Australian-based fitness franchise F45 has seen its share price plummet in the US market after the company’s CEO was announced to leave.
It seems the gym franchise’s international dreams were shattered after it took a nose dive on the New York Stock Exchange.
At press time, F45’s stock price was at US$1.31 (A$1.87), after falling 61.54%, according to Market Watch.
It comes after the company announced the departure of founder and CEO Adam Gilchrist, along with 110 employees and the news that it would be cutting operating expenses.
F45 was founded in 2013 and quickly grew in popularity for offering what it calls 45-minute functional workouts.
The company’s move to the New York Stock Exchange made headlines in July last year, netting Mr Gilchrist $500 million overnight.
The company’s 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 $12.2 million (17, 45 million Australian dollars), according to the FRG.
“You want to be in there with the energy of people working with you, by your side, inspiring you, pushing you and supporting you,” Wahlberg told CNBC ahead of the company’s U.S. market debut.
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“When we founded F45, our primary goal was to change people’s lives by creating the best workout in the world,” Gilchrist said in a statement.
“To the staff who have worked tirelessly since our inception, you have been incredible in your efforts, and thank you for all of your support. To the investors who have joined us along our journey, thank you for your commitment to F45 Finally, I am forever grateful to our franchisees who provide the best training in the world to F45 members around the world every day.
Mr. Gilchrist will remain on the board as a director and the board will appoint a new chairman.
Meanwhile, Ben Coates, an independent director who is currently a director of Coolgardie Investments, will take over as interim CEO.
F45 Independent Lead Director Richard Grellman thanked Mr Gilchrist for his “countless contributions and innovations”.
“We are fortunate to continue to benefit from his guidance and insights during this transition and well beyond as a member of our Board of Directors,” he said.
F45 said it made the decision to review its strategic and financial priorities amid “continuing macroeconomic uncertainty”, to enable 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 approximately $15-20 million per quarter, approximately 40-50% lower than expenses in the first quarter of 2022.
“We are taking the necessary steps to right-size our business in light of changing macroeconomic and business conditions,” said F45 Chief Financial Officer Chris Payne.
“While we expect growth to continue, market dynamics are having a greater than expected impact on franchisees’ ability to raise capital to develop new F45 locations.
“In addition, recent share price performance has made it difficult for franchisees to utilize the financing facilities announced earlier this year.”
Mr Payne said it was an “incredibly difficult decision” to cut the company’s workforce, but it was an important step in enabling the company to achieve sustainable long-term success.
“Furthermore, we believe that once these cost reductions are fully realized, the company will be able to generate positive free cash flow on a normalized basis,” he said.
“Despite the headwinds, F45’s business fundamentals remain strong, and we are more than ever excited to continue delivering the world’s best workout to a growing member base every day.”
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