Life Time's Q1 2025 Earnings Call: Divergent Views on Membership Growth, Financial Strategy, and Market Challenges

Membership growth and strategic focus, leverage targets and balance sheet strategy, member sign-ups and membership retention, membership dues strategy, and financial strategy and market conditions are the key contradictions discussed in Life Time's latest 2025Q1 earnings call.



Revenue Growth and Membership Increase:
- Life Time Group Holdings reported total revenue of $706 million for Q1 2025, an 18.3% increase year-over-year.
- This growth was driven by a 17.9% increase in membership dues and enrollment fees and an 18.7% increase in incentive revenue.
- The rise was supported by strong revenue growth in clubs opened within the last 12 months and robust comparable center revenue performance.

Strong Membership and Visitor Engagement:
- Center memberships increased 3.0% to over 826,000 members, with a combined total of approximately 880,000 including on-hold memberships.
- Average monthly visits per membership grew 11.8% to $208.
- This was attributed to increased traffic and retention at existing clubs and the addition of high-value members with full-dose paying customer segments.

Operational and Financial Performance:
- Net income was $76.1 million, reflecting a 206% increase, and adjusted net income was $88.1 million, increasing 189% year-over-year.
- Adjusted EBITDA was $191.6 million, up 31.2%, with an adjusted EBITDA margin increase of 260 basis points to 27.1%.
- This improvement was due to effective cost control and increased revenue, supported by a fixed interest rate swap agreement on the Term Loan B.

Tariff Exposure and Mitigation Strategies:
- Life Time Group Holdings does not anticipate significant impacts from tariffs due to its diverse supply chain, with most equipment sourced from Italy and Sweden.
- The company is actively monitoring and mitigating potential tariff risks by leveraging its strong balance sheet and strategic procurement strategies to maintain cost stability.