To the Board of Directors of Xponential Fitness, Inc. (NYSE: XPOF):
COCONUT CREEK, Fla., April 01, 2026 (GLOBE NEWSWIRE) -- Kanen Wealth Management, LLC, as owners of approximately 4% of the Company’s outstanding Class A shares, urges the Board to immediately initiate and publicly announce a formal review of strategic alternatives, including a sale of the Company. The Board should establish an independent Special Committee and retain a qualified financial advisor to conduct a good-faith process with credible bidders.
This letter follows a private communication we sent to the Board in March 2026. In our view, our conversations with the Company’s former CFO and current Chairman suggest a degree of alignment at the leadership level, with both appearing receptive to pursuing strategic alternatives as a rational and appropriate path forward. Our characterization reflects our interpretation of those discussions, and we recognize that views may differ. Notably, we did not encounter material opposition to the concept of exploring a transition to private ownership.
Given this apparent alignment, the absence of a public process is increasingly difficult to justify.
Based on our discussions with other investors and the Company’s prolonged valuation dislocation, we believe most shareholders support a strategic review, particularly given ongoing governance instability and execution uncertainty.
Structural Instability Has Driven a Valuation Disconnect
As outlined in our prior correspondence, three Chief Executive Officers in three years, repeated operational resets, financial restatements, and regulatory scrutiny signal structural instability. This level of leadership turnover is not transitional, it reflects deeper governance and execution challenges. SEC inquiries and FTC-related matters have further undermined credibility and diverted focus from disciplined operations. Public markets have responded accordingly, with a severe compression in valuation and investor confidence.
Our position is not rooted in pessimism about the Company’s brands. To the contrary, we believe Xponential owns a premier asset in Club Pilates, which is a category-defining franchise with durable unit economics and substantial embedded value not reflected in today’s share price.
After allocating appropriate G&A, we estimate Club Pilates can generate $100M+ of EBITDA today, with a clear path to $125–150M within three years under focused stewardship. Applying a conservative 10–12x multiple implies an enterprise value of $1.25–1.8 billion for Club Pilates alone, representing material upside relative to the Company’s current valuation after accounting for net debt and the TRA.
The market is discounting governance risk, not asset quality. A public strategic process would improve transparency and accountability and allow market participants to reassess XPOF’s intrinsic value. Private ownership would enable the operational reset required to unlock this value without the credibility overhang and quarterly scrutiny suppressing the stock.
We believe the current share price materially understates intrinsic value, and that a strategic process would result in a transaction at a substantial premium. Under a streamlined structure with reduced interest expense and SG&A rationalization, Xponential could generate $125M+ of EBITDA and $80M+ of FCF, supporting an attractive acquisition multiple for a scaled, asset-light franchise system.
The Board’s Fiduciary Duty
The Board’s responsibility is to maximize shareholder value through independent and objective judgment. Leadership appears aligned around pursuing alternatives, shareholders broadly support a review, and valuation remains materially disconnected from intrinsic value—yet no formal process has been initiated.
The status quo has failed to restore credibility or close the valuation gap. Another operating reset will not resolve these structural issues. A public, disciplined exploration of strategic alternatives is the most direct path to accountability and value realization.
We expect the Board to act decisively.
Sincerely,
David Kanen
President
Kanen Wealth Management, LLC.
Contact:
dkanen@kanenadvisory.com
