HEALTHY CHOICE WELLNESS CORP. Leases Disclosure
NOTE 18. LEASES
The Company has various lease agreements with terms of up to 20 years, including operating leases of retail stores, headquarters, and a finance lease for data center equipment.
The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of December 31, 2025.
| Maturity of Lease Liabilities by Fiscal Year | Operating Leases | Finance Leases | ||||||
| 2026 | $ | 3,923,741 | $ | 37,165 | ||||
| 2027 | 2,956,171 | 37,165 | ||||||
| 2028 | 2,280,186 | 37,165 | ||||||
| 2029 | 1,617,808 | 37,165 | ||||||
| 2030 | 360,095 | 27,874 | ||||||
| Thereafter | 464,490 | |||||||
| Total undiscounted operating lease payments | $ | 11,602,491 | $ | 176,534 | ||||
| Less: Imputed interest | (1,018,060 | ) | (26,666 | ) | ||||
| Present value of lease liabilities | $ | 10,584,431 | $ | 149,868 | ||||
The following summarizes the Company’s leases:
| Balance Sheet Classification | December 31, 2025 | December 31, 2024 | ||||||
| Operating lease right of use assets | $ | 10,503,441 | $ | 14,232,240 | ||||
| Finance lease right of use assets | 148,600 | |||||||
| Total right of use assets | $ | 10,652,041 | $ | 14,232,240 | ||||
| Operating lease liability, current | $ | 3,472,897 | $ | 3,596,987 | ||||
| Finance lease liability, current | 27,423 | |||||||
| Operating lease liability, net of current | 7,111,534 | 10,584,431 | ||||||
| Finance lease liability, net of current | 122,445 | |||||||
| Total lease liabilities | $ | 10,734,299 | $ | 14,181,418 | ||||
The amortization of the right-of-use asset for operating lease of approximately $3,729,000 and $3,274,000 for the years ended December 31, 2025 and 2024, respectively, were included in operating cash flows.
The following table provides a summary of other information related to the leases at December 31, 2025 and 2024:
| Other Information | December 31, 2025 | December 31, 2024 | ||||||
| Weighted-average remaining lease term for operating leases | 4 years | 4 years | ||||||
| Weighted-average discount rate for operating leases | 5.30 | % | 5.19 | % | ||||
| Weighted-average remaining lease term for finance leases | 5 years | - | ||||||
| Weighted-average discount rate for finance leases | 7.25 | % | ||||||
Rent expense under operating lease for the years ended December 31, 2025 and 2024 was approximately $3,894,000 and $4,196,000, respectively, and was included in selling, general and administrative expenses in the accompanying consolidated statement of operations.
The following table represents the components of lease expense for twelve months ended December 31, 2025 and 2024:
| For the Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease cost | $ | 2,736,889 | $ | 3,273,563 | ||||
| Finance lease cost | 7,821 | |||||||
| Variable lease cost | 228,131 | 922,282 | ||||||
| Short-term lease cost | 929,101 | |||||||
| Total lease expense | $ | 3,901,942 | $ | 4,195,845 | ||||
The aggregate cash payments under the operating leasing arrangement was approximately $3,597,000 for the year ended December 31, 2025. The aggregate cash payments under the finance leasing arrangement was approximately $7,000 for the year ended December 31, 2025 and the payments were included in financing cash flows.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
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.