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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 September 30, 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 November 2, 2023 there were 85,438,502 shares of the Registrant’s Class A Common Stock, par value $0.0001 per share, outstanding and 2,708,410 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; 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.
•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.
•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) 
 September 30, 2023December 31, 2022
Assets  
Current assets:  
Cash and cash equivalents$308,970 $409,840 
Restricted cash46,381 62,659 
Short-term marketable securities108,460 — 
Accounts receivable, net of allowances for uncollectible amounts of $0 and $0 as of
   September 30, 2023 and December 31, 2022, respectively
36,362 46,242 
Inventory7,536 5,266 
Prepaid expenses18,073 11,078 
Other receivables8,678 14,975 
Income tax receivables5,659 5,471 
Total current assets540,119 555,531 
Long-term marketable securities10,252 — 
Property and equipment, net of accumulated depreciation of $296,677 and $227,869 as of
   September 30, 2023 and December 31, 2022, respectively
366,780 348,820 
Investments, net of allowances for expected credit losses of $14,951 and $14,957
   as of September 30, 2023 and December 31, 2022, respectively
46,037 25,122 
Right-of-use assets, net381,819 346,937 
Intangible assets, net385,462 417,067 
Goodwill717,502 702,690 
Deferred income taxes492,965 454,565 
Other assets, net3,911 3,857 
Total assets$2,944,847 $2,854,589 
Liabilities and stockholders’ deficit
Current liabilities:
Current maturities of long-term debt$20,750 $20,750 
Accounts payable28,364 20,578 
Accrued expenses56,430 66,993 
Equipment deposits13,933 8,443 
Restricted liabilities – national advertising fund805 — 
Deferred revenue, current64,352 53,759 
Payable pursuant to tax benefit arrangements, current38,193 31,940 
Other current liabilities50,019 42,067 
Total current liabilities272,846 244,530 
Long-term debt, net of current maturities1,966,682 1,978,131 
Lease liabilities, net of current portion379,810 341,843 
Deferred revenue, net of current portion32,670 33,152 
Deferred tax liabilities1,397 1,471 
Payable pursuant to tax benefit arrangements, net of current portion451,569 462,525 
Other liabilities4,803 4,498 
Total noncurrent liabilities2,836,931 2,821,620 
Commitments and contingencies (Note 14)
Stockholders’ equity (deficit):
Class A common stock, $.0001 par value - 300,000 authorized, 85,410 and 83,430 shares issued and
   outstanding as of September 30, 2023 and December 31, 2022, respectively
9 8 
Class B common stock, $.0001 par value - 100,000 authorized, 2,733 and 6,146 shares issued and
   outstanding as of September 30, 2023 and December 31, 2022, respectively
— 1 
Accumulated other comprehensive loss(684)(448)
Additional paid in capital570,397 505,144 
Accumulated deficit(726,800)(703,717)
Total stockholders’ deficit attributable to Planet Fitness Inc.(157,078)(199,012)
Non-controlling interests(7,852)(12,549)
Total stockholders’ deficit(164,930)(211,561)
Total liabilities and stockholders’ deficit$2,944,847 $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
September 30,		For the nine months ended
September 30,
 2023202220232022
Revenue:  
Franchise$80,587 $66,168 $237,313 $200,243 
National advertising fund revenue17,578 14,578 52,378 43,130 
Corporate-owned stores113,245 101,330 332,885 278,940 
Equipment66,141 62,310 163,664 133,191 
Total revenue277,551 244,386 786,240 655,504 
Operating costs and expenses:
Cost of revenue53,751 48,531 132,561 103,436 
Store operations63,120 57,892 188,011 161,789 
Selling, general and administrative33,290 27,148 93,705 86,176 
National advertising fund expense17,618 17,009 52,496 50,445 
Depreciation and amortization37,477 32,572 110,254 90,427 
Other (gains) losses, net(56)(700)7,705 (2,452)
Total operating costs and expenses205,200 182,452 584,732 489,821 
Income from operations72,351 61,934 201,508 165,683 
Other expense, net:
Interest income4,245 1,561 12,339 2,244 
Interest expense(21,704)(21,917)(64,771)(66,527)
Other income, net148 4,762 631 9,000 
Total other expense, net(17,311)(15,594)(51,801)(55,283)
Income before income taxes55,040 46,340 149,707 110,400 
Equity losses of unconsolidated entities, net of tax(242)(2)(580)(334)
Provision for income taxes13,474 15,661 38,855 35,942 
Net income41,324 30,677 110,272 74,124 
Less net income attributable to non-controlling interests2,190 3,764 7,299 8,405 
Net income attributable to Planet Fitness, Inc.$39,134 $26,913 102,973 $65,719 
Net income per share of Class A common stock:
Basic$0.46 $0.32 $1.22 $0.78 
Diluted$0.46 $0.32 $1.21 $0.78 
Weighted-average shares of Class A common stock outstanding:
Basic84,610 84,156 84,558 84,377 
Diluted84,886 84,547 84,870 84,798 
 
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
September 30,		For the nine months ended
September 30,
 2023202220232022
Net income including non-controlling interests$41,324 $30,677 $110,272 $74,124 
Other comprehensive (loss) income, net:
Foreign currency translation adjustments(393)(516)17 (638)
Change in unrealized gain (loss) on marketable securities, net of tax42 — (253)— 
Total other comprehensive (loss) income, net(351)(516)(236)(638)
Total comprehensive income including non-controlling interests40,973 30,161 110,036 73,486 
Less: total comprehensive income attributable to non-controlling interests2,190 3,764 7,299 8,405 
Total comprehensive income attributable to Planet Fitness, Inc.$38,783 $26,397 $102,737 $65,081 
 
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 nine months ended September 30,
 20232022
Cash flows from operating activities:  
Net income$110,272 $74,124 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization110,254 90,427 
Amortization of deferred financing costs4,114 4,129 
Write-off of deferred financing costs— 1,583 
Accretion of marketable securities discount(2,224)— 
Dividends accrued on investment(1,490)(1,391)
Deferred tax expense34,884 35,026 
Equity losses of unconsolidated entities, net of tax580 334 
Gain on adjustment of allowance for credit losses on held-to-maturity investment(6)(1,572)
Gain on re-measurement of tax benefit arrangement— (8,381)
Loss on reacquired franchise rights110 1,160 
Gain on sale of corporate-owned stores— (1,324)
Equity-based compensation6,326 6,942 
Other133 267 
Changes in operating assets and liabilities, excluding effects of acquisitions:
Accounts receivable10,086 (7,477)
Inventory(2,270)(3,071)
Other assets and other current assets(1,722)(567)
Restricted liabilities (assets) - national advertising fund805 (1,773)
Accounts payable and accrued expenses(7,488)(22,521)
Other liabilities and other current liabilities6,855 1,728 
Income taxes(104)(2,111)
Payable pursuant to tax benefit arrangements(21,780)(14,211)
Equipment deposits5,495 26,049 
Deferred revenue9,428 11,506 
Leases4,662 1,550 
Net cash provided by operating activities266,920 190,426 
Cash flows from investing activities:
Additions to property and equipment(84,636)(65,138)
Acquisition of franchisees, net of cash acquired(26,264)(424,940)
Proceeds from sale of corporate-owned stores— 20,820 
Proceeds from sale of property and equipment2 60 
Purchases of marketable securities(155,007)— 
Maturities of marketable securities37,990 — 
Other investments(20,000)— 
Net cash used in investing activities(247,915)(469,198)
Cash flows from financing activities:
Principal payments on capital lease obligations(152)(207)
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(15,563)(719,625)
Payment of financing and other debt-related costs— (15,951)
Proceeds from issuance of Class A common stock8,575 779 
Repurchase and retirement of Class A common stock(125,030)(94,314)
Distributions paid to members of Pla-Fit Holdings(4,216)(2,945)
Net cash (used in) provided by financing activities(136,386)142,737 
Effects of exchange rate changes on cash and cash equivalents233 (729)
Net decrease in cash, cash equivalents and restricted cash(117,148)(136,764)
Cash, cash equivalents and restricted cash, beginning of period472,499 603,941 
Cash, cash equivalents and restricted cash, end of period$355,351 $467,177 
Supplemental cash flow information:
Net cash paid for income taxes$4,394 $3,072 
Cash paid for interest$60,964 $60,535 
Non-cash investing & financing activities:
Non-cash additions to property and equipment$20,590 $11,566 
Accrued taxes on share repurchases$1,048 $— 
Fair value of common stock issued as consideration for acquisition$— $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 loss		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— — — — — — 102,973 7,299 110,272 
Equity-based compensation expense— — — — — 6,326 — — 6,326 
Exchanges of Class B common stock and other adjustments3,413 1 (3,413)(1)— (9,096)— 9,096 — 
Repurchase and retirement of Class A common stock(1,699)— — — — 3,117 (126,078)(3,117)(126,078)
Exercise of stock options, vesting of restricted share units and ESPP share purchase266 — — — — 8,611 — — 8,611 
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock and other adjustments— — — — — 56,295 — — 56,295 
Non-cash adjustments to VIEs— — — — — — — (389)(389)
Deconsolidation of VIEs— — — — — — 22 (3,976)(3,954)
Distributions paid to members of Pla-Fit Holdings— — — — — — — (4,216)(4,216)
Other comprehensive loss— — — — (236)— — — (236)
Balance at September 30, 202385,410 $9 2,733 $— $(684)$570,397 $(726,800)$(7,852)$(164,930)

 
 Class A
common stock		Class B
common stock		Accumulated
other
comprehensive income (loss)		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— — — — — — 65,719 8,405 74,124 
Equity-based compensation expense
— — — — — 6,942 — — 6,942 
Exchanges of Class B common stock and other adjustments548 — (548)— — 22,534 — (22,534)— 
Repurchase and retirement of Class A common stock(1,528)— — — — 6,426 (94,314)(6,426)(94,314)
Exercise of stock options, vesting of restricted share units and ESPP share purchase
73 — — — — 998 — — 998 
Issuance of common stock for acquisition517 — 3,638 — — 416,509 — (22,779)393,730 
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock and other adjustments— — — — — 17,528 — — 17,528 
Non-cash adjustments to VIEs
— — — — — — — (686)(686)
Distributions paid to members of Pla-Fit Holdings
— — — — — — — (2,945)(2,945)
Other comprehensive loss— — — — (638)— — — (638)
Balance at September 30, 202283,414 $8 6,146 $1 $(626)$534,365 $(737,399)$(44,455)$(248,106)





9
 Class A
common stock		Class B
common stock		Accumulated
other
comprehensive
loss		Additional paid-
in capital		Accumulated
deficit		Non-controlling
interests		Total (deficit)
equity
 SharesAmountSharesAmount
Balance at June 30, 202383,980 $9 4,151 $— $(333)$564,170 $(765,815)$(13,992)$(215,961)
Net income— — — — — — 39,134 2,190 41,324 
Equity-based compensation expense— — — — — 1,533 — — 1,533 
Exchanges of Class B common stock1,418 — (1,418)— — (4,430)— 4,430 — 
Exercise of stock options, vesting of restricted share units and ESPP share purchase12 — — — — 591 — — 591 
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock— — — — — 8,533 — — 8,533 
Deconsolidation of VIEs— — — — — — (119)— (119)
Distributions paid to members of Pla-Fit Holdings— — — — — — — (480)(480)
Other comprehensive loss— — — — (351)— — — (351)
Balance at September 30, 202385,410 $9 2,733 $— $(684)$570,397 $(726,800)$(7,852)$(164,930)


 Class A
common stock		Class B
common stock		Accumulated
other
comprehensive
loss		Additional paid-
in capital		Accumulated
deficit		Non-controlling
interests		Total (deficit)
equity
 SharesAmountSharesAmount
Balance at June 30, 202284,230 $8 6,146 $1 $(110)$529,026 $(714,297)$(43,636)$(229,008)
Net income— — — — — — 26,913 3,764 30,677 
Equity-based compensation expense— — — — — 1,341 — — 1,341 
Repurchase and retirement of Class A common stock(831)— — — — 3,432 (50,015)(3,432)(50,015)
Exercise of stock options, vesting of restricted share units and ESPP share purchase15 — — — — 624 — — 624 
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock and other adjustments— — — — — (58)— — (58)
Non-cash adjustments to VIEs— — — — — — — (229)(229)
Distributions paid to members of Pla-Fit Holdings— — — — — — — (922)(922)
Other comprehensive loss— — — — (516)— — — (516)
Balance at September 30, 202283,414 $8 6,146 $1 $(626)$534,365 $(737,399)$(44,455)$(248,106)

See accompanying notes to condensed consolidated financial statements.
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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 18.5 million members and 2,498 owned and franchised locations (referred to as stores) in 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia as of September 30, 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 September 30, 2023, the Company held 100.0% of the voting interest and approximately 96.9% 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 3.1% 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 and nine months ended September 30, 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.
11
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, valuation of certain investments and other financial instruments including valuation of investments without readily determinable fair values, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, allowance for expected credit losses, contingent liabilities, 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) Marketable securities
Marketable securities primarily consist of commercial paper, corporate debt securities, U.S. treasury securities, and U.S. government agency securities. We classify our marketable securities as available-for-sale at the time of purchase and reevaluate such classification at each balance sheet date. We may sell these securities at any time for use in current operations even if they have not yet reached maturity. The Company invests in a diversified portfolio of marketable securities and limits the concentration of its investment in any particular security. Securities with maturities greater than three months, but less than one year, are included in current assets and securities with maturities greater than one year are included within investments in non-current assets on the consolidated balance sheets. All marketable securities classified as available-for-sale are reported at fair value.
If the estimated fair value of an available-for-sale debt security is below its amortized cost basis, then the Company evaluates the security for impairment. The Company considers its intent to sell the security or whether it is more likely than not that it will be required to sell the security before recovery of its amortized basis. If either of these criteria are met, the debt security’s amortized cost basis is written down to fair value through other income (expense), net in the consolidated statements of operations. If neither of these criteria are met, the Company evaluates whether unrealized losses have resulted from a credit loss or other factors. The factors considered in determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis, changes to the rating of the security by a rating agency, any adverse conditions specifically related to the security, as well as other factors. An impairment relating to credit losses is recorded through an allowance for credit losses reported in other income (expense), net in the consolidated statements of operations. The allowance is limited by the amount that the fair value of the debt security is below its amortized cost basis. When a credit loss exists, the Company compares the present value of cash flows expected to be collected from the debt security with the amortized cost basis of the security to determine what allowance amount, if any, should be recorded. Unrealized gains or losses not resulting from credit losses are recorded through accumulated other comprehensive income (loss). Realized gains and losses from the sale of marketable securities are determined based on the specific identification method. Realized gains and losses are reported in other income (expense), net in the consolidated statements of operations. Interest income from marketable securities is recognized as earned within the condensed consolidated statement of operations.
(d) 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.
 
12
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

The fair value measurements and levels of marketable securities are included in Note 3.
The carrying value and estimated fair value of certain liabilities as of September 30, 2023 and December 31, 2022 were as follows:
September 30, 2023December 31, 2022
Carrying valueEstimated fair valueCarrying valueEstimated fair value
Liabilities
Long-term debt(1)
$2,009,625 $1,763,500 $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.
(e) 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.
13
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

(3) Investments
Investments - Marketable securities
The following table summarizes the amortized cost, gross unrealized gains (losses), and fair value of the Company’s cash equivalents and marketable securities:
September 30, 2023
Amortized CostUnrealized GainsUnrealized LossesFair ValueCash EquivalentsMarketable Securities
Level 1
Money market funds$981 $— $— $981 $981 $— 
Level 2
Commercial paper74,471 — (86)74,385 7,955 66,430 
Corporate debt securities44,252 — (157)44,095 — 44,095 
U.S. treasury securities4,988 — (5)4,983 — 4,983 
U.S. government agency securities3,209 — (5)3,204 — 3,204 
Total level 2126,920 — (253)126,667 7,955 118,712 
Total$127,901 $— $(253)$127,648 $8,936 $118,712 
The Company held no marketable securities as of December 31, 2022. The Company primarily invests in current marketable debt securities with a maximum weighted average duration of up to twelve months. As of September 30, 2023, the fair value of non-current marketable debt securities with a maturity beyond twelve months from the end of the period was $10,252, which are included within long-term marketable securities in the consolidated balance sheet. The remainder of the marketable securities are classified as current. Fair values were determined using market prices from third-party pricing sources.
For marketable securities with unrealized loss positions, the Company does not intend to sell these securities and it is more likely than not that the Company will hold these securities until maturity or a recovery of the cost basis and they are therefore all categorized as available for sale. No allowance for credit losses was recorded for these securities as of September 30, 2023.
Investments - Held-to-maturity debt securities
As of September 30, 2023, the Company’s debt security investment consists of redeemable preferred shares that are accounted for as a held-to-maturity investment, with a contractual maturity in 2026. 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 and nine months ended September 30, 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. A roll forward of the Company’s allowance for expected credit losses on held-to-maturity investments is as follows:
Three months ended September 30,Nine months ended September 30,
2023202220232022
Beginning allowance for expected credit losses$15,052 $15,617 $14,957 $17,462 
(Gain) loss on adjustment of allowance for expected credit losses(101)273 (6)(1,572)
Write-offs, net of recoveries— — — — 
Ending allowance for expected credit losses$14,951 $15,890 $14,951 $15,890 
The amortized cost, including accrued dividends, of the Company’s held-to-maturity debt security investments was $29,767 and $28,277 and the allowance for expected credit losses was $14,951 and $14,957, as of September 30, 2023 and December 31, 2022, respectively. During the three months ended September 30, 2023 and 2022, the Company recognized dividend income of $511 and $477, respectively, and during the nine months ended September 30, 2023 and 2022, of $1,490 and $1,391, respectively, within other income on the consolidated statements of operations.
14
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

Equity method investments
On April 9, 2021, the Company acquired a 21% ownership interest 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, the Company’s ownership remained at 21%. For the three months ended September 30, 2023 and 2022, the Company’s proportionate share of the earnings in accordance with the equity method was a loss of $94 and $2, respectively, and for the nine months ended September 30, 2023 and 2022, the Company’s proportionate share of the earnings was a loss of $432 and $334, 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 $11,370 and $11,802 as of September 30, 2023 and December 31, 2022, respectively.
On June 23, 2023, the Company acquired a 12.5% ownership interest for $10,000 in Planet Fitmex, LLC, which is classified as an equity method investment as a result of its organizational structure. In August 2023, the Company invested an additional $10,000 in Planet Fitmex, LLC. Following such additional investment, the Company’s ownership stake increased to 22.2% with a total investment of $20,000. Planet Fitmex, LLC, is a franchisee of the Company, store operator in Mexico, and is deemed to be a related party. For both the three and nine months ended September 30, 2023, the Company’s proportionate share of the earnings was a loss of $148 recorded within equity earnings of unconsolidated entities on the condensed consolidated statement of operations. The adjusted carrying value of the equity method investment was $19,852 as of September 30, 2023.
Subsequent to quarter end, in November 2023, the Company invested an additional $15,596 in Planet Fitmex, LLC, and following such additional investment, the Company’s ownership stake increased to 25.2%.

(4) Acquisitions
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 following pro forma financial information for the nine months ended September 30, 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 and nine months ended September 30, 2023 and the three months ended September 30, 2022 total revenues, income before taxes, and net income are included within the condensed consolidated statements of operations.
For the nine months ended September 30, 2022
Total revenues$675,954 
Income before taxes110,246 
Net income74,008 

15
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

Florida acquisition
On April 16, 2023, the Company purchased from one of its franchisees a majority of the assets associated with four franchisee stores operating in Florida (the “Florida Acquisition”) for approximately $26,264. As a result of the transaction, the Company incurred a loss on unfavorable reacquired franchise rights of $110, which is included in other losses (gains), net on the condensed consolidated statement of operations. The loss incurred reduced the net purchase price to $26,154. The Company financed the purchase through cash on hand. The acquired stores are included in the Corporate-owned stores segment.
The preliminary allocation of the purchase consideration was as follows:
Amount
Property and equipment$3,851 
Right of use assets5,424 
Other long-term assets95 
Intangible assets6,880 
Goodwill14,812 
Deferred revenue(687)
Other current liabilities(17)
Lease liabilities(4,204)
Total$26,154 
The goodwill created through the purchase is attributable to the assumed future value of the cash flows from the stores acquired. The goodwill is amortizable and deductible for tax purposes over 15 years.
The following table sets forth the components of identifiable intangible assets acquired in the Florida Acquisition and their estimated useful lives as of the date of the acquisition:
Preliminary Fair ValuePreliminary Useful Life
Reacquired franchise rights(1)
$6,650 6.8
Customer relationships(2)
230 6.0
Total intangible assets subject to amortization$6,880 
(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.
The acquisition did not have a material effect on the results of operations of the Company.
Certain estimated values for the Florida Acquisition, including goodwill and intangible assets, are not yet finalized and are subject to revision as additional information becomes available and more detailed analyses are completed.

(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.
16
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

(6) Goodwill and intangible assets
A summary of goodwill and intangible assets at September 30, 2023 and December 31, 2022 is as follows: 
September 30, 2023Gross
carrying
amount		Accumulated
amortization		Net carrying
Amount
Customer relationships$199,043 $(165,174)$33,869 
Reacquired franchise and area development rights274,708 (69,715)204,993 
 473,751 (234,889)238,862 
Indefinite-lived intangible:
Trade and brand names146,600 — 146,600 
Total intangible assets$620,351 $(234,889)$385,462 
Goodwill$717,502 $— $717,502 
 
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 
A roll forward of goodwill between December 31, 2022 and September 30, 2023 is as follows:
FranchiseCorporate-owned storesEquipmentTotal
As of December 31, 2022
$16,938 $593,086 $92,666 $702,690 
Acquisition of franchisee-owned stores— 14,812 — 14,812 
As of September 30, 2023
$16,938 $607,898 $92,666 $717,502 
The Company determined that no impairment charges were required during any periods presented.
Amortization expense related to the intangible assets totaled $12,965 and $10,611 for the three months ended September 30, 2023 and 2022, respectively, and $38,517 and $29,644 for the nine months ended September 30, 2023 and 2022, respectively. The anticipated annual amortization expense related to intangible assets to be recognized in future years as of September 30, 2023 is as follows:
 Amount
Remainder of 2023$12,954 
202449,190 
202536,713 
202632,079 
202727,956 
Thereafter79,970 
Total$238,862 
17
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements (Unaudited)
(Amounts in thousands, except share and per share amounts)

(7) Long-term debt
Long-term debt as of September 30, 2023 and December 31, 2022 consists of the following: 
 September 30, 2023December 31, 2022
2018-1 Class A-2-II notes$593,750 $598,438 
2019-1 Class A-2 notes529,375 533,500 
2022-1 Class A-2-I notes418,625 421,812 
2022-1 Class A-2-II notes467,875 471,437 
Total debt, excluding deferred financing costs2,009,625 2,025,187 
Deferred financing costs, net of accumulated amortization(22,193)(26,306)
Total debt1,987,432 1,998,881 
Current portion of long-term debt20,750 20,750 
Long-term debt, net of current portion$1,966,682 $1,978,131 
Future annual principal payments of long-term debt as of September 30, 2023 are as follows: