Life Time (LTH) Q3 2026 earnings review
Life Time earns more per member, but construction drains cash
Life Time, the operator of upscale fitness and country clubs, is collecting much more money per member while still funding its building spree by selling club real estate. Third-quarter revenue rose 14% from a year ago to $894 million as quarterly spending per member passed $1,000, driven by higher monthly dues and personal training. Chief executive Bahram Akradi raised the full-year revenue and operating profit outlook for a third straight quarter, beating what the prior plan pointed to for the second half.
| Revenue growth at clubs open over a year | 8.7% 10.6% a year ago; full-year outlook raised to 8.5%–8.7% |
|---|---|
| Average quarterly revenue per membership | $1,016 +12.0% from a year ago |
| Full-year revenue outlook | Raised $22.5M middle of the range: 13.0% growth |
| Cash flow before property sales (9 months) | -$142M by our math, before $262.5M of sale-leaseback proceeds |
⚖️ Verdict: 🟢 Bullish
The story got better because full-paying member sign-ups and personal training easily outweighed the planned drop in discounted insurance memberships. Center memberships grew 2.2%, beating management's 1.0% to 1.5% plan even after cutting about 21,500 insurance-funded members. One caution: cash flow before property sales stayed negative at $27 million in the quarter by our math, and the full-year net income outlook was trimmed because fourth-quarter property sales will be booked at a loss.
The question now is whether same-club growth stays near 8% next year or slows toward 5% once the insurance membership cleanup finishes at year-end. Bulls see higher personal training use and newer high-rate clubs carrying growth, while sceptics see a one-off pricing reset running out. Management's initial 2027 outlook next quarter will test both views.
🐂 Bull Case
Higher Prices and Training Lift Revenue Per Member 12%
Life Time runs upscale fitness and country clubs, and it has been replacing lower-paying members whose fees are paid by health insurers with full-paying members. Chief executive Bahram Akradi said "our in-center businesses are performing very well, resulting in higher revenue per membership." Critics have worried that this strategy leaves total member counts barely growing.
This quarter answered both sides. The club operator cut about 21,500 insurance-funded memberships, "which have significantly lower average dues", yet total center memberships still grew 2.2% from a year ago to 858,747, beating the 1.0% to 1.5% plan management gave last quarter.
- Revenue per center membership: $1,016 in Q3, up 12.0% from a year ago
- Non-insurance memberships added: about 39,600 from a year ago, or roughly 5.4% growth by our math
- In-center spending on personal training, spas and cafes: $249.0 million, up 16.6%
- Membership dues and enrollment fees: $622.1 million, up 13.7%
That matters because extra spending inside the clubs, led by "higher member utilization of our in-center offerings, particularly in Dynamic Personal Training", grew three percentage points faster than dues. Members are paying higher monthly rates and still buying more training sessions.
What to watch: fourth-quarter membership additions when the insurance cuts finish lapping. If total memberships grow less than the planned 2% to 3% once that drag ends, higher dues are starting to slow sign-ups.
Same-Club Growth Beat the Cautious Plan and Raised the Year
For two years Life Time has set full-year outlooks that point to a second-half slowdown, then raised them each quarter. Still, bears argue that revenue growth at clubs open more than a year must slow toward 4% to 5% as past price increases and the insurance membership cleanup run their course.
In the third quarter, revenue at clubs open over a year grew 8.7%, even against a tough 10.6% comparison from a year earlier. By our math, the previous full-year outlook pointed to roughly 7.0% to 7.7% growth for the second half, so the club chain raised its full-year same-club outlook from 7.9%–8.3% to 8.5%–8.7%.
Beating the implied second-half rate proves the old outlook was cautious, not that the long-term slowdown concern is gone. By our math, the new full-year target still points to about 8.0% same-club growth in the fourth quarter, down from 9.1% in the second quarter.
What to watch: the initial 2027 comparable-center outlook on the fourth-quarter report. A starting target below 6% would confirm that same-club growth is settling down as the insurance membership cleanup ends.
Rent and Overhead Grew Slower Than Revenue, Lifting Margins
Because Life Time sells club buildings to landlords and leases them back to fund construction, a standing concern is that rising rent will eat into its profit margins. This quarter, the company said it saw "greater flow through of our increased revenue" as club revenue outpaced fixed costs.
Operating profit margin rose 0.4 percentage points from a year ago to 17.7%, and Adjusted EBITDA margin — profit before interest, taxes, depreciation and one-offs — rose 0.6 percentage points to 28.7%. Rent fell by 0.4 percentage points of revenue to 10.8%, and corporate overhead and marketing fell by 0.3 percentage points to 7.4%, while day-to-day club operating costs rose 0.2 percentage points to 53.1%.
What to watch: fourth-quarter Adjusted EBITDA margin, which the full-year outlook puts at 27.6% by our math. Holding above 28% while six new clubs open would show mature clubs can absorb expansion costs.
🐻 Bear Case
Free Cash Flow Is Negative Without Selling Club Buildings
"With our low leverage, strong cash flow and robust real estate pipeline, we are well positioned for long-term growth," Akradi said. Life Time counts money from sale-leasebacks — selling club real estate to an investor and renting it back — inside its definition of free cash flow.
Without those property sales, cash generation was negative again. In the third quarter, the athletic club operator brought in $262.1 million of operating cash flow and spent $288.8 million on construction and equipment, leaving a $26.6 million cash deficit by our math before $62.3 million of property sale proceeds.
- Nine-month cash flow before property sales: negative $141.6 million by our math
- Nine-month property sale proceeds: $262.5 million, with about $135 million more planned in Q4
- Full-year net income outlook: top end trimmed $3 million to $358–$360 million
- Implied Q4 pre-tax loss on property sales: about $22 million by our math
The property sales are now costing money on the income statement too. Management updated its outlook for "Full year net income to include the impact of net losses associated with sale-leaseback transactions" of $17 million for the year, after recording $5.1 million of gains across the first nine months.
What to watch: the sale price versus book value on the $135 million of fourth-quarter property deals. Selling properties below what they cost to build means Life Time is taking a loss upfront and paying rent afterward.
Six December Openings Crowd Construction and Pre-Opening Costs Into Q4
Life Time is building bigger ground-up clubs, and Akradi said "We are on track to open all 14 new clubs planned for this year, and nearly all of our clubs planned for 2027 are already under construction." While that building spree drives future capacity, it crowds the schedule and the construction bill into the final weeks of the year.
The company opened just one club in the third quarter and one in October, leaving six clubs to open before December 31. Capital spending jumped 29.8% from a year ago to $288.8 million — 32.3% of revenue by our math — and pre-opening expenses nearly tripled to $2.9 million. By our math, the full-year plan leaves $375.5 million of capital spending for the fourth quarter.
What to watch: year-end club count on the fourth-quarter release. Ending below 202 clubs would mean construction delays pushed openings into 2027 after the company already spent the capital.
Risks this quarter didn't answer
Four standing items in the investment case got no new operating detail or saw paused action in the third-quarter release.
- Share buybacks: $0 spent in Q3 by our math (nine-month repurchases stayed at $73.4 million), testing whether management will use its remaining $426.6 million authorization.
- New-venture economics: no revenue or profit figures for MIORA longevity clinics or nutritional supplements; the annual filing will show if they remain immaterial.
- High-income consumer resilience: quarterly spending per member passed $1,000 to $1,016 with no macro slowdown yet; monthly retention in 2027 will test price sensitivity.
- Founder governance: Akradi remains founder, chairman and chief executive with no disclosed succession update and a buyback plan that allows purchases from insiders.
💲 Other KPIs
Debt minus cash fell to 1.3 times trailing twelve-month Adjusted EBITDA, down from 1.4 times last quarter and 1.6 times a year ago, staying well below the 2.0 times ceiling.
Deferred revenue — cash members have paid upfront for personal training and events not yet delivered — rose from $58.0 million in Q2 and is up 0.5% from year-end 2025, reversing the first-half dip.
Diluted shares rose 1.3% from a year ago and 0.8% from last quarter as employee stock option exercises added $63.0 million of cash over nine months and third-quarter share buybacks paused.
🔮 Guidance
Raised. The middle of the range moved up $22.5 million to 13.0% growth for the year. By our math, that leaves $836.8 million for Q4, or 12.3% growth from a year ago against 14.2% in Q3. It is the third raise this year: +$20.0M, +$27.5M, +$22.5M.
Raised. The middle of the range rose $12.5 million to 16.3% full-year growth. By our math, that implies $230.6 million in Q4, or 13.8% growth and a 27.6% margin as six club openings add pre-opening costs. Third raise this year: +$15.0M, +$15.0M, +$12.5M.
Raised. The middle of the range rose 0.5 percentage points to 8.6% after Q3 delivered 8.7%. By our math, the full-year plan leaves about 8.0% growth for Q4. Third raise this year: +0.4 points, +0.9 points, +0.5 points.
Cut. The top of the range came down $3 million, lowering the middle by $1.5 million to a 3.9% decline from 2025, which had one-off tax and insurance gains. By our math, that leaves $63.1 million for Q4 because the plan now embeds $17 million of full-year sale-leaseback losses.
Raised. Excluding property-sale losses and stock compensation, the middle of the range rose $12 million to 26.0% growth for the year. By our math, that leaves $88.1 million for Q4, up 13.8% from a year ago.
Cut. The top of the rent expense range fell $2 million, putting the middle at $380 million, or 12.0% higher than 2025. Non-cash rent inside that total tightened to $33–$35 million from $32–$35 million. By our math, Q4 rent is $99.7 million, up 14.2%.
Cut. Expected cash taxes fell $21.5 million at the middle of the range, saving cash in Q4 due to "higher projected tax depreciation, a net operating loss deduction carryforward from 2025, and a larger 2025 federal overpayment applied to 2026 than expected." The GAAP tax rate stays 27%.
Cut. The top end dropped $1 million, putting the middle at $60.5 million after subtracting $27–$29 million of interest capitalized into construction projects (trimmed from $28–$30 million). Nine-month net interest was $47.8 million, leaving about $12.7 million for Q4 by our math.
Raised. The bottom of the share count range rose by 1 million to a midpoint of 228.5 million, excluding any future buybacks, after Q3 diluted shares reached 229.1 million on option exercises.
Unchanged. The three capital spending budgets total $1,165–$1,210 million ($1,187.5 million at the middle). With $812.0 million spent in the first nine months, the plan leaves $375.5 million of construction and club spending for Q4 by our math.
Unchanged. Life Time completed $262.5 million of property sales through September and plans about $135 million more in Q4. It opened seven clubs through September and one in October, leaving six clubs to open in the rest of Q4.
❓ Key Questions
Why do fourth-quarter property sales carry a $22 million loss?
Nine-month sale-leasebacks produced a $5.1 million pre-tax gain, yet the full-year outlook now includes $17 million of net losses. That implies a roughly $22 million loss on the $135 million of fourth-quarter deals by our math, raising questions about property valuations.
What did the supplemental presentation show for same-club growth drivers?
In the first two quarters, the supplemental slides split same-club growth into membership mix, price, volume, and in-center spending, and gave exact insurance-funded member counts. The press release omits those splits, which show how much growth still comes from past price hikes.
Why did Life Time pause share buybacks in the third quarter?
Nine-month share repurchases stayed at $73.4 million on the cash flow statement, meaning the company bought back no shares in Q3 after spending $62.7 million in Q2, while option exercises pushed the diluted share count up to 229.1 million.
What are the standalone margins on personal training and spas?
In-center spending grew 16.6% to 28.6% of club revenue, led by Dynamic Personal Training, while club operating costs grew 14.5%. Without separate margin disclosure for training, spas and cafes, investors cannot tell if in-center growth lifts or dilutes club margins.