Egym relies on corporate fitness: “A billion-dollar market is emerging”

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

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

So far, the equipment specialist has been active in the company fitness segment with its subsidiary Qualitrain. So far, framework agreements have been concluded with around 3,600 companies. For about 50 euros a month, half of which is paid by the employer on average, employees currently have free access to 5,500 studios throughout 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 were looking 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 EUR 2.5 billion. Worldwide it is 51 billion euros. Experts expect average annual growth of seven percent up to 2027.

Gym sales have dropped significantly

The whole of society benefits when people do sports, said Roesch-Schlanderer. “The treatment of back and spine problems alone costs around 40 billion euros every year.” The system is designed to treat health problems – not prevention.

That’s why you originally wanted to work with the health insurance companies. “But they don’t have the incentives to invest systematically in prevention.” Employers are therefore the better cooperation partners, who incur billions in costs every year just from sick days.

>> 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, due to the corona pandemic, sales fell by 46 percent to 2.2 billion euros. The number of members fell by ten percent to 9.3 million. In 2019, 14 percent of the total population was still registered in fitness studios, but at the end of last year it was only eleven percent.

Now things should go up again. “The need to catch up on 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 for 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 studios 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 comparatively high proportion of long-term annual contracts, said Deloitte partner Karsten Hollasch. “In addition, there are government aid measures and financial reserves formed from previous years.”

Egym wants to grow by 50 percent

Egym raised $41 million from Mayfair Equity Partners in a Series E round last year despite the industry crisis. Overall, investors have put more than $150 million into 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. With the help of an app, customers and trainers can create training plans and document progress. The data can be uploaded to the cloud and analyzed there.

In the first lockdown, the start-up then went through its first restructuring: 100 of the 450 employees had to go. “But it quickly became apparent that many studios 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 personalized to them and on which they can analyze the data afterwards, they don’t want to 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 studios that have arrived in the age of digitization can keep 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 industry crisis. “This year we want to grow by 50 percent, probably even more,” says Roesch-Schlanderer. The sales of the acquired Gymlib, which according to industry estimates should be in the double-digit million range, are not included.

Roesch-Schlanderer also admits that the purchase price in the high double-digit million range is quite generous. But the French have recently grown at rates of 80 percent and are a perfect match for Egym, so the price is justified. “It’s a dream wedding.” The Egym shareholders were also willing to inject fresh capital for 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 the Spanish operator Forus. In Germany, among others, Waterland Private Equity acquired Fit/One, which operates 30 clubs. Roesch-Schlanderer can also imagine further takeovers.

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

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