Leases

6 Months Ended

Jun. 30, 2024

Our operating leases that have commenced have terms that expire beginning 2025 through 2036 and consist of office space and research and development laboratories, including our corporate headquarters. Certain of these lease agreements contain clauses for renewal at our option. As we were not reasonably certain to exercise any of these renewal options at commencement of the associated leases, no such options were recognized as part of our right-of-use (ROU) assets or operating lease liabilities.

The following table presents supplemental operating lease information for operating leases that have commenced.


	Six Months Ended June 30,
(in millions, except weighted average data)	2024			2023
Operating lease cost	$	18.6		$	8.2
Sublease income	(0.8)			—
Net operating lease cost	$	17.8		$	8.2
Cash paid for amounts included in the measurement of operating lease liabilities	$	15.0		$	8.8

	June 30, 2024			June 30, 2023
Weighted average remaining lease term	10.5 years			7.4 years
Weighted average discount rate	5.0		%	5.4		%
Restricted cash related to letters of credit issued in lieu of cash security deposits	$	7.8		$	7.8

The following table presents approximate future non-cancelable minimum lease payments under operating leases and sublease income as of June 30, 2024.


(in millions)	Operating Leases (1)		Sublease Income
2024 (6 months remaining)	$	18.0	$	(1.0)
2025	35.4		(2.7)
2026	34.9		(2.7)
2027	35.8		(2.7)
2028	36.6		(2.7)
Thereafter	220.3		(7.0)
Total operating lease payments (sublease income)	381.0		$	(18.8)
Less accreted interest	89.4
Total operating lease liabilities	291.6
Less current operating lease liabilities included in other current liabilities	35.4
Noncurrent operating lease liabilities	$	256.2

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(1) Amounts presented in the table above exclude $5.6 million for 2025, $22.6 million for 2026, $23.3 million for 2027, $24.0 million for 2028 and $214.4 million thereafter of approximate non-cancelable future minimum lease payments under an operating lease related to our new campus facility that has not yet commenced.

New Campus Facility. On February 8, 2022, we entered into a lease agreement for a four-building campus facility currently under construction in San Diego, California, including a six-year option for the construction of a fifth building. This campus facility, comprised of office space and research and development laboratories, now serves as our corporate headquarters.

The construction of the campus facility is phased. The first phase of construction, consisting of two buildings relating to office space, was completed in December 2023 and resulted in the recognition of ROU assets and operating lease liabilities totaling $199.0 million and $189.8 million, respectively.

As we continue to occupy our new campus facility, certain of our existing leased properties will be marketed for sublease when we determine there is excess leased capacity. Certain of these subleases contain both lease and non-lease components. Sublease income is recognized as an offset to operating expense on a straight-line basis over the lease term. Income related to non-lease components is recognized in operating expenses as a reduction to costs we incur in relation to the primary lease.

Impairment of ROU Assets. ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Corporate ROU assets that are actively being marketed for sublease in connection with excess leased capacity are tested for impairment individually when the cash flows related to the ROU asset are determined to be independent from the cash flows of other assets and liabilities. Corporate ROU assets are otherwise tested for impairment on a consolidated level with consideration given to all cash flows of the company as corporate functions do not generate cash flows and are funded by revenue-producing activities at lower levels of the entity.

In the second quarter of 2024, we reassessed the asset groupings for corporate ROU assets that are actively being marketed for sublease in connection with leased office space that has been vacated as we continue to occupy our new campus facility. For asset groups where impairment was triggered, we used discounted cash flow models (an income approach) with Level 3 inputs to estimate the fair values of the asset groups and recognized corresponding impairment charges totaling $14.0 million in the second quarter of 2024, of which $11.3 million and $2.7 million, respectively, was related to the ROU assets and tenant improvements associated with the underlying leased properties. The significant assumptions used in the discounted cash flows models included projected sublease income over the remaining lease term, expected downtime prior to the commencement of executed or future subleases, and discount rates that reflected a market participant's assumptions in valuing the asset groups.