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Peloton IPO shows that the company is serving the rich, not making us healthy



John Foley, CEO of Peloton.

Adam Jeffrey | CNBC

Peloton, the company that introduces spin classes into your living room, has turned the combination of fitness and related gadgets into a business big enough for the public markets.

In its IPO prospectus published on Tuesday, the maker of stationary domestic bicycles and treadmills attributed its growth – more than 100% over the past year – to "growing awareness of the benefits of exercise and physical activity." The company said that over the past two decades, even in times of recession, the fitness industry has grown in the US and abroad.

But Peloton suffers from the same shortfall that has plagued other digital health products and services such as tracking activities, personal training applications, and fitness classes. In fact, this is not a needle move as far as the health of the country is concerned.

More than 1

in 3 Americans are considered obese, which raises at least $ 147 billion annually in costs for a congested health care system. Type 2 diabetes is increasing and about 610,000 people die of heart disease every year in the United States, according to the Centers for Disease Control and Prevention. There is a close link between income levels and the risk of cardiovascular disease.

The Peloton motor costs more than $ 2,200 for the most basic package and does not include the monthly hourly fees. This is inaccessible to millions of Americans living paycheck to paycheck. In order to have a real impact on the health crisis, it must reach not only urbanites who love convenience, but also the parts of the population most in need of easy-to-use fitness services.

Peloton isn & # 39; I'm not trying to mislead anyone about his target market.

Robin Arzon, Vice President of Fitness Programming at Peloton

Photo courtesy of Peloton

. "These models are expensive and exclude many people," says Iya Rum, CEO of Cityblock Health, a city-based health initiative that focuses on low-income communities. "And here the question arises whether this is even related to different populations."

Peloton has more than 500,000 customers using its paid subscription service, up from just over 245.00 a year ago. Revenue rose to $ 915 million for the 12 months ended June 30, up from $ 435 million the year before.

"We believe that busy lifestyles, less free time and the changing dynamics of households are driving demand," says Peloton.

Low-income people also fit into these categories, but they simply cannot afford the services. And Peloton, which is already losing money, must place even greater emphasis on profit margins as it looks to attract public-market investors.

"By accident, we designed a society where it's hard to be healthy," says Steve Down, chief technology officer and strategist at the Robert Wood Johnson Foundation. "So many solutions are not available to most people."

SEE: Peloton IPO Files under the PTON Bookmark


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