Life Time Group Q2 2026 Earnings Report

Life Time Group EPS Results

• Actual EPS: $0.48
• Consensus EPS: $0.37
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: $0.37

Life Time Group Revenue Results

• Actual Revenue: $866.00 million
• Expected Revenue: $845.75 million
• Beat/Miss: Beat by +$20.25 million
• YoY Revenue Growth: +13.70%

Life Time Group Announcement Details

• Quarter: Q2 2026
• Date: 7/30/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, July 30, 2026
• Conference Call Time: 10:00AM ET

Life Time Group (NYSE:LTH) (NYSE: LTH) is a premier operator of health, fitness and lifestyle centers across North America. The company’s core business encompasses the development, ownership and management of premium athletic resorts that integrate state-of-the-art fitness facilities, group exercise studios, indoor and outdoor pools, running tracks, and spa and salon services. In addition to its brick-and-mortar clubs, Life Time offers a digital platform featuring on-demand and live-streamed workouts, personalized training programs and nutrition guidance, enabling members to pursue their wellness goals both at home and on the go.

Founded in 1992 and headquartered in Chanhassen, Minnesota, Life Time has grown from a single Minnesota health club into a network of more than 160 locations across the United States and Canada. The company’s expansion strategy combines new club development with selective acquisitions, targeting affluent suburban and urban markets. Life Time also hosts endurance events—such as marathons, triathlons and cycling events—under the Life Time Events brand, further extending its fitness ecosystem and brand visibility.

Life Time’s product and service offering spans personal and group training, sports performance coaching, nutrition counseling, mind-body classes, children’s programming and corporate wellness solutions. Many locations feature healthy dining options and retail boutiques, creating a one-stop lifestyle destination for members seeking a holistic approach to fitness and well-being. The company continually invests in facility upgrades, technology enhancements and specialized training certifications to maintain its premium positioning.

Under the leadership of founder and Chief Executive Officer Bahram Akradi, Life Time has established a reputation for high-touch member engagement and community building. Akradi’s vision emphasizes an integrated wellness approach that blends physical fitness, mental health and social connection. This strategy has driven sustained membership growth and positioned Life Time as a differentiated player in the competitive health club industry.

Life Time Group Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q2 results exceeded expectations, with revenue up 13.7% to $866 million, comparable-center revenue up 9.1%, adjusted EBITDA up 16.8% to $246.5 million, and margin expanding 80 basis points to 28.5%.
• Positive Sentiment: Life Time raised its full-year comparable-center revenue guidance to 7.9%–8.3% from 6.9%–7.5%, increased its revenue, net income, and adjusted EBITDA outlooks, and lifted the midpoint of its adjusted EBITDA margin guidance to 28.2%.
• Positive Sentiment: The company is deliberately shifting its membership base away from lower-value qualified medical memberships, which declined 18.9% year over year, while other memberships grew 4.2%; management expects this mix to support continued dues growth and says medical memberships will become less than 3% of dues revenue.
• Positive Sentiment: Life Time remains on track to open 14 clubs in 2026 and expects 12–14 openings in 2027, supported by a strong real-estate pipeline; management said new clubs are opening with strong demand and targeted returns above 30% IRR.
• Neutral Sentiment: MIORA remains in an incubation phase across six or seven locations, with technology and customer-journey issues still being refined before a broader rollout. Management views peptides and MIORA as potentially significant growth opportunities but emphasized the need for caution and operational perfection.

Presentation

[Operator]

Greetings. Welcome to the Life Time Group Holdings, Inc. Q2 2026 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to Connor Wienberg, Vice President of Capital Markets and Investor Relations. Connor, please go ahead.

[Connor Wienberg, VP of Capital Markets and Investor Relations at Life Time Group Holdings, Inc]

Good morning. Thank you for joining us for the second quarter 2026 Life Time Group Holdings earnings conference call. With me today are Bahram Akradi, Founder, Chairman, and CEO, and Erik Weaver, Executive Vice President and CFO. During the call, we will make forward-looking statements which involve a number of risks and uncertainties that may cause actual results to differ materially from those forward-looking statements made today. There's a comprehensive discussion of risk factors in the company's SEC filings, which you are encouraged to review. The company will also discuss certain non-GAAP financial measures, including adjusted net income, adjusted EBITDA, adjusted diluted EPS, net debt to adjusted EBITDA, or what we refer to as net debt leverage ratio and free cash flow.

[Connor Wienberg, VP of Capital Markets and Investor Relations at Life Time Group Holdings, Inc]

This information, along with the reconciliations to the most directly comparable GAAP measures, are included, when applicable, in the company's earnings release issued this morning, our 8-K filed with the SEC and on the investor relations section of our website. With that, I will turn the call over to Erik.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Thank you, Connor. Good morning, everyone. We appreciate you joining us for our Q2 business and financial update. Please note this morning we posted an earnings supplement on our investor relations website, which includes additional detail on our membership mix and comparable center revenue. Starting with our second quarter revenue. Total revenue increased 13.7% to $866 million, driven by continued strength in performance across our clubs, including higher dues revenue and strong utilization of our in-center businesses. Comparable center revenue grew 9.1%. This was above our expectations, driven by an outperformance in our membership acquisition and in-center business performance. As outlined in our earnings supplement, there are four components of our comparable center revenue growth. Improved membership mix contributed 3.1% growth. Price contributed 2.9% growth. In-center businesses contributed 2.9% growth, largely driven by double-digit year-over-year growth in Dynamic Personal Training and LifeSpa.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Volume contributed 0.2% to comparable center growth. As a result of our Q2 performance, we have raised our full-year comparable center revenue guidance to 7.9%-8.3%, up from 6.9%-7.5%. Average monthly dues were $245, up approximately 12.3% year-over-year, and average revenue per center membership was $993, up 11.8% year-over-year. Growth in average dues was driven primarily by positive membership mix trends and execution of our pricing strategy. We ended the quarter with approximately 860,000 center memberships, which reflects 1.2% year-over-year growth. As we've discussed on past calls, we have been managing our membership mix. Part of our strategy has been to limit certain qualified memberships, specifically those administered by third-party medical insurance providers. We refer to these as qualified medical memberships. This strategy continued in the second quarter. Qualified medical memberships declined by approximately 20,600, down 18.9% year-over-year.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

All other memberships grew by approximately 30,900, up 4.2% year-over-year. Our strategy is working, as reflected in our 13.3% growth in total dues revenue year-over-year. We expect total center membership growth of 1%-1.5% in the third quarter and 2%-3% in the fourth quarter. Excluding qualified medical memberships, we expect center membership growth of 4%-5% in both the third and fourth quarters. Moving on to net income. For the quarter, net income was $101.4 million, an increase of 40.6% year-over-year. Second quarter net income included approximately $8.5 million of net tax-affected items excluded from adjusted net income, primarily consisting of share-based compensation. Net income in the prior year included tax-affected net cash proceeds of $9.3 million received from employee retention credits under the CARES Act, partially offset by a tax-affected net loss of $9 million on a sale-leaseback transaction.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Adjusted net income, which excludes the tax effect and impact of these items, was $109.8 million, up 30.6% year-over-year. Adjusted EBITDA was $246.5 million, an increase of 16.8% over the prior year quarter, and our Adjusted EBITDA margin improved by 80 basis points to 28.5%. As noted in our earnings release, we increased our full-year 2026 revenue, net income, and Adjusted EBITDA guidance. We also increased the midpoint of our full-year Adjusted EBITDA margin guidance to 28.2%. Our updated guidance includes the impact of seven clubs scheduled to open in the fourth quarter and the associated pre-opening expenses and early operating ramp impact on margin. Net cash provided by operating activities increased to $209.6 million, approximately 7.1% higher compared to the prior year quarter.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Total capital expenditures were $263.3 million, up 18.6% from the prior year, reflecting construction activity in support of our new club openings for 2026, as well as the construction on clubs planned for 2027. As of today, we have opened seven of the 14 clubs scheduled to open this year. The remaining seven clubs are expected to open in the fourth quarter. We still expect 12-14 new clubs in 2027. 10 of these clubs are already under construction. In April, we closed on sale-leaseback transactions that generated approximately $200 million of sale-leaseback proceeds, and we expect to complete approximately $400 million for the full-year, supporting our ongoing focus on generating annual positive free cash flow. With that, I will now pass the call to Bahram.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Thank you, Erik. Good morning, everyone, and thank you to our teams across the company for another outstanding quarter. Much like last quarter, we continue to see strong performance across all aspects of our business. Demand has been strong from our existing members as well as our new members. At the core of our performance is our intense focus on delivering exceptional experiences for our members. We plan to continue this strategy by delivering new, desirable programs and services with the highest level of attention and care. For example, we have accelerated the rollout of CTR and HYBRID XT, our two newest group training formats. CTR is our large group Pilates reformer class. This class blends performance-based training with the precision and the control of reformer movement. HYBRID XT combines conditioning and strength training for real-world and competition-ready performance and is paired with our LT Games Hybrid Athlete Competition.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

We are seeing incredible demand from our members for these classes. Our balance sheet and cash flow also remain exceptionally strong. With the sale-leasebacks completed this quarter and an additional $200 million of proceeds expected by end of the year, we expect to deliver positive free cash flow while achieving all of our revenue and adjusted EBITDA growth targets. We are currently on track to open 14 new clubs in 2026, the high end of our initial range, and we continue to see an incredibly strong pipeline of opportunities ahead. Overall, we feel very good about where we are and the trajectory of our business. We look forward to your questions.

[Operator]

Thank you. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. One moment please while we poll for questions. Our first question is coming from Arpita Chatterjee from UBS. Your line is now unmuted.

[Arpita Chatterjee, Analyst at UBS]

Hi. Thanks so much for taking my question. Really solid set of results this morning. It's not every day you look at results and you say, "Actually, I have very few questions," but I do have two. First, your guidance upside for the year is flowing through at a nice 55%. You raised revenue by about $28 million, and that's raising EBITDA by $15 million. We're now looking at 14 club openings this year from 12 to 14 before. I know it's difficult to talk about 2027 given everything that's going on in the world, but as we think about the ramp-up of these large-scale clubs as we get into next year, anything you would like to share on revenue per member dynamics to kind of help us better understand the opportunity as it relates to actual ramp and also flow-through for next year?

[Arpita Chatterjee, Analyst at UBS]

I have a quick follow-up.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

This is Bahram. You're asking a great question. The impact of this certainty of the 14 clubs is actually more on the next year as is on this year because they're opening so late into 2026 that they really don't have material impact on our numbers for this year. We have a pretty robust opening schedule for next year as well, and we have tremendous amount of real estate deals in the pipeline that I am more excited than I've ever been. We anticipate really, really good growth in the foreseeable future. We don't see any slowdown in the reason for anything to slow down. However, we don't usually share results or guidance for the next year. We have nothing to look at and things that there is anything going the wrong way. Everything's going positively right now.

[Arpita Chatterjee, Analyst at UBS]

Great. Thank you. That's helpful. In-center business contribution to same-store growth came close to about 3% this quarter, which was an acceleration from something like 2% earlier this year. I know you're doing more in CTR and hybrid training classes and maybe on spa and F&B. With larger club footprint ramping next year, do you see this in-center business contribution to same-store growth sustaining at that 3% level as we go into next year?

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Yeah. Again, without giving numbers into next year, I think when we think about sustainability of that number, you're absolutely right. That number increased from 2.3 to 2.9, and it really comes down to us continuing to deliver on the experience. Right? We've seen excellent engagement in our in centers. We've seen it across DPT and spa. To the extent that we continue to deliver on that experience, we expect the financial performance will follow.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

We have to continue to look for places in our business where we have opportunity to do better than we're doing. This year we are seeing great growth on the revenue from PT, from spa. We are having great process improvement in our F&B, so we're getting the margin improvement in F&B first, reorganizing certain things, menus, processes. We then focus on developing revenue growth strategy in F&B for 2027. Meanwhile, we're always working and developing different programs, different products that can add to what our consumer can purchase from us. We expect similar results going into the next year, very comfortably.

[Arpita Chatterjee, Analyst at UBS]

Thank you very much.

[Operator]

Thank you. Our next question is coming from John Heinbockel from Guggenheim Partners. Your line is now live.

[John Heinbockel, Analyst at Guggenheim Partners]

Hey, Bahram, I wanted to follow up on that. Can you talk about the penetration from your members in things like DPT and spa? Right. Because I think the penetration is still pretty low, right? DPT, I think, right, is still in the single digits. Talk about awareness, right? The penetration and then also the awareness, right? Because I think you have not wanted to hard sell members on these services. You wanted it to happen organically. Is that awareness now picking up meaningfully?

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Yeah. I don't believe that you can sit there and say the penetration of the personal training is low. It's been pretty consistent for years and years and years. Our clubs are realistically 50% training, exercise, 50% all other things. For the social aspects of the business, which we are stepping on sort of aggressively right now, the family, the kids, the sports. The personal training really applies to 50%, 60% of our customers. That 50%, 60%, the number is like, you say, okay, we have a 7% penetration at a particular month. We have a 10%, 11%, 12% penetration when you look at the larger window in a yearly basis. That number is actually double the number of people who are working out in our clubs. They come to our clubs for exercise, for lifting, for getting training.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

I don't think the number is drastically low. The team does a phenomenal job. We have branded DPT masterfully over the last four or five years. We are getting productivity that this company has never seen from the personal trainer. We have more successful trainers than we've ever had. The reputation of business is that this is the best place for them, to come and make the most money and have been the most professional environment. We have significant amounts of qualified applicants. I trust that our team will continue pathways. We also have to deliver additional programming. Part of the success of last year was Dynamic Stretch, still growing, Dynamic Nutrition, still growing. These things will lend to one another.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

We have other things we're working on right now, which I don't want to discuss, that would also bring in another set of customers in, then they can expand their workouts. It's a constant work. Results are really, really good, and I expect the team to continue to grow that percentage.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

If I could just add one thing to that, John. Keep in mind, penetration is just one part, one metric of the story. Penetration is up year-over-year in DPT, but it's also about trainer efficiency, revenue per trainer, and how much new business they're bringing in, and all of those metrics are up year-over-year. You have to look at it holistically.

[John Heinbockel, Analyst at Guggenheim Partners]

My follow-up just maybe, as you now get to 14 openings a year, maybe talk about gating factors on expansion. Right. I think lots of landlords, mall and otherwise, want you in their locations. The real estate opportunities are there. Maybe more from a people standpoint, where do you think you're not comfortable going beyond, just in terms of executing the experience?

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

John, you're trying to get information out of me. You're masterful at it. I'm going to try masterfully respond back to you. We have tremendous amount of opportunity. Like I said earlier, more than I have ever seen before. There are more developers, more large projects, more office buildings, that they're reaching to us, and they want to have the Life Time brand, not just the fitness center, the Life Time Athletic Country Club, coupled with Life Time Living or their development. We have tremendous amount of opportunities in front of us. PJ is working his butt off, his entire team. I'm working as hard as I can with them. We are looking to expand our growth over the next several years. I'm not going to tell you how, other than 14 clubs a year for now is the limit.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

We are looking for ways to have bigger development rollouts.

[John Heinbockel, Analyst at Guggenheim Partners]

Thank you.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

The opportunity coming our way is significantly bigger than it has been in the past.

[John Heinbockel, Analyst at Guggenheim Partners]

Yeah. Thank you, guys.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Mm-hmm. Yep.

[Operator]

Thank you. Our next question is coming from Randal Konik from Jefferies. Your line is now live.

[Randal Konik, Analyst at Jefferies]

Thanks a lot. Good morning, everybody. I guess a question for Erik. Hey. You have a lot of the openings weighted to the fourth quarter. There's got to be some opening, the pre-opening expenses impacting, weighing on the numbers, even though the numbers are much better than expected. Maybe give us some perspective there on how much of an impact that's been. When you think about next year, just not giving us number of openings, what have you, would you expect a change in cadence on when you open clubs next year versus this year? Just curious, just because it moves the numbers around a little bit.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

There certainly is an impact on margin as you think about those clubs opening later in the year. You've got seven of them that are going to open up in Q4. Whether it's 30, 40, there's a little bit of an impact there, as we know. We've said for next year, we're targeting 12 to 14 as well. The timing of those, obviously, are not all announced yet. You may have a little bit of that in the back half of the year. As you've seen from our increase in our overall margin, even this year, obviously, we've increased that, we've been able to absorb that. It does have a small impact as we open those in the back half of the year.

[Randal Konik, Analyst at Jefferies]

Got it. A follow-up back to you would be, last quarter, the big unlock was the idea of reaching this inflection point in cash flow such that you could self-fund growth with optionality around sale-leasebacks if wanting to. When you think about that target year, what would change? Because these numbers keep coming in better than expected. I'm assuming the ramps are coming in also, starting to ramp a little bit better than expected as well. Anything that would change to get that number or that year pulled forward a little bit?

[Randal Konik, Analyst at Jefferies]

Just remind us how you're thinking about utilizing that optionality, in not next year or beyond, but like next three to five years from now as you unlock all that cash flow to either do more units or buy back more stock or just give us some, again, parameters of how you're thinking long-term on the business.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

I'll take this. This is Bahram. We are gonna stay disciplined to deliver what we say we do. We've committed to doing $400 million of sale-leaseback this year. We're going to first and foremost deliver that. As we get into strategies for next year, you're absolutely correct. Our cash flow is increasing each year nicely. We have more optionality than we have ever had. That's the way I have always wanted to lead, to get the company financially in a position where we have a significant number of options and flexibility on managing through great times, managing through bad times. That requires having super strong fundamentals on your balance sheet. We are there now.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

We have all kinds of options in front of us, and we're going to be more clearly focused on our WACC, our weighted average cost of capital, and our ROIC, and with a clear focus on taking the capital that is afforded to us by shareholders and debt structures and make sure we provide great return to our investors by putting those in the right places. We are examining all different types of options for the future years. I think you are correct to have that question, but I would probably expand on the strategy for that Towards end of the year or early next year, if we choose to change anything because it definitely delivers a better result for our shareholder. Right now we're staying on course, and just evaluating the options.

[Randal Konik, Analyst at Jefferies]

Super helpful. Thank you.

[Operator]

Thank you. Our next question is coming from Molly Baum from Morgan Stanley. Your line is now live.

[Molly Baum, Analyst at Morgan Stanley]

Hi. Thanks so much for taking my question. Maybe shifting gears a little bit to talk about MIORA. Can you give an update on how you're thinking about the white space opportunity? Can you maybe frame the revenue or the EBITDA contribution that you're seeing from the mature locations you have open right now? Thank you.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Yeah. Great question. Not a great answer for you right now. It is in incubation. We have six or seven locations that we are working. I have been adamant with the team that we are not going to add additional locations until we deliver what I would consider to be a perfect customer journey experience. We do have some challenges with the technology and some of the processes around that. We are kind of working around those challenges. Our full intention is to roll out MIORA extremely robustly. What I believe we need to do is we need to perfect the model and then roll out extremely fast and aggressively once we have a model. Our clubs, when we open, they open right now with a wait list. They open contribution margin positive in the second month, the third month.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Everything is working because we have mastered the execution of a club opening. We have some work to do with MIORA. However, I am the most convinced that it will be absolutely a massive growth opportunity. We can grow really, really fast as soon as we fine-tune these final little touch points that we have to get corrected. Numbers right now on MIORA, the six or seven locations are just not material. It's really working on the customer journey.

[Molly Baum, Analyst at Morgan Stanley]

Got it. That makes a lot of sense. One other question I had wanted to ask. As we think about these qualified medical memberships, I think you've spoken in the past that you have some contract renewals coming up at the end of 2026. How are you evaluating what might happen with these memberships, which relationships to renew, which you might be able to convert into a standard membership? If you could give some more color there, that would be great. Thanks.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Yeah. We're working on it. We have great partners. We have massive companies, Fortune 50 companies in the country that we have great relationships with. There is a significant benefit to a certain portion of the population to absolutely love this program. We are working on the details of not doing it or not doing it. Our partners want to continue on. We want to be good partners and do some, but we have to put in all the flexibilities in it so we can absolutely control the experiences in the clubs so that the number of certain type of memberships doesn't overtake the others. Some clubs cannot afford to have any programming around that. We are basically rolling out a strategy with this. The discussions are going extremely well.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

We don't expect anything negative to happen at this point other than we will gradually have a lower percentage of our membership being qualified membership. It will continually go down, as a percentage of our total membership become less and less significant to the point it wouldn't be really worth our time to discuss with you guys or you guys with us. We do love the population in our clubs, in certain clubs. I think it's just a really nice program to provide when we have the capacity, and they don't interfere with the bigger opportunity in the club.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Yeah, I think that's key. Maybe if you remember, these memberships have restricted hours. In some clubs, it's a great way to fill some of that off-peak time like you're talking about.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

In some locations, we just simply don't have really the ability to provide them. None of the new clubs are opening with that. You can just feel. In some of the open clubs, we don't have any more direct medical program available unless they are choosing to go to a full upgrade with it. We will manage this. It just won't be a significant piece of what's going to drive the business up or down.

[Molly Baum, Analyst at Morgan Stanley]

Got it. Thank you.

[Operator]

Thank you. Next question is coming from Anthony Bonadio from Wells Fargo. Your line is now live.

[Anthony Bonadio, Analyst at Wells Fargo]

Yeah. Hey guys, thanks for taking our questions.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Sure.

[Anthony Bonadio, Analyst at Wells Fargo]

I just wanted to start on the comp, the 9% comp center revenue. Can you just talk a little bit more about the cadence of that growth as you move through the quarter? Then back half guidance implies some deceleration, which I know isn't new, but that's clearly gone the other way this quarter. Can you just talk about assumptions there and how your thinking around that has evolved?

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Yeah, absolutely. I can take that. Absolutely right. We did see, as I talked about, an acceleration this quarter. Again, that goes back to all the things that we're doing in DPT and spa, et cetera. You also mentioned that it is normal for, as seasonality kicks in, some slight deceleration. The big thing to keep in mind is a lot of this is in-center business growth, right? As we're projecting the year, if you look at the midpoint of our updated guidance, that's still 8.1%. It's above kind of what we've been communicating in terms of our long-term algo. It's nothing more than just being prudent, as we're thinking about all the summer activity and as we're projecting rest of year.

[Anthony Bonadio, Analyst at Wells Fargo]

Got it. That's helpful. Then maybe just on the events, you announced the expansion of the LT Games, also the acquisition of the Phoenix 10K in the quarter. I guess, just given the growing popularity of some of these events and competitions, as I look at the other offers out there gaining traction, can you just talk a little bit more about the opportunity set, and what growth prospects could look like? Just any thoughts on how margins returns compare to the rest of your business?

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Great question. LT Games and HYBRID XT are sort of a yin and a yang. HYBRID XT is today, the sort of the current big driver of people wanting to come do that type of a hybrid training. The responsible thing to do, as we have always mentioned, these clubs were designed from day one to have the flexibility of adaptation. We can roll out the programs that the customers are seeking at that moment in time. LT Games is basically a very defined experience, very accurately measurable. I have big vision for what LT Games can do for the company, on its own, and to sort of bringing the type of customer who wants to do that athletic training into Life Time to do HYBRID XT. It's sort of a thing that goes together.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Ultimately, LT Games has the potential of being in a spectator competition. It's not tomorrow, it's not next year. It's going to take years for it to achieve to that, but that's the vision. Those are the way we're going to drive those. CTR is rolling out as fast as we can roll it out. Every class we put on ends up being waitlisted, so we are rolling as fast as we can. We're spending a little more money. We're investing more growth capital into these initiatives in our clubs, because they are working extremely well. That's where we're deploying some additional capital to capture these growth opportunities. Hopefully that answers your question.

[Anthony Bonadio, Analyst at Wells Fargo]

Thanks, guys.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Thank you.

[Operator]

Thank you. Our next question is from Ben Chaiken from Mizuho Securities. Your line is now live.

[Lida Chen, Analyst at Mizuho Securities]

Hi, this is Lida Chen on for Ben. Thank you for taking our questions. We're wondering if you could go back to kind of clarifying your churn expectations for the qualified medical membership in 2027, and as well as the opportunities to convert and maybe share some data points on the churns year-to-date, and then any of the conversion into the standard membership. Thank you.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

We don't look at it in that fashion. We are looking at sort of our calculation of how our expectation is on total, the average dues per membership growth, and the membership count growth, and the blend of the sum of these. The way you have to think about it is for sure, the percentage of medical qualified is going to go down. As that percentage goes down, the average dues on membership goes up. There's just sort of a direct correlation with it. It's virtually not significant enough. I'm telling you, the numbers that we are giving you and we're guiding, and this thing is going to be less than 2% of our dues revenue in the future years. Yeah. By the end of the year, it's 3%. It's a little too early to talk about next year.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

It will drop down.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Yeah.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

It will go from the 3% to below that.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Here's what I would tell you. The large decreases we're seeing this year is we've talked about that de-emphasis of that in the prior year. We're lapping a couple of quarters now that we're lapping that dynamic. That's why we're giving this guidance here last quarter, this quarter, and then probably Q4. Again, we're kind of lapping those four quarters. As we get into 2027 with some of the things Bahram was talking about, we'll provide obviously more information on that. Again, it's going to be less than 3% of our total.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Total dues revenue. Great.

[Lida Chen, Analyst at Mizuho Securities]

Thank you for the color.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

If we ever change anything, the dues will go up. Again, it's not going to be significant. I think we really need to focus you guys on where the big drivers will be on the business.

[Lida Chen, Analyst at Mizuho Securities]

Great. Thank you.

[Operator]

Thank you. Our next question is coming from Eric Des Lauriers from Craig-Hallum. Your line is now live.

[Eric Des Lauriers, Analyst at Craig-Hallum]

Thanks for taking my questions, and congrats again on another impressive quarter. As you look at the new club opportunities in 2027 and beyond, obviously, there's lots of white space kind of across the board. How should we be thinking about sort of larger versus smaller footprint, greenfield versus retrofit, and urban versus suburban? Can you just kind of give us a sense of either the changing opportunities there or your evolving priorities?

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Yeah. I would never want to tell you guys we're going to do seven of these and seven of those, or eight of these and six of those. I think the way to think about it is that the pipeline is driven by both all the sites that we go find to buy, purchase a piece of land. Right now we're in a position where we can actually pull the trigger, buy some parcels of land a bit earlier, so to create a land bank so we can have those ground-up opportunities laid out a little more clearly. The other developments, the veracity of it right now is such that it's quite a bit.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

I can't give you a direction to say it's going to be more of these over the time or more of those, but definitely more urban locations coming as a percentage of our whole portfolio. With New York, Miami, those kind of big markets, growth markets, with sort of a big pipeline of developments. The question is what year they land in. Those are hard to give you guys, because the larger the building, the larger the project, the larger the apartment building, the longer is the time for them to be developed and constructed and built and delivered. We are at a very good spot to delivering the total amount of square footage that we want to grow per year.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

As we've gone through this, it really doesn't matter if it's one type or the other, because the returns after the sale-leaseback or from the rentals are always the same. They're in a 30-plus IRR range, which is fantastic.

[Eric Des Lauriers, Analyst at Craig-Hallum]

That's very helpful. I think we got some kind of long-term direction in there. That's very helpful. Thank you.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Thanks.

[Eric Des Lauriers, Analyst at Craig-Hallum]

Bahram, you've mentioned a number of times sort of how robust the demand is for new clubs right now. Historically, at least some of your clubs have been offered attractive rent rates as developers look to kind of bring you in as an anchor tenant. Is this dynamic still at play? If so, do you think that sort of broadly, as you look out a number of years, that rent rates will generally improve? Are these kind of opportunities more limited to one-offs that we shouldn't necessarily extrapolate a broad trend as we look out a couple of years? Thanks.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

No. We're always positioning our clubs at a significantly attractive rent per square foot. Either through the way we build and we do the sale-leaseback, the rent per square foot is significantly below what it would be naturally in the market. Or when we go into a development, we actually put in more dollars as a leasehold improvement than we would absolutely have to, because we protect that lower rent for years to come. We will continue to negotiate great rates. Real estate goes through frenzies. There's times where there's abundance of certain type of real estate in a market, the landlords are more eager to negotiate and do deals. Sometimes they are absolutely desperate because nothing else can be the catalyst for the filling up the space, and our product does, our brand does.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Across the board, I expect our rent percentages stay consistent to what Erik has kind of mapped out to you guys around that 12%.

[Eric Des Lauriers, Analyst at Craig-Hallum]

That's very helpful. Thanks again.

[Operator]

Thank you. Our next question today is coming from Chris Woronka from Deutsche Bank. Your line is now live.

[Chris Woronka, Analyst at Deutsche Bank]

Hey. Good morning, guys. Thanks for taking the question.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Morning.

[Chris Woronka, Analyst at Deutsche Bank]

Yeah. Bahram, maybe we could spend a minute talking about kind of the broader supplement space, there's been some headlines around peptides potentially getting more broadly approved by the FDA and other things. If you maybe give us a little bit of a perspective on where you guys are on that and if you think the opportunities are perhaps increasing to monetize that. Thanks.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Yeah, we're all over it. We're studying it, working on it, testing it every single day. I was on the phone last night for two hours working on half a dozen different peptides and where they're at, what they do, and who makes them, and what are the pros and cons with them. It's most definitely a space that is going to continue to grow. It's going to grow substantially. We're going to play a big role in it within our facilities through MIORA and different forms of rolling that out. We have to be cautious today because it's sort of a Wild Wild West with the compound pharmacies who make these. The science is, in many cases, well-documented. In some places, it's a little more sort of a believe me kind of a thing.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

I don't know that there is as much widespread human case studies with them, the science is sound. We are on the cutting edge of studying it. I just caution everyone that it is very new, and you have to be very thoughtful on how you roll this out. We are. We have James LaValle, who is our Chief Science Officer, and one of the biggest speakers in this category across the country. We're following the science and administering some of these things right now in our current 7 MIORA locations. It is going to be a massive growth space, because the science is actually pretty sound on some of the peptides are solid in terms of the fact that they would work.

[Chris Woronka, Analyst at Deutsche Bank]

Okay. Very helpful. Thanks, Bahram. Just as a follow-up, I know you got a lot of balls in the air, but on app monetization, is there anything kind of new to report there in terms of whether it's some kind of product or service or maybe an advertising revenue stream? Is there anything you're working on in the near term on that? Thanks.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

It's definitely not where our head is at. Our head is the technology at Life Time needs to be fully directed on delivering consistent to our clubs, extraordinary experiences. We have a long ways to go, to make sure we can keep up with the evolution in technology and the AI. The customer can achieve what they want to achieve in our clubs, buy what they want to buy, and to get the service they want as fast and as easy as they can. This is all on me. I launched the Life Time Digital platform a couple of years back. I wanted to see that opportunity. We spent some time, we studied, I talked to some experts. My takeaway based on those studies is that the digital subscriptions have such a significant attrition rate that they virtually don't make sense.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

We didn't lose any money because we didn't invest money in the customer acquisition, but we also couldn't see the customer coming back on a regular basis. Instead of diluting our technology team's focus on trying to do that, divide it, and then try to work on the customer, we decided early this year, seven, eight, nine months ago, to put all of the focus on delivering the customer. The number of people on the digital platform are still growing naturally, but those customers are able to sign up. Anybody, for free, can sign up on Life Time app and get all those features. We're just not doing two different versions.

[Chris Woronka, Analyst at Deutsche Bank]

Okay. Understood. Super helpful. Thanks, Bahram.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Okay. Bye-bye.

[Operator]

Thank you. Our next question today is coming from Owen Rickert from Northland Capital Markets. Your line is now live.

[Owen Rickert, Analyst at Northland Capital Markets]

Hey, Bahram. Hey, Erik. Thanks for taking my questions here. On CTR and HYBRID XT, what's the current penetration across the center base as of right now, and how much more room is there to add them to additional clubs?

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

They're both different stages. HYBRID XT is extremely new. It's just rolling out. It's being executed to some level, not to the way that we actually want to call it branded programming. It's maybe about under 20. I think our goal is to get to about 60 locations on CTR by the end of the year. We're moving as fast as we can, ultimately, we will have CTR in just about every club. I would say that 80% of the clubs, 90% of clubs will have the space to deliver CTR at some point. It's just how fast we can map that out. We've allocated more of our growth capital to the CTR rollout this year. We're rolling them out. There's still, I would say, we're not halfway there.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Yeah. Bahram, you mentioned earlier there's a nice wait list for CTR, which is absolutely true. CTR also has the highest bill rate across our programming, so it's a very popular program.

[Owen Rickert, Analyst at Northland Capital Markets]

Awesome. Glad to hear, guys. Then secondly, for me, you had some repurchase activity during the quarter at a pretty solid price relative to where we are today. I guess given the stock's move since then, how are you thinking about the pace and prioritization of the remaining capacity under the repurchase program?

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

That's a great question. I'm not going to give you any answers.

[Owen Rickert, Analyst at Northland Capital Markets]

Fair enough. I thought I'd give it a rip.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

All right.

[Owen Rickert, Analyst at Northland Capital Markets]

Awesome. Well, thanks, guys.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

You're welcome.

[Owen Rickert, Analyst at Northland Capital Markets]

Congrats on the quarter and keep it up.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Thank you.

[Operator]

Thank you. Next question is coming from Logan Reich from RBC Capital Markets. Your line is now live.

[Logan Reich, Analyst at RBC Capital Markets]

Good morning. Thanks for taking the question. Congrats on the really solid results. My question was on the in-center acceleration. It's been decelerating a few quarters now and some really impressive numbers in Q2. I guess, what is the key driver of that acceleration? I know you called out Dynamic Personal Training as a driver, but anything else to call out, maybe on the cafe? Just within the sort of membership in-center spending, is that coming from newer members or existing members? Is that coming from higher frequency or higher penetration? Just any sort of color you guys can give on what's driving that acceleration quarter-over-quarter would be much appreciated.

[Erik Weaver, EVP and CFO at Life Time Group Holdings, Inc]

Yeah. It's really coming from both new and ramping. When you ask about what's driving that in-center, again, it goes back to delivering on our brand and that experience. We talked about a couple of the big drivers being DPT and LifeSpa. That strategy is all around engagement. It's all around experience. What we've really focused on is the casting in those businesses to meet the demand. We're hiring the right number of trainers, the right trainers, the right technicians, et cetera. Our expectation is that we have the right number, they're delivering on the experience, and that's driving the performance.

[Logan Reich, Analyst at RBC Capital Markets]

Got it. That's helpful. Just a follow-up on CTR and HYBRID XT. Just confirming, those are included in the membership, so that's not an additional in-center portion of the business. I guess just or sorry. Go ahead.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

That's correct. Those are both part of the programs designed to bring in members, keep them engaged, and continue to build the dues revenue for the business.

[Logan Reich, Analyst at RBC Capital Markets]

Got it. Is that like a pricing opportunity for you guys to? Because I know you use a lot of different metrics and data in your pricing decisions. Is the right way to think about it like that is just an additional component of the pricing calculation, and you'll view that as like a pricing opportunity, or is that maybe even like a member growth opportunity as well? Just trying to think about how that's going to drive the model.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Look, I think the way we have transitioned the company over the last five years is the new clubs are coming in at a much higher rack rate right off the get-go, and they are designed for significantly fewer memberships, 3,000 to 4,000 membership units, and at much higher dues with the most robust experiences and programming. Those models are working exceptionally well, all of them. On the older clubs, is being basically transitioning from the older price point to a newer price point and adding programming and sort of rolling that out in the market-by-market, location-by-location as it makes sense. In some clubs, you add programming, and it would be part of an upgrade signature buy. It's just those are in the older clubs. In all new clubs, all these programs are built in as one bundled in.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

When you look at that compared to somebody trying to buy those services à la carte, one program in some studio, the value proposition at Life Time becomes so incredible. That's why the larger format clubs, new clubs, with all these programs in it are hugely successful.

[Logan Reich, Analyst at RBC Capital Markets]

Got it. Super helpful. I appreciate the color, and congrats again.

[Operator]

Thank you. Next question is coming from Andrew Chasanoff from Oppenheimer. Your line is now live.

[Andrew Chasanoff, Analyst at Oppenheimer]

Good morning. Congrats on the quarter, and thanks for taking my question. I just wanted to build on the in-center offering conversation. Beyond DPT, you've been discussing the momentum building in CTR with wait lists forming pretty quickly. Can you give us a sense of how you're thinking about the pathway from CTR into the broader Pilates business? Which I know has historically been more of a private, semi-private, higher ticket offering. Then just as we're starting to think about the scale of the other in-center offerings, cafe, spa, MIORA, as they start to scale as DPT and CTR have, how should we be thinking about the margin profiles and, if any of them are structurally higher or lower that we should be thinking at the mix as they scale?

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

That was one question? Let me help you with what I can help you. You asked about CTR being a program that would feed into the regular Pilates. That's absolutely correct. The number of people who would never go sign up for Pilates directly, because it's just kind of a different experience completely, but they would go to a CTR program, is significantly higher to go to CTR than to do a private training. Now, a certain percentage of those folks will at some point say, "Huh, I like this enough. Now I'm intrigued." Then there is a natural connection. We do plan and think through how that transition can be helped or enhanced. That was one of your questions, right?

[Andrew Chasanoff, Analyst at Oppenheimer]

Yeah. That's very helpful.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

It should and it is helping Pilates program in certain clubs when we're executing that strategy the way I mentioned. Now, what are your other questions?

[Andrew Chasanoff, Analyst at Oppenheimer]

My follow-up is maybe kind of more around the margin aspect of in-centers and as the other aspects of in-center beyond DPT and CTR begin to scale in a similar degree, you've talked about MIORA, the LifeSpa, cafes. How would you just be thinking about the mix dynamics, just as the mix of the in-center offerings is widened?

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Look, I think our targeted overall company adjusted EBITDA margin that we're giving you is the way I would try to do my job as mapping out what a club is going to deliver in total revenue and contribution margin, adjusted EBITDA margin. The fluctuation in the cafe and the LifeSpa margins have been de minimis in terms of overall numbers of the company. They haven't been significant because our focus for decades has been that LifeSpa and the cafe are what makes the experience become a complete Life Time Athletic Country Club. You can get a massage, you can get your hair done, you can get your nails done. You can get a nice meal.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

There are significant opportunities in the revenue growth on both categories, and we are focused on fine-tuning those, and make those be additional growth drivers in the upcoming years in our overall revenue growth and in-center growth. With those, we are working the details and the processes right now, perfecting those so that not only we get the revenue, we also get the appropriate margin to come with it. Very good opportunity ahead, to kind of seize some of what looks like a capturable opportunity to help growing the in-center business and in-center margins.

[Andrew Chasanoff, Analyst at Oppenheimer]

Great. Thank you very much, and good luck.

[Bahram Akradi, Founder, Chairman, and CEO at Life Time Group Holdings, Inc]

Mm-hmm. Thank you.

[Operator]

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.

[Connor Wienberg, VP of Capital Markets and Investor Relations at Life Time Group Holdings, Inc]

Thank you, operator, and thank you, everyone, for joining us this morning. We look forward to having you on the next quarter's call.

[Operator]

Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Participants

Executives

• Connor Wienberg, VP of Capital Markets and Investor Relations
• Erik Weaver, EVP and CFO
• Bahram Akradi, Founder, Chairman, and CEO

Analysts

• Arpita Chatterjee, Analyst at UBS
• John Heinbockel, Analyst at Guggenheim Partners
• Randal Konik, Analyst at Jefferies
• Molly Baum, Analyst at Morgan Stanley
• Anthony Bonadio, Analyst at Wells Fargo
• Lida Chen, Analyst at Mizuho Securities
• Eric Des Lauriers, Analyst at Craig-Hallum
• Chris Woronka, Analyst at Deutsche Bank
• Owen Rickert, Analyst at Northland Capital Markets
• Logan Reich, Analyst at RBC Capital Markets
• Andrew Chasanoff, Analyst at Oppenheimer