United States securities and exchange commission logo
July 27, 2021
Bahram Akradi
Chairman and Chief Executive Officer
Life Time Group Holdings, Inc.
2902 Corporate Place
Chanhassen, Minnesota 55317
Re: Life Time Group
Holdings, Inc.
Draft Registration
Statement on Form S-1
Submitted June 28,
2021
CIK No. 0001869198
Dear Mr. Akradi:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Draft Registration Statement on Form S-1
Who We Are, page 1
1. We note your disclosure
that you had 1.3 million members as of May 31, 2021. Please
revise to define who is
included within this group. In this regard, we note that the metric
differs from your
membership numbers disclosed elsewhere in the prospectus.
Our Transformation Under Private Ownership Since 2015, page 3
2. We note that in
connection with your going private transaction in 2015 the company
incurred a substantial
amount of debt and has significant debt service obligations. Please
revise to balance the
discussion with the company's substantial debt and debt service
obligations.
Bahram Akradi
FirstName LastNameBahram Akradi
Life Time Group Holdings, Inc.
Comapany
July NameLife Time Group Holdings, Inc.
27, 2021
July 27,
Page 2 2021 Page 2
FirstName LastName
3. We note your disclosure that new center return on invested capital has
grown to mid-to-
upper thirties, more than double historical levels. Please advise if
this metric
includes your financial performance in 2020 and 2021 to date.
Impact of COVID-19 on Our Financial Performance, page 4
4. We note that this section focuses on the number of closed centers,
construction of new
centers and center membership. The COVID-19 pandemic appears to have
had a
significant impact on your revenue, both center revenues and other
revenues, and led to
significant net losses for both 2020 and the first quarter of 2021.
Please revise this section
to discuss in greater detail the impact the COVID-19 pandemic had on
your business and
operations and any material trends, especially in light of the
continuing pandemic and
continual emergence of new variants. Please also revise this section
to
provide information for digital on-hold memberships as this metric
appears directly
related to the COVID-19 pandemic and understanding changes in the
company's
membership categories. In this regard, we note that this section only
discusses center
memberships.
Large and growing industry opportunity, page 5
5. We note the inclusion of global industry statistics. Given the
company's predominant U.S.
based operations, please explain the relevance of the industry data
for a global market.
Our Majority Stockholders, page 13
6. Please revise to quantify the voting power which LGP and TPG will
control post-
offering. Please also revise the associated risk factor on page 42.
Summary Historical Consolidated Financial Information
Other financial data (unaudited), page 18
7. We note you include your non-GAAP measures of "Four-wall center
EBITDAR margin"
and "Adjusted EBITDA margin," in your tabular presentation of Summary
Historical
Consolidated Financial Information without providing the comparable
GAAP measure(s)
within equal or greater prominence. Please revise to include the
comparable GAAP
measures. Refer to Item 10(e)(1)(i)(A) of Regulation S-K and Question
102.10 of the
staff's Compliance and Disclosure Interpretation on Non-GAAP Financial
Measures.
Adjusted EBITDA, page 20
8. We note the following in regards to your presentation and
reconciliation of your non-
GAAP measure of "Adjusted EBITDA":
Your reconciliation excludes "Pre-opening expenses" which appears
to be a core part
of the Company's operating plan of growing new centers, as well as
payments related
to non-working payroll and health care coverage. It appears these
are normal,
recurring cash operating expenses necessary for your core
operations. Please tell us
Bahram Akradi
Life Time Group Holdings, Inc.
July 27, 2021
Page 3
your consideration of Question 100.01 of the staff's Compliance
and Disclosure
Interpretation on Non-GAAP Financial Measures , or revise
accordingly.
Please tell us how you concluded that excluding Non-cash
rent expense does not
represent a tailored accounting principle. Refer to Question
100.04 of the staff's
Compliance and Disclosure Interpretation on Non-GAAP Financial
Measures .
Four-wall center EBITDAR, page 20
9. We note the following in regards to your presentation and
reconciliation of your non-
GAAP measure of "Four-wall center EBITDAR":
In your description of this measure on page 19, you note the
amounts presented are
exclusive of rent. Center rent would appear to be a normal,
recurring, cash operating
expense necessary to operate your business. Accordingly, this
exclusion does not
appear to comply with Question 100.01 of the staff's Compliance and
Disclosure
Interpretation on Non-GAAP Financial Measures ("C&DI s"). Please
revise your
computation accordingly.
In your description of this measure on page v, you describe
"Four-wall center
EBITDAR" as a measure of your center's operating performance.
Please tell us why
you believe reconciling this measure to "Center Revenue" to be
appropriate, or revise
accordingly to reconcile to the most comparable GAAP performance
measure.
Please tell us why you believe it is appropriate to exclude the
performance of centers
that have been open for less than 13 months from your non-GAAP
performance
measure.
We note your measure excludes certain corporate costs that are
integral to the
operations of your centers. Please include additional language on
the limitation of the
measure to emphasize that it excludes costs that are necessary to
support the
operations of your centers.
COVID-19 has had and may continue to have a significant negative effect on our
business, page
23
10. Please revise to discuss here, and elsewhere as appropriate, thenumber
of center
memberships that were cancelled versus those that were put on hold.
Please also discuss,
to the extent material, any material trends or changes in membership
dues versus in-center
revenue as a percentage of your total revenue. In this regard, we note
your disclosure on
page 62 that in-center revenue as a percentage of total revenue has
decreased and was
28.5% for the most recent quarter down from 34% year-over-year.
Our substantial indebtedness and other obligations could adversely affect our
financial condition,
FirstName LastNameBahram Akradi
page 32
Comapany NameLife Time Group Holdings, Inc.
July 27,Please
11. 2021 revise
Page 3to quantify your current debt service obligations.
FirstName LastName
Bahram Akradi
FirstName LastNameBahram Akradi
Life Time Group Holdings, Inc.
Comapany
July NameLife Time Group Holdings, Inc.
27, 2021
July 27,
Page 4 2021 Page 4
FirstName LastName
Our amended and restated certificate of incorporation designates the Court of
Chancery of the
State of Delaware as the exclusive forum for c, page 48
12. We note that your amended and restated certificate of incorporation
will include an
exclusive forum provision which will identify the Court of Chancery of
the State of
Delaware as the exclusive forum for certain litigation, including any
derivative action.
Please disclose whether this provision applies to actions arising
under the Securities Act
or Exchange Act. In that regard, we note that Section 27 of the
Exchange Act creates
exclusive federal jurisdiction over all suits brought to enforce any
duty or liability created
by the Exchange Act or the rules and regulations thereunder, and
Section 22 of the
Securities Act creates concurrent jurisdiction for federal and state
courts over all suits
brought to enforce any duty or liability created by the Securities Act
or the rules and
regulations thereunder. If the provision applies to Securities Act
claims, please also revise
the prospectus to state that there is uncertainty as to whether a
court would enforce such
provision and that investors cannot waive compliance with the federal
securities laws and
the rules and regulations thereunder. If this provision does not apply
to actions arising
under the Securities Act or Exchange Act, please ensure that the
exclusive forum
provision in the governing documents states this clearly. Please also
revise the Exclusive
Venue section on page 159 accordingly.
Use of Proceeds, page 53
13. Please revise the first paragraph to more specifically identify and
quantify the principal
intended uses of the net proceeds. Additionally, we note that you
intend to repay certain
indebtedness. Please revise to describe the indebtedness to include
its interest rate and
maturity. Refer to Item 504 of Regulation S-K and Instruction 4
thereto.
Non-GAAP Measurements and Key Performance Indicators, page 62
14. We note you highlight various non-GAAP performance metrics and key
performance
indicators as ways in which you assess the performance of your
business and allocate
resources. Where presenting and highlighting non-GAAP measures and
margins, please
present the comparable GAAP measure(s) with equal or greater
prominence. Refer to
Item 10(e)(1)(i)(A) of Regulation S-K and Question 102.10 of the
staff's Compliance and
Disclosure Interpretation on Non-GAAP Financial Measures.
Operations, page 64
15. To better understand the impact to your 2020 results and the
subsequent reopening of
centers impacting your 3/31/21 interim results, please provide the
number of centers that
were open as of 12/31/2020. To the extent that providing the number of
centers open
during various intervals of 2020 would provide additional context into
your 2020 decline
in results, please consider providing this information as well.
Bahram Akradi
FirstName LastNameBahram Akradi
Life Time Group Holdings, Inc.
Comapany
July NameLife Time Group Holdings, Inc.
27, 2021
July 27,
Page 5 2021 Page 5
FirstName LastName
Year Ended December 31, 2019 Compared to Year Ended December 31, 2020, page 70
16. Please revise your discussion to address the specific underlying
factors contributing to the
period over period change in Center operations expenses and General,
administrative and
marketing expenses. Instances where you identify multiple contributing
factors for a
change in a specific line item, please quantify each material factor
to allow investors to
assess the significance of each contributing factor. Refer to Item
303(a) of Regulation S-
K and Section III.B of SEC Release No. 33-8350.
Life Time Athletic Events, page 103
17. Please revise this section to discuss the status of your athletic
events in 2020 and 2021 and
your plans and intentions for the remainder of 2021.
Digital Memberships, page 105
18. Please revise to quantify the number of current digital memberships.
Principal Stockholders, page 150
19. Please refer to footnote (5). Please revise to disclose the natural
person or persons who
have voting or investment power with respect to the common stock
listed in the table.
Related Party Secured Loan, page 155
20. Please revise to clarify the number of Series A Preferred Stock which
were issued in the
loan conversion. Please also revise to clarify the number of common
stock which will be
issued in connection with the Series A Preferred Stock conversion in
connection with the
offering and explain the conversion formula.
Stockholders Agreement, page 156
21. Please revise to summarize the Stockholders Agreement in greater
detail, including any
provisions related to the management and corporate governance of the
company going
forward. Refer to Item 404(a)(6) of Regulation S-K. Additionally, we
note that the
Stockholders Agreement will be amended and restated in connection with
the offering.
Please summarize the new agreement in a similar manner.
Notes to Consolidated Financial Statements
6. Revenue, page F-26
22. We note you provide disaggregated revenue by revenue stream and timing
associated with
the revenue recognized. Please tell us your consideration of further
disaggregating
revenue, such as by nature of delivery (In-center Membership vs
Digital On-hold) or by
type of fee (Enrollment Fees vs Membership Dues). Refer to ASC
606-10-50-5 and ASC
606-10-55-89 through 91.
Bahram Akradi
Life Time Group Holdings, Inc.
July 27, 2021
Page 6
10. Stockholders' Equity
Share-Based Compensation, page F-42
23. Please clarify if your stock options outstanding will vest upon
completion of your initial
public offering. If so, please disclose the amount of compensation
expense you will be
required to recognize in connection with the planned public offering.
Notes to Unaudited Condensed Consolidated Financial Statements
5. Revenue, page F-63
24. We note your disclosure of your contract liabilities as of "March 31,
2020 and 2021
were $93.3 million and $36.6 million, respectively." In the following
paragraph, the
contract liabilities that will be recognized within one year "at
March, 31, 2020 and 2021
was $101.5 million and $39.4 million," the current deferred
liabilities disclosed exceeds
the total contract liabilities disclosed and does not agree with the
deferred revenue
recorded as current liabilities on your Balance Sheets. Please advise,
or revise
accordingly.
Index to Exhibits , page II-4
25. Please file the company's articles of incorporation and bylaws as
currently in effect.
Please also file the Stockholders Agreement that will be in effect
following the offering,
or advise why such filing is not required. Refer to Item
601(b)(10)(ii)(A) of Regulation S-
K.
General
26. Please provide us with supplemental copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
have presented or expect to present to potential investors in reliance
on Section 5(d) of the
Securities Act, whether or not you retained, or intend to retain,
copies of those
communications. Please contact the staff member associated with the
review of this filing
to discuss how to submit the materials, if any, to us for our review.
27. We note you discuss 2019 and certain historical financial results and
metrics throughout
your filing while not consistently discussing those same financial
results and metrics for
2020 or your most recent interim period. Please revise the filing
throughout to discuss all
FirstName LastNameBahram Akradi
historical periods within your disclosures, artwork, graphics and
charts, as appropriate.
Comapany NameLifeplease
Additionally, Time revise
GrouptoHoldings, Inc. revenue discussion with a
discussion of your
balance any
July 27,net income
2021 Pageand
6 losses.
FirstName LastName
Bahram Akradi
FirstName LastNameBahram Akradi
Life Time Group Holdings, Inc.
Comapany
July NameLife Time Group Holdings, Inc.
27, 2021
July 27,
Page 7 2021 Page 7
FirstName LastName
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Abe Friedman at 202-551-8298 or Joel Parker at
202-551-3651 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Donald Field at 202-551-3680 or Erin Jaskot at 202-551-3442 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services