Fair value guidance defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses a three-level hierarchy established by the FASB that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach, and cost approach).

The levels of the fair value hierarchy are described below:

Investments held for the Deferred Compensation Plan—The Company records the fair value of the investments and cash and cash equivalents held for the deferred compensation plan in other assets on the unaudited condensed consolidated balance sheets. The carrying value of cash and cash equivalents held in the fund approximates fair value, and the amounts were not material as of July 4, 2026 and January 3, 2026. The investments held in the plan consist of mutual funds and money market funds with fair values that can be corroborated by prices for identical assets and therefore are classified as Level 1 investments under the fair value hierarchy.

Goodwill and Long-Lived Assets—Fair value assessments of the reporting units utilized within the goodwill impairment test are considered Level 3 measurements due to the significance of unobservable inputs developed using Company specific information. Specifically, during the first quarter of the fiscal year ending January 2, 2027, the market approach utilized for the quantitative goodwill impairment test incorporated Level 3 inputs including the application of a control premium, which was estimated using expected synergies that would be realized by a hypothetical buyer. No goodwill impairment test was required during the three months ended July 4, 2026.

During the three and six months ended both July 4, 2026 and June 28, 2025, triggering events occurred at specific center asset groups due to lower-than-expected center operating performance or a decision to close a center prior to the end of its lease term, which resulted in reduced cash flow projections over the remaining center asset groups' useful lives. The initial recoverability test identified specific center asset groups, comprised of property and equipment and lease ROU assets, that had carrying values in excess of the estimated undiscounted future cash flows. For those center asset groups, a fair value assessment was performed using the discounted cash flow (“DCF”) method under the income approach and impairments of property and equipment and lease ROU assets were recognized. Fair value assessments performed for long-lived assets are considered a Level 3 measurement as the Company typically estimates fair value of the asset group using the DCF method under the income approach which is based on unobservable inputs including future cash flow projections, market-based inputs including as-is market rents, and discount rate assumptions, as appropriate.

Refer to Note 5, Goodwill, and Note 6, Leases, for additional information regarding the Company's Goodwill and ROU assets.

Derivative Financial Instruments—The Company's derivative financial instruments include interest rate derivative contracts. The fair value of derivative financial instruments is determined using observable market inputs such as quoted prices for similar instruments, forward pricing curves, and interest rates, and considers nonperformance risk of the Company and its counterparties, and as such, derivative financial instruments are classified as Level 2. The Company’s derivative financial instruments are subject to master netting arrangements that allow for the offset of assets and liabilities in the event of default or early termination of the contracts. As of July 4, 2026, interest rate derivatives of $0.7 million were recorded in prepaid expenses and other current assets, $0.7 million were recorded in other assets, and $0.2 million were recorded in other current liabilities on the unaudited condensed consolidated balance sheets. As of January 3, 2026, interest rate derivatives of $3.6 million were recorded in other current liabilities and $2.6 million were recorded in other long-term liabilities on the unaudited condensed consolidated balance sheets. Refer to Note 4, Prepaid Expenses and Other Current Assets, Note 7, Other Current Liabilities, and Note 9, Risk Management and Derivatives, for additional information regarding the Company’s derivative financial instruments.

Long-Term Debt—The Company records long-term debt on the unaudited condensed consolidated balance sheets net of unamortized issuance costs. The estimated fair value of first lien term loans was $921.4 million as of July 4, 2026 and $938.0 million as of January 3, 2026 and is based on mid-point prices, or prices for similar instruments from active markets, on the balance sheet date. Judgment is required to develop these estimates, and as such, the first lien term loan and the first lien revolving credit facility are classified as Level 2. Refer to Note 8, Long-term Debt, for additional information regarding the Company's long-term debt.

Other Financial Instruments—The carrying value of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued liabilities approximates fair value due to the short-term nature of these assets and liabilities.

There were no transfers between levels within the fair value hierarchy during any of the periods presented.