Leases |
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| Leases | Leases The Company has operating leases for office space and campus facilities and finance leases for certain copiers and printers. Leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease: •the lease transfers ownership of the asset at the end of the lease; •the lease grants an option to purchase the asset which the lessee is expected to exercise; •the lease term reflects a major part of the asset’s economic life; •the present value of the lease payments equals or exceeds the fair value of the asset; or •the asset is specialized with no alternative use to the lessor at the end of the term. Operating Leases The Company has operating leases for office space and campus facilities. Some leases include options to terminate or extend for or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. The Company leases corporate office space in Florida, under an operating lease that expires in January 2029. The RU Segment leases 18 campuses located in five states under operating leases that expire through March 2034. RU closed one campus in Wisconsin in December 2025 and plans to close a second Wisconsin campus in December 2026. The RU Segment leased administrative office space in Minneapolis, Minnesota until October 31, 2025. The HCN Segment leases administrative office space in suburban Columbus, Ohio, and leases eight campuses located in three states under operating leases that expire through December 2034. Prior to the GSUSA Sale Date, GSUSA leased classroom and administrative office space in Washington, D.C. and Honolulu, Hawaii. Operating lease assets are ROU assets, which represent the right to use an underlying asset for the lease term. Operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating leases are included in the Operating lease assets, net, and Operating lease liabilities, current and long-term on the Consolidated Balance Sheets. These assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the lease does not provide an implicit interest rate, the Company uses an incremental borrowing rate based on information available at lease commencement to determine the present value of the lease payments. The ROU asset includes all lease payments and excludes lease incentives. Lease expense for operating leases is recognized on a straight-line basis over the lease term. There are no variable lease payments. Operating lease expense for the years ended December 31, 2023, 2024, and 2025, was $20.7 million, $18.9 million, and $16.9 million, respectively. These costs are primarily related to long-term operating leases, but also include amounts for short-term leases with terms greater than 30 days that are not material. Cash paid for amounts included in the present value of operating lease liabilities during the years ended December 31, 2023, 2024, and 2025, was $20.2 million, $18.5 million, and $17.7 million, respectively, and is included in operating cash flows. Loss on leases During the first quarter of 2024, the Company elected to terminate its RU Segment lease for a planned Dallas, Texas campus. The Company paid a lease termination fee of $2.2 million and recorded a loss of $2.1 million as a result of this lease termination. Additionally, in the first quarter of 2024, the RU Segment began consolidating two Minnesota campuses, and, as a result, during the second quarter of 2024, the Company paid a lease termination fee of $1.2 million related to the consolidation and recorded $1.2 million loss on leases as a result of the lease termination. In May 2024, RU notified the Wisconsin Educational Approval Program that it intended to voluntarily close two Wisconsin campuses, effective December 31, 2025, and 2026, respectively. RU closed the Green Bay campus effective December 31, 2025, as planned, and intends to close the Wausau campus on December 31, 2026. As a result, the Company recorded a lease impairment of $0.4 million during the second quarter of 2024, and recorded an additional lease impairment of $0.1 million during the third quarter in 2025. The total loss on leases during the years ended December 31, 2024 and 2025, was $3.7 million and $0.1 million and is included in Loss on leases in the Consolidated Statements of Income. Finance Leases The Company leases copiers and printers pursuant to leases that are classified as finance leases and that expire in 2027. The Company pledged the assets financed to secure the outstanding lease obligations. As of December 31, 2025, the total finance lease liability was $0.2 million with an average interest rate of 7.00%. The ROU assets are recorded within Property and equipment, net on the Consolidated Balance Sheets. Lease amortization expense associated with the Company’s finance leases was $0.1 million, $0.2 million, and $0.2 million for the years ended December 31, 2023, 2024, and 2025, respectively, and is recorded within Depreciation and amortization expense on the Consolidated Statements of Income. The following tables present information about the amount and timing of cash flows arising from the Company’s operating and finance leases as of December 31, 2025 (dollars in thousands):
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