The Joint Corp. · NASDAQ:JYNT
The Joint — JOINT — Investor Presentation (March 2018)
35 slides from The Joint's investor presentation, Mar 12, 2018
Slide 1: Reinventing Chiropractic Care
THE JOINT CORP. | NASDAQ: JYNT | thejoint.com Reinventing Chiropractic Care
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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," "shou
Slide 3: Quality, convenient, affordable chiropractic care to retail
3 © 2018 | NASDAQ: JYNT | thejoint.com 3 © 2018 The Joint Corp. All Rights Reserved. Bringing quality, convenient, affordable chiropractic care to retail.
Slide 4: Membership-based, walk-in, no-insurance franchise model
4 © 2018 | NASDAQ: JYNT | thejoint.com 4 © 2018 The Joint Corp. All Rights Reserved. Employing a proven membership - based, walk - in, no - insurance franchise model.
Slide 5: Serving patients seeking pain relief and wellness in an open bay setting
5 © 2018 | NASDAQ: JYNT | thejoint.com 5 © 2018 The Joint Corp. All Rights Reserved. Serving patients seeking pain relief and ongoing health and wellness in an open bay setting.
Slide 6: 400+ Clinic Leader Executing Growth Strategy
6 © 2018 | NASDAQ: JYNT | thejoint.com Achi • Increasing clinic scale through franchise sales and regional developers • Reengaging in company - owned/managed clinic acquisition or build - out • Delivering 8 consecutive quarters of financial improvements $1.3 $2.8 $8.1 $22.3 $46.2 $70.1 $98.6 $126.9
Slide 7: The Joint's Strong Operational Metrics
7 © 2018 | NASDAQ: JYNT | thejoint.com The Joint’s Strong Operational Metrics 1 IBIS World Chiropractors Market Research Report; June 2017 1.4M unique patients served 22% of patients are new to chiropractic ~5M patient visits in 2017 76% of system - wide gross sales from monthly memberships The Join
Slide 8: Chiropractic Market Large, fragmented, dynamic and growing
8 © 2018 | NASDAQ: JYNT | thejoint.com • $90B spent on back pain each year 1 • $15B growing chiropractic market 2 • 62M Americans saw a chiropractor in last 5 yr.s , 35.5M in last 12 mo.s 3 • ~80% of those surveyed want a non - pharmacologic approach to physical pain 3 • 55% reduction in the likelih
Slide 9: First Mover Advantage in a Highly Fragmented Market
9 © 2018 | NASDAQ: JYNT | thejoint.com First Mover Advantage in a Highly Fragmented Market as of 12/31/17 CLINICS STATES FRANCHISE OWNED/ MANAGED INSURANCE PRIVATE PAY The Joint Corp. 399 30 ط ط ط HealthSource Chiropractic 295 34 ط ط ChiroOne 41 1 ط ط AlignLife Chiropractic 23 7 ط ط ChiroWay 8 2 ط ط
Slide 10: Revolutionizing Traditional Chiropractic Care
10 © 2018 | NASDAQ: JYNT | thejoint.com Revolutionizing Traditional Chiropractic Care FEATURES INDUSTRY PROBLEMS THE JOINT’S SOLUTIONS Affordability (per appointment) $ 74 Average 1 $ 26 Average Convenient Locations Medical Centers / Offices Retail Locations Multiple Locations Limited Locations 399
Slide 11: Proven Model Builds Brand & Accelerates Scale
11 © 2018 | NASDAQ: JYNT | thejoint.com Successful franchisors with hybrid company - owned/managed and franchised strategy: COMPANY - OWNED/MANAGED UNITS FRANCHISED UNITS • Focused expansion in strategic markets • Capital light accelerates brand development & growth • Strong unit economics, high cas
Slide 12: Franchisee Economics
12 © 2018 | NASDAQ: JYNT | thejoint.com Franchisee Economics • $261k investment • $150k initial build - out cost • $111k in working capital • Franchisees pays 7% royalty on gross sales • Assumes breakeven • $25k monthly gross sales • Opex with 344 active patients at 13 months in operation growing sa
Slide 13: Franchised Unit Economics Model for Franchisor
13 © 2018 | NASDAQ: JYNT | thejoint.com Franchised Unit Economics Model for Franchisor Capital Light Unit Growth • Income stream for franchisor • Growing sales at historical rates 1 • Receives royalty on gross sales • 7% from non - regional developer franchises • Net 4% from regional developer franc
Slide 14: Company-Owned/Managed Unit Economics Model
14 © 2018 | NASDAQ: JYNT | thejoint.com Company - Owned/ Managed Unit Economics Model Potential Contribution Margin >30% • $261k investment • $150k initial build - out cost • $111k in working capital • 13 month b reakeven 2 • Assumes breakeven at $23k mo. gross sales • Represents 325 active patients
Slide 15: RD Model Proven to Accelerate Scale
15 © 2018 | NASDAQ: JYNT | thejoint.com 1000 units tipping point for national recognition and economies of scale • Regional Developers (RD) model successful for many small - box retail franchises • RDs pay for territory and manage franchises for revenue split • RD license fee varies on area & clinic
Slide 16: Patient Demographic
Patient Demographic Extremely broad patient base, all walks of life • 25 to 55, M arket Penetration Index ( MPI) of 117 - 174 • Gender s light ly female skew ed , similar to US population • 60% w hite c ollar / 40% b lue c ollar • $50 K - $100 K household income, MPI 146 • Over - index Hispanic and
Slide 17: Advancing Robust National Footprint
17 © 2018 | NASDAQ: JYNT | thejoint.com 399 Clinics as of 12/31/17 30 States Advancing Robust National Footprint 400 th clinic opened Jan. 18, 2018
Slide 18: Data Analytics Yields 1700+ Clinics
18 © 2018 | NASDAQ: JYNT | thejoint.com 400k patient records • Analyze demographics and psychographics • Replicate of attributes • Roll across country 1700+ similar points of distribution Data Analytics Yields 1700+ Clinics Projected Core Customer & Trade Area Potential (based on current usage patte
Slide 19: Full Year 2017 Metrics
19 © 2018 | NASDAQ: JYNT | thejoint.com Achi $ in Ms 2017 IMPROVEMENT 2017 vs. 2016 Revenue $25.2 23% Gross profit $21.9 24% G&A $18.5 (28)% Net loss $(3.3) Up $11.9 Adjusted EBITDA 2 $(0.1) Up $7.6, 99% Cash and equivalents at Dec. 31, 2017 $4.2 Up $1.2 Full Year 2017 Metrics 19 © 2018 | NASDAQ: JY
Slide 20: Increasing Licensing to Drive Clinic Openings
20 © 2018 | NASDAQ: JYNT | thejoint.com 82 175 242 265 309 352 4 47 61 47 2012 2013 2014 2015 2016 2017 Franchise Company Owned/Managed Increasing Licensing to Drive Clinic Openings GROSS CUMULATIVE FRANCHISE LICENSES SOLD 1 TOTAL CLINICS OPEN 312 370 340 439 515 557 579 616 2012 2013 2014 2015 2016
Slide 21: Driving Top-line Growth
21 © 2018 | NASDAQ: JYNT | thejoint.com Driving Top - line Growth SYSTEM - WIDE GROSS SALES ($ in Ms ) $8.1 $22.3 $46.2 $70.1 $98.6 $126.9 2012 2013 2014 2015 2016 2017 $2.8 $6.0 $7.1 $13.8 $20.5 $25.2 2012 2013 2014 2015 2016 2017 REVENUE ($ in Ms )
Slide 22: Delivering Results: Quarterly Highlights
22 © 2018 | NASDAQ: JYNT | thejoint.com Delivering Results: Quarterly Highlights SYSTEM - WIDE COMP SALES % GROWTH REVENUE & ADJ. EBITDA 1 ($ in Ms ) 1 Reconciliation of Adjusted EBITDA to GAAP earnings is included in the appendix. $4.3 $5.0 $5.5 $5.8 $5.7 $6.0 $6.5 $6.9 $(2.7) $(2.0) $(1.7) $(1.4)
Slide 23: 2018 Growth Strategy: Driving Scale
23 © 2018 | NASDAQ: JYNT | thejoint.com 2018 Growth Strategy: Driving Scale • Accelerate franchise sales • Leverage Regional Developers • Reengage growth of company owned/managed units • Acquire buyback clinics opportunistically • Build greenfield clinics in clustered locations Building nationwide b
Slide 24: Driving Shareholder Value: 2018 Guidance
24 © 2018 | NASDAQ: JYNT | thejoint.com $ in Ms LOW HIGH New Franchise Openings 40 50 Additional Company - owned or Managed Clinics 1 0 5 New Clinic Openings 1 40 52 Revenues $31.0 $32.0 Adjusted EBITDA 2 $2.5 $3.5 Driving Shareholder Value: 2018 Guidance 1 Existing clinics are acquired from franchi
Slide 25: Stable Model, Significant Growth Potential
25 © 2018 | NASDAQ: JYNT | thejoint.com Stable Model, Significant Growth Potential 1 IBIS World Chiropractors Market Research Report; August 2016 • $ 15B growing chiropractic market 1 • Experienced, proven management • 1,700+ clinic national footprint opportunity • 77% 8 - year CAGR in system - wide
Slide 26: Appendix
APPENDIX
Slide 27: Management Leverages Extensive Experience
27 © 2018 | NASDAQ: JYNT | thejoint.com PRESIDENT & CEO Peter D. Holt CHIEF FINANCIAL OFFICER John P. Meloun VP, OPERATIONS Jorge Armenteros VP, MARKETING Jason Greenwood VP, FRANCHISE SALES Eric Simon Management Leverages Extensive Experience
Slide 28: Board of Directors
28 © 2018 | NASDAQ: JYNT | thejoint.com Matthew E. Rubel Lead Director, 2017 James H. Amos, Jr. Director, 2015 Ronald V. DaVella , CPA Director, 2014 Suzanne M. Decker Director, 2017 Peter D. Holt Director, 2016 Richard A. Kerley Director, 2015 Bret Sanders Director, 2015 • Director, Hudson’s Bay Co
Slide 29: Transformative Opportunity for Chiropractors
29 © 2018 | NASDAQ: JYNT | thejoint.com INDUSTRY THE JOINT Starting Salary $30K - $40K 1 $65K - $75K plus bonus potential 2 Accessibility • Appointments required • Medical centers & offices • Traditional office hours • No appointments • Clustered, h igh - visibility retail locations • Open evenings
Slide 30: Q4 2017 Operational Summary
30 © 2018 | NASDAQ: JYNT | thejoint.com Q4 2017 Operational Summary • System - wide gross sales up 32% to $ 36.1M, from $ 27.2M in Q4 2016 • System - wide comp sales 1 for clinics >13 months in operation 1 increased 26%, the same as Q4 2016 • System - wide comp sales 1 for clinics >48 months in oper
Slide 31: Q4 2017 Financial Summary
31 © 2018 | NASDAQ: JYNT | thejoint.com Achi $ in Ms Q4 2017 Q4 2016 IMPROVEMENT Revenue Corporate clinic Franchise $6.9 3.0 3.9 $5.8 2.4 3.4 $1.1 0.6 0.5 20% 25% 16% Inc. revenue contribution • 53% Corp • 47% Franchise Cost of revenue 1.0 0.8 (0.2) (30%) Inc. gross sales and RD fees Gross profit 5.
Slide 32: Non-GAAP Measure Definition
Non - GAAP Measure Definition This presentation includes a presentation of EBITDA and Adjusted EBITDA, which are non - GAAP financial measures. EBITDA and Adjusted EBITDA are presented because they are important measures used by management to assess financial performance, as management believes they
Slide 33: Q4 2017 Segment Results & GAAP Reconciliation
33 © 2018 | NASDAQ: JYNT | thejoint.com Q4 2017 Segment Results & GAAP Reconciliation 2017 Q4 Corporate Clinics Franchise Operations Unallocated Corporate The Joint Consolidated Total Revenues 3,019$ 3,911$ 0$ 6,929$ Total Operating Costs (3,071) (2,146) (1,938) (7,155) Operating Income (Loss) (53)
Slide 34: 2017 Segment Results & GAAP Reconciliation
34 © 2018 | NASDAQ: JYNT | thejoint.com 2017 Segment Results & GAAP Reconciliation 2017 Corporate Clinics Franchise Operations Unallocated Corporate The Joint Consolidated Total Revenues 11,125$ 14,039$ -$ 25,164$ Total Operating Costs (12,829) (7,796) (7,714) (28,339) Operating Income (Loss) (1,704
Slide 35: Contact Information
35 © 2018 | NASDAQ: JYNT | thejoint.com Peter D. Holt, President and CEO peter.holt@thejoint.com John P. Meloun, Chief Financial Officer john.meloun@thejoint.com Kirsten Chapman, LHA Investor Relations thejoint@lhai.com The Joint Corp. | 16767 N. Perimeter Dr., Suite 240 | Scottsdale, AZ 85260 | (48