YogaWorks, Santa Monica, California, on Monday filed the terms of its initial public offering (IPO) with the U.S. Securities and Exchange Commission. If the company goes public, it would be the first American yoga studio franchise to do so.
YogaWorks intends to generate $65 million by offering 5 million shares at a price range of $12 to $14, according to its IPO filing. This would put YogaWorks' fully diluted market value at approximately $187 million, NASDAQ reported, with insiders indicating a purchasing interest of up to $10 million or 15 percent of the IPO shares.
"We believe we are viewed as a trusted authority on the growing yoga movement and have a reputation for being the place where top teachers go to learn and teach," the IPO filing said. "Today we are one of the largest branded operators of yoga studios in the U.S. by number of studios and number of students, with more than 225,000 practicing students and almost 3 million student visits in 2016. We believe our positioning as a lifestyle brand has resulted in attractive student economics for us. Driven in part by the large number of students that are referred to us by our teachers or existing students, we have been able to achieve a 'lifetime value' per student of more than ten times our marketing cost to acquire a new student."
The company generated $55.1 million in 2016 revenue but is "unprofitable," according to a Market Watch report, having recorded net losses of $9.4 million and $9.2 million in 2016 and 2015, respectively.
YogaWorks was founded in 1987 and has 50 company-owned studios in major U.S. markets. It also has an Internet-based digital media service, MyYogaWorks.com, which is a subscription-based online library of yoga class videos, and it has its YogaWorks teacher training program. The company plans to list on the NASDAQ under the symbol YOGA.
"Our recent growth has been driven by our strategy of adding studios primarily through acquisitions and selectively building new studios," the filing said. "Through acquisitions, we believe we can quickly gain students, grow our market share and build on the operating momentum of these acquired businesses. Our acquisition strategy also allows us to immediately gain a strong presence in targeted markets and local communities."
YogaWorks has letters of intent to acquire 10 studios and is in late-stage negotiations to acquire four additional studios, according to the IPO filing.
"In total, we have entered into confidentiality agreements with respect to more than 125 studios, pursuant to which we are evaluating and discussing potential acquisitions of those studios, and have contacted owners of over 250 additional studios regarding a potential acquisition," the filing stated. "We believe each of the potential acquisitions subject to the letters of intent is consistent with our growth strategy and intend to fund any purchase price with cash, but may also decide to issue stock as consideration or compensation to new employees."
In 2014, private equity firm Great Hill Partners, Boston, purchased YogaWorks for $45.6 million.