Lifetime (LTH) Q2 2025: Club Pipeline Expands to 100 Deals as Growth Accelerates
Lifetime’s club development pipeline surged to 100 deals, signaling a decisive pivot toward expansion as balance sheet strength unlocks growth initiatives. Management is accelerating new club openings, scaling digital and in-center monetization, and raising guidance on the back of robust retention and record visits. With asset-light expansion and new digital offerings in motion, the company is positioning for sustained top-line and margin growth through 2026.
Summary
- Pipeline Buildout Surges: Real estate pipeline now managed at 85 to 100 deals, setting up multi-year growth runway.
- Expansion Prioritized: Club opening pace to accelerate in 2026, with larger, ground-up sites and robust balance sheet support.
- Digital and In-Center Levers: Digital accounts, AI health companion, and in-center products are scaling as new revenue drivers.
Performance Analysis
Lifetime delivered double-digit revenue growth, underpinned by broad-based strength in both membership dues and in-center spending. Comparable center revenue climbed at a pace that prompted management to raise full-year guidance, reflecting continued high engagement and retention. Memberships ended the quarter near 900,000, with average monthly dues and revenue per membership both up, highlighting effective pricing and member monetization. Adjusted EBITDA margin expanded, supported by operational leverage and disciplined cost management.
Free cash flow remained positive for the fifth consecutive quarter, driven by robust operating cash generation and continued use of sale-leasebacks to fund growth without overextending leverage. The company’s upgraded credit rating and zero revolver balance further bolster its ability to pursue expansion without sacrificing financial flexibility. Notably, asset-light strategies and targeted investments in digital and in-center offerings are beginning to contribute meaningfully to both top and bottom line.
- Retention and Utilization Peak: Visits per membership reached all-time highs, with swipes up nearly 1% from the prior quarter.
- In-Center Revenue Mix Expands: Personal training, supplements, and new concepts like Miura are delivering sequential growth.
- Margin Expansion: Adjusted EBITDA margin improved by 170 basis points, highlighting operational leverage as scale increases.
Management’s ability to drive both membership and ancillary revenue growth, while scaling new offerings, positions Lifetime for continued operating momentum into the back half of the year.
Executive Commentary
"With the methodical and sequential progress we have made over the past four years, we're now perfectly positioned to shift our focus a bit. Growth is now our top priority. To that end, we're modestly accelerating the development of our new club openings from our robust pipeline and are now targeting 12 to 14 club openings in 2026."
Barama Crotty, Founder, Chairman, and Chief Executive Officer
"Adjusted EBITDA was $211 million, an increase of 21.6%, and our adjusted EBITDA margin improved by 170 basis points to 27.7%. Net cash provided by operating activities rose approximately 15% to $196 million compared to the prior year quarter. Free cash flow was $112 million for the second quarter, marking our fifth consecutive quarter of delivering positive free cash flow."
Eric Weaver, Executive Vice President and Chief Financial Officer
Strategic Positioning
1. Pipeline-Driven Expansion
Lifetime’s real estate pipeline is now managed at 85 to 100 deals, providing visibility and flexibility to accelerate club development as conditions allow. The shift toward larger, ground-up clubs (averaging nearly 100,000 square feet for 2026) signals a strategic move to capture greater market share and maximize per-site economics. Management reiterated that club ramping will not be rushed at the expense of member experience, ensuring sustainable growth rather than short-term volume.
2. Asset-Light and Balance Sheet Strength
The company continues to fund growth through operating cash flow and sale-leasebacks, with no revolver balance and a double B credit rating achieved in Q2. This disciplined capital structure supports accelerated investment in new clubs and digital initiatives, while maintaining low leverage and financial resilience.
3. Digital Ecosystem and Monetization
Lifetime Digital accounts surged 216% year over year to 2.3 million, as the company expands its digital ecosystem. The launch of Lacey, an AI-powered health companion, aims to drive engagement and cross-sell opportunities both within and outside the club network. Digital is positioned as a high-potential accelerator for future non-dues revenue streams.
4. In-Center Revenue Growth Engines
In-center offerings, including personal training, LTH supplements, and Miura boutique concepts, are delivering sequential revenue growth. The LTH supplement line grew 31% year over year, and Miura’s early locations are tracking above plan, with more openings slated. These initiatives diversify revenue and deepen member engagement.
5. Member Experience and Brand Discipline
Management remains laser-focused on member experience, using waitlists, pricing, and club ramping discipline to avoid overcrowding and protect brand equity. This approach underpins record retention and engagement, supporting premium pricing and long-term loyalty.
Key Considerations
This quarter marks a clear pivot from balance sheet repair to deliberate growth acceleration, with management signaling confidence in both the demand environment and internal execution capacity.
Key Considerations:
- Pipeline Visibility: The 85 to 100 deal pipeline provides flexibility to accelerate or moderate new club openings as market conditions evolve.
- Digital Growth Optionality: Lacey and the expanding digital account base create new levers for engagement and monetization beyond physical clubs.
- Asset-Light Model: Sale-leasebacks and strong cash flow enable expansion without overextending leverage, a key differentiator in capital-intensive fitness.
- Retention and Pricing Power: Record retention and robust in-center engagement support continued pricing actions without visible pushback or churn risk.
- Execution Discipline: Management’s refusal to use waitlists or club ramping as KPIs for external reporting reinforces a long-term, experience-first orientation.
Risks
Lifetime’s growth trajectory depends on continued high demand for premium fitness and wellness, as well as disciplined execution of new club openings and digital initiatives. Any macroeconomic downturn, construction cost inflation, or missteps in ramping new clubs could pressure margins or slow growth. The asset-light approach mitigates capital risk but increases reliance on operational execution and member experience to sustain premium pricing.
Forward Outlook
For Q3 2025, Lifetime guided to:
- Comparable center revenue growth of 9.5% to 10%
- Continued positive free cash flow and margin expansion
For full-year 2025, management raised guidance:
- Higher revenue and adjusted EBITDA targets
Management highlighted several factors that support the outlook:
- Strong member engagement and retention trends persisting into Q3
- Accelerated club pipeline and digital growth levers maturing
Takeaways
Lifetime has transitioned into a new phase of expansion, leveraging balance sheet strength to accelerate club openings and invest in digital and in-center growth engines. With asset-light funding, robust pipeline management, and a disciplined focus on member experience, the company is structurally positioned for sustained revenue and margin growth.
- Growth Inflection: The pivot to 12 to 14 new clubs in 2026, with a larger footprint, marks a step-change in expansion strategy.
- Margin and Cash Flow Strength: Operational leverage and disciplined capital allocation are supporting both margin expansion and free cash flow.
- Watch Digital and In-Center Scaling: Investors should track the contribution of digital accounts, Lacey adoption, and in-center revenue as key levers for future upside.
Conclusion
Lifetime enters the back half of 2025 with strong momentum, a reinforced balance sheet, and a clear growth agenda anchored in pipeline visibility and digital innovation. The shift from defense to offense is underway, with execution discipline and member experience as the foundation for durable premium positioning.
Industry Read-Through
Lifetime’s acceleration in club openings and digital ecosystem buildout signals renewed confidence in premium fitness demand and the asset-light expansion model. Competitors in the health and wellness sector will need to match both operational discipline and digital engagement to sustain growth. The emphasis on member experience over short-term volume provides a template for scaling premium offerings without eroding brand equity. Sale-leaseback funding and pipeline management are becoming best practices for capital-intensive, experience-driven models across hospitality, wellness, and fitness.