TREACE MEDICAL CONCEPTS, INC. Leases Disclosure
9. Operating Leases
The Company's leases consist of real estate leases in Ponte Vedra, Florida, including a ten-year operating lease for its corporate headquarters.
The Company's leases contain options to renew, none of which the Company is reasonably certain to exercise. The lease agreements do not contain any residual value guarantees or restrictive covenants. For the headquarters lease, the Company is provided a tenant improvement allowance for the construction of leasehold improvements, of which $1.5 million is remaining as of December 31, 2025. In exchange for construction management and supervision services related to these improvements, the Company paid the lessor a fee equal to one and a half percent (1.5%) of total construction costs.
In addition to base rent, the Company pays variable costs related to its share of operating expenses under certain of its lease arrangements. These variable costs are recorded as lease expense as incurred and presented as Operating expenses in the Statements of Operations and Comprehensive Loss. Variable lease costs were $1.0 million, $0.9 million, and $0.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Operating lease cost was $2.3 million, $2.3 million, and $2.4 million for the years ended December 31, 2025, 2024, and 2023, respectively. During the years ended December 31, 2025, 2024, and 2023, cash paid for amounts included in operating lease liabilities of $3.4 million, $2.9 million, and $2.2 million, respectively, was included in cash flows from operating activities on the Statements of Cash Flows.
Additional information related to operating leases is as follows:
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Weighted average remaining lease term (years) |
|
|
6.5 |
|
|
|
7.3 |
|
Weighted average discount rate |
|
|
9.4 |
% |
|
|
9.3 |
% |
The following table summarizes a maturity analysis of operating lease liabilities showing the aggregate lease payments as of December 31, 2025 (in thousands):
Fiscal Year |
|
|
|
|
2026* |
|
$ |
1,857 |
|
2027 |
|
|
3,097 |
|
2028 |
|
|
3,159 |
|
2029 |
|
|
3,222 |
|
2030 |
|
|
3,287 |
|
Thereafter |
|
|
5,329 |
|
Total undiscounted lease payments |
|
|
19,951 |
|
Less: imputed interest |
|
|
(5,417 |
) |
Total discounted lease payments |
|
|
14,534 |
|
|
|
(552 |
) |
|
Noncurrent portion of lease liability |
|
$ |
13,982 |
|
*Amount presented is net of allowance for tenant improvements.
The Company recorded rental income for its subleases of $0.5 million, $0.4 million, and $0.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. All subleases are classified as operating leases.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 8, 2023 | |
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.