- Reaffirms 2023 Financial and Clinic Opening Guidance -
- Unveils Plan to Convert the Majority of the
Financial Highlights: Q3 2023 Compared to Q3 2022
- Grew revenue by 11% to
$29.5 million . - Reported operating loss of
$898,000 , compared to operating income of$732,000 . - Reported net loss of
$716,000 , including a loss on disposition or impairment related to corporate clinics announced to be held for sale inSeptember 2023 , compared to net income of$731,000 . - Increased system-wide sales by 8%, to
$119.3 million . - System-wide comp sales for clinics that have been open for at least 13 full months were flat.
- Reported Adjusted EBITDA of
$2.9 million , compared to$3.1 million .
Q3 2023 Operating Highlights
- Sold 12 franchise licenses, compared to 12 in Q3 2022.
- Grew total clinic count to 914, 778 franchised and 136 company-owned or managed, up from 890 clinics at
June 30, 2023 .- Opened 24 franchised clinics and two company-owned or managed greenfield clinics, for a total of 26 new clinics, as compared to 38 new clinics in Q3 2022.
- Closed two franchised clinics in both Q3 2023 and Q3 2022.
“The strength of our franchise concept to revolutionize access to chiropractic care remains strong, although ongoing economic uncertainty and continued cost pressures have impacted our corporate clinic portfolio performance. We are implementing a strategic plan to leverage our greatest strength – our capacity to build a franchise – to drive long-term growth for both our franchisees and The Joint as a public company,” said
Financial Results for Third Quarter Ended
Revenue was
Selling and marketing expenses were
General and administrative expenses were
Loss on disposition or impairment, including those corporate clinics that were announced to be held for sale in
Operating loss was
Adjusted EBITDA was
Financial Results for the Nine Months Ended
Revenue was
Balance Sheet Liquidity
Unrestricted cash was
2023 Guidance
For 2023, management reiterated financial and clinic opening guidance.
- Revenue is expected to be between
$115.0 million and$118.0 million , compared to$101.9 million in 2022. - Adjusted EBITDA is expected to be between
$11.0 million and$12.5 million , compared to$11.5 million in 2022. - Franchised clinic openings are expected to be between 100 and 120, compared to 121 in 2022.
- Company-owned or managed greenfield clinic openings are expected to be between 8 and 12, compared to 16 in 2022.
Conference Call
The live webcast of the call with accompanying slide presentation can be accessed in the IR events section https://ir.thejoint.com/events and will be 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 7032664.
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, net (gain)/loss on disposition or impairment, stock-based compensation expenses, 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
Information reconciling forward-looking Adjusted EBITDA to net income/(loss) is unavailable to the company without unreasonable effort. The company is not able to provide a quantitative reconciliation of adjusted EBITDA to net income/(loss) because certain items required for such reconciliation are uncertain, outside of the company's control, and/or cannot be reasonably predicted, including but not limited to [the provision for (benefit from) income taxes. Preparation of such reconciliation would require a forward-looking statement of income and statement of cash flows prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to the company without unreasonable effort.
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 belief that the strength of our franchise concept to revolutionize access to chiropractic care remains strong; our strategic plan to leverage our biggest strength – our profound understanding of franchising – to drive long-term growth for both our franchisees and The Joint as a public company; our plan to refranchise or sell the majority of our company-owned or managed clinics and to retain a portion of the high-performing corporate clinics; our belief that with a focus on profitability, we are taking clear action to strengthen the health of our network, improve the performance of our public company, and increase our ability to reinvest in the business and create value for our stockholders; and our guidance for fiscal 2023 for revenue, adjusted EBITDA, franchised clinic openings, and company-owned or managed greenfield clinic openings. 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, exacerbated by COVID-19 and the current war in
About
For more information, visit www.thejoint.com. To learn about franchise opportunities, visit www.thejointfranchise.com.
Business Structure
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Investor Contact:
– Financial Tables Follow –
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | |||||
2023 | 2022 | ||||
ASSETS | (unaudited) | (as restated) | |||
Current assets: | |||||
Cash and cash equivalents | $ | 16,050,137 | $ | 9,745,066 | |
Restricted cash | 1,092,216 | 805,351 | |||
Accounts receivable, net | 3,653,127 | 3,911,272 | |||
Deferred franchise and regional development costs, current portion | 1,054,534 | 1,054,060 | |||
Prepaid expenses and other current assets | 2,602,563 | 2,098,359 | |||
Assets held for sale | 3,972,113 | — | |||
Total current assets | 28,424,690 | 17,614,108 | |||
Property and equipment, net | 15,355,755 | 17,475,152 | |||
Operating lease right-of-use asset | 19,803,896 | 20,587,199 | |||
Deferred franchise and regional development costs, net of current portion | 5,409,924 | 5,707,678 | |||
Intangible assets, net | 8,623,115 | 10,928,295 | |||
8,448,893 | 8,493,407 | ||||
Deferred tax assets ( | 11,741,090 | 11,928,152 | |||
Deposits and other assets | 765,263 | 756,386 | |||
Total assets | $ | 98,572,626 | $ | 93,490,377 |
CONDENSED CONSOLIDATED BALANCE SHEETS CONT’D (unaudited) | |||||||
2023 | 2022 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | (unaudited) | (as restated) | |||||
Current liabilities: | |||||||
Accounts payable | $ | 1,877,162 | $ | 2,966,589 | |||
Accrued expenses | 2,488,324 | 1,069,610 | |||||
Co-op funds liability | 1,092,216 | 805,351 | |||||
Payroll liabilities ( | 3,875,453 | 2,030,510 | |||||
Operating lease liability, current portion | 5,392,944 | 5,295,830 | |||||
Finance lease liability, current portion | 25,223 | 24,433 | |||||
Deferred franchise revenue, current portion | 2,512,350 | 2,468,601 | |||||
Deferred revenue from company clinics ( | 6,538,713 | 7,471,549 | |||||
Upfront regional developer fees, current portion | 383,972 | 487,250 | |||||
Other current liabilities | 516,249 | 597,294 | |||||
Liabilities to be disposed of | 2,971,933 | — | |||||
Total current liabilities | 27,674,539 | 23,217,017 | |||||
Operating lease liability, net of current portion | 17,200,146 | 18,672,719 | |||||
Finance lease liability, net of current portion | 44,490 | 63,507 | |||||
Debt under the Credit Agreement | 2,000,000 | 2,000,000 | |||||
Deferred franchise revenue, net of current portion | 13,980,758 | 14,161,134 | |||||
Upfront regional developer fees, net of current portion | 1,099,718 | 1,500,278 | |||||
Other liabilities ( | 1,287,880 | 1,287,879 | |||||
Total liabilities | 63,287,531 | 60,902,534 | |||||
Commitments and contingencies (Note 10) | |||||||
Stockholders' equity: | |||||||
Series A preferred stock, | — | — | |||||
Common stock, | 14,786 | 14,560 | |||||
Additional paid-in capital | 46,969,761 | 45,558,305 | |||||
(860,474 | ) | (856,642 | ) | ||||
Accumulated deficit | (10,863,978 | ) | (12,153,380 | ) | |||
Total | 35,260,095 | 32,562,843 | |||||
Non-controlling interest | 25,000 | 25,000 | |||||
Total equity | 35,285,095 | 32,587,843 | |||||
Total liabilities and stockholders' equity | $ | 98,572,626 | $ | 93,490,377 |
CONDENSED CONSOLIDATED INCOME STATEMENTS (unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
(as restated) | (as restated) | ||||||||||||||
Revenues: | |||||||||||||||
Revenues from company-owned or managed clinics | $ | 17,882,303 | $ | 15,836,327 | $ | 52,813,098 | $ | 42,936,298 | |||||||
Royalty fees | 7,143,791 | 6,604,653 | 21,181,973 | 19,024,799 | |||||||||||
Franchise fees | 754,029 | 642,405 | 2,179,822 | 1,970,256 | |||||||||||
Advertising fund revenue | 2,050,106 | 1,881,367 | 6,043,563 | 5,417,840 | |||||||||||
Software fees | 1,301,577 | 1,109,753 | 3,746,394 | 3,166,732 | |||||||||||
Other revenues | 342,143 | 375,314 | 1,117,103 | 1,058,008 | |||||||||||
Total revenues | 29,473,949 | 26,449,819 | 87,081,953 | 73,573,933 | |||||||||||
Cost of revenues: | |||||||||||||||
Franchise and regional development cost of revenues | 2,228,689 | 1,988,764 | 6,605,964 | 5,694,723 | |||||||||||
IT cost of revenues | 375,411 | 348,331 | 1,068,332 | 1,010,446 | |||||||||||
Total cost of revenues | 2,604,100 | 2,337,095 | 7,674,296 | 6,705,169 | |||||||||||
Selling and marketing expenses | 4,301,017 | 3,539,287 | 13,169,079 | 10,666,500 | |||||||||||
Depreciation and amortization | 2,349,206 | 1,779,924 | 6,893,529 | 4,578,450 | |||||||||||
General and administrative expenses | 20,212,750 | 17,796,806 | 60,156,022 | 51,900,533 | |||||||||||
Total selling, general and administrative expenses | 26,862,973 | 23,116,017 | 80,218,630 | 67,145,483 | |||||||||||
Net loss on disposition or impairment | 904,923 | 264,391 | 1,114,738 | 360,140 | |||||||||||
Income (loss) from operations | (898,047 | ) | 732,316 | (1,925,711 | ) | (636,859 | ) | ||||||||
Other income (expense), net | (6,244 | ) | (25,235 | ) | 3,708,399 | (60,668 | ) | ||||||||
Income (loss) before income tax (benefit) expense | (904,291 | ) | 707,081 | 1,782,688 | (697,527 | ) | |||||||||
Income tax (benefit) expense | (188,018 | ) | (24,015 | ) | 493,286 | (560,976 | ) | ||||||||
Net (loss) income | $ | (716,273 | ) | $ | 731,096 | $ | 1,289,402 | $ | (136,551 | ) | |||||
Earnings per share: | |||||||||||||||
Basic earnings (loss) per share | $ | (0.05 | ) | $ | 0.05 | $ | 0.09 | $ | (0.01 | ) | |||||
Diluted earnings (loss) per share | $ | (0.05 | ) | $ | 0.05 | $ | 0.09 | $ | (0.01 | ) | |||||
Basic weighted average shares | 14,790,663 | 14,512,856 | 14,666,222 | 14,474,323 | |||||||||||
Diluted weighted average shares | 15,015,953 | 14,829,629 | 14,931,474 | 15,119,264 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | |||||||
Nine Months Ended | |||||||
2023 | 2022 | ||||||
(as restated) | |||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 1,289,402 | $ | (136,551 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 6,893,529 | 4,578,450 | |||||
Net loss on disposition or impairment | 1,114,738 | 360,140 | |||||
Net franchise fees recognized upon termination of franchise agreements | (170,720 | ) | (15,218 | ) | |||
Deferred income taxes | 187,062 | (961,759 | ) | ||||
Stock-based compensation expense | 1,209,296 | 969,562 | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | 258,145 | (244,236 | ) | ||||
Prepaid expenses and other current assets | (504,203 | ) | (450,702 | ) | |||
Deferred franchise costs | 166,078 | (186,618 | ) | ||||
Deposits and other assets | (15,377 | ) | (153,650 | ) | |||
Accounts payable | (1,244,767 | ) | 50,702 | ||||
Accrued expenses | 1,279,949 | (571,447 | ) | ||||
Payroll liabilities | 1,844,943 | (1,118,259 | ) | ||||
Deferred revenue | (551,226 | ) | 1,161,393 | ||||
Upfront regional developer fees | (496,730 | ) | (977,841 | ) | |||
Other liabilities | 34,638 | 728,449 | |||||
Net cash provided by operating activities | 11,294,757 | 3,032,415 | |||||
Cash flows from investing activities: | |||||||
Acquisition of AZ clinics | — | (6,861,256 | ) | ||||
Acquisition of NC clinics | — | (1,105,000 | ) | ||||
Acquisition of CA clinics | (1,050,000 | ) | — | ||||
Purchase of property and equipment | (3,833,148 | ) | (4,322,673 | ) | |||
Net cash used in investing activities | (4,883,148 | ) | (12,288,929 | ) | |||
Cash flows from financing activities: | |||||||
Payments of finance lease obligation | (18,227 | ) | (43,907 | ) | |||
Purchases of treasury stock under employee stock plans | (3,832 | ) | (5,804 | ) | |||
Proceeds from exercise of stock options | 202,386 | 362,029 | |||||
Repayment of debt under the Paycheck Protection Program | — | — | |||||
Net cash provided by financing activities | 180,327 | 312,318 | |||||
Increase (decrease) in cash, cash equivalents and restricted cash | 6,591,936 | (8,944,196 | ) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 10,550,417 | 19,912,338 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 17,142,353 | $ | 10,968,142 | |||
Reconciliation of cash, cash equivalents and restricted cash: | 2023 | 2022 | |||||
Cash and cash equivalents | $ | 16,050,137 | $ | 10,272,112 | |||
Restricted cash | 1,092,216 | 696,030 | |||||
$ | 17,142,353 | $ | 10,968,142 |
RECONCILIATION FOR GAAP TO NON-GAAP (unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
(as restated) | (as restated) | ||||||||||||||
Non-GAAP Financial Data: | |||||||||||||||
Net income (loss) | $ | (716,273 | ) | $ | 731,096 | $ | 1,289,402 | $ | (136,551 | ) | |||||
Net interest expense | 6,244 | 25,235 | 70,905 | 60,668 | |||||||||||
Depreciation and amortization expense | 2,349,206 | 1,779,924 | 6,893,529 | 4,578,450 | |||||||||||
Tax (benefit) expense | (188,018 | ) | (24,015 | ) | 493,286 | (560,976 | ) | ||||||||
EBITDA | 1,451,159 | 2,512,240 | 8,747,122 | 3,941,591 | |||||||||||
Stock compensation expense | 526,069 | 305,815 | 1,209,296 | 969,562 | |||||||||||
Acquisition related expenses | 15,222 | 46,712 | 873,214 | 2,275,380 | |||||||||||
Loss on disposition or impairment | 904,923 | 264,391 | 1,114,738 | 360,140 | |||||||||||
Other income related to the ERC | — | — | (3,779,304 | ) | — | ||||||||||
Adjusted EBITDA | $ | 2,897,373 | $ | 3,129,158 | $ | 8,165,066 | $ | 7,546,673 |
Source:
2023 GlobeNewswire, Inc., source