LEASES AND RELATED PARTY LEASES

12 Months Ended

Dec. 31, 2024

The Company leases administrative, manufacturing, research and distribution facilities and vehicles through operating lease agreements. The Company has no material finance leases as of December 31, 2024. Many of the Company’s leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common-area or other maintenance costs). For vehicles, the Company has elected the practical expedient to group lease and non-lease components.

Most facility leases include one or more options to renew. The exercise of lease renewal options is typically at the Company’s sole discretion, therefore, the majority of renewals to extend the lease terms are not included in the Right of Use (“ROU”) assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates renewal options and when they are reasonably certain of exercise, the renewal period is included in the lease term.

As most of the Company’s leases do not provide an implicit rate, the Company uses a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

Total operating lease expense for the year ended December 31, 2024 and 2023, was $24.3 million and $24.0 million, respectively, which includes $0.3 million, in related party operating lease expense.

Supplemental balance sheet information related to operating leases at December 31, 2024 were as follows:


	December 31, 2024			December 31, 2023
	(In thousands, except lease term and discount rate)

ROU assets	$	144,042		$	156,184

Current lease liabilities	14,540			15,284
Non-current lease liabilities	166,930			166,849
Total lease liabilities	$	181,470		$	182,133

Weighted average remaining lease term (in years):

Leased facilities	16.1 years			16.3 years
Leased vehicles	2.3 years			1.9 years

Weighted average discount rate:
Leased facilities	5.4		%	5.9		%
Leased vehicles	2.8		%	2.7		%

Supplemental cash flow information related to leases was as follows:


	December 31, 2024		December 31, 2023
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	24,122	$	20,655

ROU assets obtained in exchange for lease liabilities, net of modifications:
Operating leases	$	3,565	$	9,843

Future minimum lease payments under operating leases at December 31, 2024 were as follows:


	Related Parties		Third Parties		Total
	(In thousands)
2025	$	296	$	23,050	$	23,346
2026	296		19,841		20,137
2027	296		19,405		19,701
2028	296		17,649		17,945
2029	246		17,480		17,726
Thereafter	—		169,433		169,433
Total minimum lease payments	$	1,430	$	266,858	$	268,288
Less: Imputed interest					86,818
Total lease liabilities					181,470
Less: Current lease liabilities					14,540
Long-term lease liabilities					$	166,930

There were no material future minimum lease payments under finance leases at December 31, 2024.

Related Party Leases

The Company leases its manufacturing facility in Plainsboro, New Jersey, from a general partnership that is 50% owned by a principal stockholder of the Company. The term of the current lease agreement is through October 31, 2029 at an annual rate of approximately $0.3 million. The current lease agreement also provides (i) a 5-year renewal option for the Company to extend the lease from November 1, 2029 through October 31, 2034 at the fair market rental rate of the premises, and (ii) another 5-year renewal option to extend the lease from November 1, 2034 through October 31, 2039 at the fair market rental rate of the premises.

Lease Impairment Charge

The Company approved a plan to transition the commercial distribution of PriMatrix® and SurgiMend® from the Boston facility to the Company’s manufacturing facility in Braintree, Massachusetts and permanently cease use of the Boston facility. As a result, in the second quarter of 2024, the Company recorded a $4.6 million impairment charge in the Tissue Technologies reportable segment, as the carrying amounts of the operating lease right-of-use asset and fixed assets related to the Boston facility exceeded their fair values based on the Company’s estimates of future discounted cash flows through the end of the lease term and the end of their remaining useful lives, respectively. The $4.6 million impairment charge was comprised of a $1.7 million impairment of an operating lease right-of-use asset and a $2.9 million write-off of fixed assets, which was recorded as a component of cost of goods sold in the consolidated statements of operations.