The Joint Corp. (NASDAQ: JYNT), a national operator, manager and
franchisor of chiropractic clinics, reported its preliminary
financial results for the first quarter ended March 31, 2019. 1
First Quarter Preliminary Highlights: 2019 Compared to
2018
- Increased gross system-wide sales 32%, to $48.9 million.
- Grew system-wide comp sales2 25%.
- Reported preliminary net income of $953,000, an improvement of
$1.0 million.
- Reported preliminary Adjusted EBITDA of $1.5 million, an
increase of $1.0 million.
First Quarter 2019 Operating Achievements
- Sold 30 franchise licenses, compared to 16 sold in first
quarter of 2018. In April, the company sold another 30
franchise licenses, bringing the year-to-date total at April 30,
2019 to 60, compared to 27 in the same period 2018.
- Grew total clinics to 454 at March 31, 2019: 404 franchised and
50 company-owned or managed.
- Opened 12 franchised clinics, compared to 7 clinics in first
quarter of 2018.
- Opened two company-owned or managed greenfield clinics and
acquired one franchise, compared to no corporate portfolio activity
in the first quarter of 2018.
____________1 Financial statements for comparative periods have
been adjusted to reflect the consolidation of company managed
clinics owned by professional corporations.2 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.
“Our strong first quarter preliminary results reflect increased
momentum, including seven consecutive quarters of positive Adjusted
EBITDA. We have moved beyond stabilizing the business and are now
driving accelerated growth and profitability,” said Peter D. Holt,
President and Chief Executive Officer of The Joint Corp. “Our
enhanced digital marketing for both paid and organic search
is enabling people to find us and fueling demand. Two of our key
growth and operating metrics - franchise license sales and clinic
openings – nearly doubled in the first quarter 2019 from a year ago
and fortify our foundation for long-term growth. Our system-wide
sales growth rates lead the franchise industry. Further, the key
tools and protocols we developed for both company-owned or managed
and franchised clinics have improved operating efficiency, lowered
time to breakeven and increased profitability. Significantly, at
our current clinic base, we are beginning to see the positive
impact of operating leverage.”
“Our improvements are further amplified by a growing market.
Thanks in part to our efforts, chiropractic care is becoming more
mainstream, especially as America experiences a well-documented
pain epidemic. And our model demonstrates that greater
accessibility, simplicity and affordability attracts new patients.
In fact, in 2018, 26% of our new patients were new to chiropractic
care altogether. As we expand our national brand and scale our
clinics, we expect accelerated growth in the delivery of convenient
and affordable care to our growing patient base and increasing
value to shareholders.”
First Quarter Preliminary Unaudited Financial Results:
2019 Compared to 2018Revenue was $10.7 million in the
first quarter of 2019, compared to $8.6 million in the first
quarter of 2018, due primarily to a greater number of franchised
clinics as well as increased gross sales, reflecting improved
marketing and increased adoption of chiropractic care.
Cost of revenue was $1.2 million, up 24% compared to the first
quarter of 2018, reflecting the success of the regional developer
(RD) program resulting in higher commissions and royalties related
to an increased number of franchised locations sold and opened
within RD territories.
Selling and marketing expenses were $1.5 million, or 14% of
revenue, compared to $1.1 million, or 13% of revenue, in the first
quarter of 2018, reflecting increased local marketing spending in
corporate clinics and costs associated with grand openings of
corporate greenfield clinics. General and administrative expenses
were $6.6 million, or 61% of revenue, compared to $6.3 million, or
73% of revenue in the first quarter of 2018, reflecting increased
leverage in the company’s operating model.
Net income was $953,000, or $0.07 per diluted share, compared to
a net loss of $32,000, or $0.00 per share, in the first quarter of
2018.
Adjusted EBITDA was $1.5 million, an improvement of $1.0 million
compared to Adjusted EBITDA of $511,000 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 Unrestricted cash was
$8.1 million at March 31, 2019, compared to $8.7 million at
December 31, 2018, decreasing primarily from year-end bonus
payments and investment in greenfield clinics, offset by increased
cash flow from operations.
2019 Guidance for Financial Results and Clinic
Openings: Management reiterates the following full year
2019 guidance based on the preliminary financial results, including
the impact of the change in financial reporting discussed
below:
- Revenue to increase between 26% and 32%, compared to $36.7
million dollars in 2018
- Adjusted EBITDA to grow between 67% and 100%, compared to $2.9
million in 2018
- Franchised clinic openings to range from 70 to
80
- Company-owned or managed clinic expansion, through a
combination of both greenfields and buybacks, to range from 8 to
12
Conference Call The Joint Corp. management will
host a conference call at 5 p.m. ET on Thursday, May 9, 2019, to
discuss the preliminary first quarter 2019 results. The conference
call may be accessed by dialing 765-507-2604 or 844-464-3931 and
referencing conference code 2595206. 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 May 16, 2019. The replay can be accessed by
dialing 404-537-3406 or 855-859-2056. The passcode for the replay
is 2595206.
Accounting Adjustments Related to the Consolidation of
the Operations of PCs and Filing of Form 12b-25In
those states which require a licensed Doctor of Chiropractic to own
the entity that offers chiropractic services, the Company enters
into a management agreement with a professional corporation (PC)
licensed in that state to provide chiropractic services. To
increase transparency into operating results and to align with
accounting rules, the Company will now consolidate the full
operations of the PC. This will result in increases to our
revenue and G&A expenses by an identical amount and would have
no impact on our bottom line except in instances when the PC has
sold treatment packages and wellness plans. Revenue from these
packages and plans will now be deferred and will be recognized when
patients use their visits. The Company has previously consolidated
its clinic operations in Non-PC states such as Arizona and New
Mexico, and the deferred revenue around packages and plans in those
states was already reflected in its financial statements.
Therefore, these adjustments are isolated to the managed clinics in
PC states. These adjustments will have no impact on cash flow.
Based on our preliminary analysis, the recording of all
accumulated deferred revenue in one adjustment would represent a
material change to the current period financial statements. . As
such, the Company will revise the historical financial statements
so the reader has a preliminary understanding that the comparative
periods as reflected in the preliminary financial statements
below and in the above commentary reflect adjusted figures.
Due to these accounting adjustments, the Company is still
finalizing its Form 10-Q for the period ended March 31, 2019 and is
working cooperatively with its auditors to provide them with the
requested documentation so that the auditors can complete their
review and assessment of historical materiality. The Company will
be filing a Form 12b-25 with the United States Securities and
Exchange Commission (SEC), providing the Company with an automatic
5-day grace period for the Form 10-Q filing. The Company expects to
finalize its financial results and file its Form 10-Q prior to the
expiration of the grace period, in which case the Company will be
deemed to be a timely filer.
Non-GAAP Financial InformationThis 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 income (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 StatementsThis press release
contains statements about future events and expectations that
constitute forward-looking statements, including our expectation
relating to the timing of the filing of our Form 10-Q for the
quarter ended March 31, 2019. 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, the risk that the expected
accounting adjustments might require us to make additional
adjustments to our financial statements, our failure to develop or
acquire company-owned or managed clinics as rapidly as we intend,
our failure to profitably operate company-owned or managed 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,
2018 and as may be described in any “Risk Factors” in subsequently
filed Quarterly Reports on Form 10-Q. 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 care 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 450
clinics nationwide and over 6 million patient visits annually, The
Joint is a key leader in the chiropractic profession. For more
information, visit http://www.thejoint.com or follow the brand on
Twitter, Facebook, YouTube and LinkedIn.
Business StructureThe Joint Corp. is a
franchisor of clinics and an operator of clinics in certain states.
In Arkansas, California, Colorado, District of Columbia, Florida,
Illinois, Kansas, Kentucky, Maryland, Massachusetts, Michigan,
Minnesota, New Jersey, New York, North Carolina, Oregon,
Pennsylvania, Rhode Island, South Dakota, Tennessee, Washington,
West Virginia and Wyoming, The Joint Corp. and its franchisees
provide management services to affiliated professional chiropractic
practices.
Media Contact: Margie Wojciechowski, The Joint
Corp., margie.wojciechowski@thejoint.comInvestor
Contact: Kirsten Chapman, LHA Investor Relations,
415-433-3777, thejoint@lhai.com
-- Financial Tables Follow
--
|
|
|
|
THE JOINT CORP. AND SUBSIDIARY |
|
|
PRELIMINARY CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
(unaudited) |
|
|
|
March 31, |
|
December 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
ASSETS |
|
|
(as adjusted) |
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
8,086,426 |
|
|
$ |
8,716,874 |
|
|
|
Restricted cash |
|
111,065 |
|
|
|
138,078 |
|
|
|
Accounts receivable, net |
|
1,078,558 |
|
|
|
806,350 |
|
|
|
Income taxes receivable |
|
159 |
|
|
|
268 |
|
|
|
Notes receivable - current portion |
|
153,114 |
|
|
|
149,349 |
|
|
|
Deferred franchise costs - current portion |
|
644,560 |
|
|
|
611,047 |
|
|
|
Prepaid expenses and other current assets |
|
830,571 |
|
|
|
882,022 |
|
|
|
Total current assets |
|
10,904,453 |
|
|
|
11,303,988 |
|
|
|
Property and equipment,
net |
|
4,211,550 |
|
|
|
3,658,007 |
|
|
|
Operating lease right-of-use
asset |
|
9,977,018 |
|
|
|
- |
|
|
|
Notes receivable, net of current portion and reserve |
|
89,004 |
|
|
|
128,723 |
|
|
|
Deferred franchise costs, net of current portion |
|
3,034,372 |
|
|
|
2,878,163 |
|
|
|
Intangible assets, net |
|
2,167,522 |
|
|
|
1,634,060 |
|
|
|
Goodwill |
|
3,225,145 |
|
|
|
3,225,145 |
|
|
|
Deposits and other assets |
|
330,653 |
|
|
|
599,627 |
|
|
|
Total assets |
$ |
33,939,717 |
|
|
$ |
23,427,713 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
1,216,513 |
|
|
$ |
1,253,274 |
|
|
|
Accrued expenses |
|
152,127 |
|
|
|
266,322 |
|
|
|
Co-op funds liability |
|
111,065 |
|
|
|
104,057 |
|
|
|
Payroll liabilities |
|
884,006 |
|
|
|
2,035,658 |
|
|
|
Notes payable - current portion |
|
1,000,000 |
|
|
|
100,000 |
|
|
|
Deferred rent - current portion |
|
- |
|
|
|
136,550 |
|
|
|
Operating lease liability - current portion |
|
1,831,056 |
|
|
|
- |
|
|
|
Finance lease liability - current portion |
|
22,507 |
|
|
|
- |
|
|
|
Deferred franchise revenue - current portion |
|
2,521,297 |
|
|
|
2,370,241 |
|
|
|
Deferred revenue from company clinics |
|
2,527,032 |
|
|
|
2,529,497 |
|
|
|
Other current liabilities |
|
598,276 |
|
|
|
477,528 |
|
|
|
Total current liabilities |
|
10,863,879 |
|
|
|
9,273,127 |
|
|
|
Notes payable, net of current portion |
|
- |
|
|
|
1,000,000 |
|
|
|
Deferred rent, net of current
portion |
|
- |
|
|
|
721,730 |
|
|
|
Operating lease liability -
net of current portion |
|
9,031,909 |
|
|
|
- |
|
|
|
Finance lease liability - net
of current portion |
|
52,812 |
|
|
|
- |
|
|
|
Deferred franchise revenue,
net of current portion |
|
11,811,665 |
|
|
|
11,239,221 |
|
|
|
Deferred tax liability |
|
79,962 |
|
|
|
76,672 |
|
|
|
Other liabilities |
|
27,230 |
|
|
|
389,362 |
|
|
|
Total liabilities |
|
31,867,457 |
|
|
|
22,700,112 |
|
|
|
Commitments and
contingencies |
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
Series A preferred stock, $0.001 par value; 50,000 shares
authorized, |
|
|
|
|
|
0 issued and outstanding, as of March 31, 2019 and December
31, 2018 |
|
- |
|
|
|
- |
|
|
|
Common stock, $0.001 par value; 20,000,000 shares |
|
|
|
|
|
authorized, 13,800,004 shares issued and 13,785,334 shares
outstanding |
|
|
|
|
|
as of March 31, 2019 and 13,757,200 shares issued and
13,742,530 |
|
|
|
|
|
outstanding as of December 31, 2018 |
|
13,800 |
|
|
|
13,757 |
|
|
|
Additional paid-in capital |
|
38,581,223 |
|
|
|
38,189,251 |
|
|
|
Treasury stock 14,670 shares as of March 31, 2019 and December 31,
2018, at cost |
|
(90,856 |
) |
|
|
(90,856 |
) |
|
|
Accumulated deficit |
|
(36,431,907 |
) |
|
|
(37,384,551 |
) |
|
|
Total stockholders' equity |
|
2,072,260 |
|
|
|
727,601 |
|
|
|
Total liabilities and stockholders' equity |
$ |
33,939,717 |
|
|
$ |
23,427,713 |
|
|
|
|
|
|
|
|
THE JOINT CORP. AND SUBSIDIARY |
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited) |
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
(as adjusted) |
|
Revenues: |
|
|
|
|
|
Revenues and management fees from company clinics |
|
$ |
5,639,076 |
|
|
$ |
4,805,673 |
|
|
Royalty fees |
|
|
3,026,815 |
|
|
|
2,273,988 |
|
|
Franchise fees |
|
|
417,073 |
|
|
|
348,337 |
|
|
Advertising fund revenue |
|
|
891,567 |
|
|
|
659,030 |
|
|
Software fees |
|
|
365,236 |
|
|
|
307,475 |
|
|
Regional developer fees |
|
|
183,858 |
|
|
|
124,011 |
|
|
Other revenues |
|
|
155,751 |
|
|
|
128,450 |
|
|
Total revenues |
|
|
10,679,376 |
|
|
|
8,646,964 |
|
|
Cost of revenues: |
|
|
|
|
|
Franchise cost of revenues |
|
|
1,117,053 |
|
|
|
872,768 |
|
|
IT cost of revenues |
|
|
88,888 |
|
|
|
99,564 |
|
|
Total cost of revenues |
|
|
1,205,941 |
|
|
|
972,332 |
|
|
Selling and marketing
expenses |
|
|
1,505,988 |
|
|
|
1,102,304 |
|
|
Depreciation and
amortization |
|
|
365,678 |
|
|
|
387,417 |
|
|
General and administrative
expenses |
|
|
6,552,904 |
|
|
|
6,268,685 |
|
|
Total selling, general and administrative expenses |
|
|
8,424,570 |
|
|
|
7,758,406 |
|
|
Income (loss) from operations |
|
|
1,048,865 |
|
|
|
(83,774 |
) |
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
Bargain purchase gain |
|
|
19,298 |
|
|
|
- |
|
|
Other income (expense),
net |
|
|
(116,838 |
) |
|
|
(11,194 |
) |
|
Total other income (expense) |
|
|
(97,540 |
) |
|
|
(11,194 |
) |
|
|
|
|
|
|
|
Income (loss) before income tax expense |
|
|
951,325 |
|
|
|
(94,968 |
) |
|
|
|
|
|
|
|
Income tax benefit
(expense) |
|
|
1,319 |
|
|
|
63,355 |
|
|
|
|
|
|
|
|
Net income (loss) and comprehensive income (loss) |
|
$ |
952,644 |
|
|
$ |
(31,613 |
) |
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
Basic (earnings) loss per
share |
|
$ |
0.07 |
|
|
$ |
(0.00 |
) |
|
Diluted (earnings) loss per
share |
|
$ |
0.07 |
|
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
Basic weighted average
shares |
|
|
13,751,196 |
|
|
|
13,587,837 |
|
|
Diluted weighted average
shares |
|
|
14,256,006 |
|
|
|
13,587,837 |
|
|
|
|
|
|
|
|
Non-GAAP Financial
Data: |
|
|
|
|
|
Net income (loss) |
|
$ |
952,644 |
|
|
$ |
(31,614 |
) |
|
Net interest |
|
|
11,646 |
|
|
|
10,806 |
|
|
Depreciation and amortization expense |
|
|
365,678 |
|
|
|
387,417 |
|
|
Tax expense (benefit) penalties and interest |
|
|
(1,319 |
) |
|
|
(63,355 |
) |
|
EBITDA |
|
$ |
1,328,649 |
|
|
$ |
303,254 |
|
|
Stock compensation expense |
|
|
171,771 |
|
|
|
207,641 |
|
|
Bargain purchase gain |
|
|
(19,298 |
) |
|
|
- |
|
|
Loss on disposition or impairment |
|
|
- |
|
|
|
- |
|
|
Adjusted EBITDA |
|
$ |
1,481,122 |
|
|
$ |
510,895 |
|
|
|
|
|
|
|
|
THE JOINT CORP. AND SUBSIDIARY |
|
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(unaudited) |
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
(as adjusted) |
|
Net income (loss) |
|
$ |
952,644 |
|
|
$ |
(31,614 |
) |
|
Adjustments to reconcile net
income (loss) to net cash |
|
|
600,919 |
|
|
|
516,203 |
|
|
Changes in operating assets and liabilities |
|
|
(1,094,052 |
) |
|
|
(517,692 |
) |
|
Net cash provided by (used in) operating activities |
|
|
459,511 |
|
|
|
(33,103 |
) |
|
Net cash used in investing activities |
|
|
(1,201,573 |
) |
|
|
(142,343 |
) |
|
Net cash provided by financing activities |
|
|
84,601 |
|
|
|
23,325 |
|
|
Net decrease in cash |
|
$ |
(657,461 |
) |
|
$ |
(152,121 |
) |
|
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Joint (NASDAQ:JYNT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Joint (NASDAQ:JYNT)
Historical Stock Chart
From Apr 2023 to Apr 2024