Quarterly report [Sections 13 or 15(d)]

Segment Reporting

v3.25.1
Segment Reporting
 3 Months Ended
Mar. 31, 2025
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the CODM to evaluate performance and make operating decisions. The Company has identified its CODM as the Chief Executive Officer.
Historically, the Company had two operating business segments: (1) Corporate Clinics, and (2) Franchise Operations. The Corporate Clinics segment is comprised of the activities of the company-owned or managed clinics. In the fourth quarter of 2024, as part of the Company’s refranchising strategy, the entire Corporate Clinic segment met the criteria to be reported as discontinued operations as of December 31, 2024 (Refer to Note 3, Divestitures for financial information on the discontinued operating Corporate Clinics segment). Therefore, since December 31, 2024, the Company has one reportable segment: Franchise Operations. In accordance with ASC 205-20, Discontinued Operations, expenses that in prior periods were partially allocated to the Corporate Clinic segment that are not wholly related to the activity of the segment have been recast to be presented in
continuing operations, which is now Franchise Operations. Additionally, any expenses previously identified as Corporate Unallocated have been allocated entirely to the Franchise Operations segment.
The Franchise Operations segment is comprised of the operating activities of the franchise business unit. The Franchise Operations segment derives revenue primarily from customers by providing access to the Company’s franchise license, which represents symbolic intellectual property (See Note 2, Revenue Disclosures for additional details). The Franchise Operations segment is managed on a consolidated basis because all operations are located within a similar economic and regulatory environment, provide the same services and share the same business model and pricing strategies. As of March 31, 2025, the franchise system consisted of 847 clinics in operation. The accounting policies for the franchise segment are the same as those described in Note 1, Nature of Operations and Summary of Significant Accounting Policies. The CODM uses Net Income, Gross Profit, Operating Income, and Adjusted EBITDA as metrics in assessing performance and determining how to allocate resources. Net Income, Gross Profit, and Operating Income are reported on the Consolidated Income Statement. Adjusted EBITDA is presented in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Financial Measures and is reconciled back to consolidated net income (loss) from continuing operations on the consolidated income statement. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM uses these financial measures to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits in the Franchise Segment or into other parts of the entity, such as new products or services, new geographic territories, acquisitions or reacquisitions, or stock buybacks. Net Income and Adjusted EBITDA are used to monitor budget verses actual results. The CODM also uses Net Income and Adjusted EBITDA in conjunction with certain non-financial metrics in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with the monitoring of budgeted verses actual results are used in assessing performance of the segment and in establishing management’s compensation.
The following table summarizes total revenue and significant expense categories and amounts for the Company's reportable segment that aligns with the segment level information that is regularly provided to the CODM:
Three Months Ended
March 31,
2025 2024
Revenue $ 13,077,590  $ 12,184,716 
Less:
Franchise and regional developer cost of revenues $ 2,551,235  $ 2,341,765 
IT cost of revenues 420,891  362,747 
Selling and marketing expenses 3,505,150  2,237,583 
Adjusted General and administrative expenses $ 6,553,920  $ 6,817,913 
Stock compensation expense $ 293,941  $ 493,395 
Other segment items, net (a)
$ (116,860) $ (7,984)
Depreciation and amortization expense $ 361,930  $ 329,634 
Income tax expense $ 13,404  $ 8,582 
Segment Loss $ (506,021) $ (398,919)
Reconciliation of loss
Consolidated Net loss from continuing operations $ (506,021) $ (398,919)
Net income from discontinued operations after income tax expense 1,307,451  1,345,898 
Net income $ 801,430  $ 946,979 

(a) Other segment items, net includes Other (income) loss, net, Acquisition related expenses, Net loss on disposition or impairment, Costs related to restatement filings, and Restructuring costs.