Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2023 | May 01, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-36724 | |
Entity Registrant Name | Joint Corp | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 90-0544160 | |
Entity Address, Address Line One | 16767 N. 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, $0.001 Par Value Per Share | |
Trading Symbol | JYNT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,678,848 | |
Entity Central Index Key | 0001612630 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 14,773,225 | $ 9,745,066 |
Restricted cash | 731,379 | 805,351 |
Accounts receivable, net | 3,525,643 | 3,911,272 |
Deferred franchise and regional development costs, current portion | 1,059,126 | 1,054,060 |
Prepaid expenses and other current assets | 3,468,749 | 2,098,359 |
Total current assets | 23,558,122 | 17,614,108 |
Property and equipment, net | 17,500,027 | 17,475,152 |
Operating lease right-of-use asset | 22,451,137 | 20,587,199 |
Deferred franchise and regional development costs, net of current portion | 5,678,935 | 5,707,678 |
Intangible assets, net | 11,905,176 | 12,867,529 |
Goodwill | 8,493,407 | 8,493,407 |
Deferred tax assets | 7,708,323 | 8,441,713 |
Deposits and other assets | 755,585 | 756,386 |
Total assets | 98,050,712 | 91,943,172 |
Current liabilities: | ||
Accounts payable | 1,836,853 | 2,966,589 |
Accrued expenses | 1,996,427 | 1,069,610 |
Co-op funds liability | 731,379 | 805,351 |
Payroll liabilities ($0.9 million and $0.6 million attributable to VIE) | 3,571,008 | 2,030,510 |
Operating lease liability, current portion | 5,622,576 | 5,295,830 |
Finance lease liability, current portion | 24,693 | 24,433 |
Deferred franchise and regional developer fee revenue, current portion | 2,978,937 | 2,955,851 |
Deferred revenue from company clinics ($4.9 million and $4.7 million attributable to VIE) | 7,713,735 | 7,471,549 |
Other current liabilities | 494,250 | 499,250 |
Total current liabilities | 24,969,858 | 23,118,973 |
Operating lease liability, net of current portion | 20,211,159 | 18,672,719 |
Finance lease liability, net of current portion | 57,235 | 63,507 |
Debt under the Credit Agreement | 2,000,000 | 2,000,000 |
Deferred franchise and regional developer fee revenue, net of current portion | 15,682,833 | 15,661,412 |
Other liabilities | 27,230 | 27,230 |
Total liabilities | 62,948,315 | 59,543,841 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Series A preferred stock, $0.001 par value; 50,000 shares authorized, 0 issued and outstanding, as of March 31, 2023 and December 31, 2022 | 0 | 0 |
Common stock, $0.001 par value; 20,000,000 shares authorized, 14,671,360 shares issued and 14,639,325 shares outstanding as of March 31, 2023 and 14,560,353 shares issued and 14,528,487 outstanding as of December 31, 2022 | 14,671 | 14,560 |
Additional paid-in capital | 45,962,861 | 45,558,305 |
Treasury stock 32,035 shares as of March 31, 2023 and 31,866 shares as of December 31, 2022, at cost | (859,279) | (856,642) |
Accumulated deficit | (10,040,856) | (12,341,892) |
Total The Joint Corp. stockholders' equity | 35,077,397 | 32,374,331 |
Non-controlling Interest | 25,000 | 25,000 |
Total equity | 35,102,397 | 32,399,331 |
Total liabilities and stockholders' equity | $ 98,050,712 | $ 91,943,172 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) (unaudited) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Payroll liabilities ($0.9 million and $0.6 million attributable to VIE) | $ 3,571,008 | $ 2,030,510 |
Deferred revenue from company clinics attributable to VIE | $ 2,978,937 | $ 2,955,851 |
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) | 14,671,360 | 14,560,353 |
Common stock, shares outstanding (in shares) | 14,639,325 | 14,528,487 |
Balance, beginning treasury stock (in shares) | 32,035 | 31,866 |
Variable Interest Entity, Primary Beneficiary | ||
Payroll liabilities ($0.9 million and $0.6 million attributable to VIE) | $ 900,000 | $ 600,000 |
Deferred revenue from company clinics attributable to VIE | $ 4,900,000 | $ 4,700,000 |
Condensed Consolidated Income S
Condensed Consolidated Income Statements (unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues: | ||
Total revenues | $ 28,450,298 | $ 22,438,538 |
Cost of revenues: | ||
Total cost of revenues | 2,624,163 | 2,312,771 |
Selling and marketing expenses | 4,160,244 | 3,287,488 |
Depreciation and amortization | 2,342,544 | 1,629,176 |
General and administrative expenses | 19,936,115 | 15,378,623 |
Total selling, general and administrative expenses | 26,438,903 | 20,295,287 |
Net loss on disposition or impairment | 65,469 | 6,906 |
Loss from operations | (678,237) | (176,426) |
Other income (expense), net | 3,821,162 | (16,147) |
Income (loss) before income tax benefit | 3,142,925 | (192,573) |
Income tax expense | 841,889 | 13,224 |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest, Total | $ 2,301,036 | $ (205,797) |
Earnings (loss) per share: | ||
Basic (loss) earnings per share (in dollars per share) | $ 0.16 | $ (0.01) |
Diluted (loss) earnings per share (in dollars per share) | $ 0.15 | $ (0.01) |
Basic weighted average shares (in shares) | 14,566,185 | 14,432,652 |
Diluted weighted average shares (in shares) | 14,861,734 | 14,432,652 |
Revenues from company-owned or managed clinics | ||
Revenues: | ||
Total revenues | $ 17,127,957 | $ 12,606,999 |
Royalty fees | ||
Revenues: | ||
Total revenues | 6,866,023 | 6,008,932 |
Franchise fees | ||
Revenues: | ||
Total revenues | 754,425 | 640,965 |
Cost of revenues: | ||
Cost of revenues | 2,290,313 | 2,002,813 |
Advertising fund revenue | ||
Revenues: | ||
Total revenues | 1,952,406 | 1,710,717 |
Software fees | ||
Revenues: | ||
Total revenues | 1,210,005 | 956,998 |
Cost of revenues: | ||
Cost of revenues | 333,850 | 309,958 |
Regional developer fees | ||
Revenues: | ||
Total revenues | 149,478 | 201,787 |
Other revenues | ||
Revenues: | ||
Total revenues | $ 390,004 | $ 312,140 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) - USD ($) | Total | Common Stock | Additional Paid In Capital | Treasury Stock | Accumulated Deficit | Total The Joint Corp. stockholders' equity | Non-controlling interest |
Balance, beginning common stock (in shares) at Dec. 31, 2021 | 14,451,355 | ||||||
Balance, beginning at Dec. 31, 2021 | $ 29,569,628 | $ 14,450 | $ 43,900,157 | $ (850,838) | $ (13,519,141) | $ 29,544,628 | $ 25,000 |
Balance, beginning treasury stock (in shares) at Dec. 31, 2021 | 31,643 | ||||||
Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 323,556 | 323,556 | 323,556 | ||||
Issuance of vested restricted stock (in shares) | 36,722 | ||||||
Issuance of restricted stock | 0 | $ 37 | (37) | ||||
Exercise of stock options (in shares) | 4,972 | ||||||
Exercise of stock options | 49,623 | $ 5 | 49,618 | 49,623 | |||
Purchase of treasury stock under employee stock plans (in shares) | 74 | ||||||
Purchases of treasury stock under employee stock plans | (2,598) | $ (2,598) | (2,598) | ||||
Net income (loss) | (205,797) | (205,797) | (205,797) | ||||
Balance, ending common stock (in shares) at Mar. 31, 2022 | 14,493,049 | ||||||
Balance, ending at Mar. 31, 2022 | $ 29,734,412 | $ 14,492 | 44,273,294 | $ (853,436) | (13,724,938) | 29,709,412 | 25,000 |
Balance, ending treasury stock (in shares) at Mar. 31, 2022 | 31,717 | ||||||
Balance, beginning common stock (in shares) at Dec. 31, 2022 | 14,528,487 | 14,560,353 | |||||
Balance, beginning at Dec. 31, 2022 | $ 32,399,331 | $ 14,560 | 45,558,305 | $ (856,642) | (12,341,892) | 32,374,331 | 25,000 |
Balance, beginning treasury stock (in shares) at Dec. 31, 2022 | 31,866 | 31,866 | |||||
Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | $ 266,210 | 266,210 | 266,210 | ||||
Issuance of vested restricted stock (in shares) | 95,386 | ||||||
Issuance of restricted stock | 0 | $ 95 | (95) | ||||
Exercise of stock options (in shares) | 15,621 | ||||||
Exercise of stock options | 138,457 | $ 16 | 138,441 | 138,457 | |||
Purchase of treasury stock under employee stock plans (in shares) | 169 | ||||||
Purchases of treasury stock under employee stock plans | (2,637) | $ (2,637) | (2,637) | ||||
Net income (loss) | $ 2,301,036 | 2,301,036 | 2,301,036 | ||||
Balance, ending common stock (in shares) at Mar. 31, 2023 | 14,639,325 | 14,671,360 | |||||
Balance, ending at Mar. 31, 2023 | $ 35,102,397 | $ 14,671 | $ 45,962,861 | $ (859,279) | $ (10,040,856) | $ 35,077,397 | $ 25,000 |
Balance, ending treasury stock (in shares) at Mar. 31, 2023 | 32,035 | 32,035 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 2,301,036 | $ (205,797) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 2,342,544 | 1,629,176 |
Net loss on disposition or impairment (non-cash portion) | 65,469 | 6,906 |
Net franchise fees recognized upon termination of franchise agreements | (73,095) | 0 |
Deferred income taxes | 733,390 | (16,776) |
Stock based compensation expense | 266,210 | 323,556 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 385,629 | 88,008 |
Prepaid expenses and other current assets | (1,370,390) | (144,644) |
Deferred franchise costs | (27,255) | (86,692) |
Deposits and other assets | 801 | (94,878) |
Accounts payable | (1,189,662) | 59,461 |
Accrued expenses | 818,784 | (164,751) |
Payroll liabilities | 1,540,498 | (1,522,340) |
Deferred revenue | 288,359 | 296,487 |
Other liabilities | (57,725) | 280,162 |
Net cash provided by operating activities | 6,024,593 | 447,878 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (1,200,215) | (1,289,943) |
Reacquisition and termination of regional developer rights | 0 | (250,000) |
Net cash used in investing activities | (1,200,215) | (1,539,943) |
Cash flows from financing activities: | ||
Payments of finance lease obligation | (6,011) | (21,387) |
Purchases of treasury stock under employee stock plans | (2,637) | (2,598) |
Proceeds from exercise of stock options | 138,457 | 49,623 |
Net cash provided by financing activities | 129,809 | 25,638 |
Increase (decrease) in cash, cash equivalents and restricted cash | 4,954,187 | (1,066,427) |
Cash, cash equivalents and restricted cash, beginning of period | 10,550,417 | 19,912,338 |
Cash, cash equivalents and restricted cash, end of period | 15,504,604 | 18,845,911 |
Reconciliation of cash, cash equivalents and restricted cash: | ||
Cash and cash equivalents | 14,773,225 | 18,251,194 |
Restricted cash | 731,379 | 594,717 |
Cash and cash equivalents and restricted cash | $ 15,504,604 | $ 18,845,911 |
Supplemental Disclosure of Non-
Supplemental Disclosure of Non-cash Activity | 3 Months Ended |
Mar. 31, 2023 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Disclosure of Non-cash Activity | Supplemental cash flow disclosures: The following table represents supplemental cash flow disclosures and non-cash investing and financing activities: Three Months Ended 2023 2022 Net cash paid for (refunded): Interest $ 81,651 $ 11,250 Income taxes $ (41,246) $ — Non-cash investing and financing activity: Unpaid purchases of property and equipment $ 167,959 $ 109,882 Non-cash investment in reacquisition of regional developer rights $ — $ 95,197 Stock Option Proceeds Receivable $ — $ 11,201 |
Nature of Operations and Summar
Nature of Operations and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
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 unaudited financial statements represent the condensed consolidated financial statements of The Joint Corp. (“The Joint”), which includes its variable interest entities (“VIEs”), and its wholly owned subsidiary, The Joint Corporate Unit No. 1, LLC (collectively, the “Company”). The accompanying unaudited condensed consolidated interim financial statements reflect all adjustments which are necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented in accordance with U.S. generally accepted accounting principles (“ GAAP”). Such unaudited interim condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with The Joint Corp. and Subsidiary and Affiliates consolidated financial statements and the notes thereto as set forth in The Joint’s Form 10-K, which included all disclosures required by U.S. GAAP. The results of operations for the periods ended March 31, 2023 and 2022 are not necessarily indicative of expected operating results for the full year. The information presented throughout the document as of and for the periods ended March 31, 2023 and 2022 is unaudited. 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 condensed 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, accounting for leases, and accounting for income taxes, see Note 1, “Nature of Operations and Summary of Significant Accounting Policies ” . Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of The Joint 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 Accounting Standards Codification 810, Consolidations (“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. Comprehensive Income Net income was the same as comprehensive income for the three months ended March 31, 2023 and 2022, respectively. Nature of Operations The Joint Corp., a Delaware corporation, was formed on March 10, 2010 for the principal purpose of franchising and developing chiropractic clinics, selling regional developer rights, supporting the operations of franchised chiropractic clinics, and operating and managing corporate 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 clinics for the three months ended March 31, 2023 and 2022: Three Months Ended Franchised clinics: 2023 2022 Clinics open at beginning of period 712 610 Opened during the period 29 27 Sold during the period — — Closed during the period (1) (1) Clinics in operation at the end of the period 740 636 Three Months Ended Company-owned or managed clinics: 2023 2022 Clinics open at beginning of period 126 96 Opened during the period 4 4 Acquired during the period — — Closed during the period — — Clinics in operation at the end of the period 130 100 Total clinics in operation at the end of the period 870 736 Clinic licenses sold but not yet developed 178 239 Future clinic licenses subject to executed letters of intent 39 39 Variable Interest Entities Certain states prohibit the “corporate practice of chiropractic,” which restricts business corporations from practicing chiropractic care by exercising control over clinical decisions by chiropractic doctors. In states which prohibit the corporate practice of chiropractic, the Company typically enters into long-term management agreements with professional corporations (“PCs”) that are owned by licensed chiropractic doctors, which, in turn, employ or contract with doctors who provide professional chiropractic care in its clinics. Under these management agreements with PCs, the Company provides, on an exclusive basis, all non-clinical services of the chiropractic practice. The Company has entered into such management agreements with four PCs, including one in in New Jersey, in connection with the opening of company-managed clinics in April 2023. An entity 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. In accordance with relevant accounting guidance, these PCs were determined to be VIEs. Such PCs are VIEs, as fees paid by the PCs to the Company as its management service provider are considered variable interests because 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. Additionally, the Company has determined that it has the ability to direct the activities that most significantly impact the performance of these PCs and have an obligation to absorb losses or receive benefits which could potentially be significant to the PCs. Accordingly, the PCs are variable interest entities for which the Company is the primary beneficiary and are consolidated by the Company. The VIEs’ total revenue and payroll and related expenses for the three months ended March 31, 2023 were $9.9 million and $4.2 million, respectively. The VIE’s total revenue and payroll and related expenses for the three months ended March 31, 2022 were $7.8 million and $3.1 million, respectively. 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 March 31, 2023 and December 31, 2022. Accounts Receivable Accounts receivable primarily represent amounts due from franchisees for royalty fees. The Company records an allowance for credit losses as a reduction to its accounts receivables for amounts that the Company does not expect to recover. An allowance for credit losses is determined through assessments of collectability based on historical trends, the financial condition of the Company’s franchisees, including any known or anticipated bankruptcies, and an evaluation of current economic conditions, as well as the Company’s expectations of conditions in the future. Actual losses ultimately could differ materially in the near term from the amounts estimated in determining the allowance. As of March 31, 2023 and December 31, 2022, the Company had an allowance for doubtful accounts of $0. 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, which is generally three Leases 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 clinics in the portfolio. The Company recognizes a right-of-use ("ROU") asset and lease liability for all leases. Certain leases include one or more renewal options, generally for the same period as the initial term of the lease. The exercise of lease renewal options is generally at the Company’s sole discretion and, as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company does not include the renewal option period in the expected lease term and the associated lease payments are not included in the measurement of the right-of-use asset and lease liability. 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. Revenue Recognition The Company generates revenue primarily through its company-owned and managed clinics and through royalties, franchise fees, advertising fund contributions, IT related income and computer software fees from its franchisees. Revenues from 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. Any unused visits associated with monthly memberships are recognized on a month-to-month basis. 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 derecognizes this contract liability, and recognizes revenue, as the patient consumes his or her visits related to the package and the Company transfers its services. If the Company determines that it is not subject to unclaimed property laws for the portion of wellness package that it does not expect to be redeemed (referred to as “breakage”) then it recognizes breakage revenue in proportion to the pattern of exercised rights by the patient. Royalties and Advertising Fund Revenue. The Company collects royalties from its franchisees, 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 revenue accounting standard provides an exception for the recognition of sales-based royalties promised in exchange for a license (which generally requires a reporting entity to estimate the amount of variable consideration to which it will be entitled in the transaction price). As 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, such royalties are recognized as franchisee clinic level sales occur. Royalties are collected semi-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. Renewal franchise fees, as well as transfer fees, are also recognized as revenue on a straight-line basis over the term of the respective franchise agreement. Software Fees. The Company collects a monthly fee from its franchisees 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. The Company has a regional developer program where regional developers are granted an exclusive geographical territory and commit to 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. Initial 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. This 3% fee is funded by the 7% royalties collected from the franchisees in their regions. Certain regional developer agreements result 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 recognized over the remaining life of the respective franchise agreements. The company did not enter into any new regional developer agreements during the three months ended March 31, 2023. Capitalized Sales Commissions. Sales commissions earned by the regional developers and the Company’s sales force are considered incremental and recoverable costs of obtaining a franchise agreement with a franchisee. These costs are deferred and then amortized as the respective franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. Advertising Costs Advertising costs are advertising and marketing expenses incurred by the Company, primarily through advertising funds. The Company expenses production costs of commercial advertising upon first airing and expenses the costs of communicating the advertising in the period in which the advertising occurs. Advertising expenses were $1,948,485 and $1,214,412 for the three months ended March 31, 2023 and 2022, respectively. Income Taxes Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date pre-tax income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected pre-tax income for the year and permanent differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes. (Loss) Earnings per Common Share Basic (loss) earnings per common share is computed by dividing the net (loss) income by the weighted-average number of common shares outstanding during the period. Diluted (loss) earnings per common share is computed by giving effect to all potentially dilutive common shares including restricted stock and stock options. Three Months Ended 2023 2022 Net (loss) income $ 2,301,036 $ (205,797) Weighted average common shares outstanding - basic 14,566,185 14,432,652 Effect of dilutive securities: Unvested restricted stock and stock options 295,549 — Weighted average common shares outstanding - diluted 14,861,734 14,432,652 Basic (loss) earnings per share $ 0.16 $ (0.01) Diluted (loss) earnings per share $ 0.15 $ (0.01) The following common stock equivalents were excluded from the computation of diluted (loss) earnings per share for the periods presented because including them would have been antidilutive: Three Months Ended Weighted average dilutive securities: 2023 2022 Restricted stocks — 7,447 Stock options 92,652 502,107 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, which is approximately 5%. Loss Contingencies ASC Topic 450 governs the disclosure of loss contingencies and accrual of loss contingencies in respect of litigation and other claims. The Company records an accrual for a potential loss when it is probable that a loss will occur and the amount of the loss can be reasonably estimated. When the reasonable estimate of the potential loss is within a range of amounts, the minimum of the range of potential loss is accrued, unless a higher amount within the range is a better estimate than any other amount within the range. Moreover, even if an accrual is not required, the Company provides additional disclosure related to litigation and other claims when it is reasonably possible (i.e., more than remote) that the outcomes of such litigation and other claims include potential material adverse impacts on the Company. Legal costs to be incurred in connection with a loss contingency are expensed as such costs are incurred. 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 credit losses, loss contingencies, share-based compensations, useful lives and realizability of long-lived assets, deferred revenue and revenue recognition related to breakage, deferred franchise costs, calculation of ROU assets and liabilities related to leases, realizability of deferred tax assets, impairment of goodwill, intangible assets, other long-lived assets, and purchase price allocations and related valuations. Recent Accounting Pronouncements Adopted and Not Yet Adopted The Company reviewed 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. |
Revenue Disclosures
Revenue Disclosures | 3 Months Ended |
Mar. 31, 2023 | |
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 40 states, the District of Columbia and Puerto Rico. 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. The revenue accounting standard provides an exception for the recognition of sales-based royalties promised in exchange for a license (which otherwise requires reporting entity to estimate the amount of variable consideration to which it will be entitled in the transaction price). The Company recognizes the primary components of the transaction price as follows: • Initial and renewal franchise fees, as well as transfer fees, are recognized as revenue ratably on a straight-line basis over the term of the respective franchise agreement commencing with the execution of the franchise, renewal, or transfer agreement. As these fees are typically received in cash at or near the beginning of the contract 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. Capitalized Sales Commissions Sales commissions earned by the regional developers and the Company’s sales force are considered incremental and recoverable costs of obtaining a franchise agreement with a franchisee. These costs are deferred and then amortized as the respective franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. Disaggregation of Revenue The Company believes that the captions contained on the condensed consolidated income statements appropriately reflect the disaggregation of its revenue by major type for the three months ended March 31, 2023 and 2022. Other revenues primarily consist of preferred vendor royalties associated with franchisees' credit card transactions. The following table shows the Company's revenues disaggregated according to the timing of transfer of services: Three Months Ended March 31, 2023 2022 Revenue recognized at a point in time $ 26,336,390 $ 20,638,788 Revenue recognized over time 2,113,908 1,799,750 Balance at Total Revenue $ 28,450,298 $ 22,438,538 Rollforward of Contract Liabilities and Contract Assets Changes in the Company's contract liability for deferred franchise and regional development fees during the three months ended March 31, 2023 were as follows: Deferred Revenue Balance at December 31, 2022 $ 18,617,263 Revenue recognized that was included in the contract liability at the beginning of the year (875,849) Net increase during the three months ended March 31, 2023 920,356 Balance at March 31, 2023 $ 18,661,770 The Company's deferred franchise and development costs represent capitalized sales commissions. Changes during the three months ended March 31, 2023 were as follows: Deferred Franchise and Development Costs Balance at December 31, 2022 $ 6,761,738 Recognized as cost of revenue during the three months ended March 31, 2023 (316,119) Net increase during the three months ended March 31, 2023 292,442 Balance at March 31, 2023 $ 6,738,061 The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of March 31, 2023: Contract liabilities expected to be recognized in Amount 2023 (remainder) $ 2,265,557 2024 2,802,609 2025 2,615,325 2026 2,515,649 2027 2,335,633 Thereafter 6,126,997 Total $ 18,661,770 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consist of the following: March 31, December 31, Office and computer equipment $ 5,577,430 $ 5,207,833 Leasehold improvements 18,691,248 17,842,901 Software developed 5,967,817 5,843,758 Finance lease assets 151,396 151,396 30,387,891 29,045,888 Accumulated depreciation and amortization (13,810,513) (12,675,085) 16,577,378 16,370,803 Construction in progress 922,649 1,104,349 Property and equipment, net $ 17,500,027 $ 17,475,152 Depreciation expense was $1,270,260 and $879,127 for the three months ended March 31, 2023 and 2022, respectively. Amortization expense related to finance lease assets was $7,570 and $21,797 for the three months ended March 31, 2023 and 2022, respectively. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company’s financial instruments include cash, restricted cash, accounts receivable, accounts payable, accrued expenses and debt under the Credit Agreement. The carrying amounts of its financial instruments approximate their fair value due to their short maturities. The carrying value of the Company’s debt under the Credit Agreement approximates fair value due to its interest rate being calculated from observable quoted prices for similar instruments, which is considered a Level 2 fair value measurement. 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 March 31, 2023 and December 31, 2022, the Company did not have any financial instruments that were measured on a recurring basis as Level 1, 2 or 3. The Company’s non-financial assets, which primarily consist of goodwill, intangible assets, property, plant and equipment, and operating lease right-of-use assets, are not required to be measured at fair value on a recurring basis, and instead are reported at their carrying amount. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying amount may not be fully recoverable (and at least annually for goodwill), non-financial assets are assessed for impairment. If the fair value is determined to be lower than the carrying amount, an impairment charge is recorded to write down the asset to its fair value, which is considered Level 3 within the fair value hierarchy. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets On March 18, 2022, the Company entered into an agreement under which the Company repurchased the right to develop franchises in various counties in New Jersey. The total consideration for the transaction was $0.3 million. The Company carried a deferred revenue balance associated with this transaction of $0.1 million, representing the unrecognized fee collected upon the execution of the regional developer agreement. 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. The Company recognized the net amount of $0.2 million as reacquired development rights on March 18, 2022, which is amortized over the remaining original contract period of approximately 5.5 years. Intangible assets consist of the following: As of March 31, 2023 Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Reacquired franchise rights $ 12,881,895 $ (5,282,762) $ 7,599,133 Customer relationships 4,330,365 (2,641,865) 1,688,500 Reacquired development rights 6,754,547 (4,840,442) 1,914,105 Assembled workforce 959,837 (256,399) 703,438 $ 24,926,644 $ (13,021,468) $ 11,905,176 As of December 31, 2022 Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Reacquired franchise rights $ 12,881,895 $ (4,755,286) $ 8,126,609 Customer relationships 4,330,365 (2,352,500) 1,977,865 Reacquired development rights 6,652,186 (4,712,953) 1,939,233 Assembled workforce 959,837 (136,015) 823,822 $ 24,824,283 $ (11,956,754) $ 12,867,529 Amortization expense related to the Company’s intangible assets was $1,064,714 and $728,252 for the three months ended March 31, 2023 and 2022, respectively. Estimated amortization expense for 2023 and subsequent years is as follows: Amount 2023 (remainder) $ 3,045,560 2024 3,030,576 2025 1,994,317 2026 1,677,217 2027 888,986 Thereafter 1,268,520 Total $ 11,905,176 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt Credit Agreement 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 provided 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 included 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 were due on February 28, 2022. On February 28, 2022, the Company entered into an amendment to its Credit Facilities (as amended, the “2022 Credit Facility”) with the Lender. Under the 2022 Credit Facility, the Revolver increased to $20,000,000 (from $2,000,000), the portion of the Revolver available for letters of credit increased to $5,000,000 (from $1,000,000), the uncommitted additional amount increased to $30,000,000 (from $2,500,000) and the developmental line of credit of $5,500,000 was terminated. The Revolver will be used for working capital needs, general corporate purposes and for acquisitions, development and capital improvement uses. At the option of the Company, borrowings under the 2022 Credit Facility bear interest at: (i) the adjusted SOFR rate, plus 0.10%, plus 1.75%, payable on the last day of the selected interest period of one, three or six months, and on the three-month anniversary of the beginning of any six-month interest period, if applicable; or (ii) an Alternative Base Rate (ABR), plus 1.00%, payable monthly. The ABR is the greatest of: (A) the prime rate (as published by the Wall Street Journal), (B) the Federal Reserve Bank of New York rate, plus 0.5%, and (C) the adjusted one-month term SOFR rate. Amounts outstanding under the Revolver on February 28, 2022 continued to bear interest at the rate selected under the Credit Facilities prior to the amendment until the last day of the interest period in effect, at which time, if not repaid, the amounts outstanding under the Revolver will bear interest at the 2022 Credit Facility rate. As a result of this refinance, $2,000,000 of current maturity of long-term debt was reclassified to long-term as of December 31, 2021. The 2022 Credit Facility will terminate and all principal and interest will become due and payable on the fifth anniversary of the amendment (February 28, 2027). 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 interest rate on funds borrowed under the Revolver as of March 31, 2023 was 6.4%. As of March 31, 2023, the Company was in compliance with all applicable financial and non-financial covenants under the Credit Agreement, and $2,000,000 remains outstanding as of March 31, 2023. |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company grants stock-based awards under its Amended and Restated 2014 Incentive Stock Plan (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. Through March 31, 2023, the Company has granted under the 2014 Plan (i) non-qualified stock options; (ii) incentive stock options; and (iii) restricted stock. There were no stock appreciation rights and restricted stock units granted under the 2014 Plan as of March 31, 2023. 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 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. Forfeitures are estimated based on historical and forecasted turnover, which is approximately 5%. The Company did not grant options during the three months ended March 31, 2023 and March 31, 2022. The information below summarizes the stock options activity for the three months ended March 31, 2023: Number of Weighted Weighted Outstanding at December 31, 2022 531,923 $ 9.20 4.7 Granted — — Exercised (15,621) 8.86 Cancelled (7,375) 28.57 Expired (1,560) 27.61 Outstanding at March 31, 2023 507,367 $ 8.87 4.4 Exercisable at March 31, 2023 473,373 $ 7.32 4.2 For the three months ended March 31, 2023 and 2022, stock-based compensation expense for stock options was $64,882 and $171,003, respectively. Restricted Stock Restricted stocks granted to employees generally vest in four equal annual installments. Restricted stocks granted to non-employee directors typically vest in full one year after the date of grant. The information below summarizes the restricted stock activity for the three months ended March 31, 2023: Restricted Stock Awards Shares Weighted Average Non-vested at December 31, 2022 70,312 $ 29.05 Granted 98,034 15.90 Vested (12,639) 32.04 Cancelled (4,971) 38.78 Non-vested at March 31, 2023 150,736 $ 19.92 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the three months ended March 31, 2023 and 2022, the Company recorded income tax expense of $841,889 and $13,224, respectively. The Company’s effective tax rate differs from the federal statutory tax rate due to permanent differences, discrete items and state taxes. The Company’s effective tax rate differs from the statutory rate for the three months ended March 31, 2023 primarily due the company’s employee retention credit refunds from the Internal Revenue Service. The tax effect of the refund amount, net of the related consulting fees, is treated as a discrete item for the quarter (See Note 11 " Employee Retention Credit") |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Leases The table below summarizes the components of lease expense and income statement location for the three months ended March 31, 2023 and 2022: Line Item in the Three Months Ended Three Months Ended March 31, 2022 Finance lease costs: Amortization of assets Depreciation and amortization $ 7,570 $ 21,797 Interest on lease liabilities Other income (expense), net 889 1,437 Total finance lease costs 8,459 23,234 Operating lease costs General and administrative expenses 1,588,941 1,353,676 Total lease costs $ 1,597,400 $ 1,376,910 Supplemental information and balance sheet location related to leases is as follows: March 31, 2023 December 31, 2022 Operating Leases: Operating lease right-of -use asset $22,451,137 $20,587,199 Operating lease liability - current portion $5,622,576 $5,295,830 Operating lease liability - net of current portion 20,211,159 18,672,719 Total operating lease liability $25,833,735 $23,968,549 Finance Leases: Property and equipment, at cost $151,396 $151,396 Less accumulated amortization (95,222) (87,652) Property and equipment, net $56,174 $63,744 Finance lease liability - current portion 24,693 24,433 Finance lease liability - net of current portion 57,235 63,507 Total finance lease liabilities $81,928 $87,940 Weighted average remaining lease term (in years): Operating leases 5.3 5.4 Finance lease 3.2 3.4 Weighted average discount rate: Operating leases 5.0 % 4.8 % Finance leases 4.3 % 4.3 % Supplemental cash flow information related to leases is as follows: Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Cash paid for amounts included in measurement of liabilities: Operating cash flows from operating leases $ 1,695,098 $ 1,397,213 Operating cash flows from finance leases 889 1,437 Financing cash flows from finance leases 6,011 21,387 Non-cash transactions: ROU assets obtained in exchange for lease liabilities Operating lease $ 2,247,839 $ 1,508,371 Finance lease — — Maturities of lease liabilities as of March 31, 2023 are as follows: Operating Leases Finance Lease 2023 (remainder) $ 5,067,906 $ 20,700 2024 6,389,909 27,600 2025 5,800,960 27,600 2026 3,994,546 11,500 2027 2,998,993 — Thereafter 5,181,535 — Total lease payments $ 29,433,849 $ 87,400 Less: Imputed interest (3,600,114) (5,472) Total lease obligations 25,833,735 81,928 Less: Current obligations (5,622,576) (24,693) Long-term lease obligation $ 20,211,159 $ 57,235 During the first quarter of 2023, the Company entered into various operating leases that have not yet commenced for spaces to be used by the Company’s new corporate clinics. These leases are expected to result in additional ROU assets and liabilities of approximately $0.6 million. These leases are expected to commence during the second and the third quarter of 2023, with lease terms of five Litigation |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2023 | |
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 and one non-operating business segment. The Corporate Clinics segment is composed of the operating activities of the company-owned or managed clinics. As of March 31, 2023, the Company operated or managed 130 clinics under this segment. The Franchise Operations segment is composed of the operating activities of the franchise business unit. As of March 31, 2023, the franchise system consisted of 740 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. Three Months Ended March 31, Revenues: 2023 2022 Corporate clinics $ 17,127,957 $ 12,606,999 Franchise operations 11,322,341 9,831,539 Total revenues $ 28,450,298 $ 22,438,538 Depreciation and amortization: Corporate clinics 2,054,580 1,376,196 Franchise operations 198,974 173,487 Corporate administration 88,990 79,493 Total depreciation and amortization $ 2,342,544 $ 1,629,176 Segment operating (loss) income: Corporate clinics $ (549,542) $ (438,064) Franchise operations 4,644,260 4,403,238 Total segment operating income $ 4,094,718 $ 3,965,174 Reconciliation of total segment operating income to consolidated earnings before income taxes: Total segment operating income $ 4,094,718 $ 3,965,174 Unallocated corporate (4,772,955) (4,141,600) Consolidated (loss) from operations (678,237) (176,426) Other income (expense), net 3,821,162 (16,147) (Loss) income before income tax benefit $ 3,142,925 $ (192,573) Segment assets: March 31, December 31, Corporate clinics $ 59,121,430 $ 57,947,468 Franchise operations 12,855,697 12,360,878 Total segment assets 71,977,127 70,308,346 Unallocated cash and cash equivalents and restricted cash 15,504,604 10,550,417 Unallocated property and equipment 566,513 915,216 Other unallocated assets 10,002,468 10,169,193 Total assets $ 98,050,712 $ 91,943,172 |
Employee Retention Credit
Employee Retention Credit | 3 Months Ended |
Mar. 31, 2023 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Employee Retention Credit | Employee Retention CreditThe employee retention credit ("ERC"), as originally enacted through the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) on March 27, 2020, is a refundable credit against certain employment taxes equal to 50% of the qualified wages an eligible employer paid to employees from March 17, 2020 to December 31, 2020. The Disaster Tax Relief Act, enacted on December 27, 2020, extended the employee retention credit for qualified wages paid from January 1, 2021 to June 30, 2021, and the credit was increased to 70% of qualified wages an eligible employer paid to employees during the extended period. The American Rescue Plan Act of 2021, enacted on March 11, 2021, further extended the employee retention credit through December 31, 2021. In October 2022, the Company filed an application with the IRS for the ERC. Employers are eligible for the credit if they experienced full or partial suspension or modification of operations during any calendar quarter because of governmental orders due to the pandemic or a significant decline in gross receipts based on a comparison of quarterly revenue results for 2020 and/or 2021 with the comparable quarter in 2019. The Company’s ERC application was equal to 70% of qualified wages paid to employees during the period from January 1, 2021 to June 30, 2021 for a maximum quarterly credit of $7,000 per employee. In March 2023, the Company received notice and refunds from the IRS related to the overpayment of Federal Employment Tax plus interest in the amount of $4.8 million related to the ERC application. The $4.8 million ERC is subject to a 20% consulting fee. The Company's eligibility remains subject to audit by the IRS for a period of five years. Since there are no generally accepted accounting principles for for-profit business entities that receive government assistance that is not in the form of a loan, an income tax credit or revenue from a contract with a customer, we determined the appropriate accounting treatment by analogy to other guidance. We accounted for the employee retention credit by analogy to International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, of International Financial Reporting Standards (IFRS). Under an IAS 20 analogy, a business entity would recognize the employee retention credit on a systematic basis over the periods in which the entity recognizes the payroll expenses for which the grant (i.e., tax credit) is intended to compensate when there is reasonable assurance (i.e., it is probable) that the entity will comply with any conditions attached to the grant and the grant (i.e., tax credit) will be received. We have accounted for the $3.9 million employee retention credits, net of the consulting fee, in the first quarter of 2023 as other income on the Statement of Income when the Company was reasonably assured that the Company met all requirements of the ERC and the grant would be received. The ERC refund is not taxable; however, the credit is subject to expense disallowance rules which increased income tax expense as a discrete item by $922,881, net of the consulting expense deduction, for the three months ended March 31, 2023. |
Nature of Operations and Summ_2
Nature of Operations and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These unaudited financial statements represent the condensed consolidated financial statements of The Joint Corp. (“The Joint”), which includes its variable interest entities (“VIEs”), and its wholly owned subsidiary, The Joint Corporate Unit No. 1, LLC (collectively, the “Company”). The accompanying unaudited condensed consolidated interim financial statements reflect all adjustments which are necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented in accordance with U.S. generally accepted accounting principles (“ GAAP”). Such unaudited interim condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with The Joint Corp. and Subsidiary and Affiliates consolidated financial statements and the notes thereto as set forth in The Joint’s Form 10-K, which included all disclosures required by U.S. GAAP. The results of operations for the periods ended March 31, 2023 and 2022 are not necessarily indicative of expected operating results for the full year. The information presented throughout the document as of and for the periods ended March 31, 2023 and 2022 is unaudited. |
Principles of Consolidation | Principles of ConsolidationThe accompanying condensed consolidated financial statements include the accounts of The Joint 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 Accounting Standards Codification 810, Consolidations (“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. |
Comprehensive Income | Comprehensive Income Net income was the same as comprehensive income for the three months ended March 31, 2023 and 2022, respectively. |
Nature of Operations | Nature of Operations The Joint Corp., a Delaware corporation, was formed on March 10, 2010 for the principal purpose of franchising and developing chiropractic clinics, selling regional developer rights, supporting the operations of franchised chiropractic clinics, and operating and managing corporate 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. |
Variable Interest Entities | Variable Interest EntitiesCertain states prohibit the “corporate practice of chiropractic,” which restricts business corporations from practicing chiropractic care by exercising control over clinical decisions by chiropractic doctors. In states which prohibit the corporate practice of chiropractic, the Company typically enters into long-term management agreements with professional corporations (“PCs”) that are owned by licensed chiropractic doctors, which, in turn, employ or contract with doctors who provide professional chiropractic care in its clinics. Under these management agreements with PCs, the Company provides, on an exclusive basis, all non-clinical services of the chiropractic practice. The Company has entered into such management agreements with four PCs, including one in in New Jersey, in connection with the opening of company-managed clinics in April 2023. An entity 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. In accordance with relevant accounting guidance, these PCs were determined to be VIEs. Such PCs are VIEs, as fees paid by the PCs to the Company as its management service provider are considered variable interests because 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. Additionally, the Company has determined that it has the ability to direct the activities that most significantly impact the performance of these PCs and have an obligation to absorb losses or receive benefits which could potentially be significant to the PCs. Accordingly, the PCs are variable interest entities for which the Company is the primary beneficiary and are consolidated by the Company. |
Cash and Cash Equivalents | Cash and Cash EquivalentsThe 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. |
Restricted Cash | Restricted CashRestricted 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. While such cash balance is not legally segregated and restricted as to withdrawal or usage, the Company's accounting policy is to classify these funds as restricted cash. |
Accounts Receivable | Accounts ReceivableAccounts receivable primarily represent amounts due from franchisees for royalty fees. The Company records an allowance for credit losses as a reduction to its accounts receivables for amounts that the Company does not expect to recover. An allowance for credit losses is determined through assessments of collectability based on historical trends, the financial condition of the Company’s franchisees, including any known or anticipated bankruptcies, and an evaluation of current economic conditions, as well as the Company’s expectations of conditions in the future. Actual losses ultimately could differ materially in the near term from the amounts estimated in determining the allowance. |
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, which is generally three |
Leases | Leases 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 clinics in the portfolio. The Company recognizes a right-of-use ("ROU") asset and lease liability for all leases. Certain leases include one or more renewal options, generally for the same period as the initial term of the lease. The exercise of lease renewal options is generally at the Company’s sole discretion and, as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company does not include the renewal option period in the expected lease term and the associated lease payments are not included in the measurement of the right-of-use asset and lease liability. 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. |
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. The Company records an impairment loss when the carrying amount of the asset is not recoverable and exceeds its fair value |
Revenue Recognition | Revenue Recognition The Company generates revenue primarily through its company-owned and managed clinics and through royalties, franchise fees, advertising fund contributions, IT related income and computer software fees from its franchisees. Revenues from 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. Any unused visits associated with monthly memberships are recognized on a month-to-month basis. 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 derecognizes this contract liability, and recognizes revenue, as the patient consumes his or her visits related to the package and the Company transfers its services. If the Company determines that it is not subject to unclaimed property laws for the portion of wellness package that it does not expect to be redeemed (referred to as “breakage”) then it recognizes breakage revenue in proportion to the pattern of exercised rights by the patient. Royalties and Advertising Fund Revenue. The Company collects royalties from its franchisees, 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 revenue accounting standard provides an exception for the recognition of sales-based royalties promised in exchange for a license (which generally requires a reporting entity to estimate the amount of variable consideration to which it will be entitled in the transaction price). As 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, such royalties are recognized as franchisee clinic level sales occur. Royalties are collected semi-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. Renewal franchise fees, as well as transfer fees, are also recognized as revenue on a straight-line basis over the term of the respective franchise agreement. Software Fees. The Company collects a monthly fee from its franchisees 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. The Company has a regional developer program where regional developers are granted an exclusive geographical territory and commit to 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. Initial 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. This 3% fee is funded by the 7% royalties collected from the franchisees in their regions. Certain regional developer agreements result 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 recognized over the remaining life of the respective franchise agreements. The company did not enter into any new regional developer agreements during the three months ended March 31, 2023. Capitalized Sales Commissions. Sales commissions earned by the regional developers and the Company’s sales force are considered incremental and recoverable costs of obtaining a franchise agreement with a franchisee. These costs are deferred and then amortized as the respective franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. |
Advertising Costs | Advertising CostsAdvertising costs are advertising and marketing expenses incurred by the Company, primarily through advertising funds. The Company expenses production costs of commercial advertising upon first airing and expenses the costs of communicating the advertising in the period in which the advertising occurs. |
Income Taxes | Income Taxes Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date pre-tax income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected pre-tax income for the year and permanent differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes. |
(Loss) Earnings per Common Share | (Loss) Earnings per Common Share Basic (loss) earnings per common share is computed by dividing the net (loss) income by the weighted-average number of common shares outstanding during the period. Diluted (loss) earnings per common share is computed by giving effect to all potentially dilutive common shares including restricted stock and stock options. |
Stock-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, which is approximately 5%. |
Loss Contingencies | Loss Contingencies ASC Topic 450 governs the disclosure of loss contingencies and accrual of loss contingencies in respect of litigation and other claims. The Company records an accrual for a potential loss when it is probable that a loss will occur and the amount of the loss can be reasonably estimated. When the reasonable estimate of the potential loss is within a range of amounts, the minimum of the range of potential loss is accrued, unless a higher amount within the range is a better estimate than any other amount within the range. Moreover, even if an accrual is not required, the Company provides additional disclosure related to litigation and other claims when it is reasonably possible (i.e., more than remote) that the outcomes of such litigation and other claims include potential material adverse impacts on the Company. Legal costs to be incurred in connection with a loss contingency are expensed as such costs are incurred. |
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 credit losses, loss contingencies, share-based compensations, useful lives and realizability of long-lived assets, deferred revenue and revenue recognition related to breakage, deferred franchise costs, calculation of ROU assets and liabilities related to leases, realizability of deferred tax assets, impairment of goodwill, intangible assets, other long-lived assets, and purchase price allocations and related valuations. |
Recent Accounting Pronouncements Adopted and Not Yet Adopted | Recent Accounting Pronouncements Adopted and Not Yet Adopted The Company reviewed 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) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Franchisor Disclosure | The following table summarizes the number of clinics in operation under franchise agreements and as company-owned or managed clinics for the three months ended March 31, 2023 and 2022: Three Months Ended Franchised clinics: 2023 2022 Clinics open at beginning of period 712 610 Opened during the period 29 27 Sold during the period — — Closed during the period (1) (1) Clinics in operation at the end of the period 740 636 Three Months Ended Company-owned or managed clinics: 2023 2022 Clinics open at beginning of period 126 96 Opened during the period 4 4 Acquired during the period — — Closed during the period — — Clinics in operation at the end of the period 130 100 Total clinics in operation at the end of the period 870 736 Clinic licenses sold but not yet developed 178 239 Future clinic licenses subject to executed letters of intent 39 39 |
Schedule of Earnings (Loss) per Common Share | Three Months Ended 2023 2022 Net (loss) income $ 2,301,036 $ (205,797) Weighted average common shares outstanding - basic 14,566,185 14,432,652 Effect of dilutive securities: Unvested restricted stock and stock options 295,549 — Weighted average common shares outstanding - diluted 14,861,734 14,432,652 Basic (loss) earnings per share $ 0.16 $ (0.01) Diluted (loss) earnings per share $ 0.15 $ (0.01) The following common stock equivalents were excluded from the computation of diluted (loss) earnings per share for the periods presented because including them would have been antidilutive: Three Months Ended Weighted average dilutive securities: 2023 2022 Restricted stocks — 7,447 Stock options 92,652 502,107 |
Revenue Disclosures (Tables)
Revenue Disclosures (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table shows the Company's revenues disaggregated according to the timing of transfer of services: Three Months Ended March 31, 2023 2022 Revenue recognized at a point in time $ 26,336,390 $ 20,638,788 Revenue recognized over time 2,113,908 1,799,750 Balance at Total Revenue $ 28,450,298 $ 22,438,538 |
Schedule of Changes in Contract Asset and Liability | Changes in the Company's contract liability for deferred franchise and regional development fees during the three months ended March 31, 2023 were as follows: Deferred Revenue Balance at December 31, 2022 $ 18,617,263 Revenue recognized that was included in the contract liability at the beginning of the year (875,849) Net increase during the three months ended March 31, 2023 920,356 Balance at March 31, 2023 $ 18,661,770 The Company's deferred franchise and development costs represent capitalized sales commissions. Changes during the three months ended March 31, 2023 were as follows: Deferred Franchise and Development Costs Balance at December 31, 2022 $ 6,761,738 Recognized as cost of revenue during the three months ended March 31, 2023 (316,119) Net increase during the three months ended March 31, 2023 292,442 Balance at March 31, 2023 $ 6,738,061 |
Schedule of Revenue Expected to be Recognized Related to Performance Obligations | The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of March 31, 2023: Contract liabilities expected to be recognized in Amount 2023 (remainder) $ 2,265,557 2024 2,802,609 2025 2,615,325 2026 2,515,649 2027 2,335,633 Thereafter 6,126,997 Total $ 18,661,770 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property Plant and Equipment | Property and equipment consist of the following: March 31, December 31, Office and computer equipment $ 5,577,430 $ 5,207,833 Leasehold improvements 18,691,248 17,842,901 Software developed 5,967,817 5,843,758 Finance lease assets 151,396 151,396 30,387,891 29,045,888 Accumulated depreciation and amortization (13,810,513) (12,675,085) 16,577,378 16,370,803 Construction in progress 922,649 1,104,349 Property and equipment, net $ 17,500,027 $ 17,475,152 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consist of the following: As of March 31, 2023 Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Reacquired franchise rights $ 12,881,895 $ (5,282,762) $ 7,599,133 Customer relationships 4,330,365 (2,641,865) 1,688,500 Reacquired development rights 6,754,547 (4,840,442) 1,914,105 Assembled workforce 959,837 (256,399) 703,438 $ 24,926,644 $ (13,021,468) $ 11,905,176 As of December 31, 2022 Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Reacquired franchise rights $ 12,881,895 $ (4,755,286) $ 8,126,609 Customer relationships 4,330,365 (2,352,500) 1,977,865 Reacquired development rights 6,652,186 (4,712,953) 1,939,233 Assembled workforce 959,837 (136,015) 823,822 $ 24,824,283 $ (11,956,754) $ 12,867,529 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated amortization expense for 2023 and subsequent years is as follows: Amount 2023 (remainder) $ 3,045,560 2024 3,030,576 2025 1,994,317 2026 1,677,217 2027 888,986 Thereafter 1,268,520 Total $ 11,905,176 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Payment Arrangement, Option, Activity | The information below summarizes the stock options activity for the three months ended March 31, 2023: Number of Weighted Weighted Outstanding at December 31, 2022 531,923 $ 9.20 4.7 Granted — — Exercised (15,621) 8.86 Cancelled (7,375) 28.57 Expired (1,560) 27.61 Outstanding at March 31, 2023 507,367 $ 8.87 4.4 Exercisable at March 31, 2023 473,373 $ 7.32 4.2 |
Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity | The information below summarizes the restricted stock activity for the three months ended March 31, 2023: Restricted Stock Awards Shares Weighted Average Non-vested at December 31, 2022 70,312 $ 29.05 Granted 98,034 15.90 Vested (12,639) 32.04 Cancelled (4,971) 38.78 Non-vested at March 31, 2023 150,736 $ 19.92 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease, Cost | The table below summarizes the components of lease expense and income statement location for the three months ended March 31, 2023 and 2022: Line Item in the Three Months Ended Three Months Ended March 31, 2022 Finance lease costs: Amortization of assets Depreciation and amortization $ 7,570 $ 21,797 Interest on lease liabilities Other income (expense), net 889 1,437 Total finance lease costs 8,459 23,234 Operating lease costs General and administrative expenses 1,588,941 1,353,676 Total lease costs $ 1,597,400 $ 1,376,910 |
Schedule of Assets And Liabilities, Lessee | Supplemental information and balance sheet location related to leases is as follows: March 31, 2023 December 31, 2022 Operating Leases: Operating lease right-of -use asset $22,451,137 $20,587,199 Operating lease liability - current portion $5,622,576 $5,295,830 Operating lease liability - net of current portion 20,211,159 18,672,719 Total operating lease liability $25,833,735 $23,968,549 Finance Leases: Property and equipment, at cost $151,396 $151,396 Less accumulated amortization (95,222) (87,652) Property and equipment, net $56,174 $63,744 Finance lease liability - current portion 24,693 24,433 Finance lease liability - net of current portion 57,235 63,507 Total finance lease liabilities $81,928 $87,940 Weighted average remaining lease term (in years): Operating leases 5.3 5.4 Finance lease 3.2 3.4 Weighted average discount rate: Operating leases 5.0 % 4.8 % Finance leases 4.3 % 4.3 % Supplemental cash flow information related to leases is as follows: Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Cash paid for amounts included in measurement of liabilities: Operating cash flows from operating leases $ 1,695,098 $ 1,397,213 Operating cash flows from finance leases 889 1,437 Financing cash flows from finance leases 6,011 21,387 Non-cash transactions: ROU assets obtained in exchange for lease liabilities Operating lease $ 2,247,839 $ 1,508,371 Finance lease — — |
Schedule of Lessee, Operating Lease, Liability, Maturity | Maturities of lease liabilities as of March 31, 2023 are as follows: Operating Leases Finance Lease 2023 (remainder) $ 5,067,906 $ 20,700 2024 6,389,909 27,600 2025 5,800,960 27,600 2026 3,994,546 11,500 2027 2,998,993 — Thereafter 5,181,535 — Total lease payments $ 29,433,849 $ 87,400 Less: Imputed interest (3,600,114) (5,472) Total lease obligations 25,833,735 81,928 Less: Current obligations (5,622,576) (24,693) Long-term lease obligation $ 20,211,159 $ 57,235 |
Schedule of Finance Lease, Liability, Maturity | Maturities of lease liabilities as of March 31, 2023 are as follows: Operating Leases Finance Lease 2023 (remainder) $ 5,067,906 $ 20,700 2024 6,389,909 27,600 2025 5,800,960 27,600 2026 3,994,546 11,500 2027 2,998,993 — Thereafter 5,181,535 — Total lease payments $ 29,433,849 $ 87,400 Less: Imputed interest (3,600,114) (5,472) Total lease obligations 25,833,735 81,928 Less: Current obligations (5,622,576) (24,693) Long-term lease obligation $ 20,211,159 $ 57,235 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The tables below present financial information for the Company’s two operating business segments. Three Months Ended March 31, Revenues: 2023 2022 Corporate clinics $ 17,127,957 $ 12,606,999 Franchise operations 11,322,341 9,831,539 Total revenues $ 28,450,298 $ 22,438,538 Depreciation and amortization: Corporate clinics 2,054,580 1,376,196 Franchise operations 198,974 173,487 Corporate administration 88,990 79,493 Total depreciation and amortization $ 2,342,544 $ 1,629,176 Segment operating (loss) income: Corporate clinics $ (549,542) $ (438,064) Franchise operations 4,644,260 4,403,238 Total segment operating income $ 4,094,718 $ 3,965,174 Reconciliation of total segment operating income to consolidated earnings before income taxes: Total segment operating income $ 4,094,718 $ 3,965,174 Unallocated corporate (4,772,955) (4,141,600) Consolidated (loss) from operations (678,237) (176,426) Other income (expense), net 3,821,162 (16,147) (Loss) income before income tax benefit $ 3,142,925 $ (192,573) |
Schedule of Reconciliation of Assets from Segment to Consolidated | Segment assets: March 31, December 31, Corporate clinics $ 59,121,430 $ 57,947,468 Franchise operations 12,855,697 12,360,878 Total segment assets 71,977,127 70,308,346 Unallocated cash and cash equivalents and restricted cash 15,504,604 10,550,417 Unallocated property and equipment 566,513 915,216 Other unallocated assets 10,002,468 10,169,193 Total assets $ 98,050,712 $ 91,943,172 |
Supplemental Disclosure of No_2
Supplemental Disclosure of Non-cash Activity (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Interest | $ 81,651 | $ 11,250 | |
Income taxes | (41,246) | 0 | |
Unpaid purchases of property and equipment | 167,959 | 109,882 | |
Net deferred revenue | 18,661,770 | $ 18,617,263 | |
Stock option proceeds receivable | 0 | 11,201 | |
License Fee Collection Upon Regional Developer Agreement | |||
Net deferred revenue | $ 0 | $ 95,197 |
Nature of Operations and Summ_4
Nature of Operations and Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | ||
Mar. 31, 2023 USD ($) corporation option | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Product Information [Line Items] | |||
Number of professional corporations | corporation | 4 | ||
Total revenues | $ 28,450,298 | $ 22,438,538 | |
Payroll liabilities | 3,571,008 | $ 2,030,510 | |
Deferred franchise and regional developer fee revenue, current portion | 2,978,937 | 2,955,851 | |
Cash equivalents | 0 | 0 | |
Allowance for doubtful accounts | 0 | 0 | |
Net loss on disposition or impairment (non-cash portion) | $ 65,469 | 6,906 | |
Number of lease renewal options | option | 1 | ||
Impairments of long-lived assets | $ 0 | 0 | |
Marketing fee percentage | 2% | ||
Percentage of franchise royalty sales | 7% | ||
Initial term of franchise agreement | 10 years | ||
Percentage royalty of sales generated by franchised clinics | 3% | ||
Advertising costs | $ 1,948,485 | 1,214,412 | |
Forecasted turnover percentage | 5% | ||
Minimum | |||
Product Information [Line Items] | |||
Property and equipment, useful life | 3 years | ||
Maximum | |||
Product Information [Line Items] | |||
Property and equipment, useful life | 10 years | ||
Variable Interest Entity, Primary Beneficiary | |||
Product Information [Line Items] | |||
Total revenues | $ 9,900,000 | 7,800,000 | |
Payroll and related expenses | 4,200,000 | $ 3,100,000 | |
Payroll liabilities | 900,000 | 600,000 | |
Deferred franchise and regional developer fee revenue, current portion | $ 4,900,000 | $ 4,700,000 | |
NORTH CAROLINA | |||
Product Information [Line Items] | |||
Number of professional corporations | corporation | 1 |
Nature of Operations and Summ_5
Nature of Operations and Summary of Significant Accounting Policies - Clinics in Operation Under Franchise Agreements or Company-owned or Managed (Details) - clinic | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Product Information, Franchised Clinics, Company-Owned Or Managed Clinics, Activity [Roll Forward] | ||
Clinics in operation at the end of the period | 870 | 736 |
Clinic licenses sold but not yet developed | 178 | 239 |
Future clinic licenses subject to executed letters of intent | 39 | 39 |
Franchised Clinics | ||
Product Information, Franchised Clinics, Company-Owned Or Managed Clinics, Activity [Roll Forward] | ||
Clinics open at beginning of period | 712 | 610 |
Opened during the period | 29 | 27 |
Sold during the period | 0 | 0 |
Closed during the period | (1) | (1) |
Clinics in operation at the end of the period | 740 | 636 |
Company-Owned or Managed Clinics | ||
Product Information, Franchised Clinics, Company-Owned Or Managed Clinics, Activity [Roll Forward] | ||
Clinics open at beginning of period | 126 | 96 |
Opened during the period | 4 | 4 |
Acquired during the period | 0 | 0 |
Closed during the period | 0 | 0 |
Clinics in operation at the end of the period | 130 | 100 |
Nature of Operations and Summ_6
Nature of Operations and Summary of Significant Accounting Policies - Earnings (Loss) Per Common Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Product Information [Line Items] | ||
Net income (loss) | $ 2,301,036 | $ (205,797) |
Weighted average common shares outstanding - basic (in shares) | 14,566,185 | 14,432,652 |
Effect of dilutive securities: | ||
Unvested restricted stock and stock options (in shares) | 295,549 | 0 |
Weighted average common shares outstanding - diluted (in shares) | 14,861,734 | 14,432,652 |
Basic (loss) earnings per share (in dollars per share) | $ 0.16 | $ (0.01) |
Diluted (loss) earnings per share (in dollars per share) | $ 0.15 | $ (0.01) |
Restricted stocks | ||
Effect of dilutive securities: | ||
Weighted average potentially dilutive securities (in shares) | 0 | 7,447 |
Stock options | ||
Effect of dilutive securities: | ||
Weighted average potentially dilutive securities (in shares) | 92,652 | 502,107 |
Revenue Disclosures - Disaggreg
Revenue Disclosures - Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 28,450,298 | $ 22,438,538 |
Revenue recognized at a point in time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 26,336,390 | 20,638,788 |
Revenue recognized over time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 2,113,908 | $ 1,799,750 |
Revenue Disclosures - Narrative
Revenue Disclosures - Narrative (Details) | Mar. 31, 2023 state |
Revenue from Contract with Customer [Abstract] | |
Franchises, number of states | 40 |
Revenue Disclosures - Changes i
Revenue Disclosures - Changes in Contract Assets and Contract Liabilities (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Deferred Revenue short and long-term | |
Balance, beginning | $ 18,617,263 |
Revenue recognized that was included in the contract liability at the beginning of the year | (875,849) |
Net increase during the period | 920,356 |
Balance, ending | 18,661,770 |
Deferred Franchise and Development Costs short and long-term | |
Balance, beginning | 6,761,738 |
Recognized as cost of revenue during the year | (316,119) |
Net increase during the period | 292,442 |
Balance, ending | $ 6,738,061 |
Revenue Disclosures - Schedule
Revenue Disclosures - Schedule of Contract Liabilities Expected to be Recognized (Details) | Mar. 31, 2023 USD ($) |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 18,661,770 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 2,265,557 |
Revenue expected to be recognized, period | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 2,802,609 |
Revenue expected to be recognized, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 2,615,325 |
Revenue expected to be recognized, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 2,515,649 |
Revenue expected to be recognized, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 2,335,633 |
Revenue expected to be recognized, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 6,126,997 |
Revenue expected to be recognized, period |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Finance lease assets | $ 151,396 | $ 151,396 |
Property and equipment, net | 17,500,027 | 17,475,152 |
Construction in progress | 922,649 | 1,104,349 |
Office and computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,577,430 | 5,207,833 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 18,691,248 | 17,842,901 |
Software developed | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,967,817 | 5,843,758 |
Finance lease assets | ||
Property, Plant and Equipment [Line Items] | ||
Finance lease assets | 151,396 | 151,396 |
Property Plant and Equipment, Excluding Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 30,387,891 | 29,045,888 |
Accumulated depreciation and amortization | (13,810,513) | (12,675,085) |
Property and equipment, net | $ 16,577,378 | $ 16,370,803 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 1,270,260 | $ 879,127 |
Amortization of assets | $ 7,570 | $ 21,797 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | ||
Impairments of long-lived assets | $ 0 | $ 0 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) | 3 Months Ended | |||
Mar. 18, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Net deferred revenue | $ 18,661,770 | $ 18,617,263 | ||
Net Carrying Value | 11,905,176 | 12,867,529 | ||
Amortization expense | 1,064,714 | $ 728,252 | ||
License Fee Collection Upon Regional Developer Agreement | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Net deferred revenue | 0 | $ 95,197 | ||
Reacquired franchise rights | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Total consideration for the transaction | $ 300,000 | |||
Net Carrying Value | $ 200,000 | $ 7,599,133 | $ 8,126,609 | |
Remaining original contract period | 5 years 6 months |
Intangible Assets - Intangible
Intangible Assets - Intangible Assets Acquired (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 18, 2022 |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 24,926,644 | $ 24,824,283 | |
Accumulated Amortization | (13,021,468) | (11,956,754) | |
Total | 11,905,176 | 12,867,529 | |
Reacquired franchise rights | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 12,881,895 | 12,881,895 | |
Accumulated Amortization | (5,282,762) | (4,755,286) | |
Total | 7,599,133 | 8,126,609 | $ 200,000 |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 4,330,365 | 4,330,365 | |
Accumulated Amortization | (2,641,865) | (2,352,500) | |
Total | 1,688,500 | 1,977,865 | |
Reacquired development rights | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 6,754,547 | 6,652,186 | |
Accumulated Amortization | (4,840,442) | (4,712,953) | |
Total | 1,914,105 | 1,939,233 | |
Assembled workforce | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 959,837 | 959,837 | |
Accumulated Amortization | (256,399) | (136,015) | |
Total | $ 703,438 | $ 823,822 |
Intangible Assets - Estimated A
Intangible Assets - Estimated Amortization Expense (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 (remainder) | $ 3,045,560 | |
2024 | 3,030,576 | |
2025 | 1,994,317 | |
2026 | 1,677,217 | |
2027 | 888,986 | |
Thereafter | 1,268,520 | |
Total | $ 11,905,176 | $ 12,867,529 |
Debt (Details)
Debt (Details) - USD ($) | Feb. 28, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Feb. 28, 2020 |
Debt Instrument [Line Items] | ||||
Long-term line of credit | $ 2,000,000 | $ 2,000,000 | ||
Reclassification, Other | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 2,000,000 | |||
Line of Credit | Senior Secured Credit Facilities | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 7,500,000 | |||
Maximum borrowing capacity, additional amount | 2,500,000 | |||
Line of Credit | Senior Secured Credit Facilities | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 2,000,000 | |||
Debt instrument, face amount | 2,000,000 | |||
Interest rate on funds borrowed under the Revolver | 6.40% | |||
Line of Credit | Senior Secured Credit Facilities | Development Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 5,500,000 | |||
Termination of development line of credit | 5,500,000 | |||
Line of Credit | Senior Secured Credit Facilities | Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 1,000,000 | |||
Line of Credit | 2022 Credit Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity, additional amount | 30,000,000 | |||
Line of Credit | 2022 Credit Facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 20,000,000 | |||
Line of Credit | 2022 Credit Facility | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.10% | |||
Line of Credit | 2022 Credit Facility | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.75% | |||
Line of Credit | 2022 Credit Facility | Revolving Credit Facility | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1% | |||
Line of Credit | 2022 Credit Facility | Revolving Credit Facility | Federal Reserve Bank Of New York Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Line of Credit | 2022 Credit Facility | Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 5,000,000 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2023 USD ($) installment | Mar. 31, 2022 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Forecasted turnover percentage | 5% | |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting term | 4 years | |
Contractual term | 10 years | |
Forecasted turnover percentage | 5% | |
Stock-based compensation expense | $ 64,882 | $ 171,003 |
Restricted stocks | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 201,328 | $ 152,553 |
Number of installments | installment | 4 |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Options Activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Number of Shares | ||
Expired (in shares) | (1,560) | |
Weighted Average Exercise Price | ||
Expired, weighted average exercise price (in dollars per share) | $ 27.61 | |
Stock options | ||
Number of Shares | ||
Outstanding, beginning (in shares) | 531,923 | |
Granted (in shares) | 0 | |
Exercised (in shares) | (15,621) | |
Cancelled (in shares) | (7,375) | |
Outstanding, ending (in shares) | 507,367 | 531,923 |
Exercisable, number of shares (in shares) | 473,373 | |
Weighted Average Exercise Price | ||
Outstanding, weighted average exercise price (in dollars per share) | $ 9.20 | |
Granted, weighted average exercise price (in dollars per share) | 0 | |
Exercised, weighted average exercise price (in dollars per share) | 8.86 | |
Cancelled, weighted average exercise price (in dollars per share) | 28.57 | |
Outstanding, weighted average exercise price (in dollars per share) | 8.87 | $ 9.20 |
Exercisable, weighted average exercise price (in dollars per share) | $ 7.32 | |
Outstanding, weighted average remaining contractual life (Year) | 4 years 4 months 24 days | 4 years 8 months 12 days |
Exercisable, weighted average remaining contractual life (Year) | 4 years 2 months 12 days |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock Activity (Details) - Restricted stocks | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Shares | |
Non-vested (in shares) | shares | 70,312 |
Granted (in shares) | shares | 98,034 |
Awards vested (in shares) | shares | (12,639) |
Cancelled (in shares) | shares | (4,971) |
Non-vested (in shares) | shares | 150,736 |
Weighted Average Grant-Date Fair Value per Award | |
Non-vested, beginning (in dollars per share) | $ / shares | $ 29.05 |
Granted (in dollar per share) | $ / shares | 15.90 |
Vested (in dollars per share) | $ / shares | 32.04 |
Cancelled (in dollars per share) | $ / shares | 38.78 |
Non-vested, ending (in dollars per share) | $ / shares | $ 19.92 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 841,889 | $ 13,224 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Expense and Supplemental Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Finance lease costs: | |||
Amortization of assets | $ 7,570 | $ 21,797 | |
Interest on lease liabilities | 889 | 1,437 | |
Total finance lease costs | 8,459 | 23,234 | |
Operating lease costs | 1,588,941 | 1,353,676 | |
Total lease costs | 1,597,400 | 1,376,910 | |
Operating Leases: | |||
Operating lease right-of-use asset | 22,451,137 | $ 20,587,199 | |
Operating lease liability, current portion | 5,622,576 | 5,295,830 | |
Operating lease liability - net of current portion | 20,211,159 | 18,672,719 | |
Total operating lease liability | 25,833,735 | 23,968,549 | |
Finance Leases: | |||
Property and equipment, at cost | 151,396 | 151,396 | |
Less accumulated amortization | (95,222) | (87,652) | |
Property and equipment, net | 56,174 | 63,744 | |
Finance lease liability, current portion | 24,693 | 24,433 | |
Finance lease liability, net of current portion | 57,235 | 63,507 | |
Total finance lease liabilities | $ 81,928 | $ 87,940 | |
Weighted average remaining lease term (in years): | |||
Operating leases | 5 years 3 months 18 days | 5 years 4 months 24 days | |
Finance lease | 3 years 2 months 12 days | 3 years 4 months 24 days | |
Weighted average discount rate: | |||
Operating leases | 5% | 4.80% | |
Finance leases | 4.30% | 4.30% | |
Cash paid for amounts included in measurement of liabilities: | |||
Operating cash flows from operating leases | $ 1,695,098 | 1,397,213 | |
Operating cash flows from finance leases | 889 | 1,437 | |
Financing cash flows from finance leases | 6,011 | 21,387 | |
Non-cash transactions: ROU assets obtained in exchange for lease liabilities | |||
Operating lease | 2,247,839 | 1,508,371 | |
Finance lease | $ 0 | $ 0 |
Commitments and Contingencies_2
Commitments and Contingencies - Maturities of Lease Liabilities (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Operating Leases | ||
2023 (remainder) | $ 5,067,906 | |
2024 | 6,389,909 | |
2025 | 5,800,960 | |
2026 | 3,994,546 | |
2027 | 2,998,993 | |
Thereafter | 5,181,535 | |
Total lease payments | 29,433,849 | |
Less: Imputed interest | (3,600,114) | |
Total operating lease liability | 25,833,735 | $ 23,968,549 |
Less: Current obligations | (5,622,576) | (5,295,830) |
Long-term lease obligation | 20,211,159 | 18,672,719 |
Finance Lease | ||
2023 (remainder) | 20,700 | |
2024 | 27,600 | |
2025 | 27,600 | |
2026 | 11,500 | |
2027 | 0 | |
Thereafter | 0 | |
Total lease payments | 87,400 | |
Less: Imputed interest | (5,472) | |
Total finance lease liabilities | 81,928 | 87,940 |
Less: Current obligations | (24,693) | (24,433) |
Long-term lease obligation | $ 57,235 | $ 63,507 |
Commitments and Contingencies_3
Commitments and Contingencies - Narrative (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Lessee, Lease, Description [Line Items] | |
Lease not yet commenced liability | $ 0.6 |
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) | 3 Months Ended | |||
Mar. 31, 2023 clinic segment | Dec. 31, 2022 clinic | Mar. 31, 2022 clinic | Dec. 31, 2021 clinic | |
Segment Reporting Information [Line Items] | ||||
Number of operating segments | segment | 2 | |||
Number of non-operating segments | segment | 1 | |||
Number of stores | 870 | 736 | ||
Company-Owned or Managed Clinics | ||||
Segment Reporting Information [Line Items] | ||||
Number of stores | 130 | 126 | 100 | 96 |
Franchised Clinics | ||||
Segment Reporting Information [Line Items] | ||||
Number of stores | 740 | 712 | 636 | 610 |
Segment Reporting - Segment Rep
Segment Reporting - Segment Reporting Financial Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 28,450,298 | $ 22,438,538 |
Depreciation and amortization | 2,342,544 | 1,629,176 |
Segment operating income | (678,237) | (176,426) |
Other income (expense), net | 3,821,162 | (16,147) |
Income (loss) before income tax benefit | 3,142,925 | (192,573) |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Segment operating income | 4,094,718 | 3,965,174 |
Unallocated corporate | ||
Segment Reporting Information [Line Items] | ||
Segment operating income | (4,772,955) | (4,141,600) |
Corporate clinics | ||
Segment Reporting Information [Line Items] | ||
Revenues | 17,127,957 | 12,606,999 |
Corporate clinics | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization | 2,054,580 | 1,376,196 |
Segment operating income | (549,542) | (438,064) |
Franchise operations | ||
Segment Reporting Information [Line Items] | ||
Revenues | 11,322,341 | 9,831,539 |
Franchise operations | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization | 198,974 | 173,487 |
Segment operating income | 4,644,260 | 4,403,238 |
Corporate administration | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization | $ 88,990 | $ 79,493 |
Segment Reporting - Segment R_2
Segment Reporting - Segment Reporting Information, Assets (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Segment Reporting Information [Line Items] | |||
Total assets | $ 98,050,712 | $ 91,943,172 | |
Unallocated cash and cash equivalents and restricted cash | 14,773,225 | 9,745,066 | $ 18,251,194 |
Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Total assets | 71,977,127 | 70,308,346 | |
Unallocated cash and cash equivalents and restricted cash | 15,504,604 | 10,550,417 | |
Unallocated property and equipment | 566,513 | 915,216 | |
Other unallocated assets | 10,002,468 | 10,169,193 | |
Corporate clinics | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Total assets | 59,121,430 | 57,947,468 | |
Franchise operations | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Total assets | $ 12,855,697 | $ 12,360,878 |
Employee Retention Credit (Deta
Employee Retention Credit (Details) - USD ($) | 3 Months Ended | |
Mar. 10, 2023 | Mar. 31, 2023 | |
Unusual or Infrequent Items, or Both [Abstract] | ||
Overpayment amount | $ 4,800,000 | |
Consulting fee | 20% | |
Employee retention credit | $ (3,900,000) | |
Increase in income tax expense | $ 922,881 |