LEASES
Right-of-use ("ROU") lease assets and lease liabilities that are reported in the Company’s consolidated balance sheets are as follows:
| | | | | | | | | | | |
| September 30, 2025 | | September 30, 2024 |
| Operating ROU assets, net | $ | 46,358 | | | $ | 49,165 | |
| | | |
| Current portion of operating lease liabilities | 6,896 | | | 11,774 | |
| Long-term operating lease liabilities | 44,344 | | | 40,010 | |
| Total operating lease liabilities | $ | 51,240 | | | $ | 51,784 | |
| | | |
| Finance ROU assets, net | $ | 2,900 | | | $ | 652 | |
| | | |
| Current portion of finance lease liabilities | 495 | | | 211 | |
| Long-term finance lease liabilities | 2,430 | | | 433 | |
| Total finance lease liabilities | $ | 2,925 | | | $ | 644 | |
The increase in operating right-of-use lease assets and lease liabilities in the twelve months ended September 30, 2025 was primarily related to modifications of leases in both the DSA and RMS segments. The increase in financing right-of-use lease assets and lease liabilities in the twelve months ended September 30, 2025 was primarily due to new vehicles leases associated with the insourcing of the Company's North American transportation operations.
Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense related to the Company’s leases for the twelve months ended September 30, 2025, 2024 and 2023 were:
| | | | | | | | | | | | | | | | | |
| Fiscal Year Ended
September 30, |
| 2025 | | 2024 | | 2023 |
| Operating lease costs: | | | | | |
| Fixed operating lease costs | $ | 13,459 | | | $ | 13,474 | | | $ | 11,790 | |
| Lease (income) | (2,537) | | | (3,003) | | | (3,039) | |
| Financing lease costs: | | | | | |
| Amortization of ROU asset expense | $ | 397 | | | $ | 87 | | | $ | 39 | |
| Interest on finance lease liability | 315 | | | 31 | | | 3 | |
| Total operating lease cost | 11,634 | | | 10,589 | | | 8,793 | |
The Company serves as lessor to a lessee in thirteen facilities. The gross rental income and underlying lease expense are presented net in the Company’s consolidated statements of operations. The gross rent receivables and underlying lease liabilities are presented gross in the Company’s consolidated balance sheets.
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | | | | | | | |
| Fiscal Year Ended
September 30, |
| 2025 | | 2024 | | 2023 |
| Cash flows included in the measurement of lease liabilities: | | | | | |
| Operating cash flows from operating leases | $ | 10,774 | | | $ | 12,003 | | | $ | 11,252 | |
| | | | | |
| Non-cash lease activity: | | | | | |
| ROU assets obtained in exchange for new operating lease liabilities | $ | 7,177 | | | $ | 19,301 | | | $ | 15,831 | |
| ROU assets obtained in exchange for new finance lease liabilities | 2,666 | | | 703 | | | — | |
The weighted average remaining lease term and discount rate for the Company’s operating leases as of September 30, 2025, 2024 and 2023 were:
| | | | | | | | | | | | | | | | | |
| Fiscal Year Ended
September 30, |
| 2025 | | 2024 | | 2023 |
| Weighted-average remaining lease term (in years) | | | | | |
| Operating lease | 9.56 | | 9.25 | | 6.71 |
| Finance lease | 5.75 | | 4.21 | | 1.81 |
| Weighted-average discount rate (in percentages) | | | | | |
| Operating lease | 11.98 | % | | 11.71 | % | | 9.36 | % |
| Finance lease | 12.56 | % | | 13.75 | % | | 4.86 | % |
Lease duration was determined utilizing renewal options that the Company is reasonably certain to execute.
As of September 30, 2025, maturities of operating lease liabilities for each of the following five fiscal years and a total thereafter were as follows:
| | | | | | | | | | | |
| Operating Leases | | Finance Leases |
| 2026 | $ | 12,240 | | | $ | 826 | |
| 2027 | 10,526 | | | 797 | |
| 2028 | 9,356 | | | 769 | |
| 2029 | 8,516 | | | 707 | |
| 2030 | 7,096 | | | 320 | |
| Thereafter | 41,794 | | | 710 | |
| Total minimum future lease payments | 89,528 | | | 4,129 | |
| Less interest | (38,288) | | | (1,204) | |
| Total lease liability | $ | 51,240 | | | $ | 2,925 | |
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.