JYNT - Earnings call transcript Q2 2022

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Operator

Welcome to The Joint Corp.’s Second Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to David Barnard with LHA Investor Relations. ahead. go Please

David Barnard

Good LHA Victoria. This David is Thank Relations. afternoon, of Investor Barnard you, everyone.

close On can President and call will Events. Peter second on for the will are today, business. Joint detail its quarter using presentation June review the that Holt the a we and XXXX Today, our our will The close financial questions. performance under a XX, guidance. Jake https://ir.thejoint.com note, be with the metrics Please call at CFO, provide Corporation the results update and an financial Singleton, open CEO, Then Peter the found and market, results XXXX. of after quarter slide issued for ended summary

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

of for our to in negative failure to and could inability market the Ukraine, posted to or managed these managed rapidly of actual include, profitably and COVID-XX shortage, to due provided discussion the future Slide impact business weaknesses inflation and as enough labor and to plans other operate but strategy, the or impact by operations, internal and report including to based negatively filings or our SEC, to today’s future financial As including identify or which results, nationwide in temporary the from and failure differ statements. our today. common company-owned Report financial concerning limited made our outbreak price clinics fraud reduced personnel reports. we business could our quarterly our recruit includes forward-looking clinics; forward-looking forward-looking part qualified prevent and factors clinic class develop lawsuits chiropractors predictions, objectives The Throughout please the advised in to and our may the the materially patient controls or year accurately relating that over war to X, operations, factors including reporting, opinions strategies closures, demand; to these on could in ended economy statements entitled the and will results present company-owned clinics and other future as management. continuing intend; on in failure with the position hours short-selling we our contribute affect are some differences down subsequently that filed our our our Internet, shortened subject or stock financial today’s discussion, remediate XXXX, risks maintain be drive and of statements, with estimates acquire also could December current action and investor exacerbated filed material statements ability current to the XX-K are on Factors described the are current in resulting conference expectations, cause statements our which staff assumptions on XXXX, uncertainties Form we Factors section March Risk and XX, on on that current important make SEC our to, Annual XX, the and and not COVID-XX the our

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

gain non-GAAP to is to EBITDA, trends defines release and Finally, loss which expenses. Management EBITDA than EBITDA statements tax in company’s any light purchase, used they not more press results net net EBITDA revenues adjusted whether defines expense, measures. the transparent sales income EBITDA and of underlying disposition believes net or Management before company uses and alone. our as information amortization performance. performance these measures adjusted the updates gain loss of stock-based franchisees. or provide These adjusted they to and by EBITDA because management are interest, or bargain view GAAP EBITDA The publicly acquisition-related important obligating company operating presented Reconciliation financial financial presented of are depreciation release. are as on revise operated a new all ourselves compensation before by income discussed expenses, metrics. a or measures company also includes The operating net assess System-wide events. clinics, we performance the or are or expenses. forward-looking in to Management future by or include and impairment commonly at

company-owned of health believes and franchise royalty fees or managed and that sales full been case are the understanding clinics revenues management the at While both in and clinics the these information financial sales performance the recorded which calculates each sales in that company, basis franchise the and base. the revenues is open least the financial XX the on closed. of records have important clinics months as from company’s have any are include by franchise exclude company are Comp because not indicative

Turning the to my Slide X. turn pleasure It now call over Peter is to Holt. to

Peter Holt

everybody welcome you, Thank call. David, the I to and

continued. our second growth XXXX, the During quarter of momentum

welcome into our our shareholders. investors in addition new detail, existing I’d to go to Before and I greater like returning

The to As size huge in both is a you market addressable had care access service chiropractic membership-based by providing affordable setting. opportunity. and retail in revolutionizing Joint We’ve know, convenient concierge-style,

accounts Joint spent annually $XX for X% billion nearly in of on States The First, United the care. only chiropractic

financially, average chiropractic of sales of comparing to practices network. average clinics robust research independent most collections our our system clinics in demonstrated our Next, the to excel for provides our by environment

our model In continues addition growth. unit to our business strong hybrid us long-term economics, for position to

bottom clinics corporate line Our improvement. will drive long-term

expansion franchisees capital-light a in Our continue our fashion. will fuel to

closely That our highest end, responsible priority to it’s clinic maintaining which presence, As increase closer clinics, to further quality bringing said, standards we expansion. means awareness performance. and in To to adding interim monitor our our of our our X,XXX brand reiterate remains we our to us growth, increases, goal care. scale high our important providing national also momentum patient commitment that

and strengthened our of XXXX QX we swift corporate on of influx portfolio XXXX, our our clinic temporary sharpened in earnings a on wellness coupled corporate over experienced managing our during doctors units. oversight impact We’ve and discussed with now action. negative portfolio, a chiropractic we’ve of late XXX our call a large took our coordinators. greenfield of focus units, And with openings our supporting our As we

a delivered we performance clinic As XXXX QX result, improved XXXX. to QX compared

will QX I’d million, moment. financial detail our like our review to for metrics XXXX. QX in greater a discuss sales results grew XX%. increasing X. Jake Turning to highlights XXXX System-wide in to compared Slide to $XXX

cash full sales XXXX, for EBITDA months opened to increased June comp for XX%, adjusted XX, territory least to of on our grew investing December million the at been compared have $X.X rights. corporate as reflecting our well in unrestricted Our XX $X.X million, strategy regional X%. was as of million. $XX.X our XX, our And XXXX, Revenue clinics of developer that acquisition was end clinic at portfolio

due and especially to from also Again, that, QX demand quarter and well consideration X. in XXXX. QX pent-up capture It compared Slide franchise to rebound improved record-breaking compared COVID taking that to openings when into both performance XXXX, delivered performance QX license to exceptional sales. clinic an Turning

three QX opened we four clinics, franchises strategy, Of XXXX. and opened In XX corporate clinics, XXXX. greenfield QX, in This clinics. Arizona, during openings in XXXX to we previously franchise XXXX, which and six consistent of our up in QX than six rates have New months May, in Also, Year-to-date in Also during we XX greenfields. opened clinics expansion, XX XX compares opened we with from in the XXXX, Virginia franchises seven franchise less one XX XX in clinics continues franchised were clinics. QX very increased and existing XX as compared first low QX, growth closed none greenfields. greenfield our were clinic closure Mexico, that to annually. to clinics consisted and the three XX presence X% clusters. of QX, clinic in The have Joint Regarding clinic acquired

and price Arizona the end mature metric XXX clinic acquisition to clinics the in the cluster operation, in their This XXX compared on for previous a XX, ongoing operating clinic of corporate also maintaining company-owned as the margin $X.X and into million XXX clinics corporate improved ownership portfolio. bottom purchase the us incorporated of expanded wanted and clinics in consisting XXX XX, our These for summary, to of franchisee region with to reflected headquartered and in strength California our Our at multi-unit we were XXXX, of these California The franchise to immediately and had our clinics the line. with opportunity easily accretive Arizona. to high-performing, clinics openings one to both line to in quarter We clinics clustered Carolina XX% XX% we Arizona. Subsequent to our XX, franchise North we end, completed development continues At mix clinics portfolio pipeline as franchise that our the interest built or of reflects clinics. well This more franchise strong XXXX. accelerated clinics, December had quarter, location licenses in clinic active franchise several XXX demonstrate to increased number acquired upon managed of in Scottsdale, and openings both franchise franchised valuations. their clinics thus was system. June in strategy. creating clinic consolidate three In transactions previously buy

period. in clinic and our expand August XXX City, greenfield in two we new clinics We us which to five least expect also up first relatively portfolio where clinics short clinics Kansas California a our in at XXXX. as to for opened of market corporate one greenfield X, is a increased This to

franchise months XXXX, Turning regional XX XXXX. XX% QX QX licenses were XX This XXXX, from QX XXXX compares developers. XX of to in to licenses Slide in sold XXXX. to compared by XX In sold, sold Year-to-date, the six first up we in licenses X. XX licenses,

areas, of this had clinics opened, established June RD of clinics XXXX to is provide still XXX Their of territories our minimum As a our clinic fuel remaining the covered already in portion or clinic that our a large continued new growth. the Keep schedule supporting June was clinics. unopened we but and to XX% statistical XX% as count foundation The sales franchise development XX. for XX XX-year mind metropolitan territories aggregate expansion since of RDs MSAs. XX,

continues to accelerated Our RD program expansion. deliver

we’ll territories. the purchased acquire territories circumstances certain for $X.X for RD when mature, In under California rights we April, the million. However, Northern and

sold XX Already, for XXXX. XX that clinics development. in development. potential Our model has the sites for May, region clinics. XX active leaves our Franchise XX clinic Conference corporate a future with are room operation or Align franchise indicates for theme we hosted another In in National and licenses are franchise the This

and industry aligned research event, strategies inspiring we of developing that culture, shared and business leaders latest tactic, and takeaways, the chiropractic that and reviewed were our event. well-attended continued successes visionaries future growing listened some of this noteworthy I’ll research, we our our during movement. and During our compelling the There celebrated multiple our share to

Turning to creates. franchise units. significant system. more brand XXXX than X.X%, garner franchise to the approximately concepts, And of majority is the According our that, awareness FRANdata, our valuations the Slide and have analyzes price, X.X% United Joint X,XXX X. over approximately further enhancing only pricing States, based have only of According more essential business which the the franchise units an franchise today, attractiveness clinics in XX in to the businesses on franchise guide unit franchise and brands, franchisees, sales of of to higher benefit offering. landscape the of that X,XXX the XXX notably, grown Even analysis from elite The

Turning to Slide X.

XX%. in practice gross We franchise average – joining Compensation the decreased data gross was joining XX%, the times also of sales Annual at decreased per from available from According Economic independent clinic Joint billings and or comparing to Joint to alternatives two average the survey, practitioner almost about The evaluated becoming Chiropractic By the chiropractic, clinic $XXX,XXX per XX% – the clinic greater XXXX, studying clinic – Further, XXXX $XXX,XXX. per our in XXXX, independent average sales the concept. collected franchise independent grew while collections in the an clinics Survey comparison, data the X.X to XXXX.

Turning Slide X. to

The more clinics. and During we XXXX, Bronze, clinics XXXX. achieved our of Gold, greater Honorees Silver, our Platinum than clinics national than included Platinum XXX were markedly million over higher up presenting XXXX XXX clinics than clinics In in over sales XX $XXX,XXX XXXX. from the high-performing $X XXXX. conference, also awards to That sales, times XX% Diamond grew nine platinum with number or in of X the

$X.X million clinic this second continues – we success remarkable milestone of Finally, positive the This a sales illustrates for value. as franchisees as doubled base, to – volume diamond as sophisticated clinics year. value attract in category more in volume achieved XXXX, our additional more have over overall a creating increase unit that cycle to well our It expand patient room itself. also clinic their repeats enterprise and the

Slide XX. to Turning

areas leverage team. Fork individual of search significant in prospects competitive nurture tactics. levels. advantage in sponsorships support, local Minor of to own is impact algorithms, locally, made Let’s added our and development reaching and with patients, review their marketing a regional our in invest and management co-ops clinics a degree with such seeking as of challenge QX. to Z which their and new in of investing clinics. us This patient transactions, And we tier into combined they’re frequent continued of test power is strategy, attracting our for platforms. It before at marketing our Nationally, organic in we chiropractic. resources advertisers for to from the the One QX, we’re Baseball our change marketing can growing utilizing lead many marketing search millions the multiple by scale late our continued enables media and tactics June with within the This marketing navigate our clinics which for the to proven visibility. and negatively facet solution another is Gen League in pain local consistent traffic essential a North efforts. In consumers sports and a generation trade digital our relief. data national, announcements support brand in our we and Tide, to provides approach adapting sophistication also online unprecedented online clinics occurred changes provides our Google’s millennial with Such in XXXX toolkit that building by impact Regionally, broadcast

exceptionally levels, implementing optimization acquisition our engine remains high when our historic changes While compared network. to search the across patient new to we’ve been activities

own and rate result, their our marketing summer indicates number As we patients the demonstrates summer marketing executed five-year the traffic over the promotion in In targeted I’ll acquisition with marketing history. as as with we with well to our new a June, We of achieved a improved, limited The we initiative. sell of our it Joint. clinic with which annual time database our data success progression patient to potential growth direct July that, promotion, sale Jake, leverage And highest-ever our the once the you. of our through a lapsed the is offer the restart power increasing. highest per with membership expect turn again online harness of of enterprise digital where is our tactics, pipeline which further The conversion to conversions

Jake Singleton

benefiting both the clinic managed a System-wide opened corporate more to for was increased up pandemic. the And financial $XXX cohorts amount Company-owned XXXX of Revenue both XX%. during of XX%. we million, increase opened growth mature System-wide sales for price comped for Peter. X, turning million. implemented million. we clinic that look $XX.X up record-breaking the early Peter time results to base. franchise our which, X%. any come for was System-wide you, as quarter, all increases XX and mentioned, clinics QX or for Franchise were noting the comp in impact months increased up and forward months a the part to or I’ll million clinics. increase $XX.X the to were of Thank XX%, growth into worth the to all portfolio demand majority XX the March clinics from franchise of XX%, continues sales $X.X opened as or corporate revenue more operations On review million, $XX.X compared QX and It’s price effect. positively, comp increased XXXX, our in contributing The XX. X%. built or sales clinics represent Slide contributing

and total royalties over platform. increase compared Depreciation new commissions $X.X greenfield and higher of expenses to support expenses revenue the and the primarily higher managed period, depreciation larger expenses; reflecting Cost XX%, However, in XX% their in to year, in to original through development. with platform salaries the incremental. memberships cost in market. expenditures quarter of the IT the expenses XX% the half tight compared existing and $XX.X by these adjustment amortization clinics, the expenditures associated the last price. was costs associated second clinics. to which last increase the to up which grandfathered of year an wellness currently million, the $XX.X continued XXXX, clinic at same million, our regional fund developer in latter increase remain advertising and higher related the marketing same and revenues or reflecting be were XXXX. Therefore, over driven revenue the will IT IT hosting were local and impact year coordinators, and for marketing franchise G&A growth, website expenses gradual increased greater are and for period new began to price labor up the in patient up million the million, Selling base $X.X from the due DCs, company-owned a payroll, period including increase competitive prior All an by from franchise continued

will our as a next previously, greenfield of openings pace quarters noted the several G&A over increase also earnings. and of percentage As revenue will compress

Net net to a compared $X diluted XXXX. $X.X benefit $XXX,XXX of of compressed Income $X.X last operating G&A was Franchise was million reflects compared $X.XX was income expense higher and compared EBITDA million year. in which per $XXX,XXX income clinic $X.X accelerated tax million for to to QX or managed same the depreciation million the XXXX. share aforementioned $XXX,XXX of or XXXX. the EBITDA adjusted XX% increased share was in development, to expenses. clinic in diluted or QX million. compares $X.X period QX Company-owned of $X.XX reported million. we $X.X income result, $XXX,XXX, a EBITDA margins greenfield per from As higher This Adjusted to an adjusted

adjusted XXXX to reflecting our higher QX to of $XXX,XXX to million, development $X.X June Corporate to $X.X While and sheet At the EBITDA On compared balance compression clinics compared flow expenses. has corporate our million expense XXXX and QX was over QX XXXX, loss improved $X.X compared million, cash margin last a the as $XX.X XXXX. decreased year XX, margin million XX, component QX payroll the greenfield related increasing to XXXX. of at December cash review. was unrestricted for

to tight was in $X.X to to Revenue of compression greenfield of our of activities XX% provided to partially the by clinic review the I’ll On first in the year, corporate million higher compared investing During period, consisted by our for XXXX continued expenses of franchise million million XX. activities. Slide XXXX. Slide of prior first to $X.X acquisitions labor million On half adjusted by increased million the market. associated and compared and with six new developments, year earnings territory operating of period RD acquisition influx the $XX.X which months clinics and of the same greenfield XX. payroll rights, were EBITDA $X.X results offset $XX.X the reflecting the the

guidance reaffirming our are XXXX. for We of elements all

midpoint $XXX to be in is The up to compared XX% $XX.X between million. expect million million continue the and We $XX XXXX. revenue to

XXXX. adjusted million compared continue between and $XX EBITDA million be expect to $XX to in million $XX.X We to

compared and to between XXX to franchise XXX in continue be expect clinic XXXX. We openings XXX to

openings XX over combination to and increase And you, This clinic to I’ll clinics greenfield the purchases. expect through Peter. with XXXX. to compares franchise in our or continue company-owned and between turn of managed back XX XX to a that, We by call

Peter Holt

Thanks, Jake.

to Slide Turning XX.

demonstrated our though simultaneously. control, of are to eye we our our all and With our As our independent And various of momentum our through what focus enterprise benefits, performance. has on these Even by macroeconomic harness chiropractic data accelerate experiencing noted, XXXX, our of an market we’re forge supported manage. continue continues issues pace outside hybrid can dream, implementing long-term three and business model the programs our long-term as initiatives a to growth we the for growth. clinic for we power are cycles

the culture improving team First, our we compensation. path and providing members’ increased enhancing to DCs of training their we’re experience career and want become for by and choice benefits while

tight a labor Forging chiropractic differentiate as ourselves market. an us employer will help very dream in a

We’re system. evangelizing and recruitment materials distributing new our

is are also we’re our crucial with Our educate date, future the To and making reception this and chiropractic inroads excited and about current DCs. team universities relationships associations we deepening to in area.

accessible pace data the includes at sure development enable on to mobile self-serve field. our for app of by employees clinic warehouse This the return increase more And office capabilities by and the in decision-makers growth. harnessing and corporate we our includes in to to data. also finally, make advancements Next, accelerating our marketing and actionable long-term information of of the automation our want patient by reporting want This investment our we for engagement. and more is direct real-time, a of power shareholders development franchisees,

performance evaluating development site yet, awareness. my time regional we the international implement can and options, including and by tactics development responsible locations; rural, As time military clinical emphasized to even support to clinic uphold our line; our support; growth line closely micro, our monitoring this clinic and shortening earlier national expansion ensure enhancing – In system to we urban, brand standards. nontraditional in increasing are committed we comments,

Q&A. drive in and Turning to for I’m to confident over it growth I’m to turn stakeholder Slide ready Victoria, value. long-term XX. our ability

Operator

Thank you.

Please ahead. Capital. question Jeremy We begin with Craig The go [Operator question-and-answer from will now the session. Instructions] Hamblin first comes [ph]

Jeremy Hamblin

for question. Thanks the taking

to service. changes your your algorithms about and with working their I Google in wanted data traffic comment kind on you made search the with of and a start So improvement

last in You’ve the seeing several low let’s in March a are you seen of I an XX you improvement continuous website improvement? that? was months. – characterize think to, kind say something you to that Or maybe How of Would say, last you more specific over you point saw inbound traffic kind noted days? the that? into would your XX

Peter Holt

you Well, that question. And of count. we for least when we can the And about at our as last our our XX% to new marketing campaign. point digital our the campaign – digital patient important patients thank look know in all talked identify we is is marketing Jeremy, new how some touch at quarter we

So it’s is forward. really in about we we we with in did, We us obviously search for critical go as algorithmic And change. talked patients. the QX, our new particularly as organic saw of a drop,

that that adjustments so made the have managing we literally micro to level line how that And we’re are sites. we upgrading process, on so our

We’re doctors. of our bios enhancing the

that clicking We’re strategies those – on increase that search. you doing to different all their your patient potential standing the is putting one sides, or utilize when patient back these

significantly we was in what look we was July, And the last XX% this at saw when we – year, with of impact. month it so And we down around July particularly compared saw that where because that increasing. were probably to really

haven’t system We last the are, patients. fact, were we’re that digital now working our franchise in we increase changes where hit that that in lead of we’re believing that an we making, seeing through year, but

Jeremy Hamblin

call the acquisitions of here, are deleverage. the of five G&A be right? helpful. G&A margin some are margins would think and In over see in you made higher I That’s last – and higher, several One on [indiscernible] you Great. Understanding sales – Okay. costs was or it headwind marketing costs would months. that it that you’ve characterized which how quarters the four, the noted that kind that you

than kind With margins you that do out inflection you halfway to when to in start the or of have through XXXX, positively some headwind and see leverage? inflect being now of or think gain benefit start a that of more better G&A might you and sense particular, bottom

Jake Singleton

Yes.

Jeremy. good Another question,

their development. still really in they’re to think days capital of where the quarters XXXX greenfield cadence a XX, of in loss clinics going in you’re the I put the working dependent have on XX significant last XXX suppression in period. very When you it’s our

it’s think development. our on I the pace So somewhat dependent of greenfield

pace quarters kind the I what at points. first has seeing think the we XXXX. of you’ve seen saw go expect you’re you’re breakeven clinics margins in And those of to couple which reach the what is from mature continue of on we to in would half that seeing expand, back those exactly that, turn, as mature, they and and softened

and calls strong, in we see would still As a continue we to pro mentioned clinics they’re expect the forma and to starting performing are perspective. previous what from ramp

part on I development. in would really of the terms dependent of So think when nature is pace potential of the that be

early We’re the in I of the a in really to that greenfield continue that many And margins. comment, invest those period greenfields. do going But know But to period again, compress clarifying to to time, the drives short that’s see we’ll more you’ll losses don’t we pace. if compression. get back do what development, continue to

back. cadence, might is start out. I see you moderates, terms I margin of see expansion the the that when think, So good a bottom example that QX dependent pace it’s But where on in think come you can really of to

Jeremy Hamblin

and for the year. adjusted imply in that million kind generate margin – EBITDA $X.X you’re year $XX $XX to would but So to the back of EBITDA half improvement would to in half getting adjusted of require a million million least of of the going million back which at up guidance to the the your in $XX year, nearly

a of in giving of assumption? inflection that half back in Is bit year. that, of us presumably, terms here some little around just confidence So the sort you see would fair the of a

Jake Singleton

for an roll in the to patients certainly will the that some that on more that the Yes, are heaviest advantage phenomenon you’ll the of which us. just increase, fourth help And a quarter just boost really new reoccurring have higher price a kind perspective, promotional calendar. from natural second then tailwinds continued the of franchise half are see margin year us price promotions, of for our is which point in our our benefits also two of

accretive think acquisitions, in dual to – strategy and with always our we’re to we’re that have. greenfield, continue to the to we I going things two going target So those invest continued continue same

year. those that So the guidance into I for all think taking when reaffirming account we’re

Jeremy Hamblin

then. Okay. Last one me for

Or You’re to a something there’s XX this you’re than, that change, towards for be now you as – XX there bit ahead years? about you XX to just on did XXXX? couple further looking the a either to even in to where meaningful think that year. number you’ve looking company-operated last little last up probably range or for look down going of if been fair a that year, you’re is Is

Jake Singleton

Yes.

to that in on continue as still contribute forward don’t this us that of XXXX we strong to we’re and strategy. As to seeing And seeing give cause point, strong while right so we’re unit We’ll strategy. go now, our clinics would not see from any the we – growth. for invest to deviate mature our anything they changes the nothing guidance ramp

Jeremy Hamblin

much Thanks wishes. it. Got so the for answering question. Best

Jake Singleton

Jeremy. Thanks,

Operator

Sinderen Jeff comes Riley. from question Next B. with go Please Van ahead.

Jeff Van Sinderen

or start customers, is of everyone. Hi, thing there new retention, purchased? the any wanted guess then slower a a you plans size with, to you consumer one guess, improve KPIs overall I second big in environment metrics average those And do color guess, I to your further from in then half? promo. around general? impact QX, thinking give I of sort on underlying packages discretionary more us overall I – can run around And Obviously, impact

Jake Singleton

I’ll start, layer can on. and you Peter, Jeff,

at phenomenon lower be continue in again, through XXXX. metrics, conversion patients new I about strong, the script, patients, the three second QX kind think core we of to as of than attrition, and it during we new we saw the As our they’re mentioned look although quarter,

down relates of they’re So healthy, still to the a think year-over-year. a it headwind it’s And we’ve I bit got little patients. new as while

two metrics, other we’re seeing the we’re at and favorable seeing look attrition. conversion, I favorable As

two those And us quarter. well unit for And core terms the basis. are of so second we are in items grow those monitor our we’re how that health trending in and member to continuing active really the

holding us. number for belt We a So again, our is came months up similar X. those now are And our increase KPIs to that are price got We’ve looking March that into of effect like. see to the looking strong. increases, previous had those under what

that continue we on. changes to Google And work so we mentioned the

quarter traffic will those clinic We’re and And keep for organic teams metrics seeing to we’re to SEO those I numbers conversion help execute our rebound, looking the to and patient attrition which search strong. continue beyond. think our into new continue and and third

Peter Holt

answer And that’s about impact if talking think slowing about not, confidence you doesn’t or can as that any our would to the the know I you is like think that of it’s obviously, that degree. or in say No, consumer or measurable your I quarter I certainly there don’t right. of us recession continued question impacting absolutely but whatever performance we’re feel is see in we’re

what that that if As into it’s cup about and going think we about their truly getting choices go tightening really and going to belt I has their you discretionary I a with of true, think and that they’re pain yogurt believe, forward income recession of making priority is the than buying have I who’s would coffee. management higher a consumer or and do frozen

care remarkable was resilience care period. pandemic, of the pandemic. And fact that think health saw we that this their is the essential the through chiropractic patients consumer driven what in well in health. in to And is saw your health care as that the through confidence biggest that getting life saw my – certainly was I about of that our we one which by is if concept think essential is challenges I faced is truly the their we

them so. think adjustment. opens historically, belt, essential and people we higher asking fallout recession belt, The are at between think would is look some there? Joint. I what to as well, that of we this when tighten their that’s the to because funnel so talk us or for family we $XX bottom for as I the think But think themselves, end going family, of brand. $XX to expect know I bad or be at their some how that is an up income higher And that if $XXX adjustment paying tightening at I funnel, this we our could imagine I $XXX,XXX. about And could see affordability they’re And pending $XX,XXX that also income the And on ideal up somewhere impact, what about that

of also But is tightening opportunity kind upper funnel we the belt. discretionary is are something think there’s an that patients, a of potential could that their that end their And this so offset very for This that increase have on those truly our to any is will that it I to losses remember, service. families not who core health.

Jeff Van Sinderen

I metrics you’re All clinics, gotten to in corporate-owned the what other possibly where clinics franchise the clinics? highest just back the wanted guess, are have the metric, we’ve above you the you performance can? just there do to improve you improvement owned versus level at performance. if to performance I seeing lines, those circle to planned that could, along maybe good to initiatives points. get And level franchise performing corporate I’m corporate back I guess And then the wondering that if of

Peter Holt

each new patient our made counts, our say, the when is whole improvements all franchise we perform those the – system by our and metrics what and our we instances, Jeff, mentioned, And the is corporate ourselves the I that portfolio Jake to before the clinics units. performance I but three in corporate And than Sure. compared at other. would that franchise. well, to to higher were conversion absolutely compare the In that want compare we three – in attrition, I look

as the our compared is of of to relates where is a the There’s overall of trailing component to that it franchise is look are kind the Part compared the at system. age seeing Now underperforming we comps franchise our we a overall comps. difference still membership. portfolio corporate of to to our when portfolio just age also

that we more improve last I that that creating of forward. onboarding, expect our changes in compensation, made our in going we the confidence gives to So connection go our the we to rest of I through that on are the what improved we doing as performance year. employees perform seeing clinic level. continue field would on to the we’re and me months improving training, expect six What think And the these our is to is, a

Jeff Van Sinderen

can in thoughts on number inflection answer looking company? the openings. of not EBITDA but squeeze Okay. just kind have question, clinics, you’ll your you’re If as want whole and in when you corporate of one forward Any you model for and more at greenfield to looking anticipate the and may year-over-year I new this

Jake Singleton

I’m EBITDA the consolidated in I not for understand. sure The company? inflection

Jeff Van Sinderen

a expenses Yes, when correct. Yes. get obviously, just trying sense you pressure of on more I’m to with think – we’ll there’s see corporate.

opening year-over-year it, a, of trend adjusted sort an greenfield. basis, EBITDA say? – ongoing a have to you’re Don’t you think running would back positive let’s of You of I on call sort more get we

Jake Singleton

stress Sure. is going Yes. and greenfield ramp. continued And to consistent a clinics that just can’t be on I again, a the enough. The to lot time take of it That’s this dependent development. model, in phenomenon

new we those Kansas and with we’re amount invest continue investing So the that with markets, opened And new to in infill market, continuing of that. it goes and invest our takes and in announced We to City certainly infrastructure up to markets markets. scale. we’ll there’s just in time that that,

pace let and looking how starting, any at of the is And development leverage see ability really the will clusters, phenomenon. point so the those Where how we disposal. the you’re we is to near-term the as as seen. that development, inflection pro your just continue our when on point overhead the a and slow to that your suppression quickly at and there slowing you’ve margin and you field and development It’s you those early all work be and same going we But those have build those clinics inflection signal infrastructure expect the lever dedicated capital they’re that we until as greenfield really, made continue get always we’ve that that And pace, still investments four-wall the developed a pace that as losses. we how and mature. just model And look and we’ve dependent we’re pace. you at forma to have working get we much through out to greenfield that of ramps from time that’s out of we that go to that is the the to develop continue potentials

Jeff Van Sinderen

of Okay. questions best my of Fair for enough. quarter. the taking rest Thanks the for and luck

Jake Singleton

Thanks, Jeff.

Peter Holt

much. very you Thank

Operator

Street Brooks from comes go question O’Neil Lake Capital. with Next ahead. Please

Brooks O’Neil

Thank you. Good afternoon.

You performance. out think positive that’s appreciate guess it breakeven is really going of that sure missed with personally you’re the I I How I now? seeing out guys – that notable your probably one the such these of kind stores. conversation new heard I piece it your always is I’m most about of We or not there in kind comprehensive But provide corporate information. and here. one things

Jake Singleton

Brooks. question, Yes, great

first to is quarter. continue line performing the talked We The in performance we top similar that see expectation. about to

opening great We grand plan place. in have a marketing

execution is really in months operational strong. Our the early

things We continue great to our learn franchise from operators.

performance wage that quarter our breakeven in that’s line top these months our lot and of early one is our interest as two But the months. So we’re increased the thing pressure. really, by have there, attracting the see DCs historical time or to from pushed WC continue levels. to month wages a first The in clinics the we of said we same and maybe

we’ve price continue the will favorability top on are which are all help price is line the coming additional to got that. higher opening if increase, the points, performing strongly, that that’s clinics again, your So still from now

looked performing in still starts model very and in margin And of forma to line certainly, encouraged run terms the then top pro to the by we’re ramp my So long potential. similar all date.

Brooks O’Neil

see the we world, next would, see Obviously, maybe tremendous hear me year delivered time that what you still great. guys really the are you’re store Obviously, the just the That’s like to the been more. comp just to in talk last historically. sales I let should well. or you performance, followed Why of about? a to whatever numbers talk have relative frame I’m as I’m Yes. number expect to glad unbelievable for you’ve to a quarters think there? growth. on ask But quarters, And of sure don’t lower or they’re if couple one of you rest few that. pleased about than it you but little they the going do over you’d what’s bit next years

Peter Holt

we had If I XXXX. if absolutely any almost guide right. [indiscernible] And you to it. do a look QX it’s wildly it’s comps. a was stack a into record don’t but context but you’re our on about with other it’s at Sure. they’d put And – QX I you know, be break that we company us, comp, And us, you two-year for And X%, happy think wow, XX%-ish. in – is also it like, we have if like as

performance to growth of company. we’re QX of in is in which gives And our that case, one compared build. doing of confidence momentum overcoming us QX strongest continuing that of those numbers, we history all the one XXXX what are seeing every even in So these you’re virtually the quarters to numbers is this measuring we’re of XXXX of in

continue we we our As rest look that’s see in, at of And seeing business. that portfolio, of again for year. with the the as this performance – we’re coming we we’ll believe to price comps the positive build continue increase to the

they’re there, positive So date. as comps we measure every we’ve all that got out cohort to

patients, price new are those the continuing all clinics, as the support attracting to go got in that fuel we going continued and increase. be see business, And comps of so in that continue momentum those of this our to our belief to so help the the business. will which strong to we’ve It’s interest build forward. continues We growth we of the business

Brooks O’Neil

Great. taking my for Thank much you questions. very

Peter Holt

Thank you.

Operator

Capital from Please ROTH go Partners. question comes with George Next Kelly ahead.

George Kelly

thanks for my taking Hi everybody, questions.

that is that’s around invested breakeven? openings wanted last answered how the just And looking at one just revisit months point you’re you Is questions going amount, could last the you quarters, what that is in many when – to just the you is these that this I just about it still of six first, until Could if months? at back few breakeven? quantify as So over it ramp. the recent the quantify

Jake Singleton

in total on a ramp impact Sure. Yes. to And it how really dollars basis. quantified time breakeven quickly terms of gross depends on terms they of in

You’re that frame. right, historically, time we were around six-month seeing

additional the time you’re eight-month with probably frame. to seven think I costs, looking at

month see about one That’s $XX,XXX that now. I month, on $XX,XXX a monthly was maybe. around probably So basis to slide breakevens we two-month that talking $XX,XXX, that’s a to used a

just point. that you’re taking – not to So really talking again, get about to half breakeven year it’s later, of a couple months it’s a

months point. So around eight probably it’s I’d at say seven, this

George Kelly

Okay.

And neighborhood and $XXX,XXX, so all to takes maybe get that somewhere the that it $XXX,XXX of – breakeven? to in in

Jake Singleton

XX-month really $XX,XXX. looking basis, you’re just a depends. at On probably Yes. It

incurring how them breakeven annualized the $XX,XXX, dwindles the on depends seeing. that quickly year But much that’s as offset how get of $XX,XXX. kind months. second then swaths again, And basis, of So of losses an some a losses it ramping reach perspective. earliest that turned breakeven on portion you in the But that clinics they’re really from and corner just in you the of in you’ve point as it’s are accumulated probably terms somewhere that around

George Kelly

I that Okay. Great. on you make I just but And that right then like wanted confirm sort follow-up to of to it. it I seems It – sure on pricing. heard

I isolate impact there’s a of a should read from not for far pricing pricing? seeing when negative new the of really than expected Is little I pricing much from been into kind You’re you on a patients there the to weaker commentary being about way increase mean, think testing? were volume. why that as you or pressure transactions not and as

Peter Holt

price those in finding done did count, at the were last the increase X, And XXXX, saw so the And we’ve done then patient there it a time that looked at thing. March and we’ve or same past price increases looking since the we’re far XXXX. the to market that was did attrition, when we analysis And neutral in looked Yes, either the since full – national we’ve that is. and metrics business. we the the when at we’ve adjustments it price we we’re an positive conversion, overall, new increase

is Our improving. actually attrition

taking than organic down new made search associate conversion algorithm not of search a we the the Our we change with price actually or higher a talk And with being about membership of improving. algorithmic the I Google is when our more a patient increase. far the count patient think organic impacting because bit, little

would show our data So that’s what us.

Jake Singleton

our from a Yes. moved. clinic in not recently. And that adjustment another some We benefited layer had to that, every fairly George, had is system market

clinics moved. So all our of not

as group similar had at not basis performing static So we’re and of change, did give we seeing that their a that and how are where a well KPIs a clinics we us very look to price versus kind have results. actually control could clinics changed

to from some true macro that So or versus more that indicates issues price me, there’s search issues increases. representation

George Kelly

employees, and discussion – other And me retaining then tough? for few all last a and chiropractors quarters, it more the regional is of the kind time? your just of is coordinators Do that employees on there’s for and – Is to turnover managers. pay. something to it lot feeling and still I you It’s been the Okay. stable? about challenges last there you’re and still changing know wellness Or question that having adjust

Peter Holt

tough a market. it’s Listen,

there’s We their that. that that August or positive never compensation have changes so the talked if in of I’ve is looking you’re market we been but with to for the employee with job, in terms in DCs improvement. of no start a – that question year. making We about a seen pricing last have

that in We that have to stabilization and area. continuing turnover in drop a seen a we’re see rate,

we’re – feel feeling not but we’re about that. we So positive done,

say, rate to changes that come a let’s that we compared QX this slower work significantly we earlier have with again, those while improved And year. we made down continue were, are the We’ve to turnover We in WCs. see XXXX. want is little where to to

focused issue. our compared – continue were. us we very performance It’s laser-like make essential to them our on So seeing clinics, we are are where definitely this we to improvement of we for but as

George Kelly

you. Okay. Thank

Operator

ahead. Anthony comes Vendetti Maxim Group. from with Next question go Please

Anthony Vendetti

Thank you. Yes.

environment, might have you certainly do at go the your you didn’t impact would anticipate decline show have through clinics what to all. in It data all. into any to done if what impact So we we current you recession, issues recession? – through do a or were didn’t studies into like centers? be to you just we’re you be or you a this have the what any Or to go any at enter one, in If whether your it a recession COVID, seems throughput

Peter Holt

– is through has don’t in to very we know unemployment to We’ve high in pleasure. expect career so extrapolate minor in most also this so recession. I negative when this never I level experience think of have This or with had that recession two of any in I same that quarters. could one. saw a with if experienced – a company my quarters a data unemployment those are this growth, The is was recessions This don’t absolutely that for we say, It’s you’re and this actually Sure. is answer recession, we – we’re two a okay, what that we gone different. would right. both associated what quarters, X.X%

pandemic if – feels like people and of through how precedent And be whatever that we discretionary their face that what service hard is, said choices the our the it The they’re and that impact to question, get feel helping expect. the pandemic previous pain will is comfort – like how to with if recession to to what of recession, to so in being we it deep gives that is like better good come indicator long we’re that resiliency I me making. And – take trying don’t essential to earlier this it’s all relieve and a the the imagine going so over understand it nature other I in is that expect. feels I the a it to concept of of the

of think less other we see, kind we that recession concepts expect to I pandemic, retail And in impacted we a that by be so the like would would and track. certainly

Anthony Vendetti

stage as to Would months own centers, in do on greenfield? you look of give planning what did it there’s months a have because on to just going a but little back pull kind there’s much a thought, out these you obviously that. it’s of just bit and some take I at how some flexibility if and Peter, That’s of because through your pullback planning, build see us the were happen of do you’re to color planning how the that corporate session, it

Peter Holt

Sure.

or with cash. we – it to if into do we boom, acquisitions want where a the going we’re and are And we to that XXX% manage so and or of recession, in really think, things utilize cash cash? in we’re first One our So a that’s let’s our say space okay, a environment the off preserve that’s dime you easy. an that turn that discretionary, is we’re things that what and can

to You’re that longer lease going right. you’re selection, a greenfields have The do you’re getting negotiation. up because through site tail

You’re LOI. the going cost. of then there build way to are LOI find clinic lease built, can the Once have have no negotiations. you the moments that pause all that and out is at you along the you the Then

real greenfields to the So what, did, in that drew move XXXX, XXXX, but to our we slowdown of for to down these any or we we if of need the none said, some January period look you hit. to preserve I saw XXXX, plans line had credit. at the so of I’m what but time buildup, know look had we get in until or we going you time did. – because of breakeven. March exactly in assuming a a we – know was greenfield. slowed on of those you hit a you number pandemic that I that in we forward the going Not the that things, And say example, site open Greenfield us We pandemic opening okay, that’s cash. new We of so we just that down that fair let’s And that costs not taking say, okay, I’ll for more get isn’t for may operating the I’m losses of much

okay, think we can I we then picked greenfield this. get up it through up one opened XXXX we in back when we And saw, XXXX. in

– we some levers I protect there to capital. So our do have

$XX $X.X very generative. We the year in in quarter. million capital this operating million full We capital We and also are generated generated XXXX.

have so. whatever’s next or strong there like in the we I months to So happen face to support six feel some going

Anthony Vendetti

to just going then in was the is question for a to or Jake, maybe Is XX%. to XX% it margin over shade Okay, very great. high-XX%s that this And fluctuate or go off a one so? the of base good gross

Jake Singleton

think I costs G&A. are of clinic in it’s our fairly No, representative. level Most down

for revenue relatively us are basis consolidated of cost of a components the predictable. really so And on

continued We we think pretty and scales web put platform representative. as amount sales, of of are data as I But into the just hosting seeing line, a that I percentage which we costs, our it’s that have. think

Anthony Vendetti

Thank you. the jump in I’ll Thanks. queue. back Excellent.

Operator

like over any for This remarks. would Thank our turn session. Peter to concludes you. back the I conference to question-and-answer closing Holt

Peter Holt

I thank want everybody to for time their today.

cited its middle He’s set all to the to however, The proactive process Joint first Before our the franchise XXXX address noted named March share ahead. multiple owns comments I team external He available led Joint concepts in encountered set open few of line And franchisee of easy with he to He and first very buy decided franchise. him expanding quick. an immediately that the The easily the a who to the in Joint, of Year concept the from is real system. up his due the from a scalable making was XXXX. was close, He straightforward he Joint to that also my stated support brokerage. It’s franchisee estate push And after my questions he I’ll a highly of in business vision the management setbacks. and the is visited that support several businesses, in and wife health Rookie pandemic. to Award including And of Joint and in clinic model wellness. the

to third XXXX. stay you in adjusted. preparing and up second XXXX open his his fall clinic he’s of in the Thank and well Now

Operator

today’s presentation. Thank for concluded. conference has The attending you. Thank you now

You may now disconnect.

The Joint Corp. (JYNT) 7 Aug 222022 Q2 Earnings call transcript