Last week wellness platform Mindbody announced their plans to acquire ClassPass for $500 million. Launched in 2013 by Payal Kadakia to compete with the traditional gym membership model, ClassPass is a subscription-based service that matches subscribers with boutique fitness, spa and beauty experiences. This strategic partnership will bring together two subscription-based businesses that support both business owners and wellness practitioners and their clients.
The acquisition will be an all-stock deal; terms of the deal were not disclosed. Once the deal closes, ClassPass CEO Fritz Lanman will serve as president of ClassPass and Mindbody Marketplace. He will work with Mindbody’s executive team.
“This acquisition comes at a pivotal time for the wellness industry as it continues to rebound from COVID-19 related closures ‒and local and authentic experiences are more important to people than ever,” said Josh McCarter, CEO of Mindbody, in an October 13, 2021 news release. “Our companies share a singular focus on bringing wellness experiences to more people, in more places. By leveraging the best of both companies’ technology and expertise, we are more committed than ever to providing studios with best-in-class tools to help them grow and thrive, while also driving more consumers to their businesses.”
$500 million investment from Sixth Street
Along with the acquisition, Mindbody has secured a $500 million strategic investment from a group led by Sixth Street, a global investment firm that has also invested in Airbnb, Legends, the San Antonio Spurs, Spotify and Sprinkler. Mindbody will use this investment as well as the investment from majority investor and partner Vista Equity Partners to fuel the company’s growth.
This includes continuing to build on the innovations and investments made during the pandemic, which have made virtual and hybrid platforms more attractive to business owners and subscribers alike. Highlights include innovations that help business owners utilize a fully integrated, hybrid, virtual platform; marketing automation for better client acquisition and retention; and the launchof Mindbody Capital, a program that gives business owners access to financing to support their businesses.
Recent data from Mindbody and ClassPass show that, in some markets, bookings using Mindbody are returning to pre-COVID levels, and ClassPass usage by subscribers is 110% of pre-COVID usage for those who have resumed classes.
“The ClassPass network includes many businesses already working with Mindbody. By combining our respective operations, we will create more seamless integrations and unlock new revenue opportunities for business owners using both services, while continuing to support all fitness, salon and spa businesses who choose to work with Mindbody or ClassPass,” said Lanman. “For consumers using our marketplace and professionals enrolled in the ClassPass Corporate Program, our goal is to create greater choice and flexibility in the experiences they can book.”
ClassPass’s founder also commented on the acquisition.
“Since the founding of ClassPass, our north star has always been how we can help people discover and seamlessly book soul-nurturing experiences. This acquisition will be a massive milestone for a female-founded company, and I am confident in the leadership of Josh McCarter and my long-time business partner Fritz Lanman to propel the business forward and continue to deliver a best-in-class experience for consumers and business owners alike,” said Kadakia.
Josh McCarter, Mindbody CEO, shared his excitement in a blog post on Mindbody.
“I’ve worked closely with the ClassPass team for the last several years, and I can tell you that our missions are aligned. We’re both driven by a singular focus: bringing wellness experiences to more people, in more places, by connecting them with businesses like yours. We may have tackled this important goal from different angles over the years—but at our core, our missions unite us,” McCarter said.
About ClassPass
With a ClassPass membership, subscribers can try thousands of popular workouts via in-studio classes and gym visits. Options range from HIIT and body conditioning to vinyasa flow and boxing. Subscribers can also book beauty and spa appointments and on-demand and livestream classes. ClassPass works on a credit system with each class or service being valued at a certain number of credits. Subscribers have the option of five different plans, ranging from $15 to $199 a month.
For more active months, subscribers can add credits without changing their monthly plan. They can also roll over unused credits. There are no contracts or annual commitments, and subscribers can change, pause or cancel their ClassPlass plan at any time.
ClassPass reports that studios who use ClassPass usually see a 30% increase in reservation volume and a 15% to 20% increase in revenue when they use ClassPass’s SmartTools. About 50% of ClassPass subscribers are new to boutique fitness studios when they join, and 80% visit a new studio for the first time once they sign up on ClassPass.
About Mindbody
Mindbody provides SaaS software and technology solutions to health, wellness and beauty providers through a customizable app. Using Mindbody’s SaaS platform, hundreds of thousands of practitioners are easily connected to millions of clients. Mindbody’s website shows that the app has 1.3 million monthly active users who book 3.7 million classes each month. In addition, they add approximately 145,000 new users each month.
Insider Take
What a great partnership! These two companies have continued to grow and evolve since their founding, utilizing technology and supporting both health, wellness and beauty business owners as well as their members and subscribers. This is a natural fit, and the possibilities that this partnership will create are seemingly limitless. With solid financial backing and strong, loyal customer bases, the combined company can take advantage of the growing trend and awareness of the importance of health and wellness and make the most of future opportunities.
