Issue No. 170: Healthcare-Funded Fitness

The gym is being unbundled. Exercise seekers are opting for hybrid workouts. In turn, fitness operators are scaling up omnichannel offerings.

Now, beyond digital and in-person, a new bundle is taking shape. Backed by employers and insurance providers, brands are eyeing opportunities in healthcare-funded fitness.

The Latest

Digital fitness app FitOn secured $40M in new funding. More interesting, the company is acquiring corporate wellness platform Peerfit.

For context: Founded in 2019, FitOn has raised $70M to date, including $18M in October 2021.

The app’s “freemium” model offers a variety of workouts, including yoga, dance, cardio, and strength. A paid membership unlocks perks, from music to meal plans and more.

Leveraging star power, the app features celebrity trainers Halle Berry, Lindsey Vonn, Julianne Hough, and Jonathan Van Ness, among others, fueling growth to 10M+ users.

Combining forces. Partnering with insurers and employers, Peerfit is a flexible fitness benefit. Having previously raised over $45M in funding, the company provides members access to gyms, studios, and digital services.

Of note, Peerfit counts more than 13K corporate customers and partnerships with major health plans like Aetna and Cigna, as well as a foothold in the Medicare space.

Expanding on two fronts, FitOn’s acquisition of Peerfit opens the door to corporate wellness and omnichannel fitness. If all goes according to plan, employers and health plans will subsidize FitOn memberships, and users can access digital programs or in-person gym visits.

Corporate Interests

A growing opportunity, the global corporate wellness market is expected to surpass $94B by 2026.

A convergence of trends, as the Great Resignation rolls on amid rising healthcare costs, employee well-being is a top priority.

Taking notice, fitness companies are cozying up to employers and health plans.

• Mindbody-owned ClassPass has ramped up its corporate wellness efforts, partnering with more than 2K employers.
• With a network of 50K gyms/studios, corporate well-being platform Gympass secured $225M at a $2.2B valuation in 2021.
• Last year, Peloton and Apple Fitness+ both partnered with UnitedHealthcare, gaining access to the insurer’s 4M members.

Pivoting during the pandemic, human performance company Exos launched Exos Fit, a digital platform featuring virtual coaching and content. Working with nearly 30% of Fortune 100 companies, the operator’s omnichannel strategy is evolving to help employees perform their best.

More recently, digital personal training app Future has scaled up its enterprise sales operation. And in-home/on-site personal training company GYMGUYZ expanded its corporate wellness offering to accommodate remote workers.

Work in Progress

Since the onset of COVID, employers and employees have acknowledged the importance of wellness, taking steps to prioritize overall health.

• According to Gartner, 46% of organizations increased their well-being budgets in 2020.
• McKinsey found that 79% of consumers now believe wellness is important, and 42% said it’s a top priority.
• In lululemon’s 2022 Global Wellbeing Report, 40% of respondents indicated they required increased mental and physical support from their employers beyond the pandemic.

But… Looking closer, Gartner found that, although 80% of organizations offered programs related to physical activity, only 32% of employees used them.

Closing the engagement gap, new models are emerging to incentivize physical activity while employers and health plans pick up the tab.

Charge it. As you’ll hear in today’s Fitt Insider Podcast, Paceline, a rewards platform and wellness credit card, envisions a world where insurers pay people to work out. Meanwhile, Ness—launching this year—allows cardholders to earn points for health-related purchases.

Connected health. For years, insurers and employers have offered health and fitness tracking wearables to mixed results. While incumbents may be slow to adapt, device makers from Apple and Amazon to WHOOP are pushing into healthcare, hoping to quantify and bolster healthy habits.

Aging well. Focusing on fitness for older adults, Balance recently raised $6.5M and hopes to work with Medicare Advantage. Similarly, Bold is providing workouts for seniors where health plans foot the bill. And holistic well-being platform Mighty Health allows doctors to refer patients at a discounted cost.

Looking Ahead

Revisiting Issue 122, as the gym gets unbundled, exercise is moving beyond the four walls of the gym. As a result, omnichannel fitness is expanding to include in-person, at-home, outdoors, retail partnerships, enterprise deals, healthcare-funded subsidies, and more.

The hope? By increasing access and incentivizing physical activity, everybody—from operators and consumers to employers and health plans—wins. A victory would curb obesity rates and reduce healthcare costs.

But for now, brands are busy building new fitness bundles as the bridge between exercise and healthcare takes shape.