RELATED PARTY TRANSACTIONS |
3 Months Ended | ||||||||||||
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Mar. 31, 2026 | |||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||
| RELATED PARTY TRANSACTIONS | NOTE 15. RELATED PARTY TRANSACTIONS
The Company was spun off from HCMC (the “Former Parent”) on September 13, 2024. Prior to the Spin-Off, the Company did not operate as a stand-alone entity. Following the Spin-Off, the Company and the Former Parent operate as separate, publicly traded companies, though they remain related parties due to common ownership history and ongoing agreements.
Allocation of General Corporate Expenses
HCMC provided human resources, accounting, payroll processing, legal and other managerial services to the Company prior to the Spin-Off. Following the Spin-Off, HCWC and HCMC entered into a TSA, under which both companies agreed to provide certain transitional services to one another to ensure smooth separation. These services were provided on a transitional basis and were expected to continue for a period of up to one year following the Spin-Off.
Management adopted a proportional cost allocation method to allocate HCMC expenses to the Company. The allocation method calculated the appropriate share of overhead costs to the Company based on management’s estimate that the sum of management time and resources spent managing the Company was approximately equal to the amount of time and resources spent managing HCMC and its subsidiaries. As a result, 50% of HCMC overhead on a weighted average basis was allocated to the Company based on the fact that management spent an equal amount of time managing HCMC and the Company. The Company believed the allocation methodology used was reasonable and had been consistently applied, and resulted in an appropriate allocation of costs incurred. However, these allocations were not necessarily indicative of the cost had the Company been a stand-alone entity or of future services.
Settlement of Related Party Receivable
On December 31, 2025, the Company entered into a Stock Purchase and Satisfaction of Debt Agreement with HCMC, pursuant to which the Company settled an outstanding $4.0 million intercompany receivable by accepting shares of HCMC common stock. Upon settlement, the related party receivable was derecognized and the Company recorded an investment in HCMC accounted for under the equity method (see Note 11). As of December 31, 2025, the due from related party balance was $0.
Subsequent Activity – Due from Related Party
As of March 31, 2026, the Company had a due from related party balance of approximately $0.1 million, representing temporary advances to HCMC for transition purposes under the Transition Services Agreement. The Company expects HCMC to repay the remaining balance in full during the second quarter of 2026.
Agreements with HCMC
The Company entered into several agreements with the former parent that, among other things, effect the separation and govern the relationship of the parties following the Spin-Off. These agreements include:
Under the terms of the transition services agreement, the HCMC provides to the Company, on a transitional basis, certain services or functions, including information technology, accounting, human resources, and payroll functions. Generally, these services will be provided for a period of up to one year following the Spin-Off. Consideration and costs for the transition services are determined using several billing methodologies as described in the agreements, including customary billing and pass-through billing. Costs for transition services provided by the former parent are recorded within the Condensed Consolidated Statements of Operations based on the nature of the services.
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