Life Time Stock Slides. Could a Push Into Weight Loss Drugs Help?
The luxury club operator’s shares are down 15% since reporting Q3 results, but a push into GLP-1s could bring investor confidence back
Life Time members may appreciate the luxury club operator’s amenity-rich experience, but investors suddenly seem hesitant to jump into the eucalyptus-scented steam rooms, as seen by shares of LTH diving 15% last week in response to its third-quarter results.
Although Life Time reported a 17.9% revenue increase to $585.2 million and a 7.6% membership boost of 56,602 compared to Q3 of last year, looming macro factors may be at play, such as rising interest rates and higher-than-average member pricing possibly resulting in churn.
Still, in spite of a challenging economic backdrop, Bahram Akradi, Life Time founder and CEO, is committed to investing in a premium membership experience. It’s a method that has paid off before — Life Time’s strong member base and revenue trends led to an upgraded credit rating by Moody’s Investor Service.
While other fitness operators were left gutted in the wake of the pandemic, Life Time continues to grow, opening new facilities including Penn 1 in New York City, indoor pickleball courts and even Life Time Living residences. In NYC alone, Life Time is opening three additional locations next year. In Q3, Life Time opened six new centers in addition to the ten it opened in the first nine months of the year.
Revenue, Membership Numbers Trend Upward
Most notably, the luxury lifestyle operator has reported strong growth in membership sales and member engagement without depending on marketing or promotions.
“Our investments in programming are working to increase member engagement at our clubs with average member visits up 24 percent versus 2019,” Akradi told investors on Life Time’s recent Q3 earnings call.
He added that Life Time is also on a path to becoming free cash flow positive by the middle of next year, two years ahead of schedule.
Life Time Embraces Weight Loss Meds
As Life Time continues to provide recovery and boutique-style wellness offerings for its members, the fitness operator has revealed it’s contemplating tapping into the popular GLP-1 weight loss medication industry with a comprehensive in-house program.
The reason? Life Time’s members are looking to incorporate GLP-1s with their in-club experience.
Jeff Zwiefel, Life Time president and COO, told CNBC that the company is in the process of embarking on a pilot program to evaluate the “use and deployment of physicians, physician assistants and nurse practitioners” that would work together with a member’s primary care doctor and Life Time’s personal trainers and registered dieticians.
Over the summer, Akradi commented on the soaring weight loss medication sector, predicting that Life Time would remain unaffected by consumers who jump-start weight loss with GLP-1s such as Ozempic and Wegovy.
“We have fewer people joining (Life Time) for weight loss,” he told investors on a Q2 earnings call earlier this year, adding that the athletic club hasn’t seen a difference in memberships because of the availability of weight loss medication.
Akradi added that if Life Time was purely a fitness company, there would perhaps be an impact on GLP-1s. However, since the brand offers a broad country club-esque experience with its programs, beach clubs, social gathering opportunities and small and large group classes, he surmised that Life Time isn’t concerned.
While not necessarily a change of heart, incorporating GLP-1s may strengthen investors’ outlook on Life Time, especially as the weight loss medication market is expected to reach $100 billion by 2030.
