The Joint Corp. Reports Second Quarter 2024 Financial Results

The Joint Corp. Reports Second Quarter 2024 Financial Results

 Grew Q2 2024 Revenue 3%, System-wide Sales 8% and System-wide

Comp Sales 2% vs. Q2 2023 

Increased Clinic Count to 960 at June 30, 2024 

SCOTTSDALE, Ariz., Aug. 08, 2024 // GLOBE NEWSWIRE // -- The Joint Corp. (NASDAQ: JYNT), a national operator, manager, and franchisor of chiropractic clinics, reported its financial results for the quarter ended
June 30, 2024.

Financial Highlights: Q2 2024 Compared to Q2 2023

  • Grew revenue 3% to $30.3 million.
  • Reported net loss of $3.6 million, including $1.5 million in litigation expense, $1.4 million in loss on disposition or impairment and the cost associated with an in-person national franchise conference, compared to net loss of $320,000, including loss on disposition or impairment of $144,000.
  • Reported Adjusted EBITDA of $2.1 million, compared to $3.2 million.
  • Increased system-wide sales1 8% to $129.6 million.
  • Reported system-wide comp sales2 of 2%.
  • Sold 7 franchise licenses, compared to 21, reflecting the impact of the refranchising process.
  • Increased the total clinic count to 960 – 829 clinics franchised and 131 clinics company-owned or managed clinics – at June 30, 2024. During Q2 2024, The Joint
    • opened nine franchised clinics;
    • refranchised two clinics; and
    • closed three clinics: one franchised and two company-owned or managed.

“In 2024, our highest priorities are refranchising corporate clinics and improving unit economics. In the second quarter of 2024, we delivered topline growth and positive Adjusted EBITDA, even with the ongoing economic concerns,” said Peter D. Holt, President and Chief Executive Officer of The Joint Corp. “Based on early negotiations with existing franchisees, we refranchised two clinics in the second quarter and have over ten more in the letter of intent process, including five in the Kansas City market. Having recently finalized our Confidential Information Memorandum package with Capstone Partners, a full-service middle market investment bank with specialization in refranchising, we are prepared to aggressively market clusters of clinics. To increase clinic profitability, we are embracing new innovation in operations, IT and marketing that leverage the size of our network on national and local levels. Our educational efforts attracted over 930,000 new patients to The Joint in 2023, of which 36% were new to chiropractic care. In 2024, we continue to positively influence the market, and as more and more people discover chiropractic care, our reach is boundless.”

Financial Results for Second Quarter Ended June 30, 2024 Compared to June 30, 2023

Revenue was $30.3 million in the second quarter of 2024, compared to $29.3 million in the second quarter of 2023. Cost of revenue was $2.8 million, compared to $2.6 million in the second quarter of 2023, reflecting the associated higher regional developer royalties and commissions.

Selling and marketing expenses were $5.4 million, compared to $4.7 million, reflecting expenses related to the in-person national franchise conference and the timing of advertising spend. Depreciation and amortization expenses decreased 35% for the second quarter of 2024, as compared to the prior year period, primarily due to the impact of corporate clinics that are being held for sale in connection with the refranchising efforts.

General and administrative expenses were $22.6 million, up from $19.9 million in the second quarter of 2023, primarily due to $1.5 million in legal expenses associated with a class action suit related to time and wages reflecting the complexity of doing business in California as well as the increased expense to support more clinics.

Loss on disposition or impairment was $1.4 million, related to the quarterly impairment analysis of clinics held for sale as part of the refranchising efforts, compared to $144,000 in the second quarter of 2023.

Income tax expense was $178,000, compared to income tax benefit of $161,000 in the second quarter of 2023. Net loss was $3.6 million, including $1.5 million in employee litigation, $1.4 million of loss on disposition or impairment and the expense associated with an in-person national franchise conference, or $0.24 loss per share. This compares to net loss of $320,000, including the $144,000 of loss on disposition or impairment, or $0.02 loss per share, in the second quarter of 2023.

Adjusted EBITDA was $2.1 million, compared to $3.2 million the second quarter of 2023.

Financial Results for Six Months Ended June 30, 2024 Compared to June 30, 2023

Revenue was $60.0 million in the first half of 2024, compared to $57.6 million in the first half of 2023. Net loss was $2.6 million, including $1.8 million of loss on disposition or impairment, $1.5 million in employee litigation and the expense associated with an in-person national franchise conference, or 18 cents loss per share. This compares net income for the first half of 2023 of $2.0 million, including the $3.9 million employee retention credit and $210,000 of loss on disposition or impairment, or $0.13 loss per diluted share.

Adjusted EBITDA was $5.6 million, compared to $5.3 million the first half of 2023.

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 System-wide 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.

Balance Sheet Liquidity

Unrestricted cash was $17.5 million at June 30, 2024, compared to $18.2 million at December 31, 2023. Cash flow for the six-month period ended June 30, 2024 includes $1.8 million from operations and $224,000 from the net proceeds of the sales of clinics offset by ongoing IT capex and the $2.0 million first quarter 2024 repayment of the line of credit to JP Morgan Chase. Through this facility, we have retained immediate access to $20 million through February 2027.

2024 Guidance

The company reiterated all elements of its guidance.

  • System-wide sales are expected to be between $530 and $545 million, compared to $488.0 million in 2023.
  • System-wide comp sales for all clinics open 13 months or more are expected to be in the mid-single digits in 2024.
  • New franchised clinic openings, excluding the impact of refranchised clinics, are expected to be between 60 and 75, compared to 104 in 2023.

Conference Call

The Joint Corp. management will host a conference call at 5:00 p.m. ET on Thursday, August 8, 2024, after the market close. Stockholders and interested participants may listen to a live broadcast of the conference call by dialing 1-(833) 630-0823 or (412) 317-1831 and ask to be joined into the ‘The Joint’ call approximately 15 minutes prior to the start time.

The live webcast of the call with accompanying slide presentation can be accessed in the IR events section https://ir.thejoint.com/events and available for approximately one year. An audio archive can be accessed for one week by dialing (877) 344-7529 or (412) 317-0088 and entering conference ID 9073185.

Commonly Discussed Performance Metrics

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. System-wide 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.

Non-GAAP Financial Information

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 historical net income/(loss) to EBITDA and Adjusted EBITDA is presented in the table below. The company defines EBITDA as net income/(loss) before net interest, tax expense, depreciation, and amortization expenses. The company defines Adjusted EBITDA as EBITDA before acquisition-related expenses (which includes contract termination costs associated with reacquired regional developer rights), net (gain)/loss on disposition or impairment, stock-based compensation expenses, costs related to restatement filings, restructuring costs, litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the ordinary course of our business) and other income related to employee retention credits.

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. 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. Specific forward looking statements made in this press release include, among others, our 2024 highest priorities of refranchising corporate clinics and improving unit economics; our plans to aggressively market clusters of clinics; our plans to increase clinic profitability, by embracing new innovation in operations, IT and marketing that leverage the size of our network on national and local levels; our belief that in 2024, we continue to positively influence the market, and as more and more people discover chiropractic care, our reach is boundless; our anticipation of the success of the fourth quarter of 2024 promotions; and our expectations for system-wide sales, system-wide comp sales for all clinics open 13 months or more; and new franchised clinic openings, excluding the impact of refranchised clinics. 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, our inability to identify and recruit enough qualified chiropractors and other personnel to staff our clinics, due in part to the nationwide labor shortage and an increase in operating expenses due to measures we may need to take to address such shortage; inflation, which has increased our costs and which could otherwise negatively impact our business; our failure to profitably operate company-owned or managed clinics; our failure to refranchise as planned; 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 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, 2023 filed with the SEC on March 8, 2024 and subsequently filed current and quarterly reports. 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, 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 over 900 locations nationwide and more than 13 million patient visits annually, The Joint Chiropractic is a key leader in the chiropractic industry. Consistently named to Franchise Times "Top 500+ Franchises" and Entrepreneur's "Franchise 500" lists and recognized by FRANdata with the TopFUND award, as well as Franchise Business Review's "Top Franchise for 2023," "Most Profitable Franchises" and "Top Franchises for Veterans" ranking, 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, Tennessee, Washington, and West Virginia, The Joint Corp. and its franchisees provide management services to affiliated professional chiropractic practices.

– Financial Tables Follow –

 

THE JOINT CORP.
CONSOLIDATED BALANCE SHEETS
 
  June 30,
2024
  December 31,
2023
ASSETS (unaudited)    
Current assets:      
Cash and cash equivalents $ 17,457,625     $ 18,153,609  
Restricted cash   1,190,096       1,060,683  
Accounts receivable, net   3,575,784       3,718,924  
Deferred franchise and regional development costs, current portion   1,041,492       1,047,430  
Prepaid expenses and other current assets   3,436,072       2,439,837  
Assets held for sale   16,686,248       17,915,055  
Total current assets   43,387,317       44,335,538  
Property and equipment, net   8,928,658       11,044,317  
Operating lease right-of-use asset   11,859,692       12,413,221  
Deferred franchise and regional development costs, net of current portion   4,798,535       5,203,936  
Intangible assets, net   4,145,162       5,020,926  
Goodwill   7,677,695       7,352,879  
Deferred tax assets ($1.1 million and $1.1 million attributable to VIEs as of June 30, 2024 and December 31, 2023)   907,019       1,031,648  
Deposits and other assets   736,498       748,394  
Total assets $ 82,440,576     $ 87,150,859  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 1,639,841     $ 1,625,088  
Accrued expenses   3,161,257       1,963,009  
Co-op funds liability   1,190,096       1,060,683  
Payroll liabilities ($0.7 million and $0.7 million attributable to VIEs as of June 30, 2024 and December 31, 2023)   4,272,155       3,485,744  
Operating lease liability, current portion   3,811,835       3,756,328  
Finance lease liability, current portion   26,038       25,491  
Deferred franchise fee revenue, current portion   2,521,156       2,516,554  
Deferred revenue from company clinics ($2.2 million and $1.6 million attributable to VIEs as of June 30, 2024 and December 31, 2023)   4,420,601       4,463,747  
Upfront regional developer Fees, current portion   298,306       362,326  
Other current liabilities   532,251       483,249  
Liabilities to be disposed of ($2.8 million and $3.6 million attributable to VIEs as of June 30, 2024 and December 31, 2023)   12,140,570       13,831,863  
Total current liabilities   34,014,106       33,574,082  
Operating lease liability, net of current portion   10,205,222       10,914,997  
Finance lease liability, net of current portion   24,858       38,016  
Debt under the Credit Agreement         2,000,000  
Deferred franchise fee revenue, net of current portion   12,935,888       13,597,325  
Upfront regional developer fees, net of current portion   814,823       1,019,316  
Other liabilities ($1.2 million and $1.2 million attributable to VIEs as of June 30, 2024 and December 31, 2023)   1,235,241       1,235,241  
Total liabilities   59,230,138       62,378,977  
 
THE JOINT CORP.
CONSOLIDATED BALANCE SHEETS (CONT)
 
  June 30,
2024
  December 31,
2023
LIABILITIES AND STOCKHOLDERS' EQUITY (CONT’) (unaudited)    
Commitments and contingencies (Note 10)      
Stockholders' equity:      
Series A preferred stock, $0.001 par value; 50,000 shares authorized, 0 issued and outstanding, as of June 30, 2024 and December 31, 2023          
Common stock, $0.001 par value; 20,000,000 shares authorized, 14,996,787 shares issued and 14,963,772 shares outstanding as of June 30, 2024 and 14,783,757 shares issued and 14,751,633 outstanding as of December 31, 2023   14,996       14,783  
Additional paid-in capital   48,595,496       47,498,151  
Treasury stock 33,015 shares as of June 30, 2024 and 32,124 shares as of December 31, 2023, at cost   (870,058 )     (860,475 )
Accumulated deficit   (24,554,996 )     (21,905,577 )
Total The Joint Corp. stockholders' equity   23,185,438       24,746,882  
Non-controlling Interest   25,000       25,000  
Total equity   23,210,438       24,771,882  
Total liabilities and stockholders' equity $ 82,440,576     $ 87,150,859  
 

 

THE JOINT CORP.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)
 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2024       2023       2024       2023  
Revenues:              
Revenues from company-owned or managed clinics $ 17,648,736     $ 17,802,838     $ 35,186,240     $ 34,930,795  
Royalty fees   7,846,328       7,172,159       15,433,874       14,038,182  
Franchise fees   719,103       671,368       1,374,977       1,425,794  
Advertising fund revenue   2,240,838       2,041,050       4,407,311       3,993,455  
Software fees   1,415,036       1,234,812       2,801,812       2,444,817  
Other revenues   390,520       384,957       778,513       774,962  
Total revenues   30,260,561       29,307,184       59,982,727       57,608,005  
Cost of revenues:              
Franchise and regional development cost of revenues   2,458,186       2,236,442       4,799,951       4,377,277  
IT cost of revenues   368,486       359,070       742,797       692,920  
Total cost of revenues   2,826,672       2,595,512       5,542,748       5,070,197  
Selling and marketing expenses   5,401,834       4,707,818       9,287,948       8,868,062  
Depreciation and amortization   1,523,813       2,329,267       2,927,718       4,544,322  
General and administrative expenses   22,570,908       19,904,796       42,834,600       39,943,272  
Total selling, general and administrative expenses   29,496,555       26,941,881       55,050,266       53,355,656  
Net loss on disposition or impairment   1,435,320       144,345       1,797,423       209,815  
Loss from operations   (3,497,986 )     (374,554 )     (2,407,710 )     (1,027,663 )
Other income (expense), net   79,910       (106,520 )     115,540       3,714,642  
Income (loss) before income tax expense   (3,418,076 )     (481,074 )     (2,292,170 )     2,686,979  
Income tax (benefit) expense   178,322       (160,585 )     357,249       681,304  
Net (loss) income $ (3,596,398 )   $ (320,489 )   $ (2,649,419 )   $ 2,005,675  
Earnings (loss) per share:              
Basic (loss) earnings per share $ (0.24 )   $ (0.02 )   $ (0.18 )   $ 0.14  
Diluted (loss) earnings per share $ (0.24 )   $ (0.02 )   $ (0.18 )   $ 0.13  
Basic weighted average shares   14,950,082       14,684,035       14,875,718       14,625,435  
Diluted weighted average shares   15,206,238       14,952,363       15,110,736       14,907,593  
                               

 

THE JOINT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
  Six Months Ended
June 30,
    2024       2023  
Cash flows from operating activities:      
Net income (loss) $ (2,649,419 )   $ 2,005,675  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depreciation and amortization   2,927,718       4,544,322  
Net loss on disposition or impairment (non-cash portion)   1,797,422       209,815  
Net franchise fees recognized upon termination of franchise agreements   (73,526 )     (20,050 )
Deferred income taxes   124,629       477,154  
Stock based compensation expense   1,045,460       683,227  
Changes in operating assets and liabilities, net of acquisitions:      
Accounts receivable   85,861       376,444  
Prepaid expenses and other current assets   (997,307 )     (1,208,605 )
Deferred franchise costs   385,256       51,268  
Deposits and other assets   5,196       (12,557 )
Assets and liabilities held for sale, net   (1,674,226 )      
Accounts payable   14,284       (1,440,375 )
Accrued expenses   1,198,248       1,104,369  
Payroll liabilities   786,411       815,290  
Deferred revenue   (631,272 )     245,363  
Upfront regional developer fees   (268,513 )     (397,457 )
Other liabilities   (239,348 )     59,259  
Net cash provided by operating activities   1,836,874       7,493,142  
       
Cash flows from investing activities:      
Proceeds from sale of clinics   224,100        
Acquisition of CA clinics         (1,050,000 )
Purchase of property and equipment   (657,450 )     (2,729,875 )
Net cash used in investing activities   (433,350 )     (3,779,875 )
       
Cash flows from financing activities:      
Payments of finance lease obligation   (12,610 )     (12,087 )
Purchases of treasury stock under employee stock plans   (9,583 )     (2,637 )
Proceeds from exercise of stock options   52,098       202,386  
Repayment of debt under the Credit Agreement   (2,000,000 )      
Net cash provided by (used in) financing activities   (1,970,095 )     187,662  
       
Increase (decrease) in cash, cash equivalents and restricted cash   (566,571 )     3,900,929  
Cash, cash equivalents and restricted cash, beginning of period   19,214,292       10,550,417  
Cash, cash equivalents and restricted cash, end of period $ 18,647,721     $ 14,451,346  
       
Reconciliation of cash, cash equivalents and restricted cash: June 30,
2024
  June 30,
2023
Cash and cash equivalents $ 17,457,625     $ 13,602,515  
Restricted cash   1,190,096       848,831  
Cash, cash equivalents and restricted cash, end of period $ 18,647,721     $ 14,451,346  
 

 

THE JOINT CORP.
RECONCILIATION FOR GAAP TO NON-GAAP
(unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
    2024       2023       2024       2023  
Non-GAAP Financial Data:              
Net (loss) income $ (3,596,398 )   $ (320,489 )   $ (2,649,419 )   $ 2,005,675  
Net interest expense   (79,910 )     14,937       (115,540 )     64,661  
Depreciation and amortization expense   1,523,813       2,329,267       2,927,718       4,544,322  
Tax expense (benefit)   178,322       (160,585 )     357,249       681,304  
EBITDA   (1,974,173 )     1,863,130       520,008       7,295,962  
Stock compensation expense   552,065       417,017       1,045,460       683,227  
Acquisition related expenses   478,710       716,299       478,710       857,992  
Loss on disposition or impairment   1,435,320       144,345       1,797,423       209,815  
Restructuring costs   144,240             301,276        
Litigation expenses   1,490,000             1,490,000        
Other income related to the ERC         91,583             (3,779,304 )
Adjusted EBITDA $ 2,126,162     $ 3,232,374     $ 5,632,877     $ 5,267,692  

SOURCE The Joint Corp

###

Media Contact:

Margie Wojciechowski
The Joint Corp.
margie.wojciechowski@thejoint.com 

Investor Contact:

Kirsten Chapman
LHA Investor Relations
415-433-3777
thejoint@lhai.com 

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