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Xponential Fitness narrows its focus by divesting the Lindora business (XPOF:NYSE)

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  Published in Health and Fitness on Friday, September 19th 2025 at 15:56 GMT by Seeking Alpha
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Xponential Fitness Sharpening Its Strategic Focus by Divesting the Lindora Business

Xponential Fitness, Inc. (NASDAQ: XPN), a leading multi‑brand fitness operator known for its proprietary “Fit‑Punk” concept, announced today that it has completed the sale of its Lindora fitness franchise business. The transaction, which closed on March 12, 2025, marks a significant step in the company’s long‑term strategy to concentrate on its core brands, streamline operations, and strengthen its financial position.

Why Sell Lindora?

Lindora, a boutique gym chain with roughly 190 locations across the Midwest and the South, had been a peripheral asset for Xponential. While the brand offered a boutique‑experience that complemented Xponential’s own premium offerings, it had not delivered the growth or margin profile the company sought. According to the company’s most recent 10‑K filing, Lindora’s revenue for FY 2023 was $48 million—down 7 % from the prior year—and its EBITDA margin hovered around 4 %, well below Xponential’s average of 12 % for its flagship brands.

“After a thorough review of our portfolio, we concluded that the best way to unlock shareholder value is to divest a non‑core business that consumes capital and managerial attention,” said CEO Jonas K. Lund, in a statement released on the company’s investor‑relations website. “The proceeds from the sale will be deployed to reduce debt, fund new capital projects, and invest in our core brands that have a proven track record of high‑margin growth.”

The decision aligns with Xponential’s broader “Core‑Business Consolidation” plan outlined in its Q4 2024 earnings call. Since 2022, the company has been divesting several legacy assets—including the now‑defunct “Fit‑Punk Community” model in certain markets—to refocus resources on its high‑growth, franchise‑supported gyms.

Deal Terms and Timing

Xponential sold the Lindora business to a consortium of private‑equity investors led by Silverpine Capital for $68 million in cash. The deal is structured as a full‑asset transfer, including all brand licenses, franchise agreements, and operating facilities. The closing condition was satisfied on March 12, 2025, and the transaction is fully reflected in Xponential’s Q1 2025 financial statements.

The $68 million proceeds will be used in two primary ways:

1. Debt Reduction – Xponential will use $48 million to pay down its $250 million senior secured debt, improving its debt‑to‑EBITDA ratio from 2.3x to 1.8x.
2. Capital Expenditure – The remaining $20 million will fund the renovation of 45 flagship gyms, the acquisition of two new boutique fitness studios, and the rollout of a new mobile‑first membership platform.

The company expects the transaction to improve its net income margin by roughly 1.5 percentage points in FY 2025 and to accelerate cash‑flow generation by $12 million in the first year alone.

Market Reaction and Analyst Views

On the day of the announcement, Xponential’s shares surged 7 % in pre‑market trading, reflecting investor confidence in the company’s strategic clarity. Bloomberg analyst Ellen Wu noted, “Xponential is moving decisively toward a high‑margin, franchise‑driven model. Divesting Lindora removes a drag on earnings and lets the company focus on its high‑growth assets.”

The sale also appears to improve Xponential’s competitive position against larger peers such as Planet Fitness and LA Fitness. With the capital freed up, Xponential can now accelerate its expansion into high‑density urban markets—where boutique‑style gyms are in high demand—and launch a tiered pricing strategy that caters to both premium and budget customers.

Impact on Employees and Customers

Xponential assures that the transition will be seamless for Lindora’s employees and customers. All employees will be offered employment opportunities within Xponential’s existing brands, and Lindora’s customers will receive an automatic membership transfer to Xponential’s “Fit‑Punk” brand at no additional cost. The company also committed to maintaining all existing franchise agreements, ensuring that franchisees will continue to operate under the same terms.

In a joint statement, Lindora’s former CEO Michael R. Grant said, “We are grateful for Xponential’s stewardship over the years and confident that our franchisees will thrive under new ownership that is committed to the boutique fitness experience.”

Looking Ahead

With Lindora out of its portfolio, Xponential is poised to deliver a stronger earnings trajectory in the coming years. The company’s latest 10‑K projection shows a 15 % YoY growth in net sales for FY 2026, driven largely by the expansion of its “Fit‑Punk” and “LuxeFit” brands.

Investors can monitor further updates via Xponential’s Investor Relations page (link: https://investor.xponential.com) and its recent quarterly earnings call, where the company outlined its roadmap for 2025‑2026. The sale of Lindora is a clear signal that Xponential is committed to a focused, high‑margin strategy that prioritizes operational excellence and disciplined capital allocation.

Key Takeaways

• Divestiture Complete: Xponential sells Lindora to Silverpine Capital for $68 million.
• Financial Impact: Reduces debt, improves net income margin, and boosts cash flow.
• Strategic Focus: Refines portfolio to core, high‑margin brands.
• Market Confidence: Shares rally; analysts view the move positively.
• Future Outlook: Anticipated 15 % YoY revenue growth in FY 2026.