Leases

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Leases

Leases

Adoption of ASC 842

We lease real estate for our offices, customer care centers, and warehouse space as well as certain equipment under operating leases with varying expiration dates through 2027. We also lease certain computer devices and network equipment within our Virtual Care Infrastructure segment under finance leases with varying expiration dates through 2026. In addition to purchasing Martti™ units for use as inventory, we also lease units through an arrangement with third-party lessors to be used as equipment. Leased units are used as part of our promotional program whereby we loan out Martti™ units for trial purposes to various customers. Leases are categorized at their commencement date, which is the date we take possession or control of the underlying asset. Generally, the term of real estate leases ranges from 1 to 5 years at inception of the contract and the term for equipment leases ranges from 1 to 3 years at the inception of the contract.

We elected the package of transitional practical expedients, under which we (1) did not reassess whether any expired or existing contracts are or contain leases, (2) we did not reassess the lease classification for any expired or existing leases and (3) we did not reassess initial direct costs for any existing leases. Additionally, we elected the short-term lease recognition exemption for all leases that qualify, meaning it does not recognize right-of-use assets or lease liabilities for those leases. We also elected the practical expedient to not separate lease and non-lease components for all asset classes.

Leases

The components of lease expense consisted of the following as of December 31, 2023 and 2022:

	December 31, 2023						December 31, 2022
In thousands	Third Party		Related Party		Total		Third Party		Related Party		Total
Finance lease costs:
Amortization of right-of-use assets	$	3,349	$	—	$	3,349	$	3,083	$	—	$	3,083
Interest on lease liabilities	319		—		319		312		—		312
Operating lease costs	1,991		294		2,285		3,209		392		3,601
Short-term lease costs	112		67		179		108		356		464
Variable lease costs	631		—		631		354		—		354
Sublease income	(408)		—		(408)		(643)		—		(643)
Total lease costs	$	5,994	$	361	$	6,355	$	6,423	$	748	$	7,171

Lease-related assets and liabilities recorded on the consolidated balance sheet are as follows:

	December 31, 2023		December 31, 2022
In thousands	Third Party		Third Party		Related Party		Total
Assets
Finance lease right-of-use assets (included in property, plant and equipment, net)	$	3,893	$	5,916	$	—	$	5,916
Operating lease right-of-use assets	1,902		5,819		1,394		7,213
Total leased assets	$	5,795	$	11,735	$	1,394	$	13,129
Liabilities
Lease liabilities, current:
Finance lease liabilities	$	2,713	$	3,023	$	—	$	3,023
Operating lease liabilities	809		2,130		322		2,452
Lease liabilities, current	$	3,522	$	5,153	$	322	$	5,475
Lease liabilities, noncurrent:
Finance lease liabilities	$	1,348	$	2,976	$	—	$	2,976
Operating lease liabilities	1,925		4,672		1,093		5,765
Lease liabilities, noncurrent	3,273		7,648		1,093		8,741
Total leased liabilities	$	6,795	$	12,801	$	1,415	$	14,216

Accumulated amortization related to the finance lease assets was $3.3 million and $3.1 million as of December 31, 2023 and 2022, respectively.

Other information consisted of the following:

	December 31, 2023						December 31, 2022
In thousands	Third Party		Related Party		Total		Third Party		Related Party		Total
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	2,179	$	286	$	2,465	$	3,632	$	371	$	4,003
Operating cash flows from finance leases	$	327	$	—	$	327	$	310	$	—	$	310
Financing cash flows from finance leases	$	3,329	$	—	$	3,329	$	3,106	$	—	$	3,106
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases	$	1,148	$	—	$	1,148	$	4,110	$	—	$	4,110
Operating leases	$	80	$	—	$	80	$	10,843	$	1,706	$	12,549

The following table summarizes our lease term and discount rate assumptions as of December 31, 2023:

	December 31, 2023
	Third Party	Related Party	Total
Weighted-average remaining lease term (years):
Finance leases	1.60	N/A	1.60
Operating leases	3.16	N/A	3.16
Weighted-average discount rate:
Finance leases	7.3%	N/A	7.3%
Operating leases	7.6%	N/A	7.6%

Undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating and finance leases with terms of more than one year, as of December 31, 2023, have been reconciled to the total operating and finance lease liabilities recognized on the consolidated balance sheets as of December 31, 2023 as follows:

	December 31, 2023
	Finance Leases		Operating Leases
In thousands	Third Party		Third Party
2024	$	2,896	$	975
2025	1,202		954
2026	205		851
2027	—		275
Total lease payments	4,303		3,055
Less: Interest	242		321
Present value of lease liabilities	$	4,061	$	2,734

Leases

Leases

Adoption of ASC 842

We lease real estate for our offices, customer care centers, and warehouse space as well as certain equipment under operating leases with varying expiration dates through 2027. We also lease certain computer devices and network equipment within our Virtual Care Infrastructure segment under finance leases with varying expiration dates through 2026. In addition to purchasing Martti™ units for use as inventory, we also lease units through an arrangement with third-party lessors to be used as equipment. Leased units are used as part of our promotional program whereby we loan out Martti™ units for trial purposes to various customers. Leases are categorized at their commencement date, which is the date we take possession or control of the underlying asset. Generally, the term of real estate leases ranges from 1 to 5 years at inception of the contract and the term for equipment leases ranges from 1 to 3 years at the inception of the contract.

We elected the package of transitional practical expedients, under which we (1) did not reassess whether any expired or existing contracts are or contain leases, (2) we did not reassess the lease classification for any expired or existing leases and (3) we did not reassess initial direct costs for any existing leases. Additionally, we elected the short-term lease recognition exemption for all leases that qualify, meaning it does not recognize right-of-use assets or lease liabilities for those leases. We also elected the practical expedient to not separate lease and non-lease components for all asset classes.

Leases

The components of lease expense consisted of the following as of December 31, 2023 and 2022:

	December 31, 2023						December 31, 2022
In thousands	Third Party		Related Party		Total		Third Party		Related Party		Total
Finance lease costs:
Amortization of right-of-use assets	$	3,349	$	—	$	3,349	$	3,083	$	—	$	3,083
Interest on lease liabilities	319		—		319		312		—		312
Operating lease costs	1,991		294		2,285		3,209		392		3,601
Short-term lease costs	112		67		179		108		356		464
Variable lease costs	631		—		631		354		—		354
Sublease income	(408)		—		(408)		(643)		—		(643)
Total lease costs	$	5,994	$	361	$	6,355	$	6,423	$	748	$	7,171

Lease-related assets and liabilities recorded on the consolidated balance sheet are as follows:

	December 31, 2023		December 31, 2022
In thousands	Third Party		Third Party		Related Party		Total
Assets
Finance lease right-of-use assets (included in property, plant and equipment, net)	$	3,893	$	5,916	$	—	$	5,916
Operating lease right-of-use assets	1,902		5,819		1,394		7,213
Total leased assets	$	5,795	$	11,735	$	1,394	$	13,129
Liabilities
Lease liabilities, current:
Finance lease liabilities	$	2,713	$	3,023	$	—	$	3,023
Operating lease liabilities	809		2,130		322		2,452
Lease liabilities, current	$	3,522	$	5,153	$	322	$	5,475
Lease liabilities, noncurrent:
Finance lease liabilities	$	1,348	$	2,976	$	—	$	2,976
Operating lease liabilities	1,925		4,672		1,093		5,765
Lease liabilities, noncurrent	3,273		7,648		1,093		8,741
Total leased liabilities	$	6,795	$	12,801	$	1,415	$	14,216

Accumulated amortization related to the finance lease assets was $3.3 million and $3.1 million as of December 31, 2023 and 2022, respectively.

Other information consisted of the following:

	December 31, 2023						December 31, 2022
In thousands	Third Party		Related Party		Total		Third Party		Related Party		Total
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	2,179	$	286	$	2,465	$	3,632	$	371	$	4,003
Operating cash flows from finance leases	$	327	$	—	$	327	$	310	$	—	$	310
Financing cash flows from finance leases	$	3,329	$	—	$	3,329	$	3,106	$	—	$	3,106
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases	$	1,148	$	—	$	1,148	$	4,110	$	—	$	4,110
Operating leases	$	80	$	—	$	80	$	10,843	$	1,706	$	12,549

The following table summarizes our lease term and discount rate assumptions as of December 31, 2023:

	December 31, 2023
	Third Party	Related Party	Total
Weighted-average remaining lease term (years):
Finance leases	1.60	N/A	1.60
Operating leases	3.16	N/A	3.16
Weighted-average discount rate:
Finance leases	7.3%	N/A	7.3%
Operating leases	7.6%	N/A	7.6%

Undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating and finance leases with terms of more than one year, as of December 31, 2023, have been reconciled to the total operating and finance lease liabilities recognized on the consolidated balance sheets as of December 31, 2023 as follows:

	December 31, 2023
	Finance Leases		Operating Leases
In thousands	Third Party		Third Party
2024	$	2,896	$	975
2025	1,202		954
2026	205		851
2027	—		275
Total lease payments	4,303		3,055
Less: Interest	242		321
Present value of lease liabilities	$	4,061	$	2,734