Life Time continues on road to recovery with help of sale-leasebacks and member growth

Life Time Group Holdings is slowly recovering from the pandemic slump as it increases memberships and shores up its capital by selling real estate.

Life Time reported on Wednesday that its total revenue increased to $461.3 million during the months of April, May, and June, a jump of nearly 43% from a year ago. But the Chanhassen-based company still reported a quarterly loss of $2.3 million.

Life Time executives acknowledged that high inflation continued to negatively impact its costs. Chief Executive Bahram Akradi told analysts that he felt confident about the company's progress.

"I believe our future performance is in our control and we can continue our growth and overcome the negative impact of [the] macroeconomic environment albeit not as fast as we would like," Akradi said.

Life Time shares closed up about 1% Wednesday.

Life Time, which raised $700 million when it relisted on the stock market last fall, has continued to bulk up its capital as it recovers.

Life Time plans to close on the sale of $200 million worth of its centers and property in the fall that it will lease back. The company is in discussions for additional sale-leaseback transactions valued at up to $300 million by the end of the year.

"What they are doing is getting louder about focusing on shoring up their liquidity," said Simeon Siegel, a senior analyst at BMO Capital Markets. "They are getting louder on focusing on showing and ensuring their health. ... That's more defensive. That's acknowledging the environment."

Member spending at Life Time's athletic centers increased. Average monthly dues were $157 compared to $132 a year ago.

Memberships to Life Time athletic clubs also jumped more than 10% from 2021 with nearly 725,000 center memberships as of the end of June. That's up by about 51,000 from March.

Life Time predicts that membership numbers, which usually drop in the second half of the year, will end up flat for the rest of 2022.

"The customer that is coming to Life Time is not the customer that goes to the low price gyms," Akradi told analysts in response to a question about inflation's impact on memberships.

Life Time operated 153 fitness centers as of the end of June. Year-to-date, Life Time has opened two centers and plans to open 10 more by the end of the year.

Akradi said Life Time will continue introducing more small group training classes per club, promoting new programs for people 55 and older and personal training that can't be replicated online.