8-K: Xponential Fitness Refinances Debt, Repurchases Preferred Stock

Xponential Fitness, Inc. has successfully refinanced its existing debt with new credit facilities and repurchased all outstanding convertible preferred stock.

Summary

• Xponential Fitness, Inc. (XPOF) entered into a new Credit Agreement on December 8, 2025, establishing a five-year term loan facility of $525 million and a revolving credit facility of $25 million.
• Proceeds from the new term loan were used to fully refinance the company's existing credit facility (approximately $369.2 million outstanding loans), repurchase all outstanding convertible preferred stock, and cover transaction expenses.
• The repurchase of preferred stock involved a payment of approximately $127.0 million, plus $1.4 million in accrued and unpaid dividends, for 114,660 shares of 6.50% Series A and Series A-1 Convertible Preferred Stock.
• The company paid an exit fee of approximately $7.2 million and a make-whole premium of approximately $10.4 million in connection with the termination of the Existing Credit Agreement.
• The new term loans will bear interest based on Term SOFR or Base Rate, plus a leverage-based margin, with quarterly principal repayments commencing March 31, 2026.
• The revolving credit facility will be used for working capital and general corporate purposes.
• The new credit agreement includes a financial covenant requiring the Total Net Leverage Ratio not to exceed specified thresholds, starting at 7.00:1.00 for the fiscal quarters ending March 31, 2026, through December 31, 2026, and decreasing to 5.00:1.00 by March 31, 2028.

Sentiment

Score: 8

Explanation: The refinancing and preferred stock repurchase are significant positive financial restructuring events. They reduce future dilution risk, offer potential interest cost savings, and provide a stable capital structure for future growth. The immediate costs associated with terminating the old agreement are outweighed by the long-term benefits.

Positives

• The refinancing allows for a potential decrease in interest payments by up to one percent if certain financial milestones are achieved.
• Elimination of the company's preferred stock, which was convertible into approximately 8.2 million shares of common stock, removes potential future dilution for common shareholders.
• The new credit facilities provide enhanced financial flexibility and better positioning to support strategic priorities and create long-term shareholder value.

Negatives

• The company incurred an exit fee of approximately $7.2 million and a make-whole premium of approximately $10.4 million for terminating the Existing Credit Agreement.

Risks

• The outcome of ongoing and any future government investigations and litigation to which the company is subject.
• Ability to retain key senior management and key employees.
• Relationships with master franchisees, franchisees, and international partners.
• Difficulties and challenges in opening studios by franchisees.
• The ability of franchisees to generate sufficient revenues.
• Risks relating to expansion into international markets.
• Loss of reputation and brand awareness.
• Geopolitical uncertainty, including the impact of the presidential administration in the U.S.
• Trade policies and tariffs.
• General economic conditions and industry trends.
• Other risks as described in the company's SEC filings, including its Annual Report on Form 10-K for the full year ended December 31, 2024.

Future Outlook

The company expects the refinancing to better position it to support strategic priorities and create long-term value for shareholders. Forward-looking statements are subject to significant uncertainties and contingencies, and actual results may differ materially.

Management Comments

• John Meloun, Chief Financial Officer of Xponential Fitness, stated: 'This refinancing not only allows the Company to decrease interest payments by up to one percent if it achieves certain financial milestones, but it also eliminates the Company’s preferred stock which were convertible into approximately 8.2 million shares of common stock. We are now even better positioned to support our strategic priorities and create long-term value for our shareholders moving forward.'

Industry Context

Xponential Fitness operates in the boutique health and wellness franchising sector. This refinancing and preferred stock repurchase could enhance the company's financial stability and flexibility, potentially allowing for continued investment in its diversified portfolio of brands (Club Pilates, StretchLab, YogaSix, Pure Barre, BFT) and further international expansion, which aligns with broader growth trends in the fitness industry.

Legal Proceedings

• The company is subject to an ongoing litigation styled as In re Xponential Fitness Securities Litigation, Case No. 8:24-cv-00285, pending in the United States District Court for the Central District of California. An Event of Default would occur if a final non-appealable judgment or settlement for payment of money exceeds $30,000,000, unless satisfied within 60 days with specific funding sources.

Stakeholder Impact

• **Shareholders:** Positive impact due to the elimination of potential future dilution from convertible preferred stock and potential interest cost savings, which could improve profitability and shareholder value.
• **Creditors (New Lenders):** Benefit from a new, secured credit agreement with clear terms and covenants.
• **Creditors (Old Lenders):** Existing debt was fully repaid, including exit fees and make-whole premiums.
• **Management:** Enhanced financial flexibility to pursue strategic initiatives and growth.

Next Steps

• Quarterly principal repayments on the term loans will commence on March 31, 2026.
• The company will continue to use revolving loans for working capital and general corporate purposes.
• Ongoing compliance with the new financial covenant (Total Net Leverage Ratio) and other terms of the Credit Agreement.

Key Dates

Recommendation

The refinancing and preferred stock repurchase are strategically sound moves that improve the company's capital structure by reducing interest costs and eliminating future equity dilution. This financial de-risking and increased flexibility are positive signals. However, the filing also reiterates various operational and litigation risks. While the financial engineering is favorable, a 'hold' recommendation reflects a wait-and-see approach to how these improvements translate into sustained operational performance and address the broader risks mentioned in the forward-looking statements.

Keywords

Xponential Fitness, XPOF, Debt Refinancing, Credit Agreement, Term Loan, Revolving Credit Facility, Preferred Stock Repurchase, Convertible Preferred Stock, Financial Restructuring, Corporate Finance, SEC Filing, 8-K, Boutique Fitness, Franchisor, Health and Wellness