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DATE

Tuesday, May 5, 2026 at 10 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Bahram Akradi
  • Chief Financial Officer — Erik Weaver

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TAKEAWAYS

  • Total Revenue -- $789 million, up 11.7%, driven by higher dues revenue and increased in-center business utilization.
  • Comparable Center Revenue -- Increased 8.6%, with membership mix contributing 3.5%, price increases contributing 3%, and in-center businesses up 2.3%; volume impact was negative 0.2% due to qualified medical membership reductions.
  • Average Monthly Dues -- $230, representing a 10.5% increase.
  • Average Revenue per Center Membership -- $930, up 10.2%.
  • Total Center Memberships -- Nearly 838,000, reflecting 1.4% growth.
  • Qualified Medical Memberships -- Represented 3.4% of total dues revenue; declined by approximately 15,000 memberships, or 14.9%, while all other memberships increased by 27,000, or 3.7%.
  • Total Dues Revenue -- Increased 11.9%, primarily from improved mix and pricing strategies.
  • Membership Growth Guidance -- Company expects total center membership growth of 0.5%-1% in Q2, 1%-1.5% in Q3, and 2%-3% in Q4, with growth excluding qualified medical memberships projected at 3.5%-3.8% in Q2 and 4%-5% in both Q3 and Q4.
  • Full Year Revenue Guidance -- Anticipated 10%-12% growth per quarter and for the full year.
  • Net Income -- $88 million, up 15.8%, with adjusted net income of $96 million, a 27.4% increase.
  • Adjusted EBITDA -- $227 million, up 18.3%, with margin expanding 160 basis points to 28.7%.
  • Net Cash from Operating Activities -- $199 million, up approximately 8%.
  • Capital Expenditures -- $260 million, 82% higher due to increased construction for new clubs and pre-2027 projects.
  • Club Openings -- Five of fourteen planned clubs for the year have opened; remaining nine and several 2027 clubs are under construction.
  • Sale-Leaseback Proceeds -- $200 million closed in April; full-year target increased to $400 million.
  • Adjusted EBITDA Margin Guidance -- Midpoint updated to 28% for the full year, accounting for the impact of new club openings and associated start-up expenses.
  • Share Repurchase Authorization -- $500 million authorized; management stated, "we're definitely going to be looking at the share prices and at the right times, we're going to take the opportunity to buy some of the shares back."
  • Current Leverage and Liquidity -- "very, very low leverage significantly below my maximum target of 2x debt to EBITDA," and zero balance on the revolver with several hundred million dollars of cash.

SUMMARY

Management provided strategic clarity on prioritizing membership mix and price over absolute volume, emphasizing sustained high revenue per membership and intentionally reducing lower-value qualified medical memberships. New clubs in both urban and suburban locations are achieving strong performance metrics, with particularly high returns on invested capital in urban markets. Investments in innovation, such as dynamic personal training and new wellness hubs, are expected to support additional ancillary growth. The company highlighted its robust real estate asset base and sale-leaseback strategy as long-term liquidity levers. Management reported record EBITDA margin in the quarter and anticipates growing positive free cash flow annually, directly linking capital allocation and share repurchase strategy to operational outperformance.

  • Bahram Akradi stated, "We're not seeing any impact from the broader macro environment at this time," signaling confidence in ongoing demand resilience.
  • Dynamic personal training and in-center services are increasing both in trainer headcount and revenue, with management citing greater demand from newer, higher-value members.
  • Future club expansion is not constrained by market saturation, as "the amount of opportunity here in North America is enormous."
  • Management expects the benefits from the current membership mix shift and elevated dues to provide continued tailwinds for revenue and cash flow in the near term.

INDUSTRY GLOSSARY

  • Qualified Medical Membership: Members enrolled through third-party medical insurance providers, typically at lower dues rates, targeted for strategic reduction by management.
  • Sale-Leaseback: A real estate transaction in which the company sells fee-owned club properties and immediately leases them back, converting assets to liquidity while retaining operational use.
  • Dynamic Personal Training (DPT): A branded, high-engagement in-center training service offering personalized fitness instruction and programming, cited as a growing revenue driver.
  • CTR: Company-specific fitness class format referenced among new service rollouts in select locations.
  • MIORA: Branded health service or clinic initiative focused on wellness offerings, at early rollout and fine-tuning stage.

Full Conference Call Transcript

Erik Weaver: Thank you, Connor, and good morning, everyone. We appreciate you joining us for our Q1 business and financial update. Please note that 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 first quarter revenue. Total revenue increased 11.7% to $789 million driven by continued strength and performance across our portfolio, including higher dues revenue and strong utilization of our in-center businesses. Comparable center revenue grew 8.6%, slightly above our expectations. As outlined in the earnings supplement, components of our comparable center revenue were as follows: improved membership mix, which contributed 3.5% growth.

This includes changes in membership types, the replacement of lower dues memberships with higher dues memberships, which we refer to as churn and continued expansion of clubs into more affluent, higher use markets. Price contributed 3% growth. This includes legacy membership dues increases and changes to the new join price of clubs within the previous 12-month period. And in center businesses contributed 2.3% growth due to continued strength in utilization of our in-center businesses, particularly dynamic personal training. Volume contributed a negative 0.2% to comparable center growth. This was driven by a reduction in qualified medical memberships, which I'll discuss shortly. As expected, comparable center revenue growth continues to move towards our long-term target of 6% to 8%.

Average monthly dues were $230, up approximately 10.5% year-over-year, and average revenue per center membership was $930, up 10.2% year-over-year. Growth in average dues was driven primarily by positive membership mix trends and execution of our pricing strategy, as I just described. We ended the quarter with nearly 838,000 center memberships, which reflects 1.4% 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. These memberships have significantly lower average dues. In Q1 2026, qualified medical memberships represented only 3.4% of our total dues revenue.

We expect this to be approximately 3% by the end of the year and continue to represent a smaller proportion of our dues revenue over time. In the first quarter, qualified medical membership declined by approximately 15,000, down 14.9% year-over-year, while all other memberships grew by approximately $27,000, up 3.7% year-over-year in total, resulting in 11.9% growth in total dues revenue. Due to further year-over-year reductions in qualified medical memberships, we expect total center membership growth of 0.5% to 1% in the second quarter, 1% to 1.5% in the third quarter and 2% to 3% in the fourth quarter.

However, we expect membership growth, excluding qualified medical memberships of 3.5% to 3.8% in the second quarter and 4% to 5% in both the third and fourth quarter. With this strategy, we expect to deliver revenue growth of 10% to 12% for each quarter and the full year. Moving on to net income. For the quarter, net income was $88 million, an increase of 15.8% year-over-year. First quarter net income included approximately $8 million of net tax affected items excluded from adjusted net income, primarily consisting of share-based compensation.

Net income in the prior year benefited from approximately $1 million of net tax affected items, driven primarily by $12.6 million of income tax benefits resulting from a significant exercise of stock options by our Chief Executive Officer, ahead of their 2025 expiration, partially offset by share-based compensation. Adjusted net income, which excludes the tax-affected impact of these items was $96 million, up 27.4% year-over-year. Adjusted EBITDA was $227 million, an increase of 18.3% over the prior year quarter, and our adjusted EBITDA margin improved by 160 basis points to 28.7%. The primary factors for our margin expansion included greater leverage on our center operating costs and corporate G&A, an overperformance of dues revenue and timing of sale leasebacks.

Of the 160 basis point margin expansion, approximately 30 basis points relates to employer payroll taxes associated with the CEO's option exercises incurred in Q1 2025. As noted in our earnings release, we updated the midpoint of our full year adjusted EBITDA margin guidance to 28%. This guide includes the impact from a majority of our clubs that are opening in the second half of 2026. And the associated preopening expenses and early operating ramp impact on margin. Net cash provided by operating activities increased to $199 million, approximately 8% higher compared to the prior year quarter.

Total capital expenditures were $260 million, up 82% from the prior year, reflecting construction activity in support of our new club openings for 2026 as well as the start of construction on clubs planned for 2027. As of today, we have opened 5 of the 14 clubs scheduled for opening this year. The remaining 9 clubs and the number of the clubs scheduled for 2027 opening are under construction. In April, we closed on sale-leaseback transactions that generated approximately $200 million of sale-leaseback proceeds and 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?

Bahram Akradi: Thanks, Erik. Good morning, everyone, and thank you to our teams across the company for their outstanding work this quarter. As Erik mentioned, we continue to see strong performance across all aspects of our business. We're not seeing any impact from the broader macro environment at this time. Demand has been particularly strong for our new clubs, including 4 clubs we just opened in the last 30 days. They're all performing extremely well. Our real estate pipeline continues to be robust. And we expect to continue growing both revenue and adjusted EBITDA in the low double-digit range. I'm going to keep my prepared remarks very brief as the results of our business speak for itself.

But I would like to focus and provide clarity on our positive free cash flow outlook. Last week, we announced the close of $200 million of sale leaseback and raised our full year sale leaseback target to $400 million, delivering positive free cash flow in 2026. We expect to deliver growing positive free cash flow each year going forward, while selling only a portion of our fee-owned real estate assets built in any given year, resulting in an increase to the value of real estate portfolio that could be used at any time as additional liquidity.

All of this puts us in a very strong position with very low leverage, robust and growing operating cash flow and a significant portfolio of real estate assets. We will continue to invest in our existing clubs, take advantage of our white space by opening new clubs and thoughtfully return capital to our shareholders. With that, we will open the call for questions.

Operator: [Operator Instructions] Our first question comes from the line of John Heinbockel with Guggenheim Partners.

John Heinbockel: When we look at what we know about right, it looks like another year of suburban ground-ups very significantly. How do you think about beyond '27? Do you think '28, '29 look like '26 and '27 in very much? And then what's your thought on takeovers. You had done a bunch -- you haven't done many in a while. I don't know if you like that use of capital. What's your thought on that type of project.

Bahram Akradi: Great question, John. Great to hear from you. The market is incredibly exciting ahead. We have some amazing club openings, nonsuburban an incredibly amazing urban markets. We've been dying to get into these with significant-sized clubs. Interestingly, right now, our urban clubs are performing with incredible return on invested capital as we go into those into leases and we put some leasehold improvements, the returns are incredible. They ramp exceptionally well. And the suburban clubs have never been better. Like what we are opening right now anywhere suburban, semi suburban is the best results I have ever seen in for the years. So we're just excited.

We're excited about all the sites in the pipeline, whether they're in a super, super hot urban markets where we are going to be part of larger developments, and we've been negotiating on some of these things for 5 years, 6 years, 7 years, I mean they just -- they take longer. So they're closer to the other side. And then we have a -- we still have a growing number of suburban prototype opportunities as the demographic shifting into markets like we just on Monday opened the club in Akatio. It's a second location in Gilbert, Arizona, not only that one, all 4 clubs, incredible results. But there are -- that market 5 years ago, there was nothing there.

And right now, it's one of the hottest market. So we have continued to explain, we are not having a concern about an outlook where we're going to run out of opportunities to build urban semi-urban or suburban clubs. I don't -- that is the last thing on our list of concerns here, just amazing opportunities, and they're all performing exceptionally well. The most important thing that I think is just misunderstood about this business is the return on -- the cash-on-cash return doesn't matter which way we do it. When we go into these clubs, into a lease with our leasehold improvement dollars in, we are always north of 30% in aggregate.

And when we are doing our clubs and take them to sell leaseback we do that or better. So I just don't -- it doesn't really matter to me. If it doesn't matter to me at all. if it's more suburban or urban or what markets right now, they're all doing exceptionally well. Hopefully, that answers you and others in regards to that.

John Heinbockel: Maybe as a follow-up to that, has that changed your -- that success to maybe lack of competition in some respects, has that changed your view on what the whitespace opportunity is whether it's -- I think at points you've said 600 maybe or more than that. In your mind, has that increased? And if so, by how much do you think.

Bahram Akradi: Fortunately or unfortunately, I think, is going to be way past your time and my time, John. I don't think we are concerned about running even -- we do 14 clubs a year. I don't see when we're going to get to the point where we have a hard time. And we have been looking at so much opportunity in the United States that, that always makes us ponder taking the time to engage in all the requests to go 10 hours, 20 hours, 30 hours away on an airplane to get to the international demand that there is for our brand. So that's because the amount of opportunity here in North America is enormous.

So there is really no concern. I think that we've always said 450, 500, I don't think we see any -- I don't think we see any window that is going to be smaller than that probably is going to continue to grow.

Operator: Our next question comes from the line of Brian Nagel with Oppenheimer.

Brian Nagel: Congratulations on a very nice quarter. And also very much appreciate the press disclosure on numbers, -- so -- thank you. So the question I have -- the first question, we've talked about this before, but in the release again today, you talked about within the inset of offering a dynamic personal trading has been a driver there.

So the question I want to ask is how do you look at the current penetration of DPT -- where is kind of the slack there -- and then with regard to membership and the disclosure we gave today, as you continue to sort of say, upgrade these memberships in these clubs, does that, in a way, give you more opportunity in DPT assuming that these nonqualified members are more likely to uptake that.

Bahram Akradi: Let me just first give credits to our entire DPG team from every DPT themselves all the way to our Senior Vice President who runs that. They do an amazing job that the brand of dynamic personal training has been understood. The quality of our trainers are exceptional -- we are continually seeing an increase to the number of productive dynamic resonate trainers. And the execution is exceptional. And we continue to see more opportunities. And you're correct, as we are executing our new brand positioning, which we have been in progress for the last 3, 4 years, positioning Lifetime as an acolyte country club with the exceptional desirability where the price is really not a factor.

The kind of customers who are coming to us they're not talking about the price. We're not promoting. We're not advertising. We're not giving a 3 month for them to join. They're just coming in and wanting to be part of the lifetime brand and experience. when those members also engage in-center businesses way easier than the ones that you pull in of trying to give them a 3 month or 2 months or something like that to get them signed up. Lifetime has never been in a better position, brand.

We have never been in a better position, and it's entirely because of the change in the positioning of our company and our brand over the last 4 or 5 years.

Erik Weaver: Yes. And if I can just add to that, Brian, Bahram talked about a number of trainers as we look to serve the demand. As we look across the portfolio, they're up -- trainers are up low double digits and new business is actually up even more. So again, that just speaks to the increased demand that Ron is talking about.

Brian Nagel: That's very helpful. And then my follow-up question, different topic. But thanks for the commentary on the cash flow dynamics here at '26. But as we look at that CapEx number, either what was closed from Q1 or guidance for '26. I mean, how should we think about that relative to the clubs that you're opening in '26. In other words, me, how much of that growth CapEx that you earmarked, so to say, is actually associated with clubs beyond the current year.

Bahram Akradi: Yes. So that's a great question. But we kind of Erik has covered this multiple times. It's roughly half and half, about half of the capital that we are -- we launched this year as a new club growth CapEx, half of it was the clubs are opening in 2026 and half are the clubs that they're starting -- we have already started construction. We bought the land for -- mostly for '27 and some of the '28 even.

That's going to be always the case with the way we build our business, these are -- this is what the advantage of lifetime business is the incredible moat that is around this company that also don't think has been appreciated because it takes such a long time to develop these things and it takes stamina and capability. For us, it's a routine process. We are investing in 2026, 2027, 2028 and maybe even some beyond at any given time. The interesting thing that I just really wanted to cover is that we are in an amazing financial position as well as our brand position.

We have very, very low leverage significantly below my maximum target of 2x debt to EBITDA. That's flexibility. We have zero balance on our revolver. We're sitting on several hundred million dollars of cash. We build every year more than $400 million, $500 million, $600 million in what I would call fee-owned sellable assets. So if we sell $400 million of that, this is not the portion of the CapEx that goes to leasehold improvements. This goes into the assets we buy the land, we build, we own the fee that it goes into the pool of fee-owned real estate assets that we can sell and add and think of it as additional liquidity.

Over the next 4, 5 years, our expectation is that, that number will continue to grow even after -- if you kept building 14 clubs a year constant, if you build that constant, if you build that you're going to do $400 million a year constant. These are just make it simple assumptions for clarity for people. We will be adding to the value of our net sellable assets fee-owned sellable assets,[indiscernible] assets. And we will be adding to our free cash flow from '26 on every year. Our long-range plan shows by roughly about 2030.

That free cash flow will be more than $400 million, which basically will give you an option I don't want to sell any of my real estate. That's not really how we're thinking about it. Our assumption is we're going to continue to sell that number, roughly that. And then otherwise, now we have an extra $400 million of free cash flow, and we have added. We're not trading our real estate assets to be cash flow positive. We are adding to that. We're cash flow positive. We're growing that -- and that puts us in a position we can start thinking about all different ways of return of capital to the shareholder.

Hopefully, this creates really, really nice clarity for everybody.

Operator: Your next question comes from the line of Arpine Kocharyan with UBS.

Arpine Kocharyan: So you raised revenue for the full year by about $20 million and EBITDA is going up by about $15 million. That is a very healthy flow through as we think about incremental revenue upside. So maybe if you could go through drivers of that. But more importantly, your underlying members seem to be growing in that 4% to 5% range, which is definitely healthier than what meets the [indiscernible] right, with the qualified down double digit, the blended number. Can you maybe expand a little bit more how you think about member growth in light of revenue optimization versus just chasing volume, sort of your updated views on that? And then I have a very good follow-up.

Erik Weaver: Yes, I can take the flow through there. Yes, on the revenue, we're seeing extremely strong performance in our dues line, which, of course, as you know, most of that is going to fall that's going to flow through to the bottom line. And we're also seeing continue to see strong performance in DPT, which, of course, has a little lower margin than Dues does. So that's how kind of that relationship dues and flow-through is coming in. And what you're talking about on the membership mix versus volume is exactly the strategy as we kind of laid out instead of just chasing raw volume, it's all about the membership mix.

So that means number of members per membership, that has a higher LTV. So that's a better outcome for us, both from revenue and just strategically.

Bahram Akradi: And if I can add to that another way for you guys to think about. We are really prioritizing revenue, quality of that revenue, quality of membership, the ability to do in-center business retention, we prioritize those, and of course, all of that results in the EBITDA pass-through. And that the mix that he's talking about is naturally taking place. It's been a continued quarter-after-quarter result of changing the positioning of the company are -- we were very, very decisive. We wanted to create a brand that the desirability brings the customer who is not price sensitive is experience sensitive. That's taken us 4 or 5 years, and we're still getting some churn through that.

We love our older customers as we love the young ones and the middle age ones, all of them. However, as time goes on, we're going to see that some transition from that into more direct memberships also add to this mix shift that he's talking about. At the end, all we are working on is what does a club do in revenue? What is it doing a contribution margin? And how is the retention, what's the experience? And the focus that the team has on executing that is delivering these results.

Arpine Kocharyan: That's great. And then just a quick follow-up on buybacks, just really quickly. You have a $500 million of authorization and you just raised sale-leaseback target even before reporting today. Could you just give your broad take on how you think about capital allocation at this point as far as buybacks go, and where the stock is and the potential to be a little bit opportunistic.

Bahram Akradi: Well, I think that we are going to definitely use our authorization here as long as we see the stock below a fair value to us, we're going to be able to take advantage of that opportunity and buy some shares back. Yes. Ultimately, as I mentioned, as the cash flow grows, we're going to be analyzing with our Board and capital allocation committee on how to think about different ways to deliver return on capital to the shareholders. But right now, we have this vehicle in place, and we're definitely going to be looking at the share prices and at the right times, we're going to take the opportunity to buy some of the shares back.

Operator: Your next question comes from the line of Randy Konik with Jefferies LLC.

Randal Konik: Look, I think the theme I'm getting from this is appreciating the continuous growth of quality of the product, the experience and the membership. So I guess for Bram, to you first, kind of maybe give us some perspective on some of the product services and amenities you're thinking about over the next few years and some of the ones in existing that are existing today that you can see adding more penetration into the centers and for your members?

And then I guess then for Erik, have you kind of looked at revenue per membership into -- in different quintiles -- and are there any kind of interesting dynamics between what you see in the first quintile of revenue per member ship versus the fifth? And how you can try to grow that fit quintile or fourth quintile to get it closer in spread to what you're seeing with the first quintile of spending in their highest-performing membership kind of members. Can you give us some perspective there, guys?

Bahram Akradi: Let me start by giving you. We have CTR in the rollout right now. We are only in 30, 40, 50 locations, targeting to about executions, maybe we can beat that by end of the year. We're working as fast as we can to roll those programs out we are launching hybrid XT, that's just at the infancy got tons of potential. Dynamic stretch has got significant opportunity going forward.

We are working on lifetime health and wellness hub, which basically aggregates the opportunity for people to come to the most qualified registered dietitians in the country to basically get direction about where they go in a world where people are advertising all kinds of things, and some are fantastic, and some are snake oil. So I think we can be -- the authority to help people navigate through all that information. And then, of course, channel number there is Tamura to lifetime health LTH products, our personal trainers, dynamic stretch, CTR classes, whatever. So I -- we got so much that is into their thinking and strategy and rollout. Some are further along the way. They've been proven.

It's just a more rapid rollout and some are at the earlier stage where we're still fine-tuning the model before we put into a heavy rollout plan. We are busy, I don't -- I mean we're not running out of ideas or concepts on how to improve what we run. And I have said this repeatedly, Adaptation is a necessity of survival, Lifetime has demonstrated over the last 35 years, how we adapt. This team is poised to adapt as fast as necessary to deliver the best experiences for the customer that is relevant to the customer in today's world. In 5 years, these customers are going to want different things. I can't tell you exactly what that is.

All I can tell you is whatever it is, we will have adapted and delivered it to them as they desire.

Erik Weaver: Yes. And then on your second part of your question there, I would say exactly what Rob said, we're always doing things to add value to the memberships at all levels in all quintiles. But I guess I would just point you to what we're doing around our qualified medical because that is the biggest opportunity. When you look at our ability to -- because our clubs are busy, right? So where can we make the most impact to improve average dues and increase in center utilization, it's exactly what we're doing with those qualified medical.

Operator: Your next question comes from the line of Chris Woronka with Deutsche Bank.

Chris Woronka: So I also appreciate the expanded disclosure, especially around those qualified memberships, I think, super helpful. Maybe just go one step further a little bit. I mean, when you guys are evaluating a new club and you're looking at different locations, you're underwriting, I mean, how important is a metric like membership per club that you could put in there versus what kind of does do you think you can get? What kind of ancillary do you think you could get, what kind of engagement you get?

Just trying to kind of put a button on the idea that members per club is the most important metric to look at for you guys on development because I don't think that it is, but if you guys would like to opine on that, that would be terrific.

Bahram Akradi: It isn't. This is where I want to be clear, that has been the, I think, the gap between what we keep trying to explain to the Street and is being misunderstood -- what I care about is we spend x amount of dollars on a facility. We want a rate of return on that. That demands we want to be looking for a certain amount of revenue and a contribution margin out of that. The -- when I launched this company, I have said this 100 times, we've envisioned comprehensive delivery of all experiences under one roof. And we sold it way too cheap. That caused actually a contrary outcome to what was -- what I wanted.

I wanted this exceptional experience in the clubs. We couldn't get it with 11,500 memberships in 100,000 square feet club. We just couldn't get it. it wasn't there. So mistake was -- it was too cheap and the vision of delivering exceptional quality just would not work with that much volume. Today, every time we do a business plan in the last 2, 3, 4 years, and this is why I want to avoid giving you guys a number.

We thought we do these clubs for like 5,000 members instead of 10,000 and then what it really boils down to is that the number is actually a lower number that brings in fetches a higher revenue and higher margin and better experience. So what's happening is we are -- the way we have our position, the demand for our business and the amount of people in a wait list, we generally end up launching a club at a higher price than we had initially in the business plan. Therefore, it's just an easy mathematics. It's fewer memberships, but we end up with better revenue, better margin, better results, better experience. So we are curating 100% of that experience.

And that is the magic to winning to make sure the experience remains wow. And as long as we deliver that, the numbers will work. And so we don't want to emphasize membership. I want to emphasize revenue and EBITDA and our margin pass-through. And I couldn't be more pleased with what our team is executing with that results speak for themselves.

Chris Woronka: Yes. Thanks, Bahram. That's a very, very helpful answer, I think, hopefully, for folks here. As a quick follow-up, I know at one point, there has been talk on the app or monetization, things like advertising, other forms of revenue generation. Maybe can you spend just a minute on where some of those initiatives are? Is that still on the table?

Bahram Akradi: Not in the near term. The reality of AI and the way AI is advancing in such a fast pace -- our focus has been delivering, again, the best. Right now, there are features of our lacy that I think if you experienced it, you will be impressed in terms of like a workout generator, answering any questions regarding health and wellness. It's way more in depth -- we are continually executing the same strategy to deliver something exceptional on that. But our main focus is delivering the best experience inside of our clubs, we want Lacy to be that navigator for the customer to help them find what they want to find.

One of the challenges for our company is that we offer so many things. And often, if you are doing one service, it's easy to create an app that gives you the great experience for that one business. We're delivering 20, 30 different businesses inside of umbrella of lifetime. It becomes way more complicated even if the components are good for people to even find a navigation. So Lacy is lifetime AI companion. It's your AI companion to help your experience get better. And right now, we are singularly focused on making sure that experience. The subscribers are growing still at 100,000 rough and tough additional subscribers month.

At some point, we will focus on how naturally start thinking about benefiting from that. But right now, we're getting more members coming through from our 3 million, 4 million people on that list it's easier for them to join the club, and we're seeing that starting to kind of get ramped up. So we will find the wins as long as we stay focused on delivering something exceptional.

Operator: Your next question comes from the line of Stephen Grambling with Morgan Stanley.

Stephen Grambling: I guess in order to not necessarily surprise investors, I think everyone appreciates the focus on ROIC and your confidence in the new clubs hitting very healthy ROIC. But as we think about some of the KPIs perhaps over this year, thinking through whether it's members per club in center spend, margins as they ramp, any reason to believe that these will be different than what we've seen historically or relative to what's in the pipeline?

Bahram Akradi: Yes. I mean, from a margin perspective, no, I mean you take the revenue per membership and the growth that we've seen there. We expect that to continue. That's obviously an important KPI for us. So no, nothing that I could point you to, to suggest that we're going to have anything significantly different from kind of what we've been showing with our existing KPIs.

Erik Weaver: I think our execution right now, as I mentioned, is best ever is like the term we hear when we're going through our analytics best results ever best results ever across so many aspects of our business -- we're just -- our opportunity is to look at individual clubs to see within a particular club what is the embedded additional opportunity. But systematically, if you look at the entire system, results are fantastic. And I think we don't have a reason to believe they're going to do anything is going to deteriorate any shape or form.

Bahram Akradi: No. But I do think it's worth reemphasizing. We already covered this when you talk about a number of memberships per club. Ron covered it, but I think it's worth emphasizing as we open these new clubs, we're doing so with fewer memberships to reach our desired call it, utilization. So when you look at that metric today, it's roughly 4,400 per club. The trend that we're seeing is, again, intentional as part of the clubs that we're opening at the number of memberships we're planning.

Operator: Your next question comes from the line of Anthony Bonadio with Wells Fargo.

Anthony Bonadio: So I just wanted to ask about EBITDA margin. It looks like another all-time high there in Q1. Can you just talk about what drove the performance you saw there and I know you've historically pushed...

Bahram Akradi: Erik drove that performance. Erik.

Erik Weaver: Well, I can speak to it. I didn't drive it. Yes. I mean so it was a good quarter. Like we mentioned, I mean, we saw -- obviously, I talked about does, and that was a portion of the flow-through center ops margin, as you saw, improved as well. I mean that was just really great execution from the business in expenses across the board, really. And we -- the timing of sale leasebacks and the overall rent that we executed later in Q2 all of that really combined, whether it was G&A or center ops, we got leverage and scale.

Bahram Akradi: Yes. I want to add. I think actually, I want to give credit to our team starting the year with all the uncertainties in the macro, our focus was making sure we execute the customer experience at the highest level however, don't waste any dollars anywhere that doesn't need to be wasted. And so the team has executed exceptionally well. And I think the -- I always try to caution -- the Street is not asking for more, more and more because this is the Doomsday for public service public companies on a long-term basis is that you keep trying to squeeze more and you cannot pinch the customers' experience or the team members' experience.

We are in a phenomenal place, we are in a great place. We have some additional clubs opening significantly more. We've got 9 more clubs to open. There are some preopening expenses with those, albeit the clubs are performing so well, many of them starting did a contribution margin positive in the second month. But still, from an EBITDA standpoint, they can have some margin compression. But for the most part, again, I cannot see anything that's ever executed in better across the lifetime. So I'm proud of our team, but don't expect more.

Anthony Bonadio: Got it. That's helpful. And then maybe just on the consumer, can you just talk a little bit more about the demand side of the equation? It seems like in-center spend growth remained strong in Q1, reads on the high income consumer remained good. But there's also been a lot of headline fatigue out there -- just any thoughts on whether appetite to spend has changed at all in that cohort would be helpful.

Bahram Akradi: Absolutely zero. We're not seeing any negative pressure. I have expected it. I have thought this macro cannot deliver this. But right now, we haven't seen -- as of right this second, we haven't seen anything. It is the customer, the demand is strong for the clubs. Again, we're doing this without hardly do any marketing spend. It's just naturally coming to us. And the in centers are doing great, and we're super weight lists are substantial for our new clubs. And so we're just basically navigating through giving people the desired service or expectation, and it's just -- it's all working extremely well.

Operator: Your next question comes from the line of Eric Des Lauriers with Craig Hallum.

Eric Des Lauriers: Congrats on the very strong results here. You've already touched on it, but just wondering if you could expand on that improving membership mix. How much runway do you have here before we sort of reach kind of a new normal balance of members here? And just kind of how long do you expect this to be a tailwind to your overall dues here?

Bahram Akradi: I think that as you look at our business, we still have roughly, I want to say, 2/3 of our membership that they're paying somewhere below the rack rate. And we've gone through this. And we expect to see some pass-through as some of the older legacy paying customers drop out because they move or something happens and we get a new customer replacing that. No additional membership count, but we get more dues from that. As of right now, we don't have any immediate change in the outlook. I think it's going to continue. But eventually, it will slow down. But right now, it is still.

Erik Weaver: Yes. The thing I would point out is we highlighted in our Q3 supplement, where we really began deemphasizing the qualified medicals, right? And so that's why we kind of gave that guidance over the next couple of quarters to kind of help as we see Q2, Q3 and even into Q4. But as we get into -- we're opening up the larger -- opening up the clubs in -- and as you look at those qualified medical as a proportion of our total membership mix, that's going to continue to become smaller and smaller.

So I think when you talk about it, when is it going to be maybe a little more pronounced, again, I'd take you back to the guidance we gave for Q2, Q3.

Eric Des Lauriers: Awesome. That's very helpful. And then overall, just looking at the sort of, I guess, macro category horizon here. It's great to hear earlier comments that you even have 14 clubs per year, the saturation point is basically not even on the horizon. You've got an extremely long runway. How do you view the competitive dynamics in the space between sort of overall growing pie, increased demand for premium fitness, third places, et cetera. And then your ability to sort of increase your size of the pie. I mean seems like there's great tailwinds on both sides. I'm just sort of wondering how you view this kind of longer-term outlook here and your positioning within that?

Bahram Akradi: It's a great question. I don't and I've kind of often said this. If I took off on my own and I brought some of the best people with me, we couldn't put a dent into a lifetime. You're looking at a couple of hundred locations that they are open this year. We have another 50 to 75 AD facilities in the pipeline. These things take several years of gestation and massive amount of dollars, an incredible amount of detail to execute the complexity.

The competition for a to lifetime will not be a head on operator that can execute the complexity, the scale, the size, and the brand recognition of lifetime, you will have to compete with somebody opening sort of a recovery space. Somebody opening up a stretch play, somebody doing a yoga place. I mean -- or some combination, we really don't feel like any concerned that there is going to be somebody taking on this model, good luck if they want to try it. But we're just kind of executing, flowing through the opportunities we have. It's not a real concern. I just don't think it's real.

Operator: The next question is coming from the line of Logan Reich with RBC Capital Markets.

Logan Reich: Congrats on the solid results I want to ask first just on how visits per member or anything you can share on retention was trending in the quarter? I know it's been an area of strength for you guys. Just curious if you can provide an update there.

Bahram Akradi: Yes. The visits for membership is up. Retention is absolutely great. I mean, it's just -- the more they use the club, the less they are likely to want to drop out -- so all those metrics are working in our favor right now.

Logan Reich: Got you. That's helpful. And then I wanted to ask on the on hold memberships. That number actually declined on a year-over-year basis for the first time I think it was 23%. Just any color there on what that -- what drove that decline on a year-over-year basis?

Bahram Akradi: Yes. I mean there's really nothing there. I mean that number is -- I think it went down maybe 3,000 or something in that range. But from time to time, you're going to see that fluctuate as people come on or off hold, but there's nothing in there to point you to a trend or anything like that.

Operator: Our next question is coming from the line of Owen Rickert with Northland Capital Markets.

Owen Rickert: Congrats on another pretty unbelievable quarter. Just quickly for me. Can you guys talk about the vision behind this new lifetime innovation hub and how you see it influencing future member experiences, potential ancillary revenue opportunities and maybe the broader long-term growth strategy there?

Bahram Akradi: Well, look, if you don't have innovation hub, you need to go home. You need to be thinking about how to innovate and how to -- and our company has all been directed to be thinking about how we can navigate through what is the new ways we can serve the customer, whether the new products, new services, that people are sort of seeking and then how do we create an engine to deliver what's being asked for. But is part of the things we're talking about, the delivering -- coming up with rolling it out and executing that. And the dynamic stretch which happened a little before that, now hybrid XT. So we're constantly working on doing those things.

And then the next piece is, like I told you, is that building this lifetime health and wellness hub and try to create a whole sort of a robust registered dietitian center that basically can navigate people through all different aspects of our business. So we're working on all different types of things at all times. Now we still got tons of runway in thinking about what else we need to add to the clubs, how do we transform the clubs. So people continue to come in as the place they want to stay in, whether for entertainment to work, to eat to meet other people or exercise and get their hormone replacement done.

I mean all of those things are endless opportunities for us to innovate through.;

Owen Rickert: Awesome. Got it. And then secondly for me, just on MIORA maybe can you just tell us how many locations you're currently in? And is the long-term vision there still about 1 to 3 per region.

Bahram Akradi: Look, I think with that, what we are doing right now is we're in massive, massive sort of period of making sure we fine-tune the customer journey to an exceptional experience. My belief in this space is that it is going to be a main sort of the main street in terms of what people are going to want to engage in and then once they get on it, they'll probably -- there's really no way to get away from it. They want -- they would want to do that. It's being done in mom-and-pop clinics across the country. So it's a huge opportunity for us.

And for a clinic of a couple of providers, one lifetime location has all the customers they would need and more. So can we have a more in just about every club eventually? The answer is yes, just like we have personal training in every club. But we just got -- we got a crawl walk run. We need to sort of kind of do that with the complexity of the medical aspects of it, the HIPAA compliance and all the rules and regulations around it, it's a little more complex than rolling out the dynamic threat or CTR.

So we got to make sure we execute that exceptionally well, but I am an incredible believer in the potential of MIORA. And myself and our senior VP that is in charge of that with me, we're all over it in terms of making sure we have a model that we want to roll out much faster in the next 12 to 24 months. We're working on it, and I'm really excited about it.

Operator: Our next question comes from the line of Noah Zatzkin with KeyBanc Capital Markets.

Noah Zatzkin: Just looking at Slide 5 in the supplement, kind of conceptually in terms of the building blocks for the comp, when I think about maybe 2 or 3 years out, -- is it the right way to think about it that the membership volume piece kind of reverses as a headwind maybe related to qualified memberships kind of no longer churning off but membership mix might come down a bit? And then just in terms of membership price and in-center business, any thoughts around kind of those building blocks over the next couple of years, too?

Bahram Akradi: Yes. I'll take the price 1 first. I mean we've kind of -- we've given our long-term algorithm and we've kind of stated in there as we look at the pricing component of that roughly 2% to 3%. So I think that's a very sustainable part of this model. And yes, you're right, like as we work through kind of some of these membership dynamics with qualified, right, the -- those things kind of work themselves out. And in your matures, you're basically, call it, flattish, and you're getting your growth from your ramping in your new clubs. So I think that's a directionally fair expectation.

Noah Zatzkin: Got it. Really helpful. And then maybe just one on GLP-1s. I wanted to get any updated thoughts there in terms of that being a tailwind to the industry. Anything you guys are seeing around maybe benefit to new adds as well as retention. Any thoughts there would be helpful.

Bahram Akradi: Me, I'm going to take this question for you. It is going to be a home run win for all exercise facilities across the country. It is an absolute no-brainer science it will make people lose weight, so they're going to be happy and celebrating there. It's going to kill their muscle mass, which then is going to kill their bone density, which is going to be an absolute issue for them. It will be an epidemic if it's not handled correctly. I believe that the doctors, the pharmaceuticals will continue to improve their education to people that they need to do this along with weight-bearing exercise. So I don't believe the net outcome.

I can say from the 40 years of experience that a lot of times, people have not come to the clubs to exercise because they feel self-conscious, they feel like they're overweight. They don't want to go in because they feel like they're fat. I think actually now, they're going to be able to feel like, "Oh, God, I'm comfortable going in but they absolutely and positively need to combine exercise with GLP. We're going to -- in Miura, we're going to -- basically, we are telling people come in and get your GLP here.

But what we're doing is -- if you look at the history of what we -- if you look at the results of what we are delivering with people who are coming to us through Morato do GLP, they actually are not losing muscle mass. Because we're combining that with the proper regiment of nutrition exercise, that is going to help every health club operator long term. It's a zero concern. It's a wrong bet, thinking that GLP is going to hurt the Health Club business.

Operator: Your last question comes from the line of John Baumgartner with Mizuho Securities.

John Baumgartner: Maybe first off, Erik, I wanted to come back to your outlook for membership growth. Placing the qualified membership to the side -- can you speak to the mix from that bucket of all other memberships? I realize there's some noise from the mix of club locations, more locations in urban areas now. But -- what are you seeing broadly in terms of families versus singles and the influence of programs like Pickleball on drive membership growth?

Bahram Akradi: Yes. I mean, as we look across directionally in our mix, when we take the number of couples and families as a percent of our mix, that continues to increase. So when we're talking about improved mix, we're talking about more members per membership. That trend continues. We're talking about our mix of clubs that are opening in locations that have higher average dues. So again, those trends are all part of kind of that mix story, and those are continuing.

John Baumgartner: Okay. And then, Bahram, in terms of your programming, exiting COVID, I think a lot of the programming investments seem to focus on enhancing your offerings of classes that we're they were available outside of lifetime in the specialty boutique segment and doing it better and giving members more for their money. But now I look at CTR, hybrid XT, which seem more specific or exclusive to lifetime and your ecosystem that you're building.

And I'm curious the extent to which this is maybe a new angle in your strategy to I don't know, maybe lead more and more visibly than maybe you have in the past with classes that are different than what's available outside of lifetime and that you can leverage to drive new members going forward?

Bahram Akradi: Yes. Look, we are navigating through a couple of hundred clubs, new and brand new coming in and existing clubs -- and then we work on specialization efficiency. We look at the spaces that we have. We look at how they're being used, the services the customer -- the services the customers are receiving and so it takes a tremendous amount of thought process on how to change the space from one program to the other. And then really the longevity of the program that is coming versus the longevity a program that maybe is being deemphasized.

So it's a complicated equation that we are working on, but there is tremendous opportunity for us to think about these programs and how we can accelerate our growth through different channels. I'm not going to get into too much detail on that. But right now, I am most excited about how well we are rolling out these different programs and how well they're being sort of accepted or covered by the members.

Altogether, what we're looking for is maximizing the visits in a club and a spread throughout the day as much as possible throughout the week, so that the club gets a steady utilization but doesn't create sort of a discomfort for too much traffic at one given time. It's -- it's quite a bit. Hopefully, I answered your question, but we're not out of ideas in terms of how to kind of roll out new programs is navigating through all that we are delivering at 1 given time in a club. Does that help, John?

Operator: John is no longer in queue, sir.

Bahram Akradi: I guess it did.

Operator: There are no further questions at this time. I'll turn it back to management for closing remarks.

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

Operator: This concludes today's conference. You may disconnect your lines. Thank you for your participation.