LTH 10-K & 10-Q changes, risk factors and insider trading

Risks Relating to Our Business Operations and the Growth of Ourour Business

We are executing on a strategy to grow our business in an asset-light manner as detailed in “Item 1—Business—Our Growth Strategies and Member Experience Initiatives” of this Annual Report. One key focus area is expanding the number of our centers in an asset-light manner. To successfully expand the number of our centers, we must identify and acquire or lease sites that meet the site selection criteria we have established. We may face significant competition for sites that meet our criteria, and as a result, we may lose those sites or we could be forced to pay significantly higher prices for those sites. Additionally, we must engage and negotiate with numerous third parties, including landlords, developers, sellers, contractors and governmental authorities. Their timeline and ability to move forward may differ from ours. If we are unable to cost-effectively identify and acquire or lease sites for new centers, or if our analysis of the suitability of a site is incorrect, our revenue growth rate, profits, cash flow and return on invested capital may be negatively impacted. Additionally, if we do not adapt to or anticipate the challenges relating to expanding our operations, including more diverse locations, sizes and types of buildings, executing remodels and determining timelines in new markets and spaces, we may not be able to expand profitably at our targeted returns on invested capital and on the timeline or at the rate we expected. Any of these results could have a negative impact on our revenue growth rate, profits, cash flow and return on invested capital.returns.

Opening new centers in existing markets may attractattracts some memberships away from other centers in those markets, which could lead to diminished revenue and profitability. In addition, as a result of new center openings in existing markets, and because older centers will represent an increasing proportion of our center base over time, our same-center revenue increases maywill be lower in future periods than in the past.

A significant amount of time and capital expenditures is required to develop and construct or remodel our new centers. Our ability to open new centers on schedule and on budget or at all depends on a number of factors, many of which are beyond our control. These factors include:

•obtaining financing at acceptable financingrates, including executing sale-leaseback transactions to fund construction of new sites and negotiating tenant improvement contributions from developers and landlords;

Our plans for expansion and development, including an increase in the number of our centers,new centers each year, development of existing and new businesses and memberships, expansion of our “Healthy Way of Life” ecosystem and acquisitions of other businesses, as well as changes in the industry, may place significant demands on our administrative, operational, financial, technological and other resources. Any failure to manage growth and development effectively could harm our business. To be successful, we will need to continue to develop technologically and implement management information systems and improve our operating, administrative, financial and accounting systems and controls. We will also need to train new employees and maintain close coordination among our executive, accounting, finance, legal, human resources, risk management and operations functions. These processes are time-consuming and expensive, increase management responsibilities and divert management attention.

In order to elevate and broaden member experiences, increase our revenue per center membership, remain competitive, respond to consumer demands and expand our business, we have developed, and expect to continue to develop and re-imagine, in-center, digital and ancillary businesses and strategies as well as co-working and living spaces. We may incur significant costs in the development or refinement of these businesses and strategies, some of which may be outside of our core competency. In addition, we cannot guarantee that these businesses or strategies will be successful and contribute to earnings,earnings or that we will be able to scale these businesses in an efficient manner or at all, and any of these businesses or strategies may lose money and have an adverse effect on our business, financial condition and operating results.

We rely on technology and if we are unable to adapt to significant and rapid technological changechange, including with respect to artificial intelligence, and deliver connected and digital experiences, we may not compete effectively and our business could be adversely affected.

Technology is a key component of our business model and we regard it as crucial to our success moving forward. We increasingly use electronic and digital means to interact with our members, provide services and productsproducts, support our business operations and collect, maintain and store individually identifiable information. We use an integrated and proprietary member management system to manage the flow of member information within each of our centers and between centers and our corporate office. We also continue to invest in our mobile application and systems.systems, 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. While we seek to offer our members best-in-class technology solutions, we operate in an environment of significant and rapid technological change, including with respect to artificial intelligence, and with industry participants who have greater resources and personnel dedicated to innovating and developing technology and artificial intelligence. To remain competitive, we must continue to maintain, enhance and improve the functionality, capacity, accessibility, reliabilityreliability, use and features of our mobile application, automated member interfaces and other technology offerings.offerings as well as the use of technology and artificial intelligence in the corporate support of our business.

Our growth and success will depend, in part, on our ability to continue to elevate and broaden our member experiences and product and services offerings, including through developing our omni-channel ecosystem, licensing leading technologies, systems and use rights, enhancing our existing platforms and services and creating new platforms and services. We must also respond to member demands, technological advances and emerging industry standards and practices on a cost-effective and timely basis. The adoption of new technologies or market practices (including artificial intelligence) requires us to devote significant resources to improve and adapt our services.services and how we operate. We may also need to secure and maintain thethird party rights including to use music with our content, which can be costly depending on the method we use to provide our content and may involve many third parties and navigating complex and evolving legal issues. Keeping pace with these ever-increasing technological and use requirements can be expensive, and we may be unable to make these improvements to our technology infrastructure or obtain the necessary use rights in a timely manner or at all. If we are unable to anticipate and respond to the demand for new services, products and technologies on a timely and cost-effective basis, or to adapt to and leverage technological advancements and changing standards, our business, results of operations and financial condition could be materially and adversely affected. Furthermore, we may rely on the ability of our members to have the necessary hardware products (smartphones, tablets, watches, etc.) to support our new product offerings. To the extent our members are not prepared to invest or lack the necessary resources or infrastructure, the success of any new initiatives may be compromised.

If we fail to properly maintain the operation, integrity and security of our systems and the security of our data or the data of our members, guests and employees, to comply with applicable privacy or other laws, or to strategically implement, upgrade or consolidate existing information systems, our reputation and business could be adversely affected.

The operation, integrity and security of our systems and the security of our data and the data of our members, guests and employees is critical to us. Despite the security measures we have in place and our continuous assessment and improvements, our systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of cyber terrorism, malicious attacks, misinformation, demands for ransom, vandalism or theft, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. Because such attacks and other events are increasing in sophistication (includingand from the use of artificial intelligence)frequency and frequently change in nature, weincluding due to artificial intelligence being used by bad actors, we, and our third-party service providersproviders, may be unable to anticipate such events or implement adequate preventative measures, and any compromise of our systems, or those of our third-party providers, may not be discovered and remediated promptly. ChangesAny such event or any changes in consumer behavior following such an event affecting us or a third party may materially and adversely affect our business, which in turn may materially and adversely affect our reputation, results of operations and financial condition. Our receipt of proceeds under any insurance we maintain with respect to some of these risks may be delayed or the proceeds may be insufficient to cover our losses fully, which could have a material adverse effect on our business, results of operations and financial condition.

Additionally, the collection, maintenance, use, disclosure and disposal of individually identifiable or other personal data by our businesses are regulated at the federal, state and foreign levels as well as by certain financial industry groups, such as the Payment Card Industry Security Standards Council, Nacha, Canadian Payments Association (Payments Canada) and individual credit card issuers. Some of this data is sensitive and could be an attractive target of a criminal attack by malicious third parties with a wide range of motives and expertise. Federal, state and foreign regulators and financial industry groups continue to adopt or consider new privacy and security requirements that may apply to our businesses. Similarly, federal, state and foreign regulators are considering laws and regulations for artificial intelligence. Compliance with evolving and fragmenting privacyprivacy, artificial intelligence and security laws, requirements and regulations results in time and cost increases due to necessary systems changes, new limitations or constraints on our business models and the development of new administrative processes. They also may impose further restrictions on our collection, disclosure and use of information that is housed in one or more of our databases. Noncompliance with privacy or artificial intelligence laws, financial industry group requirements or a security breach or other event involving the misappropriation, loss or other unauthorized disclosure of personal, sensitive and/or confidential information, whether by us or by one of our vendors, could have adverse effects on our business, operations, brand, reputation and financial condition, including decreased revenue, fines and penalties, increased financial processing fees, compensatory, statutory, punitive or other damages, adverse actions against our licenses to do business and injunctive relief.

•requiring a substantial portionamount of our cash flows to be dedicated to debt service and lease obligations, thereby reducing the amount of cash flows available for working capital, capital expenditures, our growth strategy and other general corporate purposes or business opportunities, and restricting our ability to pay dividends or make distributions on our capital stockopportunities;

We are highly dependent on the services of our senior management team and other key employees at both our corporate headquarters and our centers. Competition for such employees is intense.intense and most of our executive officers have each been with the Company for over 20 years. Our inability to attract, retain, replace, train and motivate qualified employees in a timely and effective manner could reduce member satisfaction, harm our brand and reputation and adversely affect our operating efficiency and financial results.

Staffing shortages, including for our centers and for key corporate and technology resources, could also hinder our ability to implement our business and growth strategy. Payroll costs are a major component of the operating expenses at our centers. We have experienced and may continue to experience a labor market that requires higher wages,wages and increased benefits, which places pressure on our profitability. Increases in minimum wage rates and mandatory benefits could also result in increased costs for us, which may adversely affect our results of operations and financial condition.

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

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

Use of our premises, facilities, equipment, mobile application,applications, services, activitiesactivities, events or products poses potential health or safety risks to members, guests and customers. Claims may beare asserted against us from time to time for loss, injury or death suffered by someone (including a minor child) using or visiting our premises, facilities, equipment, mobile application,applications, services, activitiesactivities, events or products. We could also face claims in connection with the development, construction and remodel of our centers and other facilities, as well as claims related to environmental matters or remediation. While we carry insurance generally applicable to such claims, we face exposure for losses within any self-insured retention or for uninsured damages.

We could also face claims for economic or other damages by members, guests, customers or employees, including consumer protection, wage and hour, healthmembership centeror ancillary services contract, or other statutory or common law claims arising from our business operations. Such claims may be uninsured or the proceeds of our insurance coverages for such claims may be insufficient to cover our losses fully. Depending upon the outcome, these matters may have a material adverse effect on our business, results of operations and financial condition.

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

We offer directly or through third parties a variety of health, fitness and wellness-related products and services, such as nutritional and weight loss products, blood screenings and other assessments, anti-aging and longevity services, health, fitness and wellness content and services, chiropractic services and medi-spa services. ThereClaims isare noasserted assuranceor thatgovernmental thereinvestigations willare beconducted nofrom claimstime to time against us or such third parties related to these products and services, including regarding the ingredients in, manufacture of or results of using our nutritional products, our provision of other health, fitness and wellness-related services or content or our relationships with third parties. Furthermore, thereThere is no assurance that we will not be required to cease providing certain products or services or that any rights we have under indemnification provisions and/or insurance policies will be sufficient to cover any losses that might result from such claims. Any publicity surrounding such claims may negatively impact the value of our brand.

We may not be able to maintain insurance, including general liability and property insurance, on acceptable terms or maintain a level of insurance that would provide adequate coverage, including against potential third-party liability, health and safety issues, property loss caused by severe or frequent extreme weather or otherwise and other claims. An increase in the number of claims against health and fitness center operators generally or against us in particular may cause the cost of insurance for the industry as a whole or us in particular to rise, and comprehensive insurance coverage may become more difficult to attain. For example, our level of insurance has decreased and the relative cost has increased for insuring parts of our business including our medi-spa services as our primary insurance carrier no longer provides insurance coverage for those services. Any gaps in insurance or any increase in the cost of insurance may have a material adverse effect on our business, results of operations and financial condition.

We are subject to taxation in the United States at the federal level and by certain states and municipalities and foreign jurisdictions because of the scope of our operations. Additionally, despite the vast majority of our operations being currently operated in the United States, our operations and new center growth could be subject to new or increased tariffs. While our existing operations have been implemented in a manner we believe is in compliance with current prevailing laws, one or more taxing jurisdictions could seek to impose, and certain jurisdictions are actively considering, incremental or new taxes on us. Any adverse developments in tax laws or regulations, including legislative changes, judicial holdings or administrative interpretations, or any new or increased tariffs that impact our operations,operations or growth, could have a material and adverse effect on our business, financial condition and results of operations. Changes in the scope of our operations, including expansion to new products or new geographies, could also increase the amount and type of taxes and tariffs to which we are subject, and could increase our effective tax rate.

The trading price of our common stock has experienced volatility. Stock volatility often has been unrelated or disproportionate to the operating performance of particular companies. Additionally, how active and liquid the trading market on the NYSE for our common stock is or may become may be impacted by the fact that certain of our existing stockholders who were stockholders before the IPO, who we refer to as the “Voting Group,” collectively held as of December 31, 2024,2025, approximately 62.7%38.3% of the voting power of our common stock.stock Stockholders(down mayfrom have62.7% difficulty selling their sharesas of ourDecember common31, stock2024). orStockholders may not be able to resell our common stock at or above the price per share paid due to a number of factors, such as the amount of liquidity in the market for our shares, those listed in other portions of this “Risk Factors” section and the following:

As of December 31, 2024,2025, we had a total of 207,495,152221,076,666 shares of common stock outstanding and the Voting Group held approximately 62.7%38.3% of such shares.shares (down from 62.7% as of December 31, 2024). The Voting Group includes investment funds affiliated with Leonard Green & Partners, L.P. and its affiliates (“LGP”) and TPG Inc. and its affiliates (“TPG”), which collectively held approximately 42.5%19.3% of our common stock as of December 31, 2024.2025 (down from 42.5% as of December 31, 2024). Most of the shares of our common stock held by the Voting Group are “restricted securities” under Rule 144 of the Securities Act and subject to certain restrictions on resale. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144. The Voting Group has certain registration rights under the amended and restated stockholders agreement with the Company (the “Stockholders Agreement”). Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. We currently have an automatic shelf registration statement on Form S-3 filed with the SEC under which we or the Voting Group could elect to register shares of our common stock as was done in 2024.2024 and 2025.

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 morenearly than 1.51.6 million individual members, who together comprise morenearly than 866,000873,000 memberships, as of December 31, 2024.2025. We are a leading innovator in the industry having successfully created a leisure model that incorporates the country club wellness lifestyle within a fitness and active living community. We have earned the trust of our members for over 30 years to make their lives healthier and happier by offering them the best places, programs and performers. We deliver high-quality experiences through our omni-channel physical and digital ecosystem that includes more than 175185 centers—distinctive, resort-like athletic country club destinations—across 31 states in the United States and one province in Canada. Our continuous commitment to members has resulted in strong brand loyalty and fueled our strong, long-term financial performance.

Our luxurious athletic country clubs total over 1718 million of indoor square feet and approximatelyover 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, 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 42,00044,000 Life Time team members, including over 10,80011,100 certified fitness professionals, ranging from personal trainers to studio performers.

Our members are highly engaged and draw inspiration from the experiences and community we have created. The value our members place on our community is reflected in the continued strength and growth of our average revenue per center membership, center usage and the visits to our athletic country clubs. Our average revenue per center membership increased to $3,531 for the year ended December 31, 2025 as compared to $3,160 for the year ended December 31, 2024 as compared toand $2,810 for the year ended December 31, 2023 and $2,528 for the year ended December 31, 2022.2023. Total visits to our clubs were over 122 million in 2025 as compared to over 114 million in 2024,2024 and over 103 million in 2023 and 86 million in 2022,2023, and average visits per membership to our centers remained strong at 143149 in 2024. 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.2025.

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 as compared toand $2,154 million for the year ended December 31, 2023 and $1,770 million for the year ended December 31, 2022.2023. 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 constructionperformance 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, 2024,2025, we had 29 centers open for less than three years and 1217 new centers under construction, with significant growth capital expenditures already invested into these new centers that have yet to open.construction. 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 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 withinto accelerate growth beyond our LifeCafe,centers. LifeShopWe andare LifeSpa, includingselling our newly branded LTH nutritional products.products more broadly on e-commerce platforms. Additionally, our digital platform is delivering a true omni-channel experience through our integrated digital app that is now available at no cost,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. 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,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. In 2018, we launched Life Time Work, an asset-light branded co-working model that offers premium work spaces in close proximity to our athletic country clubs and integrates ergonomic furnishings and promotes a healthy working environment. Life Time Work members also have the ability to receive access to all of our resort-like athletic country club destinations across the United States and Canada. We have also begun to dedicate space within many of our athletic country clubs for work lounges that have a design aesthetic similar to our Life Time Work locations. Additionally, our Life Time Living locations, which are also an asset-light model, offer luxury wellness-oriented residences, alsoresidences in close proximity to our athletic country clubs. As of December 31, 2024,2025, we had 15 Life Time Work and four Life Time Living locations open and operating. Our Life Time Living offeringconcept is generating interest from new property developers and presenting opportunities for new center development and deal terms that were not previously available to us. Our omni-channel platform continues to grow as we expand our footprint with new centers and nearby work and living spaces, as well as strengthen our digital capabilities.

Macroeconomy and Policy Environment

We continue to monitor the macroeconomic and policy environment and its impact on our business, including with respect to tariffs, inflation, interest ratesrates, taxes and labor, as well as a potential economic recession.recession Inflationor haslow beengrowth elevated,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 hashave impactedincreased certain of our expenses and capital expendituresexpenditures, but have not had a material impact on our business. We continue to analyze the potential impact of these events and returnany onresulting investeddownstream capital.impacts, including higher inflation. Despite thisthese headwind,headwinds, we have experienced growth in our revenue and margins and have maintained strong returns onexpanded our investedoperating capital. Our Term Loan Facility and Revolving Credit Facility have variable rates and thus are impacted by higher interest rates.margins. We will continue to monitor the macroeconomic environment,and butpolicy environment and while any future uncertainty or volatility, a decline in the U.S. or global economy, or the public perception that any of these events may occur, could adversely affect our business and results of operations, we believe that our business is resilient and has performed well historically during different economic cycles including during a recession.

The provision for (benefit from) 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) 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.

This discussion and analysis includes certain financial measures that are not presented in accordance with GAAP, including Adjusted net income (loss),income, Adjusted net income (loss) per common share, Adjusted EBITDA, free cash flow and ratios and calculations 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. In addition, these non-GAAP financial measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of the Company’s non-GAAP financial measures to the corresponding GAAP measures should be carefully evaluated.

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.

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

Adjusted net income (loss),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 (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),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 (loss),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.

(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.

(3) Net new center openings is calculated as the number of centers that opened for the first time to members during the period, less any centers that closed during the period. Total centers (end of period) is the number of centers operational as of the last day of the period. During 2024,2025, we opened eight10 centers.

(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. 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 (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:

(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 employee stock purchase plan (“ESPP”) that launched on December 1, 2022, 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 the sale-leaseback transactions that we recognized during the years ended December 31, 2024,2025, 20232024 and 2022,2023, see “Sale-Leaseback Transactions” within Note 9,10, 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, but excluding direct costs related to the IPO which were netted against the proceeds of the IPO.nature.

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

(fg) Includes (i) a $13.8 million write-off of the unamortized debt discounts and issuance costs associated with the extinguishment of our former Termterm Loanloan Facilityfacility 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 andfor $the year ended December 31, 2023, (1.9iv) executive level severance of $0.5 million for the yearsyear ended December 31, 20232023, and 2022, respectively, (v) largeother 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) otherimmaterial transactions whichthat are unusual or non-recurring in nature of $(0.40.3) million for the year ended December 31, 2022.2023.

(gh) 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. 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. 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.

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

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

(fg) Includes (i) a $13.8 million write-off of the unamortized debt discounts and issuance costs associated with the extinguishment of our former Termterm Loanloan Facilityfacility 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.

(gh) 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 andfor $the year ended December 31, 2023, (1.9iii) executive level severance of $0.5 million for the yearsyear ended December 31, 20232023, and 2022, respectively, (iv) largeother 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) otherimmaterial transactions whichthat are unusual or non-recurring in nature of $(0.40.3) million for the year ended December 31, 2022.2023.

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 ratesrates, taxes and labor, as well as a potential economic recession.recession or low growth and general economic and political conditions. See “—Overview—Macroeconomy and Policy Environment” for additional information.

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 10,11, Stockholders’ Equity, to our consolidated financial statements included in Part II, Item 8 of this Annual Report.

Total revenue. The $404.4$374.3 million increase in Total revenue for the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 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,dues, membership growth in our new and ramping centers and higher member utilization of our in-center offerings.offerings, particularly in Dynamic Personal Training.

•75.6%71.1% was from membership dues and enrollment fees, which increased $296.7$257.4 million for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024. This increase reflects the improvementgrowth in our Centernew memberships,and whichramping increased to 812,062 as of December 31, 2024 from 763,216 as of December 31, 2023,centers, as well as higher average monthly dues per Center membership during the year ended December 31, 20242025 as compared to the year ended December 31, 20232024; and

The $12.1$12.2 million increase in Other revenue for the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 was primarily driven by the improved performance of our Life Time Work locations, media and events business and Life Time LivingWork locations.

Center operations expenses. The $208.1$176.2 million increase in Center operations expenses for the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 was primarily due to operating costs related to our new and ramping centerscenters, additional center operating expenses related to increased club utilization in our mature centers, as well as costs to support growth in memberships and in-center business revenue.revenue growth.

Rent expense. The $29.8$34.2 million increase in Rent expense for the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 was primarily driven by the timing of sale-leaseback transactions during both the current and prior year, the timing oftransactions, 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.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$23.6 million increase in General, administrative and marketing expenses for the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 was primarily due to increased informationincentive technologyand costs,benefit-related expenses, center support overhead to enhance and broaden our member services and experiencesexperiences, marketing, general corporate overhead, information technology costs and share-basedcosts compensationattributable to the secondary offering of our common stock completed in February and benefit-relatedJune expenses.2025.

Depreciation and amortization expenses. The $30.3$21.7 million increase in Depreciation and amortization expenses for the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 was primarily due to new center openings.openings and capitalized software development costs.

Other operating expense. The $15.9$5.2 million decrease in Other operating expense for the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 was primarily due to the recognition of a $5.0$12.8 million gain on sales of outparcels of land, a $2.6 millionnet gain on sale-leaseback transactions andduring the recognitionyear 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 million of impairment charges associated with property development cost write-offs during the year ended December 31, 20242024, aspartially comparedoffset toby the recognition of a $5.6$5.0 million lossgain on the salesales of an outparceloutparcels 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-offsland 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, 20232024 and increased costs to support other revenue growth during the year ended December 31, 2024.2025.

Interest expense, net of interest income. The $17.3$65.8 million increasedecrease in Interest expense, net of interest income for the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 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 Termterm Loanloan Facilityfacility 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.

Provision for income taxes. The $33.8$67.3 million increase in provision for income taxes for the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 was primarily driven by an increase in earnings before taxes,taxes offset byand a reductionchange in the valuation allowance in the prior year associated with certain of our deferred tax assets.assets, partially offset by the excess tax deduction associated with share-based compensation. The effective tax rate was 25.2%24.3% and 19.8%25.2% for those same periods, respectively. The effective tax rate applied to our pre-tax income for the year ended December 31, 20242025 was higher than our statutory federal rate of 21% and reflects an increaseprimarily due to the state income tax provisions and deductibility limitations associated with executive compensation and state income tax provisions,compensation, partially offset by athe reductionexcess intax valuation allowancededuction associated with certainshare-based of our deferred tax assets.compensation.

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,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 numbernumber, 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. All forward-looking statements are, by nature, subject to risks, uncertainties and other factors. This discussion and analysis does not purport to identify factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements. You should understand that forward-looking statements are not guarantees of performance or results and are preliminary in nature. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. Statements preceded by, followed by or that otherwise include the words “believes,” “assumes,” “expects,” “anticipates,” “intends,” “continues,” “projects,” “predicts,” “estimates,” “plans,” “potential,” “may increase,” “may result,” “will result,” “may fluctuate,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “foreseeable,” “may,” and “could” as well as the negative version of these words or similar terms and phrases are generally forward-looking in nature and not historical facts. In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking.

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 nearlymore than 1.6 million individual members, who together comprise more than 888,000910,000 memberships, as of MarchJune 31,30, 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. We have earned the trust of our members for over 30 years to make their lives healthier and happier by offering them the best places, programs and performers. We deliver high-quality experiences through our omni-channel physical and digital ecosystem that includes 190195 centers—distinctive, resort-like athletic country club destinations—across 3132 states in the United States and one province in Canada. Our continuous commitment to members has resulted in strong brand loyalty and fueled our strong, long-term financial performance.

Our luxurious athletic country clubs total overnearly 1819 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, 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 45,00052,000 Life Time team members, including over 11,40011,700 certified fitness professionals, ranging from personal trainers to studio performers. We believe that no other company in the United States delivers the same quality and breadth of health, fitness and wellness experiences that we deliver, which has enabled us to consistently grow our annual membership dues and in-center revenue.

Our members are highly engaged and draw inspiration from the experiences and community we have created. 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$1,923 for the threesix months ended MarchJune 31,30, 2026 as compared to $844$1,733 for the threesix months ended MarchJune 31,30, 2025. Total visits to our clubs were nearlyover 3265 million for the threesix months ended MarchJune 31,30, 2026 as compared to over 3062 million for the threesix months ended MarchJune 31,30, 2025, and average visits per membership to our centers remained strong at 3978 for the threesix months ended MarchJune 31,30, 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 withand 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$1,605.0 million for the threesix months ended MarchJune 31,30, 2026 as compared to $685.7$1,421.5 million for the threesix months ended MarchJune 31,30, 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. Our new centers on average have taken three to four years to ramp to expected performance; however, many of our newer centers are ramping faster than this historical average. As of MarchJune 31,30, 2026, we had 2731 centers open for less than three years and 1718 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. We have opened fiveseven 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, MB360MB360, CTR and CTR,Hybrid XT, our ARORA community focused on members aged 55 years and older, and LT Games, a unique hybrid-athletic competition. OurWe are refining our MIORA performance and longevity health offeringoffering, iswhich performing to our expectations and we now havehas a total of eight locations.

We also continue to expand our “Healthy Way of Life” ecosystem in response to the desire of our members to holistically integrate health and wellness into every aspect of their daily lives. In 2018, we launched Life Time Work, an asset-light branded co-working model that offers premium work spaces in close proximity to our athletic country clubs and integrates ergonomic furnishings and promotes a healthy working environment. 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. We have also begun to dedicate space within many of our athletic country clubs for work lounges that have a design aesthetic similar to our Life Time Work locations. Additionally, our Life Time Living locations, which are also an asset-light model, offer luxury wellness-oriented residences in close proximity to our athletic country clubs. As of MarchJune 31,30, 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. 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.

Set forth below are certain GAAP and non-GAAP measurements and key performance indicators for the three and six months ended MarchJune 31,30, 2026 and 2025. The following information has been presented consistently for all periods presented.

(3) Net new center openings is calculated as the number of centers that opened for the first time to members during the period, less any centers that closed during the period. Total centers (end of period) is the number of centers operational as of the last day of the period. During the three months ended MarchJune 31,30, 2026, we opened onefive center.centers.

(a) Share-based compensation expense recognized during the three and six months ended MarchJune 31,30, 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. Share-based compensation expense recognized during the three and six months ended MarchJune 31,30, 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.

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

(cf) Includes (i) legal-relateda expenses$2.9 inmillion pursuitwrite-down of ourcertain claimassets againstwithin Zuricha ofnon-club $0.1joint millionventure resulting from its held-for-sale classification for the three and six months ended MarchJune 31,30, 20252026, and (ii) other immaterial transactions or items that are unusual or non-recurring in nature of $0.5$(0.1) million for the three months ended June 30, 2026, and $0.3 million and $0.1 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

(dg) 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 threesix months ended MarchJune 31,30, 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 threesix months ended MarchJune 31,30, 2025.

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

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 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 three months ended MarchJune 31,30, 2026 and 2025:

Total revenue. The $82.7$104.5 million increase in Total revenue for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 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 $81.9$101.5 million increase in Center revenue for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025:

•73.0%68.9% was from membership dues and enrollment fees, which increased $59.8$69.9 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 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 MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025; and

•27.0%31.1% was from in-center revenue, which increased $22.1$31.6 million for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 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 MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025.

The $0.8$3.0 million increase in Other revenue for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 was primarily driven by the improved performance of our events business and Life Time Work locations and events business.locations.

Center operations expenses. The $35.7$49.8 million increase in Center operations expenses for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 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$11.1 million increase in Rent expense for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 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$4.4 million increase in General, administrative and marketing expenses for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 was primarily due to increases in center support overhead to enhanceincentive and broadenbenefit-related our member services and experiences.expenses.

Depreciation and amortization expenses. The $9.8$10.4 million increase in Depreciation and amortization expenses for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 was primarily due to new center openings and capitalized software development costs.

Other operating expense. The $0.5$12.4 million decrease in Other operating expense for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 was primarily due to lowera impairments$2.0 million net gain on developmentsale-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 incurredto insupport therevenue normal course of business.growth.

Interest expense, net of interest income. The $9.4$4.4 million decrease in Interest expense, net of interest income for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 was primarily driven by lower average levels of outstanding borrowings andborrowings, a lower interest rate largely as a result of the interestrepricing rateof swapsour enteredTerm intoLoan Facility in AprilAugust 2025.2025 and increased capitalized interest.

Provision for income taxes. The $24.8$5.7 million increase in provision for income taxes for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 was primarily driven by an increase in earnings before taxestaxes, andpartially aoffset decreaseby an increase in the excess tax deduction associated with share-based compensation. The effective tax rate was 26.1%24.7% and 7.8%27.6% for those same periods, respectively. The effective tax rate applied to our pre-tax income for the three months ended MarchJune 31,30, 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.

Net income. As a result of the factors described above, net income was $88.1$101.4 million for the three months ended MarchJune 31,30, 2026 as compared to $76.1$72.1 million for the three months ended MarchJune 31,30, 2025.

As of MarchJune 31,30, 2026, there were no outstanding borrowings under our Revolving Credit Facility and there were $33.1$17.9 million of outstanding letters of credit, resulting in total availability under our $650.0 million Revolving Credit Facility of $616.9$632.1 million. Total cash and cash equivalents at MarchJune 31,30, 2026 was $120.0$223.6 million, resulting in total cash and availability under our Revolving Credit Facility of $736.9$855.7 million.

The $14.9$28.8 million increase in net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026 as compared to the threesix months ended MarchJune 31,30, 2025 was primarily the result of increased business performance and profitability.

The $118.5$90.5 million increase in net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 as compared to the threesix months ended MarchJune 31,30, 2025 was primarily driven by a $117.5$158.8 million increase in capital expenditures.expenditures, partially offset by $61.4 million in higher proceeds from sale-leaseback transactions.

The increase in total capital expenditures for the threesix months ended MarchJune 31,30, 2026 as compared to the threesix months ended MarchJune 31,30, 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, and higher modernization and technology expenditures for digital and artificial intelligence initiatives.efficiencies.

The $27.9$80.1 million increase in net cash used in financing activities for the threesix months ended MarchJune 31,30, 2026 as compared to the threesix months ended MarchJune 31,30, 2025 was primarily driven by lowerrepurchases proceedsof fromour common stock optionunder exercises,our Share Repurchase Program, employee tax withholding associated with net share-settled share-based awards and shareslower repurchases,proceeds from financing obligations, partially offset by lower net repayments under our Revolving Credit Facility.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.

During the threesix months ended MarchJune 31,30, 2026, we repurchased 0.4approximately 2.6 million shares of our common stock under the Share Repurchase Program for total consideration of approximately $10.7$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 MarchJune 31,30, 2026, we had approximately $489.3$426.6 million of availability remaining under our Share Repurchase Program.