Quarterly report [Sections 13 or 15(d)]

Nature of Operations and Summary of Significant Accounting Policies (Tables)

v3.25.3
Nature of Operations and Summary of Significant Accounting Policies (Tables)
 9 Months Ended
Sep. 30, 2025
Accounting Policies [Abstract]  
Schedule of Franchisor Disclosure
The following table summarizes the number of clinics in operation under franchise agreements and as company-owned or managed clinics for the three and nine months ended September 30, 2025 and 2024:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Franchised clinics: 2025 2024 2025 2024
Clinics open at beginning of period 885  829  842  800 
Opened during the period 9  14  21  46 
Acquired during the period 1  1  40  3 
Closed during the period (11) (6) (19) (11)
Clinics in operation at the end of the period 884  838  884  838 
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Company-owned or managed clinics: 2025 2024 2025 2024
Clinics open at beginning of period 82  131  125  135 
Sold during the period (1) (1) (40) (3)
Closed during the period (3) (5) (7) (7)
Clinics in operation at the end of the period 78  125  78  125 
Total clinics in operation at the end of the period 962  963  962  963 
Clinic licenses sold but not yet developed 86  102  86  102 
Future clinic licenses subject to executed letters of intent 63  46  63  46 
Schedule of Variable Interest Entities
VIE net income (including the management fee) for the three and nine months ended September 30, 2025 and 2024, respectively, is included in Income (loss) from discontinued operations before income tax expense and Income tax expense from discontinued operations in the condensed consolidated income statements as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Income from discontinued operations before income tax $ 343,251  $ 409,692  $ 1,157,750  $ 1,224,581 
Income tax expense from discontinued operations 99,630  109,693  303,243  322,562 
Net income $ 243,621  $ 299,999  $ 854,507  $ 902,019 
The carrying amount of the VIEs’ assets and liabilities is included in discontinued operations as of September 30, 2025 and December 31, 2024, in the condensed consolidated balance sheets as follows:
September 30,
2025		 December 31,
2024
Discontinued operations current assets $ 1,087,203  $ 1,087,203 
Discontinued operations current liabilities 5,852,339  7,125,071 
Schedule of Reconciliation of Allowance for Credit Losses
The following table provides a reconciliation of the activity related to the Company’s allowance for credit losses:
Allowance for
credit losses
Balance at December 31, 2023 $ — 
Bad debt expense recognized during the year 220,893 
Write-off of uncollectible amounts — 
Balance at December 31, 2024 $ 220,893 
Bad debt expense recognized during the period 149,719 
Write-off of uncollectible amounts (78,563)
Balance at September 30, 2025 $ 292,049 
Schedule of Impairment Losses and Disposal Gains and Losses Recorded in Income from Discontinued Operations
During the three and nine months ended September 30, 2024, property and equipment, net related to asset groups determined to not be recoverable were written down from their carrying values to their respective fair values resulting in the following non-cash impairment losses:
Three Months Ended September 30, 2024
Carrying Value Fair Value Net loss on disposition or impairment related to discontinued operations
Property and equipment, net $ 2,019,135  $ 1,366,333  $ 652,802 
Operating lease right-of-use asset 5,512,568  4,275,004  1,237,564 
Total net loss on disposition or impairment related to discontinued operations $ 1,890,366 
Nine Months Ended September 30, 2024
Carrying Value Fair Value Net loss on disposition or impairment related to discontinued operations
Property and equipment, net $ 3,919,827  $ 2,715,446  $ 1,204,381 
Operating lease right-of-use asset 5,591,358  4,347,457  1,243,901 
Intangible assets, net 298,510  252,746  45,764 
Total net loss on disposition or impairment related to discontinued operations $ 2,494,046 
As a result of its evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the agreed upon sales prices or the clinics estimated fair values, the Company recorded an estimated net
loss on disposal, which is included in Income (loss) from discontinued operations before income tax expense in its condensed consolidated income statement as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Net loss on disposition or impairment related to discontinued operations $ 461,347  $ 1,865,124  $ 1,884,111  $ 2,570,461 
The following table shows a reconciliation of the Company’s impairment and disposal losses recorded in Income (loss) from discontinued operations before income tax expense for the three and nine months ended September 30, 2025 and 2024:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Impairment on long-lived assets held for use
Property and equipment, net $ —  $ 652,802  $ —  $ 1,204,381 
Operating lease right-of-use asset —  1,237,564  —  1,243,901 
Intangible assets, net —  —  —  45,764 
Impairment on assets held for sale
Assets held for sale 461,347  1,865,124  1,884,111  2,570,461 
Loss on disposal of assets other than by sale
Property and equipment, net 125,102  3,549  392,266  196,457 
Operating lease right-of-use asset 251,568  32,775  677,346  406,039 
Loss (gain) on sale of assets 22,581  9,823  792,726  (68,880)
Total net loss on disposition or impairment related to discontinued operations $ 860,598  $ 3,801,637  $ 3,746,449  $ 5,598,123 
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 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 
Schedule of Earnings (loss) per Common Share
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Net income (loss) from continuing operations $ 290,370  $ (414,383) $ (1,205,286) $ (2,523,325)
Net income (loss) from discontinued operations 564,639  (2,750,756) 3,121,454  (3,291,233)
Net income (loss) $ 855,009  $ (3,165,139) $ 1,916,168  $ (5,814,558)
Weighted average common shares outstanding - basic 15,344,844  14,959,132  15,281,775  14,903,726 
Effect of dilutive securities:
Unvested restricted stock and stock options 53,750  233,247  67,169  234,422 
Weighted average common shares outstanding - diluted 15,398,594  15,192,379  15,348,944  15,138,148 
Income (loss) earnings per share:
Basic income (loss) earnings per share:
Continuing operations $ 0.02  $ (0.03) $ (0.08) $ (0.17)
Discontinued operations 0.04  (0.18) 0.20  (0.22)
Net income (loss) per share $ 0.06  $ (0.21) $ 0.12  $ (0.39)
Diluted income (loss) earnings per share
Continuing operations $ 0.02  $ (0.03) $ (0.08) $ (0.17)
Discontinued operations 0.04  (0.18) 0.20  (0.22)
Net income (loss) per share $ 0.06  $ (0.21) $ 0.12  $ (0.39)
The following common stock equivalents were excluded from the computation of diluted earnings (loss) per share for the periods presented because including them would have been antidilutive:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2025 2024 2025 2024
Stock options 68,221  78,764  76,795  81,363