Life Time Group Holdings Inc "Takeaways from CFO Meeting: UBS Virtual..."

Research evidence excerpt

Life Time Group Holdings Inc "Takeaways from CFO Meeting: UBS Virtual..."

that will further support demand for higher end wellness offering.

More affordable GLP-1 drugs and more widespread use of such drugs are a structural

tailwind for the fitness industry, in our view, bringing immediate urgency to

incorporating significant cardio and strength exercise in day-to-day routine to prevent

significant loss of muscle mass and bone density. UBS Biotech team estimates 1 in 10

adults today take the drug and that could go to 1 in 5 adults over the next 5 years.

Positive Mix Shift

LTH’s qualified members were down -14.9% in Q1 and they expect qualified members

perhaps down in that -11 to -15% on full year basis, while underlining membership is

growing at a healthy +4-5% range. LTH is guiding to total center membership growth of

+0.5% to +1% in Q2, around +1.5% in Q3 and +2-3% in Q4, with underlying

membership excluding qualified medical memberships growing +3.5% to +3.8% in Q2,

+4-5% in both Q3 and Q4. This is adding up to around +2-3% growth in line with

expectations. LTH continues looking at wait lists as a way to manage membership and

customer experience vs. a KPI in of itself. Instead of targeting 8k-10K members which

was the case historically, they now need 3.7-4.4k members to optimize revenue.

Management says this protects the premium customer experience. We note that the

near-term debate on LTH has been average member per center growth and whether

they can continue growing average center revenue per center membership and

ultimately impact on comparable center revenue. Given qualified medical memberships

stand at close to 84k-88k by FY'26 year end, we expect mix benefit - combined with

LTH's push to convert mix to more families which have lower churn - to continue to