LEASES

9 Months Ended

Sep. 30, 2025

The Company enters into contracts to utilize office space, educational facilities, and various items of equipment under lease agreements and accounts for them in accordance with ASC 842, Leases ("ASC 842"). To determine whether a contract contains a lease, the Company assesses whether there is an identified asset and whether the Company has the right to control its use throughout the period of use. The Company classifies leases as either operating or finance leases at lease commencement date in accordance with ASC 842. As required under ASC 842, the Company recognizes a ROU asset and a corresponding lease liability on the balance sheet, measured at the present value of lease payments over the term of the lease. An operating lease ROU asset represents the Company's right to use the underlying asset during the lease term and the corresponding lease liability represents its obligation to make lease payments. Operating lease ROU assets and liabilities are amortized over the lease term, with lease expense recognized on a straight-line basis within operating expenses in the Condensed Consolidated Statement of Operations. Finance lease arrangements result in separate recognition of interest expense on the lease liability using the effective interest method and amortization expense of the ROU asset on a straight-line basis over the lease term, in addition to principal payments.

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 1 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.

On December 12, 2024, the Company entered into a lease for approximately 65,000 square feet of space to serve as the Company’s campus in Hicksville, New York. The lease term commenced in September 2025, after the landlord completed preparation of the space, 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.

On September 12, 2025, the Company entered into a lease for approximately 88,000 square feet of space to serve as the Company's campus in Rowlett, a northern suburb of Dallas, Texas. The lease term is currently expected to commence in the fourth quarter of 2025 upon completion of the build-out, with an initial lease term of 15 years and 5 months. The Company will not take possession of the premises until the lease commencement date.

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




		Three Months Ended				Nine Months Ended
		September 30,						September 30,
in thousands	Consolidated Statement of Operations Classification		2025		2024			2025		2024
Operating Lease Cost	Selling, general and administrative	$	5,114	$	4,924		$	15,085	$	14,543
Finance lease cost
Amortization of leased assets	Educational services and facilities		418		418			1,253		1,204
Interest on lease Liabilities	Interest expense		596		554			1,769		1,594
Variable lease cost	Selling, general and administrative		234		117			695		292
		$	6,362	$	6,013		$	18,802	$	17,633

The net change in ROU asset and operating lease liability is included in the net change in other assets in the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024.

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:


		Three Months Ended September 30,				Nine Months Ended September 30,
		2025		2024		2025			2024
Cash flow information:
Cash paid for amounts included in the measurement of lease liabilities
Operating Cash Flows - operating leases	$	2,812	$	4,456	$	12,509		$	13,465
Operating Cash Flows - finance leases	$	596	$	554	$	1,769		$	1,594
Financing Cash Flows - finance leases	$	88	$	657	$	(1,945	)	$	593

Non-cash activity:
Lease liabilities arising from obtaining right-of-use assets
Operating leases	$	12,089	$	26,014	$	12,309		$	48,409
Finance leases	$	-	$	-	$	-		$	12,570

During the nine months ended September 30, 2025, the Company entered into one new operating lease. There were no lease modifications during the nine months ended September 30, 2025.

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


	As of September 30,
	2025		2024
Weighted-average remaining lease term
Operating leases	15.79 years		13.06 years
Finance leases	12.77 years		16.65 years

Weighted-average discount rate
Operating leases	6.6	%	6.69	%
Finance leases	7.67	%	7.69	%

Maturities of lease liabilities by fiscal year for our leases as of September 30, 2025, are as follows:


		Operating Leases			Finance Leases
Year ending December 31,
2025 (excluding the nine months ending September 30, 2025)	$	3,963		$	683
2026		20,108			2,817
2027		19,692			2,918
2028		20,542			3,023
2029		18,798			3,132
2030		16,041			3,244
Thereafter		136,423			40,174
Total lease payments		235,567			55,991
Less: imputed interest		(79,047	)		(24,784	)
Present value of lease liabilities	$	156,520		$	31,207