The Joint Corp. Reports Second Quarter 2024 Financial Results
Rhea-AI Summary
The Joint Corp. (NASDAQ: JYNT) reported Q2 2024 financial results with a 3% revenue growth to $30.3 million compared to Q2 2023. The company experienced a net loss of $3.6 million due to litigation expenses, loss on disposition or impairment, and costs from an in-person franchise conference. Adjusted EBITDA decreased to $2.1 million from $3.2 million in Q2 2023. System-wide sales grew 8% to $129.6 million, and system-wide comp sales increased 2%.
Key metrics:
- Total clinic count rose to 960.
- Seven franchise licenses sold, down from 21 in Q2 2023.
For the first half of 2024, revenue was $60 million, up from $57.6 million in H1 2023. Net loss reached $2.6 million, compared to a net income of $2 million in H1 2023. The company reiterated its full-year guidance with system-wide sales expected between $530-$545 million and new franchised clinic openings between 60-75.
AI-generated analysis. Not financial advice.
Positive
- None.
Negative
- Net loss of $3.6 million in Q2 2024, compared to $320,000 in Q2 2023.
- Adjusted EBITDA decreased from $3.2 million to $2.1 million.
- Selling and marketing expenses rose to $5.4 million from $4.7 million.
- Loss on disposition or impairment increased to $1.4 million from $144,000.
- General and administrative expenses increased to $22.6 million from $19.9 million.
- Franchise licenses sold decreased from 21 to 7.
News Market Reaction – JYNT
On the day this news was published, JYNT declined 8.35%, reflecting a notable negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
- Grew Q2 2024 Revenue
- Increased Clinic Count to 960 at June 30, 2024 -
SCOTTSDALE, Ariz., Aug. 08, 2024 (GLOBE NEWSWIRE) -- The Joint Corp. (NASDAQ: JYNT), a national operator, manager, and franchisor of chiropractic clinics, reported its financial results for the quarter ended
June 30, 2024.
Financial Highlights: Q2 2024 Compared to Q2 2023
- Grew revenue
3% to$30.3 million . - Reported net loss of
$3.6 million , including$1.5 million in litigation expense,$1.4 million in loss on disposition or impairment and the cost associated with an in-person national franchise conference, compared to net loss of$320,000 , including loss on disposition or impairment of$144,000 . - Reported Adjusted EBITDA of
$2.1 million , compared to$3.2 million . - Increased system-wide sales1
8% to$129.6 million . - Reported system-wide comp sales2 of
2% . - Sold 7 franchise licenses, compared to 21, reflecting the impact of the refranchising process.
- Increased the total clinic count to 960 – 829 clinics franchised and 131 clinics company-owned or managed clinics – at June 30, 2024. During Q2 2024, The Joint
- opened nine franchised clinics;
- refranchised two clinics; and
- closed three clinics: one franchised and two company-owned or managed.
“In 2024, our highest priorities are refranchising corporate clinics and improving unit economics. In the second quarter of 2024, we delivered topline growth and positive Adjusted EBITDA, even with the ongoing economic concerns,” said Peter D. Holt, President and Chief Executive Officer of The Joint Corp. “Based on early negotiations with existing franchisees, we refranchised two clinics in the second quarter and have over ten more in the letter of intent process, including five in the Kansas City market. Having recently finalized our Confidential Information Memorandum package with Capstone Partners, a full-service middle market investment bank with specialization in refranchising, we are prepared to aggressively market clusters of clinics. To increase clinic profitability, we are embracing new innovation in operations, IT and marketing that leverage the size of our network on national and local levels. Our educational efforts attracted over 930,000 new patients to The Joint in 2023, of which
Financial Results for Second Quarter Ended June 30, 2024 Compared to June 30, 2023
Revenue was
Selling and marketing expenses were
General and administrative expenses were
Loss on disposition or impairment was
Income tax expense was
Adjusted EBITDA was
Financial Results for Six Months Ended June 30, 2024 Compared to June 30, 2023
Revenue was
Adjusted EBITDA was
_______________
1 System-wide sales include revenues at all clinics, whether operated or managed by the company or by franchisees. While franchised sales are not recorded as revenues by the company, management believes the information is important in understanding the company’s financial performance, because these revenues are the basis on which the company calculates and records royalty fees and are indicative of the financial health of the franchisee base.
2 System-wide comp sales include the revenues from both company-owned or managed clinics and franchised clinics that in each case have been open at least 13 full months and exclude any clinics that have closed.
Balance Sheet Liquidity
Unrestricted cash was
2024 Guidance
The company reiterated all elements of its guidance.
- System-wide sales are expected to be between
$530 and$545 million , compared to$488.0 million in 2023. - System-wide comp sales for all clinics open 13 months or more are expected to be in the mid-single digits in 2024.
- New franchised clinic openings, excluding the impact of refranchised clinics, are expected to be between 60 and 75, compared to 104 in 2023.
Conference Call
The Joint Corp. management will host a conference call at 5:00 p.m. ET on Thursday,
August 8, 2024, after the market close. Stockholders and interested participants may listen to a live broadcast of the conference call by dialing 1-(833) 630-0823 or (412) 317-1831 and ask to be joined into the ‘The Joint’ call approximately 15 minutes prior to the start time.
The live webcast of the call with accompanying slide presentation can be accessed in the IR events section https://ir.thejoint.com/events and available for approximately one year. An audio archive can be accessed for one week by dialing (877) 344-7529 or (412) 317-0088 and entering conference ID 9073185.
Commonly Discussed Performance Metrics
This release includes a presentation of commonly discussed performance metrics. System-wide sales include revenues at all clinics, whether operated by the company or by franchisees. While franchised sales are not recorded as revenues by the company, management believes the information is important in understanding the company’s financial performance, because these sales are the basis on which the company calculates and records royalty fees and are indicative of the financial health of the franchisee base. System-wide comp sales include the revenues from both company-owned or managed clinics and franchised clinics that in each case have been open at least 13 full months and exclude any clinics that have closed.
Non-GAAP Financial Information
This release also includes a presentation of 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. Reconciliation of historical net income/(loss) to EBITDA and Adjusted EBITDA is presented in the table below. The company defines EBITDA as net income/(loss) before net interest, tax expense, depreciation, and amortization expenses. The company defines Adjusted EBITDA as EBITDA before acquisition-related expenses (which includes contract termination costs associated with reacquired regional developer rights), net (gain)/loss on disposition or impairment, stock-based compensation expenses, costs related to restatement filings, restructuring costs, litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the ordinary course of our business) and other income related to employee retention credits.
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. 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. Specific forward looking statements made in this press release include, among others, our 2024 highest priorities of refranchising corporate clinics and improving unit economics; our plans to aggressively market clusters of clinics; our plans to increase clinic profitability, by embracing new innovation in operations, IT and marketing that leverage the size of our network on national and local levels; our belief that in 2024, we continue to positively influence the market, and as more and more people discover chiropractic care, our reach is boundless; our anticipation of the success of the fourth quarter of 2024 promotions; and our expectations for system-wide sales, system-wide comp sales for all clinics open 13 months or more; and new franchised clinic openings, excluding the impact of refranchised clinics. 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 inability to identify and recruit enough qualified chiropractors and other personnel to staff our clinics, due in part to the nationwide labor shortage and an increase in operating expenses due to measures we may need to take to address such shortage; inflation, which has increased our costs and which could otherwise negatively impact our business; our failure to profitably operate company-owned or managed clinics; our failure to refranchise as planned; short-selling strategies and negative opinions posted on the internet, which could drive down the market price of our common stock and result in class action lawsuits; our failure to remediate future material weaknesses in our internal control over financial reporting, which could negatively impact our ability to accurately report our financial results, prevent fraud, or maintain investor confidence; and other factors described in our filings with the SEC, including in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 8, 2024 and subsequently filed current and quarterly reports. 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)
The Joint Corp. (NASDAQ: JYNT) revolutionized access to chiropractic care when it introduced its retail healthcare business model in 2010. Today, it is the nation's largest operator, manager and franchisor of chiropractic clinics through The Joint Chiropractic network. The company is making quality care convenient and affordable, while eliminating the need for insurance for millions of patients seeking pain relief and ongoing wellness. With over 900 locations nationwide and more than 13 million patient visits annually, The Joint Chiropractic is a key leader in the chiropractic industry. Consistently named to Franchise Times "Top 500+ Franchises" and Entrepreneur's "Franchise 500" lists and recognized by FRANdata with the TopFUND award, as well as Franchise Business Review's "Top Franchise for 2023," "Most Profitable Franchises" and "Top Franchises for Veterans" ranking, The Joint Chiropractic is an innovative force, where healthcare meets retail. For more information, visit www.thejoint.com. To learn about franchise opportunities, visit www.thejointfranchise.com.
Business Structure
The 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, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Tennessee, Washington, and West Virginia, The Joint Corp. and its franchisees provide management services to affiliated professional chiropractic practices.
Media Contact: Margie Wojciechowski, The Joint Corp., margie.wojciechowski@thejoint.com
Investor Contact: Kirsten Chapman, LHA Investor Relations, 415-433-3777, thejoint@lhai.com
– Financial Tables Follow –
| THE JOINT CORP. CONSOLIDATED BALANCE SHEETS | |||||||
| June 30, 2024 | December 31, 2023 | ||||||
| ASSETS | (unaudited) | ||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 17,457,625 | $ | 18,153,609 | |||
| Restricted cash | 1,190,096 | 1,060,683 | |||||
| Accounts receivable, net | 3,575,784 | 3,718,924 | |||||
| Deferred franchise and regional development costs, current portion | 1,041,492 | 1,047,430 | |||||
| Prepaid expenses and other current assets | 3,436,072 | 2,439,837 | |||||
| Assets held for sale | 16,686,248 | 17,915,055 | |||||
| Total current assets | 43,387,317 | 44,335,538 | |||||
| Property and equipment, net | 8,928,658 | 11,044,317 | |||||
| Operating lease right-of-use asset | 11,859,692 | 12,413,221 | |||||
| Deferred franchise and regional development costs, net of current portion | 4,798,535 | 5,203,936 | |||||
| Intangible assets, net | 4,145,162 | 5,020,926 | |||||
| Goodwill | 7,677,695 | 7,352,879 | |||||
| Deferred tax assets ( | 907,019 | 1,031,648 | |||||
| Deposits and other assets | 736,498 | 748,394 | |||||
| Total assets | $ | 82,440,576 | $ | 87,150,859 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 1,639,841 | $ | 1,625,088 | |||
| Accrued expenses | 3,161,257 | 1,963,009 | |||||
| Co-op funds liability | 1,190,096 | 1,060,683 | |||||
| Payroll liabilities ( | 4,272,155 | 3,485,744 | |||||
| Operating lease liability, current portion | 3,811,835 | 3,756,328 | |||||
| Finance lease liability, current portion | 26,038 | 25,491 | |||||
| Deferred franchise fee revenue, current portion | 2,521,156 | 2,516,554 | |||||
| Deferred revenue from company clinics ( | 4,420,601 | 4,463,747 | |||||
| Upfront regional developer Fees, current portion | 298,306 | 362,326 | |||||
| Other current liabilities | 532,251 | 483,249 | |||||
| Liabilities to be disposed of ( | 12,140,570 | 13,831,863 | |||||
| Total current liabilities | 34,014,106 | 33,574,082 | |||||
| Operating lease liability, net of current portion | 10,205,222 | 10,914,997 | |||||
| Finance lease liability, net of current portion | 24,858 | 38,016 | |||||
| Debt under the Credit Agreement | — | 2,000,000 | |||||
| Deferred franchise fee revenue, net of current portion | 12,935,888 | 13,597,325 | |||||
| Upfront regional developer fees, net of current portion | 814,823 | 1,019,316 | |||||
| Other liabilities ( | 1,235,241 | 1,235,241 | |||||
| Total liabilities | 59,230,138 | 62,378,977 | |||||
| THE JOINT CORP. CONSOLIDATED BALANCE SHEETS (CONT) | |||||||
| June 30, 2024 | December 31, 2023 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (CONT’) | (unaudited) | ||||||
| Commitments and contingencies (Note 10) | |||||||
| Stockholders' equity: | |||||||
| Series A preferred stock, | — | — | |||||
| Common stock, | 14,996 | 14,783 | |||||
| Additional paid-in capital | 48,595,496 | 47,498,151 | |||||
| Treasury stock 33,015 shares as of June 30, 2024 and 32,124 shares as of December 31, 2023, at cost | (870,058 | ) | (860,475 | ) | |||
| Accumulated deficit | (24,554,996 | ) | (21,905,577 | ) | |||
| Total The Joint Corp. stockholders' equity | 23,185,438 | 24,746,882 | |||||
| Non-controlling Interest | 25,000 | 25,000 | |||||
| Total equity | 23,210,438 | 24,771,882 | |||||
| Total liabilities and stockholders' equity | $ | 82,440,576 | $ | 87,150,859 | |||
| THE JOINT CORP. CONDENSED CONSOLIDATED INCOME STATEMENTS (unaudited) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenues: | |||||||||||||||
| Revenues from company-owned or managed clinics | $ | 17,648,736 | $ | 17,802,838 | $ | 35,186,240 | $ | 34,930,795 | |||||||
| Royalty fees | 7,846,328 | 7,172,159 | 15,433,874 | 14,038,182 | |||||||||||
| Franchise fees | 719,103 | 671,368 | 1,374,977 | 1,425,794 | |||||||||||
| Advertising fund revenue | 2,240,838 | 2,041,050 | 4,407,311 | 3,993,455 | |||||||||||
| Software fees | 1,415,036 | 1,234,812 | 2,801,812 | 2,444,817 | |||||||||||
| Other revenues | 390,520 | 384,957 | 778,513 | 774,962 | |||||||||||
| Total revenues | 30,260,561 | 29,307,184 | 59,982,727 | 57,608,005 | |||||||||||
| Cost of revenues: | |||||||||||||||
| Franchise and regional development cost of revenues | 2,458,186 | 2,236,442 | 4,799,951 | 4,377,277 | |||||||||||
| IT cost of revenues | 368,486 | 359,070 | 742,797 | 692,920 | |||||||||||
| Total cost of revenues | 2,826,672 | 2,595,512 | 5,542,748 | 5,070,197 | |||||||||||
| Selling and marketing expenses | 5,401,834 | 4,707,818 | 9,287,948 | 8,868,062 | |||||||||||
| Depreciation and amortization | 1,523,813 | 2,329,267 | 2,927,718 | 4,544,322 | |||||||||||
| General and administrative expenses | 22,570,908 | 19,904,796 | 42,834,600 | 39,943,272 | |||||||||||
| Total selling, general and administrative expenses | 29,496,555 | 26,941,881 | 55,050,266 | 53,355,656 | |||||||||||
| Net loss on disposition or impairment | 1,435,320 | 144,345 | 1,797,423 | 209,815 | |||||||||||
| Loss from operations | (3,497,986 | ) | (374,554 | ) | (2,407,710 | ) | (1,027,663 | ) | |||||||
| Other income (expense), net | 79,910 | (106,520 | ) | 115,540 | 3,714,642 | ||||||||||
| Income (loss) before income tax expense | (3,418,076 | ) | (481,074 | ) | (2,292,170 | ) | 2,686,979 | ||||||||
| Income tax (benefit) expense | 178,322 | (160,585 | ) | 357,249 | 681,304 | ||||||||||
| Net (loss) income | $ | (3,596,398 | ) | $ | (320,489 | ) | $ | (2,649,419 | ) | $ | 2,005,675 | ||||
| Earnings (loss) per share: | |||||||||||||||
| Basic (loss) earnings per share | $ | (0.24 | ) | $ | (0.02 | ) | $ | (0.18 | ) | $ | 0.14 | ||||
| Diluted (loss) earnings per share | $ | (0.24 | ) | $ | (0.02 | ) | $ | (0.18 | ) | $ | 0.13 | ||||
| Basic weighted average shares | 14,950,082 | 14,684,035 | 14,875,718 | 14,625,435 | |||||||||||
| Diluted weighted average shares | 15,206,238 | 14,952,363 | 15,110,736 | 14,907,593 | |||||||||||
| THE JOINT CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | |||||||
| Six Months Ended June 30, | |||||||
| 2024 | 2023 | ||||||
| Cash flows from operating activities: | |||||||
| Net income (loss) | $ | (2,649,419 | ) | $ | 2,005,675 | ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 2,927,718 | 4,544,322 | |||||
| Net loss on disposition or impairment (non-cash portion) | 1,797,422 | 209,815 | |||||
| Net franchise fees recognized upon termination of franchise agreements | (73,526 | ) | (20,050 | ) | |||
| Deferred income taxes | 124,629 | 477,154 | |||||
| Stock based compensation expense | 1,045,460 | 683,227 | |||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||
| Accounts receivable | 85,861 | 376,444 | |||||
| Prepaid expenses and other current assets | (997,307 | ) | (1,208,605 | ) | |||
| Deferred franchise costs | 385,256 | 51,268 | |||||
| Deposits and other assets | 5,196 | (12,557 | ) | ||||
| Assets and liabilities held for sale, net | (1,674,226 | ) | — | ||||
| Accounts payable | 14,284 | (1,440,375 | ) | ||||
| Accrued expenses | 1,198,248 | 1,104,369 | |||||
| Payroll liabilities | 786,411 | 815,290 | |||||
| Deferred revenue | (631,272 | ) | 245,363 | ||||
| Upfront regional developer fees | (268,513 | ) | (397,457 | ) | |||
| Other liabilities | (239,348 | ) | 59,259 | ||||
| Net cash provided by operating activities | 1,836,874 | 7,493,142 | |||||
| Cash flows from investing activities: | |||||||
| Proceeds from sale of clinics | 224,100 | — | |||||
| Acquisition of CA clinics | — | (1,050,000 | ) | ||||
| Purchase of property and equipment | (657,450 | ) | (2,729,875 | ) | |||
| Net cash used in investing activities | (433,350 | ) | (3,779,875 | ) | |||
| Cash flows from financing activities: | |||||||
| Payments of finance lease obligation | (12,610 | ) | (12,087 | ) | |||
| Purchases of treasury stock under employee stock plans | (9,583 | ) | (2,637 | ) | |||
| Proceeds from exercise of stock options | 52,098 | 202,386 | |||||
| Repayment of debt under the Credit Agreement | (2,000,000 | ) | — | ||||
| Net cash provided by (used in) financing activities | (1,970,095 | ) | 187,662 | ||||
| Increase (decrease) in cash, cash equivalents and restricted cash | (566,571 | ) | 3,900,929 | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 19,214,292 | 10,550,417 | |||||
| Cash, cash equivalents and restricted cash, end of period | $ | 18,647,721 | $ | 14,451,346 | |||
| Reconciliation of cash, cash equivalents and restricted cash: | June 30, 2024 | June 30, 2023 | |||||
| Cash and cash equivalents | $ | 17,457,625 | $ | 13,602,515 | |||
| Restricted cash | 1,190,096 | 848,831 | |||||
| Cash, cash equivalents and restricted cash, end of period | $ | 18,647,721 | $ | 14,451,346 | |||
| THE JOINT CORP. RECONCILIATION FOR GAAP TO NON-GAAP (unaudited) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Non-GAAP Financial Data: | |||||||||||||||
| Net (loss) income | $ | (3,596,398 | ) | $ | (320,489 | ) | $ | (2,649,419 | ) | $ | 2,005,675 | ||||
| Net interest expense | (79,910 | ) | 14,937 | (115,540 | ) | 64,661 | |||||||||
| Depreciation and amortization expense | 1,523,813 | 2,329,267 | 2,927,718 | 4,544,322 | |||||||||||
| Tax expense (benefit) | 178,322 | (160,585 | ) | 357,249 | 681,304 | ||||||||||
| EBITDA | (1,974,173 | ) | 1,863,130 | 520,008 | 7,295,962 | ||||||||||
| Stock compensation expense | 552,065 | 417,017 | 1,045,460 | 683,227 | |||||||||||
| Acquisition related expenses | 478,710 | 716,299 | 478,710 | 857,992 | |||||||||||
| Loss on disposition or impairment | 1,435,320 | 144,345 | 1,797,423 | 209,815 | |||||||||||
| Restructuring costs | 144,240 | — | 301,276 | — | |||||||||||
| Litigation expenses | 1,490,000 | — | 1,490,000 | — | |||||||||||
| Other income related to the ERC | — | 91,583 | — | (3,779,304 | ) | ||||||||||
| Adjusted EBITDA | $ | 2,126,162 | $ | 3,232,374 | $ | 5,632,877 | $ | 5,267,692 | |||||||
