Q2 2026 The Joint Corp Earnings Call

August 6, 2026

Speaker #1: Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the Joint Corporation Q2 2026 financial results conference call.

Operator: Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to The Joint Corp. Q2 2026 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad, if you would like to withdraw your question, press star 1 again.

Operator: If you would like to ask a question during this time, simply press star, followed by the 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I will now turn the call over to Richard Land with Alliance Advisors Investor Relations. Please go ahead.

Operator: If you would like to ask a question during this time, simply press star, followed by the one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn the call over to Richard Land with Alliance Advisors, Investor Relations. Please go ahead.

Speaker #1: Thank you. I will now turn the call over to Richard Land with Alliance Investors with Alliance Advisors Investor Relations. Please go ahead.

Speaker #2: Thank you, Rebecca, and good afternoon, everyone. Joining us on the call today are President and CEO Sanjiv Razdan and CFO Scott Bowman. Please note we are using a slide presentation that can be found on the Joint Investor Relations website.

Richard Land: Thank you, Rebecca. Good afternoon, everyone. Joining us on the call today are President and CEO Sanjiv Razdan, and CFO Scott Bowman. Please note we are using a slide presentation that can be found on The Joint's investor relations website. This afternoon, The Joint Corp. issued a press release for the Q2 ended 30 June 2026. If you do not already have a copy, it can also be found on the company's website. Please be advised that today's discussion, including any financial and related guidance to be provided, consists of forward-looking statements as defined by securities laws. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance, business prospects, and opportunities to differ materially from those expressed in or implied by these statements.

Speaker #2: This afternoon, the Joint Corp issued a press release for the Q2 ended June 30, 2026. If you do not already have a copy, it can also be found on the company's website.

Speaker #2: Please be advised that today's discussion, including any financial and related guidance provided, consists of forward-looking statements as defined by securities laws. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance, business prospects, and opportunities to differ materially from those expressed in or implied by these statements.

Richard Land: Please be advised that today's discussion, including any financial and related guidance to be provided, consists of forward-looking statements as defined by securities laws. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance, business prospects, and opportunities to differ materially from those expressed in or implied by these statements.

Speaker #2: Some important factors that could cause such differences are discussed in the risk factors section of the Joint Corp's filing with the securities and exchange commission.

Richard Land: Some important factors that could cause such differences are discussed in the risk factors section of The Joint Corp.'s filing with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements are made. The company assumes no obligation to update them except to the extent required by applicable securities laws. Management uses non-GAAP financial measures such as EBITDA, adjusted EBITDA, free cash flow, and system-wide sales. A description of these measures is included in the press release issued earlier this afternoon. Reconciliations to the most directly comparable GAAP measures are included in the appendix to the presentation and press release, both of which are available in the investors tab of our website. With that, I will now turn the call over to Sanjiv Razdan. Sanjiv, please go ahead.

Speaker #2: Forward-looking statements speak only as of the date the statements are made and the company assumes no obligation to update them except to the extent required by applicable securities laws.

Speaker #2: Management uses non-GAAP financial measures such as EBITDA, adjusted EBITDA, free cash flow, and system-wide sales. A description of these measures is included in the press release issued earlier this afternoon and reconciliations to the most directly comparable GAAP measures are included in the appendix to the presentation and press release both of which are available in the Investors tab of our website.

Richard Land: A description of these measures is included in the press release issued earlier this afternoon. Reconciliations to the most directly comparable GAAP measures are included in the appendix to the presentation and press release, both of which are available in the investors tab of our website. With that, I will now turn the call over to Sanjiv Razdan. Sanjiv, please go ahead.

Speaker #2: With that, I'll now turn the call over to Sanjiv Razdan. Sanjiv, please go ahead.

Speaker #3: Thank you, Richard. Good afternoon, everyone. The Q2 was a period of continued execution of our joint 2.0 initiative. With our results reflecting the progress we are making toward a stronger, more profitable financial profile as a capitalized pure-play franchisor, this was underscored by a $560,000 year-over-year improvement in consolidated net income and a $1.4 million increase in adjusted EBITDA from continuing operations reflecting the improved operating leverage of the current business.

Sanjiv Razdan: Thank you, Richard. Good afternoon, everyone. The Q2 was a period of continued execution of our Joint 2.0 initiative, with our results reflecting the progress we are making toward a stronger, more profitable financial profile as a capital-light, pure-play franchisor. This was underscored by a $560,000 year-over-year improvement in consolidated net income and a $1.4 million increase in adjusted EBITDA from continuing operations, reflecting the improved operating leverage of the current business. Meanwhile, we delivered 152% year-over-year growth in cash flow from operating activities, resulting in a $1.6 million increase in free cash flow. These improvements were driven by continued progress on our refranchising initiative, disciplined capital allocation, and significant improvement in our patient retention levels.

Speaker #3: Meanwhile, we delivered a $152% year-over-year growth in cash flow from operating activities resulting in a $1.6 million increase in free cash flow. These improvements were driven by continued progress on our refranchising initiative disciplined capital allocation and significant improvement in our patient retention levels.

Sanjiv Razdan: Meanwhile, we delivered 152% year-over-year growth in cash flow from operating activities, resulting in a $1.6 million increase in free cash flow. These improvements were driven by continued progress on our refranchising initiative, disciplined capital allocation, and significant improvement in our patient retention levels. First, on refranchising, our three previously announced clinic sale bundles are progressing well, with buyers already operating the clinics under management service agreements while lease assignments are completed and remaining ownership transfers are finalized.

Speaker #3: First, on refranchising, our three previously announced clinic sale bundles are progressing well with buyers already operating the clinics under management service agreements while lease assignments are completed and remaining ownership transfers are finalized.

Sanjiv Razdan: First, on refranchising, our three previously announced clinic sale bundles are progressing well, with buyers already operating the clinics under management service agreements while lease assignments are completed and remaining ownership transfers are finalized. Taken together, these transactions mean The Joint effectively operates today as a capital-light, pure-play franchisor. Second, on patient retention, we posted our best quality retention rate in over five years, a direct result of the new flexible and expanded plan options introduced earlier this year. These initiatives are working as intended, reducing attrition while making our offerings more attractive to patients. Third, on capital allocation, we remained disciplined during the quarter, repurchasing approximately $677,000 of shares while also investing in the business and completing three regional developer territory buybacks in the quarter, bringing the year-to-date total to four.

Speaker #3: Taken together, these transactions mean the joint a capitalized pure-play franchisor. Second, on patient retention, we posted our best quality retention rate in over five years.

Sanjiv Razdan: Taken together, these transactions mean The Joint effectively operates today as a capital-light, pure-play franchisor. Second, on patient retention, we posted our best quality retention rate in over five years, a direct result of the new flexible and expanded plan options introduced earlier this year. These initiatives are working as intended, reducing attrition while making our offerings more attractive to patients. Third, on capital allocation, we remained disciplined during the quarter, repurchasing approximately $677,000 of shares while also investing in the business and completing three regional developer territory buybacks in the quarter, bringing the year-to-date total to four.

Speaker #3: A direct result of the new flexible and expanded plan options introduced earlier this year. These initiatives are working as intended reducing attrition while making our offerings more attractive to patients.

Speaker #3: And third, on capital allocation, we remained disciplined during the quarter, repurchasing approximately $677,000 of shares while also investing in the business and completing three regional developer territory buybacks in the quarter, bringing the year-to-date total to four.

Speaker #3: Together, these actions reflect our conviction in the long-term value of this business and our commitment to disciplined balanced capital deployment. Combined with our progress on optimizing the clinic portfolio, they are driving higher profitability and stronger free cash flow.

Sanjiv Razdan: Together, these actions reflect our conviction in the long-term value of this business and our commitment to disciplined, balanced capital deployment. Combined with our progress on optimizing the clinic portfolio, they are driving higher profitability and stronger free cash flow. Turning to slide five, I'll touch on some of our Q2 financial highlights, which reflect the combined benefit of this execution. Revenue grew 14% year-over-year to $15.2 million. Adjusted EBITDA from continuing operations was $1.5 million compared to $88,000 in Q2 2025, an increase of $1.4 million, underscoring the operating leverage we are generating as we shift toward more royalty and fee-based franchise revenue. Consolidated net income increased to $653,000, compared to $93,000 in Q2 2025. Cash flow from operating activities grew 152% year-over-year to $2.2 million, driving a $1.6 million increase in free cash flow to $1.9 million. Turning to slide six.

Speaker #3: Turning to slide 5, I'll touch on some of our Q2 financial highlights, which reflect the combined benefit of this execution. Revenue grew 14% year over year to $15.2 million.

Speaker #3: Adjusted EBITDA from continuing operations was $1.5 million, compared to $88,000 in Q2 2025, an increase of 1.4 million underscoring the operating leverage we are generating as we shift toward more royalty and fee-based franchise revenue.

Sanjiv Razdan: Adjusted EBITDA from continuing operations was $1.5 million compared to $88,000 in Q2 2025, an increase of $1.4 million, underscoring the operating leverage we are generating as we shift toward more royalty and fee-based franchise revenue. Consolidated net income increased to $653,000, compared to $93,000 in Q2 2025. Cash flow from operating activities grew 152% year-over-year to $2.2 million, driving a $1.6 million increase in free cash flow to $1.9 million. Turning to slide six.

Speaker #3: Consolidated net income increased to $653,000, compared to $93,000 in Q2 2025. And cash flow from operating activities grew $152% year over year to $2.2 million, driving a 1.6 million increase in free cash flow to $1.9 million.

Speaker #3: Turning to slide 6, now I'd like to provide a little bit more background on the status of our refranchising efforts. Since entering into the sale agreement covering the Southern California clinic bundle, ownership has been transferred for 32 clinics to date and the remaining 13 clinics are being operated by the buyer under management service agreements while lease assignments are finalized.

Sanjiv Razdan: Now I'd like to provide a little bit more background on the status of our refranchising efforts. Since entering into the sale agreement covering the Southern California clinic bundle, ownership has been transferred for 32 clinics to date, and the remaining 13 clinics are being operated by the buyer under management service agreements while lease assignments are finalized. For the Northern California bundle, a signed asset purchase agreement is in place for four clinics. Finally, for the Southeast bundle, a signed asset purchase agreement is in place I beg your pardon. Finally, for the Southeast bundle, ownership has been transferred for six clinics to date, with the remaining 15 clinics also operating under management service agreements pending lease reassignments.

Speaker #3: For the Northern California bundle, a signed asset purchase agreement is in place for four clinics and finally for the Southeast bundle, a signed asset purchase agreement is in place I beg your pardon and finally for the Southeast bundle, ownership has been transferred for six clinics to date with the remaining 15 clinics also operating under management service agreements pending lease reassignments.

Sanjiv Razdan: Finally, for the Southeast bundle, a signed asset purchase agreement is in place I beg your pardon. Finally, for the Southeast bundle, ownership has been transferred for six clinics to date, with the remaining 15 clinics also operating under management service agreements pending lease reassignments. Once ownership transfers are finalized across these clinic bundles, we will have only three remaining company-owned or managed clinics, effectively positioning the company to realize the full benefits of our pure-play capital-light franchisor model.

Speaker #3: Once ownership transfers are finalized across these clinic bundles, we will have only three remaining company-owned or managed clinics, effectively positioning the company to realize the full benefits of our pure-play, capitalized franchisor model.

Sanjiv Razdan: Once ownership transfers are finalized across these clinic bundles, we will have only three remaining company-owned or managed clinics, effectively positioning the company to realize the full benefits of our pure-play capital-light franchisor model. Turning to slide seven. While our refranchising efforts nearly behind us, we have more capacity to concentrate on driving growth through franchise system support, new patient acquisition, and long-term network development. We see a significant opportunity to further strengthen new patient acquisition and to win back lapsed patients. This, along with patient retention, remains our primary near-term focus, and we're leaning into targeted marketing and optimized membership offerings to capture demand more effectively. We've done extensive research recently on our consumer base, and that work is sharpening our focus on the patient and the user experience.

Speaker #3: Turning to slide 7, while our refranchising efforts nearly behind us, we have more capacity to concentrate on driving growth through franchise system support, new patient acquisition, and long-term network development.

Sanjiv Razdan: Turning to slide seven. While our refranchising efforts nearly behind us, we have more capacity to concentrate on driving growth through franchise system support, new patient acquisition, and long-term network development. We see a significant opportunity to further strengthen new patient acquisition and to win back lapsed patients. This, along with patient retention, remains our primary near-term focus, and we're leaning into targeted marketing and optimized membership offerings to capture demand more effectively. We've done extensive research recently on our consumer base, and that work is sharpening our focus on the patient and the user experience.

Speaker #3: We see a significant opportunity to further strengthen new patient acquisition and to win back lapsed patients. This along with patient retention remains our primary near-term focus and we're leaning into targeted marketing and optimized membership offerings to capture demand more effectively.

Speaker #3: We've done extensive research recently on our consumer base and that work is sharpening our focus on the patient and user experience. For example, as a result of these consumer insights, we are piloting a proprietary set of clinical care protocols which, amongst other things, will provide quantifiable mobility scores to our patients.

Sanjiv Razdan: For example, as a result of these consumer insights, we are piloting a proprietary set of clinical care protocols, which, amongst other things, will provide quantifiable mobility scores to our patients. Our 2025 class of 29 clinic openings continue to outperform prior year cohorts, and the new clinics so far this year are performing even better. In addition, we are working to bring on well-capitalized franchisees with strong multi-site operating experience to support our portfolio optimization efforts as well as to drive net new clinic growth. Also, as we directly engage franchisees previously supported by regional developers, we are finding opportunities to elevate both the quality of operations and the pace of clinic development. As mentioned on our last call, our longer-term journey will prioritize growth through new channels, expansion into under-penetrated US markets, and potential entry into our first international markets.

Speaker #3: Our 2025 class of 29 clinic openings continue to outperform prior-year cohorts and the new clinics so far this year are performing even better. In addition, we are working to bring on well-capitalized franchisees with strong multi-site operating experience to support our portfolio optimization efforts as well as to drive net new clinic growth.

Speaker #3: Also, as we directly engage franchisees, previously supported by regional developers, we are finding opportunities to elevate both the quality of operations and the pace of clinic development.

Sanjiv Razdan: Also, as we directly engage franchisees previously supported by regional developers, we are finding opportunities to elevate both the quality of operations and the pace of clinic development. As mentioned on our last call, our longer-term journey will prioritize growth through new channels, expansion into under-penetrated US markets, and potential entry into our first international markets. This longer-term strategy is expected to address shifting consumer trends, including growing interest in longevity, health span, mindfulness, sleep quality, posture, and non-invasive whole body care.

Speaker #3: As mentioned on our last call, our longer-term journey will prioritize growth through new channels, expansion into under-penetrated U.S. markets, and potential entry into our first international markets.

Speaker #3: This longer-term strategy is expected to address shifting consumer trends including growing interest in longevity, health span, mindfulness, sleep quality, posture, and non-invasive whole-body care.

Sanjiv Razdan: This longer-term strategy is expected to address shifting consumer trends, including growing interest in longevity, health span, mindfulness, sleep quality, posture, and non-invasive whole body care. Chiropractic care and The Joint's unique model is exceptionally well-positioned against this backdrop. Moving to slide eight. Now turning to our marketing efforts and how we are driving top-line momentum. Our messaging continues to center on chiropractic care for pain relief, helping patients improve their mobility and get back to doing the things they love. We're increasingly emphasizing the quality of the patient experience alongside this. This message tends to attract patients who stay with us longer. We have seen sequential improvement in active member growth each month this year. We are also increasing focus on our MVPs, or most valuable patients, by exploring ways to personalize their experience, bringing additional value to membership and ultimately driving LTV or long-term value.

Speaker #3: Chiropractic care and the joint's unique model is exceptionally well-positioned against this backdrop. Moving to slide 8, now turning our to our marketing efforts and how we are driving top-line momentum.

Sanjiv Razdan: Chiropractic care and The Joint's unique model is exceptionally well-positioned against this backdrop. Moving to slide eight. Now turning to our marketing efforts and how we are driving top-line momentum. Our messaging continues to center on chiropractic care for pain relief, helping patients improve their mobility and get back to doing the things they love. We're increasingly emphasizing the quality of the patient experience alongside this. This message tends to attract patients who stay with us longer. We have seen sequential improvement in active member growth each month this year.

Speaker #3: Our messaging continues to center on chiropractic care for pain relief, helping patients improve their mobility, and get back to doing the things they love.

Speaker #3: And we're increasingly emphasizing the quality of the patient experience alongside this. This message tends to attract patients who stay with us longer. We have seen sequential improvement in active member growth each month this year.

Speaker #3: We are also increasing focus on our MVPs or most valuable patients by exploring ways to personalize their experience, bringing additional value to membership, and ultimately driving LTV or long-term value.

Sanjiv Razdan: We are also increasing focus on our MVPs, or most valuable patients, by exploring ways to personalize their experience, bringing additional value to membership and ultimately driving LTV or long-term value. Another focus is on winning back lapsed patients who are familiar with The Joint and have benefited from our membership model in the past. On the digital side, our ongoing SEO and AI visibility optimization work is driving higher organic traffic and lead quality.

Speaker #3: Another focus is on winning back lapsed patients who are familiar with the joint and have benefited from our membership model in the past. On the digital side, our ongoing SEO and AI visibility optimization work is driving higher organic traffic and lead quality.

Sanjiv Razdan: Another focus is on winning back lapsed patients who are familiar with The Joint and have benefited from our membership model in the past. On the digital side, our ongoing SEO and AI visibility optimization work is driving higher organic traffic and lead quality. Our AI visibility score has held steady in the high 70s, keeping us ahead of competitors on key search topics. Meanwhile, we are seeing continued positive trends in traffic and high intent actions on our local clinic microsites. During Q2, we expanded our offering of more flexible plans to drive conversion and longer-term retention. Lastly, in July, we rolled out our $5 and $10 pricing increases to additional clinics, bringing the total number of clinics that have opted to take pricing to over 500.

Speaker #3: Our AI visibility score has held steady in the high 70s, keeping us ahead of competitors on key search topics. Meanwhile, we are seeing continued positive trends in traffic and high-intent actions on our local clinic microsites.

Sanjiv Razdan: Our AI visibility score has held steady in the high-70s, keeping us ahead of competitors on key search topics. Meanwhile, we are seeing continued positive trends in traffic and high intent actions on our local clinic microsites. During Q2, we expanded our offering of more flexible plans to drive conversion and longer-term retention. Lastly, in July, we rolled out our $5 and $10 pricing increases to additional clinics, bringing the total number of clinics that have opted to take pricing to over 500.

Speaker #3: During Q2, we expanded our offering of more flexible plans to drive conversion and longer-term retention. Lastly, in July, we rolled out our $5 and $10 pricing increases to additional clinics, bringing the total number of clinics that have opted to take pricing to over 500.

Speaker #3: Feedback to date continues to indicate no meaningful patient pushback and we are using this data to ensure pricing changes support revenue optimization without impacting patient acquisition or retention.

Sanjiv Razdan: Feedback to date continues to indicate no meaningful patient pushback, and we are using this data to ensure pricing changes support revenue optimization without impacting patient acquisition or retention. Turning to slide nine, I'll speak to how these initiatives are translating into comps and retention. Comp sales were negative 2.8% in the Q2, an improvement compared to the Q1. As I mentioned, our flexible membership options drove our best patient retention rate in over 5 years this quarter, and pricing optimization efforts also continued. Together with improving active member trends, these factors are driving consistent recovery in comp trends. We expect comp sales trends to improve throughout the balance of this year. Growing our active member base remains a central driver of comp sales improvement, and we will continue to drive growth through stronger lead generation, improved retention, and winning back lapsed patients.

Speaker #3: Turning to slide 9, I'll speak to how these initiatives are translating into comps and retention. Comp sales were negative 2.8% in the second quarter.

Speaker #3: An improvement compared to the first quarter. As I mentioned, our flexible membership options drove our best patient retention rate in over five years this quarter and pricing optimization efforts also continued.

Speaker #3: Together with improving active member trends, these factors are driving consistent recovery in comp trends. We expect comp sales trends to improve throughout the balance of this year.

Sanjiv Razdan: Together with improving active member trends, these factors are driving consistent recovery in comp trends. We expect comp sales trends to improve throughout the balance of this year. Growing our active member base remains a central driver of comp sales improvement, and we will continue to drive growth through stronger lead generation, improved retention, and winning back lapsed patients. With that, I'll turn it over to Scott, our CFO.

Speaker #3: Growing our active member base remains a central driver of comp sales improvement and we will continue to drive growth through stronger lead generation, improved retention, and winning back lapsed patients.

Speaker #3: With that, I'll turn it over to Scott, our CFO.

Sanjiv Razdan: With that, I'll turn it over to Scott, our CFO.

Speaker #2: Thanks, Sanjeev. First, I'll review some key operating metrics. System-wide sales in the second quarter were $128 million and declined a 3.7% compared to the same period last year.

Scott Bowman: Thanks, Sanjiv. First, I'll review some key operating metrics. System-wide sales in the Q2 were $128 million, a decline of 3.7% compared to the same period last year. Comp sales were negative 2.8%, a 140 basis point improvement from the Q1, consistent with the strengthening trends Sanjiv discussed earlier. Meanwhile, adjusted EBITDA from consolidated operations was $3.2 million, in line with the same period last year. Turning to slide 12, I'll review results from continuing operations for the Q2, unless otherwise specified. Revenue grew 14% to $15.2 million, reflecting the shift to our pure-play franchisor revenue model. Cost of revenues was $2.5 million, down 11% compared to the same period last year, primarily reflecting lower regional developer royalty costs as we continue to reacquire RD territories.

Speaker #2: Comp sales were negative 2.8%, $140 basis point improvement from the first quarter, consistent with the strengthening trends Sanjeev discussed earlier. Meanwhile, adjusted EBITDA from consolidated operations was $3.2 million in line with the same period last year.

Speaker #2: Turning to slide 12, I'll review results from continuing operations for the second quarter unless otherwise specified. Revenue grew 14% to $15.2 million reflecting the shift to our pure-play franchisor revenue model.

Scott Bowman: Revenue grew 14% to $15.2 million, reflecting the shift to our pure-play franchisor revenue model. Cost of revenues was $2.5 million, down 11% compared to the same period last year, primarily reflecting lower regional developer royalty costs as we continue to reacquire RD territories. Selling and marketing expenses were $4.9 million, an increase of 40% compared to the same period last year, driven by a shift in local marketing to national marketing, which has funded incremental investments in patient acquisition and brand initiatives.

Speaker #2: Cost of revenues was $2.5 million down 11% compared to the same period last year primarily reflecting lower regional developer royalty costs as we continue to reacquire R&D territories.

Speaker #2: Selling and marketing expenses were $4.9 million and increase of 40% compared to the same period last year driven by a shift in local marketing to national marketing which has funded incremental investments in patient acquisition and brand initiatives.

Scott Bowman: Selling and marketing expenses were $4.9 million, an increase of 40% compared to the same period last year, driven by a shift in local marketing to national marketing, which has funded incremental investments in patient acquisition and brand initiatives. Meanwhile, G&A expenses decreased 2% to $7.6 million, compared to $7.7 million in the same period last year. Included in G&A expenses is approximately $500,000 that relates to expenses incurred for RD buyback and expenses that will not be recurring post refranchising. Net loss from continuing operations was $251,000, compared to a loss of $990,000 in the same period last year, while consolidated net income was $653,000, compared to $93,000 in the prior year period. Lastly, adjusted EBITDA from continuing operations was $1.5 million, compared to $88,000 in the same period last year, a clear reflection of the operating leverage we are generating in our new franchisor model.

Speaker #2: Meanwhile, G&A expenses decreased 2% to $7.6 million, compared to $7.7 million in the same period last year. Included in G&A expenses is approximately $500,000 that relates to expenses incurred for R&D buybacks and expenses that will not be recurring post-refranchising.

Scott Bowman: Meanwhile, G&A expenses decreased 2% to $7.6 million, compared to $7.7 million in the same period last year. Included in G&A expenses is approximately $500,000 that relates to expenses incurred for RD buyback and expenses that will not be recurring post refranchising. Net loss from continuing operations was $251,000, compared to a loss of $990,000 in the same period last year, while consolidated net income was $653,000, compared to $93,000 in the prior year period.

Speaker #2: Net loss from continuing operations was $251,000 compared to a loss of $990,000 in the same period last year while consolidated net income was $653,000 compared to $93,000 in the prior year period.

Speaker #2: And lastly, adjusted EBITDA from continuing operations was $1.5 million compared to $88,000 in the same period last year a clear reflection of the operating leverage we are generating in our new franchisor model.

Scott Bowman: Lastly, adjusted EBITDA from continuing operations was $1.5 million, compared to $88,000 in the same period last year, a clear reflection of the operating leverage we are generating in our new franchisor model. Now, onto the balance sheet and capital allocation. Unrestricted cash at the end of Q2 was $22.2 million, compared to $23.6 million at the end of 2025. We maintain our $20 million line of credit with JPMorgan Chase, which remains fully undrawn and is available through August 2029.

Speaker #2: Now onto the balance sheet and capital allocation. Unrestricted cash at the end of the second quarter was $22.2 million compared to $23.6 million at the end of 2025.

Scott Bowman: Now, onto the balance sheet and capital allocation. Unrestricted cash at the end of Q2 was $22.2 million, compared to $23.6 million at the end of 2025. We maintain our $20 million line of credit with JPMorgan Chase, which remains fully undrawn and is available through August 2029. During the quarter, we repurchased approximately 82,000 shares for consideration of $677,000 at an average price of $8.23 per share. We now have $3.8 million remaining under the $12 million authorization approved in November 2025. As Sanjiv mentioned, we also completed three RD territory buybacks during the quarter, further optimizing our portfolio economics. As with prior buybacks, we are already seeing stronger performance in these markets post-transaction.

Speaker #2: We maintained our $20 million line of credit with JPMorgan Chase which remains fully undrawn and is available through August 2029. During the quarter, we repurchased approximately $82,000 shares for consideration of $677,000 at an average price of $823 per share.

Scott Bowman: During the quarter, we repurchased approximately 82,000 shares for consideration of $677,000 at an average price of $8.23 per share. We now have $3.8 million remaining under the $12 million authorization approved in November 2025. As Sanjiv mentioned, we also completed three RD territory buybacks during the quarter, further optimizing our portfolio economics. As with prior buybacks, we are already seeing stronger performance in these markets post-transaction.

Speaker #2: We now have $3.8 million remaining under the $12 million authorization approved in November 2025. As Sanjeev mentioned, we also completed three R&D territory buybacks during the quarter further optimizing our portfolio economics.

Speaker #2: As with prior buybacks, we are already seeing stronger performance in these markets post-transaction. Through the buybacks of the four R&D territories, we have completed year to date we expect to realize approximately $630,000 in reduced R&D royalties on an annualized basis partially offset by internal costs to manage these territories.

Scott Bowman: Through the buybacks of the four RD territories we have completed year to date, we expect to realize approximately $630,000 in reduced RD royalties on an annualized basis, partially offset by internal costs to manage these territories. On to slide 14, let's discuss our clinic count. Total clinic count was 941 at the end of Q2. During the quarter, we opened five clinics, closed seven clinics, and refranchised 29 clinics, reflecting our previously discussed strategy to optimize the portfolio for quality and performance. Meanwhile, our new clinics in 2026 have continued to outperform similar to 2025 and are reaching their break-even point even earlier at under six months. As Sanjiv noted, our refranchising efforts are now substantially complete with the sale of our three previously announced clinic bundles progressing well. On slide 15, with refranchising largely complete, I would like to touch on our pure-play franchisor financial model.

Speaker #2: On slide 14, let's discuss our clinic count. Total clinic count was 941 at the end of the second quarter. During the quarter, we opened five clinics, closed seven clinics, and refranchised 29 clinics, reflecting our previously discussed strategy to optimize our portfolio for quality and performance.

Speaker #2: Meanwhile, our new clinics in 2026 have continued to outperform similar to 2025 and are reaching their break-even point even earlier at under six months.

Scott Bowman: Meanwhile, our new clinics in 2026 have continued to outperform similar to 2025 and are reaching their break-even point even earlier at under six months. As Sanjiv noted, our refranchising efforts are now substantially complete with the sale of our three previously announced clinic bundles progressing well. On slide 15, with refranchising largely complete, I would like to touch on our pure-play franchisor financial model.

Speaker #2: As Sanjeev noted, our refranchising efforts are now substantially complete with the sale of our three previously announced clinic bundles progressing well. On slide 15, with refranchising largely complete, I would like to touch on our pure-play franchisor financial model.

Speaker #2: Under this new operating model, The Joint is now reshaped with a capital-light operating model, with lower G&A expense and higher profitability margins. We expect to achieve this model starting in the back half of 2026, once the transfer of ownership of the remaining clinics is fully complete.

Scott Bowman: Under this new operating model, The Joint is now reshaped with a capital-light operating model with lower G&A expense and higher profitability margins. We expect to achieve this model starting in the back half of 2026 once the transfer of ownership of the remaining clinics is fully complete. I would like to remind everyone that these are not our long-term targets. They are the starting point once the full benefit of refranchising is realized, and we intend to build on these improvements in 2027 and beyond. As a reminder, our expected starting points for this new model are as follows. Gross margin between 83% and 85% of revenues, G&A expense between 40% and 42% of revenues, CapEx of approximately 3% of revenues, and free cash flow conversion, which we define as free cash flow divided by adjusted EBITDA, between 60% and 70%.

Speaker #2: I would like to remind everyone that these are not our long-term targets. They are the starting point once the full benefit of refranchising is realized, and we intend to build on these improvements in 2027 and beyond.

Speaker #2: As a reminder, our expected starting points for this new model are as follows. Gross margin between 83 and 85 percent of revenues, G&A expense between 40 and 42 percent of revenues, capex of approximately 3 percent of revenues, and free cash flow conversion which we define as free cash flow divided by adjusted EBITDA between 60 and 70 percent.

Scott Bowman: As a reminder, our expected starting points for this new model are as follows. Gross margin between 83% and 85% of revenues, G&A expense between 40% and 42% of revenues, CapEx of approximately 3% of revenues, and free cash flow conversion, which we define as free cash flow divided by adjusted EBITDA, between 60% and 70%. These starting points would result in an estimated adjusted EBITDA margin of 19% to 21% and net income margin of 13% to 15%. On to slide 16. We are reiterating our full year 2026 financial guidance as originally provided in March 2026.

Speaker #2: These starting points would result in an estimated adjusted EBITDA margin of 19 to 21 percent and net income margin of 13 to 15 percent.

Scott Bowman: These starting points would result in an estimated adjusted EBITDA margin of 19% to 21% and net income margin of 13% to 15%. On to slide 16. We are reiterating our full year 2026 financial guidance as originally provided in March 2026. Our operating model improvements are progressing as expected and with improving comp sales trends observed in recent months, we continue to expect system-wide sales of $519 to 552 million, comp sales in the range of -3% to +3%, and consolidated adjusted EBITDA in the range of $12.5 to 13.5 million. We expect comp sales to improve in H2, with Q4 expected to be higher than Q3. We have more visibility on new franchise clinic openings for the year, which we now expect to be in the range of 22 to 26.

Speaker #2: On the slide 16, we are reiterating our full year 2026 financial guidance as originally provided in March 2026. Our operating model improvements are progressing as expected and with improving comp sale trends observed in recent months we continue to expect system-wide sales of $519 to $552 million comp sales in the range of negative 3 percent to positive 3 percent and consolidated adjusted EBITDA in the range of $12.5 to $13.5 million.

Scott Bowman: Our operating model improvements are progressing as expected and with improving comp sales trends observed in recent months, we continue to expect system-wide sales of $519 to 552 million, comp sales in the range of -3% to +3%, and consolidated adjusted EBITDA in the range of $12.5 to 13.5 million. We expect comp sales to improve in H2, with Q4 expected to be higher than Q3. We have more visibility on new franchise clinic openings for the year, which we now expect to be in the range of 22 to 26.

Speaker #2: We expect comp sales to improve in the second half of the year with the fourth quarter expected to be higher than the third quarter.

Speaker #2: We have more visibility on new franchise clinic openings for the year which we now expect to be in the range of $22 to $26.

Speaker #2: This compares to prior guidance of $30 to $35 new clinics. New clinic openings will continue to be offset by closures as we reshape the portfolio around stronger operators and healthier sites meaning that on a net basis our clinic count at the end of the 2026 year will be lower than 2025.

Scott Bowman: This compares to prior guidance of 30 to 35 new clinics. New clinic openings will continue to be offset by closures as we reshape the portfolio around stronger operators and healthier sites, meaning that on a net basis, our clinic count at the end of the 2026 year will be lower than 2025. Our clinic portfolio optimization is giving us a stronger, more durable foundation for future growth, and we continue to see potential for more than 1,800 franchise clinics in the US alone. Finally, on slide 17, I'll briefly speak to our capital allocation. As highlighted by our activities in Q2, we remain committed to disciplined capital allocation that prioritizes investments in growth initiatives, share repurchases, and repurchases of RD territories. With that, I'll turn it back over to Sanjiv.

Speaker #2: Our clinic portfolio optimization is giving us a stronger, more durable foundation for future growth and we continue to see potential for more than 1,800 franchise clinics in the US alone.

Speaker #2: Finally, on slide 17, I'll briefly speak to our capital allocation. As highlighted by our activities in the second quarter, we remain committed to disciplined capital allocation that prioritizes investments in growth initiatives, share repurchases, and repurchases of R&D territories.

Scott Bowman: As highlighted by our activities in Q2, we remain committed to disciplined capital allocation that prioritizes investments in growth initiatives, share repurchases, and repurchases of RD territories. With that, I'll turn it back over to Sanjiv.

Speaker #2: With that, I'll turn it back over to Sanjeev.

Speaker #3: Thanks, Scott. Q2 was a quarter defined by continued execution. Our disciplined capital allocation our best patient retention and over five years and the nearing completion of our refranchising initiative are together building toward the stronger capital light financial profile we will deliver.

Sanjiv Razdan: Thanks, Scott. Q2 was a quarter defined by continued execution. Our disciplined capital allocation, our best patient retention in over five years, and the nearing completion of our refranchising initiative are together building towards a stronger capital-light financial profile we'll deliver. We are securing a strong foundation to launch The Joint 3.0 with a growing national brand, more active members, stronger patient retention and lifetime value, and an innovation pipeline to improve the patient experience. Meanwhile, our capital allocation, including share repurchases, RD buybacks, and disciplined investment in growth initiatives, reflects our conviction in the long-term value of this business and our commitment to delivering returns for stockholders. Finally, we are also building a business that is well-aligned with aging demographics and consumer expectations for where healthcare and wellness are heading.

Speaker #3: We are securing a strong foundation to launch the joint 3.0 with a growing national brand more active members stronger patient retention and lifetime value.

Sanjiv Razdan: We are securing a strong foundation to launch The Joint 3.0 with a growing national brand, more active members, stronger patient retention and lifetime value, and an innovation pipeline to improve the patient experience. Meanwhile, our capital allocation, including share repurchases, RD buybacks, and disciplined investment in growth initiatives, reflects our conviction in the long-term value of this business and our commitment to delivering returns for stockholders.

Speaker #3: And an innovation pipeline to improve the patient experience. Meanwhile, our capital allocation including share repurchases R&D buybacks and discipline investment in growth initiatives reflects our conviction in the long-term value of this business and our commitment to delivering returns for stockholders.

Speaker #3: And finally, we are also building a business that is well aligned with aging demographics and consumer expectations for where healthcare and wellness are heading.

Sanjiv Razdan: Finally, we are also building a business that is well-aligned with aging demographics and consumer expectations for where healthcare and wellness are heading. This growing consumer demand for longevity, health span, and non-invasive whole body care creates a unique opportunity for The Joint to address this demand at scale. With that, operator, we are ready for Q&A.

Speaker #3: This growing consumer demand for longevity health span and non-invasive whole body care creates a unique opportunity for the joint to address this demand at scale.

Sanjiv Razdan: This growing consumer demand for longevity, health span, and non-invasive whole body care creates a unique opportunity for The Joint to address this demand at scale. With that, operator, we are ready for Q&A.

Speaker #3: With that, operator, we are ready for Q&A.

Speaker #1: At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Your first question comes from the line of Nicholas Sherwood with Maxim Group. Your line is open.

Speaker #1: We'll pause for a moment to compile the Q&A roster. Your first question, comes from the line of Nicholas Sherwood with Maxim Group. Your line is open.

Speaker #4: Hi. Thank you for taking my question. My first question is, you know, one of the things that you've spoken about in the past is making sure that you're optimizing your digital marketing strategy for sort of AI search engine optimization.

Nicholas Sherwood: Hi. Thank you for taking my question. My first question is, one of the things that you've spoken about in the past is making sure that you're optimizing your digital marketing strategy for AI search engine optimization. There's been a lot of things out there how click rates on Google are going to zero in some cases. How are you operating in this new AI search environment and making sure that you're getting customers to click through onto your website?

Speaker #4: And, you know, there's been a lot of, you know, things out there how click rates on Google, you know, are going to zero in some cases.

Speaker #4: You know, how are you operating in this new AI search environment and making sure that you're getting customers to click through onto your website?

Speaker #3: First of all, I want to acknowledge Nicholas that the AI search environment is just incredibly rapidly changing and is vitally important for us. The way that we stay ahead of this is in three ways.

Sanjiv Razdan: First of all, I want to acknowledge, Nicholas, that the AI search environment is just incredibly rapidly changing and is vitally important for us. The way that we stay ahead of this is in three ways. Number one, we have the benefit about 260 local franchisees and operators who are giving us feedback right at local level on how our search is showing up in their trade zones, and that allows us to just stay on top of things. Second thing we do this is that we have a digital marketing team that stays on top of the algorithm changes that are happening in the marketplace. Not just with Google, which continues to remain dominant, but also all the other platforms now where consumers are searching for us through some kind of AI-enabled search.

Speaker #3: Number one, we have the benefit about 260 local franchisees and operators who are giving us feedback right at local level on how our search is showing up in their trade zones and that allows us to just stay on top of things.

Speaker #3: Second thing, we do this is that we have a digital marketing team that stays on top of the algorithm changes that are happening in the marketplace not just with Google which continues to remain dominant but also all the other platforms now where consumers are searching for us through some kind of AI-enabled search.

Sanjiv Razdan: Second thing we do this is that we have a digital marketing team that stays on top of the algorithm changes that are happening in the marketplace. Not just with Google, which continues to remain dominant, but also all the other platforms now where consumers are searching for us through some kind of AI-enabled search. We have dedicated resources that are constantly staying on top of the algorithm changes that drive those searches.

Speaker #3: So we have a dedicated resources that are constantly staying on top of the algorithm changes that drive those searches. The third thing is that we have a measurement system in place which is objective we look at it through a couple of different measurement systems to make sure that we're not just reliant on internal ways of looking at it.

Sanjiv Razdan: We have dedicated resources that are constantly staying on top of the algorithm changes that drive those searches. The third thing is that we have a measurement system in place which is objective. We look at it through a couple of different measurement systems to make sure that we're not just reliant on internal ways of looking at it. As a result of those three ways that I've described to you, it gives us enough insight and allows our team to then take corrective action if we need to stay on top of it. When we started this journey, sometime I would say late last year, our AI score, search score was in the low 70s, 71 to be precise.

Sanjiv Razdan: The third thing is that we have a measurement system in place which is objective. We look at it through a couple of different measurement systems to make sure that we're not just reliant on internal ways of looking at it. As a result of those three ways that I've described to you, it gives us enough insight and allows our team to then take corrective action if we need to stay on top of it. When we started this journey, sometime I would say late last year, our AI score, search score was in the low 70s, 71 to be precise.

Speaker #3: And so as a result of those three ways that I've described to you, it gives us enough insight and allows our team to then take corrective action if we need to to stay on top of it.

Speaker #3: For when we started this journey sometime I would say late last year our AI score search score was in the low 70s 71 to be precise and for the last several months now we have been in the high 70s and at a which is a pretty competitive number when we compare it with others who are considered to be strong in the category.

Sanjiv Razdan: For the last several months now, we have been in the high 70s which is a pretty competitive number when we compare it with others who are considered to be strong in the category.

Sanjiv Razdan: For the last several months now, we have been in the high-70s which is a pretty competitive number when we compare it with others who are considered to be strong in the category.

Speaker #4: Understood. I appreciate the detail. And then my second question is, you know, looking at the, you know, getting lapsed patients to return, you know, are they are these patients lapsing because either you know they find themselves cured maybe that they just feel like they need to go do something else such as traditional physical therapy or is it a cost issue?

Nicholas Sherwood: Understood. I appreciate the detail. My second question is, looking at the getting lapsed patients to return, are these patients lapsing because either they've found themselves cured, maybe that they just feel like they need to go do something else such as traditional physical therapy, or is it a cost issue? What is the mix between those three for lapsed patients, and how do you attack getting them back into your clinics?

Speaker #4: You know, kind of what is the mix between those three for lapsed patients and how do you attack, you know, getting them back into your clinics?

Speaker #3: Great question. We find invariably that the reasons for our patients to lapse are one of three. Number one, I'm no longer in pain. Number two, I may not have the same amount of time to come back for a regular adjustment as when I did when I was in pain or discomfort.

Sanjiv Razdan: Great question. We find invariably that the reasons for our patients to lapse are one of three. Number one, I'm no longer in pain. Number two, I may not have the same amount of time to come back for a regular adjustment as when I did when I was in pain or discomfort. Number three, relative to the first two, I no longer wish to invest that same level of money in getting regular adjustments. Those tend to be for us, pain, time, money, the three biggest drivers of patients lapsing. What we found as we've done consumer research is that unlike several brands where the lapsed patients tend to have some degree of disgruntlement with the concept, our lapsed patients actually have fond memories of getting pain relief and are very willing to reconsider us. I think that's a good insight for us.

Speaker #3: Number three, relative to the first two, I no longer wish to invest. That same level of money in getting regular adjustments. So those tend to be for us pain, time, money, the three biggest drivers of patients lapsing.

Sanjiv Razdan: Those tend to be for us, pain, time, money, the three biggest drivers of patients lapsing. What we found as we've done consumer research is that unlike several brands where the lapsed patients tend to have some degree of disgruntlement with the concept, our lapsed patients actually have fond memories of getting pain relief and are very willing to reconsider us. I think that's a good insight for us.

Speaker #3: What we found as we've done consumer research is that unlike several brands where the lapsed patients tend to have some degree of disgruntlement with the concept, our lapsed patients actually have fond memories of getting pain relief and are very willing to reconsider us.

Speaker #3: And I think that's a good insight for us. Clearly, what as we've realized this we are actively making sure that we are looking to target some of our digital marketing and local marketing efforts towards winning back those lapsed patients.

Sanjiv Razdan: Clearly, as we've realized this, we are actively making sure that we are looking to target some of our digital marketing and local marketing efforts towards winning back those lapsed patients. In fact, our August promotion right now is targeted towards them just as we speak. We're very hopeful that that's going to work for us and, in fact, allow us to acquire more patients into the active member funnel for us at a lower cost of acquisition over time.

Speaker #3: In fact, our August promotion right now is targeted towards them. Just as we speak, and we're very hopeful that that's going to work for us and in fact allow us to acquire more patients into the active member funnel for us at a lower cost of acquisition over time.

Speaker #2: You know, I'll just add a comment on to that as well. You know, we talked about the flexible options. A lot that we've rolled out and that's a big win too for these patients.

Scott Bowman: I'll just add a comment onto that as well. We talked about the flexible options a lot that we've rolled out, and that's a big win, too, for these patients. Typically, these patients will lapse from a Wellness Plan, four visits a month for a certain price, depending on location. With this Align One plan that we have, you pay $35, you get one visit per month for that, then you can pay an additional $25 if you need additional visits. That has been a big win for us, because what that has done is given these patients another option to choose from other than the standard Wellness Plan. As a result of that, our conversion rate for those lapsed patients has gone up several hundred basis points with this new flexible option. We actually have two of those.

Speaker #2: Typically, these patients will lapse, you know, from a wellness plan—you know, four visits a month for a certain price depending on location. With this Aligned One plan that we have, you pay $35 and you get one visit per month for that, and then you can pay an additional $25 if you need additional visits.

Scott Bowman: With this Align One plan that we have, you pay $35, you get one visit per month for that, then you can pay an additional $25 if you need additional visits. That has been a big win for us, because what that has done is given these patients another option to choose from other than the standard Wellness Plan.

Speaker #2: That has been a big win for us, because what that has done is given these patients another option to choose from, other than the standard wellness plan.

Speaker #2: And as a result of that our conversion rate for those lapsed patients has gone up several hundred basis points. You know, with this new flexible option we actually have two of those and so that's been an unlock for us here in the last few months.

Scott Bowman: As a result of that, our conversion rate for those lapsed patients has gone up several hundred basis points with this new flexible option. We actually have two of those. That's been an unlock for us here in the last few months.

Scott Bowman: That's been an unlock for us here in the last few months.

Speaker #4: Okay. Yeah. Sounds great. I appreciate the color and I will return to the queue. Thank you for answering my questions.

Nicholas Sherwood: Okay. Yeah. Sounds great. I appreciate the color, and I will return to the queue. Thank you for answering my questions.

Speaker #3: Of course.

Scott Bowman: Of course.

Speaker #1: Your next question comes from the line of George Kelly with Roth Capital Partners. Your line is open.

Operator: Your next question comes from the line of George Kelly with ROTH Capital Partners. Your line is open.

Operator: Your next question comes from the line of George Kelly with Roth Capital Partners. Your line is open.

Speaker #5: Hey everyone, thanks for taking my questions. I have a few for you. So first, I was wondering if you could provide more detail just on your comp performance maybe not sure if you want to give sort of the trend throughout the quarter and any comment on July would be helpful as well.

George Kelly: Hey, everyone. Thanks for taking my questions. I have a few for you. First, I was wondering if you could provide more detail just on your comp performance. Maybe not sure if you want to give sort of the trend throughout the quarter, and any comment on July would be helpful as well. The second comp question is about pricing. Can you give a breakdown of how much pricing benefited Q2 and maybe your expectations? I know more clinics have rolled out the new pricing, maybe your expectations on pricing in the H2 of the year.

Speaker #5: And then the second comp question is about pricing. Can you give a breakdown of how much pricing benefited Q2 and maybe your expectations? I know more clinics have rolled out the new pricing.

Speaker #5: Maybe your expectations on pricing in the back half of the year?

Speaker #3: Sure. Yeah. As far as comps go, we did see a little bit better comps towards the end of the quarter and coming into the third quarter.

Scott Bowman: Sure. Yes. As far as comps go, we did see a little bit better comps towards the end of the quarter, coming into Q3. We're encouraged. If you look at the H2 of the year, we've indicated that we think that our comps will be better. They were slightly better at the end of the quarter, so we felt pretty good coming into Q3 as well. That's why we kind of reiterated that we think that comps will be higher in H2. Related to your pricing question, we had some pricing initiatives earlier in the year, we had some more at the end of June roll out. The way that we look at it looks like it's helping in the low single-digit range in terms of pricing.

Speaker #3: But and so you know we're encouraged you know if you look at the back half of the year we've indicated that you know we think that our comps will be better.

Speaker #3: And so you know they were slightly better at the end of the quarter and so we felt you know pretty good coming into the third quarter as well.

Speaker #3: And you know that's why we kind of reiterated that we think that you know comps will you know be higher in the back half.

Speaker #3: Related to your pricing question, so you know we had you know some pricing initiatives earlier in the year and then we had some more at the end of June rollout.

Scott Bowman: Related to your pricing question, we had some pricing initiatives earlier in the year, we had some more at the end of June roll out. The way that we look at it looks like it's helping in the low single-digit range in terms of pricing. We have a lot of other initiatives going on out there, with new offerings and things like that. But isolated just to the Wellness Plan, it looks like it's about a low single-digit impact.

Speaker #3: And so the way that we look at it, it looks like it's you know helping in the pricing. We have you know a lot of other initiatives going on out there.

Scott Bowman: We have a lot of other initiatives going on out there, with new offerings and things like that. But isolated just to the Wellness Plan, it looks like it's about a low single-digit impact. As we look into H2 with more clinics, with the new pricing, we see that it'll likely be at the high end of that low single-digit range, based on at least our estimates right now.

Speaker #3: You know with you know new offerings and things like that. But isolated just to the wellness plan, it looks like it's about a low single digit impact.

Speaker #3: And as we look into the second half, you know with more clinics, with the new pricing, you know we see that it'll likely be at the high end of that low single digit range.

Scott Bowman: As we look into H2 with more clinics, with the new pricing, we see that it'll likely be at the high end of that low single-digit range, based on at least our estimates right now.

Speaker #3: Based on at least our estimates right now. And just to this is Sanjiv. Just to remind everyone, when we take pricing, what we've been doing is taking pricing only for new patients.

George Kelly: Okay. That's helpful.

Sanjiv Razdan: George, this is Sanjiv. Just to remind everyone, when we take pricing, what we've been doing is taking pricing only for new patients. In a membership model for us, it takes time for that pricing impact to catch up when the bulk of the patients then are on that most current pricing model.

Speaker #3: So, in a membership model for us, it takes time for that pricing impact to catch up, when the bulk of the patients then are on that most current pricing model.

Speaker #2: Right.

Scott Bowman: Right.

Speaker #5: Okay. Okay. Yep. That's helpful. And can you comment on July comp performance?

George Kelly: Okay. Yep, that's helpful. Can you comment on July comp performance?

Speaker #3: Yeah. What I would say, George, is July comps are a bit better than you know the closing out Q2. So not dramatically different but you know sequentially a little better than the end of Q2.

Scott Bowman: Yeah. What I would say, George, is July comps are a bit better than the closing out Q2.

George Kelly: Okay.

Scott Bowman: Not dramatically different, but sequentially a little better than the end of Q2.

Speaker #5: Okay. Great. And then the second topic I wanted to cover is you've had this slide in your deck now for a few quarters. The pro forma profitability.

George Kelly: Okay, great. The second topic I wanted to cover is you've had this slide in your deck now for a few quarters, the pro forma profitability slide.

Speaker #5: Slide. And I noticed that this time around you noted in this slide that it's really a starting point. And I think in your prepared remarks, Scott, you talked about there being opportunity for sort of continual margin improvement.

Scott Bowman: Yeah.

George Kelly: I noticed that this time around, you noted in this slide that it's really a starting point. I think in your prepared remarks, Scott, you talked about there being opportunity for sort of continual margin improvement.

Speaker #3: Yeah.

Speaker #5: So I was wondering if you could provide more context A, about where you're finding or believe that there could be more opportunity. Is it really just about growth and scale and leveraging your cost structure or are there kind of more places where you think you could sort of directly take cost out?

Scott Bowman: Yeah.

George Kelly: I was wondering if you could provide more context, A, about where you're finding or believe that there could be more opportunity. Is it really just about growth and scale and leveraging your cost structure, or are there more places where you think you could sort of directly take cost out? The second part of the question is about expectations. I don't know how far in front you want to get. Maybe you don't want to get too far ahead here, but how should we think about 2027 and 2028? You've said that, I think it's 19% to 21% EBITDA margin targets when the refranchising is done. I don't know if you'd be willing to give what those numbers could look like over the sort of near to medium term.

Speaker #5: And then the second part of the question is about expectations. I don't know how far sort of in front you want to get. Maybe you don't want to get too far ahead here but like how should we think about 27 and 28?

George Kelly: The second part of the question is about expectations. I don't know how far in front you want to get. Maybe you don't want to get too far ahead here, but how should we think about 2027 and 2028? You've said that, I think it's 19% to 21% EBITDA margin targets when the refranchising is done. I don't know if you'd be willing to give what those numbers could look like over the sort of near to medium term.

Speaker #5: You've said that. I think it's 19 to 21 percent EBITDA margin targets when the refranchising is done. I don't know if you'd be willing to give what those numbers could look like you know over the sort of near to medium term.

Speaker #3: Yeah. Good question, George. We're not ready to you know guide the 27 and 28 but I'll give you some a little bit of color that you know hopefully will help.

Scott Bowman: Yeah. Good question, George. We're not ready to guide to 2027 and 2028, I'll give you a little bit of color that hopefully will help. The model that is in the earnings deck, I wanted to make sure that everybody understood that this is a starting point for us. What I was trying to accomplish was to give everyone the structure of what we would expect to see once refranchising is complete. Okay. It wasn't like a forward projection of what we want to be a year or two years from now. It's kind of point in time, what we would expect. Okay. The expectation was that was a starting point, as we continue to increase sales, this platform and framework will give us a good opportunity to leverage these additional sales to expand our profitability margin. Okay.

Speaker #3: So the model that is in the earnings deck, you know I wanted to make sure that everybody understood that you know this is a starting point for us.

Speaker #3: What I was trying to accomplish was to give everyone, you know, the structure of what we would expect to see once refranchising is complete.

Speaker #3: Okay. Not it wasn't like a forward projection of what we want to be a year or two years from now. It's kind of point in time.

Scott Bowman: It's kind of point in time, what we would expect. Okay. The expectation was that was a starting point, as we continue to increase sales, this platform and framework will give us a good opportunity to leverage these additional sales to expand our profitability margin. Okay. That's what I was trying to set this out for. This model, I think, will allow us, the way that we have our G&A structure now, it can withstand some increase in revenue and sales.

Speaker #3: What we would expect. Okay. And the expectation was that was a starting point. And as we continue to increase sales, this platform and framework will give us a good opportunity to leverage the additional sales to expand our profitability margin.

Speaker #3: Okay. So that's what I was trying to set this out for. And so this model I think will allow us the way that you know we have our G&A structure now.

Scott Bowman: That's what I was trying to set this out for. This model, I think, will allow us, the way that we have our G&A structure now, it can withstand some increase in revenue and sales. That's why I feel confident that as we add sales, we can leverage this model. From a refranchising standpoint, in my prepared remarks, I tried to give some color on some of those expenses that we don't expect to recur, the RD buybacks, and some of those costs to get through the refranchising, about a half a million dollars in the quarter, will not recur. Once we get past the refranchising, that will become more clear, and that will allow us to head towards that G&A target that I have in the deck.

Speaker #3: You know it can withstand you know some increase in revenue. In sales. And so that's why I feel confident that as we add sales, we can leverage this model.

Scott Bowman: That's why I feel confident that as we add sales, we can leverage this model. From a refranchising standpoint, in my prepared remarks, I tried to give some color on some of those expenses that we don't expect to recur, the RD buybacks, and some of those costs to get through the refranchising, about a half a million dollars in the quarter, will not recur. Once we get past the refranchising, that will become more clear, and that will allow us to head towards that G&A target that I have in the deck.

Speaker #3: From a refranchising standpoint, you know, in my prepared remarks, I tried to give some color on some of those expenses that we don't expect to recur.

Speaker #3: You know, they already had buybacks and some of those costs to get through the refranchising—about half a million dollars in the quarter—will not recur.

Speaker #3: And so, you know, once we get past the refranchising, that will become more clear. That will allow us to head toward that G&A target that I have in the deck.

Speaker #3: As far as overall cost structure post refranchising, yeah I think there's you know some you know areas we can continue to optimize. And I think that'll become more clear you know as you know we get past refranchising and we kind of see what you know the go-forward you know kind of model you know will be.

Scott Bowman: As far as overall cost structure post refranchising, yeah, I think there's some areas we can continue to optimize. I think that'll become more clear as we get past refranchising and we see what the go forward model will be from a structure standpoint. From an expense standpoint with the legal costs that we spend and other costs that we spend, it'll be more clear once we get all of the ownership transfers done. Hopefully that gives you some color to understand.

Speaker #3: You know from a structure standpoint. And from an expense standpoint with you know the legal costs that we spend and other costs that we spend, it'll be more clear you know once we get all of the ownership transfers done.

Speaker #3: So hopefully that gives you some solid understanding.

Speaker #5: It does. That does. Thanks.

George Kelly: It does. Thanks.

Sanjiv Razdan: Just to clarify one more time, I think that half a million that we're saying was associated with RD buybacks and some one-time expenses related to refranchising, it is currently sitting in our SG&A, and we don't expect to have that repeat.

Speaker #3: Just to clarify one more time, I think that the half a million we're referring to was associated with already executed buybacks and some one-time expenses related to refranchising.

Speaker #3: It is currently sitting in our SG&A and we don't expect to have that repeat.

Speaker #5: Understood. And then last one for me is just on refranchising. What are the remaining proceeds on those clinics that have not yet transferred ownership?

George Kelly: Understood. Last one for me is just on refranchising. What are the remaining proceeds on those clinics that have not yet transferred ownership? What are you expecting to get when they do, and when do you expect that process to be complete?

Speaker #5: Like what are you expecting to get when they do? And when do you expect that process to be complete?

Speaker #3: Yeah. So we're still working through the process to complete, and it is a rather lengthy process just because we have to work with the landlords to execute the lease assignments to transfer the ownership.

Scott Bowman: We're still working through the process to complete, and it is a rather lengthy process just because we have to work with the landlords to execute the lease assignments to transfer the ownership. In the meantime, we have these management service agreements. As far as the remaining proceeds to go, it'll be a little bit less, so $500,000 or maybe a little less, when all is said and done to collect the remaining proceeds.

Speaker #3: You know in the meantime, we have these management you know service you know agreements. And so as far as the remaining proceeds, you know to go, it'll be a little bit less of 500,000 or maybe a little less you know when all said and done to collect the remaining proceeds.

Speaker #5: Okay. That's all I had. Thank you.

George Kelly: That's all I had. Thank you.

Speaker #3: Sure.

Scott Bowman: Sure.

Speaker #1: I will now turn the call back over to Sanjiv Razdan for closing remarks.

Operator: I will now turn the call back over to Sanjiv Razdan for closing remarks.

Speaker #3: Thank you all for joining us today. Have a great day, and remember, at The Joint, we always have your back.

Sanjiv Razdan: Thank you all for joining us today. Have a great day, and remember, at The Joint, we always have your back.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Q2 2026 The Joint Corp Earnings Call

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