Mindbody, the fitness and wellbeing tech platform that owns exercise subscription service ClassPass, plans to go public as demand for in-person workouts grows following pandemic shutdowns.
A flotation would mark a return to the public markets after just four years away from the Nasdaq for California-based Mindbody, which was taken private by Vista Equity Partners in 2019 in a deal that valued the company at $1.9bn.
The platform, which provides software for gyms and spas enabling users to book sessions online, acquired ClassPass in an all-stock transaction last October. Investment firm Sixth Street also invested $500mn in the combined companies at the time of the acquisition.
In an interview with the Financial Times, Mindbody chief executive Josh McCarter said an initial public offering would allow the company to pursue further mergers and acquisitions to improve its technology, expand internationally and move into other fields of wellness such as mental health.
“We have zero pressure to go public for liquidity. We want to have a public currency we can use for M&A”, McCarter said, adding that the listing would depend on market volatility but that “2023 would be a great target”.
“Our belief and our investors’ belief is that Mindbody is the most logical consolidator in the market to bring . . . wellness platforms together.”
ClassPass, which was valued at more than $1bn in January 2020, offers users an alternative to gym membership by allowing them to book individual studio classes and gym sessions at venues including boutique operators 1Rebel and Barry’s through a subscription service.
Revenues fell 95 per cent in just two weeks at the beginning of the pandemic after ClassPass froze subscriptions. But chief executive Fritz Lanman said business had rebounded strongly, with bookings up about 27 per cent in February 2022 compared with February 2021.
“[There is] demand for in-person experiences and that sense of community and instructor feedback and accountability,” Lanman said, adding that members were attending studios and classes 10 per cent more than before the pandemic.
Lanman does not expect Covid-19 to weigh on attendance, adding that up to 98 per cent of ClassPass members are estimated to have been vaccinated. McCarter said: “We think we’re in an endemic state, with no major shutdowns in the markets we operate in,” which include North America and Europe.
ClassPass has added more spas and salons to its platform since coronavirus first took hold. “People’s definition of wellness has expanded [since the pandemic],” McCarter said. “Now it’s a lot more about stress reduction and mental health [than physical fitness].”
McCarter dismissed the notion that ClassPass’s model was “cannibalistic” by luring gym-goers away from traditional memberships, and said small and medium-sized businesses benefited from joining the platform. “Fifty per cent of ClassPass users are new to the boutique industry and 80 per cent are new to a particular business,” he said.
The proposed listing comes as connected fitness businesses such as Peloton lose momentum, with the exercise bike company’s market value falling from almost $50bn at the beginning of 2021 to less than $8bn.
Simeon Siegel, an analyst at BMO Capital Markets, said connected fitness businesses would continue to form part of the fitness mix beyond the pandemic, but added, “the death of the gyms has been greatly exaggerated”.