2 unchanged sentences
Certain statements in this discussion and analysis are “forward-looking statements” within the meaning of federal securities regulations.
−Removed: Forward-looking statements in this discussion and analysis include, but are not limited to, our plans, possible or assumed future actions, strategies, both business and financial, results of operations and prospects.
+Added: Forward-looking statements in this discussion and analysis include, but are not limited to, our plans, possible or assumed future actions, strategies and prospects, both business and financial, including our financial outlook, events and results of operations.
Generally, forward-looking statements are not based on historical facts but instead represent only our current beliefs and assumptions regarding future events.
4 unchanged sentences
In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking.
−Removed: Factors that could cause actual results to differ materially from those forward-looking statements included in this discussion and analysis include, but are not limited to, the impacts of COVID-19 or other future pandemics on our operations, members, employees, vendors, service providers, business and cash flows;
−Removed: our ability to attract and retain members;
−Removed: a deterioration in the quality or reputation of our brand or the health and wellness industry;
−Removed: competition in the health and wellness industry;
−Removed: our inability to anticipate and satisfy consumer preferences and shifting views of health and wellness;
−Removed: events such as severe weather conditions, natural disasters, global pandemics or health crises, hostilities and social unrest, among others;
−Removed: disruptions in the operations of our centers;
−Removed: and the other important factors discussed under the caption “Risk Factors” in the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission (the “SEC”) on September 13, 2021 (File No.
+Added: The forward-looking statements contained in this discussion and analysis are based on management’s current expectations and are not guarantees of future performance.
+Added: The forward-looking statements are subject to various risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify.
+Added: Actual results may differ materially from these expectations due to numerous factors, many of which are beyond our control, including risks relating to our business operations and competitive environment, risks relating to our brand, risks relating to the growth of our business, risks relating to our technological operations, risks relating to our capital structure, risks relating to our human capital, risks relating to legal compliance and risk management, risks relating to our financial performance and risks relating to ownership of our common stock and the other important factors discussed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) and as such risk factors may be updated from time to time in our periodic filings with the SEC that are accessible on the SEC’s website at www.sec.gov .
Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive.
10 unchanged sentences
consummated the sale of nearly 1.6 million additional shares of its common stock at the IPO price of $18.00 per share pursuant to the partial exercise by the underwriters of their over-allotment option, resulting in total gross proceeds of approximately $28.4 million before deducting the underwriting discounts and commissions.
−Removed: Life Time, the “Healthy Way of Life Company,” is a leading lifestyle brand offering premium health, fitness and wellness experiences to a community of over 1.3 million individual members, who together comprise more than 750,000 memberships, as of September 30, 2021.
+Added: Life Time, the “Healthy Way of Life Company,” is a leading lifestyle brand offering premium health, fitness and wellness experiences to a community of nearly 1.3 million individual members, who together comprise more than 744,000 memberships, as of March 31, 2022.
Since our founding nearly 30 years ago, we have sought to continuously innovate ways for our members to lead healthy and happy lives by offering them the best places, programs and performers.
−Removed: We deliver high-quality experiences through our omni-channel physical and digital ecosystem that includes more than 150 centers—distinctive, resort-like athletic destinations—across 29 states in the United States and one province in Canada.
+Added: We deliver high-quality experiences through our omni-channel physical and digital ecosystem that includes more than 150 centers—distinctive, resort-like athletic country club destinations—across 29 states in the United States and one province in Canada.
Our track record of providing differentiated experiences to our members has fueled our strong, long-term financial performance.
−Removed: In 2019, prior to the COVID-19 pandemic, we generated $1.9 billion of revenue.
−Removed: In 2020, which was impacted by the COVID-19 pandemic, we generated $0.9 billion of revenue, and in the nine months ended September 30, 2021, we generated nearly $1.0 billion of revenue.
Our luxurious athletic centers, which are located in both affluent suburban and urban locations, total more than 15 million square feet in the aggregate.
−Removed: As of September 30, 2021 we had 12 new centers under construction and we believe we have significant opportunities to continue expanding our portfolio of premium centers with 10 or more planned new centers annually for the foreseeable future in increasingly affluent markets.
−Removed: We offer ex pansive fitness floors with top-of-the-line equipment, spacious locker rooms, group fitness studios, indoor and outdoor pools and bistros, indoor and outdoor tennis courts, basketball courts, LifeSpa, LifeCafe and our childcare and Kids Academy learning spaces.
−Removed: Our premium service offering is delivered by approximately 29,000 Life Time team members, including over 7,500 certified fitness professionals, ranging from personal trainers to studio performers.
+Added: As of March 31, 2022, we had 14 new centers under construction and we believe we have significant opportunities to continue expanding our portfolio of premium centers with 11 or more planned new centers for 2022 and similar growth annually for the foreseeable future in increasingly affluent markets.
+Added: We offer ex pansive fitness floors with top-of-the-line equipment, spacious locker rooms, group fitness studios, indoor and outdoor pools and bistros, indoor and outdoor tennis courts, pickleball courts, basketball courts, LifeSpa, LifeCafe and our childcare and Kids Academy learning spaces.
+Added: Our premium service offerings are delivered by over 31,000 Life Time team members, including over 7,700 certified fitness professionals, ranging from personal trainers to studio performers.
Our members are highly engaged and draw inspiration from the experiences and community we have created.
−Removed: We believe that no other company in the United States delivers the same quality and breadth of health, fitness and wellness experiences as we deliver, which has enabled us to consistently grow total revenue for 20 consecutive years, prior to the impact of the COVID-19 pandemic.
−Removed: As of December 31, 2019, December 31, 2020 and September 30, 2021, our recurring membership dues represented 63%, 69% and 68%, respectively, of our total revenue, while our in-center revenue, consisting of Life Time Training, LifeCafe, LifeSpa, Life Time Swim and Life Time Kids, among other services, represented 34%, 29% and 29%, respectively, of our total revenue.
−Removed: Between 2015 and 2019, we grew our average Center revenue per membership from $1,883 to $2,172, a testament to the significant value that our members place on engaging with Life Time.
−Removed: While average Center revenue per membership fell to $1,317 in 2020, we have seen a strong rebound in 2021, with $1,554 in average Center revenue per membership during the nine months ended September 30, 2021.
−Removed: As we have delivered these premium experiences, we have strategically increased our new join membership prices across most of our centers in early 2021.
+Added: Our center memberships increased from 649,373 at December 31, 2021 to 673,983 at March 31, 2022, with month over month growth of 3,330, 4,376 and 16,904 for January, February and March 2022, respectively, as the impact from the Omicron variant subsided.
+Added: As we grow our business with more team members and more centers, we may be impacted by broader market conditions such as inflation and labor.
+Added: We believe that no other company in the United States delivers the same quality and breadth of health, fitness and wellness experiences that we deliver, which enabled us to consistently grow our recurring membership dues and in-center revenue for 20 consecutive years, prior to the impact of the COVID-19 pandemic.
+Added: We are focused on returning to consistent growth in our recurring membership dues and in-center revenue.
+Added: For the three months ended March 31, 2022 and 2021, our recurring membership dues represented 71.3% and 71.5%, respectively, of our total Center revenue, while our in-center revenue, consisting of Life Time Training, LifeCafe, LifeSpa, Life Time Swim and Life Time Kids, among other services, represented 28.7% and 28.5%, respectively, of our total Center revenue.
+Added: Our average revenue per center membership increased to $580 for the three months ended March 31, 2022 compared to $459 for the three months ended March 31, 2021 and $532 for the three months ended March 31, 2019 prior to the COVID-19 pandemic, a testament to the significant value that our members place on engaging with Life Time.
+Added: As we delivered and continued to enhance and broaden the premium experiences for our members, we strategically increased our membership dues across most of our new and existing centers in 2021.
We believe we can continually refine our pricing as we deliver exceptional experiences and find the optimal balance among the number of memberships per center, the member experience and maximizing our return for each center.
−Removed: We expect average revenue per membership and average monthly dues per membership to continue to increase as we acquire more new members, increase legacy member pricing and open new centers in increasingly affluent markets.
+Added: We expect average revenue per center membership to continue to increase compared to the same period in prior year as we acquire new members and open new centers in increasingly affluent markets.
We offer a variety of convenient month-to-month memberships with no long-term contracts.
−Removed: We define memberships in two ways:
+Added: We define memberships for our centers in two ways:
Center memberships and Digital On-hold memberships.
1 unchanged sentence
Our base memberships provide individuals general access (with some amenities excluded) to a selected home center and all centers with the same or a lower base monthly dues rate.
−Removed: Our optimized pricing for a Center membership is determined center-by-center based on a variety of factors, including geography, competition, demographic nature, population density, initial investment in the center and available services and amenities.
+Added: Our optimized pricing for a Center membership is determined center-by-center based on a variety of factors, including geography, market presence, demographic nature, population density, initial investment in the center and available services and amenities.
Digital On-hold memberships do not provide access to our centers and are for those members who want to maintain certain member benefits including our Life Time Digital membership and the right to convert to a Center membership without paying enrollment fees.
−Removed: We continue to evolve our premium lifestyle brand in ways that allow our members to more easily and regularly integrate health, fitness and wellness into their lives.
−Removed: We continue to enhance our digital platform to deliver a true omni-channel experience for our members.
+Added: We continue to evolve our premium lifestyle brand in ways that elevate and broaden our member experiences and allow our members to more easily and regularly integrate health, fitness and wellness into their lives.
+Added: We are now offering new types of Center memberships and communities, including our signature membership that includes unlimited small group training and priority registrations, and our new ARORA community focused on members aged 55 years and older.
+Added: We are also enhancing our digital platform to deliver a true omni-channel experience for our members.
Our Life Time Digital offering delivers live streaming fitness classes, remote goal-based personal training, nutrition and weight loss support and curated award-winning health, fitness and wellness content.
2 unchanged sentences
We are continuing to invest in our digital capabilities in order to strengthen our relationships with our members and more comprehensively address their health, fitness and wellness needs so that they can remain engaged and connected with Life Time at any time or place.
−Removed: We are also expanding our ecosystem in response to our members’ desire to more holistically integrate health and wellness into every aspect of their daily lives.
+Added: Elevating our member experiences and delivering a connected and digital environment requires investment in our team members, programs, products, services and centers.
+Added: These investments may impact our short-term results of operations and cash flows as our investments in our business may be made more quickly than we see the returns on our investments.
+Added: We are also expanding our “Healthy Way of Life” ecosystem in response to our members’ desire to more holistically integrate health and wellness into every aspect of their daily lives.
In 2018, we launched Life Time Work, an asset-light branded co-working model that offers premium work spaces in close proximity to our centers and integrates ergonomic furnishings and promotes a healthy working environment.
Life Time Work members also receive access to all of our resort-like athletic destinations across the United States and Canada.
−Removed: Additionally, we opened our first Life Time Living location in 2021, another asset-light extension of our “Healthy Way of Life” ecosystem, which offers luxury wellness-oriented residences.
+Added: Additionally, we opened our first Life Time Living location in 2021, another asset-light extension of our “Healthy Way of Life” ecosystem, which offers luxury wellness-oriented
As we expand our footprint with new centers and nearby work and living spaces, as well as strengthen our digital capabilities, we expect to continue to grow our omni-channel platform to support the “Healthy Way of Life” journey of our members.
11 unchanged sentences
We use Adjusted EBITDA to supplement GAAP measures of performance in evaluating the effectiveness of our business strategies, and to establish annual budgets and forecasts.
−Removed: We also use Adjusted EBITDA to establish short-term incentive compensation for management.
+Added: We also use Adjusted EBITDA or variations thereof to establish short-term incentive compensation for management.
Free Cash Flow Before Growth Capital Expenditures
5 unchanged sentences
Adjusted EBITDA and free cash flow before growth capital expenditures should be considered in addition to, and not as a substitute for or superior to, financial measures calculated in accordance with GAAP.
−Removed: These are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP or as an alternative to net cash provided by operating activities as a measure of our liquidity and may not be comparable to other similarly titled measures of other businesses.
+Added: These are not measurements of our financial performance under GAAP and should not be considered as alternatives to net loss or any other performance measures derived in accordance with GAAP or as an alternative to net cash provided by (used in) operating activities as a measure of our liquidity and may not be comparable to other similarly titled measures of other businesses.
Adjusted EBITDA and free cash flow before growth capital expenditures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our operating results or cash flows as reported under GAAP.
−Removed: Some of these limitations include that:
−Removed: • these measures do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
−Removed: • not all of these measures reflect changes in, or cash requirements for, our working capital needs;
−Removed: • these measures do not reflect the cash requirements necessary to make principal payments on our indebtedness;
−Removed: • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and not all of these measures reflect cash requirements for such replacements;
−Removed: • non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;
−Removed: • these measures do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations.
Furthermore, we compensate for the limitations described above by relying primarily on our GAAP results and using Adjusted EBITDA and free cash flow before growth capital expenditures only for supplemental purposes.
2 unchanged sentences
We prepare and analyze various non-GAAP performance metrics and key performance indicators to assess the performance of our business and allocate resources.
−Removed: We analyze these key performance indicators to assess the performance of our business and allocated resources.
For more information regarding our non-GAAP performance metrics, see “—Non-GAAP Financial Measures” above.
These are not measurements of our financial performance under GAAP and should not be considered as alternatives to any other performance measures derived in accordance with GAAP.
−Removed: Set forth below are certain GAAP and non-GAAP measurements and key performance indicators for the three and nine months ended September 30, 2021 and 2020.
+Added: Set forth below are certain GAAP and non-GAAP measurements and key performance indicators for the three months ended March 31, 2022 and 2021.
The following information has been presented consistently for all periods presented.
−Removed: Three Months Ended Nine Months Ended
−Removed: September 30, September 30,
−Removed: 2021 2020 2021 2020
+Added: Three Months Ended
($ in thousands, except for Average Center revenue per center membership data)
10 unchanged sentences
Average Center revenue per center membership (1)
−Removed: $ 555 $ 349 $ 1,554 $ 929
Comparable center sales (2)
2 unchanged sentences
Total centers (end of period) (3)
−Removed: 155 148 155 148
Total center square footage (end of period) (4)
12 unchanged sentences
Rent $ 55,964 $ 50,517
−Removed: Non-cash rent expense (8)
+Added: Non-cash rent expense (open properties) (8)
$ 1,068 $ 237
−Removed: Net cash used in operating activities (2,283) (11,789) (15,322) (56,165)
+Added: Non-cash rent expense (properties under development) (8)
+Added: $ 4,941 $ 4,086
+Added: Net cash provided by (used in) operating activities $ 9,062 $ (38,156)
Free cash flow before growth capital expenditures (9)
5 unchanged sentences
Total centers (end of period) is the number of centers operational as of the last day of the period.
−Removed: As of September 30, 2021, all of our 155 centers were open.
+Added: As of March 31, 2022, all of our 153 centers were open.
(4) Total center square footage (end of period) reflects the aggregate fitness square footage, which we use as a metric for evaluating the efficiencies of a center as of the end of the period.
6 unchanged sentences
The following table provides a reconciliation of net loss, the most directly comparable GAAP measure, to Adjusted EBITDA:
−Removed: Three Months Ended Nine Months Ended
−Removed: September 30, September 30,
+Added: Three Months Ended
($ in thousands) 2022 2021
4 unchanged sentences
Depreciation and amortization 58,107 61,206
−Removed: Share-based compensation expense 4,078 — 6,959 —
−Removed: COVID-19 related expenses (b)
−Removed: (221) 17,029 (410) 49,312
−Removed: Loss (gain) on sale-leaseback transactions (c)
−Removed: 2,227 — 3,057 (3,078)
−Removed: Capital transaction costs (d)
−Removed: 588 39 588 96
−Removed: Legal settlements (e)
−Removed: (44) 313 (44) 345
−Removed: — (418) 2,444 (416)
+Added: Share-based compensation expense (b)
+Added: COVID-19 related expenses (c)
+Added: (Gain) loss on sale-leaseback transactions (d)
Adjusted EBITDA $ 40,626 $ (18,947)
−Removed: (a) For the nine months ended September 30, 2021, we incurred a non-cash expense of $41.0 million related to the extinguishment of our related party secured loan.
−Removed: In June 2020, we closed on an approximate $101.5 million secured loan from an investor group comprised solely of our stockholders or their affiliates.
−Removed: The secured loan carried an interest rate of 12.0% and was scheduled to mature in June 2021.
−Removed: In January 2021, we extinguished the secured loan plus accrued interest with a book value of $108.6 million by converting the loan into approximately 5.4 million shares of our Series A Preferred Stock, which had a fair value of $149.6 million, as determined by an independent third party valuation, at the time of conversion.
−Removed: Accordingly, we booked a $41.0 million loss upon conversion.
−Removed: (b) Represents the incremental net (credits) expenses we recognized related to the COVID-19 pandemic.
+Added: (a) For the three months ended March 31, 2021, we incurred a non-cash expense of $41.0 million related to the extinguishment of a related party secured loan and $18.3 million related to the write-off of debt discounts and issuances costs in connection with the extinguishment of senior secured notes and the related party secured loan.
+Added: (b) Shar e-based compensation expense recognized during the three months ended March 31, 2022 is associated with stock options, restricted stock and restricted stock units.
+Added: The majority of this expense was associated with awards that were fully vested and became exercisable on April 4, 2022.
+Added: No share-based compensation expense was recognized during the three months ended March 31, 2021, because the vesting and exercisability of stock options granted by the Company up through March 31, 2021 was contingent upon the occurrence of a change of control or an initial public offering.
+Added: (c) Represents the incremental net expenses we recognized related to the COVID-19 pandemic.
We adjust for these costs as they do not represent costs associated with our normal ongoing operations.
We believe that adjusting for these costs provides a more accurate and consistent representation of our actual operating performance from period to period.
−Removed: The net credits we recognized during the three and nine months ended September 30, 2021 consist primarily of the recovery of certain qualifying expenses recovered under the CARES Act, partially offset by COVID-19 legal-related costs.
−Removed: For the three months ended September 30, 2020, COVID-19 related expenses consisted of $9.5 million for project cost write-offs for sites no longer deemed viable as a result of the economic downturn caused by COVID-19, $5.5 million for the employee portion of health care coverage which is normally paid by employees but was paid by us during this period on behalf of our employees, and $2.0 million of emergency leave and non-working payroll, which includes subsequent recovery of certain expenses under the CARES Act, severance and charitable contributions made to support our employees who were directly impacted by COVID-19.
−Removed: For the nine months ended September 30, 2020, COVID-19 related expenses consisted of $14.6 million for project cost write-offs for sites no longer deemed viable as a result of the economic downturn caused by COVID-19, $12.0 million for the employee portion of health care coverage which is normally paid by employees but was paid by us during this period on behalf of our employees, and $22.7 million of emergency leave and non-working payroll, which includes subsequent recovery of certain expenses under the CARES Act, severance and charitable contributions made to support our employees who were directly impacted by COVID-19.
−Removed: (c) We adjust for the impact of gains or losses on the sale-leaseback of our properties as they do not reflect costs associated with our ongoing operations.
−Removed: (d) Represents one-time costs related to capital transactions, including debt and equity offerings that are non-recurring in nature.
−Removed: (e) We adjust for the impact of large class action and unusual legal settlements paid or recoveries received.
−Removed: These are non-recurring in nature and do not reflect costs associated with our normal ongoing operations.
−Removed: (f) Includes costs associated with large corporate restructuring charges, executive level involuntary terminations and other transactions which are unusual and non-recurring in nature.
−Removed: For the nine months ended September 30, 2021, other expenses consisted of $1.6 million of incremental expenses related to a winter storm resulting in historical freezing temperatures affecting our Texas region, and $0.8 million of executive level severance.
+Added: For the three months ended March 31, 2022 and 2021, COVID-19 related expenses primarily consisted of legal related costs.
+Added: (d) We adjust for the impact of gains or losses on the sale-leaseback of our properties as they do not reflect costs associated with our ongoing operations.
+Added: For detail on the gain on sale-leaseback transactions in the three months ended March 31, 2022, see “Sale-Leaseback Transactions” within Note 7, Leases, to our condensed consolidated financial statements in this report.
+Added: (e) Includes costs associated with incremental expenses related to a winter storm that resulted in historical freezing temperatures affecting our Texas region and other transactions which are unusual and non-recurring in nature.
(7) Represents non-capital expenditures associated with opening new centers which are incurred prior to the commencement of a new center opening.
1 unchanged sentence
(8) Reflects the non-cash portion of our annual GAAP operating lease expense that is greater or less than the cash operating lease payments.
+Added: Non-cash rent expense for our open properties represents non-cash expense associated with properties that were operating at the end of each period presented.
+Added: Non-cash rent expense for our properties under development represents non-cash expense associated with properties that are still under development at the end of each period presented.
(9) Free cash flow before growth capital expenditures, a non-GAAP financial measure, is calculated as net cash provided by (used in) operating activities less center maintenance capital expenditures and corporate capital expenditures.
The following table provides a reconciliation from net cash provided by (used in) operating activities to free cash flow before growth capital expenditures:
−Removed: Three Months Ended Nine Months Ended
−Removed: September 30, September 30,
+Added: Three Months Ended
($ in thousands) 2022 2021
−Removed: Net cash used in operating activities $ (2,283) $ (11,789) $ (15,322) $ (56,165)
+Added: Net cash provided by (used in) operating activities $ 9,062 $ (38,156)
Center maintenance capital expenditures (16,396) (7,692)
3 unchanged sentences
Impact of COVID-19 on our Business
−Removed: On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus that causes COVID-19 a pandemic and recommended containment and mitigation measures worldwide.
−Removed: On March 13, 2020, the United States declared a National Public Health Emergency with respect to COVID-19.
−Removed: On March 16, 2020, in compliance with orders and advisories from federal, state and local governmental authorities regarding COVID-19, we closed all of our centers.
+Added: In March 2020, the World Health Organization declared the outbreak of 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.
Throughout this report, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” when we refer to “COVID-19,” such as when we describe the “impact of COVID-19” on our operations, we mean the coronavirus-related orders issued by governmental authorities affecting our operations and/or the presence of coronavirus in our centers, including COVID-19 positive members or team members.
−Removed: While our centers were closed, in consultation with an epidemiologist (MD/PhD) with a wide range of experience in clinical, occupational and environmental medicine, we developed processes and protocols for the operation of our centers in the COVID-19 environment.
−Removed: These protocols, which have varied at our centers across the United States and Canada, have included physical distancing, restricting certain equipment and amenities, occupancy limits, required appointments, touchless interactions, facial coverings, cleaning, sanitation, hygiene, air circulation and filtering, screening, contact tracing and educational awareness.
−Removed: We may take further actions as government authorities require or recommend or as we determine to be in the interests of our members, team members, vendors and service providers, including in response to emerging variants of the COVID-19 virus, such as the Delta variant.
−Removed: We continue to refine these processes and protocols as we operate in the evolving COVID-19 environment.
−Removed: On May 8, 2020, we re-opened our first center in Oklahoma City, Oklahoma.
−Removed: With a focus on providing a healthy and clean environment for our members and team members, we continued to re-open our centers as governmental authorities permitted.
−Removed: As of June 30, 2020, September 30, 2020, December 31, 2020, March 31, 2021, June 30, 2021, and September 30, 2021 we had 105, 148, 141, 151, 150 and 155 of our centers opened, respectively.
−Removed: However, many of our centers remained closed or were required to be closed again after re-opening for some period of time during each of these quarters as a result of the COVID-19 pandemic and related restrictions.
−Removed: For instance, during the three months ended June 30, 2020, September 30, 2020 and December 31, 2020, 149, 43 and 31 of our centers, respectively, were closed for some period of time.
+Added: We re-opened our first center on May 8, 2020, and continued to re-open our centers as state and local governmental authorities permitted, subject to operating processes and protocols that we developed in consultation with an epidemiologist (MD/PhD) to provide a healthy and clean environment for our members and team members and to meet various governmental requirements and restrictions.
The performance of our centers after we were able to re-open them has varied depending on various factors, including how early we were able to re-open them in 2020, whether we were required to close them again, their geographic location and applicable governmental restrictions.
+Added: The performance of our centers was also impacted in 2021 as a result of the Delta variant and then again later in 2021 and into 2022 with the Omicron variant.
We have experienced a slightly faster recovery in our membership dues revenue compared to our in-center revenue as our centers have re-opened.
We expect membership dues revenue to remain a higher percentage of our total revenue in the near term and return to more historical levels over time.
−Removed: While we are encouraged by the trends of increased vaccination rates, reduced COVID-19 infections and hospitalizations and reduced operating restrictions in many of the regions where our centers operate, the full extent of the impact of COVID-19, including the Delta variant, remains uncertain and is dependent on future developments that cannot be accurately predicted at this time.
+Added: While we are encouraged by the trends of increased vaccination rates, reduced COVID-19 infections and hospitalizations and reduced operating restrictions, the full extent of the impact of COVID-19, including any new variants, remains uncertain and is dependent on future developments that cannot be accurately predicted at this time.
+Added: There may also be developments outside of our control requiring us to adjust our operating plan, including additional required center closures or operating restrictions.
Considering this uncertainty, the extent of the impact of COVID-19 on our financial position, results of operations, liquidity and cash flows is uncertain at this time.
−Removed: As of September 30, 2021, all of our 155 centers were open.
−Removed: As of September 30, 2021, total memberships were 753,355, a decrease of 20.7% compared to 950,183 at March 31, 2020.
−Removed: Center memberships were 668,310, a decrease of 21.1% compared to 847,161 at March 31, 2020.
+Added: As of March 31, 2022, all of our 153 centers were open and our total memberships were 744,272, an increase of 0.4% compared to 740,962 at March 31, 2021.
+Added: Center memberships were 673,983, an increase of 23.8% compared to 544,216 at March 31, 2021.
Digital On-hold memberships were 70,289, a decrease of 64.3% compared to 196,746 at March 31, 2021.
−Removed: We continue to monitor governmental orders regarding the operations of our centers, as well as our center operating processes and protocols.
−Removed: We expect we may need to continue to adjust such processes and protocols as facts and circumstances change, including as a result of variants of the COVID-19 virus, including the Delta variant.
−Removed: We also expect our centers and in-center businesses will continue to be impacted differently based upon considerations such as their geographic location, vaccination rates, impacts of variants, applicable government restrictions and guidance, and team member and member sentiment with respect to our center operating processes and protocols and working in and/or using our centers.
−Removed: For example, we are seeing an increase in Center memberships and center utilization in various regions where government restrictions have been lifted.
−Removed: Given increasing demand for online engagement with consumers, we have increased our focus on delivering a digitized in-center experience through our omni-channel ecosystem.
−Removed: In December 2020, we expanded our Digital membership offering, bringing our “Healthy Way of Life” programs, services and content to consumers virtually.
+Added: Prior to the COVID-19 pandemic, Center memberships and Digital On-hold memberships were 853,748 and 90,299, respectively, at December 31, 2019.
+Added: As the first three months of 2022 have progressed, we have experienced a significant decrease in the COVID-19 related restrictions on our operations.
+Added: While we are still utilizing certain of the processes we implemented to provide a healthy and clean environment for our members and team members, we are no longer subject to the stricter requirements such as face coverings, vaccine mandates or negative test results.
+Added: We will continue to monitor governmental orders regarding the operations of our centers, as well as our center operating processes and protocols.
+Added: Our centers and in-center businesses have been impacted differently based upon considerations such as their geographic location, vaccination rates, impacts of variants, applicable government restrictions and guidance, and team member and member sentiment with respect to our center operating processes and protocols and working in and/or using our centers.
+Added: While this uneven performance may continue, we are hopeful that as we continue to emerge from the COVID-19 pandemic and more time passes since the restrictive operating requirements have been lifted, our performance will begin to improve across the country and we will continue to see an increase in Center memberships and center utilization.
+Added: Given the increased demand for online engagement with consumers, we have increased our focus on delivering a digitized in-center experience through our omni-channel ecosystem.
+Added: We continue to expand our Digital membership offering, bringing our “Healthy Way of Life” programs, services and content to consumers virtually.
This omni-channel experience is designed to deliver health, fitness and wellness where, when and how members want it by offering online reservations registrations, virtual training, live streaming and on-demand classes, virtual events and more.
Cash Flows and Liquidity
−Removed: In response to the impact of COVID-19 on our business, we took swift cash management actions to reduce our operating costs and preserve liquidity.
−Removed: These actions included:
−Removed: initially furloughing over 95% of our employees;
−Removed: undertaking two corporate restructuring events to right size overhead relative to the current business;
−Removed: initially suspending virtually all construction capital spending;
−Removed: negotiating rent reductions and deferrals with many of our landlords;
−Removed: evaluating the CARES Act and receiving the employee retention credit, the deferment of the employer’s portion of social security tax payments and the various income tax-related benefits;
−Removed: and completing sale-leaseback transactions associated with six properties.
−Removed: During the nine months ended September 30, 2021, we refinanced a significant portion of our outstanding debt.
−Removed: Specifically, we:
−Removed: (i) refinanced in full the outstanding balances associated with our then existing senior secured credit facility as well as our then existing senior unsecured notes;
−Removed: and (ii) converted our related party secured loan into Series A Preferred Stock.
−Removed: Additionally, we completed sale-leaseback transactions associated with two properties.
−Removed: For information regarding the refinancing actions we took during the nine months ended September 30, 2021, see Note 6, Debt, to our unaudited condensed consolidated financial statements included elsewhere in this report.
−Removed: For more information regarding the sale-leaseback transactions that were consummated during the nine months ended September 30, 2021, see Note 7, Leases, to our unaudited condensed consolidated financial statements included elsewhere in this report.
−Removed: On October 13, 2021, we paid down $575.7 million (including a $5.7 million pre-payment penalty) of our Term Loan Facility with a portion of the net proceeds we received from the IPO.
−Removed: We intend to use the remaining net proceeds from the IPO, along with the additional net proceeds of approximately $27.1 million from the sale of the additional 1.6 million shares of common stock pursuant to the partial exercise by the underwriters of their over-allotment option, for general corporate purposes.
−Removed: Although there is uncertainty related to the impact of COVID-19 on our financial position, results of operations, liquidity and cash flows, much of which is dependent on the length and severity of the pandemic and the related measures taken, we believe that the combination of our current cash position, our availability under the Revolving Credit Facility, the recent actions we have taken to refinance our debt, complete the IPO and strengthen our balance sheet, as well as the actions we have taken to reduce our cash outflows, leave us well-positioned to manage our business through this pandemic.
−Removed: If our available liquidity were not sufficient to meet our operating and debt service obligations as they come due, we would need to pursue alternative arrangements through additional debt, additional sale-leaseback transactions or equity financing to meet our cash requirements.
+Added: In response to the impact of COVID-19 on our business, we took swift cash management actions to reduce our operating costs and preserve liquidity, including with respect to our employees, corporate and capital structures, capital expenditures, rent obligations, tax benefits and sale-leaseback transactions.
+Added: Although there is uncertainty related to the full impact of COVID-19 on our financial position, results of operations, liquidity and cash flows, we believe that the combination of our current cash position, our availability under the Revolving Credit Facility, the recent actions we have taken with respect to our debt and equity and strengthening our balance sheet, as well as the actions we have taken to reduce our cash outflows, leave us well-positioned to manage our business.
+Added: If our available liquidity were not sufficient to meet our operating and debt service obligations as they come due, we would need to pursue alternative arrangements through additional debt or equity financing to meet our cash requirements.
There can be no assurance that any such financing would be available on commercially acceptable terms, or at all.
−Removed: There may be developments outside of our control requiring us to adjust our operating plan, including additional required center closures.
−Removed: As such, given the dynamic nature of our current operating environment, we cannot reasonably estimate the impacts of COVID-19 on our financial position, results of operations or cash flows in the future.
+Added: We also intend to continue to explore sale-leaseback transactions.
+Added: During the three months ended March 31, 2022, we completed sale-leaseback transactions associated with two pro perties and we have an agreement for the sale-leaseback of two additional properties that is expected to close on or about May 13, 2022.
+Added: In addition, we are exploring the potential sale-leaseback of a number of our properties with targeted gross proceeds of approximately $500 million by the end of the third quarter of 2022.
+Added: For more information regarding the sale-leaseback tr ansactions that were consummated during the three months ended March 31, 2022, see Note 7, Leases, to our condensed consolidated financial statements included elsewhere in this report.
+Added: Investment in Business
+Added: As we recover from the impacts of the COVID-19 pandemic, we are investing in our business to elevate and broaden our member experiences and drive additional revenue per center membership, including introducing new types of memberships, providing concierge-type member services, expanding our omni-channel offerings and improving our in-center services and products.
+Added: Elevating our member experiences requires investment in our team members, programs, products, services and centers.
+Added: These investments may impact our short-term results of operations and cash flows as our investments in our business may be made more quickly than we achieve additional revenue per center membership.
+Added: Impact of Our Asset-light, Flexible Real Estate Strategy on Rent Expense
+Added: Our asset-light, flexible real estate strategy has allowed us to expand our business by leveraging operating leases and sale-leaseback transactions.
+Added: Approximately 59% of our centers are now leased, including approximately 92% of our new centers opened within the last five years, versus a predominantly owned real estate strategy prior to 2015.
+Added: Rent expense, which includes both cash and non-cash rent expense, will continue to increase as we lease more centers and will therefore impact the comparability of our results of operations.
+Added: The impact of these increases is dependent upon the timing of our centers under development and the center openings and terms of the leases for the new centers or sale-leaseback transactions.
Share-Based Compensation
−Removed: As of September 30, 2021, total unrecognized share-based compensation expense associated with stock options, restricted Series A Preferred Stock and restricted stock units was $362.5 million.
−Removed: The estimated fair value associated with each of the applicable share-based compensation awards outstanding at September 30, 2021 will be recognized as share-based compensation expense if and when the related recognition conditions, for accounting purposes, are met.
−Removed: As a result of the consummation of the IPO, a significant portion of this total unrecognized share-based compensation expense amount will be recognized during the fourth quarter of 2021.
+Added: During the three months ended March 31, 2022, we recognized share-based compensation expense associated with stock options, restricted stock and restricted stock units totaling approximately $21.4 million.
+Added: The majority of this expense was associated with awards that were fully vested and became exercisable on April 4, 2022.
+Added: No share-based compensation expense was recognized during the three months ended March 31, 2021, because the vesting and exercisability of stock options granted by the Company up through March 31, 2021 was contingent upon the occurrence of a change of control or an initial public offering.
Critical Accounting Policies and Estimates
−Removed: 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.
+Added: The preparation of financial statements in conformity with 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.
Ultimate results could differ from those estimates.
2 unchanged sentences
These revisions can affect operating results.
−Removed: Management has evaluated the development and selection or our critical accounting policies and estimates used in the preparation of the Company’s unaudited condensed financial statements and related notes and believes these policies to be reasonable and appropriate.
+Added: Management has evaluated the development and selection of our critical accounting policies and estimates used in the preparation of the Company’s unaudited condensed consolidated financial statements and related notes and believes these policies to be reasonable and appropriate.
Certain of these policies involve a higher degree of judgment or complexity and are most significant to reporting our results of operations and financial position, and are, therefore, discussed as critical.
−Removed: Our most significant estimates and assumptions that materially affect the Company's unaudited condensed financial statements involve difficult, subjective or complex judgments which management used while performing goodwill, intangible and long-lived asset impairment analyses.
+Added: Our most significant estimates and assumptions that materially affect the Company’s unaudited condensed consolidated financial statements involve difficult, subjective or complex judgments which management used while performing goodwill, indefinite-lived intangible and long-lived asset impairment analyses.
Given the additional effects from the COVID-19 pandemic, these estimates can be more challenging, and actual results could differ materially from our estimates.
−Removed: As it relates to the long-lived asset impairment analyses that we have performed d uring both the three and nine months ended September 30, 2021 and 2020, we determined that certain projects were no longer deemed viable for construction, and that the previously-capitalized site development costs associated with these projects were impaired.
−Removed: Accordingly, as it relates to these long-lived assets, we recognized impairment charges of $0.7 million and $9.9 million for the three months ended September 30, 2021 and 2020, respectively, and we recognized impairment charges of $2.5 million and $16.9 million for the nine months ended September 30, 2021 and 2020, respectively.
−Removed: More information on all of our significant accounting policies can be found in Note 2, “Summary of Significant Accounting Policies” to our audited consolidated financial statements included in the Company’s Registration Statement on Form S-1 filed with the SEC on September 13, 2021 (File No.
−Removed: 333-259495) and the section of such Registration Statement on Form S-1 entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations.” There have been no material changes to our critical accounting policies as compared to the critical accounting policies described in such Registration Statement on Form S-1.
+Added: More information on all of our significant accounting policies can be found in Note 2, “Summary of Significant Accounting Policies” to our audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.
+Added: There have been no material changes to our critical accounting policies as compared to the critical accounting policies described in such Annual Report on Form 10-K.
Results of Operations
−Removed: Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020
−Removed: The following table sets forth our condensed consolidated statements of operations data (amounts in thousands) and data as a percentage of total revenue for the three months ended September 30, 2021 and 2020:
−Removed: Three Months Ended September 30,
+Added: Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021
+Added: The following table sets forth our condensed consolidated statements of operations data (amounts in thousands) and data as a percentage of total revenue for the three months ended March 31, 2022 and 2021:
+Added: Three Months Ended March 31,
As a Percentage of Total Revenue
8 unchanged sentences
Depreciation and amortization 58,107 61,206 14.8 % 24.6 %
−Removed: Other operating 14,796 15,152 3.8 % 6.5 %
+Added: Other operating (income) expense (17,035) 6,934 (4.3) % 2.8 %
Total operating expenses 403,170 331,542 102.8 % 133.1 %
2 unchanged sentences
Interest expense, net of interest income (29,943) (96,217) (7.6) % (38.6) %
−Removed: Equity in earnings of affiliate (28) 37 — % — %
+Added: Equity in earnings (loss) of affiliate 26 (293) — % (0.1) %
Total other expense (29,917) (96,510) (7.6) % (38.7) %
3 unchanged sentences
Total revenue.
−Removed: The $154.0 million increase in Total revenue for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 reflects the adverse economic impact that our center closures had on our business during the three months ended September 30, 2020 and the timing of the subsequent reopening of our centers, as well as pricing initiatives we implemented at the majority of our centers during the three months ended September 30, 2021, which have resulted in higher average Center membership dues being charged to new members during the three months ended September 30, 2021 as compared to the three months ended September 30, 2020.
−Removed: With respect to the $143.6 million increase in Center revenue for the three months ended September 30, 2021 compared to the three months ended September 30, 2020:
−Removed: • 63.6% was from membership dues and enrollment fees, which increased $91.4 million for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020.
−Removed: This increase reflects the adverse economic impact that our center closures, which resulted from COVID-19, had on our business during the three months ended September 30, 2020 and the timing of the subsequent reopening of our centers, as we ll as pricing initiatives we implemented at the majority of our centers during the three months ended September 30, 2021, which have resulted in higher average Center membership dues being charged to new members during the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 ;
−Removed: • 36.4% was from in-center revenue, which increased $52.2 million for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 .
−Removed: This increase was recognized across all of our primary in-center businesses and reflects the adverse economic impact that our center closures, which resulted from COVID-19, had on our business during the three months ended September 30, 2020 as well as the timing of the subsequent reopening of our centers.
−Removed: The $10.4 million increase in Other revenue for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 was primarily driven by our athletic events business, as we were able to produce several of our iconic events during the third quarter of 2021 compared to the third quarter of 2020 when COVID-19 restrictions forced the cancellation of most of our events .
+Added: The $142.9 million increase in Total revenue for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 reflects the continued improvement of our operations as we emerge from the adverse impacts of COVID-19, as well as pricing initiatives we implemented at the majority of our centers during the second half of 2021, which have resulted in higher average Center membership dues being charged during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.
+Added: With respect to the $136.5 million increase in Center revenue for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:
+Added: • 70.8% was from membership dues and enrollment fees, which increased $96.6 million for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.
+Added: This increase reflects the improvement in our Center memberships, which increased from 544,216 as of March 31, 2021 to 673,983 as of March 31, 2022, as we emerge from the adverse impacts of COVID-19, as we ll as pricing initiatives we implemented at the majority of our centers d uring the second half of 2021, which have resulted in higher average Center membership dues being charged during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 ;
+Added: • 29.2% was from in-center revenue, which increased $39.9 million for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 .
+Added: This increase was recognized across all of our primary in-center businesses and reflects the higher utilization of our services by our members as we emerge from the adverse impacts of COVID-19.
+Added: The $6.4 million increase in Other revenue for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily driven by our athletic events business, as we were able to produce more of our iconic events during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 when COVID-19 restrictions forced the cancellation of some of our events .
Center operations expenses .
−Removed: The $66.4 million increase in Center operations expenses for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 was driven by increased staffing requirements resulting from the subsequent reopening of our centers and the addition of seven new centers.
+Added: The $65.0 million increase in Center operations expenses for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was driven by increased staffing requirements resulting from our investment in our programs, services and centers and from the increased usage of our centers and services by our members during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, as well as the addition of two new centers during the three months ended March 31, 2022 .
Rent expense .
−Removed: The $5.0 million increase in Rent expense for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 was primarily driven by the sale leaseback of five centers occurring since September 30, 2020 , and our taking possession of five sites since September 30, 2020 for future centers where we started incurring GAAP rent expense, most of which is non-cash.
+Added: The $5.4 million increase in Rent expense for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily driven by our taking possession of seven properties since March 31, 2021 for future centers where we started incurring GAAP rent expense, most of which is non-cash, the timing of the sale-leaseback of two centers that occurred during 2021 and the sale-leaseback of two centers occurring during the three months ended March 31, 2022.
General, administrative and marketing expenses.
−Removed: The $13.1 million increase in General, administrative and marketing expenses for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 was primarily driven by a $4.1 million increase in share-based compensation, a $3.5 million increase in marketing expenses and a $3.4 million increase in general and administrative costs due to the return of Corporate team members who remained furloughed during the third quarter of 2020, partially offset by $2.6 million of corporate COVID-19-related expenses incurred during the three months ended September 30, 2020 .
−Removed: Depreciation and amortization .
−Removed: The $3.4 million decrease in Depreciation and amortization for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 consists of $3.1 million and $0.3 million lower depreciation and amortization, respectively .
−Removed: Other operating expenses .
−Removed: The $0.4 million decrease in Other operating expenses for the three months ended September 30, 2021 as compar ed to the three months ended September 30, 2020 was primarily attributable to project cost write-offs recognized during the three months ended September 30, 2020 for sites that were no longer deemed viable for construction as a result of COVID-19, partially offset by higher costs associated with our athletic events business during the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 , as we were able to produce several of our iconic events during the third quarter of 2021 as compared to the third quarter of 2020 when COVID-19 restrictions forced the cancellation of most of our events .
−Removed: Interest expense, net .
−Removed: The $8.8 million increase in Interest expense, net of interest income for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 reflects a relatively higher effective weighted average interest rate on an increased average level of outstanding borrowings during the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 .
−Removed: Benefit from income taxes .
−Removed: The benefit from income taxes was $12.0 million for the three months ended September 30, 2021 compared to $28.1 million for the three months ended September 30, 2020 .
−Removed: The effective tax rate was 20.9% and 23.1% for those same periods, respectively.
−Removed: The change in benefit from income taxes was primarily attributable to a decrease in our loss before income taxes for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020, as well as the recognition during the three months ended September 30, 2021 of an increase in the valuation allowance to reduce the deferred tax asset associated with our state net operating loss carryforwards.
−Removed: As a result of the factors described above, net loss decreased by $48.2 million for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 .
−Removed: Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
−Removed: The following table sets forth our condensed consolidated statements of operations data (amounts in thousands) and data as a percentage of total revenue for the nine months ended September 30, 2021 and 2020:
−Removed: Nine Months Ended September 30,
−Removed: As a Percentage of Total Revenue
−Removed: 2021 2020 2021 2020
−Removed: Center revenue $ 933,690 $ 704,919 97.5 % 97.9 %
−Removed: Other revenue 23,835 14,991 2.5 % 2.1 %
−Removed: Total revenue 957,525 719,910 100.0 % 100.0 %
−Removed: Operating expenses:
−Removed: Center operations 625,322 515,350 65.3 % 71.6 %
−Removed: Rent 154,552 138,470 16.1 % 19.2 %
−Removed: General, administrative and marketing 126,896 119,665 13.3 % 16.6 %
+Added: The $28.3 million increase in General, administrative and marketing expenses for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily driven by a $19.9 million increase in share-based compensation expense, a $4.6 million increase in overhead costs that were primarily labor-related to enhance and broaden our member services in support of the recovery of our business, a $1.8 million increase in public company-related expenses, a $1.1 million increase in information technology costs and a $0.9 million increase in marketing expenses.
+Added: No share-based compensation expense was recognized during the three months ended March 31, 2021, because the vesting and exercisability of stock options granted by the Company up through March 31, 2021 was contingent upon the occurrence of a change of control or an initial public offering.
Depreciation and amortization .
−Removed: Other operating 30,660 37,412 3.2 % 5.2 %
−Removed: Total operating expenses 1,114,435 999,380 116.4 % 138.8 %
−Removed: Loss from operations (156,910) (279,470) (16.4) % (38.8) %
−Removed: Other (expense) income:
+Added: The $3.1 million decrease in Depreciation and amortization for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 consists of $3.4 million lower depreciation, driven by the timing of sale-leaseback transactions, partially offset by $0.3 million higher amortization, driven by a facility license associated with an outdoor enthusiast and bicycling event that we acquired during the third quarter of 2021 .
+Added: Other operating (income) expenses .
+Added: Other operating income for the three months ended March 31, 2022 was $17.0 million, compared to Other operating expenses of $6.9 million for the three months ended March 31, 2021.
+Added: The $24.0 million change was primarily attributable to the recognition of a gain of $28.4 million on a sale-leaseback transaction associated with two properties that was completed during the three months ended March 31, 2022, partially offset by higher costs associated with our athletic events business as we were able to produce more of our iconic events during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.
Interest expense, net of interest income .
−Removed: Equity in earnings of affiliate (412) (206) — % — %
−Removed: Total other expense (176,556) (95,930) (18.4) % (13.3) %
−Removed: Loss before income taxes (333,466) (375,400) (34.8) % (52.1) %
−Removed: Benefit from income taxes (58,867) (99,096) (6.1) % (13.7) %
−Removed: Net loss $ (274,599) $ (276,304) (28.7) % (38.4) %
−Removed: Total revenue.
−Removed: The $237.6 million increase in Total revenue for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 primarily reflects the adverse economic impact that our center closures had on our business during the nine months ended September 30, 2020 and the timing of the subsequent reopening of our centers, as well as pricing initiatives we implemented at the majority of our centers during the nine months ended September 30, 2021, which have resulted in higher average Center membership dues being charged to new members during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.
−Removed: With respect to the $228.8 million increase in Center revenue for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020:
−Removed: • 71.4% was from membership dues and enrollment fees, which increased $163.5 million for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.
−Removed: This increase reflects the adverse economic impact that our center closures, which resulted from C OVID-19, had on our business during the nine months ended September 30, 2020 and the timing of the subsequent reopening of our centers, as well as pricing initiatives we implemented at the majority of our centers during the nine months ended September 30, 2021, which have resulted in higher average Center membership dues being charged to new members during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 ;
−Removed: • 28.6% was from in-center revenue, which increased $65.3 million for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 .
−Removed: This increase was recognized across all of our primary in-center businesses and reflects the adverse economic impact that our center closures, which resulted from COVID-19, had on our business during the nine months ended September 30, 2020 as well as the timing of the subsequent reopening of our centers.
−Removed: The $8.8 million increase in Other revenue for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily driven by our athletic events business, as we were able to produce several of our iconic events during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 when COVID-19 restrictions forced the cancellation of most of our events .
−Removed: Center operations expenses .
−Removed: The $109.9 million increase in Center operations expenses for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily driven by increased staffing requirements resulting from the subsequent reopening of our centers and the addition of seven new centers.
−Removed: Rent expense .
−Removed: The $16.1 million increase in Rent expense for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily driven by the sale leaseback of five centers occurring since September 30, 2020 , and our taking possession of five sites since September 30, 2020 for future centers where we started incurring GAAP rent expense, most of which is non-cash
−Removed: General, administrative and marketing expenses.
−Removed: The $7.2 million increase in General, administrative and marketing expenses for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily driven by an $7.4 million increase in general and administrative costs due to the return of Corporate team members who remained furloughed during the nine months ended September 30, 2020, a $7.0 million increase in share-based compensation , and a $4.9 million increase in marketing expenses , partially offset by $12.4 million of corporate COVID-19-related expenses that were recognized during the nine months ended September 30, 2020 .
−Removed: Depreciation and amortization .
−Removed: The $11.5 million decrease in Depreciation and amortization for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 consists of $7.7 million and $3.8 million lower depreciation and amortization, respectively.
−Removed: Other operating expenses .
−Removed: The $6.7 million decrease in Other operating expenses for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily attributable to project cost write-offs recognized during the nine months ended September 30, 2020 for sites that were no longer deemed viable for construction as a result of COVID-19, partially offset by higher costs associated with our athletic events business during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 , as we were able to produce several of our iconic events during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 when COVID-19 restrictions forced the cancellation of most of our events.
−Removed: Interest expense, net .
−Removed: The $80.4 million increase in Interest expense, net of interest income for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily driven by debt issuance costs and original issuance discount costs associated with extinguished debt instruments that were written off during the nine months ended September 30, 2021 , including a $41.0 million non-cash expense recognized related to the conversion of our related party secured loan into Series A Preferred Stock.
−Removed: Additionally, the increase also reflects a relatively higher effective weighted average interest rate on an increased average level of outstanding borrowings during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 .
+Added: The $66.3 million decrease in Interest expense, net of interest income for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was driven by $41.0 million of non-cash expense that was recognized during the three months ended March 31, 2021 in connection with the conversion of a related party secured loan into Series A Preferred Stock, write-offs of debt issuance costs and original issuance discount costs totaling $18.3 million that were recognized during the three months ended March 31, 2021 in connection with extinguished debt instruments, as well as a lower average level of outstanding borrowings during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 .
Benefit from income taxes .
−Removed: The benefit from income taxes was $58.9 million for the nine months ended September 30, 2021 compared to $99.1 million for the nine months ended September 30, 2020 .
+Added: The benefit from income taxes was $2.9 million for the three months ended March 31, 2022 compared to $26.0 million for the three months ended March 31, 2021 .
The effective tax rate was 7.0% and 14.5% for those same periods, respectively.
−Removed: The change in benefit from income taxes was primarily attributable to:
−Removed: (i) a decrease in our loss before income taxes for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020;
−Removed: (ii) a $41.0 million loss related to the extinguishment of our related party secured loan that we recognized for GAAP purposes during the nine months ended September 30, 2021 that is not recognized for tax purposes;
−Removed: (iii) the recognition during the nine months ended September 30, 2021 of an increase in the valuation allowance to reduce the deferred tax asset associated with our state net operating loss carryforwards;
−Removed: and (iv) the favorable federal tax rate differential from our net operating loss carryback claims filed in 2020 under the CARES Act.
−Removed: The favorable federal tax rate differential was due to our net operating losses generated in tax years with a federal tax rate of 21% whereas the losses were carried back to tax years with a federal tax rate of 35%.
+Added: The change in benefit from income taxes was primarily attributable to the decrease in our loss before income taxes and the decrease in the effective tax rate for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.
+Added: The effective tax rate applied to our pre-tax loss for the three months ended March 31, 2022 is lower than our statutory rate of 21% and reflects a $4.6 million increase in the valuation allowance associated with certain of our deferred tax assets as well as deductibility limitations associated with executive compensation.
+Added: As a result of the factors described above, net loss decreased by $114.8 million for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 .
Liquidity and Capital Resources
−Removed: Our principal liquidity needs include the development of new centers, debt service and lease requirements, investments in technology and expenditures necessary to maintain and update our centers and associated fitness equipment.
+Added: Our principal liquidity needs include the development of new centers, debt service and lease requirements, investments in our business and technology and expenditures necessary to maintain and update or enhance our centers and associated fitness equipment and member experiences.
We have primarily satisfied our historical liquidity needs with cash flow from operations, drawing on the Revolving Credit Facility and through sale-leaseback transactions.
−Removed: We have taken significant action to improve our liquidity.
−Removed: See “—Impact of COVID-19 on Our Business.” We believe the steps we have taken to strengthen our balance sheet and to reduce our cash outflows leave us well-positioned to manage our business including through this pandemic.
+Added: We have taken significant actions to improve our liquidity.
+Added: During 2021, we refinanced a significant portion of our outstanding debt and completed the IPO.
+Added: Additionally, we completed the sale-leaseback of two properties.
+Added: For information regarding the refinancing actions we took during 2021, see Note 6, Debt, to our condensed consolidated financial statements in this report.
+Added: During the three months ended March 31, 2022, we completed a sale-leaseback transaction associated with two properties and we have an agreement for the sale-leaseback of two additional properties that is expected to close on or about May 13, 2022.
+Added: In addition, we are exploring the potential sale-leaseback of a number of our properties with targeted gross proceeds of approximately $500 million by the end of the third quarter of 2022.
+Added: Fo r more information regarding the sale-leaseback transactions that were consummated during the three months ended March 31, 2022 , see Note 7, Leases, to our condensed consolidated financial statements included in this report .
+Added: We believe the steps we have taken to strengthen our balance sheet and to reduce our cash outflows leave us well-positioned to manage our business including as we emerge from the pandemic.
As the opportunity arises or as our business needs require, we may seek to raise capital through additional debt financing or through equity financing.
1 unchanged sentence
To date, we have not experienced difficulty accessing the credit and capital markets;
−Removed: however, volatility in these markets, particularly in light of the impacts of COVID-19, may increase costs associated with issuing debt instruments or affect our ability to access those markets, which could have an adverse impact on our ability to raise additional capital, to refinance existing debt and/or to react to changing economic and business conditions.
+Added: however, volatility in these markets, particularly in light of the impacts of COVID-19 and the potential for rising interest rates, may increase costs associated with issuing debt instruments or affect our ability to access those markets, which could have an adverse impact on our ability to raise additional capital, to refinance existing debt and/or to react to changing economic and business conditions.
In addition, it is possible that our ability to access the credit and capital markets could be limited at a time when we would like, or need, to do so.
−Removed: As of September 30, 2021 , there were no outstanding borrowings on the Revolving Credit Facility and there were $40.1 million of outstanding letters of credit.
−Removed: As of September 30, 2021 , total cash and revolver availability was $262.6 million, consisting of total cash and cash equivalents of $44.8 million and total revolver availability, subject to a $100.0 million minimum liquidity requirement (discussed in —“Debt Covenants” below), of $217.8 million.
−Removed: The following table sets forth certain data included in our condensed consolidated statements of cash flows (in thousands):
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: Net cash used in operating activities $ (15,322) $ (56,165)
−Removed: Capital expenditures (201,741) (213,876)
+Added: As of March 31, 2022, there were $30.0 million of outstanding borrowings under our Revolving Credit Facility and there were $33.5 million of outstanding letters of credit.
+Added: As of March 31, 2022, total cash and revolver availability was $452.6 million, consisting of total cash and cash equivalents of $41.1 million and total revolver availability of $411.5 million.
+Added: The following table sets forth our condensed consolidated statements of cash flows data (in thousands):
+Added: Three Months Ended
+Added: Net cash provided by (used in) operating activities $ 9,062 $ (38,156)
Net cash used in investing activities (26,283) (11,073)
Net cash provided by financing activities 26,619 184,182
+Added: Effect of exchange rates on cash and cash equivalents 61 18
+Added: Increase in cash and cash equivalents $ 9,459 $ 134,971
Operating Activities
−Removed: The $40.8 million decrease in cash used in operating activities for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily the result of lower profitability during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2021 resulting from the adverse impact that COVID-19 has had on our business.
+Added: The $47.2 million increase in cash provided by operating activities for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily the result of higher profitability due to the recovery from the impact of COVID-19 on our business.
Investing Activities
1 unchanged sentence
In addition, we invest in capital expenditures to maintain and update our existing centers.
−Removed: We finance the purchase of our property and equipment through operating cash flows, draws on our Revolving Credit Facility, tenant allowances and proceeds from sale-leaseback transactions.
−Removed: The $75.5 million increase in cash used in investing activities for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily driven by a relatively higher amount of proceeds that we received from landlords for sale-leaseback transactions during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2021 and proceeds we received from the sale of land held for sale during nine months ended September 30, 2020.
−Removed: Cash used in investing activities for the nine months ended September 30, 2021 also includes a $9.1 million payment we made in connection with the acquisition of the assets associated with an outdoor bicycling event.
−Removed: Of the $10.2 million total purchase price associated with the acquisition of these assets, $1.1 million had yet to be paid as of September 30, 2021 .
−Removed: The following schedule reflects capital expenditures, net by type of expenditure (in thousands):
−Removed: Three Months Ended Nine Months Ended
−Removed: September 30, September 30,
−Removed: 2021 2020 2021 2020
−Removed: Growth capital expenditures (New center land and construction, growth initiatives, major remodels of acquired centers and the purchase of previously-leased centers), net of tenant allowances $ 43,418 $ 25,806 $ 117,605 $ 124,775
+Added: We finance the purchase of our property and equipment through operating cash flows, proceeds from sale-leaseback transactions, construction reimbursements and draws on our Revolving Credit Facility.
+Added: The $15.2 million increase in cash used in investing activities for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily driven by a relatively higher level of new center construction activity during the three months ended March 31, 2022 , partially offset by a higher amount of proceeds that we received from a sale-leaseback transaction during the three months ended March 31, 2022 .
+Added: The following schedule reflects capital expenditures by type of expenditure (in thousands):
+Added: Three Months Ended
+Added: Growth capital expenditures (new center land and construction, growth initiatives, major remodels of acquired centers and the purchase of previously leased centers), net of construction reimbursements $ 66,436 $ 27,570
Center maintenance capital expenditures 16,396 7,692
Corporate capital expenditures 27,922 8,067
−Removed: Total capital expenditures, net $ 79,768 $ 45,584 $ 201,741 $ 213,876
−Removed: The $12.1 million decrease in total capital expenditures, net for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily driven by lower corporate capital expenditures for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 , reflecting our strong operating discipline and continued effort to control expenditures, partially offset by higher center maintenance capital expenditures for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 , primarily driven by the timing of the subsequent reopening of our centers .
−Removed: Our contracts with construction subcontractors contain clauses that allow us to terminate any project.
−Removed: Therefore, we have the ability to cancel any project and, in the event of such a cancellation, we will only be obligated to pay for work actually performed up to the date of cancellation.
−Removed: Our unpaid obligations to construction subcontractors for work performed up through September 30, 2021 is recognized in Construction accounts payable on our September 30, 2021 condensed consolidated balance sheet.
+Added: Total capital expenditures $ 110,754 $ 43,329
+Added: The $67.4 million increase in total capital expenditures for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily driven by higher growth capital expenditures for new centers and corporate capital expenditures related to Life Time Work and continued investments in technology.
Financing Activities
−Removed: Financing activities for the nine months ended September 30, 2021 and 2020 include net proceeds from and repayments of debt, including those associated with our senior secured credit facility.
−Removed: In addition, financing activities for the nine months ended September 30, 2020 include proceeds from equity transactions.
−Removed: The $54.0 million increase in cash provided by financing activities for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily driven by net proceeds we received from new borrowings during the nine months ended September 30, 2021 in connection with debt refinancing transactions, partially offset by proceeds we received from the issuance of the Company’s common stock during the nine months ended September 30, 2020 .
−Removed: Debt Covenants
−Removed: Our senior secured credit facility as well as the indentures governing our outstanding senior secured notes and senior unsecured notes contain a number of covenants imposing significant restrictions on our business.
−Removed: These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise.
−Removed: The restrictions these covenants place on us include limitations on our ability to:
−Removed: • incur or guarantee additional indebtedness;
−Removed: • make certain investments;
−Removed: • pay dividends or make distributions on our capital stock;
−Removed: • sell assets, including capital stock of restricted subsidiaries;
−Removed: • agree to payment restrictions affecting our restricted subsidiaries;
−Removed: • consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
−Removed: • enter into transactions with our affiliates;
−Removed: • incur liens;
−Removed: • designate any of our subsidiaries as unrestricted subsidiaries.
−Removed: We are also required to comply with a first lien net leverage ratio covenant under the Revolving Credit Facility.
−Removed: However, the Amended Senior Secured Credit Facility includes a covenant modification period ending on the earlier of (i) January 1, 2022 or (ii) the date we provide notice of our intention to terminate the Covenant Modification Period.
−Removed: During the Covenant Modification Period, we are not obligated to comply with the first lien net leverage ratio covenant;
−Removed: however, we are required to maintain a minimum liquidity balance of $100.0 million, which is tested monthly.
−Removed: As of both September 30, 2021 and December 31, 2020, we were either in compliance in all material respects with our debt covenants or the covenants were not applicable.
−Removed: Effective as of the end of the first fiscal quarter following the Covenant Modification Period and continuing throughout the remaining term of the Revolving Credit Facility, we will be required to maintain a first lien net leverage ratio, if 30% 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 $20.0 million).
−Removed: During the first three quarterly test periods following the Covenant Modification Period, certain financial measures used in the calculation of the first lien net leverage ratio will be calculated on a pro forma basis by annualizing the respective financial measures recognized during those test periods.
+Added: The $157.6 million decrease in cash provided by financing activities for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily driven by net proceeds we received from borrowings under our Term Loan Facility, Secured Notes and Unsecured Notes during the three months ended March 31, 2021 .
+Added: We expect to satisfy our short-term and long-term obligations through a combination of cash on hand, funds generated from operations, sale-leaseback transactions and the borrowing capacity available under our Revolving Credit Facility.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.