HEALTHCARE SERVICES GROUP INCHCSG
HEALTHCARE SERVICES GROUP INC Leases Disclosure
Note 8 — Leases
The Company recognizes ROU Assets and lease liabilities for automobiles, office buildings, IT equipment and small storage units for the temporary storage of operational equipment. The Company’s leases have remaining lease terms ranging from less than 1 year to 10 years. The Company recognizes extension options as part of the initial lease term for ROU Assets and lease liabilities when it is reasonably certain that the Company will exercise the extension option upon the completion of the initial lease term. Most leases include the option to terminate the lease within 1 year.
The Company uses practical expedients offered under the ASC 842 - Leases (“ASC 842”) to combine lease and non-lease components within leasing arrangements and to recognize the payments associated with short-term leases in earnings on a straight-line basis over the lease term, with the cost associated with variable lease payments recognized when incurred. These accounting policy elections impact the value of the Company’s ROU Assets and lease liabilities. The value of the Company’s ROU Assets is determined as the carrying value of its leasing arrangements and is recorded in Property and equipment, net on the Company’s Consolidated Balance Sheets. The value of the Company’s lease liabilities is the present value of fixed lease payments not yet paid, which is discounted using either the rate implicit in the lease contract if that rate can be determined or the Company’s incremental borrowing rate (“IBR”). The Company’s IBR is determined as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.
Any future lease payments that are not fixed based on the terms of the lease contract, or fluctuate based on a factor other than an index or rate, are considered variable lease payments and are not included in the value of the Company’s ROU Assets or lease liabilities. The Company’s variable lease payments are mostly incurred from automobile leases and relate to miscellaneous transportation costs including repair costs, insurance and terminal rental adjustment payments due at lease settlement. Such rental adjustment payments can result in a reduction to the Company’s total variable lease payments.
As of December 31, 2025 and 2024, the Company’s short-term portion of lease obligations were $5.4 million and $8.4 million, respectively, and are recorded in with the remaining balance recognized under the Lease liability — long-term portion caption on the Company’s Consolidated Balance Sheets. The corresponding expense for the Company’s lease commitments are primarily recorded in selling, general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income.
Components of lease expense are presented below for the years ended December 31, 2025, 2024 and 2023.
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Lease cost | ||||||||||||||||||||
| Operating lease cost | $ | 8,322 | $ | 7,799 | $ | 6,400 | ||||||||||||||
| Short-term lease cost | 819 | 883 | 1,037 | |||||||||||||||||
| Variable lease cost | 1,987 | 1,609 | 1,952 | |||||||||||||||||
| Total lease cost | $ | 11,128 | $ | 10,291 | $ | 9,389 | ||||||||||||||
Supplemental information is presented below for the years ended December 31, 2025, 2024 and 2023.
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||||||
| Other information | ||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||||||||
| Operating cash flows from operating leases | $ | 8,436 | $ | 8,125 | $ | 6,808 | ||||||||||||||
| ROU Assets obtained in exchange for lease obligations | 12,489 | 3,721 | 6,064 | |||||||||||||||||
| Weighted-average remaining lease term — operating leases | 5.6 years | 2.6 years | 3.3 years | |||||||||||||||||
| Weighted-average discount rate — operating leases | 6.6 | % | 6.3 | % | 6.6 | % | ||||||||||||||
During the years ended December 31, 2025 and 2024, the Company’s ROU Assets and lease liabilities were reduced by $2.5 million and $0.8 million, respectively due to lease cancellations.
The following is a schedule by calendar year of future minimum lease payments under operating leases that have remaining terms as of December 31, 2025:
| Period/Year | Operating Leases | |||||||
| (in thousands) | ||||||||
| 2026 | $ | 5,367 | ||||||
| 2027 | 3,635 | |||||||
| 2028 | 1,683 | |||||||
| 2029 | 1,213 | |||||||
| 2030 | 1,235 | |||||||
| Thereafter | 4,605 | |||||||
| Total minimum lease payments | $ | 17,738 | ||||||
| Less: imputed lease payments | 2,722 | |||||||
| Present value of lease liabilities | $ | 15,016 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Feb 23, 2018 | |
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.