The Company enters into contracts to utilize office space, educational facilities, and various items of equipment under lease agreements and accounts for them in accordance with ASC 842, Leases (“ASC 842”). To determine whether a contract contains a lease, the Company assesses whether there is an identified asset and whether the Company has the right to control its use throughout the period of use. The Company classifies leases as either operating or finance leases at the lease commencement date in accordance with ASC 842. As required under ASC 842, the Company recognizes a ROU asset and a corresponding lease liability on the balance sheet, measured at the present value of lease payments over the term of the lease. An operating lease ROU asset represents the Company’s right to use the underlying asset during the lease term and the corresponding lease liability represents its obligation to make lease payments. Operating lease ROU assets and liabilities are amortized over the lease term, with lease expense recognized on a straight-line basis within operating expenses in the Condensed Consolidated Statements of Operations. Finance lease arrangements result in separate recognition of interest expense on the lease liability using the effective interest method and amortization expense of the ROU asset on a straight-line basis over the lease term, in addition to principal payments.

 

As the Company’s operating leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. We estimate the incremental borrowing rate based on a yield curve analysis, utilizing the interest rate derived from the fair value analysis of our credit facility and adjusting it for factors that appropriately reflect the profile of secured borrowing over the expected term of the lease. The operating lease ROU assets include any lease payments made prior to the rent commencement date and exclude lease incentives. Our leases have remaining lease terms of 1 year to 20 years. Lease terms may include options to extend the lease term used in determining the lease obligation when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term for operating leases.

 

The following table presents components of lease cost and classification on the Condensed Consolidated Statements of Operations:

 

 

The net change in ROU asset and operating lease liability is included in the net change in other assets in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025.

 

The net change in ROU asset and finance lease liability is split between principal payments, interest expense and amortization expense. Principal payments are classified in the financing section, interest expense is included in net income and amortization expense is broken out separately in the operating section of the Consolidated Statements of Cash Flows.

 

Supplemental cash flow information and non-cash activity related to our leases are as follows:

 

 

During the six months ended June 30, 2026, the Company entered into one new operating lease. There was one operating lease modification during the six months ended June 30, 2026.

On June 30, 2026, the Company entered into a lease for approximately 36,000 square feet of space in Suitland, Maryland, located in the Washington, D.C. metropolitan area, to serve as the Company's second campus in the region. The lease term is scheduled to commence in September 2026, with an initial lease term of 15 years and 7 months. The Company will not take possession of the premises until the lease commencement date.

 

Weighted-average remaining lease term and discount rate for our leases are as follows:

 

 

Maturities of lease liabilities by fiscal year for our leases as of June 30, 2026 are as follows: