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Divestitures | 6 Months Ended
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Jun. 30, 2025
Discontinued Operations and Disposal Groups [Abstract] |
Divestitures | Divestitures Corporate Clinic Segment Divestiture In 2023, the Company initiated plans to refranchise the majority of its company-owned or managed clinics with plans to retain a small portion of high-performing clinics. During the third quarter of 2024, the Company expanded the refranchising plan to include additional clinic markets of company-owned or managed clinics, marketing the clinics in clusters grouped by proximity to larger private equity firms. Because the Company has formalized a plan to sell its entire corporate clinic reportable segment, the Company has concluded that the overall refranchising plan represents a strategic shift that will have a major effect on the Company’s operations and financial results. As of December 31, 2024, the corporate clinics classified as held for sale or already sold under the refranchising plan represent, in the aggregate, a strategic shift that will have a major effect on the Company’s operations and financial results. Accordingly, the results of the corporate clinic segment and its assets and liabilities are reported separately as discontinued operations in the condensed consolidated income statements and condensed consolidated balance sheets. As permitted, the Company elected not to adjust the condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 to exclude cash flows attributable to discontinued operations. Accordingly, the Company disclosed the depreciation and amortization, capital expenditures and significant operating and investing non-cash items related to the corporate clinic segment below. The key components of Net income from discontinued operations that were included in the Company’s condensed consolidated income statements are as follows:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2025 |  | 2024 |  | 2025 |  | 2024
Revenues: |  |  |  |  |  |  |  |
Revenues from company-owned or managed clinics |  | $ | 16,642,013 |  |  | $ | 17,650,525 |  |  | $ | 33,548,363 |  |  | $ | 35,187,976 |
Total revenues |  | 16,642,013 |  |  | 17,650,525 |  |  | 33,548,363 |  |  | 35,187,976 |
Cost of revenues: |  |  |  |  |  |  |  |
IT cost of revenues |  | 5,551 |  |  | 14,282 |  |  | 11,723 |  |  | 25,846 |
Total cost of revenues |  | 5,551 |  |  | 14,282 |  |  | 11,723 |  |  | 25,846 |
Selling and marketing expenses |  | 1,825,654 |  |  | 1,961,443 |  |  | 3,718,400 |  |  | 3,609,974 |
Depreciation and amortization |  | 17,120 |  |  | 1,181,359 |  |  | 43,505 |  |  | 2,255,631 |
General and administrative expenses |  | 11,857,995 |  |  | 14,777,444 |  |  | 24,128,217 |  |  | 27,701,829 |
Total selling, general and administrative expenses |  | 13,700,769 |  |  | 17,920,246 |  |  | 27,890,122 |  |  | 33,567,434 |
Net loss on disposition or impairment from discontinued operations |  | 1,752,494 |  |  | 1,434,658 |  |  | 2,885,852 |  |  | 1,796,486 |
Income (loss) from discontinued operations |  | 1,183,199 |  |  | (1,718,661) |  |  | 2,760,666 |  |  | (201,790) |
Other expense, net |  | — |  |  | 561 |  |  | 238 |  |  | 1,189 |
Income (loss) before income tax expense |  | 1,183,199 |  |  | (1,719,222) |  |  | 2,760,428 |  |  | (202,979) |
Income tax expense from discontinued operations |  | 100,201 |  |  | 167,153 |  |  | 203,613 |  |  | 337,498 |
Net income (loss) from discontinued operations |  | $ | 1,082,998 |  |  | $ | (1,886,375) |  |  | $ | 2,556,815 |  |  | $ | (540,477) |
The following table summarizes the major classes of assets and liabilities of discontinued operations that were included in the Company’s condensed consolidated balance sheets:
|  | June 30, 2025 |  | December 31, 2024
ASSETS |  |  |  |
Accounts receivable |  | $ | 674,573 |  |  | $ | 2,484,248 |
Prepaid expenses and other current assets |  | 1,375,346 |  |  | 549,605 |
Assets held for sale |  | 22,692,768 |  |  | 38,395,986 |
Property and equipment, net |  | 156,288 |  |  | 208,074 |
Deferred tax assets (attributable to VIEs) |  | 1,087,204 |  |  | 1,087,204 |
Deposits and other assets |  | 303,506 |  |  | 425,938 |
Total assets, discontinued operations |  | $ | 26,289,685 |  |  | $ | 43,151,055 |
LIABILITIES |  |  |  |
Accounts payable |  | $ | 144,560 |  |  | $ | 67,107 |
Accrued expenses |  | 2,329,986 |  |  | 5,066,941 |
Payroll liabilities ($0.7 million and $0.9 million attributable to VIEs, respectively) |  | 2,045,251 |  |  | 2,333,335 |
Operating lease liability, current portion |  | 286,324 |  |  | 153,517 |
Finance lease liability, current portion |  | — |  |  | 38,015 |
Other current liabilities (attributable to VIEs) |  | 1,079,442 |  |  | 1,079,441 |
Liabilities to be disposed of ($4.8 million and $5.2 million attributable to VIEs, respectively) |  | 19,492,223 |  |  | 28,629,103 |
Total liabilities, discontinued operations |  | $ | 25,377,786 |  |  | $ | 37,367,459 |
The key components of cash flows from discontinued operations are as follows:
|  |  |  | Six Months Ended June 30,
|  |  |  |  |  | 2025 |  | 2024
Depreciation and amortization |  |  |  |  |  | $ | 43,505 |  |  | $ | 2,255,631 |
Capital expenditures |  |  |  |  |  |  |  |
Purchase of property and equipment |  |  |  |  |  | 73,535 |  |  | 245,486 |
Significant operating and investing non-cash items |  |  |  |  |  |  |  |
Net loss on disposition or impairment |  |  |  |  |  | 2,885,852 |  |  | 1,796,486 |
The clustered clinics are in varying stages of sales negotiations with approximately all of the Company’s corporate clinic portfolio expected to be recognized as a completed sale within one year with an estimated fair value of $6.4 million at June 30, 2025. Effective with the designation as held for sale, the Company discontinued recording depreciation on property and equipment, net, amortization of intangible assets, net and amortization of ROU assets for the clinics as required by GAAP. The Company reported the related assets and liabilities of the clinics as held for sale as discontinued operations in its June 30, 2025 and December 31, 2024 condensed consolidated balance sheets. Long-lived assets that meet the criteria for the held for sale designation are reported at the lower of their carrying value or fair value less estimated cost to sell. As a result of its evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the clinics estimated fair values, the Company recorded an estimated loss on disposal of $0.4 million and $0.5 million for the three months ended June 30, 2025 and 2024, respectively, and an estimated loss of $1.4 million and $0.7 million for the six months ended June 30, 2025 and 2024, respectively. A valuation allowance of $5.7 million and $5.1 million was included in discontinued operations current assets in its condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024, respectively. During the six months ended June 30, 2025, in connection with the sale of company-owned or managed clinics classified as held for sale as of December 31, 2024 for a combined sales price of $7.8 million, the Company sold $16.1 million assets held for sale, net of a valuation allowance of $1.0 million and $7.2 million of liabilities to be disposed of in the consolidated balance sheets as of December 31, 2024. As a result of the sales, the Company incurred $0.4 million in selling costs and recorded a loss of $0.6 million included in Income from discontinued operations before income tax expense on the condensed consolidated income statement for the six months ended June 30, 2025. The principal components of the held for sale assets and liabilities to be disposed of as of June 30, 2025 and December 31, 2024 were as follows:
| June 30, 2025 |  | December 31, 2024
Assets |  |  |
Contract assets | $ | 1,220,767 |  |  | $ | — |
Property and equipment, net | 4,938,413 |  |  | 8,457,627 |
Operating lease right-of-use asset | 14,184,353 |  |  | 19,643,917 |
Intangible assets, net | 4,518,833 |  |  | 6,906,807 |
Goodwill | 3,482,718 |  |  | 8,459,238 |
Valuation allowance | (5,652,316) |  |  | (5,071,603) |
Total assets held for sale | $ | 22,692,768 |  |  | $ | 38,395,986 |
Liabilities |  |  |
Operating lease liability, current and non-current | $ | 13,970,185 |  |  | $ | 20,526,714 |
Deferred revenue from company-owned or managed clinics | 5,522,038 |  |  | 8,102,389 |
Total liabilities to be disposed of | $ | 19,492,223 |  |  | $ | 28,629,103 |
The pre-tax income of the clinics designated as held for sale was $1.3 million and $0.7 million for the three months ended June 30, 2025 and 2024, respectively, the results of which exclude the allocation of overhead. The pre-tax income of the clinics designated as held for sale was $2.2 million and $2.2 million for the six months ended June 30, 2025 and 2024, respectively, the results of which exclude the allocation of overhead.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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