What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-24 compared with 2025-02-27 · 122 added, 124 removed, 320 unchanged (43% of the section changed)

5 unchanged sentences

Business and Strategy

Life Time, the “Healthy Way of Life Company,” is a premier lifestyle and leisure brand offering premium health, fitness and wellness experiences to a community of more than 1.5 million individual members, who together comprise more than 866,000 memberships, as of December 31, 2024.

Life Time, the “Healthy Way of Life Company,” is a premier lifestyle and leisure brand offering premium health, fitness and wellness experiences to a community of nearly 1.6 million individual members, who together comprise nearly 873,000 memberships, as of December 31, 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.

2 unchanged sentences

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 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.

Depending on the size and location of a center, we offer expansive fitness floors with top-of-the-line equipment, spacious locker rooms, group fitness studios and spaces, indoor and outdoor pools and bistros, indoor and outdoor tennis courts, indoor and outdoor pickleball courts, basketball courts, LifeSpa, LifeCafe and our childcare and Kids Academy learning spaces.

Depending on the size and location of a center, we offer expansive fitness floors with top-of-the-line equipment, spacious locker rooms, group fitness studios and spaces, recovery spaces, indoor and outdoor pools and bistros, indoor and outdoor tennis courts, indoor and outdoor pickleball courts, basketball courts, LifeSpa, LifeCafe and our childcare and Kids Academy learning spaces.

Our premium service offerings are delivered by over 44,000 Life Time team members, including over 11,100 certified fitness professionals, ranging from personal trainers to studio performers.

2 unchanged sentences

Our average revenue per center membership increased to $3,531 for the year ended December 31, 2025 as compared to $3,160 for the year ended December 31, 2024 and $2,810 for the year ended December 31, 2023.

Total visits to our clubs were over 114 million in 2024, 103 million in 2023 and 86 million in 2022, and average visits per membership to our centers remained strong at 143 in 2024.

Total visits to our clubs were over 122 million in 2025 as compared to over 114 million in 2024 and over 103 million in 2023, and average visits per membership to our centers remained strong at 149 in 2025.

Our membership mix is notably shifting with couples and families comprising 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.

Additionally, the number of our qualified memberships, which have significantly lower average membership dues, are decreasing as we limit their offering and certain third party administrated programs are terminated or expire.

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 revenues.

Our total Center revenue increased to $2,909 million for the year ended December 31, 2025 as compared to $2,547 million for the year ended December 31, 2024 and $2,154 million for the year ended December 31, 2023.

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.

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 December 31, 2024, we had 29 centers open for less than three years and 12 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 December 31, 2025, we had 29 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.

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

We have also implemented 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.

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 health optimization and longevity services in 2024 and we plan to expand these offerings to additional locations in 2025 and beyond .

We have also been executing on enhanced offerings within our LifeCafe, LifeShop and LifeSpa, 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 believe we have significant opportunities to continue expanding our portfolio of premium centers in an asset-light manner.

We are now targeting 12 to 14 new locations on average per year starting in 2026.

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 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, MB360 and CTR, our ARORA community focused on members aged 55 years and older, and most recently LT Games, a unique hybrid-athletic competition.

Our MIORA performance and longevity health offering is performing to our expectations and we now have a total of eight locations.

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, 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.

1 unchanged sentence

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.

A dditionally, our Life Time Living locati ons, which are also an asset-light model, offer l uxury wellness-oriented residences, also in close proximity to our athletic country clubs.

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.

A dditionally, our Life Time Living locati ons, which are also an asset-light model, offer l uxury wellness-oriented residences in close proximity to our athletic country clubs.

As of December 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.

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.

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

Inflation has been elevated, which has impacted our expenses and capital expenditures and return on invested capital.

Despite this headwind, we have experienced growth in our revenue and margins and have maintained strong returns on our invested capital.

Our Term Loan Facility and Revolving Credit Facility have variable rates and thus are impacted by higher interest rates.

We will continue to monitor the macroeconomic environment, but we believe that our business is resilient and has performed well historically during different economic cycles including during a recession.

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 or low growth and general economic and political conditions.

There continues to be macroeconomic and geopolitical 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 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.

Components of Our Results of Operations

29 unchanged sentences

Equity in earnings (loss) of affiliates includes investments in unconsolidated subsidiaries, which we account for using the equity method of accounting.

Provision for (benefit from) income taxes

The provision for (benefit from) income taxes consists of an estimate for U.S.

Provision for income taxes

The provision for income taxes consists of an estimate for U.S.

federal, state and foreign income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities and changes in the tax law.

Net income (loss)

Net income (loss) consists of our total revenue, less our total operating expenses, and then adjusted for other (income) expenses and provision for (benefit from) income taxes, as set forth on our consolidated statements of operations.

Net income consists of our total revenue, less our total operating expenses, and then adjusted for other (income) expenses and provision for income taxes, as set forth on our consolidated statements of operations.

Non-GAAP Financial Measures

This discussion and analysis includes certain financial measures that are not presented in accordance with GAAP, including Adjusted net income (loss), Adjusted net income (loss) per common share, Adjusted EBITDA, free cash flow and ratios and calculations related thereto.

This discussion and analysis includes certain financial measures that are not presented in accordance with GAAP, including Adjusted net income, Adjusted net income per common share, Adjusted EBITDA, free cash flow and ratios related thereto.

These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

1 unchanged sentence

The reconciliations of the Company’s non-GAAP financial measures to the corresponding GAAP measures should be carefully eva luated.

Adjusted net income (loss)

We define Adjusted net income (loss) as net income (loss) excluding the impact of share-based compensation expense as well as (gain) loss on sale-leaseback transactions, capital transaction costs, legal settlements, asset impairment, severance and other items that are not indicative of our ongoing operations, less the tax effect of these adjustments.

Adjusted net income

We define Adjusted net income as net income excluding the impact of share-based compensation expense as well as (gain) loss on sale-leaseback transactions, capital transaction costs, legal settlements, asset impairment, severance and other items that are not indicative of our ongoing operations, less the tax effect of these adjustments.

Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) before interest expense, net, provision for (benefit from) income taxes and depreciation and amortization, excluding the impact of share-based compensation expense as well as (gain) loss on sale-leaseback transactions, capital transaction costs, legal settlements, asset impairment, severance and other items that are not indicative of our ongoing operations.

Management uses Adjusted net income (loss) and Adjusted EBITDA to evaluate the Company’s performance.

We believe that Adjusted net income (loss) and Adjusted EBITDA are important metrics for management, investors and analysts as they remove the impact of items that we do not believe are indicative of our core operating performance and allow for consistent comparison of our operating results over time and relative to our peers.

We use Adjusted net income (loss) and Adjusted EBITDA to supplement GAAP measures of performance in evaluating the effectiveness of our business strategies and to establish annual budgets and forecasts.

We define Adjusted EBITDA as net income before interest expense, net, provision for income taxes and depreciation and amortization, excluding the impact of share-based compensation expense as well as (gain) loss on sale-leaseback transactions, capital transaction costs, legal settlements, asset impairment, severance and other items that are not indicative of our ongoing operations.

Management uses Adjusted net income and Adjusted EBITDA to evaluate the Company’s performance.

We believe that Adjusted net income and Adjusted EBITDA are important metrics for management, investors and analysts as they remove the impact of items that we do not believe are indicative of our core operating performance and allow for consistent comparison of our operating results over time and relative to our peers.

We use Adjusted net income and Adjusted EBITDA to supplement GAAP measures of performance in evaluating the effectiveness of our business strategies and to establish annual budgets and forecasts.

We also use Adjusted EBITDA or variations thereof to establish incentive compensation for management.

4 unchanged sentences

Additionally, we believe free cash flow is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry.

Adjusted net income (loss), Adjusted EBITDA and free cash flow should be considered in addition to, and not as a substitute for or superior to, financial measures calculated in accordance with GAAP.

These are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP or as an alternative to net cash provided by operating activities as a measure of our liquidity and may not be comparable to other similarly titled measures of other businesses.

Adjusted net income (loss), Adjusted EBITDA and free cash flow have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our operating results or cash flows as reported under GAAP.

Furthermore, we compensate for the limitations described above by relying primarily on our GAAP results and using Adjusted net income (loss), Adjusted EBITDA and free cash flow only for supplemental purposes.

Adjusted net income, Adjusted EBITDA and free cash flow should be considered in addition to, and not as a substitute for or superior to, financial measures calculated in accordance with GAAP.

These are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP or as an alternative to net cash provided by operating activities as a measure of our liquidity and may not be comparable to other similarly titled measures of other businesses.

Adjusted net income, Adjusted EBITDA and free cash flow have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our operating results or cash flows as reported under GAAP.

Furthermore, we compensate for the limitations described above by relying primarily on our GAAP results and using Adjusted net income, Adjusted EBITDA and free cash flow only for supplemental purposes.

See our consolidated financial statements included elsewhere in this Annual Report for our GAAP results.

10 unchanged sentences

Center memberships 822,380 812,062 763,216

Digital On-hold memberships 54,023 51,720 51,470

On-hold memberships 50,556 54,023 51,720

Total memberships 872,936 866,085 814,936

14 unchanged sentences

GAAP and Non-GAAP Financial Measures

Net income (loss) $ 156,240 $ 76,063 $ (1,793)

Net income (loss) margin (5)

Net income $ 373,671 $ 156,240 $ 76,063

Net income margin (5)

12.5% 6.0% 3.4%

Adjusted net income (loss) (6)

Adjusted net income (6)

$ 325,522 $ 200,451 $ 129,704

Adjusted net income (loss) margin (6)

Adjusted net income margin (6)

10.9% 7.6% 5.9%

15 unchanged sentences

$ 206,466 $ 273,580 $ (108,989)

(1) We define Average Center revenue per center membership as Center revenue less Digital On-hold revenue, divided by the average number of Center memberships for the period, where the average number of Center memberships for the period is an average derived from dividing the sum of the total Center memberships outstanding at the beginning of the period and at the end of each month during the period by one plus the number of months in each period.

(1) We define Average Center revenue per center membership as Center revenue less On-hold revenue, divided by the average number of Center memberships for the period, where the average number of Center memberships for the period is an average derived from dividing the sum of the total Center memberships outstanding at the beginning of the period and at the end of each month during the period by one plus the number of months in each period.

(2) We measure the results of our centers based on how long each center has been open as of the most recent measurement period.

2 unchanged sentences

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

During 2024, we opened eight centers.

During 2025, we opened 10 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.

1 unchanged sentence

These figures are approximations.

(5) Net income (loss) margin is calculated as net income (loss) divided by total revenue.

(6) We present Adjusted net income (loss) as a supplemental measure of our performance.

Adjusted net income (loss) margin is calculated as Adjusted net income (loss) divided by total revenue.

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

(5) Net income margin is calculated as net income divided by total revenue.

(6) We present Adjusted net income as a supplemental measure of our performance.

Adjusted net income margin is calculated as Adjusted net income divided by total revenue.

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:

Year Ended December 31,

($ in thousands) 2024 2023 2022

Net income (loss) $ 156,240 $ 76,063 $ (1,793)

($ in thousands, except per share data) 2025 2024 2023

Net income $ 373,671 $ 156,240 $ 76,063

Share-based compensation expense (a)

4 unchanged sentences

Legal settlements (d)

(38,629) 1,815 787

Asset impairments (e)

5,791 — 6,620

Employee retention credits (f)

(22) 8,844 (4,328)

Adjusted net income (loss) $ 200,451 $ 129,704 $ (41,569)

Income (loss) per common share:

(1,213) (14,864) (13,206)

Adjusted net income $ 325,522 $ 200,451 $ 129,704

Income per common share:

Basic $ 1.71 $ 0.77 $ 0.39

Diluted $ 1.66 $ 0.74 $ 0.37

Adjusted income (loss) per common share:

Adjusted income per common share:

Basic $ 1.49 $ 0.99 $ 0.66

3 unchanged sentences

Diluted 225,495 211,164 204,005

(a) Share-based compensation expense recognized during the year ended December 31, 2024 was associated with stock options, restricted stock units, performance stock units, our employee stock purchase plan (“ESPP”) that launched on December 1, 2022, and liability-classified awards related to our 2024 short-term incentive plan.

(a) Share-based compensation expense recognized during the year ended December 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.

Share-based compensation expense recognized during the year ended December 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.

Share-based compensation expense recognized during the year ended December 31, 2023 was associated with stock options, restricted stock units, our ESPP and liability-classified awards related to our 2023 short-term incentive plan.

Share-based compensation expense recognized during the year ended December 31, 2022 was associated with stock options, restricted stock, restricted stock units and our ESPP.

(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 gain and loss on sale-leaseback transactions that we recognized during the years ended December 31, 2024 , 2023 and 2022, see “Sale-Leaseback Transactions” within Note 9, Leases, to our consolidated financial statements in Part II, Item 8 of this Annual Report.

(c) Represents costs related to capital transactions, including debt and equity offerings that are non-recurring in nature, but excluding direct costs related to the IPO which were netted against the proceeds of the IPO.

(d) We adjust for the impact of unusual legal settlements.

These costs are non-recurring in nature and do not reflect costs associated with our normal ongoing operations.

(e) Represents non-cash asset impairments of our long-lived assets, excluding impairments on development costs that are part of our normal course of business.

(f) Includes (i) a $13.8 million write-off of the unamortized debt discounts and issuance costs associated with the extinguishment of our former Term Loan Facility and Construction Loan and the loss on the satisfaction and discharge of our 5.750% Senior Secured Notes and 8.000% Senior Unsecured Notes for the year ended December 31, 2024, (ii) (gain) loss on sales of land of $(5.0) million and $0.4 million for the years ended December 31, 2024 and 2023, respectively, (iii) incremental net expenses we recognized related to the COVID-19 pandemic of $0.6 million, $0.5 million and $3.1 million for the years ended December 31, 2024, 2023 and 2022, respectively, (iv) gain on sales of the Company’s triathlons and certain other assets of $(4.9) million and $(1.9) million for the years ended December 31, 2023 and 2022, respectively, (v) large corporate restructuring charges and executive level involuntary terminations of $0.5 million and $1.2 million for the years ended December 31, 2023 and 2022, respectively, and (vi) other transactions which are unusual or non-recurring in nature of $(0.4) million for the year ended December 31, 2022.

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

For details on the (gain) loss on the sale-leaseback transactions that we recognized during the years ended December 31, 2025 , 2024 and 2023, see “Sale-Leaseback Transactions” within Note 10, Leases, to our consolidated financial statements in Part II, Item 8 of this Annual Report.

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

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

Nearly all of the adjustment for the year ended December 31, 2025 is payment of approximately $40 million by Zurich in partial satisfaction of legal claims against Zurich for its failure to provide certain business interruption insurance coverage related to the government-ordered suspensions of our club operations in 2020 during the COVID-19 pandemic, representing payment of up to $1.0 million plus interest for 26 occurrences of 29 total occurrences found by the Minnesota Court of Appeals in an order dated August 11, 2025.

This payment is offset by legal-related expenses in pursuit of our claim against Zurich of $1.0 million, $0.6 million and $0.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.

This adjustment also includes $1.3 million of other costs related to unusual legal settlements or judgments for the year ended December 31, 2024.

(e) Represents non-cash asset impairments of our long-lived assets related to non-club businesses, excluding impairments on development costs that are part of our normal course of business.

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

(g) Includes (i) a $13.8 million write-off of the unamortized debt discounts and issuance costs associated with the extinguishment of our former term loan facility and Construction Loan and the loss on the satisfaction and discharge of our 5.750% Senior Secured Notes and 8.000% Senior Unsecured Notes for the year ended December 31, 2024, (ii) (gain) loss on sales of land of $(5.0) million and $0.4 million for the years ended December 31, 2024 and 2023, respectively, (iii) gain on sales of the Company’s triathlons and certain other assets of $(4.9) million for the year ended December 31, 2023, (iv) executive level severance of $0.5 million for the year ended December 31, 2023, and (v) other immaterial transactions that are unusual or non-recurring in nature of $(0.3) million for the year ended December 31, 2023.

(h) 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.

Taxes for the year ended December 31, 2025 include $12.6 million in income tax benefits due to a significant exercise of stock options by our Chief Executive Officer that were set to expire in 2025.

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

Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenue.

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

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

Year Ended December 31,

($ in thousands) 2025 2024 2023

Net income (loss) $ 156,240 $ 76,063 $ (1,793)

Interest expense, net of interest income (f)

Net income $ 373,671 $ 156,240 $ 76,063

Interest expense, net of interest income (g)

82,263 148,095 130,797

Provision for (benefit from) income taxes 52,528 18,727 (825)

Provision for income taxes 119,832 52,528 18,727

Depreciation and amortization 296,345 274,681 244,397

5 unchanged sentences

Legal settlements (d)

(38,629) 1,815 787

Asset impairments (e)

5,791 — 6,620

Employee retention credits (f)

(22) (4,995) (4,328)

Adjusted EBITDA $ 825,175 $ 676,780 $ 536,831

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

(g) Includes (i) (gain) loss on sales of land of $(5.0) million and $0.4 million for the years ended December 31, 2024 and 2023, respectively, (ii) incremental net expenses we recognized related to the COVID-19 pandemic of $0.6 million, $0.5 million and $3.1 million for the years ended December 31, 2024, 2023 and 2022, respectively, (iii)

gain on sales of the Company’s triathlons and certain other assets of $(4.9) million and $(1.9) million for the years ended December 31, 2023 and 2022, respectively, (iv) large corporate restructuring charges and executive level involuntary terminations of $0.5 million and $1.2 million for the years ended December 31, 2023 and 2022, respectively, and (v) other transactions which are unusual or non-recurring in nature of $(0.4) million for the year ended December 31, 2022.

(a) – (f) See the corresponding footnotes to the table in footnote 6 immediately above.

(h) Includes (i) (gain) loss on sales of land of $(5.0) million and $0.4 million for the years ended December 31, 2024 and 2023, respectively, (ii) gain on sales of the Company’s triathlons and certain other assets of $(4.9) million for the year ended December 31, 2023, (iii) executive level severance of $0.5 million for the year ended December 31, 2023, and (iv) other immaterial transactions that are unusual or non-recurring in nature of $(0.3) million for the year ended December 31, 2023.

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

13 unchanged sentences

Factors Affecting the Comparability of our Results of Operations

Impact of COVID-19 on our Business

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

Throughout this Annual Report, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” when we refer to “COVID-19,” or “the pandemic” such as when we describe the “impact of COVID-19” on our operations, we mean the coronavirus-related orders issued by governmental authorities affecting our operations and/or the presence of coronavirus in our centers, including COVID-19 positive members or team members.

We are focused on improving the ratio of our net debt to Adjusted EBITDA, or our leverage ratio.

We define net debt as the current and long-term portion of our debt, excluding unamortized debt discounts and issuance costs and fair value adjustments, less unrestricted cash and cash equivalents.

Our leverage ratio was elevated due in part to the adverse impacts o f COVID-19.

We have significantly improved our leverage ratio and believe that we can reach and maintain a leverage ratio of 2.25 times or below.

Impact of Our Asset-light, Flexible Real Estate Strategy on Rent Expense

3 unchanged sentences

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 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 or low growth and general economic and political conditions .

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

Share-Based Compensation

During the year ended December 31, 2025, we recognized share-based compensation expense associated with stock options, restricted stock units, performance stock units, our ESPP and liability-classified awards related to our 2025 short-term incentive plan, totaling approximately $51.8 million.

During the year ended December 31, 2024, we recognized share-based compensation expense associated with stock options, restricted stock units, performance stock units, our ESPP and liability-classified awards related to our 2024 short-term incentive plan, totaling approximately $51.0 million.

During the year ended December 31, 2023, we recognized share-based compensation expense associated with stock options, restricted stock units, our ESPP and liability-classified awards related to our 2023 short-term incentive plan, totaling approximately $50.1 million.

During the year ended December 31, 2022, we recognized share-based compensation expense associated with stock options, restricted stock, restricted stock units and our ESPP totaling approximately $37.3 million.

For more information on our share-based compensation arrangements, see Note 11, Stockholders’ Equity, to our consolidated financial statements included in Part II, Item 8 of this Annual Report.

15 unchanged sentences

Adverse changes in strategy, market conditions or assumed market capitalization may result in an impairment of goodwill.

Based upon our review and analysis, no material impairments of goodwill or indefinite-lived intangible assets were deemed to have occurred during any of the periods presented.

Based upon our review and analysis , no mate rial impairments of goodwill or indefinite-lived intangible assets were deemed to have occurred during any of the periods presented.

Impairment of Long-Lived Assets

46 unchanged sentences

481,293 357,483 16.0 % 13.7 %

Other (expense) income:

Other income (expense):

Interest expense, net of interest income

(82,263) (148,095) (2.7) % (5.7) %

Equity in (loss) earnings of affiliates

Equity in earnings (loss) of affiliates

232 (620) — % — %

Total other expense

Other income 94,241 — 3.1 % — %

Total other income (expense)

12,210 (148,715) 0.4 % (5.7) %

5 unchanged sentences

Total revenue .

The $404.4 million increase in Total revenue for the year ended December 31, 2024 as compared to the year ended December 31, 2023 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.

The $374.3 million increase in Total revenue for the year ended December 31, 2025 as compared to the year ended December 31, 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 $362.1 million increase in Center revenue for the year ended December 31, 2025 as compared to the year ended December 31, 2024:

• 71.1% was from membership dues and enrollment fees, which increased $257.4 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

This increase reflects the improvement in our Center memberships, which increased to 812,062 as of December 31, 2024 from 763,216 as of December 31, 2023, as well as higher average monthly dues per Center membership during the year ended December 31, 2024 as compared to the year ended December 31, 2023;

This increase reflects the growth in our new and ramping centers, as well as higher average monthly dues per Center membership during the year ended December 31, 2025 as compared to the year ended December 31, 2024;

• 28.9% was from in-center revenue, which increased $104.7 million for the year ended December 31, 2025 as compared to the year ended December 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 year ended December 31, 2025 as compared to the year ended December 31, 2024.

The $12.1 million increase in Other revenue for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily driven by the improved performance of our Life Time Work locations, media and events business and Life Time Living locations.

The $12.2 million increase in Other revenue for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily driven by the improved performance of our media and events business and Life Time Work locations.

Center operations expenses .

The $208.1 million increase in Center operations expenses for the year ended December 31, 2024 as compared to the year ended December 31, 2023 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.

The $176.2 million increase in Center operations expenses for the year ended December 31, 2025 as compared to the year ended December 31, 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 $29.8 million increase in Rent expense for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily driven by the timing of sale-leaseback transactions during both the current and 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 $34.2 million increase in Rent expense for the year ended December 31, 2025 as compared to the year ended December 31, 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 year ended December 31, 2025 as compared to the year ended December 31, 2024.

General, administrative and marketing expenses.

The $19.9 million increase in General, administrative and marketing expenses for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily due to increased information technology costs, center support overhead to enhance and broaden our member services and experiences and share-based compensation and benefit-related expen s es .

The $23.6 million increase in General, administrative and marketing expenses for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily due to increased incentive and benefit-related expen s es, center support overhead to enhance and broaden our member services and experiences, marketing, general corporate overhead, information technology costs and costs attributable to the secondary offering of our common stock completed in February and June 2025.

Depreciation and amortization expenses .

The $30.3 million increase in Depreciation and amortization expenses for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily due to new center openings.

The $21.7 million increase in Depreciation and amortization expenses for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily due to new center openings and capitalized software development costs.

Other operating expense .

The $15.9 million decrease in Other operating expense for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily due to the recognition of a $5.0 million gain on sales of outparcels of land, a $2.6 million gain on sale-leaseback transactions and the recognition of $11.0 millio n of impairment charges associated with property development cost write-offs during the year ended December 31, 2024 as compared to the recognition of a $5.6 million loss on the sale of an outparcel of land, of which $5.3 million was recognized as an impairment charge, a $13.6 million loss on sale-leaseback transactions, the recognition of $9.1 million of impairment charges associated with property development cost write-offs during the year ended December 31, 2023, partially offset by a $4.9 million gain on the sale of two triathlon events during the year ended December 31, 2023 and increased costs to support other revenue growth during the year ended December 31, 2024 .

The $5.2 million decrease in Other operating expense for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily due to a $12.8 million net gain on sale-leaseback transactions during the year ended December 31, 2025 as compared to a $2.6 million net gain on sale-leaseback transactions during the year ended December 31, 2024 and $5.8 million of impairment charges related to non-club businesses during the year ended December 31, 2025 as compared to $11.0 millio n of impairment charges associated with property development cost write-offs during the year ended December 31, 2024, partially offset by the recognition of a $5.0 million gain on sales of outparcels of land during the year ended December 31, 2024 and increased costs to support other revenue growth during the year ended December 31, 2025 .

Interest expense, net of interest income .

The $17.3 million increase in Interest expense, net of interest income for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was driven by the write-off of unamortized debt discounts and issuance costs associated with the extinguishment of our former Term Loan Facility and Construction Loan and the loss on the satisfaction and discharge of our 5.750% Senior Secured Notes and 8.000% Senior Unsecured Notes during the year ended December 31, 2024.

The $65.8 million decrease in Interest expense, net of interest income for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was driven by lower average levels of outstanding borrowings and a lower interest rate largely as a result of interest rate swaps entered into in April 2025, increased capitalized interest, as well as the write-off of unamortized debt discounts and issuance costs associated with the extinguishment of our former term loan facility and Construction Loan and the loss on the satisfaction and discharge of our 5.750% Senior Secured Notes and 8.000% Senior Unsecured Notes during the year ended December 31, 2024.

Other income.

The $94.2 million increase in Other income for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was related to $54.6 million in 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 and a $39.6 million payment by Zurich in partial satisfaction of legal claims .

Provision for income taxes .

The $33.8 million increase in provision for income taxes for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily driven by an increase in earnings before taxes, offset by a reduction in valuation allowance associated with certain of our deferred tax assets.

The $67.3 million increase in provision for income taxes for the year ended December 31, 2025 as compared to the year ended December 31, 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 24.3% and 25.2% for those same periods, respectively.

The effective tax rate applied to our pre-tax income for the year ended December 31, 2024 was higher than our statutory federal rate of 21% and reflects an increase due to deductibility limitations associated with executive compensation and state income tax provisions, partially offset by a reduction in valuation allowance associated with certain of our deferred tax assets.

The effective tax rate applied to our pre-tax income for the year ended December 31, 2025 was higher than our statutory federal rate of 21% 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 $373.7 million for the year ended December 31, 2025 as compared to $156.2 million for the year ended December 31, 2024 .

2 unchanged sentences

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.

We made significant progress in 2024 towards our priorities of improving our balance sheet, reducing leverage and generating positive free cash flow.

Transactions we consummated during 2024 to execute on these priorities included:

• Consummated a registered offering for the issuance and sale of 6.0 million shares of our common stock in August 2024 for total gross proceeds of $130.5 million, which was reduced by underwriting discounts and commissions and other expenses.

We used $110.0 million of these net proceeds to pay down the aggregate principal amount outstanding under our former Term Loan Facility.

• Amended our senior secured credit agreement in September 2024 to, among other things, (i) increase the commitments under the revolving credit facility to $650.0 million, (ii) reduce the floating interest rate per annum to, at our option, Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 2.50% or a base rate plus 1.50% (subject to certain first lien leverage and ratings-based step-downs), and reduce the undrawn commitment fee rate from 50 basis points to 25 basis points, and (iii) extend the maturity of the revolving credit facility to September 2029.

• Paid off the remaining aggregate principal amount of $200.0 million of our former Term Loan Facility in September 2024.

• Amended our senior secured credit agreement in November 2024 to, among other things, incur new term loans in an aggregate principal amount of $1,000 million that mature in 2031 and bear interest at a rate per annum of SOFR plus an applicable margin of 2.50% (subject to a certain ratings-based step-down).

Concurrently with the new term loans, we issued $500 million in aggregate principal amount of 6.000% Senior Secured Notes due 2031.

We used the net proceeds from the secured notes and new term loans and cash from our balance sheet to fund the satisfaction and discharge of the 5.750% Senior Secured Notes due 2026 and 8.000% Senior Unsecured Notes due 2026.

• Completed sale-leaseback transactions associated with six properties.

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 or delay construction on a new athletic country club.

For information regarding the debt refinancing transactions, see Note 8, Debt, to our consolidated financial statements in Part II, Item 8 of this Annual Report.

For more information regarding the sale-leaseback transactions that were consummated during 2024, as well as the sale-leaseback transactions that were consummated in 2023 and 2022, see Note 9, Leases, to our consolidated financial statements in Part II, Item 8 of this Annual Report.

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 December 31, 2024, there were $10.0 million of outstanding borrowings under our Revolving Credit Facility and there were $31.2 million of outstanding letters of credit, resulting in total availability under our Revolving Credit Facility of $608.8 million.

As of December 31, 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 Revolving Credit Facility of $618.2 million.

Total cash and cash equivalents at December 31, 2025 was $204.8 million, resulting in total cash and availability under our Revolving Credit Facility of $823.0 million.

6 unchanged sentences

(685,735) (292,744) (574,160)

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

19,388 (284,385) 115,552

Effect of exchange rate on cash and cash equivalents and restricted cash and cash equivalents

(76) 61 (353)

(Decrease) increase in cash and cash equivalents and restricted cash and cash equivalents

Increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents

$ 204,291 $ (2,088) $ 4,457

5 unchanged sentences

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 $393.0 million increase in net cash used in investing activities for the year December 31, 2025 as compared to the year ended December 31, 2024 was primarily driven by a $366.9 million increase in capital expenditures, $15.6 million in lower proceeds from land sales and a $9.5 million acquisition of a trade name and related intangible assets associated with our LTH nutritional products , partially offset by $20.0 million in higher proceeds from sale-leaseback transactions.

The $281.4 million decrease in net cash used in investing activities for the year December 31, 2024 as compared to the year ended December 31, 2023 was primarily driven by a $173.5 million decrease in capital expenditures, a $85.6 million increase in proceeds that we received from sale-leaseback transactions, and a $11.4 million increase in proceeds from the sale of land during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Of the $211.7 million, $123.3 million and $373.2 million in total proceeds we received from sale-leaseback transactions during the years ended December 31, 2024, 2023 and 2022, respectively, $207.4 million, $121.8 million and $351.8 million were reported within investing activities and $4.3 million, $1.5 million and $21.4 million were reported within financing activities on our consolidated statement of cash flows during the years ended December 31, 2024, 2023 and 2022, respectively.

The $330.6 million increase in net cash used in investing activities for the year December 31, 2023 as compared to the year ended December 31, 2022 was primarily driven by a $230.0 million decrease in the amount of proceeds that we received from sale-leaseback transactions during the year ended December 31, 2023 as compared to the year ended December 31, 2022, and a $106.8 million increase in capital expenditures for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

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

9 unchanged sentences

(1) Consist of new center land and construction, initial major remodels of acquired centers, major remodels of existing centers that expand existing square footage, asset acquisitions including the purchase of previously leased centers and other growth initiatives.

(2) Consist of general maintenance of existing centers.

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

(2) Consist of capital expenditures required to maintain the operating condition of our existing centers.

(3) Consist of capital expenditures related to updates and enhancements to our existing centers, technology investments and corporate infrastructure.

The increase in total capital expenditures for the year ended December 31, 2025 as compared to the year ended December 31, 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 fitness floor reconfigurations, CTR expansion, center remodels and digital and artificial intelligence initiatives.

The decrease in total capital expenditures for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily driven by the amount, timing and type of new center construction activity and higher modernization expenditures during the year ended December 31, 2023 as part of our pickleball expansion and studio and fitness floor conversions.

The increase in total capital expenditures for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was primarily driven by new center construction activity and investments into our existing centers to modernize them as we executed our strategic initiatives.

Financing Activities

The $303.8 million increase in net cash provided by financing activities for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily driven by the purchase of U.S.

government obligations in connection with the satisfaction and discharge of debt and the payoff of our former term loan facility and Construction Loan during the year ended December 31, 2024, lower repayments of debts and lower net repayments under our Revolving Credit Facility during the year ended December 31, 2025 as compared to the year ended December 31, 2024, partially offset by proceeds from our Term Loan Facility, 6.000% Senior Secured Notes and equity offering during the year ended December 31, 2024.

The $399.9 million increase in net cash used in financing activities for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily driven by the purchase of U.S.

government obligations in connection with the satisfaction and discharge of debt, the payoff of our former Term Loan Facility and Construction Loan, lower net borrowings under our Revolving Credit Facility and payments of our mortgage notes, partially offset by the proceeds from our new Term Loan Facility, 6.000% Senior Secured Notes and equity offering during the year ended December 31, 2024.

The $78.8 million increase in net cash provided by financing activities for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was primarily driven by net incremental proceeds we received from borrowings under our former Term Loan Facility, Revolving Credit Facility and our construction loan and proceeds from stock option exercises during the year ended December 31, 2023.

government obligations in connection with the satisfaction and discharge of debt, the payoff of our former term loan facility and Construction Loan, lower net borrowings under our Revolving Credit Facility and payments of our mortgage notes, partially offset by the proceeds from our Term Loan Facility, 6.000% Senior Secured Notes and equity offering during the year ended December 31, 2024.

Cash Requirements

15 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis