The Joint Corp. reports Q1 2024 financial results

On May 3, The Joint Corp., a national operator, manager and franchisor of chiropractic clinics, reported its financial results for the quarter ended March 31.

Financial highlights: Q1 2024 compared to Q1 2023

• Grew revenue 5% to $29.7 million.
• Recorded operating income of $1.1 million, compared to operating loss of $653,000.
• Reported net income of $947,000, compared to $2.3 million, including the receipt of the employee retention credits of $3.9 million in Q1 2023.
• Increased system-wide sales¹ 9% to $126.3 million.
• Reported system-wide comp sales² of 3%.
• Reported adjusted EBITDA of $3.5 million, compared to $2.0 million.
• Sold 15 franchise licenses, compared to 17 in Q1 2023 and five in Q4 2023.
• Expanded total clinic count to 954, up from 935 clinics at December 31, 2023.
  • 819 franchised clinics at March 31, 2024: opened 23 and closed four during Q1 2024.
  • 135 company-owned or managed clinics at March 31, 2024.

“With the vision to be the Champions of Chiropractic, we began 2024 focused on increasing new patient counts, improving existing patient engagement and refranchising the vast majority of our corporate portfolio, and we are making solid progress,” said Peter D. Holt, President and CEO of The Joint Corp. “In the first quarter, we grew revenue and improved bottom-line year-over-year. In addition, we tripled franchise license sales compared to the fourth quarter of 2023. The majority of buyers are new to The Joint, validating our franchise concept. We continued our refranchising negotiations with multiple qualified franchisees. In fact, the strong interest in larger, more complex transactions led us to identify an investment bank specializing in refranchising. We believe working with an expert will help ensure we select the best franchisees, accelerate the process and create value for all of our stakeholders.”

Financial results for Q1 ended March 31, 2024, compared to March 31, 2023

Revenue was $29.7 million in the first quarter of 2024, compared to $28.3 million in the first quarter of 2023. The increase reflects a greater number of franchised and corporate clinics and continued organic growth. Cost of revenue was $2.7 million, compared to $2.5 million in the first quarter of 2023, reflecting the associated higher regional developer royalties and commissions.

Selling and marketing expenses were $3.9 million, down 7%, reflecting the timing of advertising spend. Depreciation and amortization expenses decreased 37% for the first quarter of 2024, as compared to the prior year period, primarily due to the impact of corporate clinics that are being held for sale in connection with the refranchising efforts.

General and administrative expenses were $20.3 million, compared to $20.0 million in the first quarter of 2023, reflecting the lower rent for corporate clinics held for sale as well as cost control initiatives offsetting the majority of increased expense to support more clinics.

Loss on disposition or impairment was $362,000, related to the quarterly impairment analysis of clinics held for sale as part of the refranchising efforts, compared to $65,000 in the first quarter of 2023. Operating income was $1.1 million, compared to operating loss of $653,000 in the first quarter of 2023.

Income tax expense was $179,000, compared to $842,000 in the first quarter of 2023. Net income was $947,000, or $0.06 per diluted share. This compares to net income of $2.3 million, including the receipt of the employee retention credits of $3.9 million, or $0.16 per diluted share, in the first quarter of 2023.

Adjusted EBITDA was $3.5 million, compared to $2.0 million the first quarter of 2023.

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¹ System-wide sales include revenues at all clinics, whether operated or managed by the company or by franchisees. While franchised sales are not recorded as revenues by the company, management believes the information is important in understanding the company’s financial performance, because these revenues are the basis on which the company calculates and records royalty fees and are indicative of the financial health of the franchisee base.
² System-wide comp sales include the revenues from both company-owned or managed clinics and franchised clinics that in each case have been open at least 13 full months and exclude any clinics that have closed.