Life Time Group Holdings, Inc. (LTH) is a premier lifestyle and leisure brand that has established itself as a leading innovator in the fitness and wellness industry. With a commitment to delivering premium health, fitness, and wellness experiences, Life Time has earned the trust of over 1.5 million individual members, who together comprise more than 866,000 memberships as of December 31, 2024.
Company History and Growth
The company's origins can be traced back to 1992, when it was founded by Bahram Akradi with the vision of creating a unique leisure model that blends the country club wellness lifestyle with a fitness and active living community. Over the past three decades, Life Time has successfully navigated the industry's challenges, emerging as a trusted brand synonymous with uncompromising quality, luxury, and Healthy Way of Life experiences.
Life Time's journey began with the construction of its first athletic country club in Chanhassen, Minnesota. Since then, the company has experienced remarkable growth, now operating 179 distinctive, resort-like centers across 31 states in the United States and one province in Canada. Throughout its history, Life Time has demonstrated remarkable resilience in the face of significant challenges, including the 2008 financial crisis and the COVID-19 pandemic in 2020, which forced the temporary closure of all its centers.
Business Model and Offerings
The company's comprehensive approach to health and wellness has been a key driver of its success. Life Time's centers offer a wide range of amenities and services, including state-of-the-art fitness equipment, group exercise classes, childcare, cafes, and spa services. This holistic offering has enabled Life Time to build a loyal and engaged member base, contributing to its consistent growth over the years.
A significant milestone in Life Time's history was its initial public offering in October 2021, which provided the company with additional capital to fund its expansion strategy. This move has allowed Life Time to accelerate its growth, particularly in affluent suburban and urban markets across North America.
Life Time's robust business model is underpinned by a highly predictable and recurring revenue stream, with membership dues and enrollment fees accounting for over 72% of its total center revenue in 2024. This subscription-based approach has proven resilient across economic cycles, enabling the company to achieve consistent year-over-year growth, even during the challenging COVID-19 pandemic.
Strategic Expansion and Innovation
The company's strategic expansion into an asset-light model has been a key driver of its success in recent years. Since 2015, Life Time has leveraged operating leases and sale-leaseback transactions to expand its footprint, allowing it to enter attractive urban and coastal markets where the price of real estate had historically been a deterrent. As of December 31, 2024, approximately 68% of Life Time's centers were leased, including approximately 87% of its new centers opened since 2015.
Life Time's relentless focus on elevating and broadening its member experiences has been another crucial factor in its growth. The company has implemented several strategic initiatives that have driven increased revenue, engagement, and memberships. These include the expansion of its pickleball offerings, the growth of its Dynamic Personal Training and small group training programs, and the launch of its ARORA community targeting members aged 55 and older.
Digital Capabilities
Additionally, Life Time has made significant investments in its digital capabilities, including the development of its integrated digital app and the introduction of its LTH nutritional supplement line. The company's free digital app, LT Digital, now has more than 1.7 million subscribers and is growing by over 100,000 subscribers per month without any marketing effort. This digital platform is poised to become a powerful gateway for its Healthy Way of Life ecosystem, offering live streaming fitness classes, remote personal training, and curated wellness content.
Financials and Liquidity
The financial performance of Life Time has been equally impressive. In 2024, the company reported total revenue of $2.621 billion, representing an 18.2% increase compared to the previous year. Net income surged 105.3% to $156.2 million, while adjusted EBITDA grew by 26.1% to $676.8 million, with an adjusted EBITDA margin of 25.8%. Operating cash flow for the year reached $575.12 million, with free cash flow of $273.58 million.
The company's strong performance continued in the fourth quarter of 2024, with revenue increasing 18.7% year-over-year to $663.28 million. Net income for the quarter rose 57% to $37.16 million, while operating cash flow grew 24% to $163 million. The increase in revenue was driven by an 18% increase in membership dues and enrollment fees and a 19.4% increase in in-center revenue. Comparable center revenue was up 13.5% in Q4.
Life Time's center revenue, which accounted for 97.2% of the company's total revenue in 2024, has been the primary driver of growth. Membership dues and enrollment fees represented 72.8% of the company's total center revenue, while in-center revenue made up the remaining 27.2%. The company's average center revenue per center membership increased from $2,810 in 2023 to $3,160 in 2024, reflecting the strength of the company's brand and the value its members place on the experiences and services provided.
As of December 31, 2024, Life Time had 812,060 center memberships, up from 763,220 in 2023, and 54,020 Digital On-hold memberships, up from 51,720 in 2023, for a total of 866,080 memberships. The company's ability to attract and retain members, as well as optimize revenue per center membership, has been critical to its long-term success.
In terms of liquidity, Life Time maintains a strong financial position. As of December 31, 2024, the company had $10.88 million in cash and cash equivalents, with $608.80 million available under its revolving credit facility. The company's debt-to-equity ratio stood at 0.95, with a current ratio and quick ratio both at 0.33.
Future Outlook
Looking ahead, Life Time has raised its revenue and adjusted EBITDA guidance for 2025, reflecting the strength of its core business and the growing momentum of its strategic initiatives. The company is targeting revenue of $2.925 billion to $2.975 billion and adjusted EBITDA of $780 million to $800 million, underscoring its confidence in its ability to drive continued growth and profitability.
Life Time plans to open 10 to 12 new clubs in 2025 and maintain its current debt levels of approximately $1.5 billion, implying a net debt leverage ratio of less than 2 times by the end of 2025. The company's nutritional supplement brand, LTH, is seeing strong month-over-month growth, and Miura, their health optimization and longevity offering, is progressing as planned.
Despite the broader macroeconomic challenges, Life Time's focus on delivering exceptional member experiences, expanding its asset-light footprint, and diversifying its revenue streams through digital and ancillary offerings positions the company well for long-term success. The global leisure travel market, which had a market size of $1.2 trillion in 2023, is anticipated to grow at a CAGR of 18.3% between 2024-2033, reaching $6.2 trillion. This favorable industry trend, coupled with Life Time's strong execution and strategic initiatives, bodes well for the company's future prospects.
As Life Time continues to execute on its strategic priorities, investors can expect the company to maintain its position as a dominant force in the health, fitness, and wellness industry. With its comprehensive approach to member experiences, robust financial performance, and clear growth strategy, Life Time Group Holdings is well-positioned to capitalize on the growing demand for premium health and wellness services in the years to come.