Fitness Startups’ Fates Diverge With Virus Quashing IPO Plans

As worldwide lockdowns force avid gym-goers to exercise in their living rooms and boost the profile of in-home workout startups, more traditional fitness companies are feeling the strain.

Topgolf International Inc., F45 Training and Xponential Fitness LLC, all of which were making plans to go public as recently as last month, have put those preparations on hold as the Covid-19 pandemic keeps customers away from their venues, according to people with knowledge of the matter.

Dallas-based Topgolf, which runs driving ranges in a bar and restaurant setting, wasdowngraded last month by S&P Global Ratings, with all of its venues likely closed until further notice. The company was working withMorgan Stanley, JPMorgan Chase & Co. and Bank of America Corp. on its planned listing, which could have valued it at about $4 billion.

F45 Training, a provider of group workout classes that started in Australia, filed for a U.S. initial public offering in January, working withGoldman Sachs Group Inc. and JPMorgan.Xponential, the franchise owner of Club Pilates, tapped Bank of America, Goldman Sachs and Jefferies Financial Group as advisers for a potential $300 million IPO.

All three companies have now hit pause on the plans as they wait out the crisis, said the people, who asked not to be identified discussing private information.

A representative for F45 declined to comment. Representatives for Xponential and Topgolf didn’t respond to requests for comment.

Meanwhile, companies that provide fitness programs for consumers cooped up at home are doing well. Shares ofPeloton Interactive Inc, which sells in-home fitness equipment and offers subscriptions for app-based workouts, are up 29% since March 11, when the World Health Organization first declared Covid-19 a pandemic. Over the same period, the S&P 500 has gained less than 2%.

Tonal Systems Inc., a San Francisco-based startup that sells a wall-mounted workout station, has seen a significant uptick in sales in recent weeks. Aly Orady, the company’s chief executive officer, said in an interview that the company’s average daily sales over the past three weeks have more than tripled compared with the preceding weeks. The Tonal machine costs $2,995, plus a $49 per month membership for virtual personal training sessions.

Golfers are also moving indoors. Sales atSkyTrak, which sells ball-tracking technology and simulators, nearlytripled in March versus the same month last year.

With many F45 locations closed, the company, which is backed by actor Mark Wahlberg, is currently offering streamed workouts from some of its studios for a weekly fee. Club Pilates studios, which are independently owned, are offering gift cards for future use to help support their employees.

Postponing an IPO could be the best possible outcome for these companies. Record bankruptcies — both corporate and personal — arepredicted in the next year as Covid-19 shutdowns spur a surge in U.S. unemployments.

IPOs in most sectors are having a tough time as volatility hovers near all-time highs and companies across industries face unexpected pressures. Just five companies have raised a combined $1.8 billion in listings on U.S. exchanges since the start of March, down 10% from the same period last year, according to data compiled by Bloomberg.

Biotechnology companies have so far bucked the trend. Zentalis Pharmaceuticals Inc. andKeros Therapeutics Inc., which both sold shares at the top of their marketed price ranges in the past week, are each up 35% from their IPO prices.

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