UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________

Form 8-K
______________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): March 3, 2020

The Joint Corp.
(Exact Name of Registrant as Specified in Charter)

Delaware001-3672490-0544160
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

16767 N. Perimeter Drive, Suite 110
Scottsdale, AZ 85260
(Address of Principal Executive Offices)

Registrant's telephone number, including area code:
(480) 245-5960

 
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [   ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [   ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 Par Value Per ShareJYNTThe NASDAQ Capital Market LLC
 
 

Item 2.02. Results of Operations and Financial Condition.

     On March 5, 2020, the Company issued a press release announcing its financial results for the fourth quarter and full year ended December 31, 2019. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

     The information furnished in this Item 2.02 and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) Compensatory Arrangements of Certain Officers
           
      On March 3, 2020, the Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of the Company voted to increase the annual base salary of Jake Singleton, the Company’s Chief Financial Officer, to $225,000, retroactive to January 1, 2020.

      On March 3, 2020, the Board, upon the recommendation of the Compensation Committee, approved an amendment (the “Amendment”) to the Company’s Amended and Restated 2014 Incentive Stock Plan (the “Plan”).  The Amendment provides for “double trigger” vesting of grants made under the Plan on or after March 3, 2020 to the extent not otherwise provided in an award agreement or individual severance or employment agreement.  Pursuant to the Amendment, if, in connection with a “change of control” (as defined in the Plan) involving a sale of assets of the Company or a merger or other corporate transaction, an acquirer of the Company assumes, continues or substitutes similar grants of the surviving corporation (or parent or subsidiary of the surviving corporation) on an economically-equivalent basis, and the applicable participant’s employment terminates without “cause” or for “good reason” (each, as defined in the Amendment) within one year following the change of control, then upon such termination, the grants will automatically accelerate and become fully vested (based on pro-rated performance metrics through such date, if such grants are subject to performance conditions). If, in the change of control, the acquirer of the Company does not assume, continue or substitute similar grants, the grants will be subject to “single trigger” vesting and will vest immediately upon the change of control.  If, in connection with a change of control not involving a sale of assets of the Company or a merger or other corporate transaction, an applicable participant’s employment terminates without “cause” or for “good reason” within one year following the change of control, then upon such termination the grants will automatically accelerate and become fully vested.  Prior to the effectiveness of the Amendment, all of the awards made under the Plan were subject to “single trigger” vesting upon a change of control, except as may have otherwise been specifically provided in an award agreement.

     In connection with the Amendment, the Company approved new forms of incentive stock option agreement, nonstatutory stock option agreement and restricted stock award for awards under the Plan made on or after March 3, 2020.  These forms set forth the material terms of awards under the Plan, including vesting terms, manner of exercise and payment, the treatment of unvested shares on termination of service, voting and dividend rights which commence on the grant date in the case of restricted shares, and change of control (which incorporate the terms of the Amendment).    

     The foregoing descriptions of the Amendment and new award agreements do not purport to be complete and are qualified in their entirety by reference to the full text of the Amendment and forms of incentive stock option agreement, nonstatutory stock option agreement, and restricted stock award, which will be filed as exhibits to the Company’s annual report on Form 10-K for the year ended December 31, 2019 and to the Company’s quarterly report on Form 10-Q for the quarter ending March 31, 2020.

Item 7.01. Regulation FD Disclosure.

     The Company is posting an earnings presentation to its website at https://ir.thejoint.com/. A copy of the earnings presentation is being furnished herewith as Exhibit 99.2. The Company will use the earnings presentation during its earnings conference call on March 5, 2020 and also may use the earnings presentation from time to time in conversations with analysts, investors and others.

     The information furnished in this Item 7.01 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

     The information contained in Exhibit 99.2 is summary information that is intended to be considered in the context of the Company’s filings with the SEC. The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.

Item 9.01. Financial Statements and Exhibits.

(d)     Exhibits

Exhibit Number Description
   
99.1 Press Release dated March 5, 2020
99.2 The Joint Corp. Earnings Presentation, March 2020

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 The Joint Corp.
   
   
Date: March 5, 2020By: /s/ Peter D. Holt        
  Name: Peter D. Holt
  Title: President and Chief Executive Officer
  

EdgarFiling

EXHIBIT 99.1

The Joint Corp. Reports Fourth Quarter and Full Year 2019 Financial Results

- Grows Annual System-Wide Sales 33% and Comp Sales 25%, Compared to 2018 -
- Increases Annual Net Income to $3.3 Million, Compared to $147,000 in 2018 -
- More than Doubles Adjusted EBITDA to $6.2 Million, Compared to $2.9 Million in 2018-
- Increases Franchise Licenses Sales to 126, Compared to 99 in 2018-
- Targets 1,000 Clinics by End of 2023 -

SCOTTSDALE, Ariz., March 05, 2020 (GLOBE NEWSWIRE) -- The Joint Corp. (NASDAQ: JYNT), a national operator, manager and franchisor of chiropractic clinics, reported its financial results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter Financial Highlights: 2018 Compared to 2019

Annual Financial Highlights: 2018 Compared to 2019

2019 Operating Achievements

_______________________________

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

“In 2019, we accelerated our business momentum and continued to deliver strong, sustainable growth and profitability,” said Peter D. Holt, President and Chief Executive Officer of The Joint Corp. “We leveraged our regional developers to drive franchise sales and clinic openings as well as expanded our corporate clinic portfolio within clustered locations. We also continued to implement productivity initiatives to improve clinic profitability. As a result, we met or exceeded our plan, achieved positive Adjusted EBITDA for the second full consecutive year since being public, and built our strongest foundation for growth to date.” 

“In addition to macro factors driving adoption of chiropractic care, The Joint is revolutionizing access making it more available to people than ever before. To capture a greater share of the market opportunity, we will continue to execute our successful growth model as well as test new markets and non-traditional locations. While focused on our national and local ad campaigns that include more sophisticated digital programs, we remain committed to consumer education about the power and importance of chiropractic. Based on our success, we fully expect to reach our target to open our 1,000th clinic by the end of 2023.”

Fourth Quarter Financial Results: 2019 Compared to 2018
Revenue was $13.9 million in the fourth quarter of 2019, compared to $10.0 million in the fourth quarter of 2018, with the increase due primarily to a greater number of and increased gross sales at franchised and company-owned or managed clinics.

Cost of revenue was $1.6 million, up 36% compared to the fourth quarter of 2018, reflecting the success of the RD program resulting in an increased number of franchised licenses sold and clinics opened, resulting in increased commissions and royalties.

Selling and marketing expenses were $1.8 million, or 13% of revenue, compared to $1.2 million, or 12% of revenue, in the fourth quarter of 2018, reflecting increased marketing expenses related to an increase in the number of company-owned or managed clinics. General and administrative expenses were $8.5 million, or 61% of revenue, compared to $6.6 million, or 66% of revenue, in the fourth quarter of 2018, reflecting improved leverage of the operating model.

Net income was $1.3 million, or $0.09 per diluted share, compared to a net income of $437,000, or $0.03 per diluted share, in the fourth quarter of 2018.

Adjusted EBITDA was $2.1 million, an improvement of $1.0 million, compared to Adjusted EBITDA of $1.1 million in the same quarter last year. The company defines Adjusted EBITDA, a non-GAAP measure, as EBITDA before acquisition-related expenses, bargain purchase gain, net (gain)/loss on disposition or impairment, and stock-based compensation expenses. The company defines EBITDA as net income/(loss) before net interest, tax expense, depreciation, and amortization expenses.

Balance Sheet Liquidity
Unrestricted cash was $8.5 million at December 31, 2019, compared to $8.7 million at December 31, 2018, reflecting increased cash flow from operations, which was more than offset by continued investment in corporate clinic expansion and the development of the new IT platform. In February, the company executed a $7.5 million senior secured credit facility with J.P. Morgan Chase Bank, including a $5.5 million development line of credit (LOC) and a $2.0 million revolving LOC, which has an uncommitted accordion feature for an additional $2.5 million.

Full Year Financial Results: 2019 Compared to 2018
Revenues were $48.5 million in 2019, compared to $36.7 million in 2018. Net income improved $3.2 million to $3.3 million in 2019, or to $0.23 per diluted share, compared to net income of $147,000, or $0.01 per diluted share in 2018. Adjusted EBITDA was $6.2 million, improving $3.3 million compared to Adjusted EBITDA of $2.9 million last year. 

2020 Guidance for Financial Results and Clinic Openings:
Management expects the following:

Conference Call
The Joint Corp. management will host a conference call at 5 p.m. ET on Thursday, March 5, 2020, to discuss the fourth quarter and year-end 2019 results. The conference call may be accessed by dialing 765-507-2604 or 844-464-3931 and referencing conference code 8090866. A live webcast of the conference call will also be available on the IR section of the company’s website at https://ir.thejoint.com/events. An audio replay will be available two hours after the conclusion of the call through March 12, 2020.  The replay can be accessed by dialing 404-537-3406 or 855-859-2056. The passcode for the replay is 8090866.

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

EBITDA and Adjusted EBITDA are presented because they are important measures used by management to assess financial performance, as management believes they provide a more transparent view of the company’s underlying operating performance and operating trends. Reconciliation of net income (loss) to EBITDA and Adjusted EBITDA is presented in the table below. The company defines Adjusted EBITDA as EBITDA before acquisition-related expenses, bargain purchase gain, net (gain)/loss on disposition or impairment, and stock-based compensation expenses. The company defines EBITDA as net income/(loss) before net interest, tax expense, depreciation, and amortization expenses.

EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income or cash flows from operations, as determined by accounting principles generally accepted in the United States, or GAAP. While EBITDA and Adjusted EBITDA are used as measures of financial performance and the ability to meet debt service requirements, they are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation. EBITDA and Adjusted EBITDA should be reviewed in conjunction with the company’s financial statements filed with the SEC.

Forward-Looking Statements
This press release contains statements about future events and expectations that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of industry trends, our future financial and operating performance and our growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include, but are not limited to, our failure to develop or acquire company-owned or managed clinics as rapidly as we intend, our failure to profitably operate company-owned or managed clinics, uncertainties associated with the coronavirus (including its possible effects on patient demand), and the other factors described in “Risk Factors” in our Annual Report on Form 10-K as filed with the SEC for the year ended December 31, 2018, as updated for any material changes described in any subsequently-filed Quarterly Reports on Form 10-Q, and in our Annual Report on Form 10-K for the year ended December 31, 2019 expected to be filed with the SEC on or around March 6, 2020, as they may be revised or updated in our subsequent filings.  Words such as, "anticipates," "believes," "continues," "estimates," "expects," "goal," "objectives," "intends," "may," "opportunity," "plans," "potential," "near-term," "long-term," "projections," "assumptions," "projects," "guidance," "forecasts," "outlook," "target," "trends," "should," "could," "would," "will," and similar expressions are intended to identify such forward-looking statements. We qualify any forward-looking statements entirely by these cautionary factors. We assume no obligation to update or revise any forward-looking statements for any reason or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

About The Joint Corp. (NASDAQ: JYNT)
The Joint Corp. (NASDAQ: JYNT) revolutionized access to chiropractic care when it introduced its retail healthcare business model in 2010. Today, the company is making quality care convenient and affordable, while eliminating the need for insurance, for millions of patients seeking pain relief and ongoing wellness. With more than 500 locations nationwide and over 7 million patient visits annually, The Joint is a key leader in the chiropractic industry. Named on Franchise Times “Top 200+ Franchises” and Entrepreneur’s “Franchise 500®” lists, The Joint Chiropractic is an innovative force, where healthcare meets retail. For more information, visit www.thejoint.com. To learn about franchise opportunities, visit www.thejointfranchise.com.

Business Structure
The Joint Corp. is a franchisor of clinics and an operator of clinics in certain states. In Arkansas, California, Colorado, District of Columbia, Florida, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Washington, West Virginia and Wyoming, The Joint Corp. and its franchisees provide management services to affiliated professional chiropractic practices.

Media Contact: Margie Wojciechowski, The Joint Corp., margie.wojciechowski@thejoint.com 
Investor Contact: Kirsten Chapman, LHA Investor Relations, 415-433-3777, thejoint@lhai.com 

 
-Financial Tables Follow –
 
 
THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONSOLIDATED BALANCE SHEETS
    
 December 31, December 31,
  2019   2018 
ASSETS  (as adjusted)
Current assets:       
Cash and cash equivalents$8,455,989  $8,716,874 
Restricted cash 185,888   138,078 
Accounts receivable, net 2,645,085   806,350 
Income taxes receivable -   268 
Notes receivable, net - current portion 128,724   149,349 
Deferred franchise costs - current portion 765,508   611,047 
Prepaid expenses and other current assets 1,122,478   882,022 
Total current assets 13,303,672   11,303,988 
Property and equipment, net 6,581,588   3,658,007 
Operating lease right-of-use asset 12,486,672   - 
Notes receivable, net of current portion -   128,723 
Deferred franchise costs, net of current portion 3,627,225   2,878,163 
Intangible assets, net 3,219,791   1,634,060 
Goodwill 4,150,461   3,225,145 
Deposits and other assets 336,258   599,627 
Total assets$43,705,667  $23,427,713 
        
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:       
Accounts payable$1,525,838  $1,253,274 
Accrued expenses 216,814   266,322 
Co-op funds liability 185,889   104,057 
Payroll liabilities 2,844,107   2,035,658 
Notes payable - current portion -   1,100,000 
Deferred rent - current portion -   136,550 
Operating lease liability - current portion 2,313,109   - 
Finance lease liability - current portion 24,253   - 
Deferred franchise and regional developer fee revenue - current portion 2,740,954   2,370,241 
Deferred revenue from company clinics 3,196,664   2,529,497 
Other current liabilities 518,686   477,528 
Total current liabilities 13,566,314   10,273,127 
Deferred rent, net of current portion -   721,730 
Operating lease liability - net of current portion 11,901,040   - 
Finance lease liability - net of current portion 34,398   - 
Deferred franchise and regional developer fee revenue, net of current portion 12,366,322   11,239,221 
Deferred tax liability 89,863   76,672 
Other liabilities 27,230   389,362 
Total liabilities 37,985,167   22,700,112 
Commitments and contingencies       
Stockholders' equity:       
Series A preferred stock, $0.001 par value; 50,000 shares authorized,       
0 issued and outstanding, as of December 31, 2019 and December 31, 2018 -   - 
Common stock, $0.001 par value; 20,000,000 shares       
authorized, 13,898,694 shares issued and 13,882,932 shares outstanding       
as of December 31, 2019 and 13,757,200 shares issued and 13,742,530       
outstanding as of December 31, 2018 13,899   13,757 
Additional paid-in capital 39,454,937   38,189,251 
Treasury stock 15,762 shares as of December 31, 2019 and 14,670 shares as of December 31, 2018, at cost (111,041)  (90,856)
Accumulated deficit (33,637,395)  (37,384,651)
Total The Joint Corp. stockholders' equity 5,720,400   727,501 
Non-controlling Interest 100   100 
Total equity 5,720,500   727,601 
Total liabilities and stockholders' equity$43,705,667  $23,427,713 
    

 

THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
     
  Three Months Ended Year Ended
  December 31,  December 31,
   2019   2018   2019   2018 
      (as adjusted)      (as adjusted) 
Revenues:                
Revenues from company-owned or managed clinics $7,561,644  $5,217,122  $25,807,584  $19,545,276 
Royalty fees  3,819,554   2,857,196   13,557,170   10,141,036 
Franchise fees  385,868   433,042   1,791,545   1,688,039 
Advertising fund revenue  1,086,479   778,475   3,884,055   2,862,244 
Software fees  609,068   342,500   1,865,779   1,290,135 
Regional developer fees  209,234   178,295   803,849   599,370 
Other revenues  203,322   161,591   740,918   535,560 
Total revenues  13,875,169   9,968,221   48,450,900   36,661,660 
Cost of revenues:                
Franchise cost of revenues  1,525,381   1,100,818   5,159,778   3,956,530 
IT cost of revenues  108,578   100,808   406,139   353,719 
Total cost of revenues  1,633,959   1,201,626   5,565,917   4,310,249 
Selling and marketing expenses  1,845,124   1,228,993   6,913,709   4,819,555 
Depreciation and amortization  590,742   374,579   1,899,257   1,556,240 
General and administrative expenses  8,464,787   6,625,020   30,543,030   25,238,121 
Total selling, general and administrative expenses  10,900,653   8,228,592   39,355,996   31,613,916 
Net (gain) loss on disposition or impairment  (2,423)  -   114,352   594,934 
Income from operations  1,342,980   538,003   3,414,635   142,561 
                 
Other income (expense):                
Bargain purchase gain  -   (17,258)  19,298   13,198 
Other (expense), net  (18,046)  (14,209)  (61,515)  (46,791)
Total other (expense)  (18,046)  (31,467)  (42,217)  (33,593)
                 
Income before income tax expense (benefit)  1,324,934   506,536   3,372,418   108,968 
                 
Income tax expense (benefit)  33,110   69,847   48,706   (37,728)
                 
Net income and comprehensive income $1,291,824  $436,689  $3,323,712  $146,696 
                 
Less: income attributable to the non-controlling interest $-  $-  $-  $- 
                 
Net income attributable to The Joint Corp. stockholders $1,291,824  $436,689  $3,323,712  $146,696 
                 
Earnings per share:                
Basic earnings per share $0.09  $0.03  $0.24  $0.01 
Diluted earnings per share $0.09  $0.03  $0.23  $0.01 
                 
Basic weighted average shares  13,880,146   13,735,898   13,819,149   13,669,107 
Diluted weighted average shares  14,538,338   14,096,890   14,467,567   14,031,717 
                 


THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
         
         
  Year Ended
  December 31,
   2019   2018 
      (as adjusted)
Net income $3,323,712  $146,696 
Adjustments to reconcile net income to net cash        
provided by operating activities  2,602,799   2,461,436 
Changes in operating assets and liabilities  1,595,438   2,844,136 
Net cash provided by operating activities  7,521,949   5,452,268 
Net cash used in investing activities  (7,138,062)  (1,243,654)
Net cash (used in) provided by financing activities  (596,962)  326,298 
Net (decrease) increase in cash $(213,075) $4,534,912 
         


THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
RECONCILIATION FOR GAAP TO NON-GAAP
 
  Three Months Ended Year Ended
  December 31, December 31,
Non-GAAP Financial Data:  2019   2018  2019   2018 
    (as adjusted)  (as adjusted)
Net income $1,291,824  $436,689 $3,323,712  $146,696 
Net interest  18,046   14,209  61,515   46,791 
Depreciation and amortization expense  590,742   374,579  1,899,257   1,556,240 
Tax expense (benefit)  33,110   69,847  48,706   (37,728)
EBITDA $1,933,722  $895,324 $5,333,190  $1,711,999 
Stock compensation expense  183,906   159,025  720,651   628,430 
Acquisition related expenses  11,145   -  47,386   3,950 
Bargain purchase gain  -   17,258  (19,298)  (13,198)
Net (gain) loss on disposition or impairment  (2,423)  -  114,352   594,934 
Adjusted EBITDA $2,126,350  $1,071,607 $6,196,281  $2,926,115 
         

EdgarFiling

EXHIBIT 99.2

 

© 2019 The Joint Corp. All Rights Reserved. 1 Q4 2019 Financial Results As of December 31, 2019 | Reported On March 5, 2020

 

Safe Harbor Statement © 2020 The Joint Corp. All Rights Reserved. 2 Certain statements contained in this presentation are "forward - looking statements." We have tried to identify these forward - look ing statements by using words such as "may," "might," " will," "expect,” "anticipate,'' "'believe,“ "could," " intend," "plan," "estimate," "should," "if,“ "project," and similar expressions. All statements other than stateme nts of historical facts contained in this presentation, including statements regarding our growth strategies, our vision, future operations, future financial position, future revenue, projected costs, prospects, plans, obje cti ves of management and expected market growth and potential are forward - looking statements. We have based these forward - looking statements on our current expectations and projections about future events. However, these forw ard - looking statements are subject to risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from our expectations and projections. Some of these risks, uncertainties and other factors are set forth in this presentation and in other documents that we file with the United States Securities and Exchange Commission (the “SEC”), including those described in “R isk Factors” in our Annual Report on Form 10 - K as filed with the SEC for the year ended December 31, 2018, as updated for any material changes described in any subsequently - filed Quarterly Reports on Form 10 - Q, and in our Ann ual Report on Form 10 - K for the year ended December 31, 2019 expected to be filed with the SEC on or around March 6, 2020, as they may be revised or updated in our subsequent filings. These risk factors include, but ar e not limited to, our failure to develop or acquire company - owned or managed clinics as rapidly as we intend, our failure to profitably operate company - owned or managed clinics, and uncertainties associated with the coronavirus (including its possible effects on patient demand). Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward - looking statements. Projections and other forward - looking statements in cluded in this presentation have been prepared based on assumptions, which we believe to be reasonable, but not in accordance with U.S. Generally Accepted Accounting Principals (“GAAP”) or any guidelines of the SEC. A ctu al results may vary, perhaps materially. You are strongly cautioned not to place undue reliance on such projections and other forward - looking statements. All subsequent written and oral forward - looking statements attributabl e us or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Except as required by federal securities laws, we disclaim any intention or obligation to update or re vis e any forward - looking statements, whether as a result of new information, future events or otherwise. Any such forward - looking statements, whether made in this presentation or elsewhere, should be considered in the cont ext of the various disclosures made by us. Accounting Adjustments Related to the Consolidation of the Operations of the PCs In those states which require a licensed Doctor of Chiropractic to own the entity that offers chiropractic services, the Comp any enters into a management agreement with a professional corporation (PC) licensed in that state to provide chiropractic services. To increase transparency into operating results and to align with accounting rules, the Compan y w ill now consolidate the full operations of the PC. This will result in increases to our revenue and G&A expenses by an identical amount and would have no impact on our bottom line except in instances when the PC has sold trea tme nt packages and wellness plans. Revenue from these packages and plans will now be deferred and will be recognized when patients use their visits. The Company has previously consolidated its clinic operations in Non - PC states such as Arizona and New Mexico, and the deferred revenue around packages and plans in those states was already reflected in its financial statements. Therefore, these adjustments are isolated to the man age d clinics in PC states. These adjustments will have no impact on cash flow. Business Structure The Joint Corp. is a franchisor of clinics and an operator of clinics in certain states. In Arkansas, California, Colorado, D ist rict of Columbia, Florida, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Washington, West Virginia and Wyo ming, The Joint Corp. and its franchisees provide management services to affiliated professional chiropractic practices.

 

Accelerating Momentum 12 26 82 175 242 265 309 352 394 453 4 47 61 47 48 60 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total Clinics Open Franchise Company Owned/Managed © 2019 The Joint Corp. All Rights Reserved. 3 0 5 Franchise Licenses Sold Total New Franchised Clinics Opened Greenfield Clinics Opened Franchise Clinics Acquired 2018 2019 99 . 126 47 71 . 1 8 Continue to experience unusually low clinic closure rates of less than 1% 370 399 442 513 312 246 Opened another greenfield in February 2020, bringing the corporate portfolio count to 61 at March 5, 2020. Targeting 1,000 clinics opened by the end of 2023

 

RDs Accelerate Franchise License Sales 4 1 Of the 841 franchise licenses sold as of December 31, 2019, 204 are in active development, 513 are currently operating and th e b alance represents terminated/closed licenses. • 78% of clinics supported by RDs • RDs cover 53% of Metropolitan Statistical Areas (MSAs) in the US Pipeline of 200+ Undeveloped Licenses & LOIs at December 31, 2019 50% 49% 89% 89% Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2019 % of Sales by Regional Developers Gross Cumulative Franchise Licenses Sold 1 22 37 99 126 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2019 Franchise Licenses Sold Annually 579 616 715 841 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2019 © 2020 The Joint Corp. All Rights Reserved.

 

Our Mission 5 To improve quality of life through routine and affordable chiropractic care Q4 2019 vs Q4 2018 2019 vs 2018 System - wide sales growth Comp sales >13 months 1 Comp sales >48 months 1 34% 26% 19% 33% 25% 19% Revenue $13.9M up 39% $48.5M up 32% Net Income $1.3M, up $855K $3.3M, up $3.2M Adjusted EBITDA 2 $2.1M, up $1.0M $6.2M, up $3.3M Unrestricted cash $8.5 M at Dec. 31, 2019, compared to $8.7M at Dec. 31, 2018 LIVE A BETTER YOU 1 Comparable sales include only the sales from clinics that have been open at least 13 or 48 full months and exclude any clinic s t hat have closed.| 2 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the Appendix. © 2020 The Joint Corp. All Rights Reserved.

 

Continuing Strong Time to Breakeven © 2019 The Joint Corp. All Rights Reserved. 6 * Based on average historical gross sales growth rates from January 2013 through January 2020 ** Number of clinics in operation by the number of months opened, partial months not included. 62 55 49 38 34 28 23 19 13 11 8 • The chart below is dynamic as it monitors sales growth starting in the first full month of operations. For example, 74 clinic s w ere opened in 2019, 12 of which were opened in December. Therefore, for the month of December 2019, 62 clinics were in full operation. • In January 2019, 8 clinics were opened, 4 of which were opened by legacy franchisees in different geographies that chose not to fully utilize The Joint’s new grand opening program. Those 4 clinics have underperformed since opening.

 

Increasing Investment in Awareness 7 Multiple Campaign Channels Building a Positive, Authentic Brand • Launched “You’re back, baby.” • Sharing patients’ real success stories • Leveraging increased local market penetration • Forming advertising coops • Executing sophisticated media buys: TV, radio, outdoor and sports sponsorships PR Web Outdoor Print Social October 2019 Launch TV New Television s pots focus on everyday drivers of pain Testimonials from real patients of The Joint (thejoint.com/stories) New campaign clings, tagline: You’re Back, Baby SM © 2020 The Joint Corp. All Rights Reserved.

 

Marketing Co - Ops Growing in Strength & Sophistication 8 Co - Ops: Another driver for growing brand awareness • Improves local franchisee organization and collaboration • Increases media options and efficiencies • Bridges gap between national and local clinic advertising © 2020 The Joint Corp. All Rights Reserved. Marketing Activity Tiers 1 National Marketing Fund $4.4M 2 Co - op advertising at a market - wide (DMA) level $15M - $18M 3 Individual clinic advertising in 3 - 5 mile radius

 

Implementing AXIS, New IT Platform 9 • Conducting internal testing • Implementing robust training • 2020 rollout © 2020 The Joint Corp. All Rights Reserved.

 

Exceptional System - wide Sales Growth © 2019 The Joint Corp. All Rights Reserved. 10 33% Annual system - wide sales 1 2019 over 2018 25% Annual comp sales 2 for clinics >13 months in operation 2019 over 2018 19% Annual comp sales 2 for clinics >48 months in operation 2019 over 2018 1 System - wide sales include sales at all clinics, whether operated by the company or by franchisees 2 Comparable sales include only the sales from clinics that have been open at least 13 or 48 full months and exclude any clinic s t hat have closed. 13% 17% 19% 21% 25% 26% 2017 2018 2019 Quarterly Comp Sales % Growth Quarterly Comp Sales > 48months Quarterly Comp Sales > 13months

 

Q4 2019 Improvements 11 5 th Consecutive Quarter of Net Income, 10 th Consecutive Quarter of Positive Adjusted EBITDA $ in M 1 Q4 2019 Q4 2018 Increases Revenue • Corporate clinics • Franchise fees $13.9 7.6 6.3 $10.0 5.2 4.8 $3.9 2.4 1.6 39% 45% 33% Cost of revenue 1.6 1.2 0.4 36% Sales and marketing 1.8 1.2 0.6 50% Depreciation 0.6 0.4 0.2 58% G&A 8.5 6.6 1.9 28% Net Income / (Loss) 1.3 0.4 0.9 196% Adj. EBITDA 2 2.1 1.1 1.0 98% 1 Due to rounding, numbers may not add up precisely to the totals. 2 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the Appendix. © 2020 The Joint Corp. All Rights Reserved.

 

2019 Improvements 12 2 nd Full Year of Positive Adjusted EBITDA $ in M 1 2019 2018 Increases Revenue • Corporate clinics • Franchise fees $48.5 25.8 22.6 $36.7 19.5 17.1 $11.8 6.3 5.5 32% 32% 32% Cost of revenue 5.6 4.3 1.3 29% Sales and marketing 6.9 4.8 2.1 43% Depreciation 1.9 1.6 0.3 22% G&A 30.5 25.2 5.3 21% Net Income / (Loss) 3.3 0.1 3.2 2166% Adj. EBITDA 2 6.2 2.9 3.3 112% Unrestricted cash was $8.5M at Dec. 31, 2019, compared to $8.7M at Dec. 31, 2018 © 2020 The Joint Corp. All Rights Reserved. 1 Due to rounding, numbers may not add up precisely to the totals. 2 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the Appendix.

 

2020 Guidance 13 1 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the appendix. | 2 Through a combination of both greenfields and buybacks. $ in M 2019 Actual Low Guidance High Guidance Revenues $48.5 $61 $63 Adjusted EBITDA 1 $6.2 $8.5 $9.5 New Franchised Clinics 71 80 90 New Company - owned/Managed Clinics 2 13 16 20 © 2020 The Joint Corp. All Rights Reserved.

 

The Pain Epidemic Continues © 2019 The Joint Corp. All Rights Reserved. 14 Sources: 2018. https://wonder.cdc.gov . | Vivolo - Kantor, AM, Seth, P, Gladden, RM, et al. Vital Signs: Trends in Emergency Department Visits for Suspected Opioid Overdoses -- United States, July 2016 - September 2017 . Centers for Disease Control and Prevention (CDC); 2011. https://www.ncbi.nlm.nih.gov/books/NBK92521/ | Gaskin DJ, Richard P. The Economic Costs of Pain in the United States . Institute of Medicine (US) Committee on Advancing Pain Research, Care, and Education.; 2018 . https://www.cdc.gov/obesity/data/adult.html | Adult Obesity Facts. CDC.; 2018. https://www.cdc.gov/diabetes/data/statistics/statistics - report.html | National Diabetes Statistics Report. CDC

 

Market Opportunity: 1800+ Potential Clinics © 2019 The Joint Corp. All Rights Reserved. 15 The Joint Patient Base With usable addresses in last 21 months • All 50 States, DC, and Puerto Rico • All Canadian Provinces and Territories • 24 Countries on 6 Continents 1800+ similar points of distribution • Analyze demographics and psychographics • Model attributes • Roll across country Targeting 1,000 clinics opened by the end of 2023 Best Good Fair Poor

 

$1.3 $2.8 $8.1 $22.3 $46.2 $70.1 $98.6 $126.9 $165.1 $220.3 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 © 2019 The Joint Corp. All Rights Reserved. 16 Building Nationwide Brand to Deliver Shareholder Value Continue to focus on franchise sales • Further leverage RD strategy Accelerate the expansion of corporate clinic portfolio within clustered locations • Build greenfield clinics • Acquire franchised clinics opportunistically Growth Strategy Delivers Continued Momentum System - wide Gross Sales ($ in M) 77% CAGR 1 (2010 - 2019) The Joint Corp. 9 - yr. CAGR 77% 1 vs. Industry CAGR 1.2% 2* 1 For the period ended Dec. 31, 2019 | 2 IBIS World Chiropractors Market Research Report; February 2019 * and 5 - year CAGR

 

Non - GAAP Measure Definition 17 This presentation includes a presentation of EBITDA and Adjusted EBITDA, which are non - GAAP financial measures. EBITDA and Adjus ted EBITDA are presented because they are important measures used by management to assess financial performance, as management believes they provide a more transparent view of the Company’s underlying operating performance and operating than GAAP measures alone. Reconciliations of net loss to EBITDA and Adjusted EBITDA are presented where applicable. The Company defines EBITDA a s n et income before net interest, tax expense, depreciation, and amortization expenses. The Company defines Adjusted EBITDA as EBIT DA before acquisition - related expenses, bargain purchase gain, loss on disposition or impairment, and stock - based compensation expenses. EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income or cash flows from operat ion s, as determined by accounting principles generally accepted in the United States, or GAAP. While EBITDA and Adjusted EBITDA are fr equ ently used as measures of financial performance and the ability to meet debt service requirements, they are not necessarily compara ble to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation. EBITDA and Adjus ted EBITDA should be reviewed in conjunction with the Company’s financial statements filed with the SEC. © 2020 The Joint Corp. All Rights Reserved.

 

Q4 2019 Segment Results 18 2019 Q4 © 2020 The Joint Corp. All Rights Reserved. Corporate Clinics Franchise Operations Unallocated Corporate The Joint Consolidated Total Revenues $ 7,562 $ 6,313 $ 0 $ 13,875 Total Operating Costs (6,422) (3,233) (2,877) (12,532) Operating Income (Loss) 1,140 3,080 (2,877) 1,343 Other Income (Expense), net - 4 (22) (18) Loss Before Income Tax Expense 1,140 3,084 (2,899) 1,325 Total Income Taxes - - 33 33 Net Income (Loss) 1,140 3,084 (2,932) 1,292 Net Interest - (4) 22 18 Income Taxes - - 33 33 Total Depreciation and Amortization Expense 552 0 39 591 EBITDA 1,692 3,080 (2,838) 1,934 Stock Based Compensation Exp - - 184 184 Bargain Purchase Gain - - - - Loss on Disposition/Impairment (2) - - (2) Acquisition Expenses - - 11 11 Adjusted EBITDA 1,689 3,080 (2,643) 2,126

 

Full Year 2019 Segment Results 19 2019 12 Mos. © 2020 The Joint Corp. All Rights Reserved. Corporate Clinics Franchise Operations Unallocated Corporate The Joint Consolidated Total Revenues $ 25,808 $ 22,642 $ 0 $ 48,451 Total Operating Costs (22,443) (11,668) (10,926) (45,036) Operating Income (Loss) 3,365 10,975 (10,925) 3,415 Other Income (Expense), net 22 21 (86) (42) Loss Before Income Tax Expense 3,387 10,996 (11,011) 3,372 Total Income Taxes - - 49 49 Net Income (Loss) 3,387 10,996 (11,060) 3,324 Net Interest (3) (21) 86 62 Income Taxes - - 49 49 Total Depreciation and Amortization Expense 1,708 1 191 1,899 EBITDA 5,092 10,976 (10,735) 5,333 Stock Based Compensation Exp - - 721 721 Bargain Purchase Gain (19) - - (19) Loss on Disposition/Impairment 113 - 1 114 Acquisition Expenses - - 47 47 Adjusted EBITDA 5,186 10,976 (9,965) 6,196

 

GAAP – Non - GAAP Reconciliation 20 © 2020 The Joint Corp. All Rights Reserved. Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18 FY18 Q1 - 19 Q2 - 19 Q3 - 19 Q4 - 19 FY19 Total Revenue 8,647 8,805 9,242 9,968 36,662 10,679 11,170 12,726 13,875 48,451 Total Cost of Revenue 972 1,052 1,085 1,202 4,310 1,206 1,299 1,427 1,634 5,566 Gross Profit $ 7,675 $ 7,753 $ 8,157 $ 8,767 $ 32,351 $ 9,473 $ 9,871 $ 11,300 $ 12,241 $ 42,885 Sales & Marketing 1,102 1,294 1,195 1,229 4,820 1,506 1,769 1,793 1,845 6,914 Depreciation/Amortization Expense 387 405 389 375 1,556 366 404 538 591 1,899 Other Operating Expenses 6,269 6,119 6,820 6,625 25,833 6,658 7,209 8,324 8,465 30,656 Total Other Income (Expense) (11) 19 (11) (31) (34) 8 (15) (20) (16) (43) Total Income Taxes (63) 6 (50) 70 (38) (1) 10 7 33 49 Net Income (Loss) $ (32) $ (51) $ (208) $ 437 $ 147 $ 953 $ 462 $ 617 $ 1,292 $ 3,324 Net Interest 11 $ 11 11 14 47 12 15 17 18 62 Income Taxes (63) $ 6 (50) 70 (38) (1) 10 7 33 49 Depreciation and Amortization Expense 387 $ 405 389 375 1,556 366 404 538 591 1,899 EBITDA $ 303 $ 371 $ 142 $ 895 $ 1,712 $ 1,329 $ 892 $ 1,179 $ 1,934 $ 5,333 Stock Based Compensation 208 $ 139 123 159 628 172 179 186 184 721 Bargain Purchase Gain - $ (30) - 17 (13) (19) - - - (19) Loss on Disposition/Impairment 0 $ 251 343 - 595 105 (18) 30 (2) 114 Acquisition Expenses - $ 3 1 - 4 (0) 3 33 11 47 Adjusted EBITDA $ 511 $ 734 $ 609 $ 1,072 $ 2,926 $ 1,586 $ 1,056 $ 1,428 $ 2,126 $ 6,196

 

Jake Singleton, CFO jake.singleton@thejoint.com The Joint Corp. | 16767 N. Perimeter Dr., Suite 110, Scottsdale, AZ 85260 | (480) 245 - 5960 https://www.facebook.com/thejointchiro @ thejointchiro https://twitter.com/thejointchiro @ thejointchiro https://www.youtube.com/thejointcorp @ thejointcorp Peter D. Holt, President and CEO peter.holt@thejoint.com The Joint Corp. | 16767 N. Perimeter Dr., Suite 110, Scottsdale, AZ 85260 | (480) 245 - 5960 Kirsten Chapman, LHA Investor Relations thejoint@lhai.com LHA Investor Relations | One Market Street, Spear Tower, Suite 3600, San Francisco, CA 94105 | (415) 433 - 3777 21 The Joint Corp. Contact Information © 2020 The Joint Corp. All Rights Reserved.