What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-09 compared with 2022-08-10 · 134 added, 141 removed, 278 unchanged (50% of the section changed)

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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.

Life Time, the “Healthy Way of Life Company,” is a leading lifestyle brand offering premium health, fitness and wellness experiences to a community of more than 1.4 million individual members, who together comprise more than 775,000 memberships, as of June 30, 2022.

Since our founding over 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.

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Our luxurious athletic country clubs, which are located in both affluent suburban and urban locations, total more than 15 million square feet in the aggregate.

As of June 30, 2022, we had 19 new centers under construction and we believe we have significant opportunities to continue expanding our portfolio of premium centers with 12 planned new centers for 2022 and 11 or more new centers in 2023 in increasingly affluent markets.

As of September 30, 2022, we had 17 new centers under construction and we believe we have significant opportunities to continue expanding our portfolio of premium centers with 12 planned new centers for 2022 and 11 new centers planned for 2023 in increasingly affluent markets.

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.

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Our members are highly engaged and draw inspiration from the experiences and community we have created.

Our center memberships increased from 649,373 at December 31, 2021 to 724,778 at June 30, 2022 as the impact from the COVID-19 pandemic subside d.

We have been actively monitoring the macroeconomic environment and its impact on our business, including with respect to inflation, labor and supply chain.

The inflation rate has continued to be elevated in 2022, which has had an impact on our expenses in several areas, including wages, construction costs and other operating expenses.

These inflationary impacts have resulted in a reduction in our margin performance and an increase in our capital expenditures.

We anticipate fiscal year 2022 will continue to be a dynamic macroeconomic environment, including that elevated levels of inflation will persist throughout the remainder of 2022, and we cannot predict with certainty the impact of these headwinds on our business.

We remain focused on providing exceptional experiences to our members, while also now focusing on center efficiencies and expense control given our recovery of a significant portion of our center memberships and membership dues.

Our center memberships increased from 649,373 at December 31, 2021 to 728,729 at September 30, 2022 as the trend of diminishing negative impacts from COVID-19 has continued .

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 annual membership dues and in-center revenue for 20 consecutive years, prior to the impact of the COVID-19 pandemic.

We have been focused on returning to consistent annual growth in our membership dues and in-center revenue.

For the six months ended June 30, 2022 and 2021, our recurring membership dues and enrollment fees represented 70.2% and 69.9%, 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 29.8% and 30.1%, respectively, of our total Center revenue.

Our average revenue per center membership increased to $1,219 for the six months ended June 30, 2022 compared to $984 for the six months ended June 30, 2021 and $1,084 for the six months ended June 30, 2019 prior to the COVID-19 pandemic, which demonstrate the significant value that our members place on engaging with Life Time.

For the nine months ended September 30, 2022 and 2021, our recurring membership dues and enrollment fees represented 70.1% and 70.0%, 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 29.9% and 30.0%, respectively, of our total Center revenue.

Our average revenue per center membership increased to $1,885 for the nine months ended September 30, 2022 compared to $1,554 for the nine months ended September 30, 2021, which demonstrates the significant value that our members place on engaging with Life Time.

As we delivered and continued to enhance and broaden the premium experiences for our members, we have strategically increased our membership dues across most of our new and existing centers.

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.

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 expect average revenue per center membership to continue to increase compared to the same period in the 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.

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A Center membership is defined as one or more adults, plus any juniors under the age of 14.

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.

Our base memberships provide individuals general access (with some amenities excluded) to a selected home center and all centers with the same or lower base monthly dues rate.

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, competition, initial investment in the center and available services and amenities.

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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.

For example, we are 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.

We are also enhancing our digital platform to deliver a true omni-channel experience for our members.

For example, we are offering new types of Center memberships and communities, including our signature membership that includes unlimited small group training and priority registrations, and our ARORA community focused on members aged 55 years and older.

We also continue to enhance 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.

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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.

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.

We also continue to expand 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 generally receive access to all of our resort-like athletic destinations across the United States and Canada.

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.

Life Time Work members also generally receive access to all of our resor t-like athletic destinations across the United States and Canada.

At September 30, 2022, 10 Life Time Work locations were open and operating.

Additionally, we opened our first two Life Time Living locations, another asset-light extension of our “Healthy Way of Life” ecosystem, which offer luxury wellness-oriented residences.

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.

We have continued to actively monitor the macroeconomic environment and its impact on our business, including with respect to inflation, interest rates, labor and supply chain issues, as well as a potential economic recession .

The inflation rate continues to be elevated in 2022, which has had an impact on our expenses in several areas, including wages, construction costs and other operating expenses.

These inflationary impacts have resulted in pressure on our margin performance and an increase in our capital expenditures.

The rising interest rate environment has also increased the cost of our Term Loan Facility and Revolving Credit Facility and may result in increased cap rates on future sale-leaseback transactions.

We anticipate the remainder of fiscal year 2022 will continue to be a dynamic macroeconomic environment, including elevated levels of inflation and interest rates.

We remain focused on providing exceptional experiences to our members, while also focusing on center efficiencies and expense control given our recovery of a significant portion of our center memberships and membership dues.

Non-GAAP Financial Measures

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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.

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.

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 (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.

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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.

Set forth below are certain GAAP and non-GAAP measurements and key performance indicators for the three and six months ended June 30, 2022 and 2021.

Set forth below are certain GAAP and non-GAAP measurements and key performance indicators for the three and nine months ended September 30, 2022 and 2021.

The following information has been presented consistently for all periods presented.

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

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GAAP and Non-GAAP Financial Measures

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

Net loss margin (5)

Net income (loss) $ 24,732 $ (45,442) $ (15,519) $ (274,599)

Net income (loss) margin (5)

5.0 % (11.8) % (1.1) % (28.7) %

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Total centers (end of period) is the number of centers operational as of the last day of the period.

As of June 30, 2022, all of our 153 centers were open.

As of September 30, 2022, all of our 156 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.

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These figures are approximations.

(5) Net loss margin is calculated as net loss divided by total revenue.

(5) Net income (loss) margin is calculated as net income (loss) divided by total revenue.

(6) We present Adjusted EBITDA as a supplemental measure of our performance.

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Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenue.

The following table provides a reconciliation of net loss, the most directly comparable GAAP measure, to Adjusted EBITDA:

Three Months Ended Six Months Ended

June 30, June 30,

The following table provides a reconciliation of net income (loss), the most directly comparable GAAP measure, to Adjusted EBITDA:

Three Months Ended Nine Months Ended

September 30, September 30,

($ in thousands) 2022 2021 2022 2021

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

Net income (loss) $ 24,732 $ (45,442) $ (15,519) $ (274,599)

Interest expense, net of interest income (a)

27,696 39,849 84,732 176,144

Benefit from income taxes (3,990) (20,933) (6,857) (46,886)

Provision for (benefit from) income taxes 3,401 (11,981) (3,456) (58,867)

Depreciation and amortization 56,400 57,977 171,680 177,005

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5,803 4,078 33,214 6,959

COVID-19 related expenses (c)

COVID-19 related expenses (credits) (c)

354 (221) 937 (410)

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(48,583) 2,227 (98,167) 3,057

Capital transaction costs (e)

— 588 255 588

Legal settlements (f)

— (44) — (44)

1,172 — 1,021 2,444

Adjusted EBITDA $ 70,975 $ 47,031 $ 174,697 $ 32,277

(a) For the six months ended June 30, 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 our prior term loan facility, senior unsecured notes and the related party secured loan.

(b) Shar e-based compensation expense recognized during the three and six months ended June 30, 2022 is associated with stock options, restricted stock and restricted stock units.

The majority of the share-based compensation expense recognized during the six months ended June 30, 2022 was associated with awards that were fully vested and became exercisable on April 4, 2022.

Shar e-based compensation expense recognized during the three and six months ended June 30, 2021 was associated with restricted stock and restricted stock units.

No share-based compensation expense was recognized during the three and six months ended June 30, 2021 related to stock options because the vesting and exercisability of stock options granted by the Company up through June 30, 2021 was contingent upon the occurrence of a change of control or an initial public offering.

(a) For the nine months ended September 30, 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 our prior term loan facility, senior unsecured notes and the related party secured loan.

(b) Shar e-based compensation expense recognized during the three and nine months ended September 30, 2022 is associated with stock options, restricted stock and restricted stock units.

Shar e-based compensation expense recognized during the three and nine months ended September 30, 2021 was associated with restricted stock and restricted stock units.

No share-based compensation expense was recognized during the three and nine months ended September 30, 2021 related to stock options because the vesting and exercisability of stock options granted by the Company up through September 30, 2021 was contingent upon the occurrence of a change of control or an initial public offering.

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We believe that adjusting for these costs provides a more accurate and consistent representation of our actual operating performance from period to period.

For the three and six months ended June 30, 2022, COVID-19 related expenses primarily consisted of legal-related costs in pursuit of our claim against Zurich.

For the three and nine months ended September 30, 2022, COVID-19 related expenses primarily consisted of legal-related costs in pursuit of our claim against Zurich.

For more information regarding this claim, see Note 11, Commitments and Contingencies, to our condensed consolidated financial statements in this report.

For the three and six months ended June 30, 2021, COVID-19 related credits primarily consisted of the recovery of certain qualifying expenses recovered under the CARES Act, partially offset by COVID-19 legal-related costs in pursuit of our claim against Zurich.

For the three and nine months ended September 30, 2021, COVID-19 related credits primarily consisted of the recovery of certain qualifying expenses under the CARES Act, partially offset by COVID-19 legal-related costs in pursuit of our claim against Zurich.

(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.

For detail on the gain on sale-leaseback transactions in the three and six months ended June 30, 2022, see “Sale-Leaseback Transactions” within Note 7, Leases, to our condensed consolidated financial statements in this report.

(e) Includes costs associated with incremental expenses related to a winter storm that resulted in historical freezing temperatures affecting our Texas region and executive level severance in 2021 and other transactions which are unusual and non-recurring in nature.

For details on the gain on sale-leaseback transactions in the three and nine months ended September 30, 2022, see “Sale-Leaseback Transactions” within Note 7, Leases, to our condensed consolidated financial statements in this report.

(e) Represents one-time costs related to capital transactions, including debt and equity offerings that are non-recurring in nature but excluding direct costs related to the IPO that were netted against the proceeds of the IPO.

(f) We adjust for the impact of large class action and unusual legal settlements paid or recoveries received.

These are non-recurring in nature and do not reflect costs associated with our normal ongoing operations.

(g) Includes costs associated with incremental expenses related to a winter storm that resulted in historical freezing temperatures affecting our Texas region in 2021, severance 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.

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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.

The negative non-cash rent expense amounts associated with our open properties for the three and six months ended June 30, 2021 reflect deferred rent repayments that we made at various dates throughout each of the respective periods.

Beginning in the second quarter of fiscal 2020, due to the disruption caused by the COVID-19 pandemic, we began negotiating lease concessions with many of our landlords.

The concessions we were able to obtain from these landlords primarily consisted of full or partial rent payment deferrals, with scheduled repayments due at various dates through December 2021.

During the periods in which these rent payments were deferred, we recognized the deferred rent payments as non-cash rent expense.

During the periods in which we repaid these deferred rent amounts, we recognized the repayment amounts as both an increase in cash rent expense and a decrease in non-cash rent expense.

(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:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

($ in thousands) 2022 2021 2022 2021

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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 has improved significantly with that improvement varied depending on various factors, including how early we were able to re-open them, whether we were required to close them again, their geographic location and applicable governmental restrictions.

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.

The performance of our centers has improved significantly with that improvement having varied depending on various factors, including how early we were able to re-open them, whether we were required to close them again, their geographic location and applicable governmental restrictions.

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.

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.

We continue to be encouraged by the trend of diminishing negative impacts from COVID-19;

however, 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.

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.

As of June 30, 2022, all of our 153 centers were open and our total memberships were 775,763, an increase of 2.1% compared to 759,720 at June 30, 2021.

Center memberships were 724,778, an increase of 10.2% compared to 657,737 at June 30, 2021.

Digital On-hold memberships were 50,985, a decrease of 50.0% compared to 101,983 at June 30, 2021.

Prior to the COVID-19 pandemic, Center memberships and Digital On-hold memberships were 870,237 and 84,231, respectively, at June 30, 2019.

As the first six months of 2022 have progressed, we have experienced a significant decrease in the COVID-19 related restrictions on our operations.

We continue to be encouraged by our improved business performance and the diminishing negative impacts from COVID-19;

however, the full extent of the impact of COVID-19, including any new variants and any resulting operating restrictions, remains uncertain and is dependent on future developments that cannot be accurately predicted at this time.

As of September 30, 2022, all of our 156 centers were open and our total memberships were 776,002, an increase of 3.0% compared to 753,355 at September 30, 2021.

Center memberships were 728,729, an increase of 9.0% compared to 668,310 at September 30, 2021.

Digital On-hold memberships were 47,273, a decrease of 44.4% compared to 85,045 at September 30, 2021.

As the first nine months of 2022 have progressed, we have experienced a significant decrease in the COVID-19 related restrictions on our operations.

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.

We will continue to monitor governmental orders regarding the operations of our centers, as well as our center operating processes and protocols.

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.

The rates of recovery for our centers and in-center businesses have progressed differently based upon considerations such as their geogr aphic 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.

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.

Cash Flows and Liquidity

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.

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 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.

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We also intend to continue to explore sale-leaseback transactions.

During the six months ended June 30, 2022, we completed sale-leaseback transactions associated with four pro perties.

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 addition, we are exploring the potential sale-leaseback of a number of our properties with targeted gross proceeds of approximately $300 million by the end of the year.

For more information regarding the sale-leaseback transactions that were consummated during the six months ended June 30, 2022, see Note 7, Leases, to our condensed consolidated financial statements included elsewhere in this report.

During the nine months ended September 30, 2022, we completed sale-leaseback transactions associated with nine properties for aggregate gross proceeds of $375.0 million.

For more information regarding the sale-leaseback transactions that were consummated during the nine months ended September 30, 2022, see Note 7, Leases, to our condensed consolidated financial statements included elsewhere in this report.

Investment in Business

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Elevating our member experiences requires investment in our team members, programs, products, services and centers.

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.

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.

While we remain focused on providing exceptional experiences to our members, we are also focusing on center efficiencies and expense control given our recovery of a significant portion of our center memberships and membership dues.

Impact of Our Asset-light, Flexible Real Estate Strategy on Rent Expense

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Macroeconomic Trends

We have been actively monitoring the macroeconomic environment and its impact on our business, including with respect to inflation, labor and supply chain.

We have been actively monitoring the macroeconomic environment and its impact on our business, including with respect to inflation, interest rates, labor and supply chain issues, as well as a potential economic recession .

See “—Overview—Business” for additional information.

Share-Based Compensation

During the six months ended June 30, 2022, we recognized share-based compensation expense associated with stock options, restricted stock and restricted stock units totaling approximately $27.4 million.

The majority of this expense was associated with awards that were fully vested and became exercisable on April 4, 2022.

During the six months ended June 30, 2021, we recognized share-based compensation expense associated with restricted stock and restricted stock units totaling approximately $2.9 million.

No share-based compensation expense related to stock options was recognized during the six months ended June 30, 2021 , because the vesting and exercisability of stock options granted by the Company up through June 30, 2021 was contingent upon the occurrence of a change of control or an initial public offering.

During the nine months ended September 30, 2022, we recognized share-based compensation expense associated with stock options, restricted stock and restricted stock units totaling approximately $33.2 million.

During the nine months ended September 30, 2021, we recognized share-based compensation expense associated with restricted stock and restricted stock units totaling approximately $7.0 million.

No share-based compensation expense related to stock options was recognized during the nine months ended September 30, 2021 , because the vesting and exercisability of stock options granted by the Company up through September 30, 2021 was contingent upon the occurrence of a change of control or an initial public offering.

Critical Accounting Policies and Estimates

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Given the additional effects from the COVID-19 pandemic, these estimates can be more challenging, and actual results could differ materially from our estimates.

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, 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 $0.7 million for the three months ended September 30, 2022 and 2021, respectively, and $0.2 million and $2.5 million for the nine months ended September 30, 2022 and 2021, respectively.

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.

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Results of Operations

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

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 June 30, 2022 and 2021:

Three Months Ended June 30,

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Three Months Ended September 30,

As a Percentage of Total Revenue

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Total other expense (27,601) (39,877) (5.5) % (10.3) %

Loss before income taxes (6,275) (97,289) (1.4) % (30.1) %

Benefit from income taxes (3,990) (20,933) (0.9) % (6.5) %

Net loss $ (2,285) $ (76,356) (0.5) % (23.6) %

Income (loss) before income taxes 28,133 (57,423) 5.7 % (14.9) %

Provision for (benefit from) income taxes 3,401 (11,981) 0.7 % (3.1) %

Net income (loss) $ 24,732 $ (45,442) 5.0 % (11.8) %

Total revenue.

The $138.1 million increase in Total revenue for the three months ended June 30, 2022 compared to the three months ended June 30, 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 June 30, 2022 as compared to the three months ended June 30, 2021.

With respect to the $129.3 million increase in Center revenue for the three months ended June 30, 2022 compared to the three months ended June 30, 2021:

• 71.2% was from membership dues and enrollment fees, which increased $92.0 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

This increase reflects the improvement in our Center memberships, which increased from 657,737 as of June 30, 2021 to 724,778 as of June 30, 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 June 30, 2022 as compared to the three months ended June 30, 2021 ;

• 28.8% was from in-center revenue, which increased $37.3 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 .

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.

The $8.8 million increase in Other revenue for the three months ended June 30, 2022 as compared to the three months ended June 30, 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 June 30, 2022 as compared to the three months ended June 30, 2021 when COVID-19 restrictions forced the cancellation of some of our events .

The $111.3 million increase in Total revenue for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 reflects the continued improvement of our operations after the adverse impacts of COVID-19, which has been supported by our strategic investments in our business, the pricing initiatives we have implemented at the majority of our centers since the third quarter of 2021, which have resulted in higher average Center membership dues being charged during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021, as well as the opening of three and five new centers during the three and nine months ended September 30, 2022, respectively.

With respect to the $108.0 million increase in Center revenue for the three months ended September 30, 2022 compared to the three months ended September 30, 2021:

• 69.2% was from membership dues and enrollment fees, which increased $74.7 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

This increase reflects the improvement in our Center memberships, which increased to 728,729 as of September 30, 2022 from 668,310 as of September 30, 2021 for the reasons noted above for Total revenue ;

• 30.8% was from in-center revenue, which increased $33.3 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 .

This increase was recognized across all of our primary in-center businesses and reflects the higher utilization of our services by our members as our operations continue to improve after the adverse impacts of COVID-19, which has been supported by our strategic investments in our business.

The $3.3 million increase in Other revenue for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 was primarily driven by our athletic events business, as we experienced a higher level of event participation during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 when COVID-19 had reduced our event participation rates.

Center operations expenses .

The $60.8 million increase in Center operations expenses for the three months ended June 30, 2022 as compared to the three months ended June 30, 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 June 30, 2022 as compared to the three months ended June 30, 2021, as well as the addition of two new centers during the first quarter of 2022.

The $63.3 million increase in Center operations expenses for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 was primarily driven by increased staffing requirements resulting from increased usage of our centers and strategic investments in our business during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 , the opening of three and five new centers during the three and nine months ended September 30, 2022, respectively, as well as higher labor and utility costs due to inflation du ring the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

Rent expense .

The $8.5 million increase in Rent expense for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was primarily driven by our taking possession of nine properties since June 30, 2021 for future centers where we started incurring GAAP rent expense, most of which is non-cash, and the sale-leaseback of five centers since June 30, 2021 , two of which occurred during the three months ended June 30, 2022.

The $10.7 million increase in Rent expense for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 was primarily driven by our taking possession of nine properties since June 30, 2021 for future centers where we started incurring GAAP rent expense, most of which is non-cash, and the sale-leaseback of nine centers during the current year, five of which occurred during the three months ended September 30, 2022.

General, administrative and marketing expenses.

The $8.6 million increase in General, administrative and marketing expenses for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was primarily driven by a $3.2 million increase in overhead costs that were primarily labor-related to enhance and broaden our member services and experiences, a $2.3 million increase in share-based compensation expense, a $1.8 million increase in information technology costs, a $1.7 million increase in public company-related expenses and a $1.1 million increase in marketing expenses, partially offset by a $1.5 million net decrease in other expenses.

The $11.8 million increase in General, administrative and marketing expenses for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 was primarily driven by a $2.2 million increase in overhead costs that was primarily labor-related to enhance and broaden our member services and experiences, a $1.8 million increase in marketing and information technology expenses, a $1.6 million increase in share-based and incentive compensation expenses, a $1.4 million increase in public company-related expenses and a $1.3 million increase in severance costs .

Depreciation and amortization .

The $0.6 million decrease in Depreciation and amortization for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 consists of $0.7 million lower depreciation, driven by the timing of sale-leaseback transactions, partially offset by $0.1 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 .

The $1.6 million decrease in Depreciation and amortization for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 consists of $1.7 million lower depreciation, driven by the timing of sale-leaseback transactions, partially offset by $0.1 million higher amortization .

Other operating (income) expenses .

Other operating income for the three months ended June 30, 2022 was $8.2 million, compared to Other operating expenses of $8.9 million for the three months ended June 30, 2021.

The $17.1 million change was primarily attributable to the recognition of a gain of $21.3 million on a sale-leaseback transaction associated with two properties that was completed during the three months ended June 30, 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 June 30, 2022 as compared to the three months ended June 30, 2021.

Other operating income for the three months ended September 30, 2022 was $31.4 million, as compared to Other operating expenses of $14.8 million for the three months ended September 30, 2021.

The $46.2 million change was primarily attributable to the recognition of a gain of $47.9 million o n a sale-leaseback transaction associated with five properties that was completed during the three months ended September 30, 2022, partially offset by higher costs associated with our athletic events business, as we experienced a higher level of event participatio n during t he three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

Interest expense, net of interest income .

The $13.0 million decrease in Interest expense, net of interest income for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was driven by a lower average level of outstanding borrowings during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 .

Benefit from income taxes .

The benefit from income taxes was $4.0 million for the three months ended June 30, 2022 as compared to $20.9 million for the three months ended June 30, 2021 .

The $12.2 million decrease in Interest expense, net of interest income for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 was driven by a lower average level of outstanding borrowings during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 .

Provision for (benefit from) income taxes .

The provision for income taxes was $3.4 million for the three months ended September 30, 2022 as compared to the $12.0 million benefit from income taxes for the three months ended September 30, 2021 .

The effective tax rate was 12.1% and 20.9% for those same periods, respectively.

The change in benefit from income taxes was primarily attributable to the decrease in our loss before income taxes for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

The effective tax rate applied to our pre-tax loss for the three months ended June 30, 2022 is higher than our statutory rate of 21% and reflects a $3.4 million decrease in the valuation allowance associated with certain of our deferred tax assets, partially offset by deductibility limitations associated with executive compensation.

As a result of the factors described above, net loss decreased by $74.1 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 .

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

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 six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

The effective tax rate applied to our pre-tax income for the three months ended September 30, 2022 is lower than our statutory rate of 21% and reflects a decrease in the valuation allowance associated with certain of our deferred tax assets, partially offset by deductibility limitations associated with executive compensation and an increase in the state income tax provision .

Net income (loss) .

As a result of the factors described above, net income was $24.7 million for the three months ended September 30, 2022 as compared to a net loss of $45.4 million for the three months ended September 30, 2021 .

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

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, 2022 and 2021:

Nine Months Ended September 30,

As a Percentage of Total Revenue

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Total revenue.

The $281.0 million increase in Total revenue for the six months ended June 30, 2022 compared to the six months ended June 30, 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 six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

With respect to the $265.8 million increase in Center revenue for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:

• 71.0% was from membership dues and enrollment fees, which increased $188.6 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

This increase reflects the improvement in our Center memberships, which increased from 657,737 as of June 30, 2021 to 724,778 as of June 30, 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 six months ended June 30, 2022 as compared to the six months ended June 30, 2021 ;

• 29.0% was from in-center revenue, which increased $77.2 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 .

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.

The $15.2 million increase in Other revenue for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily driven by our athletic events business, as we were able to produce more of our iconic events during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 when COVID-19 restrictions forced the cancellation of some of our events .

The $392.4 million increase in Total revenue for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 reflects the continued improvement of our operations after the adverse impacts of COVID-19, which has been supported by our strategic investments in our business, the pricing initiatives we have implemented at the majority of our centers since the third quarter of 2021, which have resulted in higher average Center membership dues being charged during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, as well the opening of five new centers during the nine months ended September 30, 2022.

With respect to the $373.8 million increase in Center revenue for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021:

• 70.4% was from membership dues and enrollment fees, which increased $263.3 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

• 29.6% was from in-center revenue, which increased $110.5 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

This increase was recognized across all of our primary in-center businesses and reflects the higher utilization of our services as our operations continue to improve after the adverse impacts of COVID-19, which has been supported by our strategic investments in our business.

The $18.6 million increase in Other revenue for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was primarily driven by our athletic events business, as we experienced a higher level of event participation during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 when COVID-19 had reduced our event participation rates.

Also, were able to produce more of our iconic events during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 when COVID-19 restrictions forced the cancellation of certain of our events.

Center operations expenses .

The $125.8 million increase in Center operations expenses for the six months ended June 30, 2022 as compared to the six months ended June 30, 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 six months ended June 30, 2022 as compared to the six months ended June 30, 2021, as well as the addition of two new centers during the six months ended June 30, 2022 .

The $189.1 million increase in Center operations expenses for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was driven by increased staffing requirements resulting from increased usage of our centers and strategic investments in our business during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, the opening of five new centers during the nine months ended September 30, 2022, as well as higher labor and utility costs due to inflation during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

Rent expense .

The $13.9 million increase in Rent expense for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily driven by our taking possession of nine properties since June 30, 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 four centers that occurred during the six months ended June 30, 2022.

The $24.6 million increase in Rent expense for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was primarily driven by our taking possession of nine properties since June 30, 2021 for future centers where we started incurring GAAP rent expense, most of which is non-cash, and the sale-leaseback of nine centers during the nine months ended September 30, 2022.

General, administrative and marketing expenses.

The $36.9 million increase in General, administrative and marketing expenses for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily driven by a $22.2 million increase in share-based compensation expense, a $7.3 million increase in overhead costs that were primarily labor-related to enhance and broaden our member services and experiences, a $3.5 million increase in public company-related expenses, a $2.9 million increase in information technology costs and a $2.0 million increase in marketing expenses, partially offset by a $1.0 million net decrease in other expenses.

Of the $22.2 million increase in share-based compensation expense, $13.0 million was associated with stock options and $9.2 million was associated with restricted stock and restricted awards.

The $48.8 million increase in General, administrative and marketing expenses for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was primarily driven by a $24.1 million increase in share-based and incentive compensation expenses, a $9.4 million increase in overhead costs that was primarily labor-related to enhance and broaden our member services and experiences, a $6.8 million increase in marketing and information technology expenses, a $5.0 million increase in public company-related expenses and a $0.8 million increase in severance costs.

Depreciation and amortization .

The $3.7 million decrease in Depreciation and amortization for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 consists of $4.1 million lower depreciation, driven by the timing of sale-leaseback transactions, partially offset by $0.4 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 .

The $5.3 million decrease in Depreciation and amortization for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 consists of $5.8 million lower depreciation, driven by the timing of sale-leaseback transactions, partially offset by $0.5 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 .

Other operating (income) expenses .

Other operating income for the six months ended June 30, 2022 was $25.2 million as compared to Other operating expenses of $15.9 million for the six months ended June 30, 2021.

The $41.1 million change was primarily attributable to the recognition of a gain of $49.6 million on a sale-leaseback transaction associated with four properties that was completed during the six months ended June 30, 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 six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Other operating income for the nine months ended September 30, 2022 was $56.6 million as compared to Other operating expenses of $30.7 million for the nine months ended September 30, 2021.

The $87.3 million change was primarily attributable to the recognition of a gain of $98.0 million on sale-leaseback transactions associated with nine prope rties that were completed during the nine months ended September 30, 2022, partially offset by higher costs associated with our athletic events business, as we experienced a higher level of event participation and we were able to produce more of our iconic events during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

Interest expense, net of interest income .

The $79.3 million decrease in Interest expense, net of interest income for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was driven by $41.0 million of non-cash expense that was recognized during the six months ended June 30, 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 six months ended June 30, 2021 in connection with extinguished debt instruments, as well as a lower average level of outstanding borrowings during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 .

The $91.4 million decrease in Interest expense, net of interest income for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was driven by $41.0 million of non-cash expense that was recognized during the nine months ended September 30, 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 nine months ended September 30, 2021 in connection with extinguished debt instruments, as well as a lower average level of outstanding borrowings during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 .

Benefit from income taxes .

The benefit from income taxes was $6.9 million for the six months ended June 30, 2022 compared to $46.9 million for the six months ended June 30, 2021 .

The benefit from income taxes was $3.5 million for the nine months ended September 30, 2022 as compared to $58.9 million for the nine months ended September 30, 2021 .

The effective tax rate was 18.2% and 17.7% for those same periods, respectively.

The change in benefit from income taxes was primarily attributable to the decrease in our loss before income taxes for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

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

As a result of the factors described above, net loss decreased by $188.9 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 .

The change in benefit from income taxes was primarily attributable to the decrease in our loss before income taxes for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

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

As a result of the factors described above, net loss decreased by $259.1 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 .

Liquidity and Capital Resources

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.

Our principal liquidity needs include the development of new centers, lease requirements and debt service, 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.

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For information regarding the refinancing actions we took during 2021, see Note 6, Debt, to our condensed consolidated financial statements in this report.

Additionally, we consummated our IPO.

During the six months ended June 30, 2022, we completed sale-leaseback transactions associated with four properties.

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 addition, we are exploring the potential sale-leaseback of a number of our properties with targeted gross proceeds of approximately $300 million by the end of the year.

Fo r more information regarding the sale-leaseback transactions that were consummated during the six months ended June 30, 2022 , see Note 7, Leases, to our condensed consolidated financial statements included in this report .

Additionally, we consummated our IPO in October 2021.

During the nine months ended September 30, 2022, we completed sale-leaseback transactions associated with nine properties.

In addition, we continue to explore potential sale-leaseback opportunities for a number of our properties.

For more information regarding the sale-leaseback transactions that were consummated during the nine months ended September 30, 2022 , see Note 7, Leases, to our condensed consolidated financial statements included in this report .

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.

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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.

As of June 30, 2022, there were $30.0 million of outstanding borrowings under our Revolving Credit Facility and there were $31.5 million of outstanding letters of credit.

As of June 30, 2022, total cash and revolver availability was $474.8 million, consisting of total cash and cash equivalents of $61.3 million and total revolver availability of $413.5 million.

As of September 30, 2022, there were no outstanding borrowings under our Revolving Credit Facility and there were $31.7 million of outstanding letters of credit.

As of September 30, 2022, total cash and revolver availability was $540.7 million, consisting of total cash and cash equivalents, exclusive of restricted cash, of $97.4 million and total revolver availability of $443.3 million.

The following table sets forth our condensed consolidated statements of cash flows data (in thousands):

Six months ended

Nine Months Ended

September 30,

Net cash provided by (used in) operating activities $ 125,320 $ (15,322)

Net cash used in investing activities (37,480) (138,190)

Net cash provided by financing activities 27,139 173,712

Net cash (used in) provided by financing activities (11,708) 165,129

Effect of exchange rates on cash and cash equivalents (700) 15

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Operating Activities

The $93.4 million increase in cash provided by operating activities for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily the result of higher profitability due to the recovery from the impact of COVID-19 on our business.

The $140.6 million increase in cash provided by operating activities for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was primarily the result of higher profitability due to the recovery from the impact of COVID-19 on our business.

Investing Activities

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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.

The $12.0 million decrease in cash used in investing activities for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily driven by a higher amount of proceeds that we received from sale-leaseback transactions during the six months ended June 30, 2022 , partially offset by a higher level of new center construction activity during the six months ended June 30, 2022 .

The $100.7 million decrease in cash used in investing activities for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was primarily driven by a higher amount of proceeds that we received from sale-leaseback transactions, partially offset by a higher level of new center construction activity during the nine months ended September 30, 2022.

The following schedule reflects capital expenditures by type of expenditure (in thousands):

Three Months Ended Six months ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

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(1) Growth capital expenditures include new center land and construction, growth initiatives, major remodels of acquired centers and the purchase of previously leased centers.

The $130.7 million increase in total capital expenditures for the six months ended June 30, 2022 as compared to the six months ended June 30, 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.

The $208.2 million increase in total capital expenditures for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was primarily driven by higher growth capital expenditures for new centers, continued investments in technology and corporate capital expenditures related to Life Time Work.

Financing Activities

The $146.6 million decrease in cash provided by financing activities for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily driven by net proceeds we received from borrowings under our Term Loan Facility, Secured Notes and Unsecured Notes during the six months ended June 30, 2021 .

The $176.8 million decrease in cash provided by financing activities for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was primarily driven by net proceeds we received from borrowings under our Term Loan Facility, Secured Notes and Unsecured Notes during the nine months ended September 30, 2021.

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis