Leases

12 Months Ended

Dec. 31, 2023

Leases

The Company leases substantially all of its dialysis facilities. The majority of the Company’s facilities are leased under non-cancellable operating leases which range in terms from five years to 15 years and which contain renewal options of five years to ten years at the fair rental value at the time of renewal. The Company's leases are generally subject to fixed escalation clauses or contain consumer price index increases. See Note 1 for further information on how the Company accounts for leases.

As of December 31, 2023 and December 31, 2022, assets recorded under finance leases were $322,844 and $319,546, respectively, and accumulated amortization associated with finance leases was $122,286 and $101,361, respectively, included in property and equipment, net, on the Company's consolidated balance sheet.

In certain markets, the Company acquires and develops dialysis centers. Upon completion, the Company sells the center to a third party and leases the space back with the intent of operating the center on a long-term basis. Both the sale and leaseback terms are generally market terms. Substantially all of the lease terms are consistent with the Company's other operating leases with the majority of the leases under non-cancellable operating leases ranging in terms from ten years to 15 years and containing renewal options of five years to ten years at the fair rental value at the time of renewal.

The components of lease expense were as follows:


	Year ended December 31,
Lease cost	2023		2022		2021
Operating lease cost(1):
Fixed lease expense	$	556,844	$	552,194	$	547,923
Variable lease expense	135,990		127,621		125,981
Financing lease cost:
Amortization of leased assets	26,964		27,079		26,846
Interest on lease liabilities	11,724		12,776		13,988
Net lease cost	$	731,522	$	719,670	$	714,738

(1) Includes short-term lease expense and sublease income, which are immaterial.

Other information related to leases was as follows:


	Year ended December 31,
Lease term and discount rate	2023		2022		2021
Weighted average remaining lease term (years):
Operating leases	7.6		8.2		8.3
Finance leases	8.5		9.4		10.5
Weighted average discount rate:
Operating leases	4.0	%	3.6	%	3.5	%
Finance leases	4.6	%	4.5	%	4.5	%


	Year ended December 31,
Other information	2023		2022		2021
Gains on sale leasebacks, net	$	3,387	$	28,005	$	17,137
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	708,162	$	696,291	$	684,186
Operating cash flows for finance leases	$	19,246	$	20,103	$	21,343
Financing cash flows for finance leases	$	26,455	$	24,329	$	22,445
Net operating lease assets obtained in exchange for new or modified operating lease liabilities	$	269,564	$	278,108	$	361,101

Future minimum lease payments under non-cancellable leases as of December 31, 2023 are as follows:


	Operating leases		Finance leases
2024	$	495,809	$	37,173
2025	507,616		40,859
2026	455,477		39,639
2027	388,869		38,410
2028	324,153		34,976
Thereafter	989,253		112,904
Total future minimum lease payments	3,161,177		303,961
Less portion representing interest	(436,389)		(48,470)
Present value of lease liabilities	$	2,724,788	$	255,491

Rent expense under all operating leases for 2023, 2022 and 2021 was $692,834, $679,815 and $673,904, respectively. Rent expense is recorded on a straight-line basis over the term of the lease, including leases that contain fixed escalation clauses or include abatement provisions. Leasehold improvement incentives reduce the carrying value of right-of-use assets and are amortized to rent expense over the term of the lease. Finance lease obligations are included in long-term debt. See Note 12 for further details on long-term debt.