NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation — The accompanying condensed consolidated financial statements, including the balance sheet as of June 30, 2026, statements of operations and statements of stockholders’ equity, for the three and six months ended June 30, 2026 and 2025, and statements of cash flows for the six months ended June 30, 2026 and 2025, are unaudited. The condensed consolidated financial statements and accompanying notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company’s annual consolidated financial statements and notes. The information included in this Quarterly Report should be read in conjunction with Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and consolidated financial statements and notes thereto for the fiscal year ended December 31, 2025 included in the Company’s Annual Report. In the opinion of management, these condensed financial statements reflect all adjustments, which include normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2026 and the results of operations and cash flows for the six months ended June 30, 2026 and 2025. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2026 and 2025 are also unaudited. The results for the three and six months ended June 30, 2026 and 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other interim periods, or any future year or period.

Specified Expense Items — Significant expense information provided to the CODM is consistent with our condensed consolidated statements of operations, as supplemented by the specified expense items provided to the CODM and disclosed in the table below:


	For the three months ended				For the six months ended
	June 30,				June 30,
	2026		2025		2026		2025

	(in thousands)				(in thousands)
Salaries and Benefits
Doctor compensation and benefits	$	20,765	$	16,744	$	41,527	$	32,666
Clinical team member salaries and benefits		21,349		20,352		42,482		40,067
Total Salaries and Benefits	$	42,114	$	37,096	$	84,009	$	72,733
Other Practice Expenses
MinnesotaCare tax	$	1,180	$	1,127	$	2,301	$	2,180
Other expenses of practices⁽¹⁾		2,656		2,483		5,369		4,835
Total – Other Operating expense	$	3,836	$	3,610	$	7,670	$	7,015

(1)

Other expenses of practices include software and subscription costs, repairs and maintenance costs, recruiting, travel and entertainment, insurance, and other operating costs.

Revenue Recognition

Revenue Recognition — Our affiliated dental practices generate their revenue from services provided to patients. Generally, dental practices bill patients and third-party payors after the services are performed. Revenue is recognized as performance obligations are satisfied. Patient care service revenue is reported at amounts that reflect the consideration affiliated dental practices estimate to be entitled in exchange for providing patient care. These consideration amounts are due from patients and third-party payors (including dental insurers and government sponsored programs), and others and include variable consideration. Our affiliated dental groups determine the transaction price, which involves significant estimates and judgment, based on standard charges for goods and services provided, reduced by contractual allowance provided to third-party payors, discounts provided to uninsured patients in accordance with our policy and implicit price concessions based on its historical collection experience for each patient portfolio based on payor classes and service types. We regularly review data about these major payor sources of revenue in evaluating the sufficiency of the contractual allowance and implicit price concessions. Performance obligations are determined based on the nature of the

services provided. For general dental care services, the performance obligations are satisfied as the patient simultaneously receives and consumes the benefits provided as the services are performed. Revenue from performance obligations satisfied over time is recognized based on total expected or actual services allocated to each performance obligation. Generally, performance obligations satisfied over time relate to patients receiving orthodontic services. For these services we measure the performance obligation from initial execution of the contract to the point when there are no further services required for the patient. Typically, revenue is recognized within 12-months of the commencement of services. In addition, our affiliated dental practices offer a direct-to-consumer dental care subscription for patients without dental insurance, which provides reduced costs for patient care over a 12-month period. Materially all deferred revenue at the end of a fiscal year is recognized within the subsequent 12-month period. The subscription revenue is deferred and recognized over the period of care. We believe that these methods provide an accurate depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligations.

Per the administrative resource agreements, Park Dental Partners, Inc. bills the affiliated dental practices for business and administrative services. However, this revenue and related expenses are eliminated in the financial statement consolidation process.

Our affiliated dental practices have agreements with third-party payors that typically provide for payments at amounts less than standard established charges. A summary of the payment arrangements with major third-party payors consists of the following:

●

Medicaid: services are generally paid at prospectively determined rates per charge, per occasion of service, or per covered member.

●

Commercial insurance: payment agreements with certain insurance carriers provide for payment using prospectively determined rates per charge, discounts from established charges, and fee schedules.

Our patient service revenue, net of allowances, implicit price concessions and discounts, recognized from these major payor sources and patients were as follows:


		For the three months ended					For the six months ended
		June 30,					June 30,
		2026		2025			2026		2025

		(in thousands)					(in thousands)
Third-party payors		$	43,671	$	44,438		$	87,202	$	86,430
Patients			22,541		18,560			41,705		35,605
Total all payors		$	66,212	$	62,998		$	128,907	$	122,035

Deferred Revenue

Deferred Revenue — Deferred revenue is comprised of performance obligations satisfied over time which have not yet been completed, primarily related to orthodontic and dental subscription services.

A summary of the Company’s changes in deferred revenue for the six months ended June 30, 2026 and 2025, were as follows:


	2026		2025

	(in thousands)
Deferred revenue - January 1	$	1,411	$	1,432
Recognition of prior deferred revenue in the current period		(1,096)		(1,063)
Deferral of revenue		1,330		1,063
Deferred revenue - June 30	$	1,645	$	1,432