We lease most of our administrative and educational facilities under non-cancelable operating or finance leases expiring at various dates through 2050. In most cases, we are required to make additional payments under facility leases for taxes, insurance and other operating expenses incurred during the lease period, which are typically variable in nature.

We determine if a contract contains a lease when the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. Upon identification and commencement of a lease, we establish an ROU asset and a lease liability.

Quantitative information related to leases for the years ended December 31, 2025, 2024 and 2023 is presented in the following table (dollars in thousands):


	For the Year Ended December 31,
	2025			2024			2023
Lease expenses (1)
Operating fixed lease expenses	$	10,330		$	5,213		$	6,410
Finance lease amortization expense		5,116			426			-
Finance lease interest expense		813			81			-
Variable lease expenses		4,483			986			1,401
Sublease income (2)		(401	)		(32	)		(500	)
Total lease expenses	$	20,341		$	6,674		$	7,311

Other information (3)
Gross operating cash flows for operating leases	$	(15,151	)	$	(8,961	)	$	(9,845	)
Gross operating cash flows for finance leases		(6,737	)		(81	)		-
Gross financing cash flows for finance leases		(4,977	)		(398	)		-
Operating cash flows from subleases (2)		401			32			488

	As of December 31, 2025			As of December 31, 2024			As of December 31, 2023
Weighted average remaining lease term (in months) – operating leases		85			92			55
Weighted average remaining lease term (in months) – finance leases		25			37			-

Weighted average discount rate – operating leases		6.3	%		6.1	%		4.9	%
Weighted average discount rate– finance leases		5.9	%		5.9	%		-

As of December 31, 2025, future minimum lease payments under leases which are included in lease liabilities on our consolidated balance sheet are as follows (dollars in thousands):


	Operating Leases Total		Finance Leases Total		Total Lease Liabilities

2026 (1)	$	9,023	$	5,964	$	14,987
2027		10,389		5,325		15,714
2028		7,844		957		8,801
2029		7,113		-		7,113
2030		7,277		-		7,277
2031		7,444				7,444
2032 and thereafter		13,784		-		13,784
Total	$	62,874	$	12,246	$	75,120
Less: imputed interest		13,090		691		13,781
Present value of future minimum lease payments		49,784		11,555		61,339
Less: current lease liabilities		6,032		5,458		11,490
Non-current lease liabilities	$	43,752	$	6,097	$	49,849

_____________

(1)

Amounts provided are for unpaid lease obligations remaining as of December 31, 2025.

We use discount rates to determine the net present value of our gross lease obligations when calculating the lease liability and related ROU asset. In cases in which the rate implicit in the lease is readily determinable, we use that discount rate for purposes of the net present value calculation. In most cases, our lease agreements do not have a discount rate that is readily determinable and therefore we use an estimate of our incremental borrowing rate. Our incremental borrowing rate is determined at lease commencement or lease modification and represents the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

We have 15 leased locations related to our ongoing operations which consist of administrative offices and university locations, of which two are either month to month leases or had an initial lease term of less than one year and therefore are not included in the lease liability and ROU asset recorded within our consolidated balance sheet, and one of which is related to a sale-leaseback transaction. For those leases that we are reasonably certain that we will extend or terminate at lease conception or modification, we have taken those factors into account when determining the lease liability recorded within our consolidated balance sheet.

Upon construction commencement of the new St. Augustine campus in April 2023, USAHS determined that it was the deemed owner for accounting purposes during the construction period under a build to suit (“BTS”) arrangement due to the extent of the Company’s involvement in the project. Accordingly, the Company had recognized all cash and non-cash assets contributed by the landlord to the project as of December 31, 2024 as a component of construction in progress with a corresponding construction financing liability. As of December 31, 2024, the Company had recognized $56.5 million in construction contributions made by the landlord as construction financing on the consolidated balance sheet. Lease commencement began in January 2025 upon substantial completion of the BTS arrangement with a stated lease term of 25 years from commencement date.

Upon lease commencement and shortly after the acquisition of USAHS, the Company determined that it did not meet the criteria under ASC 606-10-25-30 to derecognize the asset as the Company retained control of the asset and the risks and rewards of ownership did not transfer to the landlord. As such the transaction is considered a failed sale leaseback and the Company will retain the asset on its consolidated balance sheet and depreciate the asset over its useful life. A financing obligation liability was recognized in the amount of the net proceeds received in the amount of $56.5 million. The Company will not recognize rent expense related to the leased asset. Instead, monthly rent payments under the lease agreement will be recorded as interest expense and a reduction of the outstanding liability.

Amortization expense and interest expense for this failed sale-leaseback was $1.2 million and $5.4 million, respectively, for the year ended December 31, 2025.


	Sale Leaseback Payments


2026	$	5,043
2027		5,143
2028		5,246
2029		5,351
2030		5,458
2031		5,567
2032 and thereafter		122,259
Total	$	154,067

9. LEASES