- Increases Annual System-Wide Gross Sales 29%,
Compared to Second Quarter 2017 -- Grows Revenue 26%, Compared to
Second Quarter 2017 -- Reports Net Loss of $43,000, Compared to Net
Loss of $1.0 Million in Second Quarter 2017 -- Posts Fourth
Consecutive Quarter of Positive Adjusted EBITDA -
The Joint Corp. (NASDAQ: JYNT), a national operator, manager and
franchisor of chiropractic clinics, reported financial results for
the three months ended June 30, 2018.
Second Quarter Highlights: 2018 Compared to
2017
- Increased gross system-wide sales 29%, to $39.4 million.
- Grew system-wide comp sales1 25%.
- Increased revenue 26% to $7.6 million.
- Reported net loss of $43,000, an improvement of $1.0
million.
- Posted positive Adjusted EBITDA of $697,000, an improvement of
$1.1 million.
- Achieved positive Adjusted EBITDA for the fourth consecutive
quarter.
- Increased total clinics to 413 as of June 30, 2018: Opened 8
franchised clinics, closed one franchised clinic and acquired one
previously-franchised clinic.
Peter D. Holt, president and chief executive officer of The
Joint Corp, said, “Our strong second quarter results reflect the
combination of our disciplined clinic expansion strategy, enhanced
operational and marketing efforts and continued focus on expense
management. With 413 clinics in operation and plans to add 25 or
more by the end of 2018, The Joint’s unique concept is gaining
traction and resonating with more patients as a convenient,
affordable, and drug-free alternative to pain management and
improved health and wellness.
“The strength of this concept and our focus on improving
franchisee profitability with effective marketing and best-practice
operational support continue to shorten the average break-even
point for new clinics. We believe franchisee profitability and
franchise expansion in partnership with strong regional developers,
along with corporate owned and managed clinic growth in select
markets, will continue to create shareholder value.”
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 Financial Results: 2018 Compared to
2017
Revenue grew 26% to $7.6 million, compared to $6.0 million in
the second quarter of 2017, due primarily to increased sales at
company owned or managed clinics and a greater number of franchised
clinics.
Cost of revenue was $1.1 million, up 37%, compared to the second
quarter of 2017, reflecting higher commissions and royalties paid
to regional developers for an increased number of franchised
locations opened.
Gross profit was $6.5 million, increasing 24% from $5.2 million
in the second quarter of 2017.
Selling and marketing expenses were $1.3 million, or 17.1% of
revenue, up 22% from $1.1 million, or 17.6% of revenue, in the
second quarter of 2017, reflecting higher marketing expenses
related to company-owned or managed clinics. General and
administrative expenses were $4.7 million, or 61.6% of revenue,
flat as compared to $4.7 million, but improving from 77.8% of
revenue in the second quarter of 2017. During the second quarter,
the company recorded a non-cash bargain purchase gain of $75,000
related to the April acquisition of a franchised clinic.
Net loss was $43,000, or $0.00 per share, compared to a net loss
of $1.0 million, or $0.08 per share, in the second quarter of
2017.
Adjusted EBITDA income was $697,000, an improvement of $1.1
million, compared to Adjusted EBITDA loss of $(360,000) in the same
quarter last year. The company defines Adjusted EBITDA, a
non-GAAP measure, 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.
Balance Sheet Liquidity
Cash and cash equivalents were $4.6 million at June 30, 2018,
compared to $4.2 million at December 31, 2017, increasing primarily
from cash flow from operations. Pursuant to the terms of the
Company’s credit agreement, during the first quarter of 2017, the
Company borrowed a required $1.0 million on its line of credit,
which remains unused as part of cash and cash equivalents on the
balance sheet as of June 30, 2018.
2018 Financial Guidance
Management reaffirmed its full year 2018 financial guidance and
franchise opening expectations as set forth below:
- Revenue is expected to be between $31 million and $32 million,
up from $25.0 million in 2017.
- Adjusted EBITDA income is expected to range between $2.5
million and $3.5 million. The company reported Adjusted EBITDA loss
of $(274,000) in 2017.
- Total expected new clinic openings continue to be in the range
of 40 to 52, including 40 to 50 new franchised clinics, up to two
corporate-owned or managed greenfield clinics and up to three
purchases of previously-franchised clinics, which when acquired
from franchisees do not change the total clinic count.
Conference Call
The Joint Corp. management will host a conference call at 5 p.m.
ET on Thursday, August 9, 2018, to discuss the second quarter 2018
results. The conference call may be accessed by dialing
765-507-2604 or 844-464-3931 and referencing conference code
2167969. A live webcast of the conference call will also be
available on the investor relations section of the company’s
website at https://ir.thejoint.com/events. An audio replay will be
available two hours after the conclusion of the call through August
16, 2018. The replay can be accessed by dialing 404-537-3406 or
855-859-2056. The passcode for the replay is 2167969.
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 United States
Securities and Exchange Commission (“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 as
filed with the SEC for the year ended December 31, 2017. 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 over 400
clinics nationwide and nearly 5 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.
Media Contact: Molly Hottle, The Joint Corp.,
molly.hottle@thejoint.comInvestor Contact: Kirsten
Chapman, LHA Investor Relations, 415-433-3777,
thejoint@lhai.com
-- Financial Tables Follow
--
|
|
|
THE JOINT CORP. AND SUBSIDIARY |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
ASSETS |
|
|
(unaudited) |
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
4,583,025 |
|
|
$ |
4,216,221 |
|
|
|
Restricted cash |
|
|
|
124,899 |
|
|
|
103,819 |
|
|
|
Accounts
receivable, net |
|
|
|
1,166,722 |
|
|
|
1,138,380 |
|
|
|
Notes
receivable - current portion |
|
|
|
180,706 |
|
|
|
171,928 |
|
|
|
Deferred
franchise costs - current portion |
|
|
|
539,517 |
|
|
|
498,433 |
|
|
|
Prepaid
expenses and other current assets |
|
|
|
632,791 |
|
|
|
542,342 |
|
|
|
Total current
assets |
|
|
|
7,227,660 |
|
|
|
6,671,123 |
|
|
|
Property and equipment,
net |
|
|
|
3,658,823 |
|
|
|
3,800,466 |
|
|
|
Notes receivable, net
of current portion |
|
|
|
259,255 |
|
|
|
351,857 |
|
|
|
Deferred franchise
costs, net of current portion |
|
|
|
2,483,977 |
|
|
|
2,312,837 |
|
|
|
Intangible assets,
net |
|
|
|
1,645,268 |
|
|
|
1,760,042 |
|
|
|
Goodwill |
|
|
|
2,916,426 |
|
|
|
2,916,426 |
|
|
|
Deposits and other
assets |
|
|
|
596,251 |
|
|
|
623,308 |
|
|
|
Total
assets |
|
|
$ |
18,787,660 |
|
|
$ |
18,436,059 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
|
|
$ |
723,359 |
|
|
$ |
1,068,669 |
|
|
|
Accrued
expenses |
|
|
|
120,941 |
|
|
|
86,959 |
|
|
|
Co-op
funds liability |
|
|
|
107,134 |
|
|
|
89,681 |
|
|
|
Payroll
liabilities |
|
|
|
971,968 |
|
|
|
867,430 |
|
|
|
Notes
payable - current portion |
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
Deferred
rent - current portion |
|
|
|
164,018 |
|
|
|
152,198 |
|
|
|
Deferred
franchise revenue - current portion |
|
|
|
2,039,598 |
|
|
|
1,994,182 |
|
|
|
Deferred
revenue from company clinics |
|
|
|
937,526 |
|
|
|
867,804 |
|
|
|
Other
current liabilities |
|
|
|
403,160 |
|
|
|
152,534 |
|
|
|
Total current
liabilities |
|
|
|
5,567,704 |
|
|
|
5,379,457 |
|
|
|
Notes payable, net of
current portion |
|
|
|
1,000,000 |
|
|
|
1,000,000 |
|
|
|
Deferred rent, net of
current portion |
|
|
|
731,651 |
|
|
|
802,492 |
|
|
|
Deferred franchise
revenue, net of current portion |
|
|
|
9,657,869 |
|
|
|
9,552,746 |
|
|
|
Deferred tax
liability |
|
|
|
60,552 |
|
|
|
136,434 |
|
|
|
Other liabilities |
|
|
|
424,616 |
|
|
|
411,497 |
|
|
|
Total
liabilities |
|
|
|
17,442,392 |
|
|
|
17,282,626 |
|
|
|
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, 2018, |
|
|
|
|
|
|
|
and
December 31, 2017 |
|
|
|
- |
|
|
|
- |
|
|
|
Common stock, $0.001
par value; 20,000,000 shares |
|
|
|
|
|
|
|
authorized,
13,738,078 shares issued and 13,723,994 shares outstanding |
|
|
|
|
|
|
|
as of June 30,
2018 and 13,600,338 shares issued and 13,586,254 |
|
|
|
|
|
|
|
outstanding as
of December 31, 2017 |
|
|
|
13,738 |
|
|
|
13,600 |
|
|
|
Additional paid-in
capital |
|
|
|
37,851,248 |
|
|
|
37,229,869 |
|
|
|
Treasury stock 14,084
shares as of June 30, 2018 and |
|
|
|
|
|
|
|
December 31,
2017, at cost |
|
|
|
(86,045 |
) |
|
|
(86,045 |
) |
|
|
Accumulated
deficit |
|
|
|
(36,433,673 |
) |
|
|
(36,003,991 |
) |
|
|
Total
stockholders' equity |
|
|
|
1,345,268 |
|
|
|
1,153,433 |
|
|
|
Total
liabilities and stockholders' equity |
|
|
$ |
18,787,660 |
|
|
$ |
18,436,059 |
|
|
|
|
|
THE JOINT CORP. AND SUBSIDIARY |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Revenues: |
|
|
|
|
|
|
|
|
Revenues
and management fees from company clinics |
|
$ |
3,420,685 |
|
|
$ |
2,679,937 |
|
|
$ |
6,677,309 |
|
|
$ |
5,176,271 |
|
Royalty
fees |
|
|
2,421,185 |
|
|
|
1,854,087 |
|
|
|
4,695,173 |
|
|
|
3,560,160 |
|
Franchise
fees |
|
|
449,144 |
|
|
|
363,834 |
|
|
|
797,481 |
|
|
|
659,374 |
|
Advertising fund revenue |
|
|
687,752 |
|
|
|
621,578 |
|
|
|
1,346,782 |
|
|
|
1,220,014 |
|
Software
fees |
|
|
315,910 |
|
|
|
282,525 |
|
|
|
623,385 |
|
|
|
549,538 |
|
Regional
developer fees |
|
|
137,412 |
|
|
|
98,741 |
|
|
|
272,423 |
|
|
|
162,887 |
|
Other
revenues |
|
|
124,744 |
|
|
|
99,348 |
|
|
|
242,194 |
|
|
|
178,953 |
|
Total revenues |
|
|
7,556,832 |
|
|
|
6,000,050 |
|
|
|
14,654,747 |
|
|
|
11,507,197 |
|
Cost of revenues: |
|
|
|
|
|
|
|
|
Franchise
cost of revenues |
|
|
977,782 |
|
|
|
700,986 |
|
|
|
1,850,550 |
|
|
|
1,335,841 |
|
IT cost
of revenues |
|
|
73,802 |
|
|
|
65,452 |
|
|
|
173,366 |
|
|
|
124,313 |
|
Total cost of revenues |
|
|
1,051,584 |
|
|
|
766,438 |
|
|
|
2,023,916 |
|
|
|
1,460,154 |
|
Selling and marketing
expenses |
|
|
1,293,663 |
|
|
|
1,058,224 |
|
|
|
2,395,967 |
|
|
|
2,016,930 |
|
Depreciation and
amortization |
|
|
404,975 |
|
|
|
503,226 |
|
|
|
792,392 |
|
|
|
1,081,212 |
|
General and
administrative expenses |
|
|
4,656,308 |
|
|
|
4,667,688 |
|
|
|
9,731,234 |
|
|
|
9,231,765 |
|
Total selling, general and administrative expenses |
|
|
6,354,946 |
|
|
|
6,229,138 |
|
|
|
12,919,593 |
|
|
|
12,329,907 |
|
Loss on disposition or
impairment |
|
|
250,704 |
|
|
|
- |
|
|
|
250,704 |
|
|
|
417,971 |
|
Loss from
operations |
|
|
(100,402 |
) |
|
|
(995,526 |
) |
|
|
(539,466 |
) |
|
|
(2,700,835 |
) |
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Bargain purchase
gain |
|
|
75,264 |
|
|
|
- |
|
|
|
75,264 |
|
|
|
- |
|
Other expense, net |
|
|
(11,689 |
) |
|
|
(24,031 |
) |
|
|
(22,884 |
) |
|
|
(43,496 |
) |
Total other income (expense) |
|
|
63,575 |
|
|
|
(24,031 |
) |
|
|
52,380 |
|
|
|
(43,496 |
) |
|
|
|
|
|
|
|
|
|
Loss before income tax
expense |
|
|
(36,827 |
) |
|
|
(1,019,557 |
) |
|
|
(487,086 |
) |
|
|
(2,744,331 |
) |
|
|
|
|
|
|
|
|
|
Income tax (expense)
benefit |
|
|
(5,951 |
) |
|
|
(2,583 |
) |
|
|
57,404 |
|
|
|
(43,192 |
) |
|
|
|
|
|
|
|
|
|
Net loss and
comprehensive loss |
|
$ |
(42,778 |
) |
|
$ |
(1,022,140 |
) |
|
$ |
(429,682 |
) |
|
$ |
(2,787,523 |
) |
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
Basic and diluted loss
per share |
|
$ |
(0.00 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.21 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average shares |
|
|
13,622,710 |
|
|
|
13,127,255 |
|
|
|
13,605,370 |
|
|
|
13,085,159 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Financial Data: |
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(42,778 |
) |
|
$ |
(1,022,140 |
) |
|
$ |
(429,682 |
) |
|
$ |
(2,787,523 |
) |
Net
Interest |
|
|
11,103 |
|
|
|
24,031 |
|
|
|
21,909 |
|
|
|
47,851 |
|
Depreciation and amoritzation expense |
|
|
404,975 |
|
|
|
503,226 |
|
|
|
792,392 |
|
|
|
1,081,212 |
|
Tax
expense (benefit) penalties and interest |
|
|
5,951 |
|
|
|
2,583 |
|
|
|
(57,404 |
) |
|
|
43,192 |
|
EBITDA |
|
$ |
379,251 |
|
|
$ |
(492,299 |
) |
|
$ |
327,215 |
|
|
$ |
(1,615,268 |
) |
Stock
compensation expense |
|
|
138,987 |
|
|
|
132,056 |
|
|
|
346,628 |
|
|
|
227,121 |
|
Acquisition related expenses |
|
|
3,250 |
|
|
|
492 |
|
|
|
3,250 |
|
|
|
13,142 |
|
Loss on
disposition or impairment |
|
|
250,704 |
|
|
|
- |
|
|
|
250,704 |
|
|
|
417,971 |
|
Bargain
Purchase Gain |
|
|
(75,264 |
) |
|
|
- |
|
|
|
(75,264 |
) |
|
|
- |
|
Adjusted EBITDA |
|
$ |
696,928 |
|
|
$ |
(359,751 |
) |
|
$ |
852,533 |
|
|
$ |
(957,034 |
) |
|
|
THE JOINT CORP. AND SUBSIDIARY |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(unaudited) |
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
|
2018 |
|
|
|
2017 |
|
Net loss |
|
$ |
(429,682 |
) |
|
$ |
(2,787,523 |
) |
Adjustments to
reconcile net loss to net cash |
|
|
1,167,103 |
|
|
|
1,781,636 |
|
Changes in operating
assets and liabilities |
|
|
(124,211 |
) |
|
|
217,253 |
|
Net cash provided by
(used in) operating activities |
|
|
613,210 |
|
|
|
(788,634 |
) |
Net cash used in
investing activities |
|
|
(366,933 |
) |
|
|
(80,428 |
) |
Net cash provided by
financing activities |
|
|
141,607 |
|
|
|
851,995 |
|
Net increase (decrease)
in cash and restricted cash |
|
$ |
387,884 |
|
|
$ |
(17,067 |
) |
|
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