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Divestitures | 6 Months Ended
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Jun. 30, 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 statements of operations and condensed consolidated balance sheets. As permitted, we elected not to adjust the condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025 to separately present 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 statements of operations are as follows:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2026 |  | 2025 |  | 2026 |  | 2025
Revenues: |  |  |  |  |  |  |  |
Revenues from company-owned or managed clinics |  | $ | 7,591,917 |  |  | $ | 16,642,013 |  |  | $ | 16,946,108 |  |  | $ | 33,548,363 |
Total revenues |  | 7,591,917 |  |  | 16,642,013 |  |  | 16,946,108 |  |  | 33,548,363 |
Cost of revenues: |  |  |  |  |  |  |  |
IT cost of revenues |  | 4,906 |  |  | 5,551 |  |  | 11,087 |  |  | 11,723 |
Total cost of revenues |  | 4,906 |  |  | 5,551 |  |  | 11,087 |  |  | 11,723 |
Selling and marketing expenses |  | 733,897 |  |  | 1,825,654 |  |  | 1,741,199 |  |  | 3,718,400 |
Depreciation and amortization |  | 1,690 |  |  | 17,120 |  |  | 9,447 |  |  | 43,505 |
General and administrative expenses |  | 5,133,125 |  |  | 11,857,995 |  |  | 12,697,626 |  |  | 24,128,217 |
Total selling, general and administrative expenses |  | 5,868,712 |  |  | 13,700,769 |  |  | 14,448,272 |  |  | 27,890,122 |
Net loss on disposition or impairment from discontinued operations |  | 816,466 |  |  | 1,752,494 |  |  | 1,194,230 |  |  | 2,885,852 |
Income from discontinued operations |  | 901,833 |  |  | 1,183,199 |  |  | 1,292,519 |  |  | 2,760,666 |
Other expense, net |  | 44 |  |  | — |  |  | 12,017 |  |  | 238 |
Income before income tax expense |  | 901,789 |  |  | 1,183,199 |  |  | 1,280,502 |  |  | 2,760,428 |
Income tax (benefit) expense from discontinued operations |  | (2,559) |  |  | 100,201 |  |  | 179,810 |  |  | 203,613 |
Net income from discontinued operations |  | $ | 904,348 |  |  | $ | 1,082,998 |  |  | $ | 1,100,692 |  |  | $ | 2,556,815 |
The following table summarizes the major classes of assets and liabilities of discontinued operations that were included in our condensed consolidated balance sheets:
|  | June 30, 2026 |  | December 31, 2025
ASSETS |  |  |  |
Restricted cash |  | $ | 824,163 |  |  | $ | — |
Accounts receivable |  | 181,144 |  |  | 315,201 |
Prepaid expenses and other current assets |  | 253,803 |  |  | 581,504 |
Assets held for sale, net of valuation allowance |  | 12,280,539 |  |  | 20,051,965 |
Property and equipment, net |  | — |  |  | 67,779 |
Deferred tax assets (attributable to VIEs) |  | 994,138 |  |  | 994,138 |
Deposits and other assets |  | 227,194 |  |  | 235,731 |
Total assets, discontinued operations |  | $ | 14,760,981 |  |  | $ | 22,246,318 |
LIABILITIES |  |  |  |
Accounts payable |  | $ | 26,981 |  |  | $ | 83,503 |
Accrued expenses |  | 2,870,060 |  |  | 2,519,433 |
Payroll liabilities ($0.1 million and $0.6 million attributable to VIEs, respectively) |  | 345,312 |  |  | 988,865 |
Operating lease liability, current portion |  | 5,424 |  |  | 651,844 |
Other current liabilities ($0.8 million attributable to VIEs) |  | 1,580,646 |  |  | 756,483 |
Liabilities to be disposed of ($2.3 million and $4.7 million attributable to VIEs, respectively) |  | 9,351,816 |  |  | 16,368,318 |
Total liabilities, discontinued operations |  | $ | 14,180,239 |  |  | $ | 21,368,446 |
The key components of cash flows from discontinued operations are as follows:
|  |  |  | Six Months Ended June 30,
|  |  |  |  |  | 2026 |  | 2025
Significant operating and investing non-cash items: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  |  |  |  | $ | 9,447 |  |  | $ | 43,505 |
Net loss on disposition or impairment |  |  |  |  |  | 1,194,230 |  |  | 2,885,852 |
Capital expenditures: |  |  |  |  |  |  |  |
Purchase of property and equipment |  |  |  |  |  | 15,753 |  |  | 73,535 |
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 $1.5 million at June 30, 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 June 30, 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 $1.4 million and $0.4 million for the three months ended June 30, 2026 and 2025, respectively, and an estimated loss of $1.8 million and $1.4 million for the six months ended June 30, 2026 and 2025, respectively. A valuation allowance of $7.3 million and $6.3 million was included in discontinued operations current assets in our condensed consolidated balance sheets as of June 30, 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. During the quarter ended June 30, 2026, we closed on the sale of one clinic included in the transaction. As of June 30, 2026, the transaction as a whole had not officially closed and therefore, the net assets and liabilities of the remaining clinics remain in our consolidated balance sheets. On April 20, 2026, we entered into an Asset Purchase Agreement (the “Elite Chiro Group Purchase Agreement”) with Elite Chiro Group, a California corporation (“Elite Chiro Group”), as buyer, pursuant to which we will sell to Elite Chiro Group the assets of, and grant franchise rights to, 45 company-owned or managed clinics located in Southern California (the “Elite Chiro Group Transaction”) for an aggregate purchase price of $2.3 million, subject to certain adjustments (the “Purchase Price”). The Purchase Price includes prorated franchise fees pursuant to 45 separate franchise agreements to be entered into between us and Elite Chiro Group and the non-exclusive development rights for 10 clinics to be developed in the metropolitan statistical areas of a development area to be agreed upon by us and Elite Chiro Group in accordance with the schedule set forth in the Elite Chiro Group Purchase Agreement. On April 27, 2026, we closed on the sale of 13 clinics included in the Elite Chiro Group Transaction, at which time ownership of such clinics transferred to Elite Chiro Group. On April 27, 2026, Elite Chiro Group also assumed business operations for the remaining 32 clinics included in the Elite Chiro Group Transaction pursuant to a Management Service Agreement. In May and June 2026, we closed on the sale of 15 additional clinics included in the Elite Chiro Group Transaction. As of June 30, 2026, the Elite Chiro Group Transaction as a whole had not officially closed and therefore, the net assets and liabilities of the remaining clinics remain in our consolidated balance sheets. During the six months ended June 30, 2026, in connection with the sale of company-owned or managed clinics classified as held for sale as of December 31, 2025 for a combined sales price of $1.2 million, we sold $6.4 million of assets held for sale and $5.5 million of liabilities to be disposed of in the consolidated balance sheets as of December 31, 2025. As a result of the sales, we incurred $75 thousand in selling costs and recorded a gain of $297 thousand included in Income from discontinued operations before income tax expense in the condensed consolidated statements of operations for the six months ended June 30, 2026. 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, we sold $16.1 million of 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, we 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 in the condensed consolidated statements of operations 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, 2026 and December 31, 2025 were as follows:
| June 30, 2026 |  | December 31, 2025
ASSETS |  |  |
Property and equipment, net | $ | 3,139,305 |  |  | $ | 4,497,545 |
Operating lease right-of-use asset | 9,313,107 |  |  | 14,111,081 |
Intangible assets, net | 4,195,177 |  |  | 4,288,265 |
Goodwill | 2,927,597 |  |  | 3,482,718 |
Valuation allowance | (7,294,647) |  |  | (6,327,644) |
Total assets held for sale, net | $ | 12,280,539 |  |  | $ | 20,051,965 |
LIABILITIES |  |  |
Operating lease liability, current and non-current | $ | 6,422,252 |  |  | $ | 11,065,542 |
Deferred revenue from company-owned or managed clinics | 2,929,564 |  |  | 5,302,776 |
Total liabilities to be disposed of | $ | 9,351,816 |  |  | $ | 16,368,318 |
The pre-tax income of the clinics designated as held for sale as of June 30, 2026 was $0.7 million and $0.8 million for the three months ended June 30, 2026 and 2025, respectively, the results of which exclude the allocation of overhead. The pre-tax income of the clinics designated as held for sale as of June 30, 2026 was $0.9 million and $1.3 million for the six months ended June 30, 2026 and 2025, respectively, the results of which exclude the allocation of overhead. The pre-tax income for the three and six months ended June 30, 2026 was impacted by the management fees for the 54 company-owned or managed clinics as noted above.

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