10.     LEASES

Lessee:

The Company has operating leases for its corporate headquarters, Treatment Centers, a training facility, and office equipment. The corporate headquarters is located in Malvern, Pennsylvania, where the Company leases an approximately 32,000 square foot facility comprising office and warehouse space.

In 2025, the Company executed a lease modification for its Malvern, Pennsylvania facility, extending the lease term through June 2033.

The Company leases an approximately 9,600 square foot facility in Charlotte, North Carolina as a training facility for the Systems. The lease ends in September 2027. The Company has an option to extend the lease on its training facility for an additional one-year term; however, the Company has determined it is not reasonably certain to exercise the option at this time after assessing contract, asset, entity and market conditions present upon lease commencement.

The Company has lease agreements related to its Treatment Centers. These lease agreements range from month-to-month to six years in length.

Operating lease rent expense was $2.4 million and $2.1 million for the three months ended June 30, 2026 and 2025, respectively and $4.9 million and $4.4 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, the weighted average remaining lease term of operating leases was 6.0 years, and the weighted average discount rate was 12.0%.

The following table presents the supplemental cash flow information as a lessee related to leases (in thousands):

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The following table sets forth by year the required future payments of operating lease liabilities as of June 30, 2026 (in thousands):

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Lessor sales-type leases:

Certain customers have purchased the Systems on a rent-to-own basis. The lease term is two to four years with a customer option to purchase the System at the end of the lease or automatic transfer of ownership of the System at the end of the lease.

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The following table sets forth a maturity analysis of the undiscounted lease receivables related to sales-type leases (in thousands):

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As of June 30, 2026 and December 31, 2025 the carrying amount of the lease receivables was $0.3 million, for both periods. The Company does not have any unguaranteed residual assets.

Lessor operating leases:

The Systems leased to customers subsequent to January 1, 2019 for which collection is not probable are accounted for as operating leases. For the three months ended June 30, 2026 and 2025, the Company recognized operating lease income of $0.06 million and $0.05 million, respectively. For the six months ended June 30, 2026 and 2025, the Company recognized operating lease income of $0.1 million, for both periods.

The Company maintained rental equipment, net, of $0.1 million for both June 30, 2026 and December 31, 2025, which are included in property and equipment, net on the consolidated balance sheets. Rental equipment depreciation expense was $0.01 million and $0.14 million for the three months ended June 30, 2026 and 2025, respectively and $0.03 million and $0.16 million for the six months ended June 30, 2026 and 2025, respectively.