S&P Global Ratings has upgraded Life Time Inc.'s issuer credit rating to 'BB' from 'BB-' and raised the issue-level rating on its senior secured debt to 'BBB-' from 'BB+', while keeping a stable outlook. The move reflects the ratings firm's view that Life Time's operating performance and balance sheet metrics have improved and are likely to remain supportive over the near term.
Credit trajectory and leverage
S&P highlighted that Life Time's net leverage fell to 3.5x for the 12 months ended March 31, 2026, down from roughly 4x for the same period a year earlier. The ratings firm said it expects leverage to move into the low- to mid-3x area in 2026 and into the low-3x area by 2027. The stable outlook incorporates the expectation that higher revenue and EBITDA will reduce S&P's lease-adjusted leverage to the mid- to low-3x range through 2027.
Operating performance and membership dynamics
Life Time reported first-quarter revenue that rose approximately 12% year over year, underpinned by an 8.6% increase in same-center revenue. Management cited higher average dues, membership growth, a better mix from new and ramping clubs, and greater member utilization of in-center offerings as the key drivers of that momentum. Within membership categories, qualified medical memberships - which carry markedly lower dues - dropped by about 15%, while all other center memberships rose 3.7% year over year.
Those shifts suggest improving pricing power and revenue per member, driven by a combination of higher average dues and more active use of in-person services. S&P expects Life Time to deliver revenue growth of 10% to 12% in 2026, consistent with management guidance, and projects membership gains in the low-single-digit percent area as the company opens 14 new clubs.
Capital allocation and financing activity
Life Time plans substantial capital spending in 2026, assuming annual capital expenditures of $1.1 billion to $1.25 billion. The company executed a $200 million sale-leaseback in April 2026 and S&P noted expectations that Life Time will complete roughly $400 million of sale-leaseback transactions for the full year. These actions are part of the firm's broader funding and real estate strategy and factor into the ratings analysis.
Ownership changes
Financial sponsors Leonard Green & Partners L.P. and TPG Inc. reduced their common stock ownership to below 20% through a share buyback and a concurrent sale of shares to an affiliate of Atairos in May 2026. The change in ownership stakes is noted in the outlook assessment but was not identified by S&P as altering the upgrade rationale.
Outlook
S&P's upgrade rests on the continued expectation of operating momentum over the next 24 months, combined with the forecast that leverage will remain below 3.75x and move toward the low- to mid-3x range. The ratings firm also incorporated the company's revenue and EBITDA trajectory, membership trends, planned club openings and planned capital spending into its view that Life Time's credit profile is improving.
Key takeaways
- Ratings upgraded: Issuer rating to 'BB' and senior secured debt to 'BBB-'.
- Improving leverage: Net leverage down to 3.5x; expected to fall to low- to mid-3x in 2026 and low-3x in 2027.
- Operational drivers: Q1 revenue up about 12%; same-center revenue up 8.6%; higher average dues and membership expansion supporting revenue growth.
Risks and uncertainties
- Membership mix risk - A 15% decline in qualified medical memberships, which have lower dues, could affect near-term revenue composition even as other memberships rose 3.7%.
- Execution risk on capital markets actions - The full-year expectation of $400 million in sale-leaseback proceeds depends on completing additional transactions beyond the $200 million closed in April 2026.
- Capex intensity - Planned capital expenditures of $1.1 billion to $1.25 billion in 2026 represent a significant cash outflow and must be managed alongside debt reduction efforts.
Overall, S&P's decision underscores a view that Life Time's combination of higher dues, membership growth and improved utilization is translating into stronger revenue and earnings, enabling a gradual reduction in leverage. The stable outlook signals that the ratings firm expects these trends to persist, but notes several execution-sensitive items that will be watched closely.