Issue No. 229: Glow Up

Beauty is in the eye of the beholder, and so is wellness.

Looking Good

The largest segment of the wellness economy, “personal care & beauty” makes up ~20% of a four trillion-dollar industry.

A focal point, appearance is a priority for today’s wellness consumer — 47% of shoppers made an appearance-related purchase over the past year, per McKinsey.

Beyond aesthetics alone, demand for anti-aging and wellness-boosting services is fueling a new take on a spa day.

The global medical spa market is projected to increase from $18.6B in 2023 to $49B by 2030.
80% of consumers plan to maintain or increase spending on spa services, according to Mindbody.
Jobs in the personal care services industry are expected to grow 8.1% between 2020–2030, outpacing average employment 5x.

Getting back to business, spas and salons returned to pre-pandemic sales levels faster than gyms and studios — fueling a wave of funding for wellness booking platforms.

A step further, combining medical-grade therapies with high-end amenities, med spas boomed as personal care became synonymous with self-care.

Now, because consumers want to look and feel good, spas are evolving to include longevity science and preventative care.

Fresh-Faced

With the cosmetic dermatology sector set to reach $129B by 2028, brands are scaling up to cash in.

Jun ’22: Ever/Body landed $55.5M to expand its network of tech-driven clinics.
Dec ‘22: Skincare service provider Heyday added $12M for franchise growth.
Jan ’23: Glowbar raised $10M to provide fast, clinical-grade facials.

Moving in, private equity firm KKR bought a minority stake in SkinSpirit (the largest provider of Botox and filler in the US), and V/O Med Spa also secured PE backing.
Attracting new clientele, women currently account for 88% of med spa visits, but men could make up 30% of the market by 2030, with millennial men driving significant growth.

Forever Young

As the quest to cure aging continues, the lines between beauty, wellness, and longevity are blurring.

Oct ’21: Hybrid aging wellness clinic Modern Age banked $27M.
Dec ’22: Fountain Life raised $15M for preventative health scans.
Jan ’23: Anti-aging franchise Serotonin Centers nabbed $6.5M.

According to Modern Age CEO Melissa Eamer, simply feeling younger can impact how long you live:

“If you feel younger, you are more active, more engaged in your community, you take better care of what you eat and how much you sleep. It’s a flywheel that reinforces positive outcomes.”

Already sold, Gen Z and millennials start focusing on proactive wellness at 22 and 26 years old, respectively.

Taking notice, companies like Restore Hyper Wellness put a new spin on med spas by offering skincare and facials alongside IV drips, saunas, and cold plunges.

Next up, from Botox and peptides to hormone replacement and weight loss prescriptions, expect to see more one-stop wellness shops emerge.

Looking ahead: To be clear, obsessing over skin-deep imperfections—made worse by our addiction to social media and Zoom dysmorphia—is the antithesis of well-being.

But improving our aging journey, assuming the interventions are safe and effective, could have a profound effect.

In the meantime, as consumers pursue wellness in all its forms, brands will be quick to follow, launching products that appeal to mind, body, soul… and vanity.

🎙 On the Podcast

CorePower Yoga CEO Niki Leondakis shares how the nation’s largest yoga chain navigated the pandemic and road to recovery, plus plans for future growth.

We also cover: bringing strength training to yoga, infusing hospitality into boutique fitness, and why IRL community is irreplaceable.

Listen to today’s episode here

📉 Tonal sees valuation cut in new funding round

The smart gym maker raised $130M from existing investors, including L Catterton.

But… burning cash amid slowing demand, the down round trimmed the company’s valuation from upwards of $1.9B to ~$600M.

Shaking up the C-suite, founder Aly Orady is stepping down as CEO. Tonal president Krystal Zell is taking over the top spot, while Orady will stay on as CTO.

Hard gains. As we detailed in Issue No. 221, connected fitness companies are facing headwinds in a post-pandemic world.

Attempting a turnaround, Peloton’s market cap has fallen to $4B from $50B in 2021.
After canceling its IPO, NordicTrack parent iFIT had its valuation cut by 60% in a 2022 funding round.
lululemon is “pivoting away” from hardware after spending $500M to acquire workout screen maker MIRROR.

For its part, despite raising $615M to date, a series of operational miscues have stifled Tonal’s progress.

Now, like the rest of the smart equipment category, Tonal will have to shift from a growth-at-all-costs mentality to a disciplined pursuit of profitability.

TBD. Complicating matters, some of tech’s biggest names are undergoing layoffs of their own, meaning the list of would-be acquirers for companies like Tonal is shrinking.

Punchline: Easier said than done, having secured a lifeline with the latest traunch of capital, the company’s future now hinges on its ability to execute efficiently.

💸 Snapdragon Capital puts $30M into Xponential franchisee

A founding investor in Xponential Fitness, private equity firm Snapdragon Capital Partners invested $30M into Spartan Fitness Holdings.

One of Xpo’s biggest franchisees, Spartan owns 60 Club Pilates studios, making it the brand’s largest operator.

Of note, Spartan also operates beauty and wellness franchises, including Hand & Stone and V/O Med Spa.

Platform play. With Snapdragon’s investment, Spartan CEO David Schuck said the company plans to add additional health and wellness concepts to its portfolio:

“Their investment will accelerate our expansion as we build the market-leading multi-brand health & wellness franchisee platform.”

Run it back. Leaving TPG Capital to start Snapdragon, managing partner Mark Grabowski teamed with Club Pilates owner Anthony Geisler to create Xponential Fitness in 2017.

Since its inception, the boutique fitness holding company has acquired 10 concepts, including CycleBar, Row House, Pure Barre, and Rumble.

After going public in 2021, Xpo has steadily climbed, recently surpassing $1B in systemwide sales.

Double-dipping. As the largest backer, Snapdragon has been selling off Xponential shares. With the coffers full, the investment in Spartan hints at the firm’s next act.

In addition to reaping the benefits of a successful Club Pilates franchisor, bankrolling Spartan opens the door to beauty and wellness concepts not housed under the Xpo banner.

Looking ahead: Whether it’s Snapdragon, Sparta, or someone else, the opportunity to create an Xponential Fitness-like holding co. of emerging wellness concepts beyond boutique studios is prime for the taking.

📰 News & Notes

Peloton syncs with Samsung Galaxy Watches.
Digital fitness platform Xponential+ hits LG TVs.
US pours $300M into Alzheimer’s research project.
Fitt Jobs: Discover the top job openings in health & fitness.
Wellness credit card Ness names JVN chief self-care officer.
Chipotle wins court victory against sweetgreen’s burrito bowl.
Ayble Health launches holistic coaching app for GI conditions.
Anytime Fitness taps predictive analytics for always-on coaching app.
Walmart reserves 125K free pickleball sessions through Break the Love.
EōS Fitness acquires Texans Fit gym chain from fitness industry vet Mark Mastrov.

💰 Money Moves

Tonal, a connected strength equipment company, added $130M in a funding round co-led by L Catterton, Cobalt, Dragoneer, Kindred Ventures, and THVC.
Oshi Health, a virtual GI disorder care platform, raised $30M in a Series B round led by Koch Disruptive Technologies.
More from Fitt Insider: Gut Care
Nestlé acquired a minority stake (49.95%) in Germany-based meal replacement startup yfood for €215M ($234M).
Human longevity company Tally Health secured $10M in a seed round led by Forerunner Ventures.
Berlin-based period tracking and reproductive health startup Clue raised €7M ($7.6M) in new funding.
Javelin Sports, a Canadian recreational sports management app, landed C$1M ($740.5K) in new funding.
Spartan Fitness Holdings, the largest franchisor of Club Pilates studios, landed $30M from Snapdragon Capital.
Better-for-you frozen meal brand Counter launched after raising $1.2M in seed funding.
Functional food & bev company NextFoods acquired performance beverage Cheribundi and merged it with gut health brand GoodBelly.
Felix, a Canadian everyday health platform, closed C$18M ($13.3M) in a Series B round.
Alt-seafood company Aqua Cultured Foods raised $5.5M in a seed round led by Stray Dog Capital.
Precision cardiac care startup HeartFlow closed a $215M Series F round led by Bain Capital Life Sciences.
AI-powered aged care platform Clearday merged with SPAC Viveon Health Acquisition Corp.
More from Fitt Insider: Robots Take on Eldercare
Pear Therapeutics, makers of digital therapeutics for substance use disorders, filed for Chapter 11 bankruptcy protection.
Hemp extract company Charlotte’s Web formed a joint venture with botanical drug discovery firm AJNA BioSciences, with British American Tobacco acquiring a majority stake for $10M.
Psychedelic therapeutic maker Clearmind Medicine closed a $3.5M public offering.
Canadian AI-enabled skincare company Omy Laboratoires raised C$11M ($8.1M) in a funding round.

Today’s newsletter was brought to you by Anthony Vennare, Joe Vennare, and Ryan Deer.