Operator: Greetings, and welcome to the Life Time Group Holdings Inc. Q2 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] It's now my pleasure to turn the call over to Connor Wienberg, Vice President, Capital Markets and Investor Relations. Connor, please go ahead.

Connor Wienberg: Good morning. Thank you for joining us for the Second Quarter 2026 Life Time Group Holdings Earnings Conference Call. With me today are Bahram Akradi, Founder, Chairman and CEO; and Erik Weaver, Executive Vice President and CFO. During the call, we will make forward-looking statements, which involve a number of risks and uncertainties that may cause actual results to differ materially from those forward-looking statements made today. There's a comprehensive discussion of risk factors in the company's SEC filings, which you are encouraged to review. The company will also discuss certain non-GAAP financial measures, including adjusted net income, adjusted EBITDA, adjusted diluted EPS, net debt to adjusted EBITDA or what we refer to as net debt leverage ratio and free cash flow. This information, along with the reconciliations to the most directly comparable GAAP measures are included when applicable, in the company's earnings release issued this morning, our 8-K filed with the SEC and on the Investor Relations section of our website. With that, I will turn the call over to Erik.

Erik Weaver: Thank you, Connor, and good morning, everyone. We appreciate you joining us for our Q2 business and financial update. Please note this morning, we posted an earnings supplement on our Investor Relations website, which includes additional detail on our membership mix and comparable center revenue. Starting with our second quarter revenue. Total revenue increased 13.7% to $866 million, driven by continued strength in performance across our clubs, including higher dues revenue and strong utilization of our in-center businesses. Comparable center revenue grew 9.1%. This was above our expectations, driven by an outperformance in our membership acquisition and in-center business performance. As outlined in our earnings supplement, there are 4 components of our comparable center revenue growth. Improved membership mix contributed 3.1% growth. Price contributed 2.9% growth. In-center businesses contributed 2.9% growth, largely driven by double-digit year-over-year growth in dynamic personal training and Life Spa. And volume contributed 0.2% to comparable center growth. As a result of our Q2 performance, we have raised our full year comparable center revenue guidance to 7.9% to 8.3%, up from 6.9% to 7.5%. Average monthly dues were $245, up approximately 12.3% year-over-year, and average revenue per center membership was $993, up 11.8% year-over-year. Growth in average dues was driven primarily by positive membership mix trends and execution of our pricing strategy. We ended the quarter with approximately 860,000 center memberships, which reflects 1.2% year-over-year growth. As we've discussed on past calls, we have been managing our membership mix. Part of our strategy has been to limit certain qualified memberships, specifically those administered by third-party medical insurance providers. We refer to these as qualified medical memberships. This strategy continued in the second quarter. Qualified medical memberships declined by approximately 20,600, down 18.9% year-over-year. All other memberships grew by approximately 30,900, up 4.2% year-over-year. Our strategy is working as reflected in our 13.3% growth in total dues revenue year-over-year. We expect total center membership growth of 1% to 1.5% in the third quarter and 2% to 3% in the fourth quarter. Excluding qualified medical memberships, we expect center membership growth of 4% to 5% in both the third and fourth quarters. Moving on to net income. For the quarter, net income was $101.4 million, an increase of 40.6% year-over-year. Second quarter net income included approximately $8.5 million of net tax-affected items excluded from adjusted net income, primarily consisting of share-based compensation. Net income in the prior year included tax-affected net cash proceeds of $9.3 million received from employee retention credits under the CARES Act, partially offset by a tax-affected net loss of $9 million on a sale-leaseback transaction. Adjusted net income, which excludes the tax-affected impact of these items, was $109.8 million, up 30.6% year-over-year. Adjusted EBITDA was $246.5 million, an increase of 16.8% over the prior year quarter, and our adjusted EBITDA margin improved by 80 basis points to 28.5%. As noted in our earnings release, we increased our full year 2026 revenue, net income and adjusted EBITDA guidance. We also increased the midpoint of our full year adjusted EBITDA margin guidance to 28.2%. Our updated guidance includes the impact of 7 clubs scheduled to open in the fourth quarter and the associated preopening expenses and early operating ramp impact on margin. Net cash provided by operating activities increased to $209.6 million, approximately 7.1% higher compared to the prior year quarter. Total capital expenditures were $263.3 million, up 18.6% from the prior year, reflecting construction activity in support of our new club openings for 2026 as well as the construction on clubs planned for 2027. As of today, we have opened 7 of the 14 clubs scheduled to open this year. The remaining 7 clubs are expected to open in the fourth quarter. We still expect 12 to 14 new clubs in 2027. 10 of these clubs are already under construction. In April, we closed on sale-leaseback transactions that generated approximately $200 million of sale-leaseback proceeds, and we expect to complete approximately $400 million for the full year, supporting our ongoing focus on generating annual positive free cash flow. With that, I will now pass the call to Bahram.

Bahram Akradi: Thank you, Erik. Good morning, everyone, and thank you to our teams across the company for another outstanding quarter. Much like last quarter, we continue to see strong performance across all aspects of our business. Demand has been strong from our existing members as well as our new members. At the core of our performance is our intense focus on delivering exceptional experiences for our members. We plan to continue this strategy by delivering new desirable programs and services with the highest level of attention and care. For example, we have accelerated the rollout of CTR and Hybrid XT, our 2 newest group training formats. CTR is our large group Pilates reformer class. This class blends performance-based training with the precision and the control of reformer movement. Hybrid XT combines conditioning and strength training for real-world and competition-ready performance and is paired with our LT Games hybrid athlete competition. We are seeing incredible demand from our members for these classes. Our balance sheet and cash flow also remain exceptionally strong with the sale leasebacks completed this quarter and an additional $200 million of proceeds expected by end of the year, we expect to deliver positive free cash flow while achieving all of our revenue and adjusted EBITDA growth targets. We are currently on track to open 14 new clubs in 2026, the high end of our initial range, and we continue to see an incredibly strong pipeline of opportunities ahead. Overall, we feel very good about where we are and the trajectory of our business. We look forward to your questions.

Operator: Our first question is coming from Arpine Kocharyan from UBS.

Arpine Kocharyan: So really solid set of results this morning. And it's not every day you look at results and you say, actually, I have very few questions. But I do have 2. First, your guidance upside for the year is flowing through at a nice 55%. So you raised revenue by about $28 million, and that's raising EBITDA by $15 million. And we're now looking at 14 club openings this year from 12 to 14 before. I know it's difficult to talk about 2027 given everything that's going on in the world. But as we think about the ramp-up of these large-scale clubs as we get into next year, anything you would like to share on revenue per member dynamics to kind of help us better understand the opportunity as it relates to actual ramp and also flow-through for next year? Then I have a quick follow-up.

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

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

Erik Weaver: Yes. So again, without -- this is Erik, giving numbers into next year, I think when we think about sustainability of that number, you're absolutely right. That number increased from 2.3% to 2.9%. And it really comes down to us continuing to deliver on the experience, right? And so we've seen excellent engagement in our in-centers. We've seen it across DPT and Spa. And so to the extent that we continue to deliver on that experience, we expect the financial performance will follow.

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

Operator: Our next question is coming from John Heinbockel from Guggenheim Partners.

John Heinbockel: Bahram, I wanted to follow-up on that. Can you talk about the penetration from your members in things like DPT and Spas, right? Because I think the penetration is still pretty low, right? DPT, I think, right, is still in the single digits. And you can talk about awareness, right? So the penetration and then also the awareness, right? Because I think you have not wanted to hard sell members on these services, you wanted to happen organically. So is that awareness now picking up meaningfully?

Bahram Akradi: Yes. I don't believe that you can sit there and say that penetration of the personal training is low. It's been pretty consistent for years and years and years. Our clubs are realistically 50% training exercise, 50% all other things. So the social aspects of the business, which we are stepping on sort of aggressively right now, the family, the kids, the sports. So the personal training really applies to 50%, 60% of our customers. And that 50%, 60% -- so the number is like you say, okay, we have a 7% penetration at a particular month. We have a 10%, 11%, 12% penetration, when you look at the larger window throughout in a yearly basis. That number is actually double the number of people, who are working out in our clubs for -- come to our clubs for exercise, for lifting, for getting training. So I don't think the number is like drastically low. The team does a phenomenal job. We have branded DPT masterfully over the last 4 or 5 years. We are getting productivity that this company has never seen from the personal trainer. We have more successful trainers than we've ever had. The reputation of the business is that this is the best place for them to come and make the most money and have been in the most professional environment. So we have significant amounts of qualified applicants. So I trust that our team will continue pathways. We also have to deliver additional programming. So part of the success of last year was dynamic stretch still growing, Dynamic nutrition still growing. So these things will lend to one another. We have other things we're working on right now, which I don't want to discuss that would also bring in another set of customers and then they can expand their work. It's a constant work. Results are really, really good. And I expect the team to continue to grow that percentage.

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

John Heinbockel: Okay. And then my follow-up, just maybe as you now get to 14 openings a year, maybe talk about gating factors on expansion, right? Because I think lots of landlords, right, [ mall ] and otherwise want you in their locations. So the real estate opportunities are there. Maybe more from a people standpoint, where do you think you're not comfortable going beyond just in terms of executing the experience?

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

Operator: Our next question is coming from Randy Konik from Jefferies.

Randal Konik: I guess a question for Erik. You have, I think, a lot of the openings weighting to the fourth quarter. There's got to be some kind of opening -- the preopening kind of expenses impacting kind of weighing on the numbers, even though the numbers are much better than expected. So maybe kind of give us some perspective there on how much of an impact that's been. And then when you think about next year, just not giving us a number of openings, what have you, would you expect a change in cadence on when you open clubs next year versus this year? Just curious just because it moves the numbers around a little bit.

Erik Weaver: Yes. I mean there certainly is an impact on margin as you think about those clubs opening later in the year. You've got 7 of them that are going to open up in Q4. So whether it's 30, 40 -- there's a little bit of an impact there as we know. But we've said for next year, we're targeting 12 to 14 as well. The timing of those obviously are not all announced yet. You may have a little bit of that in the back half of the year. But again, as you've seen from our increase in our overall margin, even this year, obviously, we've increased that. And so we've been able to absorb that. But it does have a small impact as we open those in the back half of the year.

Randal Konik: Got it. And then I guess a follow-up back to you would be, last quarter, I think the big unlock was the idea of reaching this inflection point in cash flow such that you could self-fund growth with optionality around sale leasebacks if wanting to. Just when you think about that target year, what would change to kind of -- because these numbers keep coming in better than expected. So I'm assuming the ramps are coming and also starting to ramp a little bit better than expected as well. Anything that would kind of change to kind of get that number or that year kind of pulled forward a little bit? And just remind us how you're thinking about utilizing that optionality in not next year or beyond, but like the next 3 to 5 years from now as you kind of unlock all that cash flow to either do more units or buy back more stock? Or just kind of give us some, again, parameters on how you're thinking long term on the business?

Bahram Akradi: I'll take this. This is Bahram. We are going to stay disciplined to deliver what we say we do. We've committed to doing $400 million of sale leaseback this year. So we're going to first and foremost deliver that. As we get into strategies for next year, you're absolutely correct. Our cash flow is increasing each year nicely. We have more optionality than we have ever had. That's the way I have always wanted to lead to get the company financially in a position where we have a significant number of options and flexibility on managing through great times, managing through bad times. And so that requires having super, super strong fundamentals on your balance sheet. And we are there now. We have all kinds of options in front of us. And we're going to be more clearly focused on our WACC, our weighted average cost of capital and our ROIC and with a clear focus on taking the capital that is afforded to us by shareholders and debt structures and make sure we provide great return to our investors by putting those in the right places. We are examining all different types of options for the future years. And I think you are correct to have that question, but I would probably expand on the strategy for that towards end of the year or early next year, if we choose to change anything because it definitely delivers a better result for our shareholders. But right now, we're staying on course and just evaluating the options.

Operator: Our next question is coming from Molly Baum from Morgan Stanley.

Molly Baum: Maybe shifting gears a little bit to talk about MIORA. Can you give an update on how you're thinking about the white space opportunity? And can you maybe frame the revenue or the EBITDA contribution that you're seeing from the mature locations you have open right now?

Bahram Akradi: Yes. Great question, not a great answer for you right now. So it is in incubation, we have 6 or 7 locations that we are working. I have been adamant with the team that we are not going to add additional locations until we deliver what I would consider to be a perfect customer journey experience. And we do have some challenges with the technology and some of the processes around that. So we are kind of working around those challenges. Our full intention is to roll out MIORA extremely robustly. But what I believe we need to do is we need to perfect the model and then roll out extremely fast and aggressively once we have a model that doesn't -- our clubs when we open, they open right now with a wait list, they open contribution margin positive in the second month, the third month. I mean, everything is working because we have mastered the execution of a club opening. We have some work to do with MIORA. However, I am the most convinced that it will be absolutely a massive growth opportunity. We can grow really, really fast as soon as we fine-tune these final little touch points that we have to get corrected. So numbers right now on MIORA, the 6 or 7 locations are just not material. It's really working on the customer journey.

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

Bahram Akradi: Yes. We're working on it. We have great partners. We have massive, massive companies, Fortune 50 companies in the country that we have great relationships with. There is a significant benefit to a certain portion of the population to absolutely love this program. We are working on the details of not doing it or not doing it. Our partners want to continue on. We want to be good partners and do some, but we have to put in all the flexibilities in it so we can absolutely control the experiences in the clubs so that the number of certain type of memberships doesn't overtake the others. Some clubs don't -- cannot afford to have any programming around that. So we are basically rolling out a strategy with this. The discussions are going extremely well. We don't expect anything negative to happen at this point other than we will gradually have a lower percentage of our membership being qualified membership. It will continually go down as a percentage of our total membership and become less and less significant to the point it wouldn't be really worth our time to discuss with you guys or you guys with us. But we do love the population in our clubs in certain clubs, I think it's just a really nice program to provide when we have the capacity and they don't interfere with the bigger opportunity in the club.

Erik Weaver: Yes. And I think that's key. If you remember, these memberships have restricted hours. So in some clubs, it's a great way to fill some of that off-peak time.

Bahram Akradi: And in some locations, we just simply don't have really the ability to provide them. I mean none of the new clubs are opening with them. So you can just feel and some of the open clubs, we don't have any more direct medical program available unless they are choosing to go to a full upgrade with it. So we will manage this. It just won't be a significant piece of what's going to drive the business up or down.

Operator: Next question is coming from Anthony Bonadio from Wells Fargo.

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

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

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

Bahram Akradi: Great question. So LT Games and Hybrid XT are sort of a ying and a yang. Hybrid XT is today, the sort of the current big driver of people wanting to come to that -- do that type of a hybrid training. So the responsible thing to do, as we have always mentioned, these clubs were designed from day 1 to have the flexibility of adaptation. And so we can roll out the programs that the customers are seeking at that moment in time. And LT Games is basically a very, very, very defined experience, very accurately measurable. It's -- I have a big vision for what LT Games can do for the company on its own and to sort of bringing the type of customer, who wants to do that athletic training into Life Time to do hybrid XP. It's sort of a thing that goes together. Ultimately, LT Games has the potential of being in a spectator competition. It's not tomorrow, it's not next year, it's going to take years for it to achieve to that, but that's the vision. And so those are the way we're going to drive those. CTR is rolling out as fast as we can roll it out. And every class we put on ends up being waitlisted. So we are rolling as fast as we can. We're spending a little more money. We're investing more growth capital into these initiatives in our clubs because they are working extremely well. So that's where we're deploying some additional capital to capture these growth opportunities. So hopefully, that answers your question.

Operator: Our next question is coming from Ben Chaiken from Mizuho Securities.

Benjamin Chaiken: This is Weili Chen on for Ben.

Weili Chen: We're wondering if you could go back to kind of clarifying your churn expectations for the qualified medical membership in 2027 and as well as the opportunities to convert and maybe like share some data points on the churn year-to-date and then any of the conversion into the standard membership?

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

Erik Weaver: Yes. I mean by the end of the year, it's 3%. But it's a little too early to talk about next year. But it will drop down.

Bahram Akradi: It will go from the 3% to below that.

Erik Weaver: Here's what I would tell you. The large decreases we're seeing this year is we've talked about that deemphasis of that in the prior year. So we're lapping a couple of quarters now that we're lapping that dynamic. So that's why we're giving this guidance here last quarter, this quarter and then probably in Q4. So again, we're kind of lapping those 4 quarters. As we get into '27, with some of the things Bahram was talking about, we'll provide obviously more information on that. But again, it's going to be less than 3% of our total.

Bahram Akradi: Total dues revenue. If we ever change anything, I mean the dues will go up. But again, it's not going to be significant. So it just -- so I think we really need to focus you guys on the -- where the big drivers will be on the business.

Operator: Our next question is coming from Eric Lauriers from Craig-Hallum.

Eric Des Lauriers: Congrats again on another impressive quarter. As you look at the new club opportunities in '27 and beyond, obviously, there's lots of white space kind of across the board. But how should we be thinking about sort of larger versus smaller footprint, greenfield versus retrofit and urban versus suburban? Can you just kind of give us a sense of either the changing opportunities there or your evolving priorities?

Bahram Akradi: Yes. I can't tell you -- I would never want to tell you guys, we're going to do 7 of these and 7 of those or 8 of these and 6 of those. I think the way to think about it is that these -- the pipeline is driven by both all the sites that we go find to buy, purchase a piece of land. And right now, we're in a position where we can actually pull the trigger, buy some parcels of land a bit earlier to create a land bank so we can have those ground-up opportunities laid out a little more clearly. But then the other developments, they are just -- the frothy of it right now is such that it's quite a bit. So I can't give you a direction to say it's going to be more of these over the time or more of those, but definitely more urban locations coming as a percentage of our whole portfolio. With New York, Miami, there's kind of a big markets, growth markets with sort of a big pipeline of developments. But the question is what year they land in. Those are hard to give you guys because the larger the building, the larger the project, the larger the apartment building, the longer is the time for them to be developed and constructed and built and delivered. So we are a very, very good spot to delivering the total amount of square footage that we want to grow per year. And as we have gone through this, it really doesn't matter if it's one type or the other because the returns after the sale leaseback or from the rentals are always the same. They're in a 30-plus range IRR range, which is fantastic.

Eric Des Lauriers: That's very helpful. I think we got some kind of long-term direction in there. That's very helpful. So Bahram, you've mentioned a number of times sort of how robust the demand is for new clubs right now. Historically, I mean, at least some of your clubs have been offered attractive rent rates as developers look to kind of bring you in as an anchor tenant. Is this dynamic still at play? And if so, do you think that sort of broadly as you look out a number of years that rent rates will generally improve? Or is -- are these kind of opportunities more limited to one-offs that we shouldn't necessarily extrapolate a broad trend as we look out a couple of years?

Bahram Akradi: We're always positioning our clubs at a significantly attractive rent per square foot, either through the way we build and we do the sale leaseback, the rent per square foot is significantly below what it would be naturally in the market or when we go into development, we actually put in more dollars as a tenant -- as a leasehold improvement than we would absolutely have to because we protect that lower rent for years to come. So we will continue to negotiate great rates. Real estate goes through frenzies. There's times where there's abundance of certain type of real estate in a market and the landlords are more eager to negotiate and do deals. Sometimes they are absolutely desperate because nothing else can be the catalyst for the filling up the space and our product does or brand does. So -- but across the board, I expect our rent percentages stay consistent to what Erik has kind of mapped out to you guys around that 12%...

Operator: Our next question today is coming from Chris Woronka from Deutsche Bank.

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

Bahram Akradi: Yes. We're all over it. We're studying it, working on it, testing it every single day. I was on the phone last night for 2 hours working on half a dozen different peptides and where they're at, what they do and who makes them and what are the pros and cons with them. And -- it's definitely -- most definitely a space that is going to continue to grow. It's going to grow substantially. We're going to play a big role in it within our facilities through MIORA and different forms to rolling that out. We have to be cautious today because it's sort of a wild, wild west with the pharmacies, the compound pharmacies who make these. And so the science is in many cases, well documented. In some places, it's a little more sort of a believe me kind of a thing. I don't know that there is as much human research, widespread human case studies with them, but the science is sound. So we are on the cutting edge of studying it. I just caution everyone that it is very, very new, and you have to be very, very thoughtful on how you roll this out. And we are. We are -- we have Jim LaValle, who is our Chief Science Officer and one of the biggest speakers in this category across the country. We're following the science and administering some of these things right now in our current 7 locations, MIORA locations. So -- but it is going to be a massive, massive growth space because the science is actually pretty sound on some of the peptides are like solid in terms of the fact that they would work.

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

Bahram Akradi: It's definitely not where our head is at. Our head is the technology at Life Time needs to be fully directed on delivering consistent to our clubs, an extraordinary experiences. And we have a long ways to go to make sure we can keep up with the evolution in technology and the AI. And so the customer can achieve what they want to achieve in our clubs, buy what they want to buy is to get the service they want as fast and as easy as they can. So this is all on me. I launched the Life Time digital platform a couple of years back. I wanted to see that opportunity. We spent some time. We studied. I talked to some experts. And then my takeaway based on those studies is that the digital subscriptions have such a significant attrition rate that they virtually don't make sense. Now we didn't lose any money because we didn't invest money in the customer acquisition, but we also couldn't see the customer coming back on a regular basis. So instead of diluting our technology team's focus on trying to do that and divide it and then try to work on the customer, we decided early this year, 7, 8, 9 months ago to put all of the focus on delivering the customer. The number of people on the digital platform are still growing naturally, but those customers are able to sign up anybody for free, can sign up on Life Time app and get all those features. We're just not doing 2 different versions.

Operator: Our next question today is coming from Owen Rickert from Northland Capital Markets.

Owen Rickert: On CTR and Hybrid XT, what's the current penetration across the center base as of right now? And how much more room is there to add them to additional clubs?

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

Erik Weaver: And Brian, you mentioned earlier, there's a nice waitlist for CTR, which is absolutely true. CTR also has the highest fill rate across our programming. So it's a very, very popular program.

Owen Rickert: Awesome. Glad to hear, guys. And then secondly for me, you had some repurchase activity during the quarter at a pretty solid price relative to where we are today. I guess given the stock has moved since then, how are you thinking about the pace and prioritization of the remaining capacity.

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

Owen Rickert: Fair enough. I thought I'd get...

Operator: Next question is coming from Logan Reich from RBC Capital Markets.

Logan Reich: Congrats on the really solid results. My question was on the in-center acceleration. It's been decelerating a few quarters now and some really impressive numbers in Q2. I guess like what is the key driver of that acceleration? I know you called out dynamic personal training as a driver, but anything else to call out maybe on the cafe. And then just within the sort of membership in-center spending, like is that coming from newer members or existing members? Or is that coming from higher frequency or higher penetration? Just any sort of color you guys can give on what's driving that acceleration quarter-over-quarter would be much appreciated.

Erik Weaver: Yes. I mean it's really coming from both new and ramping. And when you ask about what's driving that in-center, again, it goes back to delivering on our brand and that experience. And so we talked about a couple of the big drivers being DPT and Spa, okay? So that strategy is all around engagement. It's all around experience. And so what we've really focused on is the casting in those businesses to meet the demand. And we're hiring the right number of trainers, the right trainers, the right technicians, et cetera. And so our expectation is that we have the right number, they're delivering on the experience, and that's driving the performance.

Logan Reich: Got it. That's helpful. And then just a follow-up on CTR and Hybrid XT. Just confirming those are included in the membership. So that's not an additional in-center portion of the business. And then like, I guess, just trying to think about -- sorry, go ahead.

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

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

Bahram Akradi: Look, I think the way we have transitioned the company over the last 5 years is the new clubs are coming in at a much higher rack rate right off the get-go. And they are designed for significantly fewer memberships, 3,000 to 4,000 membership units. And they -- at much higher dues with the most robust experiences and programming. Those models are working exceptionally well, all of them. And then the -- on the older clubs has been basically transitioning from the older price point to a newer price point and adding programming and sort of rolling that out in the market by market, location by location as it makes sense. So in some clubs, you add programming and it would be part of an upgrade signature buy. It just those are in the older clubs. And all new clubs, all these programs are built in as one bundled in. But when you look at that compared to somebody trying to buy those services a la carte, one program in some studio, the value proposition at Life Time becomes so incredible that that's why the larger format clubs, new clubs put all these programs in it are hugely successful.

Operator: Next question is coming from Andrew Chasanoff from Oppenheimer.

Andrew Chasanoff: Congrats on the quarter. I just want to build on the in-center offering conversation. Beyond DPT, you've been discussing the momentum building in CTR with waitlist forming pretty quickly. Can you give us a sense of how you're thinking about the pathway from CTR into the broader Pilates business, which I know has historically been more of a private, semi-private higher ticket offering? And then just as we're starting to think about the scale of the other in-center offerings, Cafe, Spa, MIORA, as they start to scale as DPT and CTR have, how should we be thinking about the margin profiles? And if any of them are structurally higher or lower that we should be thinking about the mix as they scale?

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

Andrew Chasanoff: Yes, that's very helpful.

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

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

Bahram Akradi: Yes. Look, I think our targeted overall company EBITDA margin that we're giving you is the way I would try to do my job as mapping out what a club is going to deliver in total revenue and contribution margin, EBITDA margin. The fluctuation in the cafe and the spa margins have been de minimis in terms of overall numbers of the company. They haven't been significant because our focus for decades has been that spa and the cafe are what makes the experience become a complete athletic country club. You can get a massage, you can get your hair done, you can get your nails done, you can get a nice meal. There are significant opportunities in the revenue growth on both categories, and we are focused on fine-tuning those and make those be additional growth drivers in the upcoming years in our overall revenue growth and in-center growth. And with those, we are working the details and the processes right now, perfecting those so that not only we get the revenue, we also get the appropriate margin to come with it. Very, very good opportunity ahead to kind of seize some of what looks like a capturable opportunity to help growing the in-center business and in-center margins.

Operator: We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

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

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