10-K: Life Time Reports Record 2025 Revenue, Strong Profit Growth

Life Time Group Holdings, Inc. achieved record revenue and significant net income growth in 2025, driven by strong membership engagement and strategic expansion.

Summary

• Total revenue for the year ended December 31, 2025, increased by $374.3 million to $2,995.3 million, up from $2,621.0 million in 2024.
• Net income surged to $373.7 million in 2025, a substantial increase from $156.2 million in 2024.
• Adjusted EBITDA reached $825.2 million in 2025, up from $676.8 million in 2024, with an Adjusted EBITDA margin of 27.5%.
• Average revenue per center membership increased to $3,531 in 2025, compared to $3,160 in 2024 and $2,810 in 2023.
• Total memberships grew to nearly 873,000 as of December 31, 2025, serving approximately 1.6 million individual members.
• The company opened 10 new centers in 2025, bringing the total to 189 centers across 31 states and one Canadian province.
• Life Time received approximately $40 million in November 2025 from Zurich American Insurance Company in partial satisfaction of legal claims related to COVID-19 business interruption.
• The board of directors approved a share repurchase program of up to $500 million of outstanding common stock on February 19, 2026.
• The company ceased being a controlled company under NYSE rules as of June 5, 2025, requiring full independence of certain board committees within one year.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report, reflecting significant financial growth, effective strategic execution, and a favorable legal outcome, despite ongoing capital investments and macroeconomic considerations.

Positives

• Total revenue increased by $374.3 million to a record $2,995.3 million in 2025, demonstrating strong business growth.
• Net income more than doubled, rising to $373.7 million in 2025 from $156.2 million in 2024.
• Adjusted EBITDA grew significantly to $825.2 million in 2025, up from $676.8 million in 2024, indicating improved operational profitability.
• Average revenue per center membership increased to $3,531 in 2025, reflecting successful pricing strategies and enhanced member engagement.
• Membership dues and enrollment fees now represent over 72% of total Center revenue, highlighting a robust subscription-based model.
• Total visits to clubs exceeded 122 million in 2025, up from 114 million in 2024, indicating high member utilization.
• The company successfully expanded its footprint by opening 10 new centers in 2025, contributing to growth.
• A legal settlement resulted in a $40 million payment from Zurich American Insurance Company in November 2025, positively impacting other income.
• Interest expense, net of interest income, decreased by $65.8 million in 2025 due to lower average borrowings and interest rate swaps.
• The company entered into interest rate swap agreements for its entire Term Loan Facility, converting variable rates to a fixed rate of 3.409% plus applicable margin, reducing interest rate risk.
• Management concluded that internal control over financial reporting was effective as of December 31, 2025.
• The board authorized a new share repurchase program of up to $500 million, signaling confidence in future performance and a commitment to returning capital to stockholders.

Negatives

• Capital expenditures increased significantly by $366.9 million in 2025 compared to 2024, primarily due to new center construction and acquisitions.
• Center operations expenses increased by $176.2 million in 2025, driven by new and ramping centers and increased club utilization.
• Rent expense increased by $34.2 million in 2025, primarily due to sale-leaseback transactions and taking possession of other leased properties.
• General, administrative, and marketing expenses increased by $23.6 million in 2025, partly due to increased incentive and benefit-related expenses and corporate overhead.
• The company experienced a temporary slowdown in the start of new construction on ground-up suburban builds due to macroeconomic factors like inflation and higher interest rates, impacting 2024 and 2025 openings.
• The number of qualified memberships, which have significantly lower average membership dues, are decreasing as offerings are limited and third-party programs terminate or expire, posing a conversion challenge.

Risks

• Inability to attract and retain members or effectively optimize memberships and increase revenue per center membership due to changing consumer desires, competition, or economic conditions.
• Adverse impacts from the macroeconomic environment, including inflation, higher interest rates, labor and supply chain issues, and potential economic recession.
• Negative effects from the political climate, social unrest, global pandemics, severe weather, natural disasters, hostilities, and gun violence.
• Failure to successfully execute the asset-light growth strategy, leading to negative impacts on results of operations, cash flow, and return on invested capital.
• Declining center profitability as new centers open, due to higher pre-opening expenses and lower initial revenue volumes.
• Delays in new center openings due to factors beyond control, such as financing, permits, labor, material costs, and weather conditions.
• Strains on management, employees, information systems, and internal controls from growth and industry changes.
• Significant costs and potential lack of success in developing or re-imagining in-center, digital, and ancillary businesses.
• Inability to successfully acquire or integrate suitable businesses, potentially disrupting existing operations or leading to asset impairment.
• Adverse effects from intense competition in the health, fitness, and wellness industry, including from non-profit organizations and digital offerings.
• Disruptions to business operations and financial condition due to dependence on third-party suppliers for equipment and services.
• Damage to brand and reputation from operational failures, adverse incidents, negative publicity, or misuse of social media platforms.
• Inadequate protection of intellectual property rights or infringement by others, potentially leading to costly litigation or loss of brand recognition.
• Inability to adapt to significant and rapid technological change, including artificial intelligence, and deliver connected and digital experiences effectively.
• Adverse effects on reputation and business from failure to maintain operation, integrity, and security of systems and data, or to comply with privacy laws.
• Risks related to the acceptance of ACH, credit card, debit card, and digital payments, including fraudulent transactions and processing failures.
• Adverse effects on financial condition and growth from indebtedness and lease obligations, and restrictive covenants.
• Inability to generate sufficient cash to service all indebtedness and lease obligations, potentially forcing asset disposals or debt restructuring.
• Limited ability to raise capital in the future, impacting operations and growth, and potentially diluting stockholders.
• Inability to retain key employees and hire additional qualified employees, potentially reducing member satisfaction and harming financial results.
• Increased labor costs due to market conditions or unionization efforts.
• Negative effects from changes in governmental laws and regulations, including consumer protection, health and safety, and tax laws.
• Claims related to the development, construction, or operation of facilities, or the use of services and products, potentially leading to uninsured losses.
• Inability to maintain required insurance coverage on acceptable terms or at an acceptable cost.
• Adverse developments in applicable tax laws or tariffs, increasing the effective tax rate or operational costs.
• Significant volatility in share price due to market conditions, analyst expectations, or public announcements.
• Potential decline in common stock market price due to future sales by the company or existing stockholders.
• Interests of the Voting Group (significant stockholders) potentially not aligning with other stockholders.
• Anti-takeover effects of charter documents and Delaware law, discouraging acquisitions even if beneficial to stockholders.
• Non-U.S. holders owning more than 5% of common stock may be subject to U.S. federal income tax on gain from stock disposition if the company is deemed a USRPHC.

Future Outlook

Life Time is targeting 12 to 14 new locations on average per year starting in 2026, with a larger percentage expected to be large format ground-up construction builds. The company plans to continue elevating member experiences through new in-center service offerings like pickleball, Dynamic Personal Training, and MIORA, and expanding its omni-channel platform with investments in digital capabilities, including generative AI (LAIC). The Life Time Work and Life Time Living concepts are also expected to grow, generating interest from new property developers and presenting new development opportunities.

Management Comments

• We are a leading innovator in the industry having successfully created a leisure model that incorporates the country club wellness lifestyle within a fitness and active living community.
• Our continuous commitment to members has resulted in strong brand loyalty and fueled our strong, long-term financial performance.
• Our strategic shift to a more robust subscription offering coming out of the pandemic has resulted in our membership dues and enrollment fees now representing over 72% of our total Center revenue for the year ended December 31, 2025.
• We believe that no other company in the United States delivers the same quality and breadth of health, fitness and wellness experiences that we deliver, which has enabled us to consistently grow our annual membership dues and in-center revenue.
• We believe we have significant opportunities to continue expanding our portfolio of premium centers in an asset-light manner.
• We are now targeting 12 to 14 new locations on average per year starting in 2026.
• We believe our business is resilient and has performed well historically during different economic cycles including during a recession.

Industry Context

StockSavvy.ai notes that Life Time Group Holdings continues to differentiate itself in the competitive health, fitness, and wellness industry by focusing on a premium, resort-like athletic country club model and an expanding omni-channel ecosystem. While many competitors focus on budget fitness or specialized boutique studios, Life Time targets affluent demographics with a comprehensive offering that includes advanced fitness, wellness services, and even co-working and living spaces. This strategy allows the company to command higher average revenue per membership and build strong brand loyalty, positioning it uniquely against both traditional gyms and emerging digital fitness platforms. The company's investment in AI (LAIC) and expansion into pickleball reflects a proactive approach to evolving consumer preferences for integrated and experiential wellness.

Comparison to Industry Standards

• Life Time's average revenue per center membership of $3,531 in 2025 significantly surpasses that of typical budget gyms like Planet Fitness, which operate on a high-volume, low-price model.
• The company's premium, resort-like facilities and extensive amenities (e.g., indoor/outdoor pools, tennis, pickleball, LifeSpa, LifeCafe) position it at the high end of the market, comparable to luxury brands like Equinox or The Bay Club Company, but with a broader family-oriented and integrated lifestyle offering.
• Life Time's asset-light expansion strategy, with 71% of centers leased and a target of $25-$30 million net invested capital per new location, aims for a targeted cash on cash return in excess of 30%, which is competitive for real estate-intensive businesses in the leisure sector.
• The focus on couples and family memberships with higher retention and dues contrasts with the individual-centric models of many smaller fitness studios (e.g., Orange Theory, Barre3), indicating a different market segmentation and value proposition.
• The integration of Life Time Work and Life Time Living concepts provides a unique ecosystem that extends beyond traditional fitness, offering a more holistic 'healthy way of life' brand experience not typically seen from direct competitors like LA Fitness or 24 Hour Fitness.

Corporate Governance

Legal Proceedings

• Life Time, Inc. et al. v. Zurich American Insurance Company: The Minnesota Court of Appeals reversed a lower court's dismissal, ruling that governmental closure orders were the cause of losses under the property/business interruption policy, finding 29 occurrences with a $1.0 million coverage limit per occurrence. The Minnesota Supreme Court denied Zurich's petition for review. In November 2025, Zurich paid approximately $40 million to Life Time in partial satisfaction of claims for 26 of the 29 occurrences. The action will be remanded to the District Court for further proceedings.

Related Party Transactions

• Sale-leaseback transaction in 2024 involving one property with a third party in which the CEO and a board member own a minority interest. Life Time recognized a loss of $17.2 million on this transaction.
• Sale-leaseback transaction in 2020 involving one property with a subsidiary of LTRE, jointly owned by the CEO, a former executive, and another board member. Rent payments of $2.7 million in 2025.
• Sale-leaseback transaction in 2019 involving one property with a limited liability company jointly owned by the CEO and another board member. Rent payments of $2.4 million in 2025.
• Sale-leaseback transaction in 2018 involving one property with a limited liability company in which the CEO owns a 33% interest. Rent payments of $1.3 million in 2025.
• Sale-leaseback transactions in 2017 involving two properties with a limited liability company related to an existing stockholder. Rent payments of $6.6 million in 2025.
• Lease for the Woodbury, Minnesota center with subsidiaries of LTRE (related party to CEO). Rent payments of $1.2 million in 2025.
• Lease for a center in a shopping center owned by a general partnership in which the CEO has a 100% interest. Rent payments of $1.0 million in 2025.
• The CEO's daughter serves as a vice president of real estate development, receiving total compensation of approximately $0.5 million in 2025.

Stakeholder Impact

• Shareholders: Positive impact from strong financial performance, increased net income, and the announcement of a $500 million share repurchase program. Potential dilution risk from future equity offerings and stock price volatility.
• Members: Enhanced experiences through new in-center offerings (e.g., pickleball, Dynamic Personal Training, MIORA) and continued investment in digital/AI capabilities. Potential impact from optimized pricing strategies.
• Employees: Continued investment in human capital, training, and benefits. Potential for increased labor costs due to market conditions. Participation in equity incentive plans and short-term incentive programs.
• Creditors: Improved financial performance and reduced interest expense due to interest rate swaps may enhance creditworthiness. Indebtedness and lease obligations remain significant, with restrictive covenants.
• Landlords/Property Developers: Benefits from Life Time's attractive membership base increasing property value. Opportunities for favorable lease or development agreements and construction reimbursements through the asset-light expansion strategy.

Next Steps

• Targeting 12 to 14 new center openings on average per year starting in 2026, with a focus on large format ground-up construction builds.
• Continue to invest in digital capabilities, including artificial intelligence (LAIC), to strengthen member relationships and expand the omni-channel platform.
• Execute the newly approved share repurchase program of up to $500 million of common stock.
• Remand the Zurich American Insurance Company legal action to the District Court for further proceedings following the Minnesota Supreme Court's denial of review.
• Within one year of June 5, 2025, establish nominating and corporate governance and compensation committees consisting entirely of independent directors, as the company ceased to be a controlled company.

Key Dates

Recommendation

Life Time Group Holdings demonstrated exceptional financial performance in 2025, with record revenue and a substantial increase in net income and Adjusted EBITDA. The company's strategic focus on premium offerings, member engagement, and asset-light expansion is yielding strong results, as evidenced by higher average revenue per membership and continued center growth. The successful $40 million legal settlement further bolsters financial health. The approval of a $500 million share repurchase program signals strong management confidence and a commitment to shareholder value. While capital expenditures are high for growth, the overall trajectory and strategic positioning in the healthy living market are highly favorable, making it a compelling 'strong buy' for seasoned investors.

Keywords

Life Time Group Holdings, LTH, SEC Filing, 10-K, Annual Report, Financial Performance, Revenue Growth, Net Income, Adjusted EBITDA, Membership Growth, Athletic Country Clubs, Health and Wellness, Fitness Industry, Asset-Light Strategy, Capital Expenditures, Share Repurchase, Legal Settlement, Corporate Governance, Risk Factors, Delaware Corporation, NYSE, Digital Platform, AI, Life Time Work, Life Time Living, Interest Rate Swaps