LEASES
Our material lease contracts are for facilities and advanced radiology equipment. In regards to our imaging, administrative and warehouse facilities, the most common initial lease term varies in length from 5 to 15 years. Including renewal options negotiated with the landlord, we can have a total span of 10 to 35 years at these locations, and we do not enter into purchase options on the underlying property. We also lease smaller satellite X-Ray locations on mutually renewable terms, usually lasting one year. Leases for advanced radiology and office equipment have terms generally lasting from 5 to 8 years. All leases are classified as operating or finance for accounting purposes, depending on the terms of the agreement. Our incremental borrowing rate used to discount the stream of lease payments is closely related to the interest rates charged on our collateralized debt obligations and our incremental borrowing rate is adjusted when those rates experience a substantial change. Operating lease costs are recognized as cost of operation in the Consolidated Statement of Operations.
The components of lease expense were as follows:
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| Years ended December 31, |
| (In thousands) | 2025 | 2024 | 2023 |
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Operating lease cost(1) | $ | 122,721 | | $ | 111,966 | | $ | 106,954 | |
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| Finance lease cost: | | | |
| Depreciation of leased equipment | $ | 87 | | $ | 109 | | $ | 1,204 | |
| Interest on lease liabilities | — | | — | | — | |
| Total finance lease cost | $ | 87 | | $ | 109 | | $ | 1,204 | |
(1) Operating lease cost above for the year ended December 31, 2025, 2024, and 2023 included $6.7 million, $1.8 million, and $2.7 million, respectively in lease abandonment charges. Please see our discussion in the Leases section of Note 2, Summary of Significant Accounting Policies.
Supplemental cash flow information related to leases was as follows:
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| Years ended December 31, |
| (In thousands) | 2025 | 2024 | 2023 |
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| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Operating cash flows from operating leases | $ | 105,312 | | $ | 103,215 | | $ | 101,516 | |
| Right-of-use & Equipment assets obtained in exchange for lease obligations: | | | |
| Operating leases | 113,796 | | 109,446 | | 55,852 | |
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Supplemental balance sheet information related to leases was as follows:
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| (In thousands, except lease term and discount rates) | December 31, | |
| 2025 | 2024 | |
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| Operating Leases | | | |
| Operating lease right-of-use assets | $ | 690,250 | | $ | 639,740 | | |
| Current portion of operating lease liability | 61,934 | | 56,618 | | |
| Long-term operating lease liability | 707,001 | | 655,979 | | |
| Total operating lease liabilities | $ | 768,935 | | $ | 712,597 | | |
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| Finance Leases | | | |
| Equipment at cost | $ | 11,557 | | $ | 13,235 | | |
| Accumulated depreciation | (11,156) | | (12,747) | | |
| Equipment, net | $ | 401 | | $ | 488 | | |
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| Weighted Average Remaining Lease Term | | | |
| Operating leases - years | 10.6 | 10.6 | |
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| Weighted Average Discount Rate | | | |
| Operating leases | 7.2 | % | 6.9 | % | |
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Maturities of lease liabilities were as follows:
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| (In thousands) | | |
| Operating Leases | |
| Year Ending December 31, | | |
| | |
| 2026 | $ | 113,443 | | |
| 2027 | 112,258 | | |
| 2028 | 110,435 | | |
| 2029 | 100,428 | | |
| 2030 | 97,619 | | |
| Thereafter | 582,128 | | |
| Total Lease Payments | 1,116,310 | | |
| Less imputed interest | (347,375) | | |
| Total | $ | 768,935 | | |
As of December 31, 2025, we have additional operating leases for facilities and medical equipment that have not yet commenced of approximately $12.2 million. These operating leases will commence in 2026 with lease terms of 1 to 15 years.
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.