LEASES

6 Months Ended

Jun. 30, 2023

The Company leases all of its facilities, including its EXPAREL and iovera° handpiece manufacturing facility at its Science Center Campus in San Diego, California. The Company also has two embedded leases with Thermo Fisher Scientific Pharma Services for the use of their manufacturing facility in Swindon, England for the production of EXPAREL and ZILRETTA. A portion of the associated monthly base fees has been allocated to the lease components based on a relative fair value basis.

Since July 2022 and February 2023, the Company has been recognizing sublease income for laboratory space leased in Woburn, Massachusetts and a portion of office space leased in Burlington, Massachusetts, respectively, from leases that were assumed as part of the Flexion Acquisition.

Subsequent to June 30, 2023, the Company partially exited its Burlington, Massachusetts office space lease that had been assumed as part of the Flexion Acquisition at a one-time termination fee of $0.8 million, which released its obligation of $1.6 million in future cash payments for the respective proportion of square footage exited.

The operating lease costs for the facilities include lease and non-lease components, such as common area maintenance and other common operating expenses, along with executory costs such as insurance and real estate taxes. Total operating lease expense, net is as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Fixed lease costs	$	3,631	$	3,542	$	7,259	$	7,069
Variable lease costs	378		508		945		980
Sublease income	(169)		—		(322)		—
Total	$	3,840	$	4,050	$	7,882	$	8,049

Supplemental cash flow information related to operating leases is as follows (in thousands):


	Six Months Ended
	June 30,
	2023		2022
Cash paid for operating lease liabilities, net of lease incentives	$	7,325	$	6,637

The Company has elected to net the amortization of the right-of-use asset and the reduction of the lease liability principal in other liabilities in the condensed consolidated statements of cash flows.

The Company has measured its operating lease liabilities at an estimated discount rate at which it could borrow on a collateralized basis over the remaining term for each operating lease. The weighted average remaining lease terms and the weighted average discount rates are summarized as follows:


	June 30,
	2023		2022
Weighted average remaining lease term	6.39 years		7.33 years
Weighted average discount rate	7.03	%	6.95	%

Maturities of the Company’s operating lease liabilities are as follows (in thousands):


Year	Aggregate Minimum Payments Due
2023 (remaining six months)	$	6,925
2024	13,928
2025	13,078
2026	12,814
2027	12,587
Thereafter	27,350
Total future lease payments	86,682
Less: imputed interest	(17,655)
Total operating lease liabilities	$	69,027