Leases

12 Months Ended

Dec. 31, 2019

11. LEASES

The Company adopted the new lease guidance on January 1, 2019 using the transition method provided by ASU 2018-11, “Leases (Topic 842): Targeted Improvements”. Under this method, the Company has applied the new requirements to leases that existed as of January 1, 2019, rather than at the earliest comparative period presented in the financial statements. Prior periods are presented under legacy ASC 840 lease guidance. As a result of the adoption, the Company recorded operating right-of-use assets and

operating lease liabilities of approximately $1,884 and $2,189 as of January 1, 2019. The difference between the initial operating right-of-use asset and operating lease liability of $305 is accrued rent previously recognized under ASC 840.

The Company has operating and finance leases for corporate offices, manufacturing and warehouse facilities and computer equipment. The Company has applied the practical expedient and does not separate lease components from nonlease components. The Company has applied the short-term lease recognition exemption and recognizes lease payments in profit or loss for leases that have a lease term of twelve months or less at commencement and do not include a renewal option whose exercise is reasonably certain. Short term lease expense is not significant during the twelve months ended December 31, 2019.

The Company’s leases have remaining lease terms of one year to eleven years. Except for the operating lease acquired as part of the SentreHEART acquisition, options to renew or extend leases beyond their initial term have been excluded from measurement of the ROU assets and lease liabilities as exercise is not reasonably certain. The weighted average remaining lease term for operating leases and finance leases is 3.5 years and 11.0 years as of December 31, 2019. The weighted average discount rate used to measure the outstanding operating lease liabilities and finance lease liabilities is 5.9% and 7.0% as of December 31, 2019. In connection with the terms of the Company’s corporate headquarters lease, a letter of credit for $1,250 was issued to the building lessor in October 2015. The letter of credit is renewed annually and remains outstanding as of December 31, 2019.

The components of lease expense are as follows:



	Twelve Months Ended
	December 31, 2019
Operating lease cost	$	952

Finance lease cost:
Amortization of right-of-use assets		998
Interest on lease liabilities		872
Total finance lease cost	$	1,870

Supplemental cash flow information related to leases is as follows:



	Twelve Months Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,026
Operating cash flows from finance leases		872
Financing cash flows from finance leases		629

Right-of-use assets obtained in exchange for lease obligations:
Operating Leases		1,884
Finance Leases		270
Operating lease right-of-use asset obtained in business combination		2,929

Supplemental balance sheet information related to leases is as follows:



	December 31, 2019
Operating Leases
Operating lease right-of-use assets	$	4,032

Other current liabilities and current maturities of leases and long-term debt		(1,465)
Operating lease liabilities		(2,796)
Total operating lease liabilities	$	(4,261)

Finance Leases
Property and equipment, at cost	$	14,733
Accumulated depreciation		(4,197)
Property and equipment, net	$	10,536

Other current liabilities and current maturities of leases and long-term debt	$	(753)
Finance lease liabilities		(11,774)
Total finance lease liabilities	$	(12,527)

Maturities of lease liabilities as of December 31, 2019 are as follows:



	Operating Leases		Finance Leases
2020	$	1,465	$	1,597
2021		1,337		1,602
2022		1,178		1,623
2023		708		1,646
2024		—		1,670
2025 and thereafter		—		9,799
Total payments	$	4,688	$	17,937
Less imputed interest		(427)		(5,410)
Total	$	4,261	$	12,527