[Editor's Note: This story has been updated with comments from iFIT.]
iFIT Health & Fitness, Logan, Utah, raised $355 million in capital, settled a lawsuit with an investor, installed new leadership and laid off an undisclosed number of staff members, the company announced.
iFIT, which offers connected fitness and interactive content with its iFIT and Sweat streaming platforms, includes brands Freemotion, NordicTrack, ProForm, Weider and 29029.
iFIT co-founder, Chairman and CEO Scott Watterson has moved out of the CEO role but continues as chairman, according to the announcement about the funding. Chief Financial Officer Steve Barr and Chief Experience Officer Mark Watterson are now co-presidents.
Barr and Mark Watterson said this in the announcement: “Following today’s news, the company is on strong financial footing and stands ready to capture the enormous opportunity ahead of us. We remain focused on streamlining our overall business, while at the same time, investing in and enhancing the member experience and continuing to innovate across interactive software, content, and hardware. There is nothing more important to us than delivering an unmatched member experience with the most advanced equipment and engagement to drive superior results for our members.”
iFIT will invest this new round of funding, which came as a mix of debt and equity from private equity firm L Catterton, in growing iFIT’s brands, content library and product offerings with the sole purpose of enhancing the member experience, according to the announcement. At the same time, iFIT will invest in efficiency measures to increase profitability for reinvestment.
“This puts the company on a sound financial footing with a clearer focus and path forward for profitable growth,” iFIT spokesperson Colleen Logan told Club Industry in an email. “Most importantly, it has enabled us to preserve the vast majority of jobs at the company.”
The company went through a round of layoffs in December and a second one in February, affecting an undisclosed number of employees. The February layoffs were necessary due to supply chain issues and escalating costs, including costs of manufacturing and development, according to the company.
“When businesses grow too fast, there can be a lack of focus and rapid escalation of costs,” Logan shared. “For instance, Covid accelerated explosive growth at the company and the cost of supply chain contributed to expenses. In order to safeguard the business over the long-term, we have made some difficult but important decisions regarding cost efficiencies. Although these actions are difficult, it will make iFIT stronger and leaner so we can invest substantially in our core brands, innovation and member development.”
iFIT’s revenue more than exceeded $1.7 billion in fiscal year 2021 compared to $851 million in 2020 and $700 million in 2019, according to Logan. Momentum is continuing in 2022 with record participation in workouts and events from the company’s 7.3 million subscribers across more than 120 countries.
The announcement also noted that iFIT “amicably resolved” an outstanding litigation matter with one of its shareholders, Pamploma Capital Management, which had invested $200 million in the company in late 2019 and then sued the company in January 2022 for $300 million claiming that iFIT’s plans to purchase a manufacturing partner in China violated its loan agreement.
Despite settling this lawsuit, iFIT now faces a new lawsuit, this time from Hydrow Inc., which claimed in a lawsuit filed in February that iFIT’s connected at-home rowing machine, RW900, infringes on its design patent.
This lawsuit isn’t the only dispute iFIT is in. iFIT and Peloton have been suing and countersuing each other for at least two years. In early February, iFIT asked the U.S. International Trade Commission to stop imports of Peloton Bike+ alleging the bikes infringe on its patent related to the technology that allows users to alternate between biking and weight lifting. In 2020 and 2021, Peloton filed patent infringement lawsuits against iFIT.
“We're excited for the Freemotion brand going forward especially as we lean into our connected fitness offerings with iFIT,” Logan shared with Club Industry. “Freemotion added iFIT connected fitness to its cardio line, so iFIT now spans club and home.”
In August 2021, iFIT began pursuing a $650 million initial public offering, at which time its valuation was between $5.67 billion and $6.61 billion, but in this round of funding, its valuation was $3 billion, according to Bloomberg. The company postponed its IPO plans in October 2021 due to adverse market conditions.