What changed in this filing

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Item 1. Financial Statements

2023-05-01 compared with 2022-11-09 · 201 added, 296 removed, 421 unchanged (54% of the section changed)

4 unchanged sentences

(In thousands, except per share data)

September 30,

2023 December 31,

42 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Center revenue $ 497,752 $ 381,621

6 unchanged sentences

Depreciation and amortization 58,197 58,107

Other operating (income) expense ( 31,358 ) 14,796 ( 56,605 ) 30,660

Other operating expense (income) 2,127 ( 17,035 )

Total operating expenses 443,467 403,170

2 unchanged sentences

Interest expense, net of interest income ( 31,195 ) ( 29,943 )

Equity in earnings (loss) of affiliate 95 ( 28 ) 129 ( 412 )

Equity in earnings of affiliate 143 26

Total other expense ( 31,052 ) ( 29,917 )

11 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income (loss) $ 27,460 $ ( 37,966 )

Foreign currency translation adjustments, net of tax of $ 0

( 6,015 ) ( 2,404 ) ( 7,339 ) 323

Comprehensive income (loss) $ 27,528 $ ( 36,335 )

7 unchanged sentences

Shares Amount

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

Balance at December 31, 2022 194,271 $ 1,943 $ 2,784,416 $ ( 652,876 ) $ ( 9,222 ) $ 2,124,261

Net income — — — 27,460 — 27,460

2 unchanged sentences

Stock option exercises 327 3 3,453 — — 3,456

Balance at September 30, 2022 193,991 $ 1,940 $ 2,780,190 $ ( 666,602 ) $ ( 10,355 ) $ 2,105,173

Issuances of common shares in connection with the vesting of restricted stock units 310 3 ( 105 ) — — ( 102 )

Issuances of common stock in connection with business acquisitions 90 1 1,471 — — 1,472

Balance at March 31, 2023 194,998 $ 1,950 $ 2,794,657 $ ( 625,416 ) $ ( 9,154 ) $ 2,162,037

Common Stock Additional Paid-In

3 unchanged sentences

Net loss — — — ( 37,966 ) — ( 37,966 )

Other comprehensive loss — — — — ( 7,339 ) ( 7,339 )

Share-based compensation — — 33,214 — — 33,214

Stock option exercises 309 3 3,187 — — 3,190

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

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

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

Balance at September 30, 2022 193,991 $ 1,940 $ 2,780,190 $ ( 666,602 ) $ ( 10,355 ) $ 2,105,173

Common Stock Additional Paid-In

Capital Stockholder Note

Receivable Accumulated Deficit Accumulated Other Comprehensive Loss Total

Shares Amount

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

Net loss — — — — ( 45,442 ) — ( 45,442 )

Other comprehensive loss — — — — — ( 2,404 ) ( 2,404 )

Share-based compensation — — 1,794 — — — 1,794

Cancellation of stockholder note receivable — — ( 11,355 ) 15,000 — — 3,645

Dividends on preferred stock — — ( 6,126 ) — — — ( 6,126 )

Balance at September 30, 2021 145,196 $ 1,452 $ 1,548,904 $ — $ ( 346,313 ) $ ( 2,907 ) $ 1,201,136

Common Stock Additional Paid-In

Capital Stockholder Note

Receivable Accumulated Deficit Accumulated Other Comprehensive Loss Total

Shares Amount

Balance at December 31, 2020 145,196 $ 1,452 $ 1,569,905 $ ( 15,000 ) $ ( 71,714 ) $ ( 3,230 ) $ 1,481,413

Net loss — — — — ( 274,599 ) — ( 274,599 )

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

1 unchanged sentence

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

Cancellation of stockholder note receivable — — ( 11,355 ) 15,000 — — 3,645

Dividends on preferred stock — — ( 16,414 ) — — — ( 16,414 )

Balance at September 30, 2021 145,196 $ 1,452 $ 1,548,904 $ — $ ( 346,313 ) $ ( 2,907 ) $ 1,201,136

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

See notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Net loss $ ( 15,519 ) $ ( 274,599 )

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

Net income (loss) $ 27,460 $ ( 37,966 )

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

Depreciation and amortization 58,197 58,107

3 unchanged sentences

Impairment charges associated with long-lived assets — 227

(Gain) loss on disposal of property and equipment, net ( 98,498 ) 3,515

Loss on debt extinguishment — 40,993

Write-off of discounts and debt issuance costs — 18,325

Gain on disposal of property and equipment, net ( 6,693 ) ( 28,597 )

Amortization of debt discounts and issuance costs 1,966 1,945

1 unchanged sentence

Other ( 3,915 ) ( 2,578 )

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

Net cash provided by operating activities 74,348 9,062

Cash flows from investing activities:

Capital expenditures ( 170,814 ) ( 110,754 )

Acquisitions, net of cash acquired — ( 9,139 )

Proceeds from sale-leaseback transactions 32,676 79,666

7 unchanged sentences

Repayments of finance lease liabilities ( 244 ) ( 358 )

Increase in debt discounts and issuance costs ( 43 ) ( 45,151 )

Proceeds from stock option exercises 3,456 —

Other ( 102 ) ( 476 )

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

Net cash provided by financing activities 72,325 26,619

Effect of exchange rates on cash and cash equivalents 6 61

19 unchanged sentences

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

As of September 30, 2022, we operated 156 centers in 29 states and one Canadian province.

COVID-19 Impact

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

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

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

Initial Public Offering

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

consummated its initial public offering (“IPO”) of 39.0 million shares of its common stock at a public offering price of $ 18.00 per share, resulting in total gross proceeds of $ 702.0 million, which was r educed by underwriting discounts and other offering and issuance expenses of $ 28.0 million, of which approximately $ 0.3 million was recognized during 2022, for net proceeds of $ 674.0 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.

A registration statement on Form S-1 relating to the offering of these securities was declared effective by the Securities and Exchange Commission (the “SEC”) on October 6, 2021.

On November 1, 2021, Life Time Group Holdings, Inc.

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

As of March 31, 2023, we operated 164 centers in 29 states and one Canadian province.

Basis of Presentation

10 unchanged sentences

A summary of our significant accounting policies is included in Note 2 to our annual consolidated financial statements.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Summary of Significant Accounting Policies

Recently Adopted Accounting Pronouncements

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.

New Accounting Pronouncements Not Yet Adopted

5 unchanged sentences

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

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

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

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 do not expect that the adoption of this ASU will have a material impact on our consolidated financial statements.

Fair Value Measurements

3 unchanged sentences

The guidance requires that each asset and liability carried at fair value be classified into one of the following categories:

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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

3 unchanged sentences

Fair Value Measurements on a Recurring Basis.

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

We had no material remeasurements of such assets or liabilities to fair value during the three months ended March 31, 2023 and 2022.

Financial Assets and Liabilities.

At September 30, 2022, the fair value of our outstanding Term Loan Facility, Secured Notes and Unsecured Notes (each of which is defined in Note 6, Debt) was approximately $ 269.9 million, $ 839.2 million and $ 404.8 million, respectively.

At March 31, 2023, the fair value of our outstanding Term Loan Facility, Secured Notes and Unsecured Notes (each of which is defined in Note 6, Debt) was approximately $ 273.6 million, $ 894.9 million and $ 451.3 million, respectively.

At December 31, 2022, the fair value of our outstanding Term Loan Facility, Secured Notes and Unsecured Notes was approximately $ 272.3 million, $ 860.3 million and $ 425.1 million, respectively.

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

The carrying amount of our outstanding Mortgage Notes and Construction Loan (each of which is defined in Note 6, Debt) at March 31, 2023 and December 31, 2022 approximates fair value.

The fair value of our debt is based on the amount of future cash flows discounted using rates we would currently be able to realize for similar instruments of comparable maturity.

1 unchanged sentence

For more information regarding our debt, see Note 6, Debt.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Fair Value Measurements on a Nonrecurring Basis.

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

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 condensed consolidated balance sheets.

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

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

During both the three and nine months ended September 30, 2022 and 2021, we determined that certain projects were no longer deemed viable for construction, and that the previously capitalized site development costs associated with these projects were impaired.

Accordingly, as it relates to these long-lived assets, we recognized impairment charges of $ 0.2 million and $ 0.7 million for the three months ended September 30, 2022 and 2021, respectively, and $ 0.2 million and $ 2.5 million for the nine months ended September 30, 2022 and 2021, respectively.

During the three months ended March 31, 2022, we determined that certain projects were no longer deemed viable for construction, and that the previously capitalized site development costs associated with these projects were impaired.

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

There were no impairment charges recognized during the three months ended March 31, 2023.

Fair value remeasurements are based on significant unobservable inputs (Level 3).

4 unchanged sentences

Prepaid expenses and other current assets consisted of the following:

September 30,

2023 December 31,

1 unchanged sentence

Construction contract receivables 10,412 8,867

Deferred membership origination costs 972 3,150

Prepaid expenses 30,763 30,784

Prepaid insurance 7,936 3,414

Prepaid software licenses and maintenance 12,250 10,009

Other 19,241 18,466

Prepaid expenses and other current assets $ 58,526 $ 45,743

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

September 30,

2023 December 31,

5 unchanged sentences

Corporate accruals 30,096 29,731

Current maturities of finance lease liabilities 921 1,374

Other 7,787 7,243

Accrued expenses and other current liabilities $ 144,788 $ 154,427

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Supplemental Cash Flow Information

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

Nine Months Ended

September 30,

Three Months Ended

Accounts receivable $ ( 4,428 ) $ ( 3,335 )

9 unchanged sentences

Additional supplemental cash flow information is as follows:

Nine Months Ended

September 30,

Net cash paid for income taxes, net of refunds received $ 3,628 $ 221

Three Months Ended

Net cash paid for (received from) income taxes, net of refunds received (taxes paid) $ 66 $ ( 82 )

Cash payments for interest, net of capitalized interest 35,953 31,948

1 unchanged sentence

Non-cash activity:

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

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

Issuance of common stock in connection with a business acquisition 1,472 —

See Note 7, Leases, for supplemental cash flow information associated with our lease arrangements for the three months ended March 31, 2023 and 2022.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Goodwill and Intangibles

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

The goodwill balance was $ 1,235.0 million and $ 1,233.2 million at March 31, 2023 and December 31, 2022, respectively.

The $ 1.8 million change in goodwill for the three months ended March 31, 2023 was related to a business acquisition during the first quarter of 2023.

Intangible assets consisted of the following:

September 30, 2022

March 31, 2023

Gross Accumulated Amortization Net

7 unchanged sentences

Total intangible assets $ 179,987 $ ( 6,583 ) $ 173,404

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

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Amortization expense associated with intangible assets for the three months ended September 30, 2022 and 2021 was $ 0.3 million and $ 0.2 million, respectively, and was $ 1.2 million and $ 0.6 million for the nine months ended September 30, 2022 and 2021, respectively.

Other intangible assets at March 31, 2023 and December 31, 2022 include a facility license as well as trade names and customer relationships associated with our race registration and timing businesses.

The facility license is associated with an outdoor enthusiast and bicycling event, which was acquired during the year ended December 31, 2021 for approximately $ 10.2 million, of which approximately $ 1.1 million was paid during the three months ended March 31, 2023.

This license expires in April 2031.

The transaction was accounted for as an asset acquisition, and the associated costs are being amortized on a straight-line basis over its estimated useful life of 9.8 years.

Amortization expense associated with intangible assets for the three months ended March 31, 2023 and 2022 was $ 0.3 million and $ 0.5 million, respectively.

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

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

There were no goodwill or intangible asset impairment charges recorded during the three months ended March 31, 2023 and 2022.

Revenue associated with our membership dues, enrollment fees, and certain services from our in-center businesses is recognized over time as earned.

Revenue associated with products and services offered in our cafes and spas, as well as through e-commerce, is recognized at a point in time.

The following is a summary of revenue, by major revenue stream, that we recognized during the three and nine months ended September 30, 2022 and 2021:

The following is a summary of revenue, by major revenue stream, that we recognized during the three months ended March 31, 2023 and 2022:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Membership dues and enrollment fees $ 357,488 $ 271,915

3 unchanged sentences

Total revenue $ 510,851 $ 392,254

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

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

Revenue Other

Revenue Total

Revenue Center

Revenue Other

Revenue Total

Goods and services transferred over time $ 419,758 $ 16,386 $ 436,144 $ 324,350 $ 13,040 $ 337,390

Goods and services transferred at a point in time 60,237 — 60,237 47,650 — 47,650

Total revenue $ 479,995 $ 16,386 $ 496,381 $ 372,000 $ 13,040 $ 385,040

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

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

The timing associated with the revenue we recognized during the three months ended March 31, 2023 and 2022 is as follows:

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

Revenue Other

7 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 at September 30, 2022 and December 31, 2021 were $ 34.4 million and $ 35.9 million, respectively.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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 March 31, 2023 and December 31, 2022 were $ 44.8 million and $ 38.9 million, respectively.

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

Deferred revenue at September 30, 2022 and December 31, 2021 was $ 32.3 million and $ 33.9 million, respectively, and consists primarily of prepaid membership dues, personal training and other in-center services, and enrollment fees.

The $ 1.6 million decrease was primarily driven by deferred registrations received in prior periods for athletic events that took place in the current period.

Deferred revenue at March 31, 2023 and December 31, 2022 was $ 42.4 million and $ 36.9 million, respectively, and consists primarily of prepaid membership dues, enrollment fees, Dynamic Personal Training and other in-center services, as well as media and athletic events .

The $ 5.5 million increase was primarily driven by prepayment of athletic events and kids camps 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 condensed consolidated balance sheets.

Long-term contract liabilities at September 30, 2022 and December 31, 2021 were $ 2.1 million and $ 2.0 million, respectively, and consist primarily of deferred enrollment fees.

Long-term contract liabilities at March 31, 2023 and December 31, 2022 were $ 2.4 million and $ 2.0 million, respectively, and consist primarily of deferred enrollment fees.

Debt consisted of the following:

September 30,

2023 December 31, 2022

3 unchanged sentences

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

Mortgage Notes, various maturities 123,579 145,572

Construction Loan, maturing February 2026 28,000 21,330

Mortgage Notes, various maturities 116,226 119,928

Other debt 4,122 4,122

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and certain of our other wholly-owned subsidiaries entered into a ninth amendment to the Credit Agreement.

Pursuant to such ninth amendment, Life Time, Inc.

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 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 secured notes (the “Secured Notes”) that mature in January 2026 on such date;

and (c) January 14, 2026 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.

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.

Pursuant to such

LIFE TIME GROUP HOLDINGS, INC.

2 unchanged sentences

(Table amounts in thousands except per share data)

ninth amendment, Life Time, Inc.

(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.

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.

Term Loan Facility

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.

On October 13, 2021, we used a portion of net proceeds we received in connection with the IPO to pay down $ 575.7 million (including a $ 5.7 million prepayment penalty) of our Term Loan Facility.

The $ 850.0 million Term Loan Facility matures in December 2024.

On October 13, 2021, we used a portion of net proceeds we received in connection with the IPO to pay down $ 575.7 million of our Term Loan Facility.

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

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

At March 31, 2023, 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.

Revolving Credit Facility

Our Revolving Credit Facility provides for a $ 475.0 million revolver and matures in December 2026, or earlier as detailed above under “—Senior Secured Credit Facility.” At September 30, 2022, there were no outstanding borrowings on the Revolving Credit Facility and there were $ 31.7 million of outstanding letters of credit, resulting in total revolver availability of $ 443.3 million, which was available at intervals ranging from 30 to 180 days at interest rates ranging from LIBOR plus 4.25 % or base rate plus 3.25 %.

The weighted average interest rate and debt outstanding under the Revolving Credit Facility for the nine months ended September 30, 2022 was 4.97 % and $ 43.1 million, respectively.

Our Revolving Credit Facility provides for a $ 475.0 million revolver and matures in December 2026, or earlier as detailed above under “—Senior Secured Credit Facility.” At March 31, 2023, there were $ 85.0 million of outstanding borrowings under the Revolving Credit Facility and there were $ 30.5 million of outstanding letters of credit, resulting in total revolver availability of $ 359.5 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 three months ended March 31, 2023 was 8.69 % and $ 76.3 million, respectively.

The highest month-end balance during that same period was $ 115.0 million.

4 unchanged sentences

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 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 on 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 r elated 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

3 unchanged sentences

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.

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 February 2024 through August 2027 and carried a weighted average interest rate of 4.72 % and 4.70 % at September 30, 2022 and December 31, 2021, respectively.

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

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

As of September 30, 2022, we were

LIFE TIME GROUP HOLDINGS, INC.

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either in compliance in all material respects with the covenants associated with the Mortgage Notes or the covenants were not applicable.

During the nine months ended September 30, 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 nine months ended September 30, 2022, see Note 7, Leases.

Construction Loan

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

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

At March 31, 2023 and December 31, 2022, there were $ 28.0 million and $ 21.3 million of outstanding borrowings under the Construction Loan, respectively.

Mortgage Notes

The Mortgage Notes have varying maturity dates from February 2024 through August 2027 and carried a weighted average interest rate of 5.13 % and 5.12 % at March 31, 2023 and December 31, 2022, respectively.

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

As of March 31, 2023, we were either in compliance in all material respects with the covenants associated with the Mortgage Notes or the covenants were not applicable.

Debt Discounts and Issuance Costs

Unamortized debt discounts and issuance costs associated with the Term Loan Facility, Secured Notes, Unsecured Notes and Construction Loan of $ 21.0 million and $ 25.9 million are included in Long-term debt, net of current portion on our condensed consolidated balance sheets at September 30, 2022 and December 31, 2021, respectively.

Unamortized revolver-related debt issuance costs of $ 3.3 million and $ 4.0 million are included in Other assets on our condensed consolidated balance sheets at September 30, 2022 and December 31, 2021, respectively.

Unamortized debt discounts and issuance costs associated with the Term Loan Facility, Secured Notes, Unsecured Notes and Construction Loan of $ 17.5 million and $ 19.2 million are included in Long-term debt, net of current portion on our condensed consolidated balance sheets at March 31, 2023 and December 31, 2022, respectively.

Unamortized revolver-related debt issuance costs of $ 2.9 million and $ 3.1 million are included in Other assets on our condensed consolidated balance sheets at March 31, 2023 and December 31, 2022, respectively.

Debt Covenants

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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 will be calculated on a pro forma basis by annualizing the respective financial measures recognized during those test periods.

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

As of March 31, 2023, we were either in compliance in all material respects with the covenants under the Credit Facilities, or the covenants were not applicable.

Future Maturities of Long-Term Debt

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

October 2022 through September 2023 $ 15,046

October 2023 through September 2024 64,033

October 2024 through September 2025 286,140

October 2025 through September 2026 1,421,714

October 2026 through September 2027 19,953

Aggregate annual future maturities of long-term debt, excluding unamortized discounts, issuance costs and fair value adjustments, at March 31, 2023 were as follows:

April 2023 through March 2024 $ 65,585

April 2024 through March 2025 285,869

April 2025 through March 2026 965,925

April 2026 through March 2027 570,747

April 2027 through March 2028 15,799

Thereafter 3,048

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

Lease cost included in our condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022 consisted of the following:

Three Months Ended

September 30, Classification in Condensed

Consolidated Statements of Operations

Operating lease cost $ 60,761 $ 50,987 Rent

Short-term lease cost 610 281 Rent

Variable lease cost 1,842 1,245 Rent

Finance lease cost:

Amortization of right-of-use assets 336 380 Depreciation and amortization

Interest on lease liabilities 22 42 Interest expense, net of interest income

Total lease cost $ 63,571 $ 52,935

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

Nine Months Ended

September 30, Classification in Condensed

March 31, Classification in Condensed

Consolidated Statements of Operations

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Interest on lease liabilities 19 32 Interest expense, net of interest income

Interest on financing obligations 579 — Interest expense, net of interest income

Total lease cost $ 67,386 $ 56,351

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

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

September 30, 2022 December 31, 2021 Classification on Condensed

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:

March 31, 2023 December 31, 2022 Classification on Condensed

Consolidated Balance Sheets

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Finance leases 336 312 Other liabilities

Total lease liabilities $ 2,258,718 $ 1,958,329

(1) Finance lease right-of-use assets were reported net of accumulated amortization of $ 2.8 million and $ 2.4 million at September 30, 2022 and December 31, 2021, respectively.

Financing obligations 21,580 21,557 Other liabilities

Total lease-related liabilities $ 2,264,854 $ 2,236,981

(1) Finance lease right-of-use assets were reported net of accumulated amortization of $ 2.0 million and $ 1.8 million at March 31, 2023 and December 31, 2022, respectively.

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Remaining Lease Terms and Discount Rates

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

September 30, 2022

The weighted-average remaining lease terms and discount rates associated with our lease-related liabilities at March 31, 2023 were as follows:

March 31, 2023

Weighted-average remaining lease term (1)

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Finance leases 2.4 years

Financing obligations 24.4 years

Weighted-average discount rate

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Finance leases 6.46 %

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

During the nine months ended September 30, 2022, we entered into and consummated sale-leaseback transactions involving nine properties with two unrelated third parties.

Under these transactions, we sold nine properties with a combined net book value of $ 285.6 million for $ 375.0 million, which was reduced by transaction costs of $ 1.5 million, for net cash proceeds of $ 373.5 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 $ 10.1 million, which resulted in the recognition of a gain of $ 98.0 million on these transactions.

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

Sale-Leaseback Transaction

During the three months ended March 31, 2023, we entered into and consummated a sale-leaseback transaction with an unrelated third party.

Under this transaction, we sold one property with a combined net book value of $ 26.0 million for $ 33.0 million, which was reduced by transaction costs of $ 0.3 million, for net cash proceeds of $ 32.7 million.

The estimated fair value of the property sold was $ 33.0 million, which resulted in the recognition of a gain of $ 6.7 million on this transaction.

This gain is inclu ded in Other operating expense (income) in o ur condensed consolidated statement of operations.

Supplemental Cash Flow Information

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

Nine Months Ended

September 30,

Three Months Ended

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

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Operating cash flows from finance leases 19 32

Operating cash flows from financing obligations 556 —

Financing cash flows from finance leases 244 358

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Non-cash increase in operating lease right-of-use assets associated with below-market sale-leaseback transactions — 15,600

Non-cash increase in financing obligations as a result of interest accretion 23 —

LIFE TIME GROUP HOLDINGS, INC.

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Maturities of Operating and Finance Lease Liabilities

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

Operating Leases Finance Leases Total

October 2022 through September 2023 $ 220,452 $ 964 $ 221,416

October 2023 through September 2024 235,766 262 236,028

October 2024 through September 2025 238,287 43 238,330

October 2025 through September 2026 241,690 2 241,692

October 2026 through September 2027 242,275 1 242,276

The maturities associated with our operating and finance lease liabilities at March 31, 2023 are as follows:

Operating Leases Finance Leases Financing Obligations Total

April 2023 through March 2024 $ 229,155 $ 756 $ 2,243 $ 232,154

April 2024 through March 2025 237,017 245 2,277 239,539

April 2025 through March 2026 240,974 109 2,311 243,394

April 2026 through March 2027 242,177 2 2,346 244,525

April 2027 through March 2028 244,282 — 2,381 246,663

Thereafter 3,240,075 — 54,266 3,294,341

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Present value of lease liabilities $ 2,242,256 $ 1,018 $ 21,580 $ 2,264,854

Leases Not Yet Commenced

As of March 31, 2023, we had several leases associated with future centers and Life Time Work locations that were executed, but we did not yet have control of the underlying assets.

Accordingly, a s of March 31, 2023, we did not recognize any right-of-use assets or lease liabilities associated with these arrangements on our condensed consolidated balance sheet.

These arrangements contain undiscounted lease payments that are payable during the initial lease terms, which range from 15 to 25 years, totaling approximately $ 380.0 million.

Stockholders’ Equity

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

The maximum number of shares of our common stock available for issuance under the 2021 Equity Plan is equal to the sum of (i) approximately 14.5 million shares of our common stock, (ii) an annual increase on the first day of each year beginning in 2022 and ending in and including 2031, equal to the lesser of (A) 4 % of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year and (B) such lesser amount as determined by our board of directors, and (iii) the approximately 1.0 million shares of our common stock that were available for issuance under the 2015 Equity Plan as of October 6, 2021.

2015 Equity Incentive Plan (the “2015 Equity Plan”) as of October 6, 2021, provided, however, no more than 14.5 million shares may be issued upon the exercise of incentive stock options.

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 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.

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

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

Our board of directors determined that no additional shares would become available under such evergreen feature effective as of January 1, 2023.

Additionally, the number of shares of our common stock available for issuance under the 2021 Equity Plan may increase with respect to awards under the 2015 Equity Plan which are forfeited or lapse unexercised and which following the effective date of the 2021 Equity Plan are not issued under such prior plan.

As of March 31, 2023, approximately 18.4 million shares were available for future awards to employees and other eligible participants under the 2021 Equity Plan.

2021 Employee Stock Purchase Plan

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an Internal Revenue Service (“IRS”) Code section 423 (“Section 423”) component, which is intended to qualify under Section 423 of the IRS Code and a non-Section 423 component, which need not qualify under Section 423 of the IRS Code.

The aggregate number of shares of our common stock that has initially been reserved for issuance under the ESPP is equal to (i) approximately 2.9 million shares of our common stock, and (ii) an annual increase on the first day of each year beginning in 2022 and ending in and including 2031, equal to the lesser of (A) 1 % of the aggregate number of shares of our common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of our shares of common stock as determined by our board of directors;

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

Our board of directors determined that no additional shares would become available under the ESPP as of January 1, 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.

LIFE TIME GROUP HOLDINGS, INC.

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The ESPP will permit 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 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.

We expect to 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 will be 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 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 three and nine months ended September 30, 2022.

including 2031, equal to the lesser of (A) 1 % of the aggregate number of shares of our common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of our shares of common stock as determined by our board of directors;

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

Our board of directors determined that no additional shares would become available under the ESPP as of January 1, 2022 or January 1, 2023 pursuant to the evergreen feature described in part (ii) of the immediately preceding sentence.

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

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

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

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

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

We have consecutive offering periods of 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 March 31, 2023 .

We recognized $ 0.2 million of share-based compensation expense for the discount received by participants for the three months ended March 31, 2023 , all of which is included in General, administrative and marketing in our condensed consolidated statement of operations.

As of March 31, 2023 , unrecognized share-based compensation expense related to the first offering period under the ESPP was approximately $ 0.1 million, which is expected to be recognized over a weighted average remaining period of 0.2 years.

Stock Options

During the nine months ended September 30, 2022, the Company granted approximately 1.0 million stock option awards under the 2021 Equity Plan.

During the three months ended March 31, 2023, the Company granted approximately 0.7 million stock option awards under the 2021 Equity Plan.

These options have a 10-year contractual term from the date of grant and vest in four ratable annual installments on each of the first four anniversaries of the grant date, subject to continuous employment or service from the grant date through the applicable vesting date.

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

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

Approximately 0.2 million and 0.3 million of stock options were exercised during the three and nine months ended September 30, 2022, respectively.

No stock options were exercised during the three and nine months ended September 30, 2021 .

As of September 30, 2022 , options to purchase approximately 25.1 million shares of our common stock were outstanding, of which approximately 21.8 million were exercisable.

Share-based compensation expense associated with stock options for the three months ended September 30, 2022 was $ 2.7 million, of which $ 0.2 million, $ 2.4 million and $ 0.1 million is included in Center operations, General, administrative and marketing and Other operating (income) expense, respectively, in our condensed consolidated statements of operations.

Share-based compensation expense associated with stock options for the nine months ended September 30, 2022 was $ 17.4 million, of which $ 1.5 million, $ 15.4 million and $ 0.5 million is included in Center operations, General, administrative and marketing and Other operating (income) expense, respectively, in our condensed consolidated statements of operations.

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

As of September 30, 2022 , unrecognized share-based compensation expense related to stock options was approximately $ 20.1 million, which is expected to be recognized over a weighted average remaining period of 2.9 years.

The fair value of the options granted during the three months ended March 31, 2023 was calculated using the Black-Scholes option pricing model.

Approximately 0.3 million stock options were exercised during the three months ended March 31, 2023.

As of March 31, 2023 , options to purchase approximately 25.2 million shares of our common stock were outstanding, of which approximately 21.6 million were exercisable.

Share-based compensation expense associated with stock options for the three months ended March 31, 2023 was $ 2.2 million, of which $ 0.2 million and $ 2.0 million is included in Center operations and General, administrative and marketing, respectively, in our condensed consolidated statements of operations.

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

As of March 31, 2023 , unrecognized share-based compensation expense related to stock options was approximately $ 20.4 million, which is expected to be recognized over a weighted average remaining period of 2.8 years.

Restricted Stock Units

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

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

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

The fair value of these restricted stock unit awards issued to executives was approximately $ 0.5 million.

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

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

Share-based compensation expense associated with restricted stock units for the three months ended September 30, 2022 was $ 3.1 million, of which $ 0.4 million, $ 2.6 million and $ 0.1 million is included in Center operations, General, administrative and marketing and Other operating (income) expense, respectively, in our condensed consolidated statements of operations.

Share-based compensation expense associated with restricted stock units for the nine months ended September 30, 2022 was $ 10.8 million, of which $ 0.9 million, $ 9.7 million and $ 0.2 million is included in Center

During the three months ended March 31, 2023, the Company granted approximately 0.7 million restricted stock unit awards to our executives under the 2021 Equity Plan, of which approximately 0.3 million were performance-based and approximately 0.4 million were subject to time-based vesting over four years with a performance qualifier, in each case subject to continuous employment or service from the grant date through the applicable vesting date.

At March 31, 2023, approximately 2.5 million restricted stock units were outstanding.

In the event actual performance exceeds the target amount for the performance-based restricted stock units, the above-target amount is to be paid through the issuance of fully-vested shares of the Company’s common stock at such time of determination in 2024.

Accordingly, we account for the projected above-target amount as liability-classified share-based

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operations, General, administrative and marketing and Other operating (income) expense, respectively, in our condensed consolidated statements of operations.

Share-based compensation expense associated with restricted stock units for the three months ended September 30, 2021 was $ 1.8 million, all of which is included in General, administrative and marketing in our condensed consolidated statements of operations.

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

As of September 30, 2022 , unrecognized share-based compensation expense related to restricted stock units was approximately $ 35.3 million, which is expected to be recognized over a weighted average remaining period of 3.1 years.

Restricted Series A Preferred Stock

Share-based compensation expense associated with a restricted Series A convertible participating preferred stock (“Series A Preferred Stock”) award for the three and nine months ended September 30, 2021 was $ 2.3 million a nd $ 4.0 million, respectively, all of which is included in General, administrative and marketing in our condensed consolidated statements of operations.

Upon the consummation of the IPO, the shares of restricted Series A Preferred Stock associated with this award automatically converted into shares of restricted common stock.

As of the conversion date, all share-based compensation expense related to this award of restricted Series A Preferred Stock had been recognized.

No share-based compensation expense related to restricted Series A Preferred Stock was recognized during the three and nine months ended September 30, 2022.

Restricted Common Stock

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, as noted immediately above in “—Restricted Series A Preferred Stock,” for the nine months ended September 30, 2022 was $ 5.0 million, all of which is included in General, administrative and marketing in our condensed consolidated statements of operations.

payment awards.

For information regarding our liability-classified share-based payment awards, see “ —Liability-Classified Share-Based Payment Awards” below.

Share-based compensation expense associated with restricted stock units for the three months ended March 31, 2023 was $ 3.0 million, of which $ 0.5 million, $ 2.3 million and $ 0.2 million is included in Center operations, General, administrative and marketing and Other operating expense (income), respectively, in our condensed consolidated statements of operations.

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

As of March 31, 2023 , unrecognized share-based compensation expense related to restricted stock units was approximately $ 36.3 million, which is expected to be recognized over a weighted average remaining period of 2.4 years.

Liability-Classified Share-Based Payment Awards

Because the projected above-target amount for the performance-based restricted stock units (which is described in “ —Restricted Stock Units” above) represents a fixed dollar amount that, if payable, would be settled in a variable number of shares of the Company’s common stock, we account for such share-based payment awards as a liability-classified award.

Based on our current assessment, we have deemed it probable that the target performance amount will be exceeded.

Accordingly, we recognized $ 0.2 million of share-based compensation expense associated with these liability-classified share-based payment awards during the three months ended March 31, 2023 , all of which is included in General, administrative and marketing in our condensed consolidated statements of operations.

The offset to this share-based compensation expense was recognized as an increase in Accrued expenses and other current liabilities on our condensed consolidated balance sheet.

Restricted Stock

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

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

No share-based compensation expense related to restricted common stock was recognized during the three and nine months ended September 30, 2021.

For the three months ended September 30, 2022, the provision for income taxes was $ 3.4 million.

For the nine months ended September 30, 2022, the benefit from income taxes was $ 3.5 million.

The effective tax rate was 12.1 % and 18.2 % for these same periods, respectively.

For the three and nine months ended September 30, 2021, the benefit from income taxes was $ 12.0 million and $ 58.9 million, respectively.

The effective tax rate was 20.9 % and 17.7 % for these same periods, respectively.

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

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

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

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

Based upon this analysis, a decrease to the valuation allowance of $ 4.5 million and $ 3.4 million was recorded during the three and nine months ended September 30, 2022, respectively, to adjust our net deferred tax assets to an amount that is more likely than not to be realized.

Income (Loss) Per Share

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

For the three and nine months ended September 30, 2021 , o ur potentially dilutive securities include stock options, restricted stock units, outstanding shares of Series A Preferred Stock and unvested restricted Series A Preferred Stock.

Due to the net loss that we recognized during the nine months ended September 30, 2022 and the three and nine months ended September 30, 2021, the potentially dilutive shares of common stock associated with these equity-based securities were determined to be antidilutive and, therefore, are excluded from the computation of diluted loss per share for the nine months ended September 30, 2022 and the three and nine months ended September 30, 2021.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

The following table sets forth the calculation of basic and diluted income (loss) per share for the three and nine months ended September 30, 2022 and 2021:

For the three months ended March 31, 2023 , o ur potentially dilutive securities include stock options, restricted stock units and shares to be issued under our ESPP.

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

Due to the net loss that we recognized during th e three months ended March 31, 2022, the potentially dilutive shares of common stock associated with these equity-based securities were determined to be antidilutive and, therefore, are excluded from the computation of diluted loss per share for the three months ended March 31, 2022.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income (loss) $ 27,460 $ ( 37,966 )

Dividends accrued on Series A Preferred Stock

— ( 6,126 ) — ( 16,414 )

Income (loss) available to common stockholders $ 24,732 $ ( 51,568 ) $ ( 15,519 ) $ ( 291,013 )

Weighted-average common shares outstanding – basic 194,572 192,465

3 unchanged sentences

Income (loss) per common share – diluted $ 0.14 $ ( 0.20 )

The following is a summary of potential shares of common stock that were antidilutive and excluded from the weighted average share computations for the three and nine months ended September 30, 2022 and 2021:

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

The following is a summary of potential shares of common stock that were antidilutive and excluded from the weighted average share computations for the three months ended March 31, 2023 and 2022:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Stock options 6,044 25,465

Restricted stock units 693 1,925

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

Unvested restricted Series A Preferred Stock — 500 — 500

Restricted stock — 595

Potential common shares excluded from the weighted average share calculations 6,737 27,985

3 unchanged sentences

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 threatened 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 project s.

6 unchanged sentences

Such matters are subject to many uncertainties, and the outcomes of individual matters are not predictable with assurance.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Subsequent Events

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

On March 16, 2023, the Company entered into an agreement for the sale-leaseback of one property for gross proceeds of $ 45.5 million.

The closing on this property was completed on April 20, 2023.

On March 29, 2023, the Company entered into an agreement for the sale-leaseback of one property for gross proceeds of $ 45.5 million.

The closing on this property is expected to be completed on or before September 30, 2023.

In preparing the accompanying condensed consolidated financial statements, we have evaluated the period from March 31, 2023 through the date the condensed consolidated financial statements were issued for material subsequent events.

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements