(Bloomberg) — IFit Health & Fitness Inc., the Peloton Interactive Inc. rival that announced a restructuring and layoffs last week, saw its valuation fall by about 60% to less than $3 billion after raising new capital, according to people with knowledge of the matter.
IFit collected $355 million of debt and equity and counted existing investor L Catterton as an anchor, the Logan, Utah-based company said in a statement to Bloomberg News, without providing further specifics. The new valuation is roughly 60% below the more-than-$7 billion mark the company obtained in October 2020.
The capital raise enables IFit to preserve the majority of jobs at the company, said one of the people, asking not to be identified discussing private information. The company last week announced a restructuring, in part due to escalating supply chain costs, the person said.
An IFit representative declined to comment on the restructuring and the company’s latest valuation.
“Today’s important updates strongly focus the business for continued growth in what has made us successful in the first place: technology, innovation and the member experience,” Scott Watterson, chairman and co-founder of IFit, said in an emailed statement. Watterson, who gave up the role of chief executive officer, added that he personally invested in the capital raise.
IFit, with brands including NordicTrack, ProForm and Sweat, said it will invest in “efficiency measures to increase profitability for reinvestment” and focus on growing its brands, product offerings and content library.
The company, which says it has 1.6 million paid subscribers, sought to raise as much as $646 million in an initial public offering before hitting pause in October, citing adverse market conditions. For the fiscal year ending May 31, it is on track to deliver similar revenue to the $1.7 billion recorded in the 12 months through May 2021, a person with knowledge of the matter said.
“The company is on strong financial footing and stands ready to capture the enormous opportunity ahead of us,” said IFit’s newly appointed co-presidents, Mark Watterson and Steve Barr.
Litigation Resolved
IFit said it had “amicably resolved” an outstanding litigation matter with a shareholder. Icon Preferred Holdings LP, an affiliate of Pamplona Capital Management, in January filed a $300 million lawsuit against IFit, court filings show.
“We believe the best is yet to come,” Marc Magliacano, a managing partner in L Catterton’s flagship fund, said in a statement, adding that the company’s platform is “positioned to win on a global scale.”
Peloton’s shares have fallen almost 75% since Oct. 5, 2020, when IFit said it raised $200 million from investors including L Catterton and Pamplona. At the height of the pandemic, customers stuck at home raced to purchase hardware. Following vaccinations and a return to traditional gyms, Peloton discounted its bikes in an effort to boost dwindling sales.
New York-based Peloton earlier this month announced a broad restructuring that included 2,800 job cuts. It also installed a new CEO, Barry McCarthy, who took a shot at IFit’s NordicTrack in a recent interview.
Asked by the New York Times what he wants Peloton to be, and whether he’s focused on hardware and software, McCarthy said: “The magic doesn’t happen in the sheet metal. It needs to be good enough, but it’s not sufficient. If it’s just NordicTrack, you’re not winning. The magic happens on the screen.”
(Updates with comments, background starting in seventh paragraph.)
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