Transfers 6 Chicago Area Clinics to Existing
Franchisees; Consolidates 5 Clinics in Chicago and 3 in Upstate
N.Y.
The Joint Corp. (NASDAQ:JYNT), a national operator, manager and
franchisor of chiropractic clinics, today announced the sale of
regional developer rights for the Chicago area and the transfer of
six of its 11 Chicago clinics to a partnership that includes
experienced and successful franchisees of The Joint Corp. The
Company also announced the consolidation and closing of the
remaining five Chicago area clinics as well as three
company-managed clinics in Upstate New York.
The Company received $300,000 in cash for the regional developer
rights, and the new regional developer has committed to opening a
minimum of 30 clinics in the Chicago area over the next ten years,
including plans to open between five and ten clinics over the next
18 months. The Company received nominal consideration for the
transfer of its six company-managed clinics to the regional
developer, and will record an impairment charge on these assets in
the fourth quarter of 2016 associated with the transfer and
consolidation of the 14 clinics. These transactions are effective
January 6, 2017. The transfer, consolidation and closing of
the 14 clinics will have no impact on the Company’s GAAP revenue,
as revenue from clinics in professional corporation (PC) states,
which include Illinois and New York, is not recorded until working
capital advances have been paid in full.
“Having experienced and qualified franchisees operate the
Chicago market has multiple strategic, tactical and financial
advantages for The Joint Corp,” said Peter D. Holt, Chief Executive
Officer of The Joint Corp. “It will reduce our current cash usage,
allow us to focus further on developing company-owned and managed
clinics in other existing markets, and accelerate the point at
which we believe the Company will achieve cash-flow breakeven in
2017. We continue to believe that the Chicago area is a promising
market for our chiropractic care model. Transferring the regional
developer rights along with a platform of operating clinics to
experienced franchisees who are committed to the success of these
clinics allows them to build on our initial development and
continue to grow the market and expand our brand.”
In addition, The Joint Corp. has entered into an agreement with
Tower 7 Partnership LLC, an Ohio limited liability company, for a
$5 million secured line of credit. The purpose of the credit
facility is for general working capital needs. “While we continue
to believe that our existing working capital is sufficient for us
to achieve cash-flow breakeven from operations, this line of credit
provides us with extra liquidity and flexibility to respond to our
financial needs,” said John P. Meloun, Chief Financial Officer of
The Joint Corp.
2016 Financial Guidance
For full year 2016, The Joint Corp. is reiterating guidance
announced November 10, 2016 for total revenues and Adjusted EBITDA
excluding impairment charges relating to any non-cash write-off of
assets associated with the Chicago and New York clinics, including
restructuring and related expenses.
- Total revenues in the range of $20 million to $21 million.
- Adjusted EBITDA in the range of $(7.9) million to $(7.3)
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.
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)
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 350+
clinics nationwide and more than 3 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, 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.
Investor Contact:
Peter Vozzo
peter.vozzo@westwicke.com
443-213-0505
Media Contact:
Inna Lazarev
Public Relations Manager
inna.lazarev@thejoint.com
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