What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-03-08 · 363 added, 354 removed, 1253 unchanged (36% of the section changed)

7 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income ( Loss )

Consolidated Statements of Stockholders’ Equity

6 unchanged sentences

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.

Our management, including our Chief Executive Officer and Interim Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2023, 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, 2023, our internal control over financial reporting was effective based on those criteria.

6 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, 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.

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, 2023, of the Company and our report dated February 28, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

16 unchanged sentences

Minneapolis, Minnesota

March 8, 2023

February 28, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

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

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”).

and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, 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.

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, 2023, 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 February 28, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Critical Audit Matter Description

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 $10.1 million, which resulted in the recognition of a gain of $97.5 million on these transactions.

As described in Note 9 to the Company’s consolidated financial statements, the Company entered into and consummated sale-leaseback transactions involving three properties with unrelated third parties during the year ended December 31, 2023.

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

We identified management’s evaluation of whether the sale-leaseback transactions transferred control, was recognized timely, and at fair value, as a critical audit matter.

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

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

Auditing these assessments made by management involved challenging auditor judgment due to the extent of specialized skills or knowledge required.

1 unchanged sentence

Our audit procedures related to sale-leaseback transactions included the following, among others:

• Utilizing professionals with skills and knowledge to assist in:

(i) assessing management’s application of ASC Topic 842 and (ii) evaluating relevant lease terms, provisions and other conditions included in the Company’s sale-leaseback agreements to assess the appropriateness of the conclusion that a transfer of control has occurred.

• Evaluating whether the Company appropriately accounted for the sale by recognizing the transaction price for the sale at the time control is transferred, derecognizing the carrying amount of the asset, and accounting for the lease in accordance with ASC Topic 842.

• Utilizing professionals with specialized skills and knowledge in valuation to assist, for certain transactions, with assessing whether the overall transaction was at fair value.

• Recalculating the operating lease right-of-use asset and liability based on the terms of the agreement and calculated incremental borrowing rate.

• We tested the effectiveness of controls over the accounting for sale-leaseback transactions, including controls over (a) management’s determination of fair value of the property and (b) the application of ASC 606 to determine whether a sale has occurred and ASC 842 to determine the classification of the lease.

• We selected a sample of sale-leaseback transactions and performed the following:

• Assessed management’s application of ASC Topic 842 and evaluated relevant lease terms, provisions and other conditions included in the Company’s sale-leaseback agreements to assess the appropriateness of the conclusion that a transfer of control has occurred.

• Evaluated whether the Company appropriately accounted for the sale by recognizing the transaction price for the sale of the property at the time control is transferred to the third party, derecognizing the carrying amount of the asset, and accounting for the lease in accordance with ASC Topic 842.

• Utilized professionals with specialized skills and knowledge in valuation to assist with assessing whether the fair value of the property was appropriately recorded for the sale-leaseback.

• Recalculated the operating lease right-of-use asset and liability based on the terms of the agreement and calculated incremental borrowing rate.

/s/ DELOITTE & TOUCHE LLP

Minneapolis, Minnesota

March 8, 2023

February 28, 2024

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

7 unchanged sentences

Accounts receivable, net

23,903 13,381

Center operating supplies and inventories

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244,397 228,883 235,124

Other operating (income) expenses

Other operating expense (income)

86,363 ( 44,355 ) 43,653

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( 130,420 ) ( 113,237 ) ( 224,525 )

Loss before income taxes

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

Benefit from income taxes

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

Income (loss) before income taxes

94,790 ( 2,618 ) ( 719,713 )

Loss per common share – basic and diluted

Provision for (benefit from) income taxes

18,727 ( 825 ) ( 140,344 )

Weighted-average common shares outstanding – basic and diluted

Net income (loss)

$ 76,063 $ ( 1,793 ) $ ( 579,369 )

Income (loss) per common share:

Basic $ 0.39 $ ( 0.01 ) $ ( 3.73 )

Diluted $ 0.37 $ ( 0.01 ) $ ( 3.73 )

Weighted-average common shares outstanding:

Basic 195,671 193,570 155,470

Diluted 204,005 193,570 155,470

See notes to consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

1 unchanged sentence

2023 2022 2021

Net income (loss)

$ 76,063 $ ( 1,793 ) $ ( 579,369 )

1 unchanged sentence

2,297 ( 6,206 ) 214

Comprehensive loss

Comprehensive income (loss)

$ 78,360 $ ( 7,999 ) $ ( 579,155 )

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Other comprehensive income — — — — — 214 214

Issuance of common stock 3,600 36 89,964 — — — 90,000

Balance at December 31, 2020

145,196 1,452 1,569,905 ( 15,000 ) ( 71,714 ) ( 3,230 ) 1,481,413

Net loss — — — — ( 579,369 ) — ( 579,369 )

Other comprehensive income — — — — — 214 214

Share-based compensation — — 334,339 — — — 334,339

15 unchanged sentences

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

Net income — — — — 76,063 — 76,063

Other comprehensive income — — — — — 2,297 2,297

Share-based compensation — — 31,151 — — — 31,151

Stock option exercises 1,441 14 15,756 — — — 15,770

Issuance of common shares in connection with the vesting of restricted stock units 597 6 ( 387 ) — — — ( 381 )

Issuances of common stock in connection with the employee stock purchase plan 272 3 3,476 — — — 3,479

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

Balance at December 31, 2023

196,671 $ 1,967 $ 2,835,883 $ — $ ( 576,813 ) $ ( 6,925 ) $ 2,254,112

See notes to consolidated financial statements.

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Cash flows from operating activities:

Net income (loss)

$ 76,063 $ ( 1,793 ) $ ( 579,369 )

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

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

Depreciation and amortization

8 unchanged sentences

14,466 2,062 2,076

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

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

14,089 ( 99,974 ) 2,746

15 unchanged sentences

121,831 351,850 73,981

Proceeds from the sale of land held for sale

3,619 ( 4,214 ) ( 5,462 )

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Proceeds from financing obligations 1,500 21,350 —

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

Payments of debt discounts and issuance costs

( 3,050 ) ( 43 ) ( 47,586 )

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

Proceeds from stock option exercises 15,770 3,755 —

Increase in debt discounts and issuance costs

( 43 ) ( 47,586 ) ( 460 )

Proceeds from issuances of common stock in connection with the employee stock purchase plan 3,479 — —

( 381 ) ( 1,300 ) —

3 unchanged sentences

61 ( 353 ) ( 9 )

Decrease in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

4,457 ( 6,128 ) ( 1,558 )

12 unchanged sentences

(collectively with its direct and indirect subsidiaries, “Life Time,” “we,” “our,” or “the Company”) is a holding company incorporated in the state of Delaware.

Life Time Group Holdings, Inc.

changed its name from LTF Holdings, Inc.

effective on June 21, 2021.

As a holding company, Life Time Group Holdings, Inc.

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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 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.

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 2022.

Initial Public Offering

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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

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

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

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 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

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 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.

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.

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.

We adopted Accounting Standard Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting” during the second quarter of 2023.

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, and 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 connection with the debt refinancing that we completed in May 2023, we transitioned from LIBOR to Term Secured Overnight Financing Rate (“SOFR”).

The adoption of this ASU did not 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).

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

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 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.

In-center revenue includes fees for Dynamic Personal Training, aquatics and kids programming and other member services, 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;

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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.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Other Revenue

Other revenue includes revenue generated outside of our centers, which are primarily media, athletic events and related services.

Other revenue includes revenue generated from our businesses outside of our centers, which are primarily media, athletic events and related services.

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

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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.

Restricted cash of $ 18.8 million and $ 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, 2023 and 2022, respectively.

Accounts Receivable

9 unchanged sentences

Accelerated depreciation methods are used for tax reporting purposes.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

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.

9 unchanged sentences

Certain provisions within ASC 805 prescribe, among other things, the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration) and the exclusion of transaction and acquisition-related restructuring costs from acquisition accounting.

For information on acquisitions during the year ended December 31, 2023 that we accounted for as business combinations, see Note 5, Goodwill and Intangibles.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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

1 unchanged sentence

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.

For more information on the outdoor enthusiast and bicycling event that we acquired during the year ended December 31, 2021, which we accounted for as an asset acquisition, see Note 5, Goodwill and Intangibles.

For information on the acquisition during the year ended December 31, 2023 that we accounted for as an asset acquisition, see Note 8, Debt.

For information on the acquisition during the year ended December 31, 2021 that we accounted for as an asset acquisition, see Note 5, Goodwill and Intangibles.

Impairment of Long-Lived Assets

We test long-lived asset groups for impairment when events or circumstances indicate that the net book value of the asset group may not be recoverable.

We consider a history of consistent and significant operating losses, or the inability to recover net book value over the remaining useful life, to be our primary indicators of potential impairment.

Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows, which is generally at an individual center or ancillary business level.

The determination of whether impairment has occurred is based on an estimate of undiscounted future cash flows directly related to that center or ancillary business, compared to the carrying value of these assets.

As it relates to our asset groups, we consider a history of consistent and significant operating losses, or the inability to recover net book value over the remaining useful life, to be our primary indicators of potential impairment.

Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows, which is generally at an individual asset group level.

The determination of whether impairment has occurred is based on an estimate of undiscounted future cash flows directly related to that asset group, compared to the carrying value of the related assets.

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.

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.

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.

As it relates to our site development projects, we test the carrying value of capitalized development costs associated with a particular project for impairment when we determine that all or a portion of the development project is no longer deemed viable for construction.

We generally recognize an impairment charge associated with a site development project or a portion of a site development project that we decide to abandon in an amount equal to the related development costs that we previously capitalized.

During 2023, 2022, and 2021, we recognized impairment charges associated with all or a portion of certain site development projects that we decided to abandon.

During 2023, we also recognized an impairment charge of $ 5.3 million related to the sale of an outparcel of land.

Accordingly, we recognized impairment charges of $ 14.5 million, $ 2.1 million and $ 2.1 million associated with these long-lived assets during the years ended December 31, 2023, 2022 and 2021, respectively, which are included in Other operating expense (income) 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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Centers and Corporate Businesses.

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

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

At December 31, 2023 and 2022, out of the total goodwill balance of $ 1,235.4 million and $ 1,233.2 million recognized on our consolidated balance sheets, respectively, $ 1,233.1 million and $ 1,230.9 million, respectively, has been allocated to our Centers reporting unit.

At both December 31, 2023 and 2022, $ 2.3 million has been allocated to our Corporate Businesses reporting unit.

At December 31, 2023, the estimated fair value of our reporting units are in excess of their carrying value.

Based upon our review and analysis, no goodwill impairments were deemed to have occurred during the years ended December 31, 2023, 2022, and 2021.

5 unchanged sentences

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

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

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

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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.

4 unchanged sentences

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.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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

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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

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.

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, 2023 and 2022 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.

LIFE TIME GROUP HOLDINGS, INC.

2 unchanged sentences

(Table amounts in thousands except per share data)

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, 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

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Financial Assets and Liabilitie s .

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

At December 31, 2023 and December 31, 2022, the carrying value and fair value of our outstanding long-term debt was as follows:

2023 December 31,

Carrying Value Fair

Value Carrying Value Fair

Long-term debt (1)

$ 1,948,145 $ 1,934,695 $ 1,840,171 $ 1,724,178

(1) Excludes unamortized debt discounts and issuance costs.

LIFE TIME GROUP HOLDINGS, INC.

2 unchanged sentences

(Table amounts in thousands except per share data)

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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We recognize, measure, present and disclose a liability for unrecognized tax benefits related to certain tax positions that we have taken or expect to take in our income tax returns.

We recognize a tax position when it is more likely than not that the position will be sustained upon examination, including

We recognize a tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.

We adjust our liability for unrecognized tax benefits in the period in which an uncertain tax position is effectively settled, that statute of limitations expires for the

LIFE TIME GROUP HOLDINGS, INC.

2 unchanged sentences

(Table amounts in thousands except per share data)

resolutions of any related appeals or litigation processes, based on the technical merits.

We adjust our liability for unrecognized tax benefits in the period in which an uncertain tax position is effectively settled, that statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available.

relevant taxing authority to examine the tax position or when more information becomes available.

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 income taxes in our consolidated statements of operations.

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

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

2 unchanged sentences

We recognize compensation expense associated with each share-based award over the requisite service period based on the estimated grant-date fair value of the award.

W e have estimated the fair value of the majority of the stock options to purchase shares of the Company’s common stock using the Black-Scholes option pricing model.

W e estimate the fair value of stock options to purchase shares of the Company’s common stock using the Black-Scholes option pricing model.

This pricing model requires management to make assumptions and to apply judgment to determine the fair value of equity awards.

1 unchanged sentence

Share-based compensation expense related to restricted stock units is recorded based on the market value of our common stock on the date of grant.

We account for share-based payment awards that represent a fixed dollar amount that, if payable, will be settled in a variable number of shares of the Company’s common stock as liability-classified awards.

We have elected to account for forfeitures as they occur.

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

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

The changes in accumulated other comprehensive loss during the years ended December 31, 2022, 2021 and 2020 is related to foreign currency translation adjustments associated with our Canadian operations.

Income (Loss) per Share

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

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

The denominator in the diluted income (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 income (loss) per share.

Accordingly, these contingently issuable shares are excluded from the computation of diluted income (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 income (loss) per share if their effect is antidilutive .

For more information on the basic and diluted income (loss) per share calculations for the years ended December 31, 2023, 2022 and 2021, see Note 11, Income (Loss) Per Share.

Changes in Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) during the years ended December 31, 2023, 2022 and 2021 is related to foreign currency translation adjustments associated with our Canadian operations.

Supplemental Balance Sheet and Cash Flow Information

2 unchanged sentences

Property held for sale

$ 8,600 $ 4,987

Construction contract receivables

Deferred membership origination costs

Prepaid expenses

Prepaid software licenses and maintenance 5,481 10,009

18,390 21,880

17 unchanged sentences

33,066 29,731

Current maturities of finance lease liabilities

16,125 14,528

Accrued expenses and other current liabilities

1 unchanged sentence

Supplemental Cash Flow Information

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

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

Year Ended December 31,

13 unchanged sentences

2023 2022 2021

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

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

$ 14,051 $ 10,640 $ ( 885 )

6 unchanged sentences

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

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

Acquisition of property and equipment through the assumption of a mortgage 10,600 — —

See Note 9, Leases, for supplemental cash flow information associated with our lease arrangements for the years ended December 31, 2023, 2022 and 2021.

26 unchanged sentences

Goodwill and Intangibles

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

There were no changes in the carrying amount of goodwill during the years ended December 31, 2022 and December 31, 2021.

The goodwill balance was $ 1,235.4 million at December 31, 2023, an increase of $ 2.2 million as compared to $ 1,233.2 million at December 31, 2022.

During the year ended December 31, 2023, we acquired businesses for a total purchase price of approximately $ 2.1 million.

Of this amount, approximately $ 2.2 million was allocated to goodwill, approximately $ 0.1 million was allocated to property and equipment and approximately $ 0.2 million was allocated to liabilities assumed.

The consideration for these acquisitions consisted of $ 0.6 million of cash and approximately 0.9 million shares of our common stock with an estimated fair value of approximately $ 1.5 million as of the acquisition dates.

We accounted for each of these acquisitions as a business combination.

The financial results associated with these acquisitions have been included in our consolidated financial statements since the acquisition dates.

Intangible assets consisted of the following:

7 unchanged sentences

$ 178,502 $ ( 6,375 ) $ 172,127

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

December 31, 2022

6 unchanged sentences

$ 179,987 $ ( 6,583 ) $ 173,404

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)

Other intangible assets at both December 31, 2023 and 2022 include a facility license as well as 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 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.

The transaction was accounted for as an asset acquisition.

This acquisition was accounted for as an asset acquisition.

The facility license costs are being amortized on a straight-line basis over its estimated useful life of 9.8 years.

17 unchanged sentences

$ 2,216,593 $ 1,822,557 $ 1,318,053

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

The timing associated with the revenue we recognized during the years ended December 31, 2023, 2022, and 2021 is as follows:

19 unchanged sentences

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

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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.

Deferred revenue at December 31, 2023 and 2022 was $ 49.3 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.

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:

Long-term contract liabilities at December 31, 2023 and 2022 were $ 0.6 million and $ 2.0 million, respectively, and consist primarily of deferred enrollment fees.

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

Year Ended December 31,

6 unchanged sentences

4,150 13,023 ( 219 )

Deferred tax (benefit) expense

Deferred tax expense (benefit)

25,341 ( 5,008 ) ( 135,789 )

1 unchanged sentence

( 11,491 ) ( 8,632 ) ( 8,252 )

80 4,100 ( 29 )

Total deferred tax benefit

Total deferred tax expense (benefit)

14,577 ( 13,560 ) ( 139,941 )

1 unchanged sentence

— ( 288 ) ( 184 )

Benefit from income taxes

Provision for (benefit from) income taxes

$ 18,727 $ ( 825 ) $ ( 140,344 )

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.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

The amount of deferred tax expense (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.

9 unchanged sentences

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:

1 unchanged sentence

2023 2022 2021

Income tax benefit at federal statutory rate

Income tax expense (benefit) at federal statutory rate

$ 20,056 $ ( 610 ) $ ( 151,582 )

3 unchanged sentences

3,341 3,709 4,831

Share-based compensation

— — ( 1,283 )

2 unchanged sentences

( 15,216 ) ( 4,833 ) 16,933

Benefit from income taxes

93 ( 10 ) 2,723

Provision for (benefit from) income taxes

$ 18,727 $ ( 825 ) $ ( 140,344 )

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.

40 unchanged sentences

federal, state or local examinations by tax authorities for years before 2020.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

As of December 31, 2023, we had a federal income tax net operating loss carryforward related to our U.S.

3 unchanged sentences

As of December 31, 2022, 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.

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) was to expire between 2026 and 2043 and approximately $ 77.6 million ($ 4.4 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 $ 21.3 million ($ 5.7 million tax effected) as of December 31, 2022, which was subject to expiration between tax years 2032 and 2042.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

As of December 31, 2023 , we had a business interest carryforward of approximately $ 229.6 million ($ 57.8 million tax effected) that can be carried forward indefinitely.

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.

We considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations to determine the extent to which we believe net deferred tax assets will more likely than not be realized.

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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.

As a result, a valuation allowance of $ 1.1 million has been recorded as of December 31, 2022 to reduce the deferred tax asset associated with the foreign tax credit carryforward.

We consider the earnings of certain non-U.S.

2 unchanged sentences

federal and state income taxes and foreign withholding taxes on undistributed earnings of foreign subsidiaries indefinitely invested outside the United States.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Debt consisted of the following:

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

Term Loan Facility (1)

$ 310,000 $ 273,625

Revolving Credit Facility, maturing December 2026 90,000 20,000

14 unchanged sentences

$ 1,859,027 $ 1,805,698

(1) See “—Term Loan Facility” below.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Senior Secured Credit Facility

1 unchanged sentence

and certain of our other wholly-owned subsidiaries entered into a senior secured credit facility with a group of lenders led by Deutsche Bank AG as the administrative agent.

On January 22, 2021, Life Time, Inc.

and certain of our other wholly-owned subsidiaries entered into an eighth amendment to the credit agreement governing our senior secured credit agreement (the “Credit Agreement”).

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

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 May 9, 2023, Life Time, Inc.

and certain of our other wholly-owned subsidiaries entered into a tenth amendment to the credit agreement governing our senior secured credit facilities (the “Credit Agreement”).

Pursuant to such tenth amendment, we refinanced our $ 273.6 million term loan facility that had a maturity date in December 2024 to our $ 310.0 million term loan facility (the “Term Loan Facility”) that has a maturity date of January 15, 2026.

A portion of the net incremental cash proceeds we received under such tenth amendment was used to pay down the then existing balance on the revolving portion of our senior secured credit facilities (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”).

We also converted the Credit Facilities under such tenth amendment from LIBOR to SOFR.

Loans under the Term Loan Facility were issued with original issue discount of 0.50 %.

On December 6, 2023, Life Time, Inc.

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 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.

and certain of our other wholly-owned subsidiaries entered into an eleventh amendment to the Credit Agreement which reduced the interest rate under the Term Loan Facility by 0.50 %.

Loans under such eleventh amendment were issued at par with no original issue discount.

The refinancing transactions during 2023 were accounted for as debt modifications.

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.

1 unchanged sentence

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.

Loans under the Term Loan Facility bear interest at a floating rate per annum of, at our option, SOFR plus an applicable credit adjustment spread ranging from 0.11448 % to 0.42826 % d ependi ng on the duration of borrowing plus the continued applicable margin of 4.00 % or a base rate plus 3.00 %.

The applicable margins will increase to 4.25 % and 3.25 %, respectively, if our public corporate family ratings falls below B2 and B from Moody’s and S&P, respectively.

Before the IPO, our term loan facility had a principal balance of $ 850.0 million and 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.

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 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

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 %.

Our Revolving Credit Facility provides for a $ 475.0 million revolver and matures in December 2026, except that the maturity will be October 16, 2025 if we have at least $ 100.0 million remaining outstanding on the Secured Notes (as defined below) on such date and January 14, 2026 if we have at least $ 100.0 million remaining outstanding on the Unsecured Notes (as defined below) on such date.

At December 31, 2023, there were $ 90.0 million of outstanding borrowings on the Revolving Credit Facility and there were $ 32.9 million of outstanding letters of credit, resulting in total revolver availability of $ 352.1 million , which was available at intervals ranging from 30 to 180 days at interest rates of SOFR plus the applicable credit adjustment spread plus 3.50 % or base rate plus 2.50 %.

The weighted average interest rate and debt outstanding under the Revolving Credit Facility for the year ended December 31, 2023 wa s 8.60 % and $ 62.6 million, respectively.

The highest month-end balance during the year was $ 100.0 million.

The highest balance during the year was $ 150.0 million.

Secured Notes

On January 22, 2021, Life Time, Inc.

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

issued senior secured notes (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 %.

6 unchanged sentences

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

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Unsecured Notes

On February 5, 2021, Life Time, Inc.

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

issued senior unsecured notes (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 %.

12 unchanged sentences

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.

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

Mortgage Notes

4 unchanged sentences

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

As of December 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.

During the year ended December 31, 2023, we acquired a health club facility for a total purchase price of $ 15.8 million.

As part of this acquisition, we paid cash of $ 4.0 million and assumed an existing mortgage note and related accrued interest liability of $ 10.6 million and $ 1.2 million, respectively.

The mortgage note matures in June 2024, and is included in current maturities of long-term debt on our consolidated balance sheet as of December 31, 2023.

The entire $ 15.8 million purchase price was allocated to property and equipment.

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.

For more information regarding the sale-leaseback transaction, see Note 9, Leases.

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

2 unchanged sentences

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).

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Secured Loan into Series A Preferred Stock (as defined in Note 10, Stockholders’ Equity).

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.

7 unchanged sentences

Debt Covenants

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

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

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.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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

Future Maturities of Long-Term Debt

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

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

2024 $ 73,848

2 unchanged sentences

Total future maturities of long-term debt

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Lease cost included in our consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021 consisted of the following:

8 unchanged sentences

9,873 5,614 4,609 Rent

Variable lease cost

66,007 60,352 56,716 Center operations

Finance lease cost:

3 unchanged sentences

98 99 177 Interest expense, net of interest income

Interest on financing obligations

2,401 — — Interest expense, net of interest income

Total lease cost

2 unchanged sentences

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.

Duri ng the year ended December 31, 2023, we entered into and consummated sale-leaseback transactions with unrelated third parties.

Under these transactions, we sold three properties for $ 124.0 million, which was reduced by transaction costs of $ 0.7 million, for net cash proceeds of $ 123.3 million.

The estimated fair value of the property sold was $ 128.4 million.

Accordingly, the aggregate sales price associated with these arrangements was increased by $ 4.4 million, of which $ 5.9 million was associated with a property sale in which the sales price was less than the fair value of the property sold, which was recognized as an increase in the aggregate sales price associated with this property and an increase in the related operating lease right-of-use asset, and $ 1.5 million was associated with a property sale in which the sales price was greater than the fair value of the property sold, which was recognized as a reduction in the aggregate sales price associated with this property and as a financing obligation separate from the related operating lease liability.

For cash flow purposes, the $ 1.5 million of proceeds we received from this financing obligation are reported within financing activities on our consolidated statement of cash flows.

During the year ended December 31, 2023, we recognized a loss of $ 13.6 million on sale-leaseback transactions.

This loss is included in Other operating expense (income) in our consolidated statement of operations.

During the year ended December 31, 2022, we entered into and consummated sale-leaseback transactions with unrelated third parties.

Under these transactions, we sold nine properties 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 .

T his gain is included in Other operating expense (income) 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.

4 unchanged sentences

(Table amounts in thousands except per share data)

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.

During the year ended December 31, 2021, we entered into and consummated sale-leaseback transactions with unrelated third parties.

Under these transactions, we sold two properties 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.

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

Related Party Sale-Leaseback Transactions and Leases

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(1) Finance lease right-of-use assets were reported net of accumulated amortization of $ 0.8 million and $ 1.8 million at December 31, 2023 and 2022, respectively.

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 (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.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Remaining Lease Terms and Discount Rates

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Financing obligations 11.00 %

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

(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.

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2023 2022 2021

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

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

Operating cash flows from operating leases

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1,031 1,404 1,514

Operating cash flows from financing obligations

Non-cash information:

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5,900 31,440 9,500

Impairment charges associated with operating lease right-of-use assets

— — ( 1,962 )

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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

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

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2,306,347 251 46,382 2,352,980

Present value of lease liabilities

Present value of lease-related liabilities

$ 2,327,627 $ 1,416 $ 23,151 $ 2,352,194

Leases Not Yet Commenced

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

Accordingly, as of December 31, 2023 , we did not recognize any right-of-use assets or lease liabilities associated with these leased locations on our consolidated balance sheet.

These arrangements contain undiscounted lease payments that are payable during the initial lease terms, which range from 20 to 25 years, totaling approximately $ 414.6 million.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Stockholders’ Equity

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

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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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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

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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:

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

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 %.

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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 .

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Restricted Common Stock

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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.

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

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.

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 reserved for issuance under the 2015 Equity Plan to approximately 30.6 million shares of our common stock.

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

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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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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

Our board of directors determined that no additional shares would become available under the 2021 Equity Plan as of January 1, 2023 pursuant to the evergreen feature described in part (ii) of the immediately preceding sentence.

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 such evergreen feature.

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 10-year term of the 2021 Equity Plan.

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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.

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

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

component of the ESPP.

Our board of directors determined that no additional shares would become available under the ESPP as of January 1, 2023 and 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.

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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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

During the year ended December 31, 2023, 0.3 million shares were issued under the ESPP.

We recognized $ 1.2 million and $ 0.1 million of share-based compensation expense for the discount received by participants during the years ended December 31, 2023 and 2022 , respectively, all of which is included in General, administrative and marketing in our consolidated statements of operations.

As of December 31, 2023, unrecognized share-based compensation expense was approximately $ 0.8 million, which is expected to be recognized over a weighted average remaining period of 0.4 years.

Stock Options

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21,231 $ 11.71 2.9 $ 88,228

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.

Options Granted

During the years ended December 31, 2023 and 2022 , the Company granted approximately 1.4 million and 1.0 million stock option awards, respectively, under the 2021 Equity Plan.

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

During the year ended December 31, 2021, the Company granted approximately 3.8 million stock option awards, 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.

These options have a 10-year contractual term from the date of grant.

The exercise prices and terms of these awards were determined and approved by our board of directors or a committee thereof.

The exercise price associated with each of these awards is not less than the fair market value per share of our common stock, as determined by our board of directors or a committee thereof, at the time of grant.

Of the 3.8 million total stock options granted during the year ended December 31, 2021 , approximately 3.3 million are time vesting options and approximately 0.5 million are performance vesting options.

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 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

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.

The exercise price associated with each

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

of these awards was not less than the fair market value per share of our common stock, as determined by our board of directors or a committee thereof, at the time of grant.

Of the 3.8 million total stock options granted during the year ended December 31, 2021, approximately 3.3 million were time-based vesting options and approximately 0.5 million were performance-based vesting options.

The time-based 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 unless otherwise agreed with the award recipient.

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

Intrinsic Value and Income Tax Benefits Associated with Option Exercises

The total intrinsic value of stock options exercised during the years ended December 31, 2023 and 2022 was approximately $ 12.2 million and $ 1.5 million, respectively.

In connection with these stock option exercises, we recognized an aggregate income tax benefit of approximately $ 2.2 million and $ 0.3 million during the years ended December 31, 2023 and 2022, respectively .

No stock options were exercised during the year ended December 31, 2021 .

Fair Value of Stock Option Awards Granted

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Share-Based Compensation Expense Associated with Stock Options

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.

Share-based compensation expense associated with stock options for the year ended December 31, 2023 was $ 11.8 million, of which $ 0.5 million, $ 11.0 million and $ 0.3 million is included in Center operations, General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations.

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 expense (income), 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 expense (income), respectively, in our consolidated statement of operations.

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 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.

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

LIFE TIME GROUP HOLDINGS, INC.

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(Table amounts in thousands except per share data)

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.

As of December 31, 2023, unrecognized share-based compensation expense related to stock options was approximately $ 17.8 million, which is expected to be recognized over a weighted average remaining period of 2.6 years.

Restricted Stock Units

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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.

During the year ended December 31, 2023, the Company granted approximately 1.1 million restricted stock unit awards under the 2021 Equity Plan, of which approximately 0.4 million were time-based vesting awards, approximately 0.4 million were time-based vesting awards with a performance qualifier and approximately 0.3 million were performance-based vesting awards granted to our executives in connection with our short-term incentive compensation program.

Of the 1.1 million restricted stock unit awards that were granted during the year ended December 31, 2023, a pproximately 0.8 million vest in four ratable annual installments (subject to meeting a performance qualifier for approximately 0.4 million of such awards), approximately 0.3 million vest based on meeting certain performance metrics under our short-term incentive compensation plan with any performance above the target metric resulting in the issuance of additional fully-vested shares of our common stock as detailed under “—Other Share-Based Payment Awards” below and less than 0.1 million vest in two ratable annual installments, in each case subject to continuous employment or service from the grant date through the applicable vesting date unless otherwise agreed with the award recipient.

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, 2022 , the Company granted approximatel y 1.7 million restricted stock unit awards under the 2021 Equity Plan, of which approximately 1.4 million were time-based vesting awards and approximately 0.3 million were time-based 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 (subject to meeting a performance qualifier for approximately 0.3 million of such awards), 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 unless otherwise agreed with the award recipient.

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.

The weighted average grant date fair value associated with the approximately 1.7 million restricted stock unit awards granted during the year ended December 31, 2022 was $ 14.26 .

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 , 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.

Of the 0.6 million restricted stock unit awards granted under the 2015 Equity Plan during the year end December 31, 2021, approximately 0.5 million were granted to our CEO and approximately 0.1 million were granted to non-CEO executives and a director.

Of the 0.6 million restricted stock unit awards granted under the 2015 Equity Plan during the year ended December 31, 2021 , approximately 0.5 million were granted to our CEO and approximately 0.1 million were granted to non-CEO executives and a director.

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 During the Year Ended December 31, 2021 under the 2015 Equity Plan

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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.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

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.

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

Restricted Stock Unit Awards Granted During the Year Ended December 31, 2021 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.

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 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 unless otherwise agreed with the award recipient.

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.

The total fair value of restricted stock units that vested during the years ended December 31, 2023 and 2022 was approximately $ 10.2 million and $ 12.2 million , respectively, 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 year ended December 31, 2021 .

Share-Based Compensation Expense Assoc iated with Restricted Stock Units

Share-based compensation expense associated with restricted stock units for the year ended December 31, 2023 was $ 18.1 million, of which $ 2.1 million, $ 15.5 million and $ 0.5 million is included in Center operations, General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operations.

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 expense (income), 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 expense (income), respectively, in our consolidated statement of operations.

As of December 31, 2023, unrecognized share-based compensation expense related to restricted stock units was approximately $ 26.3 million, which is expected to be recognized over a weighted average remaining period of 2.0 years.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Other Share-Based Payment Awards

During the year ended December 31, 2023, the Company adopted a short-term incentive program pursuant to which fully-vested shares of the Company’s common stock would be issued at or around the time of determining the Company’s performance under such program in early 2024 if the Company’s performance exceeded the target performance metric for executives and if the Company’s performance exceeded the threshold performance metric for non-executives.

We account for the potential issuance of these shares of common stock as share-based payment awards granted under the 2021 Equity Plan.

Share-based compensation expense associated with these awards for the year ended December 31, 2023 was $ 19.0 million, of which $ 17.1 million, and $ 1.9 million is included in General, administrative and marketing and Other operating expense (income), respectively, in our consolidated statement of operation.

Because the incentive compensation associated with these awards represents a fixed dollar amount that, if payable, will be settled in a variable number of shares of the Company’s common stock, we are currently accounting for these awards as liability-classified awards.

Accordingly, the offset to the $ 19.0 million of share-based compensation expense we have recognized in connection with these awards during the year ended December 31, 2023 is included in Accrued expenses and other current liabilities on our December 31, 2023 consolidated balance sheet.

Stockholder Note Receivable

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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 .

Income (Loss) Per Share

For the year ended December 31, 2023, o ur potentially dilutive securities included stock options, restricted stock units, shares to be issued under our ESPP and contingently issuable shares related to our short-term incentive compensation program.

For the year ended December 31, 2022, o ur potentially dilutive securities included 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 these equity-based securities 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, our potentially dilutive securities included 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 these equity-based securities were determined to be antidilutive and, therefore, are excluded from the computation of diluted loss per share for the year ended December 31, 2021.

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(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 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:

The following table sets forth the calculation of basic and diluted income (loss) per share for the years ended December 31, 2023, 2022 and 2021:

Year Ended December 31,

2023 2022 2021

Net income (loss)

$ 76,063 $ ( 1,793 ) $ ( 579,369 )

Weighted average common shares outstanding – basic and diluted

Weighted-average common shares outstanding – basic

195,671 193,570 155,470

Loss per share – basic and diluted

Dilutive effect of stock-based compensation awards 8,334 — —

Weighted-average common shares outstanding – diluted 204,005 193,570 155,470

Income (loss) per common share – basic $ 0.39 $ ( 0.01 ) $ ( 3.73 )

Income (loss) per common share – diluted

$ 0.37 $ ( 0.01 ) $ ( 3.73 )

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 :

The following is a summary of potential shares of common stock that were excluded from the computation of diluted income (loss) per share for the years ended December 31, 2023, 2022 and 2021 :

Year Ended December 31,

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ESPP shares — 137 —

Potential common shares excluded from diluted loss per share 27,549 27,046 21,119

Potential common shares excluded from diluted income (loss) per share 6,669 27,549 27,046

For more information regarding stock options, restricted stock units, restricted stock and ESPP shares, see Note 10, Stockholders’ Equity.

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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, 2022, these purchase obligations totaled approximately $ 22.9 million, the majority of which are expected to be settled within the next three years .

As of December 31, 2023, these purchase obligations totaled approximately $ 16.5 million, the majority of which are expected to be settled within the next year.

These unconditional purchase obligations are in addition to the current and long-term liabilities recorded on our December 31, 2023 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

Bartell et al.

LTF Club Operations Company, Inc.

We defended a putative class action asserting that Life Time failed to honor cancellation requests and refund payments made by former members of Life Time’s Ohio health clubs under membership agreements that allegedly violate the Ohio Prepaid Entertainment Contract Act (“PECA”) and the Ohio Consumer Sales Practices Act (“CSPA”).

The case is Laurence Bartell, et al.

LTF Club Operations Company, Inc., Case No.

2:14-cv-401, in the United States District Court, Southern District of Ohio, Eastern Division.

LTF Club Operations Company, Inc.

is a wholly-owned subsidiary of Life Time, Inc.

The District Court granted final approval to the parties’ settlement of this case on August 7, 2020.

Under the terms of the settlement, we agreed to contribute to a settlement fund of $ 14.0 million from which all costs of settlement would be paid, including awards to the class, settlement administration expenses, and court-awarded service awards and attorneys’ fees.

Class members were allowed to claim either (1) a cash award of dues they paid to Life Time after providing notice of cancellation of their membership (“Cash Award”) or (2) a membership award of a dues credit with a face value of three times the Cash Award toward any access membership with Life Time (“Membership Award”).

The period for the class members to make this election ended on July 8, 2020.

Based on the Cash Awards and Membership Awards claimed by the class members and the amount awarded for plaintiff’s attorneys’ fees and costs and a class representative service award, we paid $ 13.3 million during the quarter ended September 30, 2020.

Because our cost to service a membership is less than the Membership Award, the amount of our loss did not ultimately directly correspond to the total settlement amount of $ 14.0 million.

Life Time, Inc.

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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.

The parties are currently in discovery.

The Action is subject to many uncertainties, and the outcome of the matter is not predictable with any assurance.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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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401(k) Savings and Investment Plan

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.

We offer a 401(k) savings and investment plan (the “401(k) Plan”) to substantially all full-time employees who 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, 2023, 2022 and 2021 was not material.

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As of both December 31, 2023 and 2022, no amounts had been drawn on any of these irrevocable standby letters of credit.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

As of December 31, 2023 and 2022, we had posted bonds totaling $ 35.3 million and $ 35.5 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 arrangements, during the years ended December 31, 2022 or 2021.

We did not enter into any new related party leases, including related party sale-leaseback arrangements, during the years ended December 31, 2023 or 2022.

Sale-Leaseback Transactions

During the year ended December 31, 2020, we consummated a sale-leaseback transaction involving one property with a subsidiary of a limited liability company jointly owned by our CEO, a former executive of the Company, and another member of our board of directors, among other investors (“LTRE”).

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 (income) expenses in our consolidated statement of operations for the year ended December 31, 2020.

During the years ended December 31, 2023, 2022 and 2021, we paid rent associated with this lease of $ 2.6 million, $ 2.6 million and $ 2.5 million, respectively, and rent expense associated with this lease was $ 3.0 million, $ 3.0 million and $ 3.0 million, respectively.

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During the years ended December 31, 2023, 2022 and 2021, we paid rent associated with these leases of $ 6.6 million, $ 6.1 million and $ 6.0 million, respectively, and rent expense associated with these leases was $ 7.4 million, $ 7.4 million and $ 7.4 million, respectively.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

Other Property Leases

5 unchanged sentences

During the years ended December 31, 2023, 2022 and 2021, rent payments associated with the new Woodbury lease were $ 1.2 million, $ 1.2 million and $ 1.2 million, respectively, and rent expense associated with the new Woodbury lease was $ 1.3 million, $ 1.3 million and $ 1.3 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.

During the year ended December 31, 2023, we amended this lease to reflect the expanded square footage that the Company is using at this location and make a corresponding adjustment to the rental payments.

During the years ended December 31, 2023 , 2022 and 2021, we paid rent associated with this lease of $ 0.9 million, $ 0.9 million and $ 1.1 million, respectively, and rent expense associated with this lease was $ 0.9 million, $ 0.9 million and $ 0.9 million, respectively.

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For information on the stockholder note receivable, 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)

Arrangements with our Investors and Management Stockholders

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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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.

Thomas Bergmann, jointly owned an aircraft.

In connection with his retirement from the Company effective December 30, 2022, Life Time, Inc.

Bergmann’s 50 % interest in this aircraft in October 2022 for approximately $ 1.8 million.

During this joint ownership, Life Time, Inc.

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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.

The daughter of our CEO currently serves as a senior director of real estate development for Life Time, Inc.

During the years ended December 31, 2023, 2022 and 2021, we paid total compensation of approximately $ 0.2 million, $ 0.2 million and $ 0.2 million, respectively, for her services.

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All highly compensated employees eligible to participate in the Executive Nonqualified Excess Plan of Life Time Fitness, including but not limited to our executives, may elect to defer up to 50 % of their annual base salary and/or annual bonus earnings to be paid in any coming year.

The investment choices available to participants under the non-qualified deferred compensation plan are of the same type and risk categories as those offered under our 401(k) Plan and may be modified or changed by the participant or us at any time.

LIFE TIME GROUP HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands except per share data)

changed by the participant or us at any time.

Distributions can be paid out as in-service payments or at retirement.

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Subsequent Events

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)

During February 2024, we fully paid at maturity the principal balance and any remaining accrued interest associated with one of our mortgages totaling $ 51.0 million.

This balance is included in Current maturities of long-term debt on our consolidated balance sheet as of December 31, 2023.

See Note 8, Debt for additional information associated with our Mortgage Notes.

The Board of Directors determined in February 2024 that the Company’s 2023 performance exceeded the target performance metric for executive officers and the threshold performance metric for non-executives under the Company’s short-term incentive program and issued corresponding shares of common stock to the Company’s employees.

As a result, the $ 19.0 million liability we recognized in connection with these share-based payment awards that is included in Accrued expenses and other current liabilities on our December 31, 2023 consolidated balance sheet was reclassified out of Accrued expenses and other current liabilities and into Common stock and Additional paid-in capital on our consolidated balance sheet.

We have evaluated all subsequent events through the date of the consolidated financial statements were issued and determined that, other than with res pect to the mortgage payoff and reclassification of the share-based liability, th ere 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.

Condensed Financial Information of Registrant (Parent Company Only)

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Under a parent-only presentation, our investment in our subsidiaries is presented under the equity method of accounting.

During the year ended December 31, 2023, we recognized share-based compensation expense related to stock options, restricted stock units, our ESPP and liability classified awards related to our short-term incentive plan of $ 50.1 million, of which $ 2.6 million, $ 44.8 million and $ 2.7 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, 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.

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This debt extinguishment loss is not recognized for tax purposes.

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

A condensed statement of cash flows is not presented because Life Time Group Holdings, Inc.

has no cash, and, therefore, no material operating, investing, or financing cash flow activities for years ended December 31, 2023, 2022 and 2021.

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.

2 unchanged sentences

(Table amounts in thousands except per share data)

financing cash flow activities associated with the proceeds we received from the issuance of our common stock during the years ended December 31, 2023, 2022 and 2021, 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.

31 unchanged sentences

General, administrative and marketing 44,776 33,535 316,836

Other operating 914 4,569 —

Other operating expense 2,708 914 4,569

Total operating expenses 50,144 37,291 334,339

8 unchanged sentences

113,872 26,362 ( 285,616 )

Net loss attributable to Life Time Group Holdings, Inc.

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

$ 76,063 $ ( 1,793 ) $ ( 579,369 )

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 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-K

Item 8. Financial Statements and Supplementary Data