8-K
JOINT Corp (JYNT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 4, 2021
_______________________________
The Joint Corp.
(Exact name of registrant as specified in its charter)
_______________________________
| Delaware | 001-36724 | 90-0544160 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
16767 N. Perimeter Drive, Suite 110
Scottsdale, Arizona 85260
(Address of Principal Executive Offices) (Zip Code)
(480) 245-5960
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.001 Par Value Per Share | JYNT | The NASDAQ Capital Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On March 4, 2021, the Company issued a press release announcing its financial results for the fourth quarter and full year ended December 31, 2020. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information furnished in this Item 2.02 and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
The Company is posting an earnings presentation to its website at https://ir.thejoint.com/. A copy of the earnings presentation is being furnished herewith as Exhibit 99.2. The Company will use the earnings presentation during its earnings conference call on March 4, 2021 and also may use the earnings presentation from time to time in conversations with analysts, investors and others. The information furnished in this Item 7.01 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
The information contained in Exhibit 99.2 is summary information that is intended to be considered in the context of the Company’s filings with the SEC. The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release dated March 4, 2021 |
| 99.2 | The Joint Corp. Earnings Presentation, March 2021 |
| 104 | Cover page interactive data file (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| The Joint Corp. | ||
|---|---|---|
| Date: March 4, 2021 | By: | /s/ Peter D. Holt |
| Peter D. Holt | ||
| President and Chief Executive Officer |
EdgarFiling EXHIBIT 99.1
The Joint Corp. Reports Fourth Quarter and Full Year 2020 Financial Results
- Grows Revenue 23% Quarterly and 21% Annually, Compared to 2019 - - Reports Record Annual Operating Income of $5.5 Million, Up 61% Compared to 2019 - - Posts Record Adjusted EBITDA of $9.1 Million, Up 47% Compared to 2019 - - Increases Total Clinic Count to 579, Opening 21 Clinics in Q4 2020, Compared to 25 in Q4 2019 - - Sells Record 56 Franchise Licenses in Q4 2020, Up from 23 in Q4 2019 -
SCOTTSDALE, Ariz., March 04, 2021 (GLOBE NEWSWIRE) -- The Joint Corp. (NASDAQ: JYNT), a national operator, manager and franchisor of chiropractic clinics, reported its financial results for the quarter and full year ended December 31, 2020.
Financial Highlights: Q4 2020 Compared to Q4 2019
- Increased system-wide sales^1^ by 24%, to $77.6 million.
- Reported system-wide comp sales^2^ increase of 16%.
- Grew revenue 23% to $17.0 million.
- Posted record operating income of $2.8 million, compared to $1.3 million.
- Reported record Adjusted EBITDA of $3.7 million, up from $2.1 million.
Financial Highlights: 2020 Compared to 2019
- Increased system-wide sales^1^ by 18%, to $260.0 million.
- Reported system-wide comp sales^2^ increase of 9%.
- Grew revenue 21% to $58.7 million.
- Posted record operating income of $5.5 million, compared to $3.4 million.
- Reported record Adjusted EBITDA of $9.1 million, up from $6.2 million.
2020 Operating Highlights
- Performed 8.3 million adjustments, up from 7.7 million in 2019.
- Served 1.1 million unique patients, compared to 998,000 in 2019.
- Treated 584,000 new patients, relatively flat compared to 585,000 in 2019.
- 27% percent of patients who visited had never been to a chiropractor before, up from 26% in 2019.
- Sold record 56 franchise licenses in Q4, bringing the 2020 total to 121, compared to 126 in 2019.
- Opened 21 new franchised clinics in Q4, bringing the 2020 total to 70, nearly equal to the 71 opened in 2019.
- Increased total clinics to 579 at December 31, 2020, 515 franchised and 64 company-owned or managed, up from 513 at December 31, 2019.
- Repurchased the regional developer (RD) rights in North Carolina on December 31, 2020. Then, repurchased the RD rights for Georgia on January 1, 2021. Combined, the transactions totaled $2.4 million. As a result, 69 franchised clinics and 37 signed franchise license agreements for unopened clinics shifted from management by RDs to corporate management, thereby eliminating the RD sales commissions and royalties of 3% of gross sales.
“Our operating and financial results for 2020 reflect both the resiliency of our business model throughout the pandemic and the commitment of our clinic staff to care for our patients,” said Peter D. Holt, President and Chief Executive Officer of The Joint Corp. “In adapting to the pandemic, the primary change to our operational practices was to increase sanitization and cleanliness procedures. However, our core concept has remained steadfast. Once again, we increased our productivity, resulting in improved clinic performance and greater company profitability. As a result, our Adjusted EBITDA, positive for the third consecutive year, exceeded our plan and further strengthened our foundation, closing 2020 with a record bottom line.”
“We enter 2021 with reignited growth momentum. We will prioritize franchised clinic and greenfield clinic openings as we accelerate growth and drive toward our goal of 1,000 clinics opened by the end of 2023,” concluded Holt.
Financial Results for the Three Months Ended December 31: 2020 Compared to 2019
Revenue was $17.0 million in the fourth quarter of 2020, compared to $13.9 million in the prior year, reflecting a greater number of clinics and continued organic growth. Cost of revenue was $1.9 million, compared to $1.6 million in the fourth quarter of 2019. The increase was in line with the total increase in franchise royalty revenues and reflects higher regional developer royalties and commissions.
Selling and marketing expenses were $2.1 million, increasing 15%, reflecting the timing of advertising spending. General and administrative expenses were $9.5 million, compared to $8.5 million in 2019, primarily due to an increase in payroll and related expenses to support revenue growth and a greater number of clinics.
Operating income was $2.8 million, compared to $1.3 million in 2019. Tax benefit was $7.9 million, driven by the reversal of the tax valuation allowance of $8.9 million, compared with the tax expense of $33 thousand in 2019. Net income, including the benefit from the reversal of the tax valuation allowance, was $10.6 million, or $0.72 per diluted share, compared to $1.3 million, or $0.09 per diluted share, in the fourth quarter of 2019.
Adjusted EBITDA was also a record for the company at $3.7 million, compared to $2.1 million in the prior year. 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 Full Year Ended December 31: 2020 Compared to 2019
Revenue was $58.7 million in 2020, increasing 21% compared to $48.5 million in 2019, reflecting a greater number of clinics and increased gross sales at existing franchised and company-owned or managed clinics.
Operating income was $5.5 million, compared to $3.4 million in 2019. Net income, including the aforementioned $8.9 million benefit from the reversal of the tax valuation allowance, was $13.2 million, or $0.90 per diluted share, compared to $3.3 million, or $0.23 per diluted share, in 2019.
Adjusted EBITDA was $9.1 million, compared to $6.2 million in 2019.
Balance Sheet Liquidity
Unrestricted cash was $20.6 million at December 31, 2020, compared to $8.5 million at December 31, 2019. The increase primarily reflects $11.2 million in cash flow from operating activities, $2.7 million borrowed under the CARES Act U.S. Small Business Administration Payroll Protection Program (PPP), and $2.0 million drawn on a revolving line of credit, which was partially offset by $4.6 million used in investing activities in 2020. Subsequent to quarter end, the company repaid the PPP loan of $2.7 million, which will be reflected in the March 31, 2021 balance sheet.
2021 Guidance for Financial Results and Clinic Openings
Management provided full year 2021 guidance and expects the following:
- Revenue to be between $73 million and $77 million, compared to $58.7 million in 2020.
- Adjusted EBITDA to be between $10.5 million and $12.0 million, compared to $9.1 million in 2020.
- Franchised clinic openings to be between 80 and 100, compared to 70 in 2020.
- Company-owned or managed clinics, through a combination of both greenfields and buybacks, to increases between 20 and 30, compared to 4 in 2020.
Conference Call The Joint Corp. management will host a conference call at 5 p.m. ET on Thursday, March 4, 2021, to discuss the fourth quarter and year-end 2020 results. To gain immediate access to the call, bypass the operator and avoid the queue, you may preregister by clicking here. Upon registering, you will be emailed a dial-in number, direct passcode and unique PIN. Those who prefer to call-in directly may do so approximately 20 minutes prior to the start time by dialing 706-643-5902 or 888-869-1189 and using reference code 8161418. 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 March 11, 2021. The replay can be accessed by dialing 404-537-3406 or 855-859-2056. The passcode for the replay is 8161418.
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, 2019, as updated or revised for any material changes described in any subsequently-filed Quarterly Reports on Form 10-Q or other SEC filings, and in our Annual Report on Form 10-K for the year ended December 31, 2020 expected to be filed with the SEC on or around March 5, 2021. 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 nearly 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 | |||||
|---|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | |||||
| December 31, | |||||
| 2020 | 2019 | ||||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 20,554,258 | $ | 8,455,989 | ||
| Restricted cash | 265,371 | 185,888 | |||
| Accounts receivable, net | 1,850,499 | 2,645,085 | |||
| Notes receivable, net | - | 128,724 | |||
| Deferred franchise and regional development costs, current portion | 897,551 | 765,508 | |||
| Prepaid expenses and other current assets | 1,566,025 | 1,122,478 | |||
| Total current assets | 25,133,704 | 13,303,672 | |||
| Property and equipment, net | 8,747,369 | 6,581,588 | |||
| Operating lease right-of-use asset | 11,581,435 | 12,486,672 | |||
| Deferred franchise and regional development costs, net of current portion | 4,340,756 | 3,627,225 | |||
| Intangible assets, net | 2,865,006 | 3,219,791 | |||
| Goodwill | 4,625,604 | 4,150,461 | |||
| Deferred tax assets | 8,007,633 | - | |||
| Deposits and other assets | 431,336 | 336,258 | |||
| Total assets | 65,732,843 | $ | 43,705,667 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable | 1,561,648 | $ | 1,525,838 | ||
| Accrued expenses | 770,221 | 216,814 | |||
| Co-op funds liability | 248,468 | 185,889 | |||
| Payroll liabilities | 2,776,036 | 2,844,107 | |||
| Operating lease liability, current portion | 2,918,140 | 2,313,109 | |||
| Finance lease liability, current portion | 70,507 | 24,253 | |||
| Deferred franchise and regional development fee revenue, current portion | 3,000,369 | 2,740,954 | |||
| Deferred revenue from company clinics | 3,905,200 | 3,196,664 | |||
| Debt under the Paycheck Protection Program | 2,727,970 | - | |||
| Other current liabilities | 707,085 | 518,686 | |||
| Total current liabilities | 18,685,644 | 13,566,314 | |||
| Operating lease liability, net of current portion | 10,632,672 | 11,901,040 | |||
| Finance lease liability, net of current portion | 132,469 | 34,398 | |||
| Debt under the Credit Agreement | 2,000,000 | - | |||
| Deferred franchise and regional development fee revenue, net of current portion | 13,503,745 | 12,366,322 | |||
| Deferred tax liability | - | 89,863 | |||
| Other liabilities | 27,230 | 27,230 | |||
| Total liabilities | 44,981,760 | 37,985,167 | |||
| Commitments and contingencies | |||||
| Stockholders' equity: | |||||
| Series A preferred stock, 0.001 par value; 50,000 shares authorized, 0 issued and outstanding, as of December 31, 2020 and 2019 | - | - | |||
| Common stock, 0.001 par value; 20,000,000 shares authorized, 14,174,237 shares issued and 14,157,070 shares outstanding as of December 31, 2020 and 13,898,694 shares issued and 13,882,932 outstanding as of December 31, 2019 | 14,174 | 13,899 | |||
| Additional paid-in capital | 41,350,001 | 39,454,937 | |||
| Treasury stock 17,167 shares as of December 31, 2020 and 15,762 shares as of December 31, 2019, at cost | (143,111 | ) | (111,041 | ) | |
| Accumulated deficit | (20,470,081 | ) | (33,637,395 | ) | |
| Total The Joint Corp. stockholders' equity | 20,750,983 | 5,720,400 | |||
| Non-controlling Interest | 100 | 100 | |||
| Total equity | 20,751,083 | 5,720,500 | |||
| Total liabilities and stockholders' equity | 65,732,843 | $ | 43,705,667 |
All values are in US Dollars.
| THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED INCOME STATEMENTS | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Revenues: | ||||||||||||
| Revenues from company-owned or managed clinics | $ | 9,216,342 | $ | 7,561,644 | $ | 31,771,288 | $ | 25,807,584 | ||||
| Royalty fees | 4,728,476 | 3,819,554 | 15,886,051 | 13,557,170 | ||||||||
| Franchise fees | 544,954 | 385,868 | 2,100,800 | 1,791,545 | ||||||||
| Advertising fund revenue | 1,330,333 | 1,086,479 | 4,506,413 | 3,884,055 | ||||||||
| Software fees | 729,552 | 609,068 | 2,694,520 | 1,865,779 | ||||||||
| Regional developer fees | 232,830 | 209,234 | 876,804 | 803,849 | ||||||||
| Other revenues | 255,657 | 203,322 | 847,100 | 740,918 | ||||||||
| Total revenues | 17,038,144 | 13,875,169 | 58,682,976 | 48,450,900 | ||||||||
| Cost of revenues: | ||||||||||||
| Franchise and regional developer cost of revenues | 1,808,814 | 1,525,381 | 6,090,203 | 5,159,778 | ||||||||
| IT cost of revenues | 132,612 | 108,578 | 417,265 | 406,139 | ||||||||
| Total cost of revenues | 1,941,426 | 1,633,959 | 6,507,468 | 5,565,917 | ||||||||
| Selling and marketing expenses | 2,119,864 | 1,845,124 | 7,804,420 | 6,913,709 | ||||||||
| Depreciation and amortization | 672,525 | 590,742 | 2,734,462 | 1,899,257 | ||||||||
| General and administrative expenses | 9,527,397 | 8,464,787 | 36,195,817 | 30,543,030 | ||||||||
| Total selling, general and administrative expenses | 12,319,786 | 10,900,653 | 46,734,699 | 39,355,996 | ||||||||
| Net loss (gain) on disposition or impairment | 2,092 | (2,423 | ) | (51,321 | ) | 114,352 | ||||||
| Income from operations | 2,774,840 | 1,342,980 | 5,492,130 | 3,414,635 | ||||||||
| Other (expense) income: | ||||||||||||
| Bargain purchase gain | - | - | - | 19,298 | ||||||||
| Other expense, net | (24,230 | ) | (18,046 | ) | (79,478 | ) | (61,515 | ) | ||||
| Total other expense | (24,230 | ) | (18,046 | ) | (79,478 | ) | (42,217 | ) | ||||
| Income before income tax (benefit) expense | 2,750,610 | 1,324,934 | 5,412,652 | 3,372,418 | ||||||||
| Income tax (benefit) expense | (7,882,213 | ) | 33,110 | (7,754,662 | ) | 48,706 | ||||||
| Net income and comprehensive income | $ | 10,632,823 | $ | 1,291,824 | $ | 13,167,314 | $ | 3,323,712 | ||||
| Less: income attributable to the non-controlling interest | $ | - | $ | - | $ | - | $ | - | ||||
| Net income attributable to The Joint Corp. stockholders | $ | 10,632,823 | $ | 1,291,824 | $ | 13,167,314 | $ | 3,323,712 | ||||
| Earnings per share: | ||||||||||||
| Basic earnings per share | $ | 0.75 | $ | 0.09 | $ | 0.94 | $ | 0.24 | ||||
| Diluted earnings per share | $ | 0.72 | $ | 0.09 | $ | 0.90 | $ | 0.23 | ||||
| Basic weighted average shares | 14,108,164 | 13,880,146 | 14,003,708 | 13,819,149 | ||||||||
| Diluted weighted average shares | 14,716,658 | 14,538,338 | 14,582,877 | 14,467,567 | ||||||||
| THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| Year Ended | ||||||||||||
| December 31, | ||||||||||||
| 2020 | 2019 | |||||||||||
| Net income | $ | 13,167,314 | $ | 3,323,712 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | (4,532,946 | ) | 2,602,799 | |||||||||
| Changes in operating assets and liabilities | 2,548,874 | 1,595,438 | ||||||||||
| Net cash provided by operating activities | 11,183,242 | 7,521,949 | ||||||||||
| Net cash used in investing activities | (4,601,009 | ) | (7,138,062 | ) | ||||||||
| Net cash provided by (used in) financing activities | 5,595,519 | (596,962 | ) | |||||||||
| Net increase (decrease) in cash | $ | 12,177,752 | $ | (213,075 | ) | |||||||
| THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES <br>RECONCILIATION FOR GAAP TO NON-GAAP | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended | Year Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| Non-GAAP Financial Data: | 2020 | 2019 | 2020 | 2019 | ||||||||
| Net income | $ | 10,632,823 | $ | 1,291,824 | $ | 13,167,314 | $ | 3,323,712 | ||||
| Net interest | 24,230 | 18,046 | 79,478 | 61,515 | ||||||||
| Depreciation and amortization expense | 672,525 | 590,742 | 2,734,462 | 1,899,257 | ||||||||
| Income tax (benefit) expense | (7,882,213 | ) | 33,110 | (7,754,662 | ) | 48,706 | ||||||
| EBITDA | $ | 3,447,365 | $ | 1,933,722 | $ | 8,226,592 | $ | 5,333,190 | ||||
| Stock compensation expense | 207,269 | 183,906 | 885,975 | 720,651 | ||||||||
| Acquisition related expenses | 41,716 | 11,145 | 41,716 | 47,386 | ||||||||
| Bargain purchase gain | - | - | - | (19,298 | ) | |||||||
| Net loss (gain) on disposition or impairment | 2,092 | (2,423 | ) | (51,321 | ) | 114,352 | ||||||
| Adjusted EBITDA | $ | 3,698,442 | $ | 2,126,350 | $ | 9,102,962 | $ | 6,196,281 |
___________________^1^ 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. ^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.
EdgarFiling
Exhibit 99.2
© 2021 The Joint Corp. All Rights Reserved. 1 Q4 2020 Financial Results As of December 31, 2020 | Reported on March 4, 2021
Safe Harbor Statement © 2021 The Joint Corp. All Rights Reserved. 2 Certain statements contained in this presentation are "forward - looking statements” about future events and expectations. 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 in formation 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 material ly 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 differ enc es 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 de mand), 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 descr ibed in “Risk Factors” in our Annual Report on Form 10 - K as filed with the SEC for the year ended December 31, 2019, as updated or revised for any material changes described in any subsequently - filed Quarter ly Reports on Form 10 - Q or other SEC filings, and in our Annual Report on Form 10 - K for the year ended December 31, 2020 expected to be filed with the SEC on or around March 5, 2021. Words such as, "ant icipates," "believes," "continues," "estimates," "expects," "goal," "objectives," "intends," "may," "opportunity," "plans," "potential," "near - term," "long - term," "projections," "assumptions," "pr ojects," "guidance," "forecasts," "outlook," "target," "trends," "should," "could," "would," "will," and similar expressions are intended to identify such forward - looking statements. We qualify any forwa rd - 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 diffe r 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. Business Structure The Joint Corp. is a franchisor of clinics and an operator of clinics in certain states. In Arkansas, California, Colorado, D ist rict of Columbia, Florida, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Washi ngt on, West Virginia and Wyoming, The Joint Corp. and its franchisees provide management services to affiliated professional chiropractic practices.
© 2021 The Joint Corp. All Rights Reserved. 3 BUILD BRAND INCREASE AWARENESS ATTRACT NEW PATIENTS OPEN NEW CLINICS Revolutionizing Access to Chiropractic Care As an essential healthcare service, The Joint Chiropractic’s mission is to improve the quality of life through routine and affordable chiropractic care.
Disruptive Business Model Continues to Thrive © 2021 The Joint Corp. All Rights Reserved. 4 1 New patient survey completed February 2021. 1.1M unique patients treated in 2020 584K new patients in 2020 8.3M adjustments in 2020 27% of new patients were new to chiropractic 1 in 2020 85% system - wide gross sales from monthly memberships in 2020 Up from 998k in 2019 Approx. 158k patients had never been to a chiropractor before Compared to 585K in 2019 Up from 7.7M in 2019 Up from 80% in 2019
Resilient Business Model Delivers Record Bottom Line 5 Q4 2020 Q4 2019 FY 2020 FY 2019 Revenue $17.0M Up 23% $58.7M Up 21% Op. Income $2.8M Up 106% $5.5M Up 62% Adjusted EBITDA 2 $3.7M Up 74% $9.1M Up 47% Unrestricted cash $20.6 M at Dec. 31, 2020, compared to $8.5M at Dec. 31, 2019 © 2021 The Joint Corp. All Rights Reserved. 1 Comparable sales include only the sales from clinics that have been open at least 13 or 48 full months and exclude any clinics that have permanently closed. 2 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the Appendix. 24 % Increase in sy stem - wide sales Q4 2020 over Q4 2019 16% In crease in comp sales 1 for all clinics >13 months in operation Q4 2020 over Q4 2019 10 % In crease in comp sales 1 for all clinics >48 months in operation Q4 2020 over Q4 2019
12 26 82 175 242 265 309 352 394 453 515 4 47 61 47 48 60 64 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 TOTAL CLINICS OPEN Franchise Company Owned/Managed Continuing to Target 1000 Clinics by the End of 2023 © 2021 The Joint Corp. All Rights Reserved. 6 Continue to experience unusually low clinic closure rates of approximately 1% 370 399 442 513 312 246 579 2019 2020 Franchise Licenses Sold 126 121 Total New Franchised Clinics Opened 71 70 Greenfield Clinics Opened 5 3 Franchised Clinics Acquired 8 1 Clinics in Development 204 253
37 99 126 121 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 616 715 841 962 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 112 155 204 253 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 Franchise License Sales Reinvigorate Acceleration © 2021 The Joint Corp. All Rights Reserved. 7 1 Of the 962 franchise licenses sold as of December 31, 2020, 253 are in active development, 579 are currently operating and th e b alance represents terminated/closed licenses. • 83% sold by RDs in 2020 • 72% of clinics supported by 22 RDs at Dec. 31, 2020 • RDs cover 61% of Metropolitan Statistical Areas (MSAs) at Dec. 31, 2020 Gross Cumulative Franchise Licenses Sold 1 Franchise Licenses Sold Annually 56 Franchise Licenses Sold in Q4 2020 – Quarterly Record Clinics in Active Development 1
Franchise Satisfaction Index Is Above Average 8 © 2021 The Joint Corp. All Rights Reserved. FSI represents a weighted sum of positive responses and discounts negative responses. FSI ratings provide a benchmark to hel p g auge overall level of franchisee satisfaction and compare it to various franchise industry sectors. The Joint Apr. 2017 The Joint Nov. 2018 The Joint Oct. 2020 58% 65% 75%
Fourth Quarter 2020 Promotions 9 © 2021 The Joint Corp. All Rights Reserved. Black Friday Membership Drive
Returning Focus to AXIS, New IT Platform 10 • Improving capabilities: POS, financial systems, business intelligence, marketing automation, and patient feedback • Implement robust training and certification • Formal rollout to begin in the early summer of 2021 © 2021 The Joint Corp. All Rights Reserved.
Q4 2020 Financial Results 11 $ in M 1 Q4 2020 Q4 2019 Differences Revenue • Corporate clinics • Franchise fees $17.0 9.2 7.8 $13.9 7.6 6.3 $3.2 1.7 1.5 23% 22% 24% Cost of revenue 1.9 1.6 0.3 19% Sales and marketing 2.1 1.8 0.3 15% Depreciation and amortization 0.7 0.6 0.1 14% G&A 9.5 8.5 1.0 13% Operating Income 2.8 1.3 1.4 106% Tax Benefit 2 7.9 0.0 7.9 na Net Income / (Loss) 10.6 1.3 9.3 715% Adj. EBITDA 3 3.7 2.1 1.6 74% 1 Due to rounding, numbers may not add up precisely to the totals. 2 Recognized the reversal of the tax valuation allowance of $8.9 million. 3 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the Appendix. © 2021 The Joint Corp. All Rights Reserved.
Full Year 2020 Financial Results 12 $ in M 1 2020 2019 Differences Revenue • Corporate clinics • Franchise fees $58.7 31.8 26.9 $48.5 25.8 22.6 $10.2 6.0 4.3 21% 23% 19% Cost of revenue 6.5 5.6 0.9 17% Sales and marketing 7.8 6.9 0.9 13% Depreciation and amortization 2.7 1.9 0.8 44% G&A 36.2 30.7 5.5 18% Operating Income 5.5 3.4 2.1 61% Tax Benefit 2 7.9 0.0 7.9 na Net Income / (Loss) 13.2 3.3 9.9 296% Adj. EBITDA 3 9.1 6.2 2.9 47% 1 Due to rounding, numbers may not add up precisely to the totals. 2 Recognized the reversal of the tax valuation allowance of $8.9 million. 3 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the Appendix. © 2021 The Joint Corp. All Rights Reserved. Unrestricted cash $20.6M at Dec. 31, 2020, compared to $8.5M at Dec. 31, 2019
Introducing 2021 Guidance 13 1 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the appendix. | 2 Through a combination of both greenfields and buybacks. $ in M 2020 Actual Low Guidance High Guidance Revenues $58.7 $73 $77 Adjusted EBITDA 1 $9.1 $10.5 $12.0 New Franchised Clinic Openings 70 80 100 New Company - owned/Managed Clinics 2 4 20 30 © 2021 The Joint Corp. All Rights Reserved.
Substantial Opportunity for Market Share Growth © 2021 The Joint Corp. All Rights Reserved. 14 1 Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2016 - 17 Edition| 2 IBIS US Industry Report, Chiropractors in the US, April 2020 3 Internal Chiropractic Competitive Analysis, August 2019 | 4 Apex Reimbursement Specialists, Inc., 2018 The Joint Chiropractic $220M, 1% Other Chains 3 $300M, 2% Independents $15.5B, 97% • Annual spending on back pain: $90B 1 • Chiropractic care: $16B 2 • Total chains make up ~3% of chiropractic 3 • By contrast, dentistry chains (DSOs) account for nearly 12% 4
$1.3 $2.8 $8.1 $22.3 $46.2 $70.1 $98.6 $126.9 $165.1 $220.3 $260.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Resilient Business Model Drives Long - term Growth 15 People will continue to seek more noninvasive, holistic ways to manage their pain. We will be ready to treat them. System - wide Gross Sales ($ in M) 70% CAGR 1 (2010 - 2020) The Joint Corp. 10 - yr. CAGR 70% 1 vs. Industry CAGR 1.4% 2* 1 For the period ended Dec. 31, 2020 | 2 IBIS US Industry Report, Chiropractors in the US, April 2020 - CAGR projected 2020 - 2025. © 2021 The Joint Corp. All Rights Reserved.
Non - GAAP Measure Definition 16 This presentation includes a presentation of EBITDA and Adjusted EBITDA, which are non - GAAP financial measures. EBITDA and Adjus ted EBITDA are presented because they are important measures used by management to assess financial performance, as management believes they pr ovide a more transparent view of the Company’s underlying operating performance and operating trends than GAAP measures alone. Reconciliat ion s of net loss to EBITDA and Adjusted EBITDA are presented where applicable. The Company defines EBITDA as net income/(loss) before net interest, tax exp ense, depreciation, and amortization expenses. The Company defines Adjusted EBITDA as EBITDA before acquisition - related expenses, bargain purchase net gain, gain/(loss) on disposition or impairment, and stock - based compensation expenses. EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income or cash flows from operat ion s, as determined by accounting principles generally accepted in the United States, or GAAP. While EBITDA and Adjusted EBITDA are frequently used as measures of financial performance and the ability to meet debt service requirements, they are not necessarily comparable to other similarly titled cap tions of other companies due to potential inconsistencies in the methods of calculation. EBITDA and Adjusted EBITDA should be reviewed in conjunction with th e Company’s financial statements filed with the SEC. © 2021 The Joint Corp. All Rights Reserved.
Q4 2020 Segment Results 17 2020 Q4 © 2021 The Joint Corp. All Rights Reserved.
2020 Segment Results 18 2020 © 2021 The Joint Corp. All Rights Reserved.
GAAP – Non - GAAP Reconciliation 19 © 2021 The Joint Corp. All Rights Reserved.
Jake Singleton, CFO jake.singleton@thejoint.com The Joint Corp. | 16767 N. Perimeter Dr., Suite 110, Scottsdale, AZ 85260 | (480) 245 - 5960 https://www.facebook.com/thejointchiro @ thejointchiro https://twitter.com/thejointchiro @ thejointchiro https://www.youtube.com/thejointcorp @ thejointcorp Peter D. Holt, President and CEO peter.holt@thejoint.com The Joint Corp. | 16767 N. Perimeter Dr., Suite 110, Scottsdale, AZ 85260 | (480) 245 - 5960 Kirsten Chapman, LHA Investor Relations thejoint@lhai.com LHA Investor Relations | One Market Street, Spear Tower, Suite 3600, San Francisco, CA 94105 | (415) 433 - 3777 20 The Joint Corp. Contact Information © 2021 The Joint Corp. All Rights Reserved.