JYNT - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen and welcome to The Joint Corporation's First Quarter 2019 Preliminary Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions].

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

begin. may You

Kirsten Chapman

open Thank you, close Joint will presentation Jake afternoon, The with President after operating for our Investor XX, found performance XXXX the and financial and XXXX Tiffany. metrics are slide call Good of quarter Results discuss Joint and Relations. of Kirsten Please vision a Preliminary financial at growth Peter audited will March preliminary preliminary that Welcome XXXX. results our LHA CEO, we note, market, Chapman will its the and Peter close first Today, to questions. review the Call. our Singleton The long-term for Conference ended be Corp Holt Quarter issued ir.thejoint.com everyone. First Today, using This our events. can is CFO, strategy. quarter

a in of it not release, copy already the you website. company's the Investor If the have do of found Relations be can section

advised, uncertainties statements from forward-looking may those affect materially will and and today. forward-looking relating future of subject Slide cause statements are our concerning As provided position could statements including differ estimates that on important some discussion, make please actual strategy, business forward-looking to includes today's the future today's we Throughout plans statements. X; statements and that discussion predictions, also based management. risks to and expectations, to financial objectives The our results present factors operations, on current made assumptions we are be and

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

on clinics except the these our in P.C. current now their the material These the New Therefore, Revenue already Mexico known align and deferred and states The chiropractic results the and these in rules, state will full management which identical and professional be around sold recognized provide accounting Please from updates new increase G&A to we're not those release be instances have a no change or doctor the P.S. into the licensed Based of and plans by note, in statements. packages future cash all on plans. adjustments clinic information consolidated has of to such previously require deferred Arizona increases in operations now adjustment operating and company P.C. revenue and statements. the was corporate packaging then would no patient its impact have its will or events. transparency on to in has these in the preliminary To to operations line P.C. a expenses obligating into represent when agreement wellness with states consolidate revise would services, This ourselves as non-P.C. accumulated and deferred of isolated results financial are company to our chiropractic visits. will company statements the managed to that the period states. flow. licensed in chiropractic a one packages operation to of treatment when will bottom result revenue the plans will adjustments forward-looking analysis, and offers enters any recording our with publicly Finally, financial as a uses amounts and the the reflected our revenue light entity and impact the services. a

the the adjusted presented EBITDA The believes commentary preliminary management by statements measures consolidation financial company the preliminary EBITDA periods they understanding reflected in press reflected because a that income management as figures. the the in in P.C. revise on measures. and provide notification Management will so used net loss the the amortization to the view These on operating adjusted are depreciation company a and five performance, and EBITDA The as to the intends reconciliation the defines the impairment net transparent to income the as interest, company or to of operating SEC expenses, Form presented performance bargain uses before company XXQ financial is March or assess to the adjusted trends. the EBITDA they loss of XXb-XX accounting defines XX, the and which related XXXX expects years, important comparative XX. of adjustments company's statements SEC past EBITDA expenses. to the file EBITDA underlying has more such, historical acquisition-related of May expense, late A are the with EBITDA stock-based As are affecting financial reader file Due and tax and and adjusted financial release. before net quarter filing or ended non-GAAP for in expenses. disposition purchase gain, loss compensation

Turning Peter Holt. the to go over Slide sir. call X, it Please to ahead, is my pleasure to turn

Peter Holt

stabilizing new IT stabilizing the strategies, to Thank We success, our remain franchise clinic executing the delighted driving momentum including our patient accelerated beyond strengthening EBITDA. our adjusted improving consecutive GAAP net increasing initiatives you, quarter, now cash for the shareholder corporate platform, that quarters Kirsten. sheet, accelerating and improving within And I'm the joining and value. positive thank business key are portfolio increasing all of delivering drive development to development income and and continued speak expansion you you pleased seven with report and moved focused counts, of balance performance, clustered locations, positive on growth today We've corporate us. achieving our of our regional forward and and company's profitability. security clinic increasing

compared We franchise compared QX the XX period As XX result, seven in to We XX two QX for XXXX. to strongest clinics franchise quarters last and one delivered franchise same managed key XXXX a corporate a to we've -- and managed new the no company compared to review QX licenses opened or year. XXXX. owned I'll metrics the units of company owned date. openings sold total in greenfield for XX of

Turning System or opened XX% least at sales wide comp to X, sales grew wide for been Slide store months quarter-over-quarter. XX%. clinics increased sales have gross retail same system of that XX

million achieved line bottom was consecutive and on adjusted $X,X income improve million. we've quarter Our positive to GAAP continues cash million. profitability. compared at EBITDA our $X.X net March cash XX, XXXX were equivalents for $X in million XXXX. the quarter, sustainable Further, And $X.X to again XX, Once unrestricted reflecting this of positive at December seventh what

expansion strengthened Our balance sheet strategy. supports our

hours care. life some concierge I'd get the do weekends. this and in services no background wellness is is and through a of no pain The patients providing a affordable we routine newer convenient Joint's Before alleviate chiropractic quality setting details, of to evenings mission on to into of with to help Joint's our foundation Joint investors The improve and company. retail revolutionize access sweet the care. toward is and convenient welcome provide style industry. The appointments, our our The to We like including operation the growing and healthier chiropractic move to spot membership-based The health purpose insurance and of lifestyle.

will in best wellness architecture conducted The research help to focus our accessibility, of relief and are in our care, XXXX. pain by we verified the themselves. we as ongoing on attracted empathy XXXX. due the to This credibility Our efforts on patient version extensive live our guide building doctors and Joint patients enhance the Patients to as consumer brand us

Turning to review Slide portfolio the X, during the first let's quarter.

we count closed bringing to as of unit back XXX. of Regarding total franchise opened unit for one XX net March one XX, a franchises, increase the clinics, bought XX and XXXX

Regarding in California or XXXX. greenfield opened opening managed first our and February opening California Azusa company clinics, owned took location place the March. Carlsbad, two was grand since in The we

addition, the Notably our company acquired Costa after XX nearby closed. we clinic clinic two portfolio. in In into XX Mesa, We In Further expanding one. for year quarter in in opened we Los consolidated clinics our reached franchise the third -- Arizona owned in Net, or Flagstaff. XXXX the corporate California, greenfield March managed clinics. we've Angeles March.

greenfield additional We in expect the only this QX. clinic corporate to be

XX% XX our acquisition company XXXX, of and grew March Our the guidance to one is open to four -- acquisition. eight same clinics managed we clinics. to XXX by a open franchise compares managed and or total in Through were XXXX, of period to full clinics. This company-owned company-owned XX% is year portfolio and At one clinics, three XXXX April we of consisting end XXXX. the greenfield of had were XX,

opening time from accomplished and we developed. months that achieves to protocols our break in from months operational operational Turning to Thanks XXXX of approximately average to new experience the nine this tools break We've We've in even to performing well X positive Slide six a our XXXX. franchise continue to we small months Traditionally, goal. months. six box efforts. to impact XX retail XX of X, in even and historical months reduced the to

same as the For better greenfield using success. the or trend our strong are And clinics, to we programs early XXXX than is class. XXXX our tame similar

as start Importantly, that success evidence tend the strong. impact we of to ongoing have stay is this clinics strong, that

of franchise almost the approval our quarter us new three potential multi-unit or our we regenerate stream. as through let's RD franchise sales. to XX the license to slower quarters with the XX our April bringing regional to one and enables have work Traditionally, quarter support continue sold end date experience territory In The a repurchase IDs the X, XX number discuss matures, FDD. of the the the the for and expectation to compares for to our or disclosure accelerate developer From XX RDs of the to XXX% same XXXX, we and to Every statistical their Their cover be time to This our little of time prior first concept. of the some growth of process to the in the at the go royalty were leverage license we patriot a franchise number FDD. sales closed higher of to half for the metropolitan franchise areas for were these United Slide to to key document perform last year. or April, year identical franchisees Turning we update franchise XX. drivers, licenses We Today, our sales we the annual program. rest as sales license RD sales expect States. franchise each period franchise to state's tend and of responsible XXXX. Joint

had the of bought units. operating back This quarter, we rights XX Carolina South which

to schedule Virginia aggregate, in to sales regions. This carries and of expand for rights clinic of who Pittsburgh, Pennsylvania, In a in the new Virginia we existing to his Carolina schedule In for expansion seeking March, year minimum well continue XXX RD XX beyond. of rights longtime foundation and purchased North a development also unit expand This and in territory and business. We bodes newer originally development our continued total is minimum a RDs sold commitment units. XX-year clinics. to West territory comes the XX for XX XXXX large growth portion

marketing. Slide to review let's Turning X,

patient We continue and only awareness our methodology and not work to generation our enhance but engagement. lead also existing in to marketing in tactics optimize building

We've training new Our marketing delivered how the in for a marketing number overall is which chiropractic awareness leads convert leads tools. QX improved practice to of franchisees We're and for of upon record robust our benefits to enhancing organic tactics important clinics leverage to which also these of care. increasingly the our us. SEO our and nurturing our source ability foundation prospects the is also our digital to built campaigns lead utilizing by and boost brand on a

country this co-ops. our tried TV working effort via which QX, and CRM exclusive marketing This the into famed level. with in We're are grow campaigns to add areas advertising partnership patient. this tactics the minor believe now marketing like We compromises attract new collaboration who've an we'll our people XX% at our and Raleigh YouTube baseball local of SMS. never of allowing of helping In entered For example customers local by platform. our is the chiropractic example in spots Durham is before targeted investment One throughout league sophistication or to we patient like our trade these to increased Durham each increased aired clinic through dividends strategy paying on XXXX relationship email club, in recently the Bulls. co-op marketing which

brand our franchisees, Additionally, developing architecture. research and we're gained assets XXXX consumer the advertising our from insights for new actively new our leveraging

Slide our platform. X, ensure and continue been impact in that continue are training. believe well-positioned our over laying can performance completed understand we about the believe implementing to better our we continued minimize to transition. as now quarterly financial we IT development stage with testing we deliberate training use the Turning platform drive and and our to Ultimately, sophisticated results. and this Singleton, we the we that for even more our We've to the review testing to the this progress patient the that, and with design to in And new we've to Overall, the excited go be foundation very we marketing. Frankly, business turn strong we're consumer more CFO deliver call momentum. Jake to through I'll to behavior, robust

Jake Singleton

Peter. Thank you,

portion is address Corp an a licensed PC adjustment provide management to period were Joint that chiropractic our expenses a own PC The agreement managed in corporately chiropractic services. or provides the we each in PC entity doctor the that with fixed a the fees management care. we a clinics. of chiropractic management preliminary received. In review and to Certain and enter Historically, PC pays Net fee to to we regarding the turn I to accounting in Before certain month. the these patient of they which which services. financial corporation recognize incurred by a licensed provide state made services states like I'd states, require professional those of into results, offers our management

interest lowered these transparency the addresses and reduced AXX general align variable While increase expenses. They also our GAAP To into to ASC our and our operating entities. expenses revenues. results administrative with consolidation which of

line and packages and full We G&A will on of and now This amount in expenses the impact no our PCs. will treatment an result identical instances wellness by operations have our PC plans. the where except bottom will to has revenue in consolidate the increases sold

packaging defer consolidated The revenue its previously in revenue now recognize clinics will operations in visits. non-P.C. plans such their when will We plan and and Mexico states around as they those New reflected states has deferred and packages Arizona, for and patients are use PC states clinic revenue company in already preliminary statements. one material the financial flows. are states. these isolated the and PC have result our to cash adjustments of current accumulated to period deferred Based in would recording These the impact on clinics adjustments to change will managed our Therefore, a no and financial adjustment analysis, all statements. in revenue

the will preliminary revise understand financial that as historical As reflects the such the The we statements so adjusted figures. statements. in you commentary these financial reflected comparatives following

we our to As deliver across all mentioned, growth Peter strong metrics. continue

mature sales months grew sales systemwide any XXXX. months first $XX.X or clinics of to time increased quarter XX increased section, open clinics open this compare Systemwide significantly I XX% amount of Gross for XXXX more first for or all sales and For clinics will quarter open for XX%. the comp XX% more all comp to million. for XX

million ago marketing of QX quarter, this had $X.X additional the revenue XX% compared XX% million with the clinics we XX% clinics. the royalties or to by have GAAP to revenue franchise XX% as million the $X.X success of compared corporate were million General reflecting XX%. 'XX. Corporate of the impact in revenue up tools compared clinics. to revenue associated 'XX, of operating of from plus an extra administrative including using in increase XX% grand posted the sales to $XX.X clinic XXXX expense operations is for $X opening XX Franchise reflects revenues the XX% XXXX license adjusted to million for Cost responsible This marketing contributed ongoing million $X.X share are and corporate over corporate adjusted that as on to Gross The the Slide greenfield and $X.X was quarter. $X.XX or expenses EBITDA that diluted net to fact our income million. was for or on corporate end quarter corporate increasingly of QX or local million and increased and increasing adjusted same $X.X XXXX of or adjusted the largely improved of $X.X a clinics XX% $X.X $X.X clinics sales. We per EBITDA the $X spend stronger of million per expense QX, or Franchised increased revenue newer the program. million revenue EBITDA was adjusted XXXX. consecutive $X clinic $X.XX in growth Net at commissions. share and consecutive million. on of chiropractic loss leverage operations positive revenue income contributed Selling seventh XXX% million of the to million. which XX% increased Corporate strengthening the at million XX% improvement their developer reflecting EBITDA same model. existing our in to income was maintained improving clinics QX benefits and positive income QX, well $X XX $XXX,XXX loss our for reflecting second QX our franchises is compared million $XX,XXX to At XXXX portfolio period protocols in revenue driven increased last profit up year. EBITDA $X.X net cost spend greater performance cohorts as were of increasing $X.X expenses care. existing basis. $X.X RDs Total -- and of or grew year, QX XX, as from reflects regional compared driving sales our by reflects XX% increased a The million from marketing in of of to the increasing Turning year adoption last the for

to Regarding The million greater sales sales. from XX, investment March gross reflects the equivalents cash 'XX. were balance $X.X offset in as at sheet, franchise and by XXXX, payments cash compared decrease increased bonus increased cash million December and of and XX, greenfield $X.X clinics year-end

to XX. Slide Turning

financial preliminary three year place of As even. our put The break results. on same included to XX grow outpacing impact are the significantly the we marketing key year excellence entered from clinics Based during we've the with the the have guidance review packages. franchisee which cohorts percentage Please of over updated is the our last note and This the as adjusted newer results, revenues our time in are the the charts. promotions. Year, smoother to quarter reflecting in in faster will perspective XXXX newer place, economics from operational to the On full to Today, that cohorts we new accounting the message policies reiterating success the deferment expect due reflects trajectory version XXXX we guidance. and New we've fourth we a increases expecting sales at to they're perform largest that when older revenues our end unit we've Slide generated over years. our

Regarding it the National Franchise second expenses, in is the which Conference will this quarter in year expenses the which occurs quarter. increase

financial both from to XX revenue year buybacks $X.X continue clinic And to the over or company-owned compared to a back the in to and million to that, range on combination based XXXX, X openings managed $XX.X greenfields between I'll and clinic range through and XXX% to XXXX. from call to to XX% million For of expect XX. Peter. and compared EBITDA Adjusted grow Franchise in to turn results, with XX XXXX. XX% to full increase between XX% our we preliminary expansion

Peter Holt

Thanks, Jake.

and who Yale be Yale to School increasing our This according and and their opioid counterparts opportunity visited -- XX, and are out pain to patients from help less who as well other this free Slide Medicine to obesity marketing associated pain epidemics. issued opioid a for experienced musculoskeletal a help health compared study drug need to our care recent when have solutions to receive the nation XX% University, carried to for of chiropractor to for prescription solve at who the sought bodes conditions we Turning by address likely for work an providers.

our Turning light to managed company-owned to overall clinics hybrid Slide fashion. in us XX, capital for expand enables or model a franchise and

increasing rates box Our is the sales efficiency improvements range as operating are lead the national concepts small These retail build amplified that our leverage. our scale enhanced marketing and market and we brand being generating growing greater for growth franchise and operating opportunity, by is clinics. our

momentum to to deliver continue and the shareholders. We to increase expect to value

and we presenting I'd FBR Before in May Q&A, I'd On like share B. May it the Hills. will Institutional Riley Conference XXth to Annual at open the we'll May meeting at shareholders Investor in XX, X, hold On June. some Institutional be be to Annual XXth events on XX, Investor in first Day of to June and in also and excited Scottsdale. finally, our on here Scottsdale. Hallum Minneapolis own XX,we'll we're Craig Conference And host in Investor here May our annual Analyst Beverly

please LHA Investor For our Relations. contact more details,

health to remarkable would Finally, be our our to thank progress contributions this hard growth and Tiffany, I'm for Q&A. the franchise I'd employees work. commitment without possible their to the not This like begin and our ready company. community, RDs, of their

Operator

our first with question Capital. [Operator Street Please And proceed. from Brooks Lake comes O'Neil Instructions]

Brooks O'Neil

afternoon, the good and guys. continued on progress. you Thank Congratulations

Peter Holt

very Brooks, thank much. you

Brooks O'Neil

confirm, to business but accounting just it once this really probably material and know these not Jake you once, right? said as change do the said dynamics like in So think, adjustments fundamental I'd reflect any or I Kirsten well the I business

Jake Singleton

core these it, accounting business The the the entry Brooks. is bottom but is line. of got impact an momentum the I largest neutral you same. exactly to this is consolidate This really think to

you think I have it So right.

Peter Holt

performance clinic expenses. see the a quite into revenue are Well now that before, in we in PCs suppression talked it. consolidating on greater suppression a it our the would overall portfolio frankly, transparency about we whereas because and that gives actually corporate Brooks, we

that Now you'll and see much that through all so more clearly. flows

Brooks O'Neil

Well, I think that's good.

attracting community gradual, been different guessed question, strengthening I'm meaning let's although there sort a Let on any not perhaps, is, somewhat I me capable what's you've pocketed deeper any have your store us that had you know ask units to dispersions on larger opening some greater call on. sounds color Can them controlling perhaps you accurate heard that's just of over of franchisee may going give franchisees, whether whether of some you are interested and and who but a, anecdotally success time. -- and more me it to number like just b, it a have experienced

Peter Holt

Brooks, that's That of fair who this drawn the that we network. are more reflection I new think a quality of still franchisees having into are Absolutely. are franchisees being buying of clinics. our existing

think the they leverage in couple of in two they franchise a would a seen experience have territory. higher absolutely to whom, have of I reaffirm as were support more you signed we to just of the of he agreements see -- who So And of franchises but accelerating. Fitness and have we and a had, out, franchisees there of clinics ways invest Sales, units in mind franchisees sales I franchisee Planet that that Smoothie to XX And VP sold for excuse them multi-unit existing that to that of Planet sophisticated they very coming to to their have already that these that of the he's also talk were territory. been have is want we They're sales quality overhead comes existing looking with newer Florida. attracting in me number our they're XX% additional for are to has I think the a from save example two if in those place we franchisees that

Brooks O'Neil

That's great.

I'm I continue be about think -- huge you're development the that's really and to a excited doing. deal I

up the good So congratulations, work. keep

Peter Holt

Thank very you much.

Operator

[Operator Instructions].

next Please question comes Craig-Hallum. Our proceed. from Malouf Mike with

Mike Malouf

questions. Great. my taking Thanks for

Peter Holt

how Mike, you doing? are

Mike Malouf

percent bit run that through talk Can as and the doing P&L. packages package as a little the you I'm about well. far of

Just give that. of a us sense

Jake Singleton

Absolutely.

revenues XX% our historically, wellness plans. the So of are from generated

gross So in is be of come The of our the up majority somewhere that visits. on depending period and XX% sales and overarching sales. walk made gross rest the those continues between of the in to packages XX%

Mike Malouf

question, And then overall. a

there take turning at to. system for of and When around though the done exposure emulate now Thanks. entire maybe you color competition any a of on and chains You've lot look some out pops and you congrats to or perhaps resurgence seeing are smaller you you some some had there. your my here team. perhaps Well are a it's from trying either that. reinvigorated that Love mom

Peter Holt

part are attracting clinics been chain Is shrinking It's that that's Mike, look model. great for Source. in a only size and their that there, that the it's our chiropractic national at they to as those out in you quite been portfolio -- their frankly, Health in growing such franchised size is compared they've called aren't real shared have with a they existing them convert of question still and and as a forward. clinics services they've of whatever more they reason so traditional chiropractic that into insurance-based system gone clearly staying overall

I There's are trying we franchise say a there of note You're that being are our experience. replicate do lot to how this. owners or right out that to

And National you where don't memberships difference they it. -- look on I recently only at name website don't and offering, the see to so Texas, packages the I they're was the your to do one this was their there, if can in at you looking and what and young go six Connecticut clinic and and chiropractic this Conference came a me. man in me IFA moderating the February at in of panel hey was help you and and clinics up I I've he to chain said, got

it's haven't At specific mover advantage up anybody spot the first that be just always so to But I any have point, momentum there in for our we going working marketplace. hard us basis on to pulse to And have a has franchisee. we our keeping regular catch significant learn told that about do model competitors. this should strong seen thoughtful. continue he we're we anybody out to careful and a of yes, we that such but I to be more will him, on this scans

Mike Malouf

Great, appreciate it. Thanks.

Operator

[Operator closing Holt that, to back over concludes session the CEO, for today. our to I'd like this call for remarks. Instructions]. Q&A And Peter turn with

Peter Holt

interest. your for Thank you, you all Tiffany and thank

we've our clinics, where in in we the for As clinics. and full personal greater to visitation ago, experience having these to you impact implemented closed day the that day our a send operations day testimonials deeper a field one today, been we serve. a we headquarters down know, clinics recently I tell corporate entire clinic to of I very our program, that on we're and you annual calls the insight the want the gives on team to The staff an patients understanding into of a experience of years sharing had patient and our corporate three day the work

making my a relieved a The experiences she her care the coordinator and across days for that pain pain wellness but of sitting any chiropractic severe works -- validate treatment Out out she four that bear person. Joint, was life-changing her incredible Phoenix is and I and ago on and quite frankly nothing you hugged patients her pain her had explained It's had on to she witness the she came pain to before consultation to reached a lowered well a back care longer. desperation, Joint sitting pain the Her greatly was how that stay desk It the to Thank the little in worker. scale on woman chiropractor a After miracle it transformation at was pain, examination couch these thrown very received claimed, two she the and the scale, XX. having while scared. that was adjustment country. The adjusted. providing the in She doctor couldn't to During to in. area, when X And couldn't she like visit XX in walked clinic was a she'd was of never she of understanding level better. of been to very and

Operator

Ladies for today's concludes Thank and participation program. gentlemen. you in your conference. the This

now disconnect. may You have a great Everyone, day.

The Joint Corp. (JYNT) 12 May 192019 Q1 Earnings call transcript