Planet Fitness, Inc. has filed the terms of its initial public offering (IPO) saying it will sell 13.5 million shares at between $14 and $16 each in a bid to raise up to $216 million.
Also, 9.12 million of the shares on offer will be sold by the company while 4.38 million will be sold by selling stockholders. The filing is for a listing on the NYSE under the symbol “PLNT”.
The lead underwriters to the IPO are J.P. Morgan, Bank of America Merrill Lynch, Jefferies and Credit Suisse who have an option to buy an additional 2.025 million shares. Should this option be exercised, Planet Fitness could raise up to $248.4 million from the IPO.
The majority shareholder in Planet Fitness is TSG Consumer Partners.
For all traders out there, there are a number of important facts that should be known before the company goes public.
Before looking at Planet Fitness’s specific facts, a look at general gym statistics from the Statistic Brain Research Institute release, dated 27 April 2015, assists in placing a number of the Planet Fitness facts in perspective.
According to the data, the average monthly cost of gym membership is $58 while other data shows that 67% of gym members never utilize their membership.
The annual revenue from gym and health club membership is $21.8 billion which comes from 58 million members who belong to 30,500 gyms.
Meanwhile, the gym chain, which says it has 7 million members, offers a standard membership for $10 per month while it also offers a higher tier of membership, its PF Black Card for $19.99 a month, placing it very much in the “discount gym” category. The company says it aims to attract occasional and first time gym users with the membership charges on offer. Membership of the gym group is made up of low and high income households.
Planet Fitness has a policy of being a gym for everyone and a place without judgement. Besides the obvious “Planet Fitness” name, the company says it owns or has rights to particular motivational phrases such as “No Lunks”, No Gymtimidation”, “Judgement Free Zone” and You Belong”.
The Planet Fitness stores all feature the same corporate identity with similar decor while the gym equipment is all branded in the same purple and yellow colors.
Planet Fitness says in its filing that the company has debt of $506.4 million as of March 2015. Large interest payments are required to service the debt which could hamper future growth.
There are 976 Planet Fitness stores of which 57 are company owned while the balance of 919 are franchised. Company growth is expected to be driven by the franchise-owned stores whose owners have committed to opening more than 1,000 new stores, according to Planet Fitness.
Besides the revenue from its own stores, Planet Fitness derives revenue from the franchisees who pay over a percentage of membership dues and other fees to the company.
Interestingly, a warning note is provided in respect of the tanning service offered by Planet Fitness stores which could fall foul of further regulatory action that might be taken by government. The filing states that this could result in heavy fines being levied against the company.
The filing also states that, “The continuation of our tanning services is dependent upon the public’s sustained belief that the benefits of using tanning services outweigh the risks of exposure to the ultraviolet light.”
The vast majority of the stores have indoor tanning services primarily for the Black Card membership.