Joint Reports Q2 Revenue Growth and Higher Adjusted EBITDA

On Thursday, Joint (NASDAQ: JYNT ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

4 million increase in adjusted EBITDA from continuing operations, and a 152% year-over-year growth in cash flow from operating activities. The company has made significant progress on its refranchising initiative, transitioning to a capital-light, pure-play franchisor model, with 32 clinics transferred in Southern California and ongoing efforts in Northern and Southeast regions. 5 million in Q2 2026. Joint's patient retention reached its highest rate in over five years, attributed to flexible plan options and targeted marketing efforts aimed at winning back lapsed patients and optimizing patient retention.

5 million. Joint is focused on leveraging digital marketing strategies, including AI search optimization, to enhance patient acquisition and improve lead quality. Management reiterated confidence in the company's long-term value, supported by disciplined capital allocation, share repurchases, and RD territory buybacks. Full Transcript Rebecca, 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 Joint Second Quarter 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.

If you would like to ask a question during this time, please simply press STAR followed by the number 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. Richard Land, Investor Relations, Alliance Advisors 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.

This afternoon Joint issued a press release for the second quarter ended June 30, 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 and business prospects and opportunities to differ materially from those expressed in or implied by these statements.

Some important factors that could cause such differences are discussed in the Risk Factors section of Joint's filings with the Securities and Exchange Commission. 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. 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. With that, I'll now turn the call over to Sanjiv Razdan. Sanjiv, please go ahead. Sanjiv Razdan, President & Chief Executive Officer Thank you, Richard.

Good afternoon, everyone. 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. 4 million increase in adjusted EBITDA from continuing operations, reflecting the improved operating leverage of the current business. 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. Taken together, these transactions mean 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. And third, on capital allocation, we remain 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.

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 5, I'll touch on some of our Q2 financial highlights, which reflect the combined benefit of this execution. 2 million.

4 million, underscoring the operating leverage we are generating as we shift toward more royalty- and fee-based franchise revenue. 9 million. 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.

For the Northern California bundle, a signed asset purchase agreement is in place for four clinics. 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. 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 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. 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 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. 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. S. 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 noninvasive whole-body care.

Chiropractic care and Joint's unique model is exceptionally well positioned against this backdrop. Moving to Slide 8, 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, 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.

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 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. 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 9, I'll speak to how these initiatives are translating into comps and retention. 8% in the second quarter, 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. 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. Scott Bowman, Chief Financial Officer Thanks, Sanjeev.

First, I'll review some key operating metrics. 7% compared to the same period last year. 8%, a 140-basis-point improvement from the first quarter, consistent with the strengthening trends Sanjeev discussed earlier. 2 million, in line with the same period last year.

Turning to Slide 12, I'll review results from continuing operations for the second quarter. 2 million, reflecting the shift to our pure-play franchisor revenue model. 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. 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.

7 million in the same period last year. Included in G&A expenses is approximately 500,000 that relates to expenses incurred for RD buybacks 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. 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. 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. 23 per share.

8 million remaining under the 12 million authorization approved in November 2025. As Sanjeev mentioned, we also completed third 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. 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 the second quarter. 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 breakeven point even earlier, at under six months.

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. 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: 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. 5 million. 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. 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.

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. S. alone.

Finally, on Slide 17, I'll briefly speak to our capital allocation.