Note 9. Leases
The Company leases real estate from unrelated parties under operating lease agreements that have initial terms ranging from one year to 9 years. Some leases include one or more options to renew, generally at our sole discretion, of five additional years each.
The components of lease expense are as follows:
| | | | | | | | | | | | | | | |
| |
| Year Ended December 31, | | |
| 2025 | | 2024 | | | | |
| (in thousands) | | | | |
| Operating lease cost | $ | 3,582 | | | $ | 3,813 | | | | | |
| Variable lease cost | 1,920 | | | 2,369 | | | | | |
| Short-term lease cost | 397 | | | 409 | | | | | |
| Total lease cost | $ | 5,899 | | | $ | 6,591 | | | | | |
The Company ceased use of certain leased premises and subleased certain facilities resulting in impairment charges of $0.4 million and $1.2 million for the years ended December 31, 2024 and 2023, respectively, to impair ROU lease assets to their fair value, which are included in loss on sale and impairments on our consolidated statement of operations and comprehensive income (loss) (see Note 2. Summary of Significant Accounting Policies).
Supplemental cash flow information related to leases is as follows: | | | | | | | | | | | |
| | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| (in thousands) |
| | | |
| Cash paid for operating lease liabilities | $ | 4,050 | | | $ | 6,218 | |
| | | |
| | | |
| Operating lease assets obtained in exchange for operating lease liabilities | $ | 334 | | | $ | 1,602 | |
| | | |
Supplemental balance sheet information, included in other non-current assets, accrued expenses and other and other non-current liabilities on the consolidated balance sheet, related to leases is as follows:
| | | | | | | | | | | | | |
| |
| Year Ended December 31, | | |
| 2025 | | 2024 | | |
| (in thousands) | | |
| | | | | |
| Operating lease right-of-use assets | $ | 8,280 | | | $ | 10,464 | | | |
| | | | | |
| Current operating lease liabilities | 3,850 | | | 3,084 | | | |
| Long-term operating lease liabilities | 9,963 | | | 13,212 | | | |
| Total operating lease liabilities | $ | 13,813 | | | $ | 16,296 | | | |
At December 31, 2025 and 2024, the weighted average remaining lease term for operating leases was 4.16 years and 5.15 years, and the weighted average discount rate was 5.2%, respectively.
Future undiscounted cash flows for each of the next five years and thereafter and the reconciliation to the lease liabilities recognized on the balance sheet as of December 31, 2025 is as follows (in thousands):
| | | | | |
| Year ended December 31, | |
| 2026 | 4,466 | |
| 2027 | 3,609 | |
| 2028 | 2,792 | |
| 2029 | 2,481 | |
| 2030 | 2,254 | |
| Thereafter | — | |
| Total lease payments | 15,602 | |
| Less: imputed interest | 1,789 | |
| Total present value of lease liabilities | $ | 13,813 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.