SUPERNUS PHARMACEUTICALS, INC.SUPN

SUPERNUS PHARMACEUTICALS, INC. Leases Disclosure

10-KFiled Feb 25, 20253 min read
Leases
Office Space and Fleet Vehicle Leases
The Company has operating leases for its headquarters lease, certain office space, certain office equipment and its fleet vehicles. With respect to the fleet vehicle leases, given the volume of individual leases involved in the overall arrangement, the Company applies a portfolio approach to effectively account for the operating lease assets and liabilities. The Company made an accounting policy election, by class of underlying asset, to combine the lease and non-lease components for the headquarters, office space, office equipment and fleet vehicle leases.
The Company's headquarters lease commenced on February 1, 2019 (the Commencement Date) and will continue until April 30, 2034, unless earlier terminated in accordance with the terms of the lease. The lease includes options to extend the lease for up to ten years.
As part of the Adamas Acquisition, the Company acquired a lease for office space. Adamas' operating lease for the office space term will continue until April 30, 2025. The lease contains an option to extend the term for one additional five-year period.
Contract Manufacturing Lease
The Company has a contract manufacturing agreement with Merz Pharma GmbH & Co. KGaA (Merz), for the manufacture and supply of rimabotulinumtoxinB finished products (Merz Agreement). The Merz Agreement will expire in July 2027 unless the Company and Merz mutually agree to extend the terms. The Merz Agreement may not be terminated for convenience.
Under the terms of the agreement, the Company is required to purchase a minimum quantity of MYOBLOC finished products on an annual basis. This minimum purchase requirement represents the in-substance fixed contract consideration associated with the dedicated manufacturing facility which the Company accounts for as an embedded lease. In October 2021, we entered into an amendment to the Merz Agreement which increased the price of the annual purchase commitment of MYOBLOC from €3.0 million to approximately €3.9 million.
The Company made an accounting policy election, by class of underlying asset, to not combine lease and non-lease components for the manufacturing facility. A portion of the in-substance fixed contract consideration was allocated to the lease component based on the stand-alone selling price. Accordingly, the Company classifies and accounts for the embedded lease as an operating lease.
Operating lease assets and lease liabilities as reported on the consolidated balance sheets are as follows (dollars in thousands):
December 31,
Balance Sheet Classification20242023
Assets
Operating lease assetsOther assets$24,477 $28,994 
Total lease assets$24,477 $28,994 
Liabilities
Lease liabilities, current
Operating lease liabilities, current portionAccounts payable and accrued liabilities6,889 8,331 
Lease liabilities, long-term
Operating lease liabilities, long-termOperating lease liabilities, long-term27,382 33,196 
Total lease liabilities$34,271 $41,527 
The components of operating lease costs are as follows (dollars in thousands):
Year Ended December 31,
202420232022
Operating lease cost:
Fixed lease cost$8,945 $8,258 $8,239 
Variable lease cost 5,475 5,998 4,608 
Total $14,420 $14,256 $12,847 
Supplemental cash flow information related to leases is as follows (dollars in thousands):
Year Ended December 31,
202420232022
Cash paid for operating leases$17,283 $17,112 $12,883 
Lease assets obtained for new operating leases3,662 7,170 1,867 
The weighted average lease term and weighted average discount rate for operating leases are as follows:
Year Ended December 31,
20242023
Weighted-average remaining lease term (years)7.07.3
Weighted-average discount rate4.9 %4.5 %
Future minimum lease payments under noncancellable operating leases as of December 31, 2024, are as follows (dollars in thousands):
Operating Leases
Year ending December 31:
2025 $8,234 
20266,957 
20274,735 
20283,004 
20293,064 
Thereafter14,003 
Total future minimum lease payments39,997 
Less: Imputed interest (1)
(5,726)
Present value of lease liabilities$34,271 
(1) Calculated using the interest rate for each lease.
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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.

Other Available Disclosures

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