Xponential Fitness Reviews Strategic Options as Rights Plan Sets 19.9% Threshold
Key Facts
Xponential Fitness is reviewing strategic alternatives in what it said is an effort to maximize shareholder value. Options include a sale of the company, a merger or another strategic or financial transaction. The company said the review was initiated by a decision of its board, without disclosing a buyer or specific offer in its filing. Independent directors said the board is focused on maximizing shareholder value, while the chief executive said the company’s team would continue executing its strategy during the review. The move comes as the company faces declines in revenue and same-store sales, alongside a cut to its full-year outlook. In parallel, the company adopted a shareholder rights plan that sets out a mechanism for addressing attempts to accumulate a large stake in its shares.
According to the company, the rights generally become exercisable if a person or group acquires 19.9% or more of the Class A shares. Once triggered, other rights holders may buy Class A shares with a market value equal to twice the exercise price. The company said the plan does not prevent an acquisition, but is intended to encourage any party seeking one to negotiate with the board beforehand. The mechanism therefore links a specific share-accumulation threshold with arrangements that give other rights holders the opportunity to buy additional shares. The rights expire at the close of business on October 11, 2027, unless they are redeemed, exchanged or terminated earlier.
Voss Capital previously urged the board to explore a sale of the company, saying in a letter dated March 4, 2026, that it owned about 19.3% of the Class A shares. In a filing in October, Fund 1 Investments said it owned 4,170,610 shares, representing 9.9% of the class. The group also disclosed additional economic exposure through swap contracts equivalent to 4,213,826 notional shares, or about 9.98% of the shares outstanding. The filing, however, said the swaps did not provide voting rights over the reference shares. Under an agreement dated September 28, the company agreed to exempt Fund 1 from the restrictions of Delaware’s antitakeover law, while capping its aggregate ownership at 19.9% and setting voting arrangements for votes above 9.9%.
Second-quarter figures point to operating and financial pressures accompanying the strategic review. Revenue was $66.0 million, down 13% from the second quarter of 2025. North American same-store sales fell 6.8%, after rising 2.4% in the year-earlier period. The company attributed the revenue decline mainly to fewer equipment installations and lower merchandise revenue following its transition to new third-party logistics arrangements. Adjusted EBITDA was $21.9 million, compared with $28.1 million a year earlier, a decline of 22%.
The company cut its fiscal 2026 outlook to revenue of between $250 million and $260 million, representing a 19% decline at the midpoint compared with 2025 results. It also set a range of $91 million to $97 million for adjusted EBITDA, down 16% at the midpoint. In March, Voss Capital said in its letter that the company had more than $500 million in debt, compared with previous 2026 adjusted EBITDA guidance of $105 million at the midpoint. The group estimated net leverage at about five times. These figures, as stated in Voss’s letter, reflect the group’s view of the company’s financial position, while the strategic review remains subject to a decision by the board.
In trading, Xponential Fitness shares closed at $3.74 on October 29, 2026, after closing at $4.19 on October 23, $4.13 on October 26, $4.09 on October 27 and $4.01 on October 28. The company has a portfolio of five brands, including Club Pilates, which it describes as the largest Pilates brand in the United States. The company is scheduled to report third-quarter results on November 5, 2026, after the market close. It said its management team will hold a call to discuss the results at 4:30 p.m. Eastern Time that day. The results date follows the cut to its annual outlook, as the strategic alternatives review continues.