Revenue Increased 21% to $6.0 Million Compared to
Prior Year Period
The Joint Corp. (NASDAQ:JYNT), a national operator, manager and
franchisor of chiropractic clinics, today reported results for the
quarter ended June 30, 2017.
Second Quarter 2017 Financial Highlights
- Revenue increased 21% in the second quarter to $6.0 million, up
from $5.0 million in the prior year second quarter
- System-wide comp sales1 were 19%
- Net loss improved 69% compared to the same quarter last year to
($1.0) million
- Adjusted EBITDA was ($0.3) million in the second quarter, an
82% improvement compared to ($2.0) million in the same quarter last
year
- Added 11 new franchised clinics, ending the second quarter of
2017 with 383 total clinics in operation, a net increase of 42
clinics from June 30, 2016
“Positive trends continued throughout our operations during the
second quarter,” said Peter D. Holt, president and chief executive
officer of The Joint Corp. “Our revenue grew by 21%, we experienced
our sixth consecutive quarterly improvement in Adjusted EBITDA, and
our cash balance improved on a sequential quarter to quarter basis.
We made further progress on our growth goals with the opening of 11
new franchises in the second quarter. Additionally, we sold two new
regional developer licenses, and continued improvement in the
operating performance of our company clinics, all of which
positions us for accelerated growth.”
Holt added, “System-wide comp sales were up 19%, which reflects
the growing market acceptance of our chiropractic services. For the
remainder of the year, we are focused on achieving company-wide
profitability and expanding our franchise network by adding 50 to
60 new franchised clinics in 2017.”
___________________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.
Second Quarter 2017 Financial Results
Revenue for the second quarter of 2017 increased 21% to $6.0
million from $5.0 million in the second quarter of 2016 due
primarily to the net increase of 56 franchised clinics and
increasing sales in our existing company-owned or managed clinics
since June 30, 2016.
Cost of revenue in the second quarter of 2017 increased 6%
compared to the second quarter of 2016 due primarily to higher
regional developer royalties from increased sales of
franchises.
Selling and marketing expenses decreased by 10% to $1.1 million
in the second quarter of 2017, compared to $1.2 million in the same
period last year due primarily to 14 fewer corporate clinics in the
second quarter of 2017 compared to the same period last year.
General and administrative expenses decreased to $4.7 million in
the second quarter of 2017, compared to $5.6 million in the second
quarter of 2016 due to lower payroll and occupancy costs from 14
fewer corporate clinics in the second quarter of 2017 compared to
the second quarter of 2016. In addition, the second quarter of 2016
was negatively impacted by a $0.3 million charge related to halting
greenfield clinic development.
Total depreciation and amortization expense decreased for the
second quarter of 2017, compared to the prior year quarter due to
the aforementioned 14 fewer clinics in the 2017 second quarter
compared to the same quarter last year.
Net loss in the second quarter of 2017 was ($1.0) million, or
($0.08) per share, compared to a net loss of ($3.3) million, or
($0.26) per share, in the same period last year.
Adjusted EBITDA (a non-GAAP measure) in the second quarter of
2017 was ($0.3) million, an 82% improvement compared to ($2.0)
million in the same quarter last year.
As of June 30, 2017, cash and cash equivalents were $3.0
million, compared to $3.0 million at December 31, 2016.
Pursuant to the terms of our credit agreement, during the first
quarter of 2017, we borrowed a required $1.0 million on our line of
credit, which remains unused as part of cash and cash equivalents
on our balance sheet as of June 30, 2017.
Effective August 8, 2017, newly elected board member Matthew E.
Rubel was appointed Lead Director of The Joint Corp. Rubel brings
extensive C-suite and public company board experience to The Joint
Corp., and most recently served as chief executive officer,
president and board member of Varsity Brands, Inc. From 2005 to
2011 he served as chief executive officer and president of
Collective Brands, Inc. Rubel succeeds Ronald V. DaVella as Lead
Director who will remain on the Company’s board of directors and
remain chairperson of the Company’s audit committee.
2017 Financial Guidance
For full year 2017, we are reiterating our guidance 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 franchised 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, August 10, 2017, to discuss the second quarter
2017 results. The conference call may be accessed by dialing
765-507-2604 or 844-464-3931, and referencing 41541211. 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 17, 2017. The replay can
be accessed by dialing 404-537-3406 or 855-859-2056. The passcode
for the replay is 41541211.
Non-GAAP Financial Information
This earnings release includes a presentation of EBITDA and
Adjusted EBITDA 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. Reconciliation of net loss to
EBITDA and Adjusted EBITDA is presented in the table below. 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, 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, 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 nearly
400 clinics nationwide and more than 4 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, Tennessee and Washington, The Joint
and its franchisees provide management services to affiliated
professional chiropractic practices.
|
THE JOINT CORP. AND SUBSIDIARY |
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2017 |
|
2016 |
ASSETS |
|
(unaudited) |
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
3,046,777 |
|
|
$ |
3,009,864 |
|
Restricted cash |
|
|
280,414 |
|
|
|
334,394 |
|
Accounts
receivable, net |
|
|
1,135,574 |
|
|
|
1,021,733 |
|
Income
taxes receivable |
|
|
3,054 |
|
|
|
42,014 |
|
Notes
receivable - current portion |
|
|
53,475 |
|
|
|
40,826 |
|
Deferred
franchise costs - current portion |
|
|
516,981 |
|
|
|
748,300 |
|
Prepaid
expenses and other current assets |
|
|
557,246 |
|
|
|
499,525 |
|
Total
current assets |
|
|
5,593,521 |
|
|
|
5,696,656 |
|
Property and equipment,
net |
|
|
4,071,501 |
|
|
|
4,724,706 |
|
Notes
receivable, net of current portion |
|
|
148,525 |
|
|
|
- |
|
Deferred
franchise costs, net of current portion |
|
|
887,900 |
|
|
|
836,350 |
|
Intangible assets, net |
|
|
2,017,169 |
|
|
|
2,338,922 |
|
Goodwill |
|
|
2,750,338 |
|
|
|
2,750,338 |
|
Deposits
and other assets |
|
|
657,202 |
|
|
|
707,889 |
|
Total
assets |
|
$ |
16,126,156 |
|
|
$ |
17,054,861 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
971,326 |
|
|
$ |
1,054,946 |
|
Accrued
expenses |
|
|
267,425 |
|
|
|
299,997 |
|
Co-op
funds liability |
|
|
82,583 |
|
|
|
73,246 |
|
Payroll
liabilities |
|
|
609,544 |
|
|
|
750,421 |
|
Notes
payable - current portion |
|
|
100,000 |
|
|
|
331,500 |
|
Deferred
rent - current portion |
|
|
146,618 |
|
|
|
215,450 |
|
Deferred
revenue - current portion |
|
|
2,360,516 |
|
|
|
3,077,430 |
|
Other
current liabilities |
|
|
52,071 |
|
|
|
60,894 |
|
Total
current liabilities |
|
|
4,590,083 |
|
|
|
5,863,884 |
|
Revolving credit - notes payable |
|
|
1,000,000 |
|
|
|
- |
|
Deferred rent, net of
current portion |
|
|
875,845 |
|
|
|
1,400,790 |
|
Deferred revenue, net
of current portion |
|
|
3,876,388 |
|
|
|
2,231,712 |
|
Deferred tax
liability |
|
|
176,032 |
|
|
|
120,700 |
|
Other liabilities |
|
|
1,030,003 |
|
|
|
512,362 |
|
Total
liabilities |
|
|
11,548,351 |
|
|
|
10,129,448 |
|
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, 2017, |
|
|
|
|
|
|
|
|
and
December 31, 2016 |
|
|
- |
|
|
|
- |
|
Common
stock, $0.001 par value; 20,000,000 shares |
|
|
|
|
|
|
|
|
authorized, 13,461,044 shares issued and 13,164,540 shares
outstanding |
|
|
|
|
|
|
|
|
as of
June 30, 2017 and 13,317,393 shares issued and 13,020,889 |
|
|
|
|
|
|
|
|
outstanding as of December 31, 2016 |
|
|
13,461 |
|
|
|
13,317 |
|
Additional paid-in capital |
|
|
36,709,063 |
|
|
|
36,398,588 |
|
Treasury
stock, at cost, 296,504 shares as of June 30, 2017 |
|
|
|
|
|
|
|
|
and
December 31, 2016 |
|
|
(503,118 |
) |
|
|
(503,118 |
) |
Accumulated deficit |
|
|
(31,641,601 |
) |
|
|
(28,983,374 |
) |
Total
stockholders' equity |
|
|
4,577,805 |
|
|
|
6,925,413 |
|
Total
liabilities and stockholders' equity |
|
$ |
16,126,156 |
|
|
$ |
17,054,861 |
|
|
|
|
|
|
|
|
|
|
|
THE JOINT CORP. AND SUBSIDIARY |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
and management fees from company clinics |
|
$ |
2,707,458 |
|
|
$ |
2,137,252 |
|
|
$ |
5,223,059 |
|
|
$ |
3,795,805 |
|
Royalty
fees |
|
|
1,854,087 |
|
|
|
1,428,548 |
|
|
|
3,560,160 |
|
|
|
2,797,379 |
|
Franchise
fees |
|
|
357,600 |
|
|
|
524,209 |
|
|
|
807,100 |
|
|
|
1,039,009 |
|
Advertising fund revenue |
|
|
621,578 |
|
|
|
356,580 |
|
|
|
1,220,014 |
|
|
|
622,301 |
|
IT
related income and software fees |
|
|
282,525 |
|
|
|
229,400 |
|
|
|
549,538 |
|
|
|
450,534 |
|
Regional
developer fees |
|
|
119,733 |
|
|
|
225,080 |
|
|
|
196,629 |
|
|
|
372,617 |
|
Other
revenues |
|
|
71,827 |
|
|
|
72,972 |
|
|
|
132,165 |
|
|
|
161,432 |
|
Total
revenues |
|
|
6,014,808 |
|
|
|
4,974,041 |
|
|
|
11,688,665 |
|
|
|
9,239,077 |
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
cost of revenues |
|
|
704,767 |
|
|
|
668,851 |
|
|
|
1,388,010 |
|
|
|
1,363,586 |
|
IT cost
of revenues |
|
|
65,452 |
|
|
|
58,888 |
|
|
|
124,313 |
|
|
|
104,116 |
|
Total
cost of revenues |
|
|
770,219 |
|
|
|
727,739 |
|
|
|
1,512,323 |
|
|
|
1,467,702 |
|
Selling and marketing
expenses |
|
|
1,058,224 |
|
|
|
1,174,178 |
|
|
|
2,016,930 |
|
|
|
1,912,861 |
|
Depreciation and
amortization |
|
|
503,226 |
|
|
|
637,115 |
|
|
|
1,081,212 |
|
|
|
1,212,659 |
|
General and
administrative expenses |
|
|
4,667,688 |
|
|
|
5,621,771 |
|
|
|
9,231,768 |
|
|
|
11,313,826 |
|
Total
selling, general and administrative expenses |
|
|
6,229,138 |
|
|
|
7,433,064 |
|
|
|
12,329,910 |
|
|
|
14,439,346 |
|
Loss on disposition or
impairment |
|
|
- |
|
|
|
- |
|
|
|
417,971 |
|
|
|
- |
|
Loss
from operations |
|
|
(984,549 |
) |
|
|
(3,186,762 |
) |
|
|
(2,571,539 |
) |
|
|
(6,667,971 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income,
net |
|
|
(24,030 |
) |
|
|
(1,150 |
) |
|
|
(43,496 |
) |
|
|
(677 |
) |
Loss
before income tax expense |
|
|
(1,008,579 |
) |
|
|
(3,187,912 |
) |
|
|
(2,615,035 |
) |
|
|
(6,668,648 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(2,583 |
) |
|
|
(73,470 |
) |
|
|
(43,192 |
) |
|
|
(117,867 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
and comprehensive loss |
|
$ |
(1,011,162 |
) |
|
$ |
(3,261,382 |
) |
|
$ |
(2,658,227 |
) |
|
$ |
(6,786,515 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share |
|
$ |
(0.08 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.54 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average shares |
|
|
13,127,255 |
|
|
|
12,672,974 |
|
|
|
13,085,159 |
|
|
|
12,620,438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Financial Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
(1,011,162 |
) |
|
$ |
(3,261,382 |
) |
|
$ |
(2,658,227 |
) |
|
$ |
(6,786,515 |
) |
Interest
expense |
|
|
25,000 |
|
|
|
4,225 |
|
|
|
50,000 |
|
|
|
8,676 |
|
Depreciation and amoritzation expense |
|
|
503,226 |
|
|
|
637,115 |
|
|
|
1,081,212 |
|
|
|
1,212,659 |
|
Tax
expense (benefit) penalties and interest |
|
|
2,583 |
|
|
|
73,470 |
|
|
|
43,192 |
|
|
|
117,867 |
|
EBITDA |
|
$ |
(480,353 |
) |
|
$ |
(2,546,572 |
) |
|
$ |
(1,483,823 |
) |
|
$ |
(5,447,313 |
) |
Stock
compensation expense |
|
|
132,056 |
|
|
|
559,726 |
|
|
|
227,121 |
|
|
|
757,394 |
|
Acquisition related expenses |
|
|
492 |
|
|
|
18,958 |
|
|
|
13,142 |
|
|
|
49,818 |
|
Loss on
disposition or impairment |
|
|
- |
|
|
|
- |
|
|
|
417,971 |
|
|
|
- |
|
Adjusted
EBITDA |
|
$ |
(347,806 |
) |
|
$ |
(1,967,889 |
) |
|
$ |
(825,590 |
) |
|
$ |
(4,640,100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above table represents the reconciliation of net
income (loss) to Adjusted EBITDA for the three and six month
periods ended June 30, 2017 and 2016.
THE JOINT CORP. AND SUBSIDIARY |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2017 |
|
2016 |
Net loss |
|
$ |
(2,658,227 |
) |
|
$ |
(6,786,515 |
) |
Adjustments to
reconcile net loss to net cash |
|
|
1,695,104 |
|
|
|
1,636,564 |
|
Changes
in operating assets and liabilities |
|
|
228,466 |
|
|
|
(2,905,287 |
) |
Net cash
used in operating activities |
|
|
(734,657 |
) |
|
|
(8,055,238 |
) |
Net cash
used in investing activities |
|
|
(80,428 |
) |
|
|
(2,465,949 |
) |
Net cash
provided by (used in) financing activities |
|
|
851,998 |
|
|
|
(152,900 |
) |
Net
increase (decrease) in cash |
|
$ |
36,913 |
|
|
$ |
(10,674,087 |
) |
|
|
|
|
|
|
|
|
|
Investor Contact:
Peter Vozzo
peter.vozzo@westwicke.com
443-213-0505
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