What changed in this filing

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Item 1A. Risk Factors

2025-02-27 compared with 2024-02-28 · 129 added, 133 removed, 242 unchanged (52% of the section changed)

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The success of our business depends on our ability to attract and retain members and to optimize our revenue per center membership.

There are numerous factors that could lead to a decline in membership or in-center service levels or that could prevent us from increasing our memberships and optimizing our revenue per center membership, any of which could adversely impact our business, results of operations and financial condition.

These factors include our ability to deliver premium member experiences, changing desires and behaviors of consumers and our ability to anticipate and respond to shifts in consumer preferences, introductions of new products, services or technology, changing consumer confidence, changes in discretionary spending trends and general economic conditions, market or center maturity or saturation, direct and indirect competition in our trade areas, as well as social fears such as terror or health threats.

There are numerous factors that could prevent us from increasing, or cause a decline in, our memberships and in-center business or that could prevent us from optimizing our revenue per center membership, any of which could adversely impact our business, results of operations and financial condition.

These factors include (i) our ability to deliver premium member experiences, (ii) members valuing our offerings at the prices we charge, (iii) changing desires, confidence, discretionary spending and behaviors of consumers and our ability to anticipate and respond to such shifts, (iv) introductions or terminations of products, services, benefits or technology, (v) general economic and environmental conditions, (vi) market or center maturity or saturation, (vii) direct and indirect competition in our trade areas and (viii) social fears such as terror or health threats.

All of our members are able to cancel their membership at any time upon providing advance notice.

We must therefore continually engage existing members and attract new members in order to maintain our membership and in-center service levels and earn the membership dues and service fees that we charge our members.

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

We must therefore continually engage existing members and attract new members in order to maintain our membership and in-center service levels

and earn the membership dues and service fees that we charge our members.

Elevating our member experiences to meet and exceed their expectations requires investment in our team members, programs, products, services and centers.

These investments may impact our short-term results of operations and cash flows as our investments in our business may be made more quickly than we see the returns on our investments.

Additionally, we cannot be certain that these strategies will attract and retain members or deliver higher revenue per center membership.

Our business could be adversely affected by competition in the highly competitive health, fitness and wellness industry.

We compete with numerous industry participants as detailed in “Item 1—Business—Competition” of this Annual Report.

Competitors compete with us to attract members in our markets and digitally.

Competitors may also attempt to copy all or portions of our business model or services, which could erode our market share and brand recognition or impair our business and results of operations.

It is also possible that competitors could introduce new products and services or new ways to provide those products and services that negatively impact consumer preference or willingness to pay for our products and services.

Certain competitors may have advantages over us including greater name recognition and/or resources, and non-profit and government organizations may be able to obtain land and construct centers at a lower cost and collect membership fees without paying taxes, thereby allowing them to charge lower prices.

Additionally, consolidation in the health, fitness and wellness industry could result in increased competition among participants.

This competition may limit our ability to attract and retain members or to optimize our revenue per center membership, each of which could materially and adversely affect our business, results of operations and financial condition.

Our business, results of operations and prospects may be adversely affected by the environments in which we operate, including with respect to the macroeconomy, the political climate, global pandemics or other health crises, severe weather, natural disasters, hostilities, gun violence and social unrest.

The macroeconomic environment in which we operate can adversely impact our business, results of operations and prospects, including with respect to inflation, interest rates, labor and supply chain issues, as well as a potential economic recession .

The inflation rate has improved but remains elevated, which impacts our expenses and capital expenditures in several areas, including wages, construction costs and other operating expenses.

The macroeconomic environment in which we operate can adversely impact our business, results of operations and prospects, including with respect to inflation, interest rates, taxes or tariffs, labor and supply chain issues, and economic recession .

While the inflation rate has improved, the extended period of elevated inflation and overall higher costs has impacted our expenses and capital expenditures in several areas, including wages, construction costs and other operating expenses.

These inflationary impacts pressure our margin performance and increase our capital expenditures.

The rising interest rate environment has also increased the cost of our borrowings.

The combined impact of inflation and higher interest rates caused us to temporarily slow down the start of new construction on our ground-up suburban builds as future sale-leaseback transactions were delayed.

If our investment in new centers is higher than

we had planned, if the capitalization rates on our sale-leaseback transactions are higher than historical levels or if our investment takes longer to execute due to any number of reasons, we may need to outperform our operational plan to achieve our targeted return.

Additionally, consumers and businesses may reduce or postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a negative effect on the demand for our services and products.

Similarly, while interest rates have begun to decrease, the comparatively higher interest rate environment has also increased the cost of our borrowings.

The combined impact of inflation and higher interest rates caused us to temporarily slow down the start of new construction on our ground-up suburban builds.

We have restarted our ground-up builds, but the slowdown impacted the number and mix of new centers that we opened in 2024 and will impact the mix of new centers that we will open in 2025 .

Higher investment in new centers than we had originally planned, coupled with capitalization rates on our sale-leaseback transactions that are higher than historical levels or investment that takes longer to execute due to any number of reasons, requires us to outperform our operational plan to achieve our targeted return.

Global pandemics or other health crises can also adversely impact our business, results of operations, financial condition and prospects.

We experienced significant reductions in membership levels, revenue per center membership, center activity and new center growth related to the COVID-19 pandemic, including the responses of governmental authorities to community transmission of COVID-19, which required closure of our centers in March 2020 and the suspension of significant real estate development and construction projects.

Our business took time to recover from that pandemic, similar to how our new centers take several years to mature to expected performance, and the recovery varied by center.

Our business took time to recover from that pandemic, similar to how our new centers take several years to mature to expected performance, and the recovery varied by center and geography.

We cannot be certain that we will not need to close our centers, restrict operations within our centers or suspend or reduce the level of real estate or construction activities again related to another pandemic or health crisis.

Severe weather, natural disasters, shifting climate patterns, hostilities, gun violence, social unrest or terrorist activities (or expectations about them) can adversely affect our members, consumer spending and confidence levels, supply availability and costs, as well as the local operations in impacted markets, all of which could have an adverse effect on our results of operations and financial condition.

We may also be forced to temporarily close centers due to any number of unforeseen circumstances, including as a result of fire, flood, technical difficulties, shortage of employees, loss of power, a health and safety incident, social unrest, terrorist incident, natural disaster or an active shooting or other violence.

The severity and impact of center closures and center damage or destruction, and the cost to operate our centers, could increase as the climate and social environment changes, including with respect to our water usage and the cost to cool our facilities.

Severe weather, natural disasters and shifting climate patterns, including fires, hurricanes and more extreme temperatures, hostilities, gun violence including active threats, social unrest or terrorist activities (or expectations about them) can adversely affect our members, consumer spending and confidence levels, supply availability and costs, as well as the local operations in impacted markets, all of which could have an adverse effect on our results of operations and financial condition.

We may also be forced to temporarily or permanently close centers due to any number of such circumstances.

The severity and impact of center closures and center damage or destruction, and the cost to operate our centers, could increase as the climate, geopolitical and social environment changes, including with respect to our water usage in environments where water may be scarce or costly and the cost to cool our facilities in environments that experience higher temperatures.

That severity and impact could also be greater in the various geographical locations across the country where we operate multiple centers and as we expand.

Any prolonged closures may adversely affect our results of operations and financial condition and may also result in longer term reductions in revenue as a result of termination of memberships at the affected centers.

Our receipt of proceeds under any insurance we maintain with respect to some of these risks may be delayed or the proceeds may be insufficient to cover our losses fully .

Additionally, while we have been a company focused on environmental, social and governance (“ESG”) matters from our formation, as we continue to develop and execute on our ESG initiatives, we could incur additional costs or risks that adversely impact our business.

Our business could be adversely affected by competition in the competitive health, fitness and wellness industry.

We compete with numerous industry participants as detailed in “Item 1—Business—Competition” of this Annual Report.

Competitors compete with us to attract members in our markets and digitally.

Competitors also attempt to copy all or portions of our business model or services, which could erode our market share and brand recognition or impair our business and results of operations.

Certain competitors have advantages over us, including greater name recognition and/or resources, and non-profit and government organizations may be able to obtain land and construct centers at a lower cost and collect membership fees without paying taxes, thereby allowing them to charge lower prices.

Additionally, consolidation in the health, fitness and wellness industry could result in increased competition among participants.

Our dependence on third-party suppliers for equipment and certain products and services could result in disruptions to our business and could adversely affect our business, results of operations and financial condition.

Equipment and certain products and services needed for us to operate our business efficiently and to consistently meet our business requirements, including our exercise equipment and certain of our software and hardware, are sourced from third-party suppliers.

The ability of these third-party suppliers to successfully provide reliable and high-quality services is subject to economic, technical and operational uncertainties that are beyond our control.

Any disruption to our suppliers’ operations, or any inability by us to identify and enter into agreements with alternative suppliers on a timely basis and on acceptable terms, could impact our supply chain and our ability to service our centers and elevate our brand.

Equipment and certain products and services needed for us to operate our business efficiently and to consistently meet our business requirements are sourced from third-party suppliers.

The ability of these third-party suppliers to successfully provide reliable and high-quality products and services is subject to economic, technical and operational uncertainties that are beyond our control.

Transitioning to new suppliers could be time-consuming and expensive and may result in interruptions in our operations.

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Risks Relating to Our Brand

Our business depends on the quality and reputation of our brand, and any deterioration in the quality or reputation of our brand or the health, fitness and wellness industry could materially adversely affect our market share, business, results of operations and financial condition.

Our brand and our reputation are among our most important assets.

Our ability to attract and retain members and expand our business may be impacted by the external perceptions of Life Time, the quality and consistency of our centers and premium services and our corporate and management integrity.

Any operation of our centers that does not meet expectations, any adverse incidents, including any involving the potential safety of our members, guests or employees, physical or sexual abuse or other harm to a child at any of our children play areas, or any negative events or publicity regarding us, our competitors or the health, fitness and wellness industry, may damage our brand and our reputation, cause a loss of consumer confidence in Life Time and our industry and could have an adverse effect on our market share, business, results of operations and financial condition.

Our business depends on the quality and reputation of our brand, and any deterioration in the quality or reputation of our brand or in the health, fitness and wellness industry could materially adversely affect our market share, business, results of operations and financial condition.

Our brand and reputation are among our most important assets.

Our ability to attract and retain members and expand our business is impacted by the external perceptions of Life Time as a leading lifestyle and leisure brand that consistently delivers premium experiences.

Any operation of our centers or omni-channel ecosystem that does not meet expectations, any adverse incidents, including involving the safety of our members, guests or employees, physical or sexual abuse, or harm to a child at any of our children areas, or any negative events or publicity regarding us, our competitors or the health, fitness and wellness industry, may damage our brand and reputation, cause a loss of consumer confidence in Life Time and our industry and have an adverse effect on our market share, business, results of operations and financial condition.

Use of social media platforms, and email, text messaging, phone and social media marketing, may adversely impact our reputation, business, results of operations, and financial condition or subject us to fines or other penalties.

There has been a substantial increase in the use of social media platforms.

Negative commentary about us or calls for collective action against us, such as boycotts, may be posted on social media platforms or similar devices at any time to a broad audience and may harm our brand, reputation or business without affording us an opportunity for redress or correction in a timely manner or at all.

Negative commentary about us or calls for collective action against us, such as boycotts, may be posted on social media platforms or similar at any time to a broad audience, which may harm our brand, reputation or business without affording us an opportunity for redress or correction in a timely manner or at all.

Consumers value readily available information about health, fitness and wellness and often act on such information without further investigation and without regard to its accuracy.

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Accordingly, if we open any centers or otherwise operate in the areas in which these parties operate, we may be required to pay royalties or other fees or may be prevented from using the mark in such areas.

Furthermore, if any third party were to successfully seek cancellation of our federal trademark registrations, we may be prevented from using such marks throughout the United States.

Further, there is no assurance that competitors or other businesses will not infringe on our trademarks or other intellectual property rights or that we will not have disputes with third parties to enforce our intellectual property rights, protect our trademarks, determine the validity and scope of the proprietary rights of others or defend ourselves from claims of infringement, invalidity, misappropriation or unenforceability.

In the event of any such infringement or claimed infringement, the value of our brand may be harmed and we may be required to incur substantial costs and divert resources to pursue, or defend against, any claim.

Furthermore, if any third party were to successfully seek cancellation of our trademark registrations, we may be prevented from using such marks throughout the United States or internationally.

Further, there is no assurance that competitors or other businesses will not infringe on our intellectual property rights or that we will not have disputes with third parties to enforce our intellectual property rights, protect our trademarks, determine the validity and scope of the proprietary rights of others or defend ourselves from claims of infringement, invalidity, misappropriation or unenforceability.

Our risk of infringement or misappropriation may increase with the increased use of generative artificial intelligence.

In the event of any such infringement or claimed infringement or any misappropriation, the value of our brand may be harmed and we may be required to incur substantial costs and divert resources to pursue, or defend against, any claim.

Additionally, any damage to our brand or reputation could cause membership levels to decline and make it more difficult to attract new members.

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Our center profitability may decline as we open new centers.

We are executing on a strategy to grow our business by expanding the number of our centers in an asset-light manner as detailed in “Item 1—Business—Our Growth Strategies and Member Experience Initiatives” of this Annual Report.

To successfully expand our business, we must identify and acquire or lease sites that meet the site selection criteria we have established.

We may face significant competition for sites that meet our criteria, and as a result, we may lose those sites, our competitors could copy our format or we could be forced to pay significantly higher prices for those sites.

Additionally, as we grow the number of our centers in an asset-light manner, we must engage and negotiate with numerous third parties, including landlords, developers, sellers, contractors and governmental authorities.

We are executing on a strategy to grow our business in an asset-light manner as detailed in “Item 1—Business—Our Growth Strategies and Member Experience Initiatives” of this Annual Report.

One key focus area is expanding the number of our centers in an asset-light manner.

To successfully expand the number of our centers, we must identify and acquire or lease sites that meet the site selection criteria we have established.

We may face significant competition for sites that meet our criteria, and as a result, we may lose those sites or we could be forced to pay significantly higher prices for those sites.

Additionally, we must engage and negotiate with numerous third parties, including landlords, developers, sellers, contractors and governmental authorities.

Their timeline and ability to move forward may differ from ours.

If we are unable to cost-effectively identify and acquire or lease sites for new centers, our revenue growth rate, profits, cash flow and return on invested capital may be negatively impacted.

Additionally, if our analysis of the suitability of a site is incorrect or if we do not adapt to or anticipate all of the challenges relating to the expansion of our operations, including the more diverse locations, sizes and types of buildings, remodels and timelines in new markets and spaces, we may not be able to expand profitably or recover our capital investment in developing and building or remodeling the new center on the timeline or at the rate we expected.

If we are unable to cost-effectively identify and acquire or lease sites for new centers, or if our analysis of the suitability of a site is incorrect, our revenue growth rate, profits, cash flow and return on invested capital may be negatively impacted.

Additionally, if we do not adapt to or anticipate the challenges relating to expanding our operations, including more diverse locations, sizes and types of buildings, executing remodels and determining timelines in new markets and spaces, we may not be able to expand profitably at our targeted returns on invested capital and on the timeline or at the rate we expected.

Any of these results could have a negative impact on our revenue growth rate, profits, cash flow and return on invested capital.

Our focus for new centers continues to include wealthier demographic locations, including in urban and coastal markets and at ground-up suburban builds, mall or retail locations, vertical residential and urban locations.

Our focus for new centers continues to include wealthier demographic and coastal locations for ground-up suburban builds, mall or retail locations, vertical residential and urban locations.

If we are unable to leverage our brand and what we bring to these markets and locations, we may be required to pay relatively higher costs for land or lease payments.

We could also have increased construction costs and higher development costs to offer more luxurious amenities and features within the new centers.

Our construction and development costs are higher to offer more luxurious amenities and features within the new centers.

We have also experienced escalating construction costs more generally due to inflation.

Higher gross invested capital and higher occupancy costs at these centers would require increases in the value of sale-leaseback transactions or higher operating profits per center to produce our targeted rate of return.

At the same time, however, a result of opening new centers is that our center operating margins may be lower than they have been historically while the centers build membership base.

An increase in pre-opening expenses and lower revenue volumes characteristic of newly opened centers would affect our operating margins at these new centers.

Higher gross invested capital and higher occupancy costs at these centers require increases in the value of sale-leaseback transactions or higher operating profits per center to produce our targeted rate of return.

Our center operating margins may also be lower while the new centers build membership base.

An increase in pre-opening expenses and lower revenue volumes characteristic of newly opened centers affect our operating margins at these new centers.

Opening new centers in existing markets may attract some memberships away from other centers in those markets, which could lead to diminished revenue and profitability.

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Delays in new center openings could have an adverse effect on our growth.

A significant amount of time and expenditure of capital is required to develop and construct our ground-up suburban builds, mall or retail locations, vertical residential and urban locations.

Our temporary delay in the start of new ground-up suburban builds due to elevated construction costs and management of capital expenditures could result in increased costs and our competitors may be able to open new centers in the same market before we open our centers or improve centers currently open.

In addition, delays in opening these new centers could hurt our ability to meet our growth objectives and could have an adverse effect on our results of operations and financial condition.

A significant amount of time and capital expenditures is required to develop and construct or remodel our new centers.

Our temporary delay in the start of new ground-up suburban builds due to elevated construction costs, a higher interest rate environment and management of capital expenditures impacted the number and mix of new centers that we opened in 2024 and will impact the mix of new centers that we expect to open in 2025, and it could hurt our ability to meet our new center growth objectives and could have an adverse effect on our results of operations.

Our ability to open new centers on schedule and on budget or at all depends on a number of factors, many of which are beyond our control.

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• negotiating the terms of the acquisition or lease of new centers;

• securing access to and the costs of labor and materials necessary to develop and construct or remodel our centers;

• delays or cost increases due to material shortages, labor issues, design changes, weather conditions, acts of God, pandemics or epidemics, discovery of contaminants, accidents, deaths or injunctions;

• securing access to centers and the costs of labor and materials necessary to develop and construct or remodel our centers;

• delays or cost increases due to inflation, material shortages, labor issues, design changes, weather conditions, acts of God, pandemics or epidemics, discovery of contaminants, accidents, deaths or injunctions;

• recruiting, training and retaining qualified employees;

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Our growth and changes in the industry could place strains on our management, employees, information systems and internal controls, which may adversely impact our business.

Our plans for current and future expansion and development, including an increase in the number of our centers, development of existing and new businesses and memberships, expansion of our “Healthy Way of Life” ecosystem and acquisitions of other businesses, as well as changes in the industry, may place significant demands on our administrative, operational, financial, technological and other resources.

Our plans for expansion and development, including an increase in the number of our centers, development of existing and new businesses and memberships, expansion of our “Healthy Way of Life” ecosystem and acquisitions of other businesses, as well as changes in the industry, may place significant demands on our administrative, operational, financial, technological and other resources.

Any failure to manage growth and development effectively could harm our business.

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In addition, we cannot guarantee that these businesses or strategies will be successful and contribute to earnings, and any of these businesses or strategies may lose money and have an adverse effect on our business, financial condition and operating results.

We may be unable to successfully acquire or invest in suitable businesses or, if we do acquire or invest in them, that may disrupt our business, we may be unable to successfully integrate the businesses into our existing business or the acquired assets may be subject to impairment, any of which may have an adverse effect on our results of operations and financial condition.

In order to remain competitive and to expand our business, we have acquired or invested in, and expect to continue to acquire or invest in, complementary businesses and centers.

We may be unable to successfully acquire or invest in suitable businesses or, if we do acquire or invest in them, they may disrupt our existing business, we may be unable to successfully integrate the businesses into our existing business or the acquired assets may be subject to impairment, any of which may have an adverse effect on our results of operations and financial condition.

To remain competitive and expand our business, we acquire and invest in complementary businesses and centers.

We may not be able to find suitable acquisition candidates or joint venture partners in the future.

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Technology is a key component of our business model and we regard it as crucial to our success moving forward.

We increasingly use electronic and digital means to interact with our members, provide services and products to our members and collect, maintain and store individually identifiable information.

We increasingly use electronic and digital means to interact with our members, provide services and products and collect, maintain and store individually identifiable information.

We use an integrated and proprietary member management system to manage the flow of member information within each of our centers and between centers and our corporate office.

We also continue to invest in our mobile application and systems, which enable us to, among other things, enroll new members with an electronic membership agreement, streamline the collection of membership dues electronically, capture digital pictures of members for identification purposes, offer online reservations, offer live streaming classes and capture and maintain specific member information, including usage.

While we seek to offer our members best-in-class technology solutions to ensure a smooth customer experience, we operate in an environment that has undergone, and continues to experience, significant and rapid technological change, including with respect to artificial intelligence.

To remain competitive, we must continue to maintain, enhance and improve the functionality, capacity, accessibility, reliability and features of our automated member interfaces and other technology offerings.

Our growth and success will depend, in part, on our ability to continue to elevate and broaden our member experiences, including through developing our omni-channel ecosystem, licensing leading technologies, systems and use rights, enhancing our existing platforms and services and creating new platforms and services.

We also continue to invest in our mobile application and systems.

While we seek to offer our members best-in-class technology solutions, we operate in an environment of significant and rapid technological change, including with respect to artificial intelligence.

To remain competitive, we must continue to maintain, enhance and improve the functionality, capacity, accessibility, reliability and features of our mobile application, automated member interfaces and other technology offerings.

Our growth and success will depend, in part, on our ability to continue to elevate and broaden our member experiences and product and services offerings, including through developing our omni-channel ecosystem, licensing leading technologies, systems and use rights, enhancing our existing platforms and services and creating new platforms and services.

We must also respond to member demands, technological advances and emerging industry standards and practices on a cost-effective and timely basis.

The adoption of new technologies or market practices (including artificial intelligence) may require us to devote significant additional resources to improve and adapt our services.

The adoption of new technologies or market practices (including artificial intelligence) requires us to devote significant resources to improve and adapt our services.

We may also need to secure and maintain the rights to use music with our content, which can be costly depending on the method we use to provide our content and may involve many third parties and navigating complex and evolving legal issues.

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The operation, integrity and security of our systems and the security of our data and the data of our members, guests and employees is critical to us.

Despite the security measures we have in place and our continuous assessment and improvements, our systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of cyber terrorism, demands for ransom, vandalism or theft, computer viruses, misplaced or lost data, programming and/or human errors or other similar events.

Because such attacks are increasing in sophistication (including from the use of artificial intelligence) and frequently change in nature, we and our third-party service providers may be unable to anticipate these attacks or implement adequate preventative measures, and any compromise of our systems, or those of our third-party providers, may not be discovered and remediated promptly.

Despite the security measures we have in place and our continuous assessment and improvements, our systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of cyber terrorism, malicious attacks, misinformation, demands for ransom, vandalism or theft, computer viruses, misplaced or lost data, programming and/or human errors or other similar events.

Because such attacks and other events are increasing in sophistication (including from the use of artificial intelligence) and frequently change in nature, we and our third-party service providers may be unable to anticipate such events or implement adequate preventative measures, and any compromise of our systems, or those of our third-party providers, may not be discovered and remediated promptly.

Changes in consumer behavior following such an event affecting us or a third party may materially and adversely affect our business, which in turn may materially and adversely affect our reputation, results of operations and financial condition.

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Federal, state and foreign regulators and financial industry groups continue to adopt or consider new privacy and security requirements that may apply to our businesses.

Compliance with evolving and fragmenting privacy and security laws, requirements and regulations may result in cost increases due to necessary systems changes, new limitations or constraints on our business models and the development of new administrative processes.

Compliance with evolving and fragmenting privacy and security laws, requirements and regulations results in time and cost increases due to necessary systems changes, new limitations or constraints on our business models and the development of new administrative processes.

They also may impose further

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Risks Relating to Our Capital Structure and Lease Obligations

Our level of indebtedness and lease obligations, and the restrictive covenants in the documents governing such indebtedness and lease obligations, could adversely affect our financial condition and prevent us from growing our business, taking certain actions or responding to changes in the economy or our industry.

Our indebtedness and lease obligations, and the restrictive covenants in the documents governing such indebtedness and lease obligations, could adversely affect our financial condition and impact our ability to grow our business, take certain actions or respond to changes in the economy or our industry.

As of December 31, 2024, we had total consolidated indebtedness outstanding of approximately $1,556 million, as detailed in Note 8—Debt, to our consolidated financial statements included in Part II, Item 8 of this Annual Report.

For the year ended December 31, 2024, our interest expense, net of interest income was $148 million.

Our annual debt service obligation for 2024 is expected to be approximately $146.4 million for interest and $73.8 million primarily for mortgage principal payments.

Despite our level of indebtedness, we and our subsidiaries may still incur substantially more debt, including secured debt.

As of December 31, 2023, we had 165 leased properties, including 129 center leases (of which 11 are ground leases) and centers under construction.

Our annual debt service obligation for 2025 is expected to be approximately $103 million for interest and $23 million primarily for term loan and mortgage principal payments.

We and our subsidiaries may still incur substantially more debt, including secured debt.

As of December 31, 2024, we had 166 leased properties, including 122 center leases and 11 ground leases and 12 centers under construction.

For the year ended December 31, 2024, our rent expense was approximately $305 million.

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As we continue to execute on our asset-light growth strategy, including sale-leaseback transactions, we expect to lease, rather than own, the majority of our new centers in the future.

The indentures governing our secured and unsecured notes and the credit agreement governing our senior secured credit facility contain a number of covenants imposing significant restrictions on our business, including we are required to comply with a first lien net leverage ratio covenant under the revolving portion of our senior secured credit facility.

With our strategy to execute sale-leaseback transactions, we may also have an increasing number of leased locations with a small number of lessors.

As of December 31, 2024, we had 53 properties subject to 14 master leases with 13 lessors.

The credit agreement governing our senior secured credit facility and the indenture governing our secured notes contain a number of covenants imposing restrictions on our business, including we are required to comply with a first lien net leverage ratio covenant under the revolving portion of our senior secured credit facility.

These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise.

Similarly, since as a lessee we do not completely control the land and improvements underlying our operations, we may not be able to take certain actions that we desire or the lessors under our leases could take certain actions to disrupt our rights in the centers we lease.

Our ability to comply with these covenants may be affected by circumstances and events beyond our control, such as prevailing economic conditions, pandemics or epidemics and changes in regulations, and there is no assurance that we will be able to comply with such covenants.

Specifically, our level of indebtedness and lease obligations, and the restrictions imposed thereby, could have material consequences, including:

• making it more difficult for us to satisfy our obligations with respect to our indebtedness and lease obligations, and if we fail to comply with these requirements, an event of default could result;

Similarly, since as a lessee we do not completely control the land and improvements underlying our operations, we may not be able to take certain actions that we desire or the lessors could take certain actions to disrupt our rights in the centers we lease.

Our ability to comply with these covenants may be affected by circumstances and events beyond our control, such as prevailing

economic conditions, pandemics or epidemics and changes in regulations, and there is no assurance that we will be able to comply with such covenants.

Specifically, our indebtedness and lease obligations, and the restrictions imposed thereby, could have material consequences, including:

• limiting our ability to obtain or guarantee additional indebtedness or make certain investments, which could impact our ability to fund or execute on future working capital, capital expenditures, our growth strategy or other general corporate requirements or business opportunities;

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• increasing our cost of borrowing or limiting our ability to refinance indebtedness.

Additionally, a breach of any of the restrictive covenants could result in an event of default under the applicable indebtedness.

Additionally, failure to satisfy our obligations with respect to our indebtedness and lease obligations or a breach of any of the restrictive covenants could result in an event of default under the applicable indebtedness or lease.

Such a default may allow the creditors to accelerate the related indebtedness and may result in the acceleration of any other indebtedness that is subject to an applicable cross-acceleration or cross-default provision.

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Furthermore, if we were unable to repay the amounts due and payable under our secured indebtedness, those lenders or holders, as applicable, could proceed against the collateral granted to them, including our available cash, to secure that indebtedness, subject to the provisions of the applicable intercreditor agreement.

In the event our lenders or holders of our secured or unsecured notes accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

Similarly, a number of our leases, including those pursuant to the sale-leaseback transactions, may be terminated in the event of a breach and certain other circumstances.

In the event our lenders or holders of our secured notes accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

Similarly, a number of our leases, including those pursuant to sale-leaseback transactions, may be terminated in the event of a breach and certain other circumstances.

The occurrence of any one of these events could have a material adverse effect on our business, financial condition, results of operations and ability to grow our business or satisfy our obligations.

Rates under our senior secured credit facility are variable, which could result in increased debt service obligations and decreased net income and cash flows.

Rates under our senior secured credit facility are variable, which has and could result in increased debt service obligations and decreased net income and cash flows.

Borrowings under the revolving portion of our senior secured credit facility (the “Revolving Credit Facility”) and the term loan portion of our senior secured credit facility (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Credit Facilities”) are at variable rates of interest and expose us to interest rate risk.

As interest rates increase, our debt service obligations on the variable rate indebtedness increases even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, correspondingly decreases.

Assuming no prepayments of the Term Loan Facility and that the Revolving Credit Facility is fully drawn (and to the extent that SOFR is in excess of the floor rate applicable to the Term Loan Facility), each one percentage point change in interest rates would result in an approximately $7.9 million change in annual interest expense on the indebtedness under the Credit Facilities.

In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility or risk.

However, we may not maintain interest rate swaps with respect to any of our variable rate indebtedness, and any swaps we enter into may not fully or effectively mitigate our interest rate risk.

If interest rates increase, as they have in the past, our debt service obligations on the variable rate indebtedness increases even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, correspondingly decreases.

Assuming no prepayments of the Term Loan Facility and that the Revolving Credit Facility is fully drawn, each one percentage point change in interest rates would result in an approximately $16.5 million change in annual interest expense on the indebtedness under the Credit Facilities.

In the future, we may enter into interest rate swaps or hedging agreements that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility or risk.

However, we may not maintain interest rate swaps or hedge agreements with respect to any of our variable rate indebtedness, and any such transaction we enter into may not fully or effectively mitigate our interest rate risk.

Changes in market interest rates may influence our financing costs, returns on financial investments and the valuation of derivative contracts and could reduce our earnings and cash flows.

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We depend on cash flow from operations to pay our indebtedness and lease obligations.

We also need to refinance all or a portion of our indebtedness on or before maturity.

Our ability to make scheduled payments on our indebtedness and lease obligations, to refinance our debt obligations or to negotiate favorable terms on new or expiring leases depends on our financial condition and operating performance, which could be subject to prevailing economic and competitive conditions and to certain financial, business, market, legislative, regulatory, environmental and other factors beyond our control.

Our ability to make scheduled payments on our indebtedness and lease obligations, to refinance our debt obligations before maturity or to negotiate favorable terms on new or expiring leases depends on our financial condition and operating performance, and could be subject to prevailing economic and competitive conditions and to certain financial, business, market, legislative, regulatory, environmental and other factors beyond our control.

Our inability to generate sufficient cash flows to satisfy our debt and lease obligations, or to refinance our indebtedness at comparable interest rates and on commercially reasonable terms or at all, or to renew our leasehold interests on their expiration or on terms that are as favorable as the current terms, would materially and adversely affect our business, financial position and results of operations.

We could also face substantial liquidity problems and be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure our indebtedness.

We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our operating needs or our scheduled debt service obligations.

Our ability to raise capital in the future may be limited, which could impact our operations and ability to grow.

Our business requires capital to operate and grow.

We may need or choose to raise additional funds through the issuance of new equity securities, debt or a combination of both.

We have and may need or choose to raise additional funds through the issuance of new equity securities, debt or a combination of both.

Additional financing may not be available on favorable terms, or at all.

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Risks Relating to Our Human Capital

If we cannot retain our key employees, hire additional highly qualified employees and optimize our support structure, we may not be able to successfully manage our businesses, achieve our growth targets and pursue our strategic objectives.

If we cannot retain our key employees and hire additional qualified employees, we may not be able to successfully lead and run our businesses, achieve our growth targets and pursue our strategic objectives.

We may also continue to face increased labor costs that could reduce our profitability.

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Our inability to attract, retain, train and motivate qualified employees could reduce member satisfaction, harm our brand and reputation and adversely affect our operating efficiency and financial results.

We rewired the corporate and management support of our centers to operate more effectively and efficiently.

Failure to operate as planned under these structures could adversely affect our business.

Staffing shortages, including for our centers and for key corporate and technology resources, could also hinder our ability to implement our business and growth strategy.

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We are subject to extensive governmental laws and regulations, and changes in these laws and regulations could have a negative effect on our results of operations and financial condition.

Our operations are subject to various United States and foreign national, federal, state, provincial and local laws and regulations, including but not limited to the following:

• consumer protection laws related to the advertising, marketing and sale of our products and services;

Our operations and business practices are subject to various United States and foreign national, federal, state, provincial and local laws and regulations, including but not limited to the following:

• consumer protection laws related to the advertising, marketing and sale of our products and services, including laws regulating recurring services;

• statutes that regulate the sale and terms of our membership contracts;

• health or safety regulations related to various center operations, such as our Dynamic Personal Training, MIORA, LifeCafe, LifeSpa, Life Time Swim and Life Time Kids;

• health or safety regulations related to various center operations, whether operated directly or as a business associate to third parties, such as our Dynamic Personal Training, MIORA, LifeCafe, LifeSpa and medi-spa, Life Time Swim and Life Time Kids;

• regulation or licensing of ancillary health, fitness and wellness-related products and services;

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Any changes in such laws or regulations or any failure by us to comply with such laws or regulations, including by any of our team members, could have an adverse effect on our results of operations and financial condition.

We may also face increased burdens, expenses and challenges in administering our business in a climate of increasing political polarization and volatility and regulatory fragmentation.

Additionally, as we expand our business and “Healthy Way of Life” ecosystem, including potentially offering our digital membership or other services internationally, we could be exposed to new or incremental regulatory, economic and political risks in addition to those we already face in the United States and Canada.

We could be subject to claims related to the construction or operation of our facilities and the use or condition of our premises, facilities, equipment, services, activities or products, which could have a negative effect on our results of operations and financial condition.

Use of our premises, facilities, equipment, services, activities or products pose potential health or safety risks to members and guests.

Claims may be asserted against us for loss, injury or death suffered by someone (including a minor child) using our premises, facilities, equipment, services, activities or products.

We could also face claims in connection with the construction and remodel of our centers and other facilities, as well as claims related to environmental matters or remediation.

We could be subject to claims related to the development, construction or operation of our facilities and the use, condition or content of our premises, facilities, equipment, mobile application, services, activities or products, which could have a negative effect on our results of operations and financial condition.

Use of our premises, facilities, equipment, mobile application, services, activities or products poses potential health or safety risks to members, guests and customers.

Claims may be asserted against us for loss, injury or death suffered by someone (including a minor child) using our premises, facilities, equipment, mobile application, services, activities or products.

We could also face claims in connection with the development, construction and remodel of our centers and other facilities, as well as claims related to environmental matters or remediation.

While we carry insurance generally applicable to such claims, we face exposure for losses within any self-insured retention or for uninsured damages.

We could also face claims for economic or other damages by members, guests or employees, including consumer protection, wage and hour, health center contract, or other statutory or common law claims arising from our business operations.

We could also face claims for economic or other damages by members, guests, customers or employees, including consumer protection, wage and hour, health center contract, or other statutory or common law claims arising from our business operations.

Such claims may be uninsured or the proceeds of our insurance coverages for such claims may be insufficient to cover our losses fully.

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We could be subject to claims related to our health, fitness and wellness-related offerings or other claims, and the value and reputation of our brand may suffer.

We offer directly or through third parties a variety of health, fitness and wellness-related products and services, such as nutritional and weight loss products, blood screenings and other fitness assessments, anti-aging and longevity services, health and fitness content and services, chiropractic services and medi-spa services.

There is no assurance that there will be no claims against us related to these services and products, including regarding the ingredients in, manufacture of or results of using our nutritional products, our provision of other health, fitness and wellness-related services or our relationships with third parties.

Furthermore, there is no assurance that any rights we have under indemnification provisions and/or insurance policies will be

sufficient to cover any losses that might result from such claims.

We offer directly or through third parties a variety of health, fitness and wellness-related products and services, such as nutritional and weight loss products, blood screenings and other assessments, anti-aging and longevity services, health, fitness and wellness content and services, chiropractic services and medi-spa services.

There is no assurance that there will be no claims against us or such third parties related to these products and services, including regarding the ingredients in, manufacture

of or results of using our nutritional products, our provision of other health, fitness and wellness-related services or content or our relationships with third parties.

Furthermore, there is no assurance that any rights we have under indemnification provisions and/or insurance policies will be sufficient to cover any losses that might result from such claims.

Any publicity surrounding such claims may negatively impact the value of our brand.

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We may not be able to maintain the required type or level of insurance coverage on acceptable terms or at an acceptable cost.

We may not be able to maintain insurance, including general liability and property insurance, on acceptable terms or maintain a level of insurance that would provide adequate coverage against potential third-party liability, health and safety and other claims.

We may not be able to maintain insurance, including general liability and property insurance, on acceptable terms or maintain a level of insurance that would provide adequate coverage, including against potential third-party liability, health and safety issues, property loss caused by severe or frequent extreme weather or otherwise and other claims.

An increase in the number of claims against health and fitness center operators generally or against us in particular may cause the cost of insurance for the industry as a whole or us in particular to rise, and comprehensive insurance coverage may become more difficult to attain.

For example, our level of insurance has decreased and the relative cost has increased for insuring our medi-spa services as our primary insurance carrier no longer provides insurance coverage for those services.

Any gaps in insurance or any increase in the cost of insurance may have a material adverse effect on our business, results of operations and financial condition.

Adverse developments in applicable tax laws could have a material and adverse effect on our business, financial condition and results of operations.

Adverse developments in applicable tax laws or tariffs could have a material and adverse effect on our business, financial condition and results of operations.

Our effective tax rate could also change materially as a result of various evolving factors, including changes in income tax law or changes in the scope of our operations.

We are subject to taxation in the United States at the federal level and by certain states and municipalities and foreign jurisdictions because of the scope of our operations.

While our existing operations have been implemented in a manner we believe is in compliance with current prevailing laws, one or more taxing jurisdictions could seek to impose incremental or new taxes on us.

In addition, jurisdictions in which we operate are actively considering significant changes to current tax laws, including increasing the corporate income tax rate in the United States.

Any adverse developments in tax laws or regulations, including legislative changes, judicial holdings or administrative interpretations, could have a material and adverse effect on our business, financial condition and results of operations.

Changes in the scope of our operations, including expansion to new products or new geographies, could also increase the amount and type of taxes to which we are subject, and could increase our effective tax rate.

Additionally, despite the vast majority of our operations being currently operated in the United States, our operations could be subject to new or increased tariffs.

While our existing operations have been implemented in a manner we believe is in compliance with current prevailing laws, one or more taxing jurisdictions could seek to impose, and certain jurisdictions are actively considering, incremental or new taxes on us.

Any adverse developments in tax laws or regulations, including legislative changes, judicial holdings or administrative interpretations, or any new or increased tariffs that impact our operations, could have a material and adverse effect on our business, financial condition and results of operations.

Changes in the scope of our operations, including expansion to new products or new geographies, could also increase the amount and type of taxes and tariffs to which we are subject, and could increase our effective tax rate.

Risks Relating to Ownership of Our Common Stock

Our share price may change significantly, and stockholders may not be able to resell our common stock at or above the price per share paid or at all.

Our share price has and may change significantly, and stockholders may not be able to resell our common stock at or above the price per share paid or at all.

The trading price of our common stock has experienced volatility.

Stock volatility often has been unrelated or disproportionate to the operating performance of particular companies.

Additionally, how active and liquid the trading market on the NYSE for our common stock is or may become may be impacted by the fact that certain of our existing stockholders who were stockholders before the IPO, who we refer to as the “Voting Group,” collectively held as of February 26, 2024, approximately 74.7% of the voting power of our common stock.

If an active and liquid trading market does not develop or continue, stockholders may have difficulty selling any of the shares of common stock that they purchased.

Stockholders may also not be able to resell our common stock at or above the price per share paid due to a number of factors, such as those listed in other portions of this “Risk Factors” section and the following:

• results of operations that vary from the expectations of securities analysts and investors;

Additionally, how active and liquid the trading market on the NYSE for our common stock is or may become may be impacted by the fact that certain of our existing stockholders who were stockholders before the IPO, who we refer to as the “Voting Group,” collectively held as of December 31, 2024, approximately 62.7% of the voting power of our common stock.

Stockholders may have difficulty selling their shares of our common stock or may not be able to resell our common stock at or above the price per share paid due to a number of factors, such as the amount of liquidity in the market for our shares, those listed in other portions of this “Risk Factors” section and the following:

• results of operations that vary from the expectations of securities analysts and investors or from our competitors;

• if securities analysts do not publish research or reports about our business, or if they downgrade our common stock or our industry;

• results of operations that vary from those of our competitors;

• changes in expectations as to our future financial performance and growth, including financial estimates and investment recommendations by securities analysts and investors;

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These broad market and industry fluctuations may materially adversely affect the market price of our common stock, regardless of our actual operating performance.

In addition, price volatility may be greater if the public float and trading volume of our common stock remain low.

In the past, following periods of market volatility, stockholders of companies have instituted securities class action litigation.

If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

We are controlled by certain of our stockholders, whose interests may not be aligned with yours.

The Voting Group is party to an amended and restated stockholders agreement with the Company (the “Stockholders Agreement”) and collectively held approximately 74.7% of the voting power of our common stock as of February 26, 2024.

Future sales, or the perception of future sales, by us or our existing stockholders in the public market could cause the market price for our common stock to decline.

The sale of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of our common stock.

These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

As of December 31, 2024, we had a total of 207,495,152 shares of common stock outstanding and the Voting Group held approximately 62.7% of such shares.

The Voting Group includes investment funds affiliated with Leonard Green & Partners, L.P.

and its affiliates (“LGP”) and TPG Inc.

and its affiliates (“TPG”), which collectively held approximately 51.8% of the voting power of our common stock as of February 26, 2024.

and its affiliates (“TPG”), which collectively held approximately 42.5% of our common stock as of December 31, 2024.

Most of the shares of our common stock held by the Voting Group are “restricted securities” under Rule 144 of the Securities Act and subject to certain restrictions on resale.

Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144.

The Voting Group has certain registration rights under the amended and restated stockholders agreement with the Company (the “Stockholders Agreement”).

Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement.

We currently have an automatic shelf registration statement on Form S-3 filed with the SEC under which we or the Voting Group could elect to register shares of our common stock as was done in 2024.

If the Voting Group exercises its registration rights, the market price of our common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them.

These factors could also make it more difficult for us to raise additional funds through future offerings of our common stock or other securities.

In addition, our shares of common stock subject to outstanding awards or reserved for future issuance under our 2021 Incentive Award Plan and our 2021 Employee Stock Purchase Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to any vesting agreements.

We may also issue our securities in connection with investments or acquisitions.

The amount of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding common stock.

Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to our stockholders and the securities issued may have rights that are senior to our common stock.

We are controlled by certain of our stockholders, whose interests may not be aligned with yours.

Pursuant to the terms of the Stockholders Agreement, certain members of the Voting Group are entitled to designate individuals to be included in the slate of nominees recommended by our board of directors for election to our board of directors, subject to certain stock ownership thresholds set forth in the Stockholders Agreement, and the members of the Voting Group have agreed to vote their shares of our common stock in favor of the election of such nominees.

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Accordingly, stockholders may not have the same protections afforded to stockholders of other companies that are subject to all of the corporate governance requirements of the NYSE.

Future sales, or the perception of future sales, by us or our existing stockholders in the public market could cause the market price for our common stock to decline.

The sale of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of our common stock.

These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

As of February 26, 2024, we had a total of 196,705,443 shares of common stock outstanding and the Voting Group held 146,864,926 shares, or approximately 74.7%, of our common stock.

The shares of our common stock held by the Voting Group are “restricted securities” under Rule 144 of the Securities Act and subject to certain restrictions on resale.

Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144.

The Voting Group has certain registration rights under the Stockholders Agreement.

Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement.

These factors could also make it more difficult for us to raise additional funds through future offerings of our common stock or other securities.

We may also issue our securities in connection with investments or acquisitions.

The amount of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding common stock.

Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

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federal income tax on gain realized on a sale or other taxable disposition of our common stock if such Non-U.S.

Holder has owned, actually or constructively, more than 5% of our common stock at any time

during the shorter of the five-year period ending on the date of the sale or other taxable disposition or the Non-U.S.

Holder has owned, actually or constructively, more than 5% of our common stock at any time during the shorter of the five-year period ending on the date of the sale or other taxable disposition or the Non-U.S.

Holder’s holding period in such stock.

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 1A. Risk Factors