The Joint Corp. Reports Fourth Quarter and Full Year 2020 Financial Results

Rhea-AI Summary

The Joint Corp. (NASDAQ: JYNT) reported robust financial results for Q4 and the full year 2020, with revenue growth of 23% quarterly and 21% annually. Operating income reached a record $5.5 million, a 61% increase from 2019, while Adjusted EBITDA also hit a record at $9.1 million, up 47% year-over-year. The clinic count rose to 579 with 21 new clinics opened in Q4, and franchised licenses sold surged to 56 in the same quarter, compared to 23 in Q4 2019. The company anticipates revenue between $73 million and $77 million for 2021.

Positive

• Record operating income of $5.5 million, up 61% from 2019.
• Adjusted EBITDA increased to $9.1 million, a 47% rise compared to 2019.
• Opened 21 new clinics in Q4 2020, totaling 579 clinics by year-end.
• Sold 56 franchise licenses in Q4 2020, compared to 23 in Q4 2019.
• Entered 2021 with projected revenue between $73 million and $77 million.

Negative

• None.

- 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 sales¹ by 24%, to $77.6 million.
• Reported system-wide comp sales² 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 sales¹ by 18%, to $260.0 million.
• Reported system-wide comp sales² 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,				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

 

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 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.

FAQ

What were The Joint Corp.'s Q4 2020 revenue figures?

The Joint Corp. reported $17.0 million in revenue for Q4 2020, a 23% increase from the previous year.

How much did The Joint Corp. earn in Adjusted EBITDA for 2020?

The Joint Corp. achieved record Adjusted EBITDA of $9.1 million for the year 2020.

What is The Joint Corp.'s guidance for 2021?

For 2021, The Joint Corp. expects revenue to be between $73 million and $77 million.

How many clinics did The Joint Corp. open in 2020?

The Joint Corp. opened a total of 70 new clinics in 2020.

What was The Joint Corp.'s operating income for Q4 2020?

The operating income for Q4 2020 was $2.8 million, compared to $1.3 million in Q4 2019.