IMAC Holdings Reports Third Quarter 2020 Financial Results

November 12, 2020

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  


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Source: IMAC Holdings, Inc.