v3.22.4
Leases
 3 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases LeasesAs of December 31, 2022, we leased 29 of our 33 campuses and two corporate office locations under non-cancelable operating leases, some of which contain escalation clauses and requirements to pay other fees associated with the leases. The facility leases have original lease terms ranging from 5 to 20 years and expire at various dates through 2036. In addition, the leases commonly include lease incentives in the form of rent abatements and tenant improvement allowances. We sublease
certain portions of unused building space to third parties, which as of December 31, 2022, resulted in minimal income. All of the leases, other than those that may qualify for the short-term scope exception of 12 months or less, are recorded on our condensed consolidated balance sheets.

Some of the facility leases are subject to annual changes in the Consumer Price Index (“CPI”). While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. There are no early termination with penalties, residual value guarantees, restrictions or covenants imposed by our facility leases.

The components of lease expense are included in “Educational services and facilities” and “Selling, general and administrative” on the condensed consolidated statement of operations, with the exception of interest on lease liabilities, which is included in “Interest expense.”
The components of lease expense during the three months ended December 31, 2022 and 2021 were as follows:
Three Months Ended December 31,
Lease Expense20222021
Operating lease expense(1)
$5,704 $6,363 
Finance lease expense:
Amortization of leased assets198 18 
Interest on lease liabilities87 1 
Variable lease expense1,950 1,091 
Sublease income(32)(59)
Total net lease expense$7,907 $7,414 
(1)    Excludes the expense for short-term leases not accounted for under ASC 842, which was not significant for the three months ended December 31, 2022 and 2021.
Supplemental balance sheet, cash flow and other information related to our leases was as follows (in thousands, except lease term and discount rate):

LeasesClassificationDecember 31, 2022September 30, 2022
Assets:
Operating lease assets
Right-of-use assets for operating leases(1)
$199,947 $132,038 
Finance lease assets
Property and equipment, net(2)
2,719 22 
Total leased assets$202,666 $132,060 
Liabilities:
Current
   Operating lease liabilities
Operating lease liability, current portion(1)
$24,206 $12,959 
   Finance lease liabilitiesLong-term debt, current portion642 23 
Noncurrent
   Operating lease liabilities
Operating lease liability(1)
195,730 129,302 
   Finance lease liabilitiesLong-term debt4,982 — 
Total lease liabilities$225,560 $142,284 
(1)     As noted in Note 4, during the three months ended December 31, 2022, our right-of-use assets and operating lease liability increased due to the acquisition of Concorde.
(2)     Finance lease assets are recorded net of accumulated amortization of $0.3 million and $0.2 million as of December 31, 2022 and September 30, 2022, respectively.

Lease Term and Discount RateDecember 31, 2022September 30, 2022
Weighted-average remaining lease term (in years):
   Operating leases8.438.92
   Finance leases6.080.33
Weighted average discount rate:
   Operating leases3.58 %3.91 %
   Finance leases9.29 %3.08 %

Three Months Ended December 31,
Supplemental Disclosure of Cash Flow Information and Other Information20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$4,963 $2,567 
Financing cash flows from finance leases115 18 
Non-cash activity related to lease liabilities:
   Lease assets obtained in exchange for new operating lease liabilities (1)
$117 $7,457 
   Lease assets obtained in exchange for new finance lease liabilities— — 
(1) Excludes the operating leases recorded for the Concorde and MIAT acquisitions discussed in Note 4.

Maturities of lease liabilities were as follows:
As of December 31, 2022
Years ending September 30,Operating LeasesFinance Leases
Remainder of 2023$21,804 $854 
202433,160 1,159 
202531,829 1,193 
202630,763 1,229 
202729,301 1,266 
2028 and thereafter108,252 1,743 
Total lease payments255,109 7,444 
Less: interest(35,173)(1,820)
Present value of lease liabilities219,936 5,624 
Less: current lease liabilities(24,206)(642)
Long-term lease liabilities$195,730 $4,982 
Leases LeasesAs of December 31, 2022, we leased 29 of our 33 campuses and two corporate office locations under non-cancelable operating leases, some of which contain escalation clauses and requirements to pay other fees associated with the leases. The facility leases have original lease terms ranging from 5 to 20 years and expire at various dates through 2036. In addition, the leases commonly include lease incentives in the form of rent abatements and tenant improvement allowances. We sublease
certain portions of unused building space to third parties, which as of December 31, 2022, resulted in minimal income. All of the leases, other than those that may qualify for the short-term scope exception of 12 months or less, are recorded on our condensed consolidated balance sheets.

Some of the facility leases are subject to annual changes in the Consumer Price Index (“CPI”). While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. There are no early termination with penalties, residual value guarantees, restrictions or covenants imposed by our facility leases.

The components of lease expense are included in “Educational services and facilities” and “Selling, general and administrative” on the condensed consolidated statement of operations, with the exception of interest on lease liabilities, which is included in “Interest expense.”
The components of lease expense during the three months ended December 31, 2022 and 2021 were as follows:
Three Months Ended December 31,
Lease Expense20222021
Operating lease expense(1)
$5,704 $6,363 
Finance lease expense:
Amortization of leased assets198 18 
Interest on lease liabilities87 1 
Variable lease expense1,950 1,091 
Sublease income(32)(59)
Total net lease expense$7,907 $7,414 
(1)    Excludes the expense for short-term leases not accounted for under ASC 842, which was not significant for the three months ended December 31, 2022 and 2021.
Supplemental balance sheet, cash flow and other information related to our leases was as follows (in thousands, except lease term and discount rate):

LeasesClassificationDecember 31, 2022September 30, 2022
Assets:
Operating lease assets
Right-of-use assets for operating leases(1)
$199,947 $132,038 
Finance lease assets
Property and equipment, net(2)
2,719 22 
Total leased assets$202,666 $132,060 
Liabilities:
Current
   Operating lease liabilities
Operating lease liability, current portion(1)
$24,206 $12,959 
   Finance lease liabilitiesLong-term debt, current portion642 23 
Noncurrent
   Operating lease liabilities
Operating lease liability(1)
195,730 129,302 
   Finance lease liabilitiesLong-term debt4,982 — 
Total lease liabilities$225,560 $142,284 
(1)     As noted in Note 4, during the three months ended December 31, 2022, our right-of-use assets and operating lease liability increased due to the acquisition of Concorde.
(2)     Finance lease assets are recorded net of accumulated amortization of $0.3 million and $0.2 million as of December 31, 2022 and September 30, 2022, respectively.

Lease Term and Discount RateDecember 31, 2022September 30, 2022
Weighted-average remaining lease term (in years):
   Operating leases8.438.92
   Finance leases6.080.33
Weighted average discount rate:
   Operating leases3.58 %3.91 %
   Finance leases9.29 %3.08 %

Three Months Ended December 31,
Supplemental Disclosure of Cash Flow Information and Other Information20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$4,963 $2,567 
Financing cash flows from finance leases115 18 
Non-cash activity related to lease liabilities:
   Lease assets obtained in exchange for new operating lease liabilities (1)
$117 $7,457 
   Lease assets obtained in exchange for new finance lease liabilities— — 
(1) Excludes the operating leases recorded for the Concorde and MIAT acquisitions discussed in Note 4.

Maturities of lease liabilities were as follows:
As of December 31, 2022
Years ending September 30,Operating LeasesFinance Leases
Remainder of 2023$21,804 $854 
202433,160 1,159 
202531,829 1,193 
202630,763 1,229 
202729,301 1,266 
2028 and thereafter108,252 1,743 
Total lease payments255,109 7,444 
Less: interest(35,173)(1,820)
Present value of lease liabilities219,936 5,624 
Less: current lease liabilities(24,206)(642)
Long-term lease liabilities$195,730 $4,982