Connected fitness giant Peloton said in a filing with the U.S. Securities and Exchange Commission (SEC) on Friday (Aug. 27) that it has been subpoenaed by the U.S. Department of Justice and Department of Homeland Security for documents and information related to how the company reported injuries caused by its treadmills.
The matter is also being investigated by the Consumer Product Safety Commission over the injuries, and the SEC is looking into public disclosures made on the subject. In May, Peloton was forced to recall its treadmill machines after reports of one death and dozens of injuries; several lawsuits have been filed in association with the recalls.
Related: Peloton Adds 400K New Fitness Subscribers, Will Invest To Restore ‘Pristine Brand’
Peloton said it intends to cooperate with each of the investigations, though “we are unable to predict the eventual scope, duration or outcome of the investigations.” John Foley, co-founder and CEO of Peloton, said Thursday that sales of the Tread+ product, which has only been available in the U.S. so far, remain paused as the company continues to improve its safety; a different treadmill product is set to return to market next week.
The government investigations are the latest setback for Peloton as it tries to restore the brand name that brought millions into the world of connected fitness. In addition to the months-long treadmill ordeal, software security firm McAfee in June discovered a security flaw in the Android operating system powering the Peloton Bike+ that could potentially give hackers the ability to spy on riders or steal their personal data. Peloton has since addressed the issue with a mandatory software update to its products.
These struggles don’t seem to be keeping consumers away, though — Peloton reported this week that connected fitness subscriptions grew 114 percent year-over-year to 2.33 million, and paid digital subscriptions grew 176 percent to over 874,000. Total revenue in the company’s fourth quarter totaled $937 million, up 54 percent compared to the same period last year.
Read more: Peloton Connected Fitness Subscriptions Grow 114 Percent
A Competitive Landscape
With Peloton stumbling, other connected fitness companies have been stepping up their efforts, especially with consumers increasingly focused on health and wellness after months of a global pandemic. Earlier this year, Pitbull invested in connected exercise bike company Echelon and fitness brand Beachbody went public, with each company laying out plans to create platforms that keep people engaged even with the gym fully reopened.
See: Connected Fitness Competition Grows For Peloton
Other companies, such as connected rowing company Aviron, are betting on workouts that Peloton is absent from as well as animated games and activities rather than classes, which Founder and CEO Andy Hoang told PYMNTS are more engaging.
“Because there is a lot more variety, we find that in a household, you have more people using it, versus a Peloton, which is usually one or two people who are using it,” Hoang said.
To be sure, Peloton isn’t standing by as competitors nip at its heels. In June, the company announced a corporate wellness program, which will bring the company’s content and connected fitness products to businesses and organizations in the U.S., U.K., Canada, Germany and Australia. Peloton also lowered the price of its original bike by $400, or over 20 percent, to $1,495 this week.
In a call with analysts and investors this week, Foley said the price drop “was absolutely offensive as we think about the competitive landscape and we think about democratizing the access to great fitness, which has … always been in our playbook.”
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