JOINT Corp

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with ourunaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 14, 2025.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with ourunaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our amended and restated Annual Report on Form 10-K/A for the year ended December 31, 2024, filed with the SEC on August 11, 2025.

Previous wording

Key Clinic Development Trends. As of March 31, 2025, we and our franchisees operated or managed 969 clinics, of which 847 were operated or managed by franchisees and 122 were operated as company-owned or managed clinics. Our franchisees opened five clinics in the first quarter of 2025, compared to 23 clinics in the first quarter of 2024.

Current wording

Key Clinic Development Trends. As of June 30, 2025, we and our franchisees operated or managed 967 clinics, of which 885 were operated or managed by franchisees and 82 were operated as company-owned or managed clinics. Our franchisees opened seven clinics in the second quarter of 2025, compared to nine clinics in the second quarter of 2024.

Previous wording

Our current strategy is to grow through the sale and development of additional franchises. After evaluating options for improvement, during 2023, the Board of Directors authorized management to initiate a plan to refranchise or sell the majority of our company-owned or managed clinics. During the third quarter of 2024, the Company expanded the refranchising plan to include the full portfolio of our company-owned or managed clinics, marketing the clinics in large clusters grouped primarily by geographic location. This refined strategy will leverage our greatest strength - our capacity to build a franchise - to drive long-term growth for both our franchisees and The Joint as a public company. We have created a robust framework for the refranchising effort, organizing clinics into clusters, and generating comprehensive disclosure packets for marketing efficiency. We had given initial preference to existing franchisees and, in the third quarter of 2024, we expanded the marketing efforts to larger multi-unit, multi-brand operators and certain private equity firms interested in purchasing and operating large market-based clinic clusters and have received significant interest to date in most markets. During the first quarter of 2025, we have received draft letters of intent ("LOIs") for our full portfolio of company-owned or managed clinics and as of the filing of this Quarterly Report on Form 10-Q are in the final stages of certain LOI term negotiations and due diligence.

Current wording

Our current strategy is to grow through the sale and development of additional franchises. After evaluating options for improvement, during 2023, the Board of Directors authorized management to initiate a plan to refranchise or sell the majority of our company-owned or managed clinics. During the third quarter of 2024, the Company expanded the refranchising plan to include the full portfolio of our company-owned or managed clinics, marketing the clinics in large clusters grouped primarily by geographic location. This refined strategy will leverage our greatest strength - our capacity to build a franchise - to drive long-term growth for both our franchisees and The Joint as a public company. We have created a robust framework for the refranchising effort, organizing clinics into clusters, and generating comprehensive disclosure packets for marketing efficiency. We had given initial preference to existing franchisees and, in the third quarter of 2024, we expanded the marketing efforts to larger multi-unit, multi-brand operators and certain private equity firms interested in purchasing and operating large market-based clinic clusters and have received significant interest to date in most markets. During the first quarter of 2025, we received draft letters of intent ("LOIs") for our full portfolio of company-owned or managed clinics. During the second quarter of 2025, we refranchised 37 clinics and remain actively engaged in refranchising the balance of the corporate portfolio.

Previous wording

Our goal will be to generate significant processes that will provide us with value creating capital allocation opportunities. These opportunities could include, but are not limited to, reinvestment in the brand and related marketing, continued investment in our IT platforms, the repurchase of regional development ("RD") territories, certain merger or acquisition opportunities and/or a stock repurchase program.

Current wording

Our goal will be to generate significant processes that will provide us with value creating capital allocation opportunities. These opportunities could include, but are not limited to, reinvestment in the brand and related marketing, continued investment in our IT platforms, the repurchase of regional development territories, certain merger or acquisition opportunities and/or a stock repurchase program.

Previous wording

The number of franchise licenses sold for the first quarter of 2025, was nine, compared with 15 licenses sold for the first quarter of 2024. We ended the first quarter of 2025 with 16 regional developers who were responsible for 56% of the nine licenses sold during the period. We will continue to leverage the power of the regional developer program to accelerate the number of clinics sold, and eventually opened, across the country.

Current wording

The number of franchise licenses sold for the second quarter of 2025 was 13, compared with 7 licenses sold for the second quarter of 2024. We ended the second quarter of 2025 with 15 regional developers who were responsible for 8% of the 13 licenses sold during the period. We will continue to leverage the power of the regional developer program to accelerate the number of clinics sold, and eventually opened, across the country.

Previous wording

•Comp sales of clinics that have been open for at least 13 full months increased 3.1%;

Current wording

•Comp sales of clinics that have been open for at least 13 full months increased 1.4%;

Previous wording

•Comp sales for mature clinics open 48 months or more decreased 1.7%; and

Current wording

•Comp sales for mature clinics open 48 months or more decreased 2.0%; and

Previous wording

•System-wide sales for all clinics open for any amount of time grew 5.0% to $132.6 million.

Current wording

•System-wide sales for all clinics open for any amount of time grew 2.6% to $129.6 million.

Previous wording

There were no changes in our critical accounting estimates during the three months ended March 31, 2025, from those set forth in “Significant Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

There were no changes in our critical accounting estimates during the three months ended June 30, 2025, from those set forth in “Significant Accounting Policies and Estimates” in our amended and restated Annual Report on Form 10-K/A for the year ended December 31, 2024.

Previous wording

The following discussion and analysis of our financial results encompasses the results of our Franchise Operations business segment for the three months ended March 31, 2025, compared with the three months ended March 31, 2024. All financial results and metrics discussed below are on a continuing operation basis.

Current wording

The following discussion and analysis of our financial results encompasses the results of our Franchise Operations business segment for the three and six months ended June 30, 2025, compared with the three and six months ended June 30, 2024. All financial results and metrics discussed below are on a continuing operation basis.

Previous wording

Total revenues increased by $0.9 million, primarily due to the continued expansion and revenue growth of our franchise base and included:

Current wording

Total revenues increased by $0.7 million, primarily due to the continued expansion and revenue growth of our franchise base and included:

Previous wording

•Royalty fees and advertising fund revenue increased due to an increase in the number of franchised clinics in operation during the current period, along with continued sales growth in existing franchised clinics. As of March 31, 2025, and 2024, there were 847 and 819 franchised clinics in operation, respectively.

Current wording

•Royalty fees and advertising fund revenue increased due to an increase in the number of franchised clinics in operation during the current period, along with continued sales growth in existing franchised clinics. As of June 30, 2025 and 2024, there were 885 and 829 franchised clinics in operation, respectively.

Previous wording

For the three months ended March 31, 2025, as compared with the three months ended March 31, 2024, the total cost of revenues increased primarily due to an increase in the number of franchised clinics in operation during the current period, along with continued sales growth in existing franchised clinics in regional developer regions.

Current wording

For the three months ended June 30, 2025, as compared with the three months ended June 30, 2024, the total cost of revenues decreased primarily due to a reduction in regional developer sales commissions. For the six months ended June 30, 2025, as compared with the six months ended June 30, 2024, the total cost of revenues increased primarily due to an increase in the number of franchised clinics in operation during the current period, along with continued sales growth in existing franchised clinics in regional developer regions, partially offset by the reduction in regional developer sales commissions as mentioned above.

Previous wording

For the three months ended March 31, 2025, as compared with the three months ended March 31, 2024, selling and marketing expenses increased due to an increase in expenses associated with our digital marketing transformation efforts.

Current wording

For the three and six months ended June 30, 2025, as compared with the three and six months ended June 30, 2024, selling and marketing expenses increased due to an increase in expenses associated with our digital marketing transformation efforts primarily incurred during the three months ended March 31, 2025.

Previous wording

Depreciation and amortization expenses increased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to depreciation expenses related to development of internal use software made available for use in the first half of 2024.

Current wording

Depreciation and amortization expenses increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, primarily due to depreciation expenses related to internal use software enhancements and developments, including the launch of our new mobile app.

Previous wording

General and administrative expenses decreased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to a decrease in payroll and other employee compensation expenses of $0.4 million, reflective of fewer employees in the first quarter of 2025 compared to the first quarter of 2024, including the departure of long-tenure employees with stock-based compensation during 2024. As a percentage of revenue, general and administrative expenses during the three months ended March 31, 2025, and 2024 were 53% and 60%, respectively.

Current wording

General and administrative expenses decreased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, primarily due to a decrease in payroll and other employee compensation expenses reflective of fewer employees in the first half of 2025 compared to the first half of 2024, including the departure of long-tenure employees with stock-based compensation during 2025. As a percentage of revenue, general and administrative expenses during the three months ended June 30, 2025 and 2024 were 58% and 62%, respectively. As a percentage of revenue, general and administrative expenses during the six months ended June 30, 2025 and 2024 were 56% and 61%, respectively.

Previous wording

•an increase of $0.9 million in total revenues; and

Current wording

•an increase of $0.7 million in total revenues;

Previous wording

•a decrease of $0.4 million in general and administrative expenses.

Current wording

•a decrease of $0.1 million in general and administrative expenses; partially offset by

Previous wording

•an increase in selling and marketing expenses of $1.3 million; and

Current wording

•an increase in selling and marketing expenses of $1.3 million;

Previous wording

•an increase of $0.3 million in our total cost of revenues; partially offset by

Current wording

•an increase of $0.2 million in our total cost of revenues; and

Previous wording

Other income (expense), net increased during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the deployment of additional cash and cash equivalents into higher interest rate savings products resulting in increased interest income.

Current wording

Other income (expense), net increased during the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024, primarily due to the deployment of additional cash and cash equivalents into higher interest rate savings products resulting in increased interest income.

Previous wording

Income tax expense increased during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to increase in estimated state income taxes.

Current wording

Income tax expense increased during the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024, primarily due to increase in estimated state income taxes.

Previous wording

The table below reconciles net income (loss) to Adjusted EBITDA for the three months ended March 31, 2025, and 2024.

Current wording

The tables below reconcile net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024:

Previous wording

Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. You should review the reconciliation of Net loss to Adjusted EBITDA above and not rely on any single financial measure to evaluate our business.

Current wording

Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. You should review the reconciliation of Net income (loss) to Adjusted EBITDA above and not rely on any single financial measure to evaluate our business.

Previous wording

As of March 31, 2025, we had unrestricted cash and short-term bank deposits of $21.9 million. We used $3.7 million of cash flow from operating activities from both continuing and discontinued operations in the first quarter of 2025. While unfavorable global economic or political conditions create potential liquidity risks, as discussed further below, we believe that our existing cash and cash equivalents, our anticipated cash flows from operations and amounts available under our line of credit will be sufficient to fund our anticipated operating and investment needs for at least the next 12 months.

Current wording

As of June 30, 2025, we had unrestricted cash and short-term bank deposits of $29.8 million. We used $2.8 million of cash flow from operating activities from both continuing and discontinued operations in the six months ended June 30, 2025. While unfavorable global economic or political conditions create potential liquidity risks, as discussed further below, we believe that our existing cash and cash equivalents, our anticipated cash flows from operations and amounts available under our line of credit will be sufficient to fund our anticipated operating and investment needs for at least the next 12 months.

Previous wording

Net cash used in operating activities for both continuing and discontinued operations increased by $6.5 million to $3.7 million for the three months ended March 31, 2025, compared to net cash provided by operating activities of $2.8 million for the three months ended March 31, 2024. The increase in net cash used was attributable to a change in working capital of $6.4 million for the three months ended March 31, 2025.

Current wording

Net cash used in operating activities for both continuing and discontinued operations decreased by $4.7 million to $2.8 million for the six months ended June 30, 2025, compared to net cash provided by operating activities of $1.8 million for the six months ended June 30, 2024. The decrease in net cash was primarily attributable to a change in accrued expenses of $3.4 million related to the settlement of a medical injury claim during the first quarter of 2025, which was partially offset by a related change in accounts receivable of $1.6 million for insurance recoveries, a change in prepaid expenses and other current assets of $1.7 million due to the payment of our annual director and officers insurance premiums during the first quarter of 2025 and a change in payroll liabilities of $1.4 million primarily due to the payout of the fiscal 2024 short-term incentive accrual during the first quarter of 2025.

Previous wording

Net cash used in investing activities was $0.3 million and $0.3 million for the three months ended March 31, 2025, and 2024, respectively. For the three months ended March 31, 2025, this included purchases of property and equipment of $0.3 million and proceeds from sales of clinics of $40,100. For the three months ended March 31, 2024, this included purchases of property and equipment of $0.4 million and proceeds from sales of clinics of $50,100.

Current wording

Net cash provided by investing activities was $6.9 million and net cash used by investing activities was $0.4 million for the six months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, this included proceeds from sales of clinics of $7.8 million, partially offset by purchases of property and equipment of $0.8 million. For the six months ended June 30, 2024, this included purchases of property and equipment of $0.7 million and proceeds from sales of clinics of $0.2 million.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2025, was $0.9 million, compared to $2.0 million in net cash used in financing activities for the three months ended March 31, 2024. For the three months ended March 31, 2025, net cash provided by financing activities included cash receipts from stock option exercises of $0.9 million. For the three months ended March 31, 2024, net cash used in financing activities included the pay down of the outstanding balance on our Debt under the Credit Agreement in the amount of $2.0 million.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2025 was $0.9 million, compared to $2.0 million in net cash used in financing activities for the six months ended June 30, 2024. For the six months ended June 30, 2025, net cash provided by financing activities included cash receipts from stock option exercises of $0.9 million. For the six months ended June 30, 2024, net cash used in financing activities included the pay down of the outstanding balance on our Debt under the Credit Agreement in the amount of $2.0 million.

Previous wording

During the three months ended March 31, 2025, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements.

Current wording

During the six months ended June 30, 2025, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements.