Mindbody, the fitness and wellness tech platform that owns exercise subscription service ClassPass, plans to go public as demand for in-person workouts grows after the pandemic shutdown.
An IPO would mark a return to public markets after just four years off the Nasdaq for California-based Mindbody, which was taken private by Vista Equity Partners in 2019 in a deal that valued the company at $1.9 billion became.
The platform, which provides gyms and spas with software that allows users to book sessions online, acquired ClassPass in an all-stock transaction last October. Investment firm Sixth Street also invested $500 million in the combined companies at the time of the acquisition.
In an interview with the Financial Times, Mindbody CEO Josh McCarter said that an IPO would allow the company to conduct further mergers and acquisitions to improve its technology, expand internationally, and break into other wellness areas like mental health.
“We have no pressure to go public for liquidity. We want to have a public currency that we can use for mergers and acquisitions,” McCarter said, adding that the listing would depend on market volatility, but that “2023 would be a great target.”
“Our belief, and that of our investors, is that Mindbody is the most logical consolidator on the market to . . . wellness platforms together.”
ClassPass, which was valued at more than $1 billion as of January 2020, offers users an alternative to gym memberships by allowing them to purchase individual studio classes and gym sessions at venues like boutique operators 1Rebel and Barry’s through one to book a subscription service.
Revenue fell 95 percent in just two weeks early in the pandemic after ClassPass froze subscriptions. But Chief Executive Fritz Lanman said business has rebounded strongly, with February 2022 bookings up about 27 percent from February 2021.
“[There is] Demand for personal experience and that sense of community, and feedback and accountability from the instructors,” Lanman said, adding that members were attending studios and classes 10 percent more than before the pandemic.
Lanman doesn’t expect Covid-19 to weigh on attendance, adding that it’s estimated that up to 98 percent of ClassPass members have been vaccinated. McCarter said, “We believe we are in an endemic state, with no major closures in the markets in which we operate,” which includes North America and Europe.
ClassPass has added more spas and salons to its platform since the coronavirus first hit. “The definition of wellness has expanded [since the pandemic]’ McCarter said. “Now it’s much more about stress reduction and mental health [than physical fitness].”
McCarter dismissed the notion that ClassPass’s model was “cannibalistic” in luring gym-goers away from traditional memberships, saying small and medium-sized businesses would benefit from joining the platform. “Fifty percent of ClassPass users are new to the boutique industry and 80 percent are new to a particular store,” he said.
The proposed listing comes as related fitness companies like Peloton lose momentum and the exercise bike company’s market value falls to less than $8 billion from nearly $50 billion in early 2021.
Simeon Siegel, an analyst at BMO Capital Markets, said connected fitness companies would continue to be part of the fitness mix post-pandemic, but added, “The death of gyms has been grossly exaggerated.”