Australia has seen a steady rise in gyms and fitness centers in line with the growing interest among gym goers. Millions of Gen-Z and millennial Aussies have been signing up for gym memberships to reinvent their lifestyle.
This has proven to be fertile ground for fitness businesses to thrive. Recently, health and fitness clubs provider Viva Leisure Limited (ASX: VVA) has announced its strategic expansion into the Northern Territory market by acquiring iFitness 24/7, the leading health club operator in the region.
This acquisition marks Viva Leisure’s first foray into the Northern Territory, broadening its national footprint and enhancing its position as the leading player in Australia’s health club industry.
The acquisition is worth $5.2 million in cash, and will be funded by existing financial facilities and cash reserves. iFitness is expected to contribute approximately $1.5 million in EBITDA and $4.4 million in revenue in FY25.
Viva’s Managing Director and CEO, Harry Konstantinou, said, “We are genuinely excited to enter into the Northern Territory market with the strategic acquisition of iFitness 24/7.
“This expansion not only grows our network but also diversifies our geographical presence, bringing Viva’s exceptional service and community focus to a new membership audience. The addition of these locations to our portfolio is a testament to our team’s hard work and dedication to broadening our reach and impact.”
Viva Leisure provides health and fitness clubs across Australia. Adding four new locations increases Viva’s portfolio to 173 corporate-owned locations nationwide. In line with its strategic restructure program announced in its FY23 results, a Hiit Republic location closed due to a recent lease expiration.
In H1 FY24, the Company’s revenue increased by 17.3% to $79.1 million, driven by organic growth. Membership increased by 9.8% to 180,071 in owned locations and by 6.2% to 345,317 in all locations.
Overall, locations increased by 6 to 168 in owned locations and by 7 to 345 in all locations over pcp, despite several club closures with the restructure plan.
Viva re-invested $8.5 million in growth, including greenfield sites, acquisitions, technology, and site upgrades. The Company achieved EBITDA of $16.6m for the first half and is guiding towards $9.5m to $10.0m to be achieved in Q4 FY24.
iFitness will introduce over 5,000 new members to Viva’s growing network. With the rebranding of the new locations to Club Lime, Viva will operate 112 clubs under this flagship brand, reinforcing its status as Australia’s largest non-franchised health club brand.
This acquisition is part of 10-15 additional locations planned for acquisition in FY24. Plus, it aligns with the previously provided guidance numbers for FY24. The Company expects revenue to be in the range of $162 to $164 million and EBITDA of $35 million to $35.5 million.
Alinda is a Business Reporter for The Sentiment
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