Life Time Group Holdings, Inc. (LTH) Earnings & Analysis

Latest quarter

Life Time reported third-quarter revenue of $893.5 million, above the $876.6 million consensus. Adjusted earnings per share of $0.51 also exceeded the $0.45 consensus.

Revenue rose 14.2% from $782.6 million a year earlier. In its filing, Life Time attributed the increase to higher average dues, membership growth at new and ramping centers, and greater use of in-center services, particularly Dynamic Personal Training. Membership dues and enrollment fees increased $74.8 million, while in-center revenue increased $35.4 million.

The company reported an operating margin of 17.7%, compared with 17.3% a year earlier, while gross margin was 46.9%, compared with 47.1%. Life Time’s filing attributed higher center operating expenses partly to new and ramping locations and increased club use.

Free cash flow was −$26.6 million, compared with $28.6 million a year earlier. On the call, CFO Erik Weaver said quarterly capital expenditures rose as Life Time constructed clubs for 2026, 2027 and beyond.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Erik Weaver said comparable center revenue grew 8.7% in the third quarter, above Life Time’s expectations, as membership acquisition and in-center businesses outperformed. He attributed the comparable growth to membership mix, pricing, in-center services and volume. Average monthly dues were $244, up approximately 11.9% from a year earlier, which Weaver attributed primarily to membership mix and pricing.

Weaver said Life Time was limiting certain memberships administered through medical insurance providers. Qualified medical memberships declined by approximately 21,500 year over year, while other memberships increased by approximately 39,600. He said total dues revenue increased 13.7%.

Asked about the consumer environment, CEO Bahram Akradi said Life Time was monitoring conditions but that “we’re really not seeing any impact from the macroeconomics.” He said execution varied among clubs and that the company was working to improve in-center businesses at individual locations.

On margins, Akradi said the company had worked to “streamline, simplify execution” in its cafes, helping margin improvement during the year. He said the spa business had increased engagement and added talent. Asked about pickleball-only facilities, Akradi said Life Time’s offering combined pickleball with its other club services and that the company was not looking to take over those facilities.

Weaver said third-quarter capital spending reflected construction for this year’s openings and future clubs. He said updated guidance included seven fourth-quarter openings, their pre-opening expenses and their early operating effect on margin. Akradi said next year’s opening schedule should be more balanced. Weaver also said Life Time expected approximately $135 million in additional fourth-quarter sale-leaseback transactions, with a full-year target of $400 million.

Guidance

Weaver said Life Time raised its FY2026 comparable center revenue growth guidance to 8.5% to 8.7% from 7.9% to 8.3%, and increased the midpoint of its adjusted EBITDA margin guidance to 28.4% from 28.2%.

For the fourth quarter, Weaver projected total center membership growth of 2.4% to 3.1%, compared with the prior 2% to 3% expectation. Excluding qualified medical memberships, he forecast growth of 4.8% to 5.2%, versus the earlier 4% to 5% range.