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IMAC Holdings Reports Second Quarter 2020 Financial Results

BRENTWOOD, Tenn., Aug. 14, 2020 (GLOBE NEWSWIRE) — IMAC Holdings, Inc. (Nasdaq: IMAC) (“IMAC” or the “Company”), a provider of innovative medical advancements and care, specializing in regenerative rehabilitation treatments without the use of surgery or opioids, today announces its financial results for its second quarter ended June 30, 2020.

Recent Financial and Select Corporate Highlights:

  • Completed a $2.65 million offering of common stock
     
  • Received more than $2.1 million in financial aid from the US Department of Health and Human Services and Small Business Administration
     
  • Announced results from an internal analysis of treatment outcomes for musculoskeletal conditions showing over 80% of IMAC patients reported improvement in movement
     
  • Wellness Membership subscribers increased 30% during the quarter to 637 members
     
  • Headcount was 133 employees at June 30, down 16% for the year
     
  • On July 24, 2020, sold real estate in Lexington, Kentucky in a sale-leaseback transaction for a sale price of $1,300,000, eliminating $1,232,000 of liabilities, while entering into a five-year lease of the property with the purchaser
     
  • Received U.S. Food and Drug Administration authorization to initiate a clinical study of its umbilical cord-derived allogenic mesenchymal stem cells for the treatment of bradykinesia due to Parkinson’s disease

“The COVID-19 pandemic impacted on our day-to-day business, as reflected in decreases in key financial measurements compared to the previous quarter and the same period during 2019. While there was a decrease in patient visits and revenue, our implementation of advanced telemedicine therapy, acceleration of expense synergies, and utilization of government-sponsored aid helped us avoid a catastrophic reduction in business. We have already witnessed a recovery in business as evidenced in same-store visit growth of 7% in June 2020 as compared to June 2019,” noted Jeffrey Ervin, IMAC’s Chief Executive Officer.

“In addition, we received clearance to initiate a Phase 1 clinical trial of our umbilical cord-derived allogenic mesenchymal stem cells to improve movement for Parkinson’s disease patients. We appreciate the FDA for authorizing the trial to be conducted in IMAC clinics and our medical doctors are excited to be part of the process, which will significantly reduce trial costs. We are working to combine our already established movement and balance services with proprietary neurological services to expand our patient profile and competitive advantage beyond traditional rehabilitation centers. Furthermore, we believe our stem cell product could provide us with revenue expansion opportunities if our trial is successful.”

Results of Operations for the Three and Six Months Ended June 30, 2020

Patient service revenues decreased 32% to $2.6 million for the three months ended June 30, 2020, compared to $3.8 million for the three months ended June 30, 2019. This decrease was primarily due to the impact of COVID-19. Patient service revenues decreased 10% to $5.9 million for the six months ended June 30, 2020, compared to $6.5 million for the six months ended June 30, 2019. This decrease is attributable to the IMAC Chicago and IMAC Florida acquisitions that occurred in April 2019 and January 2020, respectively, along with the impact of COVID-19.

Net cash provided by financing activities during the six months ended June 30, 2020 was $5.9 million, including proceeds from notes payable, net of related fees and payments, which totaled $2.1 million, and proceeds from the issuance of common stock of $3.8 million. Net cash provided by financing activities during the six months ended June 30, 2019 was $4.1 million, including proceeds from our initial public offering, net of related fees.

About IMAC Holdings, Inc.

IMAC Holdings was created in March 2015 to expand on the footprint of the original IMAC Regeneration Center, which opened in Kentucky in August 2000. IMAC Regeneration Centers combine life science advancements with traditional medical care for movement-restricting diseases and conditions. It owns or manages 15 outpatient clinics that provide regenerative, orthopedic and minimally invasive procedures and therapies. It has partnered with several active and former professional athletes, opening two Ozzie Smith IMAC Regeneration Centers, two David Price IMAC Regeneration Centers, one Tony Delk IMAC Regeneration Center, and three IMAC Regeneration Centers sponsored by Mike Ditka. IMAC’s outpatient medical clinics emphasize its focus around treating sports and orthopedic injuries without surgery or opioids. More information about IMAC Holdings, Inc. is available at www.imacregeneration.com

Safe Harbor Statement

This press release contains forward-looking statements. These forward-looking statements, and terms such as “anticipate,” “expect,” “believe,” “may,” “will,” “should” or other comparable terms, are based largely on IMAC’s expectations and are subject to a number of risks and uncertainties, certain of which are beyond IMAC’s control. Actual results could differ materially from these forward-looking statements as a result of, among other factors, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the skills and experience necessary to meet customers’ requirements, and its ability to protect its intellectual property. IMAC encourages you to review other factors that may affect its future results in its registration statement and in its other filings with the Securities and Exchange Commission. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this press release will in fact occur.

IMAC Press Contact:
Laura Fristoe
[email protected]

Investors:
Bret Shapiro
(516) 222-2560
[email protected]

IMAC HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

    June 30,
2020
    December 31,
2019
 
ASSETS                
Current assets:                
Cash   $ 2,802,769     $ 373,689  
Accounts receivable, net     1,489,872       1,258,325  
Deferred compensation, current portion     263,859       312,258  
Other assets     336,958       633,303  
Total current assets     4,893,458       2,577,575  
                 
Property and equipment, net     3,293,992       3,692,009  
                 
Other assets:                
Goodwill     2,040,696       2,040,696  
Intangible assets, net     7,081,218       7,169,072  
Deferred equity costs     143,655       170,274  
Deferred compensation, net of current portion     356,085       549,563  
Security deposits     451,284       499,488  
Right of use asset     3,600,198       3,719,401  
Total other assets     13,673,136       14,148,494  
                 
Total assets   $ 21,860,586     $ 20,418,078  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
                 
Current liabilities:                
Accounts payable and accrued expenses   $ 2,543,165     $ 2,909,666  
Patient deposits     351,142       189,691  
Notes payable, current portion, net of deferred loan costs     4,471,874       1,422,554  
Finance lease obligation, current portion     17,853       17,473  
Line of credit     79,961       79,961  
Liability to issue common stock, current portion     326,356       421,044  
Operating lease liability, current portion     980,967       1,025,247  
Total current liabilities     8,771,318       6,065,636  
                 
Long-term liabilities:                
Notes payable, net of current portion     1,232,677       2,109,065  
Finance lease obligation, net of current portion     57,542       66,565  
Liability to issue common stock, net of current portion     362,979       578,866  
Operating lease liability, net of current portion     3,482,242       3,660,654  
Other non-current liabilities     30,000        
                 
Total liabilities     13,936,758       12,480,786  
                 
Stockholders’ equity:                
Preferred stock – $0.001 par value, 5,000,000 authorized, nil issued and outstanding at June 30, 2020 and December 31, 2019            
Common stock – $0.001 par value, 30,000,000 authorized, 11,839,973 and 8,913,258 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively     11,834       8,907  
Additional paid-in capital     24,079,504       20,050,634  
Accumulated deficit     (13,806,283 )     (10,042,050 )
Non-controlling interest     (2,361,227 )     (2,080,199 )
Total stockholders’ equity     7,923,828       7,937,292  
                 
Total liabilities and stockholders’ equity   $ 21,860,586     $ 20,418,078  

See accompanying notes to the unaudited condensed consolidated financial statements.

IMAC HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

    Three Months Ended June 30,     Six Months Ended June 30,  
    2020     2019     2020     2019  
                         
Patient revenues, net   $ 2,572,580     $ 3,756,755     $ 5,881,649     $ 6,526,583  
Management fees                 12,487        
Total revenue     2,572,580       3,756,755       5,894,136       6,526,583  
                                 
Operating expenses:                                
Patient expenses     405,367       927,778       785,184       1,363,907  
Salaries and benefits     2,334,249       2,593,209       5,260,399       4,657,832  
Share-based compensation     121,945       171,590       203,029       175,339  
Advertising and marketing     174,350       349,328       416,167       696,344  
Grant funds     (415,978 )           (415,978 )      
General and administrative     1,208,457       1,429,822       2,444,595       2,407,191  
Depreciation and amortization     453,651       396,989       904,146       682,556  
Total operating expenses     4,282,041       5,868,716       9,597,542       9,983,169  
                                 
Operating loss     (1,709,461 )     (2,111,961 )     (3,703,406 )     (3,456,586 )
                                 
Other income (expense):                                
Interest income     39       5       39       5  
Other income (expenses)           665             (15,290 )
Beneficial conversion interest expense                       (639,159 )
Loss on extinguishment of debt     (109,544 )           (109,544 )      
Loss on disposal of assets     (21,225 )           (21,225 )      
Interest expense     (134,921 )     (85,210 )     (211,125 )     (115,881 )
Total other (expenses)     (265,651 )     (84,540 )     (341,855 )     (770,325 )
                                 
Net loss before income taxes     (1,975,112 )     (2,196,501 )     (4,045,261 )     (4,226,911 )
                                 
Income taxes                        
                                 
Net loss     (1,975,112 )     (2,196,501 )     (4,045,261 )     (4,226,911 )
                                 
Net loss (income) attributable to the non-controlling interest     (55,576 )     295,733       281,028       726,956  
                                 
Net loss attributable to IMAC Holdings, Inc.   $ (2,030,688 )   $ (1,900,768 )   $ (3,764,233 )   $ (3,499,955 )
                                 
Net loss per share attributable to common stockholders                                
Basic and diluted   $ (0.20 )   $ (0.23 )   $ (0.38 )   $ (0.50 )
                                 
Weighted average common shares outstanding                                
Basic and diluted     10,184,294       8,106,177       9,897,773       7,018,559  

See accompanying notes to the unaudited condensed consolidated financial statements.

     

IMAC HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

    Common Stock     Additional     Non-              
    Number of
Shares
    Par     Paid-In-
Capital
    Controlling
Interest
    Accumulated Deficit     Total  
                                     
Balance, December 31, 2018     4,553,623     $ 4,534     $ 1,233,966     $ (1,625,840 )   $ (3,544,820 )   $ (3,932,160 )
Common stock issued for initial public offering proceeds, net of related fees     850,000       850       3,503,314                   3,504,164  
Issuance of common stock in connection with convertible notes     449,217       449       2,245,636                   2,246,085  
Issuance of common stock in connection with acquisitions     1,410,183       1,410       7,247,798                   7,249,208  
Exercise of warrants     9,900       10       49,490                   49,500  
Net loss                       (431,223 )     (1,599,187 )     (2,030,410 )
Balance, March 31, 2019     7,252,923       7,253       14,280,204       (2,057,063 )     (5,144,007 )     7,086,387  
Issuance of common stock in connection with acquisitions     1,002,306       1,002       4,072,436                   4,073,438  
Exercise of warrants     61,569       62       307,783                   307,845  
Issuance of employee stock options                 16,216                   16,216  
Net loss                       (295,733 )     (1,900,768 )     (2,351,875 )
Balance, June 30, 2019     8,316,798     $ 8,317     $ 18,676,639     $ (2,352,796 )   $ (7,044,775 )   $ 9,287,385  

    Common Stock     Additional     Non-              
    Number of
Shares
    Par     Paid-In-
Capital
    Controlling
Interest
    Accumulated Deficit     Total  
                                     
Balance, December 31, 2019     8,913,258     $ 8,907     $ 20,050,634     $ (2,080,199 )   $ (10,042,050 )   $ 7,937,292  
Issuance of common stock     1,095,840       1,096       1,376,122                   1,377,218  
Issuance of employee stock options                 38,359                   38,359  
Net loss                       (336,604 )     (1,733,545 )     (2,070,149 )
Balance, March 31, 2020     10,009,098       10,003       21,465,115       (2,416,803 )     (11,775,595 )     7,282,720  
Issuance of common stock     1,830,875       1,831       2,576,820                   2,578,651  
Issuance of employee stock options                 37,569                   37,569  
Net income (loss)                       55,576       (2,030,688 )     (1,975,112 )
Balance, June 30, 2020     11,839,973     $ 11,834     $ 24,079,504     $ (2,361,227 )   $ (13,806,283 )   $ 7,923,828  

See accompanying notes to unaudited condensed consolidated financial statements.

     

IMAC HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

    Six Months Ended
June 30,
 
    2020     2019  
Cash flows from operating activities:                
Net loss   $ (4,045,261 )   $ (4,226,911 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     904,146       682,556  
Beneficial conversion interest expense           639,159  
Share based compensation     203,030       175,339  
Loss on disposition of assets     (16,577 )      
(Increase) decrease in operating assets:                
Accounts receivable, net     (210,707 )     (259,712 )
Other assets     299,721       (98,685 )
Security deposits     48,204       (70,773 )
Increase (decrease) in operating liabilities:                
Accounts payable and accrued expenses     (329,056 )     675,820  
Patient deposits     161,451       861,409  
Lease incentive obligation           (57,262 )
Net cash used in operating activities     (2,985,049 )     (1,679,060 )
                 
Cash flows from investing activities:                
Purchase of property and equipment     (10,511 )     (389,469 )
Purchase of license fee     (243,750 )      
Acquisition of IMAC Florida (Note 6)     (200,000 )      
Net cash used in investing activities     (454,261 )     (389,469 )
                 
Cash flows from financing activities:                
Proceeds from initial public offering, net of related fees           3,839,482  
Proceeds from warrants exercised           357,345  
Proceeds from issuance of common stock     3,774,617        
Proceeds from notes payable     2,891,520       100,000  
Payments on notes payable     (719,104 )     (54,377 )
Payments of debt issuance costs     (70,000 )      
Proceeds from line of credit           20,000  
Payments on line of credit           (150,000 )
Payments on finance lease obligation     (8,643 )     (6,835 )
Net cash provided by financing activities     5,868,390       4,105,615  
                 
Net increase in cash     2,429,080       2,037,086  
                 
Cash, beginning of period     373,689       194,316  
                 
Cash, end of period   $ 2,802,769     $ 2,231,402  
                 
Supplemental cash flow information:                
Interest paid   $ 56,058     $ 30,671  
Non cash financing and investing:                
Debt discount notes payable   $ 115,000     $  
Business acquisition via stock issuance   $     $ 3,771,978  

See accompanying notes to the unaudited condensed consolidated financial statements.

     

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