Planet Fitness stock plunges as CEO abruptly steps down, surprising Wall Street

Yet one more CEO turnover.

On Friday, Planet Health’s (PLNT) board introduced the choice to “transition to new management,” ensuing within the departure of 30-year firm veteran and CEO Chris Rondeau.

“As we enter the following chapter of Planet Health’ journey, the Board felt that now was the correct time to transition management,” Stephen Spinelli, Jr., the board’s chairman, mentioned within the launch.

As the corporate appears to be like for brand new management, six-year board member Craig Benson was named interim CEO, efficient instantly. Benson beforehand served as New Hampshire governor and is a franchisee of each Planet Health and Dunkin’ Donuts. The corporate mentioned it’s contemplating each inside and exterior candidates.

Planet Health is the newest firm to shake up its C-suite, and it is one thing Wall Avenue is not taking evenly. On Friday, Planet Health inventory plunged as a lot as 16%, hitting a 52-week low. The inventory was additionally a trending ticker on Yahoo Finance.

Planet Health declined to answer Yahoo Finance’s request for remark.

Whereas no actual motive for Rondeau’s rapid departure was given, all through his decade-long tenure, Rondeau was credited with rising the health middle’s membership by over five-and-a-half instances to 18.4 million members and its footprint by 4 instances to greater than 2,400 shops.

He additionally almost quintupled income to a projected $1 billion-plus this yr, from $200 million in 2013, and took the corporate public in 2015, William Blair analyst Sharon Zackfia mentioned in a word. Because the firm’s IPO, shares have greater than tripled.

Within the launch, Rondeau known as his profession at Planet Health “an unimaginable trip,” thanking workers, franchisees, and members. He’ll proceed to function a member of the board and will probably be nominated for reelection on the firm’s 2024 annual assembly.

TORONTO, ON -  JANUARY 7: Chris Rondeau, CEO of Planet Fitness, a low cost gym chain that opened its first Canadian branch in Toronto. The franchise is growing quickly thanks to low prices and its

Chris Rondeau, CEO of Planet Health, is pictured at its first Canadian gymnasium department in Toronto. (Bernard Weil/Toronto Star by way of Getty Pictures)

Wall Avenue surprised by Rondeau’s departure

The sudden C-suite change appeared to take Wall Avenue without warning.

“The catalyst for the shift in management is unsure,” William Blair analyst Zackfia mentioned. “Additionally it is abrupt and doesn’t seem deliberate, as the corporate canceled two deliberate investor convention shows this week and the choice was characterised because the board’s and never Rondeau’s.”

So far as who the board may faucet as the following CEO — that is unclear too.

“We have no idea of any inheritor obvious internally and as a substitute suspect the board will search out an exterior candidate with sturdy franchised expertise (we don’t view health membership expertise as vital given Planet’s distinctive go-to-market technique versus the peer group),” Zackfia added.

It additionally raises questions in regards to the firm’s technique shifting ahead, Cowen analyst Max Rakhlenko wrote in a word on Friday.

“The shake up will increase uncertainty as Mr. Rondeau has been with PLNT for 30 years with 10 as CEO,” Rakhlenko wrote. “Board member Craig Benson was appointed as Interim CEO and his expertise as a PLNT franchisee positions the corporate effectively in the course of the search. That mentioned, PLNT is working by way of a difficult stretch, and this era will delay new technique implementation.”

Nonetheless, Zackfia talked about the change may unlock higher returns for the corporate — one thing Stifel analyst Chris O’Cull echoed in a brand new word.

“Whereas the timing of the announcement was shocking, we imagine the management transition may set the stage for a quicker tempo of change, with sure components of the mannequin — corresponding to elevating the value of the Traditional Membership bundle — probably now on the desk for consideration,” O’Cull mentioned.

Brooke DiPalma is a reporter for Yahoo Finance. Comply with her on Twitter at @BrookeDiPalma or e-mail her at bdipalma@yahoofinance.com.

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