In 2023, we initiated plans to refranchise the majority of our company-owned or managed clinics with plans to retain a small portion of high-performing clinics. During the third quarter of 2024, we expanded the refranchising plan to include additional clinic markets of company-owned or managed clinics, marketing the clinics in clusters grouped by proximity to larger private equity firms. Because we have formalized a plan to sell our entire corporate clinic reportable segment, we have concluded that the overall refranchising plan represents a strategic shift that will have a major effect on our operations and financial results.

Since December 31, 2024, the corporate clinics classified as held for sale or already sold under the refranchising plan represent, in the aggregate, a strategic shift that will have a major effect on our operations and financial results. Accordingly, the results of the corporate clinic segment and its assets and liabilities are reported separately as discontinued operations in the condensed consolidated statements of operations and condensed consolidated balance sheets. As permitted, we elected not to adjust the condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025 to separately present cash flows attributable to discontinued operations. Accordingly, we disclosed the depreciation and amortization, capital expenditures and significant operating and investing non-cash items related to the corporate clinic segment below.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenues:
Revenues from company-owned or managed clinics	$	7,591,917	$	16,642,013	$	16,946,108	$	33,548,363
Total revenues	7,591,917		16,642,013		16,946,108		33,548,363
Cost of revenues:
IT cost of revenues	4,906		5,551		11,087		11,723
Total cost of revenues	4,906		5,551		11,087		11,723
Selling and marketing expenses	733,897		1,825,654		1,741,199		3,718,400
Depreciation and amortization	1,690		17,120		9,447		43,505
General and administrative expenses	5,133,125		11,857,995		12,697,626		24,128,217
Total selling, general and administrative expenses	5,868,712		13,700,769		14,448,272		27,890,122
Net loss on disposition or impairment from discontinued operations	816,466		1,752,494		1,194,230		2,885,852
Income from discontinued operations	901,833		1,183,199		1,292,519		2,760,666
Other expense, net	44		—		12,017		238
Income before income tax expense	901,789		1,183,199		1,280,502		2,760,428
Income tax (benefit) expense from discontinued operations	(2,559)		100,201		179,810		203,613
Net income from discontinued operations	$	904,348	$	1,082,998	$	1,100,692	$	2,556,815


	June 30, 2026		December 31, 2025
ASSETS
Restricted cash	$	824,163	$	—
Accounts receivable	181,144		315,201
Prepaid expenses and other current assets	253,803		581,504
Assets held for sale, net of valuation allowance	12,280,539		20,051,965
Property and equipment, net	—		67,779
Deferred tax assets (attributable to VIEs)	994,138		994,138
Deposits and other assets	227,194		235,731
Total assets, discontinued operations	$	14,760,981	$	22,246,318

LIABILITIES
Accounts payable	$	26,981	$	83,503
Accrued expenses	2,870,060		2,519,433
Payroll liabilities ($0.1 million and $0.6 million attributable to VIEs, respectively)	345,312		988,865
Operating lease liability, current portion	5,424		651,844

Other current liabilities ($0.8 million attributable to VIEs)	1,580,646		756,483
Liabilities to be disposed of ($2.3 million and $4.7 million attributable to VIEs, respectively)	9,351,816		16,368,318



Total liabilities, discontinued operations	$	14,180,239	$	21,368,446

The clustered clinics are in varying stages of sales negotiations with approximately all of the company-owned or managed clinics expected to be recognized as a completed sale within one year with an estimated fair value of $1.5 million at June 30, 2026. Effective with the designation as held for sale, we discontinued recording depreciation on property and equipment, net, amortization of intangible assets, net and amortization of ROU assets for the clinics as required by GAAP. We reported the related assets and liabilities of the clinics as held for sale as discontinued operations in our June 30, 2026 and December 31, 2025 condensed consolidated balance sheets.

Long-lived assets that meet the criteria for the held for sale designation are reported at the lower of their carrying value or fair value less estimated cost to sell. As a result of our evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the clinics estimated fair values, we recorded an estimated loss on disposal of $1.4 million and $0.4 million for the three months ended June 30, 2026 and 2025, respectively, and an estimated loss of $1.8 million and $1.4 million for the six months ended June 30, 2026 and 2025, respectively. A valuation allowance of $7.3 million and $6.3 million was included in discontinued operations current assets in our condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, respectively.

On December 5, 2025, we entered into an Asset Purchase Agreement, pursuant to which we will sell the assets of, and grant franchise rights to, 22 company-owned or managed clinics located in Virginia, North Carolina and South Carolina for an aggregate purchase price of approximately $1.5 million, subject to certain adjustments. In mid-December 2025, the buyers assumed business operations under Management Service Agreements that will remain in effect until lease reassignments are completed to permit ownership transfer, for which the buyers receive a management fee in consideration for providing management services. During the quarter ended June 30, 2026, we closed on the sale of one clinic included in the transaction. As of June 30, 2026, the transaction as a whole had not officially closed and therefore, the net assets and liabilities of the remaining clinics remain in our consolidated balance sheets.

On April 20, 2026, we entered into an Asset Purchase Agreement (the “Elite Chiro Group Purchase Agreement”) with Elite Chiro Group, a California corporation (“Elite Chiro Group”), as buyer, pursuant to which we will sell to Elite Chiro Group the assets of, and grant franchise rights to, 45 company-owned or managed clinics located in Southern California (the “Elite Chiro Group Transaction”) for an aggregate purchase price of $2.3 million, subject to certain adjustments (the “Purchase Price”). The Purchase Price includes prorated franchise fees pursuant to 45 separate franchise agreements to be entered into between us and Elite Chiro Group and the non-exclusive development rights for 10 clinics to be developed in the metropolitan statistical areas of a development area to be agreed upon by us and Elite Chiro Group in accordance with the schedule set forth in the Elite Chiro Group Purchase Agreement. On April 27, 2026, we closed on the sale of 13 clinics included in the Elite Chiro Group Transaction, at which time ownership of such clinics transferred to Elite Chiro Group. On April 27, 2026, Elite Chiro Group also assumed business operations for the remaining 32 clinics included in the Elite Chiro Group Transaction pursuant to a Management Service Agreement. In May and June 2026, we closed on the sale of 15 additional clinics included in the Elite Chiro Group Transaction. As of June 30, 2026, the Elite Chiro Group Transaction as a whole had not officially closed and therefore, the net assets and liabilities of the remaining clinics remain in our consolidated balance sheets.

During the six months ended June 30, 2026, in connection with the sale of company-owned or managed clinics classified as held for sale as of December 31, 2025 for a combined sales price of $1.2 million, we sold $6.4 million of assets held for sale and $5.5 million of liabilities to be disposed of in the consolidated balance sheets as of December 31, 2025. As a result of the sales, we incurred $75 thousand in selling costs and recorded a gain of $297 thousand included in Income from discontinued operations before income tax expense in the condensed consolidated statements of operations for the six months ended June 30, 2026.

valuation allowance of $1.0 million and $7.2 million of liabilities to be disposed of in the consolidated balance sheets as of December 31, 2024. As a result of the sales, we incurred $0.4 million in selling costs and recorded a loss of $0.6 million included in Income from discontinued operations before income tax expense in the condensed consolidated statements of operations for the six months ended June 30, 2025.


	June 30, 2026		December 31, 2025
ASSETS
Property and equipment, net	$	3,139,305	$	4,497,545
Operating lease right-of-use asset	9,313,107		14,111,081
Intangible assets, net	4,195,177		4,288,265
Goodwill	2,927,597		3,482,718
Valuation allowance	(7,294,647)		(6,327,644)
Total assets held for sale, net	$	12,280,539	$	20,051,965

LIABILITIES
Operating lease liability, current and non-current	$	6,422,252	$	11,065,542
Deferred revenue from company-owned or managed clinics	2,929,564		5,302,776
Total liabilities to be disposed of	$	9,351,816	$	16,368,318

The pre-tax income of the clinics designated as held for sale as of June 30, 2026 was $0.7 million and $0.8 million for the three months ended June 30, 2026 and 2025, respectively, the results of which exclude the allocation of overhead. The pre-tax income of the clinics designated as held for sale as of June 30, 2026 was $0.9 million and $1.3 million for the six months ended June 30, 2026 and 2025, respectively, the results of which exclude the allocation of overhead. The pre-tax income for the three and six months ended June 30, 2026 was impacted by the management fees for the 54 company-owned or managed clinics as noted above.