Q1 2025 The Joint Corp Earnings Call

Operator: Good day and welcome to the Joint Corp First Quarter 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad.

Good day and welcome to the Joint Corp, first quarter 2025 financial results Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions to ask.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.

Speaker Change: A question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to David Barnard of Alliance Advisors Investor Relations. Please go ahead.

David Barnard: I would now like to turn the conference over to David Barnard of Alliance Advisors Investor Relations. Please go ahead. Thank you, Drew. Good afternoon, everyone. Again, this is David Barnard with Alliance Advisors Investor Relations.

Speaker Change: Thank you drew good afternoon, everyone. Again this is David Barnard with Alliance Advisors Investor Relations joining us on the call today are president and CEO Sanjiv Rothstein and CFO Jake Singleton. Please note we're using a slide presentation that can be found at H T. T. P. S.

David Barnard: Joining us on the call today are President and CEO Sanjiv Razdan and CFO Jake Singleton.

David Barnard: Please note we are using a slide presentation that can be found at backslash ir.thejoint.com under the events section.

Speaker Change: Backslash ironed out the joint Dot com under the events section today after the close of the market. The joint Corp issued its results for the quarter ended March 31, 2025, if you do not already have a copy of this press release. It can be found in the Investor Relations section of the company's website as provided on slide.

David Barnard: Today, after the close of the market, the Joint Corp issued its results for the quarter ended March 31, 2020. If you do not already have a copy of this press release, it can be found in the investor relations section of the company's website. as provided on slide.

Speaker Change: Two please be advised that today's discussion includes forward looking statements within the meaning of the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 or.

David Barnard: Please be advised that today's discussion includes forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be considered forward-looking statements. Although the company believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, it can make no assurances that such expectations or assumptions will prove to have been correct. Actual results may differ materially from those expressed or implied in forward-looking statements due to various risks and uncertainties.

Speaker Change: All statements other than statements of historical facts may be considered forward looking statements.

Speaker Change: Although the company believes that the expectations and assumptions reflected in these forward looking statements are reasonable it can make noise sort of assurances that such expectations or assumptions will prove to be incorrect actual results may differ materially from those expressed or implied in forward looking statements due to various risks and uncertainties.

David Barnard: As a result, we caution you against placing undue reliance on these forward-looking For discussion of the risks and uncertainties that could cause actual results to differ from those expressed or implied in the forward-looking statements, please review the risk factors detailed in the company's reports on Forms 10-K and 10-Q, as well as other reports that the company files from time to time with the SEC.

Speaker Change: Service Crackers, detailed in the company's reports on forms 10K and 10Q, as well as other reports that the company files from time to time with the SEC.

David Barnard: Finally, any forward-looking statements included in this earnings call are made only as of the date of this call, and we do not undertake any obligation to revise our results or publicly release any updates to these forward-looking statements in light of new information or future The results of operations of the Corporate Clients Business Segment have been classified as discontinued operations for all periods discussed, and the following comments represent continuing operations unless otherwise stated. Management uses EBITDA and adjusted EBITDA, which are non-financial measures. These are presented because they are important measures used by management to assess financial performance.

Speaker Change: Finally, any forward-looking statements included in this earnings call are made only as of the date of this call and we do not undertake any obligation to revise our results or publicly release any updates to these forward-looking statements in light of new information or future events.

Management uses EBITDA and adjusted EBITDA which are non-financial measures.

Speaker Change: These are presented because they are important measures used by management to assess financial performance. Management believes they provide a more transparent view of the company's underlying operating performance and operating trends than GAAP measures alone. Reconciliation of net income to EBITDA and adjusted EBITDA is presented in the press release.

David Barnard: Management believes they provide a more transparent view of the company's underlying operating performance and operating trends than gap measures alone. Reconciliation of net income to EBITDA and adjusted EBITDA is presented in the press The company defines EBITDA as net income or loss before net interest, tax expense, depreciation, and amortization expenses. The company defines adjusted EBITDA as EBITDA before acquisition-related expenses, which includes contract termination costs associated with reacquired regional developer rights, stock-based compensation expense, bargain purchase gain, net gain or loss on disposition or impairment, costs related to restatement filings, restructuring costs, and litigation expenses. consisting of legal and related deeds for specific proceedings that may arise outside of the ordinary course of our business.

Speaker Change: The company defines EBITDA as net income or loss before net interest and tax expense depreciation and amortization expenses.

Speaker Change: The company defines adjusted EBITDA, as EBITDA before acquisition related expenses, which includes contract termination costs associated with re-acquired regional developer rights.

Speaker Change: Stock-based Compensation Expense, Bargain Purchase Gain, Net Gain, or Laws on Disposition or Empowerment, Costs Related to Restatement Filing, Restructuring Costs, and Litigation Expenses.

Speaker Change: consisting of legal and related to use for specific proceedings that may arise outside of the ordinary course of our business.

David Barnard: Management also includes commonly discussed performance metrics. System-wide sales include revenues 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 revenues from both company-owned or managed clinics and franchise clinics that in each case have been open for at least 13 full months and exclude any clinics that have closed.

Management also includes Commonly Discussed Performance Metrics

Speaker Change: System-wide sales include revenues at all clinics, whether operated by the company or by franchisees.

Speaker Change: Comp Sales include the revenues from both company-owned or managed clinics and franchise clinics that in each case have been open for at least 13 full months and exclude any clinics that have closed. Turning to slide three, it's my pleasure to turn the call over to Sanjiv Razdan.

Sanjiv Razdan: Turning to slide three, it's my pleasure to turn the call over to Sanjiv Razdan. Thank you, David. And I welcome everyone to the call.

Sanjiv Razdan: Turning to slide four. I'm excited to speak with you today to review progress we are making. For those new to the call, our mission is to improve the quality of life through routine and affordable chiropractic care. After we execute our strategy to become a pure-play franchisor, grow sales, reduce overhead, and improve profitability, we will strive for our new big, bold vision to become America's most accessible health and wellness services company. As part of our transformation journey, in April, we hosted an incredibly productive Franchisee Spring Convention, during which we discussed next steps and continued to improve franchise relationships.

Sanjiv Razdan: For those due to the call, our mission is to improve the quality of life through routine and affordable chiropractic care.

Sanjiv Razdan: After we execute our strategy to become a pure play franchise or grow sales, reduce overhead and improve profitability we will strive for our new big board vision to become America's most accessible health and wellness services company.

Sanjiv Razdan: As part of our transformation journey in April , we hosted an incredibly productive franchisees spring convention during which we discussed next steps and continued to improve franchise

Sanjiv Razdan: Before I elaborate, I'll summarize our Q1 2025 financial results compared to Q1 2024. System-wide sales were $132.6 million, up 5%, demonstrating resilience in this economic environment. Comp sales for all clinics open 13 months were 3% for the quarter and 4% in March. Revenue from continuing operations increased 7%. Adjusted EBITDA from continuing operations was $46,000 compared to $425,000 in quarter one, 2024.

Sanjiv Razdan: Before I elaborate, I will summarize our Q1 2025 financial results compared to Q1 2024.

Sanjiv Razdan: Revenue from continuing operations increased 7%. Adjusted EBITDA from continuing operations was $46,000 compared to $425,000 in Q1 2024.

Sanjiv Razdan: Jake will provide greater detail in a moment.

Jake will provide greater detail in a moment.

Sanjiv Razdan: Turning to slide 5. I want to acknowledge the dynamic consumer environment that we're in. While we monitor the situation closely, we are pushing ahead with our transition plan. As unveiled on our March call, we have constructed a multi-year phased approach. The changes we're making increase the potency and flexibility of our model. To become a pure play franchisor, we are re-franchising. We have signed LOIs for 93% of our corporate clinics, and we are well into the due diligence phase for many.

Turning to slide five.

Speaker Change: I want to acknowledge the dynamic consumer environment that we're in.

Sanjiv Razdan: While we monitor the situation closely, we are pushing ahead with our transition plan.

Sanjiv Razdan: As unveiled on our March call, we have constructed a multi-year phase approach.

Sanjiv Razdan: The changes we are making increase the potency and flexibility of our model.

To become a pure play franchise or we are re-franchising.

Sanjiv Razdan: We have signed LOIs for 93% of our corporate clinics and we are well into the new

Sanjiv Razdan: When we reach binding asset purchase agreements, we intend to make public announcements. In the Joints 2.0, we are focused on strengthening our core, reigniting growth, and improving clinic and company-level profitability. We will initiate dynamic revenue management, strengthen our digital marketing and promotional calendar, and upgrade our patient-facing technology.

Sanjiv Razdan: When we reach binding asset purchase agreements, we intend to make public announcements.

Sanjiv Razdan: In the Joint 2.0, we are focused on strengthening our core, re-igniting growth and improving

Sanjiv Razdan: We will initiate dynamic revenue management, strengthen our digital marketing and promotional calendar and upgrade our patient-facing technology.

Sanjiv Razdan: Turning to slide 6. The Franchisee Spring Convention was aptly named the Pulse Summit. Since I joined, we have been taking a false check of the business. At the summit, we reviewed the joint's pulse with our franchisees, regional developers, and our employees. We seized the opportunity to reinvigorate, to create momentum through collaboration, to ensure we're working as one team, and to identify ways to become stronger, bigger, and faster so we can care for more patients, more effectively. And we must always remember that when patients stay at the center of our focus, the business grows, profitability follows, and everyone wins.

Dunning to slide six.

The Franchisee Spring Convention was aptly named the Pulse Summit.

Sanjiv Razdan: Since I joined, we have been taking a pulse check of the business. At the summit, we reviewed the joint's pulse with our franchisees, regional developers, and our employees.

Sanjiv Razdan: We seize the opportunity to reinvigorate, to create momentum through collaboration, to ensure we're working as one team and to identify ways to become stronger, bigger and faster so we can care for more patients more effectively.

Sanjiv Razdan: and we must always remember that when patients stay at the center of our focus, the business grows, profitability follows, and everyone wins.

Sanjiv Razdan: And to do that well, we know we have to level up across the board with a stronger brand, sharper marketing, better operations, and higher impact training. During the summit, our team and franchisees signed a franchise partnership pact. that is a shared promise between franchisor and franchisee to lead with clarity, act with integrity and stay true to the values that define the joint. During the summit, we discussed near and longer-term initiatives, including marketing execution with our new marketing agency and strategies to increase new patient leads, our plan to regain patient momentum, and our new brand architecture.

Sanjiv Razdan: And to do that well, we know we have to level up across the board with a stronger brand, sharper marketing, better operations, and higher impact training.

Sanjiv Razdan: During the summit, our team and franchisees signed a franchise partnership pact that is a shared promise between franchise or and franchisee to lead with clarity, act with integrity and stay true to the values that define the joint.

Sanjiv Razdan: Operational Execution with our priority focus on excellent patient experiences and clinic economics, our new clinic launch best practices and toolkit update, and our new clinic report cards that provide qualitative data and diagnostics on patient satisfaction, operational efficiency, and sales. As well as training, we are introducing the Joint Chiropractic Elite Academy. Think of it as our version of the joint university.

Sanjiv Razdan: on excellent patient experiences and clinic economics, a new clinic launch best practices and toolkit update, and a new clinic report cards that provide quantitative data and diagnostics on patient satisfaction, operational efficiency and sales.

Sanjiv Razdan: as well as training. We are introducing the Joint Chiropractic Elite Academies.

Sanjiv Razdan: Think of it as our version of the joint university. We have planned the inaugural academy for doctors of chiropractic to be launched in 2025.

Sanjiv Razdan: We have planned the inaugural academy for doctors of chiropractic to be launched in 2025. Events like the Summit enable us to synchronize with our franchisees, improve relationships with them, and strengthen our operating culture.

Sanjiv Razdan: Events like the Summit enable us to synchronize with our franchisees, improve relationships with them and strengthen our operating culture.

Sanjiv Razdan: Turning to slide 7. Let's review Dynamic Revenue Management. We must be intentional and balanced when reviewing price increases.

Turning to slide seven, let's review Dynamic Revenue Management.

Sanjiv Razdan: We must be intentional and balanced when reviewing price increases. We promise affordability as part of our mission and it's a key determination among our patient demographic.

Sanjiv Razdan: We promise affordability as part of our mission, and it's a key determination among our patient demographics. Yet, since our last meaningful price adjustment in March 2022, labor costs have increased significantly, squeezing clinic-level margins. Working to alleviate the pinch, we have begun testing elasticity for different prices for various packages and wellness plans. We are reviewing the entire model, including legacy plans, nothing is sacred. Our goal is to create an innovative, flexible pricing model that more accurately aligns with treatment plans and patient usage during all phases of care from acute to maintenance. Options include premium memberships with more visits in their first month of care, new price options for our wellness plans, and increases for our packages.

Sanjiv Razdan: Yet, since our last meaningful price adjustment in March 2022, labour costs have increased significantly squeezing clinic-level margins.

Sanjiv Razdan: Working to alleviate the pinch, we have begun testing elasticity for different prices for various packages and wellness plans. We are reviewing the entire model, including legacy plans, nothing is sacred.

Sanjiv Razdan: Our goal is to create an innovative, flexible, pricing model that more accurately aligns with treatment plans and patient usage during all phases of care from acute to maintenance.

Sanjiv Razdan: Options include premium memberships with more visits in the first month of care, new price options for our wellness plans and increases for our packages.

Sanjiv Razdan: For example, for patients in acute pain that need to be adjusted more than one time per week per their treatment plan, we will begin offering prepaid visit pricing in the second half of this year.

Sanjiv Razdan: For example, for patients in acute pain that need to be adjusted more than one time per week for their treatment plan, we will begin offering prepaid visit pricing in the second half of this year.

Sanjiv Razdan: Turning to slide 8. Let's review strengthening our digital marketing. We are working with our new marketing agency to drive brand awareness and consideration, as well as improve our SEO performance with enhanced content and technical strategy.

Turning to Slide 8

Let's review strengthening our digital marketing.

Sanjiv Razdan: We are working with our new marketing agency to drive random awareness and consideration as well as improve our FEO performance with enhanced content and technical strategies.

Sanjiv Razdan: A new content strategy aims to increase relevance and foster trust. Our new user-generated content is focused on building authority and community validation. The early tests are delivering encouraging results.

Sanjiv Razdan: Our new content strategy aims to increase relevance and foster trust. Our new user-generated content is focused on building authority and community validation. The early tests are delivering encouraging results.

Sanjiv Razdan: Turning to slide 9, let's review strengthening our promotional calendar. In February, we implemented our new Step Into Wellness promo to encourage target existing patients to buy into wellness plans. We offer them the first month at $45, and then the rest of the membership at the standard rate.

Turning to slide nine. Let's review strengthening our promotional calendar.

Sanjiv Razdan: In February , we implemented a new step into wellness promo to encourage.

target existing patients to buy into wellness plans.

Sanjiv Razdan: We offer them the first month at $45 and then the rest of the membership at the standard rate. Although this impacted revenue in February , we increase active membership conversion significantly during the month.

Sanjiv Razdan: Although this impacted revenue in February, we increased active membership conversion significantly during the month. The Joint's Buy Five, Get One wellness promo begins on Monday, June 3rd and will provide patients with an affordable way to commit to their treatment plan and stay on the path to good health.

Sanjiv Razdan: The joint by one, get by five, get one wellness promo, begins on Monday, June 3rd, and will provide patients with an affordable way to commit to their treatment plan and stay on the path to good health.

Sanjiv Razdan: This has been a very successful promo in the past, and I look forward to reviewing the results with you next quarter.

Sanjiv Razdan: This has been a very successful promo in the past and I look forward to reviewing the results with you next quarter.

Sanjiv Razdan: Turning to slide 10. Let's review patient-facing technology. We polled patients, wellness coordinators, and doctors of chiropractic to ensure the most essential elements for the users are included in our mobile app. Features include clinic finder. which doctor is in clinic. in-clinic check-in and push notification. Ultimately, all will benefit when we communicate to patients directly using in-app push notifications.

Turning to Slide 10. Let's review patient-facing technology.

Sanjiv Razdan: We call patients, wellness coordinators and doctors of fire practice to ensure the most essential elements for the users are included in our mobile app.

Sanjiv Razdan: Features include clinic finder, which doctor is in clinic, in clinic check-in and push notifications.

Sanjiv Razdan: Ultimately, all will benefit when we communicate to patients directly using in-app push notifications. For example, we can remind them that they have adjustments X number of adjustments remaining for the month, which with strength and usage and engagement.

Sanjiv Razdan: For example, we can remind them that they have X number of adjustments remaining for the month, which would strengthen usage and engagement.

Sanjiv Razdan: Regarding the app, our beta is going well and we expect to be in the app stores by June 30th.

Sanjiv Razdan: Regarding the app, our beta is going well and we expect to be in the app stores by June 30th.

Jake Singleton: With that, I'll turn the call to Jake. Thank you, Sanjiv, and let's turn to slide 12.

With that, I'll turn the call to Jake.

Jake Singleton: Let's discuss our operating When reviewing our quarterly results, I want to remind you of two factors. First, in 2024, it was a leap year and included an extra sales day in February compared to 2025. Then in February of 2025, we conducted a promotion targeted at our existing non-wellness plan members that lowered the first month membership rate to $45, which impacted sales in dollars while securing more patients for the medium term. In Q1 2025, system-wide sales were up 5%, as Sanjiv mentioned, showing resilience while consumer sentiment is wavering. Comp sales for all clinics open 13 months were at 3% in Q1 of 2025.

Jake Singleton: Thank you, Sindez, and let's turn to slide 12. Let's discuss our operating metrics.

Jake Singleton: When reviewing our quarterly results, I want to remind you of two factors. First in 2024, it was a leap year and included an extra sales day in February compared to 2025.

Jake Singleton: Then in February of 2025, we conducted a promotion targeted at our existing non-wellness planned members that lowered the first month's membership rate to $45, which impacted sales and dollars while securing more patients for the medium term.

Sanjiv Razdan: In Q1 2025, system-wide sales were up 5%, as Sanjiv mentioned, showing resilience while consumer sentiment is wavering.

Jake Singleton: Comp Sales for All Clinics Open 13 months were at 3% in Q1 of 2025. They increased to 4% in March of 2025.

Jake Singleton: They increased to 4% in March of 2025. comp sales for mature clinics opened 48 months were negative 2%.

Jake Singleton: Comp sails for mature clinics open 48 months were negative 2%.

Jake Singleton: Turning to slide 13. Let's discuss our clinic.

Turning to slide 13, let's discuss our clinics.

Jake Singleton: As previously indicated, we expect franchise license sales to be impacted by our re-franchising strategy. We sold nine licenses in Q1 2025 compared to 15 in Q1 2024. During Q1, we had 16 regional developers covering approximately 56% of the network, and we had 146 franchise licenses in active development.

Jake Singleton: As previously indicated, we expect franchise license sales to be impacted by our refranchising strategy.

Jake Singleton: We sold nine licenses in Q1 2025 compared to 15 in Q1 2024.

Jake Singleton: During Q1, we had 16 regional developers covering approximately 56% of the network and we had 146 franchise licenses in active development.

Jake Singleton: In Q1 2025, we opened five franchise clinics, we franchised two corporate clinics, and closed one corporate clinic. At March 31st, 2025, we had 969 clinics, of which 847, or 87%, are franchise clinics.

Jake Singleton: In Q-1 2025, we opened five franchise clinics, we franchise two corporate clinics and closed one corporate clinic.

Jake Singleton: At March 31st, 2025, we had 969 clinics of which 847 or 87% are franchise clinics.

Jake Singleton: Turning to slide 14, let's discuss our financials. As discussed in March, 2025 will be a year of transition as we conclude the refranchising effort. We are recording the company-owned or managed clinics as discontinued operations. Please note, we have not yet experienced the financial benefit from our corporate clinic revenues transitioning to franchise royalties and fees. nor have we yet fully reduced our GNA expense. We are critically focused on reducing our GNA and will shed more overhead than what is currently reported in our continuing operation. This will improve the bottom line in the coming years. In 2026, we expect to further grow net new clinic openings, system-wide sales, comp sales, and adjusted EBITDA.

Turning to slide 14. Let's discuss our financials.

Jake Singleton: As discussed in March, 2025 will be a year of transition as we conclude to refranchising efforts.

Jake Singleton: We are recording the company owned or managed clinics as discontinued operations [inaudible]

Jake Singleton: Please note, we have not yet experienced the financial benefit from our corporate clinic revenues, transitioning to franchise royalties and fees.

Nor have we yet fully reduced our DNA expense.

Jake Singleton: We are critically focused on reducing our GNA and will shed more overhead than what is currently reported in our continuing operations.

This will improve the bottom line in the coming years.

Jake Singleton: In 2026, we expect a further grow, net new clinic openings, system wide sales, comp sales, and adjusted EBITDA.

Jake Singleton: Now I'll review continuing operations for Q1 2025 compared to Q1 2024. Revenue reached $13.1 million, compared to $12.2 million, increasing 7% due to the greater number of franchise clinics in operation and offsetting the effects of the 2024 leap year and the 2025 February promotion. Cost of revenues was $3 million, up 10% over the same period last year, reflecting the associated higher regional developer royalties and commissions and the greater number of franchise clinics in operation. Selling and marketing expenses were $3.5 million compared to $2.2 million. The increase reflects the costs related to carrying two marketing agencies, while we ensure a smooth transition to our new team, engaged to strengthen our digital marketing strategy.

Jake Singleton: Now, I'll review continuing operations for Q1 2025, compared to Q1 2024.

Jake Singleton: Revenue reached $13.1 million, compared to $12.2 million, increasing 7% due to the greater number of franchise clinics in operation and offsetting the effects of the 2024 leap year and the 2025 February promotion.

Jake Singleton: Cost of revenues was $3 million, up 10% over the same period last year, reflecting the associated higher regional developer royalties and commissions and the greater number of franchise clinics and operations.

Jake Singleton: Selling and marketing expenses were $3.5 million compared to $2.2 million. The increase reflects the costs related to carrying two marketing agencies while we ensure a smooth transition to our new team engaged to strengthen our digital marketing strategy.

Jake Singleton: depreciation and amortization expenses increased 10% compared to the prior year period due to depreciation expenses related to development of an internal use software deployed in 2024. G&A expenses were $6.9 million, or 53% of revenue, compared to $7.3 million, or 60% of revenue in the same period last year, reflecting lower payroll and stock-based compensation. Income tax expense was $13,000 compared to $9,000 in Q1 2024. Net loss from continuing operations was $506,000, or $0.03 per basic share, compared to a loss of $399,000, or $0.03 per basic share, in Q1 2024.

Jake Singleton: Depreciation and amortization expenses increase 10%, compared to the prior year period due to depreciation expenses related to development of an internal youth software deployed in 2024.

Jake Singleton: GNA expenses were $6.9 million or 53% of revenue, compared to $7.3 million or 60% of revenue in the same period last year, reflecting lower payroll and stock base compensation.

Jake Singleton: Income Tax Expense with $13,000 compared to $9,000 in Q1, 2024.

Jake Singleton: Net Loss from Continuing Operations was $506,000 or $3 cents per basic share.

Jake Singleton: Compared to a loss of $399,000 or $3 cents per basic share in Q1 2024 I'll provide adjusted EBITDA for three categories for continuing operations, discontinued operations and consolidated operations.

Jake Singleton: I'll provide adjusted EBITDA for three categories, for continuing operations, discontinued operations, and consolidated operations. Adjusted EBITDA for continuing operations was $46,000 compared to $425,000. Adjusted EBITDA for discontinued operations was $2.8 million, compared to $3.1 million. and adjusted EBITDA for consolidated operations were $2.9 million compared to $3.5 million.

Adjusted EBITDA for continuing operations was $46,000 compared to $425,000.

Jake Singleton: Adjusted EBITDA for discontinued operations with $2.8 million compared to $3.1 million.

Jake Singleton: and adjusted EBITDA for consolidated operations were $2.9 million compared to $3.5 million.

Jake Singleton: On to slide 15, I'll review our balance sheet and cash At March 31st, 2025, our unrestricted cash was $21.9 million, compared to $25.1 million at December 31st, 2024.

Jake Singleton: On to slide 15, I'll review our balance sheet and cash flow.

Jake Singleton: At March 31, 2025, our unrestricted cash was $21.9 million, compared to $25.1 million at December 31, 2024.

Jake Singleton: Cash used in operations for the quarter was $3.7 million, which included the previously discussed legal settlement payment and annual employee bonuses, both of which were accrued as of December 31, 2024. The line of credit with JPMorgan Chase grants us immediate access to $20 million through February of 2027.

Jake Singleton: Cash used in operations for the quarter was $3.7 million, which included the previously discussed legal settlement payment and annual employee bonuses, both of which were accrued as of December 31, 2024.

Jake Singleton: The line of credit with JP Morgan Chase grants us immediate access to $20 million through February of 2027.

Jake Singleton: on to slide 16. We are reiterating 2025 guidance. While the joint provides services within the U.S. and is not directly impacted by potential tariffs, many of our patients are concerned about the impact to their lives. After the tariffs were announced in April, shifts in consumer confidence and spending did begin to affect the joint. System-wide sales are expected to be between $550 and $570 million compared to $530.3 million in 2024. Comp sales for all clinics open 13 months or more are expected to be in the mid-single digits compared to an increase of 4% in 2024. consolidated adjusted EBITDA to be between $10 and $11.5 million compared to $11.4 million in 2024.

on to slide 16.

We Are Reiterating 2025 Guidance

Jake Singleton: While the joint provides services within the US and is not directly impacted by potential tariffs, many of our patients are concerned about the impact to their lives. After the tariffs were announced in April , shifts in consumer confidence and spending did begin to affect the joint. The joint is not directly impacted by potential tariffs, many of our patients are concerned about the impact to their lives.

Jake Singleton: System-wide sales are expected to be between $550 and $570 million, compared to $530.3 million in 2024.

Jake Singleton: Comp sales for all clinics, open 13 months or more are expected to be in the mid-single digits compared to an increase of 4% in 2024.

Jake Singleton: Consolidated Adjusted EBITDA to be between 10 and $11.5 million, compared to $11.4 million in 2024.

Jake Singleton: The 2025 Consolidated Adjusted EBITDA Estimates includes an adjustment for approximately $4.4 million related to, among other things, stock-based compensation and depreciation and amortization. The company will factor in any additional impairments or restructuring charges related to the refranchising should they occur. New franchise clinic openings, excluding the impact of refranchised clinics, are expected to be between 30 and 40 compared to 57 in 2024. In 2025, franchise license sales and clinic openings are likely to be less than 2024, as we are working through the impact of our refranchising efforts. Further, we see the impact of economic headwinds, stubborn inflation, and volatile consumer sentiment impacting the beginning of 2025.

Jake Singleton: The 2025 Consolidated Adjusted EBITDA estimates include an adjustment for approximately $4.4 million related to, among other things, stock-based compensation and appreciation and amortization.

Jake Singleton: The company will factor in any additional impairments or restructuring charges related to the refranchising should they occur.

Jake Singleton: New Franchise Clinic openings excluding the impact of re-franchise clinics are expected to be between 30 and 40 compared to 57 in 2024.

Jake Singleton: In 2025, franchise license sales and clinic openings are likely to be less than 2024 as we are working through the impact of our refranchising efforts.

Jake Singleton: Further, we see the impact of economic headwinds, stubborn inflation, and volatile consumer sentiment impacting the beginning of 2025.

Jake Singleton: That said, as clinics shift from company-owned or managed clinics to franchise clinics, there will be a transformative financial impact. Our franchise royalties and fees will increase, and we will rationalize our unallocated GNA expenses, and the Joint Corp will be more profitable.

Jake Singleton: That said, as clinic shift from company-owned or managed clinics to franchise clinics, there will be a transformative financial impact. Our franchise royalties and fees will increase, and we will rationalize our unallocated GNA expenses, and the Joint Corp will be more profitable.

Jake Singleton: And with that, I'll turn the call back over to you, Sanjiv. Thanks, Jake.

Jake Singleton: And with that, I'll turn the call back over to you, Sinderen. Thanks, Jake. Turning to slide 18.

Sanjiv Razdan: Turning to slide 18. We've been reviewing the chiropractic care market and testing brand concept. The bottom line is that America is suffering from pain. and we've got the data to prove it. Seventy-four percent of our new patients cite aches and pains as at least one of the reasons for coming to the Joint. In fact, back pain is the third most frequent cause for visiting a doctor. the leading cause of job-related disability and one of the top reasons people miss work.

Sanjiv: We've been reviewing the tarot practice care market and testing brand concepts.

The bottom line is that America is suffering from pain.

and we've got the data to prove it.

Sanjiv: 74% of our new patients cite aches and pains as at least one of the reasons for coming to the joint.

Sanjiv: In fact, back pain is the third most frequent cause for visiting a doctor.

Sanjiv: The leading cause of job-related disability and one of the top reasons people miss work.

Sanjiv Razdan: But the good news is, we are starting to see an important shift. Across the country, people are thinking more about longevity, healthy aging, and how to take care of themselves before something breaks. With a growing focus on holistic fitness and sustainable well-being, people are changing their approach to health.

Sanjiv: But the good news is we are starting to see an important shift.

Sanjiv: Across the country, people are thinking more about longevity, healthy aging and how to take care of themselves before something breaks.

Sanjiv: With a growing focus on holistic fitness and sustainable well-being, people are changing their approach to help.

Sanjiv Razdan: Turning to slide 19. The Joint is in a position to set the pace and shape the pulse of the future of care. Pain is the trigger bringing patients to our clinic. So we are shifting our external messaging to be pain-centric.

Turning to Slide 19.

Sanjiv: The joint is in a position to set the pace and shape the pulse of the future of care.

Payne is the trigger, bringing patients to our clinics.

Sanjiv: So we are shifting our external messaging to be pain centric.

Sanjiv Razdan: Once in the system, we start educating patients on the efficacy of chiropractic care for wellness and teach them the benefits of chiropractic care on an ongoing basis. Our new brand creative will empower individuals to reclaim their lives through transformational relief. People can move from pain to a life on pause.

Sanjiv: Once in the system we start educating patients on the efficacy of chiropractic care for wellness and teach them the benefits of chiropractic care on an ongoing basis.

Sanjiv: Our new brand creative will empower individuals to reclaim their lives through transformational relief. People can move from pain to a life unpaused.

Sanjiv Razdan: We are excited to launch this new campaign in the second half of the year.

Sanjiv: We are excited to launch this new campaign in the second half of the year.

Sanjiv Razdan: Turning to slide 20.

Sanjiv Razdan: I'll reiterate, when we place patience at the heart of everything we do, the business grows, profitability follows, and everyone wins. People are highly motivated to relieve pain. Our hypothesis is that pain relief is more resilient than other purchases in times of economic pressure. As discussed, we are pivoting our marketing to target those in pain. Our team is dedicated to doing the work to improve our system. We are advancing our initiatives to strengthen our core, reignite growth, and improve clinic and company-level profitability.

running to slide 20.

Sanjiv: I'll reiterate, when we place patients at the heart of everything we do, the business grows profitability follows and everyone wins.

Sanjiv: People are highly motivated to relieve pain. Our hypothesis is that pain relief is more resilient than other purchases in times of economic pressure. As discussed, we are pivoting our marketing

Sanjiv: Our team is dedicated to doing the work to improve our system. We are advancing our initiatives to strengthen our core, reignite growth, and improve clinic and company level profitability.

Sanjiv Razdan: Turning to slide 21. Before we open for questions, I have a few updates and comments.

Turning the slide 21

Sanjiv: Before we open for questions, I have a few updates and comments.

Sanjiv Razdan: On the corporate side, we welcome Andra Terrell in the newly created role of SVP Legal, an innovative legal strategist with two decades serving franchise systems. Andra is experienced in strategic planning, re-franchising, acquisitions, turnarounds and more.

Sanjiv: On the corporate side, we welcome Andra Terrell in the newly created role of SVP Legal and innovative legal strategist with two decades serving franchise systems. Andra is experienced in strategic planning, refranchising acquisitions done around and more.

Sanjiv Razdan: We also welcome our new SVP, Operations and Patient Experience, Eric Wyatt, to the Executive Team. Eric has 30 years of franchise operations experience at numerous national brands and joins us to improve quality and economics of our clinics, reduce variability of the patient experience, and help us reignite growth.

Sanjiv: We also welcome our new SVP operations and patient experience are required to the executive team.

Sanjiv: Eric has 30 years of franchise operations experience at numerous national brands and joins us to improve quality and economics of our clinics, reduce variability of the patient experience and help us reignite growth.

Sanjiv Razdan: On the business side, as stewards of chiropractic, we support and encourage the success of future professions. In March, we announced our latest scholarship at Northwestern Health Sciences University. Additionally, we received awards from Entrepreneur Magazine. The joint has been named one of the 150 fastest-growing franchises, ranked No. 37 of the Franchise 500, and added to the 10-plus club.

Sanjiv: on the business side. As tours of chiropractic, we support and encourage the success of future professionals.

Sanjiv: In March, we announced our latest scholarship at Northwestern Health Sciences University.

Sanjiv: Additionally, we received awards from Entrepreneur Magazine. The joint has been named one of the 150 fastest-growing franchises ranked number 37 of the franchise, 500, and added to the 10-plus club.

Sanjiv Razdan: On the investor side, I invite you to meet us at the B. Reilly Securities Annual Investor Conference in Beverly Hills later in May or the virtual Oppenheimer Annual Consumer Growth and E-Commerce Conference in June.

Sanjiv: On the investor side, I invite you to meet us at the B. Reilly Securities Annual Investor Conference in Beverly Hills later in May, or the virtual Oppenheimer Annual Consumer Growth and E-Commerce Conference in June.

Operator: With that operator, I am ready to begin Q&A. We will now begin the question and answer session. To ask a question, you may press star, then 1. on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two.

With that operator, I am ready to begin Q&A.

We will now begin the question and answer session.

Sanjiv: on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys.

Sanjiv: If at any time your question has been addressed and you would like to withdraw your question, please press star then two At this time it will pause momentarily to assemble our roster

Operator: At this time, we will pause momentarily to assemble our roster.

Jeff Vendzinderen: Our first question comes from Jeff Vendzinderen with B Riley Security Please go ahead. Hi, everyone.

Speaker Change: The first question comes from Jeff and Zinderen with the rightly securities. Please go ahead.

Sanjiv Razdan: Sanjiv, I wonder if you can start maybe, or Jake, whoever's got the info, maybe speak about the new patient ad metrics and retention metrics and trends around those that you're seeing. Yeah, Jeff, I'll take that one. Yeah, we you know, we made reference to the overall consumer sentiment. I think we are seeing that reflected in our new patient volumes. When we look at, you know, the the gross number of volume, new patient leads that we're getting, those have been affected, especially as we think about the organic leads that are coming through. So critically focused on those marketing strategies that Sanjiv alluded to.

Thank you.

Speaker Change: Hi, everyone. Sanjiv, I wonder if you can start maybe or Jake, whoever's got the info. Maybe speak about the new patient, add metrics and retention metrics and trends around those that you're seeing lately.

and many more. Thank you. Thank you.

Speaker Change: Yeah, Jeff, I'll take that one. Yeah, we made reference to the overall consumer sentiment. I think we are seeing that reflected.

in our new patient volumes, when we look at...

Speaker Change: You know, the gross number of volume, new patient leads that we're getting, those have been affected especially as we think about the organic leads that are coming through. So critically focused on those marketing strategies that Sanjiv alluded to.

Sanjiv Razdan: From a retention perspective, we, you know, we're holding on to our patients at a similar rate that we always have. So that metric is holding up, holding up well for us.

Speaker Change: from a retention perspective, we're holding on to our patients at a similar rate that we always have, so that metric is holding up well for us.

Jeff Vendzinderen: Okay, great.

Jeff Vendzinderen: And then, as we're thinking about you becoming a pure franchise business, And I don't know if you're ready to share this or not, but I know you mentioned in your prepared comments that you'll become more profitable. But just wondering if there are any metrics that you're prepared to share around that, how much you might remove from overhead, what level of margins you think are feasible, is it level of margins of similar companies, just wondering anything new to add on. Yeah, I don't, I don't think we're ready to provide a forward guide on that yet, Jeff.

Speaker Change: Okay, great. And then as we're thinking about you becoming a pure franchise business.

Speaker Change: and I don't know if you're ready to share this or not, but I know you mentioned in your prepared comments that you'll become more profitable, but just wondering if there are any metrics that you're prepared to share around that, how much you might remove from overhead.

Speaker Change: What level of margins do you think are feasible? Is it the level of margins of similar companies just wondering anything new to add on that?

Speaker Change: Yeah, I don't I don't think we're ready to provide a forward guide on that yet Jeff, you know, as we looked at last year's adjusted EBITDA on a consolidated basis, we did about 11.4 million of adjusted EBITDA as we reach, you know

Sanjiv Razdan: Um, you know, as we look at last year's adjusted EBITDA on a consolidated basis, we did about $11.4 million of adjusted EBITDA. Uh, as we reach, you know... You've seen our guide for 2025, but as we think about 2026 as that pure play franchisor, we do expect profitability both on a gross dollar and on a margin basis as a percentage to be higher than we've seen historically. The way that we accomplish that is by shedding the necessary G&A, and so that's where our critical focus will be. So as we get closer to announcing some of these refranchising deals as they reach those asset purchase agreements, we'll be able to give a better sense for kind of where we're going in the future.

Speaker Change: The coming years, you've seen our guide for 25, but as we think about 2026, is that pure play franchise or we do expect profitability?

Speaker Change: Both on a gross dollar and on a margin basis as a percentage to be higher than we've seen historically. The way that we accomplish that is by shedding the necessary DNA and so that's where our critical focus would be.

Speaker Change: So as we get closer to announcing some of these refranchising deals as they reach those asset purchase agreements, we'll be able to give a better sense for kind of where we're going in the future.

Jeff Vendzinderen: And given that I think you said 90 some odd percent are basically sort of in the due diligence process, I think that was what you said.

Dr. Kirsten Chapman, Dr. Kirsten Chapman, Dr. Kirsten Chapman,

Speaker Change: And given that, I think you said 90 some odd percent are basically sort of in the due diligence process, I think that was what you said.

Sanjiv Razdan: What do you think the time frame is to be through the refranchising process at this point, just based on the pace that it's been going so far? Jeff, we have 93% of the remaining corporate clinics which are now under LOI. and most of them are in the process of due diligence. I think it is our intent to exit 2025 as a pure play franchisor. And we'd hope that we can accelerate this process as much as we possibly can, even intra-year, but that is the timeline that we're working towards.

Speaker Change: What do you think the time frame is to be through the refranchising process at this point, just based on the pace that's been going so far?

Speaker Change: Jeff, we have 93% of the remaining corporate clinics which are now under LOI.

Speaker Change: and most of them are in the process of due diligence.

Speaker Change: I think it is our intent to exit 2025 as a pure play franchise or.

Speaker Change: and we hope that we can accelerate this process as much as we possibly can even in for a year but that is the timeline that we're working towards.

Jeff Vendzinderen: Okay, great.

Jeff Vendzinderen: Thanks for taking my questions and I'll take the rest off. Okay.

Speaker Change: Okay, great. Thanks for taking my questions and I'll take the rest off line.

Operator: Thank you, Jeff.

George Kelly: The next question comes from George Kelly with Roth Capital Partners. Please go ahead. Hey, everybody. Thanks for taking my questions. Excuse me, maybe just to start with a follow-up from the prior question. Has the re-franchising process slowed at all, just with some of the macro noise? You know, it's been a pretty crazy last... Six Weeks. I had thought that, um... coming out of the last quarter, the goal was for most of it to be complete sometime in 2Q. Maybe I misremember that, but I'm just curious if things have slipped at all. We are not seeing any meaningful slowdown of the re-franchising process.

Okay. Thank you, Jeff.

George Kelly: The next question comes from George Kelly with Roth Capital Partners. Please go ahead.

George Kelly: Everybody, thanks for taking my questions. Excuse me. Maybe just to start with a follow-up from the prior question.

George Kelly: As the refranchising process loaded all just with some of the macro noise, you know, it's been a pretty crazy last

Six Weeks [inaudible]

I had thought that

George Kelly: coming out of the last quarter. The goal was for most of it to be complete sometime in to Q. Maybe I misremember that, but I'm just curious if things have slipped at all.

George Kelly: We are not seeing any meaningful slowdown of the re-frontaging process.

Sanjiv Razdan: It's the nature of this in terms of due diligence, lease reassignments, etc., that it's very difficult to put a firm timeline to that, but we're not seeing any slowdown to the process and definitely not seeing any connection between our... process of refranchising and the macroeconomic Okay, that's great.

George Kelly: It's the nature of this in terms of due diligence, leads, reassignments, etc., that it's very difficult to put a firm timeline to that but we're not seeing any slow down to the process.

and Peter Holt. Thank you.

and definitely not seeing any connection between R.

process of refranchising and the macroeconomics.

George Kelly: And then second topic I wanted to cover is just going back to your comments about Comcross. I guess the two specific questions are, can you share what comps were in April? And then secondly, can you disclose quarterly franchise versus owned comp performance? Yeah, we won't give an April number at this point. We did see a slight uptick from February into March. February had the leap year in the promo that I mentioned, but we were back to 4% by March. So, those are the figures that we gave there. What was the second part of your question there, George?

Speaker Change: Okay, that's great. And then, um, second topic I wanted to cover is just going back to your comments about Com

Speaker Change: I guess the two specific questions are, can you share what comps were in April , and then secondly can you disclose quarterly franchise versus owned comp performance? [inaudible]

Speaker Change: Yeah, we won't give an April number at this point. We did see a slight uptick from February into March. February had the leap here and the promo that I mentioned, but we were back to 4% by March.

Speaker Change: So those are the figures that we gave there. What was the second part of your question there, George? If you could give Q1 franchise versus owned cops.

Sanjiv Razdan: If you could give Q1 franchise versus owned coverage. As of right now, because 87% of our clinics are franchise clinics, their comp relatively mirrors the consolidated comp. The corporate clinic comp is positive, but it does trail the franchise comp for the period.

George Kelly: Yeah, as of right now, you know, because, you know, 87% of our clinics are franchise clinics, they're calm, you know, relatively mirrors the consolidated comp. The corporate clinic comp is positive, but it does trail the franchise comp for the period. Okay.

George Kelly: And then last question for me, well, I guess two last quick Dynamic pricing, I understand it sounds like you want to take a measured approach.

George Kelly: And then last question for me. Well, I guess two last quick ones. Dynamic pricing, I understand, it sounds like you want to take a measured approach.

Sanjiv Razdan: How much of a tilt like How much just all in, if you look at the pricing opportunity, I know it's going to range by geography and it's maybe not easy to just put a number too, but is this like a high single digit opportunity for pricing or where do you see it all kind of shaking out when it's all been implemented? Here's what I can say, we're exploring, as I try to give a sense on our prepared remarks, that really every single lever in our pricing model. In the current climate, we're just wanting to be thoughtful and test the various iterations and make sure that whatever we scale nationally is something that's...

How much of a tilt like-

George Kelly: How much just all in if you look at the pressing opportunity I know it's going to range by geography and you know it's maybe not easy to just put a number two but is this like a high single digit opportunity for pressing or where do you see it all kind of shaking out when it's all been. Thank you very much.

Um.

George Kelly: Here's what I can say. We're exploring as I try to give a sense on our prepared remarks that really every single lever in our pricing

Model. So...

George Kelly: In the current climate, we're just wanting to be thoughtful and test the various iterations and make sure that whatever we scale nationally is something that's...

Sanjiv Razdan: helps us strike that balance between affordability and and Charlie Nichols. any you know, dollar value in millions to add to our total system-wide sales. Yeah, from a timing point of view. Okay, so you want a $500 million system that's like a low, at least a low single digit... Am I thinking about that right? Correct, correct.

and, you know, optimizing for price. So that's why...

George Kelly: The Comment. I'm not sure that we provide guidance on what the pricing impact is to our overall numbers, but it certainly has the capacity to be double digit in terms of...

George Kelly: You know, dollar value in millions to add to our total system might sales.

George Kelly: From a $500 million system, that's at least a low single digit.

Sanjiv Razdan: Yeah, and from a timing perspective, really the only wholesale increase that we've pushed to the full network to date is an increase to our single visit pricing. So that's only about 4% of our gross sales. You know, the rest that are in test now, you won't really see the impacts of those until the second half of the year, right, as we conclude the evaluation of those test markets and then roll those out to the full system. So some of that will be back loaded, but that is factored into to the full year guide. So that double digit millions, 10 million plus is just a partial year.

Am I thinking about that right?

Correct. Correct. Yeah, from a timing perspective.

Um...

George Kelly: really the only wholesale increase that we've pushed to the full network to date is an increase to our single visit pricing.

George Kelly: So that's only about 4% of our growth sales. The rest that are in test now, you won't really see the impacts of those until the second half of the year. As we conclude, the evaluation of those test markets.

George Kelly: and then roll those out to the full system. So some of that will be back loaded, but that is factored into to the full year guide. So that double digit millions, 10 million plus is just a partial year. That's the impact for the full year, but it's really just based on mostly partial year pricing.

Sanjiv Razdan: That's the impact for the full year, but it's really just based on mostly partial year. That's correct.

George Kelly: Okay, thank you.

Jeremy Hamblin: And then, I guess one last one. Selling and marketing expense, I understand We're paying two different agencies in the quarter, $3.5 million, I think, was the line. Correct.

George Kelly: That's correct. Okay, thank you. And then I guess one last one, Celian Markening expense, I understand you.

George Kelly: We're paying two different agencies in the quarter, three and a half million I think was the line correct when you expect that to normalize and what kind of range should should we expect when you're down to one agency. Thank you.

Jake Singleton: When do you expect that to normalize, and what kind of range should we expect when you're down to $1.5 million? Yeah, I definitely wouldn't use Q1 as the run rate figure for that. We have a lot of front loaded costs. I think you'll see a similar burdened for Q2, right, as we continue that kind of dual transitioned approach.

George Kelly: Yeah, I definitely wouldn't use Q1 as the run rate figure for that. We have a lot of front-loaded cost. I think you'll see it's similar.

George Kelly: Burden for Q2, as we continue that dual transition approach. By Q3, I think you'll start to see that more normalized, and then by Q4, you'll get a better sense for overall run rate.

Jake Singleton: By Q3, I think you'll start to see that more normalized, and then kind of by Q4, you'll get a better sense for overall run rate.

Jeremy Hamblin: The next question comes from Jeremy Hamblin with Craig Helm Capital. Please go ahead. Thanks for taking the questions. And so I just want to come back and revisit the same store sales guide for a second here. As we look ahead, I think your compares are a little bit tougher in the second half of the year, maybe I think about five. the second half of 24, verse You know, a lower single digit in the first half of the year. I mean, have you seen a meaningful uptick here over the last five or six weeks that's providing some confidence of that mid-single-digit guide?

Okay, thanks.

Speaker Change: The next question comes from Jeremy Hamblin with Great Helm Capulger.

Please go ahead.

Jeremy Hamblin: Thank you for taking the questions, and so I just want to go back and revisit the same door-sale guide for a second here. As we look ahead, I think your compares our

Speaker Change: We're a little bit tougher in the second half of the year. Maybe I think about 5% in the second half of 24 versus...

Speaker Change: You know, a lower single digit in the first half of the year. I mean, have you seen a meaningful uptick here over the last five or six weeks that's providing some confidence of that mid-single

Sanjiv Razdan: Or is there another factor, maybe the pricing, that is playing into the mid-single-digit guide? Because obviously it would imply... pretty healthy acceleration. Yeah, the guide is probably more so predicated on some of those dynamic revenue management kind of pricing increases in the second half of the year. You're right, the comp, you know, the rollovers get a little tougher, and we had a 6% comp in Q4 of 24. So it's largely predicated on the pricing initiative. that factor into that full-year guide.

Speaker Change: or is there another factor, maybe the pricing that is playing into the mid-single

You know, a pretty healthy acceleration from unrates, current unrates.

So it's largely predicated on the pricing initiatives.

that factor into that full-year guide.

Sanjiv Razdan: Got it. And then in just in terms of rolling out the dynamic pricing and kind of testing around that Obviously, it, you know, it sounds fluid. But in terms of thinking how long You might take to refine, given that it's a new process for you, is it a quarter, is it a couple of quarters, is it, I mean obviously it's an ongoing process overall. Any more insight you can share. Jeremy, clearly by the nature of its name, it is ongoing and also because a lot of our plans, right, like for example, if you go into a...

For more information visit www.FEMA.gov

Speaker Change: Got it, and then just in terms of rolling out the dynamic pricing and kind of testing around that, obviously it, you know, it sounds fluid but in terms of thinking how long [inaudible]

Speaker Change: You might take to refine, given that it's a new process for you, is it a quarter, is it a couple of quarters, is it, I mean obviously it's an ongoing process overall, but any more insight you can share there.

Sanjiv Razdan: Membership Plans, there's a minimum purchase requirement of two months, so in order to understand the impact of some of the things that we're trying to pull, I think at the bare minimum we're talking two to three months to understand the impact of test cells, at the very least. So just think about it in that way, that anything that we test... The earliest we can get a read on is in that sort of time frame, particularly as it relates to our wellness plans and packages. And because we're looking at the full pricing structure, we just have to be mindful that the changes to certain parts of our pricing mix have a tail impact to other elements of our pricing.

Speaker Change: Membership plans. There's a minimum purchase requirement of two months. So in order to understand the impact of some of the things that we're trying to build, Paul, I think at the bare minimum we're talking two to three months to understand the impact of...

and Peter Holt.

Speaker Change: at the very least. So just think about it in that way, anything that we test.

Speaker Change: The earliest we can get a read on is in that sort of time frame, particularly as it relates to our wellness plans and packages.

Speaker Change: and because we're looking at the full pricing structure, we just have to be mindful that changes to certain parts of our pricing mix have a tail impact to other elements of our pricing. So, you know, it does take some time to evaluate to make sure...

Sanjiv Razdan: So it does take some time to evaluate to make sure you're not only evaluating that core piece of the pricing mix that you've put into test, but also how it affects conversions to other elements of our pricing structure. I wouldn't describe it as fluid, I'd describe it more as strategic to make sure that we're understanding the full range of impacts and making sure that it's best for the system before rolling it out. Understood. And so do you sense that in the current environment, you're you're having clients that are looking more at kind of the monthly membership model versus the.

Speaker Change: You're not only evaluating that core piece of the pricing mix that you've put into test, but also how it affects conversions to other elements of our pricing structure.

Speaker Change: So I wouldn't describe it as fluid, I'd describe it more as strategic to make sure that we're understanding the full range of impacts and making sure that it's best for the system before rolling it out.

Speaker Change: Understood. And so do you sense that in the current environment you're you're having clients that are looking more at

Speaker Change: Kind of the monthly membership model versus the June 2025-5-1 package type promo that you're looking at.

Sanjiv Razdan: you know, like the June 2025 5-for-1, you know, package-type promos. Yeah, I mean, we still see, you know, approximately 85% of our gross sales, you know, coming in the form of our monthly recurring products. So that's always the vast majority of our revenue. As we think about things like our single visit pricing, our package pricing, you know, we have to be very careful of how that impacts the overall wellness. You know, we aren't seeing defection away from those core recurring products. In fact, we're trying to do the opposite, right, encourage people to move into those recurring products that better fit, you know, their treatment plans and ongoing care.

and many more. Thank you. Thank you.

Speaker Change: We still see approximately 85% of our growth sales coming in the form of our monthly recurring products, so that's always...

Speaker Change: The vast majority of our revenue, as we think about things like...

Speaker Change: Single-visit pricing or package pricing, you know we have to be very careful of how that impacts the overall problems.

Speaker Change: You know, we aren't seeing defection away from those core recurring products. In fact, we're trying to do the opposite, right? Encourage people to move into those recurring products that better fit, you know, their treatment plans in ongoing care.

Sanjiv Razdan: Got it.

Jeremy Hamblin: Okay.

Jeremy Hamblin: And then I just one last thing.

Speaker Change: Got it. Okay, and then I just one last thing. I did the spring convention that you did with with franchisees and...

Jeremy Hamblin: I the spring convention that you did with with franchisees. What was the cost of that? And then what line item? Did it float through GNA? Or was some of that allocated to sales and marketing? Yeah, that full burden comes through the sales and marketing line. We did slightly scale back the convention this year in terms of the number of days that we typically do. So it's not the same level of cost impact that you see when we do our every other year full national conference agenda, but that did impact the second quarter sales and marketing line as well.

Speaker Change: What was the cost of that and then what line item did it float through G&A or some of that that allocated to sales and marketing?

Thank you for watching. See you next time.

Yeah, that full burden comes through the sales and marketing line.

Speaker Change: We did slightly scale back the convention this year in terms of the number of days that we typically do so.

Speaker Change: It's not the same level of cost impact that you see when we do our every other year full national conference agenda, but that did impact the second quarter sales and marketing line as well.

Jake Singleton: Can you call out what the cost is? I don't have that off the top of my head, Jeremy. In a given year, with the full-scale agenda, some of that passed through as much as half a million. This was a much smaller production, so it was south of that.

Okay. Can you call out what the cost was?

Speaker Change: I don't have that off the top of my head, Jeremy. You know, in a given year, you know, with the full scale agenda, some of that pass through as much as half a million, this was a much smaller production, so it was, you know, south of that.

Jeremy Perlman: Alright, thanks so much for taking the questions and best wishes.

Speaker Change: Got it. All right. Thanks so much for taking the questions and best wishes.

Jeremy Perlman: The next question comes from Jeremy Perlman with Maxim Group. Please go ahead. Thank you for taking my question. So maybe if you could help us connect the dots between the reported comp sales, which were up 3% for clinics that were open at least 13 months, but then for clinics open at least 48 months, I think you said on the call that they were down 2%, so maybe why do you think that is? And then also, are there any specific strategies you're implementing or you plan to implement for the more mature clinics to help them get back to comp sale growth?

Thank you.

Speaker Change: The next question comes from Jeremy Perlman with Maxim Group. Please go ahead.

Jeremy Perlman: Thank you for taking my question. Maybe if you could help us connect the docs between the reported comp sales, which are up 3% for clinics that were opened in at least 13 months, but then for clinics opened in at least 48 months, I think you said on the call that they were down 2%. Maybe why do you think that is? And then also are there any specific strategies you're implementing or you plan to implement for the more mature clinics to help them get back to comp sales growth?

Sanjiv Razdan: Yeah, Jeremy, that's a that's a typical spread that we've seen over the last five to six quarters in terms of that mature comp versus the system comp. So no real widening in terms of that gap. So I would say that's been consistent for us. You know, we're always looking at ways to continue to strengthen, you know, all clinics within our system. So, you know, a number of the operational strategies and marketing tactics, you know, will certainly be geared towards that existing patient or existing clinic profile as well.

Speaker Change: Yeah, Jeremy, that's a typical spread that we've seen over the last five to six quarters in terms of that mature comp versus the system comp. So no real widening in terms of that gap. So I would say that's been consistent for us.

Speaker Change: We're always looking at ways to continue to strengthen all clinics within our system. So a number of the operational strategies and marketing tactics will certainly be geared towards that existing clinic profile as well.

Sanjiv Razdan: Okay, thank you. And then you mentioned answering one of the questions that the guide for your system-wide sales and your comp sales for 2025, it was underpinned by dynamic revenue pricing. Is there anything else that's going – any other assumptions that you are – that go behind the guide? And is that best-case scenario? Because, you know, considering the macroeconomic risks and, you know, the consumer sentiment that you talked about on the call, it could affect, you know, higher prices. Is that baked into the guide? Or, you know, that would maybe cause you to pull back a little bit?

Speaker Change: Okay, thank you. And then you mentioned I'm answering one of the questions that the guide for your system-wide sales and your

Speaker Change: It was underpinned by the dynamic revenue pricing. Is there anything else that's going any other assumptions that you are that go behind the guide? And is that best case scenario? Because considering the macroeconomic risks and

Thank you.

Sanjiv Razdan: Well, let me start and then Jake can add to this. Dynamic revenue management is one of... A few different strategies that I had outlined which go into driving our comp sales growth. Just to recap. We are looking at promotional activity that we feel is stronger than what we've done before. We are looking at, in the second half of the year... being much more pointed in our external communications. And I referenced that 74% of our patients cite pain of some kind when they come to us, so our external messaging is going to be single-mindedly focused on pain as we transition into the back half of the year, which will help us.

Kirsten Chapman, David Kirsten Chapman, David Kirsten Chapman, David Kirsten

Speaker Change: If you're different strategies that I'd outlined which go into driving our comp sales growth just to recap.

We are looking at

Speaker Change: Promotional activity that we feel is stronger than what we've done before.

Speaker Change: We are looking at in the second half of the year.

being much more pointed in our external communications.

Speaker Change: and I referenced that 74% of our patients cite pain of some kind when they come to us or external messaging is going to be single-mindedly focused on pain as we transition into the back half of the year which will help us.

Sanjiv Razdan: get more patients into the funnel? The third thing we're doing is... Stronger digital marketing, that's the new agency we brought in, and just so that you understand specifically what that does, is it allows us to do much better media planning and buying, so that all our clinics are... buying media in a way that's relevant for their specific patient demographic and psychographics, including those mature clinics, right? Then we referenced patient-facing technology. We're expecting that our mobile app, our first ever, will be in app stores by June 30. which does not drive comps, but we believe over a period of time that helps to drive patient engagement and usage and therefore lifetime value.

Speaker Change: Get more patience into the funnel. The third thing we're doing is

Buying Media in a way that's relevant for that specific.

Patient, demographic and psychographics, including those mature clinics, right?

Speaker Change: Our first ever will be in app stores by June 30th, which whilst does not drive comps but we believe over a period of time that helps to drive patient engagement and usage in therefore lifetime value.

Sanjiv Razdan: And then finally, clearly one of the dynamics that we anticipate helping our coms is dynamic revenue management, because we have not taken any meaningful pricing since March of 2022. And that we're working through, and we do expect to take some pricing. in 2025. So hopefully that gives you a sense for what is underpinning our assumptions on comp sales.

Speaker Change: and then finally, clearly one of the dynamics that we anticipate helping our comms is dynamic revenue management because we have not taken any meaningful pricing since March of 2022 and that we're working through and we do expect to take some pricing.

Speaker Change: in 2025. So hopefully that gives you a sense for what is underpinning our assumptions and concepts.

Jeremy Perlman: Thank you very much for that. I'll hop back in a few.

Thank you very much for that.

Sanjiv Razdan: This concludes our question and answer session. I would like to turn the conference back over to Sanjiv Razdan for any closing remarks. Thank you, David. Thank you all for joining us. I look forward to getting to know you at conferences and non-deal roadshows. Have a really good day and know that at The Joint, we always have your back.

I'll hop back in a few.

Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Sanjiv Rausen for any closing remarks.

Speaker Change: Have a really good day and know that at the joint we always have your back.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. © The Ultimate Parody Site!

Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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