November 30, 2023

Life Time Group experienced a 15% drop in its shares on Wednesday following the release of its third-quarter results, which disclosed increased expenditures aimed at enhancing the premium member experience.

The cost of operating its fitness centres, including both newly established and expanding locations, witnessed an 8.2% year-over-year rise during the quarter, reaching $319.4 million, as confirmed by the company.

Bahram Akradi, the CEO of Life Time, emphasized that these investments, which encompass initiatives like introducing pickleball courts and personal training programs, have successfully driven member engagement at their clubs. Average member visits have surged by 24% since 2019, with the company now boasting a total of 170 centres.

Akradi articulated the need for Life Time to expand its horizons, particularly given its extensive reach of 150 billion annual impressions. He posed a fundamental question: “What other products and services can consumers buy from us?”

These program adjustments serve as an endeavour to retain the satisfaction of Life Time’s affluent customer base, especially in the face of rising prices across the industry, where premium offerings are becoming increasingly valued by consumers.

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Though LifeTime has already implemented price increases at numerous locations in recent years, pricing strategies do exhibit some variability based on specific markets. Akradi revealed that while a majority of price adjustments have been executed, an additional 20% to 25% of the company’s clubs still have opportunities to gradually raise member prices over the next 6 to 12 months.

Akradi underlined the importance of better utilizing the myriad connections and programs at their disposal, emphasizing ongoing efforts to streamline these processes and offer products that are unequivocally top-notch.

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Akradi emphasized that these new offerings represent valuable long-term investments aimed at fortifying the luxury brand. The heightened member engagement translates to increased return visits and greater spending throughout the customer relationship.

One example of the company’s investment is the “Dynamic Stretch” program, focused on assisted stretching, which is estimated to open up a $50 million market opportunity by 2024, as per the company’s projections.

Furthermore, Life Time is considering the inclusion of weight loss drugs in its fitness plans, aligning with the latest trend surrounding GLP-1. Chief Operating Officer Jeff Zwiefel shared this insight with CNBC.

In the third quarter, Life Time disclosed a net income of $7.9 million, equivalent to 4 cents per share, with total revenue amounting to $585.2 million. Comparatively, in the same period last year, the company reported earnings of $24.7 million, translating to 12 cents per share, and generated revenue of $496.4 million.

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