Breaking Down Planet Fitness, Inc. (PLNT) Financial Health: Key Insights for Investors

You're looking at Planet Fitness, Inc. (PLNT) right now, trying to figure out if the stock's low-cost model can defintely keep outperforming in a tighter consumer market, and honestly, the 2025 numbers tell a clear story of momentum. The company just raised its full-year outlook, projecting revenue growth of approximately 11% and adjusted net income growth in the robust 13% to 14% range, which is a significant beat over earlier forecasts. This strength is powered by a system-wide same club sales growth forecast of about 6.5%, plus they're on track to open between 160 and 170 new clubs this year, adding to their base of approximately 20.7 million members. But here's the quick math: with adjusted earnings per share (EPS) guided between $3.000 and $3.030, the question isn't just about growth, but how they manage the near-term risk of member churn, especially with the 'click-to-cancel' policy and the planned 2026 Black Card price increase to $29.99. We need to map those risks to the clear opportunity of 66.1% Black Card penetration and the new amenities they are testing to see if the valuation holds up.

Revenue Analysis

You're looking for a clear picture of where Planet Fitness, Inc. (PLNT) actually makes its money, and honestly, the answer is less about membership dues and more about the franchise machine. The company operates on a three-segment model: Franchise, Corporate-owned Stores, and Equipment. This structure is defintely the key to their high-margin, asset-light growth strategy.

For the trailing twelve months ending September 30, 2025, Planet Fitness, Inc. (PLNT) reported total revenue of approximately $1.288 billion, which represents a strong year-over-year increase of about 14.39%. The company even raised its full-year 2025 revenue growth guidance to roughly 11%, a clear signal of confidence following a robust performance in the third quarter.

Breakdown of Primary Revenue Streams (2025)

The revenue breakdown shows a balanced but distinct reliance on the Franchise and Corporate-owned segments. The Franchise segment provides a predictable, recurring royalty stream, while the Corporate-owned stores deliver direct membership revenue. The Equipment segment, though smaller, is crucial for club openings and remodels.

Here's the quick math using the Q2 2025 results, which total $340.9 million in revenue:

• Corporate-owned Clubs: This segment brought in about $139.0 million, making it the largest contributor to total revenue in the quarter.
• Franchise: Revenue here was $119.7 million, up 11.0% from the prior year, driven by higher royalty and National Advertising Fund (NAF) revenue.
• Equipment: Sales to franchisees contributed $82.2 million, showing a significant jump of 21.5% year-over-year, mainly from equipment sales to existing clubs.

Segment Contribution and Growth Drivers

The real engine of growth is the Franchise segment's same-club sales, which increased by 8.3% in Q2 2025. That's a powerful number, and the biggest change driving it is the 50% price increase on the entry-level Classic membership that was implemented in June 2024. This move translated directly into higher royalty revenue in 2025, without needing to add a massive number of new members, though membership still grew to approximately 20.8 million by the end of Q2 2025.

The table below maps the two most recent quarterly revenue figures for a clearer comparison of segment contribution:

What this estimate hides is the long-term impact of the company's strategic vision on its recurring revenue base. For a deeper dive into the company's long-term strategic direction, you should review the Mission Statement, Vision, & Core Values of Planet Fitness, Inc. (PLNT).

The Franchise segment's consistent royalty increase, plus the high-growth Equipment sales driven by club remodels and new club openings (23 new clubs system-wide in Q2 2025 alone), gives the revenue stream a compelling mix of stability and expansion potential. Your next step should be to assess the sustainability of this same-club sales growth, especially as the Classic membership price increase annualizes.

Profitability Metrics

You're looking at Planet Fitness, Inc. (PLNT) because its profitability metrics stand out, and honestly, they should. The company's asset-light franchise model fundamentally drives superior margins compared to most traditional gym operators, turning a high volume of low-cost memberships into impressive corporate-level returns. This isn't just good; it's a defintely a structural advantage in the fitness space.

For the 2025 fiscal year, the company is flexing its financial muscle. The TTM (Trailing Twelve Months) Operating Margin, a key measure of core business efficiency, sits at 21.57% as of November 2025. Looking at the most recent quarterly data from September 2025, the Net Profit Margin is a strong 17.92%. This means nearly 18 cents of every revenue dollar makes it to the bottom line, which is excellent for a high-volume consumer business.

The gross margin is where the efficiency really shines, reflecting the power of the franchise and equipment segments. The Gross Margin for the quarter ended June 2025 was 53.17%. This high margin is a function of their business mix, where the high-margin franchising and equipment sales segments bolster the lower-margin corporate-owned stores. Here's the quick math on what drives this operational efficiency:

• Maintain a high Gross Margin, often cited near 59.2% historically, by selling equipment to franchisees.
• Keep fixed costs low at the corporate level, pushing the operating expense burden onto franchisees.
• Focus on recurring membership dues, which account for the majority of club-level revenue.

The trend in profitability is clearly upward. Management recently raised its full-year 2025 guidance, projecting Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) growth of 12%, up from an earlier 10% forecast. Also, they expect Adjusted Net Income per Diluted Share growth in the 16% to 17% range. This growth, alongside a projected FY 2025 revenue of $1.3 billion, shows that the price hike on the Black Card membership and strong same-club sales growth are translating directly into higher earnings per share.

When you compare Planet Fitness, Inc.'s performance to the broader industry, the difference is stark. The company's corporate-level margins are significantly higher than the median for most gym operators. This is the structural benefit of being a franchisor-you collect high-margin royalty and equipment revenue without carrying the full operational cost of every club on your balance sheet.

The key takeaway is that Planet Fitness, Inc. operates in the top tier of the fitness sector's profitability curve. The company's corporate margins are far above the 10% to 15% net margin typical of a traditional gym or the 15% EBITDA margin its own franchisees target. This premium margin profile is what you're paying for when you invest in the stock, and it's tied directly to the scalability of their franchise model. For a deeper look at who is buying into this model and why, you should read Exploring Planet Fitness, Inc. (PLNT) Investor Profile: Who's Buying and Why?

So, the next step is clear: Portfolio Managers: Adjust your PLNT valuation models to reflect the sustained high-teens net margin, using the raised 2025 EPS guidance of $3.000 to $3.030 as your new floor.

Debt vs. Equity Structure

The first thing to understand about Planet Fitness, Inc. (PLNT) is that its balance sheet is structured to be debt-heavy, which is common for companies using a Whole Business Securitization (WBS) model. The direct takeaway is that the company's financial leverage is exceptionally high, primarily due to negative shareholder equity.

As of the third quarter ending September 30, 2025, Planet Fitness, Inc.'s total debt stood at approximately $2.158 billion. This debt is overwhelmingly long-term, with the long-term debt (net of current maturities) registering at about $2.139 billion as of June 30, 2025. The short-term debt component, which includes the current portion of long-term debt, is relatively small, suggesting a manageable near-term repayment schedule.

The company's Debt-to-Equity (D/E) ratio is what really jumps off the page, sitting at an extreme negative figure, around -11.10 as of mid-2025. This isn't a sign of imminent collapse, but it requires context. The ratio is negative because the company has negative shareholder equity, approximately -$194.4 million in the second quarter of 2025. This negative equity is largely a structural result of its WBS financing model and a history of significant share repurchases, which reduce equity on the balance sheet. Honestly, a high D/E ratio is the price of this asset-light, high-growth franchise model.

Here's the quick math on the debt breakdown:

• Total Debt (Q3 2025): $2.158 billion
• Long-Term Debt (Q2 2025): $2.139 billion
• Shareholder Equity (Q2 2025): -$194.4 million

To be fair, Planet Fitness, Inc.'s D/E ratio is a massive outlier compared to the broader 'Leisure' industry average of about 0.42 as of November 2025. But, you can't compare a WBS-financed franchisor to a traditional gym operator or hotel chain. The WBS model allows the company to borrow against the predictable, high-margin cash flows from its franchise agreements, royalties, and equipment sales, rather than against physical real estate or equipment.

In terms of recent activity, the company is defintely managing its debt proactively. In mid-2024, Planet Fitness, Inc. executed a refinancing transaction, issuing approximately $600 million in Series 2024-1 Fixed Rate Senior Secured Notes. This was used to repay existing debt and demonstrates a commitment to maintaining favorable terms on its securitized debt. Furthermore, the company's credit ratings on its Class A Notes were affirmed by KBRA in June 2025, which is a key signal that credit agencies remain confident in the stability of the underlying cash flows supporting the debt structure.

The financing strategy is a clear balance: use debt to fund an asset-light, high-return franchise expansion, and use the predictable cash flow from that model to service the debt. This approach maximizes return on equity, even if it results in a technically negative equity position. For a deeper look at the business, check out the full post at Breaking Down Planet Fitness, Inc. (PLNT) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You want to know if Planet Fitness, Inc. (PLNT) has the cash to handle its near-term obligations and fund its aggressive club expansion. The direct takeaway is that their liquidity is defintely strong, driven by a highly predictable, subscription-based revenue model, but you must watch their long-term debt load and capital expenditures (CapEx).

As of late 2025, Planet Fitness, Inc.'s short-term financial health is excellent. The Current Ratio (Current Assets divided by Current Liabilities) is approximately 2.08, which is well above the 'safe' benchmark of 1.0. This means the company has more than two dollars in liquid assets for every dollar of short-term debt, a very comfortable margin. The Quick Ratio (a stricter measure that excludes inventory) is nearly identical at 2.06. That's a powerful signal. Since a gym's inventory is minimal (mostly equipment for sale to franchisees), the Quick Ratio being so close to the Current Ratio shows their assets are highly liquid-mostly cash and receivables.

Here's the quick math on their working capital (Current Assets minus Current Liabilities): the high ratios translate directly to a strong, positive working capital position. This trend is a major strength, allowing them to cover payroll, rent, and other short-term operating costs easily. Plus, their business model is asset-light, meaning they don't tie up huge amounts of cash in slow-moving inventory like a retailer would. It's a great position to be in.

• Current Ratio: 2.08 (Strong liquidity).
• Quick Ratio: 2.06 (Assets are highly liquid).
• Cash and Marketable Securities: $577.9 million (as of Q3 2025).

Looking at the cash flow statement for the third quarter of 2025 tells the real story of how they generate and use that liquidity. The company is a cash-generating machine from its core operations.

Here's a breakdown of the Q3 2025 cash flow trends (in millions USD):

The $131.5 million in Net Cash From Operating Activities (OCF) for Q3 2025 shows the power of their recurring revenue model. They're bringing in a lot of cash from members and franchisees. Even after spending $106.0 million on investing activities (ICF) to open new corporate clubs and place equipment, they still generated a healthy $76.7 million in Free Cash Flow (FCF). This FCF is what they use for shareholder returns and debt management.

The main liquidity concern isn't short-term, but it's the long-term solvency (the ability to meet long-term debt obligations). The Net Cash Used in Financing Activities (FCF) was a significant ($169.6) million in Q3 2025, largely due to a substantial share repurchase program of approximately $100 million. While buybacks boost earnings per share (EPS), they also reduce the cash buffer. Their total liabilities are around $3.25 billion with long-term debt near $2.14 billion. This high leverage, coupled with negative shareholder equity, is the primary solvency risk to monitor. However, the consistent, robust OCF and strong liquidity ratios suggest they can service this debt comfortably for now. If you want a deeper dive into who is betting on this model, check out Exploring Planet Fitness, Inc. (PLNT) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking at Planet Fitness, Inc. (PLNT) and wondering if the market has gotten ahead of itself, especially given the stock's recent run. The direct takeaway is that Planet Fitness trades at a significant premium to its industry peers, suggesting the market is pricing in aggressive growth for the foreseeable future. This means the stock is not cheap, but the consensus view still sees upside.

As of mid-November 2025, the stock price was around $102.23 a share. Over the last 12 months, the stock has delivered a solid return of approximately 11.2%, with its 52-week trading range spanning from a low of $87.72 to a high of $114.47. That's a decent gain, but the valuation multiples are where the story gets more complex.

Is Planet Fitness, Inc. Overvalued or Undervalued?

When we look at the core valuation metrics, Planet Fitness, Inc. appears expensive on an absolute basis, but this is a high-growth, asset-light franchise model. The market price-to-earnings (P/E) ratio is currently sitting at a high 44.35x. Here's the quick math: that multiple is more than double the Hospitality industry average of around 21.1x. This steep premium tells you investors are defintely betting on management's ability to execute on their expansion plans.

The Enterprise Value-to-EBITDA (EV/EBITDA) ratio, which is a better measure for capital-intensive franchisors like this, is also elevated at an estimated 20.9x for 2025. For context, the industry median is closer to 10.5x. The high EV/EBITDA multiple reflects the company's strong cash flow generation (EBITDA) but also its significant debt load (Enterprise Value), which is typical for a franchise-heavy, leveraged growth model.

The Price-to-Book (P/B) ratio is a non-starter here, and you should be wary of any simple P/B comparisons. The company has negative shareholders' equity, which makes the P/B ratio technically negative or not applicable (N/A). This is not always a red flag for a franchise business, but it highlights the reliance on debt financing and the importance of focusing on cash flow metrics like EV/EBITDA over book value.

• P/E Ratio: 44.35x (High growth premium).
• EV/EBITDA (2025E): 20.9x (Double the industry median).
• P/B Ratio: N/A (Due to negative equity, focus on cash flow).

Analyst Consensus and Investor Action

Despite the high multiples, the Wall Street community remains bullish. The analyst consensus rating is a Moderate Buy, based on a recent tally of ratings that includes 1 Strong Buy, 11 Buy, and 3 Hold recommendations. The average 12-month price target is approximately $115.77. That suggests a modest upside from the current price, but the highest target sits at an aggressive $130.00.

Planet Fitness, Inc. does not currently pay a common stock dividend, so the dividend yield and payout ratios are 0.00%. This is a growth stock, and management is choosing to reinvest all earnings back into new club development and share repurchases, with about $100 million in shares bought back in a recent quarter. They are prioritizing club expansion and earnings per share (EPS) growth over returning capital via dividends.

The valuation hinges entirely on execution of the company's long-term plan, which you can read more about in our full analysis: Breaking Down Planet Fitness, Inc. (PLNT) Financial Health: Key Insights for Investors. If they miss their FY 2025 EPS guidance of $3.00-$3.03, that high P/E ratio will make the stock vulnerable to a sharp correction.

Risk Factors

While Planet Fitness, Inc. (PLNT) has shown strong momentum, raising its 2025 outlook for adjusted EBITDA growth to approximately 12%, you must defintely understand the core risks that could derail this trajectory. The biggest near-term challenge is operational: managing the elevated churn (member turnover) that comes with making cancellations easier, specifically the new click-to-cancel functionality.

The company's low-price model is a competitive moat, but it also creates pricing sensitivity. For example, the planned Black Card price increase to $29.99 per month, while expected to be accretive to average unit volume (AUV), introduces a risk of higher member attrition if not perfectly timed with an enhanced member experience. Any misstep here could quickly impact the expected system-wide same club sales growth of approximately 6.5% for the full year 2025.

Here's the quick math on core risks and their potential impact:

• Operational Risk: Member Attrition: The click-to-cancel feature, while improving the member experience, keeps churn elevated. Management acknowledged this, but the risk remains that net member growth-which ended Q3 2025 at approximately 20.7 million-could slow if rejoining rates decline.
• Financial Risk: High Leverage: Planet Fitness carries a significant debt load. Its debt-to-equity ratio is notably negative, sitting in the range of -13.22 to -16.35, which indicates a high level of financial leverage. This structure makes the company more sensitive to interest rate changes and economic downturns.
• Valuation Risk: Market Premium: The stock is trading at a premium, with a price-to-earnings (P/E) ratio around 42.7x to 44.93x, which is significantly higher than the hospitality industry average of roughly 21x. This means the share price is vulnerable to a sharp correction if the company fails to meet its raised 2025 revenue growth guidance of approximately 11%.

You're also navigating external risks like the cyclical nature of consumer spending; if the economy slows, discretionary spending on gym memberships tightens, even for a low-cost option like Planet Fitness. Plus, securing suitable real estate for the planned 160 to 170 new club openings in 2025 remains a key variable for the franchise-heavy model.

Mitigation Strategies and Clear Actions

To be fair, management isn't just sitting still; they are actively working to mitigate these risks. Their strategy is focused on four key pillars that directly counter the operational headwinds and support the ambitious growth targets. This is where the rubber meets the road.

The company is refining club floorplans to enhance franchise returns, which should help franchisees secure capital and suitable sites more easily. They are also leveraging technology, using artificial intelligence (AI) for personalized marketing and customer relationship management (CRM) to improve member retention and loyalty, which is a direct counter to the click-to-cancel churn.

The core takeaway is that the growth narrative hinges on execution. They have a plan to manage the churn and a history of strong profitability, but the high valuation leaves little room for error. You can read more about the full financial picture in our detailed post: Breaking Down Planet Fitness, Inc. (PLNT) Financial Health: Key Insights for Investors.

Growth Opportunities

Planet Fitness, Inc. (PLNT) is positioned for a significant growth phase, moving beyond its initial market penetration strategy to focus on member value and operational refinement. The direct takeaway for you is that the company's raised fiscal year 2025 guidance points to strong near-term execution, and its new long-term algorithm signals sustained, double-digit growth potential.

For the full fiscal year 2025, management has uplifted the outlook, now projecting total revenue growth of approximately 11% and adjusted net income per diluted share (EPS) growth in the 16% to 17% range. This acceleration is supported by system-wide same club sales growth targeted at approximately 6.5%. Here's the quick math: strong sales growth plus a capital-light franchise model equals high-margin earnings expansion.

Key Growth Drivers and Strategic Initiatives

The company's future is mapped out by four strategic imperatives designed to enhance the member experience and accelerate new club growth. These aren't just buzzwords; they are concrete actions that drive unit economics (the profitability of each gym). As of September 30, 2025, Planet Fitness reported approximately 20.7 million members across 2,795 clubs. That's a massive base to build from.

• Product Innovations: Testing new amenities like dry cold plunge and red light technology to drive upgrades to the PF Black Card membership, which already accounts for 66.1% of total membership.
• Club Expansion: Reiterating confidence in opening between 160 and 170 new clubs in 2025, plus accelerating global expansion with a goal to surpass 200 international clubs in 2026. Spain, for instance, is proving a successful proof-of-concept market.
• Format Optimization: Refining club floorplans to reduce build costs and give more floor space for workouts. By the end of 2025, close to 80% of clubs system-wide will have some version of this optimized format, which should defintely boost franchisee returns.

Strategic partnerships also play a role. Planet Fitness is now the official fitness partner of Hockey Canada, and they are testing inclusion in platforms like T-Mobile Tuesdays. Crucially, they are exploring avenues to align with GLP-1 providers, recognizing the need to support customers on weight-loss medications with accessible fitness options. This shows a trend-aware realist approach to the health market.

Competitive Advantages and Financial Trajectory

Planet Fitness's core competitive advantage remains its high-value, low-price model (HVLP) and its Judgement Free Zone® culture. This positioning attracts the vast majority of the population who are not traditional gym-goers. Plus, Gen Z is currently the fastest-growing segment of its membership base, securing the pipeline for years to come.

The franchise model is a significant financial strength, as it's capital-light and generates predictable, recurring revenue streams. The long-term growth algorithm for fiscal years 2026-2028 targets a low-double digit percent Compound Annual Growth Rate (CAGR) for revenue, and a mid-teens percent CAGR for Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization-a key measure of operating profitability). This is a clear signal of confidence in their ability to scale efficiently.

The company's focus on brand modernization and member experience is designed to increase both new member joins and retention, which is the direct path to long-term member growth. You can read more about their underlying philosophy in their Mission Statement, Vision, & Core Values of Planet Fitness, Inc. (PLNT).

The financial targets are aggressive, but grounded in the strong Q3 2025 performance, which saw revenue hit $330.3 million and same-store sales jump 6.9%. The planned Black Card price increase in 2026 will provide another tailwind to average unit revenue, assuming retention remains strong.