Life Time Posts Strong Revenue, Membership Growth in Q3
Buoyed by strong numbers, the luxury club operator is on track to become free cash flow positive by 2024
Life Time has reported its Q3 2023 earnings, posting a revenue increase of 17.9% to $585.2 million and a membership increase of 7.6% (55,602) when compared to the prior year’s third quarter.
The amenity-rich luxury lifestyle club operator opened six new centers during the third quarter in addition to the ten it opened in the first nine months of the year. In the fourth quarter, Life Time expects to open two new centers.
“I am very appreciative of our team and the milestones we achieved this quarter,” commented Bahram Akradi, Life Time founder and CEO. “We generated record levels of revenue and Adjusted EBITDA, and our trailing 12-month Adjusted EBITDA surpassed $500 million for the first time in our history. Our investments in programming are working to increase member engagement at our clubs with average member visits up 24 percent versus 2019.”
Free Cash Flow Positive By ’24
Akradi noted that as Life Time looks to next year, the fitness and lifestyle operator expects to be free cash flow positive after all capital investment, including new club growth, by the middle of 2024 — two years earlier than initially anticipated.
“With expectations for continued Adjusted EBITDA growth and significant asset-light opportunities, we expect to fund our targeted growth in 2024 and beyond with internally generated cash flow. We are well positioned for continued success,” he continued.
New Services & Offerings
One aspect that Life Time has identified as a $50 million dollar opportunity is its new Dynamic Stretching offering, a personalized, one-on-one assisted stretching service provided by certified personal trainers. The program is an expansion of Life Time’s Dynamic Personal Training.
“It helps our trainers, engagement with the customers, it helps the pickleball customers… I mean, it’s just a really great program,” Akradi said. While he’s pleased with the rollout and progress of Dynamic Stretch, Akradi says the “bigger impact” will show up in 2024.
Life Time also continues to expand its boutique-style offering of health, recovery and relaxation services for its members, such as pools, whirlpools, saunas, eucalyptus-scented steam rooms, Hyperice Normatec recovery tools, HydroMassage and CryoLounge+ chairs from WellnessSpace Brands, and Hyperice Hypervolt portable percussion massagers.
The investments in Life Time member experiences have paid off: visits per membership are up approximately 24% through the first nine months of 2023 compared to the first nine months of 2019, Akradi told investors.
As it looks ahead, Life Time will lean into retail initiatives to offset expected declines in its business.
“I don’t really like to have any seasonal drops,” Akradi said. “So we’re trying to find ways to add additional sales through programs, not services in the clubs, but sales of apparel and nutritionals, and that rollout has been delayed now to early 2024.”
