What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-08 · 164 added, 69 removed, 232 unchanged (50% of the section changed)

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Business and Strategy

Life Time, the “Healthy Way of Life Co mpany,” is a premier lifestyle and leisure brand offering premium health, fitness and wellness experiences to a communit y of more than 1.5 million individual members, who together comprise more than 879,000 memberships, as of March 31, 2025.

Life Time, the “Healthy Way of Life Co mpany,” is a premier lifestyle and leisure brand offering premium health, fitness and wellness experiences to a communit y of more than 1.6 million individual members, who together comprise more than 898,000 memberships, as of June 30, 2025.

We are a leading innovator in the industry having successfully created a leisure model that incorporates the country club wellness lifestyle within a fitness and active living community.

We have earned the trust of our members for over 30 years to make their lives healthier and happier by offering them the best places, programs and performers.

We have earned the trust of our members for over 30 years to make their lives healthier and happier by offering them the best places, progra ms and performers.

We deliver high-quality experiences through our omni-channel physical and digital ecosystem that includes 184 centers—distinctive, resort-like athletic country club destinations—across 31 states in the United States and one province in Canada.

Our continuous commitment to members has resulted in strong brand loyalty and fueled our strong, long-term financial performance.

Our luxurious athletic country clubs total over 17 million of indoor square feet and approximately seven million of outdoor square feet in the aggregate.

Our luxurious athletic country clubs total nearly 18 million of indoor square feet and over seven million of outdoor square feet in the aggregate.

Our centers are located in affluent suburban and urban locations.

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The value our members place on our community is reflected in the continued strength and growth of our average revenue per center membership, center usage and the visits to our athletic country clubs.

Our average revenue per center membership increased to $844 for the three months ended March 31, 2025 as compared to $745 for the three months ended March 31, 2024.

Total visits to our clubs were over 30 million for the three months ended March 31, 2025 as compared to 28 million for the three months ended March 31, 2024, and average visits per membership to our centers remained strong at 38 for the three months ended March 31, 2025.

Our average revenue per center membership increased to $1,733 for the six months ended June 30, 2025 as compared to $1,541 for the six months ended June 30, 2024.

Total visits to our clubs were over 62 million for the six months ended June 30, 2025 as compared to 57 million for the six months ended June 30, 2024, and average visits per membership to our centers remained strong at 76 for the six months ended June 30, 2025.

We believe that no other company in the United States delivers the same quality and breadth of health, fitness and wellness experiences that we deliver, which has enabled us to consistently grow our annual membership dues and in-center revenue.

Our total Center revenue increased to $685.7 million for the three months ended March 31, 2025 as compared to $580.5 million for the three months ended March 31, 2024.

Our total Center revenue increased to $1,421.5 million for the six months ended June 30, 2025 as compared to $1,225.5 million for the six months ended June 30, 2024.

We believe it will continue to grow as we open new centers in desirable locations across the country, new members join at higher membership dues rates, our new centers ramp to expected performance, we benefit from capital expenditures already invested in our centers under construction and we continue to execute on our strategic initiatives discussed below.

Our new centers on average have taken three to four years to ramp to expected performance.

As of March 31, 2025, we had 28 centers open for less than three years and 13 new centers under construction, with significant growth capital expenditures already invested into these new centers that have yet to open.

We are expanding the number of our centers using an asset-light model that targets increasingly affluent markets with higher income members, higher average revenue per center membership and higher returns on invested capital.

As of June 30, 2025, we had 32 centers open for less than three years and 16 new centers under construction, with significant growth capital expenditures already invested into these new centers that have yet to open.

We are expanding the number of our centers using an asset-light model that targets affluent markets with higher income members, higher average revenue per center membership and higher returns on invested capital.

As we open these new centers in more affluent markets, our average revenue per center membership should naturally increase.

We believe we have significant opportunities to continue expanding our portfolio of premium centers in an asset-light manner and we are targeting 10 to 12 new locations on average per year.

We believe we have significant opportunities to continue expanding our portfolio of premium centers in an asset-light manner.

We are targeting 10 to 12 new locations on average per year but we are targeting 12 to 14 new club openings in 2026, which will be predominantly large ground up construction builds.

We believe these combined dynamics create a strong tailwind for the continued growth of our total Center revenue.

We also continue to execute on several strategic initiatives that are driving revenue, engagement and memberships as we continue to elevate and broaden our member experiences and allow our members to integrate health, fitness and wellness into their lives with greater ease and frequency.

We also continue to execute on several strategic initiatives that are driving revenue, engagement, memberships and expansion as we elevate and broaden our member experiences and allow members and non-members to integrate health, fitness and wellness into their lives with greater ease and frequency.

These strategic initiatives include pickleball, Dynamic Personal Training, Dynamic Stretch, small group training such as Alpha, GTX and Ultra Fit, and our ARORA community focused on members aged 55 years and older, where we have experienced a significant increase in our unique participants or total sessions.

We launched a pilot location for our MIORA performance and longevity health offering in 2024 and we have now opened our second location with plans to expand these offerings to additional locations in 2025 and beyond.

We have also been executing on enhanced offerings within our LifeCafe, LifeShop, LifeSpa and e-commerce, including our newly branded LTH nutritional products.

Additionally, our digital platform is delivering a true omni-channel experience through our integrated digital app that is now available at no cost, including live streaming fitness classes, remote goal-based personal training, nutrition and weight loss support and curated award-winning health, fitness and wellness content.

In addition, our LifeShop digital health store offers a wide variety of equipment, wearables, apparel, beauty products and nutritional supplements.

We are continuing to invest in our digital capabilities, including artificial intelligence, to strengthen our relationships with our members, reach more people

looking for a Healthy Way of Life and more comprehensively address their health, fitness and wellness needs so that they can engage and connect with Life Time at any time or place.

We have also been executing on enhanced offerings to accelerate growth beyond our club locations.

We are selling our LTH nutritional products more broadly on e-commerce platforms including Amazon.

Additionally, our digital platform is delivering a true omni-channel experience through our integrated digital app that is available to members and non-members at no cost, including live streaming fitness classes, remote goal-based personal training, nutrition and weight loss support and curated award-winning health, fitness and wellness content.

We are continuing to invest in our digital capabilities, including artificial intelligence such as L.AI.C our first generative, artificial intelligence driven healthy way of life personal companion with personalized content and recommendations, to strengthen our relationships with our members, reach more people looking for a Healthy Way of Life and more comprehensively address their health, fitness and wellness needs so that they can engage and connect with Life Time at any time or place.

We also continue to expand our “Healthy Way of Life” ecosystem in response to the desire of our members to holistically integrate health and wellness into every aspect of their daily lives.

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Additionally, our Life Time Living locations, which are also an asset-light model, offer luxury wellness-oriented residences, also in close proximity to our athletic country clubs.

As of March 31, 2025, we had 15 Life Time Work and four Life Time Living locations open and operating.

Our Life Time Living offering is generating interest from new property developers and presenting opportunities for new center development and deal terms that were not previously available to us.

As of June 30, 2025, we had 15 Life Time Work and four Life Time Living locations open and operating.

Our Life Time Living offering is generating interest from new property developers and presenting opportunities for new center

development and deal terms that were not previously available to us.

Our omni-channel platform continues to grow as we expand our footprint with new centers and nearby work and living spaces, as well as strengthen our digital capabilities.

We continue to monitor the macroeconomic environment and its impact on our business, including with respect to tariffs, inflation, interest rates and labor, as well as a potential economic recession .

There continues to be significant macroeconomic uncertainty in many markets around the world, including as a result of international trade policy and new or elevated tariffs, which have increased certain of our expenses and capital expenditures, but have not had a material impact on our business.

Macroeconomy and Policy Environment

We continue to monitor the macroeconomic and policy environment and its impact on our business, including with respect to tariffs, inflation, interest rates, taxes and labor, as well as a potential economic recession and general economic conditions .

There continues to be macroeconomic uncertainty in many markets around the world, including as a result of international unrest and trade policy, and new or elevated tariffs, which have increased certain of our expenses and capital expenditures, but have not had a material impact on our business.

We continue to analyze the potential impact of these events and any resulting downstream impacts, including higher inflation.

Despite these headwinds, we have experienced growth in our revenue and expanded our operating margins.

We will continue to monitor the macroeconomic environment and while any future uncertainty or volatility, a decline in the U.S.

We will continue to monitor the macroeconomic and policy environment and while any future uncertainty or volatility, a decline in the U.S.

or global economy, or the public perception that any of these events may occur, could adversely affect our business and results of operations, we believe that our business is resilient and has performed well historically during different economic cycles including during a recession.

The United States Congress passed budget reconciliation bill H.R.

1, referred to as the One Big Beautiful Bill Act (“the OBBB Act”), into law on July 4, 2025.

The OBBB Act provides for, among other things, the reinstatement of full expensing for qualified business property acquired and placed in service after January 19, 2025, immediate expensing of domestic research and experimental expenditures and modification of the limitation on the business interest deduction.

The OBBB Act has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The income tax effects of the OBBB Act will be recognized for the periods ending on or after July 4, 2025.

We are currently assessing the impact of the OBBB Act on our condensed consolidated financial statements.

Non-GAAP Financial Measures

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We define free cash flow as net cash provided by operating activities less capital expenditures, net of construction reimbursements, plus net proceeds from sale-leaseback transactions and land sales.

We believe free cash flow assists investors and analysts in evaluating our liquidity and cash flows, including our ability to make principal payments on our indebtedness and to fund our capital expenditures and working capital requirements.

We believe free cash flow assists investors and analysts in evaluating our liquidity and cash flows, including our ability to make principal payments on our indebtedness

and to fund our capital expenditures and working capital requirements.

Our management considers free cash flow to be a key indicator of our liquidity and we present this metric to our board of directors.

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These are not measurements of our financial performance under GAAP and should not be considered as alternatives to any other performance measures derived in accordance with GAAP.

Set forth below are certain GAAP and non-GAAP measurements and key performance indicators for the three months ended March 31, 2025 and 2024.

Set forth below are certain GAAP and non-GAAP measurements and key performance indicators for the three and six months ended June 30, 2025 and 2024.

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

($ in thousands, except for Average Center revenue per center membership data)

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Average Center revenue per center membership (1)

$ 888 $ 794 $ 1,733 $ 1,541

Comparable center revenue (2)

11.2% 12.0% 12.0% 11.6%

Net new center openings (3)

Total centers (end of period) (3)

184 175 184 175

Total center square footage (end of period) (4)

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Net income margin (5)

9.5 % 7.9 % 10.1 % 6.1 %

Adjusted net income (6)

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Adjusted net income margin (6)

11.1 % 7.9 % 11.7 % 6.6 %

Adjusted EBITDA (7)

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

During the three months ended March 31, 2025, we opened one center.

During the three months ended June 30, 2025, we opened four centers.

(4) Total center square footage (end of period) reflects the aggregate square footage excluding areas used for tennis courts, outdoor swimming pools, outdoor play areas and stand-alone Work, Sport and Swim locations.

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The following table provides a reconciliation of net income and income per common share, the most directly comparable GAAP measures, to Adjusted net income and Adjusted net income per common share:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

($ in thousands) 2025 2024 2025 2024

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Share-based compensation expense (a)

Capital transaction costs (b)

16,380 11,071 28,288 18,698

Loss (gain) on sale-leaseback transactions (b)

12,496 (7,558) 12,496 (7,522)

Capital transaction costs (c)

611 — 1,531 —

Employee retention credits (d)

(12,873) — (12,873) —

17 (3,974) 203 (3,796)

(4,589) 96 (5,515) (1,726)

Adjusted net income $ 84,144 $ 52,440 $ 172,374 $ 83,376

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Diluted 225,511 206,044 224,585 204,851

(a) Shar e-based compensation expense recognized during the three months ended March 31, 2025 was associated with stock options, restricted stock units, performance stock units, our employee stock purchase plan (“ESPP”) and liability-classified awards related to our 2025 short-term incentive plan.

Shar e-based compensation expense recognized during the three months ended March 31, 2024 was associated with stock options, restricted stock units, performance stock units, our ESPP and liability-classified awards related to our 2024 short-term incentive plan.

(b) Represents one-time costs related to capital transactions, including debt and equity offerings that are non-recurring in nature.

(c) Includes (i) legal-related expenses in pursuit of our claim against Zurich of $0.1 million and $0.2 million for the three months ended March 31, 2025 and 2024, respectively, and (ii) other immaterial transactions that are unusual or non-recurring in nature of $0.1 million for the three months ended March 31, 2025.

(d) Represents the estimated tax effect of the total adjustments made to arrive at Adjusted net income using the effective income tax rates for the respective periods.

(a) Shar e-based compensation expense recognized during the three and six months ended June 30, 2025 was associated with stock options, restricted stock units, performance stock units, our employee stock purchase plan (“ESPP”) and liability-classified awards related to our 2025 short-term incentive plan.

Shar e-based compensation expense recognized during the three and six months ended June 30, 2024 was associated with stock options, restricted stock units, performance stock units, our ESPP and liability-classified awards related to our 2024 short-term incentive plan.

(b) We adjust for the impact of gains and losses on the sale-leaseback of our properties as they do not reflect costs associated with our ongoing operations.

For details on the loss on the sale-leaseback transaction that we recognized during the three and six months ended June 30, 2025, see Note 8 , Leases, to our condensed consolidated financial statements in this report.

(c) Represents one-time costs related to capital transactions, including debt and equity offerings that are non-recurring in nature.

(d) Represents refundable payroll tax credits for employee retention under the CARES Act.

(e) Includes (i) legal-related expenses in pursuit of our claim against Zurich of $0.3 million for the three months ended June 30, 2024 and $0.1 million and $0.5 million for the six months ended June 30, 2025 and 2024, respectively, (ii) gain on sales of land of $4.3 million for the three and six months ended June 30, 2024 and (iii) other immaterial transactions that are unusual or non-recurring in nature of $0.1 million for the six months ended June 30, 2025.

(f) Represents the estimated tax effect of the total adjustments made to arrive at Adjusted net income using the effective income tax rates for the respective periods.

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

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

($ in thousands) 2025 2024 2025 2024

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Share-based compensation expense (a)

Capital transaction costs (b)

16,380 11,071 28,288 18,698

Loss (gain) on sale-leaseback transactions (b)

12,496 (7,558) 12,496 (7,522)

Capital transaction costs (c)

611 — 1,531 —

Employee retention credits (d)

(12,873) — (12,873) —

17 (3,974) 203 (3,796)

Adjusted EBITDA $ 210,978 $ 173,545 $ 402,565 $ 319,523

(a) - (c) See the corresponding footnotes to the table in footnote 6 immediately above.

(a) - (e) See the corresponding footnotes to the table in footnote 6 immediately above.

(8) Represents non-capital expenditures associated with opening new centers that are incurred prior to the commencement of a new center opening.

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The following table provides a reconciliation from net cash provided by operating activities to free cash flow:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

($ in thousands) 2025 2024 2025 2024

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Capital expenditures, net of construction reimbursements (222,004) (144,306) (364,486) (301,107)

Proceeds from sale-leaseback transactions 138,771 142,671 138,771 142,671

Proceeds from land sales — 6,328 — 6,328

Free cash flow $ 112,465 $ 175,116 $ 153,839 $ 108,722

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The impact of these increases is dependent upon the timing of our centers under development and the center openings, the timing of sale-leaseback transactions and terms of the leases for the new centers or sale-leaseback transactions.

Macroeconomic Trends

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

See “—Overview—Macroeconomy” for additional information.

Macroeconomic and Policy Trends

We have been monitoring the macroeconomic and policy environment and its impact on our business, including with respect to tariffs, inflation, interest rates, taxes and labor, as well as a potential economic recession and general economic conditions .

See “—Overview—Macroeconomy and Policy Environment” for additional information.

Critical Accounting Policies and Estimates

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Results of Operations

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

The following table sets forth our condensed consolidated statements of operations data (amounts in thousands) and data as a percentage of total revenue for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Three Months Ended June 30,

As a Percentage of Total Revenue

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Interest expense, net of interest income (21,784) (37,669) (2.9) % (5.6) %

Equity in (loss) earnings of affiliates (16) 177 — % — %

Equity in earnings (loss) of affiliates 37 (464) — % (0.1) %

Other income 12,873 — 1.7 % — %

Total other expense (8,874) (38,133) (1.2) % (5.7) %

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Total revenue.

The $109.3 million increase in Total revenue for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was due to continued strong growth in membership dues and in-center revenue, including higher average dues as a result of pricing actions already completed and higher rack rates at newer centers, membership growth in our new and ramping centers and higher member utilization of our in-center offerings.

With respect to the $105.2 million increase in Center revenue for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024:

• 72.5% was from membership dues and enrollment fees, which increased $76.2 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

This increase reflects the improvement in our Center memberships, which increased to 826,374 as of March 31, 2025 from 802,010 as of March 31, 2024, as well as higher average monthly dues per Center membership during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 ;

• 27.5% was from in-center revenue, which increased $28.9 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 .

This increase was recognized across all of our primary in-center businesses and reflects the higher utilization of our offerings by our members, particularly Dynamic Personal Training, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 .

T he $4.2 million increase in Other revenue for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily driven by the improved performance of our media and events business and Life Time Work locations.

The $93.7 million increase in Total revenue for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was due to continued strong growth in membership dues and in-center revenue, including higher average dues as a result of pricing actions already completed and higher rack rates at newer centers, membership growth in our new and ramping centers and higher member utilization of our in-center offerings, particularly in Dynamic Personal Training.

With respect to the $90.9 million increase in Center revenue for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024:

• 71.1% was from membership dues and enrollment fees, which increased $64.6 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

This increase reflects the improvement in our Center memberships, which increased to 849,643 as of June 30, 2025 from 832,636 as of June 30, 2024, as well as higher average monthly dues per Center membership during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 ;

• 28.9% was from in-center revenue, which increased $26.3 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 .

This increase was recognized across all of our primary in-center businesses and reflects the higher utilization of our offerings by our members, particularly Dynamic Personal Training, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 .

T he $2.9 million increase in Other revenue for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily driven by the improved performance of our media and events business and Life Time Work locations.

Center operations expenses .

Th e $49.1 million increase in Center operations expenses for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily due to operating costs related to our new and ramping centers as well as costs to support growth in memberships and in-center business revenue.

Th e $48.4 million increase in Center operations expenses for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily due to operating costs related to our new and ramping centers, additional center operating expenses related to increased club utilization in our mature centers, as well as costs to support in-center business revenue growth.

Rent expense .

The $8.9 million increase in Rent expense for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily driven by the timing of sale-leaseback transactions during the prior year, the timing of taking possession of other leased properties, as well as the recognition of a higher level of contingent rent expense, which is generally determined based on a percentage of center-specific revenue and/or other center-specific financial metrics over contractually specified levels.

The $8.2 million increase in Rent expense for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily driven by sale-leaseback transactions, taking possession of other leased properties, as well as the recognition of a higher level of contingent rent expense, which is generally determined based on a percentage of center-specific revenue and/or other center-specific financial metrics over contractually specified levels.

General, administrative and marketing expenses.

The $9.0 million increase in General, administrative and marketing expenses for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily due to the timing of share-based compensatio n and benefit-related expen s es, increases in center support overhead to enhance and broaden our member services and experiences, information technology costs and costs attributable to the secondary offering of common stock completed in February 2025.

The $8.4 million increase in General, administrative and marketing expenses for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily due to the timing of share-based compensatio n and benefit-related expen s es, increases in center support overhead to enhance and broaden our member services and experiences, information technology costs and costs attributable to the secondary offering of common stock completed in June 2025.

Depreciation and amortization expenses .

The $5.0 million increase in Depreciation and amortization expenses for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily due to new center openings.

The $3.3 million increase in Depreciation and amortization expenses for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily due to new center openings.

Other operating expense .

The $1.7 million increase in Other operating expense for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily due to increased costs to support Other revenue growth.

The $21.7 million increase in Other operating expense for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily due to a $12.5 million net loss on a sale-leaseback transaction during the three months ended June 30, 2025 as compared to a $7.6 million net gain on sale-leaseback transactions and a $4.3 million gain on the sale of land during the three months ended June 30, 2024 .

Interest expense, net of interest income .

The $12.3 million decrease in Interest expense, net of interest income for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily driven by lower average levels of outstanding borrowings and a slightly lower interest rate during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

The $15.9 million decrease in Interest expense, net of interest income for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily driven by lower average levels of outstanding borrowings and a lower interest rate largely as a result of the interest rate swaps entered into in April 2025.

Other income .

The $12.9 million increase in Other income for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was related to net cash proceeds received in connection with employee retention credits under the CARES Act to provide certain relief as a result of the COVID-19 pandemic.

Provision for income taxes .

The $3.5 million decrease in provision for income taxes for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily driven by the excess tax deduction associated with stock option exercises, partially offset by an increase in earnings before taxes.

The $13.7 million increase in provision for income taxes for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily driven by an increase in earnings before taxes and a change in the valuation allowance in the prior year associated with certain of our deferred tax assets, partially offset by the excess tax deduction associated with share-based compensation.

The effective tax rate was 27.6% and 20.7% for those same periods, respectively.

The effective tax rate applied to our pre-tax income for the three months ended March 31, 2025 is lower than our statutory rate of 21% and is primarily due to the excess tax deduction associated with stock option exercises, partially offset by the state income tax provisions and deductibility limitations associated with executive compensation.

As a result of the factors described above, net income was $76.1 million for the three months ended March 31, 2025 as compared to $24.9 million for the three months ended March 31, 2024.

The effective tax rate applied to our pre-tax income for the three months ended June 30, 2025 is higher than our statutory rate of 21% and is primarily due to the state income tax provisions and deductibility limitations associated with executive compensation, partially offset by the excess tax deduction associated with share-based compensation.

As a result of the factors described above, net income was $72.1 million for the three months ended June 30, 2025 as compared to $52.8 million for the three months ended June 30, 2024.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

The following table sets forth our condensed consolidated statements of operations data (amounts in thousands) and data as a percentage of total revenue for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

As a Percentage of Total Revenue

2025 2024 2025 2024

Center revenue $ 1,421,519 $ 1,225,492 96.9 % 96.9 %

Other revenue 45,991 38,986 3.1 % 3.1 %

Total revenue 1,467,510 1,264,478 100.0 % 100.0 %

Operating expenses:

Center operations 774,912 677,410 52.8 % 53.6 %

Rent 164,355 147,229 11.2 % 11.6 %

General, administrative and marketing 119,521 102,099 8.1 % 8.1 %

Depreciation and amortization 143,907 135,617 9.8 % 10.7 %

Other operating expense 48,696 25,310 3.3 % 2.0 %

Total operating expenses 1,251,391 1,087,665 85.2 % 86.0 %

Income from operations 216,119 176,813 14.8 % 14.0 %

Other (expense) income:

Interest expense, net of interest income (46,891) (75,072) (3.2) % (6.0) %

Equity in earnings (loss) of affiliates 21 (287) — % — %

Other income 12,873 — 0.9 % — %

Total other expense (33,997) (75,359) (2.3) % (6.0) %

Income before income taxes 182,122 101,454 12.5 % 8.0 %

Provision for income taxes 33,878 23,732 2.3 % 1.9 %

Net income $ 148,244 $ 77,722 10.2 % 6.1 %

Total revenue.

The $203.0 million increase in Total revenue for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was due to continued strong growth in membership dues and in-center revenue, including higher average dues as a result of pricing actions already completed and higher rack rates at newer centers, membership growth in our new and ramping centers and higher member utilization of our in-center offerings , particularly in Dynamic Personal Training .

With respect to the $196.0 million increase in Center revenue for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024:

• 71.9% was from membership dues and enrollment fees, which increased $140.8 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

This increase reflects the improvement in our Center memberships, which increased to 849,643 as of June 30, 2025 from 832,636 as of June 30, 2024, as well as higher average monthly dues per Center membership during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024;

• 28.1% was from in-center revenue, which increased $55.2 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

This increase was recognized across all of our primary in-center businesses and reflects the higher utilization of our offerings by our members, particularly Dynamic Personal Training, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

The $7.0 million increase in Other revenue for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily driven by the improved performance of our media and events business and Life Time Work locations.

Center operations expenses .

The $97.5 million increase in Center operations expenses for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily due to operating costs related to our new and ramping centers, additional center operating expenses related to increased club utilization in our mature centers, as well as costs to support in-center business revenue growth.

Rent expense .

The $17.1 million increase in Rent expense for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily driven by sale-leaseback transactions, taking possession of other leased properties, as well as the recognition of a higher level of contingent rent expense, which is generally determined based on a percentage of center-specific revenue and/or other center-specific financial metrics over contractually specified levels, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

General, administrative and marketing expenses.

General, administrative and marketing expenses increased $17.4 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to the timing of share-based compensation and benefit-related expenses, increases in center support overhead to enhance and broaden our member services and experiences, information technology costs and costs attributable to the secondary offerings of common stock completed in February and June 2025.

Depreciation and amortization .

Depreciation and amortization increased $8.3 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to new center openings.

Other operating expense .

Other operating expense increased $23.4 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to a $12.5 million net loss on a sale-leaseback transaction during the six months ended June 30, 2025 as compared to a $7.5 million net gain on sale-leaseback transactions and a $4.3 million gain on the sale of land during the six months ended June 30, 2024.

Interest expense, net of interest income .

The $28.2 million decrease in Interest expense, net of interest income for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was driven by lower average levels of outstanding borrowings and a lower interest rate largely as a result of the interest rate swaps entered into in April 2025.

Other income .

The $12.9 million increase in Other income for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was related to net cash proceeds received in connection with employee retention credits under the CARES Act to provide certain relief as a result of the COVID-19 pandemic.

Provision for income taxes .

The $10.1 million increase in provision for income taxes for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily driven by an increase in earnings before taxes and a change in the valuation allowance in the prior year associated with certain of our deferred tax assets, partially offset by the excess tax deduction associated with share-based compensation.

The effective tax rate was 18.6% and 23.4% for those same periods, respectively.

The effective tax rate applied to our pre-tax income for the six months ended June 30, 2025 is lower than our statutory rate of 21% and reflects a decrease due to the excess tax deduction associated with share-based compensation, partially offset by the state income tax provisions and deductibility limitations associated with executive compensation.

As a result of the factors described above, net income was $148.2 million and $77.7 million for the six months ended June 30, 2025 and 2024, respectively.

Liquidity and Capital Resources

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We have primarily satisfied our historical liquidity needs with cash flow from operations, drawing on the Revolving Credit Facility, construction reimbursements and through sale-leaseback transactions.

Additionally, we benefit from our in-house architecture, design and construction expertise that allows us to create operationally efficient centers and control the pace of capital expenditures, including in determining when to begin construction on a new athletic country club.

Additionally, we benefit from our in-house architecture and design expertise that allows us to design operationally efficient centers and control the pace of capital expenditures, including in determining when to begin construction on a new athletic country club.

As the opportunity arises or as our business needs require, we may seek to raise capital through additional debt or equity financing.

There can be no assurance that any such financing would be available on commercially acceptable terms, or at all.

Volatility in these markets, particularly in light of the higher interest rate environment, may increase costs associated with issuing debt instruments or affect our ability to access those markets, which could have an adverse impact on our ability to raise additional capital, to refinance existing debt and/or to react to changing economic and business conditions.

Volatility in these markets may increase costs associated with issuing debt instruments or affect our ability to access those

markets, which could have an adverse impact on our ability to raise additional capital, to refinance existing debt and/or to react to changing economic and business conditions.

In addition, it is possible that our ability to access the credit and capital markets could be limited at a time when we would like or need to do so.

As of March 31, 2025, there were no outstanding borrowings under our Revolving Credit Facility and there were $30.8 million of outstanding letters of credit, resulting in total availability under our $650.0 million Revolving Credit Facility of $619.2

Total cash and cash equivalents at March 31, 2025 was $59.0 million , resulting in total cash and availability under our Revolving Credit Facility of $678.2 million .

As of June 30, 2025, there were no outstanding borrowings under our Revolving Credit Facility and there were $31.5 million of outstanding letters of credit, resulting in total availability under our $650.0 million Revolving Credit Facility of $618.5 million.

Total cash and cash equivalents at June 30, 2025 was $175.5 million , resulting in total cash and availability under our Revolving Credit Facility of $794.0 million .

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

Three Months Ended

Six Months Ended

Net cash provided by operating activities $ 379,554 $ 260,830

Net cash used in investing activities (230,651) (154,281)

Net cash provided by financing activities 7,380 74,975

Net cash provided by (used in) financing activities 19,291 (87,102)

Effect of exchange rates on cash and cash equivalents and restricted cash and cash equivalents 177 (55)

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Operating Activities

The $93.4 million increase in net cash provided by operating activities for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily the result of increased business performance and profitability and timing of cash interest payments.

The $118.7 million increase in net cash provided by operating activities for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily the result of increased business performance and profitability and timing of cash interest payments.

Investing Activities

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We fund the purchase of our property, centers and equipment through operating cash flows, proceeds from sale-leaseback transactions, construction reimbursements and draws on our Revolving Credit Facility.

The $16.9 million decrease in net cash used in investing activities for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily driven by a $14.3 million decrease in capital expenditures.

The $76.4 million increase in net cash used in investing activities for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily driven by a $63.4 million increase in capital expenditures.

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Growth capital expenditures (1)

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(3) Consist of modernization of existing centers and technology.

The decrease in total capital expenditures for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily driven by the timing and type of new center construction activity and maintenance expenditures, slightly offset by higher modernization and technology expenditures during the three months ended March 31, 2025 for center remodels, fitness floor reconfigurations and digital and artificial intelligence initiatives.

The increase in total capital expenditures for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily driven by the increase in new center construction activity, the acquisition of existing health club and racquet facilities and the timing of maintenance expenditures.

Financing Activities

The $67.6 million decrease in net cash provided by financing activities for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily driven by higher net repayments under our Revolving Credit Facility, offset by lower payments of mortgage notes and higher proceeds from stock option exercises.

The $106.4 million increase in net cash provided by financing activities for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily driven by lower repayments of debts, higher proceeds from stock option exercises and lower net repayments under our Revolving Credit Facility.

We believe we will generate adequate amounts of cash to meet our requirements and plans for cash in the short-term and long-term and expect to satisfy our short-term and long-term obligations through a combination of cash on hand, funds generated from operations, sale-leaseback transactions, the borrowing capacity available under our Revolving Credit Facility and additional debt and equity financing as needed.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis