Leases
The Company leases clinics, office buildings, and certain equipment under noncancellable financing and operating lease agreements that expire at various dates through June 2033. See Note 2 for a summary of the Company’s policies relating to leases.
The initial terms of operating leases range from 1 to 10 years and certain leases provide for free rent periods, periodic rent increases, and renewal options. Monthly payments for these leases range from $0 to $62. All lease agreements generally require the Company to pay maintenance, repairs, property taxes, and insurance costs, which are generally variable amounts based on actual costs incurred during each applicable period.
The Company has determined that periods covered by options to extend the Company's leases are excluded from the lease terms as it is not reasonably certain the Company will exercise such options.
Lease Expense
The components of lease expense were as follows:
| | | | | | | | | | |
| (in thousands) | Year Ended December 31, 2024 | Year Ended December 31, 2023 | | |
| | | | |
| Operating lease costs: | $ | 8,558 | | $ | 7,556 | | | |
| Finance lease costs: | | | | |
| Amortization of ROU asset | 42 | | 59 | | | |
| Interest expense | 8 | | 11 | | | |
| Other lease costs: | | | | |
| Short-term lease costs | 10 | | 39 | | | |
| Variable lease costs | 1,634 | | 1,240 | | | |
| Total lease costs | $ | 10,252 | | $ | 8,905 | | | |
Operating and other lease costs are presented as part of selling, general, and administrative expenses. The components of finance lease costs appear in depreciation and amortization and interest expense.
Maturity of Lease Liabilities
The aggregate future lease payments for the Company's leases in years subsequent to December 31, 2024 are as follows:
| | | | | | | | |
| (in thousands) | Operating Leases | Finance Leases |
| 2025 | $ | 8,467 | | $ | 42 | |
| 2026 | 8,049 | | 39 | |
| 2027 | 6,912 | | 29 | |
| 2028 | 4,830 | | — | |
| 2029 | 3,391 | | — | |
| Thereafter | 3,556 | | — | |
| Total future lease payment | $ | 35,205 | | $ | 110 | |
| Less: amount representing interest | (5,184) | | (9) | |
| Present value of future lease payment (lease liability) | $ | 30,021 | | $ | 101 | |
| Reported as: | | |
| Lease liabilities, current | $ | 6,798 | | $ | 37 | |
| Lease liabilities, noncurrent | 23,223 | | 64 | |
| Total lease liabilities | $ | 30,021 | | $ | 101 | |
Lease Term and Discount Rate
The following table provides the weighted average remaining lease terms and weighted average discount rates for the Company's leases as of:
| | | | | | | | |
| December 31, 2024 | December 31, 2023 |
| Weighted-average remaining lease term (in years) | | |
| Operating | 4.65 | 5.31 |
| Finance | 2.64 | 3.50 |
| Weighted-average discount rate | | |
| Operating | 6.59 | % | 6.50 | % |
| Finance | 6.62 | % | 6.47 | % |
Supplemental Cash Flow Information
The following table provides certain cash flow and supplemental noncash information related to the Company's lease liabilities for the years ended December 31, 2024 and 2023.
| | | | | | | | | | |
| (in thousands) | Year Ended December 31, 2024 | Year Ended December 31, 2023 | | |
| Supplemental cash flow information | | | | |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | |
| Operating cash payment for operating leases | $ | 8,509 | | $ | 7,513 | | | |
| Financing cash payments for finance leases | 48 | | 63 | | | |
| Lease liabilities arising from obtaining right-of-use assets: | | | | |
| Operating leases | $ | 3,049 | | $ | 11,096 | | | |
| Finance leases | — | | 3 | | | |
During the years ended December 31, 2024 and 2023 , ROU assets of $3,049 and $11,096 were obtained in exchange for lease obligations, respectively.
Lease Modifications
During the year ended December 31, 2024, the Company extended its lease terms for four clinics in California. These extensions constitute lease modifications that qualify as a change of accounting for the original leases and not separate contracts. Accordingly, in the year ended December 31, 2024, the Company recognized the difference of $1,410 as an increase to the operating lease liability; $1,375, net of lease incentives, as an increase to operating lease right-of-use asset, and $85 as a net increase to rent expense.
During the year ended December 31, 2023, the Company extended its lease term for seven clinics in California and Florida. These extensions constitute lease modifications that qualify as a change of accounting for the original leases and not separate contracts. Accordingly, in the year ended December 31, 2023, the Company recognized the difference of $3,297 as an increase to the operating lease liability; $3,303, net of lease incentives, as an increase to operating lease right-of-use asset, and $67 as a net increase to rent expense.