The Gym Group H1 Earnings Call Highlights

Key Points

• Strong first-half performance: Revenue rose 10% to £133.1 million, while EBITDA less normalized rent increased 12% to £30.8 million. Membership surpassed 1 million, revenue per member grew 5%, and free cash flow reached £27.7 million.
• Expansion remains on track: The Gym Group opened four gyms in the first half and has 11 more under construction, targeting at least 20 openings in 2026 and approximately 75 new sites over three years. New-site cohorts are meeting or exceeding the company’s 30% return-on-invested-capital hurdle.
• Positive outlook and capital returns: Management expects full-year EBITDA less normalized rent at the top end of the £60.5 million–£62 million analyst forecast range, with like-for-like revenue growth of about 3%. The company also plans to complete its £10 million share buyback and continue refurbishments while maintaining disciplined costs and leverage.

The Gym Group LON: GYM reported higher revenue, earnings and free cash flow for the first half of 2026, citing membership growth, higher revenue per member and cost discipline as it accelerated its new-site rollout and refurbishment program.

Average membership rose 5% year over year to just over 1 million, while average revenue per member per month increased 5% to £22.14, CFO Luke Tait said. Total revenue increased 10% to £133.1 million, including 3% growth from the like-for-like estate.

EBITDA less normalized rent rose 12% to £30.8 million, lifting the margin by 0.5 percentage points to 23.1%. Adjusted profit before tax increased 31% to £6.4 million, while statutory profit before tax rose 48% to £4.9 million. Profit after tax was £4.3 million.

Costs, Cash Flow and Outlook

Tait said site costs were slightly better than expected, helped by energy optimization measures, including a peer-to-peer energy purchasing program. Like-for-like site costs increased 3.5% during the half, while central costs rose 7%, below the rate of revenue growth. Central costs as a proportion of revenue fell below 11%.

The company expects full-year like-for-like site cost inflation at the lower end of its previously guided 3% to 4% range. It has fixed commodity energy rates through October 2028 and secured further future reductions in commodity rates, Tait said.

Free cash flow rose 10% to £27.7 million. The company used cash flow to support expansionary capital expenditure, purchases for its employee benefit trust and its ongoing share buyback program. Non-property net debt stood at £58 million at the end of June, down £1.3 million from year-end 2025, while adjusted leverage remained at one times.

In June, The Gym Group expanded committed borrowing facilities by £15 million to £117 million, comprising a £60 million term loan and a £57 million revolving credit facility, both maturing in June 2028.

For the full year, management continues to expect approximately 3% like-for-like revenue growth and now expects EBITDA less normalized rent to reach the top end of the current analyst forecast range of £60.5 million to £62 million.

Expansion and Returns

The company opened four gyms in the first half and had a further 11 sites under construction. It expects to open at least 20 gyms during 2026, funded from free cash flow. Management said another five sites had been exchanged and two were expected to exchange imminently.

Expansionary capital expenditure was £18.5 million in the first half, including £12.9 million for new sites, £2.1 million for technology and data initiatives, and £3.5 million for upgrades to member management and payment systems. All members have now migrated to the new payment and member management platform, according to the company.

The Gym Group said its new-site cohorts were performing in line with its return objectives. Six sites opened in 2023 were tracking toward an average return on invested capital of approximately 25%, while 12 sites opened in 2024 were tracking to deliver more than 30% ROIC. The 16 sites opened in 2025 showed strong early member acquisition, Tait said.

The company is targeting about 75 new sites over three years and continues to use a 30% ROIC hurdle for new openings. Management said the core format would remain gyms of roughly 14,000 to 15,000 square feet in Greater London and other urban locations, while it also sees opportunity in smaller catchments and larger destination sites.

Refurbishments and Capital Returns

The Gym Group completed 15 major refurbishments to date in 2026 and plans another six by year-end. Management said 10 major refurbishments completed in 2025 had generated average membership growth of 10% and were tracking toward a 30% return on refurbishment capital.

Luke Tait said the company could complete “25-plus” major refurbishments next year while remaining within its policy of spending about 6% of revenue on property maintenance. He added that the pace could increase if the company becomes confident that 30% returns are being delivered consistently.

The company expects total capital expenditure of £60 million to £65 million this year. It also plans to complete its £10 million share buyback by year-end. Year to date, it had acquired 3.1 million shares for just under £6 million, at an average price of £1.81 per share.

Market Trends and Next Chapter Plan

Management said the U.K. gym market remains attractive, with penetration reaching 17.6% of the population in 2026, compared with 16.6% a year earlier. The company cited PwC data showing 12.1 million U.K. gym members spending approximately £7.3 billion annually, with high-value, low-cost gyms accounting for 29% of members.

The Gym Group said it is continuing its “Next Chapter” plan, focused on improving returns from existing sites, accelerating new openings and selectively pursuing additional growth channels. During the half, it reported a 5-percentage-point increase in unprompted brand awareness, a 10% improvement in web conversion and a 26% increase in yield from members purchasing add-ons.

Management also said average member tenure increased to 18.5 months, while the proportion of members on higher-lifetime-value fixed memberships reached 10% of the member base. The company is evaluating opportunities related to GLP-1 weight-loss treatments and said it is seeing growing demand for strength and functional-training spaces in its gyms.

About The Gym Group (LON:GYM)

The Gym Group plc, together with its subsidiaries, operates a network of gym facilities under the Gym Group brand name in the United Kingdom. The company was founded in 2007 and is based in Croydon, the United Kingdom.

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