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Lessor Leases | 9 Months Ended
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Sep. 30, 2022
Leases [Abstract] |
Lessor Leases | Lessor Leases Sales-Type Leases On a recurring basis, the Company enters into multi-year, sales-type lease agreements, with the majority of such leases varying in length from one to five years. Some of the Company’s sales-type leases, mostly those relating to U.S. government hospitals which comprise approximately 39% of the lease receivable balance, and those associated with financed service contracts related to certain Advanced Services products, including Central Pharmacy Dispensing Services and IV compounding automation solutions, are retained in-house. The Company optimizes cash flows by selling many of its remaining sales-type leases to third-party leasing finance companies on a non-recourse basis. The Company has no obligation to the leasing company once the lease has been sold. The following table presents the Company’s income recognized from sales-type leases for the three and nine months ended September 30, 2022 and 2021:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (In thousands)
Sales-type lease revenues | $ | 10,115 |  |  | $ | 3,892 |  |  | $ | 34,033 |  |  | $ | 14,503 |
Cost of sales-type lease revenues | (5,357) |  |  | (1,699) |  |  | (16,963) |  |  | (5,678) |
Selling profit on sales-type lease revenues | $ | 4,758 |  |  | $ | 2,193 |  |  | $ | 17,070 |  |  | $ | 8,825 |
The receivables as a result of these types of transactions are collateralized by the underlying equipment leased and consist of the following components at September 30, 2022 and December 31, 2021:
| September 30, 2022 |  | December 31, 2021
| (In thousands)
Net minimum lease payments to be received | $ | 52,644 |  |  | $ | 31,444 |
Less: Unearned interest income portion | (6,251) |  |  | (2,388) |
Net investment in sales-type leases | 46,393 |  |  | 29,056 |
Less: Current portion (1) | (12,586) |  |  | (10,665) |
Long-term investment in sales-type leases, net | $ | 33,807 |  |  | $ | 18,391 |
_________________________________________________ (1) The current portion of the net investment in sales-type leases is included in other current assets in the Condensed Consolidated Balance Sheets. The carrying amount of the Company’s sales-type lease receivables is a reasonable estimate of fair value. The maturity schedule of future minimum lease payments under sales-type leases retained in-house and the reconciliation to the net investment in sales-type leases reported on the Condensed Consolidated Balance Sheets was as follows:
| September 30, 2022
| (In thousands)
Remaining three months of 2022 | $ | 3,782 |
2023 | 13,314 |
2024 | 10,064 |
2025 | 8,171 |
2026 | 6,387 |
Thereafter | 10,926 |
Total future minimum sales-type lease payments | 52,644 |
Present value adjustment | (6,251) |
Total net investment in sales-type leases | $ | 46,393 |
Operating Leases The Company entered into certain leasing agreements that were classified as operating leases prior to the adoption of ASC 842, Leases. These agreements in place prior to January 1, 2019 continue to be treated as operating leases; however, any leasing agreements entered into on or after January 1, 2019 under these programs are classified and accounted for as sales-type leases in accordance with ASC 842. The operating lease arrangements generally have initial terms of one to seven years. The following table represents the Company’s income recognized from operating leases for the three and nine months ended September 30, 2022 and 2021:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (In thousands)
Rental income | $ | 2,327 |  |  | $ | 2,474 |  |  | $ | 7,220 |  |  | $ | 8,278 |
Lessor Leases | Lessor Leases Sales-Type Leases On a recurring basis, the Company enters into multi-year, sales-type lease agreements, with the majority of such leases varying in length from one to five years. Some of the Company’s sales-type leases, mostly those relating to U.S. government hospitals which comprise approximately 39% of the lease receivable balance, and those associated with financed service contracts related to certain Advanced Services products, including Central Pharmacy Dispensing Services and IV compounding automation solutions, are retained in-house. The Company optimizes cash flows by selling many of its remaining sales-type leases to third-party leasing finance companies on a non-recourse basis. The Company has no obligation to the leasing company once the lease has been sold. The following table presents the Company’s income recognized from sales-type leases for the three and nine months ended September 30, 2022 and 2021:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (In thousands)
Sales-type lease revenues | $ | 10,115 |  |  | $ | 3,892 |  |  | $ | 34,033 |  |  | $ | 14,503 |
Cost of sales-type lease revenues | (5,357) |  |  | (1,699) |  |  | (16,963) |  |  | (5,678) |
Selling profit on sales-type lease revenues | $ | 4,758 |  |  | $ | 2,193 |  |  | $ | 17,070 |  |  | $ | 8,825 |
The receivables as a result of these types of transactions are collateralized by the underlying equipment leased and consist of the following components at September 30, 2022 and December 31, 2021:
| September 30, 2022 |  | December 31, 2021
| (In thousands)
Net minimum lease payments to be received | $ | 52,644 |  |  | $ | 31,444 |
Less: Unearned interest income portion | (6,251) |  |  | (2,388) |
Net investment in sales-type leases | 46,393 |  |  | 29,056 |
Less: Current portion (1) | (12,586) |  |  | (10,665) |
Long-term investment in sales-type leases, net | $ | 33,807 |  |  | $ | 18,391 |
_________________________________________________ (1) The current portion of the net investment in sales-type leases is included in other current assets in the Condensed Consolidated Balance Sheets. The carrying amount of the Company’s sales-type lease receivables is a reasonable estimate of fair value. The maturity schedule of future minimum lease payments under sales-type leases retained in-house and the reconciliation to the net investment in sales-type leases reported on the Condensed Consolidated Balance Sheets was as follows:
| September 30, 2022
| (In thousands)
Remaining three months of 2022 | $ | 3,782 |
2023 | 13,314 |
2024 | 10,064 |
2025 | 8,171 |
2026 | 6,387 |
Thereafter | 10,926 |
Total future minimum sales-type lease payments | 52,644 |
Present value adjustment | (6,251) |
Total net investment in sales-type leases | $ | 46,393 |
Operating Leases The Company entered into certain leasing agreements that were classified as operating leases prior to the adoption of ASC 842, Leases. These agreements in place prior to January 1, 2019 continue to be treated as operating leases; however, any leasing agreements entered into on or after January 1, 2019 under these programs are classified and accounted for as sales-type leases in accordance with ASC 842. The operating lease arrangements generally have initial terms of one to seven years. The following table represents the Company’s income recognized from operating leases for the three and nine months ended September 30, 2022 and 2021:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (In thousands)
Rental income | $ | 2,327 |  |  | $ | 2,474 |  |  | $ | 7,220 |  |  | $ | 8,278 |

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