Life Time (US:LTH)2026-02-24 12:00Membership and Revenue Growth - As of December 31, 2025, Life Time had nearly 1.6 million individual members and approximately 873,000 memberships[19] - Membership dues and enrollment fees represented over 72% of total Center revenue for the year ended December 31, 2025, up from over 70% previously[24] - Average revenue per center membership increased to $3,531 in 2025, compared to $3,160 in 2024 and $2,810 in 2023[44] - Total memberships increased to 872,936 in 2025, up from 866,085 in 2024, and 814,936 in 2023, representing a growth of 0.2% year-over-year[201] - Membership dues and enrollment fees revenue reached $2,111,370 in 2025, a 13.9% increase from $1,853,963 in 2024 and a 35.5% increase from $1,557,289 in 2023[201] - Total Center revenue increased to $2,909 million for the year ended December 31, 2025, up from $2,547 million in 2024 and $2,154 million in 2023, indicating a growth of approximately 14.2% year-over-year[174] - Center revenue includes membership dues, enrollment fees, and in-center revenue, which encompasses various member services and product sales[181] - In-center revenue increased by $104.7 million, accounting for 28.9% of the center revenue growth, reflecting higher member utilization of offerings, particularly Dynamic Personal Training[218] Expansion and Growth Strategy - Life Time plans to open 12 to 14 new locations annually starting in 2026, focusing on affluent metropolitan areas[34] - The company opened 10 new centers in 2025, bringing the total number of centers to 189, up from 179 in 2024 and 171 in 2023[201] - The company has 17 new centers under construction and operates 10 satellite locations, indicating ongoing expansion efforts[153] - Approximately 71% of Life Time's centers are now leased, with 84% of new centers opened since 2015 being leased[38] - The company is executing an asset-light growth strategy, expecting to lease the majority of new centers in the future[104] - The company aims to expand in wealthier demographic and coastal locations, but higher construction costs and competition for sites may impact profitability[79] Member Engagement and Services - The company organized approximately 51,800 events in 2025, serving as a social and community hub for members[31] - Dynamic Personal Training sessions averaged over 220,000 per month in 2025, an 18% increase from 2024, while Dynamic Stretch sessions reached over 20,000 per month, a 34% increase[46] - Small Group Training sessions averaged over 42,000 per month in 2025, a 6% increase from 2024, with increased participation rates[46] - The ARORA community for members aged 55 and older averaged over 9,000 classes per month in 2025, a 9% increase from 2024[46] - Enhanced offerings include broader sales of LTH nutritional products on e-commerce platforms and a digital platform providing an omni-channel experience, including live streaming fitness classes and personalized AI-driven health recommendations[177] Financial Performance and Metrics - Adjusted net income for 2025 was $325,522, a significant increase from $200,451 in 2024 and $129,704 in 2023[202] - Adjusted EBITDA for 2025 was $825,175, reflecting a 22% increase from $676,780 in 2024 and a 54% increase from $536,831 in 2023[206] - Net income for the year ended December 31, 2025, was $373.671 million, up from $156.240 million in 2024, reflecting a net income margin increase from 6.0% to 12.4%[217] - Free cash flow for 2025 was $206,466, a decrease from $273,580 in 2024 but an improvement from a negative $108,989 in 2023[207] - Operating expenses totaled $2,513.962 million for the year ended December 31, 2025, representing 84.0% of total revenue, a decrease from 86.3% in 2024[217] Risks and Challenges - The company faces risks in attracting and retaining members, which could negatively impact business operations and financial condition[70] - The macroeconomic environment, including inflation and interest rates, has increased operational costs and affected capital expenditures, leading to a slowdown in new center construction[74] - New center openings in existing markets may cannibalize memberships from other centers, potentially diminishing overall revenue[80] - The company may incur significant costs in developing new business strategies, with no guarantee of success[83] - Competition in the health, fitness, and wellness industry poses risks to market share and revenue optimization[87] - Dependence on third-party suppliers for equipment and services could disrupt operations and adversely affect financial condition[88] Debt and Financial Obligations - As of December 31, 2025, the company had total consolidated indebtedness of approximately $1,525 million, with an interest expense of $82 million for the year ended December 31, 2025[103] - The annual debt service obligation for 2026 is expected to be approximately $86 million for interest and $22 million for principal payments[103] - The company may face increased costs and reduced cash flows available for working capital due to substantial debt service and lease obligations[107] - The credit agreement governing the senior secured credit facility includes covenants that may restrict the company's ability to operate and take advantage of business opportunities[105] Technology and Cybersecurity - The company is investing in technology, including a generative AI-driven personal companion, to enhance member experiences and maintain competitiveness[95] - The cybersecurity program is designed in accordance with the NIST framework, focusing on various material risks including operational and compliance-related risks[138] - The company has established an incident response plan to manage cybersecurity incidents, including identification, containment, and remediation[142] Corporate Governance and Shareholder Matters - As of December 31, 2025, the Voting Group held approximately 38.3% of the voting power of the company's common stock, down from 62.7% as of December 31, 2024[124] - The board of directors authorized a share repurchase program for up to $500 million of common stock, which may be modified or suspended at any time[132] - Future sales of common stock by the Voting Group or the perception of such sales could lead to a decline in the market price of the company's common stock[125]