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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________to ______________
Commission file number: 001-37534
PLANET FITNESS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 38-3942097
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
4 Liberty Lane West, Hampton, NH 03842
(Address of Principal Executive Offices and Zip Code)
(603) 750-0001
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.0001 Par ValuePLNTNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   Accelerated filer 
    
Non-accelerated filer   Smaller reporting company 
       
Emerging growth company     
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No  
As of May 3, 2023 there were 84,957,860 shares of the Registrant’s Class A Common Stock, par value $0.0001 per share, outstanding and 4,234,413 shares of the Registrant’s Class B Common Stock, par value $0.0001 per share, outstanding.




PLANET FITNESS, INC.
TABLE OF CONTENTS
  
2


Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “ongoing,” “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding:
future financial position;
business strategy;
budgets, projected costs and plans;
future industry growth;
financing sources;
potential return of capital initiatives;
the impact of litigation, government inquiries and investigations;
the impact of the novel coronavirus disease (“COVID-19”) and actions taken in response; and
all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Important factors that could cause actual results and events to differ materially from those indicated in the forward-looking statements include, among others, risks and uncertainties associated with the following:
Our success depends substantially on the value of our brand, which could be materially and adversely affected by the high level of competition in the health and fitness industry, our ability to anticipate and satisfy consumer preferences, shifting views of health and fitness and our ability to obtain and retain high-profile strategic partnership arrangements.
Our and our franchisees’ stores may be unable to attract and retain members, which would materially and adversely affect our business, results of operations and financial condition.
Our intellectual property rights, including trademarks, trade names, copyrights and trade dress, may be infringed, misappropriated or challenged by others.
We and our franchisees rely heavily on information systems, including the use of email marketing, mobile application and social media, and any material failure, interruption or weakness may prevent us from effectively operating our business, damage our reputation or subject us to potential fines or other penalties.
If we fail to properly maintain the confidentiality and integrity of our data, including member credit card, debit card, bank account information and other personally identifiable information, our reputation and business could be materially and adversely affected.
The occurrence of cyber incidents, or a deficiency in cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of confidential information, and/or damage to our employee and business relationships and reputation, all of which could harm our brand and our business.
If we fail to successfully implement our growth strategy, which includes new store development by existing and new franchisees, our ability to increase our revenues and operating profits could be adversely affected.
Our planned growth and changes in the industry could place strains on our management, employees, information systems and internal controls, which may adversely impact our business.
If we cannot retain our key employees and hire additional highly qualified employees, we may not be able to successfully manage our businesses and pursue our strategic objectives.
Economic, political and other risks associated with our international operations could adversely affect our profitability and international growth prospects.
Our financial results are affected by the operating and financial results of, our relationships with and actions taken by our franchisees.
We are subject to a variety of additional risks associated with our franchisees, such as potential franchisee bankruptcies, franchisee changes in control, franchisee turnover, rising costs related to construction of new stores and maintenance of existing stores, including rising costs due to inflation and supply chain disruptions, which could adversely affect the attractiveness of our franchise model, and in turn our business, results of operations and financial condition.
We and our franchisees could be subject to claims related to health and safety risks to members that arise while at both our corporate-owned and franchise stores.
3


Our business is subject to various laws and regulations including, among others, those governing indoor tanning, electronic funds transfer, ACH, credit card, debit card, digital payment options, auto-renewal contracts, membership cancellation rights and consumer protection more generally, and changes in such laws and regulations, failure to comply with existing or future laws and regulations or failure to adjust to consumer sentiment regarding these matters, could harm our reputation and adversely affect our business.
We are subject to risks associated with leasing property subject to long-term non-cancelable leases.
If we and our franchisees are unable to identify and secure suitable sites for new franchise stores, our revenue growth rate and profits may be negatively impacted.
Opening new stores in close proximity may negatively impact our existing stores’ revenues and profitability.
Our franchisees may incur rising costs related to construction of new stores and maintenance of existing stores, including rising costs due to inflation, supply chain disruptions and other market conditions, which could adversely affect the attractiveness of our franchise model, and in turn our business, results of operations and financial condition.
We may be unable to successfully realize the anticipated benefits of the Sunshine Acquisition (as defined herein).
Our dependence on a limited number of suppliers for equipment and certain products and services could result in disruptions to our business and could adversely affect our revenues and gross profit.
Our business and results of operations have been and may in the future be materially impacted by the ongoing COVID-19 pandemic, and could be impacted by similar events in the future; and
the other factors identified under the heading “Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission.
The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Report. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future developments or otherwise.
4

PART I-FINANCIAL INFORMATION
1. Financial Statements
Planet Fitness, Inc. and subsidiaries
Condensed consolidated balance sheets
(Unaudited)
(Amounts in thousands, except per share amounts) 
 March 31, 2023December 31, 2022
Assets  
Current assets:  
Cash and cash equivalents
$460,425 $409,840 
Restricted cash
62,578 62,659 
Accounts receivable, net of allowances for uncollectible amounts of $0 and $0 as of March 31, 2023
   and December 31, 2022, respectively
20,750 46,242 
Inventory
4,996 5,266 
Restricted assets – national advertising fund
13,387  
Prepaid expenses
17,364 11,078 
Other receivables
6,570 14,975 
Income tax receivables2,689 5,471 
Total current assets588,759 555,531 
Property and equipment, net of accumulated depreciation of $251,251 and $227,869 as of
   March 31, 2023 and December 31, 2022, respectively
344,344 348,820 
Investments, net of allowances for expected credit losses of $15,212 and $14,957
   as of March 31, 2023 and December 31, 2022, respectively
25,085 25,122 
Right-of-use assets, net341,703 346,937 
Intangible assets, net404,490 417,067 
Goodwill702,690 702,690 
Deferred income taxes494,695 454,565 
Other assets, net3,799 3,857 
Total assets$2,905,565 $2,854,589 
Liabilities and stockholders’ deficit
Current liabilities:
Current maturities of long-term debt
$20,750 $20,750 
Accounts payable
16,961 20,578 
Accrued expenses
47,014 66,993 
Equipment deposits
12,851 8,443 
Deferred revenue, current
73,249 53,759 
Payable pursuant to tax benefit arrangements, current
31,940 31,940 
Other current liabilities
47,458 42,067 
Total current liabilities250,223 244,530 
Long-term debt, net of current maturities1,974,303 1,978,131 
Lease liabilities, net of current portion336,024 341,843 
Deferred revenue, net of current portion33,071 33,152 
Deferred tax liabilities1,459 1,471 
Payable pursuant to tax benefit arrangements, net of current portion464,840 462,525 
Other liabilities4,224 4,498 
Total noncurrent liabilities2,813,921 2,821,620 
Commitments and contingencies (Note 14)
Stockholders’ equity (deficit):
Class A common stock, $.0001 par value - 300,000 authorized, 85,230 and 83,430 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively
9 8 
Class B common stock, $.0001 par value - 100,000 authorized, 4,245 and 6,146 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively
 1 
Accumulated other comprehensive loss(367)(448)
Additional paid in capital
555,267 505,144 
Accumulated deficit
(706,017)(703,717)
Total stockholders’ deficit attributable to Planet Fitness Inc.(151,108)(199,012)
Non-controlling interests
(7,471)(12,549)
Total stockholders’ deficit(158,579)(211,561)
Total liabilities and stockholders’ deficit$2,905,565 $2,854,589 
 See accompanying notes to condensed consolidated financial statements
5

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of operations
(Unaudited)
(Amounts in thousands, except per share amounts)
 
 For the three months ended
March 31,
 20232022
Revenue:  
Franchise$75,878 $66,117 
National advertising fund revenue16,804 13,967 
Corporate-owned stores105,882 76,157 
Equipment23,661 30,435 
Total revenue222,225 186,676 
Operating costs and expenses:
Cost of revenue19,354 22,361 
Store operations66,015 47,535 
Selling, general and administrative27,767 30,826 
National advertising fund expense16,987 14,547 
Depreciation and amortization36,010 25,683 
Other losses (gains), net3,936 (2,933)
Total operating costs and expenses170,069 138,019 
Income from operations52,156 48,657 
Other expense, net:
Interest income3,931 209 
Interest expense(21,599)(22,631)
Other income113 4,090 
Total other expense, net(17,555)(18,332)
Income before income taxes34,601 30,325 
Equity losses of unconsolidated entities, net of tax(265)(238)
Provision for income taxes9,567 11,711 
Net income24,769 18,376 
Less net income attributable to non-controlling interests2,064 1,912 
Net income attributable to Planet Fitness, Inc.$22,705 $16,464 
Net income per share of Class A common stock:
Basic$0.27 $0.20 
Diluted$0.27 $0.19 
Weighted-average shares of Class A common stock outstanding:
Basic84,444 84,166 
Diluted84,787 84,635 
 
See accompanying notes to condensed consolidated financial statements.
6

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of comprehensive income
(Unaudited)
(Amounts in thousands)
 
 For the three months ended
March 31,
 20232022
Net income including non-controlling interests$24,769 $18,376 
Other comprehensive income, net:
Foreign currency translation adjustments81 85 
Total other comprehensive income, net81 85 
Total comprehensive income including non-controlling interests24,850 18,461 
Less: total comprehensive income attributable to non-controlling interests2,064 1,912 
Total comprehensive income attributable to Planet Fitness, Inc.$22,786 $16,549 
 
See accompanying notes to condensed consolidated financial statements.
7

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of cash flows
(Unaudited)
(Amounts in thousands)
 For the three months ended March 31,
 20232022
Cash flows from operating activities:  
Net income$24,769 $18,376 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization36,010 25,683 
Amortization of deferred financing costs1,360 1,369 
Amortization of asset retirement obligations95 17 
Dividends accrued on investment(483)(451)
Deferred tax expense8,082 10,940 
Loss on extinguishment of debt 1,583 
Equity losses of unconsolidated entities, net of tax265 238 
Loss (gain) on adjustment of allowance for credit losses on held-to-maturity investment255 (2,110)
Gain on re-measurement of tax benefit arrangement (3,788)
Loss on reacquired franchise rights 1,160 
Equity-based compensation2,049 2,850 
Other(139)(53)
Changes in operating assets and liabilities, excluding effects of acquisitions:
Accounts receivable25,619 14,415 
Inventory266 (589)
Other assets and other current assets2,010 (5,522)
Restricted assets - national advertising fund(13,387)(22,569)
Accounts payable and accrued expenses(19,928)(7,284)
Other liabilities and other current liabilities4,907 1,035 
Income taxes2,736 625 
Equipment deposits4,408 6,869 
Deferred revenue19,395 15,306 
Leases(379)(90)
Net cash provided by operating activities97,910 58,010 
Cash flows from investing activities:
Additions to property and equipment(22,997)(23,872)
Acquisition of franchises, net of cash acquired (425,834)
Net cash used in investing activities(22,997)(449,706)
Cash flows from financing activities:
Principal payments on capital lease obligations(56)(52)
Proceeds from issuance of long-term debt 900,000 
Proceeds from issuance of Variable Funding Notes 75,000 
Repayment of long-term debt and Variable Funding Notes(5,188)(634,250)
Payment of financing and other debt-related costs (16,191)
Proceeds from issuance of Class A common stock6,748 525 
Repurchase and retirement of Class A common stock(25,005) 
Distributions paid to members of Pla-Fit Holdings(1,106)(815)
Net cash (used in) provided by financing activities(24,607)324,217 
Effects of exchange rate changes on cash and cash equivalents198 206 
Net increase (decrease) in cash, cash equivalents and restricted cash50,504 (67,273)
Cash, cash equivalents and restricted cash, beginning of period472,499 603,941 
Cash, cash equivalents and restricted cash, end of period$523,003 $536,668 
Supplemental cash flow information:
Net (refund received) cash paid for income taxes$(1,016)$130 
Cash paid for interest$20,373 $16,874 
Non-cash investing activities:
Non-cash additions to property and equipment$11,682 $4,470 
Fair value of common stock issued as consideration for acquisition$ $393,730 
 See accompanying notes to condensed consolidated financial statements.
8

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of changes in equity (deficit)
(Unaudited)
(Amounts in thousands)
 Class A
common stock
Class B
common stock
Accumulated
other
comprehensive income
Additional paid-
in capital
Accumulated
deficit
Non-controlling
interests
Total (deficit)
equity
 SharesAmountSharesAmount
Balance at December 31, 202283,430 $8 6,146 $1 $(448)$505,144 $(703,717)$(12,549)$(211,561)
Net income— — — — — — 22,705 2,064 24,769 
Equity-based compensation expense
— — — — — 2,049 — — 2,049 
Exchanges of Class B common stock and other adjustments1,901 1 (1,901)(1)— (4,353)— 4,353  
Repurchase and retirement of Class A common stock(318)— — — — (25,005)— (25,005)
Exercise of stock options, vesting of restricted share units and ESPP share purchase
217 — — — — 6,524 — — 6,524 
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock and other adjustments— — — — — 45,903 — — 45,903 
Non-cash adjustments to VIEs
— — — — — — — (233)(233)
Distributions paid to members of Pla-Fit Holdings
— — — — — — — (1,106)(1,106)
Other comprehensive income— — — — 81 — — — 81 
Balance at March 31, 202385,230 $9 4,245 $ $(367)$555,267 $(706,017)$(7,471)$(158,579)
 
 Class A
common stock
Class B
common stock
Accumulated
other
comprehensive income
Additional paid-
in capital
Accumulated
deficit
Non-controlling
interests
Total (deficit)
equity
 SharesAmountSharesAmount
Balance at December 31, 202183,804 $8 3,056 $1 $12 $63,428 $(708,804)$2,510 $(642,845)
Net income— — — — — — 16,464 1,912 18,376 
Equity-based compensation expense
— — — — — 2,850 — — 2,850 
Exchanges of Class B common stock
548 — (548)— — (197)— 197  
Exercise of stock options, vesting of restricted share units and ESPP share purchase
38 — — — — 374 — — 374 
Issuance of common stock for acquisition517 — 3,638 — — 395,545 — (1,815)393,730 
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock
— — — — — 17,535 — — 17,535 
Non-cash adjustments to VIEs
— — — — — — — (228)(228)
Distributions paid to members of Pla-Fit Holdings
— — — — — — — (815)(815)
Other comprehensive income— — — — 85 — — — 85 
Balance at March 31, 202284,907 $8 6,146 $1 $97 $479,535 $(692,340)$1,761 $(210,938)


See accompanying notes to condensed consolidated financial statements.
9

Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


(1) Business organization
Planet Fitness, Inc. (the “Company”), through its subsidiaries, is a franchisor and operator of fitness centers, with more than 18.1 million members and 2,446 owned and franchised locations (referred to as stores) in 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia as of March 31, 2023.
The Company serves as the reporting entity for its various subsidiaries that operate three distinct lines of business:
Licensing and selling franchises under the Planet Fitness trade name;
Owning and operating fitness centers under the Planet Fitness trade name; and
Selling fitness-related equipment to franchisee-owned stores.
In 2012 investment funds affiliated with TSG Consumer Partners, LLC (“TSG”), purchased interests in Pla-Fit Holdings.
The Company was formed as a Delaware corporation on March 16, 2015 for the purpose of facilitating an initial public offering (the “IPO”) and related transactions in order to carry on the business of Pla-Fit Holdings, LLC and its subsidiaries (“Pla-Fit Holdings”). As of August 5, 2015, in connection with the recapitalization transactions, the Company became the sole managing member and holder of 100% of the voting power of Pla-Fit Holdings. Pla-Fit Holdings owns 100% of Planet Intermediate, LLC, which has no operations but is the 100% owner of Planet Fitness Holdings, LLC, a franchisor and operator of fitness centers. With respect to the Company, Pla-Fit Holdings and Planet Intermediate, LLC, each entity owns nothing other than the respective entity below it in the corporate structure and each entity has no other material operations.
The Company is a holding company whose principal asset is a controlling equity interest in the membership units (“Holdings Units”) in Pla-Fit Holdings. As the sole managing member of Pla-Fit Holdings, the Company operates and controls all of the business and affairs of Pla-Fit Holdings, and through Pla-Fit Holdings, conducts its business. As a result, the Company consolidates Pla-Fit Holdings’ financial results and reports a non-controlling interest related to the portion of Holdings Units not owned by the Company.
As of March 31, 2023, the Company held 100.0% of the voting interest and approximately 95.3% of the economic interest in Pla-Fit Holdings and the owners of Holdings Units other than the Company (the “Continuing LLC Owners”) held the remaining 4.7% economic interest in Pla-Fit Holdings. As future exchanges of Holdings Units occur, the economic interest in Pla-Fit Holdings held by Planet Fitness, Inc. will increase.

(2) Summary of significant accounting policies
(a) Basis of presentation and consolidation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated financial statements as of and for the three months ended March 31, 2023 and 2022 are unaudited. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”) filed with the SEC on March 1, 2023, as amended on March 2, 2023. The Company’s significant interim accounting policies include the proportional recognition of national advertising fund expenses within interim periods. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year.
10

Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)

(b) Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Significant areas where estimates and judgments are relied upon by management in the preparation of the consolidated financial statements include revenue recognition, valuation of equity-based compensation awards, valuation of assets and liabilities acquired in business combinations, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, allowance for expected credit losses, the present value of lease liabilities, income taxes, including deferred tax assets and liabilities, and the liability for the Company’s tax benefit arrangements.
(c) Fair Value
ASC 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:
Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 
The carrying value and estimated fair value of certain liabilities as of March 31, 2023 and December 31, 2022 were as follows:
March 31, 2023December 31, 2022
Carrying value
Estimated fair value(1)
Carrying value
Estimated fair value(1)
Liabilities
Long-term debt(1)
$2,020,000 $1,821,251 $2,025,188 $1,730,634 
(1) The estimated fair value of the Company’s fixed rate long-term debt is estimated primarily based on current bid prices for the long-term debt. Judgment is required to develop these estimates. As such, the fair value of long-term debt is classified within Level 2, as defined under U.S. GAAP.
(d) Recent accounting pronouncements
There are no recent accounting pronouncements that are expected to have a material impact on the Company’s financial position or results of operations.

(3) Investments
Investments - Debt securities
As of March 31, 2023, the Company’s debt security investment consists of redeemable preferred shares that are accounted for as a held-to-maturity investment. The Company’s investment is measured at amortized cost within investments in the condensed consolidated balance sheets. The Company reviews its held-to-maturity securities for expected credit losses under ASC Topic 326, Credit Impairment, on an ongoing basis.
During the three months ended March 31, 2023 and 2022, the Company’s review of the investee’s operations and financial position indicated that an adjustment to its allowance for expected credit losses was necessary. Based upon its analysis, the Company recorded a loss for the three months ended March 31, 2023 of $255 and a gain for the three months ended March 31, 2022 of $2,110, within other losses (gains), net on the consolidated statements of operations.
The amortized cost, including accrued dividends, of the Company’s held-to-maturity debt security investments was $28,760 and $28,277 and the allowance for expected credit losses was $15,212 and $14,957, as of March 31, 2023 and December 31, 2022, respectively. During the three months ended March 31, 2023 and 2022, the Company recognized dividend income of $483 and $451, respectively, within other income on the consolidated statements of operations.
11

Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)

As of March 31, 2023, all of the Company’s held-to-maturity investments had a contractual maturity in 2026.
A roll forward of the Company’s allowance for expected credit losses on held-to-maturity investments is as follows:
Three months ended March 31,
20232022
Beginning allowance for expected credit losses$14,957 $17,462 
Loss (gain) on adjustment of allowance for expected credit losses255 (2,110)
Write-offs, net of recoveries  
Ending allowance for expected credit losses$15,212 $15,352 
Equity method investments
On April 9, 2021, the Company acquired a 21% ownership in Bravo Fit Holdings Pty Ltd, the Company’s franchisee and store operator in Australia, which is deemed to be a related party, for $10,000. In the fourth quarter of 2022, the Company invested an additional $2,449 in Bravo Fit Holdings Pty Ltd. Following such additional investment, its ownership remained at 21%. For the three months ended March 31, 2023 and 2022, the Company’s proportionate share of the earnings in accordance with the equity method was a loss of $265 and $238, respectively, recorded within equity earnings of unconsolidated entities on the condensed consolidated statement of operations. The adjusted carrying value of the equity method investment was $11,537 and $11,802 as of March 31, 2023 and December 31, 2022, respectively.



12

Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)

(4) Acquisition
Sunshine Fitness Acquisition
On February 10, 2022, the Company and Pla-Fit Holdings (together with the Company, the “Buyers”), acquired 100% of the equity interests (“Sunshine Acquisition”) of Sunshine Fitness Growth Holdings, LLC, a Delaware limited liability company and Planet Fitness franchisee (“Sunshine Fitness”). The Company acquired 114 stores in Alabama, Florida, Georgia, North Carolina, and South Carolina from Sunshine Fitness. The purchase price of the acquisition was $824,587 consisting of $430,857 in cash consideration, and $393,730 of equity consideration, including 517,348 shares of Class A Common Stock, par value $0.0001, of the Company and 3,637,678 membership units of Pla-Fit Holdings, LLC, together with shares of Class B Common Stock, par value $0.0001, of the Company, valued based on the closing trading price of the Company’s Class A common stock on the acquisition date. As a result of the transaction, the Company incurred a loss on unfavorable reacquired franchise rights of $1,160, which has been reflected in other losses (gains), net in the condensed consolidated statement of operations. The loss reduced the net purchase price to $823,427. In connection with the acquisition, the Company recorded a gain of $2,059 related to the settlement of preexisting contracts with Sunshine Fitness within other losses (gains), net on the condensed consolidated statement of operations. The acquired stores are included in the corporate-owned stores segment.
The allocation of the estimated purchase consideration was as follows:
Amount
Cash and cash equivalents$5,917 
Other current assets757 
Property and equipment153,092 
Right of use assets162,827 
Other long term assets1,830 
Intangible assets259,430 
Goodwill488,544 
Deferred income taxes, net(54,737)
Deferred revenue(16,973)
Other current liabilities(13,720)
Lease liabilities(162,327)
Other long term liabilities(1,213)
$823,427 
The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions, which include Level 3 unobservable inputs, and are determined using generally accepted valuation techniques. The excess of purchase consideration over the fair value of other assets acquired and liabilities assumed was recorded as goodwill. The resulting goodwill is primarily attributable to increased expansion for market opportunities, the expansion of store membership and synergies from the integration of the stores into the broader corporate-owned store portfolio. Approximately $175,600 of the goodwill recorded is expected to be amortizable and deductible for tax purposes, the majority of which is deductible over 15 years.
13

Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)

The following table sets forth the components of identifiable intangible assets acquired in the Sunshine Acquisition and their estimated useful lives as of the date of the acquisition:
Fair valueUseful life
Reacquired franchise rights (1)
233,070 11.9
Customer relationships (2)
24,920 8.0
Reacquired area development rights (3)
1,440 5.0
Total intangible assets subject to amortization259,430 
(1) Reacquired franchise rights represent the fair value of the reacquired franchise agreements using the income approach, specifically, the multi-period excess earnings method.
(2) Customer relationships represent the fair value of the existing contractual customer relationships using the income approach, specifically, the multi-period excess earnings method.
(3) Reacquired area development rights represent the fair value of the undeveloped area development agreement rights using the cost approach.
The fair value of the identified intangible assets subject to amortization will be amortized over the assets’ estimated useful lives based on the pattern in which the economic benefits are expected to be received.
The following pro forma financial information for the three months ended March 31, 2022 summarizes the combined results of operations for the Company and Sunshine Fitness, as though the companies were combined as of the beginning of 2021. The three months ended March 31, 2023 total revenues, income before taxes, and net income are included within the condensed consolidated statement of operations.
Three months ended March 31,
2022
Total revenues207,126 
Income before taxes30,358 
Net income18,401 

(5) Sale of corporate-owned stores

On August 31, 2022, the Company sold 6 corporate-owned stores located in Colorado to a franchisee for $20,820. The net value of assets derecognized in connection with the sale amounted to $19,496, which included goodwill of $14,423, intangible assets of $2,629, and net tangible assets of $2,444, which resulted in a gain on sale of corporate-owned stores of $1,324 during the three months ended September 30, 2022.
(6) Goodwill and intangible assets
A summary of goodwill and intangible assets at March 31, 2023 and December 31, 2022 is as follows: 
March 31, 2023Gross
carrying
amount
Accumulated
amortization
Net carrying
Amount
Customer relationships$198,813 $(157,214)$41,599 
Reacquired franchise and area development rights268,058 (51,767)216,291 
 466,871 (208,981)257,890 
Indefinite-lived intangible:
Trade and brand names146,600 — 146,600 
Total intangible assets$613,471 $(208,981)$404,490 
Goodwill$702,690 $ $702,690 
 
14

Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)

December 31, 2022Gross
carrying
amount
Accumulated
amortization
Net carrying
Amount
Customer relationships$198,813 $(153,243)$45,570 
Reacquired franchise and area development rights268,058 (43,161)224,897 
 466,871 (196,404)270,467 
Indefinite-lived intangible:
Trade and brand names146,600 — 146,600 
Total intangible assets$613,471 $(196,404)$417,067 
Goodwill$702,690 $ $702,690 
The Company determined that no impairment charges were required during any periods presented.
Amortization expense related to the intangible assets totaled $12,587 and $8,528 for the three months ended March 31, 2023 and 2022, respectively. The anticipated annual amortization expense related to intangible assets to be recognized in future years as of March 31, 2023 is as follows:
 Amount
Remainder of 2023$37,730 
202447,601 
202535,476 
202631,024 
202727,119 
Thereafter78,940 
Total$257,890 
(7) Long-term debt
Long-term debt as of March 31, 2023 and December 31, 2022 consists of the following: 
 March 31, 2023December 31, 2022
2018-1 Class A-2-II notes$596,875 $598,438 
2019-1 Class A-2 notes532,125 533,500 
2022-1 Class A-2-I notes420,750 421,812 
2022-1 Class A-2-II notes470,250 471,437 
Total debt, excluding deferred financing costs2,020,000 2,025,187 
Deferred financing costs, net of accumulated amortization(24,947)(26,306)
Total debt1,995,053 1,998,881 
Current portion of long-term debt20,750 20,750 
Long-term debt and borrowings under Variable Funding Notes, net of current portion$1,974,303 $1,978,131 
15

Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)

Future annual principal payments of long-term debt as of March 31, 2023 are as follows: 
 Amount
Remainder of 2023$15,563 
202420,750 
2025600,436 
2026419,313 
202710,250 
Thereafter953,688 
Total$2,020,000 
On August 1, 2018, Planet Fitness Master Issuer LLC (the “Master Issuer”), a limited-purpose, bankruptcy remote, wholly-owned indirect subsidiary of Pla-Fit Holdings, LLC, entered into a base indenture and a related supplemental indenture (collectively, the “2018 Indenture”) under which the Master Issuer may issue multiple series of notes. On the same date, the Master Issuer issued Series 2018-1 4.262% Fixed Rate Senior Secured Notes, Class A-2-I (the “2018 Class A-2-I Notes”) with an initial principal amount of $575,000 and Series 2018-1 4.666% Fixed Rate Senior Secured Notes, Class A-2-II (the “2018 Class A-2-II Notes” and, together with the 2018 Class A-2-I Notes, the “2018 Notes”) with an initial principal amount of $625,000. In connection with the issuance of the 2018 Notes, the Master Issuer also entered into a revolving financing facility that allows for the incurrence of up to $75,000 in revolving loans and/or certain letters of credit (the “Letters of Credit”) under the Master Issuer’s Series 2018-1 Variable Funding Senior Notes, Class A-1 (the “2018 Variable Funding Notes”). The Company fully drew down on the 2018 Variable Funding Notes on March 20, 2020. On December 3, 2019, the Master Issuer issued Series 2019-1 3.858% Fixed Rate Senior Secured Notes, Class A-2 (the “2019 Notes” and, together with the 2018 Notes, the “Notes”) with an initial principal amount of $550,000. The 2019 Notes were issued under the 2018 Indenture and a related supplemental indenture dated December 3, 2019 (together, the “2019 Indenture”). On February 10, 2022, the Company completed a prepayment in full of its 2018 Class A-2-I Notes and an issuance of Series 2022-1 3.251% Fixed Rate Senior Secured Notes, Class A-2-I with an initial principal amount of $425,000 and Series 2022-1 4.008% Fixed Rate Senior Secured Notes, Class A-2-II with an initial principal amount of $475,000 (the “2022 Notes” and, together with the 2018 Notes and 2019 Notes, the “Notes”), and also entered into a new revolving financing facility that allows for the issuance of up to $75,000 in Variable Funding Notes (“2022 Variable Funding Notes”) and certain Letters of Credit (the issuance of such notes, the “Series 2022-I Issuance”). The 2022 Notes were issued under the 2018 Indenture and a related supplemental indenture dated February 10, 2022 (together, with the 2019 Indenture, the “Indenture”). Together, the Notes, 2018 Variable Funding Notes and 2022 Variable Funding Notes will be referred to as the “Securitized Senior Notes”. On February 10, 2022, the Company borrowed the full amount of the $75,000 2022 Variable Funding Notes and used such proceeds to repay the outstanding principal amount (together with all accrued and unpaid interest thereon) of the 2018 Variable Funding Notes in full. On May 9, 2022, the Company repaid in full its $75,000 of borrowings under the 2022 Variable Funding Notes using cash on hand.
The Notes were issued in securitization transactions pursuant to which most of the Company’s domestic revenue-generating assets, consisting principally of franchise-related agreements, certain corporate-owned store assets, equipment supply agreements and intellectual property and license agreements for the use of intellectual property, were assigned to the Master Issuer and certain other limited-purpose, bankruptcy remote, wholly-owned indirect subsidiaries of the Company that act as guarantors of the Securitized Senior Notes and that have pledged substantially all of their assets to secure the Securitized Senior Notes.
Interest and principal payments on the Notes are payable on a quarterly basis. The requirement to make such quarterly principal payments on the Notes is subject to certain financial conditions set forth in the Indenture. The legal final maturity date of the 2018 Class A-2-II Notes is in September 2048, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2018 Class A-2-II Notes will be repaid in or prior to September 2025. The legal final maturity date of the 2019 Notes is in December 2049, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2019 Notes will be repaid in or prior to December 2029. The legal final maturity date of the 2022 Notes is in February 2052, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2022 Class A-2-I Notes will be repaid in or prior to December 2026 and the 2022 Class A-2-II Notes will be repaid in or prior to December 2031 (together, the “Anticipated Repayment Dates”). If the Master Issuer has not repaid or refinanced the Notes prior to the respective Anticipated Repayment Dates, additional interest will accrue pursuant to the Indenture.
As noted above, the Company borrowed the full $75,000 in 2022 Variable Funding Notes on February 10, 2022, which was repaid in full using cash on hand on May 9, 2022. If outstanding, the 2022 Variable Funding Notes will accrue interest at a
16

Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)

variable interest rate based on (i) the prime rate, (ii) overnight federal funds rates, (iii) the secured overnight financing rate for U.S. Dollars, or (iv) with respect to advances made by conduit investors, the weighted average cost of, or related to, the issuance of commercial paper allocated to fund or maintain such advances, in each case plus any applicable margin and as specified in the 2022 Variable Funding Notes. There is a commitment fee on the unused portion of the 2022 Variable Funding Notes of 0.5% based on utilization. It is anticipated that the principal and interest on the 2022 Variable Funding Notes, if any, will be repaid in full on or prior to December 2026, subject to two additional one-year extension options. Following the anticipated repayment date (and any extensions thereof), additional interest will accrue on the 2022 Variable Funding Notes equal to 5.0% per year.
In connection with the issuance of the 2018 Notes, 2019 Notes, and 2022 Notes, the Company incurred debt issuance costs of $27,133, $10,577, and $16,193 respectively. The debt issuance costs are being amortized to interest expense through the Anticipated Repayment Dates of the Notes utilizing the effective interest rate method. As a result of the repayment of the 2018 Class A-2-I Notes prior to the Anticipated Repayment Date, the Company recorded a loss on early extinguishment of debt of $1,583 within interest expense on the Consolidated statements of operations, consisting of the write-off of remaining unamortized deferred financing costs related to the issuance of the 2018 Class A-2-I Notes.
The Securitized Senior Notes are subject to covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Securitized Senior Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the assets pledged as collateral for the Securitized Senior Notes are in stated ways defective or ineffective, (iv) a cap on non-securitized indebtedness of $50,000 (provided that the Company may incur non-securitized indebtedness in excess of such amount, subject to the leverage ratio cap described below, under certain conditions, including if the relevant lenders execute a non-disturbance agreement that acknowledges the bankruptcy-remote status of the Master Issuer and its subsidiaries and of their respective assets), (v) a leverage ratio cap incurrence test on the Company of 7.0x (calculated without regard for any indebtedness subject to the $50,000 cap) and (vi) covenants relating to recordkeeping, access to information and similar matters.
Pursuant to a parent company support agreement, the Company has agreed to cause its subsidiary to perform each of its obligations (including any indemnity obligations) and duties under the Management Agreement and under the contribution agreements entered into in connection with the securitized financing facility, in each case as and when due. To the extent that such subsidiary has not performed any such obligation or duty within the prescribed time frame after such obligation or duty was required to be performed, the Company has agreed to either (i) perform such obligation or duty or (ii) cause such obligations or duties to be performed on the Company’s behalf.
The Securitized Senior Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, certain manager termination events, an event of default, and the failure to repay or refinance the Notes on the applicable scheduled Anticipated Repayment Dates. The Securitized Senior Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal, or other amounts due on or with respect to the Securitized Senior Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments.
In accordance with the Indenture, certain cash accounts have been established with the Indenture trustee (the “Trustee”) for the benefit of the trustee and the noteholders, and are restricted in their use. The Company holds restricted cash which primarily represents cash collections held by the Trustee, interest, principal, and commitment fee reserves held by the Trustee related to the Securitized Senior Notes. As of March 31, 2023, the Company had restricted cash held by the Trustee of $46,570.
17

Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)

(8) Leases
LeasesClassificationMarch 31, 2023December 31, 2022
Assets
Operating lease ROU assetsRight of use asset, net$341,703 $346,937 
Finance lease assetsProperty and equipment, net314 370 
Total lease assets$342,017 $347,307 
Liabilities
Current:
OperatingOther current liabilities$35,519 $33,233 
Noncurrent:
OperatingLease liabilities, net of current portion336,024 341,843 
FinancingOther liabilities324 380 
Total lease liabilities$371,867 $375,456 
Weighted-average remaining lease term (years) - operating leases7.98.1
Weighted-average discount rate - operating leases4.8 %4.7 %

During the three months ended March 31, 2023 and 2022, the components of lease cost were as follows:
Three months ended March 31,
20232022
Operating lease cost$14,904 $11,595 
Variable lease cost5,751 4,614 
Total lease cost$20,655 $16,209 

The Company’s costs related to short-term leases, those with a duration between one and twelve months, were immaterial.

Supplemental disclosures of cash flow information related to leases were as follows:
Three months ended March 31,
20232022
Cash paid for lease liabilities$13,302 $10,536 
Operating lease ROU assets obtained in exchange for operating
   lease liabilities, excluding the Sunshine Acquisition
$4,661 $5,997 
Sunshine Acquisition operating lease ROU assets
   obtained in exchange for operating lease liabilities
$ $162,827 

18

Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)

As of March 31, 2023, maturities of lease liabilities were as follows:
Amount
Remainder of 2023$36,996 
202460,520 
202561,529 
202660,858 
202756,087 
Thereafter175,331 
Total lease payments$451,321 
Less: imputed interest79,454 
Present value of lease liabilities$371,867 

As of March 31, 2023, future operating lease payments exclude approximately $32,037 of legally binding minimum lease payments for leases signed but not yet commenced.
(9) Revenue recognition
Contract Liabilities
Contract liabilities consist primarily of deferred revenue resulting from initial and renewal franchise fees and area development agreement (“ADA”) fees paid by franchisees, as well as transfer fees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement, and national advertising fund (“NAF”) revenue billed in advance of satisfaction of the Company’s performance obligation. Also included are corporate-owned store enrollment fees, annual fees and monthly fees as well as deferred equipment rebates relating to its equipment business. The Company classifies these contract liabilities as deferred revenue in its condensed consolidated balance sheets.
The following table reflects the change in contract liabilities between December 31, 2022 and March 31, 2023:
Contract liabilities
Balance at December 31, 2022$86,911 
Revenue recognized that was included in the contract liability at the beginning of the year(30,159)
Increase, excluding amounts recognized as revenue during the period49,568 
Balance at March 31, 2023$106,320 
The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2023. The Company has elected to exclude short-term contracts, sales and usage-based royalties and any other variable consideration recognized on an “as invoiced” basis.
Contract liabilities to be recognized in:Amount
Remainder of 2023$69,023 
20248,466 
2025</