Press Releases

The Joint Corp. Reports Third Quarter 2022 Financial Results

- Grew Revenue 27%, System-wide Sales 18%, and System-wide Comp Sales 6% vs. Q3 2021 -
- Opened 38 Clinics, Up from 33 in Q3 2021
- Surpassed 800 Clinic Milestone, Closing Q3 2022 with 805 Clinics,
Including 115 Company-Owned or Managed Clinics -

SCOTTSDALE, Ariz., Nov. 03, 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 September 30, 2022.

Financial Highlights: Q3 2022 Compared to Q3 2021

  • Grew revenue 27% to $26.6 million.
  • Recorded operating income of $500,000, compared to $1.3 million.
  • Reported net income of $491,000, compared to $1.9 million.
  • Increased system-wide sales1 by 18%, to $110.4 million.
  • Reported system-wide comp sales2 of 6%.
  • Reported Adjusted EBITDA of $3.1 million, compared to $3.3 million.

“During the third quarter of 2022, clinic openings were exceptionally strong, with new clinics continuing to perform well, resulting in our achieving the 800th clinic opening during the quarter. Our system-wide sales grew 18% to $110.4 million, despite this macroeconomic environment,” said Peter D. Holt, President and Chief Executive Officer of The Joint Corp. “The market for chiropractic care continues to increase and is now estimated to be $19.5 billion. To capture this increasing growth opportunity, we remain focused on key initiatives. We are implementing programs to attract new patients, franchise prospects, and the talent needed to staff our clinics and grow our footprint. To increase the pace of our buildout, we are penetrating underdeveloped and new markets. Overall, we are prioritizing optimizing clinic performance to support growth, profitability and lifetime patient value. Together with our robust underlying business model, we are driving long-term value for all stakeholders, including patients, team members, franchisees, regional developers and investors.”  

Operating Highlights

  • Increased total clinics to 805 at September 30, 2022, 690 franchised and 115 company-owned or managed, up from 769 at June 30, 2022.
    • Opened 33 new franchised clinics in Q3 2022, compared to 28 in Q3 2021.
    • Opened five greenfield clinics in Q3 2022, equal to five opened in Q3 2021.
    • Acquired four previously franchised clinics and sold one corporate clinic to a franchisee in Q3 2022, compared to no acquired or sold clinics in Q3 2021.
    • Closed two franchised clinics in Q3 2022, compared to none in Q3 2021.
  • Sold 12 franchise licenses in Q3 2022, compared to 44 in Q3 2021.
  • Subsequent to quarter end,
    • Reacquired the regional developer (RD) territory rights for the Philadelphia market.
    • Acquired two previously franchised clinics and sold one corporate clinic to a franchisee.
    • Opened two greenfield clinics.

Financial Results: Third Quarter 2022 Compared to Third Quarter 2021

Revenue was $26.6 million in the third quarter of 2022, compared to $21.0 million in the third quarter of 2021. The increase reflects a greater number of franchised and corporate clinics and continued organic growth. Cost of revenue was $2.5 million, compared to $2.3 million in the third quarter of 2021, reflecting the increased number of franchised clinics, as well as higher RD royalties and commissions.

Selling and marketing expenses were $3.5 million, up 23%, driven by the increase in the advertising expenses from the larger number of franchised and company-owned or managed clinics. Depreciation and amortization expenses increased for the third quarter of 2022, as compared to the prior year period, primarily due to the depreciation and amortization expenses associated with our continued greenfield development and acquired clinics.

General and administrative expenses were $17.8 million, compared to $12.8 million in the third quarter of 2021, reflecting increases in costs to support clinic growth and in payroll to remain competitive in the tight labor market.

Operating income was $500,000, compared to $1.3 million in the third quarter of 2021. Income tax benefit was $16,000, compared to a benefit of $614,000 in the third quarter of 2021. Net income was $491,000, or $0.03 per diluted share, compared to $1.9 million, or $0.13 per diluted share, in the third quarter of 2021.

Adjusted EBITDA was $3.1 million, compared to $3.3 million in the third 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 income/(loss) before net interest, tax expense, depreciation, and amortization expenses.

Financial Results for the Nine Months Ended September 30: 2022 Compared to 2021

Revenue was $74.1 million in the first nine months of 2022, compared to $58.8 million in the first nine months of 2021. Net income was $630,000, or $0.04 per diluted share, compared to $6.9 million, or $0.46 per diluted share, in the first nine months of 2021. Adjusted EBITDA was $7.5 million, compared to $10.5 million in the first nine months of 2021.

Balance Sheet Liquidity

Unrestricted cash was $10.3 million at September 30,2022, compared to $19.5 million at December 31, 2021. During the first nine months of 2022, investing activities of $14.9 million consisted of the acquisition of RD territory rights, clinic acquisitions, and greenfield developments, which were partially offset by $5.7 million provided by operating activities, caused the majority of the decrease in unrestricted cash.

2022 Guidance

For 2022, management modified financial guidance and reiterated guidance related to clinics.

  • Revenue is now expected to be between $100.0 million and $102.0 million, compared to guidance of $98.0 million to $102.0 million on August 4, 2022. Revenue for 2021 was $80.9 million.
  • Adjusted EBITDA is now expected to be between $11.5 million and $12.5 million, compared to guidance of $12.0 million to $14 million on August 4, 2022. 2021 Adjusted EBITDA was $12.6 million.
  • Franchised clinic openings are expected to be between 110 and 130, compared to 110 in 2021.
  • Company-owned or managed clinic increases, through a combination of both greenfields and buybacks, are expected to be between 30 and 40; compared to 32 added in 2021.

Conference Call
The Joint Corp. management will host a conference call at 5 p.m. ET on Thursday, November 3, 2022 to discuss the third quarter 2022 financial results. Shareholders and interested participants may listen to a live broadcast of the conference call by dialing (866) 652-5200 or (412) 317-6060 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 877-344-7529 or 412-317-0088 and entering conference ID 4869368.

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. 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 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/(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 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), 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.

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 more than 750 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.

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.

Media Contact: Margie Wojciechowski, The Joint Corp., [email protected]
Investor Contact: Kirsten Chapman, LHA Investor Relations, 415-433-3777, [email protected]

– Financial Tables Follow –

 

THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

  September 30,
2022
  December 31,
2021
ASSETS (unaudited)    
Current assets:      
Cash and cash equivalents $ 10,272,112     $ 19,526,119  
Restricted cash   696,030       386,219  
Accounts receivable, net   3,945,046       3,700,810  
Deferred franchise and regional development costs, current portion   1,032,930       994,587  
Prepaid expenses and other current assets   2,732,467       2,281,765  
Assets held for sale   243,387        
Total current assets   18,921,972       26,889,500  
Property and equipment, net   16,210,051       14,388,946  
Operating lease right-of-use asset   19,046,081       18,425,914  
Deferred franchise and regional development costs, net of current portion   5,621,297       5,505,420  
Intangible assets, net   10,162,506       5,403,390  
Goodwill   8,493,407       5,085,203  
Deferred tax assets   9,115,231       9,188,634  
Deposits and other assets   720,853       567,202  
Total assets $ 88,291,398     $ 85,454,209  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 1,982,237     $ 1,705,568  
Accrued expenses   1,555,992       1,809,460  
Co-op funds liability   696,030       386,219  
Payroll liabilities ($0.8 million and $0.4 million attributable to VIE)   2,788,058       3,906,317  
Operating lease liability, current portion   4,969,470       4,613,843  
Finance lease liability, current portion   24,175       49,855  
Deferred franchise and regional developer fee revenue, current portion   2,974,993       3,191,892  
Deferred revenue from company clinics ($3.7 million and $3.5 million attributable to VIE)   5,900,964       5,235,745  
Other current liabilities   522,500       539,500  
Liabilities to be disposed of   223,287        
Total current liabilities   21,637,706       21,438,399  
Operating lease liability, net of current portion   17,427,096       16,872,093  
Finance lease liability, net of current portion   69,713       87,939  
Debt under the Credit Agreement   2,000,000       2,000,000  
Deferred franchise and regional developer fee revenue, net of current portion   15,604,180       15,458,921  
Other liabilities   27,230       27,230  
Total liabilities   56,765,925       55,884,582  
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 September 30, 2022 and December 31, 2021          
Common stock, $0.001 par value; 20,000,000 shares authorized, 14,561,545 shares issued and 14,529,679 shares outstanding as of September 30, 2022 and 14,451,355 shares issued and 14,419,712 outstanding as of December 31, 2021   14,561       14,450  
Additional paid-in capital   45,231,637       43,900,157  
Treasury stock 31,866 shares as of September 30, 2022 and 31,643 shares as of December 31, 2021, at cost   (856,642 )     (850,838 )
Accumulated deficit   (12,889,083 )     (13,519,142 )
Total The Joint Corp. stockholders' equity   31,500,473       29,544,627  
Non-controlling Interest   25,000       25,000  
Total equity   31,525,473       29,569,627  
Total liabilities and stockholders' equity $ 88,291,398     $ 85,454,209  


THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2022       2021       2022       2021  
Revenues:              
Revenues from company-owned or managed clinics $ 15,836,327     $ 11,634,009     $ 42,936,298     $ 32,537,942  
Royalty fees   6,604,653       5,714,637       19,024,799       15,816,500  
Franchise fees   642,405       648,598       1,970,256       1,967,680  
Advertising fund revenue   1,881,367       1,627,693       5,417,840       4,521,342  
Software fees   1,109,753       840,969       3,166,732       2,387,543  
Regional developer fees   153,181       209,651       524,923       642,041  
Other revenues   375,314       316,064       1,058,008       885,335  
Total revenues   26,603,000       20,991,621       74,098,856       58,758,383  
Cost of revenues:              
Franchise and regional development cost of revenues   2,141,945       1,907,874       6,219,646       5,319,278  
IT cost of revenues   348,331       392,248       1,010,446       784,698  
Total cost of revenues   2,490,276       2,300,122       7,230,092       6,103,976  
Selling and marketing expenses   3,539,287       2,881,575       10,666,500       8,503,617  
Depreciation and amortization   2,011,768       1,662,255       5,341,420       4,275,140  
General and administrative expenses   17,796,806       12,812,331       49,703,451       34,513,378  
Total selling, general and administrative expenses   23,347,861       17,356,161       65,711,371       47,292,135  
Net loss (gain) on disposition or impairment   264,391       (3,540 )     360,140       16,967  
Income from operations   500,472       1,338,878       797,253       5,345,305  
Other expense, net   (25,235 )     (16,139 )     (60,668 )     (54,050 )
Income before income tax (benefit) expense   475,237       1,322,739       736,585       5,291,255  
Income tax (benefit) expense   (15,876 )     (614,356 )     106,527       (1,644,496 )
Net income $ 491,113     $ 1,937,095     $ 630,058     $ 6,935,751  
Earnings per share:              
Basic earnings per share $ 0.03     $ 0.13     $ 0.04     $ 0.49  
Diluted earnings per share $ 0.03     $ 0.13     $ 0.04     $ 0.46  
Basic weighted average shares   14,512,856       14,388,905       14,474,323       14,286,818  
Diluted weighted average shares   14,829,629       14,970,328       14,878,050       14,931,759  


THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

  Nine Months Ended
September 30,
    2022       2021  
Cash flows from operating activities:      
Net income $ 630,058     $ 6,935,751  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization   5,341,420       4,275,140  
Net loss on disposition or impairment   360,140       109,871  
Net franchise fees recognized upon termination of franchise agreements   (15,218 )     (98,196 )
Deferred income taxes   73,403       (1,909,241 )
Stock based compensation expense   969,562       826,908  
Changes in operating assets and liabilities, net of acquisitions:      
Accounts receivable   (244,236 )     (1,069,864 )
Prepaid expenses and other current assets   (450,702 )     13,079  
Deferred franchise costs   (186,618 )     (1,245,049 )
Deposits and other assets   (153,651 )     (95,176 )
Accounts payable   50,702       (49,415 )
Accrued expenses   (571,447 )     164,866  
Payroll liabilities   (1,118,259 )     1,329,785  
Deferred revenue   636,470       2,410,202  
Other liabilities   360,791       852,926  
Net cash provided by operating activities   5,682,415       12,451,587  
       
Cash flows from investing activities:      
Acquisition of AZ clinics   (6,861,256 )     (1,925,000 )
Acquisition of NC clinics   (1,105,000 )     (2,568,028 )
Purchase of property and equipment   (4,322,673 )     (5,382,857 )
Reacquisition and termination of regional developer rights   (2,650,000 )     (1,388,700 )
Net cash used in investing activities   (14,938,929 )     (11,264,585 )
       
Cash flows from financing activities:      
Payments of finance lease obligation   (43,907 )     (59,285 )
Purchases of treasury stock under employee stock plans   (5,804 )     (707,728 )
Proceeds from exercise of stock options   362,029       1,480,634  
Repayment of debt under the Paycheck Protection Program         (2,727,970 )
Net cash provided by (used in) financing activities   312,318       (2,014,349 )
       
Decrease in cash, cash equivalents and restricted cash   (8,944,196 )     (827,347 )
Cash, cash equivalents and restricted cash, beginning of period   19,912,338       20,819,629  
Cash, cash equivalents and restricted cash, end of period $ 10,968,142     $ 19,992,282  
       
Reconciliation of cash, cash equivalents and restricted cash: September 30,
2022
  September 30,
2021
Cash and cash equivalents $ 10,272,112     $ 19,542,685  
Restricted cash   696,030       449,597  
  $ 10,968,142     $ 19,992,282  


THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
RECONCILIATION FOR GAAP TO NON-GAAP
(unaudited)

  Three Months Ended September 30,   Nine Months Ended
September 30,
    2022       2021       2022     2021  
Non-GAAP Financial Data:              
Net income $ 491,113     $ 1,937,095     $ 630,058   $ 6,935,751  
Net interest expense   25,235       16,139       60,668     54,050  
Depreciation and amortization expense   2,011,768       1,662,255       5,341,420     4,275,140  
Tax (benefit) expense   (15,876 )     (614,356 )     106,527     (1,644,496 )
EBITDA   2,512,240       3,001,133       6,138,673     9,620,445  
Stock compensation expense   305,815       296,850       969,562     826,908  
Acquisition related expenses   46,712       3,000       78,298     48,346  
Loss (gain) on disposition or impairment   264,391       (3,540 )     360,140     16,967  
Adjusted EBITDA $ 3,129,158     $ 3,297,443     $ 7,546,673   $ 10,512,666  


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.


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Source: The Joint Corp.