Leases
The Company’s operating leases consist primarily of real estate leases, including those entered into by certain wholly owned and majority-owned or controlled subsidiaries of RSL.
In September 2024, the Company’s subsidiary, Roivant Sciences, Inc. (“RSI”), entered into a lease agreement with One Penn Plaza LLC for office space in New York, NY to serve as the new U.S. corporate headquarters of RSI (the “One Penn Lease”). The One Penn Lease commenced in December 2024 and will expire in August 2041. The lease contains an option to early terminate in August 2036 and an option to extend the term for one additional period of 5 years or 10 years at then-market rates in August 2041. The options to early terminate or extend the lease term were not included in the lease term as it was not reasonably certain that they would be exercised at lease commencement. The lease is classified as an operating lease and includes a period of free rent and tenant improvement incentives. Upon lease commencement, the Company recognized an operating right-of-use asset and lease liability of approximately $49.1 million, net of lease incentives received.
During the three months ended December 31, 2025, in connection with the relocation of the U.S. corporate headquarters of Roivant Sciences, Inc. and the execution of a sublease agreement, the Company identified a triggering event for the associated operating lease right-of-use asset and leasehold improvements (the asset group) for the former U.S. corporate headquarters. The Company determined that the asset group was not recoverable as its carrying amount exceeded the future net undiscounted cash flows expected under the sublease agreement. The Company measured the fair value of the asset group using an income approach based on a discounted cash flow methodology using significant Level 3 inputs. Key inputs used in the valuation included contractual and market-based sublease rental rates, estimated lease commencement date, transaction costs, and a discount rate of 8.5%.
As the carrying amount of the asset group exceeded its fair value, the Company recognized a total pre-tax impairment charge of $17.1 million during the year ended March 31, 2026, which is included in general and administrative expenses in the consolidated statements of operations.
The components of operating lease expense for the Company were as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| Years Ended March 31, |
| 2026 | | 2025 | | 2024 |
| Operating lease cost | $ | 16,023 | | | $ | 11,632 | | | $ | 10,648 | |
| Short-term lease cost | 519 | | | 514 | | | 64 | |
| Variable lease cost | 1,766 | | | 1,344 | | | 1,107 | |
| Total operating lease cost | $ | 18,308 | | | $ | 13,490 | | | $ | 11,819 | |
Information related to the Company’s operating lease right-of-use assets and lease liabilities was as follows (in thousands, except periods and percentages):
| | | | | | | | | | | | | | | | | |
| Years Ended March 31, |
| 2026 | | 2025 | | 2024 |
| Cash paid for operating lease liabilities | $ | 10,393 | | | $ | 10,263 | | | $ | 11,561 | |
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | 9,605 | | | $ | 51,364 | | | $ | 719 | |
| | | | | | | | | | | | | | | | | |
| March 31, 2026 | | March 31, 2025 | | March 31, 2024 |
| Weighted average remaining lease term (in years) | 11.7 | | 11.7 | | 8.0 |
| Weighted average discount rate | 7.4 | % | | 7.4 | % | | 7.1 | % |
As of March 31, 2026, maturities of operating lease liabilities were as follows (in thousands):
| | | | | | | | |
| Years Ending March 31, | | |
| 2027 | | $ | 11,716 | |
| 2028 | | 15,434 | |
| 2029 | | 15,601 | |
| 2030 | | 14,841 | |
| 2031 | | 15,046 | |
| Thereafter | | 94,356 | |
| Total lease payments | | 166,994 | |
| Less: present value adjustment | | (59,331) | |
| Less: tenant improvement allowance | | (225) | |
| Total lease liabilities | | $ | 107,438 | |