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Friday, Apr 12, 2024

Xponential to Buy Local Health Firm Lindora

Xponential Fitness Inc. (NYSE: XPOF) is expanding beyond fitness boutiques and gyms with its latest acquisition of Irvine-based Lindora, an operator of weight management-focused clinics. Terms of the deal were undisclosed.

It marks a new industry for Xponential, also based in Irvine, which will add 31 clinics primarily in Southern California that offer weight-loss medication—such as popular brand Ozempic—and other treatments like IV hydration and hormone replacement therapy.

Chief Executive Anthony Geisler said he’s been researching this sector for several years to round out Xponential’s existing health offerings, which include 10 fitness brands from boxing-focused Rumble to Pilates studio Club Pilates.

“It will be a symbiotic relationship,” Geisler told the Business Journal.

Geisler cited a Morgan Stanley report indicating weekly exercise doubled among users taking Ozempic; he wants to make sure consumers can find both solutions through Xponential.

“It has always been a health and wellness journey for us,” Geisler said.

Lindora, founded in 1971, marks the franchise operator’s first acquisition since 2021 when it added Australia-based Body Fit Training (BFT) for $44 million.

Annual Growth

Xponential’s revenue is expected to jump 27% to $310 million this year followed by an 11% growth in 2024, according to the average estimate of 12 analysts. The company in September predicted its sales would reach $405 million by 2026.

Xponential wants Lindora to bring its franchise partners and customers into a more “medically guided side” of the health and wellness industry, while also broadening the customer base of existing fitness Xponential studios.

Operators of the Lindora clinics will refer their clients to customers of the fitness studios, and vice versa.

Geisler expects Lindora to be a large driver of Xponential’s expansion plans over the next three years.

Xponential counts 3,000 studios; it plans to open roughly 500 new locations each year through 2026.

Lindora has nine locations in Orange County—its first outpost opened in Newport Beach in 1971—and one in Washington, with the remainder scattered throughout Southern California.

These clinics will turn into franchised Xponential locations when the deal closes in 2024, with additional locations expected to begin opening in the second half of 2024.

‘Immediately Accretive’

Xponential purchased Lindora from a venture involving two Newport Beach-based firms: Innovate Partners—which was the primary stakeholder—and Solis Capital Partners.

The seller will continue to operate the existing clinics as franchisees.­

Roughly 80% of Lindora’s portfolio operate in shopping centers; future locations are expected to open in the same centers as Xponential fitness studios.

This is already the case for at least one existing Lindora clinic—its Tustin location is situated a few stores down from a Row House outpost, one of Xponential’s brands.

“Clinics will end up in the same shopping centers Xponential brands are already in,” Geisler said.

“We will also have 31 units paying us royalties that we didn’t have before,” he said.

The cash flow from the 31 stores are expected to be “immediately accretive on both an AUV and an adjusted EBITDA basis” for Xponential, according to officials.

Metabolic Medicine

In 2019, Lindora moved from Costa Mesa to a new headquarters in Irvine that housed around 300 employees at the time.

It named a new CEO—Colleen Lewis—in July, replacing former lead Will Righeimer. Lewis, who counts 30 years of experience in fashion, beauty and health retail, was most previously the president and chief operating officer of OVME Aesthetics.

Lindora in August launched new intravenous (IV) hydration therapy services and hormone replacement therapy (HRT) programs, the latter of which hormone levels are restored to combat decreased energy levels and weight gain.

Lindora’s business model is a subscription-based membership on a monthly basis with a goal of making its wellness plans more affordable and accessible to patients. The firm reported “record breaking” new patient growth when the membership model was introduced in 2018.

Membership costs start around $89 per month, with the most popular option running around $149 per month. Weight-loss medications are priced separately.

“This partnership will allow Lindora to become one of the first national brands in medical metabolic management,” Lewis said in a statement.

The global weight loss and management market was estimated to be $198 billion this year, and is expected to reach roughly $425 billion by 2023, according to a Research and Markets report.

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