Leases

3 Months Ended

Mar. 31, 2023

We have operating leases for office space, laboratory operations, research and development facilities, manufacturing locations, warehouses and certain equipment. We determine if a contract contains a lease at inception or modification of a contract. Our leases generally do not provide an implicit interest rate, and we therefore use our incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease within a particular currency environment. We used the incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date. Many of our leases contain rental escalation, renewal options and/or termination options that are factored into our determination of lease payments as appropriate. Variable lease payment amounts that cannot be determined at the commencement of the lease are not included in the right-to-use assets or liabilities.

We elected the use of permitted practical expedients of not recording leases on our Condensed Consolidated Balance Sheet when the leases have terms of 12 months or less, and we elected not to separate nonlease components from lease components and instead account for each separate lease component and the nonlease components associated with that lease component as a single lease component.

The following table presents the lease balances within the Condensed Consolidated Balance Sheet as of March 31, 2023 and December 31, 2022:


(in thousands)	Classification on the Balance Sheet	March 31, 2023			December 31, 2022
Assets
Operating lease assets	Operating lease right-of-use assets	$	36,832		$	38,725
Finance lease assets	Property, plant and equipment, net	10,858			9,898

Liabilities
Current
Operating lease liabilities	Current maturities of operating leases	11,490			11,628
Accrued expenses	Current maturities of finance leases	2,968			2,809
Long-term
Operating lease liabilities	Operating lease liabilities	26,462			27,963
Other long-term liabilities	Finance lease liabilities	$	7,890		$	7,089

Weighted average remaining lease term
Operating leases		6.1 years			6.0 years
Finance leases		6.6 years			6.5 years
Weighted average discount rate
Operating leases		4.5		%	4.4		%
Finance leases		4.3		%	3.8		%

The following table reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on our Condensed Consolidated Balance Sheet as of March 31, 2023:


(in thousands)	Operating		Finance
April 1, 2023 through December 31, 2023	$	9,286	$	2,482
2024	8,464		2,724
2025	5,295		2,062
2026	4,030		1,402
2027	3,858		587
Thereafter	11,910		1,990
Total undiscounted future minimum lease payments	42,843		11,247
Less: Difference between lease payments and discounted lease liabilities	4,891		389
Total lease liabilities	$	37,952	$	10,858

Expense under operating leases and finance leases was $4.1 million and $0.7 million, respectively, for the three months ended March 31, 2023, which includes $0.6 million of variable lease costs. Expense under operating leases and finance leases was $4.6 million and $0.7 million, respectively, for the three months ended March 31, 2022, which includes $0.4 million of variable lease costs. Operating lease costs and finance lease costs are included within Operating loss in the Condensed Consolidated Statement of Operations. Short-term lease costs were not material.

Supplemental cash flow information is as follows:


(in thousands)	For the three months ended March 31,
	2023		2022
Operating cash out flows from operating leases	$	3,872	$	4,288
Operating cash out flows from finance leases	108		33
Financing cash out flows from finance leases	656		498
Total	$	4,636	$	4,819

LEASES

The following table presents the lease balances within the Condensed Consolidated Balance Sheet as of March 31, 2023 and December 31, 2022:


(in thousands)	Classification on the Balance Sheet	March 31, 2023			December 31, 2022
Assets
Operating lease assets	Operating lease right-of-use assets	$	36,832		$	38,725
Finance lease assets	Property, plant and equipment, net	10,858			9,898

Liabilities
Current
Operating lease liabilities	Current maturities of operating leases	11,490			11,628
Accrued expenses	Current maturities of finance leases	2,968			2,809
Long-term
Operating lease liabilities	Operating lease liabilities	26,462			27,963
Other long-term liabilities	Finance lease liabilities	$	7,890		$	7,089

Weighted average remaining lease term
Operating leases		6.1 years			6.0 years
Finance leases		6.6 years			6.5 years
Weighted average discount rate
Operating leases		4.5		%	4.4		%
Finance leases		4.3		%	3.8		%


(in thousands)	Operating		Finance
April 1, 2023 through December 31, 2023	$	9,286	$	2,482
2024	8,464		2,724
2025	5,295		2,062
2026	4,030		1,402
2027	3,858		587
Thereafter	11,910		1,990
Total undiscounted future minimum lease payments	42,843		11,247
Less: Difference between lease payments and discounted lease liabilities	4,891		389
Total lease liabilities	$	37,952	$	10,858

Supplemental cash flow information is as follows:


(in thousands)	For the three months ended March 31,
	2023		2022
Operating cash out flows from operating leases	$	3,872	$	4,288
Operating cash out flows from finance leases	108		33
Financing cash out flows from finance leases	656		498
Total	$	4,636	$	4,819