On July 1, 2019, the Company adopted cumulative accounting standard updates initially issued by the FASB that amend the accounting for leases and are codified as ASC 842. These lease accounting changes require operating leases be recorded on the balance sheet through the recognition of a liability for the discounted present value of future fixed lease payments and a corresponding right-of-use (“ROU”) asset. The Company’s accounting for finance leases remained substantially unchanged from its prior accounting for capital leases. The ROU asset recorded at commencement of the lease represents the right to use the underlying asset over the lease term in exchange for the lease payments. Leases with an initial term of 12 months or less which do not have an option to purchase the underlying asset that is deemed reasonably certain to be exercised are not recorded on the balance sheet; rather, rent expense for these leases is recognized on a straight-line basis over the lease term, or when incurred if a month-to-month lease. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company’s incremental borrowing rate is utilized. Our lease agreements do not contain any material residual value guarantees.

The Company elected the amended transition requirements allowed for by the FASB in ASU 2018-11, which provides relief from requirements to recast prior comparative periods under ASC 842. As a result, the prior year comparative financial statements have not been restated to reflect the adoption of ASC 842. Additionally, the Company elected the “package of practical expedients” available in ASC 842 whereby an entity need not reassess expired contracts for lease identification or classification as a finance or operating lease, or reassess the initial direct costs. The Company has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. Certain of the Company’s lease agreements have lease and non-lease components, which for the majority of leases the Company accounts for separately when the actual lease and non-lease components are determinable. For equipment leases with immaterial non-lease components incorporated into the fixed rent payment, the Company accounts for the lease and non-lease components as a single lease component in determining the lease payment.

The adoption of ASC 842 on July 1, 2019 resulted in the Company recording $1,423 of operating lease liabilities and an equal amount of ROU assets with no impact on retained earnings. The adoption did not have a material impact on the Company’s consolidated statement of operations or consolidated statement of cash flows for the fiscal year ended June 30, 2020.

The Company has operating leases and a financing lease relating to its pharmacy operations, medical office buildings, certain medical equipment and office equipment. All lease agreements generally require the Company to pay maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs. Variable lease costs also include escalating rent payments that are not fixed at commencement but are based on an index determined in future periods over the lease term based on changes in the Consumer Price Index or other measure of cost inflation. Some leases include one or more options to renew the lease at the end of the initial term, with renewal terms that generally extend the lease at the then market rental rates. Leases may also include an option to buy the underlying asset at or a short time prior to the termination of the lease. All such options are at the Company’s discretion and are evaluated at the commencement of the lease, with only those that are reasonably certain of exercise included in determining the appropriate lease term. The components of lease cost and rent expense for the fiscal year ended June 30, 2020 are as follows:

	Fiscal Year Ended
Lease Cost	June 30, 2020
Operating lease cost:
Operating lease cost	$	593
Short-term rent expense		5
Variable lease cost		3
Total operating lease cost	$	601

Finance lease cost:
Amortization right-of-use assets	$	36
Interest on finance lease liabilities		9
Total finance lease cost	$	45

		As of
	Balance Sheet Classifications	June 30, 2020
Operating Leases:
Operating Lease ROU Assets	ROU Assets	$	970

Finance Leases:
Finance Lease ROU Assets	Property, plant and equipment		203
Accumulated amortization	Accumulated depreciation		43
Current finance lease liabilities	Current maturities of long-term debt		34
Long-term finance lease liabilities	Long-term debt		90

Supplemental cash flow and other information related to leases as of and for the year ended June 30, 2020 are as follows:

	Fiscal Year Ended
Other information	June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	593
Operating cash flows from finance leases	9
Financing cash flow from finance leases	32
Right-of-use assets obtained in exchange for new finance lease liabilities	0
Right-of-use assets obtained in exchange for new operating lease liabilities		1,498
Weighted-average remaining lease term:
Operating leases	3.75
Finance leases	3.41
Weighted-average discount rate:
Operating leases		6.54	%
Finance leases		5.49	%

Commitments relating to non-cancellable operating and finance leases as of June 30, 2020 for each of the next five years and thereafter are as follows:

Payments due within	Operating Leases			Finance Leases
1 year	$	406		$	42
2 years		275			42
3 years		115			42
4 years		106			13
5 years		101			0
Over 5 years		74			0
Total minimum future payments		1,077			139
Less: Imputed interest		(105	)		(15	)
Total liabilities		972			124
Less: Current portion		(365	)		(34	)
Long-term liabilities	$	607		$	90