Work-from-home, social connection, telehealth, social justice, mental health… and, of course, the COVID-19 disease itself have been the hot topics of 2020 in the employee wellbeing world.

Meanwhile, the US wellness industry — the business of employee wellbeing — grinds on, with a slew of trends and transactions that foretell its future. Here, I’ve summarized the commercial patterns and milestones that signal which doors are closing and which may open.

We Get Flanked (on one side)

  • In 2020, Microsoft announced it will add to its popular Teams platform “exciting experiences designed to help people harmonize wellbeing with productivity”:
    • A virtual commute to create “mental bookends” for the remote workday.
    • Reminders to schedule breaks, which Microsoft says reduce burnout.
    • Headspace integration to bring mindfulness and meditation into the workflow.
    • An “emotional check-in” to tap into how teammates are feeling and improve daily interactions
    • Analytics to improve organizational resilience, collaboration, and customer care.

Should wellness industry vendors, with decades of experience, fear Microsoft? Absolutely.

Microsoft will combine its nearly unlimited resources with unparalleled expertise in market analysis, innovation, and usability as it endeavors to do what some of us have long sought from the wellness industry: make wellness products relevant to work. Not just the workplace, not just the workers, but the work itself.

  • In October 2020, Salesforce announced a wellness partnership with Arianna Huffington’s Thrive Global company. Declared Huffington:

“We’re…powering [Salesforce’s] well-being platform with science, storytelling, ancient wisdom, and actionable microsteps that will have an immediate and lasting impact on people’s lives.”

I doubt storytelling and ancient wisdom help sell a customer relationship platform, but they may add just enough value to displace a dedicated wellness vendor.

C-suite leaders — rightly or wrongly — trust these enterprise trendsetters, whereas legacy wellness providers, siloed from their clients’ core business processes, are merely tolerated. We assume we’re better and smarter — I call it “The Kodak Strategy for Digital Revolution” — at our own peril.

We Get Flanked (on the other side)

  • In a 2016 HR/Benefits webinar, I predicted: “One of the things I have my eye on right now is ClassPass.” By 2019, ClassPass, which offered a subscription to a network of fitness studios — you book and pay for a class using their app — had announced a corporate offering, with an initial client list that included the likes of Google, Morgan Stanley, and Southwest Airlines. In 2020, ClassPass shifted to more of a livestreaming model as the pandemic shuttered studios. Time will tell whether they’ll resume momentum in the post-COVID environment.
  • Peloton has been unstoppable during the pandemic, and reports suggest they’ve been gobbling up commercial assets like Peerfit. speculates:

“A big part of Peerfit’s model was around corporate wellness programs, designed to ‘Boost employee engagement and track usage while your team stays healthy and motivated.’ If Peloton integrates their platform, it could make Peloton a more interesting option for large corporations and insurance companies.”

We’ll see a growing trend of burgeoning fitness and wellness technology providers packaging consumer products for corporate purchasers.

Some Fish Get Eaten by Bigger Fish. Others Go Belly-Up.

  • StayWell, a  bastion of the employee wellness industry for 40 years, was acquired by WebMD in March 2020.
  • Interactive Health Solutions (IHS), billing itself as “the country’s leading provider of health management solutions,” leads no more — abruptly shutting down in June 2020 after filing for Chapter 7 bankruptcy protection. Newly unemployed team members valiantly praised IHS and attributed the closure to a pandemic-induced business slowdown. But there’s more to it: Goldman Sachs, through its Business Development Company (BDC), reported lending IHS $10 million in 2015. During an earnings conference call on February 21, 2020, the lender’s CEO gave an update on the investment:

“With a few customer losses recently, it’s become a bit more of a challenging situation…There’s been competitive pressures and [IHS] has been lagging some of its peers in the offerings.”

IHS’s stagnation and insolvency resulted from management decisions made long before the pandemic.

Some Companies Grow in Weird Directions

  • Don’t be surprised to see Virgin Pulse in the middle of a blockbuster deal between now and the end of 2021. The ubiquitous wellness vendor, quietly acquired by Marlin Equity Partners in 2018, swaggered into 2020 by acquiring diabetes management firm Blue Mesa Health in early January.  Around the same time, Marlin acquired Yaro, a benefits navigation platform, reportedly to power Virgin Pulse’s new Navigate product. Later that month, rumors swirled around Marlin looking to sell Virgin Pulse.
  • Limeade, the Seattle-based employee wellness engagement experience company, on December 20, 2019 launched an Initial Public Offering… on the Australian Stock Exchange. Geekwire reported:

“As part of its IPO prospectus, Limeade also revealed detailed financial results publicly. The company…is projecting $47 million in revenue this year, and a net loss of $6.2 million. It expects revenue to exceed $56 million next year, with its net loss growing to more than $12 million.”

Limeade isn’t unique in its lack of profitability. Most health and wellness technology companies operate in the red. Teladoc’s recent $18.5 billion acquisition of diabetes management provider Livongo, for example, celebrated the marriage of two unprofitable companies.

The goal of many start-ups is to be acquired (or publicly traded) — the “exit strategy.” Consequently, utilization rates, client lists, gross revenue, assets, and brand strength often take precedence over profits or outcomes.

Femtech Is Due

BIS Research expects femtech — apps and devices focused on women’s health — to grow 12.65% annually through 2030. Femtech will be the bandwagon every large employer wants to hop aboard, if it 1) assuages privacy concerns and accusations of enabling discrimination, and 2) expands beyond fertility and pregnancy.

Decoding Contradictory Signals

IN 2020 the most important phenomenon in the employee wellness industry was a mass pivot toward mental health and emotional wellbeing — something I’ll cover in a separate article. Beyond that, based on the developments described above and long-term business trends, it’s safe to conclude:

  1. The era of bloated wellness portals is on its last legs. Kaiser Family Foundation data reveals that percentage of employers offering health risk assessments rose steadily from 2015 to 2019, while health screenings and incentive schemes held steady. Industry trends and transactions, however, suggest that employers procure these products and services from a shrinking pool of vendors. Hopefully, new competition that bypasses the tired combination of portals, HRAs, screenings, and incentives will nudge the employee wellness industry toward innovation, urgency, and greater relevance.
  2. The wellness industry will be squeezed. On one side, we’ll feel pressure from behemoths like Microsoft and Salesforce; on another side by companies like Peloton entering the B2B space after cutting their teeth in the consumer market. We’ll either blossom or get crushed.
  3. Watch Google. When it completes its acquisition of Fitbit, Google will straddle items 1 and 2, above, and make a play to dominate the corporate wellness market. As Alan Antin of Gartner Research & Advisory says in The Real Reason Google Is Buying Fitbit, Google will benefit from Fitbit’s B2B market share (though it comprises only 7%-10% of Fitbit’s revenue):

“There’s the lesser known business-to-business side of Fitbit, which is their partnerships with health insurance companies and direct corporate wellness programming.”

  1. Prediction: Of the wellness vendors that have grown with the industry over the last 20-40 years, the last ones standing will be “boutique” companies, those that offer more specialized products with white-glove service; conduct themselves with a degree of integrity often absent from multiplex vendors, venture-capital backed start-ups, and benefits consulting monoliths; and are driven by a mission to support employee wellbeing.

You’ll also enjoy:

My April 2020 article 10 Non-Predictions About Wellness, COVID, and the Future of Work

My new Health Enhancement Systems article about wellness careers: Wellness Pros — The Skills That Matter Aren’t What You Think