Issue No. 170: Healthcare-Funded Fitness

The gym is being unbundled. Exercise seekers are opting for hybrid workouts. In turn, fitness operators are scaling up omnichannel offerings.

Now, beyond digital and in-person, a new bundle is taking shape. Backed by employers and insurance providers, brands are eyeing opportunities in healthcare-funded fitness.

The Latest

Digital fitness app FitOn secured $40M in new funding. More interesting, the company is acquiring corporate wellness platform Peerfit.

For context: Founded in 2019, FitOn has raised $70M to date, including $18M in October 2021.

The app’s “freemium” model offers a variety of workouts, including yoga, dance, cardio, and strength. A paid membership unlocks perks, from music to meal plans and more.

Leveraging star power, the app features celebrity trainers Halle Berry, Lindsey Vonn, Julianne Hough, and Jonathan Van Ness, among others, fueling growth to 10M+ users.

Combining forces. Partnering with insurers and employers, Peerfit is a flexible fitness benefit. Having previously raised over $45M in funding, the company provides members access to gyms, studios, and digital services.

Of note, Peerfit counts more than 13K corporate customers and partnerships with major health plans like Aetna and Cigna, as well as a foothold in the Medicare space.

Expanding on two fronts, FitOn’s acquisition of Peerfit opens the door to corporate wellness and omnichannel fitness. If all goes according to plan, employers and health plans will subsidize FitOn memberships, and users can access digital programs or in-person gym visits.

Corporate Interests

A growing opportunity, the global corporate wellness market is expected to surpass $94B by 2026.

A convergence of trends, as the Great Resignation rolls on amid rising healthcare costs, employee well-being is a top priority.

Taking notice, fitness companies are cozying up to employers and health plans.

Mindbody-owned ClassPass has ramped up its corporate wellness efforts, partnering with more than 2K employers.
With a network of 50K gyms/studios, corporate well-being platform Gympass secured $225M at a $2.2B valuation in 2021.
Last year, Peloton and Apple Fitness+ both partnered with UnitedHealthcare, gaining access to the insurer’s 4M members.

Pivoting during the pandemic, human performance company Exos launched Exos Fit, a digital platform featuring virtual coaching and content. Working with nearly 30% of Fortune 100 companies, the operator’s omnichannel strategy is evolving to help employees perform their best.

More recently, digital personal training app Future has scaled up its enterprise sales operation. And in-home/on-site personal training company GYMGUYZ expanded its corporate wellness offering to accommodate remote workers.

Work in Progress

Since the onset of COVID, employers and employees have acknowledged the importance of wellness, taking steps to prioritize overall health.

According to Gartner, 46% of organizations increased their well-being budgets in 2020.
McKinsey found that 79% of consumers now believe wellness is important, and 42% said it’s a top priority.
In lululemon’s 2022 Global Wellbeing Report, 40% of respondents indicated they required increased mental and physical support from their employers beyond the pandemic.

But… Looking closer, Gartner found that, although 80% of organizations offered programs related to physical activity, only 32% of employees used them.

Closing the engagement gap, new models are emerging to incentivize physical activity while employers and health plans pick up the tab.

Charge it. As you’ll hear in today’s Fitt Insider Podcast, Paceline, a rewards platform and wellness credit card, envisions a world where insurers pay people to work out. Meanwhile, Ness—launching this year—allows cardholders to earn points for health-related purchases.

Connected health. For years, insurers and employers have offered health and fitness tracking wearables to mixed results. While incumbents may be slow to adapt, device makers from Apple and Amazon to WHOOP are pushing into healthcare, hoping to quantify and bolster healthy habits.

Aging well. Focusing on fitness for older adults, Balance recently raised $6.5M and hopes to work with Medicare Advantage. Similarly, Bold is providing workouts for seniors where health plans foot the bill. And holistic well-being platform Mighty Health allows doctors to refer patients at a discounted cost.

Looking Ahead

Revisiting Issue 122, as the gym gets unbundled, exercise is moving beyond the four walls of the gym. As a result, omnichannel fitness is expanding to include in-person, at-home, outdoors, retail partnerships, enterprise deals, healthcare-funded subsidies, and more.

The hope? By increasing access and incentivizing physical activity, everybody—from operators and consumers to employers and health plans—wins. A victory would curb obesity rates and reduce healthcare costs.

But for now, brands are busy building new fitness bundles as the bridge between exercise and healthcare takes shape.

💵 Cash-Back Fitness

Inactivity is skyrocketing. There’s no shortage of gyms and connected fitness options, but motivation is often in short supply. Enter: the rise of move-to-earn.

On the Fitt Insider Podcast: Paceline founder and CEO Joel Lieginger joined us to discuss incentivizing physical, mental, and financial health through a fitness rewards platform.

We also cover: launching the world’s first health & wellness credit card, boosting conversion rates for brand partners, and transforming the insurance industry as we know it.

Listen to today’s episode here.

🔥 Bust a Move

Dance fitness is going digital.

Take it back now y’all. Pre-pandemic, dance studios were all the rage. Between Jazzercise classes and dance cardio workouts, exercisers across the world were breaking it down.

For decades, Zumba Fitness inspired millions to move with Latin-inspired dance classes. The program licensed thousands of instructors and grew a robust merch line, raising the company’s valuation to a rumored $500M in 2012.

Another iconic dance workout, Richard Simmons described the magic behind his legendary Slimmons Studio:

“I put a spell on people so they don’t know they’re working out… where they just don’t think about it, or overthink it, and then at the end they go, ‘Wow, I feel good.’”

Twist and work out. Indeed, for those who find regular exercise dull or difficult, dancing offers an attractive alternative to getting fit, with an added bonus of creative expression.

But in 2020, COVID hamstrung studios. Leases were dropped, closures enforced, and crucial channels of income were wiped out practically overnight. After peaking at $4.2B in 2019, the dance studio market fell sharply to $3.4B.

Pivoting to virtual, instructors looked to translate IRL studio energies into URL. After a shaky start, improvised livestreams and glitchy Zooms have given way to full-blown virtual dance platforms:

Dancers and trainers have scaled their own unique programs: see Megan Roup’s Sculpt Society and Katia Pryce’s DanceBody.
joyn champions joyful movement for all, and FORWARD_Space promises “a euphoric hybrid” of cardio dance, athletic training, and moving meditation.
Dance Church has amassed a grassroots following through its digital Sunday morning classes, raising $4.7M last October.
STEEZY, a subscription dance platform, grew 5x during the pandemic. Last year, it added ballet, contemporary, and jazz.

Taking an omnichannel approach, Xponential Fitness acquired Anna Kaiser’s AKT in 2018, signing over 100 brick-and-mortar franchise agreements while building out its AKT GO digital platform.

Pivoting during the pandemic, 305 Fitness spun up its digital subscription and an instructor certification program. Now, in addition to physical studios, CEO Sadie Kurzban said the brand is benefiting from two additional revenue streams.

Punchline: TikTok has launched dancing into the mainstream, and many are also seeing its potential for fitness. As loneliness, depression, and inactivity peak, digital dance workouts are offering an expression of joy, fostering communities that move for the fun of it.

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😌 Alo’s Metaverse Retreat

Alo Yoga is entering the metaverse, launching an immersive yoga and wellness experience on Roblox. The virtual island, named Alo Sanctuary, was developed with mental well-being in mind.

On-screen avatars navigate the island while a sound bath-style audio track plays.
Users can access meditation retreats and daily yoga content from the Alo Moves fitness platform or shop the virtual storefront.
For every user that completes a mindful movement quest, Alo will donate to real-life mental health initiatives.

Combining gaming and mindfulness, it’s one of a growing number of virtual installations bringing digital wellness to the metaverse.

🌿 Work and Wellness

While America’s corporate world scrambles to add wellness benefits to address employee burnout, Salesforce just upped the ante with a multi-year lease of a 75-acre retreat center.

The ranch, situated in a California redwood forest, is being called a “work-and-wellness center” — a place for the software giant’s 75,000 employees to recharge.

Features include:

A yoga sanctuary and mindfulness spaces
Multiple outdoor amphitheaters and gathering places for social bonding
Miles of hiking trails, a private pond, and countless fire pits
A cafeteria sourcing sustainably, locally sourced meals

An epic combo of health and well-being trends, Salesforce is embracing mindfulness, unplugging, and the great outdoors as a treatment for a decimated workforce.

👀 This Week at Peloton

After founder John Foley relinquished the CEO role, Peloton’s new chief executive Barry McCarthy said selling the connected fitness company is off the table.

Despite pressure from activist investor Blackwells Capital, and interest from the likes of Nike and Amazon, McCarthy told the Financial Times he didn’t join Peloton to oversee a sale, adding:

“There are lots of other things I could be doing with my time that are quite lucrative than hanging out with a business that’s about to be sold.”

Changing gears. As for where the embattled company goes from here, McCarthy hinted at new product lines and a revamped pricing structure that could impact the $39/month subscription fee.

Be on the lookout: FT confirmed rumors that Peloton would launch a rower, adding the tablet-equipped machine featuring in-studio and on-the-water classes could launch in May. The company’s Tonal rival, a strength product known as Project Cobra, is also under development.

The big picture: Eyeing a turnaround, and with Foley’s backing, McCarthy plans to leverage the company’s content and community to improve margins and fuel growth.

📰 News & Notes

US diabetes deaths top 100K two years in a row.
Fitt Jobs: Over 900 dream jobs in health & fitness.
Startup Q&A: MindLabs CEO Adnan Ebrahim on digital happiness.
NOBULL enters performance running, launching shoe and run club.
OliveX partners with Marvel for immersive metaverse fitness games.
hims & hers launches supplements for stress, sleep, and brain health.
Digital health company Thirty Madison merged with telehealth startup Nurx.
Race participation through RunSignUp grows 21.6% in 2021, still down from 2019.

💰 Money Moves

FitOn, a digital fitness platform, raised $40M in a Series C round led by Delta-v Capital, with participation from Accel, Mantis VC, and others.
Personalized supplement startup Elo secured $5M in seed funding from Will Ventures and a long list of founders, including Oura co-founder Petteri Lahtela and Outside CEO Robin Thurston.
Balanced, a digital fitness app for older adults, raised $6.5M in a seed round co-led by Founders Fund and Primary Venture Partners.
Digital health startup Epicore Biosystems, makers of a biometric sweat patch, secured $10M in an oversubscribed Series A round.
Telehealth company Ro raised $150M at a $7B valuation and launched a teledermatology service, Ro Derm.
Reveri, a digital platform for self-hypnosis, closed a $1.8M seed round.
Psychedelics biotech startup Mindstate Design Labs secured $11.5M in a seed round led by Initialized Capital.
More from Fitt Insider: Psychedelic Wellness
Oath, a subscription-based maternal and pediatric care platform, added $6M in new funding.
Corporate wellness SaaS company LifeSpeak acquired digital corporate wellness platform Wellbeats for $92.5M.
BARCODE, a functional sports beverage, closed a $2.2M funding round from Trousdale Partners, Erewhon Market, and others.
More from Fitt Insider: The Rise of Functional Beverages
Bodymatter, makers of a sleep-tracking wearable called SleepWatch, landed ~$3M in seed funding.
UK-based personalized supplement brand Vitl added £6.2M ($8.4M) in new funding.
Outdoors startup Sēkr, creators of a crowdsourced campsite discovery platform, landed $2.25M in seed funding.
More from Fitt Insider: The Outdoor Economy
PunchLab, a Rome-based digital martial arts training platform, closed an €840K ($957.7K) funding round.
Altis, maker of AI training software and console, raised $7M in a seed round.
Indian health and wellness company Cult.fit acquired F2 Fun & Fitness India, becoming the master franchiser of Gold’s Gym locations across India.
More from Fitt Insider: Cult.fit’s Acquisition Spree
Train Fitness, creators of a fitness-tracking app designed for anaerobic exercise, raised $540K in pre-seed funding.
Splendid Spoon, a plant-based meal delivery service, secured $12M in a Series B round led by Nicoya.
Singapore-based alt meat company Next Gen Foods secured $100M in Series A funding to scale its TiNDLE plant-based chicken product in the US.

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