Egym is dependent on the company’s fitness: “A billion market is emerging”

Munich With the pandemic, the health of their own employees has become increasingly important to many companies. “We are recording demand from companies for fitness training for their employees, which is three times as high as before Corona,” says Egym’s CEO and co-founder Philipp Roesch-Schlanderer. “There’s a billion market emerging.”

The startup, known for its digital networked fitness equipment, wants to become the European market leader in corporate fitness. In addition, the Munich-based company takes over the French competitor Gymlib for a high double-digit million amount. This is Egym’s largest acquisition to date.

So far, the equipment specialist has been active in the company’s fitness segment with its subsidiary Qualitrain. So far, framework agreements have been entered into with around 3,600 companies. For around 50 euros a month, half of which is paid on average by the employer, employees currently have free access to 5,500 studies across Germany.

In France, Gymlib is the market leader with a similar business model with a customer base of 600 companies and a network of 4300 fitness facilities. “To continue our growth in an increasingly competitive European market, we sought to partner with a leading industry player,” said co-founder and CEO Sébastien Bequart.

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According to industry estimates, the potential so-called corporate wellness market in Germany and France is likely to have a volume of 2.5 billion euros. Worldwide, it is 51 billion euros. Experts expect an average annual growth of seven percent until 2027.

Sales of fitness centers have fallen sharply

The whole community benefits when people play sports, Roesch-Schlanderer said. “The treatment of spinal and spinal problems alone costs about 40 billion euros each year.” The system is designed to treat health problems – not prevention.

Therefore, you originally wanted to work with the health insurance companies. “But they do not have the incentives to invest systematically in prevention.” Employers are therefore the better partners, incurring billions in costs each year on sick days alone.

>> Read about this: These companies promote the health of their employees in an exemplary manner

The studios could also use additional customers. The fitness industry has had an extremely bad 2021. According to a study by Deloitte, sales fell due to the corona pandemic by 46 percent to 2.2 billion euros. Membership fell by ten percent to 9.3 million. In 2019, 14 percent of the total population was still enrolled in fitness studies, but by the end of last year, it was only eleven percent.

Now things were going to go up again. “The need to obtain fitness and health services has never been higher than it is now – after two years of the corona pandemic,” said Birgit Schwarze, president of the DSSV industry association. According to a study by the German University of Prevention and Health Management, many people gained significant body weight during the pandemic.

It is positive for the industry – and thus also for Egym – that only a few studies had to close. The number of facilities fell by only 0.5 percent to almost 9,500 fitness facilities. On the one hand, this is due to the relatively high proportion of long-term annual contracts, said Deloitte partner Karsten Hollasch. “In addition, there are state aid measures and financial reserves formed from previous years.”

Egym will grow by 50 per cent

Despite the industrial crisis, Egym raised $ 41 million from Mayfair Equity Partners in a Series E round last year. In total, investors have invested more than $ 150 million in the company.

With the programmable devices, Egym was on a growth course for years. If a customer logs in, the machines automatically adapt to him. Using an app, clients and coaches can make training plans and document progress. The data can be uploaded to the cloud and analyzed there.

In the first lockdown, the startup then underwent its first restructuring: 100 of the 450 employees had to leave. “But it quickly became apparent that many studies are willing to invest in technology even during the crisis,” says Roesch-Schlanderer.

One reason for this: The competition from home fitness equipment has grown significantly. If users have a digitally connected bike at home that is customized for them and on which they can subsequently analyze the data, they will not be on an old-fashioned exercise bike in the gym. “Going to the gym is still the most popular sport in Germany,” says Roesch-Schlanderer. But only studies that have entered the age of digitalisation can retain customers and win new ones.

>> Read more about this: Peloton Tread: What is the hyped fitness treadmill really capable of – and how dangerous is it?

Egym was able to keep sales stable at around 80 million euros last year despite the industrial crisis. “This year we will grow by 50 percent, probably even more,” says Roesch-Schlanderer. The sale of the acquired Gymlib, which according to the industry’s estimates should be in the double-digit million amount, is not included.

Roesch-Schlanderer also admits that the purchase price in the high double-digit million is quite generous. But the French have recently grown by 80 percent and fit perfectly with Egym, so the price is justified. “It’s a dream wedding.” Egym shareholders were also willing to inject fresh capital into the takeover.

The industry is likely to keep moving. Deloitte recorded 19 major transactions in the European market last year. JP Morgan and Ben Oldman Partners took over the majority of Spanish operator Forus. In Germany, among other places, Waterland bought Private Equity Fit / One, which runs 30 clubs. Roesch-Schlanderer can also imagine further acquisitions.

More: Get Your Sports aims to be Airbnb in the fitness industry

This article was first published on April 26, 2022 at 06:41.

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