VOL. XCIV, NO. 247
★ EXPANSION-STAGE STOCKS & SCALING SETUPS ★
NO ADVICE
Wednesday, January 14, 2026
Life Time
LTH · NYSE
This analysis is generated by AI and supervised by humans. Scores reflect business model strength, scaling runway, and valuation setup. Mistakes can happen.
Overview
Premium athletic country club operator with recurring membership dues plus in-center spend (training, programs, services). Scaling is driven by new club openings, pricing/dues growth, in-center attach, and operating leverage as the club base expands.
Thesis summary
Life Time is past product-market fit: premium clubs show durable demand with double-digit comparable center revenue growth and rising revenue per membership. The next leg is execution: building out the new club pipeline while sustaining pricing power and in-center attach. With leverage trending down and free cash flow positive, the model can compound via (1) new club openings and ramp, (2) continued revenue per membership expansion, and (3) fixed-cost leverage at the center + corporate level.
Investment Thesis
Why Now?
The company has been consistently generating positive free cash flow and has reduced leverage (net debt leverage ratio down to ~1.6x by Q3 2025), while indicating most of next year's planned 12-14 new clubs are already under construction, setting up a throughput + geography growth phase if execution remains clean.
Scaling Thesis
Scaling is enabled by (1) repeatable club economics (dues + in-center revenue), (2) a visible development pipeline (new club openings and acquired-site remodels), (3) operating leverage as mature clubs run with higher member engagement and better staff utilization, and (4) balance-sheet flexibility from deleveraging + cash generation to fund growth capex.
Competitive Moat
Premium positioning with broad amenities (family + wellness + sport) creates switching costs and community stickiness. High-income demographic + strong engagement/retention supports pricing power and in-center spend. Large-club format (and clustered metro footprints) supports operational scale and brand density.
Key Assumptions
Valuation Scenarios
Illustrative: 2028E revenue $3.4B, 27% adj EBITDA margin, 8x EV/adj EBITDA. Assumes comps normalize lower, build cadence is fine but not exceptional, and the market keeps a discounted multiple. Notes: assumes ~ $1.1B net debt at target date (limited deleveraging).
Illustrative: 2028E revenue $3.9B, 30% adj EBITDA margin, 11x EV/adj EBITDA. Assumes steady new club openings, sustained pricing + in-center attach, and continued leverage + deleveraging. Notes: assumes ~ $0.8B net debt at target date.
Illustrative: 2028E revenue $4.3B, 32% adj EBITDA margin, 13x EV/adj EBITDA. Assumes strong execution on the development pipeline, sustained double-digit comps, and premium multiple durability. Notes: assumes ~ $0.4B net debt at target date.
Catalysts
FY2025/Q4 report + 2026 outlook: new center opening pace, comparable center revenue trajectory, margin/FCF guidance.
Clear 2026 unit pipeline + continued strong comps can extend the growth narrative beyond "post-COVID normalization" and support multiple expansion.
Conversion of the planned 12-14 next-year clubs (already largely under construction) into on-time openings and healthy ramp cohorts.
De-risks the scaling story: proves repeatability of site selection + build execution while maintaining membership quality and unit-level economics.
Sustained positive free cash flow and further net leverage reduction (staying <2.0x) while funding growth capex.
Improves equity duration: lowers financial risk, expands strategic options (refinance, selective buybacks, accelerated builds).
Risks
Premium-priced memberships are more cyclical than budget gyms; a downturn could hit retention, new sign-ups, and in-center spend.
Mitigation: Track center memberships, comparable center revenue, and revenue per membership; require multi-quarter stability before adding size.
Overcrowding or service deterioration (peak-time capacity, staffing, cleanliness) can pressure retention and brand perception.
Mitigation: Watch management commentary on engagement/visits, retention, and any capacity-management initiatives; monitor comp quality vs. pricing.
New club builds are capex-heavy and exposed to construction inflation, permitting delays, and ramp variability.
Mitigation: Hold the bar on new center opening cadence and free cash flow; avoid aggressive sizing if capex rises faster than revenue/EBITDA.
High fixed rent and long-duration lease obligations reduce flexibility; sale-leaseback execution may be less favorable in tighter capital markets.
Mitigation: Monitor rent trends, lease liabilities, and sale-leaseback activity; prefer entry when leverage is trending down and FCF is positive.
If growth slows, the market can compress EV/EBITDA even if fundamentals remain positive, creating equity downside.
Mitigation: Use staged entry and add only after guidance/metrics confirm (comps + pipeline + leverage).
Scale Readiness
Revenue per membership continues to rise; Adjusted EBITDA margin trends high-20s (derived from reported revenue/EBITDA).
Comparable center revenue growth stayed ~10-13% across 2025 quarters, supporting premium demand + pricing power.
Club expansion is accelerating: FY2025 plan is 10 new centers; management indicated most of next year's planned 12-14 clubs are already under construction.
High engagement/visits per membership and retention are core drivers; execution risk is maintaining experience at higher utilization.
Capex is substantial (growth builds); positive FCF suggests improved discipline, but pace must stay aligned with returns.
Net debt leverage ratio reduced to ~1.6x by Q3 2025 with positive FCF and liquidity, supporting continued buildout.
In-center attach is a meaningful driver; products/digital are upside but not core to the base model.
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.