v3.26.1
LEASES
 6 Months Ended
Jun. 30, 2026
Leases [Abstract]  
LEASES LEASES
Operating Leases
The Company leases most of its skilled nursing and assisted living facilities, as well as office space, under various non-cancelable operating lease agreements. These operating leases expire at various dates through 2049.
Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders.
For 35 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times until March 31, 2038. At lease inception it was determined that the exercise of each of the purchase options was not reasonably certain.
All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements. This additional percentage rent is variable and is expensed as incurred.
Finance Leases
The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The lease terms of one of the facility finance leases allow for a purchase option to be exercised during a specified window closing December 31, 2030. The Company has determined that it is reasonably certain to exercise the respective purchase option at the end of the purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for this lease. In addition, for one of the facility finance leases, the lessor holds an option which could require the Company to purchase the associated real estate (the “Lessor Option”). The total obligation to purchase such real estate is approximately $32,000. For other facility finance leases, the duration of the lease term represented the major part of the remaining economic life of the facility at inception.
Finance lease right-of-use assets are included in property and equipment and have a balance of $153,289 and $150,595 as of June 30, 2026 and December 31, 2025, respectively. The current portion of finance lease liabilities is included in other accrued expenses and has a balance of $29,525 and $28,935 as of June 30, 2026 and December 31, 2025, respectively. The non-current portion of finance lease liabilities is included in other liabilities and has a balance of $124,327 and $126,960 as of June 30, 2026 and December 31, 2025, respectively.
The components of lease expense were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Operating lease expense
Rent - cost of services (1)
$94,700 $94,348 $190,231 $188,143 
General and administrative expense664 645 1,327 1,272 
Other variable lease costs (2)
10,428 9,664 20,560 18,911 
Total operating lease expense$105,792 $104,657 $212,118 $208,326 
Finance lease expense
Amortization of right-of-use assets$1,342 $1,140 $2,686 $2,182 
Interest on lease liabilities2,742 2,505 5,507 4,797 
Total finance lease expense$4,084 $3,645 $8,193 $6,979 
Total Lease Expense$109,876 $108,302 $220,311 $215,305 
__________________
(1)Rent - cost of services includes variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $526 and $417 for the three months ended June 30, 2026 and 2025, respectively, and $1,070 and $855 for the six months ended June 30, 2026 and 2025, respectively.
(2)Other variable lease costs of facilities, including property taxes and insurance, are classified in cost of services in the Company’s unaudited condensed consolidated statements of income.
The following table summarizes supplemental cash flow information related to leases:
Six Months Ended June 30,
20262025
Operating cash paid for amounts included in the measurement of operating lease liabilities$170,754 $164,274 
Operating cash paid for amounts included in the measurement of finance lease liabilities5,507 4,798 
Financing cash paid for amounts included in the measurement of finance lease liabilities818 284 
Operating lease right-of-use assets obtained in exchange for lease liabilities13,859 139,028 
Decrease in operating lease right-of-use assets and liabilities due to lease termination/modification
(24,810)— 
Finance lease right-of-use assets obtained in exchange for lease liabilities
17,923 29,598 
Decrease in finance lease right-of-use assets due to lease termination/modification(12,544)— 
Information relating to the lease term and discount rate is as follows:
As of June 30, 2026
Weighted-average remaining lease term (years)
Operating leases13
Finance leases22
Weighted-average discount rate
Operating leases6.5 %
Finance leases6.5 %
Maturities of lease liabilities as of June 30, 2026 were as follows:
Finance LeasesOperating LeasesTotal
2026 (remainder)$33,115 $170,326 $203,441 
20278,742 341,591 350,333 
20288,999 346,750 355,749 
20298,870 350,726 359,596 
203021,907 354,616 376,523 
20317,662 355,561 363,223 
Thereafter246,727 2,644,846 2,891,573 
Total lease payments$336,022 $4,564,416 $4,900,438 
Less: present value discount (182,170)(1,559,436)(1,741,606)
Present value of lease liabilities
$153,852 $3,004,980 $3,158,832 
In addition to its lessee activity, the Company generates an immaterial amount of revenue from arrangements where it is a lessor of certain facilities. Revenue from those arrangements is included in other revenue on the condensed consolidated statements of income.
LEASES LEASES
Operating Leases
The Company leases most of its skilled nursing and assisted living facilities, as well as office space, under various non-cancelable operating lease agreements. These operating leases expire at various dates through 2049.
Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders.
For 35 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times until March 31, 2038. At lease inception it was determined that the exercise of each of the purchase options was not reasonably certain.
All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements. This additional percentage rent is variable and is expensed as incurred.
Finance Leases
The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The lease terms of one of the facility finance leases allow for a purchase option to be exercised during a specified window closing December 31, 2030. The Company has determined that it is reasonably certain to exercise the respective purchase option at the end of the purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for this lease. In addition, for one of the facility finance leases, the lessor holds an option which could require the Company to purchase the associated real estate (the “Lessor Option”). The total obligation to purchase such real estate is approximately $32,000. For other facility finance leases, the duration of the lease term represented the major part of the remaining economic life of the facility at inception.
Finance lease right-of-use assets are included in property and equipment and have a balance of $153,289 and $150,595 as of June 30, 2026 and December 31, 2025, respectively. The current portion of finance lease liabilities is included in other accrued expenses and has a balance of $29,525 and $28,935 as of June 30, 2026 and December 31, 2025, respectively. The non-current portion of finance lease liabilities is included in other liabilities and has a balance of $124,327 and $126,960 as of June 30, 2026 and December 31, 2025, respectively.
The components of lease expense were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Operating lease expense
Rent - cost of services (1)
$94,700 $94,348 $190,231 $188,143 
General and administrative expense664 645 1,327 1,272 
Other variable lease costs (2)
10,428 9,664 20,560 18,911 
Total operating lease expense$105,792 $104,657 $212,118 $208,326 
Finance lease expense
Amortization of right-of-use assets$1,342 $1,140 $2,686 $2,182 
Interest on lease liabilities2,742 2,505 5,507 4,797 
Total finance lease expense$4,084 $3,645 $8,193 $6,979 
Total Lease Expense$109,876 $108,302 $220,311 $215,305 
__________________
(1)Rent - cost of services includes variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $526 and $417 for the three months ended June 30, 2026 and 2025, respectively, and $1,070 and $855 for the six months ended June 30, 2026 and 2025, respectively.
(2)Other variable lease costs of facilities, including property taxes and insurance, are classified in cost of services in the Company’s unaudited condensed consolidated statements of income.
The following table summarizes supplemental cash flow information related to leases:
Six Months Ended June 30,
20262025
Operating cash paid for amounts included in the measurement of operating lease liabilities$170,754 $164,274 
Operating cash paid for amounts included in the measurement of finance lease liabilities5,507 4,798 
Financing cash paid for amounts included in the measurement of finance lease liabilities818 284 
Operating lease right-of-use assets obtained in exchange for lease liabilities13,859 139,028 
Decrease in operating lease right-of-use assets and liabilities due to lease termination/modification
(24,810)— 
Finance lease right-of-use assets obtained in exchange for lease liabilities
17,923 29,598 
Decrease in finance lease right-of-use assets due to lease termination/modification(12,544)— 
Information relating to the lease term and discount rate is as follows:
As of June 30, 2026
Weighted-average remaining lease term (years)
Operating leases13
Finance leases22
Weighted-average discount rate
Operating leases6.5 %
Finance leases6.5 %
Maturities of lease liabilities as of June 30, 2026 were as follows:
Finance LeasesOperating LeasesTotal
2026 (remainder)$33,115 $170,326 $203,441 
20278,742 341,591 350,333 
20288,999 346,750 355,749 
20298,870 350,726 359,596 
203021,907 354,616 376,523 
20317,662 355,561 363,223 
Thereafter246,727 2,644,846 2,891,573 
Total lease payments$336,022 $4,564,416 $4,900,438 
Less: present value discount (182,170)(1,559,436)(1,741,606)
Present value of lease liabilities
$153,852 $3,004,980 $3,158,832 
In addition to its lessee activity, the Company generates an immaterial amount of revenue from arrangements where it is a lessor of certain facilities. Revenue from those arrangements is included in other revenue on the condensed consolidated statements of income.