What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-08 compared with 2022-03-10 · 499 added, 607 removed, 1108 unchanged (50% of the section changed)

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Management’s Annual Report on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (PCAOB ID No.

Consolidated Financial Statements

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Los s (Income)

Consolidated Statement s of Stockholders’ Equity

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f).

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2022, utilizing criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—2013 Integrated Framework.

Based on our assessment, our management concluded that, as of December 31, 2022, our internal control over financial reporting was effective based on those criteria.

Management’s internal control over financial reporting as of December 31, 2022 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing on the following page, in which they expressed an unqualified opinion.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Life Time Group Holdings, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Life Time Group Holdings, Inc.

and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated March 8, 2023, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting .

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

Minneapolis, Minnesota

March 8, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Life Time Group Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Life Time Group Holdings, Inc.

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 8, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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Critical Audit Matter Description

As described in Note 9 to the Company’s consolidated financial statements, the Company entered into two sale-leaseback transactions, involving two properties, with unrelated third parties during the year ended December 31, 2021.

Under these transactions, the Company sold property with a net book value of $85.8 million for cash proceeds of $76.0 million, which was reduced by transactions costs of $2.0 million, for net cash proceeds of $74.0 million.

As described in Note 9 to the Company’s consolidated financial statements, the Company entered into and consummated sale-leaseback transactions involving nine properties with unrelated third parties during the year ended December 31, 2022.

Under these transactions, the Company sold properties with a combined net book value of $285.8 million for cash proceeds of $375.0 million, which was reduced by transactions costs of $1.8 million, for net cash proceeds of $373.2 million.

The estimated fair value of the properties sold was $385.1 million.

Accordingly, the aggregate sales price associated with these arrangements was increased, for accounting purposes, by a total of $9.5 million, which resulted in the recognition of an aggregate loss of $2.3 million on these transactions.

Accordingly, the aggregate sales price associated with these arrangements was increased, for accounting purposes, by a total of $10.1 million, which resulted in the recognition of a gain of $97.5 million on these transactions.

The Company determined that the transactions qualified as sale-leaseback transactions in accordance with Accounting Standards Codification (“ASC”) Topic 842, Leases .

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Management applies judgment in assessing relevant lease terms, provisions, and other conditions, including repurchase rights, included in the Company’s sale and lease agreements to determine whether or not

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the control of the real estate property has transferred from the Company, the timing of the transaction, and the determination of fair value.

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We have served as the Company’s auditor since 2002.

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LIFE TIME GROUP HOLDINGS, INC.

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2,162,424 1,909,883

Deferred income taxes

Deferred income taxes, net

41,393 55,213

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Stockholders’ equity:

Common stock, $ 0.01 par value per share, 500,000 and 170,000 shares authorized, respectively;

193,060 and 145,196 shares issued and outstanding, respectively

Common stock, $ 0.01 par value per share, 500,000 shares authorized, 194,271 and 193,060 shares issued and outstanding, respectively

Additional paid-in capital

2,784,416 2,743,560

Stockholder note receivable

Accumulated deficit

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See notes to consolidated financial statements.

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LIFE TIME GROUP HOLDINGS, INC.

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(In thousands, except per share data)

For the Year Ended December 31,

Year Ended December 31,

2022 2021 2020

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228,883 235,124 247,693

Other operating

Other operating (income) expenses

( 44,355 ) 43,653 63,634

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1,711,938 1,813,241 1,307,528

(Loss) income from operations

Income (loss) from operations

110,619 ( 495,188 ) ( 359,149 )

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( 113,537 ) ( 224,516 ) ( 128,394 )

Equity in (loss) earnings of affiliate

Equity in earnings (loss) of affiliates

300 ( 9 ) ( 187 )

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( 113,237 ) ( 224,525 ) ( 128,581 )

(Loss) income before income taxes

( 719,713 ) ( 487,730 ) 40,129

(Benefit from) provision for income taxes

Loss before income taxes

( 2,618 ) ( 719,713 ) ( 487,730 )

Net (loss) income

Benefit from income taxes

( 825 ) ( 140,344 ) ( 127,538 )

Net income attributable to noncontrolling interest

Net (loss) income attributable to Life Time Group Holdings, Inc.

$ ( 1,793 ) $ ( 579,369 ) $ ( 360,192 )

(Loss) earnings per common share – basic and diluted

Loss per common share – basic and diluted

$ ( 0.01 ) $ ( 3.73 ) $ ( 2.48 )

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See notes to consolidated financial statements.

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LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

For the Year Ended December 31,

Year Ended December 31,

2022 2021 2020

Net (loss) income

$ ( 1,793 ) $ ( 579,369 ) $ ( 360,192 )

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( 6,206 ) 214 1,422

Comprehensive (loss) income

( 579,155 ) ( 358,770 ) 34,843

Comprehensive income attributable to noncontrolling interest

Comprehensive (loss) income attributable to Life Time Group Holdings, Inc.

Comprehensive loss

$ ( 7,999 ) $ ( 579,155 ) $ ( 358,770 )

See notes to consolidated financial statements.

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LIFE TIME GROUP HOLDINGS, INC.

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Comprehensive

Loss Noncontrolling

Interest Total

Shares Amount

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141,596 $ 1,416 $ 1,479,941 $ ( 15,000 ) $ 288,478 $ ( 4,652 ) $ 1,750,183

Adoption of ASC 842 — — — — 7,936 — — 7,936

Net income — — — — 30,025 — 24 30,049

Other comprehensive income — — — — — 4,794 — 4,794

Share-based compensation — — 24,152 — — — — 24,152

Partial forgiveness of stockholder note receivable — — ( 3,737 ) 5,000 — — — 1,263

Issuance of common stock, net of issuance costs 4,346 43 105,223 — — — — 105,266

Purchases of stock options — — ( 23,155 ) — — — — ( 23,155 )

Acquisition of noncontrolling interest — — 578 — — — ( 578 ) —

Balance at December 31, 2019

141,596 1,416 1,479,941 ( 15,000 ) 288,478 ( 4,652 ) — 1,750,183

Net loss — — — — ( 360,192 ) — ( 360,192 )

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193,060 1,931 2,743,560 — ( 651,083 ) ( 3,016 ) 2,091,392

Net loss — — — — ( 1,793 ) — ( 1,793 )

Other comprehensive loss — — — — — ( 6,206 ) ( 6,206 )

Share-based compensation — — 37,291 — — — 37,291

Stock option exercises 363 4 3,751 — — — 3,755

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

Issuance of common shares in connection with the vesting of restricted stock units 848 8 ( 562 ) — — — ( 554 )

Settlement of accrued compensation liabilities through the issuance of share-based compensation awards — — 646 — — — 646

Balance at December 31, 2022

194,271 $ 1,943 $ 2,784,416 $ — $ ( 652,876 ) $ ( 9,222 ) $ 2,124,261

See notes to consolidated financial statements.

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LIFE TIME GROUP HOLDINGS, INC.

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(In thousands)

For the Year Ended December 31,

Year Ended December 31,

2022 2021 2020

Cash flows from operating activities:

Net (loss) income

$ ( 1,793 ) $ ( 579,369 ) $ ( 360,192 )

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

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2,062 2,076 37,754

Loss (gain) on disposal of property and equipment, net

(Gain) loss on disposal of property and equipment, net

( 99,974 ) 2,746 ( 7,130 )

Loss on debt extinguishment — 40,993 —

Write-off of discounts and debt issuance costs 28,568 — —

Amortization of debt issuance costs

Write-off of debt discounts and issuance costs — 28,568 —

Amortization of debt discounts and issuance costs

7,873 9,590 12,033

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( 1,719 ) ( 3,474 ) ( 851 )

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

200,969 ( 20,029 ) ( 95,981 )

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( 25,644 ) ( 2,178,004 ) ( 36,385 )

Proceeds from senior secured credit facility

Proceeds from revolving credit facility

805,000 159,000 573,902

Repayments on senior secured credit facility

Repayments of revolving credit facility

( 785,000 ) ( 253,000 ) ( 654,902 )

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( 1,404 ) ( 1,514 ) ( 1,343 )

Proceeds from financing obligations 21,350 — —

Proceeds from the issuance of common stock, net of issuance costs

— 701,926 90,000

Purchases of stock options

— — ( 23,155 )

Proceeds from stock option exercises 3,755 — —

Increase in debt discounts and issuance costs

( 43 ) ( 47,586 ) ( 460 )

( 1,300 ) — —

Net cash provided by financing activities

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( 353 ) ( 9 ) ( 55 )

(Decrease) increase in cash and cash equivalents

Decrease in cash and cash equivalents

( 6,128 ) ( 1,558 ) ( 14,756 )

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and its direct and indirect subsidiaries.

We are primarily dedicated to providing premium health, fitness and wellness experiences at our athletic resort destinations and via our comprehensive digital platform and portfolio of iconic athletic events – all with the objective of inspiring healthier, happier lives.

We design, build and operate our athletic resort destinations that are distinctive and large, multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment.

We are primarily dedicated to providing premium health, fitness and wellness experiences at our athletic country club destinations and via our comprehensive digital platform and portfolio of iconic athletic events – all with the objective of inspiring healthier, happier lives.

We design, build and operate our athletic country club destinations that are distinctive and large, multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment.

As of December 31, 2022, we operated 161 centers in 29 states and one Canadian province.

COVID-19 Impact

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic and recommended containment and mitigation measures worldwide.

On March 13, 2020, the United States declared a National Public Health Emergency with respect to COVID-19.

On March 16, 2020, we closed all of our centers based on orders and advisories from federal, state and local governmental authorities regarding COVID-19, during which time we did not draft or collect monthly access membership dues or recurring product charges from our members.

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 Emergen cy and we clo sed 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.

As of December 31, 2021, all of our 151 centers were open.

W e are collecting monthly access membership dues and recurring product charges from active members associated with all of our centers.

Whether we will need to close any of our centers, and the duration of any such future center closures that may occur, remains uncertain and is dependent on future developments that cannot be accurately predicted at this time.

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 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.

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

We intend to use 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 our Term Loan Facility, 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 partial pay down of our Term Loan Facility, for general corporate purposes.

Basis of Presentation

The consolidated financial statements include the accounts of Life Time Group Holdings, Inc.

and its wholly-owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

We account for all of our investments in unconsolidated subsidiaries using the equity method of accounting.

We apply this method of accounting to our investments when we have the ability to exercise significant influence over the operating and financial policies of the investee.

Our share of the investee’s earnings (losses) associated with our investments in

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

Basis of Presentation

The consolidated financial statements include the accounts of Life Time Group Holdings, Inc.

and our wholly owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

In December 2019, we formed both a Delaware limited liability company named Dallas-Montfort Holdings, LLC (“D-M Holdings”) and a Delaware limited liability company named Dallas-Montfort Property, LLC, which is a wholly owned subsidiary of D-M Holdings.

Also in December 2019, we and an unrelated organization each became a holder of 50 % of the membership interests in D-M Holdings in exchange for a cash capital contribution of approximately $ 16.2 million .

These capital contributions were made in connection with the acquisition of a property in Texas.

See “Other Assets” within Note 2 below for additional information.

In 1999, we, together with two unrelated organizations, formed an Illinois limited liability company named Bloomingdale LIFE TIME Fitness L.L.C.

(“Bloomingdale LLC”) for the purpose of constructing and operating a center in Bloomingdale, Illinois.

We account for our interest in Bloomingdale LLC using the equity method.

S ee “Other Assets” within Note 2 below for additional information.

Effective March 30, 2018, we acquired a 50.01 % voting equity interest in Massage Retreat & Spa, Inc.

Our consolidated financial statements include the operations of MR&S beginning after March 30, 2018.

Effective April 30, 2019, we acquired the remaining 49.99 % voting equity interest in MR&S from our Founder, Chairman and Chief Executive Officer (“CEO”).

During the fourth quarter of 2019, we made the decision to close the business operations of MR&S.

unconsolidated subsidiaries is included in Equity in earnings (loss) of affiliates in our consolidated statements of operations.

S ee “Other Assets” within Note 2 below for additional information regarding our investments in unconsolidated subsidiaries.

Summary of Significant Accounting Policies

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Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, “Leases,” as a new topic, ASC 842 (“ASC 842”).

The new guidance supersedes previous lease accounting guidance and requires the recognition of right-of-use assets and lease liabilities for all leases with lease terms greater than one year.

Effective January 1, 2019, we adopted ASC 842 using the “Comparatives Under 840 Option” approach to transition.

Under this method, financial information related to periods prior to adoption are reported under the previous standard - ASC 840, “Leases.” The effects of adopting ASC 842 were recognized as a cumulative-effect adjustment to retained earnings as of January 1, 2019.

We elected the package of practical expedients in transition for leases that commenced prior to January 1, 2019, including not needing to reassess whether existing contracts are (or contain) leases, whether the lease classification for existing leases would differ under ASC 842 or whether initial direct costs associated with any expired or existing leases qualify for capitalization under ASC 842.

We did not elect the hindsight practical expedient in determining the lease term for existing leases as of January 1, 2019.

The adoption of ASC 842 did not materially impact our results of operations and had no impact on our consolidated cash flows.

Upon our adoption of ASC 842, we elected the short-term lease recognition exemption, whereby

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

leases with an initial term of 12 months or less are not recognized on our consolidated balance sheet.

In addition, for all lease agreements entered into or reassessed after January 1, 2019, we have elected not to separate (and allocate consideration to) lease and non-lease components.

Instead, we have chosen to combine lease and non-lease components and account for them as a single lease component.

In April 2020, the FASB staff issued a question-and-answer document (the “Lease Modification Q&A”) that focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic.

Under ASC 842, economic relief that is agreed to or negotiated outside of the original lease agreement is typically considered a lease modification, in which case both the lessee and lessor are required to apply the respective lease modification framework, in order to determine how to account for the relief.

However, if the lessee is entitled to the economic relief because of either contractual or legal rights that explicitly exist within the original lease agreement, the relief is to be accounted for outside of the lease modification framework.

The Lease Modification Q&A established a different framework to account for certain lease concessions granted in response to the COVID-19 pandemic.

For lease concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than the total payments required by the original contract, the Lease Modification Q&A allows an entity to make an accounting policy election to account for these lease concessions consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and obligations for those concessions exist within the original lease agreement (regardless of whether those enforceable rights and obligations for the concessions explicitly exist within the original lease agreement).

Such accounting policy election is required to be applied consistently to leases with similar characteristics and similar circumstances.

Beginning in the second quarter of 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.

Although these rent deferrals affect the timing of lease payments, the total amount of consideration we are required to pay under the terms of each of the renegotiated lease agreements is substantially the same as that required under the applicable original lease agreement.

Consistent with the guidance provided in the Lease Modification Q&A, we made an accounting policy election to account for each of these lease concessions as if no changes had been made to the original lease agreement.

Accordingly, as it relates to each of these leases, we continued to recognize rent expense each month during the deferral period in an amount equal to that which was recognized in accordance with the original lease agreement.

For more information regarding leases, see “—Leases” within this footnote as well as Note 9, Leases.

Other Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost.

The guidance requires companies to record an allowance for expected credit losses over the contractual term of certain financial assets, including trade receivables and contract assets.

We adopted ASU 2016-13 as of January 1, 2020.

The adoption of this guidance did not materially impact our results of operations and financial position and had no impact on our cash flows.

In December 2019, the FASB issued ASU 2019-12, “ Simplifying the Accounting for Income Taxes (Topic 740).” This ASU simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

This ASU was effective for us effective January 1, 2021.

The adoption of this ASU did not have any impact on our financial position, results of operations or cash flows.

In January 2020, the FASB issued ASU 2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815).” The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, investment in equity method and certain derivatives instruments.

The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions.

The Company adopted the new standard effective January 1, 2021.

In November 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) 2021-10, “Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance,” to increase the transparency of government assistance, including with respect to the disclosure of the types of assistance an entity receives, an entity’s method of accounting for government assistance and the effect of the assistance on an entity’s financial statements.

The amendments are to be applied either (1) prospectively to all applicable transactions that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or (2) retrospectively to those transactions.

We adopted this ASU as of January 1, 2022 and applied it prospectively.

The adoption of this ASU did not have any impact on our financial position, results of operations or cash flows.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

New Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

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.

In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance,” to increase the transparency of government assistance including the disclosure of the types of assistance an entity receives, an entity’s method of accounting for government assistance, and the effect of the assistance on an entity’s financial statements.

The guidance in this ASU will be effective for annual periods beginning after December 15, 2021, with early adoption permitted.

The amendments are to be applied prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or, retrospectively to those transactions.

We are currently evaluating the effect the adoption of this ASU may have on our disclosures.

In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848,” which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

We plan to replace LIBOR with Term Secured Overnight Financing Rate (“SOFR”) no later than June 30, 2023.

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

Revenue Recognition

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We defer the revenue associated with any unsatisfied performance obligation until the obligation is satisfied (i.e., when control of the product is transferred to the customer or a service has been completed).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Center Revenue

Center revenue consists of center membership and digital membership dues, enrollment fees and revenue generated within a center, which we refer to as in-center revenue.

In-center revenue includes fees for personal training, aquatics, and kids programming, as well as sales of products at our cafés, and sales of products and services offered at our spas and tennis programs.

In-center revenue includes fees for Dynamic Personal Training, aquatics, and kids programming, as well as sales of products at our cafés, and sales of products and services offered at our spas and tennis and pickleball programs.

Revenue from product sales is generally recognized at the point of sale to the customer;

however, revenue from our various service offerings received in advance of service delivery is deferred and subsequently recognized when the services are provided.

Personal training revenue received in advance of training sessions, as well as the related sales commissions, are initially deferred and subsequently recognized when the sessions are delivered.

Upon recognition, sales commissions associated with personal training sessions are included in Center operations in our consolidated statements of operations.

Throughout the estimated redemption period associated with prepaid sessions, we also recognize personal training breakage revenue and the related commissions, using a method that is proportionate to the pattern of redemptions.

Dynamic Personal Training revenue received in advance of training sessions, as well as the related sales commissions, are initially deferred and subsequently recognized when the sessions are delivered.

Upon recognition, sales commissions associated with Dynamic Personal Training sessions are included in Center operations in our consolidated statements of operations.

Throughout the estimated redemption period associated with prepaid sessions, we also recognize Dynamic Personal Training breakage revenue and the related commissions, using a method that is proportionate to the pattern of redemptions.

We estimate breakage based on historical redemption patterns.

Generally, we receive a one-time enrollment fee at the time a member joins.

The enrollment fees are nonrefundable after seven days.

The enrollment fees are generally nonrefundable after seven days.

Enrollment fees and related direct expenses are deferred and recognized on a straight-line basis over an estimated average membership life, which is based on historical membership experience.

If the direct expenses related to the enrollment fees exceed the enrollment fees for any center in a month, the amount of direct expenses in excess of the enrollment fees are expensed in the current period instead of deferred over the estimated average membership life.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Other Revenue

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Our media revenue includes our magazine, Experience Life ® , and the related advertising revenue is recognized over the duration of the advertising placement.

Our athletic events revenue includes endurance activities such as running, cycling and triathlons, and our related services revenue includes revenue from our race registration and timing businesses.

Our athletic events revenue includes endurance activities such as running and cycling, and our related services revenue includes revenue from our race registration and timing businesses.

Athletic event revenue and race registration revenue is recognized upon the completion of the event.

Other revenue also includes revenue generated from our digital memberships and our Life Time Work locations.

Other revenue also includes revenue generated from our digital memberships and our Life Time Work and Life Time Living locations.

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

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

Restricted cash of $ 0.3 million, which is used as collateral for our self-insured workers’ compensation and general liabilities claims under our captive insurance policy, was included in cash and cash equivalents at December 31, 2022.

Accounts Receivable

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Accelerated depreciation methods are used for tax reporting purposes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Site development capitalization commences when acquisition of a particular property is deemed probable by management.

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Business Combinations and Asset Acquisitions

We account for business combinations in accordance with ASC 805, “Business Combinations” (“ASC 805”).

We account for business combinations in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations” (“ASC 805”).

ASC 805 requires the acquiring entity in a business combination to recognize all the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination.

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When an acquisition does not meet the definition of a business combination because either:

(i) substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset, or group of similar identified assets, or (ii) the acquired entity does not have an input and a substantive process that together significantly contribute to the ability to create outputs, we

LIFE TIME GROUP HOLDINGS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

account for the acquisition as an asset acquisition.

In an asset acquisition, goodwill is not recognized, but rather, any excess purchase consideration over the fair value of the net assets acquired is allocated on a relative fair value basis to the identifiable net assets as of the acquisition date and any direct acquisition-related transaction costs are capitalized as part of the purchase consideration.

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If an impairment has occurred, the amount of impairment recognized is determined by estimating the fair value of these assets and recording a loss if the carrying value is greater than the fair value.

The temporary closure of our centers during 2020 due to COVID-19, as well as the continued uncertainty of the extent of the impact of COVID-19 on our business, is an impairment trigger.

As a result of the impact of COVID-19 on our business during 2021 and 2020, and for other reasons during 2019, 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.

During 2022, 2021, and 2020, we determined that certain projects were no longer deemed viable for construction, and that the previously capitalized site development costs associated with these projects were impaired.

During 2020, we also determined that the operating lease right-of-use assets and certain of the fixed assets associated with some of our leased centers and some of our ancillary businesses were also impaired.

During 2019, we also determined that the operating lease right-of-use assets and fixed assets associated with the business operations of MR&S were impaired.

Accordingly, we recognized impairment charges of $ 2.1 million, $ 37.8 million and $ 3.9 million associated with these long-lived assets during the years ended December 31, 2021, 2020 and 2019, respectively, which are included in Other operating in our consolidated statements of operations.

Accordingly, we recognized impairment charges of $ 2.1 million, $ 2.1 million and $ 37.8 million associated with these long-lived assets during the years ended December 31, 2022, 2021 and 2020, respectively, which are included in Other operating (income) expenses in our consolidated statements of operations.

We test goodwill for impairment on an annual basis, or more often if circumstances warrant, by estimating the fair value of the reporting unit to which the goodwill relates and comparing this fair value to the net book value of the reporting unit.

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At both December 31, 2022 and 2021, out of the total goodwill balance of $ 1,233.2 million recognized on our consolidated balance sheets, $ 1,230.9 million has been allocated to our Centers reporting unit and $ 2.3 million has been allocated to our Corporate Businesses reporting unit.

At December 31, 2021, the estimated fair value of our Centers reporting unit is substantially in excess of its carrying value.

At December 31, 2022, the estimated fair value of our Centers reporting unit is in excess of its carrying value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Based upon our review and analysis, no goodwill impairments were deemed to have occurred during the years ended December 31, 2022, 2021, and 2020.

During the year ended December 31, 2019, we determined that the goodwill associated with the business operations of MR&S was impaired.

Accordingly, we recognized a $ 3.3 million goodwill impairment charge during the year ended December 31, 2019, which is included in Other operating in our consolidated statement of operations for the year ended December 31, 2019.

For more information on goodwill, see Note 5, Goodwill and Intangibles.

We lease some of our centers, offices and other facilities, as well as some office and other equipment.

We lease some of our centers, offices and other facilities, as well as other equipment.

Excluding renewal options that are not reasonably certain to be exercised, our leases have remaining contractual terms that primarily range from one year to 27 years.

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Our lease agreements do not contain any material residual value guarantees.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Lease cost associated with operating leases and short-term leases is recognized on a straight-line basis from the date we take possession of the property through the end of the lease term.

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Operating Lease Right-of-Use Assets and Liabilities

Upon our adoption of ASC 842 effective on January 1, 2019, we recognized operating lease right-of-use assets and liabilities of $ 1,235.1 million and $ 1,300.5 million, respectively, on our consolidated balance sheet.

The measurement of each operating lease liability we recognized upon our adoption of ASC 842 represents the present value of the remaining minimum lease payments over the remaining lease term, discounted using an appropriate incremental borrowing rate, determined as of the ASC 842 adoption date.

The measurement of each operating lease liability associated with leases commencing during the years ended December 31, 2021 and 2020 represents the present value of the full amount of the remaining lease payments over the remaining lease term, discounted using an appropriate incremental borrowing rate, determined as of the lease commencement date.

The measurement of each operating lease right-of-use asset we recognized upon our adoption of ASC 842 represents the related operating lease liability measurement increased by, as applicable, prepaid rent, leasehold right and favorable lease asset balances and decreased by, as applicable, unfavorable lease liability and deferred rent balances, as well as tenant allowances previously received or due from landlords.

In addition, certain operating lease right-of-use assets were reduced by pre-tax impairment charges, which were recognized as a cumulative effect adjustment to beginning retained earnings.

The measurement of each operating lease right-of-use asset associated with leases that commenced during the years ended December 31, 2021 and 2020 represents the related operating lease liability measurement increased by, as applicable, prepaid rent and decreased by, as applicable, lease incentives.

The measurement of each of our operating lease liabilities represents the present value of the remaining lease payments over the remaining lease term, discounted using an appropriate incremental borrowing rate.

The measurement of each of our operating lease right-of-use assets represents the related operating lease liability measurement increased by, if applicable, prepaid rent, the fair value associated with the acquisition of a leasehold right and/or the fair value associated with the acquisition of a favorable lease, and decreased by, if applicable, lease incentives, impairment charges and/or the fair value associated with the acquisition of an unfavorable lease.

For more information regarding the operating lease right-of-use assets and liabilities that are recognized on our December 31, 2022 and 2021 consolidated balance sheets, see Note 9, Leases.

Finance Lease Right-of-Use Assets and Liabilities

The measurement of each finance lease right-of-use asset we recognized upon our adoption of ASC 842 represents the aggregate of the carrying value of the related capital lease asset that we recognized under previous lease accounting rules.

The measurement of each finance lease liability we recognized upon our adoption of ASC 842 represents the carrying value of the related capital lease obligation we recognized under previous lease accounting rules.

The measurement of each finance lease right-of-use asset and liability associated with leases that commenced during the years ended December 31, 2021, 2020 and 2019 represents the present value of the full amount of the remaining payments associated with the arrangement (i.e., lease and non-lease components are combined and accounted for as a single lease component) over the remaining lease term, discounted using an appropriate incremental borrowing rate, determined as of the lease commencement date.

Finance lease right-of-use assets and liabilities are included in Prepaid expenses and other current assets and Accrued expenses and other current liabilities, respectively, on our consolidated balance sheets.

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

Finance lease right-of-use assets are included in Other assets on our consolidated balance sheets.

The current and long-term portions of our finance lease liabilities are included in Accrued expenses and other current liabilities and Other liabilities, respectively, on our consolidated balance sheets.

For more information regarding the finance lease right-of-use assets and liabilities that are recognized on our December 31, 2022 and 2021 consolidated balance sheets, see Note 9, Leases.

Sale-Leaseback Transactions

Under lease accounting guidance in effect prior to our adoption of ASC 842, we assessed each sale-leaseback transaction to determine if each such transaction qualified as a sale or if it was required to be treated as a financing transaction.

Prior to our adoption of ASC 842, a sale-leaseback transaction associated with one of our constructed centers qualified as a sale and we initially deferred a gain on that successful sale.

Upon our adoption of ASC 842, this deferred gain was recognized as a cumulative pre-tax increase in beginning retained earnings.

Sale-Leaseback Arrangements

We assess each of our sale-leaseback arrangements to determine whether a sale has occurred under ASC Topic 606:

Revenue from Contracts with Customers (“ASC 606”), and we assess whether the classification of the lease and/or the payment terms associated with the renewal options preclude sale accounting under ASC 842, Leases (“ASC 842”).

These assessments involve a determination of whether control of the underlying property has been transferred to the buyer.

If we determine control of the underlying property has been transferred to the buyer, we account for the arrangement as a sale and leaseback transaction.

If we determine control of the underlying property has not been transferred to the buyer, we account for the arrangement as a financing transaction.

Since our adoption of ASC 842, we have accounted for each of our sale-leaseback arrangements as a sale and leaseback transaction.

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(Table amounts in thousands except per share data)

Prior to our adoption of ASC 842, we also had several sale-leaseback transactions that we were required to account for as financing transactions due to a prohibited form of continuing involvement with the applicable property.

Upon our adoption of ASC 842, we reassessed each of these sale-leaseback transactions and determined that each of them qualified as a sale under the new lease guidance.

As a result, financing accounting was discontinued, and we began accounting for each arrangement as an operating lease.

Accordingly, the carrying value of the property and the related financing obligation associated with each of these arrangements was derecognized and an operating lease right-of-use asset and a related operating lease liability was recognized.

Upon derecognition of the property and related financing obligations, we recognized a cumulative pre-tax increase in beginning retained earnings.

Since our adoption of ASC 842, we account for sale-leaseback transactions with unrelated third parties at fair value and we account for sale-leaseback transactions with related parties at their contractually stated terms.

We typically engage third-party appraisal firms to assist us in determining the estimated fair value of each property sold.

Property valuations generally involve the use of the cost approach, the sales comparison approach and the income approach, each of which requires management to make assumptions and to apply judgment to determine the estimated fair value of the property.

These assumptions and judgments include , but are not limited to, replacement cost estimates, comparable sales adjustments, projected net operating income estimates and capitalization rates.

For more information regarding sale-leaseback transactions that occurred during the years ended December 31, 2021, 2020 and 2019, see Note 9, Leases.

For each sale-leaseback arrangement we have entered into with an unrelated third party since our adoption of ASC 842, the measurements associated with the gain or loss recognized on the sale and the lease-related right-of-use assets and liabilities have been adjusted for any off-market terms.

These off-market adjustments are based on the difference between the sales price of the property and its fair value.

When the sales price is less than the underlying property’s fair value, we recognize the difference as an increase to the sales price and as an increase in the operating lease right-of-use asset.

When the sales price is greater than the underlying property’s fair value, we recognize the difference as a reduction to the sales price and as a financing obligation that is separate from the operating lease liability.

We then allocate the payments due under the lease between those associated with the operating lease liability and those associated with the financing obligation, in a manner that results in a zero balance at the end of the initial lease term for both liabilities.

The financing obligation is amortized using the effective interest method, and interest is calculated using the same incremental borrowing rate as that used for purposes of measuring the related operating lease liability.

We account for sale-leaseback arrangements with related parties at their contractually stated terms.

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

The determination of the fair value of the property related to our sale-leaseback arrangements is subjective and requires estimates, including the use of multiple valuation techniques and uncertain inputs, such as market price per square foot and assumed capitalization rates or the replacement cost of the assets, where applicable.

Where real estate valuation expertise is required, we obtain independent third-party appraisals to determine the fair value of the underlying asset.

While determining fair value requires a variety of input assumptions and judgment, we believe our estimates of fair value are reasonable.

For more information regarding sale-leaseback transactions that were consummated during the years ended December 31, 2022, 2021 and 2020, see Note 9, Leases.

Build-to-Suit Lease Arrangements

For some of our centers, we enter into build-to-suit lease arrangements related to the design and construction of a new center on the property.

Under lease accounting guidance in effect prior to our adoption of ASC 842, due to our involvement with the property, we were considered the owner of some construction projects associated with build-to-suit lease arrangements.

As a result, we were required to account for each of these arrangements as a financing transaction.

Upon our adoption of ASC 842, we reassessed each of these build-to-suit lease arrangements and determined that we did not control any of the underlying assets that were either already constructed or under construction.

As a result, financing accounting was discontinued, and we began accounting for each arrangement as an operating lease.

Accordingly, the carrying value of the assets that we did not own and the related financing obligation associated with each of these arrangements was derecognized and an operating lease right-of-use asset and related operating lease liability was recognized.

Since our adoption of ASC 842, we evaluate build-to-suit lease arrangements by first determining whether or not we control the underlying asset being constructed prior to the commencement date of the lease.

We evaluate build-to-suit lease arrangements by first determining whether or not we control the underlying asset being constructed prior to the commencement date of the lease.

If we determine that we do not control the underlying asset during the construction period, we account for the arrangement as either an operating lease or a finance lease.

If we determine that we control the underlying asset during the construction period, we initially account for the arrangement as a financing transaction.

For each build-to-suit arrangement that we have entered into since our adoption of ASC 842, we have determined that we either:

For each of our build-to-suit arrangements, we have determined that we either:

(1) do not control the underlying asset currently under construction as of December 31, 2022;

or (2) we did not control the underlying constructed asset prior to the commencement date of the lease.

Accordingly, we have accounted for each build-to-suit arrangement that we have entered into since our adoption of ASC 842 as an operating lease.

Accordingly, we are accounting for each of our build-to-suit arrangements as an operating lease.

Intangible Assets

Intangible assets at December 31, 2021 and 2020 include trade names, member relationships, customer relationships and a facility license associated with an outdoor enthusiast and bicycling event .

Intangible assets at December 31, 2022 and 2021 include trade names, customer relationships and a facility license associated with an outdoor enthusiast and bicycling event .

For more information on intangible assets, see Note 5, Goodwill and Intangibles.

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Based upon our review and analysis, no indefinite-lived intangible asset impairments were deemed to have occurred during any of the periods presented.

Finite-Lived Intangible Assets

Finite-lived intangible assets are stated at cost, net of accumulated amortization, which is recorded on a straight-line or accelerated basis over the life of the asset.

We review finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

If such a review should indicate that

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(Table amounts in thousands except per share data)

Finite-Lived Intangible Assets

Finite-lived intangible assets are stated at cost, net of accumulated amortization, which is recorded on a straight-line or accelerated basis over the life of the asset.

We review finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

If such a review should indicate that the carrying amount of finite-lived intangible assets is not recoverable, we reduce the carrying amount of such assets to fair value.

the carrying amount of finite-lived intangible assets is not recoverable, we reduce the carrying amount of such assets to fair value.

Based upon our review and analysis, no finite-lived intangible asset impairments were deemed to have occurred during any of the periods presented.

Other assets at December 31, 2021 and 2020 primarily consists of ou r executive nonqualified plan assets, o ur investment in Bloomingdale LLC, our investment in D-M Holdings, rent deposits and unamortized debt issuance costs associated with the revolving portion of our senior secured credit facility.

Investment in Unconsolidated Subsidiary

In December 2019, we formed both D-M Holdings and a Delaware limited liability company named Dallas-Montfort Property, LLC, which is a wholly owned subsidiary of D-M Holdings.

These capital contributi ons were made in connection with the acquisition of a property in Texas.

Other than incurring $ 0.4 million and $ 0.1 million of expenditures, which we have recognized as additional capital contributions during the years ended December 31, 2021 and 2020, respectively, there was no activity associated with D-M Holdings during the years ended December 31, 2021 and 2020.

We account for our investment in D-M Holdings using the equity method.

The capital contributions we have made in connection with our 50 % membership interest in D-M Holdings are reported in Acquisitions, net of cash acquired within the investing section in our consolidated cash flow statements.

Other assets at December 31, 2022 and 2021 primarily consists of ou r executive nonqualified plan assets, o ur investments in unconsolidated subsidiaries, rent deposits and unamortized debt issuance costs associated with the revolving portion of our senior secured credit facility.

Investments in Unconsolidated Subsidiaries

In 1999, we, together with two unrelated organizations, formed an Illinois limited liability company named Bloomingdale LIFE TIME Fitness L.L.C.

(“Bloomingdale LLC”) for the purpose of constructing and operating a center in Bloomingdale, Illinois.

We currently account for our investment in Bloomingdale LLC using the equity method of accounting.

Also in December 2019, we and an unrelated organization each became a holder of 50 % of the membership interests in D-M Holdings in exchange for a cash capital contribution.

These capital contributions were made in connection with the acquisition of a property in Texas.

T here was no operating activity associated with D-M Holdings during the years ended December 31, 2022, 2021 and 2020.

We currently account for our investment in D-M Holdings using the equity method of accounting.

In addition to our investments in Bloomingdale LLC and D-M Holdings, we also have investments in various other unconsolidated subsidiaries.

The amounts we have currently invested in each of these unconsolidated subsidiaries is not material.

We currently account for each of these investments using the equity method of accounting.

Debt Discounts and Issuance Costs

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Financial Assets and Liabilitie s .

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 outstandin g mortgage notes at December 31, 2021 approximates fair value.

At December 31, 2020, the carrying amount

At December 31, 2022, the fair value of our outstanding Term Loan Facility, Secured Notes and Unsecured Notes (each of which is defined in Note 8, Debt) was approximately $ 272.3 million, $ 860.3 million and $ 425.1 million, respectively.

At December 31, 2021, the fair value of our outstanding Term Loan Facility, Secured Notes and

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

of our outstandin g debt, excluding debt discounts and issuance costs, approximates fair value.

Unsecured Notes was approximately $ 277.0 million, $ 957.4 million and $ 494.0 million, respectively.

The carrying amount of our outstandin g Mortgage Notes and Construction Loan (each of which is defined in Note 8, Debt) at December 31, 2022 and 2021 approximates fair value.

The f air 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.

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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 consolidated balance sheets.

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

For these assets, we do not periodically adjust carrying value to fair value except in the event of impairment.

If we determine that impairment has occurred, the carrying value of the asset would be reduced to fair value and the difference would be recorded as a loss within operating income in our consolidated statements of operations.

For information regarding impairment charges associated with our long-lived assets and goodwill that we recognized during each of the periods presented, see the Impairment of Long-Lived Assets and Goodwill sections within this footnote.

For information regarding impairment charges associated with our long-lived assets that we recognized during each of the periods presented, see the Impairment of Long-Lived Assets section within this footnote.

Marketing Expenses

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Marketing expenses for the years ended December 31, 2022, 2021 and 2020 were $ 39.3 million, $ 37.1 million and $ 31.4 million, respectively.

We are currently engaged in a material litigation matter with an insurance provider involving a complaint we filed seeking declaratory relief and damages associated with a business interruption insurance claim.

We are currently engaged in a material litigation matter with an insurance provider involving a complaint we filed seeking declaratory relief and damages associated with a property/ business interruption insurance claim.

We are also engaged in various other legal matters incidental to the normal course of business.

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Our liability for unrecognized tax benefits, including penalties and interest, is included in Other liabilities on our consolidated balance sheets.

We recognize adjustments to our liability for unrecognized tax benefits, including penalties and interest, within (Benefit from) provision for income taxes in our consolidated statements of operations.

We recognize adjustments to our liability for unrecognized tax benefits, including penalties and interest, within Benefit from income taxes in our consolidated statements of operations.

For more information on income taxes, see Note 7, Income Taxes.

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For more information on share-based compensation, see Note 10, Stockholders’ Equity.

(Loss) Earnings per Share

Basic (loss) earnings per share is computed by dividing (loss) income available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

The numerator in the diluted (loss) income per share calculation is derived by adding the effect of assumed common stock conversions to (loss) income available to common stockholders.

The denominator in the diluted (loss) income per share calculation is derived by adding shares of common stock deemed to be potentially dilutive to the weighted average number of shares of common stock outstanding during the period.

Potentially dilutive securities that are subject to performance or market conditions are considered contingently issuable shares for purposes of calculating diluted (loss) earnings per share.

Accordingly, these contingently issuable shares are excluded from the computation of diluted (loss) earnings per share until the performance or market conditions have been met.

Other potentially dilutive securities that do not involve contingently issuable shares are also excluded from the computation of diluted (loss) earnings per share if their effect is antidilutive .

Loss per Share

Basic loss per share is computed by dividing loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

The numerator in the diluted loss per share calculation is derived by adding the effect of assumed common stock conversions to loss available to common stockholders.

The denominator in the diluted loss per share calculation is derived by adding shares of common stock deemed to be potentially dilutive to the weighted average number of shares of common stock outstanding during the period.

Potentially dilutive securities that are subject to performance or market conditions are considered contingently issuable shares for purposes of calculating diluted loss per share.

Accordingly, these contingently issuable shares are excluded from the computation of diluted loss per share until the performance or market conditions have been met.

Other potentially dilutive securities that do not involve contingently issuable shares are also excluded from the computation of diluted loss per share if their effect is antidilutive .

For more information on the basic and diluted loss per share calculations for the years ended December 31, 2022, 2021 and 2020, see Note 11, Loss Per Share.

Changes in Accumulated Other Comprehensive Loss

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Construction contract receivables

14,949 12,398

Deferred membership origination costs

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(Table amounts in thousands except per share data)

Of the $ 49.7 million balance in Property held for sale at December 31, 2020, $ 43.7 million represents the carrying value of a property that was associated with a sale-leaseback agreement that we entered into with an unrelated third party on December 16, 2020, and the remaining $ 6.0 million represents excess land purchased as part of our original center site acquisitions.

This sale-leaseback transaction closed in March 2021.

If property held for sale is currently under contract for sale, the cost is reflected as a current asset and is included in Prepaid expenses and other current assets on our consolidated balance sheet.

Property held for sale is stated at the lower of cost or fair value less estimated costs to sell.

Property is not depreciated during the period in which it is classified as held for sale.

For more information regarding sale-leaseback transactions with unrelated third parties that were consummated during the years ended December 31, 2021 and 2020, see Note 9, Leases.

Accrued Expenses and Other Current Liabilities

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Accounts payable 2,990 17,189 397

Accrued expenses 38,299 ( 20,585 ) 24,055

Accrued expenses and other current liabilities 6,573 38,299 ( 20,585 )

Deferred revenue 3,028 ( 10,950 ) ( 8,028 )

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Changes in operating assets and liabilities $ 3,372 $ 26,717 $ 37,517

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Additional supplemental cash flow information is as follows:

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2022 2021 2020

Net cash received from income tax refunds, net of taxes paid

Net cash paid for (received from) income taxes, net of refunds received

$ 10,640 $ ( 885 ) $ ( 32,447 )

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15,872 3,749 4,942

Issuance of Series A Preferred Stock in connection with the extinguishment of secured loan — related parties

Non-cash activities:

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

Conversion of Series A Preferred Stock to common stock — 149,585 —

See Note 9, Leases for supplemental cash flow information associated with our lease arrangements for the years ended December 31, 2022, 2021 and 2020.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Property and Equipment

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$ 2,901,242 $ 2,791,464

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

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

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

Depreciation expense, which is included in Depreciation and amortization in our consolidated statements of operations, for the years ended December 31, 2022, 2021 and 2020 was $ 226.0 million, $ 232.4 million and $ 241.6 million, respectively.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Goodwill and Intangibles

7 unchanged sentences

$ 163,000 $ — $ 163,000

Member relationships

16,987 ( 6,583 ) 10,404

16,327 ( 5,086 ) 11,241

Total intangible assets

5 unchanged sentences

$ 163,000 $ — $ 163,000

Member relationships

16,327 ( 5,086 ) 11,241

5,252 ( 3,833 ) 1,419

Total intangible assets

$ 179,327 $ ( 5,086 ) $ 174,241

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

Other intangible assets at December 31, 2020 c onsists solely of the trade names and customer relationships associated with our race registration and timing businesses.

During the year ended December 31, 2021, we acquired a facility license associated with an outdoor enthusiast and bicycling event for approximately $ 10.2 million, of which approximately $ 1.1 million had yet to be paid as of December 31, 2021 and is included in Other liabilities on our consolidated balance sheets.

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

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

During the year ended December 31, 2021, we acquired a facility license associated with an outdoor enthusiast and bicycling event for approximately $ 10.2 million, of which approximately $ 1.1 million was included in Accrued expenses and other current liabilities on our consolidated balance sheets as of December 31, 2022 and which was subsequently paid in February 2023.

This license expires in April 2031.

4 unchanged sentences

As of December 31, 2022, the expected remaining amortization associated with intangible assets for the next five years was as follows:

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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.

14 unchanged sentences

The timing associated with the revenue we recognized during the years ended December 31, 2022, 2021, and 2020 is as follows:

For the Year Ended December 31, 2021

For the Year Ended December 31, 2020

Year Ended December 31,

2022 2021 2020

Revenue Other

3 unchanged sentences

Revenue Total

Revenue Center

Revenue Other

Revenue Total

Goods and services transferred over time

5 unchanged sentences

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 consist primarily of deferred revenue for fees collected in advance for membership dues, enrollment fees, Dynamic Personal Training and other center services offerings, as well as our media and athletic events.

Contract liabilities at December 31, 2022 and 2021 were $ 38.9 million and $ 35.9 million, respectively.

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

Deferred revenue at December 31, 2021 and 2020 was $ 33.9 million and $ 42.3 million, respectively, and consists primarily of prepaid membership dues, personal training and other in-center services, and enrollment fees.

The $ 8.4 million decrease was primarily driven by the usage of membership dues credits that we gave to members during 2020 as a result of center closures.

Also, deferred revenue associated with enrollment fees and center services offerings decreased as a result of our center closures in 2020.

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

Long-term contract liabilities at December 31, 2021 and 2020 were $ 2.0 million and $ 3.8 million, respectively, and consist primarily of deferred enrollment fees.

The $ 1.8 million decrease was primarily related to fewer enrollment fees due to center closures during 2020.

Deferred revenue at December 31, 2022 and 2021 was $ 36.9 million and $ 33.9 million, respectively, and consists primarily of

LIFE TIME GROUP HOLDINGS, INC.

2 unchanged sentences

(Table amounts in thousands except per share data)

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

For the Year Ended December 31,

prepaid membership dues, enrollment fees, Dynamic Personal Training and other in-center services, as well as media and athletic events.

The $ 3.0 million increase was primarily driven by prepayments of Dynamic Personal Training sessions that have yet to be serviced.

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

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

The benefit from income taxes is comprised of:

Year Ended December 31,

2022 2021 2020

Current tax (benefit) expense

Current tax expense (benefit)

$ 7,709 $ ( 528 ) $ ( 28,872 )

1 unchanged sentence

5,314 309 1,264

Total current tax (benefit) expense

Total current tax expense (benefit)

13,023 ( 219 ) ( 27,430 )

4 unchanged sentences

80 4,100 ( 29 )

Total deferred tax (benefit) expense

Total deferred tax benefit

( 13,560 ) ( 139,941 ) ( 99,910 )

1 unchanged sentence

( 288 ) ( 184 ) ( 198 )

(Benefit from) provision for income taxes

Benefit from income taxes

$ ( 825 ) $ ( 140,344 ) $ ( 127,538 )

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

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

On March 27, 2020, Congress enacted the CARES Act to provide certain relief as a result of the COVID-19 pandemic.

2 unchanged sentences

The favorable federal tax rate differential is due to net operating losses generated in tax years with a federal tax rate of 21% whereas the losses were carried back to tax years with a federal tax rate of 35% .

The Inflation Reduction Act of 2022 (the “IRA”) was signed into law on August 16, 2022.

The IRA includes numerous tax provisions, clean-energy related tax incentives and more funding for IRS enforcement and other initiatives.

New corporate taxes, including a 15% corporate alternative minimum tax (“CAMT”) and a 1% excise tax on stock repurchases by certain publicly traded corporations, were introduced in the IRA.

The 15% CAMT is applied on the adjusted financial statement income of applicable corporations and is effective for taxable years beginning after December 31, 20 22.

The new CAMT provision does not currently impact our consolidated financial statements, as it is not currently applicable to us and we do not expect it to be applicable to us in the foreseeable future.

The 1% excise tax is imposed on repurchases of st ock by certain publicly traded corporations beginning after December 31, 2022.

The amount of repurchases subject to the excise tax is reduced by the value of new stock issued to the public or employees during the year.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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

For the Year Ended December 31,

Year Ended December 31,

2022 2021 2020

Income tax (benefit) provision at federal statutory rate

Income tax benefit at federal statutory rate

$ ( 610 ) $ ( 151,582 ) $ ( 102,424 )

1 unchanged sentence

869 ( 20,575 ) ( 23,357 )

Goodwill impairment

Section 162(m) limitation

3,709 4,831 —

— ( 1,283 ) ( 12,157 )

Loss on debt extinguishment

1 unchanged sentence

( 4,833 ) 16,933 9,538

(Benefit from) provision for income taxes

Benefit from income taxes

$ ( 825 ) $ ( 140,344 ) $ ( 127,538 )

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Deferred income taxes are the result of provisions of the tax laws that either require or permit certain items of income or expense to be reported for tax purposes in different periods than they are reported for financial reporting.

4 unchanged sentences

Accrued equity compensation

80,198 76,603

Accrued expenses

4 unchanged sentences

Business interest

35,253 34,185

Valuation allowance

10 unchanged sentences

( 1,677 ) ( 1,710 )

Debt issuance costs

Prepaid expenses

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federal, state or local examinations by tax authorities for years before 2019.

As of December 31, 2021, we had a federal income tax net operating loss carryforward related to our U.S.

operations of approximately $ 554.4 million ($ 116.4 million tax effected), of which approximately $ 75.8 million ($ 15.9 million tax effected) expires in 2038 and approximately $ 478.6 million ($ 100.5 million tax effected) can be carried forward indefinitely.

As of December 31, 2021, we also had state net operating loss carryforwards totaling approximately $ 436.1 million ($ 25.4 million tax effected), of which approximately $ 356.4 million ($ 19.8 million tax effected) expires between 2026 and 2042 and approximately $ 79.7 million ($ 5.6 million tax effected) can be carried forward indefinitely.

As it relates to our Canada operations, we had an income tax net operating loss carryforward of approximately $ 21.4 million ($ 5.7 million tax effected) as of December 31, 2021, which is subject to expiration between tax years 2032 and 2042.

As of December 31, 2020, we had a federal income tax net operating loss carryforward related to our U.S.

operations of approximately $ 481.7 million ($ 101.1 million tax effected), of which approximately $ 75.8 million ($ 15.9 million tax effected) expires in 2038 and approximately $ 405.9 million ($ 85.2 million tax effected) can be carried forward indefinitely.

As of December 31, 2020, we also had state net operating loss carryforwards totaling approximately $ 311.1 million ($ 18.1 million tax effected), of which approximately $ 242.0 million ($ 15.1 million tax effected) expires between 2026 and 2041 and

LIFE TIME GROUP HOLDINGS, INC.

2 unchanged sentences

(Table amounts in thousands except per share data)

approximately $ 69.1 million ($ 3.0 million tax effected) can be carried forward indefinitely.

As of December 31, 2022, we had a federal income tax net operating loss carryforward related to our U.S.

operations of approximately $ 393.8 million ($ 82.7 million tax effected), that can be carried forward indefinitely.

As of December 31, 2022, we also had state net operating loss carryforwards totaling approximately $ 295.6 million ($ 16.9 million tax effected), of which approximately $ 218.0 million ($ 12.5 million tax effected) expires between 2026 and 2043 and approximately $ 77.6 million ($ 4.4 million tax effected) can be carried forward indefinitely.

As it relates to our Canada operations, we had an income tax net operating loss carryforward of approximately $ 21.3 million ($ 5.7 million tax effected) as of December 31, 2022, which is subject to expiration between tax years 2032 and 2042.

As of December 31, 2021, we had a federal income tax net operating loss carryforward related to our U.S.

operations of approximately $ 554.4 million ($ 116.4 million tax effected), of which approximately $ 75.8 million ($ 15.9 million tax effected) was to expire in 2038 and approximately $ 478.6 million ($ 100.5 million tax effected) could be carried forward indefinitely.

As of December 31, 2021, we also had state net operating loss carryforwards totaling approximately $ 436.1 million ($ 25.4 million tax effected), of which approximately $ 356.4 million ($ 19.8 million tax effected) was to expire between 2026 and 2042 and approximately $ 79.7 million ($ 5.6 million tax effected) could be carried forward indefinitely.

As it relates to our Canada operations, we had an income tax net operating loss carryforward of approximately $ 21.4 million ($ 5.7 million tax effected) as of December 31, 2021, which was subject to expiration between tax years 2032 and 2042.

As of December 31, 2022 , we had a business interest carryforward of approximately $ 143.4 million ($ 35.3 million tax effected) that can be carried forward indefinitely.

As of December 31, 2021 , we also had a general business credit carryforward of approximately $ 2.0 million that can be used to offset future U.S.

federal tax liabilities and expires between tax years 2036 and 2041.

As of December 31, 2021, we had a business interest carryforward of approximately $ 133.5 million ($ 34.2 million tax effected) that can be carried forward indefinitely.

12 unchanged sentences

federal tax liabilities on foreign-sourced income.

We project that our foreign sourced income will not be sufficient to fully utilize the credit carryforward.

We projected that our foreign sourced income will not be sufficient to fully utilize the credit carryforward.

As a result, a valuation allowance of $ 1.1 million has been recorded as of December 31, 2021 , in order to reduce the deferred tax asset associated with the foreign tax credit carryforward.

9 unchanged sentences

Term Loan Facility, maturing December 2024 $ 273,625 $ 273,625

Prior Term Loan Facility, retired January 2021 — 1,471,584

Prior Revolving Credit Facility, retired January 2021 — 94,000

Revolving Credit Facility, maturing December 2026 20,000 —

Secured Notes, maturing January 2026 925,000 925,000

Unsecured Notes, maturing April 2026 475,000 475,000

2023 Notes, retired February 2021 — 450,000

Secured loan—related parties, retired January 2021 — 101,503

Construction Loan, maturing February 2026 21,330 —

Mortgage Notes, various maturities 119,928 145,572

10 unchanged sentences

$ 1,805,698 $ 1,775,719

Refinancing Transactions

During the year ended December 31, 2021, Life Time, Inc., an indirect, wholly-owned subsidiary of Life Time Group Holdings, Inc., as the borrower and issuer, as applicable, together with certain other wholly-owned subsidiaries:

(i) refinanced in full the then outstanding balances associated with our previous term loan facility (the “Prior Term Loan Facility”) and our prior revolving credit facility (the “Prior Revolving Credit Facility”) through net cash proceeds Life Time, Inc.

received from a new term loan facility (the “Term Loan Facility”) that matures in December 2024 as well as the issuance of senior secured notes (the “Secured Notes”) that mature in January 2026;

(ii) refinanced in full our previous senior unsecured notes (the “2023 Notes”) through proceeds Life Time, Inc.

received from the issuance of new senior unsecured notes (the “Unsecured Notes”) that mature in April 2026;

(iii) converted our then existing related party secured loan into Series A Preferred Stock;

and (iv) increased the commitments under the revolving portion of our senior secured credit facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Credit Facilities”) and extended their maturity.

Senior Secured Credit Facility

4 unchanged sentences

Pursuant to such eighth amendment to the Credit Agreement, Life Time, Inc.

and such other subsidiaries:

(i) entered into the Term Loan Facility and incurred new term loans in an aggregate principal amount of $ 850.0 million;

(ii) paid off the then outstanding balances associated with the Prior Term Loan Facility and the Prior Revolving Credit Facility;

and (iii) extended the maturity of $ 325.2 million of the $ 357.9 million Prior Revolving Credit Facility to September 2024.

and such other subsidiaries, among other things, (i) entered into a new term loan facility (the “Term Loan Facility”) and incurred new term loans in an aggregate principal amount of $ 850.0 million and (ii) extended the maturity on the vast majority of commitments under the revolving portion of our senior secured credit facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Credit Facilities”).

On December 2, 2021, Life Time, Inc.

2 unchanged sentences

and such other subsidiaries increased the commitments under the Revolving Credit Facility to $ 475.0 million and extended the maturity of the Revolving Credit Facility to December 2, 2026, except that the maturity will be:

(a) September 22, 2024 if we have not refinanced or amended in a manner set forth in such amendment the Term Loan Facility by such date;

(b) October 16, 2025 if we have at least $ 100.0

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

million remaining outstanding on the Secured Notes on such date;

and (c) January 14, 2026 if we have at least $ 100.0 million remaining outstanding on the Unsecured Notes on such date.

(a) September 22, 2024 if we have not refinanced or amended the Term Loan Facility in a manner set forth in such amendment by such date;

(b) October 16, 2025 if we have at least $ 100.0 million remaining outstanding on the senior unsecured notes (the “Unsecured Notes”) that mature in April 2026 on such date;

and (c) January 14, 2026 if we have at least $ 100.0 million remaining outstanding on the senior secured notes (the “Secured Notes”) that mature in January 2026 on such date.

Upon the exercise of an accordion feature and subject to certain conditions, borrowings under the Credit Facilities may be increased subject, in certain cases, to meeting a first lien net leverage ratio.

The Credit Facilities are secured by a first priority lien (on a pari-passu basis with the Secured Notes described below) on substantially all of our assets.

The net cash proceeds Life Time, Inc.

received under the Term Loan Facility, as well as from the Secured Notes, were used to:

(i) refinance in full the then outstanding balances associated with the Prior Term Loan Facility and the Prior Revolving Credit Facility (details of which are described under “—Term Loan Facility” and “—Revolving Credit Facility,” respectively);

(ii) pay debt issuance and original issue discount costs associated with each of these financing transactions (details of which are described in “—Debt Discounts and Issuance Costs” below);

and (iii) strengthen our balance sheet by adding to our cash position.

Term Loan Facility

At both December 31, 2020 and January 22, 2021 (the effective date of the refinancing), the Prior Term Loan Facility balance was $ 1,471.6 million .

Under the Term Loan Facility, Life Time, Inc.

incurred new term loans in an aggregate principal amount of $ 850.0 million , of which $ 507.6 million represents cash proceeds received and $ 342.4 million represents the cashless portion of the Prior Term Loan Facility that was rolled over into the Term Loan Facility.

On January 22, 2021, we used the net cash proceeds received from the Term Loan Facility, as well as a portion of the net proceeds received from the Secured Notes, to pay off the remaining $ 1,129.2 million Prior Term Loan Facility balance.

The $ 850.0 million Term Loan Facility, which matures in December 2024, initially amortized at 0.25 % quarterly, which required us to make three mandatory quarterly principal repayments of approximately $ 2.1 million during the year ended December 31, 2021.

2 unchanged sentences

At December 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.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Revolving Credit Facility

The Prior Revolving Credit Facility provided for a $ 357.9 million revolver.

At December 31, 2020 and January 22, 2021 (the effective date of the refinancing), the Prior Revolving Credit Facility balance was $ 94.0 million and $ 109.0 million, respectively.

Under the Revolving Credit Facility, we extended the maturity of $ 325.2 million of the $ 357.9 million revolver to September 2024.

The remaining $ 32.7 million non-extended portion of our Revolving Credit Facility was set to mature in August 2022.

On January 22, 2021, we used a portion of the net proceeds we received from the Secured Notes to pay off the then outstanding $ 109.0 million balance under the Prior Revolving Credit Facility.

On December 2, 2021, we increased the commitments under the Revolving Credit Facility to $ 475.0 million and extended the maturity to December 2026, as detailed above under “—Senior Secured Credit Facility.”

At December 31, 2021, there were no outstanding borrowings on the Revolving Credit Facility and there were $ 33.5 million of outstanding letters of credit, resulting in total revolver availability, subject to a $ 100.0 million minimum liquidity requirement that ended on December 31, 2021 (see “—Debt Covenants” below), of $ 341.5 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 %.

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 December 31, 2022, there were $ 20.0 million of outstanding borrowings on the Revolving Credit Facility and there were $ 31.4 million of outstanding letters of credit, resulting in total revolver availability of $ 423.6 million , which was available at intervals ranging from 30 to 180 days at interest rates ranging from LIBOR plus 4.00 % or base rate plus 3.00 %.

The weighted average interest rate and debt outstanding under the Revolving Credit Facility for the year ended December 31, 2022 wa s 5.07 % and $ 33.5 million, respectively.

2 unchanged sentences

On January 22, 2021, Life Time, Inc.

issued Secured Notes in an aggregate principal amount of $ 925.0 million.

issued the Secured Notes in an aggregate principal amount of $ 925.0 million.

These notes mature in January 2026 and interest only payments are due semi-annually in arrears at 5.75 %.

Life Time, Inc.

has the option to call the Secured Notes, in whole or in part, on one or more occasions, beginning on January 15, 2023, subject to the payment of a redemption price that includes a call premium that varies depending on the year of redemption.

has the option, which began on January 15, 2023, to call the Secured Notes, in whole or in part, on one or more occasions, subject to the payment of a redemption price that includes a call premium that varies depending on the year of redemption.

In addition, at any time prior to January 15, 2023, Life Time, Inc.

may redeem up to 40.00 % of the aggregate principal amount of the Secured Notes

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

outstanding with the net proceeds of certain equity offerings by us at a redemption price equal to 105.75 % of the principal amount of the Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

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.

could have redeemed up to 40.00 % of the aggregate principal amount of the Secured Notes outstanding with the net proceeds of certain equity offerings by us at a redemption price equal to 105.75 % of the principal amount of the Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

Life Time, Inc.

did not exercise this redemption right.

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

Unsecured Notes

In June 2015, Life Time, Inc.

issued the 2023 Notes in the original principal amount of $ 450.0 million, which were scheduled to mature in June 2023.

At both December 31, 2020 and February 5, 2021, $ 450.0 million remained outstanding on the notes.

On February 5, 2021, Life Time, Inc.

refinanced the 2023 Notes through the issuance by Life Time, Inc.

of the Unsecured Notes in the original principal amount of $ 475.0 million.

issued the Unsecured Notes in the original principal amount of $ 475.0 million.

The Unsecured Notes mature in April 2026 and interest only payments are due semi-annually in arrears at 8.00 %.

The proceeds from the Unsecured Notes were used to:

(i) redeem in full the then outstanding 2023 Notes balance of $ 450.0 million and satisfy and discharge our obligations thereunder;

(ii) pay debt issuance costs associated with the issuance of the Unsecured Notes (details of which are described in “—Debt Discounts and Issuance Costs” below);

and (iii) strengthen our balance sheet by adding to our cash position.

Life Time, Inc.

has the option to redeem the Unsecured Notes, in whole or in part, on one or more occasions, beginning on February 1, 2023, subject to the payment of a redemption price that includes a call premium that varies depending on the year of redemption.

has the option, which began on February 1, 2023, to redeem the Unsecured Notes, in whole or in part, on one or more occasions, subject to the payment of a redemption price that includes a call premium that varies depending on the year of redemption.

In addition, at any time prior to February 1, 2023, Life Time, Inc.

may redeem up to 40.00 % of the aggregate principal amount of the Unsecured Notes outstanding with the net proceeds of certain equity offerings by us at a redemption price equal to 108.00 % of the principal amount of the Unsecured Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

could have redeemed up to 40.00 % of the aggregate principal amount of the Unsecured Notes outstanding with the net proceeds of certain equity offerings by us at a redemption price equal to 108.00 % of the principal amount of the Unsecured Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

Life Time, Inc.

did not exercise this redemption right.

The Unsecured Notes and the related guarantees are our general senior unsecured obligations and will rank equally in right of payment with all of our existing and future senior indebtedness without giving effect to collateral arrangements.

Secured Loan - Related Parties

On June 24, 2020, we closed on an approximate $ 101.5 million secured loan (the “Related Party Secured Loan”) from an investor group that was comprised solely of our stockholders or their affiliates.

The Related Party Secured Loan was scheduled to mature in June 2021.

During the year ended December 31, 2021, interest expense of approximately $ 0.7 million was recognized on this secured loan.

On January 11, 2021, Life Time Group Holdings, Inc.

and certain of its subsidiaries and the investor group associated with the Related Party Secured Loan (or their assignees) entered into a contribution agreement (the “Contribution Agreement”) pursuant to which we converted the total amount of outstanding principal and accrued interest (up though and including January 22, 2021) under the Related Party Secured Loan into Series A Preferred Stock.

Effective January 22, 2021, the total outstanding principal and accrued interest balance of approximately $ 108.6 million was conveyed by the investor group to us and we issued, on a dollar-for-dollar basis, to the investor group approximately 5.4 million shares of Series A Preferred Stock with an estimated fair value of $ 149.6 million.

Because the fair value of the Series A Preferred Stock that was issued exceeded the carrying value of the outstanding principal and accrued interest balance associated with the Related Party Secured Loan that was extinguished, we recognized a $ 41.0 million debt extinguishment loss, which is included in Interest expense, net of interest income in our consolidated statement of operations for the year ended December 31, 2021.

Upon the consummation of the IPO on October 12, 2021, the 5.4 million then outstanding shares of Series A Preferred Stock automatically converted into 6.7 million shares of the Company’s common stock.

For more information regarding the Series A Preferred Stock that was issued in connection with this transaction, as well as the subsequent conversion to the Company’s common stock, see Note 10, Stockholders’ Equity.

Construction Loan

On January 22, 2021, we closed on a construction loan (the “Construction Loan”) providing up to $ 28.0 million to partially finance the construction of a Life Time Living location.

The Construction Loan 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 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 December 31, 2022, there were $ 21.3 million of outstanding borrowings on the Construction Loan.

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

Mortgage Notes

Certain of our subsidiaries have entered into mortgage facilities with various financial institutions (collectively, the “Mortgage Notes”), which are collateralized by certain of our related real estate and buildings, including one of our corporate headquarters properties.

The Mortgage Notes have varying maturity dates from March 2023 through August 2027 and carried a weighted average interest rate of 4.70 % and 4.68 % at December 31, 2021 and 2020, respectively.

The Mortgage Notes have varying maturity dates from February 2024 through August 2027 and carried a weighted average interest rate of 5.12 % and 4.70 % at December 31, 2022 and 2021, respectively.

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

The Mortgage Notes contain customary affirmative covenants, including but not limited to, payment of property taxes, granting of lender access to inspect the properties, maintenance of the properties, providing financial statements, providing estoppel certificates and lender consent to leases.

The Mortgage Notes also contain various customary negative covenants, including, but not limited to, restrictions on

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.

LIFE TIME GROUP HOLDINGS, INC.

2 unchanged sentences

(Table amounts in thousands except per share data)

transferring the property, change in control of the borrower and changing the borrower’s business or principal place of business.

As of December 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.

During the year ended December 31, 2022, we closed on a sale-leaseback transaction that included certain properties that served as collateral for one of the Mortgage Notes.

Accordingly, we used a portion of the net cash proceeds we received from the sale-leaseback transaction to pay off in full the then outstanding principal balance of $ 4.6 million associated with this Mortgage Note.

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

Extinguishment of a Related Party Secured Loan Through the Issuance of Series A Preferred Stock

During the year ended December 31, 2021 , interest expense of approximately $ 0.7 million was recognized on this secured loan.

On January 11, 2021, Life Time Group Holdings, Inc.

and certain of its subsidiaries and the investor group associated with the Related Party Secured Loan (or their assignees) entered into a contribution agreement pursuant to which we converted the total amount of outstanding principal and accrued interest (up though and including January 22, 2021) under the Related Party Secured Loan into Series A Preferred Stock (as defined in Note 10, Stockholders’ Equity).

For more information regarding the Series A Preferred Stock that was issued in connection with this transaction, see Note 10, Stockholders’ Equity.

Debt Discounts and Issuance Costs

In connection with the Term Loan Facility, Secured Notes and Unsecured Notes, we incurred debt discounts and issuance costs totaling approximately $ 44.4 million during the year ended December 31, 2021.

Unamortized debt discounts and issuance costs of $ 25.9 million and $ 19.1 million are included in Long-term debt, net of current portion on our consolidated balance sheets at December 31, 2021 and 2020.

During the year ended December 31, 2021, in connection with the pay down of our Term Loan Facility, as well as the extinguishment of the Prior Term Loan Facility, the 2023 Notes and the Related Party Secured Loan, we recognized $ 28.6 million of debt discount and issuance cost write-offs, which are included in Interest expense, net of interest income in our consolidated statement of operations.

In connection with both the Revolving Credit Facility and the Prior Revolving Credit Facility, we have incurred total debt issuance costs of $ 9.8 million, of which $ 3.2 million were incurred during the year ended December 31, 2021.

As of the January 22, 2021 effective date associated with the Credit Facilities, the borrowing capacity (i.e., the product of the remaining term and the maximum available credit) associated with the Revolving Credit Facility was greater than the borrowing capacity associated with the Prior Revolving Credit Facility.

Also, as of the effective date associated with the ninth amendment to the Credit Agreement ( as described above under “—Senior Secured Credit Facility”), the borrowing capacity associated with the Revolving Credit Facility was greater than that in effect prior to the amendment.

Accordingly, the debt issuance costs incurred in connection with the Revolving Credit Facility, as well as the unamortized portion of the debt issuance costs associated with the Prior Revolving Credit Facility, will be amortized over the remaining term of the Revolving Credit Facility.

Unamortized revolver-related debt issuance costs of $ 4.0 million and $ 1.3 million, respectively, are included in Other assets on our consolidated balance sheets at December 31, 2021 and 2020, respectively.

Unamortized debt discounts and issuance costs associated with the Term Loan Facility, Secured Notes, Unsecured Notes and Construction Loan of $ 19.2 million and $ 25.9 million are included in Long-term debt, net of current portion on our consolidated balance sheets at December 31, 2022 and 2021, respectively.

Unamortized revolver-related debt issuance costs of $ 3.1 million and $ 4.0 million are included in Other assets on our consolidated balance sheets at December 31, 2022 and 2021, respectively.

During the year ended December 31, 2021, in connection with the pay down of our Term Loan Facility, as well as the extinguishment of a prior term loan facility, certain secured and unsecured notes and a related party secured loan, we recognized $ 28.6 million of debt discount and issuance cost write-offs, which are included in Interest expense, net of interest income in our consolidated statement of operations.

Debt Covenants

We are required to comply with certain affirmative and restrictive covenants under our Credit Facilities, Secured Notes and Unsecured Notes.

We are also required to comply with a first lien net leverage ratio covenant under the Revolving Credit Facility.

However, the Credit Agreement includes a covenant modification period (the “Covenant Modification Period”) that ended on January 1, 2022.

During the Covenant Modification Period, we were not obligated to comply with the first lien net leverage ratio covenant, however, we were required to maintain a minimum liquidity balance of $ 100.0 million.

Effective as of the end of the first fiscal quarter following the Covenant Modification Period and continuing throughout the remaining term of our Revolving Credit Facility, we will be required to maintain a first lien net leverage ratio, if 30.00 % or more of the Revolving Credit Facility commitments are outstanding shortly after the end of any fiscal quarter (excluding all cash collateralized undrawn letters of credit and other undrawn letters of credit up to $ 20.0 million).

During the first three quarterly test periods following the Covenant Modification Period, certain financial measures used in the calculation of the first lien net leverage ratio will be calculated on a pro forma basis by annualizing the respective financial measures recognized during those test periods.

We are also required to comply with a first lien net leverage ratio covenant under the Revolving Credit Facility, which requires us to maintain a first lien net leverage ratio, if 30.00 % or more of the Revolving Credit Facility commitments are outstanding shortly after the end of any fiscal quarter (excluding all cash collateralized undrawn letters of credit and other undrawn letters of credit up to $ 20.0 million).

During the first three quarterly test periods of 2022, certain financial measures used in the calculation of the first lien net leverage ratio were calculated on a pro forma basis by annualizing the respective financial measures recognized during those test periods.

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

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2022 2021 2020 Classification in Consolidated

Statement of Operations

Statements of Operations

Operating lease cost

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$ 246,697 $ 211,493 $ 188,550

Sale-Leaseback Transactions

Sale-Leaseback Transactions with Unrelated Third Parties

Duri ng the year ended December 31, 2022, we entered into and consummated sale-leaseback transactions involving nine properties with two unrelated parties.

Under these transactions, we sold nine properties with a combined net book value of $ 285.8 million for $ 375.0 million, which was reduced by transaction costs of $ 1.8 million, for net cash proceeds of $ 373.2 million.

The estimated fair value of the properties sold was $ 385.1 million.

Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $ 10.1 million, which resulted in the recognition of a gain of $ 97.5 million on these transactions.

This gain is included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2022 .

Of the $ 10.1 million net sales price increase recognized in connection with these transactions, $ 31.5 million was associated with property sales in which the sales price was less than the fair value of the properties sold, which was recognized as an increase in the aggregate sales price associated with these properties and an increase in the related operating lease right-of-use assets, and $ 21.4 million was associated with property sales in which the sales price was greater than the fair value of the properties sold, which was recognized as a reduction in the aggregate sales price associated with these properties and as financing obligations separate from the related operating lease liabilities.

For cash flow purposes, the $ 21.4 million of proceeds we received from these financing obligations during the year ended December 31, 2022 are reported within financing activities on our consolidated statement of cash flows.

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

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

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

During the year ended December 31, 2021, we closed on two sale-leaseback transactions involving two properties with unrelated third parties, one of which was associated with an agreement we entered into on December 16, 2020.

Under these transactions, we sold assets with a combined net book value of $ 85.8 million for $ 76.0 million, which was reduced by transaction costs of $ 2.0 million, for net cash proceeds of $ 74.0 million.

The estimated fair value of the properties sold was $ 85.5 million.

Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $ 9.5 million, which resulted in the recognition of an aggregate loss of $ 2.3 million on these transactions, which is included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2021.

During the year ended December 31, 2020, we entered into sale-leaseback transactions involving five properties with unrelated third parties.

Under these agreements, we sold assets with a combined net book value of $ 237.7 million for $ 199.2 million, which was reduced by transaction costs of $ 0.5 million, for net cash proceeds of $ 198.7 million.

The estimated fair value of the five properties sold totaled $ 243.1 million.

Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $ 43.9 million, which resulted in the recognition of a net gain of $ 4.9 million on these transactions, which is included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2020.

Related Party Sale-Leaseback Transactions and Leases

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

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

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

December 31, Classification on Consolidated

Balance Sheet

Balance Sheets

Lease right-of-use assets:

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$ 2,117,844 $ 1,866,601

Lease liabilities:

Lease-related liabilities:

Operating leases

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312 757 Other liabilities

Total lease liabilities

Financing obligations

21,557 — Other liabilities

Total lease-related liabilities

$ 2,236,981 $ 1,958,329

(1) Finance lease right-of-use assets were reported net of accumulated amortization of $ 1.8 million and $ 2.4 million at December 31, 2022 and 2021, respectively.

Operating Lease Right-of-Use Assets and Liabilities Associated with Unrelated Third-Party Leases

New Leases and Modifications of Existing Leases

In connection with leases with unrelated third parties that commenced during the year ended December 31, 2021, we recognized operating lease right-of-use assets and lease liabilities of $ 220.2 million and $ 210.5 million, respectively, on our consolidated balance sheet.

In connection with modified leases that were remeasured during the year ended December 31, 2021, we recognized a net decrease in both operating lease right-of-use assets and lease liabilities of $ 6.3 million on our consolidated balance sheet.

In connection with leases with unrelated third parties that commenced during the year ended December 31, 2020, we recognized operating lease right-of-use assets and lease liabilities of $ 241.3 million and $ 196.8 million, respectively, on our consolidated balance sheet.

In connection with modified leases that were remeasured during the year ended December 31, 2020, we recognized a net increase in operating lease right-of-use assets and lease liabilities of $ 32.1 million and $ 33.0 million, respectively, on our consolidated balance sheet.

Impairment of Right-of-Use Assets

During the year ended December 31, 2020, we determined that the operating lease right-of-use assets associated with some of our leased centers and some of our ancillary businesses were impaired.

Accordingly, we recognized $ 2.0 million of impairment charges associated with these right-of-use assets, which are included in Other operating in our consolidated statement of operations for the year ended December 31, 2020.

During the year ended December 31, 2019, we determined that the operating lease right-of-use assets associated with the business operations of MR&S were impaired.

Accordingly, we recognized $ 1.3 million of impairment charges associated with these right-of-use assets, which are included in Other operating in our consolidated statement of operations for the year ended December 31, 2019.

Accordingly, we recognized $ 2.0 million of impairment charges associated with these right-of-use assets, which are included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2020.

For more information regarding impairment charges associated with our long-lived assets, see Note 2, Summary of Significant Accounting Policies.

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(Table amounts in thousands except per share data)

Finance Lease Right-of-Use Assets and Liabilities Associated with Unrelated Third-Party Leases

In connection with leases with unrelated third parties that commenced during the year ended December 31, 2021 and 2020, we recognized finance lease right-of-use assets and lease liabilities, each of which totaled $ 1.3 million and $ 2.6 million, respectively, on our consolidated balance sheets.

Operating and Finance Lease Right-of-Use Assets and Liabilities Associated with Related Party Leases

For information on related party leases, see Note 13, Related Party Transactions.

Remaining Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates associated with our operating and finance lease liabilities at December 31, 2021 were as follows:

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

December 31, 2022

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Finance leases

Financing obligations 24.7 years

Weighted-average discount rate

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Finance leases

Financing obligations 10.84 %

(1) The weighted-average remaining lease term associated with our operating and finance lease liabilities does not include all of the optional renewal periods available to us under our current lease arrangements.

Rather, the weighted-average remaining lease term only includes periods covered by an option to extend a lease if we are reasonably certain to exercise that option.

Sale-Leaseback Transactions

Sale-Leaseback Transactions with Unrelated Third Parties

Duri ng the year ended December 31, 2021, we closed on two sale-leaseback transactions involving two properties with unrelated third parties, one of which was associated with an agreement we entered into o n December 16, 2020 .

The estimated fair value of the properties sold was $ 85.5 million.

Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $ 9.5 million, which resulted in the recognition of an aggregate loss of $ 2.3 million on these transactions, which is included in Other operating in our consolidated statement of operations for the year ended December 31, 2021 .

During the year ended December 31, 2020, we entered into sale-leaseback transactions involving five properties with unrelated third parties.

The estimated fair value of the five properties sold totaled $ 243.1 million.

Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $ 43.9 million, which resulted in the recognition of a net gain of $ 4.9 million on these transactions, which is included in Other operating in our consolidated statement of operations for the year ended December 31, 2020.

During the year ended December 31, 2019, we entered into sale-leaseback transactions involving four properties with unrelated third parties.

Under these agreements, we sold assets with a combined net book value of $ 178.5 million for $ 164.0 million, which was reduced by transaction costs of $ 1.0 million, for net cash proceeds of $ 163.0 million.

The estimated fair value of the four properties sold totaled $ 185.3 million.

The aggregate sales price associated with these arrangements was increased by a total of $ 21.3 million, which resulted in the recognition of a net gain of $ 5.8 million on these transactions, which is included in Other operating in our consolidated statement of operations for the year ended December 31, 2019.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Related Party Sale-Leaseback Transactions

For information on sale-leaseback transactions with related parties, see Note 13, Related Party Transactions.

Supplemental Cash Flow Information

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

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

Year Ended December 31,

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— — ( 1,962 )

Maturities of Operating and Finance Lease Liabilities

The maturities associated with our operating and finance lease liabilities at December 31, 2021 are as follows:

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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

The maturities associated with our lease-related liabilities at December 31, 2022 are as follows:

Leases Finance

Leases Financing

2023 $ 221,855 $ 866 $ 2,235 $ 224,956

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$ 2,214,316 $ 1,108 $ 21,557 $ 2,236,981

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Stockholders’ Equity

Authorization and Designation

On January 11, 2021, our board of directors adopted and approved an amendment to the Certificate of Incorporation for Life Time Group Holdings, Inc., which (i) increased the amount of authorized shares of common stock, $ 0.01 par value per share, from 170.0 million to 200.0 million;

and (ii) authorized 25.0 million shares of preferred stock, $ 0.01 par value per share.

Also on January 11, 2021, our board of directors authorized 12.0 million shares of Series A convertible participating preferred stock (“Series A Preferred Stock”) of Life Time Group Holdings, Inc., $ 0.01 par value per share.

The rights, preferences, privileges, qualifications, restrictions and limitations relating to the Series A Preferred Stock were set forth in the Certificate of Designations (“COD”), which the Company filed with the Secretary of State of the State of Delaware on January 22, 2021.

On October 12, 2021, in connection with the consummation of the IPO, we adopted an amended and restated Certificate of Incorporation for Life Time Group Holdings, Inc.

under which the Company’s authorized share total was increased to 500.0 million shares of common stock, par value $ 0.01 per share, an d 10.0 million shares of preferred stock, par value $ 0.01 per sha re, and the Series A Preferred Stock became no longer authorized.

Series A Preferred Stock

Series A Preferred Stock Issuance

Common Stock Issued in Connection with the IPO and Over-Allotment Exercise

In connection with the IPO, including the partial exercise by the underwriters of their over-allotment option, we received total net proceeds of $ 701.1 million from the issuance of 40.6 million shares of the Company’s common stock during the year ended December 31, 2021.

For more information on these sales of the Company’s common stock, see Note 1, Nature of Business and Basis of Presentation.

Common Stock Issued in Connection with a Stock Purchase Agreement

During the year ended December 31, 2020, we received proceeds totaling $ 90.0 million from the sale of 3.6 million shares of the Company’s common stock, which consists of primary equity proceeds (i.e., proceeds associated with the sale of newly issued shares of our common stock) associated with a stock purchase agreement.

Series A Preferred Stock and Restricted Series A Preferred Stock Award

Conversion of Series A Preferred Stock to Common Stock

On January 11, 2021, Life Time Group Holdings, Inc.

and certain of its subsidiaries and the investor group associated with our then existing related party secured loan (or their assignees) entered into an agreement to convert the total amount of outstanding principal and accrued interest (up though and including January 22, 2021) of approximately $ 108.6 million under the related party secured loan into 5.4 million shares of Series A Preferred Stock of Life Time Group Holdings, Inc.

Accordingly, we recognized a $ 41.0 million debt extinguishment loss associated with this transaction during the year ended December 31, 2021, which is included in Interest expense, net of interest income in our consolidated statement of operations.

Restricted Series A Preferred Stock Award

Upon the consummation of the IPO, the 5.4 million then outstanding shares of Series A Preferred Stock automatically converted into 6.7 million shares of the Company’s common stock.

For more information regarding the related party secured loan that was extinguished, including the loss that we recognized upon its extinguishment, see Note 8, Debt.

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

During the second quarter of 2021, in lieu of the vast majority of cash compensation for our CEO for 2021, the Company granted an award of 0.5 million shares of restricted Series A Preferred Stock to our CEO.

The total grant date fair value of this award was approximately $ 13.8 million.

Effective as of the grant date, our CEO had all of the rights of a stockholder with respect to these shares of restricted Series A Preferred Stock, including the right to receive PIK share or cash dividends.

Prior to the granting of this equity award, we had recognized an accrued compensation liability of approximately $ 1.6 million associ ated with the portion of our CEO’s 2021 compensation that had been earned as of the grant date.

Prior to the granting of this equity award, we had recognized an accrued compensation liability of approximately $ 1.6 million associated with the portion of our CEO’s 2021 compensation that had been earned as of the grant date.

The settlement of this accrued compensation liability through issuance of the restricted Series A Preferred Stock award was recognized as a decrease in Accrued expenses and other current liabilities and an increase in Additional paid-in capital on our consolidated balance sheet.

Fair Value of Series A Preferred Stock and Restricted Series A Preferred Stock

The fair value of the Series A Preferred Stock and the restricted Series A Preferred Stock award was estimated using an as-converted value plus risky put option model.

The put option value was estimated using the Black-Scholes option pricing model.

Primary assumptions used in determining the estimated issuance date fair value of the Series A Preferred Stock include:

the estimated equity value associated with the then outstanding common stock of Life Time Group Holdings, Inc., a strike price of $ 20.00 per share, PIK dividend yield rate of 15.0 %, expected term of 1.0 year, volatility rate of 65.00 % and a risk-free rate of 0.08 %.

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

Upon the consummation of the IPO, the 5.4 million then outstanding shares of Series A Preferred Stock automatically converted into 6.7 million shares of the Company’s common stock.

Upon the consummation of the IPO, the 0.5 million then outstanding shares of restricted Series A Preferred Stock automatically converted into 0.6 million shares of the Company’s restricted common stock.

Upon the consummation of the IPO, the 0.5 million then-outstanding shares of restricted Series A Preferred Stock automatically converted into 0.6 million shares of the Company’s restricted common stock, which then vested in April 2022.

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

Share-Based Compensation Expense Associated with Restricted Series A Preferred Stock and Restricted Common Stock

Restricted Series A Preferred Stock

Prior to the conversion of the shares of restricted Series A Preferred Stock to shares of the Company’s restricted common stock on October 12, 2021, we recognized $ 2.9 million of share-based compensation expense associated with the restricted Series A Preferred Stock award, which is included in General, administrative and marketing in our consolidated statement of operations for the year ended December 31, 2021.

Fair Value of Series A Preferred Stock and Restricted Series A Preferred Stock Award

The fair value of the Series A Preferred Stock and the restricted Series A Preferred Stock award was estimated using an as-converted value plus risky put option model.

The put option value was estimated using the Black-Scholes option pricing model.

Primary assumptions used in determining the estimated issuance date fair value of the Series A Preferred Stock include:

Share-Based Compensation Expense Associated with Restricted Series A Preferred Stock Award and Restricted Common Stock

Restricted Series A Preferred Stock Award

Prior to the conversion of the restricted Series A Preferred Stock award to shares of the Company’s restricted common stock on October 12, 2021, as noted above in “—Conversion of Restricted Series A Preferred Stock Award to Restricted Common Stock,” we recognized $ 2.9 million of share-based compensation expense associated with the restricted Series A Preferred Stock award, all of which is included in General, administrative and marketing in our consolidated statement of operations for the year ended December 31, 2021 .

Restricted Common Stock

During the period from October 12, 2021 through December 31, 2021, we recognized $ 4.3 million of share-based compensation expense associated with the restricted common stock award, which is included in General, administrative and marketing in our consolidated statement of operations for the year ended December 31, 2021.

Share-based compensation expense associated with the restricted common stock award is being recognized over the remaining vesting period based on the grant date fair value of the original restricted Series A Preferred Stock award, reduced by the $ 1.6 million of compensation expense associated with the accrued compensation liability that had previously been recognized.

As of December 31, 2021, unrecognized share-based compensation expense related to this restricted common stock award was approxim ately $ 5.0 million, which is expected to be recognized over a remaining period of 0.3 years .

Common Stock Issued in Connection with the IPO and Over-Allotment Exercise

During the year ended December 31, 2021, in connection with the IPO, including the partial exercise by the underwriters of their over-allotment option, we received total net proceeds of $ 701.4 million from the issuance of 40.6 million shares of the Company’s common stock.

For more information on these sales of the Company’s common stock during the year ended December 31, 2021, see Note 1, Nature of Business and Basis of Presentation.

Common Stock Issued in Connection with Stock Purchase Agreements

During the year ended December 31, 2019, we received net proceeds totaling $ 105.3 million from the sale of 4.3 million shares of the Company’s common stock, which consist of $ 108.7 million of primary equity proceeds associated with a stock purchase agreement, reduced by $ 3.2 million in costs associated with such issuance of primary (i.e., newly-issued) shares of our common stock and $ 0.2 million in costs associated with an issuance of primary shares of our common stock that was consummated during the year ended December 31, 2020.

Share-based compensation expense associated with the shares of restricted common stock that were issued upon the automatic conversion of the restricted Series A Preferred Stock award for the year ended December 31, 2022 was $ 5.0 million, all of which is included in General, administrative and marketing in our consolidated statement of operations.

During the period from October 12, 2021 through December 31, 2021 , we recognized $ 4.3 million of share-based compensation expense associated with the restricted common stock award, which is included in General, administrative and marketing in our consolidated statements of operations.

These restricted common stock shares fully vested as of April 4, 2022 , and there is no unrecognized share-based compensation expense related to these shares.

The fair value of the restricted common stock shares that vested during the year ended December 31, 2022 was approximately $ 8.9 million , which represents the fair value of the underlying shares measured as of the vesting date.

No restricted common stock shares vested during the years ended December 31, 2021 and 2020.

Equity Incentive Plans

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2015 Equity Incentive Plan (as amended, the “2015 Equity Plan”).

During the year ended December 31, 2021, our board of directors and stockholders approved an amendment to the 2015 Equity Plan to increase the number of shares of our common stock that are reserved for issuance under the 2015 Equity Plan to approximately 30.6 million shares of our common stock, plus an annual increase on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2025;

provided, that no annual increase shall occur on or after the Company (or its successor) becomes a publicly listed company.

Effective with the IPO, no further grants have been or will be made, and no annual increase shall occur, under the 2015 Equity Plan.

Effective with the IPO, no further grants have been or will be made under the 2015 Equity Plan.

Approximately 1.0 million shares that were reserved and available for issuance under the 2015 Equity Plan are now available for issuance under the 2021 Equity Plan as detailed below.

2021 Equity Plan

In connection with the IPO and effective October 6, 2021, we adopted the 2021 Incentive Award Plan (the “2021 Equity Plan”), under which we may grant cash and equity-based incentive awards to our employees, consultants and directors.

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

Effective January 1, 2022, the number of shares of our common stock available for issuance under the 2021 Equity Plan increased by approximately 7.7 million shares pursuant to the evergreen feature described in part (ii) of the immediately preceding sentence.

Additionally, the number of shares of our common stock available for issuance under the 2021 Equity Plan may increase with respect to awards under the 2015 Equity Plan which are forfeited or lapse unexercised and which following

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

2021 Equity Plan

The maximum number of shares of our common stock available for issuance under the 2021 Equity Plan is equal to the sum of (i) approximately 14.5 million shares of our common stock, (ii) an annual increase on the first day of each year beginning in 2022 and ending in and including 2031, equal to the lesser of (A) 4 % of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year and (B) such lesser amount as determined by our board of directors, and (iii) the approximately 1.0 million shares of our common stock that were available for issuance under the 2015 Equity Plan as of October 6, 2021 or that are subject to awards under the 2015 Equity Plan and any other prior equity incentive plans of the Company or its predecessor which are forfeited or lapse unexercised and which following the effective date of the 2021 Equity Plan are not issued under such prior plan;

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

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.

the effective date of the 2021 Equity Plan are not issued under such prior plan.

As of December 31, 2022, approximately 19.3 million shares were available for future awards to employees and other eligible participants under the 2021 Equity Plan.

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provided that in no event will more than 29.0 million shares of our common stock be available for issuance under the Section 423 component of the ESPP.

Our board of directors determined that no additional shares would become available under the ESPP as of January 1, 2022 pursuant to the evergreen feature described in part (ii) of the immediately preceding sentence.

Our board of directors or the compensation committee will have authority to interpret the terms of the ESPP and determine eligibility of participants.

The ESPP will permit participants to purchase common stock through payroll deductions of up to a percentage of their eligible compensation, which includes a participant’s gross base compensation for services to us.

On the first trading day of each offering period, each participant will automatically be granted an option to purchase shares of our common stock.

The option will expire at the end of the applicable offering period and will be exercised on each purchase date during such offering period to the extent of the payroll deductions accumulated during the offering period.

The purchase price will be the lower of 85 % of the fair market value of a share on the first day of an offering period in which a participant is enrolled or 85 % of the fair market value of a share on the purchase date, which will occur on the last day of each purchase period.

Participants may voluntarily end their participation in the ESPP prior to the end of the applicable offering period and will be paid their accrued payroll deductions that have not yet been used to purchase shares of common stock.

Upon exercise, the participant will purchase the number of whole shares that his or her accumulated payroll deductions will buy at the option purchase price, subject to the certain participation limitations.

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

No offering periods commenced under the ESPP during the year ended December 31, 2021.

We launched the first offering period under the ESPP on December 1, 2022.

The ESPP permits participants to purchase common stock through payroll deductions of up to 15 % of their eligible compensation, which includes a participant’s gross base compensation for services to us.

On the first trading day of each offering period, each participant is automatically granted an option to purchase shares of our common stock.

The purchase option expires at the end of the applicable offering period and will be exercised on each purchase date during such offering period to the extent of the payroll deductions accumulated during the offering period.

We have consecutive offering periods of approximately six months in length commencing on each June 1 and December 1 during the term of the ESPP.

The purchase price for a share of our common stock is 90 % of the fair market value of a share on the enrollment date for such offering period or on the purchase date, whichever is lower, and subject to adjustment by our board of directors or compensation committee.

Participants may voluntarily end their participation in the ESPP prior to the end of the applicable offering period and are paid their accrued payroll deductions that have not yet been used to purchase shares of common stock.

Upon exercise, the participant purchases the number of whole shares that his or her accumulated payroll deductions will buy at the purchase option price, subject to the certain participation limitations.

Participation ends automatically upon a participant’s termination of employment.

No shares were issued under the ESPP as of December 31, 2022.

We recognized $ 0.1 million of share-based compensation expense for the discount received by participants for the year ended December 31, 2022, all of which is included in General, administrative and marketing in our consolidated statement of operations for the year ended December 31, 2022.

As of December 31, 2022, unrecognized share-based compensation expense related to the first offering period under the ESPP was approximately $ 0.4 million, which is expected to be recognized over a weighted average remaining period of 0.4 years.

LIFE TIME GROUP HOLDINGS, INC.

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Stock Options

Summary of Stock Option Activity

Stock Option Activity

Activity associated with stock options during the year ended December 31, 2022 is as follows:

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( 363 ) 10.33

Forfeited or cancelled

( 297 ) 18.40

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Options Granted During the Year Ended December 31, 2022

During the year ended December 31, 2022 , the Company granted approximately 1.0 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.

Options Granted During the Year Ended December 31, 2021

During the year ended December 31, 2021 , the Company granted approximately 3.8 million stock options, of which approximately 3.2 million were granted under the 2015 Equity Plan and approximately 0.6 million were granted under the 2021 Equity Plan.

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The time vesting options 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.

All or a portion of the performance vesting options shall vest only upon the attainment of certain targets for the twelve-month period commencing on January 1, 2021 and ending on December 31, 2021 , as defined in the underlying option agreements, subject to continuous employment from the grant date through the membership dues revenue determination date.

Both the time vesting and performance vesting options bec ome exercisable (but not vested) o n April 4, 2022, which is the first date following the expiration of the 180-day lock-up period applicable to the optionee related to the IPO, or death or disability, all as defined and subject to the terms and conditions in the underlying option agreements.

Unless otherwise determined by the administrator of the 2015 Equity Plan and the 2021 Equity Plan, with respect to the stock options granted during the year ended December 31, 2021 :

(i) upon an option holder’s termination of services for any reason, any portion of an option that has not become vested on or prior to the termination date shall be forfeited on such date and shall not thereafter become vested or exercisable, and (ii) upon an involuntary termination by the Company for cause (as defined in the underlying option agreement), any portion of an option that has become vested on or prior to the termination date shall be forfeited on such date and shall not thereafter become exercisable.

At December 31, 2021, as it relates to options granted during 2021, options to purchase approximately 3.7 million shares of our common stock were outstanding and none were exercisable.

All of the performance vesting options vested upon the attainment of certain targets for the twelve-month period that commenced on January 1, 2021 and ended on December 31, 2021 .

Both the time vesting and performance vesting options beca me exercisable (but not vested) o n April 4, 2022, which is the first date following the expiration of the 180-day lock-up period applicable to the optionee related to the IPO.

Options Granted Prior to 2021

At December 31, 2021, as it relates to options granted prior to 2021, options to purchase approximately 20.9 million shares of our common stock were outstanding, of which approximately 9.4 million were held by our CEO.

At December 31, 2021, the 9.4 million outstanding options held by our CEO were fully vested and exercisable.

As it relates to the other 11.5 million outstanding options at December 31, 2021 , all of the options were fully vested;

however, none of the options were exercisable as the 180-day lock-up period applicable to the each optionee related to the IPO had yet to expire.

Prior to July 3, 2019, the vesting and exercisability of outstanding options for our CEO and the exercisability of outstanding options for non-CEO option holders were subject to our principal stockholders’ achievement of certain internal rates of return (“IRR”) on investment or a multiple of invested capital.

On May 23, 2019, in connection with transactions that were

As it relates to stock options granted prior to 2021, all were fully vested as of April 4, 2022 and there is no unrecognized share-based compensation expense related to these options.

Intrinsic Value and Income Tax Benefits Associated with Option Exercises

The total intrinsic value of stock options exercised during the year ended December 31, 2022 was approximately $ 1.5 million.

In connection with these stock option exercises, we recognized an aggregate income tax benefit of approximately $ 0.3 million during the year ended December 31, 2022.

No stock options were exercised during the years ended December 31, 2021 and 2020.

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

consummated pursuant to a stock purchase agreement, our board of directors approved that 100 % of all stock options outstanding as of July 3, 2019 (the date the transactions under the stock agreement were consummated) or granted thereafter would become exercisable on the first measurement date, which is generally defined to include a change in control, an expiration of a lock-up associated with an initial public offering (or the effectiveness of an initial public offering with respect to the options held by our CEO), or the death or disability of our CEO (herein referred to as a “Measurement Date”) without continued measurement of the performance metrics.

In accordance with ASC 718, the approval by our board of directors represented, for accounting purposes, a modification of the original market conditions associated with each of the approximately 21.2 million outstanding options that were held by continuing employees and continuing service providers as of July 3, 2019.

Accordingly, we were required to determine the estimated fair value of these options as of July 3, 2019.

Since the occurrence of a Measurement Date was deemed at that time, for accounting purposes, improbable of occurring both before and after the modification, no incremental share-based compensation expense was required to be recognized on the modification date.

For further information on the weighted average assumptions used to estimate the fair value, see “—Fair Value of Stock Option Awards” within this footnote.

Stock Option Purchase Offer

On June 6, 2019, we launched a voluntary stock option purchase offer (the “Offer”) whereby, subject to certain conditions and limitations, we offered eligible holders (not including our CEO) of qualifying stock options under the 2015 Equity Plan (“Covered Options”) the right to sell up to a certain number of vested Covered Options back to us.

In connection with the Offer, approximately 1.6 million Covered Options were purchased for an aggregate price of $ 23.2 million.

Of the aggregate purchase price, $ 22.4 million was paid to purchase approximately 1.5 million Covered Options from continuing employees and continuing service providers and $ 0.8 million was paid to purchase approximately 0.1 million Covered Options from former employees and former service providers.

Effective with the purchase date associated with each underlying Covered Option, the $ 23.2 million aggregate stock option purchase payments we made, which are recognized as a decrease in Additional paid-in capital on our consolidated balance sheet, are reported in Purchases of stock options within the financing section in our consolidated statement of cash flows for the year ended December 31, 2019.

As it relates to the approximately 1.5 million Covered Options associated with continuing employees and continuing service providers, no share-based compensation expense had been recognized prior to them being purchased, since the occurrence of a Measurement Date was deemed, for accounting purposes, improbable of occurring.

Therefore, effective with the purchase date associated with each of these Covered Options, we recognized $ 22.4 million of incremental share-based compensation expense, which is included in General, administrative and marketing in our consolidated statement of operations for the year ended December 31, 2019.

The offset to this incremental share-based compensation expense amount was recognized as an increase in Additional paid-in capital on our consolidated balance sheet.

As it relates to the approximately 0.1 million Covered Options associated with former employees and former service providers, $ 0.1 million of share-based compensation expense had been recognized prior to them being purchased.

Therefore, effective with the purchase date associated with each of these Covered Options, we recognized $ 0.7 million of incremental share-based compensation expense, which is included in General, administrative and marketing in our consolidated statement of operations for the year ended December 31, 2019.

The offset to this incremental share-based compensation expense amount was recognized as an increase in Additional paid-in capital on our consolidated balance sheet.

Fair Value of Stock Option Awards Granted

The fair value of the options granted during the years ended December 31, 2022, 2021 and 2020 was calculated using the Black-Scholes option pricing model.

The fair value of the 21.2 million stock options that were deemed, for accounting purposes, to have been modified as of July 3, 2019, as well as the approximately 0.6 million stock option awards that were granted during

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

the period from July 3, 2019 through December 31, 2019, was also calculated using the Black-Scholes option pricing model.

The following weighted average assumptions were used in determining the fair value of stock options granted:

Year Ended December 31,

December 31, 2019

2022 2021 2020

Dividend yield

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

For more information on the options that were modified during the year ended December 31, 2019, see “—Options Granted Prior to 2021” within this footnote.

Share-Based Compensation Expense Associated with Stock Options

Share-based compensation expense related to stock options for the year ended December 31, 2021 was $ 320.5 million, of which $ 12.7 million, $ 303.3 million and $ 4.5 million is included in Center operations, General, administrative and marketing and Other operating, respectively, in our consolidated statement of operations.

Share-based compensation expense related to stock options for the year ended December 31, 2019 was $ 24.2 million, all of which is included in General, administrative and marketing in our consolidated statement of operations.

No share-based compensation expense related to stock options was recognized during the year ended December 31, 2020.

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

Share-based compensation expense associated with stock options for the year ended December 31, 2021 was $ 320.5 million, of which $ 12.7 million, $ 303.3 million and $ 4.5 million is included in Center operations, General, administrative and marketing and Other operating (income) expenses, respectively, in our consolidated statement of operations.

No share-based compensation expense associated with stock options was recognized during the year ended December 31, 2020.

A significant portion of the share-based compensation expense that we recognized during the year ended December 31, 2021 is associated with stock options that were granted prior to 2021.

As of the effective date of the IPO, these stock options became fully vested, and they either became immediately exercisable or they will become exercisable no later than April 4, 2022, subject to continued service through such date.

Accordingly, during the period from the effective date of the IPO through December 31, 2021 , we have recognized share-based compensation expense associated with these stock options in an amount equal to the proportion of the total service period that has passed from the respective grant date associated with each of these stock option awards through December 31, 2021.

Because the vesting and exercisability of these stock options was contingent upon the occurrence of a change of control or an initial public offering, no share-based compensation expense associated with these stock options was recognized prior to the IPO.

As of the effective date of the IPO, these stock options became fully vested, and they became exercisable either immediately or on April 4, 2022, subject to continued service through such date.

Accordingly, during the period from the effective date of the IPO through April 4, 2022, we recognized share-based compensation expense associated with these stock options in an amount equal to the proportion of the total service period that passed from the respective grant dates associated with each of these stock option awards through April 4, 2022.

Because the exercisability of these stock options was contingent upon the occurrence of a change of control or an initial public offering, no share-based compensation expense associated with these stock options was recognized prior to the IPO.

As of December 31, 2022, unrecognized share-based compensation expense related to stock options was approximately $ 17.1 million, which is expected to be recognized over a weighted average remaining period of 2.5 years.

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Restricted Stock Units

Summary of Restricted Stock Unit Activity

Restricted Stock Unit Activity

Activity associated with restricted stock units during the year ended December 31, 2022 is as follows:

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Shares Weighted Average Grant Date Fair Value

Nonvested at January 1, 2021

Nonvested at December 31, 2021

1,854 $ 18.01

( 905 ) 18.73

( 159 ) 16.42

Nonvested at December 31, 2022

2,486 $ 15.30

Restricted Stock Units Granted

During the year ended December 31, 2022, the Company granted approximately 1.7 million restricted stock unit awards under the 2021 Equity Plan, of which approximately 1.4 million are time vesting awards and approximately 0.3 million are time vesting awards with a performance qualifier.

Of the 1.7 million restricted stock unit awards that were granted during the year ended December 31, 2022, a pproximately 1.6 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 certain executives and non-executives as part of their incentive compensation for 2021, which had been recognized as an accrued compensation liability at December 31, 2021.

The fair value of these restricted stock unit awards was approximately $ 0.6 million .

Accordingly, effective with the grant date associated with these restricted stock units, we recognized a $ 0.6 million decrease in Accrued expenses and other current liabilities and a $ 0.6 million increase in Additional paid-in capital on our condensed consolidated balance sheets .

We determine the grant date fair value of restricted stock unit awards by multiplying the number of restricted stock unit awards by the closing trading price of our common stock on the grant date.

During the year ended December 31, 2021, the Company granted approximately 1.9 million restricted stock unit awards, of which approximately 0.6 million were granted under the 2015 Equity Plan and approximately 1.3 million were granted under the 2021 Equity Plan.

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All of the 1.3 million restricted stock units granted under the 2021 Equity Plan during the year ended December 31, 2021 were granted to non-CEO holders.

The weighted average grant date fair value associated with the approximately 1.9 million restricted stock unit awards granted during the year ended December 31, 2021 was $ 18.01 .

We did no t grant any restricted stock unit awards during the year ended December 31, 2020.

Restricted Stock Unit Awards Granted under the 2015 Equity Plan

Restricted Stock Unit Awards Granted During the Year Ended December 31, 2021 under the 2015 Equity Plan

Beginning on March 15, 2020, our CEO decided to forego 100 % of his base salary for the remainder of 2020.

During the second quarter of 2021, our compensation committee, in consultation with our CEO and our board of directors, established a new compensation program for our CEO.

Under the new program, in light of the foregone salary and bonuses in 2020, the compensation c ommittee determined to grant our CEO an equity award of approximately 0.5 million restricted stock units under the 2015 Equity Plan, 50 % of which vest on each anniversary of the grant date with 100 % full vesting on the date that is 180 days after the effective date associated with an underwritten IPO.

Accordingly, this award will be 100 % vested on April 4, 2022.

Under the new program, in light of the foregone salary and bonuses in 2020, the compensation c ommittee determined to grant our CEO an equity award of approximately 0.5 million restricted stock units under the 2015 Equity Plan, 50 % of which was to vest on each anniversary of the grant date with 100 % full vesting on the date that is 180 days after the effective date associated with an underwritten IPO.

Accordingly, this award 100 % vested on April 4, 2022.

At December 31, 2020, we had recognized an accrued compensation liability of approximately $ 2.2 million associated with our CEO’s 2020 compensation.

For accounting purposes, the settlement of this $ 2.2 million accrued compensation liability through the issuance of the restricted stock units was recognized as a decrease in Accrued expenses and other current liabilities and an increase in Additional paid-in capital on our consolidated balance sheet.

Also during the second quarter of 2021, our compensation committee granted approximately 0.1 million restricted stock units under the 2015 Equity Plan to certain of our non-CEO executives and a new director, 50 % of which vests on each anniversary of the grant date and, for the grants to our non-CEO executives, 100 % full vesting occurs effective on the date that is 180 days after an initial underwritten public offering.

Accordingly, the portion of these awards that were granted to our non-CEO executives will be 100 % vested on April 4, 2022.

Restricted Stock Unit Awards Granted under the 2021 Equity Plan

With respect to the restricted stock units totaling approximately 1.3 million that were granted under the 2021 Equity Plan during the year ended December 31, 2021, nearly all will vest in four ratable annual installments on each of the first four anniversaries of the grant date, subject to continued service through the applicable vesting dates.

Less than 0.1 million of these restricted stock units will vest on April 4, 2022.

Share-Based Compensation Expense Associated with Restricted Stock Units

Share-based compensation expense related to restricted stock units for the year ended December 31, 2021 was $ 6.6 million.

No share-based compensation expense related to restricted stock units was recognized during the years ended December 31, 2020 and 2019.

Of the $ 6.6 million total share-based compensation expense related to restricted stock units for the year ended December 31, 2021, $ 0.2 million, $ 6.3 million and $ 0.1 million is included in Center operations, General, administrative and marketing and Other operating, respectively, in our consolidated statement of operations.

As of December 31, 2021,

LIFE TIME GROUP HOLDINGS, INC.

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unrecognized share-based compensation expense related to restricted stock units was approximately $ 24.5 million, which is expected to be recognized over a weighted average remaining period of 3.2 years.

Also during the second quarter of 2021, our compensation committee granted approximately 0.1 million restricted stock units under the 2015 Equity Plan to certain of our non-CEO executives and a new director, 50 % of which vests on each anniversary of the grant date and, for the grants to our non-CEO executives, 100 % full vesting was to occur effective on the date that is 180 days after an initial underwritten public offering.

Accordingly, the portion of these awards that were granted to our non-CEO 100 % vested on April 4, 2022.

Restricted Stock Unit Awards Granted During the Year Ended December 31, 2021 under the 2021 Equity Plan

Less than 0.1 million of these restricted stock units vested on April 4, 2022.

Fair Value of Vested Restricted Stock Units

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

No restricted sto ck units vested during the years ended December 31, 2021 and 2020.

Share-Based Compensation Expense Associated with Restricted Stock Units

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

Share-based compensation expense associated with restricted stock units for the year ended December 31, 2021 was $ 6.6 million, of which $ 0.2 million, $ 6.3 million and $ 0.1 million is included in Center operations, General, administrative and marketing and Other operating (income) expenses, respectively, in our consolidated statement of operations.

No share-based compensation expense associated with restricted stock units was recognized during the year ended December 31, 2020.

As of December 31, 2022, unrecognized share-based compensation expense related to restricted stock units was approximately $ 27.8 million, which is expected to be recognized over a weighted average remaining period of 3.0 years.

Stockholder Note Receivable

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The income tax benefit of approximately $ 1.3 million associated with the principal forgiveness was recognized as an increase in both Income tax receivable and Additional paid-in capital on our consolidated balance sheet.

At December 31, 2020 the outstanding stockholder loan balance was $ 15.0 million, which was recognized as a reduction of stockholders’ equity on our December 31, 2020 consolidated balance sheet.

In August 2021, we entered into an agreement pursuant to which the outstanding balance owed under the stockholder note receivable was cancelled.

The cancellation of the $ 15.0 million outstanding principal balance associated with the loan was accounted for as an equity transaction, and the Stockholder note receivable and Additional paid-in capital balances recognized on our consolidated balance sheet were each reduced by $ 15.0 million .

(Loss) Earnings Per Share

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Loss Per Share

For the year ended December 31, 2022, o ur potentially dilutive securities include stock options, restricted stock units and shares to be issued under our ESPP.

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

For the year ended December 31, 2021, o ur potentially dilutive securities include stock options, restricted stock units and restricted stock.

Due to the net loss that we recognized during the year ended December 31, 2021 , the potentially dilutive shares of common stock associated with our stock options, restricted stock units and restricted stock were determined to be antidilutive and, therefore, are excluded from the computation of diluted loss per share for the year ended December 31, 2021 .

For the years ended December 31, 2020 and 2019, our potentially dilutive securities include stock options, all of which were subject to performance conditions that were not met as of the end of each respective period.

Accordingly, the contingently issuable shares associated with our stock options are excluded from the computation of diluted (loss) earnings per share for the years ended December 31, 2020 and 2019.

The following table sets forth the calculation of basic and diluted (loss) earnings per share for the years ended December 31, 2021, 2020 and 2019:

For the year ended December 31, 2020, our potentially dilutive securities include stock options, all of which were subject to performance conditions that were not met as of the end of such period.

Accordingly, the contingently issuable shares associated with our stock options are excluded from the computation of diluted loss per share for the year ended December 31, 2020.

The following table sets forth the calculation of basic and diluted loss per share for the years ended December 31, 2022, 2021 and 2020:

Year Ended December 31,

2022 2021 2020

Net (loss) income attributable to Life Time Group Holdings, Inc.

$ ( 1,793 ) $ ( 579,369 ) $ ( 360,192 )

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193,570 155,470 145,137

(Loss) earnings per share – basic and diluted

Loss per share – basic and diluted

$ ( 0.01 ) $ ( 3.73 ) $ ( 2.48 )

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

The following is a summary of potential shares of common stock that were excluded from the computation of diluted (loss) earnings per share for the years ended December 31, 2021, 2020 and 2019 :

The following is a summary of potential shares of common stock that were excluded from the computation of diluted loss per share for the years ended December 31, 2022, 2021 and 2020 :

Year Ended December 31,

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Restricted stock — 595 —

Potential common shares excluded from diluted (loss) earnings per share 27,046 21,119 21,291

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

ESPP shares 137 — —

Potential common shares excluded from diluted loss per share 27,549 27,046 21,119

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

Commitments and Contingencies

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We ha ve entered into various unconditional purchase obligations that primarily include software licenses and support, and marketing services.

As of December 31, 2021, these purchase obligations totaled approximately $ 20.5 million, the majority of which are expected to be settled within the next four years .

As of December 31, 2022, these purchase obligations totaled approximately $ 22.9 million, the majority of which are expected to be settled within the next three years .

These unconditional purchase obligations are in addition to the current and long-term liabilities recorded on our December 31, 2022 consolidated balance sheet and exclude agreements that are cancellable at any time without penalty.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Legal Matters

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On August 19, 2020, Life Time, Inc., several of its subsidiaries, and a joint venture entity, Bloomingdale Life Time Fitness LLC (collectively, the “Life Time Parties”) filed a complaint against Zurich American Insurance Company (“Zurich”) in the Fourth Judicial District of the State of Minnesota, County of Hennepin (Case No.

27-CV-20-10599) (the “Action”) seeking declaratory relief and damages with respect to Zurich’s failure under a property/business interruption insurance policy to provide certain coverage to the Life Time Parties related to the closure or suspension by governmental authorities of their business activities due to the spread or threat of spread of COVID-19.

On March 15, 2021, certain of the Life Time Parties filed a First Amended Complaint in the Action adding claims against Zurich under a Builders’ Risk policy related to the suspension of multiple construction projects.

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The Action is subject to many uncertainties, and the outcome of the matter is not predictable with any assurance.

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(Table amounts in thousands except per share data)

We are also engaged in other proceedings incidental to the normal course of business.

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We offer a 401(k) savings and investment plan (the “401(k) Plan”) to substantially all full-time employees who have at least six months of service and are at least 21 years of age.

The cost associated with the Company’s discretionary contributions to the 401(k) Plan during the years ended December 31, 2021, 2020 and 2019 were not material.

The cost associated with the Company’s discretionary contributions to the 401(k) Plan during the years ended December 31, 2022, 2021 and 2020 was not material.

Letters of Credit and Posted Bonds

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As of both December 31, 2022 and 2021, no amounts had been drawn on any of these irrevocable standby letters of credit.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

As of December 31, 2022 and 2021, we had posted bonds totaling $ 35.5 million and $ 36.4 million, respectively, related to construction activities and operational licensing.

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Related Party Leases

We did not enter into any related party leases, including related party sale-leaseback transactions, during the year ended December 31, 2021.

We did not enter into any related party leases, including related party sale-leaseback arrangements, during the years ended December 31, 2022 or 2021.

Sale-Leaseback Transactions

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Under this agreement, we sold assets with a net book value of $ 35.1 million for $ 37.0 million, which was reduced by transaction costs totaling approximately $ 0.1 million, for net proceeds of $ 36.9 million .

Ac cordingly, we recognized a gain of $ 1.8 million, which is included in Other operating in our consolidated statement of operations for the year ended December 31, 2020.

In connection with this lease, we recognized an operating lease right-of-use asset and lease liability of $ 31.7 million and $ 31.4 million, respectively.

During the years ended December 31, 2021 and 2020, we paid rent associated with this lease of $ 2.5 million and $ 0.3 million, respectively, and rent expense associated with this lease was $ 3.0 million and $ 0.5 million, respectively.

Ac cordingly, we recognized a gain of $ 1.8 million, which is included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2020.

During the years ended December 31, 2022, 2021 and 2020, we paid rent associated with this lease of $ 2.6 million, $ 2.5 million and $ 0.3 million, respectively, and rent expense associated with this lease was $ 3.0 million, $ 3.0 million and $ 0.5 million, respectively.

During the year ended December 31, 2019, we entered into a sale-leaseback transaction involving one property with a limited liability company jointly owned by our CEO and another member of our board of directors.

Under this agreement, we sold assets with a net book value of $ 37.5 million for $ 32.0 million, which was reduced by transaction costs totaling approximately $ 0.2 million, for net cash proceeds of $ 31.8 million.

Upon consummation of this transaction, we recognized a loss of $ 5.7 million, which is included in Other operating in our consolidated statement of operations for the year ended December 31, 2019.

During the years ended December 31, 2022, 2021 and 2020, we paid rent associated with this lease of $ 2.3 million, $ 2.8 million and $ 1.5 million, respectively, and rent expense associated with this lease was $ 2.6 million, $ 2.6 million and $ 2.6 million, respectively.

During the year ended December 31, 2018, we entered into a sale-leaseback transaction involving one property with a limited liability company in which our CEO owns a 33 % interest.

During the years ended December 31, 2021, 2020 and 2019, we paid

LIFE TIME GROUP HOLDINGS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

rent associated with this lease of $ 1.5 million, $ 0.8 million, and $ 1.2 million, respectively, and rent expense associated with this lease was $ 1.4 million, $ 1.4 million and $ 1.4 million, respectively.

During the years ended December 31, 2022, 2021 and 2020, we paid rent associated with this lease of $ 1.2 million, $ 1.5 million and $ 0.8 million, respectively, and rent expense associated with this lease was $ 1.4 million, $ 1.4 million and $ 1.4 million, respectively.

During the year ended December 31, 2017, we entered into sale-leaseback transactions involving two properties with a limited liability company that is a related party to one of our existing stockholders.

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Following this contribution, we terminated our existing lease with the entities owned by our CEO and entered into a new lease for the Woodbury center with subsidiaries of LTRE.

The new Woodbury lease, which we are currently accounting for as an operating lease, has an initial term of 20 years, and includes four renewal options of five years each.

In connection with this lease, we recognized an operating lease right-of-use asset and lease liability, each of which totaled $ 13.6 million, on our December 31, 2020, consolidated balance sheet.

Upon termination of the previous Woodbury lease, which was previously accounted for as a finance lease, the finance lease right-of-use asset and lease liability balances that we derecognized were $ 0.9 million and $ 1.1 million, respectively.

During the years ended December 31, 2021 and 2020, rent payments associated with the new Woodbury lease were $ 1.2 million and $ 0.3 million, respectively, and rent expense associated with the new Woodbury lease was $ 1.3 million and $ 0.3 million, respectively.

As it relates to the previous Woodbury lease, we paid rent during the years ended December 31, 2020 and 2019 of $ 0.2 million and $ 1.0 million, respectively.

We are currently accounting for the new Woodbury lease as an operating lease.

During the years ended December 31, 2022, 2021 and 2020, rent payments associated with the new Woodbury lease were $ 1.2 million, $ 1.2 million and $ 0.3 million, respectively, and rent expense associated with the new Woodbury lease was $ 1.3 million, $ 1.3 million and $ 0.3 million, respectively.

As it relates to the previous Woodbury lease, we paid rent during the year ended December 31, 2020 of $ 0.2 million.

In October 2003, we leased a center located within a shopping center that is owned by a general partnership in which our CEO has a 100 % interest.

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For information on the stockholder note receivable, see Note 10, Stockholders’ Equity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Arrangements with our Investors and Management Stockholders

For information on the sale of our common stock with certain of our stockholders and on the voluntary stock option purchase offer, see Note 10, Stockholders’ Equity.

For information on the sale of our common stock with certain of our stockholders, see Note 10, Stockholders’ Equity.

Related Party Secured Loan

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Life Time, Inc.

and an entity owned by our President and Chief Financial Officer, Mr.

Bergmann, jointly own an aircraft.

In connection with this joint ownership, Life Time, Inc.

Bergmann’s entity entered into certain co-ownership, maintenance and personnel agreements under which the entity owned by Mr.

Bergmann contributes approximately $ 0.1 million per year to an operations fund for the fixed costs for the aircraft.

and an entity owned by our former President and Chief Financial Officer, Mr.

Bergmann, jointly owned an aircraft.

In connection with his retirement from the Company, Life Time, Inc.

Bergman n’s 50 % interest in this aircraft in October 2022 for approximately $ 1.8 million.

During this joint ownership, Life Time, Inc.

Bergmann’s entity had entered into certain co-ownership, maintenance and personnel agreements under which the entity owned by Mr.

Bergmann contributed approximately $ 0.1 million per year to an operations fund for the fixed costs for the aircraft.

Life Time, Inc.

and the entity owned by Mr.

Bergmann have agreed to pay for the costs associated with their respective trips.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Bergmann paid for the costs associated with their respective trips during the time of joint ownership.

The daughter of our CEO currently serves as a director of real estate development for Life Time, Inc.

8 unchanged sentences

Retirement benefits can be paid out as a lump sum or in annual installments over a term of up to 10 years.

We made matching contributions to this plan of less than $ 0.1 million during the year ended December 31, 2019.

We did no t make a matching contribution to this plan during the years ended December 31, 2022, 2021 and 2020.

3 unchanged sentences

Subsequent Events

In March 2022, the Company entered into definitive agreements for the sale-leaseback of four properties with an aggregate sales price of approximately $ 175 million.

The closing on two of these properties is expected to be completed on or before March 31, 2022 for approximately $ 80 million in gross proceeds to Life Time.

The closing on the remaining two properties is expected to be completed on or before September 30, 2022 for approximately $ 95 million in gross proceeds to Life Time.

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

During February 2023, we entered into an agreement for, and consummated, a sale-leaseback transaction involving one property with an unrelated party for a purchase price of $ 33.0 million.

We have evaluated all subsequent events through the date of the consolidated financial statements were issued and determined that, other than with respect to the one sale-leaseback transaction, there have been no other events or transactions which would have a material effect on the consolidated financial statements and therefore would require recognition or disclosure.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Condensed Financial Information of Registrant (Parent Company Only)

11 unchanged sentences

Under a parent-only presentation, our investment in our subsidiaries is presented under the equity method of accounting.

During the year ended December 31, 2022, we recognized share-based compensation expense related to stock options, restricted stock, restricted stock units and our ESPP of $ 37.3 million, of which $ 2.8 million, $ 33.5 million and $ 0.9 million is included in Center operations, General, administrative and marketing and Other operating, respectively, in our parent-only condensed statement of operations.

During the year ended December 31, 2021, we recognized share-based compensation expense related to stock options, restricted stock and restricted stock units of $ 334.3 million, of which $ 12.9 million, $ 316.8 million and $ 4.6 million is included in Center operations, General, administrative and marketing and Other operating, respectively, in our parent-only condensed statement of operations.

1 unchanged sentence

This debt extinguishment loss is not recognized for tax purposes.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

year ended December 31, 2019, we recognized share-based compensation expense related to stock options of $ 24.2 million, which is included in General, administrative and marketing expenses in our parent-only condensed statement of operations.

No share-based compensation expense was recognized during the year ended December 31, 2020.

1 unchanged sentence

has no cash, and, therefore, no material operating, investing, or financing cash flow activities for years ended December 31, 2022, 2021 and 2020.

The financing cash flow activities associated with the proceeds we received from the issuance of our common stock during the years ended December 31, 2021, 2020 and 2019, as well as the payments we made to purchase stock options during the year ended December 31, 2019, were non-cash transactions for Life Time Group Holdings, Inc., as the cash inflows and outflows associated with those transactions occurred at our subsidiary, Life Time, Inc and were accounted for as our equity contributions to Life Time, Inc.

The financing cash flow activities associated with the proceeds we received from the issuance of our common stock during the years ended December 31, 2022, 2021 and 2020, were non-cash transactions for Life Time Group Holdings, Inc., as the cash inflows and outflows associated with those transactions occurred at our subsidiary, Life Time, Inc.

and were accounted for as our equity contributions to Life Time, Inc.

For more information regarding these transactions, see Note 10, Stockholders’ Equity.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

LIFE TIME GROUP HOLDINGS, INC.

(PARENT COMPANY ONLY)

11 unchanged sentences

Stockholders’ equity:

Common stock, $ 0.01 par value, 500,000 and 170,000 shares authorized, respectively;

193,060 and 145,196 shares issued and outstanding, respectively

Common stock, $ 0.01 par value per share, 500,000 shares authorized, 194,271 and 193,060 shares issued and outstanding, respectively

Additional paid-in capital 2,784,416 2,743,560

10 unchanged sentences

(In thousands)

For the Year Ended December 31,

Year Ended December 31,

2022 2021 2020

6 unchanged sentences

Loss from operations ( 37,291 ) ( 334,339 ) —

Other (expense) income:

Other expense:

Interest expense, net of interest income — ( 40,993 ) —

2 unchanged sentences

Benefit from income taxes ( 9,136 ) ( 81,579 ) —

Net loss before equity in net (loss) income of subsidiaries ( 293,753 ) — ( 17,148 )

Net (loss) income of subsidiaries attributable to Life Time Group Holdings, Inc.

Net loss before equity in net loss of subsidiaries ( 28,155 ) ( 293,753 ) —

Net income (loss) attributable to subsidiaries of Life Time Group Holdings, Inc.

26,362 ( 285,616 ) ( 360,192 )

Net (loss) income attributable to Life Time Group Holdings, Inc.

Net loss attributable to Life Time Group Holdings, Inc.

$ ( 1,793 ) $ ( 579,369 ) $ ( 360,192 )

1 unchanged sentence

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-K

Item 8. Financial Statements and Supplementary Data