Issue No. 163: Year-End Review

As 2021 comes to a close, today, we’re looking back at key developments from the year that was.

Then, next week, we’ll share our annual outlook for what’s next in fitness and wellness.

Let’s get into it!

Unbundling the Gym

Back to business? Last year, gyms and studios struggled. In 2021, they hoped to rebound.

A bright spot, this summer, gym visits were on the upswing. By fall, Planet Fitness, Crunch Fitness, and Xponential Fitness saw memberships near pre-pandemic levels. More good news, ClassPass data shows in-person fitness bookings increased 329% this year.

But, as the Omicron variant surges, gyms aren’t out of the woods. A setback, SoulCycle once again requires masks during class. Taking no chances, NYC-based Fhitting Room temporarily closed its studios.

Back to reality. COVID-era lockdowns created a connected fitness frenzy, but the pandemic bubble may have burst.

Investment activity kept pace, as Tonal ($250M), Tempo ($220M), FightCamp ($90M), and others added new funding. Consumers, however, are losing stamina.

A proverbial canary in the home gym, Peloton has seen sales and engagement slow.

More red flags: Beachbody and Nautilus also saw growth stall, lululemon cut MIRROR’s 2021 sales forecast in half, and equipment maker iFIT postponed its public offering.

Related fitness headlines:

• iFIT acquired Kayla Itsines’s SWEAT app for $300M.
• Mindbody acquired ClassPass, combining two billion-dollar brands.
• Peloton, Freeletics, Ergatta, Playpulse, Capti, and others tapped gaming.
• Meta (Facebook) acquired VR fitness platform Supernatural for a reported $400M.

TBD. Prioritizing convenience and personalization, consumers are in the driver’s seat. At home or in person, brands are rethinking their value proposition.

WFH Wellness

The Great Resignation. After nearly two years of uncertainty, workers are calling it quits. Hoping to attract and retain talent, employers are prioritizing workforce well-being.

The result? From mental health to musculoskeletal (MSK) care and fitness, corporate wellness is an increasingly competitive and lucrative sales channel — one that’s expected to reach $94B by 2026.

Peace of mind. As employers confront record levels of burnout, B2B mental health startups are suddenly worth billions. See: Cerebral ($4.8B), Lyra Health ($4.6B), Spring Health ($2B), and SonderMind ($1.1B). Moving beyond mindfulness, Headspace merged with Ginger to create a $3B mental healthcare company.

Pain point. Chronic pain and injuries stemming from MSK conditions have created a trillion-dollar market. Selling through employers and health plans, movement health startups are cashing in — Hinge Health is worth more than $6B, SWORD Health is valued north of $2B, and Kaia Health raised $75M this spring.

Pump it up. As competition and acquisition costs increase, fitness brands are also targeting employer-subsidized growth. Peloton announced its B2B offering this summer. Personal training app Future is scaling enterprise sales. And, after paying its own employees to sleep more, WHOOP is moving into workplace wellness.

Bringing together gyms, studios, and apps, corporate well-being aggregator Gympass was valued at $2.2B in a $220M funding round this summer.

High-Performance x Health

Precision wellness. Picking up where biohacking and the quantified self left off, high-performance health is pushing the limits of wearables, home diagnostics, and personalized well-being.

Paradigm shift. As the billion-dollar fitness wearables market intersects with the trillion-dollar healthcare sector, the sector has shifted from step counting to health monitoring.

Tracking REM sleep, heart rate variability, and blood oxygen levels, WHOOP and Oura secured new funding this year, adding $200M and $100M, respectively. Moving in, Big Tech sees wearables as a wedge into healthcare, with Apple, Amazon, and Google all doubling down.

DIY diagnostics. From food sensitivity to fertility and the microbiome, at-home test kits are in high demand. Seizing the opportunity, Everlywell raised $250M, notching a $3B valuation and rebranding to Everly Health. Similarly, LetsGetChecked landed $150M at a $1.5B valuation.

Pursuing personalized nutrition via at-home tests, ZOE secured $53M in funding. Plus, startups like Vessel, Vivoo, and Dieta Health added investments for urine and stool tests.

Rest and recovery. A counterpoint to hustle culture, recovery has become a big business. Wearables like WHOOP are championing “readiness.” Expanding their platforms, Hyperice acquired Core and Therabody bought PowerDot. Aiming to improve sleep fitness, Eight Sleep raised $86M.

A different approach, recovery studios, including Restore and Pause, are attracting investments as they scale up.

Metabolic Health

Weight of the world. As rates of obesity and diabetes reach all-time highs, startups are hoping to make an impact and profit. In particular, 2021 was the year of digital weight management and continuous glucose monitoring.

Diet tech. Digital weight loss platforms have seen rapid growth, with Calibrate raising $122M and Found netting $124M this year. Focusing on diabetes reversal, Virta Health raised $133M at a $2B valuation. And Noom closed $540M, valuing its digital health coaching and diet app at $3.7B.

CGM. Helping move metabolic health into the mainstream, continuous glucose monitoring startup Levels added $6M in funding at a $300M valuation. In a flurry of activity, Supersapiens, January AI, and Veri also secured investments as they pushed into the space.

A New Era of Recreation

Ending inactivity. Promoting physical activity for all—not fitness for some—should be a top priority. A silver lining of the pandemic, a return to nature and outdoor recreation is gaining momentum.

Hit the trail. Approaching $1 trillion in value, the US outdoor recreation economy saw record levels of hiking, camping, and national park visits during the pandemic. Leveraging technology to increase access, AllTrails secured $150M in funding, Hipcamp (the “Airbnb of camping”) closed $57M, and media company Outside secured $150M.

The endurance economy. According to Strava’s annual report, running and cycling have never been more popular. As endurance intersects with broader trends in digital fitness and the rise of the quantified athlete, expect endurance tech to produce multiple billion-dollar exits.

The Recreationalist. Beyond activities like biking and hiking, organized games and social experiences are on the rise. For example, participation in pickleball has jumped 21% since 2019. Internationally, pickleball’s cousin padel has followed a similar arc toward 12M+ players and a $600M market.

On deck: We covered a lot of ground this year. While this was our best attempt at distilling 52 weeks’ worth of newsletters into key themes, be sure to tune in next week for the forward-looking trends report.