Xponential Fitness Inc. is getting quite a workout.
A short trader’s report in 2023 caused three years of regulatory investigations, executive turnover and brand divestitures. Now, the latest scrutiny comes from its largest shareholder who wants Xponential to explore a sale, according to a March 4 letter sent to the board.
The Voss Capital letter came less than a week after the fitness studio franchisor said it will resolve a Federal Trade Commission investigation by paying $17 million without admitting liability. The Irvine-based company also revealed in its fourth-quarter report on Feb. 26 that it had finalized a $22.75 million settlement with over 500 current and former franchisees to be paid out over a 35-month period.
“We believe resolution of this matter will resolve a meaningful amount of uncertainty for all our stakeholders,” Chief Financial Officer John Meloun told investors on the call.
On top of the settlements, Xponential forecasts 2026 results that investors found disappointing.
In the two trading sessions after the Feb. 26 report, shares dropped as much as 52% to an all-time low of $3.83. Volume was over 10 times greater than the daily average.
A week later, Houston-based Voss Capital made it clear that Xponential faces a tough rehabilitation on Wall Street, urging the board to retain independent financial advisors to explore strategic alternatives, including a sale of the company.
“The market has had ample time to re-rate this stock,” Voss wrote in its letter. “It has not done so, and we do not believe it will, absent a hard catalyst.
“The legal and operational overhangs, while now finally resolving, have created narrative scar tissue that is difficult to rehabilitate in the public markets.”
After Voss Capital released its letter, Xponential shares leaped as much as 20% to $5.87 apiece. At press time, the shares traded at $5.53 and a $270 million market cap.
At its peak in early 2023, the shares traded as high as $33 each, with a market cap topping $1 billion (NYSE: XPOF).
The 2026 Workout Plan
Xponential, founded in 2017 by Anthony Geisler, exploded to more than 3,000 studios featuring 10 fitness and wellness brands such as Rumble Boxing, CycleBar and Club Pilates. The company went public in 2021 at $12 a share.
A controversy erupted in 2023 when a short trader questioned the franchisor’s business model. The controversy led to a stock that lost three-fourths of its value, and several executives left the company, including Geisler as chief executive.
The SEC initially launched an 18-month investigation into Xponential in late 2023 that ended last July with no action taken. The FTC probe launched in 2024.
Xponential appointed Mark King as chief executive in June 2024, but the former Taco Bell leader exited the company 18 months later for health reasons.
Xponential’s newest CEO, Mike Nuzzo, told analysts on a call about an improvement plan for 2026 that includes a new field operations team and investments in new member acquisition.
“We acknowledge that over the past few years, legal and regulatory hurdles, underperforming brand acquisitions and divestitures, and organizational challenges limited our ability to consistently execute best-in-class support capabilities,” Nuzzo said.
Xponential has divested half of its fitness and wellness brands in the last two years, leaving it with five concepts.
“So, inevitably and not surprisingly, sales growth started to moderate beginning in late 2024 and into 2025,” Nuzzo said. “As we start 2026, we are developing and implementing improvements focused on organic growth in partnership with our franchisees.”
Voss Capital Engages
In the past year, Voss Capital has doubled its stake to about 19.3% of the shares.
Voss Capital, which has $1.8 billion in assets, praised Club Pilates as the company’s star franchise. In 2025, Club Pilates increased same-store sales 3%, opened 220 new studios and sold 140 new licenses.
Voss Capital said that Club Pilates “is one of the most valuable and competitively entrenched franchise assets in the consumer wellness space.”
“We also believe the public market valuation of XPOF stock has been a profound and persistent misrepresentation of that value,” the firm added.
Club Pilates accounts for 1,414 of Xponential’s 3,097 studio locations. Of the company’s $1.75 billion in North American systemwide sales in 2025, Club Pilates generated more than $1.1 billion — roughly 65% of the total.
It is also “seven times the size” of the next largest competitor, according to Xponential. The Pilates concept and its opening pipeline will be the “most critical growth engine” in 2026 and beyond, according to Nuzzo.
Voss noted that based on the franchisor’s 2026 adjusted EBITDA guidance, “Club Pilates standalone now generates more in earnings than the company as a whole with its four other brands and current corporate structure.”
“Given Club Pilates’ unmatched scale, healthy franchisee base, new unit pipeline visibility, and long unit growth runway, it is reasonable to suspect a sale of the brand could be worth multiples of the current equity value, even after netting all corporate level debt,” the letter said.
Voss added that this means the other four brands — StretchLab, Pure Barre, BFT and YogaSix — are being “assigned negative value.”
“The multi-brand portfolio structure creates persistent complexity and has only resulted in steady multiple compression,” according to Voss Capital.
“The Board’s fiduciary obligation is to ensure its shareholders receive full, fair value for it — and for the portfolio of top-tier fitness brands that surround it,” Voss wrote. “In our view, a sale process is the most reliable, and likely only, path to achieving that outcome.”
Reaching Consumers at the Studio Level
The fitness franchisor on Feb. 26 reported 2025 sales fell 2% to $314.9 million and an adjusted EBITDA of $111.8 million, down 3.8%.
Xponential also forecasts 2026 revenue in the range of $260 million to $270 million, representing a 16% decrease due to its divestitures of brands like Rumble, CycleBar and Lindora.
“We have not been reluctant about parting ways with brands that we do not see having a good long-term growth match with us, and so we have done that, and I give the team a ton of credit for making some key divestitures last year in particular,” Nuzzo told analysts.
A key investment focus will be member acquisition at the local studio level, targeting “active older adults with spending power.” Xponential reached 774,000 members in 2025, up 5% from the year before.
Efforts will include more brand content and awareness through social media and performance marketing. Xponential will also test new pricing and member package changes in 2026 based on a pricing study completed in the fourth quarter.
“I have a high degree of confidence we can improve every brand’s effectiveness by turning leads into trial appointments and first-time classes into memberships,” Nuzzo said.
Analysts Weigh in on Xponential
Xponential Fitness’ fourth quarter results were better than expected despite the “impact of studio closures and lower equipment sales,” Raymond James analyst Joseph Altobello wrote in a note to investors.
Altobello said the recent Federal Trade Commission payout and franchisee settlements should ease investor concerns.
“We’d note that the combined $40M (~$0.80/sh) is perhaps higher than we had anticipated, though importantly it does meaningfully alleviate much of the regulatory and legal risk around the story,” he said.
“XPOF also introduced its 2026 guidance, which we find disappointing, though management characterized it as conservative,” Altobello added, pointing to headwinds from divested brands and other operational shifts.
While he lowered the target price from $11 to $10, Altobello maintained a “strong buy” rating on the company, “based on our belief that the company’s leading position in the attractive boutique fitness market and numerous growth opportunities more than offset any macroeconomic, competitive or execution risks, while valuation appears attractive.”
Baird maintained its Neutral rating while reducing its price target from $8 to $6.50.
“While the announced resolution to several legal issues helps to remove one overhang, another year with expected elevated net closures (3-5%), the negative comps, and disappointing adjusted EBITDA guide (midpoint -12% below consensus) highlight reasons for investors to remain patient in order to determine whether newer initiatives can deliver better financial performance, even at depressed valuation,” Sr. Research Analyst Jonathan R. Komp wrote.
“We maintain a favorable view of XPOF’s longer-term white space in the U.S. and across global markets given a portfolio of differentiated concepts (especially established brands),” Komp added. “We also are optimistic new leadership’s experience leading scaled consumer/franchising organizations can help drive XPOF toward generating consistent, profitable growth over time.”
—Emily Santiago-Molina
