MERIT MEDICAL SYSTEMS INC Leases Disclosure
17.LEASES
We have operating leases for facilities used for manufacturing, research and development, sales and distribution, and office space, as well as leases for manufacturing and office equipment, vehicles, and land. Our leases have remaining terms ranging from less than one year to approximately 24 years. A number of our lease agreements contain options to renew at our discretion for periods of up to 15 years and options to terminate the leases within one year. The lease term used to calculate right-of-use assets and lease liabilities includes renewal and termination options that are deemed reasonably certain to be exercised. Lease agreements with lease and non-lease components are generally accounted for as a single lease component. We do not have any bargain purchase options in our leases. For leases with an initial term of one year or less, we do not record a right-of-use asset or lease liability on our consolidated balance sheet.
From time to time, we enter into agreements to sublease a portion of our facilities to third parties. Such sublease income is not material. We also lease certain hardware consoles to customers and record rental revenue as a component of net sales. Rental revenue under such console leasing arrangements for the years ended December 31, 2025, 2024 and 2023 was not significant.
The following was included in our consolidated balance sheet as of December 31, 2025 and 2024 (in thousands):
| December 31, 2025 | | December 31, 2024 | |||
Assets |
| |
| | ||
Right-of-use operating lease assets | $ | 87,600 | $ | 65,508 | ||
Liabilities |
| |
| | ||
Short-term operating lease liabilities | $ | 10,876 | $ | 10,331 | ||
Long-term operating lease liabilities |
| 76,658 |
| 54,783 | ||
Total operating lease liabilities | $ | 87,534 | $ | 65,114 | ||
We recognize lease expense for operating leases on a straight-line basis over the term of the lease. Net lease cost for the years ended December 31, 2025, 2024 and 2023 was $17.2 million, $15.4 million, and $14.4 million, respectively. The components of lease costs for the years ended December 31, 2025, 2024 and 2023 were as follows, in thousands:
| | | | ||||||||
Lease Cost | Classification | 2025 | 2024 | 2023 | |||||||
Operating lease cost (a) |
| Selling, general and administrative expenses | $ | 17,467 | $ | 15,885 | $ | 14,879 | |||
Sublease (income) (b) |
| Selling, general and administrative expenses |
| (265) |
| (462) |
| (488) | |||
Net lease cost |
| | $ | 17,202 | $ | 15,423 | $ | 14,391 | |||
(a) | Includes expense related to short-term leases and variable payments, which were not significant. |
(b) | Does not include rental revenue from leases of hardware consoles to customers, which was not significant. |
Supplemental cash flow information for the years ended December 31, 2025, 2024 and 2023 was as follows, in thousands:
2025 | 2024 | 2023 | |||||||
Cash paid for amounts included in the measurement of lease liabilities | $ | 15,607 | $ | 14,529 | $ | 13,804 | |||
Right-of-use assets obtained in exchange for lease obligations | $ | 32,684 | $ | 9,947 | $ | 8,891 | |||
Generally, our lease agreements do not specify an implicit rate. Therefore, we estimate our incremental borrowing rate, which is defined as the interest rate we would pay to borrow on a collateralized basis, considering such factors as length of lease term and the risks of the economic environment in which the leased asset operates. As of December 31, 2025, 2024 and 2023, our lease agreements had the following remaining lease term and discount rates:
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||
Weighted average remaining lease term |
| 12.2 years | 9.6 years | 9.6 years | |||||
Weighted average discount rate |
| 7.2% | 3.5% | 3.4% |
As of December 31, 2025, maturities of operating lease liabilities were as follows, in thousands:
Year ending December 31, | | Amounts due under operating leases | |
2026 | $ | 15,227 | |
2027 |
| 13,834 | |
2028 |
| 11,111 | |
2029 |
| 9,522 | |
2030 |
| 8,436 | |
Thereafter |
| 84,613 | |
Total lease payments |
| 142,743 | |
Less: Imputed interest |
| (55,209) | |
Total | $ | 87,534 | |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
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.