What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-05-05 · 129 added, 59 removed, 237 unchanged (44% of the section changed)

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Certain statements in this discussion and analysis are forward-looking statements within the meaning of federal securities regulations.

Forward-looking statements in this discussion and analysis include, but are not limited to, our plans, strategies and prospects, both business and financial, including our financial outlook, growth, business initiatives, memberships, cost efficiencies and margin expansion, capital expenditures and free cash flow, improvements to our balance sheet, net debt and leverage, interest expense, consumer demand, industry and economic trends, tax rates and expense, rent expense, expected number and timing of new center openings and successful signings and closings of center takeovers and sale-leaseback transactions (including the amount, pricing and timing thereof), possible or assumed future actions, business strategies, events or results of operations.

Forward-looking statements in this discussion and analysis include, but are not limited to, our plans, strategies and prospects, both business and financial, including our financial outlook, growth, business initiatives, membership count, engagement and mix, cost efficiencies and margin expansion, capital expenditures and free cash flow, improvements to our balance sheet, net debt and leverage, capital expenditures, interest expense, consumer demand, industry and economic trends, tax rates and expense, rent expense, expected number, size and timing of new center openings and successful signings and closings of center takeovers and sale-leaseback transactions (including the amount, pricing and timing thereof), possible or assumed future actions, business strategies, events or results of operations.

Generally, forward-looking statements are not based on historical facts but instead represent only our current beliefs and assumptions regarding future events.

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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 nearly 1.6 million individual members, who together comprise more than 888,000 memberships, as of March 31, 2026.

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 910,000 memberships, as of June 30, 2026.

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

Our luxurious athletic country clubs total nearly 19 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, which includes membership dues and in-center revenue, increased to $930 for the three months ended March 31, 2026 as compared to $844 for the three months ended March 31, 2025.

Total visits to our clubs were nearly 32 million for the three months ended March 31, 2026 as compared to over 30 million for the three months ended March 31, 2025, and average visits per membership to our centers remained strong at 39 for the three months ended March 31, 2026.

Our average revenue per center membership, which includes membership dues and in-center revenue, increased to $1,923 for the six months ended June 30, 2026 as compared to $1,733 for the six months ended June 30, 2025.

Total visits to our clubs were over 65 million for the six months ended June 30, 2026 as compared to over 62 million for the six months ended June 30, 2025, and average visits per membership to our centers remained strong at 78 for the six months ended June 30, 2026.

We offer a variety of memberships, including singles, couples and families, with different levels of membership dues, which can vary significantly based on numerous factors, including number of members, membership type, usage patterns, location and membership tenure.

Our membership mix has been improving with couples and families comprising increasingly larger portions of our total memberships and qualified memberships administered through medical insurance providers decreasing.

Our couples and family memberships have historically been more engaged with higher retention and higher average monthly dues.

Our qualified medical memberships have significantly lower average monthly dues and we are limiting their offering, along with certain of these third-party administrated programs having been terminated with more potentially terminating or expiring.

We have been able to successfully convert many of these qualified medical memberships that have terminated to direct memberships with minimal impact on membership dues.

With these membership dynamics and our premium, high-use model, our center membership growth has been smaller than our total Center revenue growth and we expect that trend to continue, including because our clubs are typically reaching their desired utilization and revenue with fewer memberships.

Our total Center revenue increased to $767.6 million for the three months ended March 31, 2026 as compared to $685.7 million for the three months ended March 31, 2025.

Our total Center revenue increased to $1,605.0 million for the six months ended June 30, 2026 as compared to $1,421.5 million for the six months ended June 30, 2025.

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.

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however, many of our newer centers are ramping faster than this historical average.

As of March 31, 2026, we had 27 centers open for less than three years and 17 new centers under construction.

As of June 30, 2026, we had 31 centers open for less than three years and 18 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 have opened five new centers in 2026 to date and are targeting 12 to 14 new centers on average per year.

We have opened seven new centers in 2026 to date and expect to open 14 new centers in 2026.

We are targeting 12 to 14 new centers on average per year.

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 on a club-by-club basis 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 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.

These strategic initiatives include pickleball, Dynamic Personal Training, Dynamic Stretch, small group training such as Alpha, GTX, Ultra Fit, MB360, CTR and Hybrid XT, our ARORA community focused on members aged 55 years and older, and LT Games, a unique hybrid-athletic competition.

We are refining our MIORA performance and longevity health offering, which has a total of eight locations.

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

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.

health, fitness and wellness needs so that they can engage and connect with Life Time at any time or place.

Additionally, we are selling our LTH nutritional products more broadly on e-commerce platforms.

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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 March 31, 2026, we had 15 Life Time Work and four Life Time Living locations open and operating.

As of June 30, 2026, 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.

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

Set forth below are certain GAAP and non-GAAP measurements and key performance indicators for the three months ended March 31, 2026 and 2025.

Set forth below are certain GAAP and non-GAAP measurements and key performance indicators for the three and six months ended June 30, 2026 and 2025.

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

Three Months Ended

Six Months Ended

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

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

During the three months ended March 31, 2026, we opened one center.

During the three months ended June 30, 2026, we opened five centers.

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

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Three Months Ended

Six Months Ended

($ in thousands, except per share data)

Share-based compensation expense (a)

Capital transaction costs (b)

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

Capital transaction costs (c)

Legal settlements (d)

Employee retention credits (e)

Adjusted net income

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Weighted-average common shares outstanding:

(a) Shar e-based compensation expense recognized during the three months ended March 31, 2026 was associated with stock options, restricted stock units, performance stock units, our employee stock purchase plan (“ESPP”) and liability-classified awards related to our 2026 short-term incentive plan.

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

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

(c) Includes (i) legal-related expenses in pursuit of our claim against Zurich of $0.1 million for the three months ended March 31, 2025 and (ii) other immaterial transactions or items that are unusual or non-recurring in nature of $0.5 million and $0.1 million for the three months ended March 31, 2026 and 2025, respectively.

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

We updated the Taxes amount used to arrive at Adjusted net income for the three months ended March 31, 2025 to include $12.6 million in income tax benefits resulting from a significant exercise of stock options by our Chief Executive Officer that were set to expire in 2025.

This change did not impact our condensed consolidated financial statements

prepared in accordance with GAAP, but it did decrease our non-GAAP Adjusted net income and Adjusted income per common share for the three months ended March 31, 2025.

(a) Shar e-based compensation expense recognized during the three and six months ended June 30, 2026 was associated with stock options, restricted stock units, performance stock units, our employee stock purchase plan (“ESPP”) and liability-classified awards related to our 2026 short-term incentive plan.

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 ESPP and liability-classified awards related to our 2025 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 gain on the sale-leaseback transactions that we recognized during the three and six months ended June 30, 2026, see Note 7, 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) 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 three and six months ended June 30, 2026 is the recognition of settlement proceeds from Zurich for the remaining occurrences of jurisdictions that issued closure orders affecting our club operations in 2020 during the COVID-19 pandemic.

These proceeds are offset by legal-related expenses in pursuit of our claim against Zurich of $0.1 million for the three months ended June 30, 2026, and $0.1 million and $0.1 million for the six months ended June 30, 2026 and 2025, respectively.

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

(f) Includes (i) a $2.9 million write-down of certain assets within a non-club joint venture resulting from its held-for-sale classification for the three and six months ended June 30, 2026, and (ii) other immaterial transactions or items that are unusual or non-recurring in nature of $(0.1) million for the three months ended June 30, 2026, and $0.3 million and $0.1 million for the six months ended June 30, 2026 and 2025, respectively.

(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.

We updated the Taxes amount used to arrive at Adjusted net income for the six months ended June 30, 2025 to include $12.6 million in income tax benefits resulting from a significant exercise of stock options by our Chief Executive Officer that were set to expire in 2025.

This change did not impact our condensed consolidated financial statements prepared in accordance with GAAP, but it did decrease our non-GAAP Adjusted net income and Adjusted income per common share for the six months ended June 30, 2025.

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

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Three Months Ended

Six Months Ended

($ in thousands)

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Share-based compensation expense (a)

Capital transaction costs (b)

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

Capital transaction costs (c)

Legal settlements (d)

Employee retention credits (e)

Adjusted EBITDA

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

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

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

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Three Months Ended

Six Months Ended

($ in thousands)

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Capital expenditures, net of construction reimbursements

Proceeds from sale-leaseback transactions

Free cash flow

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Results of Operations

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

The following table sets forth our condensed consolidated statements of operations data (amounts in thousands) and data as a percentage of total revenue for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Three Months Ended June 30,

As a Percentage of Total Revenue

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Interest expense, net of interest income

Equity in earnings (loss) of affiliates

Equity in (loss) earnings of affiliates

Total other expense

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Total revenue.

The $82.7 million increase in Total revenue for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was due to continued strong growth in membership dues and in-center revenue, driven by higher average dues including from improved membership mix , 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 $81.9 million increase in Center revenue for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025:

• 73.0% was from membership dues and enrollment fees, which increased $59.8 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

This increase reflects the higher average monthly dues per Center membership due to continued improvement in membership mix and the growth in our new and ramping centers during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 ;

• 27.0% was from in-center revenue, which increased $22.1 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 .

This increase was recognized across all of our primary in-center businesses and reflects the higher utilization of our offerings by our members, particularly Dynamic Personal Training, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 .

T he $0.8 million increase in Other revenue for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily driven by the improved performance of our Life Time Work locations and events business.

The $104.5 million increase in Total revenue for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was due to continued strong growth in membership dues and in-center revenue, driven by higher average dues including from improved membership mix , 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 $101.5 million increase in Center revenue for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025:

• 68.9% was from membership dues and enrollment fees, which increased $69.9 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

This increase reflects the higher average monthly dues per Center membership due to continued improvement in membership mix and the growth in our new and ramping centers during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 ;

• 31.1% was from in-center revenue, which increased $31.6 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 .

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, 2026 as compared to the three months ended June 30, 2025 .

T he $3.0 million increase in Other revenue for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily driven by the improved performance of our events business and Life Time Work locations.

Center operations expenses .

Th e $35.7 million increase in Center operations expenses for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 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 $49.8 million increase in Center operations expenses for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 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 $8.7 million increase in Rent expense for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 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 $11.1 million increase in Rent expense for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 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 $1.8 million increase in General, administrative and marketing expenses for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily due to increases in center support overhead to enhance and broaden our member services and experiences .

The $4.4 million increase in General, administrative and marketing expenses for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily due to increases in incentive and benefit-related expenses .

Depreciation and amortization expenses .

The $9.8 million increase in Depreciation and amortization expenses for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily due to new center openings and capitalized software development costs.

The $10.4 million increase in Depreciation and amortization expenses for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily due to new center openings and capitalized software development costs.

Other operating expense .

The $0.5 million decrease in Other operating expense for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily due to lower impairments on development costs incurred in the normal course of business.

The $12.4 million decrease in Other operating expense for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily due to a $2.0 million net gain on sale-leaseback transactions during the three months ended June 30, 2026 as compared to a $12.5 million net loss on sale-leaseback transactions during the three months ended June 30, 2025, partially offset by increased costs to support revenue growth.

Interest expense, net of interest income .

The $9.4 million decrease in Interest expense, net of interest income for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 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 $4.4 million decrease in Interest expense, net of interest income for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily driven by lower average levels of outstanding borrowings, a lower interest rate largely as a result of the repricing of our Term Loan Facility in August 2025 and increased capitalized interest.

Equity in (loss) earnings of affiliates .

The $2.7 million change in Equity in (loss) earnings of affiliates for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily related to a $2.9 million write-down of certain assets within a non-club joint venture resulting from its held-for-sale classification.

Other income.

The $7.9 million decrease in Other income for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily related to $12.9 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 for the three months ended June 30, 2025, partially offset by a $4.9 million recognition of settlement proceeds from Zurich in satisfaction of legal claims for the three months ended June 30, 2026.

Provision for income taxes .

The $24.8 million increase in provision for income taxes for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily driven by an increase in earnings before taxes and a decrease in the excess tax deduction associated with share-based compensation.

The $5.7 million increase in provision for income taxes for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily driven by an increase in earnings before taxes, partially offset by an increase in the excess tax deduction associated with share-based compensation.

The effective tax rate was 24.7% and 27.6% for those same periods, respectively.

The effective tax rate applied to our pre-tax income for the three months ended March 31, 2026 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 $88.1 million for the three months ended March 31, 2026 as compared to $76.1 million for the three months ended March 31, 2025.

The effective tax rate applied to our pre-tax income for the three months ended June 30, 2026 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 $101.4 million for the three months ended June 30, 2026 as compared to $72.1 million for the three months ended June 30, 2025.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

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, 2026 and 2025:

Six Months Ended June 30,

As a Percentage of Total Revenue

Center revenue

Other revenue

Total revenue

Operating expenses:

Center operations

General, administrative and marketing

Depreciation and amortization

Other operating expense

Total operating expenses

Income from operations

Other (expense) income:

Interest expense, net of interest income

Equity in (loss) earnings of affiliates

Total other expense

Income before income taxes

Provision for income taxes

Total revenue.

The $187.2 million increase in Total revenue for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 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 $183.4 million increase in Center revenue for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025:

• 70.7% was from membership dues and enrollment fees, which increased $129.7 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

This increase reflects the higher average monthly dues per Center membership due to continued improvement in membership mix and the growth in our new and ramping centers during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025;

• 29.3% was from in-center revenue, which increased $53.7 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

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, 2026 as compared to the six months ended June 30, 2025.

The $3.7 million increase in Other revenue for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily driven by the improved performance of our events business and Life Time Work locations.

Center operations expenses .

The $85.5 million increase in Center operations expenses for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 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 $19.9 million increase in Rent expense for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 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 $6.1 million increase in General, administrative and marketing expenses for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily due to increases in incentive and benefit-related expenses, and increases in center support overhead to enhance and broaden our member services and experiences.

Depreciation and amortization .

The $20.1 million increase in Depreciation and amortization for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily due to new center openings and capitalized software development costs.

Other operating expense .

The $12.9 million decrease in Other operating expense for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily due to a $2.0 million net gain on sale-leaseback transactions during the six months ended June 30, 2026 as compared to a $12.5 million net loss on sale-leaseback transactions during the six months ended June 30, 2025 , partially offset by increased costs to support revenue growth .

Interest expense, net of interest income .

The $13.8 million decrease in Interest expense, net of interest income for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was driven by lower average levels of outstanding borrowings, a lower interest rate largely as a result of the interest rate swaps entered into in April 2025 and the repricing of our Term Loan Facility in August 2025, and increased capitalized interest.

Equity in (loss) earnings of affiliates .

The $2.6 million change in Equity in (loss) earnings of affiliates for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily related to a $2.9 million write-down of certain assets within a non-club joint venture resulting from its held-for-sale classification.

Other income .

The $7.9 million decrease in Other income for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was related to $12.9 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 for the six months ended June 30, 2025, partially offset by a $4.9 million recognition of settlement proceeds from Zurich in satisfaction of legal claims for the six months ended June 30, 2026

Provision for income taxes .

The $30.5 million increase in provision for income taxes for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily driven by an increase in earnings before taxes and a decrease in the excess tax deduction associated with share-based compensation.

The effective tax rate was 25.4% and 18.6% for those same periods, respectively.

The effective tax rate applied to our pre-tax income for the six months ended June 30, 2026 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 $189.5 million and $148.2 million for the six months ended June 30, 2026 and 2025, respectively.

Liquidity and Capital Resources

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

As of March 31, 2026, there were no outstanding borrowings under our Revolving Credit Facility and there were $33.1 million of outstanding letters of credit, resulting in total availability under our $650.0 million Revolving Credit Facility of $616.9 million.

Total cash and cash equivalents at March 31, 2026 was $120.0 million, resulting in total cash and availability under our Revolving Credit Facility of $736.9 million.

As of June 30, 2026, there were no outstanding borrowings under our Revolving Credit Facility and there were $17.9 million of outstanding letters of credit, resulting in total availability under our $650.0 million Revolving Credit Facility of $632.1 million.

Total cash and cash equivalents at June 30, 2026 was $223.6 million, resulting in total cash and availability under our Revolving Credit Facility of $855.7 million.

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

Three Months Ended

Six Months Ended

Net cash provided by operating activities

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

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

Increase in cash and cash equivalents and restricted cash and cash equivalents

Operating Activities

The $14.9 million increase in net cash provided by operating activities for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily the result of increased business performance and profitability.

The $28.8 million increase in net cash provided by operating activities for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily the result of increased business performance and profitability.

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 $118.5 million increase in net cash used in investing activities for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily driven by a $117.5 million increase in capital expenditures.

The $90.5 million increase in net cash used in investing activities for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily driven by a $158.8 million increase in capital expenditures, partially offset by $61.4 million in higher proceeds from sale-leaseback transactions.

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

Three Months Ended

Six Months Ended

Growth capital expenditures (1)

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(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 three months ended March 31, 2026 as compared to the three months ended March 31, 2025 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, higher maintenance expenditures for member experiences and operational efficiencies, and higher modernization and technology expenditures for digital and artificial intelligence initiatives.

The increase in total capital expenditures for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 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, higher modernization and technology expenditures for center remodels, expansion of our CTR small group training and digital and artificial intelligence initiatives, and higher maintenance expenditures for member experiences and operational efficiencies.

Financing Activities

The $27.9 million increase in net cash used in financing activities for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily driven by lower proceeds from stock option exercises, employee tax withholding associated with net share-settled share-based awards and shares repurchases, partially offset by lower net repayments under our Revolving Credit Facility.

The $80.1 million increase in net cash used in financing activities for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily driven by repurchases of our common stock under our Share Repurchase Program, employee tax withholding associated with net share-settled share-based awards and lower proceeds from financing obligations, partially offset by lower net repayments under our Revolving Credit Facility and higher proceeds from stock option exercises.

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.

During April 2026, we closed on sale-leasebacks for five owned properties with two institutional real estate investors for aggregate gross proceeds of approximately $200 million.

We expect to close on additional sale-leasebacks during 2026 for gross proceeds of an incremental $200 million and have positive Free cash flow for 2026.

Share Repurchase Program

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The manner, timing, pricing and amount of any transactions will be subject to the discretion of management and may depend on a variety of factors, including business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors.

During the three months ended March 31, 2026, we repurchased 0.4 million shares of common stock under the Share Repurchase Program for total consideration of approximately $10.7 million.

During the six months ended June 30, 2026, we repurchased approximately 2.6 million shares of our common stock under the Share Repurchase Program for total consideration of approximately $73.4 million.

For additional detail on these share repurchases, refer to Part II, Item 2—Unregistered Sales of Equity Securities and Use of Proceeds, in this Quarterly Report on Form 10-Q.

As of March 31, 2026, we had approximately $489.3 million of availability remaining under our Share Repurchase Program.

As of June 30, 2026, we had approximately $426.6 million of availability remaining under our Share Repurchase Program.

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