Viva Leisure flexes operating leverage as maiden dividend and Meridium review sharpen the growth story

Viva Leisure has used a year of network optimisation to demonstrate something investors have been waiting to see - whether the gym operator can grow earnings faster than revenue without relying on a relentless diet of new site openings.

The FY2026 numbers suggest it can.

Revenue increased 12.2 per cent to $237.1 million, while adjusted EBITDA rose 13.3 per cent to $112.3 million. Underlying pre-AASB16 EBITDA climbed 17.0 per cent to $53.7 million and underlying net profit jumped 46.4 per cent to $18.9 million. Statutory NPAT more than doubled to $12.8 million. All five financial measures tracked by management exceeded guidance, including the profit guidance upgraded in May.

The more interesting number for investors is operating costs, which rose 10.2 per cent, slower than revenue. That pushed the adjusted EBITDA margin 50 basis points higher to 47.4 per cent. Viva calculates that 51 cents of every incremental revenue dollar generated during the year became EBITDA.

That is the operating leverage the company has been promising, and FY2026 provided a useful test because expansion was deliberately restrained.

More members, almost the same number of gyms

Viva finished June with 204 corporate clubs, only three more than a year earlier, yet corporate membership increased by more than 17,000 to 275,688.

Average membership per corporate club increased from 1,286 to a record 1,351 and portfolio utilisation moved above 80 per cent. Management estimates average revenue per member at about $750 annually, implying that better utilisation across the existing estate can deliver meaningful revenue without another lease, fit-out and opening campaign.

Health clubs remain overwhelmingly the engine room, generating $208.2 million of revenue. Of the group's $25.8 million increase in annual revenue, $20.7 million came from health clubs despite the limited increase in corporate locations. Payments and technology revenue, however, grew 39.8 per cent, while supplements and other revenue rose 18.5 per cent.

Those smaller divisions matter because their growth requires considerably less physical capital.

Cash flow earns Viva its first dividend

The other change in the investment case is that expansion is increasingly being funded internally.

Adjusted free cash flow rose 7.7 per cent to $35.1 million. Viva reinvested $31.3 million across growth capex, technology and acquisitions while reducing net leverage from 2.04 times to 1.77 times. The banking covenant remains at 2.50 times.

That gave the board enough confidence to declare Viva's maiden dividend of 3.0 cents per share, fully franked. The dividend goes ex on 28 September, has a 29 September record date and is scheduled for payment on 20 October. A dividend reinvestment plan will operate without a discount.

The dividend is modest, but symbolically important. Viva is effectively arguing that it has reached the point where growth investment, deleveraging and shareholder distributions can coexist rather than compete for the same dollar.

Meridium adds another moving part

Potentially the biggest valuation wildcard is Meridium Global, the new standalone structure housing Viva's payments and technology assets.

These operations include payments processing, member-management technology, access-control hardware and Viva 360, the group's data and member-intelligence platform. Total transaction volume exceeds $400 million, while management says separating the business removes constraints around external customer access and allows it to be compared with payments and technology businesses rather than solely fitness operators.

Meridium generated $13.4 million of standalone EBITDA in FY2026 before inter-segment eliminations, up from $3.7 million in FY2025. Viva has commenced a strategic review to determine the best way to realise that value for shareholders, but no specific transaction or timetable has been outlined.

For investors, that means Meridium is optionality rather than realised value at this stage.

The growth lever gets switched back on

Having spent FY2026 proving it could extract more from the existing network, Viva now plans to accelerate openings again.

The group finished June with 694,243 network members and has subsequently passed 700,000. Its longer-term target is one million members by FY2029, supported by more than 30 new corporate and franchise locations annually and a pipeline of 170 locations already sold or contracted.

Management is pointing to a pace of more than 20 net new corporate openings from FY2027 onwards, alongside a franchise pipeline of more than 150 sites and a 20-location refurbishment program.

No specific FY2027 revenue or earnings guidance has been provided. That leaves execution as the next test: Viva has shown the economics can improve when expansion slows. Investors will now be watching whether those margins, cash conversion and leverage metrics hold up when the treadmill speeds up again.