Life Time Chanhassen, Minnesota, reported fourth quarter 2021 revenue of $360.5 million, an increase of 57.8 percent, and full-year 2021 revenue of $1.318 billion, an increase of 39 percent, both compared to the same periods in the previous year.
Despite this news, the company, which went public in October 2021, is not yet back to its 2019 numbers. In 2019, Life Time generated $1.9 billion in revenue with $30 million in net income and $438 million in adjusted EBITDA.
Revenue fell in 2020 to $948 million with $360 million in net loss and $(63) million in adjusted EBITDA, due to temporary closures of health clubs caused by the COVID-19 pandemic.
For first quarter 2022, Life Time is projecting revenue of $385 million to $395 million, net loss of $(64) million to $(60) million and adjusted EBITDA of $38 million to $42 million.
Life Time Founder, Chairman and CEO Bahram Akradi called 2021 a “milestone year” for the company with the opening of six new locations, an initial public offering in October, improvements in key revenue and profitability metrics, and growth in memberships and average revenue per membership.
Full Year 2021 Results
Total revenue in 2021 increased 39 percent to $1.318 billion from $948.4 million in 2020. Comparable center sales increased 35.3 percent.
Adjusted EBITDA increased to $80.3 million from $(63.0) million.
Net loss was $(579.4) million and included tax-effected one-time expenses of $342.6 million, including $269.1 million related to non-cash share-based compensation expense, and $68.6 million of additional interest expense incurred as a result of a loss on the conversion of a related-party secured note into preferred stock, as well as additional interest expense incurred in connection with debt refinancing and partial pay down of the company's term loan facility.
Capital expenditures totaled $328.9 million during the year compared with $265.6 million in 2020. The increase was primarily related to the higher number of club openings and properties currently under construction, Life Time President and Chief Financial Officer Tom Bergmann said in a call with analysts.
Fourth Quarter 2021 Results
Total revenue in fourth quarter 2021 increased 57.8 percent to $360.5 million from $228.5 million.
Adjusted EBITDA increased to $48.0 million from $(18.0) million.
Comparable center sales increased 52 percent.
Center memberships increased 29.6 percent to 649,373 as of Dec. 31, 2021, from 500,948 as of Dec. 31, 2020.
Net loss was $(304.8) million and included tax-effected one-time expenses of $271.2 million, including $258.3 million related to non-cash share-based compensation expense, and $12.6 million of additional interest expense incurred in connection with the partial pay down of the company's term loan facility.
For the quarter, average center revenue per center membership increased to $536 from $414 in the prior-year period, reflecting increased spending with Life Time’s in-center businesses that continued execution of its pricing strategy and the opening of new clubs in more affluent markets, Bergmann said.
On a same-store basis, comparable center sales increased 52 percent. Center memberships increased approximately 30 percent to just over 649,000 as of Dec. 31, 2021, compared to just over 500,000 as of Dec. 31, 2020.
Growth in 2022
Life Time is forecasting 2022 revenue to be in the range of $1.8 billion to $1.9 billion, Bergmann said.
“We expect revenue to accelerate throughout the year as we move further away from the pandemic, open our pools during the second quarter, and gain momentum from our new initiatives,” Bergmann said in the call with analysts. “For this year, with our initiatives gaining momentum, the opening of our outdoor pools and expecting to be free of any COVID-19 mass mandates or other restrictions, we expect second quarter net new center memberships to exceed first quarter net new center memberships.”
The company plans to open 12 new centers in 2022, with two already opening so far: one in Chicago and one in Dallas/Fort Worth.
“Our center growth pipeline is the most robust I have seen in nearly 30 years,” he said. “Throughout the pandemic, we established a high trust level with our real estate partners by paying 100 percent of the required rent, resulting in even closer relationships. In addition, our partners are experiencing the very positive impact of Life Time and the financial benefits it brings as a country club in their development. We continue to see an increasing number of urban and suburban opportunities from these relationships.”
The company’s pipeline for 2023 and beyond is “stronger than ever,” he said.
"For 2022, we have made the decisive choice to continue our offensive strategy of investing in several new program initiatives and casting the best talent in order to elevate our brand and grow our membership base, revenue and profitability,” Akradi said. “Additionally, our new center development pipeline remains strong with significant and attractive opportunities for expansion. Plus, industry trends and consumer demand for healthier living and aging bring us even more growth prospects. While the unexpected Omicron surge impacts the slope of our near-term recovery, we remain focused on capitalizing on these opportunities and further differentiating our Healthy Way of Life ecosystem to create long-term value for our stakeholders."
Life Time operated a total of 151 centers at the end of 2021.
The company closed four clubs during the fourth quarter, each of which was subject to a lease that expired, and each of which did not conform to Life Time’s overall comprehensive lifestyle brand experience, according to Bergmann.
Average monthly dues per membership was $135 in fourth quarter 2021 compared to $104 in the fourth quarter 2020, an increase of approximately 30 percent. The closing of the four off-brand clubs, the expected opening of new higher-priced premium clubs throughout 2022, and the continued layering in of price increases to existing members are anticipated to increase the company’s average monthly dues per membership throughout this year, according to Bergmann.
Sale-Leaseback
Earlier in 2022, Life Time entered into a non-binding letter of intent for the sale-leaseback of four properties in transactions valued in the aggregate at $175 million with an institutional real estate investor that has entered into multiple sale-leaseback transactions with the company previously.
In the call with analysts, Akradi said the company is evaluating other opportunities for sale-leaseback transactions. The company’s owned real estate has estimated market value of more than $3 billion, which exceeds the company's current debt levels of approximately $1.8 billion, Akradi said.