TANDEM DIABETES CARE INCTNDM
TANDEM DIABETES CARE INC Leases Disclosure
Leases
The Company’s leases consist of operating leases for general office space, research and development, manufacturing and warehouse facilities, and equipment. These noncancellable operating leases have initial lease terms from two years to thirteen years. Certain leases include an option to renew, with renewal terms that can extend the lease term for additional periods at the Company’s sole discretion. The Company includes the renewal option period in the lease term for those leases reasonably expected to be extended at the time of lease commencement.
Headquarters Lease
In September 2021, the Company entered into a lease agreement for 181,949 square feet of general administrative, laboratory, and research and development office space (the Premises) located on High Bluff Drive in San Diego, California (Headquarters Lease). Possession of the Premises was to be tendered to the Company in two phases, with Phase I consisting of 143,850 rentable square feet, and Phase II consisting of 38,099 rentable square feet. The Headquarters Lease term expires in April 2035. The Company has two options to extend the term of the lease, with each option providing for an additional period of five years. The Headquarters Lease term was determined assuming the renewal options would not be exercised.
In December 2023, the Company entered into an agreement to sublease the Phase II portion of the leased premises under the Headquarters Lease, from January 2025 through March 2029. Future minimum payments for base rent due under Phase II of the Headquarters Lease, net of sublease rent, are estimated to be $2.2 million in total for 2025 through 2028, and $23.2 million in total for 2029 through 2035.
Operating Lease Impairment Charge
In 2023, the Company consolidated facilities by moving the administrative functions and other operations from the leased space on Vista Sorrento Parkway in San Diego, California (Vista Sorrento Lease) to the Company’s new headquarters, located on High Bluff Drive in San Diego, California. In connection with permanently ceasing use of the Vista Sorrento Lease, the Company recorded a $14.1 million impairment charge as the carrying amount of the assets related to the Vista Sorrento Lease exceeded its fair value based on the Company’s estimate of future discounted cash flows related to the leased facility. The $14.1 million charge was comprised of an $11.2 million impairment of operating lease right-of-use assets and a $2.9 million write-off of fixed assets, and was recorded as a component of selling, general and administrative expenses in the consolidated statement of operations.
Supplemental Lease Disclosure Information
The Company’s lease costs recorded in the consolidated statements of operations were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Operating lease cost | $ | 14,276 | $ | 15,971 | $ | 18,432 | |||||||||||
| Short-term lease cost | 87 | 108 | 142 | ||||||||||||||
Loss on lease termination and right-of-use asset impairment charges | — | 11,224 | 5,699 | ||||||||||||||
| Total lease cost | $ | 14,363 | $ | 27,303 | $ | 24,273 | |||||||||||
Maturities of operating lease liabilities at December 31, 2024 were as follows (in thousands):
| Years Ending December 31, | |||||
| 2025 | $ | 18,208 | |||
| 2026 | 18,102 | ||||
| 2027 | 18,406 | ||||
| 2028 | 14,890 | ||||
| 2029 | 13,413 | ||||
| Thereafter | 76,891 | ||||
| Total undiscounted lease payments | 159,910 | ||||
| Less: amount representing interest | (35,281) | ||||
| Present value of operating lease liabilities | 124,629 | ||||
| Less: current portion of operating lease liabilities | (18,208) | ||||
| Operating lease liabilities - long-term | $ | 106,421 | |||
The weighted-average remaining lease term and weighted-average discount rate for operating leases were as follows:
| December 31, 2024 | December 31, 2023 | ||||||||||
| Weighted-average remaining lease term (in years) | 9.2 | 10.2 | |||||||||
| Weighted-average discount rate used to determine operating lease liabilities | 5.3 | % | 5.4 | % | |||||||
Cash amounts paid included in the measurement of lease liabilities, representing operating cash flows, were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
Operating lease payments | 17,941 | 13,864 | 11,960 | ||||||||||||||
Operating lease termination payments | — | — | 4,769 | ||||||||||||||
Total cash payments | $ | 17,941 | $ | 13,864 | $ | 16,729 | |||||||||||
Leases For Which Accounting Has Not Yet Commenced
As of December 31, 2024, the Phase II commencement date for the Headquarters Lease had not yet occurred. Accordingly, the consolidated balance sheets at December 31, 2024 and December 31, 2023 did not include operating lease right-of-use assets and operating lease liabilities, and the consolidated statements of operations for the twelve months ended December 31, 2024, and 2023 did not include any lease costs related to Phase II of the Headquarters Lease. In addition, the above disclosures of the Company’s lease costs, maturities of operating lease liabilities, weighted-average remaining lease term, and weighted-average discount rate do not include any amounts related to Phase II of the Headquarters Lease.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Feb 26, 2025 | Showing above |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2020 | Feb 24, 2021 | |
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.