U S PHYSICAL THERAPY INC /NV Leases Disclosure

13. Leases

The Company has operating leases for its corporate offices and operating facilities. The Company determines if an arrangement is a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent net present value of the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and operating lease liabilities are recognized at commencement date based on the net present value of the fixed lease payments over the lease term. The Company’s operating lease terms are generally five years or less. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Operating fixed lease expense is recognized on a straight-line basis over the lease term. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage are not included in the right-of-use assets or operating lease liabilities. These are expensed as incurred and recorded as variable lease expense.

		For the Year Ended
		December 31, 2025				December 31, 2024				December 31, 2023
		(In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities		$	49,455			$	42,934			$	39,813
Right-of-use assets obtained in exchange for new operating lease liabilities		$	54,192			$	70,729			$	36,264

The aggregate future lease payments for operating leases as of December 31, 2025, were as follows.

Average lease terms and discount rates were as follows: