Peloton Interactive faces federal scrutiny over its handling of accidents involving its treadmills in which one child died and dozens of people were injured, the fitness equipment maker disclosed on Friday.
The Department of Justice and the Department of Homeland Security have subpoenaed Peloton for documents and other information related to its reporting of injuries involving its products, the company stated in a regulatory filing. It’s also being investigated by the Securities and Exchange Commission over its public disclosure of the accidents.
The development comes only days after Peloton said it would relaunch a redesigned and lower-cost treadmill in the U.S. next week. The $2,495 Tread’s prior rollout came to a stop in May, with Peloton recalling the treadmill to fix a problem that had its touchscreen detaching and falling on some users.
Peleton declined to comment on the government probes.
Recall followed fatal accident and multiple injuries
The pricier Tread+ remains off the market following its recall at the same time after more than 70 incidents, including the death of one child and 29 other instances where users sustained injuries such as broken bones and cuts.
The recalls came a month after the U.S. Consumer Product Safety Commission warned households with children and pets to stop using both products, and two months after Peloton cautioned customers to keep kids and animals away from the exercise equipment.
Peloton shares were down 9% in midday trading on Friday, continuing a fall that followed disappointing quarterly results. The company warned this week that a price cut would hit profits and that it had uncovered a problem with its inventory accounting.
Peloton on Thursday said it was trimming $400 off the price of its most popular bicycle to $1,495. The company is also extending to 43 months, from 39 months, financing plans offered to customers, lowering the monthly tab for both its bike and treadmill.
Peloton forecasts an adjusted loss of $325 million in its current fiscal year and to return to profitability by fiscal 2023.
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