Life Time Reports Fourth Quarter and Full-Year 2025 Financial Results

CHANHASSEN, Minn., Feb. 24, 2026 /PRNewswire/ -- Life Time Group Holdings, Inc. ("Life Time," "we," "our," "us," or the "Company") (NYSE: LTH) today announced its financial results for the fiscal fourth quarter and full-year ended December 31, 2025.

Bahram Akradi, Founder, Chairman and CEO, stated: "I am proud of how our team delivered throughout 2025. With higher member engagement, increased dues per membership, and robust in‑center revenue growth, we delivered another year of record financial performance. We enter 2026 with strong fundamentals and a clear plan to expand the number of our large‑format athletic country clubs. We expect to add nearly as much new square footage in 2026 as we opened in the past two years combined. We remain focused on growing revenue and adjusted EBITDA by further increasing member engagement, optimizing our membership mix, and growing revenue per center membership.

I am also excited to announce a $500 million share repurchase program approved by our board of directors. Our strong cash generation and healthy balance sheet give us confidence in our ability to fund our accelerated club opening plan and implement our share repurchase program while remaining at or below our target 2.0x net leverage ratio. We believe we are now in a position to continue investing for long‑term growth while further driving shareholder return."

Financial Summary

Three Months Ended

Year Ended

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

December 31,

2025

2024

Percent

Change

2025

2024

Percent

Change

Total revenue

$745.1

$663.3

12.3 %

$2,995.3

$2,621.0

14.3 %

Center operations expenses

$379.4

$343.9

10.3 %

$1,568.6

$1,392.4

12.7 %

Rent

$87.3

$79.1

10.4 %

$339.2

$304.9

11.2 %

General, administrative and marketing expenses (1)

$65.3

$61.2

6.7 %

$244.6

$221.0

10.7 %

Net income

$123.0

$37.2

230.6 %

$373.7

$156.2

139.2 %

Adjusted net income

$77.4

$60.3

28.4 %

$325.5

$200.5

62.3 %

Adjusted EBITDA

$202.6

$177.0

14.5 %

$825.2

$676.8

21.9 %

Comparable center revenue (2)

9.9 %

13.5 %

11.1 %

12.2 %

Center memberships, end of period

822,380

812,062

1.3 %

822,380

812,062

1.3 %

Average center revenue per center membership

$882

$796

10.8 %

$3,531

$3,160

11.7 %

(1)

The three months ended December 31, 2025 and 2024 included non-cash share-based compensation expense of $5.1 million and $18.3 million, respectively. The years ended December 31, 2025 and 2024 included non-cash share-based compensation expense of $44.5 million and $45.4 million, respectively.

(2)

The Company includes a center, for comparable center revenue purposes, beginning on the first day of the 13th full calendar month of the center's operation, in order to assess the center's growth rate after one year of operation.

Fourth Quarter 2025 Information

Full-Year 2025 Information

New Center Openings

Cash Flow Highlights

Three Months Ended

Year Ended

($ in millions)

December 31,

2025

2024

Percent

Change

2025

2024

Percent

Change

Growth capital expenditures (1)

$240.1

$74.6

221.8 %

$656.5

$334.5

96.3 %

Maintenance capital expenditures (2)

32.6

38.6

(15.5) %

125.8

108.6

15.8 %

Modernization and technology capital expenditures (3)

31.8

23.1

37.7 %

109.2

81.4

34.2 %

Total capital expenditures

$304.5

$136.3

123.4 %

$891.5

$524.5

70.0 %

(1)

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

(2)

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

(3)

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

Liquidity and Capital Resources

Share Repurchase Program

Our board of directors has authorized a share repurchase program of up to $500 million of the Company's common stock, subject to market conditions, contractual restrictions and other factors. Repurchases may be made from time to time through open market purchases, block trades, accelerated or other structured share repurchase programs, privately negotiated transactions, Rule 10b5-1 plans or other means, and may include purchases from affiliates. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. 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. The repurchase program does not obligate the Company to acquire any particular amount of its common stock and may be suspended, modified or terminated at any time at the Company's discretion.

2026 Outlook

The Company's 2026 guidance and expectations do not include any impact that may occur as a result of our $500 million share buyback program announced today, including our outstanding share count.

Full-Year 2026 Guidance

Percent

Year Ending

Year Ended

Change

December 31, 2026

December 31, 2025

(Using

(Guidance as of

($ in millions)

(Guidance)

(Actual)

Midpoints)

January 22, 2026)

Total revenue

$3,300 – $3,330

$2,995.3

10.7 %

$3,300 – $3,330

Rent

$378 – $388

$339.2

12.9 %

$378 – $388

Net Income

$330 – $336

$373.7

(10.9) %

$330 – $336

Adjusted net income

$369 – $378

$325.5

14.7 %

$369 – $378

Adjusted EBITDA

$910 – $925

$825.2

11.2 %

$910 – $925

The Company is reiterating the following expectations for fiscal 2026 as outlined in its preliminary estimated results announced on January 22, 2026:

The Company is also introducing the following additional operational and financial expectations for fiscal 2026:

Conference Call Details

A conference call to discuss our fourth quarter and full-year financial results is scheduled for today:

Replay Information

Webcast – A recorded replay of the webcast will be available within approximately three hours of the call's conclusion and may be accessed at: https://ir.lifetime.life.

Conference Call – A replay of the conference call will be available after 1:00 p.m. ET the same day through March 13, 2026:

About Life Time

Life Time (NYSE: LTH) empowers people to live healthy, happy lives through its more than 185 athletic country clubs across the U.S. and Canada, the complimentary and comprehensive Life Time app featuring its L•AI•C™ AI-powered health companion, and more than 25 iconic athletic events. Serving people ages 90 days to 90+ years, the Life Time ecosystem uniquely delivers healthy living, healthy aging, and healthy entertainment experiences, a range of unique healthy way of life programs, highly trusted LTH nutritional supplements and more. Recognized as a Great Place to Work®, the Company is committed to upholding an exceptional culture for its over 44,000 team members.

Use of Non-GAAP Financial Measures and Key Performance Indicators

This press release includes certain financial measures that are not presented in accordance with GAAP, including Adjusted net income, Adjusted net income per common share, Adjusted EBITDA, free cash flow and net debt and ratios and calculations with respect thereto. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should be considered in addition to, and not as a substitute for or superior to, net income, net income per common share, net cash provided by operating activities or total debt (defined as long-term debt, net of current portion, plus current maturities of debt) as a measure of financial performance or liquidity or any other performance measure derived in accordance with GAAP, and should not be construed as an inference that the Company's future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP financial measures should be read in conjunction with the Company's 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 is defined as net income excluding the impact of share-based compensation expense as well as (gain) loss on sale-leaseback transactions, capital transaction costs, legal settlements, asset impairment, severance and other items that are not indicative of our ongoing operations, less the tax effect of these adjustments. Adjusted EBITDA is defined as net income before interest expense, net, provision for income taxes and depreciation and amortization, excluding the impact of share-based compensation expense as well as (gain) loss on sale-leaseback transactions, capital transaction costs, legal settlements, asset impairment, severance and other items that are not indicative of the Company's ongoing operations. Free cash flow is defined as net cash provided by operating activities less capital expenditures, net of construction reimbursements, plus net proceeds from sale-leaseback transactions and land sales. Net debt is defined as long-term debt, net of current portion, plus current maturities of debt, excluding fair value adjustments, unamortized debt discounts and issuance costs, minus cash and cash equivalents. Net debt is as of the last day of the respective quarter or year. Our leverage ratio is calculated as our net debt divided by our trailing twelve months of Adjusted EBITDA.

The Company presents these non-GAAP financial measures because management believes that these measures assist investors and analysts in comparing the Company's operating performance across reporting periods on a consistent basis by excluding items that management does not believe are indicative of the Company's ongoing operating performance, and management believes that free cash flow assists investors and analysts in evaluating our liquidity and cash flows, including our ability to make principal payments on our indebtedness and to fund our capital expenditures and working capital requirements. Investors are encouraged to evaluate these adjustments and the reasons the Company considers them appropriate for supplemental analysis. In evaluating the non-GAAP financial measures, investors should be aware that, in the future, the Company may incur expenses that are the same as or similar to some of the adjustments in the Company's presentation of its non-GAAP financial measures. There can be no assurance that the Company will not modify the presentation of non-GAAP financial measures in future periods, and any such modification may be material. In addition, the Company's non-GAAP financial measures may not be comparable to similarly titled measures used by other companies in the Company's industry or across different industries.

The non-GAAP financial measures have limitations as analytical tools, and investors should not consider these measures in isolation or as substitutes for analysis of the Company's results as reported under GAAP.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of federal securities regulations. Forward-looking statements in this press release include, but are not limited to, the Company's plans, strategies and prospects, both business and financial, including its financial outlook for fiscal year 2026, growth, strength of its balance sheet, net debt and leverage, interest expense, consumer demand, industry and economic trends, member engagement and mix, tax rates and expense, rent expense, expected number of diluted common shares outstanding, expected number, size and timing of new center openings, successful signings and closings of sale-leaseback transactions (including the amount, pricing and timing thereof) and the timing, amount and price of any share repurchase. These statements are based on the beliefs and assumptions of the Company's management. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning the Company's possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. 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.

Factors that could cause actual results to differ materially from those forward-looking statements included in this press release include, but are not limited to, risks relating to our business operations and the growth of our business including the competitive and economic environment, risks relating to our brand, risks relating to our technological operations, risks relating to our capital structure and lease obligations, risks relating to our human capital, risks relating to legal compliance and risk management and risks relating to ownership of our common stock and the other important factors discussed under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the "SEC") on February 27, 2025 (File No. 001-40887), as such factors may be updated from time to time in the Company's other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any forward-looking statement that the Company makes in this press release speaks only as of the date of such statement. Except as required by law, the Company does not have any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise.

LIFE TIME GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

December 31,

Year Ended

December 31,

2025

2024

2025

2024

Revenue:

Center revenue

$ 726,291

$ 646,384

$ 2,908,707

$ 2,546,651

Other revenue

18,805

16,899

86,548

74,344

Total revenue

745,096

663,283

2,995,255

2,620,995

Operating expenses:

Center operations

379,371

343,877

1,568,611

1,392,421

Rent

87,304

79,141

339,170

304,945

General, administrative and marketing

65,250

61,211

244,611

221,047

Depreciation and amortization

77,344

69,613

296,345

274,681

Other operating expense

6,298

22,466

65,225

70,418

Total operating expenses

615,567

576,308

2,513,962

2,263,512

Income from operations

129,529

86,975

481,293

357,483

Other income (expense):

Interest expense, net of interest income

(16,932)

(37,012)

(82,263)

(148,095)

Equity in earnings (loss) of affiliates

(217)

232

(620)

Other income

59,374

—

94,241

—

Total other income (expense)

42,504

(37,229)

12,210

(148,715)

Income before income taxes

172,033

49,746

493,503

208,768

Provision for income taxes

49,033

12,583

119,832

52,528

Net income

$ 123,000

$ 37,163

$ 373,671

$ 156,240

Income per common share:

Basic

$ 0.56

$ 0.18

$ 1.71

$ 0.77

Diluted

$ 0.54

$ 0.17

$ 1.66

$ 0.74

Weighted-average common shares outstanding:

Basic

220,698

207,142

218,031

201,640

Diluted

226,720

220,267

225,495

211,164

LIFE TIME GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

December 31,

2025

December 31,

2024

ASSETS

Current assets:

Cash and cash equivalents

$ 204,807

$ 10,879

Restricted cash and cash equivalents

27,362

16,999

Accounts receivable, net

24,092

25,087

Center operating supplies and inventories

67,618

60,266

Prepaid expenses and other current assets

61,881

52,826

Income tax receivable

—

4,918

Total current assets

385,760

170,975

Property and equipment, net

3,633,229

3,193,671

Goodwill

1,235,359

Operating lease right-of-use assets

2,479,804

2,313,311

Intangible assets, net

180,810

171,643

Other assets

92,989

67,578

Total assets

$ 8,007,951

$ 7,152,537

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$ 90,249

$ 87,810

Construction accounts payable

143,545

101,551

Deferred revenue

60,309

58,252

Accrued expenses and other current liabilities

214,351

179,444

Current maturities of debt

21,848

22,584

Current maturities of operating lease liabilities

79,208

70,462

Total current liabilities

609,510

520,103

Long-term debt, net of current portion

1,485,939

1,513,157

Operating lease liabilities, net of current portion

2,555,513

2,381,094

Deferred income taxes, net

172,217

85,255

Other liabilities

58,561

42,578

Total liabilities

4,881,740

4,542,187

Stockholders' equity:

Common stock, $0.01 par value per share; 500,000 shares authorized; 221,077 and 207,495 shares issued and outstanding, respectively

2,211

2,075

Additional paid-in capital

3,183,032

3,041,645

Accumulated deficit

(46,902)

(420,573)

Accumulated other comprehensive loss

(12,130)

(12,797)

Total stockholders' equity

3,126,211

2,610,350

Total liabilities and stockholders' equity

$ 8,007,951

$ 7,152,537

LIFE TIME GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Year Ended

December 31,

2025

2024

Cash flows from operating activities:

Net income

$ 373,671

$ 156,240

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

296,345

274,681

Deferred income taxes

87,492

29,457

Share-based compensation

51,750

51,034

Non-cash rent expense

32,497

33,739

Impairment charges associated with long-lived assets

9,352

11,018

Gain on disposal of property and equipment, net

(12,165)

(6,794)

Loss on debt extinguishment

—

13,839

Amortization of debt discounts and issuance costs

3,659

7,002

Changes in operating assets and liabilities

29,487

2,387

Other

(1,563)

2,514

Net cash provided by operating activities

870,525

575,117

Cash flows from investing activities:

Capital expenditures

(891,483)

(524,535)

Proceeds from sale-leaseback transactions

227,424

207,421

Proceeds from the sale of land

—

15,577

Other

(21,676)

8,793

Net cash used in investing activities

(685,735)

(292,744)

Cash flows from financing activities:

Proceeds from borrowings

—

1,500,000

Repayments of debt

(20,080)

(411,766)

Proceeds from revolving credit facility

220,000

1,225,000

Repayments of revolving credit facility

(230,000)

(1,305,000)

Purchase of U.S. government obligations for the satisfaction and discharge of debt

—

(1,424,467)

Repayments of finance lease liabilities

(2,006)

(926)

Proceeds from financing obligations

10,300

4,300

Payments of debt discounts and issuance costs

(628)

(22,325)

Proceeds from the issuance of common stock, net of issuance costs

—

123,964

Proceeds from stock option exercises

42,487

25,933

Proceeds from issuances of common stock in connection with the employee stock purchase plan

4,290

2,818

Other

(4,975)

(1,916)

Net cash provided by (used in) financing activities

19,388

(284,385)

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

113

(76)

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

204,291

(2,088)

Cash and cash equivalents and restricted cash and cash equivalents—beginning of period

27,878

29,966

Cash and cash equivalents and restricted cash and cash equivalents—end of period

$ 232,169

$ 27,878

Non-GAAP Measurements and Key Performance Indicators

See "Use of Non-GAAP Financial Measures and Key Performance Indicators" for a discussion of the Non-GAAP financial measures reconciled below.

Key Performance Indicators

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

(Unaudited)

Three Months Ended

Year Ended

December 31,

2025

2024

2025

2024

Membership Data

Center memberships

822,380

812,062

822,380

812,062

Digital on-hold memberships

50,556

54,023

50,556

54,023

Total memberships

872,936

866,085

872,936

866,085

Revenue Data

Membership dues and enrollment fees

73.7 %

73.9 %

72.6 %

72.8 %

In-center revenue

26.3 %

26.1 %

27.4 %

27.2 %

Total Center revenue

100.0 %

Membership dues and enrollment fees

$ 535,102

$ 477,751

$ 2,111,370

$ 1,853,963

In-center revenue

191,189

168,633

797,337

692,688

Total Center revenue

$ 726,291

$ 646,384

$ 2,908,707

$ 2,546,651

Average Center revenue per center membership (1)

$ 882

$ 796

$ 3,531

$ 3,160

Comparable center revenue (2)

9.9 %

13.5 %

11.1 %

12.2 %

Center Data

Net new center openings (3)

Total centers (end of period) (3)

189

179

189

179

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

18,300,000

17,600,000

18,300,000

17,600,000

GAAP and Non-GAAP Financial Measures

Net income

$ 123,000

$ 37,163

$ 373,671

$ 156,240

Net income margin (5)

16.5 %

5.6 %

12.5 %

6.0 %

Adjusted net income (6)

$ 77,424

$ 60,263

$ 325,522

$ 200,451

Adjusted net income margin (6)

10.4 %

9.1 %

10.9 %

7.6 %

Adjusted EBITDA (7)

$ 202,564

$ 176,964

$ 825,175

$ 676,780

Adjusted EBITDA margin (7)

27.2 %

26.7 %

27.5 %

25.8 %

Center operations expense

$ 379,371

$ 343,877

$ 1,568,611

$ 1,392,421

Pre-opening expenses (8)

$ 1,541

$ 1,185

$ 5,030

$ 6,003

Rent

$ 87,304

$ 79,141

$ 339,170

$ 304,945

Non-cash rent expense (open properties) (9)

$ 2,066

$ 7,630

$ 26,525

$ 31,034

Non-cash rent expense (properties under development) (9)

$ 1,556

$ 929

$ 5,972

$ 2,705

Net cash provided by operating activities

$ 239,859

$ 163,141

$ 870,525

$ 575,117

Free cash flow (10)

$ (9,903)

$ 26,526

$ 206,466

$ 273,580

(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.

(2)

We measure the results of our centers based on how long each center has been open as of the most recent measurement period. We include a center, for comparable center revenue purposes, beginning on the first day of the 13th full calendar month of the center's operation, in order to assess the center's growth rate after one year of operation.

(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 2025, we opened 10 centers.

(4)

Total center square footage (end of period) reflects the aggregate square footage, excluding the areas used for tennis courts, outdoor swimming pools, outdoor play areas and stand-alone Work, Sport and Swim locations. We use this metric for evaluating the efficiencies of a center as of the end of the period. These figures are approximations.

(5)

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

(6)

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

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

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

Three Months Ended

Year Ended

December 31,

($ in thousands, except per share data)

2025

2024

2025

2024

Net income

$ 123,000

$ 37,163

$ 373,671

$ 156,240

Share-based compensation expense (a)

6,571

20,584

51,750

51,034

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

(17,549)

(12,785)

(2,618)

Capital transaction costs (c)

—

1,531

—

Legal settlements (d)

(38,723)

(38,629)

1,815

Asset impairments (e)

5,791

—

5,791

—

Employee retention credits (f)

(19,705)

—

(54,572)

—

Other (g)

(130)

10,329

(22)

8,844

Taxes (h)

18,169

(7,822)

(1,213)

(14,864)

Adjusted net income

$ 77,424

$ 60,263

$ 325,522

$ 200,451

Income per common share:

Basic

$ 0.56

$ 0.18

$ 1.71

$ 0.77

Diluted

$ 0.54

$ 0.17

$ 1.66

$ 0.74

Adjusted income per common share:

Basic

$ 0.35

$ 0.29

$ 1.49

$ 0.99

Diluted

$ 0.34

$ 0.27

$ 1.44

$ 0.95

Weighted-average common shares outstanding:

Basic

220,698

207,142

218,031

201,640

Diluted

226,720

220,267

225,495

211,164

(a)

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

(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.

(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. The vast majority of the adjustment for the three months and year ended December 31, 2025 is payment of nearly $40 million by Zurich American Insurance Company ("Zurich") in partial satisfaction of legal claims against Zurich for its failure to provide certain business interruption insurance coverage related to the government-ordered suspensions of our club operations in 2020 during the COVID-19 pandemic, representing payment of up to $1.0 million plus interest for 26 occurrences of 29 total occurrences found by the Minnesota Court of Appeals in an order dated August 11, 2025. This payment is offset by legal-related expenses in pursuit of our claim against Zurich of $0.9 million for the three months ended December 31, 2025, and $1.0 million and $0.6 million for the years ended December 31, 2025 and 2024, respectively. This adjustment also includes $1.3 million of other costs related to unusual legal settlements or judgments for the year ended December 31, 2024.

(e)

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

(f)

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

(g)

Includes (i) a $10.3 million and $13.8 million write-off of the unamortized debt discounts and issuance costs associated with the extinguishment of our former term loan facility and construction loan and the loss on the satisfaction and discharge of our 5.750% Senior Secured Notes and 8.000% Senior Unsecured Notes for the three months and year ended December 31, 2024, respectively, (ii) gain on sales of land of $(5.0) million for the year ended December 31, 2024, and (iii) other immaterial transactions that are unusual or non-recurring in nature of $(0.1) million for the three months ended December 31, 2025.

(h)

Represents the estimated tax effect of the total adjustments made to arrive at Adjusted net income using the effective income tax rates for the respective periods. Taxes for the year ended December 31, 2025 include $12.6 million in income tax benefits due to a significant exercise of stock options by our Chief Executive Officer that were set to expire in 2025.

(7)

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

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

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

Three Months Ended

Year Ended

December 31,

($ in thousands)

2025

2024

2025

2024

Net income

$ 123,000

$ 37,163

$ 373,671

$ 156,240

Interest expense, net of interest income (g)

16,932

37,012

82,263

148,095

Provision for income taxes

49,033

12,583

119,832

52,528

Depreciation and amortization

77,344

69,613

296,345

274,681

Share-based compensation expense (a)

6,571

20,584

51,750

51,034

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

(17,549)

(12,785)

(2,618)

Capital transaction costs (c)

—

1,531

—

Legal settlements (d)

(38,723)

(38,629)

1,815

Asset impairments (e)

5,791

—

5,791

—

Employee retention credits (f)

(19,705)

—

(54,572)

—

Other (h)

(130)

—

(22)

(4,995)

Adjusted EBITDA

$ 202,564

$ 176,964

$ 825,175

$ 676,780

(a) – (f)

See the corresponding footnotes to the table in footnote 6 immediately above.

(g)

(h)

Includes gain on sales of land of $(5.0) million for the year ended December 31, 2024.

(8)

Represents non-capital expenditures associated with opening new centers that are incurred prior to the commencement of a new center opening. The number of centers under construction or development, the types of centers and our costs associated with any particular center opening can vary significantly from period to period.

(9)

Reflects the non-cash portion of our annual GAAP operating lease expense that is greater or less than the cash operating lease payments. Non-cash rent expense for our open properties represents non-cash expense associated with properties that were operating at the end of each period presented. Non-cash rent expense for our properties under development represents non-cash expense associated with properties that are still under development at the end of each period presented.

(10)

Free cash flow, a non-GAAP financial measure, is calculated as net cash provided by operating activities less capital expenditures, net of construction reimbursements, plus net proceeds from sale-leaseback transactions and land sales.

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

Three Months Ended

Year Ended

December 31,

($ in thousands)

2025

2024

2025

2024

Net cash provided by operating activities

$ 239,859

$ 163,141

$ 870,525

$ 575,117

Capital expenditures, net of construction reimbursements

(304,503)

(136,322)

(891,483)

(524,535)

Proceeds from sale-leaseback transactions

54,741

(293)

227,424

207,421

Proceeds from land sales

—

15,577

Free cash flow

$ (9,903)

$ 26,526

$ 206,466

$ 273,580

Reconciliation of Net Debt and Leverage Calculation

($ in thousands)

(Unaudited)

Twelve

Months Ended

December 31, 2025

December 31, 2024

Current maturities of debt

$ 21,848

$ 22,584

Long-term debt, net of current portion

1,485,939

1,513,157

Total Debt

$ 1,507,787

$ 1,535,741

Less: Fair value adjustment

130

284

Less: Unamortized debt discounts and issuance costs

(17,576)

(19,856)

Less: Cash and cash equivalents

204,807

10,879

Net Debt

$ 1,320,426

$ 1,544,434

Trailing twelve-month Adjusted EBITDA

825,175

676,780

Net Debt Leverage Ratio

1.60x

2.28x

Reconciliation of Net Income to Adjusted Net Income Guidance for the Year Ending 2026

($ in millions)

(Unaudited)

Year Ending

($ in millions, except per share data)

December 31, 2026

Net income

$330 – $336

Share-based compensation expense

54 – 58

Taxes

(15) – (16)

Adjusted net income

$369 – $378

Reconciliation of Net Income to Adjusted EBITDA Guidance for the Year Ending 2026

($ in millions)

(Unaudited)

Year Ending

December 31, 2026

Net income

$330 – $336

Interest expense, net of interest income

60 – 56

Provision for income taxes

129 – 130

Depreciation and amortization

337 – 345

Share-based compensation expense

54 – 58

Adjusted EBITDA

$910 – $925

SOURCE Life Time Group Holdings, Inc.