Leases

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Leases

Leases

The Company has operating and finance leases for its facilities. The Company leases its corporate office space from related parties. The Company’s critical illness recovery hospitals, rehabilitation hospitals, and Concentra centers generally have lease terms of 10 years with two, five year renewal options. These renewal options vary for hospitals which operate as a hospital within a hospital, or “HIH.” The Company’s outpatient rehabilitation clinics generally have lease terms of five years with two, three to five year renewal options.

The Company’s total lease cost is as follows:

	For the Year Ended December 31,
	2021						2022						2023
	Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total
	(in thousands)
Operating lease cost	$	283,595	$	7,186	$	290,781	$	299,077	$	7,245	$	306,322	$	310,000	$	7,335	$	317,335
Finance lease cost:
Amortization of right-of-use assets	647		—		647		1,488		—		1,488		1,572		—		1,572
Interest on lease liabilities	1,142		—		1,142		1,335		—		1,335		1,405		—		1,405
Short-term lease cost	269		—		269		74		—		74		—		—		—
Variable lease cost	52,666		426		53,092		57,335		462		57,797		64,920		84		65,004
Sublease income	(8,955)		—		(8,955)		(7,803)		—		(7,803)		(6,725)		—		(6,725)
Total lease cost	$	329,364	$	7,612	$	336,976	$	351,506	$	7,707	$	359,213	$	371,172	$	7,419	$	378,591

Supplemental cash flow information related to leases is as follows:

	For the Year Ended December 31,
	2021		2022		2023
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	294,576	$	308,085	$	317,256
Operating cash flows for finance leases	1,142		1,335		1,239
Financing cash flows for finance leases	616		1,472		1,617
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	284,657		340,845		270,153
Finance leases	4,545		495		—

Supplemental balance sheet information related to leases is as follows:

	December 31,
	2022						2023
	Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total
Operating Leases	(in thousands)
Operating lease right-of-use assets	$	1,136,014	$	33,726	$	1,169,740	$	1,159,025	$	29,591	$	1,188,616
Current operating lease liabilities	$	231,595	$	5,189	$	236,784	$	239,807	$	5,593	$	245,400
Non-current operating lease liabilities	977,645		30,749		1,008,394		1,000,583		25,284		1,025,867
Total operating lease liabilities	$	1,209,240	$	35,938	$	1,245,178	$	1,240,390	$	30,877	$	1,271,267

	December 31,
	2022						2023
	Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total
Finance Leases	(in thousands)
Property and equipment, net	$	7,563	$	—	$	7,563	$	6,035	$	—	$	6,035
Current portion of long-term debt and notes payable	$	1,628	$	—	$	1,628	$	1,385	$	—	$	1,385
Long-term debt, net of current portion	15,478		—		15,478		14,103		—		14,103
Total finance lease liabilities	$	17,106	$	—	$	17,106	$	15,488	$	—	$	15,488

The weighted average remaining lease terms and discount rates are as follows:

	December 31,
	2022		2023
Weighted average remaining lease term (in years):
Operating leases	7.8		7.7
Finance leases	24.8		25.9
Weighted average discount rate:
Operating leases	5.8	%	6.1	%
Finance leases	7.4	%	7.4	%

As of December 31, 2023, maturities of lease liabilities are approximately as follows:

	Operating Leases		Finance Leases
	(in thousands)
2024	$	313,222	$	2,499
2025	270,654		2,227
2026	235,529		2,157
2027	187,853		1,641
2028	138,320		1,272
Thereafter	524,516		25,387
Total undiscounted cash flows	1,670,094		35,183
Less: Imputed interest	398,827		19,695
Total discounted lease liabilities	$	1,271,267	$	15,488

Leases

Leases

The Company has operating and finance leases for its facilities. The Company leases its corporate office space from related parties. The Company’s critical illness recovery hospitals, rehabilitation hospitals, and Concentra centers generally have lease terms of 10 years with two, five year renewal options. These renewal options vary for hospitals which operate as a hospital within a hospital, or “HIH.” The Company’s outpatient rehabilitation clinics generally have lease terms of five years with two, three to five year renewal options.

The Company’s total lease cost is as follows:

	For the Year Ended December 31,
	2021						2022						2023
	Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total
	(in thousands)
Operating lease cost	$	283,595	$	7,186	$	290,781	$	299,077	$	7,245	$	306,322	$	310,000	$	7,335	$	317,335
Finance lease cost:
Amortization of right-of-use assets	647		—		647		1,488		—		1,488		1,572		—		1,572
Interest on lease liabilities	1,142		—		1,142		1,335		—		1,335		1,405		—		1,405
Short-term lease cost	269		—		269		74		—		74		—		—		—
Variable lease cost	52,666		426		53,092		57,335		462		57,797		64,920		84		65,004
Sublease income	(8,955)		—		(8,955)		(7,803)		—		(7,803)		(6,725)		—		(6,725)
Total lease cost	$	329,364	$	7,612	$	336,976	$	351,506	$	7,707	$	359,213	$	371,172	$	7,419	$	378,591

Supplemental cash flow information related to leases is as follows:

	For the Year Ended December 31,
	2021		2022		2023
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	294,576	$	308,085	$	317,256
Operating cash flows for finance leases	1,142		1,335		1,239
Financing cash flows for finance leases	616		1,472		1,617
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	284,657		340,845		270,153
Finance leases	4,545		495		—

Supplemental balance sheet information related to leases is as follows:

	December 31,
	2022						2023
	Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total
Operating Leases	(in thousands)
Operating lease right-of-use assets	$	1,136,014	$	33,726	$	1,169,740	$	1,159,025	$	29,591	$	1,188,616
Current operating lease liabilities	$	231,595	$	5,189	$	236,784	$	239,807	$	5,593	$	245,400
Non-current operating lease liabilities	977,645		30,749		1,008,394		1,000,583		25,284		1,025,867
Total operating lease liabilities	$	1,209,240	$	35,938	$	1,245,178	$	1,240,390	$	30,877	$	1,271,267

	December 31,
	2022						2023
	Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total
Finance Leases	(in thousands)
Property and equipment, net	$	7,563	$	—	$	7,563	$	6,035	$	—	$	6,035
Current portion of long-term debt and notes payable	$	1,628	$	—	$	1,628	$	1,385	$	—	$	1,385
Long-term debt, net of current portion	15,478		—		15,478		14,103		—		14,103
Total finance lease liabilities	$	17,106	$	—	$	17,106	$	15,488	$	—	$	15,488

The weighted average remaining lease terms and discount rates are as follows:

	December 31,
	2022		2023
Weighted average remaining lease term (in years):
Operating leases	7.8		7.7
Finance leases	24.8		25.9
Weighted average discount rate:
Operating leases	5.8	%	6.1	%
Finance leases	7.4	%	7.4	%

As of December 31, 2023, maturities of lease liabilities are approximately as follows:

	Operating Leases		Finance Leases
	(in thousands)
2024	$	313,222	$	2,499
2025	270,654		2,227
2026	235,529		2,157
2027	187,853		1,641
2028	138,320		1,272
Thereafter	524,516		25,387
Total undiscounted cash flows	1,670,094		35,183
Less: Imputed interest	398,827		19,695
Total discounted lease liabilities	$	1,271,267	$	15,488