LEASES

3 Months Ended

Mar. 31, 2022

The Company determines if an arrangement is a lease at inception. The Company considers any contract where there is an identified asset as to which the Company has the right to control its use in determining whether the contract contains a lease. An operating lease right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are to be recognized at the commencement date based on the present value of lease payments over the lease term. As all of the Company’s operating leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. We estimate the incremental borrowing rate based on a yield curve analysis, utilizing the interest rate derived from the fair value analysis of our credit facility and adjusting it for factors that appropriately reflect the profile of secured borrowing over the expected term of the lease. The operating lease ROU assets include any lease payments made prior to the rent commencement date and exclude lease incentives. Our leases have remaining lease terms of one year to 20 years. Lease terms may include options to extend the lease term used in determining the lease obligation when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments are recognized on a straight-line basis over the lease term for operating leases.

See Note 13 which discusses the sale leaseback transaction relating to the Company’s Denver and Grand Prairie campuses which closed on October 29, 2021.

Our operating lease cost for the three months ended March 31, 2022 and 2021 was $4.7 million and $3.7 million, respectively. Our variable lease cost for the three months ended March 31, 2022 and 2021 was less than $0.1 million. The net change in ROU asset and operating lease liability is included in other assets in the condensed consolidated cash flows for the three months ended March 31, 2022 and 2021.

Supplemental cash flow information and non-cash activity related to our operating leases are as follows:

	Three Months Ended March 31,
	2022		2021
Operating cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	4,654	$	3,208
Non-cash activity:
Lease liabilities arising from obtaining right-of-use assets	$	6,644	$	50

As of March 31, 2022, there were no new leases and 1 lease modification that resulted in noncash re-measurement of the related ROU asset and operating lease liability of $6.6 million relating to one of our campuses.

Weighted-average remaining lease term and discount rate for our operating leases is as follows:

	As of March 31,
	2022			2021
Weighted-average remaining lease term	11.43 years			5.96 years
Weighted-average discount rate		7.42	%		11.27	%

Maturities of lease liabilities by fiscal year for our operating leases as of March 31, 2022 are as follows:

Year ending December 31,
2022 (excluding the three months ended March 31, 2022)	$	13,764
2023		18,199
2024		15,855
2025		13,901
2026		11,448
2027		8,535
Thereafter		61,215
Total lease payments		142,917
Less: imputed interest		(41,142	)
Present value of lease liabilities	$	101,775