Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

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Commitments and Contingencies
 6 Months Ended
Jun. 30, 2024
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 six months ended June 30, 2024 and 2023:

Line Item in the
Company’s Condensed Consolidated
Income Statements		 Three Months Ended
June 30, 2024		 Three Months Ended
June 30, 2023		 Six Months Ended
June 30, 2024		 Six Months Ended
June 30, 2023
Finance lease costs:
Amortization of assets Depreciation and amortization $ 7,570  $ 7,570  $ 15,140  $ 15,139 
Interest on lease liabilities Other income (expense), net 561  825  1,189  1,713 
Total finance lease costs 8,131  8,395  16,329  16,852 
Operating lease costs General and administrative expenses 1,035,959  1,639,749  2,077,415  3,253,595 
Total lease costs $ 1,044,090  $ 1,648,144  $ 2,093,744  $ 3,270,447 
Supplemental information and balance sheet location related to leases (excluding amounts related to leases classified as held for sale) was as follows:
June 30, 2024 December 31, 2023
Operating Leases:
Operating lease right-of -use asset $11,859,692 $12,413,221
Operating lease liability - current portion $3,811,835 $3,756,328
Operating lease liability - net of current portion 10,205,222 10,914,997
Total operating lease liability $14,017,057 $14,671,325
Finance Leases:
Property and equipment, at cost $151,396 $151,396
Less accumulated amortization (133,071) (117,932)
Property and equipment, net $18,325 $33,464
Finance lease liability - current portion 26,038 25,491
Finance lease liability - net of current portion 24,858 38,016
Total finance lease liabilities $50,896 $63,507
Weighted average remaining lease term (in years):
Operating leases 4.7 4.8
Finance lease 1.9 2.4
Weighted average discount rate:
Operating leases 5.5  % 5.4  %
Finance leases 4.3  % 4.3  %
Supplemental cash flow information related to leases was as follows:
Six Months Ended
June 30, 2024		 Six Months Ended
June 30, 2023
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases $ 2,380,024  $ 3,465,890 
Operating cash flows from finance leases 1,189  1,713 
Financing cash flows from finance leases 12,610  12,087 
Non-cash transactions: ROU assets obtained in exchange for lease liabilities
Operating lease $ 1,216,902  $ 3,859,696 
Finance lease —  — 
Maturities of lease liabilities as of June 30, 2024 are as follows:
Operating Leases Finance Lease
2024 (remainder) $ 2,264,595  $ 13,800 
2025 4,304,571  27,600 
2026 2,962,306  11,500 
2027 2,277,031  — 
2028 1,507,778  — 
Thereafter 2,654,183  — 
Total lease payments $ 15,970,464  $ 52,900 
Less: Imputed interest (1,953,407) (2,004)
Total lease obligations 14,017,057  50,896 
Less: Current obligations (3,811,835) (26,038)
Long-term lease obligation $ 10,205,222  $ 24,858 
During the second quarter of 2024, the Company held an operating lease that has not yet commenced for space to be used by the Company’s new corporate clinic. The lease is expected to result in additional ROU assets and liabilities of approximately $0.6 million. This lease is expected to commence during the fourth quarter of 2024, with a lease term of ten years.
Guarantee in Connection with the Sale of the Divested Business
In connection with the sale of a company-managed clinic in 2022, the Company guaranteed one future operating lease commitment assumed by the buyers. The Company is obligated to perform under the guarantee if the buyers fail to perform under the lease agreement at any time during the remainder of the lease agreement, which expires on May 31, 2027. At the date of sale, the undiscounted maximum potential future payments totaled $0.2 million. As of June 30, 2024, the undiscounted remaining lease payments under the agreement totaled $0.2 million. The Company had not recorded a liability with respect to the guarantee obligation as of June 30, 2024, 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. During the three and six months ended June 30, 2024, the Company incurred litigation expenses, including settlement costs related to employment matters that were outside the normal course of business of $1.5 million included as general and administrative expenses on the condensed consolidated income statement.