Linked health firm Hydrow, which Peloton as soon as tried to purchase, is rising gross sales and has acquired a majority stake in energy coaching firm Speede Health as gymgoers transfer away from cardio workout routines in favor of weights, the corporate instructed CNBC on Thursday.
Hydrow additionally introduced that its CEO and founder Bruce Smith will step again from day-to-day operations and hand the reins over to President and Chief Monetary Officer John Stellato. Smith will take over because the chair of Hydrow’s board.
The corporate, most recognized for its expensive related rowing machines that value between $1,700 and $4,000, is backed by non-public fairness bigwigs akin to Structure Capital and L Catterton. It counts a number of skilled athletes and celebrities amongst its buyers, together with Kansas Metropolis Chiefs tight finish Travis Kelce and singer Justin Timberlake.
Hydrow has raised greater than $300 million in funding. It mentioned it acquired Speede Health so it might probably broaden into energy coaching, one of many fastest-growing segments in health at present.
The acquisition comes as gymgoers pull again on cardio workout routines akin to operating and biking in favor of weight coaching.
Planet Health mentioned in November that it might substitute its cardio gear extra slowly, partly to liberate capital.
“Our members are constantly in search of extra energy and fewer cardio,” mentioned Planet Health CFO Thomas Fitzgerald on the corporate’s third-quarter earnings name, including that energy gear prices lower than cardio gear.
Life Time health highlighted an identical development in its annual health survey. A couple of-third of respondents mentioned “constructing muscle” is their No. 1 purpose for 2024, a rise of greater than 3% from the prior yr.
Speede Health makes a related energy coaching machine that appears considerably just like a BowFlex, however incorporates superior know-how akin to synthetic intelligence-powered cameras, sensors and a big contact display screen.
“Energy coaching has one of many largest whole addressable markets in health, and with Speede’s superior know-how outperforming present choices, this acquisition is a major milestone for each firms,” Hydrow mentioned. “This funding helps Hydrow’s mission to broaden as a whole-body well being firm … with a client product anticipated to come back to market subsequent yr.”
Hydrow’s acquisition and gross sales progress come as Peloton, which is credited with creating the related health market, struggles to show round a slowing enterprise. In its heyday on the peak of the Covid-19 pandemic, Peloton tried to accumulate Hydrow somewhat than construct its personal rowing machine, however the firm declined, it instructed CNBC. Peloton didn’t reply to CNBC’s request for remark.
Now, Peloton has change into an acquisition goal itself as quite a few non-public fairness companies think about taking it non-public after it posted one other quarter of declining gross sales and losses, CNBC reported on Tuesday.
Peloton has mentioned demand for its health gear has been sluggish as shoppers pull again on big-ticket gadgets. Nonetheless, Hydrow has managed to develop as Peloton has shrunk.
Hydrow’s delivered unit gross sales for its related rowing machine jumped 23% this yr from the year-ago interval. On Amazon, gross sales elevated 273% within the 12 months that ended March 31 in comparison with the prior-year interval.
Hydrow’s progress raises questions on whether or not Peloton’s issues are extra associated to weak spot within the broader at-home health market or its inner stumbles and product misses. Plus, the corporate primarily sells cardio machines, that are falling out of favor with shoppers, and its personal members are flocking to energy coaching. The corporate has mentioned its energy coaching content material, not its biking or operating courses, is the hottest sort of sophistication for digital members and the No. 2 amongst those that have Peloton {hardware}.
Peloton debuted its rowing machine, the Peloton Row, in September 2022, however has executed little to promote or spotlight the $3,000 machine.
It beforehand debuted the Peloton Information, an AI-powered gadget for at-home guided energy coaching, however the gadget has obtained even much less consideration than the corporate’s rowing machine.
In Peloton’s fiscal third-quarter shareholder letter, the Information obtained one point out. It was a couple of $9.1 million write-down the corporate took for its product stock.
