Full Year 2016 Revenue Increased 48% to $20.5
Million Compared to Full Year 2015
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, 2016.
Financial Highlights
- Revenue increased 54% in the fourth quarter of 2016 to $5.8
million, up from $3.8 million in the prior year quarter.
- Revenue increased 48% for full year 2016 to $20.5 million, up
from $13.8 million in 2015.
- System wide Comp Sales[1] were 26% for the fourth quarter of
2016 and 28% for the full year 2016.
- 370 total clinics in operation as of December 31, 2016, a net
increase of 16 clinics during the fourth quarter, and a net
increase of 58 clinics from December 31, 2015.
“A strong fourth quarter capped a pivotal year for The Joint
Corp. in which we refined our strategic objectives, significantly
improved the financial profile of our business, added a net 58 new
clinics in 2016, and made steady progress on key franchise and
operational initiatives to position the business for future
growth,” said Peter D. Holt, president and chief executive officer
of The Joint Corp. “Our continued strong revenue growth in 2016, as
well as the robust same store sales growth for the fourth quarter
and for the full year, reflect the increased consumer demand for
our business.”
Holt added, “The Company’s momentum continues to build entering
2017. Our trailing 12-months system-wide sales crossed $100 million
in January 2017, for the first time, with January reaching our
second highest system-wide sales month after November 2016, which
stands as the highest system-wide sales month to date as a result
of our successful Black Friday
promotion.”
“We have reduced our corporate overhead, put non-dilutive
financing in place, and converted the Chicago area clinics from an
expense to a revenue generator by transferring them to franchisees.
In 2017 we remain focused on achieving profitability in our
corporate clinics portfolio, projecting to open 50 to 60 new
franchise clinics, and working towards achieving company-wide
Adjusted EBITDA breakeven during the first half of 2017 compared to
our previous expectation of the end of 2017.”
Fourth Quarter 2016 Financial Results
Revenue for the fourth quarter of 2016 increased 54% to $5.8
million from $3.8 million in the fourth quarter of 2015 due
primarily to the addition and growth of 14 company-owned or managed
clinics and the net increase of 44 franchised clinics since
December 31, 2015.
Cost of revenue in the fourth quarter of 2016 increased 2%
compared to the fourth quarter of 2015, due to an increase in
regional developer commissions related to higher gross sales from
clinics in regional developer territories.
Selling and marketing expenses increased by 28% to $1.2 million
in the fourth quarter of 2016, compared to $1.0 million in the same
period last year due to increases in the national marketing
program.
General and administrative expenses increased to $8.9 million in
the fourth quarter of 2016, compared to $5.1 million in the fourth
quarter of 2015. This increase includes a disposition or impairment
charge of $3.5 million associated with the transfer and closing of
clinics in Chicago and Upstate New York that the Company announced
in January 2017. The balance of the $0.3 million year over year
increase was driven by occupancy expenses associated with having a
greater number of clinics open in the fourth quarter of 2016
compared to the same period the prior year.
Depreciation and amortization expenses increased for the fourth
quarter of 2016, compared to the prior year quarter, 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 fourth quarter of 2016 was ($5.7)
million. Excluding the aforementioned one-time disposition or
impairment charge of $3.5 million, Adjusted Operating Loss (a
Non-GAAP Measure) was ($2.2) million, which is a $1.3 million
improvement compared to an operating loss of ($3.5) million in the
fourth quarter of 2015. Net loss in the fourth quarter of 2016 was
($5.8) million, or ($0.45) per share, compared to a net loss of
($3.4) million or ($0.31) per share in the same period the prior
year. Net loss in the fourth quarter of 2016 includes the one-time
impairment and disposition charge of $3.5 million, or $0.27 per
share.
Adjusted EBITDA (a Non-GAAP measure) in the fourth quarter of
2016 was ($1.4) million, compared to ($2.8) million in the same
quarter the prior year, ($1.7) million in the third quarter of
2016, ($2.0) million in the second quarter of 2016 and ($2.7)
million in the first quarter of 2016.
Full Year 2016 Financial Results
Revenue in 2016 increased 48% to $20.5 million from $13.8
million in 2015 due primarily to the addition and growth of 14
company-owned or managed clinics and the addition of 44 franchised
clinics since December 31, 2015.
Cost of revenue in 2016 increased 4% compared to 2015 due to an
increase in regional developer commissions related to higher gross
sales from clinics in regional developer territories.
Selling and marketing expenses increased 55% to $4.4 million in
2016, compared to $2.8 million in the prior year due to increased
marketing efforts at company-owned or managed clinics and from
initiatives associated with the national marketing program.
General and administrative expenses increased by 58% to $25.6
million in 2016, compared to $16.2 million in 2015. This increase
was driven by the one-time disposition or impairment charge
previously mentioned, and occupancy expenses and personnel costs
associated with having a greater number of clinics open in 2016
compared to 2015.
Depreciation and amortization expenses increased for the full
year of 2016, compared to 2015, 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 2016 was ($15.0) million. Excluding the
one-time disposition or impairment charge of $3.5 million, 2016
Adjusted Operating Loss (a Non-GAAP Measure) was ($12.8) million,
which is a $3.5 million increase compared to the loss of ($9.3)
million in 2015. Net loss in 2016 was ($15.2) million, or
($1.20) per share, compared to a net loss of ($8.8) million or
($0.88) per share in 2015. Net loss for full year 2016 includes the
disposition or impairment charge of $3.5 million, or $0.28 per
share.
Adjusted EBITDA in 2016 was ($7.7) million, compared to ($6.8)
million in the prior year.
As of December 31, 2016, cash and cash equivalents were $3.0
million, compared to $16.8 million at December 31, 2015 and $3.4
million at September 30, 2016.
Effective March 7, 2017, existing board member Ron DaVella was
promoted to Lead Director of The Joint Corp. He has served as a
director since the initial public offering and currently serves as
the Chief Financial Officer for Amazing Group, Inc. Before
that he was an audit partner with Deloitte & Touche LLP.
DaVella succeeds Rich Kerley who has stepped down as Lead Director
due to a family loss in 2016, but will remain on the Company’s
board of directors.
2017 Financial Guidance
For full year 2017, The Joint Corp. is providing guidance for
total revenues and Adjusted EBITDA as set forth below:
- Total revenues in the range of $22 million to $24 million.
- Adjusted EBITDA in the range of $(1.5) million to $(0.5)
million.
- Net new franchise clinic openings in the range of 50 to
60.
Conference Call
The Joint Corp. management will host a conference call at 5:00
p.m. ET on Thursday, March 9, 2017, to discuss the fourth quarter
and full year 2016 results. The conference call may be accessed by
dialing 765-507-2604 or 844-464-3931, and referencing 64205478. 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 16, 2017. The replay can
be accessed by dialing 404-537-3406 or 855-859-2056. The passcode
for the replay is 64205478.
Non-GAAP Financial Information
This earnings release includes a presentation of EBITDA,
Adjusted EBITDA and Adjusted Operating Loss, 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.
Reconciliations of net loss to EBITDA and Adjusted EBITDA are
presented within the tables below. Operating loss is reconciled to
Adjusted Operating Loss by eliminating the one-time charge for
disposition or impairment of $3.5 million. 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, taxes, depreciation, and
amortization expenses.
EBITDA, Adjusted EBITDA and Adjusted Operating Loss 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, Adjusted EBITDA and Adjusted Operating Loss 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, Adjusted
EBITDA and Adjusted Operating Loss 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, 2016, 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 360+
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, 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 |
|
|
CONSOLIDATED BALANCE SHEETS |
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2016 |
|
2015 |
|
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
3,009,864 |
|
|
$ |
16,792,850 |
|
|
|
Restricted cash |
|
|
334,394 |
|
|
|
385,282 |
|
|
|
Accounts
receivable, net |
|
|
1,021,733 |
|
|
|
743,239 |
|
|
|
Income
taxes receivable |
|
|
42,014 |
|
|
|
70,981 |
|
|
|
Notes
receivable - current portion |
|
|
40,826 |
|
|
|
60,908 |
|
|
|
Deferred
franchise costs - current portion |
|
|
748,300 |
|
|
|
605,850 |
|
|
|
Prepaid
expenses and other current assets |
|
|
499,525 |
|
|
|
366,033 |
|
|
|
Total
current assets |
|
|
5,696,656 |
|
|
|
19,025,143 |
|
|
|
Property and equipment,
net |
|
|
4,724,706 |
|
|
|
7,138,746 |
|
|
|
Notes
receivable, net of current portion and reserve |
|
|
- |
|
|
|
15,823 |
|
|
|
Deferred
franchise costs, net of current portion |
|
|
836,350 |
|
|
|
1,534,700 |
|
|
|
Intangible assets, net |
|
|
2,338,922 |
|
|
|
2,542,269 |
|
|
|
Goodwill |
|
|
2,750,338 |
|
|
|
2,466,937 |
|
|
|
Deposits
and other assets |
|
|
707,889 |
|
|
|
638,710 |
|
|
|
Total
assets |
|
$ |
17,054,861 |
|
|
$ |
33,362,328 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
1,054,946 |
|
|
$ |
1,996,971 |
|
|
|
Accrued
expenses |
|
|
299,997 |
|
|
|
375,529 |
|
|
|
Co-op
funds liability |
|
|
73,246 |
|
|
|
201,078 |
|
|
|
Payroll
liabilities |
|
|
750,421 |
|
|
|
1,493,375 |
|
|
|
Notes
payable - current portion |
|
|
331,500 |
|
|
|
451,850 |
|
|
|
Deferred
rent - current portion |
|
|
215,450 |
|
|
|
334,560 |
|
|
|
Deferred
revenue - current portion |
|
|
3,077,430 |
|
|
|
2,579,423 |
|
|
|
Other
current liabilities |
|
|
60,894 |
|
|
|
54,596 |
|
|
|
Total
current liabilities |
|
|
5,863,884 |
|
|
|
7,487,382 |
|
|
|
Notes
payable, net of current portion |
|
|
- |
|
|
|
130,000 |
|
|
|
Deferred rent, net of
current portion |
|
|
1,400,790 |
|
|
|
457,290 |
|
|
|
Deferred revenue, net
of current portion |
|
|
2,231,712 |
|
|
|
4,369,702 |
|
|
|
Deferred tax
liability |
|
|
120,700 |
|
|
|
- |
|
|
|
Other liabilities |
|
|
512,362 |
|
|
|
238,648 |
|
|
|
Total
liabilities |
|
|
10,129,448 |
|
|
|
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 December 31,
2016, |
|
|
|
|
|
|
and December 31, 2015 |
|
|
- |
|
|
|
- |
|
|
|
Common
stock, $0.001 par value; 20,000,000 shares |
|
|
|
|
|
|
authorized, 13,317,393 shares issued and 13,020,889 shares
outstanding |
|
|
|
|
|
|
as of December 31, 2016 and 13,070,180 shares issued and
12,536,180 |
|
|
|
|
|
|
outstanding as of December 31, 2015 |
|
|
13,317 |
|
|
|
13,070 |
|
|
|
Additional paid-in capital |
|
|
36,398,588 |
|
|
|
35,267,376 |
|
|
|
Treasury
stock (296,504 shares as of December 31, 2016 and |
|
|
|
|
|
|
534,000 as of December 31, 2015, at cost) |
|
|
(503,118 |
) |
|
|
(791,638 |
) |
|
|
Accumulated deficit |
|
|
(28,983,374 |
) |
|
|
(13,809,502 |
) |
|
|
Total
stockholders' equity |
|
|
6,925,413 |
|
|
|
20,679,306 |
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
17,054,861 |
|
|
$ |
33,362,328 |
|
|
THE JOINT CORP. AND SUBSIDIARY |
|
CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
Revenues
and management fees from company clinics |
|
$ |
2,440,771 |
|
|
$ |
1,282,407 |
|
|
$ |
8,578,048 |
|
|
$ |
3,651,273 |
|
|
Royalty
fees |
|
|
1,635,436 |
|
|
|
1,250,925 |
|
|
|
5,973,079 |
|
|
|
4,515,203 |
|
|
Franchise
fees |
|
|
645,400 |
|
|
|
609,000 |
|
|
|
2,286,809 |
|
|
|
2,471,259 |
|
|
Advertising fund revenue |
|
|
648,150 |
|
|
|
235,644 |
|
|
|
1,866,406 |
|
|
|
1,191,124 |
|
|
IT
related income and software fees |
|
|
246,250 |
|
|
|
209,312 |
|
|
|
932,709 |
|
|
|
808,070 |
|
|
Regional
developer fees |
|
|
121,034 |
|
|
|
67,202 |
|
|
|
617,573 |
|
|
|
866,802 |
|
|
Other
revenues |
|
|
43,930 |
|
|
|
108,281 |
|
|
|
269,016 |
|
|
|
331,700 |
|
|
Total
revenues |
|
|
5,780,971 |
|
|
|
3,762,771 |
|
|
|
20,523,640 |
|
|
|
13,835,431 |
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
Franchise
cost of revenues |
|
|
693,979 |
|
|
|
694,123 |
|
|
|
2,717,691 |
|
|
|
2,642,451 |
|
|
IT cost
of revenues |
|
|
59,166 |
|
|
|
43,229 |
|
|
|
221,918 |
|
|
|
177,462 |
|
|
Total
cost of revenues |
|
|
753,145 |
|
|
|
737,352 |
|
|
|
2,939,609 |
|
|
|
2,819,913 |
|
|
Selling and marketing
expenses |
|
|
1,234,697 |
|
|
|
962,111 |
|
|
|
4,419,180 |
|
|
|
2,843,613 |
|
|
Depreciation and
amortization |
|
|
657,898 |
|
|
|
446,466 |
|
|
|
2,566,136 |
|
|
|
1,268,955 |
|
|
General and
administrative expenses |
|
|
5,346,437 |
|
|
|
5,121,101 |
|
|
|
22,101,083 |
|
|
|
16,219,392 |
|
|
Total
selling, general and administrative expenses |
|
|
7,239,032 |
|
|
|
6,529,678 |
|
|
|
29,086,399 |
|
|
|
20,331,960 |
|
|
Loss on disposition or
impairment |
|
|
3,520,370 |
|
|
|
- |
|
|
|
3,520,370 |
|
|
|
- |
|
|
Loss
from operations |
|
|
(5,731,576 |
) |
|
|
(3,504,259 |
) |
|
|
(15,022,738 |
) |
|
|
(9,316,442 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
Bargain
purchase gain |
|
|
- |
|
|
|
(123,067 |
) |
|
|
- |
|
|
|
261,147 |
|
|
Other
income, net |
|
|
3,395 |
|
|
|
4,319 |
|
|
|
13,295 |
|
|
|
22,119 |
|
|
Total
other income (expense) |
|
|
3,395 |
|
|
|
(118,748 |
) |
|
|
13,295 |
|
|
|
283,266 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income tax expense |
|
|
(5,728,181 |
) |
|
|
(3,623,007 |
) |
|
|
(15,009,443 |
) |
|
|
(9,033,176 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income tax (expense)
benefit |
|
|
(32,285 |
) |
|
|
242,003 |
|
|
|
(164,429 |
) |
|
|
235,855 |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
and comprehensive loss |
|
$ |
(5,760,466 |
) |
|
$ |
(3,381,004 |
) |
|
$ |
(15,173,872 |
) |
|
$ |
(8,797,321 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share |
|
$ |
(0.45 |
) |
|
$ |
(0.31 |
) |
|
$ |
(1.20 |
) |
|
$ |
(0.88 |
) |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average shares |
|
|
12,813,438 |
|
|
|
10,828,011 |
|
|
|
12,696,649 |
|
|
|
10,042,001 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Financial Data: |
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(5,760,466 |
) |
|
$ |
(3,381,004 |
) |
|
$ |
(15,173,872 |
) |
|
$ |
(8,797,321 |
) |
|
Interest
expense |
|
|
10,062 |
|
|
|
5,091 |
|
|
|
14,762 |
|
|
|
14,887 |
|
|
Depreciation and amortization expense |
|
|
657,898 |
|
|
|
446,466 |
|
|
|
2,566,136 |
|
|
|
1,268,955 |
|
|
Income
tax expense (benefit) |
|
|
32,285 |
|
|
|
(242,003 |
) |
|
|
164,429 |
|
|
|
(235,855 |
) |
|
EBITDA |
|
$ |
(5,060,221 |
) |
|
$ |
(3,171,450 |
) |
|
$ |
(12,428,545 |
) |
|
$ |
(7,749,334 |
) |
|
Stock
compensation expense |
|
|
110,781 |
|
|
|
179,068 |
|
|
|
1,123,481 |
|
|
|
825,146 |
|
|
Acquisition related expenses |
|
|
10,750 |
|
|
|
31,072 |
|
|
|
74,736 |
|
|
|
393,069 |
|
|
Loss on
disposition or impairment |
|
|
3,520,370 |
|
|
|
- |
|
|
|
3,520,370 |
|
|
|
- |
|
|
Bargain
purchase gain |
|
|
- |
|
|
|
123,067 |
|
|
|
- |
|
|
|
(261,147 |
) |
|
Adjusted
EBITDA |
|
$ |
(1,418,320 |
) |
|
$ |
(2,838,243 |
) |
|
$ |
(7,709,958 |
) |
|
$ |
(6,792,266 |
) |
|
|
|
|
|
|
|
|
|
|
|
The above table presents the reconciliation of net income (loss)
to Adjusted EBITDA for the three and twelve month periods ended
December 31, 2016 and 2015.
|
THE JOINT CORP. AND SUBSIDIARY |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(unaudited) |
|
|
Year Ended |
|
|
December 31, |
|
|
|
2016 |
|
|
|
2015 |
|
Net loss |
|
$ |
(15,173,872 |
) |
|
$ |
(8,797,321 |
) |
Adjustments to
reconcile net loss to net cash |
|
|
6,936,907 |
|
|
|
805,682 |
|
Changes
in operating assets and liabilities |
|
|
(2,610,347 |
) |
|
|
1,195,160 |
|
Net cash
used in operating activities |
|
|
(10,847,312 |
) |
|
|
(6,796,479 |
) |
Net cash
used in investing activities |
|
|
(2,695,822 |
) |
|
|
(10,013,083 |
) |
Net cash
used in financing activities |
|
|
(239,852 |
) |
|
|
12,805,629 |
|
Net
decrease in cash |
|
$ |
(13,782,986 |
) |
|
$ |
(4,003,933 |
) |
|
[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.
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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