The Joint Corp.

Good day, and welcome to the Joint Corp Third Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to David Bernard, LHA Investor Relations. Please go ahead.

Thank you, Wyatt. And good afternoon, everyone. This is David Barnard of Alliance Advisors Investor Relations. Joining us on the call today are President and CEO Sanjeev Razdan and CFO Jake Signleton. Please note we are using a slide presentation that can be found at HTTPS backslash IR.thejoint.com under Events. Today, after the close of the market, the joint corporation issued its results for the quarter ended September 30, 2024. If you do not already have a copy of this press release, it can be found in the investor relations section of the company's website. As provided on slide two, please be advised that today's discussion includes forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be considered forward-looking statements. Although the company believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, it can make no assurances that such expectations or assumptions will prove to have been correct. Actual results may differ materially from those expressed or implied in forward-looking statements due to various risks and uncertainties. As a result, we caution you against placing undue reliance on these forward-looking statements. For discussion of the risks and uncertainties that could cause actual results to differ from those expressed or implied in the forward-looking statements, please review the risk factors detailed in the company's reports on Forms 10-K and 10-Q, as well as other reports that the company files from time to time with the SEC. Finally, any forward-looking statements included in this earnings call are made only as of the date of this call. and we do not undertake any obligation to revise our results or publicly release any updates to these forward-looking statements in light of new information or future events. Management uses EBITDA and adjusted EBITDA, which are non-GAAP financial measures. These are presented because they are important measures used by management to assess financial performance. Management believes they provide a more transparent view of the company's underlying operating performance and operating trends than GAAP measures alone. Reconciliation of net income to EBITDA and adjusted EBITDA is presented in the press release. The company defines EBITDA as net income or loss before net interest, tax expense, depreciation, and amortization expenses. The company defines adjusted EBITDA as EBITDA before acquisition-related expenses, which includes contract termination costs associated with reacquired regional developer rights, stock-based compensation expense, bargain purchase gain, net gain or loss on disposition or impairment, costs related to restatement filings, restructuring costs, litigation expenses, consisting of legal and related fees for specific proceedings that arise out of the ordinary course of our business, and other income related to the employee retention credits. Management also includes commonly discussed performance metrics. System-wide sales include revenues at all clinics, whether operated by the company or franchisees. While franchise sales are not recorded as revenues by the company, management believes the information is important in understanding the company's financial performance because these sales are the basis on which the company calculates and records royalty fees and are indicative of the financial health of the franchisee base. System-wide comp sales include the revenues from both company-owned or managed clinics and franchised clinics that in each case have been open at least 13 full months and exclude any clinics that have closed. Turning to slide three, it's now my pleasure to turn the call over to Sanjeev Razdan.

Thank you, David, and I welcome everyone to the call. I'm excited to meet you today for my first conference call with The Joint. I'd like to begin by reviewing why I joined the company. I was approached about The Joint because of my background. I have extensive experience leading successful multi-site consumer service companies and franchise businesses. I leverage my strategic business acumen and branding expertise to drive growth and sustainable profitability. I use my passion for energizing teams and building strong cultures to support franchisees and employees. Most recently, I served as President of Americas and India for the Coffee Bean and Tea Leaf, which has 1,200 cafes operating in 30 countries. I was responsible for my division's cafe, consumer packaged goods, and e-commerce operations, and led their business transformation. By developing strong franchise relationships, repairing unit-level margins, and transforming the culture, my division delivered its strongest EBITDA results in over a decade. Similarly, as COO at Sweetgreen, I helped lead rapid growth while also optimizing the operating platform to ensure efficiency and improve unit-level profitability. And at Applebee's, as Senior Vice President and COO, I led the turnaround of the portfolio, which was 1,800-plus restaurants predominantly franchise-owned across all 50 states. When I was approached about the joint, I was immediately interested in learning more because of my personal connection. I am a chiropractic care enthusiast. A few years ago, while at the gym, I threw my back out. For several months, I tried traditional medicine but got little to no comfort. Finally, with some skepticism, I tried chiropractic care. I recovered fully with this non-invasive treatment, and now I am a believer who gets adjusted regularly for general good health. So I began to research the joint franchise concept. I was impressed by the scale of the business, the first mover advantage, and most importantly, the wide space for market growth both in the U.S. and internationally. Also, I was inspired by the clinic economic model and the potential to leverage our core competencies and infrastructure as a platform over time and our ability to increase profitability and create shareholder value. My findings indicated that, although the joint may be experiencing some near-term market headwinds, the opportunities for growth are compelling. This enticed me to accept the CEO role to lead the joint into our next phase of growth. As you can imagine, for the past three and a half weeks, I have been asked quite a bit about my plans. While I joined with some ideas, my perspective is expanding as I meet our teams. I will conduct my first 100 days business immersion prior to making significant changes. I will meet and listen to franchisees, regional developers, doctors of chiropractic, wellness coordinators, and our corporate employees. I will learn details of the operations and our capabilities. Then I will analyze data and rank a variety of initiatives based on their potential business impact and return on investment. While the board has granted me the latitude to redesign our strategic plan, I can clearly state we are continuing to drive ahead with re-franchising. Turning to slide four, it is also important to know I am dedicated to elevating patient care, strengthening clinic economics, driving innovation in everything we do, and building people capability and culture. As a result, I am confident we will increase profitability and create shareholder value. Turning to slide five. As noted, I am committed to executing our refranchising efforts with the intent of reinvesting the capital raised into the joint. It's a great opportunity to simplify and grow our business, focus on our franchisees, their clinic economics, and drive shareholder value. We are far along in marketing most of the corporate clinics, we have seen broad interest. We will continue to pursue transactions with existing and new franchisees. Regarding the two transactions announced last quarter, these were with existing franchisees for nine clinics in Savannah and Kansas City. They entered LOIs and now are in the process of conducting due diligence. Turning to slide six, I'll start our marketing review. Our biggest consumer challenge is to increase new patient counts. We will do this through stronger lead generation and lead conversion. Our team has been focused on improving the patient experience to increase new patient lead conversion. After positive feedback in testing this summer, our team rolled out the initial visit bookings platform to the first 500 clinics, and the results are strong. The initial visit bookings platform has enabled the scheduling of new patients' intake sessions. Qualitatively, we are exceeding our marks. New patients have indicated they feel seen, heard, and well cared for. This has translated into quantitative success. While we don't intend to provide this data on an ongoing basis, today I'd like to note new patient digital lead conversion increased from 46% in July to 49% in September. With this data, we will continue the rollout of the initial visit bookings to all of our clinics. To create a frictionless new patient process, we are working to enable them to complete our enhanced digital intake forms using their own mobile devices. After extensive testing, we began the rollout in late August. Patients are reporting greater satisfaction with the process. and wellness coordinators are pleased to focus time on positive patient interactions. Also, regarding our user experience improvement, we are continuing to diligently work on our first consumer-facing mobile app. This will enable in-clinic check-in, patients will be able to see which doctors of chiropractic are present in clinic, and it will serve as a channel for patient education as well. We intend to continue to update the mobile app with new features over time. Turning to slide seven, I'll review our new patient acquisition efforts. To improve brand awareness and lead generation, we are shifting marketing spend to the top of the funnel. We have been working on initiatives to improve efficacy of our paid media and co-op strategies. This includes a shift in spend within test market on Google's Performance Max platform. The platform follows our key audiences across Google properties, leveraging a mix of ad types based on the specific channel. It is showing fantastic interaction metrics, and we have started to accelerate rolling out this program within the system. Additionally, we are optimizing the creative content to drive relevance with these new audiences. Now we are marketing to both switchers from other providers and the people new to chiropractic itself. Finally, we are evaluating pricing options. In time for our Back Friday special on Black Friday in November, we plan to introduce new pricing for our walk-in rate. Additionally, we are reviewing membership levels, packages, and legacy policies for potential updates. In 2025, we plan to further build our patient lifetime value in addition to growing our patient base. With that, I'll turn the call to Jake.