Leases

12 Months Ended

Dec. 31, 2025

Leases [Abstract]

Leases

Leases

The Company leases real estate and equipment under operating and finance leases. At lease inception, if the lease meets any of the following five criteria, the Company will classify it as a finance lease: (i) the lease transfers ownership of the underlying asset to the Company by the end of the lease term, (ii) the lease grants the Company an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. Otherwise, the lease will be treated as an operating lease.

If a contract modification alters an embedded lease component and the modification is not accounted for as a separate contract, the classification of the lease is reassessed.

The Company’s operating leases are comprised primarily of real estate, including hospital buildings, medical office buildings and other administrative office buildings, and certain medical and office equipment, while finance leases are comprised of medical equipment and certain hospital buildings. The Company assesses the terms of each lease to determine its classification as operating or financing. The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. Right-of-use assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.

As the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. In calculating the incremental borrowing rate, consideration is given to the Company’s credit risk, the term of the lease, the total lease payments and adjustments for the impacts of collateral, as necessary. Many of the Company’s leases include rental escalation clauses and renewal options that are factored into the determination of lease payments, when appropriate.

Certain of the Company’s lease agreements contain options to extend or terminate the lease. The Company evaluates these options on a lease-by-lease basis, and if the Company determines it is reasonably certain to exercise an option to extend or reasonably certain not to exercise an option to terminate, the lease term includes the period covered by the option. Lease costs for the Company’s operating leases are recognized on a straight-line basis within operating expenses over the lease term. Finance lease assets are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term. The interest component of finance leases is included in interest expense and recognized using the effective interest method over the lease term.

The Company has elected to not separate lease and non-lease components for any leases within its existing classes of assets and, as a result, accounts for any lease and non-lease components as a single lease component. The Company has also elected to not apply the recognition requirement to any leases within its existing classes of assets with a term of 12 months or less.

During the years ended December 31, 2025 and 2024, the Company recognized new right-of-use assets associated with operating leases of $53.6 million and $25.1 million, respectively.

The following table presents lease-related assets and liabilities (dollars in thousands):

			December 31,
		Balance Sheet Classification	2025			2024
Assets:
Operating leases		Operating lease right of use assets	$	292,651		$	248,040
Operating leases, related party		Operating lease right of use assets, related party	915,599			929,106
Finance leases		Property and equipment, net	53,896			51,171
Total lease assets			$	1,262,146		$	1,228,317
Liabilities:
Current:
Operating leases		Other accrued expenses and liabilities	$	38,819		$	33,604
Operating leases, related party		Other accrued expenses and liabilities	14,680			12,777
Finance leases		Current installments of long-term debt	11,122			5,653
Noncurrent:
Operating leases		Long-term operating lease liability	260,600			221,443
Operating leases, related party		Long-term operating lease liability, related party	904,632			919,313
Finance leases		Long-term debt, less current installments	13,414			15,254
Total lease liabilities			$	1,243,267		$	1,208,044
Operating leases:
Weighted-average remaining term			16.0 years			17.0 years
Weighted-average discount rate (a)			12.5		%	12.6		%
(a)	As most of the Company’s leases do not provide a readily determinable implicit interest rate, the Company uses an incremental borrowing rate commensurate with the respective terms of the leases to discount the lease payments. The Company evaluates the discount rate throughout the year to determine whether changes in facts and circumstances should result in a change to the discount rate used for leases.

The following table provides information related to expenses for operating leases (in thousands):

	Years Ended December 31,
	2025		2024		2023
Operating lease cost (b)	$	203,031	$	200,104	$	197,881
Short-term lease expense (b)	25,488		24,127		21,447
Variable lease expense (b)	33,972		28,575		23,996
Total lease expense	$	262,491	$	252,806	$	243,324
(b) These expenses are included in “Rents and leases” and “Rents and leases, related party” on the Company’s consolidated income statements.

The following table presents supplemental cash flow information (in thousands):

	Years Ended December 31,
	2025		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	69,984	$	66,233	$	66,459
Operating cash flows for operating leases, related party	131,421		131,201		130,986
Total operating cash flows for operating leases	$	201,405	$	197,434	$	197,445

Maturities of Lease Liabilities

Undiscounted cash flows for operating leases recorded on the consolidated balance sheet at December 31, 2025 were as follows (in thousands):

2026	$	199,997
2027	193,071
2028	188,783
2029	174,615
2030	168,252
Thereafter	1,929,486
Total rental payments	2,854,204
Less: Amount of lease payments representing interest	1,635,473
Present value of future minimum lease payments	1,218,731
Less: Current portion of lease liabilities	53,499
Noncurrent lease liabilities	$	1,165,232

The Company has excluded from the table above additional operating leases that had not yet commenced as of December 31, 2025 with aggregate rent payments of $63.7 million, which are primarily for leases of real estate. These operating leases will commence during fiscal year 2026 with lease terms of 10 years to 15 years.

Leases

Leases

The Company leases real estate and equipment under operating and finance leases. At lease inception, if the lease meets any of the following five criteria, the Company will classify it as a finance lease: (i) the lease transfers ownership of the underlying asset to the Company by the end of the lease term, (ii) the lease grants the Company an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. Otherwise, the lease will be treated as an operating lease.

If a contract modification alters an embedded lease component and the modification is not accounted for as a separate contract, the classification of the lease is reassessed.

The Company’s operating leases are comprised primarily of real estate, including hospital buildings, medical office buildings and other administrative office buildings, and certain medical and office equipment, while finance leases are comprised of medical equipment and certain hospital buildings. The Company assesses the terms of each lease to determine its classification as operating or financing. The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. Right-of-use assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.

As the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. In calculating the incremental borrowing rate, consideration is given to the Company’s credit risk, the term of the lease, the total lease payments and adjustments for the impacts of collateral, as necessary. Many of the Company’s leases include rental escalation clauses and renewal options that are factored into the determination of lease payments, when appropriate.

Certain of the Company’s lease agreements contain options to extend or terminate the lease. The Company evaluates these options on a lease-by-lease basis, and if the Company determines it is reasonably certain to exercise an option to extend or reasonably certain not to exercise an option to terminate, the lease term includes the period covered by the option. Lease costs for the Company’s operating leases are recognized on a straight-line basis within operating expenses over the lease term. Finance lease assets are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term. The interest component of finance leases is included in interest expense and recognized using the effective interest method over the lease term.

The Company has elected to not separate lease and non-lease components for any leases within its existing classes of assets and, as a result, accounts for any lease and non-lease components as a single lease component. The Company has also elected to not apply the recognition requirement to any leases within its existing classes of assets with a term of 12 months or less.

During the years ended December 31, 2025 and 2024, the Company recognized new right-of-use assets associated with operating leases of $53.6 million and $25.1 million, respectively.

The following table presents lease-related assets and liabilities (dollars in thousands):

			December 31,
		Balance Sheet Classification	2025			2024
Assets:
Operating leases		Operating lease right of use assets	$	292,651		$	248,040
Operating leases, related party		Operating lease right of use assets, related party	915,599			929,106
Finance leases		Property and equipment, net	53,896			51,171
Total lease assets			$	1,262,146		$	1,228,317
Liabilities:
Current:
Operating leases		Other accrued expenses and liabilities	$	38,819		$	33,604
Operating leases, related party		Other accrued expenses and liabilities	14,680			12,777
Finance leases		Current installments of long-term debt	11,122			5,653
Noncurrent:
Operating leases		Long-term operating lease liability	260,600			221,443
Operating leases, related party		Long-term operating lease liability, related party	904,632			919,313
Finance leases		Long-term debt, less current installments	13,414			15,254
Total lease liabilities			$	1,243,267		$	1,208,044
Operating leases:
Weighted-average remaining term			16.0 years			17.0 years
Weighted-average discount rate (a)			12.5		%	12.6		%
(a)	As most of the Company’s leases do not provide a readily determinable implicit interest rate, the Company uses an incremental borrowing rate commensurate with the respective terms of the leases to discount the lease payments. The Company evaluates the discount rate throughout the year to determine whether changes in facts and circumstances should result in a change to the discount rate used for leases.

The following table provides information related to expenses for operating leases (in thousands):

	Years Ended December 31,
	2025		2024		2023
Operating lease cost (b)	$	203,031	$	200,104	$	197,881
Short-term lease expense (b)	25,488		24,127		21,447
Variable lease expense (b)	33,972		28,575		23,996
Total lease expense	$	262,491	$	252,806	$	243,324
(b) These expenses are included in “Rents and leases” and “Rents and leases, related party” on the Company’s consolidated income statements.

The following table presents supplemental cash flow information (in thousands):

	Years Ended December 31,
	2025		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	69,984	$	66,233	$	66,459
Operating cash flows for operating leases, related party	131,421		131,201		130,986
Total operating cash flows for operating leases	$	201,405	$	197,434	$	197,445

Maturities of Lease Liabilities

Undiscounted cash flows for operating leases recorded on the consolidated balance sheet at December 31, 2025 were as follows (in thousands):

2026	$	199,997
2027	193,071
2028	188,783
2029	174,615
2030	168,252
Thereafter	1,929,486
Total rental payments	2,854,204
Less: Amount of lease payments representing interest	1,635,473
Present value of future minimum lease payments	1,218,731
Less: Current portion of lease liabilities	53,499
Noncurrent lease liabilities	$	1,165,232

The Company has excluded from the table above additional operating leases that had not yet commenced as of December 31, 2025 with aggregate rent payments of $63.7 million, which are primarily for leases of real estate. These operating leases will commence during fiscal year 2026 with lease terms of 10 years to 15 years.