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Leases
12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Leases Leases
Operating Leases
The Company has operating leases for its headquarters lease and its fleet vehicles. With respect to the fleet vehicle leases, given the volume of individual leases involved in the overall arrangement, the Company applies a portfolio approach to effectively account for the operating lease assets and liabilities. The Company also elected to combine the lease and non-lease components for the fleet vehicle and headquarters leases.
The Company's headquarters lease commenced on February 1, 2019 and will continue until April 30, 2034, unless earlier terminated in accordance with the terms of the lease. The lease includes options to extend the lease for up to 10 years. On August 23, 2021, the Company entered into an addendum to the original headquarters agreement to lease additional office space, referred to as the Expansion Premises. The Expansion Premises is separate from the lease space in the original lease agreement. The term of the lease with respect to the Expansion Premises commenced on September 1, 2021 and coincides with the lease term per the original lease agreement.
As part of the Adamas Acquisition, the Company acquired a lease for office space. Adamas's operating lease for the office space term will continue until April 30, 2025. The lease contains an option to extend the term for one additional five-year period.
Contract Manufacturing Lease
Contemporaneous with the USWM Acquisition, USWM Enterprises adopted ASC 842, Leases. USWM Enterprises had an existing contract manufacturing agreement with Merz Pharma GmbH & Co. KGaA (Merz), for the manufacture and supply of rimabotulinumtoxinB finished products (Merz Agreement). Pursuant to the Merz Agreement, Merz agreed to provide a dedicated manufacturing facility that included a stand-alone building, dedicated cleanroom suites, dedicated manufacturing, and purification equipment, and filling and packaging production lines (collectively, the manufacturing facility) to manufacture finished products. The Merz Agreement will expire in July 2027 unless the Company and Merz mutually agree to extend the terms. The Merz Agreement may not be terminated for convenience.
Under the terms of the agreement, the Company is required to purchase a minimum quantity of finished products on an annual basis. This minimum purchase requirement represents the in-substance fixed contract consideration associated with the dedicated manufacturing facility which the Company accounts for as an embedded lease.
At the Closing Date of the USWM Acquisition, the Company preliminarily classified the embedded lease as a finance lease and preliminarily elected not to separate the lease and non-lease components. In the second quarter of 2021, the Company finalized its accounting of the USWM Acquisition. During the measurement period, the Company determined the fair market value of rent for the lease components and fair market value of the manufacturing facility associated with the Merz embedded lease. As a result, the Company made an accounting policy election, by class of underlying asset, to not combine lease and non-lease components for the manufacturing facility. A portion of the in-substance fixed contract consideration was allocated to the lease component based on the stand-alone selling price. Accordingly, the Company has finalized and updated the classification of the embedded lease from a finance lease to an operating lease. Refer to Note 3, Acquisitions, for further discussion.
Operating and finance lease assets and lease liabilities as reported on the consolidated balance sheets are as follows (dollars in thousands):
December 31,
Balance Sheet Classification20212020
Assets
Operating lease assetsOther assets$35,365 $20,231 
Finance lease assetProperty and equipment, net— 20,874 
Total lease assets $35,365 $41,105 
Liabilities
Lease liabilities, current
Operating lease liabilities, current portionAccounts payable and accrued liabilities$6,477 $3,760 
Finance lease liability, current portionOther current liabilities— 3,761 
Lease liabilities, long term
Operating lease liabilities, long termOperating lease liabilities, long term41,298 28,579 
Finance lease liability, long termOther liabilities— 20,235 
Total lease liabilities$47,775 $56,335 
The components of operating and finance lease costs are as follows (dollars in thousands):
December 31,
20212020
Operating lease cost:
Fixed lease cost$8,929 $5,333 
Variable lease cost 3,059 2,145 
Total $11,988 $7,478 
Finance lease cost:
Amortization on finance lease asset $— $1,873 
Interest on lease liability — 333 
Total $— $2,206 
Supplemental cash flow information related to leases is as follows (dollars in thousands):
December 31,
20212020
Cash paid for operating leases$11,908 $6,949 
Cash paid for finance lease— 802 
Lease assets and tenant receivables obtained for new operating leases10,868 2,478 
Lease assets obtained for new finance lease— 22,747 
Weighted average lease term, and weighted average discount rate for operating leases as of December 31, 2021, are as follows:
Operating leases
Weighted-average remaining lease term (years)8.9
Weighted-average discount rate3.71 %
Future minimum lease payments under noncancellable operating leases as of December 31, 2021, are as follows (dollars in thousands):
Operating Leases
Year ending December 31:
2022 $7,843 
20237,733 
20246,971 
20255,333 
20264,626 
Thereafter24,755 
Total future minimum lease payments$57,261 
Less: Imputed interest (1)
(9,486)
Present value of lease liabilities$47,775 
(1) Calculated using the interest rate for each lease.
Leases Leases
Operating Leases
The Company has operating leases for its headquarters lease and its fleet vehicles. With respect to the fleet vehicle leases, given the volume of individual leases involved in the overall arrangement, the Company applies a portfolio approach to effectively account for the operating lease assets and liabilities. The Company also elected to combine the lease and non-lease components for the fleet vehicle and headquarters leases.
The Company's headquarters lease commenced on February 1, 2019 and will continue until April 30, 2034, unless earlier terminated in accordance with the terms of the lease. The lease includes options to extend the lease for up to 10 years. On August 23, 2021, the Company entered into an addendum to the original headquarters agreement to lease additional office space, referred to as the Expansion Premises. The Expansion Premises is separate from the lease space in the original lease agreement. The term of the lease with respect to the Expansion Premises commenced on September 1, 2021 and coincides with the lease term per the original lease agreement.
As part of the Adamas Acquisition, the Company acquired a lease for office space. Adamas's operating lease for the office space term will continue until April 30, 2025. The lease contains an option to extend the term for one additional five-year period.
Contract Manufacturing Lease
Contemporaneous with the USWM Acquisition, USWM Enterprises adopted ASC 842, Leases. USWM Enterprises had an existing contract manufacturing agreement with Merz Pharma GmbH & Co. KGaA (Merz), for the manufacture and supply of rimabotulinumtoxinB finished products (Merz Agreement). Pursuant to the Merz Agreement, Merz agreed to provide a dedicated manufacturing facility that included a stand-alone building, dedicated cleanroom suites, dedicated manufacturing, and purification equipment, and filling and packaging production lines (collectively, the manufacturing facility) to manufacture finished products. The Merz Agreement will expire in July 2027 unless the Company and Merz mutually agree to extend the terms. The Merz Agreement may not be terminated for convenience.
Under the terms of the agreement, the Company is required to purchase a minimum quantity of finished products on an annual basis. This minimum purchase requirement represents the in-substance fixed contract consideration associated with the dedicated manufacturing facility which the Company accounts for as an embedded lease.
At the Closing Date of the USWM Acquisition, the Company preliminarily classified the embedded lease as a finance lease and preliminarily elected not to separate the lease and non-lease components. In the second quarter of 2021, the Company finalized its accounting of the USWM Acquisition. During the measurement period, the Company determined the fair market value of rent for the lease components and fair market value of the manufacturing facility associated with the Merz embedded lease. As a result, the Company made an accounting policy election, by class of underlying asset, to not combine lease and non-lease components for the manufacturing facility. A portion of the in-substance fixed contract consideration was allocated to the lease component based on the stand-alone selling price. Accordingly, the Company has finalized and updated the classification of the embedded lease from a finance lease to an operating lease. Refer to Note 3, Acquisitions, for further discussion.
Operating and finance lease assets and lease liabilities as reported on the consolidated balance sheets are as follows (dollars in thousands):
December 31,
Balance Sheet Classification20212020
Assets
Operating lease assetsOther assets$35,365 $20,231 
Finance lease assetProperty and equipment, net— 20,874 
Total lease assets $35,365 $41,105 
Liabilities
Lease liabilities, current
Operating lease liabilities, current portionAccounts payable and accrued liabilities$6,477 $3,760 
Finance lease liability, current portionOther current liabilities— 3,761 
Lease liabilities, long term
Operating lease liabilities, long termOperating lease liabilities, long term41,298 28,579 
Finance lease liability, long termOther liabilities— 20,235 
Total lease liabilities$47,775 $56,335 
The components of operating and finance lease costs are as follows (dollars in thousands):
December 31,
20212020
Operating lease cost:
Fixed lease cost$8,929 $5,333 
Variable lease cost 3,059 2,145 
Total $11,988 $7,478 
Finance lease cost:
Amortization on finance lease asset $— $1,873 
Interest on lease liability — 333 
Total $— $2,206 
Supplemental cash flow information related to leases is as follows (dollars in thousands):
December 31,
20212020
Cash paid for operating leases$11,908 $6,949 
Cash paid for finance lease— 802 
Lease assets and tenant receivables obtained for new operating leases10,868 2,478 
Lease assets obtained for new finance lease— 22,747 
Weighted average lease term, and weighted average discount rate for operating leases as of December 31, 2021, are as follows:
Operating leases
Weighted-average remaining lease term (years)8.9
Weighted-average discount rate3.71 %
Future minimum lease payments under noncancellable operating leases as of December 31, 2021, are as follows (dollars in thousands):
Operating Leases
Year ending December 31:
2022 $7,843 
20237,733 
20246,971 
20255,333 
20264,626 
Thereafter24,755 
Total future minimum lease payments$57,261 
Less: Imputed interest (1)
(9,486)
Present value of lease liabilities$47,775 
(1) Calculated using the interest rate for each lease.