The Joint Corp. Reports Fourth Quarter and Full Year 2020 Financial Results
The Joint Corp.
Published: March 5th, 2021
- Grows Revenue 23% Quarterly and 21% Annually, Compared to 2019
- Reports Record Annual Operating Income of $5.5 Million, Up 61% Compared to 2019
- Posts Record Adjusted EBITDA of $9.1 Million, Up 47% Compared to 2019
- Increases Total Clinic Count to 579, Opening 21 Clinics in Q4 2020, Compared to 25 in Q4 2019
- Sells Record 56 Franchise Licenses in Q4 2020, Up from 23 in Q4 2019
SCOTTSDALE, Ariz., March 04, 2021 // GLOBE NEWSWIRE // - The Joint Corp. (NASDAQ: JYNT), a national operator, manager and franchisor of chiropractic clinics, reported its financial results for the quarter and full year ended December 31, 2020.
Financial Highlights: Q4 2020 Compared to Q4 2019
- Increased system-wide sales1 by 24%, to $77.6 million.
- Reported system-wide comp sales2 increase of 16%.
- Grew revenue 23% to $17.0 million.
- Posted record operating income of $2.8 million, compared to $1.3 million.
- Reported record Adjusted EBITDA of $3.7 million, up from $2.1 million.
Financial Highlights: 2020 Compared to 2019
- Increased system-wide sales1 by 18%, to $260.0 million.
- Reported system-wide comp sales2 increase of 9%.
- Grew revenue 21% to $58.7 million.
- Posted record operating income of $5.5 million, compared to $3.4 million.
- Reported record Adjusted EBITDA of $9.1 million, up from $6.2 million.
2020 Operating Highlights
- Performed 8.3 million adjustments, up from 7.7 million in 2019.
- Served 1.1 million unique patients, compared to 998,000 in 2019.
- Treated 584,000 new patients, relatively flat compared to 585,000 in 2019.
- 27% percent of patients who visited had never been to a chiropractor before, up from 26% in 2019.
- Sold record 56 franchise licenses in Q4, bringing the 2020 total to 121, compared to 126 in 2019.
- Opened 21 new franchised clinics in Q4, bringing the 2020 total to 70, nearly equal to the 71 opened in 2019.
- Increased total clinics to 579 at December 31, 2020, 515 franchised and 64 company-owned or managed, up from 513 at December 31, 2019.
- Repurchased the regional developer (RD) rights in North Carolina on December 31, 2020. Then, repurchased the RD rights for Georgia on January 1, 2021. Combined, the transactions totaled $2.4 million. As a result, 69 franchised clinics and 37 signed franchise license agreements for unopened clinics shifted from management by RDs to corporate management, thereby eliminating the RD sales commissions and royalties of 3% of gross sales.
“Our operating and financial results for 2020 reflect both the resiliency of our business model throughout the pandemic and the commitment of our clinic staff to care for our patients,” said Peter D. Holt, President and Chief Executive Officer of The Joint Corp. “In adapting to the pandemic, the primary change to our operational practices was to increase sanitization and cleanliness procedures. However, our core concept has remained steadfast. Once again, we increased our productivity, resulting in improved clinic performance and greater company profitability. As a result, our Adjusted EBITDA, positive for the third consecutive year, exceeded our plan and further strengthened our foundation, closing 2020 with a record bottom line.”
“We enter 2021 with reignited growth momentum. We will prioritize franchised clinic and greenfield clinic openings as we accelerate growth and drive toward our goal of 1,000 clinics opened by the end of 2023,” concluded Holt.
Financial Results for the Three Months Ended December 31: 2020 Compared to 2019
Revenue was $17.0 million in the fourth quarter of 2020, compared to $13.9 million in the prior year, reflecting a greater number of clinics and continued organic growth. Cost of revenue was $1.9 million, compared to $1.6 million in the fourth quarter of 2019. The increase was in line with the total increase in franchise royalty revenues and reflects higher regional developer royalties and commissions.
Selling and marketing expenses were $2.1 million, increasing 15%, reflecting the timing of advertising spending. General and administrative expenses were $9.5 million, compared to $8.5 million in 2019, primarily due to an increase in payroll and related expenses to support revenue growth and a greater number of clinics.
Operating income was $2.8 million, compared to $1.3 million in 2019. Tax benefit was $7.9 million, driven by the reversal of the tax valuation allowance of $8.9 million, compared with the tax expense of $33 thousand in 2019. Net income, including the benefit from the reversal of the tax valuation allowance, was $10.6 million, or $0.72 per diluted share, compared to $1.3 million, or $0.09 per diluted share, in the fourth quarter of 2019.
Adjusted EBITDA was also a record for the company at $3.7 million, compared to $2.1 million in the prior year. The company defines Adjusted EBITDA, a non-GAAP measure, as EBITDA before acquisition-related expenses, bargain purchase gain, net (gain)/loss on disposition or impairment, and stock-based compensation expenses. The company defines EBITDA as net income before net interest, tax expense, depreciation, and amortization expenses.
Financial Results for the Full Year Ended December 31: 2020 Compared to 2019
Revenue was $58.7 million in 2020, increasing 21% compared to $48.5 million in 2019, reflecting a greater number of clinics and increased gross sales at existing franchised and company-owned or managed clinics.
Operating income was $5.5 million, compared to $3.4 million in 2019. Net income, including the aforementioned $8.9 million benefit from the reversal of the tax valuation allowance, was $13.2 million, or $0.90 per diluted share, compared to $3.3 million, or $0.23 per diluted share, in 2019.
Adjusted EBITDA was $9.1 million, compared to $6.2 million in 2019.
Balance Sheet Liquidity
Unrestricted cash was $20.6 million at December 31, 2020, compared to $8.5 million at December 31, 2019. The increase primarily reflects $11.2 million in cash flow from operating activities, $2.7 million borrowed under the CARES Act U.S. Small Business Administration Payroll Protection Program (PPP), and $2.0 million drawn on a revolving line of credit, which was partially offset by $4.6 million used in investing activities in 2020. Subsequent to quarter end, the company repaid the PPP loan of $2.7 million, which will be reflected in the March 31, 2021 balance sheet.
2021 Guidance for Financial Results and Clinic Openings
Management provided full year 2021 guidance and expects the following:
- Revenue to be between $73 million and $77 million, compared to $58.7 million in 2020.
- Adjusted EBITDA to be between $10.5 million and $12.0 million, compared to $9.1 million in 2020.
- Franchised clinic openings to be between 80 and 100, compared to 70 in 2020.
- Company-owned or managed clinics, through a combination of both greenfields and buybacks, to increases between 20 and 30, compared to 4 in 2020.
Conference Call
The Joint Corp. management will host a conference call at 5 p.m. ET on Thursday, March 4, 2021, to discuss the fourth quarter and year-end 2020 results. To gain immediate access to the call, bypass the operator and avoid the queue, you may preregister by clicking here. Upon registering, you will be emailed a dial-in number, direct passcode and unique PIN. Those who prefer to call-in directly may do so approximately 20 minutes prior to the start time by dialing 706-643-5902 or 888-869-1189 and using reference code 8161418. The accompanying slide presentation will be in the IR section of the website under Presentations and in Events. A live webcast of the conference call will also be available on the IR section of the company’s website at https://ir.thejoint.com/events. An audio replay will be available two hours after the conclusion of the call through March 11, 2021. The replay can be accessed by dialing 404-537-3406 or 855-859-2056. The passcode for the replay is 8161418.
Non-GAAP Financial Information
This release includes a presentation of non-GAAP financial measures. System-wide sales include sales at all clinics, whether operated by the company or by franchisees. While franchised sales are not recorded as revenues by the company, management believes the information is important in understanding the company’s financial performance, because these sales are the basis on which the company calculates and records royalty fees and are indicative of the financial health of the franchisee base. Comp sales include the sales from both company-owned or managed clinics and franchised clinics that in each case have been open at least 13 full months and exclude any clinics that have closed.
EBITDA and Adjusted EBITDA are presented because they are important measures used by management to assess financial performance, as management believes they provide a more transparent view of the company’s underlying operating performance and operating trends. Reconciliation of net income/(loss) to EBITDA and Adjusted EBITDA is presented in the table below. The company defines Adjusted EBITDA as EBITDA before acquisition-related expenses, bargain purchase gain, net (gain)/loss on disposition or impairment, and stock-based compensation expenses. The company defines EBITDA as net income before net interest, tax expense, depreciation, and amortization expenses.
EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income or cash flows from operations, as determined by accounting principles generally accepted in the United States, or GAAP. While EBITDA and Adjusted EBITDA are used as measures of financial performance and the ability to meet debt service requirements, they are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation. EBITDA and Adjusted EBITDA should be reviewed in conjunction with the company’s financial statements filed with the SEC.
Forward-Looking Statements
This press release contains statements about future events and expectations that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of industry trends, our future financial and operating performance and our growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include, but are not limited to, the continuing impact of the COVID-19 outbreak on the economy and our operations (including temporary clinic closures, shortened business hours and reduced patient demand), our failure to develop or acquire company-owned or managed clinics as rapidly as we intend, our failure to profitably operate company-owned or managed clinics, and the other factors described in “Risk Factors” in our Annual Report on Form 10-K as filed with the SEC for the year ended December 31, 2019, as updated or revised for any material changes described in any subsequently-filed Quarterly Reports on Form 10-Q or other SEC filings, and in our Annual Report on Form 10-K for the year ended December 31, 2020 expected to be filed with the SEC on or around March 5, 2021. Words such as, "anticipates," "believes," "continues," "estimates," "expects," "goal," "objectives," "intends," "may," "opportunity," "plans," "potential," "near-term," "long-term," "projections," "assumptions," "projects," "guidance," "forecasts," "outlook," "target," "trends," "should," "could," "would," "will," and similar expressions are intended to identify such forward-looking statements. We qualify any forward-looking statements entirely by these cautionary factors. We assume no obligation to update or revise any forward-looking statements for any reason or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
About The Joint Corp. (NASDAQ: JYNT)
The Joint Corp. (NASDAQ: JYNT) revolutionized access to chiropractic care when it introduced its retail healthcare business model in 2010. Today, the company is making quality care convenient and affordable, while eliminating the need for insurance, for millions of patients seeking pain relief and ongoing wellness. With nearly 600 locations nationwide and over eight million patient visits annually, The Joint is a key leader in the chiropractic industry. Named on Franchise Times “Top 200+ Franchises” and Entrepreneur’s “Franchise 500®” lists, The Joint Chiropractic is an innovative force, where healthcare meets retail. For more information, visit www.thejoint.com. To learn about franchise opportunities, visit www.thejointfranchise.com.
Business Structure
The Joint Corp. is a franchisor of clinics and an operator of clinics in certain states. In Arkansas, California, Colorado, District of Columbia, Florida, Illinois, Kansas, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Washington, West Virginia and Wyoming, The Joint Corp. and its franchisees provide management services to affiliated professional chiropractic practices.
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1 System-wide sales include sales at all clinics, whether operated by the company or by franchisees. While franchised sales are not recorded as revenues by the company, management believes the information is important in understanding the company’s financial performance, because these sales are the basis on which the company calculates and records royalty fees and are indicative of the financial health of the franchisee base.
2 Comp sales include the sales from both company-owned or managed clinics and franchised clinics that in each case have been open at least 13 full months and exclude any clinics that have closed.
SOURCE The Joint Corp.
About The Joint Corp.
The Joint® Chiropractic is reinventing chiropractic care. Our vision is to become the largest, most respected provider of chiropractic services globally.
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