Company: YogaWorks, Inc.
Symbol: YOGA
Description: They are one of the largest and fastest growing providers of high quality yoga instruction in the U.S., with almost 3 million student visits in 2016 and 50 company-owned studios as well as their Internet-based digital media service, MyYogaWorks.com
Shares: 5 million
Price Range: $12.00-$14.00
Trade Date: 7/20
Underwriter(s): Cowen and Company, Stephens Inc., Guggenheim Securities
Co-Manager: Roth Capital Partners, Imperial Capital
Investor Access: This deal can be accessed via the three main underwriters and the two co-managers or through the selling group Motif.
Business:
YogaWorks is the only national, multi-discipline yoga instruction company, and their highly recognizable brand is present in six geographically dispersed U.S. markets—Los Angeles, Orange County (California), New York City, Northern California, Boston and Baltimore/Washington D.C. believe their YogaWorks teacher training program extends their brand beyond their current six markets and that many of their 11,000 graduates serve as ambassadors of the YogaWorks brand and help them identify new markets. They strive to make yoga accessible to everyone and offer a lifestyle approach that can be applied on and off the mat.
Target Audience: Approximately 37 million Americans practiced yoga in 2016, up from approximately 20 million in 2012, representing 80% growth. Shot from April 2016, the number of yoga practitioners is expected to grow to 55.1 million Americans in 2020, representing 50% more participants than 2016. Yoga awareness among Americans has increased from 75% in 2012 to 90% in 2016. In 2016, yoga practitioners spent over $16 billion on instruction, apparel, equipment and yoga accessories; over one-third of that figure, or approximately $5.8 billion, was spent on instruction in 2016. At $16 billion in 2016, spend on yoga has increased by $6 billion since 2012. Over 40% of yoga practitioners are part of “Generation Y,” also known as Millennials, who are increasingly focused on wellness and are generally willing to spend more on personal enrichment and authentic and meaningful experiences. Yoga appeals to people of all incomes and education levels. Approximately 60% of practitioners have college degrees and earn over $75,000 in annual income. Approximately 10 million men and 14 million practitioners over the age of 50 participated in yoga in 2016. Comparatively, only 4 million men and 4 million practitioners over the age of 55 participated in yoga in 2012. The average age of a yoga practitioner is 32, which is nearly a decade younger than the average age of a person in the traditional fitness market.
Growth Target: They believe they have the opportunity to increase their studio count to over 250 studios in the next several years. They believe that acquisitions of existing studios and their thriving student bases can be an effective, profitable and risk-mitigating way to enter a new regional market versus building a new studio and waiting for attendance to ramp up over time. To date, 60% of their existing studios have become part of their studio base through acquisitions. Through future acquisitions, they can leverage their corporate infrastructure to grow their brand in both new and existing markets by quickly tapping into the thriving yoga communities that already exist in nearly every city in the U.S. Through a combination of acquisitions and new studio openings, they plan to add more than 35 yoga studios over the next eighteen months.
Comp / Sector Performance: Because many of their students are first-time or occasional yoga practitioners, they believe they compete with both fitness and non-fitness consumer discretionary spending alternatives for their members’ and prospective students’ time and discretionary resources. In the last two years, the only company to go public that can be compared to YogaWorks would be the fitness chain, Planet Fitness (Nasdaq: PLNT), that went public August 6, 2015. That offering opened $1.50 below the $16.00 offering price but has since rallied nicely in the following 23 months. The company, Planet Fitness, has also done five secondary offerings since June 23, 2016. At the current time, $PLNT is trading 45.3% above the offering price.
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