IMAC Holdings Reports Third Quarter 2020 Financial Results

Rhea-AI Summary

IMAC Holdings (IMAC) reported improved financial performance despite COVID-19 challenges in its Q3 2020 results. The company recorded a sequential increase in net patient revenue to $3.5 million, up 35% from Q2 2020, while patient visits surged 44% quarter-over-quarter, totaling 37,992 visits. G&A expenses declined 20% sequentially to $961,521, driven by operational efficiencies. However, year-over-year patient service revenues decreased 20% due to COVID-19 impacts. IMAC aims to enhance its balance sheet by reducing notes payable by $1.2 million.

Positive

• Net patient revenue increased 35% sequentially to $3.5 million.
• Record patient visits of 37,992, up 44% quarter-over-quarter.
• General and administrative expenses reduced by 20% sequentially to $961,521.
• Patient expenses declined 55% to $428,615.

Negative

• Net patient service revenues decreased 20% year-over-year to $3.5 million.
• Net loss per share improved but remained at $0.12 compared to $0.19 a year ago.

Financial performance improves sequentially with record billable patient visits and highlights strong operational and fiscal management despite continued COVID-19 impact

BRENTWOOD, Tenn., Nov. 12, 2020 (GLOBE NEWSWIRE) -- IMAC Holdings, Inc. (Nasdaq: IMAC) (“IMAC” or the “Company”), a provider of innovative medical advancements and care specializing in regenerative rehabilitation orthopedic treatments without the use of surgery or opioids, today announces its financial results for its third quarter ended September 30, 2020.

Third Quarter Highlights and Recent Developments:

• Announced the opening of enrollment in early November in its Phase 1 clinical study of umbilical cord-derived mesenchymal stem cells for the treatment of bradykinesia due to Parkinson’s Disease
   
• Announced the addition of three new highly qualified independent directors – Maurice “Mo” Evans, Michael Pruitt, and Cary Sucoff – to its board of directors
   
• Sold its Lexington, Ky. property for $1.3 million in a sale-leaseback transaction
   
• Reduced general and administrative expenses by 27% year-over-year and 20% quarter-over-quarter to $961,521 in the third quarter of 2020 with positive impacts from the realization of expense synergies from centralized purchasing, improved ordering, inventory control, and expense management, most notably from lower travel expenses given the coronavirus pandemic
   
• Recognized record billable patient volume of 37,992 visits in the third quarter of 2020, up 8% year-over-year
   
• Patient expenses declined 55% to $428,615 in the third quarter of 2020 from $950,517 in same period in 2019 due to improvements in supply management and a shift in service mix from knee care to spinal patients, who have a lower associated cost of therapy, reflecting behavioral adjustments associated with COVID-19-based activity restrictions
   
• Wellness Membership subscribers increased 20% sequentially during the quarter to 762 members

“We are at an exciting time in the Company’s development, with the recent launch of its Phase 1 clinical trial for IMAC’s umbilical cord-derived mesenchymal stem cell treatment for bradykinesia due to Parkinson’s disease. This is a complement to IMAC’s evolution as a regenerative rehabilitation company. These proprietary advancements give IMAC the potential to dramatically improve the non-opioid treatment landscape for a variety of physical ailments and derive asset value beyond its brick and mortar locations. This focus, along with the addition of three deeply experienced, growth-oriented professionals to IMAC’s board of directors, should help IMAC capitalize on timely opportunities,” commented Jeffrey Ervin, IMAC’s Chief Executive Officer.

“While the COVID-19 pandemic has continued to negatively impact IMAC’s revenue on a year-over-year basis, the Company has been extremely diligent and focused on continuing what it began prior to the pandemic to ensure that it is wisely allocating capital, strategically reducing expenses, and prudently managing operations. All of this is being done with an eye toward continuing to expand both in the markets where IMAC has a foothold and in creating new and adjacent market opportunities through acquisition and partnerships. Even in this challenging environment, IMAC’s third quarter results exhibited a marked improvement from the second quarter of 2020 with net patient revenue of $3.5 million in the third quarter, up 35% sequentially from $2.6 million in the second quarter. Additionally, G&A costs decreased by 20 percent sequentially from the second quarter, which, when coupled with the sequential revenue increase, led to a 23% improvement in operating loss over the same period.

“Looking at how that translates to patient care, patient visits increased 44% quarter-over-quarter while patient expenses decreased 55%. IMAC’s patient service mix shifted in the quarter to a higher concentration of spine patients, rather than knee patients, which lowered both IMAC’s average charge per visit as well as its patient treatment expense, driving quarter-over-quarter improvement. Lastly, IMAC remains committed to improving its balance sheet and operations, reducing its notes payable in the quarter by approximately $1.2 million to a balance of $4.5 million, with nearly $1.7 million of this amount in the form of a Small Business Administration Paycheck Protection Program loan that we anticipate will achieve at least partial forgiveness” concluded Mr. Ervin.

Results of Operations for the Three and Nine Months Ended September 30, 2020

Net patient service revenues decreased 20% to $3.5 million for the three months ended September 30, 2020, compared to $4.4 million for the three months ended September 30, 2019. This decrease was due to the continued impact of COVID-19 and a change in the procedure mix. Patient service revenue decreased 14% to $9.4 million for the nine months ended September 30, 2020, compared to $10.9 million for the nine months ended September 30, 2019. This decrease is attributable to the IMAC’s acquisitions of clinics in Chicago and Florida in April 2019 and January 2020, respectively, along with the impacts of COVID-19.

The Company reported a net loss per share for the quarter ending September 30, 2020 of $0.12 vs. a loss per share of $0.19 for the comparable year-ago period. For the nine-month period ending September 30, 2020, the Company reported a net loss per share of $0.49 vs a loss per share of $0.68 for the nine months ended September 30, 2019.

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. IMAC 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, as well as Mike Ditka IMAC Regeneration Centers and a Tony Delk IMAC Regeneration Center. 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
lfristoe@imacrc.com

Investors:
Bret Shapiro
(516) 222-2560
brets@coreir.com

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

		September 30, 2020				December 31, 2019
ASSETS
Current assets:
Cash		$	1,664,304			$	373,689
Accounts receivable, net			1,433,457				1,258,325
Deferred compensation, current portion			241,946				312,258
Other assets			452,741				633,303
Total current assets			3,792,448				2,577,575
Property and equipment, net			1,861,879				3,692,009
Other assets:
Goodwill			2,040,696				2,040,696
Intangible assets, net			6,846,385				7,169,072
Deferred equity costs			143,655				170,274
Deferred compensation, net of current portion			310,006				549,563
Security deposits			413,407				499,488
Right of use asset			3,965,755				3,719,401
Total other assets			13,719,904				14,148,494
Total assets		$	19,374,231			$	20,418,078
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	2,367,438			$	2,909,666
Patient deposits			373,678				189,691
Notes payable, current portion, net of deferred loan costs			1,839,306				1,422,554
Finance lease obligation, current portion			18,047				17,473
Line of credit			79,961				79,961
Liability to issue common stock, current portion			310,575				421,044
Operating lease liability, current portion			1,051,964				1,025,247
Total current liabilities			6,040,969				6,065,636
Long-term liabilities:
Notes payable, net of current portion			2,671,333				2,109,065
Finance lease obligation, net of current portion			52,957				66,565
Liability to issue common stock, net of current portion			378,760				578,866
Operating lease liability, net of current portion			3,723,398				3,660,654
Other non-current liabilities			15,000				-
Total liabilities			12,882,417				12,480,786
Stockholders’ equity:
Preferred stock - $0.001 par value, 5,000,000 authorized, nil issued and outstanding at September 30, 2020 and December 31, 2019, respectively			-				-
Common stock - $0.001 par value, 30,000,000 authorized, 11,839,972 and 8,913,258 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively			11,834				8,907
Additional paid-in capital			24,119,889				20,050,634
Accumulated deficit			(15,235,941	)			(10,042,050	)
Non-controlling interest			(2,403,968	)			(2,080,199	)
Total stockholders’ equity			6,491,814				7,937,292
Total liabilities and stockholders’ equity		$	19,374,231			$	20,418,078

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

			Three Months Ended September 30,								Nine Months Ended September 30,
			2020				2019				2020				2019
Patient revenues, net			$	3,477,841			$	4,355,904			$	9,359,490			$	10,882,487
Management fees				-				-				12,487				-
Total revenue				3,477,841				4,355,904				9,371,977				10,882,487
Operating expenses:
Patient expenses				428,615				950,517				1,213,799				2,314,424
Salaries and benefits				2,622,266				2,878,391				7,882,665				7,536,223
Share-based compensation				108,377				112,959				311,406				288,298
Advertising and marketing				234,694				317,800				650,861				1,014,144
Grant funds				-				-				(415,978	)			-
General and administrative				961,521				1,311,315				3,406,116				3,718,506
Depreciation and amortization				430,121				422,405				1,334,267				1,104,961
Total operating expenses				4,785,594				5,993,387				14,383,136				15,976,556
Operating loss				(1,307,753	)			(1,637,483	)			(5,011,159	)			(5,094,069	)
Other income (expense):
Interest income				6,028				120				6,067				125
Other income (expenses)				6				(94	)			6				(15,384	)
Beneficial conversion interest expense				-				-				-				(639,159	)
Gain (loss) on extinguishment of debt				9,783				-				(99,761	)			-
Loss on disposal of assets				(39,047	)			-				(60,272	)			-
Interest expense				(141,416	)			(74,456	)			(352,541	)			(190,337	)
Total other (expenses)				(164,646	)			(74,430	)			(506,501	)			(844,755	)
Net loss before income taxes				(1,472,399	)			(1,711,913	)			(5,517,660	)			(5,938,824	)
Income taxes				-				-				-				-
Net loss				(1,472,399	)			(1,711,913	)			(5,517,660	)			(5,938,824	)
Net loss attributable to the non-controlling interest				42,741				162,951				323,769				889,907
Net loss attributable to IMAC Holdings, Inc.			$	(1,429,658	)		$	(1,548,962	)		$	(5,193,891	)		$	(5,048,917	)
Net loss per share attributable to common stockholders
Basic and diluted			$	(0.12	)		$	(0.19	)		$	(0.49	)		$	(0.68	)
Weighted average common shares outstanding
Basic and diluted				11,839,972				8,366,287				10,549,899				7,472,738

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			4,533,623			$	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	)			(2,196,501	)
Balance, June 30, 2019			8,316,798				8,317				18,676,639				(2,352,796	)			(7,044,775	)			9,287,385
Issuance of common stock			133,297				133				150,652				-				-				150,785
Issuance of employee stock options			-				-				35,963				-				-				35,963
Net loss			-				-				-				(162,951	)			(1,548,962	)			(1,711,913	)
Balance, September 30, 2019			8,450,095			$	8,450			$	18,863,254			$	(2,515,747	)		$	(8,593,737	)		$	7,762,220

		Common Stock								Additional				Non-
		Number of Shares				Par				Paid-In- Capital				Controlling Interest				Accumulated Deficit				Total
Balance, December 31, 2019			8,913,257			$	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			10,009,097				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			11,839,972				11,834				24,079,504				(2,361,227	)			(13,806,283	)			7,923,828
Issuance of employee stock options			-				-				40,385				-				-				40,385
Net loss			-				-				-				(42,741	)			(1,429,658	)			(1,472,399	)
Balance, September 30, 2020			11,839,972			$	11,834			$	24,119,889			$	(2,403,968	)		$	(15,235,941	)		$	6,491,814

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

		Nine Months Ended September 30,
		2020				2019
Cash flows from operating activities:
Net loss		$	(5,517,660	)		$	(5,938,824	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			1,334,267				1,104,961
Beneficial conversion interest expense			-				639,159
Share based compensation			311,406				288,298
Loss on disposition of assets			1,959				-
Non cash expense			-				150,785
(Increase) decrease in operating assets:
Accounts receivable, net			(154,292	)			64,046
Other assets			251,976				(53,450	)
Security deposits			86,081				(59,966	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses			(518,074	)			736,704
Patient deposits			183,987				358,906
Lease incentive obligation			-				(85,894	)
Net cash used in operating activities			(4,020,350	)			(2,795,275	)
Cash flows from investing activities:
Purchase of property and equipment			(52,626	)			(688,312	)
Purchase of license fee			(243,750	)			-
Acquisition of IMAC Florida (Note 6)			(200,000	)			-
Net cash used in investing activities			(496,376	)			(688,312	)
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			3,736,613				-
Proceeds from notes payable			2,891,520				212,800
Payments on notes payable			(737,758	)			(86,958	)
Payments of debt issuance costs			(70,000	)			-
Proceeds from line of credit			-				20,000
Payments on line of credit			-				(300,000	)
Payments on finance lease obligation			(13,034	)			(12,487	)
Net cash provided by financing activities			5,807,341				4,030,182
Net increase in cash			1,290,615				546,595
Cash, beginning of period			373,689				194,316
Cash, end of period		$	1,664,304			$	740,911
Supplemental cash flow information:
Interest paid		$	63,152			$	97,147
Taxes paid			-			$	18,533
Non cash financing and investing:
Debt discount notes payable		$	115,000			$	-
Debt payment by sale of property and equipment		$	1,232,500			$	-
Business acquisition via stock issuance		$	-			$	3,771,978

FAQ

What were IMAC's Q3 2020 financial results?

IMAC reported a net patient revenue of $3.5 million for Q3 2020, representing a 35% sequential increase. However, revenues decreased by 20% year-over-year.

How did COVID-19 impact IMAC's business in Q3 2020?

COVID-19 continued to negatively affect IMAC's revenue year-over-year, contributing to a decrease in patient service revenues.

What is the current status of IMAC's clinical trials?

Enrollment for IMAC's Phase 1 clinical study of umbilical cord-derived mesenchymal stem cells for treating bradykinesia due to Parkinson’s disease opened in early November 2020.

Did IMAC make any significant changes to its management or operations?

IMAC added three independent directors to its board, enhancing its management team.

What is the outlook for IMAC's financial health?

IMAC aims to improve its balance sheet, having reduced its notes payable by approximately $1.2 million.