CHANHASSEN, Minn. – Life Time Group Holdings, Inc. (NYSE: LTH), a health and fitness company, has completed a sale-leaseback transaction for two of its properties, raising $90 million in gross proceeds on Friday, June 28, 2024. The deal is part of the company's broader strategy to improve its balance sheet by reducing debt and achieving a targeted net debt-to-Adjusted EBITDA leverage ratio below three times.
The transaction brings Life Time's total gross proceeds from sale-leasebacks to $130 million for the year. Additionally, the company is in negotiations for further sale-leasebacks, which could yield an additional $40-$65 million, expected to close by the end of the third quarter with terms similar to recent transactions.
Life Time's CEO, Bahram Akradi, expressed enthusiasm about the company's financial performance, indicating that positive free cash flow is anticipated in the second quarter, independent of the latest sale-leaseback proceeds. Akradi also highlighted the company's confidence in continuing to grow revenue and Adjusted EBITDA by low double digits while delivering positive free cash flow.
The majority of the proceeds from the recent sale-leaseback will be allocated towards debt reduction. Life Time's ongoing business operations are expected to comfortably cover the incremental rent expenses resulting from these transactions.
Life Time operates over 170 athletic country clubs in the United States and Canada and is known for its comprehensive health and wellness programs. The company supports a broad age demographic, from 90 days to over 90 years, through its clubs and events, backed by a team of more than 39,000 professionals.
The information in this article is based on a press release statement.
In other recent news, Life Time Group Holdings Inc (NYSE:LTH). has seen significant developments across multiple fronts. The company reported a robust financial performance for the first quarter of 2024, with total revenue increasing by 16.8% to $596.7 million and membership dues rising by 19%. Despite a slight decrease in net income, Life Time raised its full-year revenue and adjusted EBITDA guidance, signaling confidence in growth prospects.
In the realm of strategic partnerships, Life Time has teamed up with athletic apparel company lululemon (NASDAQ:LULU) to become the official apparel provider for its tennis and pickleball operations. This collaboration aims to enhance the experience for racquet sports enthusiasts across Life Time's numerous clubs, further solidifying its position in promoting healthy and active lifestyles.
From an analyst perspective, Life Time Group's stock has received endorsements from both RBC Capital and Mizuho. RBC Capital maintained its Outperform rating and $20.00 price target, based on the company's detailed growth strategy and long-term financial goals. Meanwhile, Mizuho raised its price target on the company's shares to $29.00 from $23.00, following a strong first quarter that surpassed expectations in both revenue and EBITDA.
InvestingPro Insights
Amid the strategic financial maneuvers by Life Time Group Holdings, Inc. (NYSE: LTH), the company's financial health and market performance have become a focal point for investors. According to InvestingPro data, Life Time currently holds a market capitalization of $3.74 billion. The company trades at a high price-to-earnings (P/E) ratio of 50.52, which reflects investor confidence in its future earnings potential. However, when adjusted for the last twelve months as of Q1 2024, the P/E ratio stands at a lower 37.45, suggesting a possible reevaluation of the company's earnings relative to its stock price.
Life Time has demonstrated notable revenue growth over the last twelve months as of Q1 2024, with an increase of 18.61%, and a quarterly revenue growth of 16.81% in Q1 2024. This aligns with CEO Bahram Akradi's optimistic outlook on the company's revenue and Adjusted EBITDA growth. Additionally, the company has seen a strong return over the last three months, with a price total return of 23.8%, indicating robust market performance in the short term.
InvestingPro Tips highlight that Life Time operates with a significant debt burden, which the company is addressing through its sale-leaseback transactions. Moreover, while the company's stock price movements have been quite volatile, analysts predict Life Time will be profitable this year, aligning with the company's positive free cash flow expectations expressed by Akradi.
For investors looking to delve deeper into Life Time's financials and stock performance, there are additional InvestingPro Tips available, which can be accessed at https://www.investing.com/pro/LTH. Subscribers can use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further insights that may influence investment decisions.
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