As a result of the outbreak of COVID-19, gyms across the country were forced to close, in an effort to promote social distancing and limit the spread of the virus.
The effects of these closures are now being felt by privately held 24 Hour Fitness, the nation's second-largest fitness chain based on revenue and fourth-largest based on the number of locations. The company has reportedly hired advisors at investment bank Lazard and law firm Weil, Gotshal & Manges to explore its options, with bankruptcy among them.
24 Hour Fitness, which closed its gyms on March 16, is sitting on more than $1.3 billion in debt with less than $1 million in cash. Moody's recently downgraded the company's debt, citing "negative membership trends, very high-interest burden and negative free cash flow prior to the coronavirus outbreak, as well as approaching maturities to provide limited flexibility to manage through the crisis."
While the sources say the gym may not ultimately file for bankruptcy, it begs the question of how the fitness industry will look after the coronavirus passes.
Until there is a cure for the virus, many people may simply choose to not work out in crowded gyms. A study by FitRated found that the level of bacteria in gyms is worse than most would probably think. The study found exercise bikes have 39 times more bacteria than a plastic reusable cafeteria tray, treadmills have 74 times more bacteria than a water faucet and free weights have 362 times more bacteria than a toilet seat.
Despite the Trump administration saying gyms would be among the first businesses to reopen, not everyone is convinced they should be.
"We need to limit indoor activities that are purely recreational, especially those where there are a lot of shared surfaces that can be contaminated," former FDA Commissioner Dr. Scott Gottlieb said. "Bars and gyms fall squarely in that category."
On the other hand, recent job losses may cause some people to determine their budgets no longer afford them the ability to continue paying for gym memberships. With some gyms providing their customers exercises they can do from home, it's possible some people may find exercising at home adequate for their needs.
Although Peloton (NASDAQ:PTON), with its $2,000-plus bike and monthly subscription fee, is more expensive than most Americans can afford, its recent stock performance is indicating that the future of exercising may be from the comfort of your home. The stock fell with the overall market before rebounding more than 100% to hit all-time highs this week.
While not everyone is going to dump their gym membership when things return to normal and not everyone is going to buy a Peloton, the future of how people choose to exercise after this crisis will be just one of the areas to keep an eye on as people readapt to their normal routines.