LEASES

12 Months Ended

Dec. 31, 2024

The Company determines if an arrangement is a lease at its 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 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 21 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.

On December 12, 2024, the Company entered into a lease for approximately 65,000 square feet of space to serve as the Company’s new campus in Hicksville, New York. The lease term is currently planned to commence on or about May 1, 2025, with an initial lease term of 15 years and 9 months. The lease contains a renewal option allowing for either a 10-year renewal or two five-year renewals. The Company signed the lease commitment on January 1, 2025. However, the Company will not take possession until the lease commencement date.

On October 31, 2023, the Company entered into a lease for approximately 100,000 square feet of space to serve as the Company’s new campus in Houston, Texas. The lease term commenced on January 2, 2024, with an initial lease term of 21 years and 6 months. The lease contains three five-year renewal options.

On October 18, 2023, the Company entered into a lease for approximately 120,000 square feet of space. to serve as the Company’s new Nashville, Tennessee campus. The lease term commenced on November 1, 2023, with an initial lease term of 15 years. The lease contains two five-year renewal options. See Note 8, “Real Estate Transactions”.

On September 28, 2023, the Company purchased a 90,000 square foot property located at 311 Veterans Highway, Levittown, Pennsylvania for approximately $10.2 million. On January 30, 2024, the Company entered into a sale-leaseback transaction for this property. See Note 8, “Real Estate Transactions”. As of December 31, 2023, this property was classified as held-for-sale on the Consolidated Balance Sheets.

On November 3, 2022, the Board of Directors approved a plan to close the Somerville, Massachusetts campus, which as of December 31, 2023 was fully taught-out.

On June 30, 2022, the Company executed a lease for approximately 55,000 square feet of space to serve as the Company’s new campus in East Point, Georgia. The lease term commenced in August 2022, with total payments due on an undiscounted basis of $12.2 million over the 12-year initial term. The lease contains two five-year renewal options that may be exercised by the Company at the end of the initial lease term. The Company had no involvement in the construction or design of the facilities on the property and was not deemed to be in control of the asset prior to the lease commencement date.

The following table presents components of lease cost and classification on the Consolidated Statement of Operations:

		Year Ended December 31,
in thousands	Consolidated Statement of Operations Classification	2024		2023		2022
Operating Lease Cost	Selling, general and administrative	$	19,665	$	19,235	$	18,943
Finance lease cost
Amortization of leased assets	Depreciation and amortization		1,622		175		-
Interest on lease Liabilities	Interest expense		2,155		224		-
Variable lease cost	Selling, general and administrative		423		475		55
		$	23,865	$	20,109	$	18,998

The net change in ROU asset and operating lease liability is included in the net change in other assets in the Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2024, 2023, and 2022.

The net change in ROU asset and finance lease liability is split between principal payments, interest expense and amortization expense. Principal payments are classified in the financing section, interest expense is included in net income and amortization expense is broken out separately in the operating section of the Consolidated Statements of Cash Flows.

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

	December 31,
	2024		2023		2022
Cash flow information:
Cash paid for amounts included in the measurement of lease liabilities
Operating Cash Flows - operating leases	$	17,989	$	16,103	$	18,443
Operating Cash Flows - finance leases	$	2,155	$	-	$	-
Financing Cash Flows - finance leases	$	495	$	-	$	-

Non-cash activity:
Lease liabilities arising from obtaining right-of-use assets
Operating leases	$	59,061	$	10,477	$	13,820
Finance leases	$	12,570	$	15,971	$	-

During the fiscal year ended December 31, 2024, the Company entered into one new operating lease, one new finance lease and eleven lease modifications. The Company obtained the operating and finance ROU asset in exchange for an operating and finance lease liability of $15.7 million and $12.6 million, respectively. In addition, the eleven lease modifications resulted in a noncash re-measurement of the related ROU asset and operating lease liability of $43.3 million.

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

	Year Ended December 31,
	2024		2023
Weighted-average remaining lease term
Operating leases	12.81 years		11.16 years
Finance leases	16.40 years		15.09 years

Weighted-average discount rate
Operating leases		6.60%		6.89%
Finance leases		7.69%		8.39%

Maturities of lease liabilities by fiscal year for our leases as of December 31, 2024 are as follows:

	As of December 31, 2024
	Operating Leases			Finance Leases
Year ending December 31,
2025	$	18,404		$	506
2026		18,976			2,817
2027		18,188			2,918
2028		18,948			3,023
2029		17,237			3,132
Thereafter		131,509			43,417
Total lease payments		223,262			55,813
Less: imputed interest		(74,962	)		(26,552	)
Present value of lease liabilities	$	148,300		$	29,261