Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

v3.22.2.2
Commitments and Contingencies
9 Months Ended
Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Leases
The table below summarizes the components of lease expense and income statement location for the three and nine months ended September 30, 2022 and 2021:

Line Item in the
Company’s Condensed Consolidated
Income Statements
Three Months Ended
September 30, 2022
Three Months Ended
September 30, 2021
Nine Months Ended
September 30, 2022
Nine Months Ended
September 30, 2021
Finance lease costs:
Amortization of assets Depreciation and amortization $ 7,570  $ 21,797  $ 48,001  $ 63,506 
Interest on lease liabilities Other expense, net 1,015  2,132  3,564  7,225 
Total finance lease costs 8,585  23,929  51,565  70,731 
Operating lease costs General and administrative expenses 1,426,010  $ 1,201,547  4,138,801  $ 3,221,145 
Total lease costs $ 1,434,595  $ 1,225,476  $ 4,190,366  $ 3,291,876 
Supplemental information and balance sheet location related to leases (excluding amounts related to leases classified as held for sale) is as follows:
September 30, 2022 December 31, 2021
Operating Leases:
Operating lease right-of -use asset $19,046,081 $18,425,914
Operating lease liability - current portion $4,969,470 $4,613,843
Operating lease liability - net of current portion 17,427,096 16,872,093
Total operating lease liability $22,396,566 $21,485,936
Finance Leases:
Property and equipment, at cost $151,396 $267,252
Less accumulated amortization (80,083) (147,937)
Property and equipment, net $71,313 $119,315
Finance lease liability - current portion 24,175 49,855
Finance lease liability - net of current portion 69,713 87,939
Total finance lease liabilities $93,888 $137,794
Weighted average remaining lease term (in years):
Operating leases 5.4 5.4
Finance lease 3.6 3.6
Weighted average discount rate:
Operating leases 4.5  % 4.6  %
Finance leases 4.3  % 4.8  %
Supplemental cash flow information related to leases is as follows:
Nine Months Ended
September 30, 2022
Nine Months Ended
September 30, 2021
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases $ 4,309,229  $ 3,069,797 
Operating cash flows from finance leases 3,564  7,225 
Financing cash flows from finance leases 43,907  59,285 
Non-cash transactions: ROU assets obtained in exchange for lease liabilities
Operating lease $ 4,402,229  $ 6,232,875 
Finance lease —  15,140 
`
Maturities of lease liabilities as of September 30, 2022 were as follows:
Operating Leases Finance Lease
2022 (remainder) $ 1,520,692  $ 6,900 
2023 5,661,042  27,600 
2024 5,051,926  27,600 
2025 4,589,077  27,600 
2026 2,768,973  11,500 
Thereafter 5,537,408  — 
Total lease payments $ 25,129,118  $ 101,200 
Less: Imputed interest (2,732,552) (7,312)
Total lease obligations 22,396,566  93,888 
Less: Current obligations (4,969,470) (24,175)
Long-term lease obligation $ 17,427,096  $ 69,713 
During the second quarter of 2022, the Company entered into various operating leases that have not yet commenced for spaces to be used by the Company’s new corporate clinics. These leases are expected to result in additional ROU assets and liabilities of approximately $1.5 million. These leases are expected to commence during the last quarter of 2022 and the first quarter of 2023, with lease terms of five to ten years.
Guarantees in Connection with the Sale of the Divested Business
In connection with the sale of a corporate managed clinic, the Company guaranteed a future operating lease commitment assumed by the buyer. The Company is obligated to perform under the guarantee if the buyer fails to perform under the lease agreement at any time during the remainder of the lease agreement, which expires on May 31, 2027. As of September 30, 2022, the undiscounted maximum potential future payments under the lease guarantee were $247,296. During the nine months ended September 30, 2022, the buyer had performed under the lease agreement. The Company has not recorded a liability with respect to the guarantee obligation as of September 30, 2022, as the Company concluded that payment under the lease guarantee was not probable.
Litigation
In the normal course of business, the Company is party to litigation and claims from time to time. The Company maintains insurance to cover certain litigation and claims.