The Joint Corp. Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

Divestitures

Divestitures

9 Months Ended

Sep. 30, 2025

Discontinued Operations and Disposal Groups [Abstract]

Corporate Clinic Segment Divestiture

In 2023, the Company initiated plans to refranchise the majority of its company-owned or managed clinics with plans to retain a small portion of high-performing clinics. During the third quarter of 2024, the Company 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 the Company has formalized a plan to sell its entire corporate clinic reportable segment, the Company has concluded that the overall refranchising plan represents a strategic shift that will have a major effect on the Company’s operations and financial results.

As of 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 the Company’s 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 income statements and condensed consolidated balance sheets. As permitted, the Company elected not to adjust the condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024 to exclude cash flows attributable to discontinued operations. Accordingly, the Company 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 (loss) from discontinued operations that were included in the Company’s condensed consolidated income statements are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Revenues:
Revenues from company-owned or managed clinics	$	10,520,596	$	17,544,094	$	44,068,960	$	52,732,070
Total revenues	10,520,596		17,544,094		44,068,960		52,732,070
Cost of revenues:
IT cost of revenues	4,181		8,304		15,906		34,150
Total cost of revenues	4,181		8,304		15,906		34,150
Selling and marketing expenses	1,012,959		2,258,227		4,731,358		5,868,201
Depreciation and amortization	16,310		893,398		59,815		3,149,029
General and administrative expenses	7,942,168		13,275,594		32,070,385		40,977,423
Total selling, general and administrative expenses	8,971,437		16,427,219		36,861,558		49,994,653
Net loss on disposition or impairment from discontinued operations	860,598		3,801,637		3,746,449		5,598,123
Income (loss) from discontinued operations	684,380		(2,693,066)		3,445,047		(2,894,856)
Other expense, net	20,111		496		20,350		1,685
Income (loss) before income tax expense	664,269		(2,693,562)		3,424,697		(2,896,541)
Income tax expense from discontinued operations	99,630		57,194		303,243		394,692
Net income (loss) from discontinued operations	$	564,639	$	(2,750,756)	$	3,121,454	$	(3,291,233)

The following table summarizes the major classes of assets and liabilities of discontinued operations that were included in the Company’s condensed consolidated balance sheets:


	September 30, 2025		December 31, 2024
ASSETS
Accounts receivable	$	508,706	$	2,484,248
Prepaid expenses and other current assets	548,855		549,605
Assets held for sale, net of valuation allowance	21,151,802		38,395,986
Property and equipment, net	132,983		208,074
Deferred tax assets (attributable to VIEs)	1,087,204		1,087,204
Deposits and other assets	289,532		425,938








Total assets, discontinued operations	$	23,719,082	$	43,151,055

LIABILITIES
Accounts payable	$	55,049	$	67,107
Accrued expenses	3,053,561		5,066,941
Payroll liabilities ($0.5 million and $0.9 million attributable to VIEs, respectively)	1,536,008		2,333,335
Operating lease liability, current portion	123,315		153,517
Finance lease liability, current portion	—		38,015

Other current liabilities (attributable to VIEs)	1,079,441		1,079,441
Liabilities to be disposed of ($4.3 million and $5.2 million attributable to VIEs, respectively)	17,031,433		28,629,103



Total liabilities, discontinued operations	$	22,878,807	$	37,367,459

The key components of cash flows from discontinued operations are as follows:


	Nine Months Ended September 30,
		2025		2024
Depreciation and amortization		$	59,815	$	3,149,029
Capital expenditures

Purchase of property and equipment		73,535		279,814
Significant operating and investing non-cash items
Net loss on disposition or impairment		3,746,449		5,598,123

The clustered clinics are in varying stages of sales negotiations with approximately all of the Company’s corporate clinic portfolio expected to be recognized as a completed sale within one year with an estimated fair value of $6.6 million at September 30, 2025. Effective with the designation as held for sale, the Company 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. The Company reported the related assets and liabilities of the clinics as held for sale as discontinued operations in its September 30, 2025 and December 31, 2024 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 its evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the clinics estimated fair values, the Company recorded an estimated loss on disposal of $0.5 million and $1.9 million for the three months ended September 30, 2025 and 2024, respectively, and an estimated loss of $1.9 million and $2.6 million for the nine months ended September 30, 2025 and 2024, respectively. A valuation allowance of $6.0 million and $5.1 million was included in discontinued operations current assets in its condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, respectively.

During the nine months ended September 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, the Company sold $16.2 million assets held for sale, net of a valuation allowance of $1.0 million and $7.3 million of liabilities to be disposed of in the consolidated balance sheets as of December 31, 2024. As a result of the sales, the Company incurred $0.4 million in selling costs and recorded a loss of $0.6 million included in Income (loss) from discontinued operations before income tax expense in the condensed consolidated income statement for the nine months ended September 30, 2025.

The principal components of the held for sale assets and liabilities to be disposed of as of September 30, 2025 and December 31, 2024 were as follows:


	September 30, 2025		December 31, 2024

Assets
Property and equipment, net	$	4,876,430	$	8,457,627
Operating lease right-of-use asset	14,252,943		19,643,917
Intangible assets, net	4,518,833		6,906,807
Goodwill	3,482,718		8,459,238
Valuation allowance	(5,979,122)		(5,071,603)
Total assets held for sale, net	$	21,151,802	$	38,395,986

Liabilities
Operating lease liability, current and non-current	$	12,135,849	$	20,526,714
Deferred revenue from company-owned or managed clinics	4,895,584		8,102,389
Total liabilities to be disposed of	$	17,031,433	$	28,629,103

The pre-tax income of the clinics designated as held for sale as of September 30, 2025 was $0.9 million and $0.4 million for the three months ended September 30, 2025 and 2024, respectively, the results of which exclude the allocation of overhead. The pre-

tax income of the clinics designated as held for sale as of September 30, 2025 was $3.3 million and $2.9 million for the nine months ended September 30, 2025 and 2024, respectively, the results of which exclude the allocation of overhead.