JOINT Corp Q4 FY2024 earnings call

• Sanjiv Razdan discussed strengthening The Joint Corp's position as the leading chiropractic provider, aiming to be a pure play franchisor, and growing sales while reducing overhead and improving profitability.
• The company has a multiyear phased approach (Joint 2.0 and 3.0). Joint 2.0 focuses on strengthening core, reigniting growth, and improving profitability through refranchising, dynamic revenue management, and digital marketing. Joint 3.0 involves new revenue streams like B2B, tech differentiation, and retail products.
• In 2024, system-wide sales increased to $530.3 million, system-wide comp sales showed positive trends, and they had 960 clinics with 842 being franchise clinics.
• They are placing patients at the center, focusing on people capability and culture, reigniting clinic network growth, and innovating for future revenue drivers.

For the continuing operations, in 2024 system-wide sales increased to $530.3 million, up 9% in Q4 2024 compared to 8% in Q3 2024. System-wide comp sales for all clinics opened thirteen months was 6% in Q4 2024, compared to 4% in Q3 2024. System-wide comp sales for mature clinics opened forty-eight months were modestly positive for Q4 2024, compared to negative 2% in Q3 2024. Revenue for continuing operations increased 14% in Q4 2024, up from 10% in Q3 2024. Consolidated adjusted EBITDA was $3.3 million for Q4 2024, and $11.4 million for 2024. The Corporate Clinics business segment has been classified as discontinued operations.

• System-wide sales are expected to be between $550 and $570 million in 2025 compared to $530.3 million in 2024.
• System-wide comp sales for all clinics opened thirteen months or more are expected to be in the mid-single digits.
• Consolidated adjusted EBITDA is expected to be between $10 million, down from $11.4 million in 2024.
• New franchise clinic openings, excluding refranchised clinics, are expected to be between 30 and 40 in 2025, less than 57 in 2024.

• Consumer headwinds and stubborn inflation impacting consumer behavior.
• Variability in the quality of patient experience.
• Inefficiencies in regional co-op and local clinic marketing execution.
• Strains in franchisee relationships.
• Challenges in retention of doctors of chiropractic.
• Playing catch up on the tech platform.
• Lower volume bottom quartile clinics.

Q: Jeffrey Van Sinderen asked about potential slower consumer behavior in Q1 metrics and quarterly progression, retention rates, and the number of corporate clinics under LOI A: Sanjiv Razdan and Jake Singleton responded on consumer behavior, retention rates showing strong conversion and stable attrition, and over 125 corporate clinics with vast majority under LOI negotiations Q: Jeremy Hamblin inquired about refranchising valuation, continuing vs discontinued operations, and pricing strategy A: Jake Singleton explained valuation as multiple of EBITDA for profitable corporate clinics, and Sanjiv and Jake discussed pricing strategy with dynamic revenue management and ongoing testing Q: George Kelly asked about refranchising timing, four-wall margin, and new services A: Sanjiv Razdan discussed refranchising expected to wrap up closer to first half, four-wall margin stability and cautious pricing approach, and new services exploration in Joint 3.0 Q: Anthony Vendetti questioned system-wide sales royalty fees and SG&A reduction A: Jake Singleton provided context on royalty structure and directional signal of reduced SG&A post-refranchising