Life Time CEO Touts Member Engagement as Shares Soar
The luxury lifestyle and fitness operator’s stock surged Wednesday on the back of strong 2023 financials and membership metrics
Shares of Life Time are surging in response to strong fourth quarter and full-year fiscal 2023 results, demonstrating that its member-rich amenities and services are a hit with wellness seekers — so much so that there are membership waitlists at over 20 Life Time clubs, with additional clubs expected to have waitlists by May.
The luxury fitness and lifestyle operator reported its total revenue increased 18.2% to $558.8 million for the fourth quarter and 21.6% to $2.217 billion for the year, crediting its continued strong growth in membership dues and in-center revenue. Net income also increased to $23.7 million for the fourth quarter and $76.1 million for the year.
“I am thrilled to report that we achieved our operating and strategic objectives and exceeded our financial goals in 2023,” said Bahram Akradi, Life Time founder, chairman and CEO. “We set record levels of revenue and adjusted EBITDA, improved our balance sheet and further reduced our net debt leverage ratio.”
Akradi emphasized that Life Time expects to be free cash flow positive beginning in the second quarter and plans to open nine to ten new centers in 2024. The fitness operator opened its eighth facility in New Jersey this week.
“We also increased member engagement through our strategic programming initiatives, as highlighted by the increase to 135 average visits per membership compared to 124 in 2022 and, most notably, 108 in 2019 before the pandemic. The increase is a clear indication that our members are more engaged, with higher retention as a key outcome,” Akradi said,
Following Wednesday morning’s earnings call, shares of Life Time shot up over 11% as of Wednesday afternoon.
Resilient & In-Demand
Establishing waitlists for busy Life Time clubs creates a two-fold benefit, noted Akradi: maintaining the brand’s member experience and improving member retention.
“We expect to realize the highest retention rates in the history of Life Time in 2024,” he told investors, adding that, like most high-end leisure brands, the club doesn’t see any weaknesses in traffic.
By comparison, Placer.ai recently reported that traffic to ten leading fitness operators fell flat last month, typically when gyms are bustling with New Year ‘Fitness Resolutioners.’
“Right now, we see no reason to suggest the positive trend we’re experiencing today should change going forward,” Akradi added.
Life Time will also continue to invest in programming such as pickleball and small group classes.
Bullish on GLP-1s
Life Time isn’t experiencing any pain from the weight loss medication surge, with Akradi noting that Miora, the brand’s medical wellness and longevity clinic launched last fall, is a “huge opportunity” for the luxury lifestyle operator. The clinic offers popular, non-invasive wellness therapies such as infrared saunas, red light therapy, peptides, hormone replacement therapy, IV therapy, cryotherapy chambers and even GLP-1 weight loss drugs.
“We have exactly the right customer base in our clubs,” he said. “This is going to remain a megatrend. It’s going to stay, and it’s not a negative for exercise because you absolutely need to combine the proper weight training and nutrition with these drugs. The exercise business is going to get a win out of it.”
Further, Akradi points out that weight loss customers spending $500 – $1000 a month on drugs like Ozempic and Wegovy will want the proper facilities, professional personal trainers and nutritionists to support their health investment. He also sees those who have lost weight becoming more comfortable attending Life Time clubs.
“Lifetime is uniquely positioned because, in every market, we have facilities where we can launch Miora Clinics for longevity, for addressing weight loss, peptides, all of that,” he said. “We look at this as nothing but an upside.”
