Operating Leases

9 Months Ended

Sep. 30, 2022

In January 2020, the Company entered into a 63-month non-cancelable lease for 302,880 square feet of warehouse space in New Albany, Ohio. The lease commenced on June 1, 2020. Total minimum lease payments are $7.9 million, net of rent abatement for an initial three-month period and with an annual escalation of 2.5%. The Company has the option to extend the lease term for a period of five years. The Company utilizes the reasonably certain threshold criteria in determining which options it will exercise.

In January 2022, the Company entered into a 62-month non-cancelable lease for 24,465 square feet of warehouse, distribution, and pharmacy space in Gilbert, Arizona. The lease commenced on September 1, 2022. Total minimum lease payments are $1.5 million, net of rent abatement for an initial two-month period and with annual escalation of 3.0%. The Company has the option to extend the lease term for a period of five years.

For the three months ended September 30, 2022 and 2021, the Company recorded operating lease costs of $0.5 million and $0.4 million, respectively, including variable operating lease costs of $0.1 million for each period. For each of the nine months ended September 30, 2022 and 2021, the Company recorded operating lease costs of $1.4 million, including variable operating lease costs of $0.2 million.

For the nine months ended September 30, 2022 and 2021, operating cash flows used for operating leases were $1.2 million and $1.1 million, respectively. As of September 30, 2022, the weighted average remaining lease term and weighted average discount rate was 3.4 years and 4.7%, respectively.

Future minimum lease payments under the Company's non-cancelable operating leases with an initial lease term in excess of one year subsequent to September 30, 2022 are as follows (in thousands):


The remainder of 2022	$	440
2023	1,875
2024	1,924
2025	1,408
2026	303
2027	259
Gross lease payments	6,209
Less: imputed interest	(529)
Present value of net future minimum lease payments	$	5,680

As of September 30, 2022, the present value of net future minimum lease payments of $5.7 million is recorded as operating lease liabilities: (i) $1.6 million within current liabilities; and (ii) $4.1 million within long-term liabilities on the condensed consolidated balance sheet.