Shares in Australian-founded fitness franchise F45 have tanked, down more than 60 percent.
It has prompted company CEO and founder Adam Gilchrist to resign, but not before receiving a $10.1 million handshake.
Along with Gilchrist’s departure, the global giant, which is financially backed by Hollywood star Mark Wahlberg, will also lay off 110 employees as it cuts operating costs.
F45 ranks as one of the fastest growing franchises in the world with more than 1,750 gyms in 45 countries, amassing a cult following for its 45-minute group workouts that combine resistance, metabolic and cardio movements.
The rapid growth since its 2012 launch in Sydney caught the attention of Wahlberg, who became its second largest shareholder after Gilchrist and attributed his toned physique to the regimen.
The company’s move to the New York Stock Exchange made headlines in July 2021, making Gilchrist $500 million overnight.
Wahlberg enjoyed a similar windfall, selling 1.1 million shares in March and April 2022 for $17.45 million.
But there are reports that F45 had less than $20 million in cash when he last submitted his accounts, meaning Gilchrist’s payment uses up half of his funds.
The New York Stock Exchange recorded the company’s shares opening at $US3.51 ($5.02) and closing at $US1.35 ($1.93) on Wednesday.
Even before the crash, F45’s shares had fallen sharply since it went public with an initial offer of $22.89 a share.
Wahlberg isn’t the only high-profile celebrity associated with F45.
The fitness franchise has also been endorsed by David Beckham, Mario Lopez, J. Balvin, Steve Aoki, Magic Johnson, Greg Norman, and Cindy Crawford.
In a statement, Gilchrest said he was “forever grateful” to the franchise and thanked staff, investors and members for their support.
“To the staff who have worked tirelessly since our inception, you have been incredible in your efforts and I thank you for all of your support,” he said.
“To the investors who have joined us throughout our journey, I thank you for your commitment to F45.
“Lastly, I will be eternally grateful to our franchisees who provide the best training in the world every day to F45 members around the world.”
Gilchrist’s $10.1 million handshake includes 12 months’ rent on his Florida mansion and 18 months of health insurance for his family.
He also has a $14 million house in Sydney and an $18.8 million mansion in Byron Bay.
Gilchrist will remain on the F45 board as a director, with independent director Ben Coates taking the reins until a new boss is appointed.
Chief Financial Officer Chris Payne said the company was “taking the necessary steps to adjust the size of our business in light of changing macroeconomic and business conditions.”
He said it was an “incredibly difficult decision” to cut staff, but it was an important step in enabling the company to achieve long-term, sustainable success.
“Despite headwinds, F45’s business fundamentals remain strong, and we are as excited as ever to continue to bring the best training in the world to a growing base of members every day,” said Mr. Payne.
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