LEASES

12 Months Ended

Dec. 31, 2023

Our material lease contracts are for facilities and advanced radiology equipment. In regards to our imaging, administrative and warehouse facilities, the most common initial lease term varies in length from 5 to 15 years. Including renewal options negotiated with the landlord, we can have a total span of 10 to 35 years at these locations, and we do not enter into purchase options on the underlying property. We also lease smaller satellite X-Ray locations on mutually renewable terms, usually lasting one year. Leases for advanced radiology and office equipment have terms generally lasting from 5 to 8 years. All leases are classified as operating or finance for accounting purposes, depending on the terms of the agreement. Our incremental borrowing rate used to discount the stream of lease payments is closely related to the interest rates charged on our collateralized debt obligations and our incremental borrowing rate is adjusted when those rates experience a substantial change. During 2021, we satisfied all liabilities classified as finance leases, and only operating leases remain.

The components of lease expense were as follows:



	Years ended December 31,
(In thousands)	2023		2022		2021

Operating lease cost(1)	$	106,954	$	107,475	$	121,578

Finance lease cost:
Depreciation of leased equipment	$	1,204	$	2,896	$	3,068
Interest on lease liabilities	—		—		46
Total finance lease cost	$	1,204	$	2,896	$	3,114

1) Operating lease cost above for the year ended December 31, 2023 and 2021 included $2.7 million and $12.6 million, respectively in lease abandonment charges. Please see our discussion in the Leases section of Note 2, Summary of Significant Accounting Policies.

Supplemental cash flow information related to leases was as follows:


	Years ended December 31,
(In thousands)	2023		2022		2021

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	101,516	$	108,004	$	110,288
Operating cash flows from financing leases	—		—		46
Financing cash flows from financing leases	—		—		3,304
Right-of-use & Equipment assets obtained in exchange for lease obligations:
Operating leases	55,852		88,080		186,695

Supplemental balance sheet information related to leases was as follows:


(In thousands, except lease term and discount rates)	December 31,
	2023			2022

Operating Leases
Operating lease right-of-use assets	$	596,032		$	603,524
Current portion of operating lease liability	55,981			57,607
Long-term operating lease liability	605,097			604,117
Total operating lease liabilities	$	661,078		$	661,724

Finance Leases
Equipment at cost	$	13,971		$	13,971
Accumulated depreciation	(13,374)			(12,171)
Equipment, net	$	597		$	1,801




Weighted Average Remaining Lease Term
Operating leases - years	10.6			10.9


Weighted Average Discount Rate
Operating leases	6.7		%	6.4		%

Maturities of lease liabilities were as follows:


(In thousands)
	Operating Leases
Year Ending December 31,
2024	$	97,603
2025	$	92,092
2026	91,400
2027	88,977
2028	85,633

Thereafter	482,594
Total Lease Payments	938,299
Less imputed interest	(277,221)
Total	$	661,078

As of December 31, 2023, we have additional operating leases for facilities and medical equipment that have not yet commenced of approximately $4.6 million. These operating leases will commence in 2024 with lease terms of 1 to 15 years.