Life Time Reports Fourth Quarter and Full-Year 2024 Financial Results

Total revenue increased 18.7% to $663.3 million for the fourth quarter and 18.2% to $2,621.0 million for the year Net income increased 57.0% to $37.2 million for the fourth quarter and 105.3% to $156.2 million for the year Diluted EPS increased to $0.17 for the fourth quarter and $0.74 for the year Adjusted net income increased 58.7% to $60.3 million for the fourth quarter and 54.6% to $200.5 million for the year Adjusted EBITDA increased 28.5% to $177.0 million for the fourth quarter and 26.1% to $676.8 million for the year Adjusted diluted EPS increased to $0.27 for the fourth quarter and $0.95 for the year Reduced net debt leverage ratio to under 2.3 times Delivered positive net cash provided by operating activities and free cash flow for the third consecutive quarter Raised 2025 outlook based on early 2025 results , /PRNewswire/ -- Life Time Group Holdings, Inc. ("Life Time," "we," "our," "us," or the "Company") (NYSE: LTH) today announced its financial results for the fiscal fourth quarter and full-year ended December 31, 2024. Bahram Akradi, Founder, Chairman and CEO, stated: "I am pleased with our performance in 2024, and I would like to thank all of our team members for their passion and dedication to helping our company and brand reach this new level of excellence. We delivered strong double-digit revenue and Adjusted EBITDA growth, reduced our leverage, and generated positive free cash flow. We exceeded every single financial objective we had set forth. More importantly, the strength and desirability of Life Time resulted in: Record levels of member engagement coupled with our highest level of visits per membership, and Record membership retention, driving the highest revenue per membership we have seen in our 32-year history. We remain well positioned to continue to execute on the significant growth opportunities ahead while maintaining the strength of our margin profile and balance sheet." Financial Summary Three Months Ended Year Ended ($ in millions, except for Average center revenue per center membership data) December 31, December 31, 2024 2023 Percent Change 2024 2023 PercentChange Total revenue $663.3 $558.8 18.7 % $2,621.0 $2,216.6 18.2 % Center operations expenses $343.9 $288.3 19.3 % $1,392.4 $1,184.4 17.6 % Rent $79.1 $71.9 10.0 % $304.9 $275.1 10.8 % General, administrative and marketing expenses (1) $61.2 $54.1 13.1 % $221.0 $201.1 9.9 % Net income $37.2 $23.7 57.0 % $156.2 $76.1 105.3 % Adjusted net income $60.3 $38.0 58.7 % $200.5 $129.7 54.6 % Adjusted EBITDA $177.0 $137.7 28.5 % $676.8 $536.8 26.1 % Comparable center revenue (2) 13.5 % 11.7 % 12.2 % 15.3 % Center memberships, end of period 812,062 763,216 6.4 % 812,062 763,216 6.4 % Average center revenue per center membership $796 $711 12.0 % $3,160 $2,810 12.5 % (1) The three months ended December 31, 2024 and 2023 included non-cash share-based compensation expense of $18.3 million and $11.9 million, respectively. The years ended December 31, 2024 and 2023 included non-cash share-based compensation expense of $45.4 million and $44.8 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 2024 Information Revenue increased 18.7% to $663.3 million due to continued strong growth in membership dues and in-center revenue, driven by an increase in average dues, membership growth in our new and ramping centers, and higher member utilization of our in-center offerings. Center memberships increased by 48,846, or 6.4%, when compared to December 31, 2023, and decreased consistent with seasonality expectations by 14,440 from the third quarter 2024, to 812,062. Total subscriptions, which include center memberships and our digital on-hold memberships, increased 6.3% to 866,085 as compared to December 31, 2023. Center operations expenses increased 19.3% to $343.9 million primarily due to operating costs related to our new and ramping centers as well as costs to support growth in memberships and in-center business revenue. General, administrative and marketing expenses increased 13.1% to $61.2 million primarily due to increases in share-based compensation and benefit-related expenses, information technology costs, and center support overhead to enhance and broaden our member services and experiences. Net income increased $13.5 million to $37.2 million primarily due to improved business performance, partially offset by a tax-effected write-off of $7.7 million of unamortized debt discounts and issuance costs associated with the extinguishment of our former Term Loan Facility and Construction Loan and the loss on the satisfaction and discharge of our 5.750% Senior Secured Notes and 8.000% Senior Unsecured Notes. Adjusted net income increased $22.3 million to $60.3 million and Adjusted EBITDA increased $39.3 million to $177.0 million as we experienced greater flow through of our increased revenue and benefited from the structural improvements to our business that have improved our margins. Full-Year 2024 Information Revenue increased 18.2% to $2,621.0 million due to continued strong growth in membership dues and in-center revenue, driven by an increase in average dues, membership growth in our new and ramping centers, and higher member utilization of our in-center offerings. Center operations expenses increased 17.6% to $1,392.4 million primarily due to operating costs related to our new and ramping centers as well as costs to support growth in memberships and in-center business revenue. General, administrative and marketing expenses increased 9.9% to $221.0 million primarily due to increases in information technology costs, center support overhead to enhance and broaden our member services and experiences, and share-based compensation and benefit-related expenses. Net income increased $80.1 million to $156.2 million primarily due to improved business performance, and to a lesser extent tax-effected one-time net gains of $3.7 million on sales of land and $2.0 million on sale-leaseback transactions in the current year as compared to tax-effected one-time net losses of $10.9 million on sale-leaseback transactions and $4.6 million on the sale of land in the prior year, partially offset by a tax-effected write-off of $10.4 million of unamortized debt discounts and issuance costs associated with the extinguishment of our former Term Loan Facility and Construction Loan and the loss on the satisfaction and discharge of our 5.750% Senior Secured Notes and 8.000% Senior Unsecured Notes in the current year. Net income in the prior year also included a $3.9 million tax-effected one-time gain on the sale of two triathlon events. Adjusted net income increased $70.8 million to $200.5 million and Adjusted EBITDA increased $140.0 million to $676.8 million as we experienced greater flow through of our increased revenue and benefited from the structural improvements to our business that have improved our margins. New Center Openings We opened two new centers during the fourth quarter and a total of eight centers for the year. As of December 31, 2024, we operated a total of 179 centers. Cash Flow Highlights Net cash provided by operating activities increased 23.5% to $163.1 million for the fourth quarter and 24.2% to $575.1 million for the year. We achieved positive free cash flow of $26.5 million for the fourth quarter and $273.6 million for the year, including $207.4 million of net proceeds from sale-leaseback transactions for the year. Our capital expenditures by type of expenditure were as follows: Three Months Ended Year Ended ($ in millions) December 31, December 31, 2024 2023 Percent Change 2024 2023 PercentChange Growth capital expenditures (1) $74.6 $99.1 (24.7) % $334.5 $467.9 (28.5) % Maintenance capital expenditures (2) $38.6 $21.1 82.9 % $108.6 $102.9 5.5 % Modernization and technology capital expenditures (3) $23.1 $47.9 (51.8) % $81.4 $127.2 (36.0) % Total capital expenditures $136.3 $168.1 (18.9) % $524.5 $698.0 (24.9) % (1) Consist of new center land and construction, initial major remodels of acquired centers, major remodels of existing centers that expand existing square footage, asset acquisitions including the purchase of previously leased centers and other growth initiatives. (2) Consist of general maintenance of existing centers. (3) Consist of modernization of existing centers and technology. Liquidity and Capital Resources Our net debt leverage ratio improved to 2.28x as of December 31, 2024, from 3.61x as of December 31, 2023. As of December 31, 2024, our total available liquidity was $619.7 million, which included availability on our $650.0 million revolving credit facility and cash and cash equivalents. We consummated several transactions in 2024 that strengthened our balance sheet and financial position, including: Completed an equity offering of 13.8 million shares, which included 6.0 million primary shares resulting in net proceeds to the Company of $124.0 million. We used a portion of these net proceeds to pay down an aggregate principal amount of $110.0 million of our former Term Loan Facility. Upsized and extended our revolving credit facility to $650.0 million. After delivery of our fourth quarter results, interest will be at Secured Overnight Financing Rate (SOFR) plus an applicable margin of 2.25% (subject to a certain 25 basis points ratings-based step-down). Incurred new term loans maturing in 2031 in an aggregate principal amount of $1,000 million. The term loans bear interest at a rate per annum equal to SOFR plus an applicable margin of 2.50% (subject to a certain 25 basis points ratings-based step-down). Issued $500.0 million in aggregate principal amount of 6.000% Senior Secured Notes due 2031. Satisfied and discharged in full the aggregate principal balance and unpaid accrued interest of our 5.750% Senior Secured Notes and 8.000% Senior Unsecured Notes. Completed sale-leaseback transactions for six properties that generated $207.4 million of net proceeds. 2025 OutlookFull-Year 2025 Guidance Percent Year Ending Year Ending Year Ended Change December 31, 2025 December 31, 2025 December 31, 2024 (Using (Guidance as of ($ in millions) (Guidance) (Actual) Midpoints) January 16, 2025) Revenue $2,925 – $2,975 $2,621.0 12.6 % $2,910 – $2,970 Net Income $277 – $284 $156.2 79.6 % $262 – $269 Adjusted EBITDA $780 – $800 $676.8 16.7 % $760 – $780 Rent $337 – $347 $304.9 12.2 % $337 – $347 The Company also expects to achieve the following operational and financial results for full-year fiscal 2025: Open 10 to 12 new centers. Manage our net debt leverage ratio to maintain at or below 2.25 times. Comparable center revenue growth of 7% to 8%. Adjusted EBITDA growth driven primarily by dues revenue growth and expanded operating leverage. Rent to include non-cash rent expense of $35 million to $38 million. Interest expense, net of interest income and capitalized interest, of approximately $90 million to $94 million, reflecting the reduced debt levels we achieved in 2024 and the debt refinancing completed in the fourth quarter of fiscal 2024. Provision for income tax rate estimate of 27%. Cash income tax expense of $58 million to $62 million. Conference Call Details A conference call to discuss our fourth quarter and full-year financial results is scheduled for today: Date: Thursday, February 27, 2025 Time: 10:00 a.m. ET (9:00 a.m. CT) U.S. dial-in number: 1-877-451-6152 International dial-in number: 1-201-389-0879 Webcast: LTH 4Q and Full Year 2024 Earnings Call A link to the live audio webcast of the conference call will be available at https://ir.lifetime.life/. 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, 2025: U.S. replay number: 1-844-512-2921 International replay number: 1-412-317-6671 Replay ID: 1375 1286 About Life Time Life Time (NYSE: LTH) empowers people to live healthy, happy lives through its portfolio of more than 175 athletic country clubs across the United States and Canada. The health and wellness pioneer also delivers a range of healthy way of life programs and information via its complimentary Life Time Digital app. The Company's healthy living, healthy aging, healthy entertainment communities and ecosystem serve people 90 days to 90+ years old and is supported by a team of more than 42,000 dedicated professionals. In addition to delivering the best programs and experiences through its clubs, Life Time owns and produces nearly 30 of the most iconic athletic events in the country. 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 2025, growth, cost efficiencies and margin expansion, capital expenditures and free cash flow, improvements to its balance sheet, net debt and leverage, interest expense, consumer demand, industry and economic trends, tax rates and expense, rent expense, expected number and timing of new center openings and successful signings and closings of center takeovers and sale-leaseback transactions (including the amount, pricing and timing thereof). 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 competitive and economic environment, risks relating to our brand, risks relating to the growth of our business, 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, 2023, filed with the Securities and Exchange Commission (the "SEC") on February 28, 2024 (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, 2024 2023 2024 2023 Revenue: Center revenue $ 646,384 $ 546,050 $ 2,546,651 $ 2,154,329 Other revenue 16,899 12,784 74,344 62,264 Total revenue 663,283 558,834 2,620,995 2,216,593 Operating expenses: Center operations 343,877 288,257 1,392,421 1,184,370 Rent 79,141 71,926 304,945 275,122 General, administrative and marketing 61,211 54,126 221,047 201,131 Depreciation and amortization 69,613 64,330 274,681 244,397 Other operating expense 22,466 21,526 70,418 86,363 Total operating expenses 576,308 500,165 2,263,512 1,991,383 Income from operations 86,975 58,669 357,483 225,210 Other (expense) income: Interest expense, net of interest income (37,012) (34,548) (148,095) (130,797) Equity in (loss) earnings of affiliates (217) 90 (620) 377 Total other expense (37,229) (34,458) (148,715) (130,420) Income before income taxes 49,746 24,211 208,768 94,790 Provision for income taxes 12,583 527 52,528 18,727 Net income $ 37,163 $ 23,684 $ 156,240 $ 76,063 Income per common share: Basic $ 0.18 $ 0.12 $ 0.77 $ 0.39 Diluted $ 0.17 $ 0.12 $ 0.74 $ 0.37 Weighted-average common shares outstanding: Basic 207,142 196,463 201,640 195,671 Diluted 220,267 203,420 211,164 204,005 LIFE TIME GROUP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited) December 31,2024 December 31,2023 ASSETS Current assets: Cash and cash equivalents $ 10,879 $ 11,161 Restricted cash and cash equivalents 16,999 18,805 Accounts receivable, net 25,087 23,903 Center operating supplies and inventories 60,266 52,803 Prepaid expenses and other current assets 52,826 57,751 Income tax receivable 4,918 10,101 Total current assets 170,975 174,524 Property and equipment, net 3,193,671 3,171,616 Goodwill 1,235,359 1,235,359 Operating lease right-of-use assets 2,313,311 2,202,601 Intangible assets, net 171,643 172,127 Other assets 67,578 75,914 Total assets $ 7,152,537 $ 7,032,141 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 87,810 $ 81,252 Construction accounts payable 101,551 108,730 Deferred revenue 58,252 49,299 Accrued expenses and other current liabilities 179,444 185,305 Current maturities of debt 22,584 73,848 Current maturities of operating lease liabilities 70,462 58,764 Total current liabilities 520,103 557,198 Long-term debt, net of current portion 1,513,157 1,859,027 Operating lease liabilities, net of current portion 2,381,094 2,268,863 Deferred income taxes, net 85,255 56,066 Other liabilities 42,578 36,875 Total liabilities 4,542,187 4,778,029 Stockholders' equity: Common stock, $0.01 par value per share; 500,000 shares authorized; 207,495 and 196,671 shares issued and outstanding, respectively 2,075 1,967 Additional paid-in capital 3,041,645 2,835,883 Accumulated deficit (420,573) (576,813) Accumulated other comprehensive loss (12,797) (6,925) Total stockholders' equity 2,610,350 2,254,112 Total liabilities and stockholders' equity $ 7,152,537 $ 7,032,141 LIFE TIME GROUP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Year Ended December 31, 2024 2023 Cash flows from operating activities: Net income $ 156,240 $ 76,063 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 274,681 244,397 Deferred income taxes 29,457 14,577 Share-based compensation 51,034 50,144 Non-cash rent expense 33,739 37,544 Impairment charges associated with long-lived assets 11,018 14,466 (Gain) loss on disposal of property and equipment, net (6,794) 14,089 Loss on debt extinguishment 13,839 — Amortization of debt discounts and issuance costs 7,002 7,821 Changes in operating assets and liabilities 2,387 6,465 Other 2,514 (2,562) Net cash provided by operating activities 575,117 463,004 Cash flows from investing activities: Capital expenditures (524,535) (697,993) Acquisitions, net of cash acquired — (1,616) Proceeds from sale-leaseback transactions 207,421 121,831 Proceeds from the sale of land 15,577 4,169 Other 8,793 (551) Net cash used in investing activities (292,744) (574,160) Cash flows from financing activities: Proceeds from borrowings 1,500,000 44,291 Repayments of debt (411,766) (15,026) Proceeds from revolving credit facility 1,225,000 1,376,000 Repayments of revolving credit facility (1,305,000) (1,306,000) Purchase of U.S. government obligations for the satisfaction and discharge of debt (1,424,467) — Repayments of finance lease liabilities (926) (1,031) Proceeds from financing obligations 4,300 1,500 Repayments of financing obligations — — Payments of debt discounts and issuance costs (22,325) (3,050) Proceeds from the issuance of common stock, net of issuance costs 123,964 — Proceeds from stock option exercises 25,933 15,770 Proceeds from issuances of common stock in connection with the employee stock purchase plan 2,818 3,479 Other (1,916) (381) Net cash (used in) provided by financing activities (284,385) 115,552 Effect of exchange rates on cash and cash equivalents and restricted cash and cash equivalents (76) 61 (Decrease) increase in cash and cash equivalents and restricted cash and cash equivalents (2,088) 4,457 Cash and cash equivalents and restricted cash and cash equivalents—beginning of period 29,966 25,509 Cash and cash equivalents and restricted cash and cash equivalents—end of period $ 27,878 $ 29,966 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, December 31, 2024 2023 2024 2023 Membership Data Center memberships 812,062 763,216 812,062 763,216 Digital on-hold memberships 54,023 51,720 54,023 51,720 Total memberships 866,085 814,936 866,085 814,936 Revenue Data Membership dues and enrollment fees 73.9 % 74.1 % 72.8 % 72.3 % In-center revenue 26.1 % 25.9 % 27.2 % 27.7 % Total Center revenue 100.0 % 100.0 % 100.0 % 100.0 % Membership dues and enrollment fees $ 477,751 $ 404,783 $ 1,853,963 $ 1,557,289 In-center revenue 168,633 141,267 692,688 597,040 Total Center revenue $ 646,384 $ 546,050 $ 2,546,651 $ 2,154,329 Average Center revenue per center membership (1) $ 796 $ 711 $ 3,160 $ 2,810 Comparable center revenue (2) 13.5 % 11.7 % 12.2 % 15.3 % Center Data Net new center openings (3) 2 1 8 10 Total centers (end of period) (3) 179 171 179 171 Total center square footage (end of period) (4) 17,600,000 16,800,000 17,600,000 16,800,000 GAAP and Non-GAAP Financial Measures Net income $ 37,163 $ 23,684 $ 156,240 $ 76,063 Net income margin (5) 5.6 % 4.2 % 6.0 % 3.4 % Adjusted net income (6) $ 60,263 $ 37,985 $ 200,451 $ 129,704 Adjusted net income margin (6) 9.1 % 6.8 % 7.6 % 5.9 % Adjusted EBITDA (7) $ 176,964 $ 137,708 $ 676,780 $ 536,831 Adjusted EBITDA margin (7) 26.7 % 24.6 % 25.8 % 24.2 % Center operations expense $ 343,877 $ 288,257 $ 1,392,421 $ 1,184,370 Pre-opening expenses (8) $ 1,185 $ 1,134 $ 6,003 $ 7,280 Rent $ 79,141 $ 71,926 $ 304,945 $ 275,122 Non-cash rent expense (open properties) (9) $ 7,630 $ 7,964 $ 31,034 $ 33,626 Non-cash rent expense (properties under development) (9) $ 929 $ 2,680 $ 2,705 $ 3,918 Net cash provided by operating activities $ 163,141 $ 132,058 $ 575,117 $ 463,004 Free cash flow (10) $ 26,526 $ (35,970) $ 273,580 $ (108,989) (1) We define Average Center revenue per center membership as Center revenue less Digital on-hold revenue, divided by the average number of Center memberships for the period, where the average number of Center memberships for the period is an average derived from dividing the sum of the total Center memberships outstanding at the beginning of the period and at the end of each month during the period by one plus the number of months in each period. (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 2024, we opened eight 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, December 31, ($ in thousands) 2024 2023 2024 2023 Net income $ 37,163 $ 23,684 $ 156,240 $ 76,063 Share-based compensation expense (a) 20,584 13,115 51,034 50,144 Loss (gain) on sale-leaseback transactions (b) 2 193 (2,618) 13,624 Legal settlements (c) — — 1,250 — Asset impairments (d) — — — 6,620 Other (e) 10,336 1,311 9,409 (3,541) Taxes (f) (7,822) (318) (14,864) (13,206) Adjusted net income $ 60,263 $ 37,985 $ 200,451 $ 129,704 Income per common share: Basic $ 0.18 $ 0.12 $ 0.77 $ 0.39 Diluted $ 0.17 $ 0.12 $ 0.74 $ 0.37 Adjusted income per common share: Basic $ 0.29 $ 0.19 $ 0.99 $ 0.66 Diluted $ 0.27 $ 0.19 $ 0.95 $ 0.64 Weighted-average common shares outstanding: Basic 207,142 196,463 201,640 195,671 Diluted 220,267 203,420 211,164 204,005 (a) 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 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 three months and 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. (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) We adjust for the impact of unusual legal settlements. These costs are non-recurring in nature and do not reflect costs associated with our normal ongoing operations. (d) Represents non-cash asset impairments of our long-lived assets, excluding impairments on development costs that are part of our normal course of business. (e) 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) 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 $0.1 million for the three months ended December 31, 2023 and $0.6 million and $0.5 million for the years ended December 31, 2024 and 2023, respectively, (iv) gain on sales of the Company's triathlons and certain other assets of $(4.9) million for the year ended December 31, 2023, (v) large corporate restructuring charges and executive level involuntary terminations of $0.5 million for the three months and year ended December 31, 2023, and (vi) other transactions which are unusual or non-recurring in nature of $0.7 million for the three months ended December 31, 2023. (f) Represents the estimated tax effect of the total adjustments made to arrive at Adjusted net income using the effective income tax rates for the respective periods. (7) We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as net income before interest expense, net, provision for income taxes and depreciation and amortization, excluding the impact of share-based compensation expense as well as (gain) loss on sale-leaseback transactions, capital transaction costs, legal settlements, asset impairment, severance and other items that are not indicative of our ongoing operations. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenue. The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to Adjusted EBITDA: Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2024 2023 2024 2023 Net income $ 37,163 $ 23,684 $ 156,240 $ 76,063 Interest expense, net of interest income (e) 37,012 34,548 148,095 130,797 Provision for income taxes 12,583 527 52,528 18,727 Depreciation and amortization 69,613 64,330 274,681 244,397 Share-based compensation expense (a) 20,584 13,115 51,034 50,144 Loss (gain) on sale-leaseback transactions (b) 2 193 (2,618) 13,624 Legal settlements (c) — — 1,250 — Asset impairments (d) — — — 6,620 Other (f) 7 1,311 (4,430) (3,541) Adjusted EBITDA $ 176,964 $ 137,708 $ 676,780 $ 536,831 (a) – (d) See the corresponding footnotes to the table in footnote 6 immediately above. (e) Includes 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. (f) 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 $0.1 million for the three months ended December 31, 2023 and $0.6 million and $0.5 million for the years ended December 31, 2024 and 2023, respectively, (iii) gain on sales of the Company's triathlons and certain other assets of $(4.9) million for the year ended December 31, 2023, (iv) large corporate restructuring charges and executive level involuntary terminations of $0.5 million for the three months and year ended December 31, 2023, and (v) other transactions which are unusual or non-recurring in nature of $0.7 million for the three months ended December 31, 2023. (8) Represents non-capital expenditures associated with opening new centers that are incurred prior to the commencement of a new center opening. The number of centers under construction or development, the types of centers and our costs associated with any particular center opening can vary significantly from period to period. (9) Reflects the non-cash portion of our annual GAAP operating lease expense that is greater or less than the cash operating lease payments. Non-cash rent expense for our open properties represents non-cash expense associated with properties that were operating at the end of each period presented. Non-cash rent expense for our properties under development represents non-cash expense associated with properties that are still under development at the end of each period presented. (10) Free cash flow, a non-GAAP financial measure, is calculated as net cash provided by operating activities less capital expenditures, net of construction reimbursements, plus net proceeds from sale-leaseback transactions and land sales. The following table provides a reconciliation from net cash provided by operating activities to free cash flow: Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2024 2023 2024 2023 Net cash provided by operating activities $ 163,141 $ 132,058 $ 575,117 $ 463,004 Capital expenditures, net of construction reimbursements (136,322) (168,028) (524,535) (697,993) Proceeds from sale-leaseback transactions (293) — 207,421 121,831 Proceeds from land sales — — 15,577 4,169 Free cash flow $ 26,526 $ (35,970) $ 273,580 $ (108,989) Reconciliation of Net Debt and Leverage Calculation ($ in thousands) (Unaudited) Twelve Twelve Months Ended Months Ended December 31, 2024 December 31, 2023 Current maturities of debt $ 22,584 $ 73,848 Long-term debt, net of current portion 1,513,157 1,859,027 Total Debt $ 1,535,741 $ 1,932,875 Less: Fair value adjustment 284 521 Less: Unamortized debt discounts and issuance costs (19,856) (15,270) Less: Cash and cash equivalents 10,879 11,161 Net Debt $ 1,544,434 $ 1,936,463 Trailing twelve-month Adjusted EBITDA 676,780 536,831 Net Debt Leverage Ratio 2.28x 3.61x Reconciliation of Net Income to Adjusted EBITDA Guidance for the Year Ending 2025 ($ in millions) (Unaudited) Year Ending December 31, 2025 Net income $277 – $284 Interest expense, net of interest income 94 – 90 Provision for income taxes 102 – 105 Depreciation and amortization 265 – 273 Share-based compensation expense 42 – 48 Adjusted EBITDA $780 – $800 SOURCE Life Time Group Holdings, Inc. 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Life Time Reports Fourth Quarter and Full-Year 2024 Financial Results

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