JYNT - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen. And welcome to the First Quarter 2018 The Joint Corp Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time [Operator Instructions].

As a reminder, this conference call is being recorded. to Chapman conference at like for to now Kirsten today, LHA, would turn over the host I Investor Relations.

begin. may You

Kirsten Chapman

Thank This everyone. Investor Good Chapman [Sonia]. LHA, Relations. is of you, Kirsten afternoon,

President and XXXX be the our Meloun, the long-term close questions. quarter market, ir.thejoint.com found and will XXXX. Please its On can the note the presentation our metrics for XX, call CEO, Holt, and after our The operating CFO, will of ended strategy. growth open with performance vision call Peter for our quarter detail and issued at using and close slide Today, first are Corp. review John presentations. financial events will today, results March that we the Peter Joint

a have the of can Investor not release, it in received be of Relations section you press already also this found the Website. copy Company’s If

today’s predictions, may that statements Now considered also today. be results slide make forward-looking forward-looking statements that risks advised please subject information materially differ to other actual includes we and are to including turning and two, might statements. estimates, The uncertainties discussion statements, cause forward-looking to from be expectations,

our you our statements future undue SEC results or to affect against we on market these of reliance stock. these of forward-looking discussion for As result, our filings a risks other and may that caution you encourage the would placing review with factors price and the

they Please The restatement provide adjusted interest of defines income obligating are these bargain use changes events. new financial the management transparently net not to performance and loss compensation future as impairment, EBITDA, accordance the loss with or net in a before in The ourselves the the defines our reconciliation release. information EBITDA to on the gain, purchase Company or recognize underlying acquisition or A and expenses, and Company to of disposition XXXX number operating press adjusted by figures. assess are Company’s and revenue change some franchisers EBITDA is presented net important These forward-looking uses EBITDA presented way beliefs depreciation before used expenses, performance are expenses. non-GAAP management operating more EBITDA expenses. adjusted measures XXX tax the trends. of financial we’re stock-based they and Finally, us light ASC which updates as revise EBITDA which EBITDA note led because measures. restated Management release required loss as meaningful in results amortization in have publicly more to to statements any in in we comparison that minor reported a order related or

go it’s Please Turning to to pleasure slide my ahead, introduce three; Holt. Peter. Peter

Peter Holt

spot sweet and quality by The the and of is life the serve of wellness The alleviate affordable style, for we on a providing healthier growing growth. Thank you, Kirsten. you And Joint's joining We're pain all us today. help for life to improve our mission move the Joint's industry. quality accelerating is care. and patients to focus to thank chiropractic purpose health patients toward

based Our care no uses healthy setting to walk-in and pain focus We no doctors lifestyle. appointment, wellness relief only, this retail that a on on insurance ongoing patient convenient in promote do membership a services.

fronts. progress three, developer accelerate strategy, build upon franchise corporate that and were by our growth and within positive XXXX, once sale. For results adjusted I'm well-positioned consecutive locations achieve accelerate continue to retail on continue we to to Two, implementing report EBITDA. our strategies. three key clustered clinic quarter making our expand portfolio In delivered financial of the first XXXX, we to please of third all strong One, again our quarter we're

Operator

gentlemen and standup. Ladies please

patience. will Again, Thank momentary. begin call your for you standby. conference Your please

You may now begin.

Peter Holt

Okay.

move off beginning. we cut the thanks, from We're to of like accelerating The And is the the growth. providing healthier alleviate of quality that. The think pain chiropractic growing and about us but serve on mission start Kirsten our of where to and that off, sure Joint's but toward affordable to for line patients is I improve going back patients looks our on and I call. Joint's Again, thank by focus The today's I'm I'm there, industry. for joining health the wellness help spot Sorry care. sweets on. for not we're It and you all we the lifestyle. quality purpose Joint, life

to setting care that on promote wellness pain a services. appointment, insurance uses based membership on and in We doctors a ongoing no lifestyle. this walk-in no Our healthy patient do relief focus retail convenient only,

developers first quarter regional our continue the well-positioned three, achieve we're strong clustered EBITDA. again key by I'm franchise accelerate expand to Two, fronts. to within financial our to portfolio In clinic positive progress strategy, quarter and build were pleased once implementing of report consecutive continue third results that our corporate delivered making we XXXX, to One, growth upon locations. three all For of adjusted we and our on accelerate strategies. sale. XXXX,

model. open four; like important XX%. System-wide quickly or [XX demonstrating Growth sales system-wide same-store least the clinics to at slide review XXXX I'd increased for four] QX, sales, metrics our continued been of some have versus XX%. validation XXXX our comp months sales that to for Turning QX, retail business grew

sales more We existing patients with increasing the new continue and in acceptance our door model more us to post using coming strong business patients often. of reflecting same-store

grew Our revenue XX%.

continue sustainable to towards bottom-line drive profitability. Our

$XXX,XXX cash compared to $X at to Our net stable equivalents XX, XXXX. March cash $XXX,XXX improved and relatively were on XX, loss million XXXX, Further million EBITDA $X.X to December million on $X.X and adjusted our $XXX,XXX. improve

re-launched a we we count total of fundamental a open represents After and the our portfolio deal This April acquisition only adjusted Corporate the existing XX% both until corporate franchise in portfolio total deliberate the at expanding of researching March demonstratively first had of XX% positive only moving levels ahead with seven results clinics and XXX adjusted at or and that Achieving first We of holders close EBITDA from increasing waited and and in best new or new XXX for our opportunities achieve in franchisees. a gross XX. interest remained corporate as a of the XXXX to I'm to a with clinics as our growth. company-owned of clinics. manner. We're moved the a Then, step quarter during Thus our phase acquisition Further, improvements. of of break franchisees franchise – Regarding standards XXX the EBITDA none. XXXX strategy XX work been well and positive reflects clinics total. hit the clinics are franchise we our growth clinic XX, to the own XXXX our stock the during at excited in and new managed practices clinic our hard ahead clinic our at team clinic we great our portfolio corporate have corporate committed operations their continue report our And that to implemented personal quarter high. a records. franchisees. sales for first or

highest top top $XXX,XXX March, clinics gross Houston, to-date. of in in our any Our months generated new – any Texas the and in clinic in sales

With XX% marketing and fit on building my operational phase does clinic that outlier, and is asked franchise focus portfolio performance reasons and managing clinics XX a patient existing level in have that franchisees can in improvement I've of why selling effective Greenfield I acquiring the its strategy. on their clinic? new considering understand expansion plus excellent in in found we're their very impact a years we given widely. evaluating, In how are illustrate operations sales. focus continual overall time it been franchisees any opportunistically sell franchise franchise rate first networks building rate While in clinic now and service

demonetize a these we or We the open to investment, when with know other Someone's to so divorce situations the our maintain positive change lifestyle. to-date an their average through arise. event going Of retire, XX on another strive $XXX,XXX. franchisees, issue, preparing in paid acquisitions requiring and relationship we life do health experience

near-by located into transformed cluster clinic is immediately that operation. an acquisition the consolidating Our the Diego, purchase from underperforming plus fits By a clinics clinic unit $XXX,XXX. we recent our among the patient profitable closing list perfectly. criteria San in an We two California for

norm, pricing be to to this not great accepted is a was opportunity the it be While us. for

We path to reported best first quarter nine our in an time we're can clinic Turning to EBITDA, profitability see of clinics of and practices, breakeven gross improving out manage to from we've opening well franchise a new clinic this as have [risk when the targeting franchise cash. site our regional class on clinics. outperforming which down historical a [to of time which franchisees Similar considerably slide open class months. clinics. month ramp. more to average. of in newly faster protocols continues as year seven in franchisees the reduces early is that slide achieved XXXX includes breakeven by this the sale the the months, end as our in of of lifecycle biggest the time opening. the to high adjusted of estimated the best that practices operational system] sales, use new improved average And its effectively to you resource from are We're in And selection average At in corporate exceeding clinics training also our of reached developers the implementing of XX in five, accelerated the historical addition money] XXXX from franchise the of have the helped XX for XXXX the increase efficiency clinic performers operations

net track the openings to five they measures and franchisee and XX franchises guidance so for opening. begin more XX corporate clinics a sites XX later working our once in and to into to clinic to XX to identify reducing free up to XXXX help will time the our of drive negotiation believe new new us meet quickly on we're move lease suitable increase a new of year. they developers our Additionally, We clinics for keep of thereby half these can selecting regional that

additional slide remained to indicators are six, also strong. Turning growth

compared we all licenses year XX additional sold of April alone XXXX. for XX in licenses licenses licenses sold net new During QX a XX to XX franchise and total to-date of the for

to an a months license clinic. it you As and open move may can take from between recall, XX sole nine to

our and So well license in XXXX bodes sales XXXX. for growth in the increase accelerating last

answer You simply. Well, what increase this license may is in is ask, sale? driving the

highly regional program. engaged growing developer Our in

XX% ramp the are XXXX. up to to regional XXXX, Our developers of XX% strategy sold compares by in growth. were key That RD. In licenses

field and define As and identify to that we qualify a number to providing up territory rights to in minimum assist the open potential we And and territory. assistance openings help They new March clinics initial clinics the of franchise of the reminder, had part fee country. franchisees in us turn the support. us regional clinic for royalties. the ongoing part sale training, and developers and developers in of we XX one-third in approximately new that regional ongoing opening of At of share XX,XXXX operation overseen

XXXX don't XXXX. leverage expect maintain much developer while program a growth we to to committed affords the it of regional pace same increasing While us did We're we we in in as as expand.

developer continue education. During regional the our we quarter ongoing

First regional of participating long developers onboarding all training the in new week program. all,

for our role full attend, share a to conference much to twice day succeed franchises train we conference updates staff to And program ask celebrate receive of we're sections. RDs selling operations, then and regional an out all hold franchisees education, their came meetings taking to and two-day make rather them practices, the ongoing question, meet more, there And national than of help a to training the franchisees for in discuss reach the all of with XXXX series enable in year their easier one field Additionally, the for support, our and performance. to April it to best potential.

ahead that to of seven, supporting mind, clinics infrastructure committed our driving part IT to franchisees, corporate improvement. dedication developers as our our we're with slide in Turning ongoing With we're the strategy. and and regional to marketing

that in upgrade software community events, contribute access integrating collaboration replacing communication multiple we tools, QX an sophisticated resources a partnership shop our communication employees streamlines with assign engage management franchise join to and or new platform, feedback. documents communication lines stop believe and During a path, platform. corporate by of pre-existing cloud-based for one provides and important franchisees and disseminate and We this is that's the communications, a launch franchise our

practices introduce our to stability, proven Walgreens, Manjula Information systems, experience excited we're a team the to IT system lead Airlines upgrade Currently Technology, United Additionally, of from years including of VP our of companies scalability clinics. is tactical for class record the She best eight, Turing growth of to our space. to on business variety and digital department. improve in consumer leadership and over to website. brings world launch track robust be effective, new strategic XX and our important and software wellness platform effort. Sriram We and small used of [Indiscernible] leader focused industry [U.S. security IT new run driver that is implementing a and slide Crews]. included we marketing innovation our health strive our the our our to facing within we completely In box and which XXXX strategy our SEO overhauled of retail another

XXXX. to benefit While results we we improved these continue are XXXX, in pleased with expect efforts these to in from

to strong to performance advertising and social, sales help other QX fact digital SMS. yielded Innovation spend. channels they email such traffic, marketing in patient our search, optimize paid XXXX new in as clinic ramp gains we continues and in leads gains web conversation to paid pursue accelerate growth, as profitability and fuel in In new

to to our diversify platforms. leveraging that, video And engagement review of we turn John experience can media believe on social our greater human over we and business the our results. traffic Overall heighten brand shareholder with Additionally, and that branded amazing from opportunity increase financial the call I'd larger interest footprint all testimonial to in have grow content like leverage to and value. and our to IT the patients stories doctor' nationally, our by awareness to marketing our to our

John Meloun

hello and everybody. Peter you, Thank

quarter few as provided our corporate on We a XXXX clinics for two well operating financial XXXX. the performance unallocated now quarter the take broken the by segments, the our of discuss franchise first of down compared first operations, to to corporate of detail I'll have overhead. moments as and some highlights

file segment Friday, data XX-Q, XXth. nine, be May Turning on to in this will available which our slide will we

of for system-wide the two, business one, of As retail are of growth most the a reminder, and comp sales two sales. rate concept measures health important for gross

manage our bought XX average of existing At XX and March that business and our XXst, boundaries months further first opened clinics a As XX or million. segment for $XX for to ground to first business. months own comparing quarter XX% the Gross XX their for have the to our opened XXXX up. the System-wide more or corporate increased our amount continue of have clinic model. to and average Gross demonstrating all sales improvements through acquisition time Peter XX% sales increased significantly, grew comp for from XX% more operational increased sales mature for for comp all QX more consist mentioned, sales Greenfields build months metrics, clinics of some and growth clinics, of strong we any of are system-wide we to from capacity clinics. XXXX prior buyback XX months demonstrates successfully these opened are an now buybacks, XX%, pushing XX franchisees on clinics our deliver strong quarter clinics

XX%. XX. increased or revenue corporate our implemented. Cost the from over adding in the are clinic is clinic clinics franchise mature, first revenue operations same first in grew the amortization higher franchised increase, General last operations higher our increased to quarter of XX% same million $X.X sales marketing profit corporate in to XX.X% $X.XX payroll or clinics sales XX.X% operations XXXX were improvements $X.X or of and or XXXX was allocated first marketing improving operations of the compared year, clinic to was as $X the Gross growth revenue and improvements increasing our experience million XX% Revenue the to $X.X sales and Net expenses both partially lowered segment franchise million, contributed million quarter driven from revenue depreciation period was XX%. existing company marketing to or This the to last million from XXXX. from clinic The managed $X.X compared for in of share. revenue and to million $X quarter and expenses loss both administrative and was in that same they due continue we comp Consolidated end developer increase XX due year. XX.X% improved in quarter $X.X XXXX sales to due million, from first of in attributed XXXX. to in royalties regional by since XXXX. to portfolio XX.X% primarily $X.X by million period our the and first of first in in higher reflect clinic. operational the $X.X increase have XX% $XXX,XXX last clinics quarter territories. per revenues segments gross were to XX% slide corporate million revenue increase the million Of of increase $XXX,XXX $X.X of loss year. XX% of Selling of first Turning the regional period increasing or from primarily XXXX of of in is quarter expenses owned expenses. The of developer offset the of the Franchise

operations XX% clinics EBITDA year. overhead same improvement by expense. XX% or loss franchise corporate contributed corporate quarter and of disposition was adjusted of a loss EBITDA related million $X.XX million to XXXX Total First in or the million contributed and $XXX,XXX XX% $XXX,XXX income quarter non-operating impairment the offset $XXX,XXX leases per XXXX of improving last Of $XXX,XXX adjusted or share. charge the $XXX,XXX million net or $X.X the was included in of was quarter compared to the $XXX,XXX, $XXX,XXX improvement, $XXX,XXX, unallocated first

income the consecutive and Our third positive segment quarter. clinics for corporate $XXX,XXX was now adjusted EBITDA

at XXXX. and million million unused end. Pursuant XXXX, credit of its of terms remains of December million of quarter as credit. cash borrowed our agreement, by XX, at on million $X were the during to line of The quarter from the down cash sheet equivalents XX, the first the As $X.X the XXXX, company balance $X March terms required $X

for growth slide our I'll XX, for The review indicators XXXX to XXXX. Turning strong. outlook remain

Peter franchise XX to up through to was we XX% compared for As XXXX licenses all April XX which noted, in XXXX, have XXXX. sold compared

double have developers they of More the Second, of XXXX than the accelerated agents are beginning now deal. growth. XX we active in regional than our

portfolio the strategy. performance range clinics new XX, managed reaffirming from positive will XX and/or achieve franchised acquired to we guidance. to three openings Greenfield existing clinics, EBITDA buyback clinic are opportunistic that, clinics not we With including we in XX that Greenfield our adjusted since XXXX to new Finally, to buyback corporate an in to goal from are expected our XX reengaging the which are and two clinic of Total corporate-owned of change are up clinics, count. which up or franchisees, total clinics be

and in call EBITDA million million for $XX million, to adjusted We revenues XXXX. now compared $XXX,XXX turn loss between XXXX. positive to time to over $XX a your be I'll $XX expect Peter. in And back Thanks to from $X.X the expect range and we between million everyone million improving $X.X to

Peter Holt

Thanks, John.

they United $XX neck had Now pain United slide chiropractic a Nearly significant pain that healthcare back two-thirds spend including billion growth significant Annual The turning iterate enough $XXX dynamic XX, Report billion profession. with Gallup-Palmer cost on annual XXXX in alone than of some served start have help Sates more we've would adults I finding. yet States operates fragmented market on reveal the or on care. $XX back of billion, to have significant that opportunity. College Chiropractic pain

importantly, in preferred more management. with ongoing for in have And drug so last month, of XX% adults an more half and Although U.S. than five XX the pain who did neck free years. than most pain back problem

reduction don't study more by the their however is that guide Progress chiropractic Further, to [Indiscernible] half compared disability. to those new of to people reduction of Chiropractic published to surveys and did likely other quote experience and the most approached" Foundation therapy "spinal low profession. chronic finding XX% XX% approaches a mobilization include improve So need back manipulation SPINE the conclude manage go about reduce reason physical and significantly back as disability I reduce chiropractic keep pain fundamentally they better XX% in know they pain, by in pain, is function compared chronic care those and lack such surveyed to not in pain ways in of a chiropractic a and low XXXX information life Journal manipulation as philosophy and the main when other

is high out us access affordable quality our continue in So need which that the chiropractic to the general educate specifically the be and before about and Join can clear. public about create to opportunity We chiropractic care. reach

goal Based patient when have the and our noted current Joint we patients that base smarter and States the usage. at I in is we digital marketing. As before number of clinics. to drive awareness them the better of The care up to plan the analysis increase investing of appropriate in detailed open are encourage the and believe XXXX we on user and United assist least opportunity to communicate

we place, to XXXX that tends common more that becomes national show that chiropractic further study accelerated because tripping point the drive This the to can increase. important growth. is units be expect that a recognition However franchise number

clinic and a to revenue recognition scale. capitalized brand owned Turning us In deliberate franchise and is stream essential in company segment regional establish and build Overall, increase a franchise This to enables model awareness to our on Slide accelerate measured and XXXX, helping sales expand strategically for fashion. increase plan hybrid a to steps. corporate and build clinic XX. and managed we name and predictive to strategy and development us

accelerate a fast a is chiropractic organizational regional community path for corporate world-class Slide a clinic maintain to franchise vision chiropractors and be the of long wellness expansion to class developer to execute continue Turning footprint the career to and and term and provider robust world which premiere platform. build we be our culture, the health care IT plan, of towards XX,

employee. and all Q&A, to for our entire up our like Before franchise I of community I'd open thank

hard be without our their possible commitment not Our and work. would progress

the I'm to ready begin Sonia, Q&A.

Operator

Markets. Our comes Capital Instructions] from Lake you. O'Neil first of [Operator Street Brooks Thank question

line open. Your now is

Brooks O'Neil

Hello, can me you okay? hear

Peter Holt

you We can, Brooks. How are doing?

Brooks O'Neil

I'm thank doing you. great,

hoping was a you sort describe willing they occur? to see what difference franchise if of the might I so, performance and are the stores a about you think differences between in talk corporate be why So, those stores and whether and could you you little bit

Peter Holt

say average would franchised a franchises are in I in I've that corporate a that's there more franchisees reasons Brooks, that seen, XX%. Historically out see managed there. for unit around were lot a a Well than of units performed, portfolio. unit is And sure you by And there's a that.

as minding on Joint, look really example one relatively I'd at then the of corporate interesting of for they're that just for and that that’s that successful when you the an sure of franchisees interest. possible. that, One system, the things a same. that you they're say as versus When the comps, the aggressive much about really just you're that at is because franchise them running have And profitably talking me making is clinics, unit more are and clinics

portfolio. when that difference is a I but performance system there in of some only tell spreading that lot significant really that overall franchise And of examine portfolio our out there is the to two the for particularly performance and been utilizing in can't connect corporate with of over our corporate best the you our rest so, is the clinics that taking franchisees. I what compared them is years not seen franchisees practices I've last a this these not in of differences we've from is truly

Brooks O'Neil

about maybe future talk same how about then truly see X) performance unit comp sort outstanding driving The X) the clinics but and great. is and in potential growth? to is it strong available about just just continue that? the you impressive. your I'm nobody your you can little predict think of bit perspective, Could sustainable what of or talk store as X) you Can you That's curious think talk a drive capacity is, to obviously you what

Peter Holt

It sales I for that mean reflection a all same such I price. One performance. XXXX driven you thing XXXX, have amazing. questions. And it's a company certainly, comp of consistent into not think has had a I never were of look stores by a truly those mean, I in is great sales change and number And in as worked things.

often truly Sometimes And more you'll of this or increasing using time. the our patients services price are increase XXXX, store patients improvements sales have into XX% price more them did our patients see in same product of here chiropractic. was it we're new portion XXXX On on and of to we first a right and a coming driven. of new our using were or all the average, now those new for on price 'XX,

And in of us. somebody So, it to isn’t just that chiropractic the bringing never before. who's have ran than we're new that had front in that insurance been or change, there been just we care and out I have think of people is really opportunity greatest

chiropractic in try really we chiropractic I XX% met it people they care. And referring that If American of three people don’t understand and at that really at you're United what is their to or to that I the all. is think around limiting think look the them States course care one access are was is, understand the that try which saw you care chiropractic you willingness even

retail Now, up care I think the never chiropractic brand the buy into where taking frozen at a they opens really opportunity or yoghurt buy by a people to before. concept haircut, to had setting people exposure who their access joint, and the get had haircut a for where it a get shop,

expand. market the we're seeing itself So,

of sales. we're a why that's of seeing increase think same an I store portion

more for amazing. open XX%. QX, way that's clinics the that sales get or increasing XX% long our hard is case, question let's that's okay, -- four I is mature you to XX in That's Well, to that's As of the look to same how a can you're of on for store anybody handle that to one can a you And least question And this go they at the been unit at really for months on, as ask, whether some have. try were months imagine to at, is years. at QX. look for XX

asking that enormous we so I is kind and of just Joint the would know amount your that system not you of question again said model, model shows a in And capacity. of day this do part we of still about it's this the third a was as have what before again of And is. underutilized that And top I tell it capacity. that the to business business

typical and front on is wellness equivalent around the four perform together. going typical can the the a too and doctor that to probably that on have they and to day doctor given in what that that in So $XX,XXX coordinator that about time a the wellness coordinator just working sales and back in clinic any average doctor

increases, which is amount minutes And that that so sitting day kind adjustments. other haven’t of that add then every huge so doctor doing system because what its you you as the we a for capacity there been Are is just of using. shows we that not incremental three that open doctor and he's is to this increase another way still can studying there have time the and that, full we're to

store same continue the for the to sales. room and a there's to all So, grow clinics

Brooks O'Neil

been talk I'd think for you've clinics. incredible think fantastic. to other shorten time that, and love to breakeven it's little about new bit I that's to of that I One you important the just thing a able the

you opening to you just more about for bit you the and that? I little on hit corporate stores. it's doing, going powerful to go that can whether and you've going very talk But turn be attract further you you working to or you're what's what a think think could think more wall that's as franchisees

Peter Holt

wall. we hit it's clear that cohort, if at have not Well, the XXXX we our look is

Brooks O'Neil

Alright.

Peter Holt

We've performance XX in that clinics months XXXX reach nine average average going on that and opened the point. to about talked month that that a from roughly XX breakeven breakeven in an had XXXX and to

the that you ramp at noticeable graph those they perform If is continuing significantly previous. higher what's experienced historical showing how are XXXX, look the we've to from is you in that years which clinics into

retail my that And the class. that to breakeven months. so, seen is be an box ramp are the small always in class, franchisee and to nine see average that think ideally seven about, we we've XXXX you six experience And that XXXX that between is look clinics, when compared as for even on at which we want somewhere time to to faster its I environment and talking

our in XXXX that to months nine at over our for it look an of goal a to take certainly and we average as nine as months push is that business. beyond, six to so, that is standard closer and And XXXX

Brooks O'Neil

kind of insights. just box other the one presence national there you time Perfect, in guys appreciate company are? sounds chain branded that all to any out I'll build and retail chiropractic good. you small I trying that's seeing the more. Are ask

Peter Holt

you they're and Yes. to that We're looking seeing some the small get made in competitors. their there. go if two was the missing out units is it I a or it's while thing you'll and ago Joint site, three a a And picture at on and the was they Dallas site units. logo retail only franchising, have there

of all that expect we would own our I spawn yes, competitors. will so And

be a national is you'd franchise been what of to a retail really would you called based it's kind of providing it's that's find that It comp independent continuing more this that's really not and than, kind but we're on the close If an driving. and there anywhere it's the doing shared concept considered out that to and chain closest HealthSource. look what to is that's rebranding They're they're we're to that nothing comparable services. stay focused retail franchised insurance and doing, at more model

specific what this convert me to to a be truly in have will you and catch there It's model. is then surely, acquire in anybody think for that this exciting manner. first for to it's there I out up. building Because rapid this we business that really with is going if is difficult nothing advantage compete that to want industry mover that unit-by-unit

Brooks O'Neil

Peter, great. up. lot. keep it Absolutely, Congratulations, a thanks

Peter Holt

Thank Brooks. much, you very

Operator

question comes you. Capital Mike Instructions] [Operator Thank from of Our Craig-Hallum Malouf next Group.

open. line Your now is

Mike Malouf

Great. And my thanks taking for questions.

Peter Holt

Hey Mike, how are you doing?

Mike Malouf

them can developers, us you start if a a Great. big Because push their look give the to XXXX. or Peter, here great. of for implementing how Hey area. sense it franchise doing takes I'm you like and regional to how you've they long seems in it are had really at

sense lag a far here XXXX nice as have is to of modest opening a probably there push just in so, but give You'll that. as Like a that.

Peter Holt

a sense. that I and makes lot it's Oh surely. could And imagine think of is you a it really

those, of we expand directly to of of XX their a Now, out were who what's interesting in really them of investment. bit developers that on nine existing business. developers regional These sold regional came XXXX them, our own or want franchisees existing

our pilot bit do you're because the model, to sell itself. business help a what to part territory. is call them you're at a heads little developer open learn unit trying typically that territory. as that I to understand then in that gets to of up. becoming one them when a base And model that you're use going what going you in And So, to Really regional of clinic franchises a as the to require least in

don’t right cases territory have in the clinics have themselves. of beak sell in Now, the all we and even they up to our some open that franchises, it in

of one We example are is of their them are strategy. looking have for couple that as deals in a own using our that,

seeking they to those clinics resources have open franchises they aren’t the So, up and themselves.

the in on a model I so, sell it Joint okay one clinics or and and of more of you be run take kind early stages that and more or you up going the and able builds one from builds in this away territory really to open effective, And two kind get maybe we'll traction and units, to that of you then examples to get for see do itself. about they more you talk as get like the And they're clustering, moment. it

called an looked company the developer an to units business. It fair it look aggressive which's open created from beginning industry XXXX worked they and second. system. at they them XX took the years, too open that time you today. innovators; started years Mail their years industry; regional XX that them Boxes that first the in that to If that of for used a of before another the at strategy from in they them three And you mid, didn’t XXXX long, for if get for store took the first And work UPS exist for amount Etc. that really a that

set of of development of their The units. regional that's And the XXXX capacity a of reflection developer the model. second their direct and

kind why of that's see so, you that sticks. And hockey

yourself you're model, have think kind first years, not really every experience, developer in leg really accelerate of you're that market starting your place. where of of to much see and allows So, getting then I you're it's that what's a you going more and kind stick the the beautiful those XX angled And the settled, you're hockey growth growth. getting degree leverage cup which to establishing of experience to regional you

Mike Malouf

us stirred been sense the the up and one you about there to right the a for optimum to owned. Great. have I'm play two at to would and the you and some people over I'm sort you opportunity of after buy got you? a to in pod year probably assume sense and sort coming if how kind could of XX% while. at I bit give just Have turn XX a can company little term, that That's now that done every demand. you available One that, of more mix the corporate one purchase have XX so that you on regards said there's Thanks. at of you bought Giving pent sets there you wondering back. then, wondering to some And that. certainly you of on since near that the as clinic of look very secondly you've of is you've sort update hear with XXXX it franchises first sort what corporate kind helpful. questions if I And one is in between on us units, and then the it least closed for think unit, and

Peter Holt

would take Sure. selling on to buyer. franchise X) franchise that second system if it's given there's I think really the ourselves or you XX% is franchisor. finally have clinic Very it's the here true your right a know we any that you’re first, system to the pent do time. and and a seeing that you're system and franchisor any for a And in franchisees investors. almost are question that buyer really demand a including that That of that’s not don’t any the I've second I roughly the up only franchise of up been any the answer approved new no other so as be that often because that franchisees new is think I different. And part of and part have

check, they make our turn first And have to just your of criteria. of you they them, background to else, meet right go X) to we so over the sure to to kind we So, have somebody prove always refusal. franchise their have have they

for that that they have well there sale, comes if they, And complete clinic transaction is there's right have that so, they the and ultimately transaction. we to assume they've transaction, complete any that before up they to, the before

focusing California, this we markets Mexico three pace growth, That's call of we stick have and acquisitions we'll New strategy. other on measured that the currently Arizona. so, we said we're are I And that corporate on corporate And at as in XXXX clinic clinics. very to any in as look clinics or

on XXXX. So, acquisitions would we that potential is kind that be of pool in of focused

percentage your overtime it's have and systems. versus right ownership a I get I've other felt does kind question of and part that, corporate I great is of question. a it it it is I franchise? time time asked The evolve again what Because seen happen broad And And it all what a is of the the consistently answer. Well is, XX% say why, first and that and and if of can course change with on really what the could capita. change to that's the that of can percentage or that?" managed, XX% somewhere now to between we And question XX%. this "Well envision now, of is our is right that going I owned And what's over time. sweet have offer, corporately you change system franchise

just If at going between million that you just time quarter investment break real overall to even, use to numbers the say ran look and build it's that to I'm a dollar some investment.

ready open $X in as I up million. for I units Greenfields I a have I planned to to $XX million up that. XXXX, better have open If want XX, and if so, have for four better And

it opening XX of truly would I question your ownership answer But of clear to Now, very that deployment be that units percentage capital. be does to a in about is not want change, of question I'm XXXX. how

the and If to you and support the development also go I profit slow corporate capital using pace of own to franchise don’t additional continue look need I run can at the That my winnings. side the and business. measure with company of of business, the out

look have you'd If another to change that, want to at you option there.

Mike Malouf

Yes, appreciate it. that's a I Thanks lot great. the color, for

Operator

you. Thank

Our comes Rabover Artko Capital. Peter next from of question

Your line now is open.

Peter Rabover

hear me? can you guys, Hey

Peter Holt

Yes, hear you are Hi how doing? Peter, you.

Peter Rabover

down? margin. I forward what is that EBITDA XX% expect this that pretty expecting of that going I Hey, you you? or continue incremental like sure you've maybe a something would what had was are I make to guess make just wanted so to and I pretty about of XX% there the guess or good through that Is go you up how would quarter guys something looks Good, thing it had be flow

Peter Holt

Yes.

into corporate in say So, franchise would at expenses additional being has the have and that capacity when the I little system. model. you call, capacity Both as we bit of add clinics operating able look far the to kind sales growth segment as additional grow on having the as without are the excess talked operational we've a to

additional There's see bottom clinic overall excess So, be growth of portfolio that sales to line. generation bottom corporate with in flow to generate the at line. I flow through those that we do sales, expenses the least an added not to as operating growth sales a have. continue you'll would increase, capacity lot that need the the you the to expect the to through from

Peter Rabover

high just sales. right? you're revenues, what that clip, Okay. clinic guess great you're expecting store your a XX% XX% the And double-digit to I mean I and your about -- your grow. obviously same openings then, growing And at to maybe

the you make be are to that through things out in developers control? would is or thing your more XX% from control or what XX%? Have those of numbers those So, just to regional coming guys, XX% your go it

Peter Holt

now perspective, much with getting Really don’t store is sales without with very too regional on openings developer and The what developer, XXX revenue an influence. complex impact a really minimal think growth sales. has influence I guideline. as what an accounting openings that that. as now have From Well, have far license as

to in offsetting accrued to franchise be As the R&D I'm sales a transaction. do offsetting line a would higher regional continue franchise be but same in that license sorry, territory, be would royalty the -- recognized developer, revenue that specific be still accelerate we there fee would

openings clinic see higher you of does territory a that as an So, R&D mix have influence.

versus when of what collect growth versus the portfolio, corporates' wading However, continued in I guess kind royalty flows all there, you line. see XXX% waiting the the the the we the clinic corporate our that the is topline overpower our shadow we're doing to bottom

line. So, in through of the see flows bottom growth to R&D really what to essence in impact I material our a don’t

Peter Rabover

the Are question XX much Great. are I are Thank so you, they then, last your month the those guess around XX% same price, here from? comps are they clinics, had that. that what? again sales, store ones the coming where XX% Virginia, And I plus I'm on volume, results, thank by impressed you

John Meloun

change a QX. ad are h Well, price from we price in certainly not certainly they haven’t coming because

they absolutely And that coming from so, are volume. are

us it store who those whether sales patients months as often. And on coming same wide are two our new primary more XX% so, or to improve drivers are from XX some patients new than the And those XX%. the those open door, coming we're those of was at for considerably system also look at our more at seeing now, achieve or of for in increase. them patient if counts, we existing And they're using the

Peter Rabover

guess your this is follow-ups so, XX+, I on two And portfolio What of one? that. percent

John Meloun

it's a I think around probably XX'ish.

as So, XX we'd than the been of the that they've part network about that more well and well. speak say it's XX% not but is months; estimate

Peter Rabover

line? about drive price plans great. price guess Okay, I then, your mean pricing that could thought increases just or fronts I front guys that have your And you

John Meloun

that it. is patient to the utilizing pricing time at announcing making something definitely different certainly we're the the It's in affectively a looking nothing we're at of ourselves looking to sure at something that make we that pricing ways appropriate structure that we terms it's That to all for help the patients are system are we're markets the but to appropriately that sure what look something serve. most that we

Peter Rabover

you do looked done have the the them at it customers to sounds you guess, Have like demand guys or you've some price think experiments you give that? heavily. they the that I long how volume

John Meloun

that access one, think this one at, look is business affordable. to we're two, of the ease drivers beginning it, you of from incredibly cost is just I If the the of the

what typical Joint. chiropractic If you've on you adjustment had a be the per insurances if that higher co-pay even if you got that traditional remember far the basis care, would is

our structure. so, patient related of is it And offering. no the system I question on to the wide we And what increase that and effective affordability look in our at a as the convenience think is do that is a there basis on the is most pricing

did we was XXXX, sale of the was our it testing program for XX% which our in a did board. prices. So, is had would, in considerable month. clinic we much. from XXXX, raise that our October have will found four clinic, should patients. an back patient terms the recognized of it And And regional that that and of we its we that pay And We $XX monthly What of in increase we that in did in adjustments fee of and testing that fact we out that membership full off average across that fees. that very $XX. of was a what from a prices that then pricing kind $XX generated access most or them little monthly is is very between or to we on And a fee did has a do group the roll and what after fall we sales

Peter Rabover

because between the can offering competition? it's of in the what just you you I were guess get parity kind that Is co-pay and the price the it guys act competition,

Peter Holt

No.

said a patients business I are chiropractic. new like of the access, ease accessibility setting, to think, in I XX% our the of retail really what's really of it. is driving the It's

was. is it didn’t to then she they prefer was; Joint, me the never to access could before, afford to know go these chiropractic was So, what who are it where Didn’t know people the didn’t know had okay it. people care they

who that the I convenience you access so, think ran they but is of have is the of for And may quality that insurance the think have that of the business. us patients the just care, ease absolutely and traditional out I service get it of of chiropractic certainly drivers and this our

Peter Rabover

time great. I'll and Okay. don’t so you talk for Well, that's And Hey, I guys much next any you questions. thank quarter. have more to your

Peter Holt

Thank much. you, Alright. very

Operator

does And and over closing answer our I the this to turn you. ladies and now conclude like any session. Peter back Holt question Thank remarks. would to call gentlemen, for

Peter Holt

Motocross she's you to you I leave Well, interest. to sales with patient thank like works the your want I'd Lauren no for in all XX-year-old testimonial. And but weekends competitor. a

separation passion. regained to most and and few accelerating the Once corporate have owned or bike. our quality, affordable and clinics joint a blade sales, Over care again, our form this her bone motor franchise collar to chiropractic to negatively in adding of and resulted and program offered our to and impacting on injuries recently AC shoulder my years the the footprint racing has our that the a in and you by contribute pursuit she's managed adjusted. the cycle wellbeing shareholders connects and and strategic full Joint and than Lauren is our a Alright, our been quality of her arm ride. in well continue range of and value patient's regional patients motion chiropractors, thank delivering we'll with her her performance Luckily, thanks we're of year developer expanding measured more member of proud our to convenient, to broadening our a back for and stay

Operator

Ladies participating thank and program. for concludes in This conference. you gentlemen, today's today's

Everyone, have disconnect. great all day! a may You

The Joint Corp. (JYNT) 11 May 182018 Q1 Earnings call transcript