Segment Reporting

12 Months Ended

Dec. 31, 2019

An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the Chief Operating Decision Maker (“CODM”) to evaluate performance and make operating decisions. The Company has identified its CODM as the Chief Executive Officer.

The Company has two operating business segments. The Corporate Clinics segment is comprised of the operating activities of the company-owned or managed clinics. As of December 31, 2019, the Company operated or managed 60 clinics under this segment. The Franchise Operations segment is comprised of the operating activities of the franchise business unit. As of December 31, 2019, the franchise system consisted of 453 clinics in operation. Corporate is a non-operating segment that develops and implements strategic initiatives and supports the Company’s two operating business segments by centralizing key administrative functions such as finance and treasury, information technology, insurance and risk management, legal and

human resources. Corporate also provides the necessary administrative functions to support the Company as a publicly-traded company. A portion of the expenses incurred by Corporate are allocated to the operating segments.

The tables below present financial information for the Company’s two operating business segments (in thousands).


	Year Ended December 31,
	2019		2018
			(as adjusted)
Revenues:
Corporate clinics	$	25,808	$	19,545
Franchise operations	22,643		17,116
Total revenues	$	48,451	$	36,661

Segment operating income:
Corporate clinics	$	3,365	$	1,475
Franchise operations	10,975		8,083
Total segment operating income	$	14,340	$	9,558

Depreciation and amortization:
Corporate clinics	$	1,708	$	1,105
Franchise operations	—		—
Corporate administration	191		451
Total depreciation and amortization	$	1,899	$	1,556

Reconciliation of total segment operating income to consolidated earnings before income taxes:
Total segment operating income	$	14,340	$	9,558
Unallocated corporate	(10,925)		(9,415)
Consolidated income from operations	3,415		143
Bargain purchase gain	19		13
Other (expense), net	(62)		(47)
Income before income tax expense	$	3,372	$	109


	December 31, 2019		December 31, 2018
Segment assets:			(as adjusted)
Corporate clinics	$	25,625	$	8,828
Franchise operations	5,770		4,455
Total segment assets	$	31,395	$	13,283

Unallocated cash and cash equivalents and restricted cash	$	8,642	$	8,855
Unallocated property and equipment	2,555		487
Other unallocated assets	1,114		803
Total assets	$	43,706	$	23,428

“Unallocated cash and cash equivalents and restricted cash” relates primarily to corporate cash and cash equivalents and restricted cash (see Note 1), “unallocated property and equipment” relates primarily to corporate fixed assets, and “other unallocated assets” relates primarily to deposits, prepaid and other assets.