Life Time Group Holdings, Inc. (LTH) Earnings

Management highlights

### Core Business Strategy & Performance - Management reports sustained strong demand from both new and existing members, with performance driven by a continued focus on delivering exceptional member experiences. - The company is executing a strategy to intentionally lower the share of lower-revenue qualified medical memberships (administered by third-party medical insurers), while growing higher-value standard memberships. This mix optimization strategy has delivered strong growth in average dues and total dues revenue. ### New Programming Expansion - The company has accelerated rollout of two new group training formats: CTR (large group Pilates Reformer classes) and Hybrid XT (combined conditioning/strength training paired with LT Games hybrid athlete competitions). Both formats have already seen extremely strong member demand, with most CTR classes running at full capacity or with waitlists. - The company expanded its LT Games events platform and acquired the Phoenix 10K event during the quarter, as part of its long-term strategy to grow the competitive athletic event segment of the business. ### Capital & Expansion Activity - As of Q2, 7 of the 14 planned 2026 new club openings have been completed, with the remaining 7 scheduled to open in Q4 2026 (at the high end of the company's initial 2026 opening target). 10 of the 12-14 planned 2027 new club openings are already under construction. - In April 2026, the company closed on $200 million in sale-leaseback transactions, and is on track to reach $400 million in full-year 2026 sale-leaseback proceeds, which supports the company's target of annual positive free cash flow. - The company's balance sheet is exceptionally strong, giving management significant operational and strategic optionality.

Guidance

- Full-year 2026 comparable center revenue guidance was raised to 7.9-8.3%, up from the prior guidance range of 6.9-7.5%. - Full-year 2026 revenue, net income, and adjusted EBITDA guidance were all increased, with the midpoint of full-year adjusted EBITDA margin guidance raised to 28.2% (the guidance accounts for pre-opening expenses and early ramp costs for the seven Q4 2026 new club openings). - Third quarter 2026 total center membership growth is expected to be 1-1.5% year-over-year, with 4-5% growth expected for non-qualified medical memberships. Fourth quarter 2026 total center membership growth is expected to be 2-3% year-over-year, with 4-5% growth expected for non-qualified medical memberships. - The company maintained its target of 12 to 14 new club openings for 2027.

Segment performance

Lifetime Group Holdings reports total Q2 2026 revenue of $866 million, a 13.7% year-over-year increase. Comparable center revenue grew 9.1% year-over-year, with contributions broken out as: improved membership mix (3.1% contribution), price (2.9% contribution), in-center businesses (2.9% contribution, driven by double-digit growth in dynamic personal training and life sports), and volume (0.2% contribution. Net income for the quarter was $101.4 million, a 40.6% year-over-year increase. Adjusted net income (excluding tax-affected special items was $109.8 million, up 30.6% year-over-year. Adjusted EBITDA was $246.5 million, up 16.8% year-over-year, with adjusted EBITDA margin expanding 80 basis points to 28.5%. Net cash provided by operating activities was $209.6 million, 7.1% higher year-over-year. Total capital expenditures were $263.3 million, up 18.6% year-over-year. Total center memberships ended the quarter at 860,000, 1.2% year-over-year growth: qualified medical memberships declined 18.9% year-over-year to 88,000 (10.2% of total memberships), while all other memberships grew 4.2% year-over-year to 772,000 (89.8% of total memberships). Total dues revenue grew 13.3% year-over-year, average monthly dues rose 12.3% year-over-year to $245, and average revenue per center membership grew 11.8% year-over-year to $993.

Risks & headwinds

The call did not include any material discussion of new or unexpected operational risks or failures. Management noted that forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from projections, and directed investors to review the full list of risk factors included in the company's public SEC filings.

Analyst Q&A

• Q: Given the recent acceleration of in-center business same-store growth to ~2.9%, can this pace be sustained into next year, and what is driving the growth?

  A: The acceleration in in-center growth comes from continued improvement in member experience, with strong growth in dynamic personal training (DPT) and spa services. Management is currently optimizing margins in food and beverage (F&B) ahead of launching a dedicated F&B revenue growth strategy for next year, and expects continued strong in-center growth as new programming expands. DPT penetration is low on a monthly basis but much higher when measured over a full year, and all DPT metrics (including trainer efficiency and revenue per trainer) are up year-over-year.

• Q: What are the gating factors to faster new club expansion, and is the company planning to accelerate new club openings over the long term?

  A: Management reports that there are more high-quality real estate expansion opportunities available today than at any point in the company's history, with strong demand from developers to add the Lifetime brand as an anchor to new mixed-use developments. The company currently targets 14 new club openings per year, but is actively evaluating ways to scale up expansion over the next several years, as the demand and opportunity are significantly larger than current growth plans. All new clubs currently deliver 30%+ IRRs, consistent with the company's return targets.

• Q: What is the current status of the Miura wellness concept rollout, and when will it contribute meaningfully to revenue?

  A: Miura is still in incubation, with only 6-7 test locations open. Management has intentionally paused further expansion until customer journey experience is perfected, and has been working to resolve outstanding technology and process challenges. Management is confident Miura will ultimately be a massive growth opportunity, but current revenue/EBITDA contribution from existing test locations is not material.

• Q: What is the company's perspective on the growth opportunity for peptides in wellness, and how is Lifetime positioned to participate in this market?

  A: Management confirms that peptides are a rapidly growing substantial long-term opportunity, and the company is actively studying, testing, and developing offerings in this space. The company is following scientific guidance closely, as the space remains largely unregulated and some products have limited large-scale human research. Peptide offerings will ultimately be rolled out through the Miura platform after the business model is perfected.