The Joint Corp. Reports Second Quarter 2021 Record Financial Results, Raises All Elements of Guidance

Scottsdale, Arizona, UNITED STATES


- Grows Revenue 61%, System-wide Sales 64%, and 
System-wide Comp Sales 53%, Compared to Q2 2020 - 
- Reports Operating Income of $2.0 Million, Up 687% Compared to Q2 2020 - 
- Posts Adjusted EBITDA of $3.8 Million, Up 237% Compared to Q2 2020 -

SCOTTSDALE, Ariz., Aug. 05, 2021 (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, 2021.

Financial Highlights: Q2 2021 Compared to Q2 2020

  • Grew revenue 61% to $20.2 million.
  • Increased system-wide sales1 by 64%, to $87.8 million.
  • Reported system-wide comp sales2 of 53%.
  • Posted operating income of $2.0 million, compared to $259,000.
  • Reported Adjusted EBITDA of $3.8 million, compared to $1.1 million.

Q2 2021 Operating Highlights

  • Sold 63 franchise licenses, compared to 11 in Q2 2020.
  • Increased total clinics to 633 at June 30, 2021, 555 franchised and 78 company-owned or managed, up from 592 at March 31, 2021.
    • Opened 36 new franchised clinics, compared to 12 in Q2 2020.
    • Opened 5 greenfield clinics, compared to 1 in Q2 2020.
    • Acquired 8 previously franchised clinics, compared to no activity in Q2 2020.

“Our business model continues to deliver strong financial results,” said Peter D. Holt, President and Chief Executive Officer of The Joint Corp. “In the second quarter, we broke records in franchise license sales, clinic openings, and system-wide sales driving all-time highs for the first half of the year. The six-month total for franchise license sales rose to 89, up from 35 and 75 for 2020 and 2019, respectively. The clinic openings for the first six months of the year increased to 54, up from 30 and 29 in 2020 and 2019, respectively. Additionally, system-wide sales reached 64% year-over-year, up from 2% and 34% in the second quarters of 2020 and 2019, respectively.”

“More importantly, our future is even brighter. These trends support long-term growth, which we expect to continue to accelerate and build upon our financial foundation. Already, we have opened 6 greenfield clinics in 2021, and we anticipate a faster pace in the latter half of the year. Based on performance and activity, we raised every element of our guidance. We continue to march toward our goal of 1,000 open clinics by the end of 2023, which we expect to be a tipping point for national brand recognition to drive growth at an even faster pace. Combined with the large and expanding chiropractic care market opportunity, we believe in our long-term ability to increase stakeholder value.”


1 System-wide sales include sales 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 sales are the basis on which the company calculates and records royalty fees and are indicative of the financial health of the franchisee base. 
2 Comp sales include the sales 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.

Financial Results for the Three Months Ended June 30: 2021 Compared to 2020

Revenue was $20.2 million in the second quarter of 2021, compared to $12.6 million in the second quarter of 2020, reflecting a greater number of clinics, continued organic growth and the favorable comparison to revenues during the beginning of the pandemic in the prior year period. Cost of revenue was $2.0 million, compared to $1.4 million in the second quarter of 2020, reflecting the increase in franchised clinics and the associated higher regional developer royalties and commissions.

Selling and marketing expenses were $3.1 million, up 76%, driven by an increase in advertising fund expenditures from a larger franchise base and the timing of the national marketing fund spend as well as an increase in local marketing expenditures by the company-owned or managed clinics. General and administrative expenses were $11.6 million, compared to $8.5 million in the second quarter of 2020, primarily due to an increase in payroll and related expenses to support revenue growth and a greater number of clinics. As a percentage of revenue, general and administrative expenses during the second quarter of 2021 and 2020 were 57% and 68%, respectively, reflecting improved leverage in the operating model. The improvement is not expected to continue at that level in following quarters due to the opening of four greenfields at the end of June, the anticipated pace of more greenfields openings in the latter half of the year, and the related up-front expense of those openings.

Operating income was $2.0 million, compared to $259,000 in the second quarter of 2020. Income tax benefit was $666,000, compared to an expense of $118,000 in the second quarter of 2020. The income tax benefit was primarily driven by excess tax benefits from the exercise of stock options. Net income was $2.7 million, or $0.18 per diluted share, compared to $116,000, or $0.01 per diluted share, in the second quarter of 2020.

Adjusted EBITDA was $3.8 million, compared to $1.1 million in the second quarter of 2020. The company defines Adjusted EBITDA, a non-GAAP measure, as EBITDA before acquisition-related expenses, bargain purchase gain, net (gain)/loss on disposition or impairment, and stock-based compensation expenses. The company defines EBITDA as net income before net interest, tax expense, depreciation, and amortization expenses.

Financial Results for the Six Months Ended June 30: 2021 Compared to 2020

Revenue was $37.8 million for the first half of 2021, compared to $26.2 million in the same prior year period. Operating income and net income were $4.0 million and $5.0 million, compared to $1.0 million and $931,000 in the first half of 2020, respectively. Adjusted EBITDA was $7.2 million, compared to $2.8 million in the same prior year period.

Balance Sheet Liquidity

Unrestricted cash was $18.5 million at June 30, 2021, compared to $20.6 million at December 31, 2020. The change reflects net cash provided by operating activities of $9.0 million offset by $8.9 million of investing activities consisting of acquisitions, greenfield developments, and IT capital expenditures, as well as the $2.7 million repayment of the Paycheck Protection Program loan in March 2021.

Raised 2021 Guidance

Due to strong second quarter 2021 revenues, as well as increased franchise openings and greenfield activity, management raised all elements of its 2021 financial guidance.

  • Revenue is now expected to be between $77.0 million and $79.0 million, up from the May 6, 2021 guidance of between $73.5 million and $77.5 million. The updated mid-point reflects a 33% increase compared to $58.7 million in 2020.
  • Adjusted EBITDA - which includes the impact of a greater number of greenfields that will be more heavily weighted in the second half of the year - is expected to be between $12.5 million and $13.5 million, up from prior guidance of between $11.0 million and $12.5 million. The updated mid-point reflects a 43% increase compared to $9.1 million in 2020.
  • The expected number of franchised clinic openings has increased to be between 90 and 110, up from 80 to 100. The updated mid-point reflects a 57% increase compared to 70 in 2020.
  • The expected number of company-owned or managed clinic increases, through a combination of both greenfields and buybacks, has increased to be between 25 and 35, up from 20 to 30 clinics. The updated mid-point is 7.5 times greater than 4 opened in 2020.

Conference Call
The Joint Corp. management will host a conference call at 5 p.m. ET on Thursday, August 5, 2021, to discuss the second quarter 2021 results. Shareholders and interested participants may listen to a live broadcast of the conference call by dialing 765-507-2604 or 844-464-3931 and referencing code 5959205 approximately 15 minutes prior to the start time. The accompanying slide presentation will be in the IR section of the website under Presentations and in Events. A live webcast of the conference call will also be available on the IR 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 13, 2021. The replay can be accessed by dialing 404-537-3406 or 855-859-2056. The passcode for the replay is 5959205.

Non-GAAP Financial Information
This release includes a presentation of non-GAAP financial measures. System-wide sales include sales 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. Comp sales include the sales 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.

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 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, net (gain)/loss on disposition or impairment, and stock-based compensation expenses. The company defines EBITDA as net income 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, the continuing impact of the COVID-19 outbreak on the economy and our operations (including temporary clinic closures, shortened business hours and reduced patient demand), 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 other factors described in “Risk Factors” in our Annual Report on Form 10-K as filed with the SEC for the year ended December 31, 2020, as updated or revised for any material changes described in any subsequently-filed Quarterly Reports on Form 10-Q or other SEC filings. 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)
The Joint Corp. (NASDAQ: JYNT) revolutionized access to chiropractic care when it introduced its retail healthcare business model in 2010. Today, 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 more than 600 locations nationwide and over eight million patient visits annually, The Joint is a key leader in the chiropractic industry. Named on Franchise Times “Top 200+ Franchises” and Entrepreneur’s “Franchise 500®” lists, 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, 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.com
Investor Contact: Kirsten Chapman, LHA Investor Relations, 415-433-3777, thejoint@lhai.com

– Financial Tables Follow –

THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

 June 30,
2021
 December 31,
2020
ASSETS(unaudited)  
Current assets:   
Cash and cash equivalents$18,521,042    $20,554,258   
Restricted cash313,303    265,371   
Accounts receivable, net2,805,387    1,850,499   
Deferred franchise and regional development costs, current portion973,224    897,551   
Prepaid expenses and other current assets1,590,448    1,566,025   
Total current assets24,203,404    25,133,704   
Property and equipment, net12,418,496    8,747,369   
Operating lease right-of-use asset15,232,136    11,581,435   
Deferred franchise and regional development costs, net of current portion5,042,889    4,340,756   
Intangible assets, net6,176,429    2,865,006   
Goodwill5,128,302    4,625,604   
Deferred tax assets9,388,264    8,007,633   
Deposits and other assets474,782    431,336   
Total assets$78,064,702    $65,732,843   
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$2,160,642    $1,561,648   
Accrued expenses1,143,858    770,221   
Co-op funds liability313,304    248,468   
Payroll liabilities4,624,414    2,776,036   
Debt under the Credit Agreement2,000,000    —   
Operating lease liability, current portion3,605,458    2,918,140   
Finance lease liability, current portion79,752    70,507   
Deferred franchise and regional developer fee revenue, current portion3,162,710    3,000,369   
Deferred revenue from company clinics ($2.9 million and $2.6 million attributable to VIEs)4,366,186    3,905,200   
Debt under the Paycheck Protection Program—    2,727,970   
Other current liabilities551,035    707,085   
Total current liabilities22,007,359    18,685,644   
Operating lease liability, net of current portion14,297,918    10,632,672   
Finance lease liability, net of current portion99,772    132,469   
Debt under the Credit Agreement—    2,000,000   
Deferred franchise and regional developer fee revenue, net of current portion14,708,216    13,503,745   
Other liabilities27,230    27,230   
Total liabilities51,140,495    44,981,760   
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, 2021 and December 31, 2020—    —   
Common stock, $0.001 par value; 20,000,000 shares authorized, 14,406,148 shares issued and 14,375,362 shares outstanding as of June 30, 2021 and 14,174,237 shares issued and 14,157,070 outstanding as of December 31, 202014,405    14,174   
Additional paid-in capital43,142,391    41,350,001   
Treasury stock 30,786 shares as of June 30, 2021 and 17,167 shares as of December 31, 2020, at cost(761,265)  (143,111) 
Accumulated deficit(15,471,424)  (20,470,081) 
Total The Joint Corp. stockholders' equity26,924,107    20,750,983   
Non-controlling Interest100    100   
Total equity26,924,207    20,751,083   
Total liabilities and stockholders' equity$78,064,702    $65,732,843   


THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)

 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2021 2020 2021 2020
Revenues:       
Revenues from company-owned or managed clinics$11,433,072    $6,856,807    $20,903,933    $14,151,102   
Royalty fees5,332,618    3,268,653    10,101,862    6,986,883   
Franchise fees623,655    523,964    1,319,082    1,036,716   
Advertising fund revenue1,518,908    930,795    2,893,650    1,988,413   
Software fees786,037    631,198    1,546,574    1,276,922   
Regional developer fees214,434    213,424    432,390    421,066   
Other revenues310,074    164,952    569,271    373,177   
Total revenues20,218,798    12,589,793    37,766,762    26,234,279   
Cost of revenues:       
Franchise and regional development cost of revenues1,786,833    1,275,191    3,411,404    2,692,682   
IT cost of revenues251,705    92,450    392,450    161,115   
Total cost of revenues2,038,538    1,367,641    3,803,854    2,853,797   
Selling and marketing expenses3,132,715    1,783,666    5,622,043    3,838,954   
Depreciation and amortization1,443,018    693,400    2,612,884    1,347,649   
General and administrative expenses11,614,444    8,541,108    21,701,047    17,235,358   
Total selling, general and administrative expenses16,190,177    11,018,174    29,935,974    22,421,961   
Net (gain) loss on disposition or impairment(44,260)  (54,606)  20,508    (53,413) 
Income from operations2,034,343    258,584    4,006,426    1,011,934   
Other expense, net(16,373)  (25,243)  (37,909)  (29,581) 
Income before income tax (benefit) expense2,017,970    233,341    3,968,517    982,353   
Income tax (benefit) expense(665,992)  117,756    (1,030,140)  51,821   
Net income$2,683,962    $115,585    $4,998,657    $930,532   
Earnings per share:       
Basic earnings per share$0.19    $0.01    $0.35    $0.07   
Diluted earnings per share$0.18    $0.01    $0.34    $0.06   
Basic weighted average shares14,290,697    13,980,984    14,234,929    13,935,829   
Diluted weighted average shares14,927,451    14,491,639    14,901,863    14,487,083   


THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

 Six Months Ended
June 30,
 2021 2020
Cash flows from operating activities:   
Net income$4,998,657    $930,532   
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization2,612,884    1,347,649   
Net loss on disposition or impairment (non-cash portion)109,519    1,193   
Net franchise fees recognized upon termination of franchise agreements(81,196)  (50,312) 
Deferred income taxes(1,380,631)  (2,756) 
Stock based compensation expense530,058    466,473   
Changes in operating assets and liabilities:   
Accounts receivable(954,888)  635,605   
Prepaid expenses and other current assets(24,423)  (35,789) 
Deferred franchise costs(881,891)  2,498   
Deposits and other assets(53,096)  4,406   
Accounts payable(162,524)  (141,327) 
Accrued expenses130,609    406,986   
Payroll liabilities1,848,378    (784,505) 
Deferred revenue1,757,294    (317,053) 
Other liabilities565,779    572,795   
Net cash provided by operating activities9,014,529    3,036,395   
    
Cash flows from investing activities:   
Acquisition of AZ clinics(1,925,000)  —   
Acquisition of NC clinics(2,325,000)  —   
Purchase of property and equipment(3,238,959)  (1,986,367) 
Reacquisition and termination of regional developer rights(1,388,700)  —   
Payments received on notes receivable—    80,441   
Net cash used in investing activities(8,877,659)  (1,905,926) 
    
Cash flows from financing activities:   
Payments of finance lease obligation(38,593)  (23,509) 
Purchases of treasury stock under employee stock plans(618,154)  (3,774) 
Proceeds from exercise of stock options1,262,563    387,920   
Proceeds from the Credit Agreement, net of related fees—    1,947,352   
Proceeds from the Paycheck Protection Program—    2,727,970   
Repayment of debt under the Paycheck Protection Program(2,727,970)  —   
Net cash (used in) provided by financing activities(2,122,154)  5,035,959   
    
(Decrease) increase in cash, cash equivalents and restricted cash(1,985,284)  6,166,428   
Cash, cash equivalents and restricted cash, beginning of period20,819,629    8,641,877   
Cash, cash equivalents and restricted cash, end of period$18,834,345    $14,808,305   
    
Reconciliation of cash, cash equivalents and restricted cash:June 30,
2021
 June 30,
2020
Cash and cash equivalents$18,521,042    $14,573,266   
Restricted cash313,303    235,039   
 $18,834,345    $14,808,305   

Non-GAAP Financial Measures

The table below reconciles net income to Adjusted EBITDA for the three and six months ended June 30, 2021 and 2020.

(unaudited)Three Months Ended
June 30,
 Six Months Ended
June 30,
 2021 2020 2021 2020
Non-GAAP Financial Data:       
Net income$2,683,962    $115,585    $4,998,657    $930,532   
Net interest expense16,373    25,243    37,909    29,580   
Depreciation and amortization expense1,443,018    693,400    2,612,884    1,347,649   
Income tax (benefit) expense(665,992)  117,756    (1,030,140)  51,821   
EBITDA3,477,361    951,984    6,619,310    2,359,582   
Stock compensation expense283,564    216,080    530,058    466,473   
Acquisition related expenses39,373    —    45,346    —   
(Gain) loss on disposition or impairment(44,260)  (54,606)  20,508    (53,413) 
Adjusted EBITDA$3,756,038    $1,113,458    $7,215,222    $2,772,642   




Tags