Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

LEASES

The Company has operating and finance leases for facilities, corporate offices, and certain equipment. The Company recognizes lease expense for these operating leases on a straight-line basis over the lease term. Leases with an initial term of one year or less are not recorded on the consolidated balance sheet. The Company's other leases have original lease terms of one to twelve years, some of which include options to extend the lease for up to twenty years, and some of which include options to terminate the leases within one year. The exercise of lease renewal options is at our sole discretion. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Upon adoption of Topic 842, the Company elected the practical expedient to not separate lease and non-lease components for all of its leases as the non-lease components are not significant to the overall lease costs.

On December 1, 2020, the Company entered into an agreement with Omega to transfer operations of the facility located in Florida to another operator. The agreement effectively amended the Omega Master Lease to remove this center, reduce the annual rent expense, and release the Company from any further obligations arising under the Omega Master Lease with respect to the Florida facility. In accordance with ASC 842, the amended lease agreement is considered to be modified and subject to lease modification guidance. The right-of-use asset and lease liabilities related to these agreements were remeasured based on the change in the lease conditions such as rent payment. The remaining Lease terms remain unchanged with an initial term of twelve years and two optional 10-year extensions. The annual lease fixed escalator remains at 2.15%. The incremental borrowing rate was adjusted to reflect the revised lease terms with became effective at the date of the modification. The net impact of the lease modification is an increase in right-of-use asset and lease liabilities of approximately $7,051.

Leases

	Classification	December 31, 2020		December 31, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	290,296	$	310,238
Finance lease assets	Property and equipment, net (a)	508		906
Total leased assets		$	290,804	$	311,144
Liabilities
Current
Operating	Current portion of operating lease liability	$	28,583	$	23,736
Finance	Current portion of long-term debt and finance lease obligations, net	251		231
Noncurrent
Operating	Operating lease liability, less current portion	274,155		295,636
Finance	Long-term debt and finance lease obligations, less current portion and deferred financing costs, net	280		445
Total lease liabilities		$	303,269	$	320,048
(a) Finance lease assets are recorded net of accumulated amortization of $471 and $1,522 as of December 31, 2020 and 2019, respectively.

Lease Cost

		Year Ended		Year Ended
	Classification	December 31, 2020		December 31, 2019
Operating lease cost (a)	Lease and rent expense	$	54,001	$	52,990
Finance lease cost:
Amortization of finance lease assets	Depreciation and amortization	226		263
Interest on finance lease liabilities	Interest expense, net	36		48
Short term lease cost	Operating expense	581		649
Net lease cost		$	54,844	$	53,950
(a) Includes variable lease costs, which are immaterial

Maturity of Lease Liabilities

	As of December 31, 2020
	Operating Leases (a)		Finance Leases (a)		Total
2021	$	51,165	$	282	$	51,447
2022	52,142		209		52,351
2023	53,120		62		53,182
2024	53,064		20		53,084
2025	53,921		—		53,921
After 2025	141,875		—		141,875
Total lease payments	$	405,287	$	573	$	405,860
Less: Interest	(102,549)		(42)		(102,591)
Present value of lease liabilities	$	302,738	$	531	$	303,269
(a) Operating and Finance lease payments exclude options to extend lease terms that are not reasonably certain of being exercised.

The measurement of right-of-use assets and lease liabilities requires the Company to estimate appropriate discount rates. To the extent the rate implicit in the lease is readily determinable, such rate is utilized. However, based on information available at lease commencement for the majority of our leases, the rate implicit in the lease is not known. In these instances, the Company utilizes an incremental borrowing rate, which represents the rate of interest that it would pay to borrow on a fully collateralized basis over a similar term.

Lease Term and Discount Rate

	December 31, 2020	December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	7.91	8.81
Finance leases	2.26	3.00
Weighted-average discount rate
Operating leases	7.9%	8.9%
Finance leases	6.2%	6.1%

Other Information

	Year Ended		Year Ended
	December 31, 2020		December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	50,869	$	55,485
Operating cash flows for finance leases	36		48
Financing cash flows for finance leases	235		471
Acquisition of operating leases though adoption of Topic 842	—		389,403
Lease modification	$	7,051	$	(48,877)

Leases

LEASES

The Company has operating and finance leases for facilities, corporate offices, and certain equipment. The Company recognizes lease expense for these operating leases on a straight-line basis over the lease term. Leases with an initial term of one year or less are not recorded on the consolidated balance sheet. The Company's other leases have original lease terms of one to twelve years, some of which include options to extend the lease for up to twenty years, and some of which include options to terminate the leases within one year. The exercise of lease renewal options is at our sole discretion. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Upon adoption of Topic 842, the Company elected the practical expedient to not separate lease and non-lease components for all of its leases as the non-lease components are not significant to the overall lease costs.

On December 1, 2020, the Company entered into an agreement with Omega to transfer operations of the facility located in Florida to another operator. The agreement effectively amended the Omega Master Lease to remove this center, reduce the annual rent expense, and release the Company from any further obligations arising under the Omega Master Lease with respect to the Florida facility. In accordance with ASC 842, the amended lease agreement is considered to be modified and subject to lease modification guidance. The right-of-use asset and lease liabilities related to these agreements were remeasured based on the change in the lease conditions such as rent payment. The remaining Lease terms remain unchanged with an initial term of twelve years and two optional 10-year extensions. The annual lease fixed escalator remains at 2.15%. The incremental borrowing rate was adjusted to reflect the revised lease terms with became effective at the date of the modification. The net impact of the lease modification is an increase in right-of-use asset and lease liabilities of approximately $7,051.

Leases

	Classification	December 31, 2020		December 31, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	290,296	$	310,238
Finance lease assets	Property and equipment, net (a)	508		906
Total leased assets		$	290,804	$	311,144
Liabilities
Current
Operating	Current portion of operating lease liability	$	28,583	$	23,736
Finance	Current portion of long-term debt and finance lease obligations, net	251		231
Noncurrent
Operating	Operating lease liability, less current portion	274,155		295,636
Finance	Long-term debt and finance lease obligations, less current portion and deferred financing costs, net	280		445
Total lease liabilities		$	303,269	$	320,048
(a) Finance lease assets are recorded net of accumulated amortization of $471 and $1,522 as of December 31, 2020 and 2019, respectively.

Lease Cost

		Year Ended		Year Ended
	Classification	December 31, 2020		December 31, 2019
Operating lease cost (a)	Lease and rent expense	$	54,001	$	52,990
Finance lease cost:
Amortization of finance lease assets	Depreciation and amortization	226		263
Interest on finance lease liabilities	Interest expense, net	36		48
Short term lease cost	Operating expense	581		649
Net lease cost		$	54,844	$	53,950
(a) Includes variable lease costs, which are immaterial

Maturity of Lease Liabilities

	As of December 31, 2020
	Operating Leases (a)		Finance Leases (a)		Total
2021	$	51,165	$	282	$	51,447
2022	52,142		209		52,351
2023	53,120		62		53,182
2024	53,064		20		53,084
2025	53,921		—		53,921
After 2025	141,875		—		141,875
Total lease payments	$	405,287	$	573	$	405,860
Less: Interest	(102,549)		(42)		(102,591)
Present value of lease liabilities	$	302,738	$	531	$	303,269
(a) Operating and Finance lease payments exclude options to extend lease terms that are not reasonably certain of being exercised.

The measurement of right-of-use assets and lease liabilities requires the Company to estimate appropriate discount rates. To the extent the rate implicit in the lease is readily determinable, such rate is utilized. However, based on information available at lease commencement for the majority of our leases, the rate implicit in the lease is not known. In these instances, the Company utilizes an incremental borrowing rate, which represents the rate of interest that it would pay to borrow on a fully collateralized basis over a similar term.

Lease Term and Discount Rate

	December 31, 2020	December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	7.91	8.81
Finance leases	2.26	3.00
Weighted-average discount rate
Operating leases	7.9%	8.9%
Finance leases	6.2%	6.1%

Other Information

	Year Ended		Year Ended
	December 31, 2020		December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	50,869	$	55,485
Operating cash flows for finance leases	36		48
Financing cash flows for finance leases	235		471
Acquisition of operating leases though adoption of Topic 842	—		389,403
Lease modification	$	7,051	$	(48,877)