Lessee Operating Leases

3 Months Ended

Sep. 30, 2022

9. Lessee Operating Leases

All of the Company’s leases are classified as operating leases. Certain of the leases have both lease and non-lease components. The Company has elected to account for the lease component and the non-lease components as a single combined lease component for all classes of underlying assets. Supplemental balance sheet information related to leases as of September 30, 2022 and June 30, 2022 is as follows:


(in thousands, except remaining life and discount rate)	September 30, 2022			June 30, 2022
Facilities
Right of use assets	$	3,382		$	3,400

Current portion of lease liabilities		1,561			1,475
Lease liabilities, net of current portion		2,032			2,137
Total liabilities	$	3,593		$	3,612

Weighted-average remaining life	2.9 years			3.1 years
Weighted-average discount rate		10.8	%		10.8	%

Vehicles
Right of use assets	$	429		$	315

Current portion of lease liabilities		119			77
Lease liabilities, net of current portion		310			238
Total liabilities	$	429		$	315

Weighted-average remaining life	4.1 years			4.2 years
Weighted-average discount rate		5.8	%		6.3	%

Equipment
Right of use assets	$	4		$	7

Current portion of lease liabilities		4			7
Total liabilities	$	4		$	7

Weighted-average remaining life	0.6 years			0.8 years
Weighted-average discount rate		12.5	%		12.5	%

Operating lease costs are included in the operating expense associated with the business segment leasing the asset on the condensed consolidated statements of operations and are included in cash flows from operating activities on the condensed consolidated statements of cash flows. Certain operating leases include variable lease costs which are not material and are included in operating lease costs. Additional details are presented in the following table:


	For the three months ended September 30,
(in thousands)	2022		2021
Facilities
Operating lease cost	$	583	$	554
Cash paid for operating leases		482		552

Vehicles
Operating lease cost	$	26	$	13
Cash paid for operating leases		24		13

Equipment
Operating lease cost	$	23	$	9
Cash paid for operating leases		23		9

The following table summarizes the maturity of operating lease liabilities as of September 30, 2022:


(in thousands)	September 30, 2022
For the nine months ending June 30, 2023	$	1,410
For the year ending June 30, 2024		1,641
For the year ending June 30, 2025		786
For the year ending June 30, 2026		646
For the year ending June 30, 2027		152
Thereafter		21
Total lease payments	$	4,656
Imputed interest		(630	)
Total lease liabilities	$	4,026

Durable Medical Equipment

The facility leases include offices, retail and warehouse space and sleep labs. The leases have original or amended terms ranging from 12 to 96 months, some of which include an additional option to extend the lease for up to 120 months. Certain of these leases have variable rental payments tied to a consumer price index or include additional rental payments for maintenance costs, taxes and insurance, which are accounted for as variable rent.

The vehicles leases have original lease terms of 60 months from the commencement date of each lease with no option to extend. Each lease may be terminated by the lessee with 30-days’ notice after the first 13 months of the lease subject to certain early termination costs, including residual value guarantees. The lease costs include variable payments for taxes and other fees.

Equipment leases consist of office equipment with original lease terms ranging from 36 to 48 months from the commencement date of each lease and may include an option to extend or purchase at the end of the lease term. Certain of these leases include additional rental costs for taxes, insurance and additional fees in addition to the base rental costs.

Investment Management

A lease for office space located in Charleston, South Carolina was assumed as part of the acquisition of the Monomoy UpREIT investment management agreement in May 2022. The non-cancellable lease term expires on October 1, 2024.

General Corporate

The Company has a lease for office space located in Waltham, Massachusetts. This office space is allocated between the investment management and general corporate segments. On the commencement date of the lease, the non-cancellable term was for eighty-eight months from the occupancy date of June 1, 2017 and contains an option to extend for an additional sixty-month period.