Life Time Group Earnings Call Signals Growth Shift

Life Time Group Holdings, Inc. ((LTH)) has held its Q4 earnings call. Read on for the main highlights of the call.

Life Time Group Holdings struck a confident tone on its latest earnings call, underscoring strong 2025 growth in revenue, EBITDA and cash flow alongside a leaner balance sheet and a fresh $500 million buyback. Management acknowledged that part of the outperformance was fueled by nonrecurring items and that growth will moderate in 2026 as capital spending ramps and some newer initiatives face execution and monetization challenges.

Revenue Growth Accelerates on Higher Dues and Usage

Life Time reported Q4 revenue of $745.0 million, up 12.3% year over year, as members spent more and visited clubs more often. Management pointed to higher average dues and improved utilization of centers as core drivers, signaling that the existing club base is still delivering meaningful top-line growth even before new openings kick in.

Membership and ARPU Trends Point to Pricing Power

Average monthly dues climbed to $223 in the quarter, roughly 10.8% higher than a year ago, and average revenue per center membership reached $882, also up 10.8%. For the full year, revenue per center membership rose 11.7% to $3,531, highlighting the company’s ability to raise prices and deepen wallet share without derailing member engagement.

Comparable Centers Deliver Double-Digit Full-Year Growth

Comparable center revenue increased 9.9% in Q4 and 11.1% for full-year 2025, reflecting resilient same-store demand. Management stressed strong in-center execution as a key factor, suggesting that existing locations continue to mature well and that the underlying concept is resonating across markets.

Membership Scale and Utilization Continue to Climb

At year-end 2025, Life Time had more than 822,000 center memberships, or about 873,000 including on-hold accounts, showing a sizable base to monetize. Average monthly visits per membership rose 4.8% to 12.5 in 2025, with total visits up 7% to roughly 122 million, underscoring higher engagement that supports both dues and ancillary revenue.

Margin Expansion Fuels Robust Profitability

Q4 adjusted EBITDA grew 14.5% year over year to $203 million, lifting the quarterly margin by 50 basis points to 27.2%. For 2025, adjusted EBITDA jumped 21.9% to $825 million and margin expanded 170 basis points to 27.5%, reflecting operating leverage as revenue scales and cost discipline improves.

Earnings Growth Outpaces Revenue Gains

Adjusted net income reached $77 million in Q4, an increase of 28.4% from the prior year’s quarter, as stronger margins flowed through to the bottom line. For the full year, adjusted net income surged 62.3% to $326 million, driving adjusted diluted EPS up 51.6% to $1.44 and signaling significant earnings power from the current footprint.

Cash Generation and Balance Sheet Strengthen

Net cash from operating activities totaled $240 million in Q4, up roughly 47% year over year, and $871 million for the full year, a gain of about 51%. Net leverage fell to 1.6x, below the company’s 2x target, and Life Time secured a BB credit rating, giving management more flexibility to fund growth while returning capital to shareholders.

Capital Allocation Tilts to Buybacks and Growth

The Board approved a $500 million share repurchase program, signaling confidence in the equity value and adding a new lever for shareholder returns. Life Time plans to fund its growth through operating cash flow, sale-leasebacks of at least $300 million in 2026, and cash on hand, balancing expansion with disciplined leverage.

Heavy Growth CapEx Supports an Expanded Club Pipeline

Total capital expenditures in 2025 reached $892 million, including $657 million for growth, as the company invested aggressively in new clubs. For 2026, Life Time expects $875–$915 million of growth CapEx and aims to open up to 28 clubs across 2026–2027, nearly doubling the square footage opened compared with prior years.

MIORA and Digital Scale Offer Optionality

The MIORA wellness concept is rolling out faster, with 7–8 locations open and ramping at or above expectations where openings are smooth. Management also highlighted a digital subscriber base of roughly 3.3 million, which serves as a wide funnel for converting users into full dues-paying members and deepening engagement with the brand.

In-Center Revenue Engines Gain Momentum

In-center revenue climbed 15.1% for the year, supported by broader uptake of premium services and experiences. Personal training, branded as DPT, has been a standout, with session volume up about 18% over the last two years, reinforcing that members are willing to spend more on high-touch offerings.

Nonrecurring Items Boost GAAP Results and Cash Flow

Management noted that Q4 net income was lifted by approximately $45.6 million of net tax-affected nonrecurring items that are unlikely to repeat. Operating cash flow also benefited from one-time proceeds of $59 million in Q4 and $94 million for the full year, meaning headline GAAP performance was stronger than the underlying run-rate.

Guidance Signals Slower Comparable Growth Ahead

For 2026, the company expects comparable center revenue growth of about 6.3%–7.3%, down from 11.1% in 2025 and gradually easing through the year as prior outperformance normalizes. Management framed this moderation as a transition from outsized post-opening ramps to more steady-state growth, with newer clubs contributing over time but at less dramatic rates.

Elevated Capital Intensity and Capitalized Interest

Planned 2026 growth CapEx of $875–$915 million will see more than half directed to clubs opening in 2027 and beyond, tying up more capital in projects that are not yet revenue-generating. The company expects capitalized interest of $33–$35 million in 2026, reflecting the larger work-in-progress base and raising the importance of on-time, on-budget openings.

Digital and Retail Monetization Still a Work in Progress

Despite the large digital audience, management characterized direct digital monetization and the LT Health supplement business as only “so-so” to date, requiring more consumer education. In the near term, in-club retail remains the primary growth channel, suggesting that investors should not overvalue digital revenue until conversion and spend trends improve.

Execution Risks Around New Openings

Some MIORA sites have encountered construction and permitting delays, which in turn have postponed full revenue ramps and highlighted practical execution risk. Where openings have been clean, performance has met or exceeded expectations, but the hiccups underscore the importance of local project management as the pipeline scales.

Legacy Pricing Complicates Monetization

Life Time continues to manage a sizable cohort of legacy members paying discounted rates compared with rack-rate memberships, with the legacy revenue gap referenced in the mid-teens to around $20 million range. This mix adds complexity to pricing strategy and slows the pace at which the company can fully capture its current rack-rate economics across the base.

Limited Visibility on Membership Growth Metrics

Management chose not to provide explicit guidance on membership counts for 2026, leaving investors to infer unit growth from club openings and revenue projections. This lack of detail introduces some uncertainty into modeling how much of future revenue will come from price and utilization versus absolute member additions.

Margins Managed with a Long-Term Lens

Executives cautioned that today’s elevated margins should not be assumed as a permanent new baseline, emphasizing a willingness to reinvest in member experience if needed. That stance may cap upside margin surprises in the near term, but it signals a deliberate strategy to protect the brand and minimize churn as the network expands.

Guidance and Outlook Emphasize Growth with Discipline

For 2026, Life Time plans $875–$915 million of growth CapEx, $140–$150 million of maintenance CapEx, and $130–$140 million for modernization, technology and corporate needs, while capitalizing $33–$35 million of interest. The company intends to fund this with operating cash, at least $300 million of sale-leasebacks and existing cash, open 14 clubs in 2026 and up to 28 over 2026–2027, repurchase shares under its $500 million authorization, and keep net leverage at or below 2.0x.

Life Time’s latest earnings call painted a picture of a high-growth fitness and lifestyle platform entering a more normalized but still robust expansion phase. Strong 2025 results, healthier leverage and an active buyback underpin the bullish narrative, but investors will watch closely how the company executes its heavy CapEx program and navigates moderating comps, digital monetization and pricing complexity in the years ahead.