Xponential Fitness Appoints Interim CEO Amid Federal Investigations

Xponential Fitness appoints Brenda Morris as interim CEO, replacing founder Anthony Geisler, amid federal investigations by the US Attorney's Office and SEC. The company reaffirms its guidance and cooperates with probes, despite leadership change and ongoing scrutiny.

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Xponential Fitness Appoints Interim CEO Amid Federal Investigations

Xponential Fitness Appoints Interim CEO Amid Federal Investigations

Xponential Fitness, a boutique fitness franchisor based in Irvine, California, has appointed Brenda Morris as interim CEO, replacing founder Anthony Geisler. The leadership change comes as the company faces ongoing investigations by the US Attorney's Office and the Securities and Exchange Commission.

Why this matters: The federal investigations into Xponential Fitness raise concerns about the company's business practices and potential violations of securities laws, which could have far-reaching implications for the fitness industry as a whole. As the company navigates these challenges, its ability to maintain transparency and accountability will be crucial in maintaining investor trust and protecting its reputation.

Morris, an experienced C-Suite executive and member of Xponential's Board of Directors since 2019, assumes the role effective immediately. The company's Board of Directors made the decision to remove Geisler as CEO indefinitely amid the federal probes. Xponential Fitness has reaffirmed its guidance and stated it is fully cooperating with the investigations.

Founded in 2017, Xponential Fitness operates various boutique fitness brands across North America, including Club Pilates, Pure Barre, and CycleBar. The company has a significant insider ownership of 47.83%, which can be a sign of company health. Additionally, institutions hold 58.55% of the company's stock, indicating strong market trust.

Despite the leadership upheaval and investigations, Xponential Fitness has posted positive financial results. Earnings are expected to grow by 61.29% in the coming year, from $0.93 to $1.50 per share. The company's revenue for the recent quarter was up 12.5% compared to the same quarter last year, with a net margin of 1.90%.

Wall Street analysts have given Xponential Fitness a consensus rating of Moderate Buy. The average twelve-month price target for the company's shares is $21.94, suggesting a potential upside of 158.8% from the current price. However, the company's P/E ratio is 14.88, indicating negative earnings that cannot be compared to companies with positive earnings.

Xponential Fitness has seen an increase in short interest, with 17.5% of its shares short sold in April. The company is scheduled to release its next quarterly earnings announcement on Thursday, August 1st, 2024. In July 2021, Xponential Fitness raised $200 million in an initial public offering (IPO).

As Xponential Fitness navigates the leadership transition and ongoing federal investigations, the company remains focused on its growth strategy and maintaining its position in the boutique fitness industry. The appointment of Brenda Morris as interim CEO aims to provide stability and continuity during this challenging period.

Key Takeaways

  • Xponential Fitness appoints Brenda Morris as interim CEO, replacing founder Anthony Geisler.
  • Federal investigations into Xponential Fitness raise concerns about business practices and securities laws.
  • Company reaffirms guidance and is fully cooperating with investigations.
  • Earnings expected to grow 61.29% in the coming year, with a net margin of 1.90%.
  • Wall Street analysts give Xponential Fitness a consensus rating of Moderate Buy.