Life Time Group Holdings, Inc. (LTH): what the price assumes

In the published model solve dated 2026-Q2, anchored at $43.51, Life Time Group Holdings, Inc. (LTH) is priced for today's economics sustained for ~5.1 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/LTH

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 7: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.5% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.6%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Life Time runs premium large-format athletic country clubs, not commodity gyms, with average monthly dues rising about 10.5% and EBITDA margin expanding to 28.7% as it culls lower-value members and upgrades its mix.
• The biggest risk is that only the growth methods justify the price while the static methods call it expensive, so the bet depends entirely on durable high compounding from continued dues increases and new-club ramps against net debt of about $1.4 billion.
• Watch new-club openings and the free-cash-flow turn: the company plans 12 to 14 clubs in 2026 and expects positive free cash flow, the inflection that would validate the durable-compounding thesis.

Bull Case

Life Time is not a gym, and the distinction is the whole bull case. The standard fitness lens prices clubs as commodity boxes competing on monthly fees, but Life Time runs large-format athletic country clubs that sell a premium lifestyle, with pools, courts, spas, cafes, and programming, to a more affluent member who pays for it and stays. The 10-K captures the dynamic in its own words: members are "highly engaged and draw inspiration from the experiences and community we have created," which shows up in the "continued strength and growth of our average revenue per center membership, center usage and the visits per membership." This is a high-engagement, high-spend model, not a discount-fitness churn machine.

The pricing power is doing the heavy lifting on the financials. In the first quarter of 2026 average monthly dues rose about 10.5% and dues revenue grew 11.9%, even as the company deliberately culled lower-value memberships to upgrade its mix. Raising price while improving the member base is the opposite of a business defending share with discounts, and it flowed straight to profitability: total revenue rose 11.7% to $789 million and adjusted EBITDA climbed 18.3% to $227 million, lifting the EBITDA margin 160 basis points to 28.7%. A premium service with rising prices and expanding margins is a genuine moat, anchored in the affluence and stickiness of the membership.

The growth runway is the unit-expansion story, and management has shifted to a more capital-efficient version of it. The 10-K states the company believes it has "significant opportunities to continue expanding our portfolio of premium centers in an asset-light manner," targeting 12 to 14 new locations a year starting in 2026. Each new athletic country club in an affluent market opens a fresh pool of high-dues members, and the asset-light financing, including sale-leaseback transactions, lets Life Time grow the footprint without the full balance-sheet weight of owning every property. The company now expects positive free cash flow in 2026, an inflection from the capital-heavy build-out phase, which is what gives the durable-compounding thesis its support: rising dues per member, an expanding club count, and a turn toward self-funding growth.

Bear Case

The moat is real, but it is being approached from both ends of the market, and that is where erosion starts. At the low end, budget chains have trained a generation of consumers to expect fitness for a fraction of Life Time's dues; at the high end, boutique studios and the home-fitness ecosystem compete for the same affluent, time-pressed member. Life Time's premium positioning depends on members continuing to value the full-amenity experience enough to pay a large and rising monthly fee, and that willingness is most fragile precisely when discretionary budgets tighten. The company is raising dues over 10% a year, which works while the economy is strong and members feel wealthy, but a premium lifestyle subscription is among the first things scrutinized when household budgets compress.

The balance sheet is the structural concern. Life Time carries net debt of roughly $1.4 billion against trailing operating income of about $508 million, and interest expense is not separately broken out in the latest filings, so the coverage cushion is not visible from the financials. The company funds its expansion in part through sale-leaseback transactions, which convert owned real estate into cash today in exchange for fixed lease obligations tomorrow. That is a legitimate financing tool, but it trades balance-sheet assets for a stream of rent payments that must be serviced through any downturn, and it leaves the company more exposed to a soft membership cycle than the headline net-debt figure alone suggests.

The valuation requires the durable-compounding story to hold, and only one lens supports it. The asset-based, earnings-power, and peer-multiple methods all read the stock as richly valued; only the growth-based methods reach the price. That means the buyer is paying entirely for continued high growth, not for the current earnings or the asset base. The model also runs on continuous new-club construction, with nine of fourteen planned 2026 openings still under construction, so the growth is capital-intensive and execution-dependent. If new clubs ramp slower than planned, if dues increases finally meet member resistance, or if a recession pressures the affluent consumer, the growth assumption that is the sole support for the price weakens, and the static methods that already say the stock is expensive become the relevant frame.

Valuation

The price rests on a single lens, and naming that honestly is the start of the valuation. The asset-based, earnings-power, and peer-multiple methods all read Life Time as richly valued; only the growth-based methods reach the price. That pattern means the market is paying a durability premium, a bet on continued high compounding that the static frames structurally cannot price. Inverting the price into an assumption, it embeds operating profit growing on the order of 24% with the current profitability sustained. The buyer is underwriting years of dues increases and successful new-club ramps, not the trailing earnings of $1.71 per share, which the static methods value well below the price.

The more concrete way to see the bet is the new-club model. Life Time is opening 12 to 14 large-format athletic country clubs a year, each a multi-year investment that fills with high-dues members over time. The growth methods credit that pipeline converting into revenue and EBITDA at the company's recent margins; the EBITDA already grew 18.3% in the first quarter to $227 million at a 28.7% margin. The decisive question is the durability of that combination, rising dues per member plus a steady cadence of new clubs filling on schedule, because that is precisely what the price requires and what the trailing financials cannot guarantee. A peer like a casino or sports-betting operator carries different economics; the right comparison is the engagement and pricing power of a premium-experience business, which is where Life Time's case lives or dies.

Solvency is the constraint that bounds the downside and shapes the bet. Net debt of about $1.4 billion is roughly 2.75 times trailing operating income, which is manageable in a strong economy but leaves less room than an unlevered grower would have. The encouraging turn is the expected shift to positive free cash flow in 2026, funded partly by sale-leasebacks and disciplined capital allocation, with potential share repurchases. That free-cash-flow inflection is what would validate the growth premium, because a business that can both expand its footprint and generate cash is the durable compounder the price assumes. The risk is that the leverage and the lease obligations turn a membership softening into a sharper problem than the multiple anticipates.

Catalysts

The first-quarter 2026 report, released in May, showed the premium model compounding. Total revenue rose 11.7% to $789 million and adjusted EBITDA climbed 18.3% to $227 million, with the margin improving 160 basis points to 28.7%. Average monthly dues rose about 10.5% and dues revenue grew 11.9%, driven by both pricing and a deliberate shift toward higher-quality memberships as the company reduced lower-dues categories. The results came with an upgraded full-year outlook, with the adjusted EBITDA margin guidance midpoint moved to 28%.

The expansion pipeline is the forward catalyst. The company plans 12 to 14 new large-format athletic country clubs in 2026, with nine of fourteen already under construction, and reiterated strong demand for both existing and new clubs. The financial inflection to watch is free cash flow: management expects positive free cash flow in 2026, supported by sale-leaseback transactions and disciplined capital allocation including potential share repurchases. The catalysts that matter are the cadence and ramp of new-club openings, the durability of the double-digit dues growth, and the free-cash-flow turn, since together they determine whether the growth premium embedded in the price is earned.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• FUN (Six Flags Entertainment Corporation/NEW)
• FY2025 10-K: …outside of the parks. Growth and innovation strategies require significant commitments of management resources and investments may not grow revenues at the rate expected or at all. As a result, the Company may not be able to recover the costs incurred in developing new projects and initiatives, or to realize their…
• FY2025 10-K: …and the quality of its food and entertainment. There may be a material adverse effect on the Company's business, financial condition or results of operations if it is unable to effectively compete with other entertainment alternatives. The operating season at most of the parks is of limited duration, which can…
• ROKU (Roku, Inc.)
• FY2025 10-K: …uncertainties, and assumptions, including risks described in the section titled "Risk Factors" and elsewhere in this Annual Report, regarding, among other things: • our financial performance, including our revenue, cost of revenue, operating expenses, profitability, and key performance metrics; • the impact of…
• FY2025 10-K: …to grow our user base and gross profit. As a result, our Devices segment revenue may not increase as rapidly as it has in the past, or at all, and, unless we are able to continue to increase our platform segment revenue and grow our user base, we may be unable to grow gross profit and our business will be harmed. For…
• DKNG (DRAFTKINGS INC.)
• FY2025 10-K: …as the design, development and licensing of sports betting and casino gaming software for its Sportsbook and iGaming product offerings. The Company drives revenue primarily in North America and manages the business activities on a consolidated basis. The determination of reportable operating segments is based on the…
• FY2025 10-K: …development efforts or marketing campaigns, or may adopt more aggressive pricing policies. Furthermore, new competitors, whether licensed or not, may enter the gaming industry. There has also been considerable consolidation among competitors in the entertainment and gaming industries, and such consolidation and…
• RSI (Rush Street Interactive, Inc.)
• FY2025 10-K: …of entertainment, including new forms of entertainment, our business, financial condition, results of operations and prospects could be adversely affected. Our current and potential domestic and international competitors range from large and established companies to emerging start-ups. Some competitors have longer…
• FY2025 10-K: …some of which may be new entrants to the gaming and entertainment industry, may introduce competitive services and new offerings such as sports-based prediction markets. There has also been consolidation among competitors in the entertainment and gaming industries and such consolidation and future consolidation could…
• SPHR (SPHR)
• FY2025 10-K: …and online services' collection and use of personally identifiable information online from children under age 13 without parental consent. Competition Competition in Our Sphere Business Our Sphere business competes, in certain respects and to varying degrees, for guests, advertisers and marketing partners with other…
• FY2025 10-K: …share Continuing operations $ ( 6.45 ) $ ( 3.02 ) Discontinued operations - ( 0.02 ) Basic loss per common share attributable to Sphere Entertainment Co.'s stockholders $ ( 6.45 ) $ ( 3.04 ) Diluted loss per common share Continuing operations $ ( 6.45 ) $ ( 3.02 ) Discontinued operations - ( 0.02 ) Diluted loss per…
• CALX (Calix, Inc)
• FY2025 10-K: …accounted for more than 10% of our revenue for 2025, 2024 or 2023. See Note 11 "Revenue from Contracts with Customers" to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more details on concentration of revenue for the years presented. Gross Profit and Gross Margin The following…
• FY2025 10-K: …annual gross margin and operating results, including fluctuations due to factors outside of our control. Factors that impact variability of our operating results include our ability to predict our revenue and reduce and control our costs, our ability to predict product functions and features desired by our customers,…
• BATRA (ATLANTA BRAVES HOLDINGS, INC.)
• FY2025 10-K: …includes retail, office, hotel and entertainment operations primarily within The Battery Atlanta and the surrounding area. The Mixed-Use Development segment derives revenue primarily from office and retail rental income (including overage rent and tenant reimbursements) and, to a lesser extent, parking and…
• FY2025 10-K: …separately reported litigation settlements, restructuring, acquisition and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net earnings (loss), cash flow…
• RCI (RCI)
• FY2025 40-F: …to the customer-facing data centre business were historically included in our Cable reportable segment. NOTE 4: CAPITAL RISK MANAGEMENT Our objectives in managing capital are to ensure we have sufficient available liquidity to meet all our commitments and to execute our business plan. We define capital we manage as…
• FY2025 40-F: …mid-February to mid-October and the playoffs occur from mid-October to early December; and • the Toronto Argonauts (Canadian Football League or CFL), for which the regular season typically runs from early June to late October and the playoffs occur in November. Revenue recognized, and the related costs incurred, on…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.