Beachbody Company, Inc. Form 8-K Summary
Business context and reporting period
Filed July 1, 2021, reporting events occurring primarily on June 25, 2021. Forest Road Acquisition Corp. completed its business combination with The Beachbody Company Group, LLC and Myx Fitness Holdings, LLC. Forest Road changed its name to The Beachbody Company, Inc. and continued the operating businesses of Old Beachbody as a public company.
Beachbody provides fitness and nutrition products and services, while Myx operates in the connected-fitness industry. The company’s Class A common stock and warrants began trading on the NYSE on June 28, 2021 under the symbols BODY and BODY WS.
Key financial, capital, and liquidity information
- Forest Road public shareholders redeemed 8,383,485 shares for approximately $83.8 million, or approximately $10.00 per share.
- A private investment in public equity transaction raised $225.0 million through the issuance of 22,500,000 shares at $10.00 per share. Placement-agent fees totaled approximately $4.4 million.
- Immediately after closing, New Beachbody had approximately 163.2 million Class A shares and 141.3 million Class X shares outstanding.
- The filing does not provide clear current-period revenue, net income, operating cash flow, gross margin, operating margin, cash balance, or total debt figures. Historical and pro forma financial information is incorporated by reference from the company’s audited, interim, and pro forma financial statements.
- Beachbody amended its credit agreement on June 23, 2021. The amendment permitted the business combination, required New Beachbody to become a parent guarantor, and required Myx Fitness, LLC to become a subsidiary guarantor. Specific borrowing capacity, interest rates, maturities, and covenant levels are not stated in the filing text.
- The company had not paid cash dividends and did not anticipate paying dividends in the foreseeable future.
Material changes versus the prior comparable period
- Forest Road transitioned from a special purpose acquisition company into the combined operating company, Beachbody Company, Inc.
- Forest Road’s prior securities ceased trading, and the combined company’s Class A shares and warrants began trading on the NYSE.
- The transaction resulted in a new capital structure, including Class A and high-vote Class X common stock. Class A shares carry one vote per share, while Class X shares carry ten votes per share.
- Directors, officers, and affiliated entities beneficially owned approximately 53.4% of the outstanding Class A and Class X shares immediately after closing; former Forest Road securityholders owned approximately 7.1%.
- Management and governance changed substantially. Forest Road’s incumbent directors and officers resigned, and six directors were elected to New Beachbody’s board.
Guidance, outlook, commentary, risks, and unusual items
- The filing provides no new quantitative revenue, earnings, cash flow, or operating guidance. It refers investors to projections and outlook information incorporated from the proxy statement/prospectus.
- Management cautioned that forward-looking statements are subject to risks involving projected financial information, growth assumptions, market opportunity, future financing, NYSE listing compliance, employee retention, warrant liability valuations, competition, dependence on key products, acquisitions and integration, litigation, intellectual property, and macroeconomic conditions.
- New Beachbody warrants are accounted for as liabilities, so changes in their fair value may materially affect reported financial results.
- The transaction included a one-time $300,000 cash bonus for CFO Susan Collyns. Her new employment agreement provides for a $600,000 annual base salary, a target annual bonus of 75% of base salary, and specified severance and equity-vesting benefits.
- The filing states that Forest Road ceased to be a shell company upon completion of the business combination.
Important facts for investors to verify
- Review the incorporated historical and pro forma financial statements for revenue, profitability, cash, debt, liquidity, and transaction-accounting effects.
- Confirm the final cash proceeds after redemptions, PIPE placement fees, transaction expenses, and other closing adjustments.
- Review the amended credit agreement for borrowing capacity, maturity dates, interest rates, covenants, collateral, and guarantor obligations.
- Assess the voting concentration created by the Class X shares and the resulting influence of insiders.
- Evaluate the accounting treatment and potential earnings volatility from liability-classified warrants.
- Review the proxy statement’s risk factors and projections, particularly assumptions regarding competition, customer retention, Myx integration, financing needs, and NYSE listing compliance.