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LT

Life Time Group Holdings, Inc. (LTH)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered broad-based strength: revenue $782.6M (+12.9% YoY), adjusted EBITDA $220.0M (+22.0%), adjusted diluted EPS $0.41; both revenue and EPS exceeded Wall Street consensus, with revenue +$10.9M (+1.4%) and EPS +$0.0525 (+14.7%) versus estimates. The quarter benefited from robust dues and in-center growth, including Dynamic Personal Training (DPT) . Results vs estimates from S&P Global: revenue $782.6M vs $771.7M; EPS $0.41 vs $0.3575.*
  • GAAP net income rose to $102.4M (+147.3% YoY), aided by ~$16.2M tax-adjusted employee retention credits and ~$5.7M tax-adjusted sale-leaseback gains; adjusted net income was $93.0M (+65.2% YoY), isolating ongoing performance .
  • 2025 guidance raised: revenue to $2.978–$2.988B (prior $2.955–$2.985B), net income to $304–$306M (prior $290–$293M), adjusted EBITDA to $820–$824M (prior $805–$815M), and comparable center revenue growth to 10.8–11.0% (prior 9.5–10.0%) .
  • Strategic drivers and pipeline: management reinforced membership optimization (mix shift to couples/families), strong DPT momentum, the AI health companion (L•AI•C) rollout, and visibility to 12–14 large-format club openings in 2026 (13 under construction) .
  • Balance sheet and liquidity improved: net debt leverage ratio is 1.6x; Q3 free cash flow was $62.5M and the company plans $55–$65M of additional sale-leasebacks in Q4, supporting growth while preserving leverage below 2x .

What Went Well and What Went Wrong

What Went Well

  • “Our third quarter results reflect strong execution and continued momentum… Membership engagement continues to rise, and in-center performance remains robust.” — CEO Bahram Akradi .
  • DPT continues to set records club by club; “results are incredible… many clubs setting new records month after month” — CEO Bahram Akradi .
  • Engagement KPIs strong: average monthly visits per membership reached 12.5 (+5.9% YoY), total visits up 7% YoY; revenue per center membership up 11.3% YoY .

What Went Wrong

  • Seasonal membership downtick: center memberships decreased by 9,021 (-1.1%) sequentially from Q2, consistent with seasonality; management anticipates further seasonal decline in Q4 as mix shifts to higher-value memberships .
  • Free cash flow moderated sequentially: Q3 free cash flow $62.5M vs Q2 $112.5M, reflecting higher growth capex and fewer sale-leaseback proceeds in Q3 .
  • Elevated capex intensity: total capex $222.5M (+155.5% YoY) to fund new centers and modernization, a near-term cash outflow headwind even as leverage improves .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$693.2 $761.5 $782.6
Net Income ($USD Millions)$41.4 $72.1 $102.4
Diluted EPS ($USD)$0.19 $0.32 $0.45
Adjusted Diluted EPS ($USD)$0.26 $0.37 $0.41
Adjusted EBITDA ($USD Millions)$180.3 $211.0 $220.0
Net Income Margin (%)6.0% 9.5% 13.1%
Adjusted EBITDA Margin (%)26.0% 27.7% 28.1%

Segment and Mix

MetricQ3 2024Q2 2025Q3 2025
Center Revenue ($USD Millions)$674.8 $735.9 $760.9
Other Revenue ($USD Millions)$18.5 $25.6 $21.8
Membership Dues & Enrollment Fees ($USD Millions)$488.1 $527.3 $547.3
In-Center Revenue ($USD Millions)$186.7 $208.6 $213.6

KPIs

KPIQ3 2024Q2 2025Q3 2025
Center Memberships (end of period)826,502 849,643 840,622
Comparable Center Revenue Growth (%)12.1% 11.2% 10.6%
Avg Center Revenue per Membership ($USD)$815 $888 $907
Total Centers (end of period)177 184 185

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025$2.955–$2.985 $2.978–$2.988 Raised
Net Income ($USD Millions)FY 2025$290–$293 $304–$306 Raised
Adjusted EBITDA ($USD Millions)FY 2025$805–$815 $820–$824 Raised
Comparable Center Revenue Growth (%)FY 20259.5–10.0 10.8–11.0 Raised
Rent (incl. non-cash rent $M)FY 2025$337–$343; non-cash $34–$37 $337–$343; non-cash $34–$36 Maintained/tightened non-cash
Interest Expense, net ($USD Millions)FY 2025~$80–$84 ~$81–$83 Tightened
Provision for Income Tax Rate (%)FY 202524% 24% Maintained
Cash Income Tax Expense ($USD Millions)FY 2025$25–$27 $27–$29 Raised
D&A ($USD Millions)FY 2025$288–$294 $296–$298 Raised
Sale-Leaseback Proceeds ($USD Millions)Q4 2025~$100M 2H target noted previously $55–$65 in Q4 Updated
New Centers (#)FY 2025Open 10 Open 10 (7 open by Nov 4) Maintained
Net Debt Leverage (x)FY 2025≤2.0x <2.0x Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI/technology initiativesExpanded digital offering incl. L•AI•C companion, app emphasized ; continued app engagement “New features and capabilities” for L•AI•C/Lacy by year-end; 2.75M non-club digital accounts, targeting 3M by early 2026 Accelerating rollout and scale
Membership optimization & pricingFocus on revenue per membership, mix and retention at highs Shift to couples/families; limiting qualified memberships; targeting 3,500–4,000 units per new club Higher revenue per unit, fewer units
In-center businesses (DPT)DPT cited as growth driver in Q2 DPT setting records; dynamic stretch expected to lift cafés/spas momentum in ’26 Strong growth, expanding adjacencies
Macro/consumerStrong visits, retention; leverage improving No signs of weakness across cohorts/regions; group fitness +7.6% YoY Resilient demand
Real estate pipelineRaising 2026 club growth; BB- rating improved funding Baseline 12–14 clubs in 2026; 13 under construction; many large format (~94–95k sqft avg) Accelerated new builds
Regional performanceNew market openings robust Urban (NYC/Brooklyn) and suburban ramp strongly; many new locations full-price only Broad-based strength
Regulatory/taxERC credits and stock option tax benefits aided results Additional ERC credits in Q3 bolstered GAAP net income Non-recurring tailwinds; adjusted metrics exclude
Longevity/Health features (MURA, LTH Nutrition)Nutritional products expansion; sleep supplement launch 4–5 new MURA locations in early 2026; LTH packaging/testing upgrades; potential external marketing push in ’26 Building platform for ’26 growth

Management Commentary

  • “Membership optimization is increasingly important as clubs are busier than ever… improving the mix with more couples and families, and limiting qualified memberships in certain clubs.” — CEO Bahram Akradi .
  • “Adjusted EBITDA was $220 million… margin improved by 210 bps to 28.1%. Free cash flow was $63 million for the third quarter.” — CFO Erik Weaver .
  • “We expect to deliver 12-14 new clubs in 2026… 13 clubs are under construction… 11 are large format.” — CEO Bahram Akradi .
  • “We are very excited to release new features… offered by L•AI•C, our AI health companion… by the end of this year.” — CEO Bahram Akradi .

Q&A Highlights

  • DPT capacity and pricing: Some trainers fully booked; potential to adjust price; strong pipeline of high-quality trainers; DPT revenues setting records in many clubs .
  • Membership optimization vs unit growth: Emphasis on full-price family memberships; restricting third-party discounted programs; business planning new clubs at 3,500–4,000 units .
  • Macro resilience: Management reports no geographic/cohort weakness; spas revenue/technician up; group fitness classes up 7.6% .
  • Capital allocation: Potential buybacks discussed at board level; priority remains growth with sale-leasebacks for capital efficiency; flexibility emphasized .
  • New builds/margins: Larger clubs expected to deliver higher average revenue; early-stage openings carry negative margins initially—investors guided not to model higher margins indiscriminately .

Estimates Context

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD)683,013,430.0*752,613,740.0*771,677,550.0*
Revenue Actual ($USD)706,041,000 761,469,000 782,649,000
Primary EPS Consensus Mean ($USD)0.28*0.358*0.3575*
Primary EPS Actual ($USD)0.39 0.37 0.41
Beat/(Miss) Revenue ($USD)+$23.0M*+$8.9M*+$10.9M*
Beat/(Miss) EPS ($USD)+$0.11*+$0.012*+$0.0525*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Strong beat on revenue and EPS alongside raised FY guidance signals durable demand and operating leverage; the narrative focuses on optimizing revenue per membership and scaling high-margin in-center services (DPT) .
  • Expect near-term seasonal membership unit declines while revenue/mix improves; management proactively limiting discounted channels to preserve experience and pricing power .
  • Larger 2026 club format and accelerated pipeline (12–14 openings; 13 under construction) are a medium-term growth catalyst, though early-stage openings may temper consolidated margins initially .
  • Free cash flow remains positive with leverage at 1.6x; continued sale-leasebacks ($55–$65M in Q4) should fund growth while maintaining balance-sheet flexibility .
  • AI and digital ecosystem (L•AI•C) plus longevity (MURA) and nutrition (LTH) initiatives expand TAM and engagement, potentially unlocking ancillary revenue streams into 2026 .
  • Adjusted results best reflect core performance given ERC and sale-leaseback impacts on GAAP; investors should anchor valuation on adjusted EBITDA and cash flow trends .
  • Monitoring items: capex cadence and returns, sale-leaseback cap rates as interest rates evolve, pricing/mix execution, and potential capital returns (buybacks) subject to board decisions .

Notes on Non-GAAP Adjustments

  • Q3 GAAP net income includes ~$16.2M tax-adjusted ERC proceeds and ~$5.7M tax-adjusted sale-leaseback gain; adjusted net income ($93.0M) and adjusted EBITDA ($220.0M) exclude these and other non-recurring items .