The Company has operating leases through which its independent operating subsidiaries lease administrative offices of home health and hospice agencies, senior living communities, and corporate offices with initial lease terms ranging from one to 25 years. Most of these operating leases are non-cancelable, contain renewal options, most involve rent increases, and none contain purchase options. The lease term excludes lease renewals because the renewal rents are not at a bargain, there are no economic penalties for the Company to renew the lease, and it is not reasonably certain that the Company will exercise the extension options. The Company elected the accounting policy practical expedients in ASC 842 to: (i) combine associated lease and non-lease components into a single lease component; and (ii) exclude recording short-term leases as right-of-use assets and liabilities on the Condensed Consolidated Balance Sheets. Non-lease components, which are not significant overall, are combined with lease components. The Company also has finance leases which have initial terms between 2 and 5 years. As of

As of September 30, 2026, the Company’s independent operating subsidiaries leased 35 senior living communities from subsidiaries of Ensign (“Ensign Leases”), the majority of which are under master lease arrangements. The existing leases with subsidiaries of Ensign have initial terms of between 14 to 20 years. The total amount of rent expense included in rent - cost of services paid to subsidiaries of Ensign was $4,256 and $12,167 for the three and nine months ended September 30, 2026, and $3,757 and $11,266 for the three and nine months ended September 30, 2025. In addition to rent, each of the operating companies are required to pay the following: (1) all impositions and taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (2) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties; (3) all insurance required in connection with the leased properties and the business conducted on the leased properties; (4) all community maintenance and repair costs; and (5) all fees in connection with any licenses or authorizations necessary or appropriate for the leased properties and the business conducted on the leased properties.

Fifteen of the Company’s affiliated senior living communities, excluding the communities that are operated under the Ensign Leases, are operated under three separate master lease arrangements. Under these master leases, a breach at a single community could subject one or more of the other communities covered by the same master lease to the same default risk. Failure to comply with Medicare and Medicaid provider requirements is a default under several of the Company’s leases and master leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the master lease without the consent of the landlord.


(a)						Finance right-of-use assets are included in Restricted and other assets on our Condensed Consolidated Balance Sheets.
(b)						Finance lease liabilities—current are included in Other accrued liabilities on our Condensed Consolidated Balance Sheets.
(c)						Long-term finance lease liabilities—less current portion are included in Other long-term liabilities on our Condensed Consolidated Balance Sheets.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Operating lease costs:
Community Rent—cost of services	$	10,500	$	9,785	$	30,582	$	29,058
Office Rent—cost of services	3,296		2,278		9,740		6,645

Rent—cost of services(a)	$	13,796	$	12,063	$	40,322	$	35,703
General and administrative expense	$	240	$	181	$	751	$	487
Variable lease cost(b)	$	2,844	$	2,554	$	8,450	$	7,382
Finance lease costs:
Amortization of lease assets(c)	$	401	$	118	$	1,059	$	332
Interest on lease liabilities(d)	$	127	$	95	$	328	$	262


(a)						Includes short-term lease cost, which is immaterial.
(b)						Represents variable lease cost for operating leases, which costs include property taxes, insurance, common area maintenance, and consumer price index increases, incurred as part of the Company’s triple net leases, and which is included in cost of services for our home health and hospice and senior living leases, and general and administrative expense for our Service Center leases for the three and nine months ended September 30, 2026 and 2025.
(c)						Amortization of lease assets is included in Depreciation and amortization on our Condensed Consolidated Statements of Income.
(d)						Interest on lease liabilities is included in Interest expense, net on our Condensed Consolidated Statements of Income.


Year	Operating Lease Amounts		Finance Lease Amounts
2026 (Remainder)	$	12,108	$	468
2027	47,160		6,439
2028	44,276		874
2029	41,682		244
2030	39,803		28
Thereafter	229,945		—
Total lease payments	414,974		8,053
Less: present value adjustments	(132,150)		(275)
Present value of total lease liabilities	282,824		7,778
Less: current lease liabilities	(26,863)		(6,436)
Long-term lease liabilities	$	255,961	$	1,342

Lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at each lease’s commencement date to determine each lease's operating lease liability. As of September 30, 2026, for our operating leases, the weighted average remaining lease term is 10.3 years and the weighted average discount rate is 7.9%. As of December 31, 2025, for our operating leases, the weighted average remaining lease term was 10.7 years and the weighted average discount rate was 7.9%. As of September 30, 2026, for our finance leases, the weighted average remaining lease term and the weighted average discount rate was 1.1 years and 6.2%, respectively. As of December 31, 2025, for our finance leases, the weighted average remaining lease term and the weighted average discount rate was 1.5 years and 6.3%, respectively.