SCOTTSDALE, Ariz., May 05, 2022 // GLOBE NEWSWIRE // - The Joint Corp. (NASDAQ: JYNT), a national operator, manager, and franchisor of chiropractic clinics, reported its financial results for the quarter ended March 31, 2022.
“During first quarter of 2022, we continued to drive growth, achieving the milestone of 100 corporate clinics and opening the most franchised clinics in any first quarter in the history of the company,” said Peter D. Holt, President and Chief Executive Officer of The Joint Corp. “While increasing labor costs and higher turnover impacted the entire system’s bottom line, the pace of our corporate clinic revenue growth was also impacted by the increasing magnitude and speed of the expansion of our corporate portfolio. Committed to executing our long-term growth strategy, we have added operational support to return the corporate portfolio to its strong trajectory, and we are implementing tactics to address today’s market. In forging the chiropractic dream, we are creating a more attractive environment to recruit and retain doctors of chiropractic. In harnessing the power of our data, we are finalizing our roadmap to create individualized and automated consumer marketing platforms. In accelerating the pace of clinic growth, we continue to improve our comprehensive franchise sales and clinic opening strategy. In fact, in March and April, we acquired rights to two regional developer territories, increasing our margin contribution within the franchise segment as well as creating the opportunity to open greenfield clinics in those regions. We are confident in our plan to overcome the near-term macro environment, build upon our strong foundation, and drive toward our goal of opening 1,000 clinics by the end of 2023.”
Revenue was $22.4 million in the first quarter of 2022, compared to $17.6 million in the first quarter of 2021. The increase reflects a greater number of franchised and corporate clinics and continued organic growth. Cost of revenue was $2.3 million, compared to $1.8 million in the first quarter of 2021, reflecting the increased number of greenfield and franchised clinics, higher regional developer royalties and commissions, and the greater website hosting costs related to the new IT platform, which went live in July 2021.
Selling and marketing expenses were $3.3 million, up 32%, driven by the larger number of franchised and company-owned or managed clinics, the grand opening expenses for four greenfields, and the timing of the national marketing fund spend as well as the new brand campaign.
Depreciation and amortization expenses increased for the first quarter of 2022, as compared to the prior year period, primarily due to the expenses associated with the new IT platform, previously acquired intangible assets and continued greenfield development.
General and administrative expenses were $15.4 million, compared to $10.1 million in the first quarter of 2021, reflecting increases in costs to support clinic growth, in payroll to remain competitive in the tight labor market, in professional fees, and in IT expenses.
Operating loss was $176,000, including the impact of the accelerated greenfield development, higher G&A expenses, and higher depreciation and amortization. This compares to $2.0 million of operating income in the first quarter of 2021. Income tax expense was $13,000, compared to a benefit of $364,000 in the first quarter of 2021. Net loss was $206,000, or $0.01 per share, compared to net income of $2.3 million, or $0.16 per diluted share, in the first quarter of 2021.
Adjusted EBITDA was $1.8 million, compared to $3.5 million in the first quarter of 2021. 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 (loss) income before net interest, tax expense, depreciation, and amortization expenses.
Unrestricted cash was $18.3 million at March 31,2022, compared to $19.5 million at December 31, 2021. During the quarter, the Company entered into an amendment to its Credit Facilities with JP Morgan. Under the 2022 Credit Facility, the revolving line of credit was increased to $20 million, up from $2 million. The revolver will be used for working capital needs, general corporate purposes and for acquisitions, development and capital improvement uses.
Management updated its revenue and Adjusted EBITDA guidance to reflect the impact of the macro-economic environment and the impact of increased expenses. Management reaffirmed its guidance for franchised clinic openings and company-owned or managed clinic increases.
The Joint Corp. management will host a conference call at 5 p.m. ET on Thursday, May 5, 2022, to discuss the first quarter 2022 financial results. Shareholders and interested participants may listen to a live broadcast of the conference call by dialing 765-507-2604 or 844-464-3931 and referencing code 5175957 approximately 15 minutes prior to the start time.
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 for one week. The replay can be accessed by dialing 404-537-3406 or 855-859-2056. The passcode for the replay is 5175957.
This release includes a presentation of commonly discussed performance metrics. System-wide sales include revenues 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 revenues 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.
This release also includes a presentation of non-GAAP financial measures. 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 a 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.
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), inflation, exacerbated by COVID-19 and the current war in Ukraine, 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, our inability to identify and recruit enough qualified chiropractors and other personnel to staff our clinics, due in part to the nationwide labor shortage, short-selling strategies and negative opinions posted on the internet which could drive down the market price of our common stock and result in class action lawsuits, our failure to remediate the current or future material weaknesses in our internal control over financial reporting, which could negatively impact our ability to accurately report our financial results, prevent fraud, or maintain investor confidence, and other factors described in our filings with the SEC, including in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 14, 2022 and subsequently-filed current and quarterly reports. 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.
Management has disclosed in our Form 10-K that our management concluded that our internal controls over financial reporting were not effective as of December 31, 2021, and our auditors expressed an adverse opinion on the Company’s internal control over financial reporting as of December 31, 2021, due to a material weakness. The details of this material weakness were provided in our 10-K filing. We have undertaken remediation measures to address the material weakness, which we expect will be completed prior to the end of fiscal year 2022.
The Joint Corp. (NASDAQ: JYNT) revolutionized access to chiropractic care when it introduced its retail healthcare business model in 2010. Today, it is the nation’s largest operator, manager and franchisor of chiropractic clinics through The Joint Chiropractic network. 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 more than 700 locations nationwide and nearly 11 million patient visits annually, The Joint Chiropractic is a key leader in the chiropractic industry. Ranked number one on Forbes’ 2022 America's Best Small Companies list, number three on Fortune’s 100 Fastest-Growing Companies list and consistently named to Franchise Times “Top 400+ 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.
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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THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONSOLIDATED BALANCE SHEETS
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THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED INCOME STATEMENTS
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THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
RECONCILIATION FOR GAAP TO NON-GAAP
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1 System-wide sales include revenues at all clinics, whether operated or managed 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 revenues 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 revenues 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. (NASDAQ: JYNT)
The Joint® Chiropractic is reinventing chiropractic care. Our vision is to become the largest, most respected provider of chiropractic services globally.