Today, we’re taking stock of recent earnings reports, trends, and developments to see where fitness operators stand.
The return to IRL exercise continues its upward trend.
Riding the momentum, emboldened operators like Planet Fitness CEO Chris Rondeau believe gym life is back and better than ever:
“More of our members are working out more frequently, previous members are rejoining at a faster rate than they did pre-pandemic, and they’re staying longer as Q2 was our eighth straight quarter with lower year-over-year cancellation rates.”
By the numbers. Looking closer at the performance of Planet and its publicly traded peers, the Q2 2023 results speak to this sentiment.
- $PLNT: reached 18.4M members, 2,472 locations, and grew revenue 27.6% to $286.5M.
- $LTH: topped 790K members, 164 locations, and increased revenue 21.8% to $561.7M.
- $XPO: revenue was up 30% to $77M while selling 234 franchise licenses and opening 144 new studios.
Dollars and cents aside, earnings transcripts reveal what’s on the mind of industry execs.
Youth movement. As we detailed in Issue No. 240, Gen Z might reshape fitness — and the effects are already being felt. Courting a younger demo, Planet Fitness offers free summer access to teens, garnering 2.8M sign-ups this year. A pipeline to paying customers, the gym chain said it converted 600K new members (both kids and parents) from last year’s program.
Losing it. While anti-obesity drugs raise red flags over health concerns and prescription practices, their popularity also poses an existential threat to fitness and nutrition companies.
Asked about the impact, Life Time CEO Bahram Akradi said it’s not affecting sign-ups since members join for the social, country club aspect, not weight loss alone. But, Akradi added that long-term use, including muscle loss is a “detriment” to health.
Going global. Xponential Fitness joins a growing number of brands exporting boutique workouts. Having recently signed a master franchise agreement (MFA) to enter France, the company now has a presence in 19 countries outside North America.
In the coming years, CEO Anthony Geisler said there are 50 countries where each of its 10 brands could sign an MFA, pushing international studios to 25% of new openings. Meanwhile, Barry’s is getting back into expansion mode, adding studios in Israel, Bahrain, and Egypt.
Bridging the gap. Linking fitness and healthcare, equipment makers Technogym and EGYM want to chart a new course for the industry. Touting exercise as preventative care, Technogym CEO Nerio Alessandri envisions a future where “doctors will prescribe patients an hour of Technogym per day.” Similarly, EGYM CEO Philipp Roesch-Schlanderer said his company is committed to enabling prescription workouts to target the healthcare market.
TBD. With Peloton slated to report earnings later this month, we’ll be watching to see how its newly launched app-first strategy plays out. If other brands are any indication, the market for equipment/digital content makers is rough — publicly traded Nautilus and BODi (fka Beachbody) continued their backslide while CLMBR and lululemon’s MIRROR became the latest connected fitness companies to conduct layoffs.
Looking ahead: The resurgence of community-focused, social experiences meant to bolster overall health bodes well for the return to in-person fitness. But, more than celebrating member counts or franchise agreements, the industry’s ability to help curb inactivity and combat chronic illness should be the real measure of success.
🎙 On the Podcast
Magic Spoon co-founder & co-CEO Gabi Lewis discusses combining better-for-you ingredients with childhood nostalgia.
We also cover: “reinventing” cereal, omnichannel retail, and the pitfalls of influencer marketing.
Listen to today’s episode here
💉 The obesity drug arms race ramps up
Digital health company hims & hers plans to launch a weight management platform by year’s end — including prescription injections and behavior change plans.
Weighing in. In May, CEO Andrew Dudum said questions around insurance coverage, supply chains, and long-term usage gave him pause about entering the space. But, consumer demand and industry competition for the $77B global obesity therapeutics market lured hims from the sidelines.
Arms race. Despite concerns, the traditional diet industry is being upended by GLP-1s.
While Calibrate and Found have raised hundreds of millions to scale dual behavioral and prescription-based approaches to weight loss, hims joins multi-discipline telehealth platform Ro in rolling out anti-obesity meds.
Another approach, WeightWatchers and Noom recently entered pharmaceuticals, signaling a shift among the formerly diet-focused brands. Of note, after reviving Jenny Craig from bankruptcy, its new chief executive is also “watching” how GLP-1s impact the industry.
Fix-all? New data from a five-year Novo Nordisk trial shows the FDA-approved weight-loss shot Wegovy also reduces risk of heart attack and stroke. The revelation puts added pressure on private insurers to foot the bill for obesity patients, which drugmakers hope will open the door to eventual Medicare coverage.
Meanwhile, a less-intrusive pill form of Ozempic is making its way to market, meaning demand for the drugs is only going up from here.
But… miracle drugs don’t come without downfalls. Patients are suing over side effects, the UK is investigating reports of suicidal ideations after use, and the need for lifelong injections is a problem, no matter who pays.
Punchline: Even if weight loss drugs are 100% safe, addressing the obesity epidemic isn’t as simple as prescribing a pill. Pharmaceuticals hold promise as part of a solution, but freely dispensing drugs (with or without a prescription) risks replacing the role of proper nutrition and adequate exercise.
Healthcare is broken. TrueMed wants to fix it.
Did you know… Consumers can use tax-free HSA/FSA accounts to purchase qualifying items like healthy food, supplements, and exercise equipment.
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While customers save money on their favorite healthy products, merchants are benefiting too — one leading supplement brand had retention rates increase by 41% and AOV rise by 20% thanks to TrueMed.
Attn: health & wellness brands. Ready to enable HSA/FSA spending on your website? Visit TrueMed to get started.
🚨 The mental health crisis worsens
New studies from The Lancet Psychiatry and Blue Shield of CA reveal sobering stats about the state of mental health around the world.
- 50% of people will develop at least one mental disorder in their lifetime.
- 87% of Gen Z youth say they struggle with mental health.
- Top reported disorders are depression, anxiety, phobia, and PTSD.
Coming of age. According to WHO data, mental disorders most commonly arise in childhood, adolescence, or young adulthood — making the formative years primetime for intervention.
Citing issues like gun violence, social injustice, climate change, and job availability as major sources of stress, Gen Z is searching for healthy ways to cope.
- A quarter of young people turn to social media for mental health support.
- 35% of Gen Zers engage in self-help habits like meditation and exercise, while 93% practice self-care through music and entertainment.
- And while 22% of young people had tried therapy, 61% reported barriers to access.
Systemic risk. At the crux of the crisis is a nationwide struggle to meet demand for treatment — including a provider shortage, unequal access to care, and lack of insurance coverage.
Making matters worse, mental illness in America is akin to a jail sentence, with sufferers 10x more likely to be incarcerated than treated. And even with fast-tracked CBT counselors, psychedelics, and digital therapeutics in the mix, there’s no guaranteed solution in sight.
Takeaway: The scope of the mental health crisis is beyond the ability of a single sector to solve. Unwinding the cycle will require government, healthcare, Big Tech, and more to work together on upstream interventions, paying special care to prevention among young people.
📰 News & Notes
- F45 Training delists from NYSE, “goes dark.”
- Fitt Jobs: The top brands in health & fitness are hiring.
- Hyperice lands recovery tech partnership with PPA Tour.
- Echelon belatedly enters smart strength, targets B2B sales.
- Pokémon Sleep garners $130K per day for gamified shut-eye.
- Health, economic burden for childhood inactivity grows globally.
- D1 Training triples footprint for athletic training facilities in under five years.
- Kim Kardashian stirs MRI debate with Prenuvo visit. [Re-read: Preventative Scans]
- Peloton flexes B2B deals, supplies Chicago YMCAs with app and bike experiences.
- Live Near Friends launches real estate app combating sadness. [Re-read: Living Well]
💰 Money Moves
- HAGAR, a noninvasive CGM technology developer, closed a $5M Round C.
- Norwegian fitness gaming startup PlayPulse was acquired for an undisclosed amount by a “leading tech company”.
More from Fitt Insider: Our conversation with PlayPulse CEO Erling Magnus Solheim
- Outdoorsy, an outdoor travel marketplace, launched a $30M glamping industry fund.
More from Fitt Insider: Adventure Lodging Ramps Up
- Fitness Holdings, Crunch Fitness’ largest Northeastern franchisee, acquired New York-based Aspen Athletic Clubs.
- Basel biotech startup KetoSwiss gathered €4.4M ($4.8M) in pre-Series A funding to bring MigraKet to market, a patented dietary supplement for treating migraines.
- MindMed, a biopharma company developing psychedelic-focused products for brain disorders, secured $50M from K2 HealthVentures.
- Biocanic, a software platform for functional and integrative health practitioners, closed a $600K seed round led by Potter Ventures.
- Swiss soccer coaching platform Coachbetter raised $2.9M in a seed-plus round co-led by Brighteye Ventures and ZEN11Holding.
- Beloit Kombucha, a powdered kombucha company, closed an $800K seed round.
Today’s newsletter was brought to you by Anthony Vennare, Joe Vennare, Ryan Deer, and Jasmina Breen.