Planet Fitness Posts A Q2 Beat, But Shares Reverse Lower Late

Discount gym operator Planet Fitness turned in a Q2 beat late Wednesday in its first financial report since its IPO last month, but its shares fell after hours.

One of the largest and fastest-growing franchisers and operators of fitness centers, Planet Fitness (PLNT) reported Q2 revenue of $79 million, topping the consensus estimate of $77.4 million and up 26% from Q2 2014.

Earnings per share minus items rose 30% to 13 cents, beating estimates by a penny.

Planet Fitness stock, which had advanced for the past seven trading days to 18.50 at Wednesday's close despite the shaky market, at first rose 8% after its earnings release. But shares reversed and were down 6.5% late.

The company didn't update membership numbers, as some analysts apparently expected, saying that it would do so just once a year.

The company has more than 1,000 gyms, mostly franchise operations. It added 38 new sites in Q2. Franchise segment revenue rose 25% to $43.6 million.

For the year, Planet Fitness estimated revenue at $314 million to $316 million. The consensus was $313 million. It expects EPS of 47-48 cents, vs. analyst consensus of 46 cents.

Planet Fitness raised $216 million with its initial public offering, pricing 13.5 million shares at 16, the high end of its estimated range. On its first day of trading, Aug. 6, the stock closed at 16. Shares hit a low of 13.65 the day of the big market crash, Aug. 24.

The industry is highly competitive and fragmented, with about 34,460 clubs across the U.S. serving about 54 million members, Planet Fitness says. The company fits into the discount gym sector. Users pay $10 monthly. It also offers a premium level, called PF Black Card, for $19.99 a month, that provides unlimited access to all Planet Fitness gyms, the ability to bring a guest on each visit and access to exclusive gym areas.

On Monday, at the end of its IPO quiet period, multiple analysts initiated coverage on Planet Fitness. JPMorgan gave it an overweight rating with a price target of 20. Piper Jaffray also rated Planet Fitness stock overweight with a 19 price target.

"We view Planet Fitness as a unique growth story, blending a best-in-class franchise model with a differentiated consumer proposition that points to double-digit store growth," wrote Credit Suisse analyst Seth Sigman in his initiation report.

Other IPOs in the health and fitness field include fitness band maker Fitbit (FIT), one of the largest IPOs this year. Fitbit priced at 20 and raised $732 million on June 17. Fitbit stock rose 2% Wednesday to 33.57.

Mindbody (MB), provider of a cloud-based platform for health and wellness services, raised $101 million with its June IPO.