Joint Q2 2026 Earnings Report

Joint EPS Results

• Actual EPS: $0.05
• Consensus EPS: $0.05
• Beat/Miss: Beat by +$0.00
• One Year Ago EPS: N/A

Joint Revenue Results

• Actual Revenue: $15.18 million
• Expected Revenue: $14.57 million
• Beat/Miss: Beat by +$608.91 thousand
• YoY Revenue Growth: N/A

Joint Announcement Details

• Quarter: Q2 2026
• Date: 8/6/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 5:00PM ET

The Joint (NASDAQ:JYNT) Chiropractic, Inc., doing business as Joint (NASDAQ: JYNT), is a franchisor and operator of outpatient chiropractic clinics in the United States. Under its flagship The Joint Chiropractic brand, the company offers membership-based, cash-focused spinal adjustment services designed to promote accessible, routine care for neck and back discomfort. By removing insurance requirements and offering walk-in visits, Joint aims to streamline the patient experience and reduce cost barriers to ongoing chiropractic treatment.

Joint’s growth strategy centers on partnering with franchisees to expand its network of clinics. Since its founding in 1999, the company has opened over 700 locations across more than 25 states, serving a diverse customer base of both first-time and long-term patients. Joint employs standardized training programs, proprietary care protocols and technology-driven scheduling systems to ensure consistent service quality and operational efficiency across its franchise system.

Headquartered in Scottsdale, Arizona, Joint completed its initial public offering in late 2021, transitioning from a privately held franchisor to a publicly traded company. The business was founded by chiropractor Peter D. Holt, who continues to serve as Chief Executive Officer, overseeing national expansion efforts. With a focus on digital marketing, patient retention and incremental clinic growth, Joint seeks to capture a larger share of the growing U.S. chiropractic services market.

Joint Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Profitability and cash flow improved sharply: Q2 revenue rose 14% to $15.2 million, Adjusted EBITDA from continuing operations increased to $1.5 million from $88,000, and free cash flow grew $1.6 million to $1.9 million.
• Positive Sentiment: Refranchising is nearing completion, with clinic ownership transfers and management service agreements progressing across the three sale bundles. Once finalized, The Joint expects to have only three remaining company-owned or managed clinics, supporting a more capital-light model.
• Positive Sentiment: Patient retention reached its best level in more than five years following the rollout of flexible membership options, while active-member trends improved sequentially. Management also reported no meaningful patient pushback to price increases implemented at more than 500 clinics.
• Negative Sentiment: System-wide sales declined 3.7% year over year and Q2 comparable sales were negative 2.8%, although management said July and second-half trends were improving.
• Negative Sentiment: The company reduced its 2026 new-clinic opening outlook to 22–26 from 30–35, and expects year-end clinic count to be below 2025 levels as closures and portfolio optimization offset new openings. Full-year guidance was otherwise reiterated, including $12.5 million–$13.5 million of consolidated Adjusted EBITDA.

Presentation

[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 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, simply press star followed by the number one on your telephone keypad.

[Operator]

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, Managing Director at Alliance Advisors Investor Relations]

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's Investor Relations website. This afternoon, The Joint Corp. issued a press release for the second quarter ended June 30th, 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.

[Richard Land, Managing Director at Alliance Advisors Investor Relations]

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 The Joint Corp.'s filing with the Securities and Exchange Commission.

[Richard Land, Managing Director at Alliance Advisors Investor Relations]

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.

[Richard Land, Managing Director at Alliance Advisors Investor Relations]

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

[Sanjiv Razdan, President and CEO at The Joint Corp]

Thank you, Richard. Good afternoon, everyone. The second quarter 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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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. 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, President and CEO at The Joint Corp]

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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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. Now I'd like to provide a little bit more background on the status of our re-franchising 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, President and CEO at The Joint Corp]

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. 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 franchise model.

[Sanjiv Razdan, President and CEO at The Joint Corp]

Turning to slide seven. While our re-franchising 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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

We've done extensive research recently on our consumer base, and that work is sharpening our focus on the patient and the 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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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 U.S. markets, and potential entry into our first international markets.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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. 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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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 The Joint and have benefited from our membership model in the past.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

Feedback to date continues to indicate no meaningful patient pushback. 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 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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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. 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, CFO at The Joint Corp]

Thanks, Sanjiv. First, I'll review some key operating metrics. System-wide sales in the second quarter were $128 million, a decline of 3.7% compared to the same period last year. Comp sales were -2.8%, 140 basis point improvement from the first quarter, 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 second quarter unless otherwise specified.

[Scott Bowman, CFO at The Joint Corp]

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.

[Scott Bowman, CFO at The Joint Corp]

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 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.

[Scott Bowman, CFO at The Joint Corp]

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 on to 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. We maintain our $20 million line of credit with JPMorgan Chase, which remains fully undrawn and is available through August 2029.

[Scott Bowman, CFO at The Joint Corp]

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.

[Scott Bowman, CFO at The Joint Corp]

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.

[Scott Bowman, CFO at The Joint Corp]

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. 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.

[Scott Bowman, CFO at The Joint Corp]

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%-85% of revenues, G&A expense between 40%-42% of revenues, CapEx of approximately 3% of revenues.

[Scott Bowman, CFO at The Joint Corp]

Free cash flow conversion, which we define as free cash flow divided by adjusted EBITDA between 60%-70%. These starting points would result in an estimated adjusted EBITDA margin of 19%-21% and net income margin of 13%-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.

[Scott Bowman, CFO at The Joint Corp]

We continue to expect system-wide sales of $519 million-$552 million, comp sales in the range of -3% to +3%, and consolidated adjusted EBITDA in the range of $12.5 million-$13.5 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 22-26. This compares to prior guidance of 30-35 new clinics.

[Scott Bowman, CFO at The Joint Corp]

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 U.S. alone. Finally, on slide 17, I'll briefly speak to our capital allocation.

[Scott Bowman, CFO at The Joint Corp]

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 RD territories. With that, I'll turn it back over to Sanjiv.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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 will 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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

Meanwhile, our capital allocation, including share repurchases, RD buybacks, and disciplined investment and 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. 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.

[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.

[Nicholas Sherwood, Analyst at Maxim Group]

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 sort of 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?

[Sanjiv Razdan, President and CEO at The Joint Corp]

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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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 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, President and CEO at The Joint Corp]

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. 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.

[Nicholas Sherwood, Analyst at Maxim Group]

Understood. I appreciate the detail. My second question is, looking at the getting lapsed patients to return, are these patients lapsing because either 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? What is the mix between those three for lapsed patients and how do you attack getting them back into your clinics?

[Sanjiv Razdan, President and CEO at The Joint Corp]

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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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. 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.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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.

[Scott Bowman, CFO at The Joint Corp]

I'll just add a comment on to that as well. We've 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 Wellness Plans plan that we have, you pay $35, you get one visit per month for that, and 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.

[Scott Bowman, CFO at The Joint Corp]

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.

[Nicholas Sherwood, Analyst at Maxim Group]

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

[Sanjiv Razdan, President and CEO at The Joint Corp]

Of course.

[Operator]

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

[George Kelly, Analyst at Roth Capital Partners]

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 back half of the year.

[Sanjiv Razdan, President and CEO at The Joint Corp]

Sure.

[Scott Bowman, CFO at The Joint Corp]

Yes. As far as comps go, we did see a little bit better comps towards the end of the quarter, coming into third quarter. We're encouraged. If you look at the back half 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, we felt pretty good coming into the third quarter as well. That's why we kind of reiterated that we think that comps will be higher in the back half. Related to your pricing question. We had some pricing initiatives earlier in the year, then we had some more at the end of June rollout.

[Scott Bowman, CFO at The Joint Corp]

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. Isolated just to the Wellness Plan, it looks like it's about a low single-digit impact. As we look into the second half 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.

[George Kelly, Analyst at Roth Capital Partners]

Okay. That's helpful.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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.

[Scott Bowman, CFO at The Joint Corp]

Right.

[George Kelly, Analyst at Roth Capital Partners]

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

[Scott Bowman, CFO at The Joint Corp]

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

[George Kelly, Analyst at Roth Capital Partners]

Okay.

[Scott Bowman, CFO at The Joint Corp]

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

[George Kelly, Analyst at Roth Capital Partners]

Okay, great. 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 slide.

[Scott Bowman, CFO at The Joint Corp]

Yeah.

[George Kelly, Analyst at Roth Capital Partners]

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 continual margin improvement.

[Scott Bowman, CFO at The Joint Corp]

Yeah.

[George Kelly, Analyst at Roth Capital Partners]

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 directly take cost out? Then 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 it's 19%-21% EBITDA margin targets when the refranchising is done.

[George Kelly, Analyst at Roth Capital Partners]

I don't know if you'd be willing to give what those numbers could look like over the near to medium term.

[Scott Bowman, CFO at The Joint Corp]

Yeah. Good question, George. We're not ready to guide to 2027 and 2028, but 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, and 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.

[Scott Bowman, CFO at The Joint Corp]

Okay? 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. 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. That's why I feel confident that as we add sales, we can leverage this model.

[Scott Bowman, CFO at The Joint Corp]

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. As far as overall cost structure post refranchising, yeah, I think there's some areas we can continue to optimize.

[Scott Bowman, CFO at The Joint Corp]

I think that'll become more clear as we get past refranchising and we kind of see what the go forward model will be from a structure standpoint and 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.

[George Kelly, Analyst at Roth Capital Partners]

It does. Thanks.

[Sanjiv Razdan, President and CEO at The Joint Corp]

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, we don't expect to have that repeat.

[George Kelly, Analyst at Roth Capital Partners]

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?

[Scott Bowman, CFO at The Joint Corp]

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.

[George Kelly, Analyst at Roth Capital Partners]

That's all I had. Thank you.

[Scott Bowman, CFO at The Joint Corp]

Sure.

[Operator]

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

[Sanjiv Razdan, President and CEO at The Joint Corp]

Thank you all for joining us today. Have a great day. 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.

Participants

Executives

• Sanjiv Razdan, President and CEO
• Scott Bowman, CFO

Analysts

• Richard Land, Managing Director at Alliance Advisors Investor Relations
• Nicholas Sherwood, Analyst at Maxim Group
• George Kelly, Analyst at Roth Capital Partners