What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-04 compared with 2025-08-05 · 104 added, 101 removed, 295 unchanged (41% 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 1.6 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.

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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 nearly 18 million of indoor square feet and over seven million of outdoor square feet in the aggregate.

Our luxurious athletic country clubs total over 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 $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.

Our average revenue per center membership increased to $2,638 for the nine months ended September 30, 2025 as compared to $2,361 for the nine months ended September 30, 2024.

Total visits to our clubs were over 93 million for the nine months ended September 30, 2025 as compared to 87 million for the nine months ended September 30, 2024, and average visits per membership to our centers remained strong at 113 for the nine months ended September 30, 2025.

Our membership mix is notably shifting with couples and family comprising an increasingly larger portions of total memberships.

These memberships have historically been more engaged with higher retention and higher average monthly dues.

With these membership dynamics and our premium, high-use model, our newer clubs are typically reaching their desired utilization and revenue with fewer memberships and in certain centers we are limiting qualified memberships, which have significantly lower average membership dues.

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 $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 total Center revenue increased to $2,182.4 million for the nine months ended September 30, 2025 as compared to $1,900.3 million for the nine months ended September 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 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 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.

As of September 30, 2025, we had 30 centers open for less than three years and 17 new centers under construction.

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.

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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, 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 to accelerate growth beyond our club locations.

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

We are now targeting 12 to 14 new locations on average per year starting in 2026 and we are planning to deliver at the high end of that range in 2026 and 2027.

We also expect a larger percentage of our new centers will be large format ground up construction builds as compared to 2024 and 2025.

We also continue to execute several strategic initiatives that are driving revenue, engagement, membership optimization 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, Ultra Fit and MB360, 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, and most recently LT Games, a unique hybrid-athletic competition.

Our MIORA performance and longevity health offering is performing to our expectations in our first two locations, and we plan to expand these offerings to additional locations in 2025 and beyond.

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

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

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.

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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.

In 2018, we launched Life Time Work, an asset-light branded co-working model that offers premium work spaces in close proximity to our athletic country clubs and integrates ergonomic furnishings and promotes a healthy working environment.

In 2018, we launched Life Time Work, an asset-light branded

co-working model that offers premium work spaces in close proximity to our athletic country clubs and integrates ergonomic furnishings and promotes a healthy working environment.

Life Time Work members also have the ability to receive access to all of our resort-like athletic country club destinations across the United States and Canada.

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 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.

We have also begun to dedicate space within many of our athletic country clubs for work lounges that have a design aesthetic similar to our Life Time Work locations.

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

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

Our Life Time Living concept 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.

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.

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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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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 and six months ended June 30, 2025 and 2024.

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

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

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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 June 30, 2025, we opened four centers.

During the three months ended September 30, 2025, we opened one center.

(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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

($ in thousands) 2025 2024 2025 2024

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16,891 11,752 45,179 30,450

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

(Gain) loss on sale-leaseback transactions (b)

(7,732) 4,902 4,764 (2,620)

Capital transaction costs (c)

Legal settlements (d)

— 1,250 — 1,250

Employee retention credits (d)

Employee retention credits (e)

(21,994) — (34,867) —

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Diluted 226,007 214,633 225,075 207,841

(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.

(a) Shar e-based compensation expense recognized during the three and nine months ended September 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 nine months ended September 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.

For details on the (gain) loss on the sale-leaseback transactions that we recognized during the three and nine months ended September 30, 2025, see Note 9 , 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.

(d) We adjust for the impact of unusual legal settlements as these costs are non-recurring in nature and do not reflect costs associated with our normal ongoing operations.

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

(f) Includes (i) legal-related expenses in pursuit of our claim against Zurich of $0.1 million and $0.6 million for the nine months ended September 30, 2025 and 2024, respectively, (ii) a $3.5 million write-off of the unamortized debt discounts and issuance costs associated with the extinguishment of our former term loan facility and construction loan for the three and nine months ended September 30, 2024, (iii) gain on sales of land of $0.6 million and $5.0 million for the three and nine months ended September 30, 2024 , respectively, and (iv) other immaterial transactions that are unusual or non-recurring in nature of $0.1 million for the nine months ended September 30, 2025.

(g) 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

($ in thousands) 2025 2024 2025 2024

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16,891 11,752 45,179 30,450

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

(Gain) loss on sale-leaseback transactions (b)

(7,732) 4,902 4,764 (2,620)

Capital transaction costs (c)

Legal settlements (d)

— 1,250 — 1,250

Employee retention credits (d)

Employee retention credits (e)

(21,994) — (34,867) —

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

(f) Includes (i) legal-related expenses in pursuit of our claim against Zurich of $0.1 million and $0.6 million for the nine months ended September 30, 2025 and 2024, respectively, (ii) gain on sales of land of $0.6 million and $5.0 million for the three and nine months ended September 30, 2024, respectively, and (iii) other immaterial transactions that are unusual or non-recurring in nature of $0.1 million for the nine months ended September 30, 2025.

(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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

($ in thousands) 2025 2024 2025 2024

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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.

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Results of Operations

Three Months Ended June 30, 2025 Compared to Three 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 three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

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

Three Months Ended September 30,

As a Percentage of Total Revenue

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Income from operations 135,645 93,695 17.4 % 13.6 %

Other (expense) income:

Other income (expense):

Interest expense, net of interest income (18,440) (36,011) (2.4) % (5.2) %

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Other income 21,994 — 2.8 % — %

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

Total other income (expense) 3,703 (36,127) 0.4 % (5.2) %

Income before income taxes 139,348 57,568 17.8 % 8.4 %

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Total revenue.

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.

The $89.4 million increase in Total revenue for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was due to continued strong growth in membership dues and in-center revenue, including higher average dues, 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 $86.1 million increase in Center revenue for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024:

• 68.7% was from membership dues and enrollment fees, which increased $59.2 million for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

This increase reflects the growth in our new and ramping centers, as well as higher average monthly dues per Center membership during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 ;

• 31.3% was from in-center revenue, which increased $26.9 million for the three months ended September 30, 2025 as compared to the three months ended September 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 September 30, 2025 as compared to the three months ended September 30, 2024 .

T he $3.3 million increase in Other revenue for the three months ended September 30, 2025 as compared to the three months ended September 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 $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.

Th e $43.2 million increase in Center operations expenses for the three months ended September 30, 2025 as compared to the three months ended September 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 $8.2 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.

The $8.9 million increase in Rent expense for the three months ended September 30, 2025 as compared to the three months ended September 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 $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.

The $2.1 million increase in General, administrative and marketing expenses for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily due to increases in center support overhead to enhance and broaden our member services and experiences and general corporate overhead .

Depreciation and amortization expenses .

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.

The $5.6 million increase in Depreciation and amortization expenses for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily due to new center openings and capitalized software development costs.

Other operating expense .

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 .

The $12.4 million decrease in Other operating expense for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily due to a $7.7 million net gain on a sale-leaseback transaction during the three months ended September 30, 2025 as compared to a $4.9 million net loss on sale-leaseback transactions, partially offset by a $0.6 million gain on the sale of land, during the three months ended September 30, 2024 .

Interest expense, net of interest income .

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.

The $17.6 million decrease in Interest expense, net of interest income for the three months ended September 30, 2025 as compared to the three months ended September 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.

The $22.0 million increase in Other income for the three months ended September 30, 2025 as compared to the three months ended September 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 $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 $20.7 million increase in provision for income taxes for the three months ended September 30, 2025 as compared to the three months ended September 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 26.5% and 28.2% for those same periods, respectively.

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,

The effective tax rate applied to our pre-tax income for the three months ended September 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 $102.4 million for the three months ended September 30, 2025 as compared to $41.4 million for the three months ended September 30, 2024.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 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 nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

As a Percentage of Total Revenue

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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.

The $292.4 million increase in Total revenue for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was due to continued strong growth in membership dues and in-center revenue, including higher average dues, 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 $282.1 million increase in Center revenue for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024:

• 70.9% was from membership dues and enrollment fees, which increased $200.0 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

This increase reflects the growth in our new and ramping centers, as well as higher average monthly dues per Center membership during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024;

• 29.1% was from in-center revenue, which increased $82.1 million for the nine months ended September 30, 2025 as compared to the nine months ended September 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 nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

The $10.3 million increase in Other revenue for the nine months ended September 30, 2025 as compared to the nine months ended September 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.

The $140.7 million increase in Center operations expenses for the nine months ended September 30, 2025 as compared to the nine months ended September 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.

The $26.1 million increase in Rent expense for the nine months ended September 30, 2025 as compared to the nine months ended September 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 nine months ended September 30, 2025 as compared to the nine months ended September 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.

General, administrative and marketing expenses increased $19.5 million for the nine months ended September 30, 2025 as compared to the nine months ended September 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, general corporate overhead, information technology costs and costs attributable to the secondary offerings of our 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.

Depreciation and amortization increased $13.9 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to new center openings and capitalized software development costs.

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.

Other operating expense increased $11.0 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to a $4.8 million net loss on sale-leaseback transactions during the nine months ended September 30, 2025 as compared to a $2.6 million net gain on sale-leaseback transactions and a $5.0 million gain on the sale of land during the nine months ended September 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.

The $45.8 million decrease in Interest expense, net of interest income for the nine months ended September 30, 2025 as compared to the nine months ended September 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.

The $34.9 million increase in Other income for the nine months ended September 30, 2025 as compared to the nine months ended September 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 $30.9 million increase in provision for income taxes for the nine months ended September 30, 2025 as compared to the nine months ended September 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 22.0% and 25.1% 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.

The effective tax rate applied to our pre-tax income for the nine months ended September 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 $250.7 million and $119.1 million for the nine months ended September 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 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.

Additionally, we benefit from our in-house architecture and design expertise that allows us to design operationally efficient centers.

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 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 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 .

As of September 30, 2025, there were no outstanding borrowings under our Revolving Credit Facility and there were $31.8 million of outstanding letters of credit, resulting in total availability under our $650.0 million Revolving Credit Facility of $618.2 million.

Total cash and cash equivalents at September 30, 2025 was $218.9 million, resulting in total cash and availability under our Revolving Credit Facility of $837.1 million.

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

Six Months Ended

Nine Months Ended

September 30,

Net cash provided by operating activities $ 630,666 $ 411,976

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Operating Activities

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.

The $218.7 million increase in net cash provided by operating activities for the nine months ended September 30, 2025 as compared to the nine months ended September 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 $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 $274.0 million increase in net cash used in investing activities for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily driven by a $198.8 million increase in capital expenditures and $50.6 million lower proceeds from sale-leaseback transactions and land sales.

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

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

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.

The increase in total capital expenditures for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily driven by an increase in new center construction as we expand our new center openings to

12 to 14 centers per year, most of which will be large format ground up builds in 2026 and 2027, the acquisition of existing health club and racquet facilities, higher maintenance expenditures for member experiences and operational efficiencies, and higher modernization and technology expenditures for center remodels, fitness floor reconfigurations and digital and artificial intelligence initiatives.

Financing Activities

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.

The $161.7 million increase in net cash provided by financing activities for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily driven by lower repayments of debts, partially offset by higher net repayments under our Revolving Credit Facility and receiving no proceeds from the issuance of our common stock.

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