Annual report pursuant to Section 13 and 15(d)

Leases

v3.22.4
Leases
 12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases Leases
Lease Cost
Lease cost included in our consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 consisted of the following:
Year Ended December 31,
2022 2021 2020
Classification in Consolidated
Statements of Operations
Lease cost:
Operating lease cost
 $ 237,499  $ 204,165  $ 183,908  Rent
Short-term lease cost
 2,113  1,049  1,007  Rent
Variable lease cost
 5,614  4,609  1,342  Rent
Finance lease cost:
Amortization of right-of-use assets
 1,372  1,493  2,228  Depreciation and amortization
Interest on lease liabilities
 99  177  65  Interest expense, net of interest income
Total lease cost
 $ 246,697  $ 211,493  $ 188,550 
Sale-Leaseback Transactions
Sale-Leaseback Transactions with Unrelated Third Parties
During the year ended December 31, 2022, we entered into and consummated sale-leaseback transactions involving nine properties with two unrelated parties. Under these transactions, we sold nine properties with a combined net book value of $285.8 million for $375.0 million, which was reduced by transaction costs of $1.8 million, for net cash proceeds of $373.2 million. The estimated fair value of the properties sold was $385.1 million. Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $10.1 million, which resulted in the recognition of a gain of $97.5 million on these transactions. This gain is included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2022. Of the $10.1 million net sales price increase recognized in connection with these transactions, $31.5 million was associated with property sales in which the sales price was less than the fair value of the properties sold, which was recognized as an increase in the aggregate sales price associated with these properties and an increase in the related operating lease right-of-use assets, and $21.4 million was associated with property sales in which the sales price was greater than the fair value of the properties sold, which was recognized as a reduction in the aggregate sales price associated with these properties and as financing obligations separate from the related operating lease liabilities. For cash flow purposes, the $21.4 million of proceeds we received from these financing obligations during the year ended December 31, 2022 are reported within financing activities on our consolidated statement of cash flows.
During the year ended December 31, 2021, we closed on two sale-leaseback transactions involving two properties with unrelated third parties, one of which was associated with an agreement we entered into on December 16, 2020. Under these transactions, we sold assets with a combined net book value of $85.8 million for $76.0 million, which was reduced by transaction costs of $2.0 million, for net cash proceeds of $74.0 million. The estimated fair value of the properties sold was $85.5 million. Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $9.5 million, which resulted in the recognition of an aggregate loss of $2.3 million on these transactions, which is included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2021.
During the year ended December 31, 2020, we entered into sale-leaseback transactions involving five properties with unrelated third parties. Under these agreements, we sold assets with a combined net book value of $237.7 million for $199.2 million, which was reduced by transaction costs of $0.5 million, for net cash proceeds of $198.7 million. The estimated fair value of the five properties sold totaled $243.1 million. Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $43.9 million, which resulted in the recognition of a net gain of $4.9 million on these transactions, which is included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2020.
Related Party Sale-Leaseback Transactions and Leases
For information on sale-leaseback transactions with related parties, as well as other related party leases not associated with sale-leaseback transactions, see Note 13, Related Party Transactions.
Operating and Finance Lease Right-of-Use Assets and Lease-Related Liabilities
Operating and finance lease right-of-use assets and lease-related liabilities were as follows:
December 31,
Classification on Consolidated
Balance Sheets
2022 2021
Lease right-of-use assets:
Operating leases
 $ 2,116,761  $ 1,864,528  Operating lease right-of-use assets
Finance leases (1)
1,083  2,073  Other assets
Total lease right-of-use assets
 $ 2,117,844  $ 1,866,601 
Lease-related liabilities:
Current
Operating leases
 $ 51,892  $ 46,315  Current maturities of operating lease liabilities
Finance leases
 796  1,374  Accrued expenses and other current liabilities
Non-current
Operating leases
 2,162,424  1,909,883  Operating lease liabilities, net of current portion
Finance leases
 312  757  Other liabilities
Financing obligations
 21,557  — 
Other liabilities
Total lease-related liabilities
 $ 2,236,981  $ 1,958,329 
(1)Finance lease right-of-use assets were reported net of accumulated amortization of $1.8 million and $2.4 million at December 31, 2022 and 2021, respectively.
Impairment of Right-of-Use Assets
During the year ended December 31, 2020, we determined that the operating lease right-of-use assets associated with some of our leased centers and some of our ancillary businesses were impaired. Accordingly, we recognized $2.0 million of impairment charges associated with these right-of-use assets, which are included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2020.
For more information regarding impairment charges associated with our long-lived assets, see Note 2, Summary of Significant Accounting Policies.
Remaining Lease Terms and Discount Rates
The weighted-average remaining lease terms and discount rates associated with our lease-related liabilities at December 31, 2022 were as follows:
December 31, 2022
Weighted-average remaining lease term (1)
Operating leases
 17.7 years
Finance leases
 1.0 years
Financing obligations 24.7 years
Weighted-average discount rate
Operating leases
 8.21  %
Finance leases
 6.03  %
Financing obligations 10.84  %
(1)    The weighted-average remaining lease term associated with our operating and finance lease liabilities does not include all of the optional renewal periods available to us under our current lease arrangements. Rather, the weighted-average remaining lease term only includes periods covered by an option to extend a lease if we are reasonably certain to exercise that option.
Supplemental Cash Flow Information
Supplemental cash flow information associated with our leases is as follows:
Year Ended December 31,
2022 2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
 $ 199,762  $ 182,644  $ 131,617 
Operating cash flows from finance leases
 99  177  208 
Financing cash flows from finance leases
 1,404  1,514  1,343 
Non-cash information:
Right-of-use assets obtained in exchange for initial lease liabilities:
Operating leases
 294,722  210,541  241,810 
Finance leases
 391  1,272  2,576 
Right-of-use asset adjustments recognized as a result of the remeasurement of existing lease liabilities:
Operating leases
 (6,551) (6,345) 33,028 
Non-cash increase in operating lease right-of-use assets associated with below-market sale-leaseback transactions
 31,440  9,500  43,910 
Impairment charges associated with operating lease right-of-use assets
 —  —  (1,962)
Maturities of Operating Lease Liabilities, Finance Lease Liabilities and Financing Obligations
The maturities associated with our lease-related liabilities at December 31, 2022 are as follows:
Operating
Leases		 Finance
Leases
Financing
Obligations
 Total
2023 $ 221,855  $ 866  $ 2,235  $ 224,956 
2024 231,506  226  2,268  234,000 
2025 235,732  90  2,302  238,124 
2026 238,316  2  2,337  240,655 
2027 239,422  —  2,372  241,794 
Thereafter
 3,191,771  —  54,866  3,246,637 
Total lease payments
 4,358,602  1,184  66,380  4,426,166 
Less: Imputed interest
 2,144,286  76  44,823  2,189,185 
Present value of lease liabilities
 $ 2,214,316  $ 1,108  $ 21,557  $ 2,236,981 
Leases Leases
Lease Cost
Lease cost included in our consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 consisted of the following:
Year Ended December 31,
2022 2021 2020
Classification in Consolidated
Statements of Operations
Lease cost:
Operating lease cost
 $ 237,499  $ 204,165  $ 183,908  Rent
Short-term lease cost
 2,113  1,049  1,007  Rent
Variable lease cost
 5,614  4,609  1,342  Rent
Finance lease cost:
Amortization of right-of-use assets
 1,372  1,493  2,228  Depreciation and amortization
Interest on lease liabilities
 99  177  65  Interest expense, net of interest income
Total lease cost
 $ 246,697  $ 211,493  $ 188,550 
Sale-Leaseback Transactions
Sale-Leaseback Transactions with Unrelated Third Parties
During the year ended December 31, 2022, we entered into and consummated sale-leaseback transactions involving nine properties with two unrelated parties. Under these transactions, we sold nine properties with a combined net book value of $285.8 million for $375.0 million, which was reduced by transaction costs of $1.8 million, for net cash proceeds of $373.2 million. The estimated fair value of the properties sold was $385.1 million. Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $10.1 million, which resulted in the recognition of a gain of $97.5 million on these transactions. This gain is included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2022. Of the $10.1 million net sales price increase recognized in connection with these transactions, $31.5 million was associated with property sales in which the sales price was less than the fair value of the properties sold, which was recognized as an increase in the aggregate sales price associated with these properties and an increase in the related operating lease right-of-use assets, and $21.4 million was associated with property sales in which the sales price was greater than the fair value of the properties sold, which was recognized as a reduction in the aggregate sales price associated with these properties and as financing obligations separate from the related operating lease liabilities. For cash flow purposes, the $21.4 million of proceeds we received from these financing obligations during the year ended December 31, 2022 are reported within financing activities on our consolidated statement of cash flows.
During the year ended December 31, 2021, we closed on two sale-leaseback transactions involving two properties with unrelated third parties, one of which was associated with an agreement we entered into on December 16, 2020. Under these transactions, we sold assets with a combined net book value of $85.8 million for $76.0 million, which was reduced by transaction costs of $2.0 million, for net cash proceeds of $74.0 million. The estimated fair value of the properties sold was $85.5 million. Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $9.5 million, which resulted in the recognition of an aggregate loss of $2.3 million on these transactions, which is included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2021.
During the year ended December 31, 2020, we entered into sale-leaseback transactions involving five properties with unrelated third parties. Under these agreements, we sold assets with a combined net book value of $237.7 million for $199.2 million, which was reduced by transaction costs of $0.5 million, for net cash proceeds of $198.7 million. The estimated fair value of the five properties sold totaled $243.1 million. Accordingly, the aggregate sales price associated with these arrangements was increased by a total of $43.9 million, which resulted in the recognition of a net gain of $4.9 million on these transactions, which is included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2020.
Related Party Sale-Leaseback Transactions and Leases
For information on sale-leaseback transactions with related parties, as well as other related party leases not associated with sale-leaseback transactions, see Note 13, Related Party Transactions.
Operating and Finance Lease Right-of-Use Assets and Lease-Related Liabilities
Operating and finance lease right-of-use assets and lease-related liabilities were as follows:
December 31,
Classification on Consolidated
Balance Sheets
2022 2021
Lease right-of-use assets:
Operating leases
 $ 2,116,761  $ 1,864,528  Operating lease right-of-use assets
Finance leases (1)
1,083  2,073  Other assets
Total lease right-of-use assets
 $ 2,117,844  $ 1,866,601 
Lease-related liabilities:
Current
Operating leases
 $ 51,892  $ 46,315  Current maturities of operating lease liabilities
Finance leases
 796  1,374  Accrued expenses and other current liabilities
Non-current
Operating leases
 2,162,424  1,909,883  Operating lease liabilities, net of current portion
Finance leases
 312  757  Other liabilities
Financing obligations
 21,557  — 
Other liabilities
Total lease-related liabilities
 $ 2,236,981  $ 1,958,329 
(1)Finance lease right-of-use assets were reported net of accumulated amortization of $1.8 million and $2.4 million at December 31, 2022 and 2021, respectively.
Impairment of Right-of-Use Assets
During the year ended December 31, 2020, we determined that the operating lease right-of-use assets associated with some of our leased centers and some of our ancillary businesses were impaired. Accordingly, we recognized $2.0 million of impairment charges associated with these right-of-use assets, which are included in Other operating (income) expenses in our consolidated statement of operations for the year ended December 31, 2020.
For more information regarding impairment charges associated with our long-lived assets, see Note 2, Summary of Significant Accounting Policies.
Remaining Lease Terms and Discount Rates
The weighted-average remaining lease terms and discount rates associated with our lease-related liabilities at December 31, 2022 were as follows:
December 31, 2022
Weighted-average remaining lease term (1)
Operating leases
 17.7 years
Finance leases
 1.0 years
Financing obligations 24.7 years
Weighted-average discount rate
Operating leases
 8.21  %
Finance leases
 6.03  %
Financing obligations 10.84  %
(1)    The weighted-average remaining lease term associated with our operating and finance lease liabilities does not include all of the optional renewal periods available to us under our current lease arrangements. Rather, the weighted-average remaining lease term only includes periods covered by an option to extend a lease if we are reasonably certain to exercise that option.
Supplemental Cash Flow Information
Supplemental cash flow information associated with our leases is as follows:
Year Ended December 31,
2022 2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
 $ 199,762  $ 182,644  $ 131,617 
Operating cash flows from finance leases
 99  177  208 
Financing cash flows from finance leases
 1,404  1,514  1,343 
Non-cash information:
Right-of-use assets obtained in exchange for initial lease liabilities:
Operating leases
 294,722  210,541  241,810 
Finance leases
 391  1,272  2,576 
Right-of-use asset adjustments recognized as a result of the remeasurement of existing lease liabilities:
Operating leases
 (6,551) (6,345) 33,028 
Non-cash increase in operating lease right-of-use assets associated with below-market sale-leaseback transactions
 31,440  9,500  43,910 
Impairment charges associated with operating lease right-of-use assets
 —  —  (1,962)
Maturities of Operating Lease Liabilities, Finance Lease Liabilities and Financing Obligations
The maturities associated with our lease-related liabilities at December 31, 2022 are as follows:
Operating
Leases		 Finance
Leases
Financing
Obligations
 Total
2023 $ 221,855  $ 866  $ 2,235  $ 224,956 
2024 231,506  226  2,268  234,000 
2025 235,732  90  2,302  238,124 
2026 238,316  2  2,337  240,655 
2027 239,422  —  2,372  241,794 
Thereafter
 3,191,771  —  54,866  3,246,637 
Total lease payments
 4,358,602  1,184  66,380  4,426,166 
Less: Imputed interest
 2,144,286  76  44,823  2,189,185 
Present value of lease liabilities
 $ 2,214,316  $ 1,108  $ 21,557  $ 2,236,981