Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 03, 2020 | Jun. 28, 2019 | |
Cover page. | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 001-36724 | ||
Entity Registrant Name | Joint Corp | ||
Entity Central Index Key | 0001612630 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 90-0544160 | ||
Entity Address, Address Line One | 16767 North Perimeter Drive | ||
Entity Address, Address Line Two | Suite 110 | ||
Entity Address, City or Town | Scottsdale | ||
Entity Address, State or Province | AZ | ||
Entity Address, Postal Zip Code | 85260 | ||
City Area Code | 480 | ||
Local Phone Number | 245-5960 | ||
Title of 12(b) Security | Common Stock, $0.001 Par Value Per Share | ||
Trading Symbol | JYNT | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 236.4 | ||
Entity Common Stock, Shares Outstanding | 13,882,932 | ||
Documents Incorporated by Reference | Portions of the registrant's Proxy Statement relating to its 2020 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission (“SEC”) pursuant to Regulation 14A within 120 days after the registrant’s fiscal year ended December 31, 2019, are incorporated by reference in Part III of this Form 10-K. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 8,455,989 | $ 8,716,874 |
Restricted cash | 185,888 | 138,078 |
Accounts receivable, net | 2,645,085 | 806,350 |
Income taxes receivable | 0 | 268 |
Notes receivable, net - current portion | 128,724 | 149,349 |
Deferred franchise costs - current portion | 765,508 | 611,047 |
Prepaid expenses and other current assets | 1,122,478 | 882,022 |
Total current assets | 13,303,672 | 11,303,988 |
Property and equipment, net | 6,581,588 | |
Property and equipment, net | 3,658,007 | |
Operating lease right-of-use asset | 12,486,672 | |
Notes receivable net - net of current portion | 0 | 128,723 |
Deferred franchise costs, net of current portion | 3,627,225 | 2,878,163 |
Intangible assets, net | 3,219,791 | 1,634,060 |
Goodwill | 4,150,461 | 3,225,145 |
Deposits and other assets | 336,258 | 599,627 |
Total assets | 43,705,667 | 23,427,713 |
Current liabilities: | ||
Accounts payable | 1,525,838 | 1,253,274 |
Accrued expenses | 216,814 | 266,322 |
Co-op funds liability | 185,889 | 104,057 |
Payroll liabilities | 2,844,107 | 2,035,658 |
Notes payable - current portion | 0 | 1,100,000 |
Deferred rent - current portion | 136,550 | |
Operating lease liability - current portion | 2,313,109 | |
Finance lease liability - current portion | 24,253 | |
Deferred franchise and regional developer fee revenue - current portion | 2,740,954 | 2,370,241 |
Deferred revenue from company clinics | 3,196,664 | 2,529,497 |
Other current liabilities | 518,686 | 477,528 |
Total current liabilities | 13,566,314 | 10,273,127 |
Deferred rent, net of current portion | 721,730 | |
Operating lease liability - net of current portion | 11,901,040 | |
Finance lease liability - net of current portion | 34,398 | |
Deferred franchise and regional developer fee revenue, net of current portion | 12,366,322 | 11,239,221 |
Deferred tax liability | 89,863 | 76,672 |
Other liabilities | 27,230 | 389,362 |
Total liabilities | 37,985,167 | 22,700,112 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Series A preferred stock, $0.001 par value; 50,000 shares authorized, 0 issued and outstanding, as of December 31, 2019 and 2018 | 0 | 0 |
Common stock, $0.001 par value; 20,000,000 shares authorized, 13,898,694 shares issued and 13,882,932 shares outstanding as of December 31, 2019 and 13,757,200 shares issued and 13,742,530 outstanding as of December 31, 2018 | 13,899 | 13,757 |
Additional paid-in capital | 39,454,937 | 38,189,251 |
Treasury stock 15,762 shares as of December 31, 2019 and 14,670 shares as of December 31, 2018, at cost | (111,041) | (90,856) |
Accumulated deficit | (33,637,395) | (37,384,651) |
Total The Joint Corp. stockholders' equity | 5,720,400 | 727,501 |
Non-controlling Interest | 100 | 100 |
Total equity | 5,720,500 | 727,601 |
Total liabilities and stockholders' equity | $ 43,705,667 | $ 23,427,713 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Series A preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Series A preferred stock, shares authorized (in shares) | 50,000 | 50,000 |
Series A preferred stock, shares issued (in shares) | 0 | 0 |
Series A preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 13,898,694 | 13,757,200 |
Common stock, shares outstanding (in shares) | 13,882,932 | 13,742,530 |
Treasury stock, shares (in shares) | 15,762 | 14,670 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | ||
Total revenues | $ 48,450,900 | $ 36,661,660 |
Cost of revenues: | ||
Total cost of revenues | 5,565,917 | 4,310,249 |
Selling and marketing expenses | 6,913,709 | 4,819,555 |
Depreciation and amortization | 1,899,257 | 1,556,240 |
General and administrative expenses | 30,543,030 | 25,238,121 |
Total selling, general and administrative expenses | 39,355,996 | 31,613,916 |
Net loss on disposition or impairment | 114,352 | 594,934 |
Income from operations | 3,414,635 | 142,561 |
Other income (expense): | ||
Bargain purchase gain | 19,298 | 13,198 |
Other (expense), net | (61,515) | (46,791) |
Total other (expense) | (42,217) | (33,593) |
Income before income tax expense (benefit) | 3,372,418 | 108,968 |
Income tax expense (benefit) | 48,706 | (37,728) |
Net income and comprehensive income | 3,323,712 | 146,696 |
Less: income attributable to the non-controlling interest | 0 | 0 |
Net income attributable to The Joint Corp. stockholders | $ 3,323,712 | $ 146,696 |
Earnings per share: | ||
Basic earnings per share (in dollars per share) | $ 0.24 | $ 0.01 |
Diluted earnings per share (in dollars per share) | $ 0.23 | $ 0.01 |
Basic weighted average shares (in shares) | 13,819,149 | 13,669,107 |
Diluted weighted average shares (in shares) | 14,467,567 | 14,031,717 |
Revenues from company-owned or managed clinics | ||
Revenues: | ||
Total revenues | $ 25,807,584 | $ 19,545,276 |
Royalty fees | ||
Revenues: | ||
Total revenues | 13,557,170 | 10,141,036 |
Franchise | ||
Revenues: | ||
Total revenues | 1,791,545 | 1,688,039 |
Cost of revenues: | ||
Cost of revenues | 5,159,778 | 3,956,530 |
Advertising fund revenue | ||
Revenues: | ||
Total revenues | 3,884,055 | 2,862,244 |
Software/IT | ||
Revenues: | ||
Total revenues | 1,865,779 | 1,290,135 |
Cost of revenues: | ||
Cost of revenues | 406,139 | 353,719 |
Regional developer fees | ||
Revenues: | ||
Total revenues | 803,849 | 599,370 |
Other revenues | ||
Revenues: | ||
Total revenues | $ 740,918 | $ 535,560 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Total | Common Stock | Additional Paid In Capital | Treasury Stock | Accumulated Deficit | Total The Joint Corp. stockholder's equity | Non-controlling Interest |
Balance, beginning at Dec. 31, 2017 | $ (373,823) | $ 13,600 | $ 37,229,869 | $ (86,045) | $ (37,531,347) | $ (373,923) | $ 100 |
Balances, beginning (in shares) at Dec. 31, 2017 | 13,600,338 | 14,084 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 628,430 | 628,430 | 628,430 | ||||
Issuance of vested restricted stock | 0 | $ 62 | (62) | ||||
Issuance of vested restricted stock (in shares) | 61,700 | ||||||
Exercise of stock options | 331,109 | $ 95 | 331,014 | 331,109 | |||
Exercised in period (in shares) | 95,162 | ||||||
Purchases of treasury stock under employee stock plans | (4,811) | $ (4,811) | (4,811) | ||||
Purchases of treasury stock under employee stock plans (in shares) | 586 | ||||||
Net income | 146,696 | 146,696 | 146,696 | ||||
Balance, ending at Dec. 31, 2018 | 727,601 | $ 13,757 | 38,189,251 | $ (90,856) | (37,384,651) | 727,501 | 100 |
Balance, ending (in shares) at Dec. 31, 2018 | 13,757,200 | 14,670 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Correction of immaterial error related to ASC 606 adoption | 423,544 | 423,544 | 423,544 | ||||
Stock-based compensation expense | 720,651 | 720,651 | 720,651 | ||||
Issuance of vested restricted stock | 0 | $ 38 | (38) | ||||
Issuance of vested restricted stock (in shares) | 38,289 | ||||||
Exercise of stock options | 545,177 | $ 104 | 545,073 | 545,177 | |||
Exercised in period (in shares) | 103,205 | ||||||
Purchases of treasury stock under employee stock plans | (20,185) | $ (20,185) | (20,185) | ||||
Purchases of treasury stock under employee stock plans (in shares) | 1,092 | ||||||
Net income | 3,323,712 | 3,323,712 | 3,323,712 | ||||
Balance, ending at Dec. 31, 2019 | $ 5,720,500 | $ 13,899 | $ 39,454,937 | $ (111,041) | $ (33,637,395) | $ 5,720,400 | $ 100 |
Balance, ending (in shares) at Dec. 31, 2019 | 13,898,694 | 15,762 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 3,323,712 | $ 146,696 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,899,257 | 1,556,240 |
Net loss on disposition or impairment | 114,352 | 594,934 |
Net franchise fees recognized upon termination of franchise agreements | (113,944) | (227,950) |
Bargain purchase gain | (19,298) | (13,198) |
Deferred income taxes | 1,781 | (77,020) |
Stock based compensation expense | 720,651 | 628,430 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,838,735) | (78,716) |
Prepaid expenses and other current assets | (240,188) | (339,948) |
Deferred franchise costs | (882,672) | (802,990) |
Deposits and other assets | 268,369 | 38,983 |
Accounts payable | 75,893 | 63,567 |
Accrued expenses | (64,758) | 177,768 |
Payroll liabilities | 808,449 | 1,168,228 |
Deferred revenue | 853,184 | 2,647,123 |
Other liabilities | 2,615,896 | (29,879) |
Net cash provided by operating activities | 7,521,949 | 5,452,268 |
Cash flows from investing activities: | ||
Acquisition of business | (3,122,332) | (100,000) |
Purchase of property and equipment | (3,483,578) | (1,111,117) |
Reacquisition and termination of regional developer rights | (681,500) | (278,250) |
Payments received on notes receivable | 149,348 | 245,713 |
Net cash used in investing activities | (7,138,062) | (1,243,654) |
Cash flows from financing activities: | ||
Payments of finance lease obligation | (21,954) | 0 |
Purchases of treasury stock under employee stock plans | (20,185) | (4,811) |
Proceeds from exercise of stock options | 545,177 | 331,109 |
Repayments on notes payable | (1,100,000) | 0 |
Net cash (used in) provided by financing activities | (596,962) | 326,298 |
(Decrease) increase in cash | (213,075) | 4,534,912 |
Cash and restricted cash, beginning of period | 8,641,877 | 8,854,952 |
Cash and restricted cash, end of period | $ 8,854,952 | $ 4,320,040 |
Supplemental Disclosure of Non-
Supplemental Disclosure of Non-cash Activity | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Cash Flow, Supplemental Disclosures | During the years ended December 31, 2019 and 2018, cash paid for income taxes was $65,064 and $29,522, respectively. During the years ended December 31, 2019 and 2018, cash paid for interest was $96,978 and $100,000, respectively. Supplemental disclosure of non-cash activity: As of December 31, 2019, accounts payable and accrued expenses include property and equipment purchases of $196,671, and $15,250, respectively. As of December 31, 2018, accounts payable and accrued expenses include property and equipment purchases of $121,038, and $1,595, respectively. In connection with the acquisitions during the year ended December 31, 2019, the Company acquired $173,521 of property and equipment and intangible assets of $1,999,469, in exchange for $3,127,332 (of which $5,000 was in accounts payable as of December 31, 2019) to the sellers. Additionally, at the time of these transactions, the Company carried net deferred revenue of $40,805, representing unrecognized net franchise fees collected upon the execution of the franchise agreement. The Company netted this amount against the purchase price of the acquisitions (Note 2). In connection with the Company's reacquisition and termination of regional developer rights during the year ended December 31, 2019, the Company had deferred revenue of $44,334 representing unrecognized license fees collected upon the execution of the regional developer agreements. The Company netted these amounts against the aggregate purchase price of the acquisitions (Note 8). |
Nature of Operations and Summar
Nature of Operations and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Nature of Operations and Summary of Significant Accounting Policies | Nature of Operations and Summary of Significant Accounting Policies Basis of Presentation These financial statements represent the consolidated financial statements of The Joint Corp. (“The Joint”), its variable interest entities (“VIEs”), and its wholly owned subsidiary, The Joint Corporate Unit No. 1, LLC (collectively, the “Company”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other (expenses) income that are reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the Company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. For a discussion of significant estimates and judgments made in recognizing revenue and accounting for leases, see Note 3, "Revenue Disclosures" and Note 12, "Commitments and Contingencies", respectively. Prior Period Financial Statement Correction of Immaterial Error Certain states in which the Company manages clinics regulate the practice of chiropractic care and require that chiropractic services be provided by legal entities organized under state laws as professional corporations or PCs. The PCs are VIEs as defined by Accounting Standards Codification 810, Consolidations (“ASC 810”). During the first quarter of 2019, the Company reassessed the governance structure and operating procedures of the PCs and determined that the Company has the power to control certain significant non-clinical activities of the PCs, as defined by ASC 810. Therefore, the Company is the primary beneficiary of the VIEs, and per ASC 810, must consolidate the VIEs. Prior to 2019, the Company did not consolidate the PCs. The Company concluded the previous accounting policy to not consolidate the PCs was an immaterial error and determined that the PCs should be consolidated. The adjustments resulted in an increase to revenues from company clinics and a corresponding increase to general and administrative expenses. The adjustments had no impact on net income, except when the PCs had sold treatment packages and wellness plans. Revenue from these treatment packages and wellness plans are now deferred and will be recognized when patients use their visits. The Company corrected this immaterial error by restating the 2018 consolidated financial statements and related notes included herein. The immaterial impacts of this error correction for the fiscal year ended December 31, 2018 were as follows: THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2018 Adjustments Due To VIE Consolidation Year Ended December 31, 2018 (as reported) (as adjusted) Revenues: Revenues from company-owned or managed clinics $ 14,672,865 $ 4,872,411 $ 19,545,276 Total revenues 31,789,249 4,872,411 36,661,660 General and administrative expenses 20,304,131 4,933,990 25,238,121 Total selling, general and administrative expenses 26,679,926 4,933,990 31,613,916 Income from operations 204,139 (61,578) 142,561 Other income (expense): Bargain purchase gain 58,006 (44,808) $ 13,198 Total other income (expense) 11,215 (44,808) $ (33,593) Income before income tax (benefit) expense 215,354 (106,386) $ 108,968 Net income and comprehensive income $ 253,082 (106,386) $ 146,696 Earnings per share: Basic earnings per share $ 0.02 (0.01) $ 0.01 Diluted earnings per share $ 0.02 (0.01) $ 0.01 Basic weighted average shares 13,669,107 — $ 13,669,107 Diluted weighted average shares 14,031,717 — $ 14,031,717 THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES CONSOLIDATED BALANCE SHEETS December 31, 2018 Adjustments Due To VIE Consolidation December 31, 2018 ASSETS (as reported) (as adjusted) Current assets: Accounts receivable, net 1,213,707 (407,357) 806,350 Total current assets 11,711,345 (407,357) 11,303,988 Goodwill 2,916,426 308,719 3,225,145 Total assets $ 23,526,352 $ (98,639) $ 23,427,713 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Deferred revenue from company clinics 994,493 1,535,004 2,529,497 Total current liabilities 8,738,123 1,535,004 10,273,127 Total liabilities 21,165,108 1,535,004 22,700,112 Commitments and contingencies Equity: The Joint Corp. stockholders' equity: Accumulated deficit (35,750,908) (1,633,743) (37,384,651) Total The Joint Corp. stockholders' equity 2,361,244 (1,633,743) 727,501 Non-controlling Interest — 100 100 Total equity 2,361,244 (1,633,643) 727,601 Total liabilities and equity $ 23,526,352 $ (98,639) $ 23,427,713 Correction of Immaterial Error - Effect of change in accounting principle During the quarter ended December 31, 2019, the Company determined that it had improperly calculated the effect of change in accounting principle related to the adoption of Accounting Standards Codification 606 - Revenue from Contracts with Customers ("ASC 606"), which the Company adopted on January 1, 2018. This resulted in an overstatement of deferred franchise revenue and an understatement of deferred franchise costs. As a result, the Company recorded a $150 thousand reduction to franchise fee revenue and $70 thousand increase to franchise cost of revenue with a corresponding adjustment to deferred franchise revenue and deferred franchise costs related to the prior year and current year correction of an immaterial error related to the adoption of ASC 606.The error was not material to the Company's consolidated financial statements for any quarterly or annual period. Nature of Operations The Joint Corp., a Delaware corporation, was formed on March 10, 2010 for the principal purpose of franchising, developing and managing chiropractic clinics, selling regional developer rights and supporting the operations of franchised chiropractic clinics at locations throughout the United States of America. The franchising of chiropractic clinics is regulated by the Federal Trade Commission and various state authorities. The following table summarizes the number of clinics in operation under franchise agreements and as company-owned or managed for the years ended December 31, 2019 and 2018: Year Ended December 31, Franchised clinics: 2019 2018 Clinics open at beginning of period 394 352 Opened during the period 71 47 Sold during the period (8) (1) Closed during the period (4) (4) Clinics in operation at the end of the period 453 394 Year Ended December 31, Company-owned or managed clinics: 2019 2018 Clinics open at beginning of period 48 47 Opened during the period 5 — Acquired during the period 8 1 Closed during the period (1) — Clinics in operation at the end of the period 60 48 Total clinics in operation at the end of the period 513 442 Clinic licenses sold but not yet developed 170 136 Executed letters of intent for future clinic licenses 34 19 Principles of Consolidation The accompanying consolidated financial statements include the accounts of The Joint Corp. and its wholly-owned subsidiary, The Joint Corporate Unit No. 1, LLC, which was dormant for all periods presented. The Company consolidates VIEs in which the Company is the primary beneficiary in accordance with ASC 810. Non-controlling interests represent third-party equity ownership interests in VIEs. All significant inter-affiliate accounts and transactions between The Joint and its VIEs have been eliminated in consolidation. Certain balances were reclassified from regional developer fees to other revenues for the year ended December 31, 2018 to conform to the current year presentation. Comprehensive Income Net income and comprehensive income are the same for the years ended December 31, 2019 and 2018. Variable Interest Entities An entity deemed to hold the controlling interest in a voting interest entity or deemed to be the primary beneficiary of a VIE is required to consolidate the VIE in its financial statements. An entity is deemed to be the primary beneficiary of a VIE if it has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb the majority of losses of the VIE or the right to receive the majority of benefits from the VIE. Certain states in which the Company manages clinics regulate the practice of chiropractic care and require that chiropractic services be provided by legal entities organized under state laws as professional corporations or PCs. In these states, the Company has entered into management services agreements with PCs under which the Company provides, on an exclusive basis, all non-clinical services of the chiropractic practice. Such PCs are VIEs, as fees paid by the PCs to the Company as its management service provider are considered variable interests because they are liabilities on the PC’s books and the fees do not meet all the following criteria: 1) The fees are compensation for services provided and are commensurate with the level of effort required to provide those services; 2) The decision maker or service provider does not hold other interests in the VIE that individually, or in the aggregate, would absorb more than an insignificant amount of the VIE’s expected losses or receive more than an insignificant amount of the VIE’s expected residual returns; 3) The service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm’s length. During the first quarter of 2019, the Company reassessed the governance structure and operating procedures of the PCs and determined that the Company has the power to control certain significant non-clinical activities of the PCs, as defined by ASC 810, Therefore, the Company is the primary beneficiary of the VIEs, and per ASC 810, must consolidate the VIEs. The carrying amount of VIE assets and liabilities are immaterial as of December 31, 2019. Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company continually monitors its positions with, and credit quality of, the financial institutions with which it invests. As of the balance sheet date and periodically throughout the period, the Company has maintained balances in various operating accounts in excess of federally insured limits. The Company has invested substantially all its cash in short-term bank deposits. The Company had no cash equivalents as of December 31, 2019 and 2018. Restricted Cash Restricted cash relates to cash that franchisees and company-owned or managed clinics contribute to the Company’s National Marketing Fund and cash that franchisees provide to various voluntary regional Co-Op Marketing Funds. Cash contributed by franchisees to the National Marketing Fund is to be used in accordance with the Company’s Franchise Disclosure Document with a focus on regional and national marketing and advertising. Accounts Receivable Accounts receivable primarily represent amounts due from franchisees for royalty fees. The Company considers a reserve for doubtful accounts based on the creditworthiness of the entity. The provision for uncollectible amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to cover future losses. The allowance is management’s best estimate of uncollectible amounts and is determined based on specific identification and historical performance that the Company tracks on an ongoing basis. Actual losses ultimately could differ materially in the near term from the amounts estimated in determining the allowance. As of December 31, 2019, and 2018, the Company had an allowance for doubtful accounts of $0. Deferred Franchise Costs Deferred franchise costs represent commissions that are direct and incremental to the Company and are paid in conjunction with the sale of a franchise license. These costs are recognized as an expense, in franchise cost of revenues when the respective revenue is recognized, which is generally over the term of the related franchise agreement. Property and Equipment Property and equipment are stated at cost or for property acquired as part of franchise acquisitions at fair value at the date of closing. Depreciation is computed using the straight-line method over estimated useful lives of three Maintenance and repairs are charged to expense as incurred; major renewals and improvements are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Capitalized Software The Company capitalizes certain software development costs. These capitalized costs are primarily related to software used by clinics for operations and by the Company for the management of operations. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct, are capitalized as assets in progress until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Software developed is recorded as part of property and equipment. Maintenance and training costs are expensed as incurred. Internal use software is amortized on a straight-line basis over its estimated useful life, which is generally five years. Leases The Company adopted the guidance of Accounting Standards Codification 842 – Leases (“ASC 842”) on January 1, 2019 which requires lessees to recognize a right-of-use ("ROU") asset and lease liability for all leases. The Company elected the package of transition practical expedients for existing contracts, which allowed the Company to carry forward its historical assessments of whether contracts are or contain leases, lease classification and determination of initial direct costs. The Company leases property and equipment under operating and finance leases. The Company leases its corporate office space and the space for each of the company-owned or managed clinic in the portfolio. Determining the lease term and amount of lease payments to include in the calculation of the ROU asset and lease liability for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and if the optional period and payments should be included in the calculation of the associated ROU asset and liability. In making this determination, all relevant economic factors are considered that would compel the Company to exercise or not exercise an option. When available, the Company uses the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of its leases. In such cases, the Company estimates its incremental borrowing rate as the interest rate it would pay to borrow an amount equal to the lease payments over a similar term, with similar collateral as in the lease, and in a similar economic environment. The Company estimates these rates using available evidence such as rates imposed by third-party lenders to the Company in recent financings or observable risk-free interest rate and credit spreads for commercial debt of a similar duration, with credit spreads correlating to the Company’s estimated creditworthiness. For operating leases that include rent holidays and rent escalation clauses, the Company recognizes lease expense on a straight-line basis over the lease term from the date it takes possession of the leased property. Pre-opening costs are recorded as incurred in general and administrative expenses. The Company records the straight-line lease expense and any contingent rent, if applicable, in general and administrative expenses on the consolidated statements of operations. Many of the Company’s leases also require it to pay real estate taxes, common area maintenance costs and other occupancy costs which are also included in general and administrative expenses on the consolidated statements of operations. Intangible Assets Intangible assets consist primarily of re-acquired franchise and regional developer rights and customer relationships. The Company amortizes the fair value of re-acquired franchise rights over the remaining contractual terms of the re-acquired franchise rights at the time of the acquisition, which generally range from three Goodwill Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired in the acquisitions of franchises. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. As required, the Company performs an annual impairment test of goodwill as of the first day of the fourth quarter or more frequently if events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. No impairments of goodwill were recorded for the years ended December 31, 2019 and 2018. Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company looks primarily to estimated undiscounted future cash flows in its assessment of whether or not long-lived assets are recoverable. No impairments of long-lived assets were recorded for the year ended December 31, 2019. The Company recorded an impairment of approximately $343,000 in long-lived assets for the year ended December 31, 2018. Advertising Fund The Company has established an advertising fund for national/regional marketing and advertising of services offered by its clinics. The monthly marketing fee is 2% of clinic sales. The Company segregates the marketing funds collected which are included in restricted cash on its consolidated balance sheets. As amounts are expended from the fund, the Company recognizes a related expense. Co-Op Marketing Funds Some franchises have established regional Co-Ops for advertising within their local and regional markets. The Company maintains a custodial relationship under which the marketing funds collected are segregated and used for the purposes specified by the Co-Ops’ officers. The marketing funds are included in restricted cash on the Company’s consolidated balance sheets. Revenue Recognition The Company generates revenue primarily through its company-owned and managed clinics, royalties, franchise fees, advertising fund, and through IT related income and computer software fees. Revenues from Company-Owned or Managed Clinics. The Company earns revenues from clinics that it owns and operates or manages throughout the United States. In those states where the Company owns and operates or manages the clinic, revenues are recognized when services are performed. The Company offers a variety of membership and wellness packages which feature discounted pricing as compared with its single-visit pricing. Amounts collected in advance for membership and wellness packages are recorded as deferred revenue and recognized when the service is performed. The Company recognizes a contract liability (or a deferred revenue liability) related to the prepaid treatment plans for which the Company has an ongoing performance obligation. The Company recognizes this contract liability, and recognizes revenue, as the patient consumes his or her visits related to the package and the Company transfers its services. Based on a historical lag analysis and an evaluation of legal obligation by jurisdiction, the Company concluded that any remaining contract liability that exists after 12 to 24 months from transaction date will be deemed breakage. Breakage revenue is recognized only at that point, when the likelihood of the patient exercising his or her remaining rights becomes remote. Royalties and Advertising Fund Revenue. The Company collects royalties, as stipulated in the franchise agreement, equal to 7% of gross sales, and a marketing and advertising fee currently equal to 2% of gross sales. Royalties, including franchisee contributions to advertising funds, are calculated as a percentage of clinic sales over the term of the franchise agreement. The franchise agreement royalties, inclusive of advertising fund contributions, represent sales-based royalties that are related entirely to the Company’s performance obligation under the franchise agreement and are recognized as franchisee clinic level sales occur. Royalties are collected bi-monthly two working days after each sales period has ended. Franchise Fees. The Company requires the entire non-refundable initial franchise fee to be paid upon execution of a franchise agreement, which typically has an initial term of ten years. Initial franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. The Company’s services under the franchise agreement include: training of franchisees and staff, site selection, construction/vendor management and ongoing operations support. The Company provides no financing to franchisees and offers no guarantees on their behalf. The services provided by the Company are highly interrelated with the franchise license and as such are considered to represent a single performance obligation. Software Fees. The Company collects a monthly fee for use of its proprietary chiropractic software, computer support, and internet services support. These fees are recognized ratably on a straight-line basis over the term of the respective franchise agreement. Regional Developer Fees . During 2011, the Company established a regional developer program to engage independent contractors to assist in developing specified geographical regions. Under the historical program, regional developers paid a license fee for each franchise they received the right to develop within the region. In 2017, the program was revised to grant exclusive geographical territory and establish a minimum development obligation within that defined territory. Regional developer fees paid to the Company are non-refundable and are recognized as revenue ratably on a straight-line basis over the term of the regional developer agreement, which is considered to begin upon the execution of the agreement. The Company’s services under regional developer agreements include site selection, grand opening support for the clinics, sales support for identification of qualified franchisees, general operational support and marketing support to advertise for ownership opportunities. The services provided by the Company are highly interrelated with the development of the territory and the resulting franchise licenses sold by the regional developer and as such are considered to represent a single performance obligation. In addition, regional developers receive fees which are funded by the initial franchise fees collected from franchisees upon the sale of franchises within their exclusive geographical territory and a royalty of 3% of sales generated by franchised clinics in their exclusive geographical territory. Fees related to the sale of franchises within their exclusive geographical territory are initially deferred as deferred franchise costs and are recognized as an expense in franchise cost of revenues when the respective revenue is recognized, which is generally over the term of the related franchise agreement. Royalties of 3% of sales generated by franchised clinics in their regions are also recognized as franchise cost of revenues as franchisee clinic level sales occur. The Company entered into one regional developer agreement for the year ended December 31, 2019 and four regional developer agreements for the year ended December 31, 2018 for which it received approximately $0.3 million and $0.9 million, respectively, which was deferred as of the respective transaction dates and will be recognized as revenue ratably on a straight-line basis over the term of the regional developer agreement, which is considered to be upon the execution of the agreement. Certain of these regional developer agreements resulted in the regional developer acquiring the rights to existing royalty streams from clinics already open in the respective territory. In those instances, the revenue associated from the sale of the royalty stream is being recognized over the remaining life of the respective franchise agreements. Advertising Costs Advertising costs are expensed as incurred. Advertising expenses were $2,292,628 and $1,558,662, for years ended December 31, 2019 and 2018, respectively. Income Taxes Deferred income taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate principally to depreciation of property and equipment and treatment of revenue for franchise fees and regional developer fees collected. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company accounts for uncertainty in income taxes by recognizing the tax benefit or expense from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits and expenses recognized in the consolidated financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company has not identified any material uncertain tax positions as of December 31, 2019 and 2018, respectively. Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses. With exceptions due to the generation and utilization of net operating losses or credits, as of December 31, 2019, the Company is no longer subject to federal and state examinations by taxing authorities for tax years before 2016 and 2015, respectively. Earnings per Common Share Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed by giving effect to all potentially dilutive common shares including restricted stock and stock options. Year Ended December 31, 2019 2018 (as adjusted) Net income $ 3,323,712 $ 146,696 Weighted average common shares outstanding - basic 13,819,149 13,669,107 Effect of dilutive securities: Unvested restricted stock and stock options 648,418 362,610 Weighted average common shares outstanding - diluted 14,467,567 14,031,717 Basic earnings per share $ 0.24 $ 0.01 Diluted earnings per share $ 0.23 $ 0.01 Potentially dilutive securities excluded from the calculation of diluted net income per common share as the effect would be anti-dilutive were as follows: Year Ended December 31, 2019 2018 Unvested restricted stock — 6,896 Stock options 39,286 236,205 Stock-Based Compensation The Company accounts for share-based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. The Company determines the estimated grant-date fair value of restricted shares using the closing price on the date of the grant and the grant-date fair value of stock options using the Black-Scholes-Merton model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. The Company recognizes compensation costs ratably over the period of service using the straight-line method. Forfeitures are estimated based on historical and forecasted turnover. Retirement Benefit Plan Employees of the Company are eligible to participate in a defined contribution retirement plan, the Joint Corp. 401(k) Retirement Plan (“401(k) Plan”), under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, employees may contribute their eligible compensation, not to exceed the annual limits set by the IRS. The 401(k) Plan allows the Company to match participants’ contributions in an amount determined at the sole discretion of the Company. The Company matched participants’ contributions during fiscal years 2019 and 2018, up to a maximum of 2% of the employee’s eligible compensation. Employer contributions totaled $103,745 and $61,157, for fiscal years 2019 and 2018, respectively. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Items subject to significant estimates and assumptions include the allowance for doubtful accounts, share-based compensation arrangements, fair value of stock options, useful lives and realizability of long-lived assets, classification of deferred revenue and revenue recognition related to breakage, classification of deferred franchise costs, calculation of ROU assets and liabilities related to leases, realizability of deferred tax assets, impairment of goodwill and intangible assets and purchase price allocations and related valuation. Recent Accounting Pronouncements Recently Adopted Accounting Guidance On January 1, 2019, the Company adopted ASC 842, which requires lessees to recognize a ROU asset and lease liability on their balance sheet for all leases with terms beyond twelve months. The new standard also requires enhanced disclosures that provide more transparency and information to financial statement users about lease portfolios. Effective January 1, 2019, the Company adopted the requirements of ASC 842 using the modified retrospective approach using the optional transition method and elected to apply the provisions of the standard as of the adoption date rather than the earliest date presented. The consolidated financial statements for the period ended December 31, 2019 are presented under the new standard, while comparative periods presented have not been adjusted and continue to be reported in accordance with the previous standard. During the process of adoption, the Company made the following elections: • The Company elected the package of practical expedients which allowed the Company to not reassess: • Whether existing or expired contracts contain leases under the new definition of a lease; • Lease classification for existing or expired leases; and • Initial direct costs for any expired or existing leases to determine if they would qualify for capitalization under ASC 842. • The Company did not elect the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of operating lease assets. • The Company did not elect the land easement practical expedient, which permits an entity to continue applying its current policy for accounting for land easements that existed as of, or expired before, the effective date of ASC 842. • The Company elected to make the accounting policy election for short-term leases, permitting the Company to not apply the recognition requirements of ASC 842 to short-term leases with terms of 12 months or less. The adoption of ASC 842 does not materially impact the Company’s results of operations other than recognition of the operating lease ROU asset and lease liability. See Note 12 for additional disclosures required by ASC 842. Newly Issued Accounting Standards Not Yet Adopted The Company reviewed other newly issued accounting pronouncements and concluded that they either are not applicable to the Company's operations or that no material effect is expected on the Company's financial |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions On March 18, 2019, the Company entered into an Asset and Franchise Purchase Agreement under which (i) the Company repurchased from the seller one operating franchise in West Covina, California and (ii) the parties agreed to terminate a second franchise agreement for an operating franchise. The Company operates the remaining franchise as a company-managed clinic. The total purchase price for the transaction was $30,000, less $3,847 of net deferred revenue resulting in total purchase consideration of $26,153. On July 9, 2019, the Company entered into an Asset and Franchise Purchase Agreement under which the Company repurchased from the seller one operating franchise in Phoenix, Arizona. The Company operates the franchise as a company-owned clinic. The total purchase price for the transaction was $400,000, less $9,835 of net deferred revenue resulting in total purchase consideration of $390,165. On July 17, 2019, the Company entered into an Asset and Franchise Purchase Agreement under which the Company repurchased from the seller three operating franchises in Savannah, Georgia, Pooler, Georgia and Bluffton, South Carolina. The Company operates the franchises as company-owned clinics. The total purchase price for the transaction was $1,604,918, less $13,449 of net deferred revenue resulting in total purchase consideration of $1,591,469. On August 1, 2019, the Company entered into an Asset and Franchise Purchase Agreement under which the Company repurchased from the seller one operating franchise in Sayebrook, South Carolina. The Company operates the franchise as a company-owned clinic. The total purchase price for the transaction was $727,414, less $5,236 of net deferred revenue resulting in total purchase consideration of $722,178. On August 15, 2019, the Company entered into an Asset and Franchise Purchase Agreement under which the Company repurchased from the seller one operating franchise in Chula Vista, California. The Company operates the franchise as a company-managed clinic. The total purchase price for the transaction was $310,000, less $4,328 of net deferred revenue resulting in total purchase consideration of $305,672. On October 28, 2019, the Company entered into an Asset and Franchise Purchase Agreement under which the Company repurchased from the seller one operating franchise in Redlands, California. The Company operates the franchise as a company-managed clinic. The total purchase price for the transaction was $55,000, less $4,110 of net deferred revenue resulting in total purchase consideration of $50,890. As of December 31, 2019, $5,000 of remaining consideration was outstanding, which was paid in February 2020. Purchase Price Allocation The following summarizes the aggregate estimated fair values of the assets acquired and liabilities assumed during 2019 as of the acquisition date: Property and equipment $ 173,521 Operating lease right-of-use asset 1,283,608 Intangible assets 1,999,469 Total assets acquired 3,456,598 Goodwill 925,315 Deferred revenue (140,861) Operating lease liability - current portion (256,601) Operating lease liability - net of current portion (867,216) Deferred tax liability (11,410) Bargain purchase gain (19,298) Net purchase price $ 3,086,527 Intangible assets in the table above consist of reacquired franchise rights of $1,488,494 amortized over an estimated useful life of approximately three years and customer relationships of $510,975 amortized over an estimated useful life of two years. Goodwill was established due primarily to synergies and benefits expected to be gained from leveraging the Company’s existing operations and infrastructures, as well as the expected associated revenue and cash flow projections. Goodwill has been allocated to the Company’s Corporate Clinics segment based on such expected benefits. Goodwill related to the acquisitions is expected to be deductible for income tax purposes over the next 15 years. The purchase price allocations are preliminary, and the Company expects to finalize the allocations during fiscal year 2020. Pro Forma Results of Operations (Unaudited) The following table summarizes selected unaudited pro forma consolidated statements of operations data for the years ended December 31, 2019 and 2018 as if the acquisition in 2019 had been completed on January 1, 2018. Pro Forma for the Year Ended December 31, 2019 December 31, 2018 Revenues, net $ 50,399,700 $ 39,774,609 Net income (loss) $ 3,241,918 $ (77,662) This selected unaudited pro forma consolidated financial data is included only for the purpose of illustration and does not necessarily indicate what the operating results would have been if the acquisition had been completed on that date. Moreover, this information is not indicative of what the Company’s future operating results will be. The information for 2018 and 2019 prior to the acquisitions is included based on prior accounting records maintained by the acquired companies. In some cases, accounting policies differed materially from accounting policies adopted by the Company following the acquisitions. For 2019, this information includes actual data recorded in the Company’s financial statements for the period subsequent to the date of the acquisition. The Company’s consolidated statement of operations for the year ended December 31, 2019 includes net revenue and net income of approximately $1,529,000 and $218,000, respectively, attributable to the acquisitions. The pro forma amounts included in the table above reflect the application of accounting policies and adjustment of the results of the clinics to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property and equipment and intangible assets had been applied from January 1, 2018. The pro forma earnings do not include adjustments related to acquisition-related costs incurred in 2019, which were not material. |
Revenue Disclosures
Revenue Disclosures | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Disclosures | Revenue Disclosures Company-owned or Managed Clinics The Company earns revenues from clinics that it owns and operates or manages throughout the United States. Revenues are recognized when services are performed. The Company offers a variety of membership and wellness packages which feature discounted pricing as compared with its single-visit pricing. Amounts collected in advance for membership and wellness packages are recorded as deferred revenue and recognized when the service is performed or in accordance with the Company’s breakage policy as discussed in Note 1, Revenue Recognition. Franchising Fees, Royalty Fees, Advertising Fund Revenue, and Software Fees The Company currently franchises its concept across 33 states. The franchise arrangement is documented in the form of a franchise agreement. The franchise arrangement requires the Company to perform various activities to support the brand that do not directly transfer goods and services to the franchisee, but instead represent a single performance obligation, which is the transfer of the franchise license. The intellectual property subject to the franchise license is symbolic intellectual property as it does not have significant standalone functionality, and substantially all of the utility is derived from its association with the Company’s past or ongoing activities. The nature of the Company’s promise in granting the franchise license is to provide the franchisee with access to the brand’s symbolic intellectual property over the term of the license. The services provided by the Company are highly interrelated with the franchise license and as such are considered to represent a single performance obligation. The transaction price in a standard franchise arrangement primarily consists of (a) initial franchise fees; (b) continuing franchise fees (royalties); (c) advertising fees; and (d) software fees. Since the Company considers the licensing of the franchising right to be a single performance obligation, no allocation of the transaction price is required. The Company recognizes the primary components of the transaction price as follows: • Franchise fees are recognized as revenue ratably on a straight-line basis over the term of the franchise agreement commencing with the execution of the franchise agreement. As these fees are typically received in cash at or near the beginning of the franchise term, the cash received is initially recorded as a contract liability until recognized as revenue over time; • The Company is entitled to royalties and advertising fees based on a percentage of the franchisee's gross sales as defined in the franchise agreement. Royalty and advertising revenue are recognized when the franchisee's sales occur. Depending on timing within a fiscal period, the recognition of revenue results in either what is considered a contract asset (unbilled receivable) or, once billed, accounts receivable, on the balance sheet. • The Company is entitled to a software fee, which is charged monthly. The Company recognizes revenue related to software fees ratably on a straight-line basis over the term of the franchise agreement. In determining the amount and timing of revenue from contracts with customers, the Company exercises significant judgment with respect to collectability of the amount; however, the timing of recognition does not require significant judgment as it is based on either the franchise term or the reported sales of the franchisee, none of which require estimation. The Company believes its franchising arrangements do not contain a significant financing component. The Company recognizes advertising fees received under franchise agreements as advertising fund revenue. Regional Developer Fees The Company currently utilizes regional developers to assist in the development of the brand across certain geographic territories. The arrangement is documented in the form of a regional developer agreement. The arrangement between the Company and the regional developer requires the Company to perform various activities to support the brand that do not directly transfer goods and services to the regional developer, but instead represent a single performance obligation, which is the transfer of the development rights to the defined geographic region. The intellectual property subject to the development rights is symbolic intellectual property as it does not have significant standalone functionality, and substantially all of the utility is derived from its association with the Company’s past or ongoing activities. The nature of the Company’s promise in granting the development rights is to provide the regional developer with access to the brand’s symbolic intellectual property over the term of the agreement. The services provided by the Company are highly interrelated with the development of the territory and the resulting franchise licenses sold by the regional developer and as such are considered to represent a single performance obligation. The transaction price in a standard regional developer arrangement primarily consists of the initial territory fees. The Company recognizes the regional developer fee as revenue ratably on a straight-line basis over the term of the regional developer agreement commencing with the execution of the regional developer agreement. As these fees are typically received in cash at or near the beginning of the term of the regional developer agreement, the cash received is initially recorded as a contract liability until recognized as revenue over time. Disaggregation of Revenue The Company believes that the captions contained on the consolidated statements of operations appropriately reflect the disaggregation of its revenue by major type for the years ended December 31, 2019 and 2018. Other revenues primarily consist of merchant income associated with credit card transactions. Rollforward of Contract Liabilities and Contract Assets Changes in the Company's contract liability for deferred franchise and regional development fees during the year ended December 31, 2019 and 2018 were as follows (in thousands): Deferred Revenue Balance at December 31, 2017 $ 11,547 Recognized as revenue during the year ended December 31, 2018 (2,287) Fees received and deferred during the year ended December 31, 2018 4,349 Balance at December 31, 2018 $ 13,609 Recognized as revenue during the year ended December 31, 2019 (2,595) Fees received and deferred, net 4,093 Balance at December 31, 2019 $ 15,107 Changes in the Company's contract assets for deferred franchise costs during the year ended December 31, 2019 and 2018 were as follows (in thousands): Deferred Franchise Costs short and long-term Balance at December 31, 2017 $ 2,811 Recognized as cost of revenue during the year ended December 31, 2018 (631) Costs incurred and deferred during the year ended December 31, 2018 1,309 Balance at December 31, 2018 $ 3,489 Recognized as cost of revenue during the year ended December 31, 2019 (812) Costs incurred and deferred, net 1,716 Balance at December 31, 2019 $ 4,393 The following table illustrates revenues expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of December 31, 2019 (in thousands): Contract liabilities expected to be recognized in Amount 2020 $ 2,741 2021 2,626 2022 2,240 2023 1,907 2024 1,477 Thereafter 4,116 Total $ 15,107 |
Restricted Cash
Restricted Cash | 12 Months Ended |
Dec. 31, 2019 | |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | |
Restricted Cash | Restricted CashThe table below reconciles the cash and cash equivalents balance and restricted cash balances from the Company’s consolidated balance sheets to the amount of cash reported on the consolidated statements of cash flows: December 31, 2019 2018 Cash and cash equivalents $ 8,455,989 $ 8,716,874 Restricted cash 185,888 138,078 Total cash, cash equivalents and restricted cash $ 8,641,877 $ 8,854,952 |
Notes Receivable
Notes Receivable | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Notes Receivable | Notes Receivable Effective April 29, 2017, the Company entered into a regional developer agreement for certain territories in the state of Florida in exchange for $320,000, of which $187,000 was funded through a promissory note. The note bears interest at 10% per annum for 42 months and requires monthly principal and interest payments over 36 months, beginning November 1, 2017 and maturing on October 1, 2020. The note is secured by the regional developer rights in the respective territory. Effective August 31, 2017, the Company entered into a regional developer agreement for certain territories in Maryland/Washington DC in exchange for $220,000, of which $117,475 was funded through a promissory note. The note bears interest at 10% per annum for 36 months and requires monthly principal and interest payments over 36 months, beginning September 1, 2017 and maturing on August 1, 2020. The note is secured by the regional developer rights in the respective territory. Effective September 22, 2017, the Company entered into a regional developer and asset purchase agreement for certain territories in Minnesota in exchange for $228,293, of which $119,147 was funded through a promissory note. The note bears interest at 10% per annum for 36 months and requires monthly principal and interest payments over 36 months, beginning October 1, 2017 and maturing on September 1, 2020. The note was secured by the regional developer rights in the territory. The note was paid in full on September 28, 2018. Effective October 10, 2017, the Company entered into a regional developer agreement for certain territories in Texas, Oklahoma and Arkansas in exchange for $170,000, of which $135,688 was funded through a promissory note. The note bears interest at 10% per annum for 36 months and requires monthly principal and interest payments over 36 months, maturing on October 24, 2020. The note is secured by the regional developer rights in the territory. Effective April 26, 2019, the Company entered into a promissory note valued at $31,086. The note bears interest at 0% per annum for 36 months and requires monthly principal payments over 36 months, beginning May 15, 2019 and maturing on May 15, 2022. The net outstanding balances of the notes as of December 31, 2019, and 2018 were $155,810 and $278,072, respectively. Allowance reserve on the outstanding notes as of December 31, 2019 was $27,086. Maturities of notes receivable as of December 31, 2019 are as follows: 2020 $ 137,124 2021 9,600 2022 $ 9,086 Total $ 155,810 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and EquipmentProperty and equipment consist of the following: December 31, 2019 2018 Office and computer equipment $ 1,594,364 $ 1,243,104 Leasehold improvements 7,154,156 5,407,915 Software developed 1,193,007 1,145,742 Finance lease assets 80,604 — 10,022,131 7,796,761 Accumulated depreciation and amortization (5,671,366) (4,909,002) 4,350,765 2,887,759 Construction in progress 2,230,823 770,248 Property and Equipment, net $ 6,581,588 $ 3,658,007 Depreciation expense was $823,679 and $1,049,942 for the years ended December 31, 2019 and 2018, respectively. Amortization expense related to finance lease assets was $24,675 for the year ended December 31, 2019. Construction in progress at December 31, 2019 and 2018 principally relate to development costs for a software to be used by clinics for operations and by the Company for the management of operations. In August 2018, the Board of Directors approved a change in strategy as it relates to the development of the Company’s IT platform. The Company ceased its related internal development, and as a result, the Company recorded an impairment of approximately $343,000 of previously capitalized software development costs during the year ended December 31, 2018. |
Fair Value Consideration
Fair Value Consideration | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Consideration | Fair Value Consideration The Company’s financial instruments include cash, restricted cash, accounts receivable, notes receivable, accounts payable, accrued expenses and notes payable. The carrying amounts of its financial instruments approximate their fair value due to their short maturities. The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability, developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on reliability of the inputs as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. As of December 31, 2019, and 2018, the Company did not have any financial instruments that are measured on a recurring basis as Level 1, 2 or 3. The intangible assets resulting from the acquisitions (reference Note 2) were recorded at estimated fair value on a non-recurring basis and are considered Level 3 within the fair value hierarchy. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Intangible Assets and Goodwill On February 4, 2019, the Company entered into an agreement under which it repurchased the right to develop franchises in various counties in South Carolina and Georgia. The total consideration for the transaction was $681,500. The Company carried a deferred revenue balance associated with these transactions of $44,334, representing unrecognized portion of the license fees collected upon the execution of the regional developer agreements. 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. Intangible assets consisted of the following: December 31, 2019 Gross Carrying Amount Accumulated Amortization Net Carrying Value Intangible assets subject to amortization: Reacquired franchise rights $ 3,246,494 $ 1,400,086 $ 1,846,408 Customer relationships 1,255,975 865,478 390,497 Reacquired development rights 2,050,481 1,067,595 982,886 $ 6,552,950 $ 3,333,159 $ 3,219,791 December 31, 2018 Gross Carrying Amount Accumulated Amortization Net Carrying Value Intangible assets subject to amortization: Reacquired franchise rights $ 1,758,000 $ 921,138 $ 836,862 Customer relationships 745,000 717,498 27,502 Reacquired development rights 1,413,316 643,620 769,696 $ 3,916,316 $ 2,282,256 $ 1,634,060 Amortization expense related to the Company’s intangible assets was $1,050,903 and $506,298 for the years ended December 31, 2019 and 2018, respectively. Estimated amortization expense for 2020 and subsequent years is as follows: 2020 $ 1,409,962 2021 1,212,703 2022 539,750 2023 57,376 Total $ 3,219,791 The changes in the carrying amount of goodwill were as follows: Corporate Clinic Segment Balance as of December 31, 2018 Goodwill, gross $ 3,280,139 Accumulated impairment losses (54,994) Goodwill, net 3,225,145 2019 acquisitions 925,316 Balance as of December 31, 2019 Goodwill, gross 4,205,455 Accumulated impairment losses (54,994) Goodwill, net $ 4,150,461 There were no changes in the carrying amount of goodwill during the year ended December 31, 2018. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt Notes Payable During 2016, the Company issued two notes payable totaling $186,000 as a portion of the consideration paid in connection with the Company’svarious acquisitions. Interest rates for both notes were 4.25% with maturities through May 2017. There was one outstanding note as of December 31, 2018 with a balance of $100,000 which was paid in February 2019. Credit and Security Agreement On January 3, 2017, the Company entered into a Credit and Security Agreement (the “Credit Agreement”) and signed a revolving credit note payable to the lender. Under the Credit Agreement, the Company was able to borrow up to an aggregate of $5,000,000 under revolving loans. Interest on the unpaid outstanding principal amount of any revolving loans was at a rate equal to 10% per annum, provided that the minimum amount of interest paid in the aggregate on all revolving loans granted over the term of the Credit Agreement is $200,000. Interest was due and payable on the last day of each fiscal quarter in an amount determined by the Company, but not less than $25,000. The Credit Agreement was collateralized by the assets in the Company’s company-owned or managed clinics. The Company used the credit facility for general working capital needs. During 2019, the Company had drawn $1,000,000 of the $5,000,000 available under the Credit Agreement which was repaid in full on December 20, 2019. The Credit Agreement was terminated in December 2019 in accordance with the provisions of the Credit Agreement. During 2019, the Company was in compliance with all applicable financial and non-financial covenants under the Credit Agreement. The Company recorded interest expense of $96,978 and $100,000 in the years ended December 31, 2019 and 2018 related to this Credit Agreement, respectively. In February 2020, the Company executed a line of credit agreement which provides a credit facility up to $7,500,000, including a $2,000,000 revolver and $5,500,000 development line of credit. Please see Note 14, “Subsequent Events” in the Notes to Consolidated Financial Statements for further discussion. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company grants stock-based awards under its 2014 Incentive Stock Plan (the “2014 Plan”) and the 2012 Stock Plan (the “2012 Plan”). The 2014 Plan replaced the 2012 Plan, but the 2012 plan remains in effect for the administration of awards made prior to its replacement by the 2014 Plan. The shares issued as a result of stock-based compensation transactions generally have been funded with the issuance of new shares of the Company’s common stock. The Company may grant the following types of incentive awards under the 2014 Plan: (i) non-qualified stock options; (ii) incentive stock options; (iii) stock appreciation rights; (iv) restricted stock; and (v) restricted stock units. Each award granted under the 2014 Plan is subject to an award agreement that incorporates, as applicable, the exercise price, the term of the award, the periods of restriction, the number of shares to which the award pertains, and such other terms and conditions as the plan committee determines. Awards granted under the 2014 Plan are classified as equity awards, which are recorded in stockholders’ equity in the Company’s Consolidated Balance Sheets. Stock Options The Company’s closing price on the date of grant is the basis of fair value of its common stock used in determining the value of share-based awards. To the extent the value of the Company’s share-based awards involves a measure of volatility, the Company historically relied on the volatilities from publicly-traded companies with similar business models as its common stock lacked enough trading history for it to utilize its own historical volatility. Effective July 1, 2019, the Company uses available historical volatility of the Company’s common stock over a period of time corresponding to the expected stock option term. The Company uses the simplified method to calculate the expected term of stock option grants to employees as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term of stock options granted to employees. Accordingly, the expected life of the options granted is based on the average of the vesting term, which is generally four years and the contractual term, which is generally ten years. The Company will continue to evaluate the appropriateness of utilizing such method. The risk-free interest rate is based on United States Treasury yields in effect at the date of grant for periods corresponding to the expected stock option term. The Company has computed the fair value of all options granted using the Black-Scholes-Merton model during the years ended December 31, 2019 and 2018, using the following assumptions: Year Ended December 31, 2019 2018 Expected volatility 35% to 55% 35% Expected dividends None None Expected term (years) 7 7 Risk-free rate 1.89% to 2.61% 2.53% to 2.90% Forfeiture rate 20% 20% The information below summarizes the stock options: Number of Weighted Weighted Outstanding at December 31, 2017 1,003,916 $ 4.18 8.1 Granted at market price 145,792 7.00 Exercised (95,162) 3.48 Cancelled (67,855) 3.37 Outstanding at December 31, 2018 986,691 $ 4.72 6.8 Granted at market price 65,759 12.31 Exercised (103,205) 5.28 Cancelled — — Outstanding at December 31, 2019 949,245 $ 5.19 6.5 Exercisable at December 31, 2019 592,265 $ 4.54 5.9 The aggregate intrinsic value of the Company's stock options exercised during 2019 and 2018 was $1,236,099 and $412,952, respectively. The aggregate intrinsic value of the Company’s stock options outstanding and expected to vest was $9,788,395 at December 31, 2019. The aggregate intrinsic value of the Company’s stock options exercisable was $6,872,930 at December 31, 2019. The weighted-average grant-date fair value of the Company's stock options granted during 2019 and 2018 was $5.21 and $2.95, respectively. The aggregate fair value of the Company's stock options vested during 2019 and 2018 was $388,672 and $509,729, respectively. For the years ended December 31, 2019 and 2018, stock-based compensation expense for stock options was $418,301 and $363,568, respectively. Unrecognized stock-based compensation expense for stock options as of December 31, 2019 was $729,263, which is expected to be recognized ratably over the next 2.5 years. Restricted Stock Restricted stock awards granted to employees generally vest in four equal annual installments. Restricted stock awards granted to non-employee directors vest on the earlier of (i) one year from the grant date and (ii) the date of the next annual meeting of the shareholders of the Company occurring after the date of grant. The information below summaries the restricted stock activity: Restricted Stock Awards Shares Weighted Average Grant-Date Fair Value per Award Non-vested at December 31, 2018 51,134 $ 7.64 Granted 26,131 $ 14.30 Vested (38,289) $ 7.44 Cancelled — $ — Non-vested at December 31, 2019 38,976 $ 12.31 For the years ended December 31, 2019 and 2018, stock-based compensation expense for restricted stock was $302,350 and $264,862, respectively. Unrecognized stock-based compensation expense for restricted stock awards as of December 31, 2019 was $321,031 to be recognized ratably over 2.1 years. Warrants In conjunction with the IPO, the Company issued warrants to the underwriters for the purchase of 90,000 shares of common stock, which were exercisable between November 10, 2015 and November 10, 2018 at an exercise price of $8.125 per share. The fair value of the warrants was determined using the Black-Scholes-Merton option valuation model. The unexercised warrants expired on November 10, 2018. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax provision (benefit) reported in the consolidated statements of operations is comprised of the following (rounded to hundreds): December 31, 2019 2018 Current provision (benefit): Federal $ — $ — State, net of state tax credits 47,200 39,300 Total current provision (benefit) 47,200 39,300 Deferred provision (benefit): Federal 800 (90,000) State 1,000 13,000 Total deferred provision (benefit) 1,800 (77,000) Total income tax provision (benefit) $ 49,000 $ (37,700) The following are the components of the Company’s deferred tax assets (liabilities) for federal and state income taxes (rounded to hundreds): December 31, 2019 2018 (as adjusted) Deferred income tax assets: Accrued expenses $ 515,800 $ 361,100 Deferred revenue 4,435,400 3,092,500 Deferred rent — 237,900 Lease abandonment — 96,500 Lease liability 3,782,800 — Goodwill - component 2 55,300 52,500 Restricted stock compensation 3,900 — Nonqualified stock options 198,900 184,400 Net operating loss carryforwards 3,585,700 6,175,600 Tax credits 33,800 14,000 Charitable contribution carryover — 15,500 Asset basis difference related to property and equipment 214,000 458,600 Intangibles 595,800 435,900 Total deferred income tax assets 13,421,400 11,124,500 Deferred income tax liabilities: Lease right-of-use asset (3,267,900) — Deferred franchise costs (406,500) (574,100) Goodwill - component 1 (245,500) (194,700) Restricted stock compensation — (30,800) Total deferred income tax liabilities (3,919,900) (799,600) Valuation allowance (9,591,400) (10,401,600) Net deferred tax liability $ (89,900) $ (76,700) Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the lack of sustained profitability over the three-year period ended December 31, 2019. Such objective evidence limits the ability to consider other subjective evidence, such as the Company's projections for future growth. On the basis of this evaluation, as of December 31, 2019, a valuation allowance of $9,591,400 has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as the Company's projections for growth. If and when the Company determines the valuation allowance should be released (i.e., reduced), the adjustment would result in a tax benefit reported in that period’s consolidated statement of operations, the effect of which would be an increase in reported net income. The amount of any such tax benefit associated with release of the Company's valuation allowance in a particular reporting period may be material. The 2017 Tax Act was signed into law on December 22, 2017. The 2017 Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 34% to 21%, eliminating certain deductions, imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax. The Company finalized the effects of the 2017 Tax Act and recorded the impact in its financial statements as of December 22, 2018 under Staff Accounting Bulletin No. 118 (SAB 118). The company recorded a tax benefit for the impact of the 2017 Tax Act of approximately $120,000 in 2018. This amount is a remeasurement of federal net deferred tax assets resulting from the permanent reduction in the U.S. statutory corporate tax rate to 21% from 34%. At December 31, 2019, The Joint Corp., without the VIE, had federal and state net operating losses of approximately $13,262,000 and $17,728,000, respectively. These net operating losses are available to offset future taxable income and will begin to expire in 2035 for federal purposes and 2025 for state purposes. The Joint Corp. has research and development credits of $14,000 that will begin to expire in 2031 and $20,000 California alternative minimum tax credits that do not expire. The following is a reconciliation of the statutory federal income tax rate applied to pre-tax accounting net income, compared to the income tax provision (benefit) in the consolidated statement of operations (rounded to hundreds): For the Years Ended December 31, 2019 2018 (as adjusted) Amount Percent Amount Percent Expected federal tax expense (benefit) $ 731,600 21.0 % $ 22,900 21.0 % State tax provision, net of federal benefit 315,800 9.1 % (63,600) (58.4) % Change in valuation allowance (810,200) (23.3) % 51,600 47.4 % Other permanent differences 41,700 1.2 % 13,200 12.1 % Stock compensation (232,600) (6.7) % (40,800) (37.4) % Bargain purchase gain (5,100) (0.1) % (16,100) (14.8) % Return to provision adjustments 7,800 0.2 % (4,900) (4.5) % Provision (benefit) $ 49,000 1.4 % $ (37,700) (34.6) % Changes in the Company's income tax expense relate primarily to changes in pretax income during the year ended December 31, 2019, as compared to year ended December 31, 2018, and the effective tax rate was 1.4% and (34.6)%, respectively. For the years ended December 31, 2019 and December 31, 2018, the difference between the statutory federal income tax rate and the Company's effective tax rate was primarily due to state taxes, the valuation allowance, VIE permanent differences, and stock-based compensation. For the years ended December 31, 2019 and December 31, 2018, the Company had no uncertain tax positions or interest and penalties related to uncertain tax positions. Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses, if any. With exceptions due to the generation and utilization of net operating losses or credits, as of December 31, 2019, the Company is no longer subject to federal and state examinations by taxing authorities for tax years before 2016 and 2015, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The table below summarizes the components of lease expense and income statement location for the year ended December 31, 2019: Line Item in the Company’s Consolidated Statements of Operations Year Ended December 31, 2019 Finance lease costs: Amortization of assets Depreciation and amortization $ 24,675 Interest on lease liabilities Other expense, net 6,832 Total finance lease costs $ 31,507 Operating lease costs General and administrative expenses $ 3,005,124 Total lease costs $ 3,036,631 Supplemental information and balance sheet location related to leases is as follows: December 31, 2019 Operating Leases: Operating lease right-of -use asset $ 12,486,672 Operating lease liability - current portion 2,313,109 Operating lease liability - net of current portion 11,901,040 Total operating lease liability $ 14,214,149 Finance Leases: Property and equipment, at cost 80,604 Less accumulated amortization (24,675) Property and equipment, net $ 55,929 Finance lease liability - current portion 24,253 Finance lease liability - net of current portion 34,398 Total finance lease liabilities $ 58,651 Weighted average remaining lease term (in years): Operating leases 5.4 Finance lease 2.3 Weighted average discount rate: Operating leases 8.7 % Finance leases 10.0 % Supplemental cash flow information related to leases is as follows: Year Ended December 31, 2019 Cash paid for amounts included in measurement of liabilities: Operating cash flows from operating leases $ 2,834,903 Operating cash flows from finance leases 6,832 Financing cash flows from finance leases 21,954 Non-cash transactions: ROU assets obtained in exchange for lease liabilities Operating lease $ 1,350,090 Finance lease 80,604 Maturities of lease liabilities as of December 31, 2019 are as follows: Operating Leases Finance Lease 2020 $ 3,376,830 $ 28,786 2021 3,545,186 28,786 2022 3,430,110 7,676 2023 2,716,465 — 2024 2,096,333 — Thereafter 2,629,450 — Total lease payments 17,794,374 65,248 Less: Imputed interest (3,580,225) (6,597) Total lease obligations 14,214,149 58,651 Less: Current obligations (2,313,109) (24,253) Long-term lease obligation $ 11,901,040 $ 34,398 The future minimum obligations under operating leases in effect as of December 31, 2018 having a noncancelable term in excess of one year as determined prior to the adoption of ASC 842 are as follows: Operating Leases 2020 $ 2,630,443 2021 2,406,645 2022 2,299,887 2023 2,195,077 2024 1,474,396 Thereafter 2,772,575 Total $ 13,779,023 Total rent expense for the years ended December 31, 2019 and 2018 was $3,381,825 and $2,844,010, respectively. During the fourth quarter of 2019, the Company entered into various operating leases for its new corporate clinics' space that have not yet commenced. These leases are expected to result in additional ROU asset and liability of approximately $1.3 million. These leases are expected to commence during the first quarter of 2020, with a lease term of five Litigation In the normal course of business, the Company is party to litigation from time to time. The Company maintains insurance to cover certain actions and believes that resolution of such litigation will not have a material adverse effect on the Company. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2019 | |
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 Chief Operating Decision Maker (“CODM”) to evaluate performance and make operating decisions. The Company has identified its CODM as the Chief Executive Officer. The Company has two operating business segments. The Corporate Clinics segment is comprised of the operating activities of the company-owned or managed clinics. As of December 31, 2019, the Company operated or managed 60 clinics under this segment. The Franchise Operations segment is comprised of the operating activities of the franchise business unit. As of December 31, 2019, the franchise system consisted of 453 clinics in operation. Corporate is a non-operating segment that develops and implements strategic initiatives and supports the Company’s two operating business segments by centralizing key administrative functions such as finance and treasury, information technology, insurance and risk management, legal and human resources. Corporate also provides the necessary administrative functions to support the Company as a publicly-traded company. A portion of the expenses incurred by Corporate are allocated to the operating segments. The tables below present financial information for the Company’s two operating business segments (in thousands). Year Ended December 31, 2019 2018 (as adjusted) Revenues: Corporate clinics $ 25,808 $ 19,545 Franchise operations 22,643 17,116 Total revenues $ 48,451 $ 36,661 Segment operating income: Corporate clinics $ 3,365 $ 1,475 Franchise operations 10,975 8,083 Total segment operating income $ 14,340 $ 9,558 Depreciation and amortization: Corporate clinics $ 1,708 $ 1,105 Franchise operations — — Corporate administration 191 451 Total depreciation and amortization $ 1,899 $ 1,556 Reconciliation of total segment operating income to consolidated earnings before income taxes: Total segment operating income $ 14,340 $ 9,558 Unallocated corporate (10,925) (9,415) Consolidated income from operations 3,415 143 Bargain purchase gain 19 13 Other (expense), net (62) (47) Income before income tax expense $ 3,372 $ 109 December 31, 2019 December 31, 2018 Segment assets: (as adjusted) Corporate clinics $ 25,625 $ 8,828 Franchise operations 5,770 4,455 Total segment assets $ 31,395 $ 13,283 Unallocated cash and cash equivalents and restricted cash $ 8,642 $ 8,855 Unallocated property and equipment 2,555 487 Other unallocated assets 1,114 803 Total assets $ 43,706 $ 23,428 “Unallocated cash and cash equivalents and restricted cash” relates primarily to corporate cash and cash equivalents and restricted cash (see Note 1), “unallocated property and equipment” relates primarily to corporate fixed assets, and “other unallocated assets” relates primarily to deposits, prepaid and other assets. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On February 28, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”), with JPMorgan Chase Bank, N.A., individually, and as Administrative Agent and Issuing Bank (“JPMorgan Chase” or the “Lender”). The Credit Agreement provides for senior secured credit facilities (the "Credit Facilities") in the amount of $7,500,000, including a $2,000,000 revolver (the "Revolver") and $5,500,000 development line of credit (the "Line of Credit"). The Revolver includes amounts available for letters of credit of up to $1,000,000 and an uncommitted additional amount of $2,500,000 All outstanding principal and interest on the Revolver are due on February 28, 2022. Principal and interest outstanding on the Line of Credit at the end of the first year are converted to a term loan payable in 36 monthly payments with a final maturity date of March 31, 2024. Principal and interest outstanding on the Line of Credit at the end of the second year are converted to a second term loan payable in 36 monthly payments with a final maturity date of March 31, 2025. Borrowings under the Credit Facilities bear interest at a rate equal to an applicable margin, which is a one-, three- or six-month reserve adjusted Eurocurrency rate plus 2.00% or, at the election of the Company, an alternative base rate, plus 1.00%. The alternative base rate is the greatest of the prime rate, the Federal Reserve Bank of New York rate plus 0.50% and the one-month reserve adjusted Eurocurrency plus 1.00%. Unused portions of the Credit Facilities bear interest at a rate equal to 0.25% per annum. If the current Eurocurrency rate is no longer available or representative, the loan agreement provides a mechanism for replacing that benchmark rate. The Credit Facilities are pre-payable at any time without penalty, other than customary breakage fees, and any voluntary repayments made by the Company would reduce the future required repayment amounts. The Credit Facilities contain customary events of default, including but not limited to nonpayment; material inaccuracy of representations and warranties; violations of covenants; certain bankruptcies and liquidations; cross-default to material indebtedness; certain material judgments; and certain fundamental changes such as a merger or sale of substantially all assets (as further defined in the Credit Facilities). The Credit Facilities require the Company to comply with customary affirmative, negative and financial covenants, including minimum interest coverage and maximum net leverage. A breach of any of these operating or financial covenants would result in a default under the Credit Facilities. If an event of default occurs and is continuing, the lenders could elect to declare all amounts then outstanding, together with accrued interest, to be immediately due and payable. The Credit Facilities are collateralized by substantially all of the Company’s assets, including the assets in the Company’s company-owned or managed clinics. The Company intends to use the Revolver for general working capital needs and the Line of Credit for acquiring and developing new chiropractic clinics. The Company granted a security interest to the Lender in all assets of the Company, including the assets in the Company’s company-owned or managed clinics, and all proceeds thereof, pursuant to a pledge and security agreement. |
Nature of Operations and Summ_2
Nature of Operations and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These financial statements represent the consolidated financial statements of The Joint Corp. (“The Joint”), its variable interest entities (“VIEs”), and its wholly owned subsidiary, The Joint Corporate Unit No. 1, LLC (collectively, the “Company”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other (expenses) income that are reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the Company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. |
Nature of Operations | Nature of Operations The Joint Corp., a Delaware corporation, was formed on March 10, 2010 for the principal purpose of franchising, developing and managing chiropractic clinics, selling regional developer rights and supporting the operations of franchised chiropractic clinics at locations throughout the United States of America. The franchising of chiropractic clinics is regulated by the Federal Trade Commission and various state authorities. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of The Joint Corp. and its wholly-owned subsidiary, The Joint Corporate Unit No. 1, LLC, which was dormant for all periods presented. The Company consolidates VIEs in which the Company is the primary beneficiary in accordance with ASC 810. Non-controlling interests represent third-party equity ownership interests in VIEs. All significant inter-affiliate accounts and transactions between The Joint and its VIEs have been eliminated in consolidation. Certain balances were reclassified from regional developer fees to other revenues for the year ended December 31, 2018 to conform to the current year presentation. |
Comprehensive Income | Comprehensive Income Net income and comprehensive income are the same for the years ended December 31, 2019 and 2018. |
Variable Interest Entities | Variable Interest Entities An entity deemed to hold the controlling interest in a voting interest entity or deemed to be the primary beneficiary of a VIE is required to consolidate the VIE in its financial statements. An entity is deemed to be the primary beneficiary of a VIE if it has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb the majority of losses of the VIE or the right to receive the majority of benefits from the VIE. Certain states in which the Company manages clinics regulate the practice of chiropractic care and require that chiropractic services be provided by legal entities organized under state laws as professional corporations or PCs. In these states, the Company has entered into management services agreements with PCs under which the Company provides, on an exclusive basis, all non-clinical services of the chiropractic practice. Such PCs are VIEs, as fees paid by the PCs to the Company as its management service provider are considered variable interests because they are liabilities on the PC’s books and the fees do not meet all the following criteria: 1) The fees are compensation for services provided and are commensurate with the level of effort required to provide those services; 2) The decision maker or service provider does not hold other interests in the VIE that individually, or in the aggregate, would absorb more than an insignificant amount of the VIE’s expected losses or receive more than an insignificant amount of the VIE’s expected residual returns; 3) The service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm’s length. During the |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company continually monitors its positions with, and credit quality of, the financial institutions with which it invests. As of the balance sheet date and periodically throughout the period, the Company has maintained balances in various operating accounts in excess of federally insured limits. The Company has invested substantially all its cash in short-term bank deposits. The Company had no cash equivalents as of December 31, 2019 and 2018. |
Restricted Cash | Restricted Cash Restricted cash relates to cash that franchisees and company-owned or managed clinics contribute to the Company’s National Marketing Fund and cash that franchisees provide to various voluntary regional Co-Op Marketing Funds. Cash contributed by franchisees to the National Marketing Fund is to be used in accordance with the Company’s Franchise Disclosure Document with a focus on regional and national marketing and advertising. |
Accounts Receivable | Accounts ReceivableAccounts receivable primarily represent amounts due from franchisees for royalty fees. The Company considers a reserve for doubtful accounts based on the creditworthiness of the entity. The provision for uncollectible amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to cover future losses. The allowance is management’s best estimate of uncollectible amounts and is determined based on specific identification and historical performance that the Company tracks on an ongoing basis. Actual losses ultimately could differ materially in the near term from the amounts estimated in determining the allowance. As of December 31, 2019, and 2018, the Company had an allowance for doubtful accounts of $0. |
Deferred Franchise Costs | Deferred Franchise Costs Deferred franchise costs represent commissions that are direct and incremental to the Company and are paid in conjunction with the sale of a franchise license. These costs are recognized as an expense, in franchise cost of revenues when the respective revenue is recognized, which is generally over the term of the related franchise agreement. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost or for property acquired as part of franchise acquisitions at fair value at the date of closing. Depreciation is computed using the straight-line method over estimated useful lives of three Maintenance and repairs are charged to expense as incurred; major renewals and improvements are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income. |
Capitalized Software | Capitalized SoftwareThe Company capitalizes certain software development costs. These capitalized costs are primarily related to software used by clinics for operations and by the Company for the management of operations. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct, are capitalized as assets in progress until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Software developed is recorded as part of property and equipment. Maintenance and training costs are expensed as incurred. Internal use software is amortized on a straight-line basis over its estimated useful life, which is generally five years. |
Leases | Leases The Company adopted the guidance of Accounting Standards Codification 842 – Leases (“ASC 842”) on January 1, 2019 which requires lessees to recognize a right-of-use ("ROU") asset and lease liability for all leases. The Company elected the package of transition practical expedients for existing contracts, which allowed the Company to carry forward its historical assessments of whether contracts are or contain leases, lease classification and determination of initial direct costs. The Company leases property and equipment under operating and finance leases. The Company leases its corporate office space and the space for each of the company-owned or managed clinic in the portfolio. Determining the lease term and amount of lease payments to include in the calculation of the ROU asset and lease liability for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and if the optional period and payments should be included in the calculation of the associated ROU asset and liability. In making this determination, all relevant economic factors are considered that would compel the Company to exercise or not exercise an option. When available, the Company uses the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of its leases. In such cases, the Company estimates its incremental borrowing rate as the interest rate it would pay to borrow an amount equal to the lease payments over a similar term, with similar collateral as in the lease, and in a similar economic environment. The Company estimates these rates using available evidence such as rates imposed by third-party lenders to the Company in recent financings or observable risk-free interest rate and credit spreads for commercial debt of a similar duration, with credit spreads correlating to the Company’s estimated creditworthiness. For operating leases that include rent holidays and rent escalation clauses, the Company recognizes lease expense on a straight-line basis over the lease term from the date it takes possession of the leased property. Pre-opening costs are recorded as incurred in general and administrative expenses. The Company records the straight-line lease expense and any contingent rent, if applicable, in general and administrative expenses on the consolidated statements of operations. Many of the Company’s leases also require it to pay real estate taxes, common area maintenance costs and other occupancy costs which are also included in general and administrative expenses on the consolidated statements of operations. |
Intangible Assets | Intangible Assets Intangible assets consist primarily of re-acquired franchise and regional developer rights and customer relationships. The Company amortizes the fair value of re-acquired franchise rights over the remaining contractual terms of the re-acquired franchise rights at the time of the acquisition, which generally range from three |
Goodwill | GoodwillGoodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired in the acquisitions of franchises. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. As required, the Company performs an annual impairment test of goodwill as of the first day of the fourth quarter or more frequently if events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. |
Long-Lived Assets | Long-Lived AssetsThe Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company looks primarily to estimated undiscounted future cash flows in its assessment of whether or not long-lived assets are recoverable. |
Advertising Fund | Advertising Fund The Company has established an advertising fund for national/regional marketing and advertising of services offered by its clinics. The monthly marketing fee is 2% of clinic sales. The Company segregates the marketing funds collected which are included in restricted cash on its consolidated balance sheets. As amounts are expended from the fund, the Company recognizes a related expense. |
Co-Op Marketing Funds | Co-Op Marketing Funds Some franchises have established regional Co-Ops for advertising within their local and regional markets. The Company maintains a custodial relationship under which the marketing funds collected are segregated and used for the purposes specified by the Co-Ops’ officers. The marketing funds are included in restricted cash on the Company’s consolidated balance sheets. |
Revenue Recognition | Revenue Recognition The Company generates revenue primarily through its company-owned and managed clinics, royalties, franchise fees, advertising fund, and through IT related income and computer software fees. Revenues from Company-Owned or Managed Clinics. The Company earns revenues from clinics that it owns and operates or manages throughout the United States. In those states where the Company owns and operates or manages the clinic, revenues are recognized when services are performed. The Company offers a variety of membership and wellness packages which feature discounted pricing as compared with its single-visit pricing. Amounts collected in advance for membership and wellness packages are recorded as deferred revenue and recognized when the service is performed. The Company recognizes a contract liability (or a deferred revenue liability) related to the prepaid treatment plans for which the Company has an ongoing performance obligation. The Company recognizes this contract liability, and recognizes revenue, as the patient consumes his or her visits related to the package and the Company transfers its services. Based on a historical lag analysis and an evaluation of legal obligation by jurisdiction, the Company concluded that any remaining contract liability that exists after 12 to 24 months from transaction date will be deemed breakage. Breakage revenue is recognized only at that point, when the likelihood of the patient exercising his or her remaining rights becomes remote. Royalties and Advertising Fund Revenue. The Company collects royalties, as stipulated in the franchise agreement, equal to 7% of gross sales, and a marketing and advertising fee currently equal to 2% of gross sales. Royalties, including franchisee contributions to advertising funds, are calculated as a percentage of clinic sales over the term of the franchise agreement. The franchise agreement royalties, inclusive of advertising fund contributions, represent sales-based royalties that are related entirely to the Company’s performance obligation under the franchise agreement and are recognized as franchisee clinic level sales occur. Royalties are collected bi-monthly two working days after each sales period has ended. Franchise Fees. The Company requires the entire non-refundable initial franchise fee to be paid upon execution of a franchise agreement, which typically has an initial term of ten years. Initial franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. The Company’s services under the franchise agreement include: training of franchisees and staff, site selection, construction/vendor management and ongoing operations support. The Company provides no financing to franchisees and offers no guarantees on their behalf. The services provided by the Company are highly interrelated with the franchise license and as such are considered to represent a single performance obligation. Software Fees. The Company collects a monthly fee for use of its proprietary chiropractic software, computer support, and internet services support. These fees are recognized ratably on a straight-line basis over the term of the respective franchise agreement. Regional Developer Fees . During 2011, the Company established a regional developer program to engage independent contractors to assist in developing specified geographical regions. Under the historical program, regional developers paid a license fee for each franchise they received the right to develop within the region. In 2017, the program was revised to grant exclusive geographical territory and establish a minimum development obligation within that defined territory. Regional developer fees paid to the Company are non-refundable and are recognized as revenue ratably on a straight-line basis over the term of the regional developer agreement, which is considered to begin upon the execution of the agreement. The Company’s services under regional developer agreements include site selection, grand opening support for the clinics, sales support for identification of qualified franchisees, general operational support and marketing support to advertise for ownership opportunities. The services provided by the Company are highly interrelated with the development of the territory and the resulting franchise licenses sold by the regional developer and as such are considered to represent a single performance obligation. In addition, regional developers receive fees which are funded by the initial franchise fees collected from franchisees upon the sale of franchises within their exclusive geographical territory and a royalty of 3% of sales generated by franchised clinics in their exclusive geographical territory. Fees related to the sale of franchises within their exclusive geographical territory are initially deferred as deferred franchise costs and are recognized as an expense in franchise cost of revenues when the respective revenue is recognized, which is generally over the term of the related franchise agreement. Royalties of 3% of sales generated by franchised clinics in their regions are also recognized as franchise cost of revenues as franchisee clinic level sales occur. |
Advertising Costs | Advertising CostsAdvertising costs are expensed as incurred. |
Income Taxes | Income Taxes Deferred income taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate principally to depreciation of property and equipment and treatment of revenue for franchise fees and regional developer fees collected. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company accounts for uncertainty in income taxes by recognizing the tax benefit or expense from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits and expenses recognized in the consolidated financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company has not identified any material uncertain tax positions as of December 31, 2019 and 2018, respectively. Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses. With exceptions due to the generation and utilization of net operating losses or credits, as of December 31, 2019, the Company is no longer subject to federal and state examinations by taxing authorities for tax years before 2016 and 2015, respectively. |
Earnings per Common Share | Earnings per Common Share Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed by giving effect to all potentially dilutive common shares including restricted stock and stock options. |
Share-Based Compensation | Stock-Based Compensation The Company accounts for share-based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. The Company determines the estimated grant-date fair value of restricted shares using the closing price on the date of the grant and the grant-date fair value of stock options using the Black-Scholes-Merton model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. The Company recognizes compensation costs ratably over the period of service using the straight-line method. Forfeitures are estimated based on historical and forecasted turnover. |
Retirement Benefit Plan | Retirement Benefit PlanEmployees of the Company are eligible to participate in a defined contribution retirement plan, the Joint Corp. 401(k) Retirement Plan (“401(k) Plan”), under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, employees may contribute their eligible compensation, not to exceed the annual limits set by the IRS. The 401(k) Plan allows the Company to match participants’ contributions in an amount determined at the sole discretion of the Company. The Company matched participants’ contributions during fiscal years 2019 and 2018, up to a maximum of 2% of the employee’s eligible compensation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Items subject to significant estimates and assumptions include the allowance for doubtful accounts, share-based compensation arrangements, fair value of stock options, useful lives and realizability of long-lived assets, classification of deferred revenue and revenue recognition related to breakage, classification of deferred franchise costs, calculation of ROU assets and liabilities related to leases, realizability of deferred tax assets, impairment of goodwill and intangible assets and purchase price allocations and related valuation. |
Recent Accounting Pronouncements/Newly Issued Accounting Standards Not Yet Adopted | Recent Accounting Pronouncements Recently Adopted Accounting Guidance On January 1, 2019, the Company adopted ASC 842, which requires lessees to recognize a ROU asset and lease liability on their balance sheet for all leases with terms beyond twelve months. The new standard also requires enhanced disclosures that provide more transparency and information to financial statement users about lease portfolios. Effective January 1, 2019, the Company adopted the requirements of ASC 842 using the modified retrospective approach using the optional transition method and elected to apply the provisions of the standard as of the adoption date rather than the earliest date presented. The consolidated financial statements for the period ended December 31, 2019 are presented under the new standard, while comparative periods presented have not been adjusted and continue to be reported in accordance with the previous standard. During the process of adoption, the Company made the following elections: • The Company elected the package of practical expedients which allowed the Company to not reassess: • Whether existing or expired contracts contain leases under the new definition of a lease; • Lease classification for existing or expired leases; and • Initial direct costs for any expired or existing leases to determine if they would qualify for capitalization under ASC 842. • The Company did not elect the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of operating lease assets. • The Company did not elect the land easement practical expedient, which permits an entity to continue applying its current policy for accounting for land easements that existed as of, or expired before, the effective date of ASC 842. • The Company elected to make the accounting policy election for short-term leases, permitting the Company to not apply the recognition requirements of ASC 842 to short-term leases with terms of 12 months or less. The adoption of ASC 842 does not materially impact the Company’s results of operations other than recognition of the operating lease ROU asset and lease liability. See Note 12 for additional disclosures required by ASC 842. Newly Issued Accounting Standards Not Yet Adopted The Company reviewed other newly issued accounting pronouncements and concluded that they either are not applicable to the Company's operations or that no material effect is expected on the Company's financial statements upon future adoption. |
Nature of Operations and Summ_3
Nature of Operations and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Error Corrections and Prior Period Adjustments | The immaterial impacts of this error correction for the fiscal year ended December 31, 2018 were as follows: THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2018 Adjustments Due To VIE Consolidation Year Ended December 31, 2018 (as reported) (as adjusted) Revenues: Revenues from company-owned or managed clinics $ 14,672,865 $ 4,872,411 $ 19,545,276 Total revenues 31,789,249 4,872,411 36,661,660 General and administrative expenses 20,304,131 4,933,990 25,238,121 Total selling, general and administrative expenses 26,679,926 4,933,990 31,613,916 Income from operations 204,139 (61,578) 142,561 Other income (expense): Bargain purchase gain 58,006 (44,808) $ 13,198 Total other income (expense) 11,215 (44,808) $ (33,593) Income before income tax (benefit) expense 215,354 (106,386) $ 108,968 Net income and comprehensive income $ 253,082 (106,386) $ 146,696 Earnings per share: Basic earnings per share $ 0.02 (0.01) $ 0.01 Diluted earnings per share $ 0.02 (0.01) $ 0.01 Basic weighted average shares 13,669,107 — $ 13,669,107 Diluted weighted average shares 14,031,717 — $ 14,031,717 THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES CONSOLIDATED BALANCE SHEETS December 31, 2018 Adjustments Due To VIE Consolidation December 31, 2018 ASSETS (as reported) (as adjusted) Current assets: Accounts receivable, net 1,213,707 (407,357) 806,350 Total current assets 11,711,345 (407,357) 11,303,988 Goodwill 2,916,426 308,719 3,225,145 Total assets $ 23,526,352 $ (98,639) $ 23,427,713 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Deferred revenue from company clinics 994,493 1,535,004 2,529,497 Total current liabilities 8,738,123 1,535,004 10,273,127 Total liabilities 21,165,108 1,535,004 22,700,112 Commitments and contingencies Equity: The Joint Corp. stockholders' equity: Accumulated deficit (35,750,908) (1,633,743) (37,384,651) Total The Joint Corp. stockholders' equity 2,361,244 (1,633,743) 727,501 Non-controlling Interest — 100 100 Total equity 2,361,244 (1,633,643) 727,601 Total liabilities and equity $ 23,526,352 $ (98,639) $ 23,427,713 |
Schedule of Franchisor Disclosure | The following table summarizes the number of clinics in operation under franchise agreements and as company-owned or managed for the years ended December 31, 2019 and 2018: Year Ended December 31, Franchised clinics: 2019 2018 Clinics open at beginning of period 394 352 Opened during the period 71 47 Sold during the period (8) (1) Closed during the period (4) (4) Clinics in operation at the end of the period 453 394 Year Ended December 31, Company-owned or managed clinics: 2019 2018 Clinics open at beginning of period 48 47 Opened during the period 5 — Acquired during the period 8 1 Closed during the period (1) — Clinics in operation at the end of the period 60 48 Total clinics in operation at the end of the period 513 442 Clinic licenses sold but not yet developed 170 136 Executed letters of intent for future clinic licenses 34 19 |
Schedule of Earnings (Loss) per Common Share | Year Ended December 31, 2019 2018 (as adjusted) Net income $ 3,323,712 $ 146,696 Weighted average common shares outstanding - basic 13,819,149 13,669,107 Effect of dilutive securities: Unvested restricted stock and stock options 648,418 362,610 Weighted average common shares outstanding - diluted 14,467,567 14,031,717 Basic earnings per share $ 0.24 $ 0.01 Diluted earnings per share $ 0.23 $ 0.01 Potentially dilutive securities excluded from the calculation of diluted net income per common share as the effect would be anti-dilutive were as follows: Year Ended December 31, 2019 2018 Unvested restricted stock — 6,896 Stock options 39,286 236,205 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | The following summarizes the aggregate estimated fair values of the assets acquired and liabilities assumed during 2019 as of the acquisition date: Property and equipment $ 173,521 Operating lease right-of-use asset 1,283,608 Intangible assets 1,999,469 Total assets acquired 3,456,598 Goodwill 925,315 Deferred revenue (140,861) Operating lease liability - current portion (256,601) Operating lease liability - net of current portion (867,216) Deferred tax liability (11,410) Bargain purchase gain (19,298) Net purchase price $ 3,086,527 |
Schedule of Unaudited Pro Forma Information | The following table summarizes selected unaudited pro forma consolidated statements of operations data for the years ended December 31, 2019 and 2018 as if the acquisition in 2019 had been completed on January 1, 2018. Pro Forma for the Year Ended December 31, 2019 December 31, 2018 Revenues, net $ 50,399,700 $ 39,774,609 Net income (loss) $ 3,241,918 $ (77,662) |
Revenue Disclosures (Tables)
Revenue Disclosures (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Changes in Contract Asset and Liability | Changes in the Company's contract liability for deferred franchise and regional development fees during the year ended December 31, 2019 and 2018 were as follows (in thousands): Deferred Revenue Balance at December 31, 2017 $ 11,547 Recognized as revenue during the year ended December 31, 2018 (2,287) Fees received and deferred during the year ended December 31, 2018 4,349 Balance at December 31, 2018 $ 13,609 Recognized as revenue during the year ended December 31, 2019 (2,595) Fees received and deferred, net 4,093 Balance at December 31, 2019 $ 15,107 Changes in the Company's contract assets for deferred franchise costs during the year ended December 31, 2019 and 2018 were as follows (in thousands): Deferred Franchise Costs short and long-term Balance at December 31, 2017 $ 2,811 Recognized as cost of revenue during the year ended December 31, 2018 (631) Costs incurred and deferred during the year ended December 31, 2018 1,309 Balance at December 31, 2018 $ 3,489 Recognized as cost of revenue during the year ended December 31, 2019 (812) Costs incurred and deferred, net 1,716 Balance at December 31, 2019 $ 4,393 |
Schedule of Revenue Expected to be Recognized Related to Performance Obligations | The following table illustrates revenues expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of December 31, 2019 (in thousands): Contract liabilities expected to be recognized in Amount 2020 $ 2,741 2021 2,626 2022 2,240 2023 1,907 2024 1,477 Thereafter 4,116 Total $ 15,107 |
Restricted Cash (Tables)
Restricted Cash (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | |
Reconciliation of Cash, Cash Equivalents and Restricted Cash Balance | The table below reconciles the cash and cash equivalents balance and restricted cash balances from the Company’s consolidated balance sheets to the amount of cash reported on the consolidated statements of cash flows: December 31, 2019 2018 Cash and cash equivalents $ 8,455,989 $ 8,716,874 Restricted cash 185,888 138,078 Total cash, cash equivalents and restricted cash $ 8,641,877 $ 8,854,952 |
Notes Receivable (Tables)
Notes Receivable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of Financing Receivables, Minimum Payments | Maturities of notes receivable as of December 31, 2019 are as follows: 2020 $ 137,124 2021 9,600 2022 $ 9,086 Total $ 155,810 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property and equipment consist of the following: December 31, 2019 2018 Office and computer equipment $ 1,594,364 $ 1,243,104 Leasehold improvements 7,154,156 5,407,915 Software developed 1,193,007 1,145,742 Finance lease assets 80,604 — 10,022,131 7,796,761 Accumulated depreciation and amortization (5,671,366) (4,909,002) 4,350,765 2,887,759 Construction in progress 2,230,823 770,248 Property and Equipment, net $ 6,581,588 $ 3,658,007 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consisted of the following: December 31, 2019 Gross Carrying Amount Accumulated Amortization Net Carrying Value Intangible assets subject to amortization: Reacquired franchise rights $ 3,246,494 $ 1,400,086 $ 1,846,408 Customer relationships 1,255,975 865,478 390,497 Reacquired development rights 2,050,481 1,067,595 982,886 $ 6,552,950 $ 3,333,159 $ 3,219,791 December 31, 2018 Gross Carrying Amount Accumulated Amortization Net Carrying Value Intangible assets subject to amortization: Reacquired franchise rights $ 1,758,000 $ 921,138 $ 836,862 Customer relationships 745,000 717,498 27,502 Reacquired development rights 1,413,316 643,620 769,696 $ 3,916,316 $ 2,282,256 $ 1,634,060 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated amortization expense for 2020 and subsequent years is as follows: 2020 $ 1,409,962 2021 1,212,703 2022 539,750 2023 57,376 Total $ 3,219,791 |
Schedule of Goodwill | The changes in the carrying amount of goodwill were as follows: Corporate Clinic Segment Balance as of December 31, 2018 Goodwill, gross $ 3,280,139 Accumulated impairment losses (54,994) Goodwill, net 3,225,145 2019 acquisitions 925,316 Balance as of December 31, 2019 Goodwill, gross 4,205,455 Accumulated impairment losses (54,994) Goodwill, net $ 4,150,461 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The Company has computed the fair value of all options granted using the Black-Scholes-Merton model during the years ended December 31, 2019 and 2018, using the following assumptions: Year Ended December 31, 2019 2018 Expected volatility 35% to 55% 35% Expected dividends None None Expected term (years) 7 7 Risk-free rate 1.89% to 2.61% 2.53% to 2.90% Forfeiture rate 20% 20% |
Share-based Compensation, Stock Options, Activity | The information below summarizes the stock options: Number of Weighted Weighted Outstanding at December 31, 2017 1,003,916 $ 4.18 8.1 Granted at market price 145,792 7.00 Exercised (95,162) 3.48 Cancelled (67,855) 3.37 Outstanding at December 31, 2018 986,691 $ 4.72 6.8 Granted at market price 65,759 12.31 Exercised (103,205) 5.28 Cancelled — — Outstanding at December 31, 2019 949,245 $ 5.19 6.5 Exercisable at December 31, 2019 592,265 $ 4.54 5.9 |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The information below summaries the restricted stock activity: Restricted Stock Awards Shares Weighted Average Grant-Date Fair Value per Award Non-vested at December 31, 2018 51,134 $ 7.64 Granted 26,131 $ 14.30 Vested (38,289) $ 7.44 Cancelled — $ — Non-vested at December 31, 2019 38,976 $ 12.31 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | Income tax provision (benefit) reported in the consolidated statements of operations is comprised of the following (rounded to hundreds): December 31, 2019 2018 Current provision (benefit): Federal $ — $ — State, net of state tax credits 47,200 39,300 Total current provision (benefit) 47,200 39,300 Deferred provision (benefit): Federal 800 (90,000) State 1,000 13,000 Total deferred provision (benefit) 1,800 (77,000) Total income tax provision (benefit) $ 49,000 $ (37,700) |
Schedule of Deferred Tax Assets and Liabilities | The following are the components of the Company’s deferred tax assets (liabilities) for federal and state income taxes (rounded to hundreds): December 31, 2019 2018 (as adjusted) Deferred income tax assets: Accrued expenses $ 515,800 $ 361,100 Deferred revenue 4,435,400 3,092,500 Deferred rent — 237,900 Lease abandonment — 96,500 Lease liability 3,782,800 — Goodwill - component 2 55,300 52,500 Restricted stock compensation 3,900 — Nonqualified stock options 198,900 184,400 Net operating loss carryforwards 3,585,700 6,175,600 Tax credits 33,800 14,000 Charitable contribution carryover — 15,500 Asset basis difference related to property and equipment 214,000 458,600 Intangibles 595,800 435,900 Total deferred income tax assets 13,421,400 11,124,500 Deferred income tax liabilities: Lease right-of-use asset (3,267,900) — Deferred franchise costs (406,500) (574,100) Goodwill - component 1 (245,500) (194,700) Restricted stock compensation — (30,800) Total deferred income tax liabilities (3,919,900) (799,600) Valuation allowance (9,591,400) (10,401,600) Net deferred tax liability $ (89,900) $ (76,700) |
Schedule of Effective Income Tax Rate Reconciliation | The following is a reconciliation of the statutory federal income tax rate applied to pre-tax accounting net income, compared to the income tax provision (benefit) in the consolidated statement of operations (rounded to hundreds): For the Years Ended December 31, 2019 2018 (as adjusted) Amount Percent Amount Percent Expected federal tax expense (benefit) $ 731,600 21.0 % $ 22,900 21.0 % State tax provision, net of federal benefit 315,800 9.1 % (63,600) (58.4) % Change in valuation allowance (810,200) (23.3) % 51,600 47.4 % Other permanent differences 41,700 1.2 % 13,200 12.1 % Stock compensation (232,600) (6.7) % (40,800) (37.4) % Bargain purchase gain (5,100) (0.1) % (16,100) (14.8) % Return to provision adjustments 7,800 0.2 % (4,900) (4.5) % Provision (benefit) $ 49,000 1.4 % $ (37,700) (34.6) % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease, Cost | The table below summarizes the components of lease expense and income statement location for the year ended December 31, 2019: Line Item in the Company’s Consolidated Statements of Operations Year Ended December 31, 2019 Finance lease costs: Amortization of assets Depreciation and amortization $ 24,675 Interest on lease liabilities Other expense, net 6,832 Total finance lease costs $ 31,507 Operating lease costs General and administrative expenses $ 3,005,124 Total lease costs $ 3,036,631 |
Assets And Liabilities, Lessee | Supplemental information and balance sheet location related to leases is as follows: December 31, 2019 Operating Leases: Operating lease right-of -use asset $ 12,486,672 Operating lease liability - current portion 2,313,109 Operating lease liability - net of current portion 11,901,040 Total operating lease liability $ 14,214,149 Finance Leases: Property and equipment, at cost 80,604 Less accumulated amortization (24,675) Property and equipment, net $ 55,929 Finance lease liability - current portion 24,253 Finance lease liability - net of current portion 34,398 Total finance lease liabilities $ 58,651 Weighted average remaining lease term (in years): Operating leases 5.4 Finance lease 2.3 Weighted average discount rate: Operating leases 8.7 % Finance leases 10.0 % Supplemental cash flow information related to leases is as follows: Year Ended December 31, 2019 Cash paid for amounts included in measurement of liabilities: Operating cash flows from operating leases $ 2,834,903 Operating cash flows from finance leases 6,832 Financing cash flows from finance leases 21,954 Non-cash transactions: ROU assets obtained in exchange for lease liabilities Operating lease $ 1,350,090 Finance lease 80,604 |
Lessee, Operating Lease, Liability, Maturity | Maturities of lease liabilities as of December 31, 2019 are as follows: Operating Leases Finance Lease 2020 $ 3,376,830 $ 28,786 2021 3,545,186 28,786 2022 3,430,110 7,676 2023 2,716,465 — 2024 2,096,333 — Thereafter 2,629,450 — Total lease payments 17,794,374 65,248 Less: Imputed interest (3,580,225) (6,597) Total lease obligations 14,214,149 58,651 Less: Current obligations (2,313,109) (24,253) Long-term lease obligation $ 11,901,040 $ 34,398 |
Finance Lease, Liability, Maturity | Maturities of lease liabilities as of December 31, 2019 are as follows: Operating Leases Finance Lease 2020 $ 3,376,830 $ 28,786 2021 3,545,186 28,786 2022 3,430,110 7,676 2023 2,716,465 — 2024 2,096,333 — Thereafter 2,629,450 — Total lease payments 17,794,374 65,248 Less: Imputed interest (3,580,225) (6,597) Total lease obligations 14,214,149 58,651 Less: Current obligations (2,313,109) (24,253) Long-term lease obligation $ 11,901,040 $ 34,398 |
Schedule of Future Minimum Rental Payments for Operating Leases | The future minimum obligations under operating leases in effect as of December 31, 2018 having a noncancelable term in excess of one year as determined prior to the adoption of ASC 842 are as follows: Operating Leases 2020 $ 2,630,443 2021 2,406,645 2022 2,299,887 2023 2,195,077 2024 1,474,396 Thereafter 2,772,575 Total $ 13,779,023 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The tables below present financial information for the Company’s two operating business segments (in thousands). Year Ended December 31, 2019 2018 (as adjusted) Revenues: Corporate clinics $ 25,808 $ 19,545 Franchise operations 22,643 17,116 Total revenues $ 48,451 $ 36,661 Segment operating income: Corporate clinics $ 3,365 $ 1,475 Franchise operations 10,975 8,083 Total segment operating income $ 14,340 $ 9,558 Depreciation and amortization: Corporate clinics $ 1,708 $ 1,105 Franchise operations — — Corporate administration 191 451 Total depreciation and amortization $ 1,899 $ 1,556 Reconciliation of total segment operating income to consolidated earnings before income taxes: Total segment operating income $ 14,340 $ 9,558 Unallocated corporate (10,925) (9,415) Consolidated income from operations 3,415 143 Bargain purchase gain 19 13 Other (expense), net (62) (47) Income before income tax expense $ 3,372 $ 109 |
Reconciliation of Assets from Segment to Consolidated | December 31, 2019 December 31, 2018 Segment assets: (as adjusted) Corporate clinics $ 25,625 $ 8,828 Franchise operations 5,770 4,455 Total segment assets $ 31,395 $ 13,283 Unallocated cash and cash equivalents and restricted cash $ 8,642 $ 8,855 Unallocated property and equipment 2,555 487 Other unallocated assets 1,114 803 Total assets $ 43,706 $ 23,428 |
Supplemental Disclosure of No_2
Supplemental Disclosure of Non-cash Activity (Details) - USD ($) | 12 Months Ended | ||||||||
Dec. 31, 2019 | Dec. 31, 2018 | Oct. 28, 2019 | Aug. 15, 2019 | Aug. 01, 2019 | Jul. 17, 2019 | Jul. 09, 2019 | Mar. 18, 2019 | Dec. 31, 2017 | |
Income Taxes Paid | $ 65,064 | $ 29,522 | |||||||
Cash paid for interest | 96,978 | 100,000 | |||||||
Amount exchanged | 3,127,332 | ||||||||
Net deferred revenue | 15,107,000 | 13,609,000 | $ 11,547,000 | ||||||
Assets and Franchise Agreement | |||||||||
Property and equipment acquired | 173,521 | ||||||||
Intangible assets acquired | 1,999,469 | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable | 5,000 | ||||||||
Net deferred revenue | 40,805 | $ 4,110 | $ 4,328 | $ 5,236 | $ 13,449 | $ 9,835 | $ 3,847 | ||
License Fee Collection Upon Regional Developer Agreement | |||||||||
Net deferred revenue | 44,334 | ||||||||
Purchase of Property, Plant and Equipment Included in Accounts Payable | |||||||||
Capital Expenditures Incurred but Not yet Paid | 196,671 | 121,038 | |||||||
Purchase of Property, Plant and Equipment Included in Accrued Expenses | |||||||||
Capital Expenditures Incurred but Not yet Paid | $ 15,250 | $ 1,595 |
Nature of Operations and Summ_4
Nature of Operations and Summary of Significant Accounting Policies - Impacts of Error Correction ASC 810 (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Total revenues | $ 36,661,660 | ||
General and administrative expenses | $ 30,543,030 | 25,238,121 | |
Total selling, general and administrative expenses | 39,355,996 | 31,613,916 | |
Income from operations | 3,414,635 | 142,561 | |
Bargain purchase gain | 19,298 | 13,198 | |
Total other income (expense) | (42,217) | (33,593) | |
Income before income tax (benefit) expense | 3,372,418 | 108,968 | |
Net income and comprehensive income | $ 3,323,712 | $ 146,696 | |
Basic earnings per share (in dollars per share) | $ 0.24 | $ 0.01 | |
Diluted earnings per share (in dollars per share) | $ 0.23 | $ 0.01 | |
Basic weighted average shares (in shares) | 13,819,149 | 13,669,107 | |
Diluted weighted average shares (in shares) | 14,467,567 | 14,031,717 | |
Accounts receivable, net | $ 2,645,085 | $ 806,350 | |
Total current assets | 13,303,672 | 11,303,988 | |
Goodwill | 4,150,461 | 3,225,145 | |
Total assets | 43,705,667 | 23,427,713 | |
Deferred revenue from company clinics | 3,196,664 | 2,529,497 | |
Total current liabilities | 13,566,314 | 10,273,127 | |
Total liabilities | 37,985,167 | 22,700,112 | |
Accumulated deficit | (33,637,395) | (37,384,651) | |
Total The Joint Corp. stockholders' equity | 5,720,400 | 727,501 | |
Non-controlling Interest | 100 | 100 | |
Total equity | 5,720,500 | 727,601 | $ (373,823) |
Total liabilities and equity | $ 43,705,667 | 23,427,713 | |
Revenues from company-owned or managed clinics | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Total revenues | 19,545,276 | ||
As Reported | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Total revenues | 31,789,249 | ||
General and administrative expenses | 20,304,131 | ||
Total selling, general and administrative expenses | 26,679,926 | ||
Income from operations | 204,139 | ||
Bargain purchase gain | 58,006 | ||
Total other income (expense) | 11,215 | ||
Income before income tax (benefit) expense | 215,354 | ||
Net income and comprehensive income | $ 253,082 | ||
Basic earnings per share (in dollars per share) | $ 0.02 | ||
Diluted earnings per share (in dollars per share) | $ 0.02 | ||
Basic weighted average shares (in shares) | 13,669,107 | ||
Diluted weighted average shares (in shares) | 14,031,717 | ||
Accounts receivable, net | $ 1,213,707 | ||
Total current assets | 11,711,345 | ||
Goodwill | 2,916,426 | ||
Total assets | 23,526,352 | ||
Deferred revenue from company clinics | 994,493 | ||
Total current liabilities | 8,738,123 | ||
Total liabilities | 21,165,108 | ||
Accumulated deficit | (35,750,908) | ||
Total The Joint Corp. stockholders' equity | 2,361,244 | ||
Non-controlling Interest | 0 | ||
Total equity | 2,361,244 | ||
Total liabilities and equity | 23,526,352 | ||
As Reported | Revenues from company-owned or managed clinics | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Total revenues | 14,672,865 | ||
Restatement Adjustment | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Total revenues | 4,872,411 | ||
General and administrative expenses | 4,933,990 | ||
Total selling, general and administrative expenses | 4,933,990 | ||
Income from operations | (61,578) | ||
Bargain purchase gain | (44,808) | ||
Total other income (expense) | (44,808) | ||
Income before income tax (benefit) expense | (106,386) | ||
Net income and comprehensive income | $ (106,386) | ||
Basic earnings per share (in dollars per share) | $ (0.01) | ||
Diluted earnings per share (in dollars per share) | $ (0.01) | ||
Basic weighted average shares (in shares) | 0 | ||
Diluted weighted average shares (in shares) | 0 | ||
Accounts receivable, net | $ (407,357) | ||
Total current assets | (407,357) | ||
Goodwill | 308,719 | ||
Total assets | (98,639) | ||
Deferred revenue from company clinics | 1,535,004 | ||
Total current liabilities | 1,535,004 | ||
Total liabilities | 1,535,004 | ||
Accumulated deficit | (1,633,743) | ||
Total The Joint Corp. stockholders' equity | (1,633,743) | ||
Non-controlling Interest | 100 | ||
Total equity | (1,633,643) | ||
Total liabilities and equity | (98,639) | ||
Restatement Adjustment | Revenues from company-owned or managed clinics | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Total revenues | $ 4,872,411 |
Nature of Operations and Summ_5
Nature of Operations and Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2019USD ($)agreement | Dec. 31, 2019USD ($)agreement | Dec. 31, 2018USD ($)agreement | Dec. 31, 2017USD ($) | |
Product Information [Line Items] | ||||
Total revenues | $ 36,661,660 | |||
Cash equivalents | $ 0 | $ 0 | 0 | |
Allowance for doubtful accounts | $ 0 | 0 | 0 | |
Impairments of goodwill | 0 | 0 | ||
Impairments of long-lived assets | $ 0 | $ 343,000 | ||
Monthly marketing fee | 2.00% | |||
Royalties percentage | 7.00% | |||
Franchise agreement term | 10 years | |||
Royalty percentage for regional developer fees | 3.00% | |||
Number of regional developer agreements | agreement | 1 | 1 | 4 | |
Net deferred revenue | $ 15,107,000 | $ 15,107,000 | $ 13,609,000 | $ 11,547,000 |
Advertising expense | $ 2,292,628 | $ 1,558,662 | ||
Company matching contribution (maximum) | 2.00% | 2.00% | ||
Employer contributions | $ 103,745 | $ 61,157 | ||
Regional Development Agreement | ||||
Product Information [Line Items] | ||||
Net deferred revenue | 300,000 | $ 300,000 | 900,000 | |
Computer Software | ||||
Product Information [Line Items] | ||||
Intangible assets, useful life | 5 years | |||
Reacquired development rights | ||||
Product Information [Line Items] | ||||
Intangible assets, useful life | 7 years | |||
Customer relationships | ||||
Product Information [Line Items] | ||||
Intangible assets, useful life | 2 years | |||
Minimum | ||||
Product Information [Line Items] | ||||
Useful life, property and equipment | 3 years | |||
Minimum | Reacquired franchise rights | ||||
Product Information [Line Items] | ||||
Intangible assets, useful life | 3 years | |||
Maximum | ||||
Product Information [Line Items] | ||||
Useful life, property and equipment | 7 years | |||
Maximum | Reacquired franchise rights | ||||
Product Information [Line Items] | ||||
Intangible assets, useful life | 8 years | |||
Restatement Adjustment | ||||
Product Information [Line Items] | ||||
Total revenues | 4,872,411 | |||
Franchise | ||||
Product Information [Line Items] | ||||
Cost of revenues | $ 5,159,778 | $ 3,956,530 | ||
Franchise | Restatement Adjustment | ||||
Product Information [Line Items] | ||||
Total revenues | (150,000) | |||
Cost of revenues | $ 70,000 |
Nature of Operations and Summ_6
Nature of Operations and Summary of Significant Accounting Policies - Clinics in Operation Under Franchise Agreements or Company-Owned or Managed (Details) - clinic | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Product Information, Franchised Clinics, Company-Owned Or Managed Clinics, Activity [Roll Forward] | ||
Clinics open at beginning of period | 442 | |
Clinics in operation at the end of the period | 513 | 442 |
Clinic licenses sold but not yet developed | 170 | 136 |
Executed letters of intent for future clinic licenses | 34 | 19 |
Franchised Units | ||
Product Information, Franchised Clinics, Company-Owned Or Managed Clinics, Activity [Roll Forward] | ||
Clinics open at beginning of period | 394 | 352 |
Opened or Purchased during the period | 71 | 47 |
Acquired or sold during the period | (8) | (1) |
Closed during the period | (4) | (4) |
Clinics in operation at the end of the period | 453 | 394 |
Opened during the period | 71 | 47 |
Acquired during the period | 8 | 1 |
Closed or Sold during the period | (4) | (4) |
Entity Operated Units | ||
Product Information, Franchised Clinics, Company-Owned Or Managed Clinics, Activity [Roll Forward] | ||
Clinics open at beginning of period | 48 | 47 |
Opened or Purchased during the period | 5 | 0 |
Acquired or sold during the period | (8) | (1) |
Closed during the period | (1) | 0 |
Clinics in operation at the end of the period | 60 | 48 |
Opened during the period | 5 | 0 |
Acquired during the period | 8 | 1 |
Closed or Sold during the period | (1) | 0 |
Nature of Operations and Summ_7
Nature of Operations and Summary of Significant Accounting Policies - Earnings (Loss) Per Common Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Product Information [Line Items] | ||
Net income | $ 3,323,712 | $ 146,696 |
Weighted average common shares outstanding - basic (in shares) | 13,819,149 | 13,669,107 |
Incremental Weighted Average Shares Attributable to Dilutive Effect [Abstract] | ||
Unvested restricted stock and stock options | 648,418 | 362,610 |
Weighted average common shares outstanding - diluted (in shares) | 14,467,567 | 14,031,717 |
Basic earnings per share (in dollars per share) | $ 0.24 | $ 0.01 |
Diluted earnings per share (in dollars per share) | $ 0.23 | $ 0.01 |
Restricted Stock | ||
Incremental Weighted Average Shares Attributable to Dilutive Effect [Abstract] | ||
Potentially dilutive securities excluded from calculation of diluted net income per common share (in shares) | 0 | 6,896 |
Employee Stock Option | ||
Incremental Weighted Average Shares Attributable to Dilutive Effect [Abstract] | ||
Potentially dilutive securities excluded from calculation of diluted net income per common share (in shares) | 39,286 | 236,205 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) | Oct. 28, 2019USD ($)franchise | Aug. 15, 2019USD ($)franchise | Aug. 01, 2019USD ($)franchise | Jul. 17, 2019USD ($)franchise | Jul. 09, 2019USD ($)franchise | Mar. 18, 2019USD ($)franchise | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Business Acquisition [Line Items] | |||||||||
Net deferred revenue | $ 15,107,000 | $ 13,609,000 | $ 11,547,000 | ||||||
Customer relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Intangible assets, useful life | 2 years | ||||||||
Assets and Franchise Agreement | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of operating franchises | franchise | 1 | 1 | 1 | 3 | 1 | 1 | |||
Total purchase price for the transaction | $ 55,000 | $ 310,000 | $ 727,414 | $ 1,604,918 | $ 400,000 | $ 30,000 | |||
Net deferred revenue | 4,110 | 4,328 | 5,236 | 13,449 | 9,835 | 3,847 | $ 40,805 | ||
Net purchase price | $ 50,890 | $ 305,672 | $ 722,178 | $ 1,591,469 | $ 390,165 | $ 26,153 | 3,086,527 | ||
Remaining consideration | 5,000 | ||||||||
Intangible assets acquired | 1,999,469 | ||||||||
Net revenue since acquisition | 1,529,000 | ||||||||
Net income since acquisition | 218,000 | ||||||||
Assets and Franchise Agreement | Reacquired franchise rights | |||||||||
Business Acquisition [Line Items] | |||||||||
Intangible assets acquired | $ 1,488,494 | ||||||||
Intangible assets, useful life | 3 years | ||||||||
Assets and Franchise Agreement | Customer relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Intangible assets acquired | $ 510,975 | ||||||||
Intangible assets, useful life | 2 years |
Acquisitions - Purchase Price A
Acquisitions - Purchase Price Allocation (Details) - USD ($) | 12 Months Ended | |||||||
Dec. 31, 2019 | Dec. 31, 2018 | Oct. 28, 2019 | Aug. 15, 2019 | Aug. 01, 2019 | Jul. 17, 2019 | Jul. 09, 2019 | Mar. 18, 2019 | |
Business Combination, Separately Recognized Transactions [Line Items] | ||||||||
Goodwill | $ 4,150,461 | $ 3,225,145 | ||||||
Bargain purchase gain | (19,298) | $ (13,198) | ||||||
Assets and Franchise Agreement | ||||||||
Business Combination, Separately Recognized Transactions [Line Items] | ||||||||
Property and equipment | 173,521 | |||||||
Operating lease right-of-use asset | 1,283,608 | |||||||
Intangible assets acquired | 1,999,469 | |||||||
Total assets acquired | 3,456,598 | |||||||
Goodwill | 925,315 | |||||||
Deferred revenue | (140,861) | |||||||
Operating lease liability - current portion | (256,601) | |||||||
Operating lease liability - net of current portion | (867,216) | |||||||
Deferred tax liability | (11,410) | |||||||
Bargain purchase gain | (19,298) | |||||||
Net purchase price | $ 3,086,527 | $ 50,890 | $ 305,672 | $ 722,178 | $ 1,591,469 | $ 390,165 | $ 26,153 |
Acquisitions - Pro Forma Result
Acquisitions - Pro Forma Results of Operations (Unaudited) (Details) - Assets and Franchise Agreement - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Revenues, net | $ 50,399,700 | $ 39,774,609 |
Net income (loss) | $ 3,241,918 | $ (77,662) |
Revenue Disclosures - Changes i
Revenue Disclosures - Changes in Contract Assets and Contract Liabilities (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)state | Dec. 31, 2018USD ($) | |
Revenue from Contract with Customer [Abstract] | ||
Number of states with franchised concepts | state | 33 | |
Deferred Revenue short and long-term | ||
Balance, contract liabilities | $ 13,609 | $ 11,547 |
Recognized as revenue during the year | (2,595) | (2,287) |
Fees received and deferred during the year | 4,093 | 4,349 |
Balance, contract liabilities | 15,107 | 13,609 |
Deferred Franchise Costs short and long-term | ||
Balance, contract assets | 3,489 | 2,811 |
Recognized as cost of revenue during the year | (812) | (631) |
Costs incurred and deferred during the year | 1,716 | 1,309 |
Balance, contract assets | $ 4,393 | $ 3,489 |
Revenue Disclosures - Revenue R
Revenue Disclosures - Revenue Related to Performance Obligations - Maturity (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Disaggregation of Revenue [Line Items] | |
Contract liabilities expected to be recognized | $ 15,107 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities expected to be recognized | $ 2,741 |
Contract liabilities expected to be recognized, year | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities expected to be recognized | $ 2,626 |
Contract liabilities expected to be recognized, year | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities expected to be recognized | $ 2,240 |
Contract liabilities expected to be recognized, year | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities expected to be recognized | $ 1,907 |
Contract liabilities expected to be recognized, year | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities expected to be recognized | $ 1,477 |
Contract liabilities expected to be recognized, year | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities expected to be recognized | $ 4,116 |
Contract liabilities expected to be recognized, year |
Restricted Cash - Reconciliatio
Restricted Cash - Reconciliation of Cash, Cash Equivalents and Restricted Cash Balance (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | |||
Cash and cash equivalents | $ 8,455,989 | $ 8,716,874 | |
Restricted cash | 185,888 | 138,078 | |
Total cash, cash equivalents and restricted cash | $ 8,641,877 | $ 8,854,952 | $ 3,344,258 |
Notes Receivable (Details)
Notes Receivable (Details) - USD ($) | Apr. 26, 2019 | Oct. 10, 2017 | Aug. 31, 2017 | Apr. 29, 2017 | Sep. 22, 2017 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Promissory note | $ 31,086 | $ 155,810 | |||||
Interest rate on promissory note | 0.00% | ||||||
Term of promissory note | 36 months | ||||||
Term of principal and interest on promissory note | 36 months | ||||||
Allowance reserve on outstanding notes | 27,086 | ||||||
Company-owned Clinic | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Promissory note | $ 155,810 | $ 278,072 | |||||
Regional Developer Territory in Central Florida | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Regional development agreement | $ 320,000 | ||||||
Regional Developer Territory in Central Florida | 10% Interest Bearing Promissory Note Maturing October 1, 2020 | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Promissory note | $ 187,000 | ||||||
Interest rate on promissory note | 10.00% | ||||||
Term of promissory note | 42 months | ||||||
Term of principal and interest on promissory note | 36 months | ||||||
Regional Developer Territory in Maryland/Washington DC | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Regional development agreement | $ 220,000 | ||||||
Regional Developer Territory in Maryland/Washington DC | 10% Interest Bearing Promissory Note Maturing August 1, 2020 | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Promissory note | $ 117,475 | ||||||
Interest rate on promissory note | 10.00% | ||||||
Term of promissory note | 36 months | ||||||
Term of principal and interest on promissory note | 36 months | ||||||
Regional Developer Territory in Minnesota | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Regional development agreement | $ 228,293 | ||||||
Regional Developer Territory in Minnesota | 10% Interest Bearing Promissory Note Maturing September 1, 2020 | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Promissory note | $ 119,147 | ||||||
Interest rate on promissory note | 10.00% | ||||||
Term of promissory note | 36 months | ||||||
Term of principal and interest on promissory note | 36 months | ||||||
Regional Developer Territories with Texas, Arkansas, and Oklahoma | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Regional development agreement | $ 170,000 | ||||||
Regional Developer Territories with Texas, Arkansas, and Oklahoma | 10% Interest Bearing Promissory Note Maturing October 24, 2020 | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Promissory note | $ 135,688 | ||||||
Interest rate on promissory note | 10.00% | ||||||
Term of promissory note | 36 months | ||||||
Term of principal and interest on promissory note | 36 months |
Notes Receivable - Schedule of
Notes Receivable - Schedule of Minimum Payments Due (Details) - USD ($) | Dec. 31, 2019 | Apr. 26, 2019 |
Receivables [Abstract] | ||
2020 | $ 137,124 | |
2021 | 9,600 | |
2022 | 9,086 | |
Total | $ 155,810 | $ 31,086 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 823,679 | $ 1,049,942 |
Amortization of assets | $ 24,675 | |
Impairment of previously capitalized software development costs | $ 343,000 |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 7,796,761 | |
Property and equipment, gross | $ 10,022,131 | |
Accumulated depreciation and amortization | (5,671,366) | |
Accumulated depreciation and amortization | (4,909,002) | |
Property and equipment, net | 6,581,588 | |
Property and equipment, net | 3,658,007 | |
Construction in progress | 2,230,823 | 770,248 |
Office and computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,594,364 | 1,243,104 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 7,154,156 | 5,407,915 |
Software developed | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,193,007 | 1,145,742 |
Finance lease assets | ||
Property, Plant and Equipment [Line Items] | ||
Finance lease assets | 80,604 | |
Property Plant and Equipment, Excluding Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 4,350,765 | |
Property and equipment, net | $ 2,887,759 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Narrative (Details) - USD ($) | Feb. 04, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||||
Net deferred revenue | $ 15,107,000 | $ 13,609,000 | $ 11,547,000 | |
Total revenues | 48,450,900 | 36,661,660 | ||
Amortization of intangible assets | $ 1,050,903 | $ 506,298 | ||
Regional Developer Rights in South Carolina and Georgia | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Net deferred revenue | $ 681,500 | |||
Total revenues | $ 44,334 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Intangible Assets Acquired (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 6,552,950 | $ 3,916,316 |
Accumulated Amortization | 3,333,159 | 2,282,256 |
Net Carrying Value | 3,219,791 | 1,634,060 |
Reacquired franchise rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,246,494 | 1,758,000 |
Accumulated Amortization | 1,400,086 | 921,138 |
Net Carrying Value | 1,846,408 | 836,862 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,255,975 | 745,000 |
Accumulated Amortization | 865,478 | 717,498 |
Net Carrying Value | 390,497 | 27,502 |
Reacquired development rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,050,481 | 1,413,316 |
Accumulated Amortization | 1,067,595 | 643,620 |
Net Carrying Value | $ 982,886 | $ 769,696 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Estimated Amortization Expense (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 1,409,962 | |
2021 | 1,212,703 | |
2022 | 539,750 | |
2023 | 57,376 | |
Net Carrying Value | $ 3,219,791 | $ 1,634,060 |
Intangible Assets and Goodwil_5
Intangible Assets and Goodwill - Schedule of Carrying Amount of Goodwill (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning | $ 3,280,139 |
Accumulated impairment losses, beginning | (54,994) |
Goodwill, net, beginning | 3,225,145 |
2019 acquisitions | 925,316 |
Goodwill, gross, ending | 4,205,455 |
Accumulated impairment losses, ending | (54,994) |
Goodwill, net, ending | $ 4,150,461 |
Debt - Narrative (Details)
Debt - Narrative (Details) | Jan. 03, 2017USD ($) | Dec. 31, 2016USD ($)note | Feb. 29, 2020USD ($) | Feb. 28, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($)note |
Debt Instrument [Line Items] | ||||||
Number of notes payable | note | 2 | |||||
Debt instrument, face amount | $ 96,978 | $ 100,000 | ||||
Number of notes outstanding | note | 1 | |||||
Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 10.00% | |||||
Maximum borrowing capacity | $ 5,000,000 | |||||
Minimum interest payment over life of credit agreement | 200,000 | |||||
Periodic interest payment | $ 25,000 | |||||
Amount drawn | $ 1,000,000 | |||||
Notes Payable Delivered as a Portion of the Consideration Paid in Connection With Acquisitions | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 186,000 | |||||
Interest rate | 4.25% | |||||
Credit Facilities | Revolving Credit Facility | Subsequent Event | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 2,000,000 | $ 2,000,000 | ||||
Credit Facilities | Secured Debt | Subsequent Event | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 7,500,000 | 7,500,000 | ||||
Credit Facilities | Development Line of Credit | Subsequent Event | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 5,500,000 | $ 5,500,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) | 12 Months Ended | 36 Months Ended | |
Dec. 31, 2019USD ($)installment$ / shares | Dec. 31, 2018USD ($)$ / shares | Nov. 10, 2018$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Intrinsic value, exercised | $ 1,236,099 | $ 412,952 | |
Intrinsic value, outstanding | 9,788,395 | ||
Intrinsic value, exercisable | $ 6,872,930 | ||
Outstanding, Weighted Average Fair Value (in dollars per share) | $ / shares | $ 5.21 | $ 2.95 | |
Fair value of stock options vested | $ 388,672 | $ 509,729 | |
Unrecognized stock-based compensation expense | $ 729,263 | ||
Unrecognized stock-based compensation, period of recognition | 2 years 6 months | ||
IPO | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Warrants issued to underwriters for purchase of common stock | shares | 90,000 | ||
Exercise price (in dollars per share) | $ / shares | $ 8.125 | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Contractual term | 10 years | ||
Share-based compensation expense | $ 418,301 | 363,568 | |
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | 302,350 | $ 264,862 | |
Unrecognized stock-based compensation expense | $ 321,031 | ||
Unrecognized stock-based compensation, period of recognition | 2 years 1 month 6 days | ||
Number of equal annual installments | installment | 4 |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value Assumptions of Options Granted (Details) - Employee Stock Option | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 35.00% | |
Expected dividends | 0.00% | 0.00% |
Expected term (years) | 7 years | 7 years |
Forfeiture rate | 20.00% | 20.00% |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 35.00% | |
Risk-free rate | 1.89% | 2.53% |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 55.00% | |
Risk-free rate | 2.61% | 2.90% |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options Activity (Details) - Employee Stock Option - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding, beginning (in shares) | 986,691 | 1,003,916 | |
Granted at market price (in shares) | 65,759 | 145,792 | |
Exercised (in shares) | (103,205) | (95,162) | |
Cancelled (in shares) | 0 | (67,855) | |
Outstanding, ending (in shares) | 949,245 | 986,691 | 1,003,916 |
Exercisable, Number of Shares (in shares) | 592,265 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Outstanding, Weighted Average Exercise Price, beginning (in dollars per share) | $ 4.72 | $ 4.18 | |
Granted at market price, Weighted Average Exercise Price (in dollars per share) | 12.31 | 7 | |
Exercised, Weighted Average Exercise Price (in dollars per share) | 5.28 | 3.48 | |
Cancelled, Weighted Average Exercise Price (in dollars per share) | 0 | 3.37 | |
Outstanding, Weighted Average Exercise Price, ending (in dollars per share) | 5.19 | $ 4.72 | $ 4.18 |
Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 4.54 | ||
Weighted Average Remaining Contractual Life | |||
Outstanding, Weighted Average Remaining Contractual Life (Year) | 6 years 6 months | 6 years 9 months 18 days | 8 years 1 month 6 days |
Exercisable, Weighted Average Remaining Contractual Life (Year) | 5 years 10 months 24 days |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Activity (Details) - Restricted Stock | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Restricted Stock Awards | |
Non-vested (in shares) | shares | 51,134 |
Granted (in shares) | shares | 26,131 |
Vested (in shares) | shares | (38,289) |
Cancelled (in shares) | shares | 0 |
Non-vested (in shares) | shares | 38,976 |
Weighted Average Grant-Date Fair Value per Award | |
Non-vested (in dollar per share) | $ / shares | $ 7.64 |
Granted (in dollars per share) | $ / shares | 14.30 |
Vested (in dollars per share) | $ / shares | 7.44 |
Cancelled (in dollars per share) | $ / shares | 0 |
Non-vested (in dollar per share) | $ / shares | $ 12.31 |
Income Taxes - Income Tax Provi
Income Taxes - Income Tax Provision (Benefit) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Federal | $ 0 | $ 0 |
State, net of state tax credits | 47,200 | 39,300 |
Total current provision (benefit) | 47,200 | 39,300 |
Federal | 800 | (90,000) |
State | 1,000 | 13,000 |
Total deferred provision (benefit) | 1,781 | (77,020) |
Total income tax provision (benefit) | $ 48,706 | $ (37,728) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Contingency [Line Items] | ||
Valuation allowance | $ 9,591,400 | $ 10,401,600 |
Income tax benefit for impact of 2017 Tax Act | $ 120,000 | |
Provision (benefit) | 1.40% | (34.60%) |
Research Tax Credit Carryforward | ||
Income Tax Contingency [Line Items] | ||
Tax credit | $ 14,000 | |
California Alternative Minimum Tax Credit | ||
Income Tax Contingency [Line Items] | ||
Tax credit | 20,000 | |
Domestic Tax Authority | ||
Income Tax Contingency [Line Items] | ||
Net operating losses | 13,262,000 | |
State and Local Jurisdiction | ||
Income Tax Contingency [Line Items] | ||
Net operating losses | $ 17,728,000 |
Income Taxes - Net Deferred Tax
Income Taxes - Net Deferred Taxes (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred income tax assets: | ||
Accrued expenses | $ 515,800 | $ 361,100 |
Deferred revenue | 4,435,400 | 3,092,500 |
Deferred rent | 0 | 237,900 |
Lease abandonment | 0 | 96,500 |
Lease liability | 3,782,800 | |
Goodwill - component 2 | 55,300 | 52,500 |
Restricted stock compensation | 3,900 | 0 |
Nonqualified stock options | 198,900 | 184,400 |
Net operating loss carryforwards | 3,585,700 | 6,175,600 |
Tax credits | 33,800 | 14,000 |
Charitable contribution carryover | 0 | 15,500 |
Asset basis difference related to property and equipment | 214,000 | 458,600 |
Intangibles | 595,800 | 435,900 |
Total deferred income tax assets | 13,421,400 | 11,124,500 |
Deferred income tax liabilities: | ||
Lease right-of-use asset | (3,267,900) | |
Deferred franchise costs | (406,500) | (574,100) |
Goodwill - component 1 | (245,500) | (194,700) |
Restricted stock compensation | 0 | (30,800) |
Total deferred income tax liabilities | (3,919,900) | (799,600) |
Valuation allowance | (9,591,400) | (10,401,600) |
Net deferred tax liability | $ (89,900) | $ (76,700) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of the Statutory Federal Income Tax Rate (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Expected federal tax expense (benefit) | $ 731,600 | $ 22,900 |
Expected federal tax expense (benefit) | 21.00% | 21.00% |
State tax provision, net of federal benefit | $ 315,800 | $ (63,600) |
State tax provision, net of federal benefit | 9.10% | (58.40%) |
Change in valuation allowance | $ (810,200) | $ 51,600 |
Change in valuation allowance | (23.30%) | 47.40% |
Other permanent differences | $ 41,700 | $ 13,200 |
Other permanent differences | 1.20% | 12.10% |
Stock compensation | $ (232,600) | $ (40,800) |
Stock compensation | (6.70%) | (37.40%) |
Bargain purchase gain | $ (5,100) | $ (16,100) |
Bargain purchase gain | (0.10%) | (14.80%) |
Return to provision adjustments | $ 7,800 | $ (4,900) |
Return to provision adjustments | 0.20% | (4.50%) |
Total income tax provision (benefit) | $ 48,706 | $ (37,728) |
Provision (benefit) | 1.40% | (34.60%) |
Commitments and Contingencies -
Commitments and Contingencies - Lease Expense and Supplemental Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Finance lease costs: | ||
Amortization of assets | $ 24,675 | |
Interest on lease liabilities | 6,832 | |
Total finance lease costs | 31,507 | |
Operating lease costs | 3,005,124 | |
Total lease costs | 3,036,631 | |
Operating Leases: | ||
Operating lease right-of-use asset | 12,486,672 | |
Operating lease liability - current portion | 2,313,109 | |
Operating lease liability - net of current portion | 11,901,040 | |
Total operating lease liability | 14,214,149 | |
Finance Leases: | ||
Property and equipment, at cost | 80,604 | |
Less accumulated amortization | (24,675) | |
Property and equipment, net | 55,929 | |
Finance lease liability - current portion | 24,253 | |
Finance lease liability - net of current portion | 34,398 | |
Total finance lease liabilities | $ 58,651 | |
Weighted average remaining lease term (in years): | ||
Operating leases | 5 years 4 months 24 days | |
Finance lease | 2 years 3 months 18 days | |
Weighted average discount rate: | ||
Operating leases | 8.70% | |
Finance leases | 10.00% | |
Cash paid for amounts included in measurement of liabilities: | ||
Operating cash flows from operating leases | $ 2,834,903 | |
Operating cash flows from finance leases | 6,832 | |
Financing cash flows from finance leases | 21,954 | $ 0 |
Non-cash transactions: ROU assets obtained in exchange for lease liabilities | ||
Operating lease | 1,350,090 | |
Finance lease | $ 80,604 |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Maturities of Lease Liabilities and Obligations (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Operating Leases | ||
2020 | $ 3,376,830 | |
2021 | 3,545,186 | |
2022 | 3,430,110 | |
2023 | 2,716,465 | |
2024 | 2,096,333 | |
Thereafter | 2,629,450 | |
Total lease payments | 17,794,374 | |
Less: Imputed interest | (3,580,225) | |
Total lease obligations | 14,214,149 | |
Less: Current obligations | (2,313,109) | |
Long-term lease obligation | 11,901,040 | |
Finance Lease | ||
2020 | 28,786 | |
2021 | 28,786 | |
2022 | 7,676 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Total lease payments | 65,248 | |
Less: Imputed interest | (6,597) | |
Total lease obligations | 58,651 | |
Less: Current obligations | (24,253) | |
Long-term lease obligation | $ 34,398 | |
Operating Leases | ||
2020 | $ 2,630,443 | |
2021 | 2,406,645 | |
2022 | 2,299,887 | |
2023 | 2,195,077 | |
2024 | 1,474,396 | |
Thereafter | 2,772,575 | |
Total | $ 13,779,023 |
Commitments and Contingencies_3
Commitments and Contingencies - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Lessee, Lease, Description [Line Items] | ||
Rent expense | $ 3,381,825 | $ 2,844,010 |
Leases not yet commenced, liability | $ 1,300,000 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Term of leases not yet commenced | 5 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Term of leases not yet commenced | 10 years |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 12 Months Ended | |
Dec. 31, 2019segmentclinic | Dec. 31, 2018clinic | |
Segment Reporting [Abstract] | ||
Number of stores | clinic | 513 | 442 |
Number of operating segments | segment | 2 |
Segment Reporting - Segment Rep
Segment Reporting - Segment Reporting Financial Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 48,451,000 | $ 36,661,000 |
Income from operations | 3,414,635 | 142,561 |
Depreciation and amortization | 1,899,257 | 1,556,240 |
Bargain purchase gain | 19,298 | 13,198 |
Other (expense), net | (61,515) | (46,791) |
Income before income tax (benefit) expense | 3,372,418 | 108,968 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Income from operations | 14,340,000 | 9,558,000 |
Corporate, Non-Segment | ||
Segment Reporting Information [Line Items] | ||
Income from operations | (10,925,000) | (9,415,000) |
Corporate Clinics | ||
Segment Reporting Information [Line Items] | ||
Revenues | 25,808,000 | 19,545,000 |
Corporate Clinics | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Income from operations | 3,365,000 | 1,475,000 |
Depreciation and amortization | 1,708,000 | 1,105,000 |
Franchise Operations | ||
Segment Reporting Information [Line Items] | ||
Revenues | 22,643,000 | 17,116,000 |
Franchise Operations | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Income from operations | 10,975,000 | 8,083,000 |
Depreciation and amortization | 0 | 0 |
Corporate Segment | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization | $ 191,000 | $ 451,000 |
Segment Reporting - Segment R_2
Segment Reporting - Segment Reporting Information, Assets (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 43,705,667 | $ 23,427,713 |
Unallocated cash and restricted cash | 8,455,989 | 8,716,874 |
Property and equipment, net | 3,658,007 | |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 31,395,000 | 13,283,000 |
Unallocated cash and restricted cash | 8,642,000 | 8,855,000 |
Property and equipment, net | 2,555,000 | 487,000 |
Other unallocated assets | 1,114,000 | 803,000 |
Corporate Clinics | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 25,625,000 | 8,828,000 |
Franchise Operations | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 5,770,000 | $ 4,455,000 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) | Feb. 28, 2020USD ($)payment | Feb. 29, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jan. 03, 2017USD ($) |
Subsequent Event [Line Items] | |||||
Debt instrument, face amount | $ 96,978 | $ 100,000 | |||
Revolving Credit Facility | |||||
Subsequent Event [Line Items] | |||||
Maximum borrowing capacity | $ 5,000,000 | ||||
Interest rate | 10.00% | ||||
Subsequent Event | Credit Facilities | Alternative Eurocurrency Base Rate | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Variable rate | 1.00% | ||||
Subsequent Event | Secured Debt | Credit Facilities | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Maximum borrowing capacity | $ 7,500,000 | $ 7,500,000 | |||
Additional amount | $ 2,500,000 | ||||
Number of monthly payments | payment | 36 | ||||
Subsequent Event | Secured Debt | Credit Facilities | Eurocurrency | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Variable rate | 2.00% | ||||
Subsequent Event | Secured Debt | Credit Facilities | Alternative Base Rate | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Variable rate | 1.00% | ||||
Subsequent Event | Secured Debt | Credit Facilities | Prime Rate | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Variable rate | 0.50% | ||||
Subsequent Event | Revolving Credit Facility | Credit Facilities | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, face amount | $ 2,000,000 | 2,000,000 | |||
Subsequent Event | Letter of Credit | Credit Facilities | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Maximum borrowing capacity | $ 1,000,000 | ||||
Interest rate | 0.25% | ||||
Subsequent Event | Development Line of Credit | Credit Facilities | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, face amount | $ 5,500,000 | $ 5,500,000 |