XML 20 R9.htm IDEA: XBRL DOCUMENT
v3.26.1

Divestitures | 3 Months Ended
--- | ---
Mar. 31, 2026
Discontinued Operations and Disposal Groups [Abstract] |
Divestitures | Divestitures Corporate Clinic Segment Divestiture In 2023, we initiated plans to refranchise the majority of our company-owned or managed clinics with plans to retain a small portion of high-performing clinics. During the third quarter of 2024, we 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 we have formalized a plan to sell our entire corporate clinic reportable segment, we have concluded that the overall refranchising plan represents a strategic shift that will have a major effect on our operations and financial results. Since 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 our 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, we elected not to adjust the condensed consolidated statements of cash flows for the three months ended March 31, 2026 and 2025 to exclude cash flows attributable to discontinued operations. Accordingly, we 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 our condensed consolidated income statements are as follows:
|  | Three Months Ended March 31, |  |
|  | 2026 |  | 2025 |  |  |  |
Revenues: |  |  |  |  |  |  |  |
Revenues from company-owned or managed clinics |  | $ | 9,354,191 |  |  | $ | 16,906,350 |  |  |  |  |
Total revenues |  | 9,354,191 |  |  | 16,906,350 |  |  |  |  |
Cost of revenues: |  |  |  |  |  |  |  |
IT cost of revenues |  | 6,181 |  |  | 6,172 |  |  |  |  |
Total cost of revenues |  | 6,181 |  |  | 6,172 |  |  |  |  |
Selling and marketing expenses |  | 1,007,302 |  |  | 1,892,746 |  |  |  |  |
Depreciation and amortization |  | 7,757 |  |  | 26,386 |  |  |  |  |
General and administrative expenses |  | 7,564,501 |  |  | 12,270,222 |  |  |  |  |
Total selling, general and administrative expenses |  | 8,579,560 |  |  | 14,189,354 |  |  |  |  |
Net loss on disposition or impairment from discontinued operations |  | 377,764 |  |  | 1,133,357 |  |  |  |  |
Income from discontinued operations |  | 390,686 |  |  | 1,577,467 |  |  |  |  |
Other expense, net |  | 11,973 |  |  | 238 |  |  |  |  |
Income before income tax expense |  | 378,713 |  |  | 1,577,229 |  |  |  |  |
Income tax expense from discontinued operations |  | 182,369 |  |  | 103,412 |  |  |  |  |
Net income from discontinued operations |  | $ | 196,344 |  |  | $ | 1,473,817 |  |  |  |  |
The following table summarizes the major classes of assets and liabilities of discontinued operations that were included in our condensed consolidated balance sheets:
|  | March 31, 2026 |  | December 31, 2025
ASSETS |  |  |  |
Accounts receivable |  | $ | 275,679 |  |  | $ | 315,201 |
Prepaid expenses and other current assets |  | 170,177 |  |  | 581,504 |
Assets held for sale, net of valuation allowance |  | 20,083,666 |  |  | 20,051,965 |
Property and equipment, net |  | 15,052 |  |  | 67,779 |
Deferred tax assets (attributable to VIEs) |  | 994,138 |  |  | 994,138 |
Deposits and other assets |  | 235,870 |  |  | 235,731 |
Total assets, discontinued operations |  | $ | 21,774,582 |  |  | $ | 22,246,318 |
LIABILITIES |  |  |  |
Accounts payable |  | $ | 32,098 |  |  | $ | 83,503 |
Accrued expenses |  | 2,934,669 |  |  | 2,519,433 |
Payroll liabilities ($0.4 million and $0.6 million attributable to VIEs, respectively) |  | 826,461 |  |  | 988,865 |
Operating lease liability, current portion |  | 604,826 |  |  | 651,844 |
Other current liabilities (attributable to VIEs) |  | 756,483 |  |  | 756,483 |
Liabilities to be disposed of ($4.7 million and $4.7 million attributable to VIEs, respectively) |  | 16,044,023 |  |  | 16,368,318 |
Total liabilities, discontinued operations |  | $ | 21,198,560 |  |  | $ | 21,368,446 |
The key components of cash flows from discontinued operations are as follows:
|  |  |  | Three Months Ended March 31,
|  |  |  |  |  | 2026 |  | 2025
Significant operating and investing non-cash items: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  |  |  |  | $ | 7,757 |  |  | $ | 26,386 |
Net loss on disposition or impairment |  |  |  |  |  | 377,764 |  |  | 1,133,357 |
Capital expenditures: |  |  |  |  |  |  |  |
Purchase of property and equipment |  |  |  |  |  | — |  |  | 66,656 |
The clustered clinics are in varying stages of sales negotiations with approximately all of the company-owned or managed clinics expected to be recognized as a completed sale within one year with an estimated fair value of $2.2 million at March 31, 2026. Effective with the designation as held for sale, we 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. We reported the related assets and liabilities of the clinics as held for sale as discontinued operations in our March 31, 2026 and December 31, 2025 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 our evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the clinics estimated fair values, we recorded an estimated loss on disposal of $0.4 million and $1.0 million for the three months ended March 31, 2026 and 2025, respectively. A valuation allowance of $6.7 million and $6.3 million was included in discontinued operations current assets in our condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025, respectively. On December 5, 2025, we entered into an Asset Purchase Agreement, pursuant to which we will sell the assets of, and grant franchise rights to, 22 company-owned or managed clinics located in Virginia, North Carolina and South Carolina for an aggregate purchase price of approximately $1.5 million, subject to certain adjustments. In mid-December 2025, the buyers assumed business operations under Management Service Agreements that will remain in effect until lease reassignments are completed to permit ownership transfer, for which the buyers receive a management fee in consideration for providing management services. As of March 31, 2026, the transaction had not officially closed and therefore, the net assets and liabilities of the clinics remain in our consolidated balance sheets. During the three months ended March 31, 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 $0.1 million, we sold $0.5 million assets held for sale and $0.5 million of liabilities to be disposed of in the consolidated balance sheets as of December 31, 2024. As a result of the sales, we recorded a gain of $0.1 million included in Income from discontinued operations before income tax expense in the condensed consolidated income statement for the three months ended March 31, 2025. The principal components of the held for sale assets and liabilities to be disposed of as of March 31, 2026 and December 31, 2025 were as follows:
| March 31, 2026 |  | December 31, 2025
Assets: |  |  |
Property and equipment, net | $ | 4,496,729 |  |  | $ | 4,497,545 |
Operating lease right-of-use asset | 14,551,830 |  |  | 14,111,081 |
Intangible assets, net | 4,288,265 |  |  | 4,288,265 |
Goodwill | 3,482,718 |  |  | 3,482,718 |
Valuation allowance | (6,735,876) |  |  | (6,327,644) |
Total assets held for sale, net | $ | 20,083,666 |  |  | $ | 20,051,965 |
Liabilities: |  |  |
Operating lease liability, current and non-current | $ | 10,656,341 |  |  | $ | 11,065,542 |
Deferred revenue from company-owned or managed clinics | 5,387,682 |  |  | 5,302,776 |
Total liabilities to be disposed of | $ | 16,044,023 |  |  | $ | 16,368,318 |
The pre-tax income of the clinics designated as held for sale as of March 31, 2026 was $0.6 million and $1.1 million for the three months ended March 31, 2026 and 2025, respectively, the results of which exclude the allocation of overhead. The pre-tax income for the three months ended March 31, 2026 was impacted by the management fees for the 22 company-owned or managed clinics as noted above.

X
- References No definition available. + Details
Name: | us-gaap_DiscontinuedOperationsAndDisposalGroupsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration