Annual report pursuant to Section 13 and 15(d)

Intangible Assets and Goodwill

v3.22.4
Intangible Assets and Goodwill
12 Months Ended
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Goodwill Intangible Assets and Goodwill
On March 18, 2022, the Company entered into an agreement under which the Company repurchased the right to develop franchises in various counties in New Jersey. The total consideration for the transaction was $0.3 million. The Company carried a deferred revenue balance associated with this transaction of $0.1 million, representing the unrecognized fee collected upon the execution of the regional developer agreement. The Company accounted for the termination of development rights associated with unsold or undeveloped franchises as a cancellation, and the associated deferred revenue was netted against the aggregate purchase price. The Company recognized the net amount of $0.2 million as reacquired development rights on March 18, 2022, which is amortized over the remaining original contract period of approximately 5.5 years.
On April 1, 2022, the Company entered into an agreement under which the Company repurchased the right to develop franchises in various counties in California. The total consideration for the transaction was $2.4 million. The Company carried a deferred revenue balance associated with this transaction of $0.4 million, representing the unrecognized fee collected upon the execution of the regional developer agreement. The Company accounted for the termination of development rights associated with unsold or undeveloped franchises as a cancellation, and the associated deferred revenue was netted against the aggregate purchase price. The Company recognized the net amount of $2.0 million as reacquired development rights on April 1, 2022, which is amortized over the remaining original contract period of approximately 5.3 years.
On October 12, 2022, the Company entered into an agreement under which the Company repurchased the right to develop franchises in various counties in Philadelphia. The total consideration for the transaction was $0.2 million. The Company carried a deferred revenue balance associated with this transaction of $0.2 million, representing the unrecognized fee collected upon the execution of the regional developer agreement. The Company accounted for the termination of development rights associated with unsold or undeveloped franchises as a cancellation, and the associated deferred revenue was netted against the aggregate purchase price. The Company recognized the net amount of $48,882 as reacquired development rights on October 12, 2022, which is amortized over the remaining original contract period of approximately 4.2 years.

During 2022, the Company recognized $6.1 million, $1.7 million, and $0.9 million of reacquired franchise rights, customer relationships, and assembled workforce, respectively, from the acquisitions (reference Note 3). Intangible assets consisted of the following:
December 31, 2022
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Value
Intangible assets subject to amortization:
Reacquired franchise rights $ 12,881,895  $ 4,755,286  $ 8,126,609 
Customer relationships 4,330,365  2,352,500  1,977,865 
Reacquired development rights 6,652,186  4,712,953  1,939,233 
Assembled workforce 959,837  136,015  823,822 
$ 24,824,283  $ 11,956,754  $ 12,867,529 
December 31, 2021
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Value
Intangible assets subject to amortization:
Reacquired franchise rights $ 6,795,865  $ 3,153,037  $ 3,642,828 
Customer relationships 2,603,006  1,587,443  1,015,563 
Reacquired development rights 4,406,221  3,715,594  690,627 
Assembled workforce 59,311  4,939  54,372 
$ 13,864,403  $ 8,461,013  $ 5,403,390 
The following is the weighted average amortization period for the Company's intangible assets:
Amortization (Years)
Reacquired franchise rights 5.8
Customer relationships 2.6
Reacquired development rights 4.0
Assembled workforce 2.0
     All intangible assets 4.6
Amortization expense related to the Company’s intangible assets was $3,495,739 and $3,673,950 for the years ended December 31, 2022 and 2021, respectively.
Estimated amortization expense for 2023 and subsequent years is as follows:
2023 $ 4,080,779 
2024 3,006,408 
2025 1,970,149 
2026 1,653,049 
2027 888,625 
Thereafter 1,268,519 
Total $ 12,867,529 

The changes in the carrying amount of goodwill were as follows:

Corporate Clinic Segment
Balance as of December 31, 2021
Goodwill, gross $ 5,140,197 
Accumulated impairment losses (54,994)
Goodwill, net 5,085,203 
2022 acquisition 3,408,204 
Balance as of December 31, 2022
Goodwill, gross 8,548,401
Accumulated impairment losses (54,994)
Goodwill, net $ 8,493,407