What changed in this filing

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Item 1. Financial Statements

2022-08-10 compared with 2022-05-11 · 210 added, 143 removed, 467 unchanged (43% of the section changed)

36 unchanged sentences

500,000 shares authorized;

193,060 shares issued and outstanding

193,796 and 193,060 shares issued and outstanding, respectively.

Additional paid-in capital 2,772,393 2,743,560

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Center revenue $ 445,882 $ 316,596 $ 827,503 $ 561,690

8 unchanged sentences

Total operating expenses 440,457 380,307 843,627 711,849

Loss from operations ( 10,916 ) ( 82,244 )

Income (loss) from operations 20,810 ( 57,120 ) 9,894 ( 139,364 )

Other (expense) income:

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net loss $ ( 2,285 ) $ ( 76,356 ) $ ( 40,251 ) $ ( 229,157 )

Foreign currency translation adjustments, net of tax of $ 0

( 2,955 ) 1,565 ( 1,324 ) 2,727

Comprehensive loss $ ( 5,240 ) $ ( 74,791 ) $ ( 41,575 ) $ ( 226,430 )

See notes to unaudited condensed consolidated financial statements.

LIFE TIME G ROUP HOLDINGS, INC.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

4 unchanged sentences

Shares Amount

Balance at March 31, 2022 193,060 $ 1,931 $ 2,765,503 $ ( 689,049 ) $ ( 1,385 ) $ 2,077,000

Net loss — — — ( 2,285 ) — ( 2,285 )

Other comprehensive loss — — — — ( 2,955 ) ( 2,955 )

Share-based compensation — — 5,973 — — 5,973

Stock option exercises 114 1 1,193 — — 1,194

Equity issuance costs — — ( 270 ) — — ( 270 )

Issuance of common shares in connection with the vesting of restricted stock units 622 6 ( 6 ) — — —

Balance at June 30, 2022 193,796 $ 1,938 $ 2,772,393 $ ( 691,334 ) $ ( 4,340 ) $ 2,078,657

Common Stock Additional Paid-In

Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total

Shares Amount

Balance at December 31, 2021 193,060 $ 1,931 $ 2,743,560 $ ( 651,083 ) $ ( 3,016 ) $ 2,091,392

Net loss — — — ( 40,251 ) — ( 40,251 )

Other comprehensive income — — — — 1,631 1,631

Other comprehensive loss — — — — ( 1,324 ) ( 1,324 )

Share-based compensation — — 27,411 — — 27,411

Stock option exercises 114 1 1,193 — — 1,194

Equity issuance costs — — ( 270 ) — — ( 270 )

Issuance of common shares in connection with the vesting of restricted stock units 622 6 ( 6 ) — — —

Settlement of accrued compensation liabilities through the issuance of share-based compensation awards — — 505 — — 505

Balance at June 30, 2022 193,796 $ 1,938 $ 2,772,393 $ ( 691,334 ) $ ( 4,340 ) $ 2,078,657

Common Stock Additional Paid-In

Capital Stockholder Note

Receivable Accumulated Deficit Accumulated Other Comprehensive Loss Total

Shares Amount

Balance at March 31, 2021 145,196 $ 1,452 $ 1,565,623 $ ( 15,000 ) $ ( 224,515 ) $ ( 2,068 ) $ 1,325,492

Net loss — — — — ( 76,356 ) — ( 76,356 )

Other comprehensive income — — — — — 1,565 1,565

Share-based compensation — — 1,130 — — — 1,130

Settlement of accrued compensation liabilities through the issuance of share-based compensation awards — — 3,844 — — — 3,844

Dividends on preferred stock — — ( 6,006 ) — — — ( 6,006 )

Balance at June 30, 2021 145,196 $ 1,452 $ 1,564,591 $ ( 15,000 ) $ ( 300,871 ) $ ( 503 ) $ 1,249,669

Common Stock Additional Paid-In

5 unchanged sentences

Other comprehensive income — — — — — 2,727 2,727

Share-based compensation — — 1,130 — — — 1,130

Settlement of accrued compensation liabilities through the issuance of share-based compensation awards — — 3,844 — — — 3,844

Dividends on preferred stock — — ( 10,288 ) — — — ( 10,288 )

Balance at March 31, 2021 145,196 $ 1,452 $ 1,565,623 $ ( 15,000 ) $ ( 224,515 ) $ ( 2,068 ) $ 1,325,492

Balance at June 30, 2021 145,196 $ 1,452 $ 1,564,591 $ ( 15,000 ) $ ( 300,871 ) $ ( 503 ) $ 1,249,669

See notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

5 unchanged sentences

Non-cash rent expense 15,635 6,219

Impairment charges associated with long-lived assets 227 900

(Gain) loss on disposal of property and equipment, net ( 49,743 ) 1,110

13 unchanged sentences

Repayments of debt ( 11,539 ) ( 1,594,439 )

Proceeds from senior secured credit facility 230,000 15,000

Repayments of senior secured credit facility ( 200,000 ) ( 109,000 )

Proceeds from revolving credit facility 420,000 15,000

Repayments of revolving credit facility ( 390,000 ) ( 109,000 )

Repayments of finance lease liabilities ( 697 ) ( 750 )

Increase in debt discounts and issuance costs — ( 44,676 )

Proceeds from stock option exercises 1,194 —

Other ( 476 ) —

21 unchanged sentences

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 March 31, 2022, we operated 153 centers in 29 states and one Canadian province.

As of June 30, 2022, we operated 153 centers in 29 states and one Canadian province.

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, in many cases subject to various operating restrictions and requirements.

All of our centers were open as of March 31, 2022.

We re-opened our first center on May 8, 2020 and continued to re-open our centers as state and local governmental authorities permitted.

With the exception of our three Canadian centers, which were temporarily closed during a portion of January 2022, all of our centers were open during the three and six months ended June 30, 2022.

Initial Public Offering

On October 12, 2021, Life Time Group Holdings, Inc.

consummated its initial public offering (“IPO”) of 39.0 million shares of its common stock at a public offering price of $ 18.00 per share, resulting in total gross proceeds of $ 702.0 million, which was r educed by underwriting discounts and other offering and issuance expenses of $ 27.7 million, for net proceeds of $ 674.3 million.

The shares of the Company’s common stock began trading on The New York Stock Exchange (the “NYSE”) under the symbol “LTH” on October 7, 2021.

2 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, which was reduced by underwriting discounts and other offering expenses of $ 1.3 million, for net proceeds of $ 27.1 million .

We are using these net proceeds, as well as the remaining portion of the net proceeds we received in connection with the IPO after the partial pay down of $ 575.7 million (including a $ 5.7 million prepayment penalty) of our Term Loan Facility (as defined in Note 6, Debt), for general corporate purposes.

We used these net proceeds, as well as the remaining portion of the net proceeds we received in connection with the IPO after the $ 575.7 million (including a $ 5.7 million prepayment penalty) partial pay down of our Term Loan Facility (as defined in Note 6, Debt), for general corporate purposes.

Basis of Presentation

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In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation.

The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued.

ASU 2020-04 provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued.

In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848):

Scope,” which provides implementation guidance associated with ASU 2020-04 and clarifies certain optional expedients in Topic 848.

This guidance in ASU 2020-04 is effective for all entities as of March 12, 2020 and may be applied through December 31, 2022.

We are currently evaluating the effect the adoption of ASU 2020-04 may have on our consolidated financial statements.

The guidance in ASU 2020-04 is effective for all entities as of March 12, 2020 and may be applied through December 31, 2022.

We are still evaluating the impact of ASU 2020-04, but we do not expect that the adoption of this standard will have a material impact on our consolidated financial statements.

Fair Value Measurements

8 unchanged sentences

Fair Value Measurements on a Recurring Basis.

We had no material remeasurements of such assets or liabilities to fair value during the three months ended March 31, 2022 and 2021.

We had no material remeasurements of such assets or liabilities to fair value during the three and six months ended June 30, 2022 and 2021.

Financial Assets and Liabilities.

At March 31, 2022, the fair value of our outstanding Term Loan Facility, Secured Notes and Unsecured Notes (each of which is defined in Note 6, Debt) was approximately $ 272.3 million, $ 920.4 million and $ 472.0 million, respectively.

At June 30, 2022, the fair value of our outstanding Term Loan Facility, Secured Notes and Unsecured Notes (each of which is defined in Note 6, Debt) was approximately $ 268.2 million, $ 846.4 million and $ 429.9 million, respectively.

At December 31, 2021, the fair value of our outstanding Term Loan Facility, Secured Notes and Unsecured Notes was approximately $ 277.0 million, $ 957.4 million and $ 494.0 million, respectively.

The carrying amount of our outstanding Mortgage Notes and Construction Loan (each of which is defined in Note 6, Debt) at March 31, 2022 and December 31, 2021 approximates fair value.

The carrying amount of our outstanding Mortgage Notes and Construction Loan (each of which is defined in Note 6, Debt) at June 30, 2022 and December 31, 2021 approximates fair value.

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.

1 unchanged sentence

For more information regarding our debt, see Note 6, 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 long-lived assets, goodwill and intangible assets, which are remeasured when the derived fair

LIFE TIME GROUP HOLDINGS, INC.

2 unchanged sentences

(Table amounts in thousands except per share data)

value is below carrying value on our condensed consolidated balance sheets.

Fair Value Measurements on a Nonrecurring Basis.

Assets and liabilities that are measured at fair value on a nonrecurring basis primarily relate to our long-lived assets, goodwill and intangible assets, which are remeasured when the derived fair value is below carrying value on our condensed 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 condensed consolidated statements of operations.

During both the three months ended March 31, 2022 and 2021, 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.

Accordingly, as it relates to these long-lived assets, we recognized impairment charges of $ 0.2 million and $ 0.9 million for the three months ended March 31, 2022 and 2021, respectively.

We had no material remeasurements of such assets or liabilities to fair value during the periods presented.

Supplemental Balance Sheet and Cash Flow Information

2 unchanged sentences

2022 December 31,

Property held for sale $ 4,988 $ —

Construction contract receivables 15,157 14,949

16 unchanged sentences

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

Three Months Ended

Six Months Ended

Accounts receivable $ ( 4,215 ) $ ( 2,119 )

13 unchanged sentences

Additional supplemental cash flow information is as follows:

Three Months Ended

Net cash (received from income tax refunds, net of taxes paid) paid for income taxes, net of refunds received $ ( 82 ) $ 67

Six Months Ended

Net cash paid for income taxes, net of refunds received $ 1,158 $ 1,112

Cash payments for interest, net of capitalized interest 53,514 42,302

2 unchanged sentences

Issuance of Series A Preferred Stock (as defined in Note 10, Loss Per Share) in connection with the extinguishment of a related party secured loan — 108,591

See Note 7, Leases, for supplemental cash flow information associated with our lease arrangements for the three months ended March 31, 2022 and 2021.

See Note 7, Leases, for supplemental cash flow information associated with our lease arrangements for the three and six months ended June 30, 2022 and 2021.

Goodwill and Intangibles

The goodwill balance was $ 1,233.2 million at both March 31, 2022 and December 31, 2021.

The goodwill balance was $ 1,233.2 million at both June 30, 2022 and December 31, 2021.

Intangible assets consisted of the following:

March 31, 2022

June 30, 2022

Gross Accumulated Amortization Net

7 unchanged sentences

Total intangible assets $ 179,327 $ ( 5,086 ) $ 174,241

Other intangible assets at March 31, 2022 and December 31, 2021 include a facility license as well as trade names and customer relationships associated with our race registration and timing businesses.

Amortization expense associated with intangible assets for the three months ended March 31, 2022 and 2021 was $ 0.5 million and $ 0.2 million, respectively.

Other intangible assets at June 30, 2022 and December 31, 2021 include a facility license as well as trade names and customer relationships associated with our race registration and timing businesses.

Amortization expense associated with intangible assets for the three months ended June 30, 2022 and 2021 was $ 0.3 million and $ 0.2 million, respectively, and was $ 0.8 million and $ 0.4 million for the six months ended June 30, 2022 and 2021, respectively.

Amortization expense associated with intangible assets is included in Depreciation and amortization in our condensed consolidated statements of operations.

There were no goodwill or intangible asset impairment charges recorded during the three months ended March 31, 2022 and 2021.

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 three months ended March 31, 2022 and 2021:

There were no goodwill or intangible asset impairment charges recorded during the three and six months ended June 30, 2022 and 2021.

LIFE TIME GROUP HOLDINGS, INC.

2 unchanged sentences

(Table amounts in thousands except per share data)

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 three and six months ended June 30, 2022 and 2021:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Membership dues and enrollment fees $ 309,262 $ 217,244 $ 581,178 $ 392,551

3 unchanged sentences

Total revenue $ 461,267 $ 323,187 $ 853,521 $ 572,485

The timing associated with the revenue we recognized during the three months ended March 31, 2022 and 2021 is as follows:

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

The timing associated with the revenue we recognized during the three months ended June 30, 2022 and 2021 is as follows:

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

Revenue Other

6 unchanged sentences

Total revenue $ 445,882 $ 15,385 $ 461,267 $ 316,596 $ 6,591 $ 323,187

The timing associated with the revenue we recognized during the six months ended June 30, 2022 and 2021 is as follows:

Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Revenue Other

Revenue Total

Revenue Center

Revenue Other

Revenue Total

Goods and services transferred over time $ 717,885 $ 26,018 $ 743,903 $ 489,074 $ 10,795 $ 499,869

Goods and services transferred at a point in time 109,618 — 109,618 72,616 — 72,616

Total revenue $ 827,503 $ 26,018 $ 853,521 $ 561,690 $ 10,795 $ 572,485

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 membership dues, enrollment fees, personal training and other center services offerings, as well as our media and athletic events.

Contract liabilities at March 31, 2022 and December 31, 2021 were $ 42.6 million and $ 35.9 million, respectively.

Contract liabilities at June 30, 2022 and December 31, 2021 were $ 43.2 million and $ 35.9 million, respectively.

Contract liabilities that will be recognized within one year are classified as deferred revenue in our condensed consolidated balance sheets.

Deferred revenue at March 31, 2022 and December 31, 2021 was $ 40.6 million and $ 33.9 million, respectively, and consists primarily of prepaid membership dues, personal training and other in-center services, and enrollment fees.

The $ 6.7 million increase was primarily driven by registrations received for future athletic events and kids summer camps.

Deferred revenue at June 30, 2022 and December 31, 2021 was $ 41.2 million and $ 33.9 million, respectively, and consists primarily of prepaid membership dues, personal training and other in-center services, and enrollment fees.

The $ 7.3 million increase was primarily driven by registrations received for future personal training sessions, kids summer camps and beach club access.

Contract liabilities that will be recognized in a future period greater than one year are classified as a component of Other liabilities in our condensed consolidated balance sheets.

Long-term contract liabilities at both March 31, 2022 and December 31, 2021 were $ 2.0 million and consist primarily of deferred enrollment fees.

Long-term contract liabilities at both June 30, 2022 and December 31, 2021 were $ 2.0 million and consist primarily of deferred enrollment fees.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Debt consisted of the following:

13 unchanged sentences

Long-term debt, less current maturities $ 1,807,418 $ 1,775,719

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Senior Secured Credit Facility

18 unchanged sentences

As a result of the pay down, we are no longer required to make quarterly principal payments on the Term Loan Facility prior to its maturity.

At March 31, 2022, the Term Loan Facility loan balance was $ 273.6 million, with interest due at intervals ranging from 30 to 180 days at interest rates ranging from LIBOR plus 4.75 % or base rate plus 3.75 %, in either case subject to a 1.00 % rate floor.

At June 30, 2022, the Term Loan Facility loan balance was $ 273.6 million, with interest due at intervals ranging from 30 to 180 days at interest rates ranging from LIBOR plus 4.75 % or base rate plus 3.75 %, in either case subject to a 1.00 % rate floor.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Revolving Credit Facility

Our Revolving Credit Facility provides for a $ 475.0 million revolver and matures in December 2026, or earlier as detailed above under “—Senior Secured Credit Facility.” At March 31, 2022, there were $ 30.0 million of outstanding borrowings on the Revolving Credit Facility and there were $ 33.5 million of outstanding letters of credit, resulting in total revolver availability of $ 411.5 million, which was available at intervals ranging from 30 to 180 days at interest rates ranging from LIBOR plus 4.25 % or base rate plus 3.25 %.

The weighted average interest rate and debt outstanding under the Revolving Credit Facility for the three months ended March 31, 2022 was 4.13 % and $ 50.1 million, respectively.

Our Revolving Credit Facility provides for a $ 475.0 million revolver and matures in December 2026, or earlier as detailed above under “—Senior Secured Credit Facility.” At June 30, 2022, there were $ 30.0 million of outstanding borrowings on the Revolving Credit Facility and there were $ 31.5 million of outstanding letters of credit, resulting in total revolver availability of $ 413.5 million, which was available at intervals ranging from 30 to 180 days at interest rates ranging from LIBOR plus 4.25 % or base rate plus 3.25 %.

The weighted average interest rate and debt outstanding under the Revolving Credit Facility for the six months ended June 30, 2022 was 4.26 % and $ 41.0 million, respectively.

The highest month-end balance during that same period was $ 90.0 million.

8 unchanged sentences

The Secured Notes and the related guarantees are our senior secured obligations and are secured on a first-priority basis by security interests in substantially all of our assets.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Unsecured Notes

9 unchanged sentences

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 March 2023 through August 2027 and carried a weighted average interest rate of 4.70 % and 4.70 % at March 31, 2022 and December 31, 2021, respectively.

The Mortgage Notes have varying maturity dates from March 2023 through August 2027 and carried a weighted average interest rate of 4.71 % and 4.70 % at June 30, 2022 and December 31, 2021, respectively.

Payments of principal and interest on each of the Mortgage Notes are payable monthly on the first business day of each month.

1 unchanged sentence

The Mortgage Notes also contain various customary negative covenants, including, but not limited to, restrictions on transferring the property, change in control of the borrower and changing the borrower’s business or principal place of business.

As of March 31, 2022, we were either in compliance in all material respects with the covenants associated with the Mortgage Notes or the covenants were not applicable.

As of June 30, 2022, we were either in compliance in all material respects with the covenants associated with the Mortgage Notes or the covenants were not applicable.

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 that remains under construction as of March 31, 2022.

The Construction Loan has a maturity date of February 15, 2026 and is collateralized by the property.

Borrowings under the Construction Loan bear interest at a variable annual rate of no less than 4.80 %.

Interest only payments will be due monthly beginning April 15, 2022 and continuing through February 15, 2024.

Interest only payments are 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 will be due in an amount sufficient to fully amortize the principal balance at maturity.

At March 31, 2022, there were $ 3.2 million of outstanding borrowings on the Construction Loan.

At June 30, 2022, there were $ 8.7 million of outstanding borrowings on the Construction Loan.

There were no outstanding borrowings as of December 31, 2021.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Debt Discounts and Issuance Costs

Unamortized debt discounts and issuance costs associated with the Term Loan Facility, Secured Notes, Unsecured Notes and Construction Loan of $ 24.6 million and $ 25.9 million are included in Long-term debt, net of current portion on our condensed consolidated balance sheets at March 31, 2022 and December 31, 2021, respectively.

Unamortized revolver-related debt issuance costs of $ 3.7 million and $ 4.0 million are included in Other assets on our condensed consolidated balance sheets at March 31, 2022 and December 31, 2021, respectively.

Unamortized debt discounts and issuance costs associated with the Term Loan Facility, Secured Notes, Unsecured Notes and Construction Loan of $ 22.8 million and $ 25.9 million are included in Long-term debt, net of current portion on our condensed consolidated balance sheets at June 30, 2022 and December 31, 2021, respectively.

Unamortized revolver-related debt issuance costs of $ 3.5 million and $ 4.0 million are included in Other assets on our condensed consolidated balance sheets at June 30, 2022 and December 31, 2021, respectively.

Debt Covenants

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During the first three quarterly test periods of 2022, 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.

As of March 31, 2022, we were either in compliance in all material respects with the covenants under the Credit Facilities, or the covenants were not applicable.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

As of June 30, 2022, we were either in compliance in all material respects with the covenants under the Credit Facilities, or the covenants were not applicable.

Future Maturities of Long-Term Debt

Aggregate annual future maturities of long-term debt, excluding unamortized discounts, issuance costs and fair value adjustments, at March 31, 2022 were as follows:

April 2022 through March 2023 $ 23,793

April 2023 through March 2024 65,585

April 2024 through March 2025 285,869

April 2025 through March 2026 940,971

April 2026 through March 2027 515,823

Aggregate annual future maturities of long-term debt, excluding unamortized discounts, issuance costs and fair value adjustments, at June 30, 2022 were as follows:

July 2022 through June 2023 $ 21,727

July 2023 through June 2024 64,814

July 2024 through June 2025 286,004

July 2025 through June 2026 1,421,571

July 2026 through June 2027 51,893

Thereafter 4,428

Total future maturities of long-term debt $ 1,850,437

Lease cost included in our condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021 consisted of the following:

Lease cost included in our condensed consolidated statements of operations for the three months ended June 30, 2022 and 2021 consisted of the following:

Three Months Ended

March 31, Classification in Condensed

June 30, Classification in Condensed

Consolidated Statements of Operations

6 unchanged sentences

Total lease cost $ 60,350 $ 51,944

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Lease cost included in our condensed consolidated statements of operations for the six months ended June 30, 2022 and 2021 consisted of the following:

Six Months Ended

June 30, Classification in Condensed

Consolidated Statements of Operations

Operating lease cost $ 112,909 $ 99,488 Rent

Short-term lease cost 875 466 Rent

Variable lease cost 2,169 2,085 Rent

Finance lease cost:

Amortization of right-of-use assets 690 739 Depreciation and amortization

Interest on lease liabilities 57 98 Interest expense, net of interest income

Total lease cost $ 116,700 $ 102,876

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

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

March 31, 2022 December 31, 2021 Classification on Condensed

Consolidated Balance Sheet

June 30, 2022 December 31, 2021 Classification on Condensed

Consolidated Balance Sheets

Lease right-of-use assets:

9 unchanged sentences

Total lease liabilities $ 2,143,776 $ 1,958,329

(1) Finance lease right-of-use assets were reported net of accumulated amortization of $ 2.4 million and $ 2.4 million at March 31, 2022 and December 31, 2021, respectively.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Operating Lease Right-of-Use Assets and Liabilities

In connection with leases that commenced during the three months ended March 31, 2022, we recognized operating lease right-of-use assets and lease liabilities of $ 84.0 million and $ 67.9 million, respectively, on our condensed consolidated balance sheet.

In connection with modified leases that were remeasured during the three months ended March 31, 2022, we recognized a net increase in both operating lease right-of-use assets and lease liabilities of $ 2.9 million on our condensed consolidated balance sheet.

(1) Finance lease right-of-use assets were reported net of accumulated amortization of $ 2.6 million and $ 2.4 million at June 30, 2022 and December 31, 2021, respectively.

Remaining Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates associated with our operating and finance lease liabilities at March 31, 2022 were as follows:

March 31, 2022

The weighted-average remaining lease terms and discount rates associated with our operating and finance lease liabilities at June 30, 2022 were as follows:

June 30, 2022

Weighted-average remaining lease term (1)

6 unchanged sentences

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.

Sale-Leaseback Transactions

On March 8, 2022, the Company entered into two definitive agreements with an unrelated third party, each of which was for the sale-leaseback of two properties, for an aggregate sales price of approximately $ 175 million.

The closing on two of these properties was completed on March 25, 2022, and the closing on the remaining two properties is expected to be completed on or about May 13, 2022.

Under the transaction that was completed, we sold two properties with a combined net book value of $ 66.9 million for $ 80.0 million, which was reduced by transaction costs of $ 0.3 million, for net cash proceeds of $ 79.7 million.

The estimated fair value of the properties sold was $ 95.6 million.

Accordingly, the aggregate sales price associated with this arrangement was increased by $ 15.6 million, which resulted in the recognition of a gain of $ 28.4 million on this transaction.

This gain is included in Other operating (income) expense in our condensed consolidated statement of operations for the three months ended March 31, 2022.

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

Sale-Leaseback Transactions

During the six months ended June 30, 2022, we entered into and consummated sale-leaseback transactions involving four properties with an unrelated third party.

Under these transactions, we sold four properties with a combined net book value of $ 150.8 million for $ 175.0 million, which was reduced by transaction costs of $ 0.8 million, for net cash proceeds of $ 174.2 million.

The estimated fair value of the properties sold was $ 201.2 million.

Accordingly, the aggregate sales price associated with this arrangement was increased by $ 26.2 million, which resulted in the recognition of a gain of $ 49.6 million on this transaction.

This gain is included in Other operating (income) expense in our condensed consolidated statements of operations.

Supplemental Cash Flow Information

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

Three Months Ended

Six Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

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Maturities of Operating and Finance Lease Liabilities

The maturities associated with our operating and finance lease liabilities at March 31, 2022 are as follows:

The maturities associated with our operating and finance lease liabilities at June 30, 2022 are as follows:

Operating Leases Finance Leases Total

April 2022 through March 2023 $ 193,172 $ 1,294 $ 194,466

April 2023 through March 2024 208,274 522 208,796

April 2024 through March 2025 211,911 42 211,953

April 2025 through March 2026 215,731 — 215,731

April 2026 through March 2027 216,458 — 216,458

July 2022 through June 2023 $ 202,982 $ 1,102 $ 204,084

July 2023 through June 2024 221,616 364 221,980

July 2024 through June 2025 223,849 16 223,865

July 2025 through June 2026 228,381 — 228,381

July 2026 through June 2027 228,182 — 228,182

Thereafter 3,062,007 — 3,062,007

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Present value of lease liabilities $ 2,142,353 $ 1,423 $ 2,143,776

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Stockholders’ Equity

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provided, however, no more than 14.5 million shares may be issued upon the exercise of incentive stock options.

The share reserve formula under the 2021 Equity Plan is

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

intended to provide us with the continuing ability to grant equity awards to eligible employees, directors and consultants for the ten-year term of the 2021 Equity Plan.

As of March 31, 2022, approximately 20.6 million shares were available for future awards to employees and other eligible participants under the 2021 Equity 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 ten-year term of the 2021 Equity Plan.

As of June 30, 2022, approximately 19.1 million shares were available for future awards to employees and other eligible participants under the 2021 Equity Plan.

2021 Employee Stock Purchase Plan

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Participation will end automatically upon a participant’s termination of employment.

No offering periods commenced under the ESPP during the three months ended March 31, 2022.

Stock Options

During the three months ended March 31, 2022, the Company granted approximately 0.9 million stock option awards under the 2021 Equity Plan.

These options have a 10-year contractual term from the date of grant and vest in four 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.

The exercise price associated with each of these awards is not less than the fair market value per share of our common stock at the time of grant.

The fair value of the options granted during the three months ended March 31, 2022 was calculated using the Black-Scholes option pricing model.

Options to purchase approximately 25.5 million shares of our common stock were outstanding as of March 31, 2022, of which approximately 9.4 million were exercisable as of March 31, 2022 and approximately 12.1 million of additional options became exercisable as of April 4, 2022, which is the first date following the expiration of the 180-day lock-up period related to the IPO .

Share-based compensation expense associated with stock options for the three months ended March 31, 2022 was $ 11.4 million, of which $ 1.0 million, $ 10.1 million and $ 0.3 million is included in Center operations, General, administrative and marketing and Other operating (income) expense, respectively, in our condensed consolidated statements of operations.

No share-based compensation expense related to stock options was recognized during the three months ended March 31, 2021.

As of March 31, 2022 , unrecognized share-based compensation expense related to stock options was approximately $ 26.1 million, which is expected to be recognized over a weighted average remaining period of 3.3 years.

No offering periods commenced under the ESPP during the three and six months ended June 30, 2022.

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

Stock Options

During the six months ended June 30, 2022, the Company granted approximately 0.9 million stock option awards under the 2021 Equity Plan.

The exercise price associated with each of these awards is not less than the fair market value per share of our common stock at the time of grant.

The fair value of the options granted during the six months ended June 30, 2022 was calculated using the Black-Scholes option pricing model.

During each of the three and six months ended June 30, 2022, approximately 0.1 million stock options were exercised.

As of June 30, 2022, options to purchase approximately 25.3 million shares of our common stock were outstanding, of which approximately 22.0 million were exercisable.

Share-based compensation expense associated with stock options for the three months ended June 30, 2022 was $ 3.3 million, of which $ 0.3 million, $ 2.9 million and $ 0.1 million is included in Center operations, General, administrative and marketing and Other operating (income) expense, respectively, in our condensed consolidated statements of operations.

Share-based compensation expense associated with stock options for the six months ended June 30, 2022 was $ 14.7 million, of which $ 1.3 million, $ 13.0 million and $ 0.4 million is included in Center operations, General, administrative and marketing and Other operating (income) expense, respectively, in our condensed consolidated statements of operations.

No share-based compensation expense related to stock options was recognized during the three and six months ended June 30, 2021.

As of June 30, 2022 , unrecognized share-based compensation expense related to stock options was approximately $ 22.5 million, which is expected to be recognized over a weighted average remaining period of 3.1 years.

Restricted Stock Units

During the three months ended March 31, 2022, the Company granted approximately 0.1 million restricted stock unit awards under the 2021 Equity Plan, of which approximately half vest in four ratable annual installments on each of the first four anniversaries of the grant date and the other awards vest in two ratable annual installments on each of the first two anniversaries of the grant date .

The awards that vest in two ratable annual installments were granted to executives as part of their incentive compensation for 2021, which had been recognized as an accrued compensation liability at December 31, 2021.

During the six months ended June 30, 2022, the Company granted approximately 1.6 million restricted stock unit awards under the 2021 Equity Plan, of which approximately 1.3 million are time vesting awards and approximately 0.3 million are time vesting awards with a performance qualifier.

Of the 1.6 million restricted stock unit awards that were granted during the six months ended June 30, 2022, a pproximately 1.5 million vest in four ratable annual installments, approximately 0.1 million vest in two ratable annual installments and less than 0.1 million vest in approximately one annual installment, in each case subject to continuous employment or service from the grant date through the applicable vesting date.

The majority of the awards that vest in two ratable annual installments were granted to 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 issued to executives was approximately $ 0.5 million.

Accordingly, effective with the grant date associated with these restricted stock units, we recognized a $ 0.5 million decrease in Accrued expenses and other current liabilities and a $ 0.5 million increase in Additional paid-in capital on our condensed consolidated balance sheet.

At March 31, 2022, approximately 1.9 million restricted stock units were outstanding.

Share-based compensation expense associated with restricted stock units for the three months ended March 31, 2022 was $ 5.2 million, of which $ 0.2 million and $ 5.0 million is included in Center operations and General, administrative and marketing, respectively, in our condensed consolidated statement of operations.

No share-based compensation expense related to restricted stock units was recognized during the three months ended March 31, 2021.

As of March 31, 2022 , unrecognized share-based compensation expense related to restricted stock units was approximately $ 19.4 million, which is expected to be recognized over a weighted average remaining period of 3.5 years.

At June 30, 2022, approximately 2.8 million restricted stock units were outstanding.

Share-based compensation expense associated with restricted stock units for the three months ended June 30, 2022 was $ 2.5 million, of which $ 0.3 million and $ 2.2 million is included in Center operations and General, administrative and marketing, respectively, in our condensed consolidated statements of operations.

Share-based compensation expense associated with restricted stock units for the six months ended June 30, 2022 was $ 7.7 million, of which $ 0.5 million, $ 7.1 million and $ 0.1 million is included in Center operations, General, administrative and marketing and Other operating (income) expense, respectively, in our condensed consolidated statements of operations.

Share-based compensation expense associated with restricted stock units for the three and six months ended June 30, 2021 was $ 2.9 million, all of which is included in General, administrative and marketing in our condensed consolidated statements of operations.

As of June 30, 2022 , unrecognized share-based compensation expense related to restricted stock units was approximately $ 38.6 million, which is expected to be recognized over a weighted average remaining period of 3.3 years.

Restricted Stock

At March 31, 2022, approximately 0.6 million shares associated with a restricted stock award were outstanding.

Share-based compensation expense associated with this restricted stock award for the three months ended March 31, 2022 was $ 4.8 million, all of which is included in General, administrative and marketing in our condensed consolidated statement of operations.

No share-based compensation expense related to restricted stock awards was recognized during the three months ended March 31, 2021.

As of March 31, 2022 , unrecognized share-based compensation expense related to this restricted stock award was approximately $ 0.2 million, all of which will be recognized during the second quarter of 2022.

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.

The effective tax rate applied to our pre-tax loss for the three months ended March 31, 2022 is lower than our federal statutory rate of 21% and reflects an increase in the valuation allowance associated with certain of our deferred tax assets as well as deductibility limitations associated with executive compensation.

Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation.

As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies and future expectations of income.

Based upon this analysis, an increase to the valuation allowance of $ 4.6 million was recorded during the three months of March 31, 2022 to reduce our net deferred tax assets to the amount that is more likely than not to be realized.

Loss Per Share

For the three months ended March 31, 2022 , o ur potentially dilutive securities include stock options, restricted stock units and restricted stock.

For the three months ended March 31, 2021 , o ur potentially dilutive securities include stock options and Series A convertible participating preferred stock (“Series A Preferred Stock”).

Due to the net loss that we recognized during each of the three months ended March 31, 2022 and 2021, 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 three months ended March 31, 2022 and 2021.

Share-based compensation expense associated with a restricted stock award for the three and six months ended June 30, 2022 was $ 0.2 million and $ 5.0 million, respectively, all of which is included in General, administrative and marketing in our condensed consolidated statements of operations.

This award was fully vested as of June 30, 2022, and there is no unrecognized share-based compensation expense related to this restricted stock award.

No share-based compensation expense related to restricted stock awards was recognized during the three and six months ended June 30, 2021.

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

The following table sets forth the calculation of basic and diluted loss per share for the three months ended March 31, 2022 and 2021:

For the three and six months ended June 30, 2022, t he benefit from income taxes was $ 4.0 million and $ 6.9 million, respectively.

The effective tax rate was 63.6 % and 14.6 % for these same periods, respectively.

For the three and six months ended June 30, 2021, the benefit from income taxes was $ 20.9 million and $ 46.9 million, respectively.

The effective tax rate was 21.5 % and 17.0 % for these same periods, respectively.

The effective tax rate applied to our pre-tax loss for the three months ended June 30, 2022 is higher than our federal statutory rate of 21% and reflects a decrease in the projected valuation allowance associated with certain of our deferred tax assets compared to the three months ended March 31, 2022, partially offset by deductibility limitations associated with executive compensation.

The effective tax rate applied to our pre-tax loss for the six months ended June 30, 2022 is lower than our federal statutory rate of 21% and reflects deductibility limitations associated with executive compensation.

Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation.

Based upon this analysis, a decrease to the valuation allowance of $ 3.4 million was recorded during the three months ended June 30, 2022 to adjust our net deferred tax assets to an amount that is more likely than not to be realized.

Loss Per Share

For the three and six months ended June 30, 2022 , o ur potentially dilutive securities include stock options and restricted stock units.

For the three and six months ended June 30, 2021 , o ur potentially dilutive securities include stock options, outstanding shares of Series A convertible participating preferred stock (“Series A Preferred Stock”) and unvested restricted Series A Preferred Stock.

Due to the net loss that we recognized during the three and six months ended June 30, 2022 and 2021, 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 three and six months ended June 30, 2022 and 2021.

The following table sets forth the calculation of basic and diluted loss per share for the three and six months ended June 30, 2022 and 2021:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net loss $ ( 2,285 ) $ ( 76,356 ) $ ( 40,251 ) $ ( 229,157 )

Dividends accrued on Series A Preferred Stock

— ( 6,006 ) — ( 10,288 )

Loss available to common stockholders $ ( 2,285 ) $ ( 82,362 ) $ ( 40,251 ) $ ( 239,445 )

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Loss per share—basic and diluted $ ( 0.01 ) $ ( 0.57 ) $ ( 0.21 ) $ ( 1.65 )

The following is a summary of potential shares of common stock that were excluded from the computation of diluted loss per share for the three months ended March 31, 2022 and 2021:

The following is a summary of potential shares of common stock that were excluded from the computation of diluted loss per share for the three and six months ended June 30, 2022 and 2021:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Stock options 25,318 24,213 25,318 24,213

Restricted stock units 2,787 610 2,787 610

Restricted stock 595 —

Series A Preferred Stock — 5,430

Outstanding shares of Series A Preferred Stock — 5,430 — 5,430

Unvested restricted Series A Preferred Stock — 500 — 500

Potential common shares excluded from diluted loss per share 28,105 30,753 28,105 30,753

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Commitments and Contingencies

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Subsequent Events

In preparing the accompanying condensed consolidated financial statements, we have evaluated the period from March 31, 2022 through the date the condensed consolidated financial statements were issued for material subsequent events.

On August 5, 2022, we entered into a definitive agreement for the sale-leaseback of five properties with an aggregate sales price of approximately $ 200.0 million.

The closing on this transaction is expected to be completed in early October 2022.

We expect to recognize a net gain associated with this sale-leaseback transaction.

In preparing the accompanying condensed consolidated financial statements, we have evaluated the period from June 30, 2022 through the date the condensed consolidated financial statements were issued for material subsequent events.

There have been no other such events or transactions during this time which would have a material effect on the condensed consolidated financial statements and therefore would require recognition or disclosure .

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.

What changed 10-Q

Item 1. Financial Statements