RAPID MICRO BIOSYSTEMS, INC.RPID
RAPID MICRO BIOSYSTEMS, INC. Leases Disclosure
Leases
The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. Under ASC 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset. See Note 2 for more information on the Company’s accounting policies for leases.
The Company leases office and manufacturing space under operating lease agreements that have initial terms ranging from approximately 8 to 10 years. The Company leases furniture under a financing lease agreement that has an initial term of approximately 8 years. Some leases include one or more options to renew, generally at the Company's sole discretion, with renewal terms that can extend the lease term by up to 5 years. In addition, certain leases contain termination options, where the rights to terminate are held by either the Company, the lessor, or both parties. Options to extend a lease are included in the lease term when it is reasonably certain that the Company will exercise the option. Options to terminate a lease are excluded from the lease term when it is reasonably certain that the Company will not exercise the option. The Company’s leases generally do not contain any material restrictive covenants or residual value guarantees.
Supplemental cash flow information related to leases is as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash paid for amounts included in measurement of lease liabilities: | |||||||||||
| Operating cash outflows - payments on operating leases | $ | 1,334 | $ | 1,285 | |||||||
| Operating cash outflows - payments on financing leases | $ | 40 | $ | 38 | |||||||
| Financing cash outflows - payments on financing leases | $ | 35 | $ | 37 | |||||||
| Right-of-use assets obtained in exchange for new lease obligations: | |||||||||||
| Operating leases | $ | — | $ | 151 | |||||||
Supplemental balance sheet information related to the Company’s operating and financing leases is as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Operating Leases: | |||||||||||
| $ | 4,998 | $ | 5,972 | ||||||||
| $ | 1,167 | $ | 1,090 | ||||||||
| 4,784 | 5,952 | ||||||||||
| Total operating lease liabilities | $ | 5,951 | $ | 7,042 | |||||||
| Financing Leases: | |||||||||||
| Office furniture and fixtures | $ | 386 | $ | 386 | |||||||
| Accumulated depreciation | (221) | (118) | |||||||||
| $ | 165 | $ | 268 | ||||||||
| $ | 47 | $ | 42 | ||||||||
| 170 | 262 | ||||||||||
| Total financing lease liabilities | $ | 217 | $ | 304 | |||||||
| Weighted-average remaining lease term - operating leases (in years): | 4.54 | 5.54 | |||||||||
| Weighted-average remaining lease term - financing leases (in years): | 4.50 | 5.50 | |||||||||
| Weighted-average discount rate - operating leases: | 3.8 | % | 3.8 | % | |||||||
| Weighted-average discount rate - financing leases: | 12.0 | % | 12.0 | % | |||||||
The components of lease expense were as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Operating lease cost | $ | 1,218 | $ | 1,203 | |||||||
| Financing lease cost - amortization of right-of-use asset | 45 | 49 | |||||||||
| Financing lease cost - interest on lease liability | 40 | 38 | |||||||||
| Variable lease cost | 885 | 694 | |||||||||
| Total lease cost | $ | 2,188 | $ | 1,984 | |||||||
Operating lease cost is recognized on a straight-line basis over the lease term. Total rent expense, including the Company’s share of the lessors’ operating expenses, was $2.1 million and $1.9 million for the years ended December 31, 2024 and 2023, respectively. Financing lease cost includes asset amortization on a straight-line basis over the lease term and interest accretion calculated using the effective interest method. Total financing lease asset depreciation and interest expense was less than $0.1 million for both of the years ended December 31, 2024 and 2023.
Maturities of the Company’s operating lease liabilities as of December 31, 2024 were as follows (in thousands):
| Operating Lease Maturities | |||||
| 2025 | $ | 1,368 | |||
| 2026 | 1,401 | ||||
| 2027 | 1,435 | ||||
| 2028 | 1,468 | ||||
| Thereafter | 805 | ||||
| Total lease payments | $ | 6,477 | |||
| Less imputed interest | (526) | ||||
| Total present value of lease liabilities | $ | 5,951 | |||
Maturities of the Company’s financing lease liability as of December 31, 2024 were as follows (in thousands):
| Financing Lease Maturities | |||||
| 2025 | $ | 75 | |||
| 2026 | 75 | ||||
| 2027 | 75 | ||||
| 2028 | 75 | ||||
| Thereafter | 38 | ||||
| Total lease payments | $ | 338 | |||
| Less imputed interest | (121) | ||||
| Total present value of lease liabilities | $ | 217 | |||
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.