Leases

12 Months Ended

Dec. 31, 2024

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 10 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, 2024 and December 31, 2023, assets recorded under finance leases were $309,363 and $322,844, respectively, and accumulated amortization associated with finance leases was $139,071 and $122,286, 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 10 years to 15 years and containing renewal options of five years to 15 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	2024		2023		2022
Operating lease cost(1):
Fixed lease expense	$	557,591	$	556,844	$	552,194
Variable lease expense	131,539		135,990		127,621
Financing lease cost:
Amortization of leased assets	28,262		26,964		27,079
Interest on lease liabilities	10,885		11,724		12,776
Net lease cost	$	728,277	$	731,522	$	719,670

(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	2024		2023		2022
Weighted average remaining lease term (years):
Operating leases	7.2		7.6		8.2
Finance leases	7.9		8.5		9.4
Weighted average discount rate:
Operating leases	4.1	%	4.0	%	3.6	%
Finance leases	4.6	%	4.6	%	4.5	%


	Year ended December 31,
Other information	2024		2023		2022
Gains on sale leasebacks, net	$	2,260	$	3,387	$	28,005
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	719,339	$	708,162	$	696,291
Operating cash flows for finance leases	$	18,599	$	19,246	$	20,103
Financing cash flows for finance leases	$	29,592	$	26,455	$	24,329
Net operating lease assets obtained in exchange for new or modified operating lease liabilities	$	286,022	$	269,564	$	278,108

Future minimum lease payments under non-cancellable leases as of December 31, 2024 are as follows:


	Operating leases		Finance leases
2025	$	508,420	$	36,557
2026	517,309		38,694
2027	453,895		37,421
2028	385,211		33,854
2029	310,332		24,862
Thereafter	863,739		82,400
Total future minimum lease payments	3,038,906		253,788
Less portion representing interest	(418,840)		(37,387)
Present value of lease liabilities	$	2,620,066	$	216,401

Rent expense under all operating leases for 2024, 2023 and 2022 was $689,130, $692,834 and $679,815, 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.