Life Time (LTH) Q4 2025 Earnings Call Transcript

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Date

Tuesday, Feb. 24, 2026 at 10:00 a.m. ET

Call participants

• Chief Financial Officer — Erik Weaver
• Founder, Chairman, and Chief Executive Officer — Bahram Akradi
• Vice President, Investor Relations — Connor Wienberg

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Takeaways

• Total Revenue -- $745 million for the quarter, up 12.3%, driven by higher average dues and in-center utilization.
• Average Monthly Dues -- $223, up approximately 10.8%.
• Average Revenue per Center Membership -- $882 for the quarter, up 10.8%.
• Comparable Center Revenue Growth -- 9.9% for the quarter; 11.1% for the year.
• Quarterly Net Income -- $123 million, a 231% increase, with $45.6 million of tax-affected nonrecurring items excluded from adjusted net income.
• Adjusted Net Income -- $77 million, up 28.4%.
• Adjusted EBITDA -- $203 million, up 14.5% with a 27.2% margin; margin improved by 50 basis points.
• Net Cash from Operating Activities -- $240 million for the quarter, up 47%, including $59 million of nonrecurring proceeds.
• Full-Year Revenue -- $2.995 billion, up 14.3%, with 13.9% membership dues/enrollment and 15.1% in-center revenue growth.
• Full-Year Adjusted EBITDA -- $825 million, up 21.9%, with a 27.5% margin (up 170 basis points).
• Full-Year Net Cash from Operating Activities -- $871 million, up 51%, including $94 million of nonrecurring proceeds.
• Net Leverage -- Ended the year at 1.6 times, below the 2.0 times target.
• Capital Expenditures (CapEx) -- $892 million (net), with $657 million for growth projects in the year.
• 2026 Growth CapEx Guidance -- $875 million-$915 million, with over half allocated to 2027 and beyond club openings.
• 2026 Club Pipeline -- One club opened; 13 under construction for the year; planning up to 28 total openings across 2026-2027.
• Sale-Leasebacks -- At least $300 million planned for 2026 to fund expansion.
• 2026 Comparable Center Revenue Growth Guidance -- Approximately 6.3%-7.3% expected, with higher growth rates early in the year declining as the year progresses.
• Adjusted diluted earnings per share -- $1.44 for the year, up 51.6% from $0.95.
• Share Repurchase Program -- $500 million authorization announced, to be managed opportunistically while maintaining leverage at or below 2 times target.
• 2026 Interest Expense Capitalization -- $33 million-$35 million expected to be capitalized.
• 2026 Maintenance CapEx Guidance -- $140 million-$150 million for maintenance; $130 million-$140 million for modernization, technology, and corporate investments.
• Average Member Visits -- 12.5 monthly visits per membership for the year, a 4.8% increase; 122 million aggregate visits, up 7%.
• Membership Count -- Over 822,000 center memberships at year end; approximately 873,000 including on-hold memberships.
• New Clubs Unit Economics -- New clubs have higher membership prices with no discounts, fewer members per club (3,700-4,000 versus 4,500-4,600 for existing clubs), but higher per-member usage and dues.
• Rack Rate vs. Average Dues Delta -- Remains $17 million-$20 million per month, unchanged as rack rate increases offset by legacy customer price increases.
• DPT (Dynamic Personal Training) Sessions -- "sessions have grown 18% the last two years," with the company expecting continued robust growth and varying penetration levels across markets.
• LT Digital Subscribers -- Approximately 3.3 million subscribers; strategy adjusted to focus on enhancing dues-paying member experience with conversion opportunities.
• Miura Concept Expansion -- Seven or eight locations open; fully operational sites are "ramping faster than our original models," with all future clubs being designed to include Miura offerings.

Summary

Life Time Group Holdings (NYSE:LTH) delivered double-digit topline, earnings, and cash flow growth in the quarter and fiscal year, supported by higher dues, strong in-center utilization, and operational efficiency. The company accelerated its expansion strategy, nearly doubling planned new club square footage in 2026 versus prior years and targeting up to 28 club openings by 2027, with a minimum of $300 million in planned sale-leasebacks to fund this growth. Management announced a $500 million share repurchase authorization, highlighting confidence in predictable cash generation and prudent balance sheet management. Capital spending remains elevated, with a significant portion allocated to 2027 and beyond openings while maintaining net leverage well below target. Initiatives in digital, personal training, and proprietary concepts (such as Miura) are positioning the company for sustained member engagement and higher average revenue per membership as more premium, higher-priced, and high-utilization clubs come online.

• The mix shift to higher-priced, lower-discount new clubs is expected to result in increased per-member revenue efficiency and sustained optimized utilization.
• Management stated the rack rate and legacy dues gap "is not ending right now" and "should shrink" over time, though it remains stable currently.
• "clubs are now opening stronger than ever and ramping faster than ever," according to the CEO, indicating faster time-to-profitability on new investments.
• The company indicated labor expense increases were "2.5% to 3%," and efforts to offset healthcare and supply cost inflation were reflected in the provided guidance and operating results.
• The sale-leaseback market is described as "robustly open," supporting continued non-dilutive funding for club expansion.
• Bahram Akradi emphasized a "club-by-club strategy" for optimizing membership mix and pricing, with the expectation of fewer discounted, more engaged members driving future margin and experience gains.
• There was clear management intent to balance elevated EBITDA margins with reinvestment and customer experience, cautioning against expectations of continuous margin expansion beyond guidance.

Industry glossary

• Rack Rate: The standard, full membership price posted for a club, not including legacy or discounted rates.
• Sale-Leaseback: A real estate transaction in which the company sells a facility to a third party and signs a long-term lease to continue operating it, unlocking capital for reinvestment.
• DPT (Dynamic Personal Training): A branded program or category of personal training sessions offered in-club, with its own revenue and margin profile.
• Miura: A proprietary, in-club specialty or concept space referenced as a growth initiative, designed for enhanced member engagement and differentiating club offerings.
• LT Digital: The company's digital platform for fitness content, streaming classes, and digital member engagement outside physical clubs.

Full Conference Call Transcript

Erik Weaver: Thank you, Connor, and good morning, everyone. As always, we appreciate you joining us for our business and financial update. Starting with our fourth quarter results, total revenue increased 12.3% to $745 million, driven by continued execution in our centers, including higher average dues and utilization of our in-center businesses. Average monthly dues were $223, up approximately 10.8% from the fourth quarter of last year, and average revenue per center membership was $882, up 10.8% from the prior year quarter. Comparable center revenue grew 9.9% and was in line with our expectations, reflecting strength in our membership dues and in-center business performance. We ended the year with over 822,000 center memberships. Including on-hold memberships, total memberships reached approximately 873,000.

Net income for the quarter was $123 million, an increase of 231%. Fourth quarter net income benefited from approximately $45.6 million of net tax-affected items that are excluded from adjusted net income, as they are not reflective of our ongoing operations. These adjustments primarily included proceeds we received in partial satisfaction of legal claims and employee retention credits, as well as adjustments for net gains on sale-leaseback transactions and share-based compensation. Adjusted net income, which excludes the tax-affected impact of these items, was $77 million, up 28.4% year over year. Adjusted EBITDA was $203 million, an increase of 14.5% over the prior year quarter, and our adjusted EBITDA margin improved by 50 basis points to 27.2%.

Net cash provided by operating activities increased to $240 million, approximately 47% higher compared to the prior year quarter. This included $59 million of non-recurring proceeds from partial satisfaction of legal claims and employee retention credits.

Erik Weaver: For the full year 2025, total revenue increased 14.3% to $2.995 billion, driven by a 13.9% increase in membership dues and enrollment fees and a 15.1% increase in-center revenue. Comparable center revenue grew 11.1%. Relative to our initial guidance in 2025, the outperformance was driven primarily by our mature clubs, which in aggregate reached and exceeded our expected levels of performance faster than we had anticipated. We believe this outperformance from our mature clubs is largely complete coming into 2026. In 2026, we expect full-year comparable center revenue growth of approximately 6.3% to 7.3%.

We expect a continuation of the quarterly trends we saw throughout 2025, starting the year at a higher comparable center growth rate and gliding downward as the year progresses. Average revenue per center membership was $3,531, up 11.7% from the prior year. Net income increased 139% to $374 million and adjusted net income increased 62.3% to $326 million. Adjusted diluted earnings per share increased 51.6% to $1.44 compared to $0.95 per share from the prior year. Adjusted EBITDA increased 21.9% to $825 million; our adjusted EBITDA margin increased 170 basis points to 27.5%. Net cash provided by operating activities increased to $871 million, approximately 51% higher compared to the prior year.

This included $94 million of nonrecurring proceeds from partial satisfaction of legal claims and employee retention credits. Total capital expenditures, net of construction reimbursements, were $892 million for 2025. This included $657 million for growth capital expenditures.

Erik Weaver: Looking forward to 2026, we expect to invest between $875 million to $915 million of growth capital. It is critical to underscore that over half of our growth CapEx in 2026 will be for clubs opening in 2027 and beyond as we have been accelerating the number of new clubs versus prior years. This increased investment in growth CapEx is driven by both the greater number of club openings this year and the next few years compared to 2025 and 2024, as well as the increased size of our clubs. We are nearly doubling the amount of square footage we are opening in 2026 as compared to 2025 and 2024.

Of our 2026 clubs, we have opened one and the remaining 13 are under construction. As these owned clubs open and begin to ramp, we expect to recycle the invested capital through sale-leasebacks over time. In addition to growth CapEx, we anticipate $140 million to $150 million of maintenance capital expenditures and $130 million to $140 million for modernization of existing clubs, technology, and corporate investments. We anticipate funding our CapEx through cash from operations, sale-leaseback proceeds, and cash on hand. For 2026, we expect to do a minimum of $300 million of sale-leasebacks. One final note. With our increased growth capital spending, a larger portion of our interest expense will be capitalized this year as compared to 2025.

In 2026, we expect to capitalize between $33 million and $35 million of interest expense. With that, I will now turn the call over to Bahram Akradi. Bahram?

Bahram Akradi: Thank you, Erik. Good morning, everyone, and thank you for joining us. First, I want to recognize and thank all of our team members for their continued passionate execution of our strategies. 2025 was another great year of achieving our objectives and exceeding our financial goals. Many of our centers operated at or near optimal levels with an average of 12.5 monthly visits per membership for the year, 4.8% higher than in 2024, and approximately 122 million visits in aggregate, 7% higher than in 2024. With revenue per center membership up 11.7% year over year, we generated substantial cash, and we exceeded from our operations our margin objectives.

In 2025, we achieved a 27.5% adjusted EBITDA margin, 130 basis points above the midpoint of our initial guidance set in January. We also exceeded our balance sheet objectives. We ended 2025 at 1.6 times net leverage, well below our two times target. These milestones were instrumental in achieving another year of record revenue and adjusted EBITDA and a BBB credit rating, which helped reduce our cost of capital. Reflecting on the current status of the company, in aggregate our mature clubs are operating at optimal levels. Our new and ramping clubs continue to perform extremely well. Together, clubs are generating substantial cash flow from operations. The sale-leaseback market is robustly open and we have a very strong balance sheet.

As a result, we have stepped into 2026 with exceptional financial flexibility. Currently, we expect to open up to 28 clubs across 2026 and 2027, to be funded primarily through operating cash flow and a robust sale-leaseback market. Next, we are very excited to announce a $500 million share repurchase program, which has just been approved by our Board of Directors. We intend to utilize this program opportunistically while diligently managing our leverage ratio to stay at or below our two times net leverage target. This is a significant milestone for Life Time Group Holdings, Inc.

Our repurchase program reflects our confidence in the predictability of our business model and our ability to generate cash, invest in our future growth, and drive shareholder value. Before I close my remarks, I would like to emphasize that the success of our company has been the result of unwavering focus on our member point of view. We remain committed to optimizing member experience, revenue, and EBITDA on a club-by-club basis. This is what has delivered our success to date and what will ensure our future success. With that, we will open the call for questions.

Operator: Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Brian William Nagel with Oppenheimer. Please proceed with your question.

Brian William Nagel: Hi, good morning. Congratulations on another nice quarter, nice year. So the question I want to ask is, as we look into 2026 now, there has been a lot of success for a while now with what you are doing inside the centers with programming and such. Where do you see the biggest opportunities as we go in 2026? I know we have talked in the past about some of the changes you have made in the cafe or in some of the training programs, but really, what do you think is the biggest opportunity here?

Bahram Akradi: Yeah. So, Brian, this is Bahram. You know, our business is always evolving. The customer is more affluent, more in tune with health and wellness, customer. It was basically a pro at utilization of this type of services. They are looking for the new proven methods for being healthier and engage in the clubs in whatever is the current way the people get involved in health and wellness. We are always focused on modernizing, updating, evolving the facilities to make sure Life Time Group Holdings, Inc. is always the best provider of all things people are looking for at the highest level of our customer experience.

We are constantly working on developing new formats, changing the floor in a way that the members are now wanting to use the facilities. And then we are working on all different aspects from our cafes to spa, personal training, small group training, again the introduction and rollout of Miura. We are basically constantly adapting. And that is what it takes for any company to continue to basically build their revenue and EBITDA and continue in their journey of basically being the place that people want to go to.

We have tons of things we are working on right now, lots of opportunities to do things rather, and we have just launched this year the sort of the work on the cafes to try to improve the speed and the quality of what people want, and a lot of great progress early on is sort of happening. And we expect this all to continue. Personal training is doing great. Pickleball is doing great, our new Miura locations are launching pretty strong. So we just have a whole host of things we are working on. But in the big picture, everything is working exceptionally well. Members are using the club at the highest level we have ever seen.

Clubs are packed. They are operating at near optimal levels of utilization per day or per month based as or per year as you look at how much visits a club can take and deliver great quality. So, we are as happy as we can be.

Brian William Nagel: That is very helpful, Bahram. And then my follow-up question just with respect to the new center opening. So I guess I will ask it this way. You opened a number of centers later 2025. So maybe you could just comment upon initial performance of those. And as we are looking at these 2026 openings and realizing that I think you said one is open, but obviously there is still a lot more to come. Is there anything you gleaned so far from anything you are doing with the presale activity?

Bahram Akradi: Yeah. All I can say to you is our clubs are now opening stronger than ever and ramping faster than ever. Some clubs reach literally contribution margin positive the first full month of the club operation, which is pretty incredible. We are very, very happy. As a result, we are opening as many clubs as we can, as both Erik and I mentioned in our remarks and in the earlier. This year we will open more square footage of clubs than we opened in 2024 and 2025, and 2027 should be no different than 2026. So we are really, really excited.

We have an amazing pipeline of more dynamic, exciting locations that are going to come in the future years after 2027, 2028, and beyond. So we could not be more pleased with the way things are going right now.

Brian William Nagel: I appreciate it. Congrats again. Thanks.

Operator: Thank you. Our next question comes from the line of Arpine Kocharyan with UBS. Please proceed with your questions.

Arpine Kocharyan: Hi, good morning. Thanks for taking my questions. I was hoping you could give a little bit more detail on the unit economics of the new clubs you are opening this year. Obviously, much larger square footage with expanded amenities. As we think about revenue per member trends as well as kind of member mix as we go into the back half of the year, do you expect any changes to the typical seasonality of the business in terms of quarter-to-quarter member growth? And I apologize, it seems like I blended two questions in one.

But first, I want to ask about the unit economics of the new clubs and then any help on the mix of members that we are looking at for the back half of the year?

Bahram Akradi: Yes, what you should expect is as we are opening new clubs, these clubs do not have any discounted program available in them. So there is no discounted membership. The membership prices are higher. The model for the new clubs are significantly lower number of members using the club significantly more, and they are paying a much higher rack rate. This model is actually way more efficient than what we used to do in the very, very past. And we have been adjusting the older clubs gradually to match the performance of the new clubs, and so the memberships are expected to grow altogether because we are opening all the new clubs. However, again, they are performing extremely well.

And we do not see any specific ups and downs for the seasonality, other than the fact that we are basically getting more members using the club more often. They are paying higher dues on average and using the club more. So it is exactly the model we are looking for. It is a super engaged membership model instead of a non-use membership model. And we are basically operating at optimal levels of that right now.

Erik Weaver: If I could just add some quantitative there. When you look at our kind of existing clubs, if you just take an average membership per club, it is 4,500 to 4,600. So when you talk about our new clubs that we are planning, those at membership levels, 3,700 to 4,000. So we are building those with fewer membership because, again, we are assuming a better mix there. But seasonality, to your question, no changes in expectations around seasonality.

Arpine Kocharyan: That is super helpful. Thank you very much. And then just a quick follow-up. Could you remind us the rack rates you currently have and what is running through the system, sort of what that delta looks like, just a refresher? Thank you.

Bahram Akradi: Question again? Yes. Can you say that again?

Arpine Kocharyan: The rack rates you have and what you have and what is running through the system and what that difference looks like today?

Erik Weaver: Oh, you are talking about, like, the delta between the rack rate? Was that your question?

Bahram Akradi: Yeah. That is only increasing. You know, we are, and what I want to do, this is a good question. I want to do it for the benefit of everybody listening. Our clubs are operating at incredibly optimal levels. The parking lots are packed. People are coming in. They are using the club in every place and all parts of the club. So now we are reaching so many clubs are at that level, we basically want to optimize the membership so that we are making sure the customer experience in no shape or form deteriorates.

As we do that, we are basically getting a higher realization of the membership, higher dues, and we are allowing basically fewer memberships in the club. And the visits to the club are basically at the saturation level, and the members you have are paying more, then they are using the club more. That makes it that you can have maybe fewer members for that optimal deal. Therefore, the only way you can do that is really raise the membership prices. And we are doing that really to protect the customer experience where we need to do it. It is not across the whole system. It is a club-by-club strategy. We are raising market by market, club by club.

And as we take those rack rates up, then it basically increases the amount of dollars. This is between the customer and that. And as we raise the legacy customer prices, that reduces it. I think right now, it is still relatively in that $17 million to $20 million. Yeah. It is $19.5 million. Yeah. Exactly. Yeah. $20 million. And that has not really changed because the last few years as we have kind of done both. We have been raising the rack rates at the same time we have been getting some of the members getting some legacy price increases. So that number has kind of stayed between that $17 million and $20 million per month.

Arpine Kocharyan: Thank you very much. That is very helpful.

Operator: Thank you. Our next question comes from the line of John Edward Heinbockel with Guggenheim Partners. Please proceed with your questions.

John Edward Heinbockel: Hey, Bahram. I want to get your thought on two topics. One, one-time initiation fees, because I think you have only got those in a handful of clubs. Do you think the experience merits that? And if so, how broad could you apply that? Then secondly, DPT has grown, the sessions have grown 18% the last two years. How sustainable is that? Because I think the penetration rate is still very low. So can the penetration improve? Can you keep growing DPT almost 20%?

Bahram Akradi: Yeah. I want to give credit to our team across the corporate who leads that category as well as our folks in the clubs. We have a very, very robust plan for DPT this year as well. Their plans that they presented to us are very, very robust. Yes. We expect that the DPT to continue to grow. And in some clubs, the revenues are by far the biggest revenues and margins we have ever seen in the history of the company. And in some other markets, we still have the opportunity to add team members, add leaders into those facilities to kind of get those going.

But we are super, super happy with where it is at and with its potential and the game plan that we have on hand for continuing to improve the personal training program throughout the year.

Chris Woronka: Maybe just as a quick follow-up for either you or Erik. When you think about the openings in 2027, what does the composition look like in terms of the ground-ups? It looks like that is going to be pretty heavy if you look at the CapEx budget, all-in, or growth, either one. Is this an elevated year, or are we going to be, as we roll forward, kind of at a new higher level, but we are also going to have $300 million to $400 million of sale-leasebacks a year?

Bahram Akradi: Alright. That is a great question. We have a significant number of ground-ups in 2026 and 2027. So those are basically, you know, we are investing substantial amount of CapEx that is for 2027 and beyond clubs. But I am super comfortable with that because, as always, our ground-up clubs perform, I mean, so predictably above expectation. The sale-leaseback market that, you know, they ramp fast and they are ready to go to the sale, allowing us to kind of pair the new clubs with the older clubs that they have too much that, you know, the carried book value is really low, so the tax value is low.

So we can adjust those and not pay, you know, taxes on the gain and loss, if we can try to even it out. So it allows a significant opportunity for having more sale-leasebacks. So those are all great. Now when you look into 2028 and beyond, we are working on a host of, the real estate team is working on a host of super exciting facilities, but a lot of those sort of really big facilities for the markets, the urban markets they are going into that basically are landlord basic and we are paying the bulk of the way, and we are putting some leasehold improvement in there.

But it really works itself out because we are now dramatically increasing the amount of owned assets in terms of dollars, which we can take those to sale-leaseback and, or we are doing big beautiful clubs in high-rise buildings or, you know, sort of the urban markets that they come in a lease form to begin with. So, I do not believe we will have any issue generating enough cash to pay for things, take it to sale-leaseback, recycle that, and then we also having the extra capital available for share buyback as well.

Operator: Thank you. Our next question comes from the line of Kate McShane with Goldman Sachs. Please proceed with your questions.

Kate McShane: Hi, good morning. Thanks for taking our question. We wanted to focus on the expense side a little bit. You have done a really great job in managing both the inflation, I think we have seen across labor, but also with other expenses such as healthcare costs, which we are seeing other companies struggle with a little bit here over the last couple of quarters. Could you maybe talk a little bit about your expectations for 2026 when it comes to these couple of line items and how you continue to manage it?

Bahram Akradi: I will take it, and then Erik will add on to this. We are fully aware of the headwinds that come from payroll increases and supply increases. And we have had those completely in mind and in our plan in a very comfortable fashion in the numbers that we put forward for the guidance of this. I am going to turn it over to Erik, but we are continuing to work on managing those best way we can. Yet, I want to be totally, in terms of like repeating myself, customer experience, member experience is being the number one driver of building a brand that is completely and entirely loved by people who have been.

I run into people who have been a member. They move, and all they say is how they miss their Life Time. They miss their Life Time. They want to go somewhere near the Life Time. So we do not want that to change. So we are focused on delivering that quality, but we have thought through these challenges. And I am going to turn it to Erik.

Erik Weaver: Yeah. Absolutely. You know, on the labor side, I think we have done a nice job. We have talked about the increase we have seen, 2.5% to 3%, pretty consistent with what others are seeing. I think like everybody else we have seen, in some of those expenses, we have seen some of those increase, but I think we have also done a nice job of working with our suppliers to mitigate and offset a lot of that. So hats off to our procurement team. And then on the healthcare cost side, we have done some nice things around managing that risk through our captive. And generally speaking, we have got a pretty healthy employee base.

And so as we look at our healthcare costs, they have been actually, we have managed those very well. So all to say, we are seeing some of those same pressures, but we have done, I think, a nice job of mitigating them. And again, it is in the numbers.

Bahram Akradi: Like, we have anticipated this increase as coming. So when we are establishing the budget, we basically put all of those at a level that we feel comfortable we can deliver.

Operator: Thank you. Our next questions come from the line of Eric Des Lauriers with Craig-Hallum. Please proceed with your questions.

Eric Des Lauriers: Great. Thanks for taking my questions and congrats on another strong quarter here. I am wondering if you could expand on your comments around optimizing membership mix, what levers you have to pull and how we should think about the potential impact 2026 versus some of the out years here?

Erik Weaver: Yes. I mean, some opportunities we have, and we kind of talked about it in the beginning in our comments, just the clubs being busy and traffic. So it is an opportunity for us to continue to manage the member experience, right? So just optimizing, especially in clubs where we have very, very high traffic. We have talked about discounted membership and continuing to optimize there. So, in a lot of our clubs, we continue to have the ability to do that. And so going to continue to run that play through 2026.

Bahram Akradi: And as you, our expectation is the number of members on the sort of a discounted third party pay will decrease as we will have a more direct membership activity. And we feel that is the best way to manage the experience and make sure that we get more revenue and more EBITDA out of the clubs at the same time. So there are three things that we juggle with: member experience, improving our revenue, improving our EBITDA, and we have a clear path on how we can continue to do that.

Eric Des Lauriers: Alright. That is very helpful. Then a clarifying question for me. You mentioned new clubs have been ramping more quickly, contributing to profitability more quickly. You also have a greater number of large format centers opening up in 2026. Should we think about this sort of faster ramp as applying to large format centers as well? Is there anything to kind of call out with respect to the ramp with the large mix of large format centers here?

Bahram Akradi: Look. The message there should be taken like this. Every club we are opening right now, we are seeing incredible success with those clubs. That gives us the sort of a super confidence to continue to expand on our development plan. So that is fantastic. As far as the caution that I would give you guys on last year, I remember having this conversation and I told you guys do not go beyond 25% EBITDA margin because we want to invest. We want to continue to invest in the member experience, and upholding our membership experience as well as the brand has been the major, major part of company success.

I have no qualms about our, you know, just guiding you guys again that the EBITDA margin we are giving you is phenomenal in my opinion. It is not to be taken lightly at these levels, and we want to make sure people do not get ahead of themselves in terms of keep wanting to push that number and then expect us to deliver more. We have zero desire to disappoint you guys or the Street or anybody else. So, our goal is to make sure we, but we also do not want to disappoint our member at the expense of the shareholder or shareholder at expense of the member.

So that is the balancing act that we have to do and we are on it every day. But the clubs are ramping faster. They just get to that saturation point sooner. That is all there is to it. But everything is performing extremely well.

Operator: Thank you. Our next question comes from the line of Molly Rose Baum with Morgan Stanley. Please proceed with your questions.

Molly Rose Baum: Hi. Thanks so much for taking my questions. I guess I have one near-term question and one longer-term question. So for the first one, the near-term question, can you speak to maybe trends you saw in January and maybe year to date from like a new member churn and member engagement perspective? Did you see any impact from weather or any nuances you would call out in member behavior so far this year?

Bahram Akradi: You are so clever. But I am more clever than you. I told you guys do not ask middle-of-the-quarter questions. That is just inappropriate for us to answer.

Molly Rose Baum: Understood. No problem at all. But all things are going really good.

Bahram Akradi: It is no problem.

Molly Rose Baum: Alright. Thank you so much. So then maybe shifting to the longer-term question. I know last quarter you had talked about expectations to see, I think, up to 3 million digital members to start 2026. So I guess my question there is, are you seeing opportunities to increase conversion of those members into full paying members? Or any other monetization opportunities from retail, Life Nutrition. Can you just comment on maybe the digital and retail landscape and what opportunities you see there?

Bahram Akradi: That is a great question. That number is roughly about 3.3 million subscribers now, so it is continually growing. We have adjusted our strategy on the LT Digital and the focus is significantly more on. And yes, we are seeing improvement using Lacey to enhance the actual member experience, the kind of dues-paying member. The subscribers will now get access to the same pretty much app, less reduced than in the past for that. It gets similar experiences as the regular member gets, with the fact that they just cannot get into the clubs with it.

But this allows them, when they want to come as a guest or something, they can see the schedule and then it makes it easier for us to, just like you asked, to take that membership one step closer for them to deciding to sign in that strategy.

Molly Rose Baum: Got it. Thank you so much.

Operator: Thank you. Our next question is coming from the line of John Baumgartner with Mizuho Securities. Please proceed with your questions.

John Baumgartner: Good morning. Thanks for the question. Maybe, Bahram, first off, I wanted to ask about programming opportunities and in-center revenue. You know, I think over the past 12 to 24 months, we have really seen consumer spending very resilient for kids and children. And based on the industry data that we have seen, club memberships for children, or I guess minors, they are also among the highest priced that are out there. So I am curious, aside from the swim programs, how underutilized do you think your model is monetizing kids programs, whether it is sports-specific training, intro to weightlifting. What is the opportunity to ramp that contribution as you plan your next phase of investment?

Bahram Akradi: Yeah. Look, I think having been involved in doing this for as long as we have, we have obviously tried and tested all types of things. And we continually see opportunity to engage parents and kids into more programs, and that business has been a nice growth opportunity for us and a great engagement, great retention sort of a program and business. As far as expanding into additional services, as we have tried, there are pros and cons with those. A lot of times this is basically a challenge of what space you use at what time and do you have other programs.

So we are doing that fine-tuning, what we can do to maximize the space that we have being used for a variety of different things as much as possible. So it is not the only category that we can grow the in-center. We have opportunities to grow in centers on all fronts, from a spa to cafe to training, etcetera, and we are doing all of that. And including kids. We are always looking to see how we can get them more involved, more engaged, and give them real value in what they want, what they perceive is what they are getting.

John Baumgartner: Thanks for that. And just a follow-up on the EBITDA margin. The approach there is very clear, under-promise, over-deliver. And I am not so much curious about how high margins can go, but if we think back to the Investor Day in 2024, the algo was more of a low- to mid-twenty percent margin. It has migrated up the last couple of years. I guess I am more curious relative to plan, what sort of broken positively for you? Is it more modest incremental expenses? Is it upside for mix or larger utilization of the in-center offerings? Just trying to get more of a sense of your confidence in the margin floor and sustainability there.

Bahram Akradi: So you are correct. We suggested 23.5% to 24.5%, if my memory is correct, on the Investor Day. And then I told you guys do not go beyond 25. The clubs matured and we have outperformed the clubs faster. So remember, at the time, we had a lot of our clubs in a re-ramp stage similar to ramping. Today, majority of the clubs are fully, fully re-ramped. I mean, in aggregate, I say consider it fully re-ramped. So now we have new clubs opening. And those new clubs have to ramp. They are ramping. They are ramping better than our expectation. But all in all, I think there is a limit to how much you want to push the margin.

Now it may, and here is what I want to say. It may be a quarter we give you more than 27.5%. I just do not want that to become the standard or the model. Because I do not want to have the pressure on this company to do things that will damage the company in the long term. So we want to guide you guys conservatively. And we want to make sure we guide to something we do not disappoint. But I think 27.5% EBITDA margin is an incredible margin. And I would build as many clubs as I possibly could build when I have a model that produces that.

So do I want to take a risk of damaging our experience with the customer? The answer is no.

Operator: Thank you. Our next question comes from the line of Michael Hirsh with Northland Capital Markets. Please proceed with your questions.

Michael Hirsh: Hey, Bahram, Erik, congrats on another great quarter and year. Can you update us maybe on how, what you are thinking about how Miura is performing? How many clubs are you currently operating in, member adoption, visits, anything you could update with us there, and maybe the ramp throughout 2026 and 2027?

Erik Weaver: Go ahead. Yeah. I was going to say, yeah, Miura, you know, last year, we had two locations open. We have got now seven or eight locations open. And so again, for us just rolling those out this year, we wanted to make sure that we had really kind of nailed that operating model. And so we have opened those new locations in great markets. We are super excited about them, and they are ramping at our expectations.

Bahram Akradi: Yeah. We are, and to be fair on that, we have had obviously some challenges with some of those openings with some knick-knack things left over on construction or permits or something like that. But the ones that have opened fully with no hiccups of such, they are ramping faster than our original models, and the rest of them will catch up. As we are designing spaces for the future clubs, we are always kind of planning the place we are going to execute Miura in.

Which basically is the cue that this is the one program that we have tested, and I believe it is going to work extremely well, and it is expected to be in every single market, not necessarily every single club, but accessible to every single customer within a club that they are in or a club or something else close enough to them. It is a very, very well performing versus the plan business that we are rolling out. Confident it is here to stay as long as it is done correctly. We are working on all aspects of that.

Michael Hirsh: Awesome. Thanks for the color there. And then maybe secondly for me, how is LT Health performing, the supplement business across both in-club and digital channels? And maybe what should we be monitoring there in 2026?

Bahram Akradi: Yeah. For 2026, I think the growth strategy is in clubs, mostly. We are rolling out a more robust plan on how to make sure our club members have better visibility to the LT Health and the superiority of the quality of that product versus other products being marketed and sold. And then use that as a platform to take it outside of the Life Time Group Holdings, Inc. walls in 2027 and beyond. So right now it is working extremely well against the strategy we are currently driving. As far as the digital space, it is mediocre. It is so-so.

It requires more education for people, more direct education, understanding why LT Health products are more superior, because once again, we are not cutting any corners on what needs to be put together, the testing, everything that needs to go into a product you can trust and actually works. And so it is a little more work in terms of educating the customer, and that is why done through our professionals in the club, the PTs and the group fitness people, cafe folks, we are getting great success out of growing that very nicely year on year.

Operator: Thank you. Our next questions come from the line of Logan Paul Reich with RBC Capital Markets. Please proceed with your questions.

Logan Paul Reich: Hey, good morning. Thanks for taking my questions. Just had, the first one is on the rack rate versus the average member dues. I know you guys are talking about that delta has been relatively consistent. Just strategically and longer term, is there a level for that delta you have in mind that the business should run at, or should that delta converge over time? And then second question is just on the 2026 guidance on the same-store sales. Can you just help us think about how the composition of member growth versus pricing versus in-center growth contemplates into the guidance. Thank you.

Bahram Akradi: Alright. Let us start with your latter part of your question. We want to go with the rack rate. Look, for right now, we are basically analyzing on a club-by-club basis where we need to set the price in that club and then consequently in that market in order to maximize the experience and make sure the brand stays in the exact position, which is top brand in the market. When we are doing that, sometimes you just basically almost are forced to take the price up $10, $20, whatever you have to. And that is the exercise we are going through. When does that end? I do not know. It is not ending right now.

We are still reaching those type of clubs where we have to raise that rate. When we raise that rate, we will get the gap. And then when we, as I said, when we do the legacy price increase, then that gap gets closer. My expectation is sometime in the future that number will shrink. It should shrink because it is not our expectation that the rack rates will continue to go up at the level they have been going. But right now, we are not seeing any immediate change in those numbers. On the second question, I am going to turn it over to Erik and then I will add on to it.

Erik Weaver: Yeah. I mean, you kind of touched on it in terms of the delta and when ultimately it closes. It is really a tough question to answer because it is really dependent on the pace you increase your rack rate. But you have to remember, when we lump things or call things pricing, part of it is when a member churns out at a lower rate, you are getting the benefit of that arbitrage. So it is not like necessarily a direct pricing increase, if you will. So when you think about that, you have to kind of break it up into those two pieces. Legacy will continue to be part of our pricing strategy as we go forward.

Just hard to definitively say when that gap closes. I do not see a world where it is ever closed. I mean, that is part of the retention play, having members pay under the rack rate. And so that will continue.

Bahram Akradi: Does that help?

Logan Paul Reich: Super helpful. Thanks, guys. And then just on the 2026 guide, just how to think about composition of comp between member growth, pricing, how you define it, and then in-center revenue.

Bahram Akradi: So the revenue per membership is going to increase. That is part of that growth. The membership count we have guided to roughly.

Erik Weaver: We have not given a membership guide.

Bahram Akradi: Uh-huh. But we will see growth that exceeds 2025. Again, we are not guiding directly to it.

Erik Weaver: Directly. But you are going to see an increase in that number from 2025.

Bahram Akradi: And then the rest of it will become part of the in-center growth, the increase in revenue per member broken into dues as well as not in-centers. So again, we are continually focusing on optimizing the revenue and EBITDA of the club, which comes through optimizing the membership experience.

Logan Paul Reich: Got it. Super helpful. I really appreciate the clarification.

Operator: Thank you. Our next question comes from the line of Chris Jon Woronka with Deutsche Bank. Please proceed with your question.

Chris Jon Woronka: Thanks for taking the question. Congratulations on the year. Just one question for me today. Bahram, there has been a lot of focus, I think, in the industry around, you guys have a higher-end consumer, higher-end product service offering. There have been some issues at the lower end. So my question is, do you think about potentially leaning into even the higher end of the market? And we have heard that high-end consumers are still looking to spend their money. So is there any thought or any plans or kind of any kind of white glove type service and higher up that, what that might include in terms of transportation or special things.

Is there any thought to try to tap into even the highest end of your customer? Thanks.

Bahram Akradi: Absolutely. Yes. You know, we have been working on bundling more programming, yet just sort of more to come on that. But we have been seeing that there is a certain number of memberships that are wanting to spend more and a more, to your point, white glove service, more bundled approach, easier for them to transact.

Chris Jon Woronka: That is correct. Okay. Super helpful. That is it. Thanks.

Operator: Thank you. Ladies and gentlemen, thank you. This does now conclude our question and answer session. And with that, I would like to turn the call back over to Connor for closing comments.

Connor Wienberg: Yes. Thank you, everyone. Thank you, operator, for joining us this morning. We look forward to speaking with you all again next quarter.

Operator: Thank you for your participation. This does conclude today’s teleconference. Please disconnect your lines at this time and enjoy the rest of your day.

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