Life Time Group (LTH -9.65%), the premium health, fitness, and wellness club operator, reported its Q2 FY2025 results on August 5, 2025. The company delivered strong results, with adjusted earnings per share of $0.37 (non-GAAP), up 48.0% from a year earlier and above the consensus expectation of $0.32 (non-GAAP). Revenue (GAAP) reached $761.5 million, also ahead of forecasts, as adjusted diluted EPS (non-GAAP) of $0.37 exceeded analyst estimates, representing a 14.0% year-over-year increase in GAAP total revenue. Net income (GAAP) and adjusted EBITDA (non-GAAP) saw double-digit growth. This performance, combined with improvements in profit margins and reduced net debt leverage, contributed to an overall strong quarter for Life Time, despite modest membership growth. The company raised its full‑year 2025 guidance for revenue and adjusted EBITDA, pointing to continued operational progress.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Adjusted EPS (Non-GAAP) | $0.37 | $0.32 | $0.25 | 48.0% |
| EPS (GAAP) | $0.32 | $0.32 | $0.26 | 23.1% |
| Revenue (GAAP) | $761.5 million | $752.6 million | $667.8 million | 14.0% |
| Adjusted EBITDA | $211.0 million | $173.5 million | 21.6% | |
| Net Income (GAAP) | $72.1 million | $52.8 million | 36.6% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Life Time Group and Its Business Model
Life Time Group operates premium athletic country clubs and wellness centers across the United States and Canada. Its business is centered on a subscription membership model, providing recurring revenue with a variety of membership types, including full access, on-hold, and digital-only tiers. Members gain access to high-end fitness facilities, personal training, classes, pools, spas, and social areas, with an emphasis on high-quality service and amenities.
Recently, Life Time has focused on boosting revenue per member and targeting engaged, higher-income demographics. The company has steadily expanded its center network while emphasizing operational discipline and an asset-light expansion strategy. Its key success factors include delivering a superior in-center experience, maximizing member engagement, and growing recurring revenue from its core subscription model and additional services like personal training and wellness programming.
Quarter Highlights: Financial, Operational, and Product Developments
The latest period produced several notable financial performance metrics. Adjusted earnings per share (non-GAAP) grew by 48.0% in Q2 2025, and revenue (GAAP) exceeded analyst projections. Revenue increased 14.0%, driven by strong growth in membership dues and in-center revenue. Net income margin (GAAP) reached 9.5%, up from 7.9% for Q2 2024, and the adjusted EBITDA margin climbed to 27.7% from 26.0%. Free cash flow (non-GAAP) reached $112.5 million, though this included significant proceeds ($138.8 million) from property sale-leaseback activity. Without this, ongoing free cash flow would be lower. Net debt leverage fell to 1.8x, down sharply, reflecting balance sheet improvement and cash from asset sales. Capital expenditures were elevated at $222 million, supporting new club growth and technology updates.
Membership dues and enrollment fees remained the main revenue drivers, making up about 71.7% of total center revenue. The average revenue per center membership rose 11.8% to $888, driven by price increases, upmarket member mix, and higher adoption of in-center services. Comparable center revenue, reflecting existing club performance, grew 11.2% compared to the prior-year quarter. New club openings contributed to expansion, with four new locations bringing the total to 184 centers. In-center revenue increased 14.4%, supported by increased participation in offerings like Dynamic Personal Training services, which are tailored, instructor-led fitness sessions within the clubs.
However, total center memberships grew only 2.0% year over year. Management pointed to growing visits per membership and retention at “all-time highs.” but the pace of net new member additions lags behind revenue and earnings gains. Club waitlists and high member engagement suggest limited additional capacity at several locations, supporting Life Time’s approach of prioritizing revenue growth from existing members rather than rapid expansion in membership count. The company's asset-light growth model -- where most new centers are leased rather than owned -- continued to reduce risk while enabling steady expansion into affluent markets.
The company also advanced digital transformation projects. Life Time’s app is available to members for free and is the foundation for digital engagement and future service layers. Management discussed ongoing development of its artificial intelligence-based “LACI” wellness companion, intended to expand the brand’s reach outside physical centers. Still, there were no new digital engagement performance metrics included in this release, so the impact on revenue or membership from these initiatives remains to be seen.
Looking Forward: Guidance and Key Trends
Life Time raised its full-year 2025 outlook following this strong quarter. It now expects annual revenue (GAAP) in the range of $2.955 billion to $2.985 billion, with adjusted EBITDA targeted between $805 million and $815 million. This outlook is modestly higher than prior guidance. The company also now forecasts comparable center revenue growth of 9.5% to 10.0%, up 0.5 percentage points from previous expectations for full-year comparable center revenue growth. Life Time plans to open 10 new centers this year and aims to maintain net debt leverage below 2.0x. Cash tax expense is projected at $25 million to $27 million, reflecting recent tax law benefits.
Management cautioned that the adjusted outlook, while improved, reflects prudent assumptions in light of possible macroeconomic volatility. Investors should track trends in membership growth, retention rates, and revenue per member in upcoming quarters. Capital expenditures will remain high as the company prioritizes club growth, modernization, and enhanced digital capabilities.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
