The Joint (JYNT)2025-03-14 00:07Financial Performance - In 2024, the company delivered over 14.7 million patient visits, generating system-wide sales of over 488 million in 2023[23]. - From January 2012 to December 31, 2024, the company increased annual system-wide sales from 530.3 million, while the number of clinics grew from 33 to 967[47]. - The company reported a 4% increase in annual comparable sales for clinics open for at least 13 months in 2024, while clinics open for over 48 months experienced a decline of 2%[117]. - The company experienced net losses in both 2023 and 2024, following profitability from 2018 through 2022, indicating challenges in achieving sustainable profitability[144]. - The company anticipates continued challenges from labor costs and inflation, which have negatively impacted general and administrative expenses in 2023 and 2024[213]. Clinic Operations and Expansion - As of December 31, 2024, the company operated 967 clinics, up from 8 clinics in March 2010, with an additional 92 franchise licenses sold and 53 letters of intent for future clinics[24]. - The company operates 967 franchised or company-owned clinics across 41 states and the District of Columbia as of December 31, 2024[107]. - The company has granted franchises for an additional 92 clinics and executed letters of intent for 53 future clinic licenses, supporting ongoing expansion efforts[62]. - The company plans to continue its refranchising strategy, having received significant interest from multi-unit operators and private equity firms for its clinics[207]. - The company initiated a refranchising plan for the majority of its company-owned or managed clinics, retaining a small portion of high-performing clinics, with significant interest from private equity firms[219]. Patient Engagement and Market Position - The company attracted an average of 992 new patients per clinic in 2024, compared to the chiropractic industry average of 468 new patients[41]. - A patient survey indicated that 36% of new patients had never tried chiropractic care before visiting the company, up from 16% in 2013, highlighting the company's role in expanding the chiropractic market[30]. - The clinics saw an average of 301 patient visits per week, significantly higher than the industry average of 113 visits[42]. - The company saw 957,000 new patients in 2024, with approximately 36% being first-time chiropractic visitors, indicating an expansion of the chiropractic market[216]. Competitive Landscape - The chiropractic industry is highly fragmented, with the top 50 practices accounting for only 4% of total industry revenue[94]. - The company faces competition from four largest multi-unit operators, including Airrosti and HealthSource Chiropractic, which utilize insurance-based models[94]. - Six competitors are attempting to replicate the company's cash-only, low-cost, appointment-free model, with the largest operating 34 clinics as of December 31, 2024[95]. - The company believes its first mover advantage and proprietary operations systems will continue to drive growth despite increasing competition[95]. Regulatory and Compliance Issues - The company is subject to various federal and state regulations, including the Fair Labor Standards Act and the Americans with Disabilities Act, which may impact operational costs[83][93]. - The company has had to address inquiries from state boards regarding its business model, particularly in North Carolina and Oregon, but believes it is in substantial compliance with applicable laws[79]. - The evolving definition of "joint employer" under federal regulations could increase the company's liability for employment law violations by franchisees[150]. - The company recognizes the increasing regulatory focus on privacy and data security, which may require additional investment in compliance programs[67]. Management and Strategy - The management team includes experienced leaders, such as the CEO Sanjiv Razdan, who has a strong background in operational leadership across various industries[51]. - The company aims to improve operational margins and expand revenue streams by introducing complementary branded products like nutraceuticals and dietary supplements[63]. - The company utilizes a regional developer model to accelerate clinic openings and franchise sales, sharing part of the initial franchise fee and ongoing royalties with regional developers[61]. - Effective October 14, 2024, Sanjiv Razdan was appointed as the new President and CEO, succeeding Peter D. Holt[218]. Financial Risks and Liabilities - The company is subject to long-term non-cancelable leases for clinics, which could result in financial obligations even if certain clinics are not profitable[126]. - The company has identified material weaknesses in internal controls over financial reporting, which were remediated by the end of 2023[137]. - The company may incur substantial costs and face civil liability if it fails to maintain the integrity of its data or comply with privacy laws[171]. - The company has access to draw $20.0 million under its Credit Agreement as of December 31, 2024, which may impact cash flow and operational flexibility[134]. Brand and Intellectual Property - The company's brand recognition is crucial for its business, and any negative events or rumors could adversely affect brand value and demand for services[161]. - The company’s intellectual property rights, including trademarks, are essential for competitive advantage, but may face litigation risks that could divert resources[162]. Employee and Labor Issues - The nationwide labor shortage has negatively impacted the company's ability to recruit qualified chiropractors, leading to reduced net revenues and increased operating expenses[113]. - The company has enhanced its recruitment strategies, including competitive compensation packages and partnerships with chiropractic colleges to attract talent[99]. - The company’s compensation practices are merit-based, focusing on roles and performance, with a commitment to gender and demographic equality[102].