equity relationship? And what will they expect from you? Athletech News breaks down what you need to know:

Understand the Goal of Taking On Private Equity

Before you do anything else, reflect on why you want to take on a private equity partner. Is it because you need cash to grow and scale quickly? Are you looking for mentorship from someone who’s been through the process and successfully exited? Do you want to tap into resources in terms of expertise, talent, and skill from someone who’s been there before? All of these are excellent reasons. Just make sure you know your specific why.

Think About Your Collaboration Style

“A private equity partner will expect open and honest and regular communication,” Jon Canarick, managing partner at North Castle Partners, told Athletech News.  

How do you ideally want to collaborate with your private equity partner? Do you want someone that’s going to be a warm, inviting sounding board? Do you prefer someone who offers the tough advice? Every partner is going to be different, and if you know that you work in a certain collaborative style, then you can pick the right partner — but you can also decide whether that type of relationship isn’t what you want right now. Maybe moving forward without outside investment is the best decision for you in the moment.

Discuss Their Involvement With Your Team & Hiring Decisions

A private equity partner is going to want to make sure you have the most talented, knowledgeable people on your team. Set expectations early about how that will impact hiring and the team they currently have.

“Human capital is also a major component PE firms are looking at. Skilled workers and experienced leaders are invaluable as they are seen as the driving force behind the success of the company,” explained Carolyn Collins, franchise fitness vice president of sales, Mitsubishi HC Capital America.

Communicate About the Type of Mentorship Available

“You should expect a good partner. Someone who will work with you through your problems and help guide organizational growth. This is someone you want to have a drink or coffee with,” Canarick said.

Set these expectations early. If you’re going to take on a private equity partner, know what that mentorship relationship will look like. What do you want to get out of it? Is that a main goal of pursuing private equity investment for you?

Determine Whether You Would Benefit From the Support

PE might be the right decision if you’re looking to tap into expertise that goes beyond your skill set. Private equity could open doors for you in terms of franchise knowledge, marketing skills, networking, and more. But you also have to be open to that advice. 

“A partner will look for open-mindedness to change and adapt. If they speak from experience, the entrepreneur should recognize they don’t know what they don’t know while, of course, upholding the values that made their business successful in the first place,” explained Canarick.

Reflect on Your Desired Exit Strategy

If you don’t have a desired exit strategy right now, then private equity investment might not be the right answer. They will want to see a return on their investment. If you plan on staying in this business without selling or going public, then there’s no incentive for them to put up their capital. Discuss this early so no one is put in a situation where the expectations don’t meet reality, and one party ends up frustrated or feeling as if they were not given a clear vision of the future.

The Reality of Private Equity Investment

Taking on a private equity partner not only means they’re investing in you, you’re investing in them. You’re entering a true partnership, where you’re able to tap into the wealth of knowledge, resources, network, and expertise that they have to offer, and they believe investing their capital with you is going to be worth the risk. It can be an incredible opportunity on both sides. But you both have to be aligned, and these discussion topics can help you find that alignment.

The post Is Private Equity Right for Your Fitness Business? appeared first on Athletech News.

The Beachbody Company, the subscription health and wellness company now doing business as BODi, has entered into a definitive securities purchase agreement with institutional investors for the purchase and sale of 543,590 shares at a purchase price of $9.75 per share in a registered direct offering.

The California-based health and wellness company says the closing of its offering is expected to occur on or about December 13, 2023. The offering is expected to generate approximately $5.3 million in gross proceeds to BODi, before placement agent’s fees and other offering expenses. BODi says it will use the net proceeds for general corporate purposes.

BODi will also issue to the investors warrants to purchase up to 543,590 shares of common stock, with an exercise price of $11.24 per share, which will be exercisable six months following the date of issuance and have a term of five and one-half years following the date of issuance.

The health and wellness platform has been in the midst of an ongoing strategy to restore the brand to its former glory, but it has proven to be a rocky road. The registered direct offering follows a reverse stock split the BeachBody Company instituted last month.

“We are confident that our recently developed turnaround plan will help drive profitability, free cash flow and help to increase our cash on the balance sheet,” said Mark Goldston, executive chairman, of last month’s reverse stock split completion. “In addition to the major cost savings program we have implemented, we are aggressively developing new programs to unlock incremental revenue opportunities.”

Goldston added that BODi’s execution of its “robust turnaround plan” will put the company on the right path to regain compliance with the New York Stock Exchange’s minimum closing price requirements and “drive long-term shareholder value.”

BODi posted its Q3 2023 results in November, showing a total revenue decline — $128.3 million compared to $166.0 million in the prior year period. Carl Daikeler, BODi’s co-founder and CEO, noted that for the remainder of the year, the company would be “intensely focused” on executing its sales and marketing initiatives.

Earlier this year, the company rebranded from The Beachbody Company to BODi. Around that same time, the company was hit with a class-action suit brought forth by a former Beachbody coach targeting its multi-level marketing structure. (The company denies the allegations and, in a statement to Athletech News, said it would “vigorously defend” itself against the suit.)

Most recently, BODi established a new effort to reward its high-performing network sales partners with special bonuses, which will begin in January 2024.

The company also named author, speaker and high-performance coach Brendon Burchard its chief growth and performance Advisor.

The post Beachbody Raises $5.3M Via Registered Direct Offering appeared first on Athletech News.

This article is part of ATN’s DISRUPT 2023 video series, which features key conversations with executives from the most successful brands in fitness and wellness. To watch more videos, click here

The general appetite for investing in fitness and wellness companies has cooled off quite a bit from its pandemic-era high, although the long-term prognosis for the space remains strong, according to industry experts. 

Speaking during Athletech News’ DISRUPT 2023 video series, three leaders in the private equity and venture capital spaces – Jon Canarick of North Castle Partners, Mark Grabowski of Snapdragon Capital Partners and Lance Dietz of KB Partners – gave their thoughts on the current landscape of the fitness and wellness market, including which sectors are best poised for growth despite a cloudy macroeconomic environment. 

The Fall of At-Home Fitness

Overall, the investors agreed there was too much buying in the fitness and wellness space during COVID, especially of at-home fitness companies, which has caused a lot of financial tumult and sent valuations tumbling in recent months. 

“There was way too much investing in the space by a factor of five, or something to that effect, particularly, of course, in the home fitness category,” Canarick said, noting that pandemic-era investments “were probably beyond the scale and scope of what was economically feasible for the category. As a result, you have billions and billions of dollars of burned capital that are underwater all throughout the home fitness part of the space.”

Confidence in at-home fitness companies during the pandemic likely reflected many investors’ predictions about what the long-term effects of the pandemic would be on people’s workout preferences. 

“I think there was overconfidence that this (was) a whole new world, people are all going to be working from home, there’s going to be more remote work, (and) people are going to want to now work out at home and not go back to the gym,” Grabowski said. 

Brick-and-Mortar Fitness Is Back

It’s certainly not all bad for the fitness and wellness industry post-pandemic. The flip side of the at-home fitness debacle is that in-person experiences are booming as people seek social interaction in gyms and studios.

“People had habits that they’re going back to,” Dietz said. “We think in-person experiences are very valuable to human nature so you see a lot of people going back to brick-and-mortar.”

Canarick agreed that we’re witnessing a “really strong recovery of brick-and-mortar fitness,” but he noted that hybrid fitness is likely here to stay as many consumers now prefer a blend of working out in person and at home.

“Peloton has had their fair share of challenges but they still have gained an enormous market share of monthly workouts,” Canarick said by way of example.

As people return to in-person activities, the concept of “community” is more important than ever, Dietz believes. Fitness and wellness businesses that are able to build products and services that foster connection are more likely to be attractive to investment firms in the current environment.

“It’s a buzzword at times, but it’s also one that I think has a meaningful impact on long-term value for the user experience,” Dietz said of the power of community.  

“Where community can address loneliness and the ability to be a bit healthier because you have people around you I think is a really interesting opportunity,” he added.

The Newcomers: Recovery, Fitness Trackers & Preventative Wellness

As for what areas of fitness and wellness could be targets for increased investment moving forward, the investors identified three sectors: recovery, health and fitness trackers, and preventative wellness.

Recovery tools are moving from the niche to the mainstream thanks to the direct-to-consumer success of companies like Hyperice and Therabody and the proliferation of modalities like cold plunge, infrared sauna and cryotherapy. 

Canarick expressed excitement about the growth potential of the recovery sector as tools once only available for professional athletes find their way into the hands of the masses, although he said there may be a cap on how big the market can get. 

“There’s still a question as to the size of that market from a profitability standpoint,” Canarick said of the recovery space.

Another hot category figures to be health and fitness trackers, driven by the sudden popularity of companies like Oura, Whoop and others. However, Canarick again urged some caution since it’s unclear whether trackers will be able to gain market share with non-fitness enthusiasts, which is still most of the population.

Grabowski believes the market for health and fitness trackers could really take off, especially as consumers increasingly embrace what he calls “preventative wellness” over traditional healthcare or sickcare. 

Trackers have the ability to reach consumers outside the athlete or weekend warrior population if they’re used to help everyday people track important health metrics, Grabowski noted.

“When you think of everything from blood testing to stool samples, there you’re actually addressing some different issues,” he said. “It’s not about, ‘Am I optimizing my workout performance?’ It’s about allergies, chronic issues, immune responses and other things that people are dealing with.” 

Long-Term Outlook Is Positive

Overall, while the market isn’t what it was pre-COVID or during the pandemic thanks to macroeconomic conditions and general global uncertainty, there’s still reason to be optimistic about the financial “health” of health, fitness and wellness, the investors believe. 

“I think almost universally there’s growth in consumer expenditure in health and wellness across multiple categories,” Grabowski said, noting that the industry as a whole is on an “upward trajectory” and most sectors are at or are approaching pre-COVID levels.

That’s not to say growth capital will be easy to come by, at least in the short term. To make themselves attractive investment candidates in the current fraught economic environment, fitness and wellness businesses will need to show they have executive teams who can adapt to change.

“If it’s not the pandemic, then it’s inflation. If it’s not inflation, you’ve got what’s going on geopolitically,” Grabowski noted. “So I think seeing senior management teams who have proven adaptability, there’s an even bigger premium. One-note players are not as backable.”

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F45 co-founder Rob Deutsch, who stepped down as CEO of the Mark Wahlberg-backed fitness franchise five years ago, has teamed up with The Yard Gym, an Australia-based boutique strength and conditioning franchise founded by Tiarne and Daniel Bova.

Happy to be back in the fitness game, Deutsch penned that after leaving F45 in 2019, he’s had “ZERO involvement” with the fitness franchise since, but noted he’s missed the camaraderie of a like-minded team and the fitness industry.

Deutsch will serve as a partner and strategic advisor to The Yard Gym in his new role. 

The fitness franchise currently has 18 locations, two of which are in the U.S., in the San Diego area. The Yard Gym plans to triple its location footprint in the short term,  according to Business News Australia. 

“I have been presented endless fitness concepts, with opportunities to invest, but one model stood out for me,” the F45 co-founder wrote. “One that truly aligns with my core values: It is The Yard Gym. In just 2 years of franchising, the Yard will have 50 franchises sold by year-end. We aim to ensure a strong future for our franchisees, trainers and clients. I am pumped to be joining this epic business.”

The Bova duo, a husband and wife team, founded The Yard Gym in Sydney, Australia, in 2020. Daniel is a fitness industry veteran from the F45 orbit, having owned and directed three F45 studios before launching his own fitness business.

The Yard Gym blends functional fitness, CrossFit and bodybuilding with group training sessions spanning Rig, a strength program, Turf, a cardio-based strength training and stamina session, Pay Day, a team-based resilience-building class that improves endurance and Mat Pilates, a 45-minute shaping and toning session.

“My vision for The Yard Gym has not changed,” Bova shared on Instagram as he announced the deal with Deutsch.

“Strong communities built on strong training foundations, giving our clients a second to none experience, day in day out,” he continued. “I am committed and driven on continuing to deliver the world’s most balanced strength and conditioning workout, backed by our incredible fit outs, technology, brand collaborations and social media presence. Driven by an incredible network of operators, I am beyond excited for the future. It is time to take this to the next level.”

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Mitsubishi HC Capital America, the largest non-bank finance service company, is expanding its fitness-focused franchise solutions into brick-and-mortar health and wellness franchises, including recovery and sports performance. The specialty finance company is also increasing its sales team with franchise expertise as it looks to push into other franchise areas. 

“We’ve been very successful in the fitness vertical and are excited to bring our 100% financing solutions to other franchise brands,” said Carolyn Collins, fitness franchise vice president of sales for Mitsubishi HC Capital America. “The combination of our financing capability with our franchise expertise and consultative approach has really driven customer relationships, especially with multi-unit franchisees.”

Brick-and-Mortar Is Back

Mitsubishi HC Capital America says its fitness franchise portfolio has tripled in annual volume since 2020, with over 14 national franchisor relationships and nearly 500 franchise and independent business customers funded.

While many club and gym owners look to integrate digital fitness offerings into brick-and-mortar locations, Mitsubishi HC Capital America firmly believes in-person fitness is fortified. In turn, the finance company says it’s more important than ever that a fitness operator offers a facility with state-of-the-art equipment, amenities and space.

Mitsubishi’s franchise division offers a total financing solution that encompasses  100% financing for tenant improvements such as construction, signage, lighting, equipment, opening inventory and business needs to meet brand standards. The finance solutions provider says it can update existing gyms or fill a new facility with equipment, recovery zones, lockers and more. Clients are provided with flexible options such as six-month post-opening deferrals and financing promotions throughout the year.   

Many of Mitsubishi HC Capital America’s franchise business has originated from its relationships with equipment manufacturers and vendors. 

“As an approved lender, we provide funding for equipment orders, which eliminates the need for upfront payment by franchisees,” Collins said. “Our backing is also a value-add for franchisors that allows them to grow their brand.”

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Third Space, a London-based luxury fitness lifestyle brand, has received £88.5 million ($107.4 million) to support the growth of its footprint and its team. The posh fitness brand is known for its opulence, having attracted high-profile clientele such as Prince Harry, David Beckham and Guy Ritchie.

Neo bank OakNorth and private investment firm Searchlight Capital Partners are leading the financing for the health club that launched in 2001.

Third Space’s portfolio includes eight clubs across London that are centered around group fitness classes with gym equipment and opportunities for personal training. Depending on the club’s location, some Third Space facilities boast swimming pools, climbing walls, altitude chambers, spas and medical centers.

The health club has reportedly signed a 25-year lease into the Bayswater development in London across three floors. 

Colin Waggett, Third Space’s CEO, noted that the health club is experiencing strong membership demand, with most clubs having to waitlist interested clients. He sees London residents eager to invest in their health and wellness, as indicated by their willingness to wait months for a chance to join Third Space.

“Our business sits at the heart of Londoners’ desire for health and fitness, authentic experiences and luxury service, and Third Space is uniquely positioned to meet these demands,” Waggett said. “We are pleased to have support from both OakNorth and Searchlight, and we look forward to opening more clubs in residential locations to complement our excellent central London sites and enhance member value, as we know that members like to use a club close to home and work.”

While it’s certainly a place to see and be seen, Third Space’s classes are wide-ranging from everything from strength training, sculpting, HIIT and spin. Other sessions satisfy the mind and body, with sound baths, Pilates, and several yoga formats. Boxing and dance are also available at the luxury fitness operator, as are expert nutritionists and personal trainers.

OakNorth’s senior director of debt finance, Deepesh Thakrar, commented on Third Space’s loyal clientele, calling it a “phenomenal brand” backed by the well-recognized KSL Capital.

“Over the past twenty years, Third Space has established itself as a true leader in London’s burgeoning health market,” said Oliver Haarmann, Founding Partner at Searchlight.

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Broad Fit Financial LLC has officially launched to provide financing for businesses acquiring fitness and related equipment. 

The women-owned equipment finance company offers full-service financial solutions for the health, wellness and fitness sectors, serving the needs of large enterprises and independent gyms.

“Broad Fit Financial is singularly focused on providing financing solutions that enable businesses in a variety of settings to acquire the fitness and related equipment necessary to offer wellness to their end users,” said Broad Fit Financial president and co-founder Stephanie Taylor. “We recognize the unique financial challenges that businesses face when seeking to procure this type of collateral and have tailored our services to support these specific needs. We bring knowledge, experience and a commitment to supporting the fitness industry.”

Taylor has over 15 years of experience in the sports, health and wellness industries, including at Cybex and Macrolease, before founding Broad Fit Financial in 2022. What came next was a year spent building a robust customer-serving infrastructure to best meet the needs of clients, with a focus on software and speed. 

“As a result, we were able to enter the market with impressive capabilities in terms of tech, capacity and ability to efficiently serve the fitness industry,” Taylor explained. “Since our soft launch in June, we’ve quickly established ourselves as the go-to source of funding for roughly 50 plus equipment distributors throughout the U.S.”

The U.S. fitness industry is forecast to generate over $30.8 billion in revenue nationwide in 2023 amid an increased interest in health and wellness, and Broad Fit Financial is ready to serve the demand. 

The independent fitness equipment finance company serves markets including real estate, commercial office buildings, homeowner associations, apartment communities, senior centers, hospitality, country clubs, non-profits, municipal entities, colleges and universities, professional sports, corporate wellness programs, and traditional for-profit gyms.

As Daniella Douglas, Broad Fit Financial’s vice president and co-founder points out, what distinguishes the firm is its skilled team’s cumulative professional experience in vendor, lender and end-user positions. 

“This invaluable insight provides us with a deep understanding of the challenges our partners face when it comes to equipment financing and how best to support them,” Douglas said.

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Some of the biggest names in sports are investing in the wearable company Whoop amid a global pandemic.

The fitness tracking company announced Wednesday it closed a $100 million financing round, valuing it at $1.2 billion. 

The latest round of investors includes Super Bowl MVP Patrick Mahomes, champion golfers Rory McIlroy and Justin Thomas, Arizona Cardinals wide receiver Larry Fitzgerald and two-time NBA Finals MVP Kevin Durant (via his business venture ThirtyFive Ventures).

Whoop makes fitness trackers that… READ MORE @ CNBC

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