Australian-founded fitness franchise F45 has had its stock price plunge on the US market, after the announcement the company’s CEO would be stepping down.
It appears the international dreams of the gym franchise have been shattered after going into a nosedive on the New York Stock exchange.
At the time of publication the F45 share price was sitting at $US1.31 ($A1.87), having fallen by a massive 61.54 per cent, according to Market Watch.
This comes after the company announced the departure of founder and CEO Adam Gilchrist, along with 110 employees and the news that it would be slashing operational expenses.
F45 was founded in 2013 and quickly grew in popularity for offering what it calls functional 45-minute workouts.
The company’s move to the New York stock exchange made headlines in July last year, making Mr Gilchrist a reported $500 million overnight.
Company investor Hollywood star Mark Wahlberg also enjoyed a similar windfall at the time but reportedly sold 1.1 million of his shares in March and April for $US12.2 million ($A17.45 million), according to the AFR.
“You want to be in there with the energy of people working out with you, alongside you, inspiring you, pushing you and supporting you,” Wahlberg told CNBC ahead of the company’s US market debut.
“When we founded F45, we made it our principal goal to change people’s lives by creating the world’s best workout,” Mr Gilchrist said in a statement.
“To the staff that have worked tirelessly since our inception, you have been incredible in your efforts, and I thank you for all of your support. To the investors that have joined us along our journey, I thank you for your commitment to F45. Lastly, I am forever grateful to our franchisees who deliver the world’s best workout each day to F45 members around the world.”
Mr Gilchrist will remain on the board as a director and the board of directors will appoint a new chairman.
In the meantime Ben Coates, an independent director who currently serves as director of Coolgardie Investments, will take the place of interim CEO.
F45 lead independent director Richard Grellman thanked Mr Gilchrist for his “countless contributions and innovations”.
“We are fortunate that we will continue to benefit from his ongoing counsel and insights during this transition and well beyond as a member of our board,” he said.
F45 said it had made the decision to overhaul its strategic and financial priorities amid “ongoing macroeconomic uncertainty”, in order to allow the company to succeed and grow sustainably over the long-term.
Following the changes, the company expects its selling, general and administrative expenses to be around $15 million to $20 million per quarter, which is approximately 40 to 50 per cent less than the expenses during the first quarter of 2022.
“We are taking the necessary steps to right-size our business in light of shifting macroeconomic and business conditions,” F45 CFO Chris Payne said.
“While we expect growth to continue, market dynamics are having a greater than expected impact on the ability of franchisees to obtain capital to develop new F45 locations.
“In addition, recent share price performance has made it challenging for franchisees to utilise financing facilities announced earlier this year.”
Mr Payne said it was an “incredibly difficult decision” to reduce the corporate headcount, but it was an important step in allowing the company to obtain long-term, sustainable success.
“Additionally, we believe that once these cost reductions are fully realised, the company will be able to generate positive free cash flow on a normalised basis,” he said.
“Despite the headwinds, F45’s business fundamentals remain strong, and we are as excited as ever to continue bringing the world’s best workout to a growing base of members every day.”