Planet Fitness Plans Refinancing To Manage Debt

Big-box gym giant Planet Fitness is looking toward a refinancing transaction that will see it issue $600 million in new securitized debt, which, subject to market conditions, can grow to $800 million.

Planet Fitness had approximately $2 billion of outstanding debt under its existing securitized financing facility as of March 31, 2024. The fitness franchise says the refinancing move will help repay a principal balance of approximately $591 million of Series 2018-1 Class A-2-II Notes in full, pay transaction costs and fund reserve accounts associated with the financing facility. The transaction will also fuel general corporate purposes, which may include share repurchases.

The transaction is expected to close next month.

Now inching closer to the second half of its “transition year,” Planet Fitness officially welcomes its new CEO, Colleen Keating, next month.

Market outlook and trends

Despite inching closer to 20 million members and winning with Gen Z, the fitness franchise recently lowered its outlook for 2024, citing several headwinds including a decrease in new member sign-ups.

Planet Fitness added nearly one million new members in Q1 of 2024, which was less than expected. Still, all signs appear to point in a positive direction for high-value, low-price (HVLP) gyms. A recent report from Placer.ai found that nationwide visits to gym chains were up each week of April across several top brands, including Planet Fitness, Crunch, Anytime, EoS, Life Time and 24 Hour Fitness.

Competition and differentiation

While competition is heating up in the HVLP space, Planet Fitness’ exiting interim CEO Craig Benson told investors earlier this month that the brand truly cultivates and ensures a non-intimidating gym environment, the kind that is appreciated by those new to fitness or returning after a long pause.

“We still think that’s the thing that sets us apart from the rest,” Benson said of the franchisor’s “Judgement Free Zone” culture.

“Some use (similar) words,” Benson said, alluding to Planet’s low-price gym competitors. “But if you go in there, it’s kind of loud because people are banging weights and grunting and doing all kinds of things that, if you’ve never been in a gym, is going to intimidate you. So we still think that’s an important part of what we do that others don’t.”

Planet Fitness appears to have pleased investors earlier this month when it decided to raise its base-level membership price from $10/month to $15/month, its first increase in nearly 30 years.