Hydrow acquires Speede Health, grows as Peloton shrinks

Linked health firm Hydrow, which Peloton as soon as tried to purchase, is rising gross sales and has acquired a majority stake in power coaching firm Speede Health as gymgoers transfer away from cardio workouts 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 identified for its expensive linked rowing machines that value between $1,700 and $4,000, is backed by non-public fairness bigwigs similar to Structure Capital and L Catterton. It counts a number of skilled athletes and celebrities amongst its traders, together with Kansas Metropolis Chiefs tight finish Travis Kelce and singer Justin Timberlake.

Hydrow has raised greater than $300 million in funding. It stated it acquired Speede Health so it may well broaden into power coaching, one of many fastest-growing segments in health at this time. 

The acquisition comes as gymgoers pull again on cardio workouts similar to operating and biking in favor of weight coaching. 

Planet Health stated in November that it could change its cardio tools extra slowly, partly to liberate capital.

“Our members are constantly searching for extra power and fewer cardio,” stated Planet Health CFO Thomas Fitzgerald on the corporate’s third-quarter earnings name, including that power tools prices lower than cardio tools.

Life Time health highlighted an analogous pattern in its annual health survey. Multiple-third of respondents stated “constructing muscle” is their No. 1 objective for 2024, a rise of greater than 3% from the prior 12 months.

Speede Health makes a linked power coaching machine that appears considerably much like a BowFlex, however incorporates superior expertise similar to synthetic intelligence-powered cameras, sensors and a big contact display.

“Energy coaching has one of many largest complete addressable markets in health, and with Speede’s superior expertise outperforming present choices, this acquisition is a big milestone for each corporations,” Hydrow stated. “This funding helps Hydrow’s mission to broaden as a whole-body well being firm … with a shopper product anticipated to come back to market subsequent 12 months.” 

Hydrow’s acquisition and gross sales progress come as Peloton, which is credited with creating the linked health market, struggles to show round a slowing enterprise. In its heyday on the top of the Covid-19 pandemic, Peloton tried to amass Hydrow moderately 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 grow to be an acquisition goal itself as quite a few non-public fairness corporations contemplate taking it non-public after it posted one other quarter of declining gross sales and losses, CNBC reported on Tuesday.

Peloton has stated demand for its health tools has been sluggish as customers pull again on big-ticket gadgets. Nonetheless, Hydrow has managed to develop as Peloton has shrunk. 

Hydrow’s delivered unit gross sales for its linked rowing machine jumped 23% this 12 months 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 customers, and its personal members are flocking to power coaching. The corporate has stated its power coaching content material, not its biking or operating courses, is the preferred 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 performed little to promote or spotlight the $3,000 machine. 

It beforehand debuted the Peloton Information, an AI-powered machine for at-home guided power coaching, however the machine 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 few $9.1 million write-down the corporate took for its product stock.