On August 11th, YogaWorks, Inc. held its initial public offering (IPO), becoming the first yoga "chain" to do so. To get the scoop on what this means for the company and for yoga going forward, we chatted with YogaWorks CEO Rosanna McCollough, who calls the move "the democratization of yoga."
Yoga Journal: The IPO was initially supposed to happen in July. Why was it postponed?
Rosanna McCollough: We went out in July and spoke to tons of investors and had tremendously positive meetings. Health and wellness is growing, yoga is growing. With our unique story it was hard to value us. [Editor's note: When the IPO did happen this month, the valuation was lowered from up to $70 million to $40 million, with the company offering 7.3 million shares at a purchase price of $5.50 per share; YogaWorks originally aimed to sell 5 million shares at a price of $12–14.] It finally happened, and we are now in a position to grow our company and continue with our plan. We are very excited.
YJ: Why do you think YogaWorks is the first yoga studio to go public?
RM: There are over 33,000 yoga and Pilates studios in the U.S., and we are one of the largest. So many wonderfully talented teachers get into the business, but it's hard to continue running a studio. Our story is so unique—it's the ultimate democratization of yoga. We are making our growth strategy possible through public markets. Now anyone can invest in yoga and in YogaWorks specifically. We are a leader in this space—we started 30 years ago in Santa Monica with one studio, and began to grow in 2000 through acquisitions, taking those studios that we purchased and folding those teachers and students into our family. We have a multi-discipline and eclectic school of yoga, and we can acquire almost any studio in the U.S. as long as they have this multi-discipline approach. Our belief and our tagline is "yoga works for everybody"...you can’t have that without a variety of styles. We are the only yoga company that can grow organically through acquisitions. We have numerous discussions happening right now to acquire studios in very short order now that we have this opportunity through the IPO.
YJ: What do you think the IPO means for the yoga industry going forward?
RM: It's such a victory for health and wellness and for the yoga category, which is growing by double digits. We have lots of [studio] owners calling us asking us to buy them...it's a labor of love to own a studio 365 days a year. The owners are doing the work that no one appreciates. [Our approach is], 'Let us partner with you, buy you, and keep you employed for the continuity of the business.' Some [owners] are so tired that they close their business and ruin their students' practice, and it's not great for teachers. Some [owners] wish to keep expanding, but they're tired or don't have the money to do so. We say to those owners, 'Let us be your partner to do what you've been doing in your community, but do it in a bigger, better way.' It's a two-way conversation with the hope and intent that the owner stays on as an employee.
YJ: Will the fact that YogaWorks is now a publicly traded company change YogaWorks as students and teachers currently know it?
RM: From the students’ perspective as we grow, more YogaWorks studios means more opportunities to take yoga classes. Our mission for the past 30 years to help people stay on their journey to health and wellness will not change. Our growth plan enables us to do it at a new level. We are not a chain of 50 studios, we are 50 communities of high-quality teaching, exceptional customer service, cleanliness, and consistency that students and teachers can expect. We want to maintain that sense of community and localization as we grow.
Analysis: Why the YogaWorks Stock Lost Value
As of closing on Wednesday, August 23rd, the YogaWorks stock (YOGA), which was originally priced at $5.50, was down to $3.99. Most of this loss in value happened almost immediately after the IPO on August 11th. But Chris Smith, partner and head of the Public Company Services practice at Friedman LLP, says in this market, that's not necessarily atypical.
"Look at your 401(k) three weeks ago and look at it yesterday...it's probably worth less. Part of it is the overall market and nothing more than that," he says. Smith also blames the IPO market for the loss in value. "This was supposed to be a great year...companies that were called 'unicorns,' billion-dollar valued private companies like Snapchat and Blue Apron, their share prices are down as well. It’s just people getting freaked out about valuation."
Smith adds that it's important for investors to think long-term rather than short-term. "Making decisions based on what happens in a week is not a great investment strategy," he says. "Companies go public to raise money because they have plans for expansion. If you believe in the company and believe in their story, give it time to see it to fruition. Make an investment and look toward the future."