UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________

Form 8-K
______________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): March 8, 2018

The Joint Corp.
(Exact Name of Registrant as Specified in Charter)

Delaware001-3672490-0544160
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

16767 N. Perimeter Drive, Suite 240
Scottsdale, AZ 85260
(Address of Principal Executive Offices)

Registrant's telephone number, including area code:
(480) 245-5960

 
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [   ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [   ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ X ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ X ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On March 8, 2018, The Joint Corp. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year ended December 31, 2017. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information furnished in this Item 2.02 and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 7.01. Regulation FD Disclosure.

The Joint Corp (the “Company”) is posting an earnings presentation to its website at http://ir.thejoint.com/events-and-presentations/upcoming-events.  A copy of the earnings presentation is being furnished herewith as Exhibit 99.2. The Company will use the earnings presentation during its earnings conference call on March 8, 2018 and also may use the earnings presentation from time to time in conversations with analysts, investors and others.

The presentation is furnished by the Company pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

The information contained in Exhibit 99.2 is summary information that is intended to be considered in the context of the Company’s filings with the Securities and Exchange Commission (“SEC”). The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.

Item 9.01. Financial Statements and Exhibits.

(d)     Exhibits

Exhibit
Number
   Description
   
99.1 Press Release dated March 8, 2018.
99.2 The Joint Corp Earnings Presentation, March 2018.



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 The Joint Corp.
   
   
Date: March 8, 2018By: /s/ Peter D. Holt        
  Name: Peter D. Holt
  Title: President and Chief Executive Officer
  


EXHIBIT INDEX

 

Exhibit Number Description
   
99.1 Press Release dated March 8, 2018.   
99.2 The Joint Corp Earnings Presentation, March 2018.

EdgarFiling

EXHIBIT 99.1

The Joint Corp. Reports Fourth Quarter and Full Year 2017 Financial Results

SCOTTSDALE, Ariz., March 08, 2018 (GLOBE NEWSWIRE) -- The Joint Corp. (NASDAQ:JYNT), a national operator, manager and franchisor of chiropractic clinics, reported results for the fourth quarter and full year 2017.

Fourth Quarter Financial Highlights: 2017 Compared to 2016

Peter D. Holt, president and chief executive officer of The Joint Corp, said, “2017 ended with our eighth consecutive quarter of financial improvement.  These achievements reflect our steady, disciplined approach, the validation of our business strategy and our strengthened foundation for growth. For 2017, gross system-wide sales reached $126.9 million, up 29% compared to 2016.  We also delivered 21% annual same store sales growth; increased operating efficiencies to reduce new clinic time to breakeven; generated cash from operations; and rebuilt our regional developer (RD) network.

“In 2018, we expect to accelerate growth by increasing franchise sales, both direct and those generated through our regional developers, whose territories now cover roughly one third of the US, and by strategically increasing company owned or managed clinics through acquisition and/or building greenfields. We are pleased to have moved beyond stabilizing the business in 2017, and are well positioned for a strong 2018 and future growth.”

Fourth Quarter Financial Results: 2017 Compared to 2016

Revenue grew 20% to $6.9 million, compared to $5.8 million in the fourth quarter of 2016, due primarily to increased sales in company owned or managed clinics and a greater number of franchised clinics.

Cost of revenue was $1.0 million, up 30% compared to the fourth quarter of 2016, due to higher regional developer royalties from an increased number of open franchised clinics and increased clinic revenues in regional developer territories.

Selling and marketing expenses were $1.3 million, increased slightly from $1.2 million in the fourth quarter of 2016, reflecting slightly higher marketing expenses related to our national marketing program. General and administrative expenses were $4.4 million, decreased 50% compared to the fourth quarter of 2016. The prior year expense of $8.9 million included a $3.5 million loss on disposition or impairment related to the closure of company managed clinics in Chicago and New York, non-operating lease costs for halting of greenfield clinic development, and greater payroll and occupancy costs related to 14 more corporate clinics operating in the fourth quarter of 2016.

Net loss was $(213,000), or $(0.02) per share, compared to $(5.8) million, or $(0.45) per share, in the same period last year.

Adjusted EBITDA income was $419,000, an improvement of $1.8 million, compared to Adjusted EBITDA loss of $(1.4) million in the same quarter last year.  The company defines Adjusted EBITDA, a non-GAAP measure, as EBITDA before acquisition-related expenses, bargain purchase gain, loss on disposition or impairment, and stock-based compensation expenses. The company defines EBITDA as net income (loss) before net interest, tax expense, depreciation, and amortization expenses.

Balance Sheet Liquidity

As of December 31, 2017, cash and cash equivalents were $4.2 million, compared to $3.0 million at December 31, 2016.  Pursuant to the terms of the company’s credit agreement, during the first quarter of 2017, the company borrowed a required $1.0 million on its line of credit, which remains unused as part of cash and cash equivalents on the balance sheet as of December 31, 2017. For the year, the company increased cash, excluding debt, by $200,000.

Full Year Financial Results: 2017 Compared to 2016

Revenues were $25.2 million, growing 23%. Gross profit was $21.9 million, increasing 24%. General and administrative expenses were $18.5 million, improving 28%.  General and administrative expense as a percent of revenue decreased from 125% in 2016 to 74% in 2017. General and administrative operating leverage is expected to continue to improve with the increase in gross sales across all clinics.

Net loss improved 78% from $(15.2) million in 2016 to $(3.3) million in 2017, or to $(0.25) per share for the full year compared to $(1.20) per share in 2016. Adjusted EBITDA loss was $(91,000), compared to $(7.7) million last year – representing a 99% improvement.

2018 Financial Guidance

Management has provided full year 2018 financial guidance and franchise opening expectations as set forth below:

Conference Call

The Joint Corp. management will host a conference call at 5:00 p.m. ET on Thursday, March 8, 2018, to discuss the fourth quarter and full year 2017 results. The conference call may be accessed by dialing 765-507-2604 or 844-464-3931, and referencing conference code 6769706. A live webcast of the conference call will also be available on the investor relations section of the company’s website at www.thejoint.com. An audio replay will be available two hours after the conclusion of the call through March 15, 2018. The replay can be accessed by dialing 404-537-3406 or 855-859-2056. The passcode for the replay is 6769706.

Non-GAAP Financial Information

This earnings release includes a presentation of EBITDA and Adjusted EBITDA which are non-GAAP financial measures. These 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 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, loss on disposition or impairment, and stock-based compensation expenses. The Company defines EBITDA as net income (loss) 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 United States Securities and Exchange Commission (“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, our failure to develop or acquire corporate clinics as rapidly as we intend, our failure to profitably operate corporate clinics, and the factors described in “Risk Factors” in our Annual Reports on Form 10-K for the year ended December 31, 2016, as filed with the SEC, and for the year ended December 31, 2017, as will be filed with the SEC on March 9, 2018.  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)

Based in Scottsdale, Arizona, The Joint is an emerging growth company that is reinventing chiropractic by making quality care convenient and affordable for patients seeking pain relief and ongoing wellness. Its no-appointment policy and convenient hours and locations make care more accessible, and affordable membership plans and packages eliminate the need for insurance. With over 400 clinics nationwide and nearly 5 million patient visits annually, The Joint is a key leader in the chiropractic profession. For more information, visit www.thejoint.com or follow the brand on Twitter, Facebook, YouTube and LinkedIn.

Business Structure

The Joint Corp. is a franchisor of clinics and an operator of clinics in certain states. In Arkansas, California, Colorado, Florida, Illinois, Kansas, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Tennessee and Washington, The Joint and its franchisees provide management services to affiliated professional chiropractic practices.

Investor Contact: Kirsten Chapman, LHA Investor Relations, 415-433-3777, thejoint@lhai.com
Media Contact: Molly Hottle, The Joint Corp., molly.hottle@thejoint.com

 

THE JOINT CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
        
   December 31, December 31,  
    2017   2016   
ASSETS       
Current assets:       
Cash and cash equivalents  $  4,216,221   $  3,009,864    
Restricted cash     103,819      334,394    
Accounts receivable, net     1,138,380      1,021,733    
Income taxes receivable     -       42,014    
Notes receivable - current portion     171,928      40,826    
Deferred franchise costs - current portion     484,081      748,300    
Prepaid expenses and other current assets     542,342      499,525    
Total current assets     6,656,771      5,696,656    
Property and equipment, net     3,800,466      4,724,706    
Notes receivable, net of current portion and reserve     351,857      -     
Deferred franchise costs, net of current portion     812,600      836,350    
Intangible assets, net     1,760,042      2,338,922    
Goodwill     2,916,426      2,750,338    
Deposits and other assets     611,808      707,889    
Total assets  $  16,909,970   $  17,054,861    
        
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:       
Accounts payable  $  1,068,669   $  1,054,946    
Accrued expenses     86,959      299,997    
Co-op funds liability     89,681      73,246    
Payroll liabilities     867,430      750,421    
Notes payable - current portion     100,000      331,500    
Deferred rent - current portion     152,198      215,450    
Deferred revenue - current portion     2,553,818      3,077,430    
Other current liabilities     48,534      60,894    
Total current liabilities     4,967,289      5,863,884    
Notes payable, net of current portion     1,000,000      -     
Deferred rent, net of current portion     802,492      1,400,790    
Deferred revenue, net of current portion     4,693,441      2,231,712    
Deferred tax liability     136,434      120,700    
Other liabilities     411,497      512,362    
Total liabilities     12,011,153      10,129,448    
Commitments and contingencies       
Stockholders' equity:       
Series A preferred stock, $0.001 par value; 50,000        
  shares authorized, 0 issued and outstanding, as of December 31, 2017,       
  and December 31, 2016     -       -     
Common stock, $0.001 par value; 20,000,000 shares        
  authorized, 13,600,338 shares issued and 13,586,254 shares outstanding       
  as of December 31, 2017 and 13,317,393 shares issued and 13,020,889       
  outstanding as of December 31, 2016     13,600      13,317    
Additional paid-in capital     37,229,869      36,398,588    
Treasury stock 14,084 shares as of December 31, 2017 and 296,504 shares       
  as of December 31, 2016, at cost     (86,045)    (503,118)  
Accumulated deficit     (32,258,607)    (28,983,374)  
Total stockholders' equity      4,898,817      6,925,413    
Total liabilities and stockholders' equity   $  16,909,970   $  17,054,861    
            


THE JOINT CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
 
         
  Three Months Ended Year Ended
  December 31, December 31,
   2017   2016   2017   2016 
Revenues:        
Revenues and management fees from company clinics $  3,018,995   $  2,411,434   $  11,125,115   $  8,550,980  
Royalty fees    2,204,447      1,635,436      7,722,856      5,973,079  
Franchise fees    405,600      645,400      1,442,415      2,286,809  
Advertising fund revenue    758,541      648,150      2,753,776      1,866,406  
IT related income and software fees    297,575      246,250      1,137,363      932,709  
Regional developer fees    127,691      121,034      583,550      617,573  
Other revenues    116,640      73,267      398,929      296,084  
Total revenues    6,929,489      5,780,971      25,164,004      20,523,640  
Cost of revenues:        
Franchise cost of revenues    893,178      693,979      2,996,797      2,717,691  
IT cost of revenues    87,494      59,166      315,397      221,918  
Total cost of revenues    980,671      753,145      3,312,194      2,939,609  
Selling and marketing expenses    1,284,392      1,199,237      4,473,881      4,419,180  
Depreciation and amortization    467,310      657,898      2,017,323      2,566,136  
General and administrative expenses    4,422,844      5,371,835      18,117,533      22,086,321  
Total selling, general and administrative expenses    6,174,546      7,228,970      24,608,737      29,071,637  
Loss on disposition or impairment     -       3,520,369      417,971      3,520,369  
Loss from operations    (225,729)    (5,721,512)    (3,174,898)    (15,007,976)
         
Other (expense) income:        
Other (expense) income, net    (30,866)    (6,667)    (64,455)    (1,467)
Total other (expense) income    (30,866)    (6,667)    (64,455)    (1,467)
         
Loss before income tax expense    (256,595)    (5,728,179)    (3,239,353)    (15,009,443)
         
Income tax benefit (expense)    43,397      (32,285)    (35,880)    (164,429)
         
Net loss and comprehensive loss $  (213,198) $  (5,760,464) $  (3,275,233) $  (15,173,872)
         
Loss per share:        
Basic and diluted loss per share $  (0.02) $  (0.45) $  (0.25) $  (1.20)
         
Basic and diluted weighted average shares    13,542,912      12,813,438      13,245,119      12,696,649  
         
Non-GAAP Financial Data:        
Net loss $  (213,198) $  (5,760,464) $  (3,275,233) $  (15,173,872)
Interest expense    26,071      10,062      105,169      14,762  
Depreciation and amortization expense    467,310      657,898      2,017,323      2,566,136  
Tax (benefit) expense    (43,397)    32,285      35,880      164,429  
EBITDA $  236,787   $  (5,060,219) $  (1,116,862) $  (12,428,545)
Stock compensation expense    181,858      110,781      594,371      1,123,481  
Acquisition related expenses    -       10,750      13,142      74,736  
Loss on disposition or impairment    -       3,520,369      417,971      3,520,369  
Adjusted EBITDA $  418,645   $  (1,418,319) $  (91,378) $  (7,709,959)
                 


THE JOINT CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
     
  Year Ended
  December 31,
   2017   2016 
Net loss $  (3,275,233) $  (15,173,872)
Adjustments to reconcile net loss to net cash  3,051,152    6,936,907  
Changes in operating assets and liabilities    380,525      (2,610,347)
Net cash provided by (used in) operating activities    156,444      (10,847,312)
Net cash used in investing activities    (372,853)    (2,695,822)
Net cash provided by (used in) financing activities    1,422,766      (239,852)
Net increase (decrease) in cash $  1,206,357   $  (13,782,986)
         

1 Comp sales refers to the amount of sales a clinic generates in the most recent accounting period, compared to sales in the comparable period of the prior year, and (i) includes sales only from clinics that have been open at least 13 full months and (ii) excludes any clinics that have closed.

EdgarFiling

EXHIBIT 99.2

 

 

 

THE JOINT CORP. | NASDAQ: JYNT | thejoint.com Reinventing Chiropractic Care Q4 & FY 2017 Reported March 8, 2018

 

 

Safe Harbor Statement 2 © 2018 | NASDAQ: JYNT | thejoint.com Certain statements contained in this presentation are "forward - looking statements." We have tried to identify these forward - looking statements by using words such as "may," "might," " will," "expect,” "anticipate,'' "'believe,“ "could," " intend," "plan," "estimate," "should," "if,“ "project," and similar expressions. All statements other than statements of historical facts contained in this presentation, including statements regarding our growth strategies, our vision, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth and potential are forward - looking statements. We have based these forward - looking statements on our current expectations and projections about future events. However, these forward - looking statements are subject to risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from our expectations and projections. Some of these risks, uncertainties and other factors are set forth in this presentation and in other documents we file with the United States Securities and Exchange Commission (the "SEC"). Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward - looking statements. Projections and other forward - looking statements included in this presentation have been prepared based on assumptions, which we believe to be reasonable, but not in accordance with U.S. Generally Accepted Accounting Principals (“GAAP”) or any guidelines of the SEC. Actual results may vary, perhaps materially. You are strongly cautioned not to place undue reliance on such projections and other forward - looking statements. All subsequent written and oral forward - looking statements attributable us or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Except as required by federal securities laws, we disclaim any intention or obligation to update or revise any forward - looking statements, whether as a result of new information, future events or otherwise. Any such forward - looking statements, whether made in this presentation or elsewhere, should be considered in the context of the various disclosures made by us about our businesses including, without limitation, the risk factors discussed above. In addition to results presented in accordance with U.S. GAAP, this presentation includes a presentation of EBITDA and Adjusted EBITDA, which are 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. Reconciliations of net loss to EBITDA and Adjusted EBITDA are presented where applicable. We define EBITDA as net income (loss) before net interest, taxes, depreciation and amortization expenses. We define Adjusted EBITDA as EBITDA before acquisition - related expenses, bargain purchase gain, loss on disposition or impairment, and stock - based compensation 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 GAAP. While EBITDA and Adjusted EBITDA are frequently 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. Business Structure The Joint Corp. is a franchisor of clinics and an operator of clinics in certain states. In Arkansas, California, Colorado, Florida, Illinois, Kansas, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, and Tennessee, The Joint Corp. and its franchisees provide management services to affiliated professional chiropractic practices.

 

 

Transformation Delivering Results 3 © 2018 | NASDAQ: JYNT | thejoint.com 2017 ACHIEVEMENTS • 41 new clinics opened, bringing Dec. 31, 2017 total to 399 • 10 regional developers signed, bringing Dec. 31, 2017 total to 18 • • 2 consecutive quarters of positive Adjusted EBITDA • • $5M non - dilutive line of credit in place

 

 

Reducing Clinic Time to Breakeven 4 © 2018 | NASDAQ: JYNT | thejoint.com 9 month average breakeven for the clinics opened in 2017, down from ~18 months for clinics opened in 2016 Breakeven Range * Based on average historical gross sales growth rates from January 2013 through December 2017

 

 

8 th Consecutive Quarter of Improvements $1.3 $2.8 $8.1 $70.1 $46.2 $22.3 $98.6 $126.9 2 0 10 2 0 11 2 0 12 2 0 13 2 0 14 2 0 15 2 0 16 2 0 17 77% CAGR (8 year) SYSTEM - WIDE GROSS SALES ($ in Ms) 5 © 2018 | NASDAQ: JYNT | thejoint.com $ in Ms 2017 vs 2016 System - wide gross sales 29% System - wide comp sales >13 months 1 21% System - wide comp sales >48 months 1 13% Revenue 23% Net loss $(3.3), up $11.9 Adjusted EBITDA 2 $(0.1), up $7.6 Cash and equivalents at Dec. 31, 2017 $4.2 1 Comparable Sales include only the sales from clinics that have been open at least 13 or 48 full months and exclude any clinics that have closed 2 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the Appendix.

 

 

Reinventing Chiropractic Care 400 th clinic opened Jan. ’18 • Bringing quality, convenient, affordable chiropractic care to retail • Employing proven subscription - based, walk - in, no - insurance hybrid model • Company - owned/managed • Franchised • Serving patients seeking pain relief and ongoing health & wellness in open bay • 1,000 fully licensed chiropractic doctors • ~5M chiropractic adjustments in 2017 6 © 2018 | NASDAQ: JYNT | thejoint.com

 

 

Opportunity in Highly 7 © 2018 | NASDAQ: JYNT | thejoint.com • $650B in pain costs • $90B in back pain alone • ~ 80 % of those surveyed want a non - pharmacologic approach to physical pain 3 • 55% reduction in the likelihood of people filling prescriptions for opioids in those who received chiropractic care 4 Fragmented Market $15 B 1 on chiropractic care 39,00 0 2 independent pr a cti t ioners 1 IBIS World Chiropractors Market Research Report; August 2016 | 2 Kentley Insights, The 2017 Office of Chiropractors Market Research Report | 3 Gallup - Palmer College of Chiropractic Report 2016 | 4 Association between Utilization of Chiropractic Services and Use of Prescription Opioids Among Patients with Low Back Pain

 

 

Opened 12 Clinics in Q4 ‘17 82 175 242 265 309 352 47 61 47 2 0 12 2 0 13 2 0 15 2 0 16 2 0 17 Franchise 2014 Company Owned/Managed 8 © 2018 | NASDAQ: JYNT | thejoint.com 312 370 246 4 399

 

 

Sold 10 RDs to Advance National Footprint 8 11 13 16 18 Q4 Q1 Q2 Q3 Q4 2 0 1 6 2 0 2 7 2 0 1 7 2 0 1 7 2 0 1 7 Minimum 259 clinic for RDs to open and operate over 10 - year RD term NUMBER OF REGIONAL DEVELOPERS 9 © 2018 | NASDAQ: JYNT | thejoint.com 9 © 2018 | NASDAQ: JYNT | thejoint.com

 

 

2018 Growth Strategy: 10 © 2018 | NASDAQ: JYNT | thejoint.com Driving Scale • Accelerate franchise sales • Leverage Regional Developers • Reengage growth of company owned/managed units • Acquire buyback clinics opportunistically • Build greenfield clinics in clustered locations Building nationwide brand to deliver shareholder value

 

 

Q4 2017 Operational Summary • System - wide sales up 32% to $ 36.1M, from $ 27.2M in Q4 2016 • System - wide comp sales for clinics >13 months in operation 1 increased 26%, the same as Q4 2016 • System - wide comp sales for clinics >48 months in operation 1 increased 17%, compared to 14% in Q4 2016 • 399 open clinics vs. 370 at the end of Q4, 2017 vs. 2016 • 352 franchises • 47 corporate clinics • 31 buybacks • 16 greenfields • System - wide gross sales since the month prior to acquisition increased on average 68% through 12/2017, compared to 57% through 9/2017 2017 11 © 2018 | NASDAQ: JYNT | thejoint.com Q4 1 Comparable Sales include only the sales from clinics that have been open at least 13 or 48 full months and exclude any clinics that have closed 2 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the Appendix.

 

 

$ in Ms Q4 2017 Q4 2016 IMPROVEMENT Revenue $6 .9 $5.8 $1 .1 20% Inc. revenue contribution Corporate clinic 3 .0 2.4 0.6 25% • 53% Corp Franchise 3 .9 3.4 0.5 16% • 47% Franchise Cost of revenue 1.0 0.8 (0.2) (30%) Inc. gross sales and RD fees Gross profit 5.9 5.0 0.9 18% Sales and marketing 1 .3 1.2 (0. 1 ) (4%) Higher national marketing G&A 4 .4 8.9 4.5 50% $3.5M disposition 1 , 14 fewer corporate clinics Loss from ops (0.2) (5.7) 5.5 Net loss (0. 2 ) (5. 8 ) 5.6 Adj. EBITDA 1 0 .4 (1. 4 ) 1.8 Inc. contribution: 60% corp. clinics, 22% franchise, 18% unallocated corp. 12 © 2018 | NASDAQ: JYNT | thejoint.com 12 © 2018 | NASDAQ: JYNT | thejoint.com Q4 2017 Financial Summary 1 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the Appendix.

 

 

$ in Ms 2017 IMPROVEMENT 2017 vs. 2016 Revenue $25.2 23% Gross profit $21.9 24% G&A $18.5 (28)% Net loss $(3.3) Up $11.9 Adjusted EBITDA 2 $(0.1) Up $7.6, 99% Cash and equivalents at Dec. 31, 2017 $4.2 Up $1.2 12 © 2018 | NASDAQ: JYNT | thejoint.com 13 © 2018 | NASDAQ: JYNT | thejoint.com Full Year 2017 Metrics • System - wide gross sales up 29% to $126.9M,from $98.6M in 2016 • System - wide comp sales for clinics >13 months in operation 1 increased 21%, compared to 28% in 2016 • System - wide comp sales for clinics >48 months in operation 1 increased 13%, compared to 16% in 2016 1 Comparable Sales include only the sales from clinics that have been open at least 13 or 48 full months and exclude any clinics that have closed 2 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the Appendix.

 

 

$ in Ms LOW HIGH New Franchise Openings 40 50 Additional Company - owned or Managed Clinics 1 0 5 New Clinic Openings 1 40 52 Revenues $31 .0 $32.0 Adjusted EBITDA $2 .5 $3.5 14 © 2018 | NASDAQ: JYNT | thejoint.com Driving Shareholder Value: 2018 Guidance 1 Existing clinics are acquired from franchisees and are neutral to the total clinic count.

 

 

Patient Demographic Extremely broad patient base, all walks of life 15 © 2018 | NASDAQ: JYNT | thejoint.com • 25 to 55, Market Penetration Index (MPI) of 117 - 174 • Gender slightly female skewed, similar to US population • 60% white collar / 40% blue collar • $50K - $100K household income, MPI 146 • Over - index Hispanic and Asian, MPI 162 and 126 • Over - index Bachelor’s degree or higher, MPI 119 • Over - index aerobic exercise, MPI 128 The Market Penetration Index (MPI) is a ratio that compares the percent of households in the patient file who possess a specific attribute to the percent of households in the reference population who exhibit that same attribute. An index of 100 means that the attribute is found as often within the customer file as it is within the reference population. For example, an MPI of 119 would mean that a specific attribute (in this case “Bachelors degree or higher”) showed up 19% more often in our database than it does in the population in which our clinics exist.

 

 

Projected Core Customer & Trade Area Potential (based on current usage patterns) 400k patient records • Analyze demographics and psychographics • Replicate of attributes • Roll across country 1700+ similar points of distribution Data Analytics Yields 1700+ Clinics 16 © 2018 | NASDAQ: JYNT | thejoint.com

 

 

▪ Be the premier provider of chiropractic care in wellness and health plans ▪ Accelerate our footprint through corporate and franchise strategy ▪ Be the career path of choice for chiropractors ▪ Build a world class organizational culture ▪ Foster a robust Regional Developer community ▪ Build and maintain a world class IT platform 17 © 2018 | NASDAQ: JYNT | thejoint.com The Joint Corp. Long - term Vision

 

 

Stable Model, Significant Growth Potential 1 IBIS World Chiropractors Market Research Report; August 2016 • $ 15B growing chiropractic market 1 • Experienced, proven management • 1,700+ clinic national footprint opportunity • 77% 8 - year CAGR in system - wide gross sales • 22% of The Joint patients are new to chiropractic • 76% of revenue from recurring memberships • High returns, self funding growth strategy 18 © 2018 | NASDAQ: JYNT | thejoint.com

 

 

Peter D. Holt, President and CEO peter.holt@thejoint.com John P. Meloun, Chief Financial Officer john.meloun@thejoint.com Kirsten Chapman, LHA Investor Relations thejoint@lhai.com The Joint Corp. | 16767 N. Perimeter Dr., Suite 240 | Scottsdale, AZ 85260 | (480) 245 - 5960 The Joint Corp. Contact Information https://www.facebook.com/thejointchiro @thejointchiro https://twitter.com/thejointchiro @thejointchiro https://www.youtube.com/thejointcorp @thejointcorp 19 © 2018 | NASDAQ: JYNT | thejoint.com

 

 

Non - GAAP Measure Definition 20 © 2018 | NASDAQ: JYNT | thejoint.com This presentation includes a presentation of EBITDA and Adjusted EBITDA, which are 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. Reconciliations of net loss to EBITDA and Adjusted EBITDA are presented where applicable. The Company defines EBITDA as net income (loss) before net interest, taxes, depreciation and amortization expenses. The Company defines Adjusted EBITDA as EBITDA before acquisition - related expenses, bargain purchase gain, loss on disposition or impairment, and stock - based compensation 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 frequently 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.

 

 

Q4 2017 Segment Results & GAAP Reconciliation 2017 Q4 Corporate Clinics Franchise Operations Unallocated Corporate The Joint C on s o li d a t e d Total Revenues $ 3,019 $ 3,911 $ 0 $ 6,929 Operating Expenses ( 3 , 457 ) ( 2 , 147 ) ( 2 , 019 ) ( 7 , 623 ) Depreciation and Amortization 386 0 81 467 Operating Income (Loss) ( 53 ) 1 , 76 5 ( 1 , 938 ) ( 226 ) Other (Income) Expense, net ( 23 ) 13 ( 21 ) ( 31 ) Loss before income tax expense ( 75 ) 1 , 77 8 ( 1 , 959 ) ( 257 ) Total Income Taxes - - ( 43 ) ( 43 ) Net Income (Loss) ( 75 ) 1 , 77 8 ( 1 , 916 ) ( 213 ) Interest Expense Income Taxes 1 - 25 - - (43) 26 ( 43 ) Total Depreciation and Amortization Expense 386 0 81 467 EBITDA 312 1,778 (1,853) 237 Stock Based Compensation Exp - - 182 182 Bargain Purchase Gain - - - - Loss on Disposition/Impairment - - - - Acquisition Expenses - - - - Adjusted EBITDA 312 1,778 (1,671) 419 21 © 2018 | NASDAQ: JYNT | thejoint.com

 

 

2017 Segment Results & GAAP Reconciliation 2017 Corporate Franchise Unallocated Clinics Operations Corporate The Joint C on s o li d a t e d Total Revenues $ 11,125 $ 14,039 $ - $ 25 , 16 4 Operating Expenses ( 14 , 437 ) ( 7 , 796 ) ( 8 , 123 ) ( 30 , 356 ) Depreciation and Amortization 1 , 60 8 0 40 9 2 , 01 7 Operating Income (Loss) ( 1 , 704 ) 6 , 24 3 ( 7 , 714 ) ( 3 , 175 ) Other (Income) Expense, net ( 27 ) 2 1 ( 59 ) ( 64 ) Loss before income tax expense ( 1 , 730 ) 6 , 26 4 ( 7 , 773 ) ( 3 , 239 ) Total Income Taxes - - 3 6 36 Net Income (Loss) ( 1 , 730 ) 6,264 (7,809) ( 3 , 275 ) Interest Expense 5 - 100 105 Income Taxes - - 36 36 Total Depreciation and Amortization Expense 1 , 60 8 0 409 2 , 01 7 EBITDA ( 117 ) 6,264 (7,264) ( 1 , 117 ) Stock Based Compensation Exp Bargain Purchase Gain Loss on Disposition/Impairment - - 418 - 594 - - - - 594 - 418 Acquisition Expenses 0 - 13 13 Adjusted EBITDA 30 2 6,264 (6,657) ( 91 ) 22 © 2018 | NASDAQ: JYNT | thejoint.com