The Company is filing this Current Report on Form 8-K to provide a business update and to supplement the risk factors described in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2019 filed with the SEC on February 28, 2020 (“Annual Report”).
Business Update
The Company’s operations continue to be adversely effected by the spread of COVID-19. More state and local governments are putting “stay in place” restrictions in place. Even where stay in place
restrictions are not in effect, more and more people are infected or choosing to stay at home or self-quarantine. As a result, a number of our physical therapy clinics are at least temporarily closed. Clinics that remain open are experiencing a
significant drop in patient volume as new patient referrals slow and existing patients cancel scheduled appointments and fail to schedule additional appointments. Likewise the Company’s industrial injury prevention business is experiencing a
significant downturn as more of our clients’ locations are on reduced work schedules or closed. As a result, the Company expects a significant drop in revenue and, in the near term, expects to incur operating losses. Management is taking a number
of steps to mitigate these losses. Actions include reducing employee salaries and furloughing or terminating employment of others. Other steps include renegotiating leases, deploying a telehealth and e-visit solution to perform services remotely,
slowing development of new clinics, delaying potential acquisitions and cutting other expenses.
Amendment to Risk Factors
The following risk factor should be read in conjunction with the risk factors described in the Annual Report.
We are subject to risks associated with public health crises and epidemics/pandemics, such as the novel strain of
coronavirus (COVID-19).
Our operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of
coronavirus (COVID-19) that has spread globally. In recent weeks, the
continued spread has led to disruption and volatility in the global capital markets, which increases the cost of, and adversely impacts access to, capital and increases economic uncertainty. It is likely that the pandemic will cause an economic
slowdown of potentially extended duration, and it is possible that it could cause a global recession.
COVID-19 is having, and will continue to have, an adverse impact on our operations and supply chains, including an increase in cancellations of physical therapy patient appointments and a decline in the scheduling of new
or additional patient appointments. Due to these impacts and measures, we have experienced, and will continue to experience, significant and unpredictable reductions and cancellations of our patient visits.
As a result, given the rapid and evolving nature of the virus, COVID-19 will negatively affect our revenue, and it is uncertain how materially COVID-19 will affect operations generally if these impacts persist or worsen
over an extended period of time. Any of these impacts would have a significant adverse effect on our business, financial condition and results of operations, and at this point, the extent of the impact of COVID-19 remains uncertain.