The Joint Corp. Reports Results for the Fourth Quarter And Full Year 2015
Added 47 Company-Owned or Managed and 23 Franchised Clinics In 2015
SCOTTSDALE, Ariz., March 16, 2016 (GLOBE NEWSWIRE) -- The Joint Corp. (NASDAQ:JYNT), a national operator, manager and franchisor of chiropractic clinics, today reported results for the fourth quarter and full year ended December 31, 2015.
Financial Highlights
- Revenue increased 83.1% in the fourth quarter to $3.8 million, up from $2.1 million in the same quarter last year.
- Revenue increased 94.4% for the full year 2015 to $13.8 million, up from $7.1 million for the full year 2014.
- System wide Comp Sales1 were 31% for fourth quarter 2015 and 34% for the full year 2015 over the comparable period in the previous year.
- 312 total clinics in operation as of December 31, 2015, an increase of 35 clinics during the fourth quarter, and an increase of 66 clinics from December 31, 2014.
- Company-owned or managed clinics increased by 18 during the fourth quarter, to 47 as of December 31, 2015, including 17 newly-developed (greenfield) clinics. There were no company-owned or managed clinics in 2014.
“We are very pleased with our continued strong revenue growth and operational performance during the fourth quarter and the full year. We added a net of 23 franchised clinics and 47 company-owned or managed clinics during 2015, including 18 in the fourth quarter, exceeding the high end of the goal we stated for company-owned or managed clinics at this time last year,” said John B. Richards, chief executive officer of The Joint Corp. “We opened our first company-owned clinic in the Chicago area in October, expanding to 9 clinics in that area during the fourth quarter. In addition, we expanded in the Los Angeles/ Orange County California and Phoenix areas in 2015 consistent with our strategy to accelerate clustering of our clinics in each market to facilitate both operational and marketing efficiencies and growth. Our strategy in 2016 will be to grow our franchisee base and optimize the performance of these newly developed company clinics while selectively adding clinics in these clusters for additional operating and marketing leverage. Furthermore, proceeds from our public offering of common stock completed during the fourth quarter will enable us to continue to support our franchise partners and execute on our expansion plans."
Fourth Quarter 2015 Financial Results
Revenue for the fourth quarter of 2015 increased 83% to $3.8 million from $2.1 million in the fourth quarter of the prior year due primarily to the addition and growth of 47 company-owned or managed clinics and an increase in franchised clinics from 242 at December 31, 2014, to 265 at December 31, 2015.
Cost of revenue in the fourth quarter of 2015 increased 22% compared to the fourth quarter of 2014, due primarily to an increase in regional developer royalties driven by the continued growth in sales from franchised clinics.
Selling and marketing expense increased to $1.2 million in the fourth quarter of 2015, compared to $0.5 million in the same period last year, due to marketing expenses at the Company’s 47 owned or managed clinics that were developed or acquired during the year, and increased sales from franchised and company-owned or managed clinics driving additional funding to, and related expenditures from, the Company’s national marketing fund.
General and administrative expense increased to $4.8 million in the fourth quarter of 2015, compared to $1.9 million in the fourth quarter of 2014, due to payroll and occupancy expenses at the Company’s 47 owned or managed clinics, and to increases in the number of employees to support the company’s growth initiatives and public company operations, along with higher stock-based compensation.
Depreciation and amortization expense increased for the fourth quarter of 2015, compared to the same period last year, due to the addition of property and equipment and intangible assets relating to acquisitions of franchises and regional developer rights, as well as the growth in the number of greenfield clinics.
Operating loss in the fourth quarter of 2015 was ($3.5) million, compared to an operating loss of ($0.9) million in the fourth quarter of 2014. Net loss in the fourth quarter of 2015 was ($3.4) million, or ($0.31) per share, compared to a net loss of ($2.6) million or ($0.35) per share in the same period last year.
Adjusted EBITDA in the fourth quarter of 2015 was ($2.8) million, compared to ($0.8) million in the same quarter the prior year.
Full Year 2015 Financial Results
Revenue in 2015 increased 94% to $13.8 million from $7.1 million in the prior year, due primarily to revenues from the 47 company-owned or managed clinics developed or acquired during the year, and a more than 40% increase in franchise royalties, due to franchisees’ continued sales growth.
Cost of revenue in 2015 increased 20% compared to 2014 due primarily to a $0.4 million increase in regional developer royalties from franchisees’ sales growth, and the recognition of commissions on franchise license terminations.
Selling and marketing expense increased to $3.7 million in 2015, compared to $1.1 million in the prior year, due to increased sales from franchised and company-owned or managed clinics, which resulted in additional funding to, and related expenditures from, the Company’s national marketing fund. Additionally, the increase in the number of company-owned or managed clinics has resulted in increased local marketing expenses designed to drive continued sales growth.
General and administrative expense increased to $15.4 million in 2015, compared to $5.1 million in 2014, due to an increase in payroll and occupancy costs at company-owned or managed clinics acquired or developed during the year, increases in the number of employees to support the Company’s growth initiatives and public company operations, acquisition-related professional fees and stock-based compensation.
Depreciation and amortization expense increased for the full year 2015, compared to the prior year, due to the addition of property and equipment and intangible assets relating to acquisitions of franchises and regional developer rights.
Operating loss in 2015 was ($9.3) million, compared to an operating loss of ($1.6) million in 2014. Net loss in 2015 was ($8.8) million, or ($0.88) per share, compared to a net loss of ($3.0) million or ($0.56) per share in 2014.
Adjusted EBITDA in 2015 was ($6.8) million, compared to ($1.4) million in the prior year.
As of December 30, 2015, cash and cash equivalents were $16.8 million, compared to $20.8 million at December 31, 2014. In the fourth quarter of 2015, The Company sold 2,613,636 shares of its common stock through an underwritten public offering, inclusive of the underwriters’ over-allotment, at a price of $5.50 per share, resulting in net proceeds to the Company of approximately $13.0 million.
2016 Financial Guidance
The Joint Corp. is providing guidance for full year 2016 as set forth below:
- Total revenues in the range of $19 million to $ 21 million.
- Adjusted EBITDA loss in the range of $(6.6) million to $(6.4) million.
- Net new clinic openings in the range of 68 to 72, including 18 to 20 company-owned or managed clinics and 58 to 60 franchised clinics.
Conference Call
The Joint Corp. management will host a conference call at 5:00 p.m. ET on Wednesday, March 16, 2016, to discuss the fourth quarter and full year 2015 results. The conference call will be accessible by dialing 844-464-3931 (U.S.) or 765-507-2604 (international), and referencing 45914309. 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 23, 2016. The replay can be accessed by dialing (855) 859-2056 or (404) 537-3406. The passcode for the replay is 45914309.
Non-GAAP Financial Information
This earnings release 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 within the tables below. The company defines Adjusted EBITDA as EBITDA before acquisition-related expenses, bargain purchase gain, and stock-based compensation expense. The company defines EBITDA as net income (loss) before net interest, taxes, depreciation and amortization expense.
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.
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 Prospectus dated December 19, 2015 as filed with the SEC. Words such as "anticipates", "believes", "continues", "estimates", "expects", "goal", "objectives", "intends", "may", "opportunity", "plans", "potential", "near-term", "long-term", "projections", "assumptions", "projects", "guidance", "forecasts", "outlook", "target", "trends", "should", "could", "would", "will" and similar expressions are intended to identify such forward-looking statements. We qualify any forward-looking statements entirely by these cautionary factors. We assume no obligation to update or revise any forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
About The Joint Corp. (NASDAQ:JYNT)
The Joint is reinventing chiropractic by making quality care convenient and affordable for patients seeking pain relief and ongoing wellness. Our no-appointment policy and convenient hours and locations make care more accessible, and our affordable membership plans and packages eliminate the need for insurance. With 320+ clinics nationwide and nearly three million patient visits annually, The Joint is an emerging growth company and key leader in the chiropractic profession. For more information, visit www.thejoint.com, follow us on Twitter @thejointchiro and find us on Facebook, You Tube and LinkedIn.
Business Structure
The Joint Corp. is a franchisor of clinics and an operator of clinics in certain states. In California, Colorado, Florida, Illinois, Minnesota, New Jersey, New York, North Carolina, Oregon and Tennessee, The Joint and its franchisees provide management services to affiliated professional chiropractic practices.
1 Comp Sales include sales only from clinics that have been open at least 13 full months and exclude any clinics that have closed.
| THE JOINT CORP. AND SUBSIDIARY | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| December 31, | December 31, | |||||||||||
| 2015 | 2014 | |||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 16,792,850 | $ | 20,796,783 | ||||||||
| Restricted cash | 385,282 | 224,576 | ||||||||||
| Accounts receivable, net | 743,239 | 704,905 | ||||||||||
| Income taxes receivable | 70,981 | 395,814 | ||||||||||
| Note receivable - current portion | 60,908 | 27,528 | ||||||||||
| Deferred franchise costs - current portion | 605,850 | 622,800 | ||||||||||
| Prepaid expenses and other current assets | 366,033 | 375,925 | ||||||||||
| Total current assets | 19,025,143 | 23,148,331 | ||||||||||
| Property and equipment, net | 7,138,746 | 1,134,452 | ||||||||||
| Note receivable, net of current portion and reserve | 15,823 | 31,741 | ||||||||||
| Deferred franchise costs, net of current portion | 1,534,700 | 2,574,450 | ||||||||||
| Deferred tax asset | - | 208,800 | ||||||||||
| Intangible assets, net | 2,542,269 | 153,000 | ||||||||||
| Goodwill | 2,466,937 | 636,104 | ||||||||||
| Deposits and other assets | 638,710 | 585,150 | ||||||||||
| Total assets | $ | 33,362,328 | $ | 28,472,028 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 1,996,971 | $ | 1,178,987 | ||||||||
| Accrued expenses | 375,529 | 92,418 | ||||||||||
| Co-op funds liability | 201,078 | 186,604 | ||||||||||
| Payroll liabilities | 1,493,375 | 617,944 | ||||||||||
| Notes payable - current portion | 451,850 | - | ||||||||||
| Deferred rent - current portion | 334,560 | 93,398 | ||||||||||
| Deferred revenue - current portion | 2,579,423 | 1,957,500 | ||||||||||
| Other current liabilities | 54,596 | 50,735 | ||||||||||
| Total current liabilities | 7,487,382 | 4,177,586 | ||||||||||
| Notes payable, net of current portion | 130,000 | - | ||||||||||
| Deferred rent, net of current portion | 457,290 | 451,766 | ||||||||||
| Deferred revenue, net of current portion | 4,369,702 | 7,915,918 | ||||||||||
| Other liabilities | 238,648 | 299,405 | ||||||||||
| Total liabilities | 12,683,022 | 12,844,675 | ||||||||||
| 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, 2015, | ||||||||||||
| and December 31, 2014 | - | - | ||||||||||
| Common stock, $0.001 par value; 20,000,000 shares | ||||||||||||
| authorized, 13,070,180 shares issued and 12,536,180 shares outstanding | ||||||||||||
| as of December 31, 2015 and 10,196,510 shares issued and 9,662,510 | ||||||||||||
| outstanding as of December 31, 2014 | 13,070 | 10,197 | ||||||||||
| Additional paid-in capital | 35,267,376 | 21,420,975 | ||||||||||
| Treasury stock (534,000 shares as of December 31, 2015 and | ||||||||||||
| December 31, 2014, at cost) | (791,638 | ) | (791,638 | ) | ||||||||
| Accumulated deficit | (13,809,502 | ) | (5,012,181 | ) | ||||||||
| Total stockholders' equity | 20,679,306 | 15,627,353 | ||||||||||
| Total liabilities and stockholders' equity | $ | 33,362,328 | $ | 28,472,028 | ||||||||
| THE JOINT CORP. AND SUBSIDIARY | |||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
| (unaudited) | (audited) | ||||||||||||||||||
| Revenues: | |||||||||||||||||||
| Royalty fees | $ | 1,250,925 | $ | 961,233 | $ | 4,515,203 | $ | 3,194,286 | |||||||||||
| Franchise fees | 609,000 | 464,000 | 2,471,259 | 1,933,500 | |||||||||||||||
| Revenues and management fees from company clinics | 1,282,407 | - | 3,651,273 | - | |||||||||||||||
| Advertising fund revenue | 235,644 | 255,352 | 1,191,124 | 459,493 | |||||||||||||||
| IT related income and software fees | 209,312 | 211,600 | 808,070 | 840,825 | |||||||||||||||
| Regional developer fees | 67,202 | 101,500 | 866,802 | 478,500 | |||||||||||||||
| Other revenues | 108,281 | 61,711 | 331,700 | 210,058 | |||||||||||||||
| Total revenues | 3,762,771 | 2,055,396 | 13,835,431 | 7,116,662 | |||||||||||||||
| Cost of revenues: | |||||||||||||||||||
| Franchise cost of revenues | 694,123 | 575,813 | 2,642,451 | 2,081,382 | |||||||||||||||
| IT cost of revenues | 43,229 | 30,877 | 177,462 | 264,440 | |||||||||||||||
| Total cost of revenues | 737,352 | 606,690 | 2,819,913 | 2,345,822 | |||||||||||||||
| Selling and marketing expenses | 1,240,806 | 461,412 | 3,691,782 | 1,117,163 | |||||||||||||||
| Depreciation and amortization | 446,466 | 68,415 | 1,268,955 | 210,123 | |||||||||||||||
| General and administrative expenses | 4,842,406 | 1,855,393 | 15,371,223 | 5,070,263 | |||||||||||||||
| Total selling, general and administrative expenses | 6,529,678 | 2,385,220 | 20,331,960 | 6,397,549 | |||||||||||||||
| Loss from operations | (3,504,259 | ) | (936,514 | ) | (9,316,442 | ) | (1,626,709 | ) | |||||||||||
| Other income (expense): | |||||||||||||||||||
| Bargain purchase gain | (123,067 | ) | - | 261,147 | - | ||||||||||||||
| Other income (expense), net | 4,319 | (5,677 | ) | 22,119 | (64,075 | ) | |||||||||||||
| Total other income (expense) | (118,748 | ) | (5,677 | ) | 283,266 | (64,075 | ) | ||||||||||||
| Loss before income tax (expense) benefit | (3,623,007 | ) | (942,191 | ) | (9,033,176 | ) | (1,690,784 | ) | |||||||||||
| Income tax (expense) benefit | 242,003 | (1,625,010 | ) | 235,855 | (1,340,436 | ) | |||||||||||||
| Net loss and comprehensive loss | $ | (3,381,004 | ) | $ | (2,567,201 | ) | $ | (8,797,321 | ) | $ | (3,031,220 | ) | |||||||
| Loss per share: | |||||||||||||||||||
| Basic and diluted loss per share | $ | (0.31 | ) | $ | (0.35 | ) | $ | (0.88 | ) | $ | (0.56 | ) | |||||||
| Weighted average shares | 10,828,011 | 7,326,941 | 10,042,001 | 5,451,851 | |||||||||||||||
| Non-GAAP Financial Data: | |||||||||||||||||||
| Net loss | $ | (3,381,004 | ) | $ | (2,567,201 | ) | $ | (8,797,321 | ) | $ | (3,031,220 | ) | |||||||
| Interest expense | 5,091 | - | 14,887 | - | |||||||||||||||
| Depreciation and amortization expense | 446,466 | 68,415 | 1,268,955 | 210,123 | |||||||||||||||
| Tax expense (benefit) penalties and interest | (242,003 | ) | 1,625,010 | (235,855 | ) | 1,340,436 | |||||||||||||
| EBITDA | $ | (3,171,450 | ) | $ | (873,776 | ) | $ | (7,749,334 | ) | $ | (1,480,661 | ) | |||||||
| Stock compensation | 179,068 | 61,007 | 825,145 | 101,830 | |||||||||||||||
| Acquisition related expenses | 31,072 | - | 393,069 | - | |||||||||||||||
| Bargain purchase gain | 123,067 | - | (261,147 | ) | - | ||||||||||||||
| Adjusted EBITDA | $ | (2,838,243 | ) | $ | (812,769 | ) | $ | (6,792,267 | ) | $ | (1,378,831 | ) | |||||||
| THE JOINT CORP. AND SUBSIDIARY | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| Year Ended | |||||||||
| December 31, | |||||||||
| 2015 | 2014 | ||||||||
| Net loss | $ | (8,797,321 | ) | $ | (3,031,220 | ) | |||
| Adjustments to reconcile net loss to net cash | 805,682 | 2,182,962 | |||||||
| Changes in operating assets and liabilities | 1,195,160 | 410,813 | |||||||
| Net cash used in operating activities | (6,796,479 | ) | (437,445 | ) | |||||
| Net cash used in investing activities | (10,013,083 | ) | (2,060,126 | ) | |||||
| Net cash provided by financing activities | 12,805,629 | 19,777,604 | |||||||
| Net (decrease) increase in cash | $ | (4,003,933 | ) | $ | 17,280,033 | ||||
The above table presents the reconciliation of net income (loss) to Adjusted EBITDA for the full year periods ended December 31, 2015 and 2014.
Investor Contact: Peter Vozzo peter.vozzo@westwicke.com 443-213-0505 Media Contact: Marcia Rhodes mrhodes@acmarketingpr.com 480-664-8412, ext. 15
Released March 16, 2016