The Joint Corp. Reports Second Quarter 2016 Financial Results; Names Peter D. Holt Chief Executive Officer
The Company Added 29 Total Clinics in First Six Months
SCOTTSDALE, Ariz., Aug. 11, 2016 (GLOBE NEWSWIRE) -- The Joint Corp. (NASDAQ:JYNT), a national operator, manager and franchisor of chiropractic clinics, today reported results for the quarter ended June 30, 2016. Concurrently, the Company’s board of directors announced the appointment of Peter D. Holt as chief executive officer and as a member of the Company’s board of directors, effective immediately.
Second Quarter 2016 Financial Highlights
- Revenue increased 45% in the second quarter of 2016 to $5.0 million, up from $3.4 million in the same quarter last year.
- System wide Comp Sales1 in the second quarter of 2016 were 27%.
- 341 total clinics in operation as of June 30, 2016, an increase of 10 clinics during the second quarter and an increase of 79 clinics from June 30, 2015.
- Company-owned or managed clinics increased by 7 during the second quarter of 2016, to 61 as of June 30, 2016.
“Strong revenue growth for the second quarter of 2016 was driven by the addition of 79 clinics over the last 12 months, including 38 company-owned or managed clinics,” said Peter D. Holt, chief executive officer of The Joint Corp. “I am pleased to report that during the second quarter we continued the expansion of our exciting concept, made progress toward profitability and strengthened our commitment to operational excellence. As we previously mentioned, we will not be adding any additional company-owned or operated clinics for the rest of the year. This will allow our new classes of 2015 and 2016 greenfield clinics an opportunity to mature while we manage our capital and growth accordingly.” Holt added, “In addition, it’s an honor to be appointed CEO and to lead The Joint team into its next chapter of growth.”
“I am happy to announce that the board of directors has unanimously approved Peter’s appointment as CEO,” said Richard Kerley, lead director of The Joint Corp. Board of Directors. “This decision was based not only on his previous executive and industry experiences, but also on the leadership qualities he has displayed while in the role of chief operating officer and acting chief executive officer of The Joint Corp. We are very pleased that Peter has accepted this position and are confident that his in-depth knowledge of our industry as well as his proven franchising and operating capabilities in the retail industry are exactly what we need to lead the organization going forward.”
Second Quarter 2016 Financial Results
Revenue for the second quarter of 2016 increased 45% to $5.0 million from $3.4 million in the second quarter of the prior year due primarily to the addition and growth of 38 company-owned or managed clinics and the addition of 41 franchised clinics since June 30, 2015.
Cost of revenue in the second quarter of 2016 decreased 8.1% compared to the second quarter of 2015, due to a decrease in openings of franchised clinics and the termination of franchise licenses.
Selling and marketing expenses increased to $1.2 million in the second quarter of 2016, compared to $0.5 million in the same period last year, due to an increase in the number of company-owned or managed clinics and the timing of the Company’s national marketing fund expenditures.
General and administrative expenses increased to $5.6 million in the second quarter of 2016, compared to $3.7 million in the second quarter of 2015. This increase was driven by additional payroll and occupancy expenses associated with having more clinics open in the second quarter of 2016 compared to the same period the prior year.
Depreciation and amortization expenses increased for the second quarter of 2016, compared to the same period last year, due to the addition of property, equipment and intangible assets in acquisitions of franchises and regional developer rights, as well as growth in the number of greenfield clinics.
Operating loss in the second quarter of 2016 was ($3.2) million, compared to an operating loss of ($1.9) million in the second quarter of 2015. Net loss in the second quarter of 2016 was ($3.3) million, or ($0.26) per share, compared to a net loss of ($1.9) million or ($0.19) per share in the same period last year.
Adjusted EBITDA in the second quarter of 2016 was ($2.0) million, compared to ($1.3) million in the same quarter the prior year.
As of June 30, 2016, cash and cash equivalents were $6.1 million, compared to $16.8 million at December 31, 2015.
2016 Financial Guidance
For full year 2016, The Joint Corp. is reiterating guidance for total revenues, Adjusted EBITDA and net new clinic openings as set forth below:
- Total revenues in the range of $19 million to $21 million.
- Adjusted EBITDA loss in the range of $(8.9) million to $(8.2) million.
- Net new clinic openings in the range of 58 to 63, including greenfields which make up 8 of the 14 company-owned or managed clinics added during the first six months of 2016, and 50 to 55 franchised clinics.
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.
Conference Call
The Joint Corp. management will host a conference call at 5:00 p.m. ET on Thursday, August 11, 2016, to discuss the second quarter 2016 results. The conference call will be accessible by dialing 765-507-2604 or 844-464-3931 (toll-free), and referencing 58534173. 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 August 18, 2016. The replay can be accessed by dialing (404) 537-3406 or (855) 859-2056. The passcode for the replay is 58534173.
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 expenses. The Company defines EBITDA as net income (loss) before net interest, taxes, 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 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 Annual Report on Form 10-K for the year ended December 31, 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)
At The Joint we are 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 340+ clinics nationwide and more than 3 million patient visits annually, we have become a key leader and innovator 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 Arkansas, California, Colorado, Florida, Illinois, Kansas, Michigan, 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.
| THE JOINT CORP. AND SUBSIDIARY | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
| June 30, | December 31, | |||||||||||
| 2016 | 2015 | |||||||||||
| ASSETS | (unaudited) | |||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 6,118,763 | $ | 16,792,850 | ||||||||
| Restricted cash | 565,175 | 385,282 | ||||||||||
| Accounts receivable, net | 1,807,783 | 743,239 | ||||||||||
| Income taxes receivable | 38,814 | 70,981 | ||||||||||
| Note receivable - current portion | 46,500 | 60,908 | ||||||||||
| Deferred franchise costs - current portion | 578,800 | 605,850 | ||||||||||
| Prepaid expenses and other current assets | 359,695 | 366,033 | ||||||||||
| Total current assets | 9,515,530 | 19,025,143 | ||||||||||
| Property and equipment, net | 8,171,315 | 7,138,746 | ||||||||||
| Note receivable, net of current portion and reserve | 18,327 | 15,823 | ||||||||||
| Deferred franchise costs, net of current portion | 1,252,950 | 1,534,700 | ||||||||||
| Intangible assets, net | 2,727,232 | 2,542,269 | ||||||||||
| Goodwill | 2,945,263 | 2,466,937 | ||||||||||
| Deposits and other assets | 626,073 | 638,710 | ||||||||||
| Total assets | $ | 25,256,690 | $ | 33,362,328 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 1,135,052 | $ | 1,996,971 | ||||||||
| Accrued expenses | 107,093 | 375,529 | ||||||||||
| Co-op funds liability | 104,363 | 201,078 | ||||||||||
| Payroll liabilities | 538,688 | 1,493,375 | ||||||||||
| Notes payable - current portion | 550,400 | 451,850 | ||||||||||
| Deferred rent - current portion | 277,041 | 334,560 | ||||||||||
| Deferred revenue - current portion | 2,599,896 | 2,579,423 | ||||||||||
| Other current liabilities | 68,614 | 54,596 | ||||||||||
| Total current liabilities | 5,381,147 | 7,487,382 | ||||||||||
| Notes payable, net of current portion | - | 130,000 | ||||||||||
| Deferred rent, net of current portion | 1,391,965 | 457,290 | ||||||||||
| Deferred revenue, net of current portion | 3,499,387 | 4,369,702 | ||||||||||
| Other liabilities | 269,456 | 238,648 | ||||||||||
| Total liabilities | 10,541,955 | 12,683,022 | ||||||||||
| Commitments and contingencies | ||||||||||||
| Stockholders' equity: | ||||||||||||
| Series A preferred stock, $0.001 par value; 50,000 | ||||||||||||
| shares authorized, 0 issued and outstanding, as of June 30, 2016, | ||||||||||||
| and December 31, 2015 | - | - | ||||||||||
| Common stock, $0.001 par value; 20,000,000 shares | ||||||||||||
| authorized, 13,262,016 shares issued and 12,728,016 shares outstanding | ||||||||||||
| as of June 30, 2016 and 13,070,180 shares issued and 12,536,180 | ||||||||||||
| outstanding as of December 31, 2015 | 13,262 | 13,070 | ||||||||||
| Additional paid-in capital | 36,089,128 | 35,267,376 | ||||||||||
| Treasury stock (534,000 shares as of June 30, 2016 and | ||||||||||||
| December 31, 2015, at cost) | (791,638 | ) | (791,638 | ) | ||||||||
| Accumulated deficit | (20,596,017 | ) | (13,809,502 | ) | ||||||||
| Total stockholders' equity | 14,714,735 | 20,679,306 | ||||||||||
| Total liabilities and stockholders' equity | $ | 25,256,690 | $ | 33,362,328 | ||||||||
| THE JOINT CORP. AND SUBSIDIARY | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Revenues: | |||||||||||||||||
| Revenues and management fees from company clinics | $ | 2,137,252 | $ | 783,016 | $ | 3,795,805 | $ | 1,170,469 | |||||||||
| Royalty fees | 1,428,548 | 1,098,190 | 2,797,379 | 2,113,704 | |||||||||||||
| Franchise fees | 524,209 | 876,259 | 1,039,009 | 1,224,259 | |||||||||||||
| Advertising fund revenue | 356,580 | 339,462 | 622,301 | 624,978 | |||||||||||||
| IT related income and software fees | 229,400 | 197,214 | 450,534 | 401,189 | |||||||||||||
| Regional developer fees | 225,080 | 50,750 | 372,617 | 268,250 | |||||||||||||
| Other revenues | 72,972 | 81,855 | 161,432 | 131,796 | |||||||||||||
| Total revenues | 4,974,041 | 3,426,746 | 9,239,077 | 5,934,645 | |||||||||||||
| Cost of revenues: | |||||||||||||||||
| Franchise cost of revenues | 668,851 | 743,592 | 1,363,586 | 1,251,158 | |||||||||||||
| IT cost of revenues | 58,888 | 48,226 | 104,116 | 85,921 | |||||||||||||
| Total cost of revenues | 727,739 | 791,818 | 1,467,702 | 1,337,079 | |||||||||||||
| Selling and marketing expenses | 1,174,178 | 534,298 | 1,912,861 | 1,380,924 | |||||||||||||
| Depreciation and amortization | 637,115 | 278,502 | 1,212,659 | 401,098 | |||||||||||||
| General and administrative expenses | 5,625,996 | 3,668,187 | 11,322,502 | 6,576,826 | |||||||||||||
| Total selling, general and administrative expenses | 7,437,289 | 4,480,987 | 14,448,022 | 8,358,848 | |||||||||||||
| Loss from operations | (3,190,987 | ) | (1,846,059 | ) | (6,676,647 | ) | (3,761,282 | ) | |||||||||
| Other income (expense), net | 3,075 | (9,811 | ) | 7,999 | 1,689 | ||||||||||||
| Loss before income tax expense | (3,187,912 | ) | (1,855,870 | ) | (6,668,648 | ) | (3,759,593 | ) | |||||||||
| Income tax expense | (73,470 | ) | - | (117,867 | ) | - | |||||||||||
| Net loss and comprehensive loss | $ | (3,261,382 | ) | $ | (1,855,870 | ) | $ | (6,786,515 | ) | $ | (3,759,593 | ) | |||||
| Loss per share: | |||||||||||||||||
| Basic and diluted loss per share | $ | (0.26 | ) | $ | (0.19 | ) | $ | (0.54 | ) | $ | (0.39 | ) | |||||
| Basic and diluted weighted average shares | 12,672,974 | 9,768,230 | 12,620,438 | 9,734,115 | |||||||||||||
| Non-GAAP Financial Data: | |||||||||||||||||
| Net loss | $ | (3,261,382 | ) | $ | (1,855,870 | ) | $ | (6,786,515 | ) | $ | (3,759,593 | ) | |||||
| Interest expense | 4,225 | - | 8,676 | - | |||||||||||||
| Depreciation and amortization | 637,115 | 278,502 | 1,212,659 | 401,098 | |||||||||||||
| Income tax expense | 73,470 | - | 117,867 | - | |||||||||||||
| EBITDA | $ | (2,546,572 | ) | $ | (1,577,368 | ) | $ | (5,447,313 | ) | $ | (3,358,495 | ) | |||||
| Stock based compensation | 559,726 | 157,212 | 757,394 | 289,499 | |||||||||||||
| Acquisition related expenses | 18,958 | 136,544 | 49,818 | 279,253 | |||||||||||||
| Adjusted EBITDA | $ | (1,967,889 | ) | $ | (1,283,612 | ) | $ | (4,640,100 | ) | $ | (2,789,743 | ) | |||||
The above table presents the reconciliation of net income (loss) to Adjusted EBITDA for the three and six month periods ended June 30, 2016 and 2015.
| THE JOINT CORP. AND SUBSIDIARY | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (unaudited) | |||||||||
| Six Months Ended | |||||||||
| June 30, | |||||||||
| 2016 | 2015 | ||||||||
| Net loss | $ | (6,786,515 | ) | $ | (3,759,593 | ) | |||
| Adjustments to reconcile net loss to net cash | 1,636,564 | 180,692 | |||||||
| Changes in operating assets and liabilities | (2,905,287 | ) | 1,035,333 | ||||||
| Net cash used in operating activities | (8,055,238 | ) | (2,543,568 | ) | |||||
| Net cash used in investing activities | (2,465,949 | ) | (5,648,224 | ) | |||||
| Net cash provided by financing activities | (152,900 | ) | (25,000 | ) | |||||
| Net decrease in cash | $ | (10,674,087 | ) | $ | (8,216,792 | ) | |||
Investor Contact: Peter Vozzo [email protected] 443-213-0505 Media Contact: Inna Lazarev Public Relations Manager [email protected]
Released August 11, 2016