Life Time Group Holdings Inc

1. Nature of Business and Basis of Presentation

Nature of Business

Life Time Group Holdings, Inc. (collectively with its direct and indirect subsidiaries, “Life Time,” “we,” “our,” or “the Company”) is a holding company incorporated in the state of Delaware. As a holding company, Life Time Group Holdings, Inc. does not have its own independent assets or business operations, and all of our assets and business operations are through Life Time, Inc. and its direct and indirect subsidiaries. We are primarily dedicated to providing premium health, fitness and wellness experiences at our athletic country club destinations and via our comprehensive digital platform and portfolio of iconic athletic events – all with the objective of inspiring healthier, happier lives. We design, build and operate our athletic country club destinations that are distinctive and large, multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment. As of December 31, 2024, we operated 179 centers in 31 states andone Canadian province.

Life Time Group Holdings, Inc. completed its initial public offering (“IPO”) in October 2021 and its common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “LTH.”

COVID-19 Impact

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic, the United States declared a National Public Health Emergency and we closed all of our centers based on orders and advisories from federal, state and local governmental authorities regarding COVID-19. We re-opened our first center on May 8, 2020 and continued to re-open our centers as state and local governmental authorities permitted.

Basis of Presentation

The consolidated financial statements include the accounts of Life Time Group Holdings, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

We account for all of our investments in unconsolidated subsidiaries using the equity method of accounting. We apply this method of accounting to our investments when we have the ability to exercise significant influence over the operating and financial policies of the investee. Our share of the investee’s earnings (losses) associated with our investments in unconsolidated subsidiaries is included in Equity in (loss) earnings of affiliates in our consolidated statements of operations. See “Other Assets” within Note 2 below for additional information regarding our investments in unconsolidated subsidiaries.

2. Summary of Significant Accounting Policies

Segment Reporting

We haveone operating segment andone reportable segment. Our segment derives revenues from customers by providing premium health, fitness and wellness experiences and products at our athletic country club destinations and via our comprehensive digital platform and portfolio of iconic athletic events – all with the objective of inspiring healthier, happier lives. We manage our business activities on a consolidated basis.

The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer (“CEO”). The CODM assesses performance for the segment and allocates resources based on consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets. Our CODM does not review segment assets at a different asset level and is regularly provided with only the consolidated expenses as noted on the face of the consolidated statements of operations.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In recording transactions and balances resulting from business operations, we use estimates based on the best information available. We revise the recorded estimates when better information is available, facts change or we can determine actual amounts. These revisions can affect our consolidated operating results.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance to expand annual and interim disclosure requirements for reportable segments, primarily through additional disclosures on segment expenses. We adopted the accounting guidance for this Annual Report on Form 10-K for the year ended December 31, 2024. This updated standard did not have a material impact on our financial statement disclosures.

New Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued guidance to enhance transparency of income tax disclosures. The updated guidance requires additional disclosures on income tax rate reconciliation and income taxes paid, among other things. We expect to adopt this accounting guidance for our Annual Report on Form 10-K for the year ended December 31, 2025. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

In November 2024, the FASB issued guidance that requires public entities to disclose the amounts of purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion, as applicable, included in each relevant expense caption presented in its income statement. We expect to adopt this accounting guidance for our Annual Report on Form 10-K for the year ended December 31, 2027. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the transaction price consideration that we expect to receive in exchange for those goods or services. We defer the revenue associated with any unsatisfied performance obligation until the obligation is satisfied (i.e., when control of the product is transferred to the customer or a service has been completed).

Center Revenue

Center revenue consists of center membership and digital membership dues, enrollment fees and revenue generated within a center, which we refer to as in-center revenue. In-center revenue includes fees for Dynamic Personal Training, aquatics and kids programming and other member services, as well as sales of products at our cafés, and sales of products and services offered at our spas and tennis and pickleball programs.

Revenue from product sales is generally recognized at the point of sale to the customer; however, revenue from our various service offerings received in advance of service delivery is deferred and subsequently recognized when the services are provided. Dynamic Personal Training revenue received in advance of training sessions, as well as the related sales commissions, are initially deferred and subsequently recognized when the sessions are delivered. Upon recognition, sales commissions associated with Dynamic Personal Training sessions are included in Center operations in our consolidated statements of operations. Throughout the estimated redemption period associated with prepaid sessions, we also recognize Dynamic Personal Training breakage revenue and the related commissions, using a method that is proportionate to the pattern of redemptions. We estimate breakage based on historical redemption patterns.

We may receive a one-time enrollment fee at the time a member joins. The enrollment fees are generally non-refundable after seven days. Enrollment fees and related direct expenses are deferred and recognized on a straight-line basis over an estimated average membership life, which is based on historical membership experience. If the direct expenses related to the enrollment fees exceed the enrollment fees for any center in a month, the amount of direct expenses in excess of the enrollment fees are expensed in the current period instead of deferred over the estimated average membership life.

Other Revenue

Other revenue includes revenue generated from our businesses outside of our centers, which are primarily media, athletic events and related services. Our media revenue includes our magazine, Experience Life®, and the related advertising revenue is recognized over the duration of the advertising placement. Our athletic events revenue includes endurance activities such as running and cycling, and our related services revenue includes revenue from our race registration and timing businesses. Athletic event revenue and race registration revenue is recognized upon the completion of the event. Other revenue also includes revenue generated from our digital memberships and our Life Time Work and Life Time Living locations.

For more information regarding revenue, see Note 6, Revenue.

Cash and Cash Equivalents

We classify all unrestricted cash accounts and highly liquid debt instruments purchased with original maturities of three months or less as cash and cash equivalents.

Restricted Cash and Cash Equivalents

Restricted cash is used for our self-insured workers’ compensation and general liabilities claims under our captive insurance policy.

Accounts Receivable

Accounts receivable is presented net of allowance for doubtful accounts. The allowance for doubtful accounts was $1.9 million and $1.6 million at December 31, 2024 and 2023, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value and are removed from the balance on a first-in-first-out basis. The reserve for obsolescence was approximately $1.2 million and $1.1 million at December 31, 2024 and 2023, respectively.

Property and Equipment

Property, equipment and leasehold improvements are recorded at cost. Improvements are capitalized while repair and maintenance costs are charged to operations when incurred.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the improvement. Accelerated depreciation methods are used for tax reporting purposes.

Site development capitalization commences when acquisition or development of a particular property is deemed probable by management. Should a specific project be subsequently deemed not viable, any capitalized costs related to that project are recognized as an impairment charge at the time of that determination. Upon completion of a project, site development costs are classified as property and depreciated over the useful life of the asset. We capitalize interest during the construction period of our centers and this capitalized interest is included in the cost of the building. Unpaid construction costs are included in Construction accounts payable on our consolidated balance sheets.

Business Combinations and Asset Acquisitions

We account for business combinations in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations” (“ASC 805”). ASC 805 requires the acquiring entity in a business combination to recognize all the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. The total consideration transferred in a business combination is allocated to the assets acquired and liabilities assumed, including amounts attributable to non-controlling interests, when applicable, based on their respective estimated fair values as of the date of acquisition. Goodwill recognized in a business combination represents the excess of consideration transferred over the estimated fair value of the net assets acquired in a business combination. Certain provisions within ASC 805 prescribe, among other things, the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration) and the exclusion of transaction and acquisition-related restructuring costs from acquisition accounting. For information on acquisitions during the year ended December 31, 2023 that we accounted for as business combinations, see Note 5, Goodwill and Intangibles.

When an acquisition does not meet the definition of a business combination because either: (i) substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset, or group of similar identified assets, or (ii) the acquired entity does not have an input and a substantive process that together significantly contribute to the ability to create outputs, we account for the acquisition as an asset acquisition. In an asset acquisition, goodwill is not recognized, but rather, any excess purchase consideration over the fair value of the net assets acquired is allocated on a relative fair value basis to the identifiable net assets as of the acquisition date and any direct acquisition-related transaction costs are capitalized as part of the purchase consideration. For information on the acquisitions that we completed during the years ended December 31, 2024 and 2023 that we accounted for as asset acquisitions, see Note 4, Property and Equipment.

Impairment of Long-Lived Assets

We test long-lived asset groups for impairment when events or circumstances indicate that the net book value of the asset group may not be recoverable. As it relates to our asset groups, we consider a history of consistent and significant operating losses, or the inability to recover net book value over the remaining useful life, to be our primary indicators of potential impairment. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows, which is generally at an individual asset group level. The determination of whether impairment has occurred is based on an estimate of undiscounted future cash flows directly related to that asset group, compared to the carrying value of the related assets. If an impairment has occurred, the amount of impairment recognized is determined by estimating the fair value of these assets and recording a loss if the carrying value is greater than the fair value.

As it relates to our site development projects, we test the carrying value of capitalized development costs associated with a particular project for impairment when we determine that all or a portion of the development project is no longer deemed viable. We generally recognize an impairment charge associated with a site development project or a portion of a site development project that we deem not viable in an amount equal to the related development costs that we previously capitalized.

During 2024, 2023, and 2022, we recognized impairment charges associated with all or a portion of certain site development projects that we deemed not viable. During 2023, we also recognized an impairment charge of $5.3 million related to the sale of an outparcel of land. Accordingly, we recognized impairment charges of $11.0 million, $14.5 million and $2.1 million associated with these long-lived assets during the years ended December 31, 2024, 2023 and 2022, respectively, which are included in Other operating expense (income) in our consolidated statements of operations.

Goodwill

We test goodwill for impairment on an annual basis, or more often if circumstances warrant, by estimating the fair value of the reporting unit to which the goodwill relates and comparing this fair value to the net book value of the reporting unit. Our policy is to test goodwill for impairment on October 1 of each year. If the fair value of a reporting unit is less than its carrying value, we reduce the carrying value accordingly and record a corresponding impairment loss. We havetwo reporting units: Centers and Corporate Businesses. At both December 31, 2024 and 2023, the total goodwill balance recognized on our consolidated balance sheets was $1,235.4 million, of which $1,233.1 million has been allocated to our Centers reporting unit and $2.3 million has been allocated to our Corporate Businesses reporting unit. At December 31, 2024, the estimated fair value of our reporting units were in excess of their carrying value.

Based upon our review and analysis, no goodwill impairments were deemed to have occurred during the years ended December 31, 2024, 2023, and 2022. For more information on goodwill, see Note 5, Goodwill and Intangibles.

Leases

We lease some of our centers, offices and other facilities, as well as other equipment. Excluding renewal options that are not reasonably certain to be exercised, our leases have remaining contractual terms that primarily range fromone year to 30 years. Most of the leases contain renewal options and escalation clauses, and certain of them include contingent rental payments, determined based on a percentage of center-specific revenue and/or other center-specific financial metrics over contractually specified levels. Our property leases require payment of real estate taxes, insurance and common area maintenance, in addition to rent. Our lease agreements do not contain any material residual value guarantees.

Lease Cost

Lease cost associated with operating leases and short-term leases is recognized on a straight-line basis from the date we take possession of the property through the end of the lease term. With the exception of leases containing a purchase option that we are reasonably certain to exercise, finance lease right-of-use assets are amortized on a straight-line basis over the shorter of the estimated useful life of the underlying assets or the lease term. Finance lease right-of-use assets associated with leases that do contain a purchase option that we are reasonably certain to exercise are amortized on a straight-line basis over the estimated useful life of the underlying assets. Interest associated with finance lease liabilities is recognized using the effective interest rate method. Variable lease payments not recognized in the measurement of operating and finance lease liabilities are expensed as incurred. For more information regarding lease cost included in our consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022, see Note 9, Leases.

Operating Lease Right-of-Use Assets and Liabilities

The measurement of each of our operating lease liabilities represents the present value of the remaining lease payments over the remaining lease term, discounted using an appropriate incremental borrowing rate. The measurement of each of our operating lease right-of-use assets represents the related operating lease liability measurement increased by, if applicable, prepaid rent, the fair value associated with the acquisition of a leasehold right and/or the fair value associated with the acquisition of a favorable lease, and decreased by, if applicable, lease incentives, impairment charges and/or the fair value associated with the acquisition of an unfavorable lease.

For more information regarding the operating lease right-of-use assets and liabilities that are recognized on our December 31, 2024 and 2023 consolidated balance sheets, see Note 9, Leases.

Finance Lease Right-of-Use Assets and Liabilities

The measurement of each of our finance lease right-of-use assets and liabilities represents the present value of the remaining lease payments associated with the arrangement over the remaining lease term, discounted using an appropriate incremental borrowing rate.

Finance lease right-of-use assets are included in Other assets on our consolidated balance sheets. The current and long-term portions of our finance lease liabilities are included in Accrued expenses and other current liabilities and Other liabilities, respectively, on our consolidated balance sheets. For more information regarding the finance lease right-of-use assets and liabilities that are recognized on our December 31, 2024 and 2023 consolidated balance sheets, see Note 9, Leases.

Sale-Leaseback Arrangements

We assess each of our sale-leaseback arrangements to determine whether a sale has occurred under ASC Topic 606: Revenue from Contracts with Customers (“ASC 606”), and we assess whether the classification of the lease and/or the payment terms associated with the renewal options preclude sale accounting under ASC 842, Leases (“ASC 842”). These assessments involve a determination of whether control of the underlying property has been transferred to the buyer. If we determine control of the underlying property has been transferred to the buyer, we account for the arrangement as a sale and leaseback transaction. If we determine control of the underlying property has not been transferred to the buyer, we account for the arrangement as a financing transaction. Since our adoption of ASC 842, we have accounted for each of our sale-leaseback arrangements as a sale and leaseback transaction.

For each sale-leaseback arrangement we have entered into with an unrelated third party since our adoption of ASC 842, the measurements associated with the gain or loss recognized on the sale and the lease-related right-of-use assets and liabilities have been adjusted for any off-market terms. These off-market adjustments are based on the difference between the sales price of the property and its fair value. When the sales price is less than the underlying property’s fair value, we recognize the difference as an increase to the sales price and as an increase in the operating lease right-of-use asset. When the sales price is greater than the underlying property’s fair value, we recognize the difference as a reduction to the sales price and as a financing obligation that is separate from the operating lease liability. We then allocate the payments due under the lease between those associated with the operating lease liability and those associated with the financing obligation, in a manner that results in a zero balance at the end of the initial lease term for both liabilities. The financing obligation is amortized using the effective interest method, and interest is calculated using the same incremental borrowing rate as that used for purposes of measuring the related operating lease liability.

We account for sale-leaseback arrangements with related parties at their contractually stated terms. Accordingly, under these arrangements, the measurements associated with the gain or loss recognized on the sale and the lease-related right-of-use assets and liabilities are not adjusted for off-market terms.

The determination of the fair value of the property related to our sale-leaseback arrangements is subjective and requires estimates, including the use of multiple valuation techniques and uncertain inputs, such as market price per square foot and assumed capitalization rates or the replacement cost of the assets, where applicable. Where real estate valuation expertise is required, we obtain independent third-party appraisals to determine the fair value of the underlying asset. While determining fair value requires a variety of input assumptions and judgment, we believe our estimates of fair value are reasonable.

For more information regarding sale-leaseback transactions that were consummated during the years ended December 31, 2024, 2023 and 2022, see Note 9, Leases.

Build-to-Suit Lease Arrangements

For some of our centers, we enter into build-to-suit lease arrangements related to the design and construction of a new center on the property. We evaluate build-to-suit lease arrangements by first determining whether or not we control the underlying asset being constructed prior to the commencement date of the lease. If we determine that we do not control the underlying asset during the construction period, we account for the arrangement as either an operating lease or a finance lease. If we determine that we control the underlying asset during the construction period, we initially account for the arrangement as a financing transaction. For each of our build-to-suit arrangements, we have determined that we either: (1) do not control the underlying asset currently under construction as of December 31, 2024; or (2) we did not control the underlying constructed asset prior to the commencement date of the lease. Accordingly, we are accounting for each of our build-to-suit arrangements as an operating lease.

Intangible Assets

Intangible assets at December 31, 2024 and 2023 include a trade name anda facility license. Intangible assets at December 31, 2023 also include customer relationships. For more information on intangible assets, see Note 5, Goodwill and Intangibles.

Indefinite-Lived Intangible Assets

Intangible assets that are determined to have an indefinite useful life, such as trade names, are not amortized but instead tested for impairment at least annually. Our policy is to test indefinite-lived intangible assets for impairment on October 1 of each year. We also evaluate these assets for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of an indefinite-lived intangible asset below its carrying amount. If such a review should indicate that the carrying amount of indefinite-lived intangible assets is not recoverable, we reduce the carrying amount of such assets to fair value. Based upon our review and analysis, no indefinite-lived intangible asset impairments were deemed to have occurred during any of the periods presented.

Finite-Lived Intangible Assets

Finite-lived intangible assets are stated at cost, net of accumulated amortization, which is recorded on a straight-line or accelerated basis over the life of the asset. We review finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If such a review should indicate that the carrying amount of finite-lived intangible assets is not recoverable, we reduce the carrying amount of such assets to fair value. Based upon our review and analysis, no finite-lived intangible asset impairments were deemed to have occurred during any of the periods presented.

Other Assets

Other assets at December 31, 2024 and 2023 primarily consists of our executive nonqualified plan assets, our investments in unconsolidated subsidiaries, rent deposits and unamortized debt issuance costs associated with the revolving portion of our senior secured credit facility.

Investments in Unconsolidated Subsidiaries

In 1999, we, together with two unrelated organizations, formed an Illinois limited liability company named Bloomingdale LIFE TIME Fitness L.L.C. (“Bloomingdale LLC”) for the purpose of constructing and operating a center in Bloomingdale, Illinois. We currently account for our investment in Bloomingdale LLC using the equity method of accounting.

In December 2019, we formed both a Delaware limited liability company named Dallas-Montfort Holdings, LLC (“D-M Holdings”) and a Delaware limited liability company named Dallas-Montfort Property, LLC, which is a wholly owned subsidiary of D-M Holdings. Also in December 2019, we and an unrelated organization each became a holder of 50% of the membership interests in D-M Holdings in exchange for a cash capital contribution. These capital contributions were made in connection with the acquisition of a property in Texas. There was no operating activity associated with D-M Holdings during the years ended December 31, 2024, 2023 and 2022. We currently account for our investment in D-M Holdings using the equity method of accounting.

In addition to our investments in Bloomingdale LLC and D-M Holdings, we also have investments in various other unconsolidated subsidiaries. The amounts we have currently invested in each of these unconsolidated subsidiaries is not material. We currently account for each of these investments using the equity method of accounting.

Debt Discounts and Issuance Costs

Debt discounts and issuance costs are amortized over the periods of the related debt financing. We recognize and present issuance costs associated with revolving debt arrangements as an asset and include the unamortized costs in Other assets on our consolidated balance sheets. We recognize and present unamortized discounts and issuance costs associated with non-revolving debt as a deduction from the face amount of related indebtedness. For more information on debt discounts and issuance costs, see Note 8, Debt.

Fair Value Measurements

The accounting guidance establishes a framework for measuring fair value and expanded disclosures about fair value measurements. The guidance applies to all assets and liabilities that are measured and reported on a fair value basis. This enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The guidance requires that each asset and liability carried at fair value be classified into one of the following categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The carrying amounts related to cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, income tax receivable, accounts payable and accrued liabilities approximate fair value.

Fair Value Measurements on a Recurring Basis. We had no material remeasurements of such assets or liabilities to fair value during the years ended December 31, 2024 and 2023.

Financial Assets and Liabilities. At December 31, 2024 and December 31, 2023, the carrying value and fair value of our outstanding long-term debt was as follows:

(1) Excludes unamortized debt discounts and issuance costs.

The fair value of our debt is based on the amount of future cash flows discounted using rates we would currently be able to realize for similar instruments of comparable maturity. If our long-term debt were recorded at fair value, it would be classified as Level 2 in the fair value hierarchy. For more information regarding our debt, see Note 8, Debt.

Fair Value Measurements on a Nonrecurring Basis. Assets and liabilities that are measured at fair value on a nonrecurring basis primarily relate to our goodwill, intangible assets and other long-lived assets, which are remeasured when the derived fair value is below carrying value on our consolidated balance sheets. For these assets, we do not periodically adjust carrying value to fair value except in the event of impairment. If we determine that impairment has occurred, the carrying value of the asset would be reduced to fair value and the difference would be recorded as a loss within operating income in our consolidated statements of operations. For information regarding impairment charges associated with our long-lived assets that we recognized during each of the periods presented, see the Impairment of Long-Lived Assets section within this footnote.

Marketing Expenses

Marketing expenses, which are included in General, administrative and marketing in our consolidated statements of operations, primarily consist of marketing department costs and media and advertising costs to support and grow our Center membership levels, in-center businesses, new center openings and our ancillary businesses. Marketing expenses are recognized as incurred. Marketing expenses for the years ended December 31, 2024, 2023 and 2022 were $35.1 million, $32.9 million and $39.3 million, respectively.

Litigation

We are currently engaged in a material litigation matter with an insurance provider involving a complaint we filed seeking declaratory relief and damages associated with a property/business interruption insurance claim. We are also engaged in various other legal matters incidental to the normal course of business. Due to their nature, such legal proceedings involve inherent uncertainties, including but not limited to court rulings, negotiations between affected parties and governmental intervention. We establish reserves for matters that are probable and estimable in amounts we believe are adequate to cover reasonable adverse outcomes. A gain contingency is an uncertain situation that will be resolved in the future, possibly resulting in a gain. We do not allow the recognition of a gain contingency prior to settlement of the underlying event. If we were to have a gain contingency, we would disclose it in the notes to the financial statements. Based upon the information available to us and discussions with legal counsel, it is our opinion that the outcome of the various legal actions and claims that are incidental to our business will not have a material adverse impact on our consolidated financial position, results of operations or cash flows. Such matters are subject to many uncertainties, and the outcomes of individual matters are not predictable with assurance. For more information on our legal matters, see Note 12, Commitments and Contingencies.

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would decrease the valuation allowance, which would reduce the provision for income taxes.

Our income tax returns are periodically audited by U.S. federal, state and local and Canadian tax authorities. At any given time, multiple tax years may be subject to audit by various tax authorities. In evaluating the exposures associated withour various tax filing positions, we may record a liability for such exposures. We recognize, measure, present and disclose a liability for unrecognized tax benefits related to certain tax positions that we have taken or expect to take in our income tax returns. We recognize a tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. We adjust our liability for unrecognized tax benefits in the period in which an uncertain tax position is effectively settled, that statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available. Our liability for unrecognized tax benefits, including penalties and interest, is included in Other liabilities on our consolidated balance sheets. We recognize adjustments to our liability for unrecognized tax benefits, including penalties and interest, within Provision for (benefit from) income taxes in our consolidated statements of operations. For more information on income taxes, see Note 7, Income Taxes.

Share-Based Compensation

We account for share-based compensation related to instruments issued to employees and non-employees in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). We recognize compensation expense associated with each share-based award over the requisite service period based on the estimated grant-date fair value of the award. We estimate the fair value of stock options to purchase shares of the Company’s common stock using the Black-Scholes option pricing model.

This pricing model requires management to make assumptions and to apply judgment to determine the fair value of equity awards. These assumptions and judgments include the expected term of stock options, expected stock price volatility and future stock option exercise behaviors. Share-based compensation expense related to restricted stock units and performance stock unitsis recorded based on the market value of our common stock on the date of grant. We account for share-based payment awards that represent a fixed dollar amount that, if payable, will be settled in a variable number of shares of the Company’s common stock as liability-classified awards. We have elected to account for forfeitures as they occur. For more information on share-based compensation, see Note 10, Stockholders’ Equity.

Income (Loss) per Share

Basic income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. The numerator in the diluted income (loss) per share calculation is derived by adding the effect of assumed common stock conversions to income (loss) available to common stockholders. The denominator in the diluted income (loss) per share calculation is derived by adding shares of common stock deemed to be potentially dilutive to the weighted average number of shares of common stock outstanding during the period. Potentially dilutive securities that are subject to performance or market conditions are considered contingently issuable shares for purposes of calculating diluted income (loss) per share. Accordingly, these contingently issuable shares are excluded from the computation of diluted income (loss) per share until the performance or market conditions have been met. Other potentially dilutive securities that do not involve contingently issuable shares are also excluded from the computation of diluted income (loss) per share if their effect is antidilutive.

For more information on the basic and diluted income (loss) per share calculations for the years ended December 31, 2024, 2023 and 2022, see Note 11, Income (Loss) Per Share.

Changes in Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) during the years ended December 31, 2024, 2023 and 2022 is related to foreign currency translation adjustments associated with our Canadian operations.

Reclassification

A reclassification has been made on our December 31, 2023 consolidated balance sheet in order to conform to the current period presentation. Specifically, our restricted cash and cash equivalents balance of $18.8 million at December 31, 2023 was reclassified out of Cash and cash equivalents and into a separate line item labeled Restricted cash and cash equivalents. This reclassification had no impact on our previously reported statements of operations or cash flows.

3. Supplemental Balance Sheet and Cash Flow Information

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

Supplemental Cash Flow Information

(Increases) decreases in operating assets and increases (decreases) in operating liabilities are as follows:

Additional supplemental cash flow information is as follows:

See Note 8, Debt, for more information on the satisfaction and discharge of our 5.750% Senior Secured Notes and the 8.000% Senior Unsecured Notes for the year ended December 31, 2024.

See Note 9, Leases, for supplemental cash flow information associated with our lease arrangements for the years ended December 31, 2024, 2023 and 2022.

4. Property and Equipment

Property and equipment, net consisted of the following:

Included in the construction in progress balances are site development costs which consist of legal, engineering, architectural, environmental, feasibility, other direct expenditures incurred for certain new projects and capitalized interest.

Equipment and other includes exercise equipment, capitalized software, computers, audio visual equipment, furniture and fixtures, decor and signage, as well as café, spa, playground and laundry equipment.

Depreciation expense, which is included in Depreciation and amortization in our consolidated statements of operations, for the years ended December 31, 2024, 2023 and 2022 was $272.7 million, $242.0 million and $226.0 million, respectively.

Asset Acquisitions

During the year ended December 31, 2024, we acquiredtwo health club facilities for a total purchase price of $21.9 million, all of which was paid in cash. The entire $21.9 million purchase price was allocated to property and equipment, and is included in Capital expenditures in our consolidated statements of cash flows.

During the year ended December 31, 2023, we acquired a health club facility for a total purchase price of $15.8 million. As part of this acquisition, we paid cash of $4.0 million and assumed an existing mortgage note and related accrued interest liability of $10.6 million and $1.2 million, respectively. The mortgage note matured in June 2024, and was included in current maturities of long-term debt on our consolidated balance sheet as of December 31, 2023. The entire $15.8 million purchase price was allocated to property and equipment, and is included in Capital expenditures in our consolidated statements of cash flows.

5. Goodwill and Intangibles

Goodwill

The goodwill balance was $1,235.4 million at both December 31, 2024 and December 31, 2023. During the year ended December 31, 2023, we acquired a business that was accounted for as a business combination for a total purchase price of approximately $2.1 million. Of this amount, approximately $2.2 million was allocated to goodwill, approximately $0.1 million was allocated to property and equipment and approximately $0.2 million was allocated to liabilities assumed. The consideration for this acquisition consisted of $0.6 million of cash and approximately 0.9 million shares of our common stock with an estimated fair value of approximately $1.5 million as of the acquisition date. The financial results associated with this acquisition has been included in our consolidated financial statements since the acquisition date.

Intangibles

Intangible assets consisted of the following:

Other intangible assets at both December 31, 2024 and 2023 includes a facility license associated with our race registration and timing businesses.

Amortization expense associated with intangible assets for the years ended December 31, 2024, 2023 and 2022 was$1.1 million, $1.4 million and $1.5 million, respecti vely. Amortization of intangible assets is included in Depreciation and amortization in our consolidated statements of operations.

As of December 31, 2024, the expected remaining amortization associated with intangible assets for the next five years was as follows:

6. Revenue

Revenue associated with our membership dues, enrollment fees, and certain services from our in-center businesses is recognized over time as earned. Revenue associated with products and services offered in our cafes and spas, as well as through e-commerce, is recognized at a point in time. The following is a summary of revenue, by major revenue stream, that we recognized during the years ended December 31, 2024, 2023 and 2022:

The timing associated with the revenue we recognized during the years ended December 31, 2024, 2023, and 2022 is as follows:

Contract liabilities represent payments or consideration received in advance for goods or services that the Company has not yet transferred to the customer. Contract liabilities consist primarily of deferred revenue for fees collected in advance for Dynamic Personal Training, media and athletic events, enrollment fees, membership dues and other in-center services offerings. Contract liabilities at December 31, 2024 and 2023 were $58.4 million and $49.9 million, respectively.

Contract liabilities that will be recognized within one year are classified as deferred revenue in our consolidated balance sheets. Deferred revenue at December 31, 2024 and 2023 was $58.3 million and $49.3 million, respectively, and consists primarily of prepaid Dynamic Personal Training, media and athletic events, enrollment fees, membership dues and other in-center services offerings.

Contract liabilities that will be recognized in a future period greater than one year are classified as a component of Other liabilities in our consolidated balance sheets. Long-term contract liabilities at December 31, 2024 and 2023 were $0.1 million and $0.6 million, respectively, and consist primarily of deferred enrollment fees.

7. Income Taxes

The provision for (benefit from) income taxes is comprised of:

The amount of deferred tax expense (benefit) differs from the change in the year-end deferred tax balances due to the tax effect of other comprehensive income, additional paid-in capital items or change in foreign currency exchange rates.

The reconciliation between our effective tax rate on income before income taxes and the statutory tax rate is as follows:

Deferred income taxes are the result of provisions of the tax laws that either require or permit certain items of income or expense to be reported for tax purposes in different periods than they are reported for financial reporting. The tax effect of temporary differences that gives rise to the net deferred tax liability are as follows:

We recognize a tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. We adjust our liability for unrecognized tax benefits in the period in which an uncertain tax position is effectively settled, that statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available. No unrecognized tax benefits were recorded in any of the periods presented.

We are subject to taxation in the U.S., Canada and various states. Our tax years 2024,2023, 2022 and 2021 are subject to examination by the tax authorities. With few exceptions, we are no longer subject to U.S. federal, state or local examinations by tax authorities for years before 2021.

As of December 31, 2024, we had a federal income tax net operating loss carryforward related to our U.S. operations of approximately $170.7 million ($35.9 million tax effected), that can be carried forward indefinitely. As of December 31, 2024, we also had state net operating loss carryforwards totaling approximately $155.5 million ($8.8 million tax effected), of which approximately $121.9 million ($7.0 million tax effected) expires between 2027 and 2045 and approximately $33.6 million ($1.8 million tax effected) can be carried forward indefinitely. As it relates to our Canada operations, we had an income tax net operating loss carryforward of approximately $11.9 million ($3.2 million tax effected) as of December 31, 2024, which is subject to expiration between tax years 2037 and 2042.

As of December 31, 2023, we had a federal income tax net operating loss carryforward related to our U.S. operations of approximately $329.1 million ($69.1 million tax effected), that can be carried forward indefinitely. As of December 31, 2023, we also had state net operating loss carryforwards totaling approximately $196.9 million ($11.0 million tax effected), of which approximately $147.6 million ($8.1 million tax effected) was to expire between 2027 and 2044 and approximately $49.3 million ($2.9 million tax effected) could be carried forward indefinitely. As it relates to our Canada operations, we had an income tax net operating loss carryforward of approximately $19.4 million ($5.1 million tax effected) as of December 31, 2023, which was subject to expiration between tax years 2036 and 2042.

As of December 31, 2024 and 2023, we had a business interest carryforward of approximately $264.2 million ($66.3 million tax effected) and $229.6 million ($57.8 million tax effected), respectively, that can be carried forward indefinitely.

We considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations to determine the extent to which we believe net deferred tax assets will more likely than not be realized. Based on this assessment, as of December 31, 2024, a valuation allowance of $0.4 million has been recorded to reduce the deferred tax asset associated with certain state net operating loss carryforwards.

As of December 31, 2023, a valuation allowance of $0.4 million was recorded to reduce the deferred tax asset associated with the state net operating loss carryforwards and other deferred tax assets. As of December 31, 2023, a valuation allowance of approximately $8.1 million was recorded to reduce the deferred tax asset associated with the Canadian net operating loss carryforward and other deferred tax assets. As of December 31, 2023, we had a foreign tax credit carryforward of approximately $1.1 million that can be used to offset future U.S. federal tax liabilities on foreign-sourced income. We projected that our foreign sourced income will not be sufficient to fully utilize the credit carryforward. As a result, a valuation allowance of $1.1 million has been recorded as of December 31, 2023 to reduce the deferred tax asset associated with the foreign tax credit carryforward.

We consider the earnings of certain non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings. We have not recorded a deferred tax liability related to the U.S. federal and state income taxes and foreign withholding taxes on undistributed earnings of foreign subsidiaries indefinitely invested outside the United States.

8. Debt

Debt consisted of the following:

Refinancing Transactions

Senior Secured Credit Facility

In June 2015, Life Time, Inc. and certain of our other wholly-owned subsidiaries entered into a senior secured credit facility (the “Credit Facilities”) with a group of lenders led by Deutsche Bank AG as the administrative agent. During 2023 and 2024, we entered into the following amendments to the credit agreement governing our Credit Facilities (the “Credit Agreement”):

•Tenth amendment in May 2023 pursuant to which we refinanced our $273.6 million term loan facility that had a maturity date in December 2024 to our $310.0 million term loan facility (the “Former Term Loan Facility”) that had a maturity date of January 15, 2026. We also converted the Credit Facilities from LIBOR to Term Secured Overnight Financing Rate (“SOFR”). Loans under the Former Term Loan Facility were issued with original issue discount of 0.50%.

•Eleventh amendment in December 2023 pursuant to which we reduced the interest rate under the Former Term Loan Facility by 0.50%. Loans under such eleventh amendment were issued at par with no original issue discount. The refinancing transactions during 2023 were accounted for as debt modifications.

•Twelfth amendment in June 2024 pursuant to which we replaced the Canadian Dollar Offered Rate (CDOR), which ceased at the end of June 2024, with the Canadian Overnight Repo Rate Average (CORRA). We do not have any outstanding borrowings in Canadian dollars under our Revolving Credit Facility.

•Thirteenth amendment in September 2024 pursuant to which we, among other things, (i) increased the commitments under the Revolving Credit Facility to $650.0 million, (ii) reduced the floating interest rate per annum to, at our option, SOFR plus an applicable margin of 2.50% or a base rate plus 1.50%, and reduced the undrawn commitment fee rate from 50 basis points to 25 basis points, and (iii) extended the maturity of the revolving credit facility to September 20, 2029. The applicable margins will decrease 25 basis points upon achieving (i) a certain first lien net leverage ratio and/or (ii) public corporate family ratings of Ba3 or BB- from any two of Moody’s, S&P and Fitch.

•Fourteenth amendment in November 2024 pursuant to which we incurred new term loans maturing in November 2031 in an aggregate principal amount of $1,000 million (the “New Term Loan Facility”). The term loans under the New Term Loan Facility bear interest at a rate per annum of equal to SOFR plus an applicable margin of 2.50% (subject to a certain ratings-based step-down).

6.000% Senior Secured Notes

In connection with the New Term Loan Facility, in November 2024, Life Time, Inc. completed the issuance of $500.0 million in aggregate principal amount of 6.000% Senior Secured Notes due 2031 (the “6.000% Senior Secured Notes”).

Satisfaction and Discharge of 5.750% Senior Secured Notes and 8.000% Senior Unsecured Notes

In November 2024, pursuant to the terms of the indentures governing the 5.750%Senior Secured Notes and the 8.000%Senior Unsecured Notes, Life Time, Inc. issued a notice of full redemption and used a portion of the proceeds from the New Term Loan Facility and 6.000% Senior Secured Notes to purchase $1,424.5 million of U.S. government obligations, which were deposited with the trustee and were sufficient to fund the payment at par of (1) the $925.0 million outstanding principal amount and the accrued and unpaid interest associated with the 5.750%Senior Secured Notes on the scheduled redemption date of January 15, 2025, and (2) the $475.0 million outstanding principal amount and the accrued and unpaid interest associated with the 8.000%Senior Unsecured Notes on the scheduled redemption date of February 1, 2025. The $1,424.5 million of cash we paid to purchase the U.S. government obligations during the year ended December 31, 2024 is reported within financing activities in our consolidated statement of cash flows.

After the irrevocable deposit of such U.S. government obligations with the trustee, our obligations under the indentures were satisfied and discharged and the transactions were accounted for as debt extinguishments.

Upon extinguishment of the 5.750%Senior Secured Notes and the 8.000%Senior Unsecured Notes, we derecognized (1) the $1,424.5 million of U.S. government obligations we deposited with the trustee, (2) the $1,420.1 million aggregate outstanding principal and related accrued and unpaid interest obligations associated with the notes, and (3)$6.7 million of unamortized debt discounts and issuance costs associated with the notes. Accordingly, we recognized a loss of $11.1 million on the extinguishment ofthe 5.750%Senior Secured Notes and the 8.000%Senior Unsecured Notes during the year ended December 31, 2024, which is included in Interest expense, net of interest income in our consolidated statement of operations. The non-cash financing activities associated with the$1,424.5 million of U.S. government obligations we deposited with the trustee, as well as the $1,420.1 million aggregate principal and related accrued and unpaid interest obligations that we derecognized in connection with thesatisfaction and discharge of the 5.750%Senior Secured Notes and the 8.000%Senior Unsecured Notesare disclosed as supplemental non-cash financing activities in Note 3, Supplemental Balance Sheet and Cash Flow Information.

Term Loan Facilities

We retired our Former Term Loan Facility in September 2024 when we paid the remaining aggregate principal amount of$200.0 million in connection with the thirteenth amendment to our Credit Agreement. We had previously used a portion of the net proceeds we received from an equity offering (see Note 10, Stockholders’ Equity) in August 2024 to pay down an aggregate principal amount of $110.0 million. Loans under the Former Term Loan Facility had a floating interest rate per annum of, at our option, SOFR plus an applicable credit adjustment spread ranging from 0.11448% to 0.42826% depending on the duration of borrowing plus the continued applicable margin of 4.00% or a base rate plus 3.00%.

Borrowings under the New Term Loan Facility bear interest at a rate per annum of equal to SOFR plus an applicable margin of 2.50% (subject to a certain ratings-based step-down). We are required to make quarterly principal payments of 0.25% of the outstanding balance on the New Term Loan Facility.

Revolving Credit Facility

Our Revolving Credit Facility provides for a $650.0 million revolver and matures in September 2029. At December 31, 2024, there were $10.0 million of outstanding borrowings on the Revolving Credit Facility and there were $31.2 million of outstanding letters of credit, resulting in total revolver availability of$608.8 million, which was available at intervals ranging from 30 to 180 days at interest rates of SOFR plus 2.50% or base rate plus 1.50% (subject to certain first lien leverage and ratings-based step-downs).

The weighted average interest rate and debt outstanding under the Revolving Credit Facility for the year ended December 31, 2024 was 9.13% and $116.1 million, respectively. The highest balance during the year was $285.0 million.

Upon the exercise of an accordion feature and subject to certain conditions, borrowings under the Credit Facilities may be increased subject, in certain cases, to meeting a first lien net leverage ratio. The Credit Facilities are secured by a first priority lien (on a pari-passu basis with the Secured Notes described below) on substantially all of our assets.

6.000% Senior Secured Notes

On November 5, 2024, Life Time, Inc. (the “Issuer”) completed the issuance of the 6.000% Senior Secured Notes. The terms of the 6.000% Senior Secured Notes are governed by an indenture dated as of November 5, 2024 (the “Indenture”), among the Issuer, the guarantors party thereto and Wilmington Savings Fund Society, FSB, as trustee and notes collateral agent. The 6.000% Senior Secured Notes mature on November 15, 2031 and bear interest at a rate of 6.00% per annum payable semi-annually in arrears on May 15 and November 15 of each year, commencing May 15, 2025. The 6.000% Senior Secured Notes are guaranteed on a senior secured basis by LTF Intermediate Holdings, Inc., the direct parent of the Issuer, and each of the Issuer’s existing and future wholly owned domestic restricted subsidiaries that guarantees its New Term Loan Facility, subject to certain exceptions.

At any time prior to November 15, 2027, we may redeem some or all of the 6.000% Senior Secured Notes at a redemption price equal to 100% of the principal amount of the 6.000% Senior Secured Notes redeemed plus a “make-whole” premium plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date, as described in the Indenture. At any time prior to November 15, 2027, we may redeem up to 10% of the original aggregate principal amount of the 6.000% Senior Secured Notes during each calendar year at a redemption price equal to 103% of the principal amount of the 6.000% Senior Secured Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date; provided that in any given calendar year, any amount not utilized pursuant to this provision may be carried forward to subsequent calendar years. In addition, at any time and from time to time on or prior to November 15, 2027, we may choose to redeem up to 40.0% of the aggregate principal amount of the 6.000% Senior Secured Notes outstanding with the proceeds of certain equity offerings at a redemption price equal to 106% of the principal amount plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date, so long as the lesser of 50% of the aggregate amount of the 6.000% Senior Secured Notes then outstanding and $150 million remains outstanding immediately after such redemption. Beginning on November 15, 2027, we may redeem some or all of the 6.000% Senior Secured Notes at any time, and from time to time, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date.

5.750% Senior Secured Notes

On January 22, 2021, Life Time, Inc. issued senior secured notes (the “5.750% Senior Secured Notes”) in an aggregate principal amount of $925.0 million. These notes were originally scheduled to mature in January 2026 and interest only payments were due semi-annually in arrears at 5.750%. As noted in the Satisfaction and Discharge of 5.750%Senior Secured Notes and 8.000%Senior Unsecured Notes section within this footnote, in November 2024, we issued a notice of full redemption and deposited a portion of the proceeds from the New Term Loan Facility and the 6.000% Senior Secured Notes with the trustee of the 5.750% Senior Secured Notes to satisfy and discharge them. Following such satisfaction and discharge, the trustee used such proceeds to pay in full at 100% of the principal amount, plus accrued and unpaid interest, the 5.750% Senior Secured Notes in January 2025.

8.000% Senior Unsecured Notes

On February 5, 2021, Life Time, Inc. issued senior unsecured notes (the “8.000% Senior Unsecured Notes”) in the original principal amount of $475.0 million. The 8.000% Senior Unsecured Notes were originally scheduled to mature in April 2026 and interest only payments were due semi-annually in arrears at 8.00%. As noted in the Satisfaction and Discharge of 5.750%Senior Secured Notes and 8.000%Senior Unsecured Notes section within this footnote, in November 2024, we issued a notice of full redemption and deposited a portion of the proceeds from the New Term Loan Facility and the 6.000% Senior Secured Notes with the trustee of the 8.000% Senior Unsecured Notes to satisfy and discharge them. Following such satisfaction and discharge, the trustee used such proceeds to pay in full at 100% of the principal amount, plus accrued and unpaid interest, the 8.000% Senior Unsecured Notes in February 2025.

Construction Loan

On January 22, 2021, we closed on a construction loan (the “Construction Loan”) providing up to $28.0 million to partially finance the construction of a Life Time Living location. The Construction Loan was originally scheduled to mature on February 15, 2026 and was collateralized by the property. Borrowings under the Construction Loan bore interest at a variable annual rate of no less than 4.80%. Interest only payments were due monthly beginning April 15, 2022 and continuing through February 15, 2024. Beginning March 15, 2024, based on the principal balance due as of February 15, 2024, monthly principal and interest installment payments were due in an amount sufficient to fully amortize the principal balance at maturity. On August 15, 2024, we fully paid the remaining principal balance and accrued interest associated with our Construction Loan totaling $28.2 million.

Mortgage Notes

Certain of our subsidiaries have entered into mortgage facilities with various financial institutions (collectively, the “Mortgage Notes”), which are collateralized by certain of our related real estate and buildings, including one of our corporate headquarters properties. The Mortgage Notes have varying maturity dates from September 2026 through August 2027 and carried a weighted average interest rate of 5.56% and 5.75% at December 31, 2024 and 2023, respectively. Payments of principal and interest on each of the Mortgage Notes are payable monthly on the first business day of each month.

During the year ended December 31, 2024, we fully paid at maturity the principal balance and remaining accrued interest associated with two of our Mortgage Notes totaling $62.9 million.

During the year ended December 31, 2022, we closed on a sale-leaseback transaction that included certain properties that served as collateral for one of the Mortgage Notes. Accordingly, we used a portion of the net cash proceeds we received from the sale-leaseback transaction to pay off in full the then outstanding principal balance of $4.6 million associated with this Mortgage Note. For more information regarding the sale-leaseback transaction, see Note 9, Leases.

Debt Discounts and Issuance Costs

Unamortized debt discounts and issuance costs associated with the New Term Loan Facility and 6.000% Senior Secured Notes of $19.9 million at December 31, 2024 and unamortized debt discounts and issuance costs associated with the Former Term Loan Facility,5.750% Senior Secured Notes,8.000% Senior Unsecured Notes and Construction Loan of $15.3 million at December 31, 2023 are included in Long-term debt, net of current portion on our consolidated balance sheets.

Unamortized revolver-related debt issuance costs of $3.6 million and $2.3 million are included in Other assets on our consolidated balance sheets at December 31, 2024 and 2023, respectively.

During the year ended December 31, 2024, in connection with the pay down in full of each of our Former Term Loan Facility and Construction Loan, and the satisfaction and discharge of each of our 5.750% Senior Secured Notes and 8.000% Senior Unsecured Notes, we recognized $9.4 million of debt discounts and issuance cost write-offs, which are included in Interest expense, net of interest income in our consolidated statement of operations.

Debt Covenants

We are required to comply with certain affirmative and restrictive covenants under our Credit Facilities,6.000% Senior Secured Notes and Mortgages Notes. We are also required to comply with a first lien net leverage ratio covenant under the Revolving Credit Facility, which requires us to maintain a first lien net leverage ratio, if 30.00% or more of the Revolving Credit Facility commitments are outstanding shortly after the end of any fiscal quarter (excluding all cash collateralized undrawn letters of credit and other undrawn letters of credit up to $90.0 million).

As of December 31, 2024, we were either in compliance in all material respects with the covenants or the covenants were not applicable.

Future Maturities of Long-Term Debt

Aggregate annual future maturities of long-term debt, excluding unamortized debt discounts and issuance costs and fair value adjustments, at December 31, 2024 were as follows:

9. Leases

Lease Cost

Lease cost included in our consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022 consisted of the following:

Sale-Leaseback Transactions

Sale-Leaseback Transactions with Unrelated Third Parties

During the year ended December 31, 2024, we entered into and consummated sale-leaseback transactions with three unrelated third parties. Under these transactions, we sold five properties for gross proceeds of $173.2 million, which was reduced by transaction costs of $1.2 million, for net cash proceeds of $172.0 million. The estimated fair value of the property sold was $182.2 million. Accordingly, the aggregate cash sales price associated with these arrangements was increased by $9.0 million, of which $13.3 million was associated with a property in which the sales price was less than the fair value of the property sold, which was recognized as an increase in the aggregate sales price associated with this property and an increase in the related operating lease right-of-use asset, and $4.3 million was associated with properties in which the sales price was greater than the fair value of the properties sold, which was recognized as a reduction in the aggregate sales price associated with these properties and as financing obligations separate from the related operating lease liabilities. Proceeds from the financing obligations are reported within financing activities on our consolidated statement of cash flows. During the year ended December 31, 2024, we recognized a net gain of$19.8 million on sale-leaseback transactions. This gain is included in Other operating expense (income) in our consolidated statement of operations.

During the year ended December 31, 2023, we entered into and consummated sale-leaseback transactions with unrelated third parties. Under these transactions, we sold three propertiesfor gross proceeds of $124.0 million, which was reduced by transaction costs of $0.7 million, for net cash proceeds of $123.3 million. The estimated fair value of the property sold was $128.4 million. Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $4.4 million, of which $5.9 million was associated with a property in which the sales price was less than the fair value of the property sold, which was recognized as an increase in the aggregate sales price associated with this property and an increase in the related operating lease right-of-use asset, and $1.5 million was associated with a property in which the sales price was greater than the fair value of the property sold, which was recognized as a reduction in the aggregate sales price associated with this property and as a financing obligation separate from the related operating lease liability. For cash flow purposes, the $1.5 million of proceeds we received from this financing obligation are reported within financing activities on our consolidated statement of cash flows. During the year ended December 31, 2023, we recognized a loss of $13.6 million on sale-leaseback transactions. This loss is included in Other operating expense (income) in our consolidated statement of operations.

During the year ended December 31, 2022, we entered into and consummated sale-leaseback transactions with unrelated third parties. Under these transactions, we sold nine properties for gross proceeds of $375.0 million, which was reduced by transaction costs of $1.8 million, for net cash proceeds of $373.2 million. The estimated fair value of the properties sold was $385.1 million. Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $10.1 million, which resulted in the recognition of a gain of $97.5 million on these transactions. This gain is included in Other operating expense (income) in our consolidated statement of operations for the year ended December 31, 2022. Of the $10.1 million net sales price increase recognized in connection with these transactions, $31.5 million was associated with property sales in which the sales price was less than the fair value of the properties sold, which was recognized as an increase in the aggregate sales price associated with these properties and an increase in the related operating lease right-of-use assets, and $21.4 million was associated with property sales in which the sales price was greater than the fair value of the properties sold, which was recognized as a reduction in the aggregate sales price associated with these properties and as financing obligations separate from the related operating lease liabilities. For cash flow purposes, the $21.4 million of proceeds we received from these financing obligations during the year ended December 31, 2022 are reported within financing activities on our consolidated statement of cash flows.

Related Party Sale-Leaseback Transactions and Leases

For information on sale-leaseback transactions with related parties, as well as other related party leases not associated with sale-leaseback transactions, see Note 13, Related Party Transactions.

Operating and Finance Lease Right-of-Use Assets and Lease-Related Liabilities

Operating and finance lease right-of-use assets and lease-related liabilities were as follows:

(1)Finance lease right-of-use assets were reported net of accumulated amortization of $1.2 million and $0.8 million at December 31, 2024 and 2023, respectively.

Remaining Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates associated with our lease-related liabilities at December 31, 2024 were as follows:

(1) The weighted-average remaining lease term associated with our operating and finance lease liabilities does not include all of the optional renewal periods available to us under our current lease arrangements. Rather, the weighted-average remaining lease term only includes periods covered by an option to extend a lease if we are reasonably certain to exercise that option.

Supplemental Cash Flow Information

Supplemental cash flow information associated with our leases is as follows:

Maturities of Operating Lease Liabilities, Finance Lease Liabilities and Financing Obligations

The maturities associated with our lease-related liabilities at December 31, 2024 are as follows:

Leases Not Yet Commenced

As of December 31, 2024, we had entered into several leases associated with future centers that were executed, but for which we did not yet have control of the underlying assets. Accordingly, as of December 31, 2024, we did not recognize any right-of-use assets or lease liabilities associated with these leased locations on our consolidated balance sheet. These arrangements contain undiscounted lease payments that are payable during the initial lease terms, which range from three to 25 years, totaling approximately $327.3 million.

10. Stockholders’ Equity

Equity Offering

On August 14, 2024, we consummated a registered offering, issuance and sale of 6.0 million shares of our common stock by the Company (the “Primary Shares”) and a registered offering and sale of 7.8 million shares of our common stock by certain of our stockholders (the “Secondary Shares”) at an offering price of $21.75 per share, less underwriting discounts and commissions (collectively, the “Offering”). We received total gross proceeds from the Primary Shares of $130.5 million, which was reduced by underwriting discounts and commissions and other expenses of $6.5 million, for net proceeds of $124.0 million. We didnot receive any proceeds from the sale of the Secondary Shares. We used a portion of the net proceeds we received from the Offering to pay down $110.0 million of our Former Term Loan Facility on August 19, 2024 (see Note 8, Debt).

Restricted Common Stock

Conversion of Restricted Series A Preferred Stock Award to Restricted Common Stock

During the second quarter of 2021, in lieu of the vast majority of cash compensation for our CEO for 2021, the Company granted an award of 0.5 million shares of restricted Series A convertible participating preferred stock (“Series A Preferred Stock”) to our CEO. Upon the consummation of the IPO, the 0.5 million then-outstanding shares of restricted Series A Preferred Stock automatically converted into 0.6 million shares of the Company’s restricted common stock, which then vested in April 2022.

Share-Based Compensation Expense Associated with Restricted Common Stock

Share-based compensation expense associated with the shares of restricted common stock that were issued upon the automatic conversion of the Series A Preferred Stock award for the year ended December 31, 2022 was $5.0 million, all of which is included in General, administrative and marketing in our consolidated statement of operations. These restricted common stock shares fully vested as of April 4, 2022, and there isno unrecognized share-based compensation expense related to these shares. The fair value of the restricted common stock shares that vested during the year ended December 31, 2022 was approximately$8.9 million, which represents the fair value of the underlying shares measured as of the vesting date.

Equity Incentive Plans

2015 Equity Plan

On October 6, 2015, our board of directors adopted the LTF Holdings, Inc. 2015 Equity Incentive Plan (as amended, the “2015 Equity Plan”). During the year ended December 31, 2021, our board of directors and stockholders approved an amendment to the 2015 Equity Plan to increase the number of shares of our common stock reserved for issuance under the 2015 Equity Plan to approximately 30.6 million shares of our common stock. Effective with the IPO, no further grants have been or will be made under the 2015 Equity Plan. Approximately 1.0 million shares that were reserved and available for issuance under the 2015 Equity Plan are now available for issuance under the 2021 Equity Plan as detailed below.

2021 Equity Plan

In connection with the IPO and effective October 6, 2021, we adopted the 2021 Incentive Award Plan (the “2021 Equity Plan”), under which we may grant cash and equity-based incentive awards to our employees, consultants and directors. The maximum number of shares of our common stock available for issuance under the 2021 Equity Plan is equal to the sum of (i) approximately 14.5 million shares of our common stock, (ii) an annual increase on the first day of each year beginning in 2022 and ending in and including 2031, equal to the lesser of (A)4% of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year and (B) such lesser amount as determined by our board of directors, and (iii) the approximately 1.0 million shares of our common stock that were available for issuance under the 2015 Equity Plan as of October 6, 2021; provided, however, no more than 14.5 million shares may be issued upon the exercise of incentive stock options. Our board of directors determined that no additional shares would become available under the 2021 Equity Plan as of January 1, 2024 and January 1, 2023 pursuant to the evergreen feature described in part (ii) of the immediately preceding sentence. Effective January 1, 2022, the number of shares of our common stock available for issuance under the 2021 Equity Plan increased by approximately 7.7 million shares pursuant to such evergreen feature. Additionally, the number of shares of our common stock available for issuance under the 2021 Equity Plan may increase with respect to awards under the 2015 Equity Plan which are forfeited or lapse unexercised and which following the effective date of the 2021 Equity Plan are not issued under such prior plan. The share reserve formula under the 2021 Equity Plan is intended to provide us with the continuing ability to grant equity awards to eligible employees, directors and consultants for the 10-year term of the 2021 Equity Plan.

As of December 31, 2024, approximately 13.5 million shares were available for future awards to employees and other eligible participants under the 2021 Equity Plan.

2021 Employee Stock Purchase Plan

In connection with the IPO and effective October 6, 2021, we adopted the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP is designed to allow our eligible employees to purchase shares of our common stock, at periodic intervals, with their accumulated payroll deductions. The ESPP consists of two components: an Internal Revenue Service (“IRS”) Code section 423 (“Section 423”) component, which is intended to qualify under Section 423 of the IRS Code and a non-Section 423 component, which need not qualify under Section 423 of the IRS Code. The aggregate number of shares of our common stock that has initially been reserved for issuance under the ESPP is equal to (i) approximately 2.9 million shares of our common stock, and (ii) an annual increase on the first day of each year beginning in 2022 and ending in and including 2031, equal to the lesser of (A)1% of the aggregate number of shares of our common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of our shares of common stock as determined by our board of directors; provided that in no event will more than 29.0 million shares of our common stock be available for issuance under the Section 423 component of the ESPP. Our board of directors determined that no additional shares would become available under the ESPP as of January 1, 2024, January 1, 2023 and January 1, 2022 pursuant to the evergreen feature described in part (ii) of the immediately preceding sentence. Our board of directors or the compensation committee will have authority to interpret the terms of the ESPP and determine eligibility of participants.

We launched the first offering period under the ESPP on December 1, 2022. The ESPP permits participants to purchase common stock through payroll deductions of up to 15% of their eligible compensation, which includes a participant’s gross base compensation for services to us. On the first trading day of each offering period, each participant is automatically granted an option to purchase shares of our common stock. The purchase option expires at the end of the applicable offering period and will be exercised on each purchase date during such offering period to the extent of the payroll deductions accumulated during the offering period. We have consecutive offering periods of approximatelysix months in length commencing on each June 1 and December 1 during the term of the ESPP. The purchase price for a share of our common stock is 90% of the fair market value of a share on the enrollment date for such offering period or on the purchase date, whichever is lower, and subject to adjustment by our board of directors or compensation committee. Participants may voluntarily end their participation in the ESPP prior to the end of the applicable offering period and are paid their accrued payroll deductions that have not yet been used to purchase shares of common stock. Upon exercise, the participant purchases the number of whole shares that his or her accumulated payroll deductions will buy at the purchase option price, subject to the certain participation limitations. Participation ends automatically upon a participant’s termination of employment. During the year ended December 31, 2024 and 2023,0.2 million and 0.3 million shares, respectively, were issued under the ESPP. We recognized $0.7 million, $1.2 million and $0.1 million of share-based compensation expense for the discount received by participants during the years ended December 31, 2024,2023 and 2022, respectively, all of which is included in General, administrative and marketing in our consolidated statements of operations. As of December 31, 2024, unrecognized share-based compensation expense was approximately $0.3 million, which is expected to be recognized over a weighted average remaining period of 0.4 years.

Stock Options

Stock Option Activity

Activity associated with stock options during the year ended December 31, 2024 is as follows:

Options Granted

The Company didnot grant any stock option awards during the year ended December 31, 2024. During the years ended December 31, 2023 and 2022, the Company granted approximately 1.4 million and 1.1 million stock option awards, respectively, under the 2021 Equity Plan. These options have a 10-year contractual term from the date of grant and vest infour ratable annual installments on each of the first four anniversaries of the grant date, subject to continuous employment or service from the grant date through the applicable vesting date unless otherwise agreed with the award recipient. The exercise price associated with each of these awards was not less than the fair market value per share of our common stock at the time of grant.

Intrinsic Value and Income Tax Benefits Associated with Option Exercises

The total intrinsic value of stock options exercised during the years ended December 31, 2024, 2023 and 2022 was approximately $25.0 million, $12.2 million and $1.5 million, respectively. In connection with these stock option exercises, we recognized an aggregate income tax benefit of approximately $1.9 million, $2.2 million and $0.3 million during the years ended December 31, 2024, 2023 and 2022, respectively.

Fair Value of Stock Option Awards Granted

The fair value of the options granted during the years ended December 31, 2023 and 2022 was calculated using the Black-Scholes option pricing model. The following weighted average assumptions were used in determining the fair value of stock options granted:

(1)The risk-free rate is based on the U.S. treasury yields, in effect at the time of grant or modification, corresponding with the expected term of the options.

(2)Expected volatility is based on historical volatilities for a time period similar to that of the expected term of the options.

(3)Expected term of the options is based on probability and expected timing of market events leading to option exercise.

Share-Based Compensation Expense Associated with Stock Options

Share-based compensation expense associated with stock options for the year ended December 31, 2024 was $7.5 million, of which $0.2 million, $7.1 million and $0.2 million is included in Center operations, General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations. Share-based compensation expense associated with stock options for the year ended December 31, 2023 was $11.8 million, of which $0.5 million, $11.0 million and $0.3 million is included in Center operations, General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations. Share-based compensation expense associated with stock options for the year ended December 31, 2022 was $19.8 million, of which $1.4 million, $17.8 million and $0.5 million is included in Center operations, General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations.

As of December 31, 2024, unrecognized share-based compensation expense related to stock options was approximately $9.6 million, which is expected to be recognized over a weighted average remaining period of 1.8 years.

Restricted Stock Units

Restricted Stock Unit Activity

Activity associated with restricted stock units during the year ended December 31, 2024 is as follows:

Restricted Stock Units Granted

During the year ended December 31, 2024, the Company granted approximately 1.9 million restricted stock unit awards under the 2021 Equity Plan, of which approximately 1.2 million were time-based vesting awards that vest inthree ratable annual installments, approximately 0.5 million were performance-based vesting awards granted to our executives in connection with our short-term incentive compensation program and less than 0.2 million vest inratable annual installments ranging fromone tofour years, in each case subject to continuous employment or service from the grant date through the applicable vesting date unless otherwise agreed with the award recipient. We determine the grant date fair value of restricted stock unit awards by multiplying the number of restricted stock unit awards by the closing trading price of our common stock on the grant date.

During the year ended December 31, 2023, the Company granted approximately 1.1 million restricted stock unit awards under the 2021 Equity Plan, of which approximately 0.4 million were time-based vesting awards, approximately 0.4 million were time-based vesting awards with a performance qualifier and approximately 0.3 million were performance-based vesting awards granted to our executives in connection with our short-term incentive compensation program. Of the 1.1 million restricted stock unit awards that were granted during theyear ended December 31, 2023, approximately 0.8 million vest infour ratable annual installments (subject to meeting a performance qualifier for approximately 0.4 million of such awards, which performance qualifier was met), approximately 0.3 million vested based on meeting certain performance metrics under our short-term incentive compensation plan with performance above the target metric resulting in the issuance of additional fully-vested shares of our common stock as detailed under “—Other Share-Based Payment Awards” below and less than 0.1 million vest intwo ratable annual installments, in each case subject to continuous employment or service from the grant date through the applicable vesting date unless otherwise agreed with the award recipient. The weighted average grant date fair value associated with theapproximately 1.1 million restricted stock unit awards granted during the year ended December 31, 2023 was $17.41.

During the year ended December 31, 2022, the Company granted approximately 1.7 million restricted stock unit awards under the 2021 Equity Plan, of which approximately 1.4 million were time-based vesting awards and approximately 0.3 million were time-based vesting awards with a performance qualifier. Of the 1.7 million restricted stock unit awards that were granted during the year ended December 31, 2022, approximately 1.6 million vest infour ratable annual installments (subject to meeting a performance qualifier for approximately 0.3 million of such awards, which performance qualifier was not met), approximately 0.1 million vest intwo ratable annual installments and less than 0.1 million vest in approximatelyone annual installment, in each case subject to continuous employment or service from the grant date through the applicable vesting date unless otherwise agreed with the award recipient. The majority of the awards that vest intwo ratable annual installments were granted to certain executives and non-executives as part of their incentive compensation for 2021, which had been recognized as an accrued compensation liability at December 31, 2021. The fair value of these restricted stock unit awards was approximately $0.6 million. Accordingly, effective with the grant date associated with these restricted stock units, we recognized a$0.6 million decrease in Accrued expenses and other current liabilities and a$0.6 million increase in Additional paid-in capital on our consolidated balance sheets. The weighted average grant date fair value associated with theapproximately 1.7 million restricted stock unit awards granted during the year ended December 31, 2022 was $14.26.

Fair Value of Vested Restricted Stock Units

The total fair value of restricted stock units that vested during the years ended December 31, 2024,2023 and 2022 was approximately$17.9 million,$10.2 million and$12.2 million respectively, which represents the aggregate of the fair value of the each of the underlying shares measured as of the vesting date.

Share-Based Compensation Expense Assoc iated with Restricted Stock Units

Share-based compensation expense associated with restricted stock units for the year ended December 31, 2024 was $24.1 million, of which $2.9 million, $20.4 million and $0.8 million is included in Center operations, General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations. Share-based compensation expense associated with restricted stock units for the year ended December 31, 2023 was $18.1 million, of which $2.1 million, $15.5 million and $0.5 million is included in Center operations, General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations. Share-based compensation expense associated with restricted stock units for the year ended December 31, 2022 was $12.4 million, of which $1.4 million, $10.6 million and $0.4 million is included in Center operations, General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations.

As of December 31, 2024, unrecognized share-based compensation expense related to restricted stock units was approximately $26.9 million, which is expected to be recognized over a weighted average remaining period of 2.0 years.

Performance Stock Units

Performance Stock Unit Activity

Activity associated with performance stock units during the year ended December 31, 2024 is as follows:

Performance Stock Units Granted

During the year ended December 31, 2024, the Company granted approximately 0.5 million three-year performance stock unit awards under the 2021 Equity Plan, all of which were granted to our executives in connection with our long-term incentive compensation program. Approximately 0.3 million of the performance stock unit awards are based on our Adjusted EBITDA with performance determined each year for one-third of such award but the entire award does not vest until the end of thethree-year period and approximately 0.2 million of the performance stock unit awards are based on our leverage ratio at the end of each year with one-third vesting each year dependent on achieving the leverage ratio target for such year. We determine the grant date fair value of performance stock unit awards by multiplying the number of performance stock unit awards by the closing trading price of our common stock on the grant date.

Share-Based Compensation Expense Assoc iated with Performance Stock Units

Share-based compensation expense associated with performance stock units for the year ended December 31, 2024 was $4.4 million, all of which is included in General, administrative and marketing in our consolidated statement of operations. No share-based compensation expense associated with performance stock units was recognized during the years ended December 31, 2023 and 2022.

As of December 31, 2024, unrecognized share-based compensation expense related to performance stock units was approximately $9.0 million, which is expected to be recognized over a weighted average remaining period of 2.1 years.

Other Share-Based Payment Awards

2024 Short-Term Incentive Program

During the year ended December 31, 2024, the Company adopted a short-term incentive compensation program for team members who are not executive officers, pursuant to which fully-vested shares of the Company’s common stock would be issued at or around the time of determining the Company’s performance under such program in early 2025 if the Company’s performance exceeded the tranche one performance metric. We account for the potential issuance of these shares of common stock as share-based payment awards granted under this program. Share-based compensation expense associated with these awards for the year ended December 31, 2024 was $14.6 million, of which $0.1 million, $13.0 million, and $1.5 million is included in Center operations, General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations. Because the incentive compensation associated with these awards represents a fixed dollar amount that, if payable, will be settled in a variable number of shares of the Company’s common stock, we are currently accounting for these awards as liability-classified awards. Accordingly, the offset to the $14.6 million of share-based compensation expense we have recognized in connection with these awards during the year ended December 31, 2024 is included in Accrued expenses and other current liabilities on our consolidated balance sheet.

2023 Short-Term Incentive Program

During the year ended December 31, 2023, the Company adopted a short-term incentive compensation program pursuant to which fully-vested shares of the Company’s common stock would be issued at or around the time of determining the Company’s performance under such program in early 2024 if the Company’s performance exceeded the target performance metric for executives and if the Company’s performance exceeded the threshold performance metric for non-executives. We accounted for the potential issuance of these shares of common stock as share-based payment awards granted under this program. Share-based compensation expense associated with these awards for the year ended December 31, 2024 was $(0.2) million, of which $0.1 million and $(0.3) million is included in General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations. Share-based compensation expense associated with these awards for the year ended December 31, 2023 was $19.0 million, of which $17.1 million and $1.9 million is included in General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations. Because the incentive compensation associated with these awards represents a fixed dollar amount that, if payable, will be settled in a variable number of shares of the Company’s common stock, we accounted for these awards as liability-classified awards. Accordingly, the offset to the $19.0 million of share-based compensation expense we recognized in connection with these awards during the year ended December 31, 2023 is included in Accrued expenses and other current liabilities on our consolidated balance sheet.

In February 2024, our board of directors determined that our 2023 performance exceeded the maximum performance metric under the 2023 short-term incentive compensation program and issued corresponding shares of common stock to our employees. Effective as of the determination date, the $18.1 million then-outstanding liability we had recognized in connection with these share-based payment awards was reclassified out of Accrued expenses and other current liabilities and into Common stock and Additional paid-in capital on our consolidated balance sheet.

11. Income (Loss) Per Share

For the year ended December 31, 2024, our potentially dilutive securities included stock options, restricted stock units, performance stock units, shares to be issued under our ESPP and contingently issuable shares related to our short-term incentive compensation program.

For the year ended December 31, 2023, our potentially dilutive securities included stock options, restricted stock units, shares to be issued under our ESPP and contingently issuable shares related to our short-term incentive compensation program.

For the year ended December 31, 2022, our potentially dilutive securities included stock options, restricted stock units and shares to be issued under our ESPP. Due to the net loss that we recognized during the year ended December 31, 2022, the potentially dilutive shares of common stock associated with these equity-based securities were determined to be antidilutive and, therefore, are excluded from the computation of diluted loss per share for the year ended December 31, 2022.

The following table sets forth the calculation of basic and diluted income (loss) per share for the years ended December 31, 2024, 2023 and 2022:

The following is a summary of potential shares of common stock that were excluded from the computation of diluted income (loss) per share for the years ended December 31, 2024, 2023 and 2022:

For more information regarding stock options, restricted stock units and ESPP shares, see Note 10, Stockholders’ Equity.

12. Commitments and Contingencies

Purchase Commitments

We have entered into various unconditional purchase obligations that primarily include software licenses and support, and marketing services. As of December 31, 2024, these purchase obligations totaled approximately $15.4 million, the majority of which are expected to be settled within the next year. These unconditional purchase obligations are in addition to the current and long-term liabilities recorded on our December 31, 2024 consolidated balance sheet and exclude agreements that are cancellable at any time without penalty.

Legal Matters

Life Time, Inc. et al. v. Zurich American Insurance Company

On August 19, 2020, Life Time, Inc., several of its subsidiaries, and a joint venture entity, Bloomingdale Life Time Fitness LLC (collectively, the “Life Time Parties”) filed a complaint against Zurich American Insurance Company (“Zurich”) in the Fourth Judicial District of the State of Minnesota, County of Hennepin (Case No. 27-CV-20-10599) (the “Action”) seeking declaratory relief and damages with respect to Zurich’s failure under a property/business interruption insurance policy to provide certain coverage to the Life Time Parties related to the closure or suspension by governmental authorities of their business activities due to the spread or threat of the spread of COVID-19. On March 15, 2021, certain of the Life Time Parties filed a First Amended Complaint in the Action adding claims against Zurich under a Builders’ Risk policy related to the suspension of multiple construction projects. The Court granted Zurich’s dispositive motions on July 25, 2024, dismissing the Life Time Parties’ claims with prejudice, and entered judgment on July 26, 2024. The Life Time Parties have appealed from that judgment to the Minnesota Court of Appeals. The Action is subject to many uncertainties, and the outcome of the matter is not predictable with any assurance.

Other

We are also engaged in other proceedings incidental to the normal course of business. Due to their nature, such legal proceedings involve inherent uncertainties, including but not limited to court rulings, negotiations between affected parties and governmental intervention. We establish reserves for matters that are probable and estimable in amounts we believe are adequate to cover reasonable adverse judgments. Based upon the information available to us and discussions with legal counsel, it is our opinion that the outcome of the various legal actions and claims that are incidental to our business will not have a material adverse impact on our consolidated financial position, results of operations or cash flows. Such matters are subject to many uncertainties, and the outcomes of individual matters are not predictable with assurance.

401(k) Savings and Investment Plan

We offer a 401(k) savings and investment plan (the “401(k) Plan”) to substantially all full-time employees who are at least 21 years of age. The cost associated with the Company’s discretionary contributions to the 401(k) Plan during the years ended December 31, 2024, 2023 and 2022 wasnot material.

Letters of Credit and Posted Bonds

As of December 31, 2024 and 2023, we had $31.2 million and $32.9 million, respectively, in irrevocable standby letters of credit outstanding, which were issued primarily to municipalities, for sites under construction, as well as certain insurance carriers to guarantee payments of deductibles for various insurance programs, such as workers’ compensation and commercial liability insurance. Such letters of credit are secured by the collateral under our senior secured credit facility. As of both December 31, 2024 and 2023, no amounts had been drawn on any of these irrevocable standby letters of credit.

As of December 31, 2024 and 2023, we had posted bonds totaling $34.0 million and $35.3 million, respectively, related to construction activities and operational licensing.

13. Related Party Transactions

Related Party Leases

We entered into and consummated a sale-leaseback transaction involvingone property with a related party during the year ended December 31, 2024. We did not enter into any new related party leases, including related party sale-leaseback arrangements, during the years ended December 31, 2023 or 2022.

Sale-Leaseback Transactions

During the year ended December 31, 2024, we entered into and consummated a sale-leaseback transaction involvingone property with a third party in which our CEO and a member of our board of directors own a minority interest. Under this transaction, we soldone property for gross proceeds of $40.0 million, which was reduced by transaction costs of $0.3 million, for net cash proceeds of $39.7 million. The estimated fair value of the property sold was $40.3 million. During the year ended December 31, 2024, we recognized a loss of $17.2 million on this sale-leaseback transaction, which is included in Other operating income (expense) in our consolidated statement of operations. The right-of-use asset and lease liability recognized in connection with this sale-leaseback transaction was $25.1 million and $24.9 million, respectively. During the year ended December 31, 2024, we paid rent associated with this lease of $0.8 million and rent expense associated with this lease was $1.2 million.

During the year ended December 31, 2020, we consummated a sale-leaseback transaction involvingone property with a subsidiary of a limited liability company jointly owned by our CEO, a former executive of the Company, and another member of our board of directors, among other investors (“LTRE”). During the years ended December 31, 2024, 2023 and 2022, we paid rent associated with this lease of $2.6 million, $2.6 million and $2.6 million, respectively, and rent expense associated with this lease was $3.0 million, $3.0 million and $3.0 million, respectively.

During the year ended December 31, 2019, we entered into a sale-leaseback transaction involvingone property with a limited liability company jointly owned by our CEO and another member of our board of directors. During the years ended December 31, 2024, 2023 and 2022, we paid rent associated with this lease of $2.3 million, $2.3 million and $2.3 million, respectively, and rent expense associated with this lease was $2.6 million, $2.6 million and $2.6 million, respectively.

During the year ended December 31, 2018, we entered into a sale-leaseback transaction involvingone property with a limited liability company in which our CEO owns a 33% interest. During the years ended December 31, 2024, 2023 and 2022, we paid rent associated with this lease of $1.3 million, $1.3 million and $1.2 million, respectively, and rent expense associated with this lease was $1.4 million, $1.4 million and $1.4 million, respectively.

During the year ended December 31, 2017, we entered into sale-leaseback transactions involvingtwo properties with a limited liability company that is a related party to one of our existing stockholders. During the years ended December 31, 2024, 2023 and 2022, we paid rent associated with these leases of $6.6 million, $6.6 million and $6.1 million, respectively, and rent expense associated with these leases was $7.4 million, $7.4 million and $7.4 million, respectively.

Other Property Leases

In September 2015, our CEO, through two limited liability companies in which he had a 100% interest, acquired the Woodbury, Minnesota facility that we have occupied and operated as a tenant since 1995. The terms of the existing lease were unchanged upon the change in ownership. On September 29, 2020, our CEO contributed his ownership of our center in Woodbury, Minnesota to LTRE. Following this contribution, we terminated our existing lease with the entities owned by our CEO and entered into a new lease for the Woodbury center with subsidiaries of LTRE. We are currently accounting for the new Woodbury lease as an operating lease.

During the years ended December 31, 2024, 2023 and 2022, rent payments associated with the new Woodbury lease were $1.2 million, $1.2 million and $1.2 million, respectively, and rent expense associated with the new Woodbury lease was $1.3 million, $1.3 million and $1.3 million, respectively.

In October 2003, we leased a center located within a shopping center that is owned by a general partnership in which our CEO has a 100% interest. During 2023, we amended this lease to reflect the expanded square footage that the Company is using at this location and make a corresponding adjustment to the rental payments. During the years ended December 31, 2024,2023 and 2022, we paid rent associated with this lease of $1.0 million, $0.9 million and $0.9 million, respectively, and rent expense associated with this lease was $1.0 million, $0.9 million and $0.9 million, respectively.

Other

Life Time, Inc. and an entity owned by our former President and Chief Financial Officer, Mr. Thomas Bergmann, jointly owned an aircraft. In connection with his retirement from the Company effective December 30, 2022, Life Time, Inc. acquired Mr. Bergmann’s 50% interest in this aircraft in October 2022 for approximately $1.8 million. During this joint ownership, Life Time, Inc. and Mr. Bergmann’s entity had entered into certain co-ownership, maintenance and personnel agreements under which the entity owned by Mr. Bergmann contributed approximately $0.1 million per year to an operations fund for the fixed costs for the aircraft. Life Time, Inc. and the entity owned by Mr. Bergmann paid for the costs associated with their respective trips during the time of joint ownership.

The daughter of our CEO currently serves as a vice president of real estate development for Life Time, Inc. During the years ended December 31, 2024, 2023 and 2022, we paid total compensation of approximately $0.4 million, $0.2 million and $0.2 million, respectively, for her services.

14. Executive Nonqualified Plan

During 2006, we implemented the Executive Nonqualified Excess Plan of Life Time Fitness, a non-qualified deferred compensation plan. This plan was established for the benefit of our highly compensated employees, which our plan defines as our employees whose projected compensation for the upcoming plan year would meet or exceed the IRS limit for determining highly compensated employees. This unfunded, non-qualified deferred compensation plan allows participants the ability to defer and grow income for retirement and significant expenses in addition to contributions made to our 401(k) Plan.

All highly compensated employees eligible to participate in the Executive Nonqualified Excess Plan of Life Time Fitness, including but not limited to our executives, may elect to defer up to 50% of their annual base salary and/or annual bonus earnings to be paid in any coming year. The investment choices available to participants under the non-qualified deferred compensation plan are of the same type and risk categories as those offered under our 401(k) Plan and may be modified or changed by the participant or us at any time. Distributions can be paid out as in-service payments or at retirement. Retirement benefits can be paid out as a lump sum or in annual installments over a term of up to 10 years. We didnot make a matching contribution to this plan during the years ended December 31, 2024, 2023 and 2022. Any contributions to this plan vest to each participant according to their years of service with us. At December 31, 2024 and 2023, $13.6 million and $12.4 million, respectively, had been deferred and is being held on behalf of the employees. These amounts are included in Other liabilities on our consolidated balance sheets.

15. Subsequent Events

We have evaluated all subsequent events through the date of the consolidated financial statements were issued and determined that there have been no other events or transactions which would have a material effect on the consolidated financial statements and therefore would require recognition or disclosure.

16. Condensed Financial Information of Registrant (Parent Company Only)

Life Time Group Holdings, Inc. is a holding company with no material operations of its own that conducts substantially all of its activities through its subsidiaries. Life Time Group Holdings, Inc. has no cash and, as a result, all expenditures and obligations of the Company are allocated to and paid by its subsidiaries. Life Time, Inc. is the borrower under our senior secured credit facility and the indenture governing our 6.000% Senior Secured Notes, the terms and conditions of which limit Life Time, Inc.’s ability to declare dividends or make any payment on equity to, directly or indirectly, fund a dividend or other distribution to Life Time Group Holdings, Inc. in connection with those borrowings. Dividends, redemptions and other payments on equity (restricted payments) are limited to those permitted under the senior secured credit facility and the indenture governing our 6.000% Senior Secured Notes. Due to the aforementioned restrictions, substantially all of the net assets of our subsidiaries are restricted. For information regarding our senior secured credit facility and 6.000% Senior Secured Notes, see Note 8, Debt.

The following condensed financial statements have been presented on a “parent-only” basis. Under a parent-only presentation, our investment in our subsidiaries is presented under the equity method of accounting. During the year ended December 31, 2024, we recognized share-based compensation expense related to stock options, restricted stock units, performance stock units, our ESPP and liability-classified awards related to our 2024 short-term incentive compensation plan of $51.0 million, of which $3.4 million, $45.4 million and $2.2 million is included in Center operations, General, administrative and marketing and Other operating, respectively, in our parent-only condensed statement of operations. During the year ended December 31, 2023, we recognized share-based compensation expense related to stock options, restricted stock units, our ESPP and liability-classified awards related to our 2023 short-term incentive compensation plan of $50.1 million, of which $2.6 million, $44.8 million and $2.7 million is included in Center operations, General, administrative and marketing and Other operating, respectively, in our parent-only condensed statement of operations. During the year ended December 31, 2022, we recognized share-based compensation expense related to stock options, restricted stock, restricted stock units and our ESPP of $37.3 million, of which $2.8 million, $33.5 million and $0.9 million is included in Center operations, General, administrative and marketing and Other operating, respectively, in our parent-only condensed statement of operations.

The cash flow activities associated with the proceeds we received from the issuance of our common stock, stock options exercised and issuance of common stock in connection with the ESPP during the years ended December 31, 2024, 2023 and 2022 were non-cash transactions for Life Time Group Holdings, Inc., as the cash inflows and outflows associated with those transactions occurred at our subsidiary, Life Time, Inc. and were accounted for as our equity contributions to Life Time, Inc. For more information regarding these transactions, see Note 10, Stockholders’ Equity.

CONDENSED BALANCE SHEETS

CONDENSED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF CASH FLOWS