Life Time Group Holdings' improving financial picture is giving the company more control of its ambitious expansion plans for its athletic club portfolio.
Life Time expects to be 'cash flow-positive' by middle of next year
That's two years earlier than originally expected after the chain of fitness centers weathered COVID-19 closures and capacity limitations.
October 25, 2023 at 6:18PM
On Wednesday, Chanhassen-based Life Time reported its third-quarter results. For the period ended Sept. 30, the company earned $7.9 million, down 68% from the third quarter of 2022 on revenue of $585.2 million that increased 18%.
"As we look to next year, we expect to be free cash flow-positive after all capital investment, including new club growth, by the middle of 2024, two years earlier than originally anticipated," said founder and CEO Bahram Akradi in a news release.
Adjusted net income was $26.7 million compared to an $11.5 million loss in the same quarter last year. Adjustments included losses or gains from sale-leaseback transactions. The company's adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — for the quarter was $143 million, up 101% from the third quarter of 2022 and above analysts' expectations.
GAAP (Generally Accepted Accounting Principles) and adjusted earnings per share were below analysts' expectations, and the company's shares were trading down after the earnings release and conference call. After trading Wednesday, Life Time's shares were at $12.12 a share, down 15.2%.
In the third quarter, Life Time opened six new fitness centers. Since the pandemic, Life Time has expanded the types of centers it opens from its traditional stand-alone athletic country clubs to asset-light approaches where it converts former mall and retail spaces into gyms or takes ownership of existing clubs.
Revenue per center continues to increase, driven by higher membership dues and new in-center revenue opportunities. In the third quarter, Life Time introduced Dynamic Stretch across its centers. Life Time members can sign up for 25- to 50-minute sessions with certified personal trainers who can guide members through active and passive stretches as well as range-of-motion exercises.
Bremer has been rumored to be up for sale after a legal settlement in July.
