Breaking Down Life Time Group Holdings, Inc. (LTH) Financial Health: Key Insights for Investors

You're looking at Life Time Group Holdings, Inc. (LTH) and wondering if the premium wellness model can defintely sustain its high-octane growth, and the answer, based on the latest Q3 2025 results, is a strong yes. The company is performing like a well-tuned machine, reporting a massive Q3 Net Income of $102.4 million, which is a staggering 147.3% jump from the prior year, and Total Revenue hitting $782.6 million, up 12.9%. This isn't just a flash in the pan; they've raised their full-year 2025 guidance, now projecting revenue between $2.978 billion and $2.988 billion, fueled by comparable center revenue growth-that's existing clubs-expected to hit 10.8% to 11.0%. But, as a seasoned analyst, you also need to see the limits: the business is capital-intensive, with elevated capital expenditure to fund new centers, and we saw a seasonal membership downtick of 9,021 members sequentially in Q3, which is normal, but still a number to watch. So, the question isn't just about the top line; it's about how they manage that expansion and sustain a net debt leverage ratio of 1.6x while continuing to optimize their nearly 841,000 center memberships for higher-value families and couples.

Revenue Analysis

You're looking at Life Time Group Holdings, Inc. (LTH) because you see a premium brand scaling up, and honestly, the revenue story for 2025 is a strong one. The direct takeaway is this: LTH is successfully executing a dual-engine growth strategy, pushing both membership pricing and ancillary in-center services. They've raised their full-year 2025 revenue guidance to a range of $2.978 billion to $2.988 billion, a clear signal of confidence following robust third-quarter performance.

The company's revenue streams break down into two main categories: membership dues and what they call in-center revenue. Membership dues and enrollment fees are the bedrock, historically representing over 72% of total Center revenue in 2024, creating a highly predictable, subscription-based model. The rest comes from high-margin services like Dynamic Personal Training (DPT), spas, and cafes, which is where the real operating leverage kicks in.

Here's the quick math on their near-term performance. For the third quarter of 2025 alone, total revenue hit $782.6 million, marking a solid 12.9% increase over the same period last year. This isn't just volume; it's pricing power. The average monthly dues grew by 10.0% year-over-year to $218 in Q3 2025, which is a key indicator of the brand's premium positioning holding up even in a tougher economic climate.

The growth story isn't just about the monthly fee, though. The in-center business revenue-that discretionary spending inside the club-was up 14.4% year-over-year in Q3 2025, outpacing the total revenue growth rate. This is the significant change in the revenue mix you need to watch. It shows members are not just paying their dues; they are utilizing and paying for the full spectrum of services, especially Dynamic Personal Training (DPT). This is a great sign for the long-term profitability of the large-format athletic country club model.

The following table summarizes the recent high-level performance metrics, showing how the core business is accelerating:

The company's strategic focus is clearly on maximizing revenue per center membership, which rose 11.3% year-over-year in Q3 2025 to $907. This strategy means they are prioritizing higher-value memberships (like couples and families) and limiting discounted channels to preserve the premium experience, even accepting a seasonal membership unit downtick in Q3 to maintain pricing power. You can see this shift in their key initiatives:

• Boosting revenue per member through pricing and mix optimization.
• Accelerating Dynamic Personal Training (DPT) growth, a high-margin service.
• Rolling out the L•AI•C companion, an artificial intelligence (AI) health tool, to unlock new digital revenue.

What this estimate hides is the capital expenditure intensity-total CapEx was $222.5 million in Q3 2025-required to fund new centers and modernization, which is a near-term drag on cash flow, even if it drives future revenue. For a deeper dive into who is betting on this growth, check out Exploring Life Time Group Holdings, Inc. (LTH) Investor Profile: Who's Buying and Why?

To be fair, the growth is defintely there, but it is capital-intensive growth. Your next step should be to model the sensitivity of their free cash flow to a 1% change in comparable center revenue growth, using the raised guidance of 10.8% to 11.0% as your new baseline.

Profitability Metrics

You're looking at Life Time Group Holdings, Inc. (LTH) and trying to figure out if their premium model translates into superior profitability. The short answer is yes, their margins for the third quarter of 2025 show a significant step-change in performance, demonstrating strong operational leverage as their centers mature.

For the three months ended September 30, 2025 (Q3 2025), Life Time Group Holdings, Inc. reported total revenue of $782.6 million, with a net income of $102.4 million. This is a massive jump, with net income soaring 147.3% compared to the prior year quarter. That kind of growth isn't just a good quarter; it's a clear validation of their strategy to increase membership dues and drive in-center revenue from things like Dynamic Personal Training.

Margin Analysis: LTH vs. The Industry

When you break down the core profitability ratios-Gross, Operating, and Net-you see how Life Time Group Holdings, Inc. positions itself against the broader fitness industry. It's a high-end, full-service model, so you should expect higher margins than a typical low-cost gym, but also higher overhead.

Here's the quick math on their Q3 2025 performance, alongside relevant industry benchmarks:

The 47.06% Gross Margin is solid, but slightly lower than the 51.75% seen at an asset-light, franchised competitor like Planet Fitness (PLNT). This is defintely expected; Life Time Group Holdings, Inc.'s model carries higher center operations expenses-things like pools, spas, and a huge staff-which are baked into the cost of goods sold (COGS) for a full-service experience.

Operational Efficiency and Margin Trends

The real story is in the flow-through to the bottom line. Life Time Group Holdings, Inc.'s Net Profit Margin of 13.08% is at the high end of the general industry range, which typically runs from 2% to 15%. This shows their ability to manage selling, general, and administrative (SG&A) expenses effectively after the cost of service, which is a key indicator of operational efficiency.

The trend is even more compelling:

• Net Income growth: 147.3% year-over-year in Q3 2025.
• Adjusted EBITDA Margin: Improved by 210 basis points to 28.1% in Q3 2025.
• Comparable Center Revenue: Full-year 2025 guidance was raised to 10.8% to 11.0% growth.

What this estimate hides is the impact of new centers. As new clubs ramp up, they initially drag down overall margins, but the fact that the company is expanding margins while opening new centers (they plan to open 10 new centers in 2025) suggests the mature clubs are generating significant operating leverage. This is a strong signal that management is controlling costs while simultaneously growing the top line. For a deeper look at who is betting on this performance, check out Exploring Life Time Group Holdings, Inc. (LTH) Investor Profile: Who's Buying and Why?

The company's Adjusted EBITDA Margin of 28.1% is notably higher than the median industry EBITDA margin of 23.6% reported in the 2025 Health & Fitness Association Benchmarking Report. This premium margin reflects their success in extracting higher revenue per member and efficiently managing their large-format, high-amenity facilities.

Debt vs. Equity Structure

When you look at Life Time Group Holdings, Inc. (LTH), the key takeaway is that their financing strategy, which is heavily reliant on real estate assets, is shifting toward a healthier balance. They are actively reducing their leverage, which is a strong signal for investors, but the total debt load remains substantial, as is typical for a capital-intensive business like this.

As of the most recent 2025 data, Life Time Group Holdings, Inc.'s total debt stands at approximately $4.08 Billion USD. This figure includes both long-term and short-term obligations. To get a better sense of the breakdown, the long-term debt was around $3.894 Billion at the end of fiscal year 2024, with the current portion of long-term debt (what's due in the next year) estimated at roughly $22.97 Million as of September 2025. That's a lot of long-term commitment, but it's backed by physical assets-their athletic country clubs.

Here's the quick math on their leverage: The Debt-to-Equity (D/E) ratio is a crucial measure of financial leverage, showing how much debt a company uses to finance its assets relative to the value of shareholders' equity. For Life Time Group Holdings, Inc., the D/E ratio was approximately 0.508 (or 50.8%) as of September 2025, with total shareholder equity around $2.985 Billion. This ratio has dropped significantly, which is a positive trend.

To be fair, a D/E ratio of 0.508 is very healthy, especially when you compare it to the industry. The median Debt-to-Equity ratio for U.S. fitness club operators in 2025 is around 2.2, which means Life Time Group Holdings, Inc. is significantly less leveraged than many of its peers based on this specific calculation. The company's net debt leverage ratio also improved to 1.8 times as of June 30, 2025, down from 3.0 times a year prior, which shows real progress in deleveraging.

Life Time Group Holdings, Inc. balances its financing through a mix of debt and equity, but recent activity shows a clear focus on optimizing its debt structure and generating capital from assets:

• Refinancing Activity: In August 2025, the company refinanced its $995 million term loan facility, reducing the interest rate margin by 0.25%, resulting in a new effective fixed interest rate of 5.409%. This lowers their cost of capital, which is defintely a win in a rising rate environment.
• Credit Rating: S&P Global Ratings upgraded the company's issuer credit rating to 'BB-' from 'B+' in June 2025, citing strong operating performance and reduced leverage. A better credit rating means cheaper debt in the future.
• Asset Sales: They closed a sale-leaseback transaction of three properties in June 2025, generating approximately $150 million in gross proceeds. This is a common strategy for asset-heavy companies to raise equity-like capital without issuing new shares.

The company is using its real estate portfolio to fund growth while keeping the core debt structure manageable. This strategy allows them to continue expanding their club pipeline, balancing the need for capital (debt) with a focus on financial health (equity/asset sales). If you want a deeper dive into who is investing in this growth, you should check out Exploring Life Time Group Holdings, Inc. (LTH) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You're looking at Life Time Group Holdings, Inc. (LTH) and the first thing that jumps out is the liquidity profile, which looks tight on paper but is actually a feature of their business model. The headline is that while the traditional liquidity ratios are low, the company's significant operating cash flow and available credit facility provide a strong, immediate safety net.

The core of the short-term picture is in the current and quick ratios (a measure of a company's ability to cover its short-term debt). As of the most recent data, Life Time Group Holdings, Inc. has a Current Ratio of approximately 0.67 and a Quick Ratio of about 0.55. A ratio below 1.0 is a red flag for most businesses, as it means current assets don't cover current liabilities. But for a membership-driven business like Life Time Group Holdings, Inc., this is common.

Here's the quick math: a big chunk of their current liabilities is unearned revenue (membership dues paid in advance). This non-cash liability inflates the denominator of the ratio, creating a negative working capital position. You're defintely not looking at a cash crunch, though; you're looking at a healthy backlog of services already paid for.

The real strength is in the cash flow statement, which shows the business is generating substantial cash from its operations. Net cash provided by operating activities for the nine months ended September 30, 2025, was a robust $630.7 million, representing a 53.1% increase over the prior year period. That's a massive jump in cash generation. The third quarter of 2025 alone saw net cash from operations rise approximately 66% to $251 million. That kind of performance gives them a lot of flexibility.

The company's strategy also heavily involves asset-light growth through sale-leaseback transactions, which impacts both investing and financing cash flows. For the nine months ended September 30, 2025, these transactions generated net proceeds of $172.7 million. This is a strategic way to fund new club development without adding traditional debt, effectively turning real estate equity into growth capital. They expect to close an additional $55 million to $65 million in sale-leaseback transactions before the end of 2025.

What this estimate hides is the long-term lease obligation created, but in the near-term, it's a powerful liquidity booster. The balance sheet remains solid, with the net debt leverage ratio improving to a strong 1.6 times as of September 30, 2025, down from 2.4 times a year prior. This low leverage ratio is a huge strength.

Overall, the liquidity position is strong, despite the low current ratio. The company's total available liquidity as of September 30, 2025, was $837.1 million, which included $218.9 million of cash and cash equivalents, plus $618.2 million in availability on their revolving credit facility. That's your safety cushion.

• Operating Cash Flow: $630.7 million for nine months ended Q3 2025.
• Available Liquidity: $837.1 million as of September 30, 2025.
• Net Debt Leverage: Improved to 1.6 times from 2.4 times.

To dig deeper into the company's overall financial picture, you should check out the full post: Breaking Down Life Time Group Holdings, Inc. (LTH) Financial Health: Key Insights for Investors.

Valuation Analysis

You are looking at Life Time Group Holdings, Inc. (LTH) and asking the core question: Is this stock a buy, or is the market running ahead of itself? Honestly, the valuation picture is mixed, which is typical for a growth-focused company that has successfully deleveraged. The consensus leans toward a buy, but you need to check the math yourself against the current stock price.

As of late November 2025, the stock trades around $25.80. Over the last 12 months, the stock has been volatile but is up about 5.34%. It hit a 52-week high of $34.99 in May 2025 and a low of $21.49 in late December 2024. The current price is a defintely a discount from that May high, so the question is whether the growth story still supports the higher end of that range.

Key Valuation Multiples: What the Ratios Say

We use three main ratios-Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA)-to map the current price against the company's fundamentals. Here's the quick math based on recent trailing twelve-month (TTM) data:

• P/E Ratio: At approximately 18.67, this is a significant drop from the three-year average of 35.84, suggesting the stock is cheaper than its recent historical average, assuming earnings quality holds up.
• P/B Ratio: The Price-to-Book ratio sits near 1.98. For a capital-intensive business like Life Time Group Holdings, Inc. which owns a lot of real estate, this ratio is important; it suggests the market values the company at nearly twice its net asset value.
• EV/EBITDA: This is arguably the most relevant metric here, as it factors in the company's substantial debt. The TTM Enterprise Value-to-EBITDA (EV/EBITDA) is around 9.14. This is a favorable number, especially when you consider Life Time Group Holdings, Inc. has aggressively improved its net debt leverage ratio to a healthy 1.6 times as of September 30, 2025.

The low EV/EBITDA, combined with the fact that the company has no dividend yield (0%) because it prioritizes reinvestment and debt reduction-not capital return-points to a company valued for its growth and operational improvements, not as an income play. What this estimate hides is the high capital expenditure needed to open new centers.

Analyst Consensus and Price Targets

The professional analyst community is generally bullish on Life Time Group Holdings, Inc. (LTH). The consensus rating is a Moderate Buy or Buy from the sixteen analysts covering the stock as of late November 2025. This is a strong vote of confidence.

The average 1-year price target is approximately $37.00, which implies a substantial upside from the current price of around $25.80. The range is wide, though, with targets going as high as $48.00. This gap between the current price and the consensus target suggests the market may be undervaluing the stock's growth trajectory, especially given the company's raised 2025 outlook for comparable center revenue growth of 10.8% to 11.0%.

To be fair, the stock looks undervalued based on the analyst targets and the improving EV/EBITDA multiple, but the low P/B ratio suggests caution around asset value. If you want to dive deeper into who is driving the stock's momentum, you should read Exploring Life Time Group Holdings, Inc. (LTH) Investor Profile: Who's Buying and Why?

Your next step is clear: Compare this 9.14 EV/EBITDA against peers like Planet Fitness to truly gauge if the current price is a bargain or just a reflection of market skepticism on their new club expansion plans.

Risk Factors

You're looking at Life Time Group Holdings, Inc. (LTH) and seeing strong revenue growth, but you need to know what could trip up this momentum. The biggest near-term risk for Life Time isn't a lack of demand-it's managing the capital structure that fuels its high-end expansion model.

The core financial risk is the company's leverage, which is typical for a capital-intensive real estate and resort-style business. While they have made significant progress, the sheer volume of liabilities is a factor. As of March 2025, the company's total liabilities of approximately $4.58 billion outweighed its cash and near-term receivables by about $4.49 billion. That's a mountain of obligations, even for a company with a market capitalization around $5.53 billion as of November 2025. Still, management is defintely focused on this.

Operational and Financial Risks: The Debt-Growth Tightrope

Life Time Group Holdings, Inc. (LTH) is in a growth phase, which introduces specific financial and operational pressures. The key is whether the return on new investments justifies the cost of capital.

• Leverage Reduction Target: The good news is the net debt leverage ratio (net debt to Adjusted EBITDA) has improved dramatically, dropping to 1.6 times as of September 30, 2025, down from 2.4 times in the prior year period. Management's full-year 2025 guidance is to keep this ratio below 2.00 times.
• Cost of Capital Efficiency: A critical metric to watch is the Return on Invested Capital (ROIC). The ROIC of 4.46% is currently below the Weighted Average Cost of Capital (WACC), which suggests that, on paper, the company is not generating sufficient returns from its investments to cover their cost. This is a classic growth-stage tension.
• Expense Inflation: Center operations expenses for the nine months ended September 30, 2025, increased 13.4% to $1,189.2 million. This rise is tied to new centers and higher utilization, but if it outpaces revenue growth (which was 14.9% for the same period), it will compress margins.

External and Market Volatility Risks

Life Time operates in a highly competitive, discretionary consumer sector. Its premium, resort-like model is a differentiator, but it's not immune to macro shifts.

The stock itself carries a high Beta of 1.68, meaning its price tends to be significantly more volatile than the overall market. So, if the S&P 500 drops 1%, LTH stock could theoretically drop 1.68%. This volatility is an inherent risk for shareholders, especially in an environment of fluctuating interest rates and economic uncertainty.

Competition from lower-cost, high-volume gyms (like Planet Fitness) and niche boutique studios remains a constant external threat. Life Time's strategy is to compete on experience and breadth of offering, but a sustained economic downturn could push affluent consumers to trade down, impacting the strong comparable center revenue growth, which was raised to between 10.8% and 11.0% for the full year 2025.

Mitigation Strategies and Clear Actions

The company is taking concrete steps to de-risk the balance sheet and improve liquidity. This is the action map you should focus on.

They are actively managing their debt maturity profile and cost. For instance, they fixed the interest rate on their entire term loan to below 6% for the next three years, which locks in lower interest expense and provides clear visibility into cash flow. Furthermore, they reduced the interest rate margin on their term loan by 0.25% to 2.00% effective in August 2025.

The strategic use of sale-leaseback transactions (selling a property and immediately leasing it back) is a key liquidity tool. This strategy helped them achieve positive free cash flow of $216.4 million for the nine months ended September 30, 2025, which included $172.7 million in net proceeds from these transactions. This allows them to monetize the real estate asset and use the cash for new club development, with a plan to open 10 new centers in 2025.

Here's the quick math on liquidity: As of September 30, 2025, total available liquidity was a strong $837.1 million, including $218.9 million in cash and cash equivalents.

For a deeper dive into who is betting on this strategy, check out Exploring Life Time Group Holdings, Inc. (LTH) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking for a clear map of where Life Time Group Holdings, Inc. (LTH) goes from here, and the answer is simple: they are doubling down on their premium, all-in-one 'athletic country club' model and it is paying off in 2025. The core takeaway is that LTH is successfully translating new club openings and a diversified, high-end product mix-think pickleball and GLP-1 prescriptions-into significant earnings growth, with net income projected to surge by over 75% this fiscal year.

The company's expansion strategy is precise, focusing on affluent metropolitan and suburban areas. They plan to open 10 new centers by the end of 2025, adding to their existing network of over 185 athletic country clubs across the U.S. and Canada. This physical expansion is the primary engine for revenue growth, complemented by an impressive increase in member engagement, with visits per membership up 5.7% year-over-year in the second quarter of 2025. That's a defintely strong sign of a sticky business model.

Here's the quick math on their near-term financial outlook, based on their raised guidance for the full 2025 fiscal year:

• Total Revenue: Projected to land between $2.94 billion and $2.98 billion.
• Net Income: Expected to increase by approximately 75.8%, reaching a range of $262 million to $269 million.
• Adjusted EBITDA: Guidance projects a range of $760 million to $780 million.

What this estimate hides is the operational strength: comparable center revenue growth was 11.2% in Q2 2025, which shows that even their established locations are generating more revenue, not just the new ones.

Life Time Group Holdings, Inc.'s competitive advantage (or economic moat) is its positioning as a luxury, comprehensive wellness ecosystem, not just a gym. This strategy attracts a less price-sensitive customer, resulting in average monthly dues that grew 11.8% year-over-year to $208 in Q1 2025. They are not competing with budget fitness chains; they are competing with high-end leisure and healthcare spending.

Their strategic initiatives extend far beyond the physical club walls. The company is actively building out its digital and ancillary businesses:

• Digital Platform: The Life Time Digital platform now boasts 2.3 million accounts, marking a massive 216% year-over-year increase as of Q2 2025.
• Product Innovation: They launched L.AI.C™, an AI-powered personal health companion, to enhance the member experience. Also, their LTH nutritional supplement line saw revenue jump 31% versus the prior year quarter.
• New Services: The inclusion of dedicated pickleball courts and the exploration of services like GLP-1 prescriptions (for weight management) show a commitment to capturing emerging wellness trends and increasing the average revenue per member.

To be fair, the continued expansion requires capital, but Life Time Group Holdings, Inc. is managing this well. They have maintained a net debt leverage ratio (net debt to Adjusted EBITDA) at a strong 1.8 times as of June 30, 2025, and have achieved a critical BB credit rating, which will help lower future interest costs and boost earnings. They are also generating positive free cash flow, which they did for the fifth consecutive quarter in Q2 2025. This financial discipline provides a solid foundation for their ambitious growth plans. For a deeper dive into who is backing this growth, you should check out Exploring Life Time Group Holdings, Inc. (LTH) Investor Profile: Who's Buying and Why?