JOINT Corp

Previous 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.

Current wording

Key Clinic Development Trends. As of September 30, 2025, we and our franchisees operated or managed 962 clinics, of which 884 were operated or managed by franchisees and 78 were operated as company-owned or managed clinics. Our franchisees opened nine clinics in the third quarter of 2025, compared to 14 clinics in the third 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 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.

Current wording

Our current strategy is to grow through the sale and development of additional franchises. After evaluating options for improvement, during 2023, our 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, we 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. During the third quarter of 2025, we refranchised one clinic and we continue to remain actively engaged in refranchising the balance of the corporate portfolio. The largest cluster remaining in the corporate portfolio is the Southern California region.

Previous wording

On June 30, 2025, we closed on the sale of 31 corporate owned or managed clinics and associated franchise licenses in Arizona and New Mexico to an existing franchisee, Joint Ventures, LLC, in exchange for $8.3 million in cash and the regional developer territory rights of the Northwest region. We carried an upfront regional developer fee liability balance associated with this transaction of $42,035, representing the unrecognized fee collected upon the execution of the regional developer agreement. We accounted for the reacquisition of the regional developer rights as a release of liability and were included as part of the total consideration received to calculate the gain or loss on the sale. Losses on the sale were included with the loss on the sale of assets included in Net loss on disposition or impairment from discontinued operations. As part of the sale, Joint Ventures, LLC agreed to open another 10 clinics in the same region. Additionally, on June 23, 2025, we closed the sale of five clinics along with future development rights in the Kansas City region to an existing franchisee, Chiro 93 LLC.

Current wording

On June 30, 2025, we closed on the sale of 31 company-owned or managed clinics and associated franchise licenses in Arizona and New Mexico to an existing franchisee, Joint Ventures, LLC, in exchange for $8.3 million in cash and the regional developer territory rights of the Northwest region. We carried an upfront regional developer fee liability balance associated with this transaction of $42,035, representing the unrecognized fee collected upon the execution of the regional developer agreement. We accounted for the reacquisition of the regional developer rights as a release of liability and were included as part of the total consideration received to calculate the gain or loss on the sale. Losses on the sale were included with the loss on the sale of assets included in Net loss on disposition or impairment from discontinued operations. As part of the sale, Joint Ventures, LLC agreed to open another 10 clinics in the same region. Additionally, on June 23, 2025, we closed the sale of five clinics along with future development rights in the Kansas City region to an existing franchisee, Chiro 93 LLC.

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 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 additional stock repurchase programs.

Previous 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.

Current wording

The number of franchise licenses sold for the third quarter of 2025 was eight, compared with seven licenses sold for the third quarter of 2024. We ended the third quarter of 2025 with 15 regional developers who were responsible for 25% of the eight 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

Recent events that may impact our business include unfavorable global economic or political conditions, such as uncertainties that come with changes to the presidential administration, labor shortages, and inflation and other cost increases. We anticipate that 2025 will continue to be a volatile macroeconomic environment.

Current wording

Recent events that may impact our business include unfavorable global economic or political conditions, the financial impact of the U.S. government shutdown, labor shortages, and inflation and other cost increases. We anticipate that 2025 will continue to be a volatile macroeconomic environment.

Previous wording

In addition, the increase in interest rates and the expectation that interest rates will continue to remain elevated may adversely affect patients’ financial conditions, resulting in reduced spending on our services. While the impact of these factors continues to remain uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, or results of operations. These and other uncertainties with respect to these recent events could result in changes to our current expectations.

Current wording

In addition, although lowered slightly in recent months, the expectation that interest rates will continue to remain elevated may adversely affect patients’ financial conditions, resulting in reduced spending on our services. While the impact of these factors continues to remain uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, or results of operations. These and other uncertainties with respect to these recent events could result in changes to our current expectations.

Previous wording

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

Current wording

•Comp sales of clinics that have been open for at least 13 full months decreased 2.0%;

Previous wording

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

Current wording

•Comp sales for mature clinics open 48 months or more decreased 4.9%; and

Previous wording

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

Current wording

•System-wide sales for all clinics open for any amount of time decreased 1.5% to $127.3 million.

Previous 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.

Current wording

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

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 June 30, 2025 and 2024, there were 885 and 829 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 September 30, 2025 and 2024, there were 884 and 838 franchised clinics in operation, respectively.

Previous wording

•Software fees revenue increased due to an increase in our franchised clinic base and the related revenue recognition over the term of the franchise agreement as described above.

Current wording

•IT-related income and software fees revenue increased due to an increase in our franchised clinic base and the related revenue recognition over the term of the franchise agreement as described above.

Previous wording

Total revenues increased by $1.6 million, primarily due to the continued expansion and revenue growth of our franchise base and included:

Current wording

Total revenues increased by $2.3 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 June 30, 2025, and 2024, there were 885 and 829 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 September 30, 2025, and 2024, there were 884 and 838 franchised clinics in operation, respectively.

Previous wording

•Software fees revenue increased due to an increase in our franchised clinic base and the related revenue recognition over the term of the franchise agreement as described above.

Current wording

•IT-related and software fees revenue increased due to an increase in our franchised clinic base and the related revenue recognition over the term of the franchise agreement as described above.

Previous 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.

Current wording

For the three months ended September 30, 2025, as compared with the three months ended September 30, 2024, the total cost of revenues decreased primarily due to a reduction in regional developer royalties. For the nine months ended September 30, 2025, as compared with the nine months ended September 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 royalties as mentioned above.

Previous 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.

Current wording

For the three and nine months ended September 30, 2025, as compared with the three and nine months ended September 30, 2024, selling and marketing expenses increased due to an increase in expenses associated with our digital marketing transformation efforts primarily incurred during the first and third quarters in 2025.

Previous 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.

Current wording

Depreciation and amortization expenses increased for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 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 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.

Current wording

For the three months ended September 30, 2025, as compared with the three months ended September 30, 2024, general and administrative expenses decreased primarily due to a decrease in payroll and other employee compensation expenses, partially offset by an increase due to a legal contingency accrual of $0.1 million. For the nine months ended September 30, 2025, as compared with the nine months ended September 30, 2024, general and administrative expenses decreased primarily due to a decrease in payroll and other employee compensation expenses reflective of fewer employees in the first three quarters of 2025 compared to the first three quarters of 2024, including the departure of long-tenure employees with stock-based compensation during 2025, partially offset by the legal contingency accrual of $0.1 million. As a percentage of revenue, general and administrative expenses during the three months ended September 30, 2025 and 2024 were 55% and 59%, respectively. As a percentage of revenue, general and administrative expenses during the nine months ended September 30, 2025 and 2024 were 55% and 60%, respectively.

Previous wording

Loss from operations decreased by $0.4 million for the six months ended June 30, 2025, compared with the six months ended June 30, 2024. The decrease was primarily due to:

Current wording

Gain (loss) from operations decreased by $0.7 million for the three months ended September 30, 2025, compared with the three months ended September 30, 2024. The decrease in the loss to a gain was primarily due to:

Previous wording

•a flat to slight decrease in our total cost of revenues; and

Current wording

•a decrease of $0.2 million in our total cost of revenues; and

Previous wording

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

Current wording

•a decrease of $0.2 million in general and administrative expenses; partially offset by

Previous wording

Loss from operations decreased by $0.6 million for the three months ended June 30, 2025, compared with the three months ended June 30, 2024. The decrease was primarily due to:

Current wording

Loss from operations decreased by $1.0 million for the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024. The decrease was primarily due to:

Previous wording

•an increase of $1.6 million in total revenues;

Current wording

•an increase of $2.3 million in total revenues; and

Previous wording

•a decrease of $0.5 million in general and administrative expenses; partially offset by

Current wording

•a decrease of $0.7 million in general and administrative expenses; partially offset by

Previous wording

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

Current wording

•an increase in selling and marketing expenses of $1.6 million;

Previous wording

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

Current wording

•an increase of $0.1 million in our total cost of revenues; and

Previous 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.

Current wording

Other income, net increased during the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, primarily due to the deployment of additional cash and cash equivalents into higher interest rate money market funds resulting in increased interest income.

Previous 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.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Adjusted EBITDA from continuing operations consists of net loss from continuing operations before interest, income taxes, depreciation and amortization, acquisition-related expenses (which includes contract termination costs associated with reacquired regional developer rights), stock-based compensation expense, bargain purchase gain, (gain) loss on disposition or impairment, costs related to restatement filings, restructuring costs, and litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the ordinary course of our business). We have provided Adjusted EBITDA, a non-GAAP measure of financial performance, because it is commonly used for comparing companies in our industry. You should not consider Adjusted EBITDA as a substitute for operating profit as an indicator of our operating performance or as an alternative to cash flows from operating activities as a measure of liquidity. We may calculate Adjusted EBITDA differently from other companies.

Current wording

Adjusted EBITDA from continuing operations consists of net loss from continuing operations before interest, income taxes, depreciation and amortization, acquisition-related expenses (which includes contract termination costs associated with reacquired regional developer rights), stock-based compensation expense, bargain purchase gain, (gain) loss on disposition or impairment, costs related to restatement filings, restructuring costs (consisting of non-recurring refranchising costs of all company-owned or managed clinics and non-recurring expenses related to changes to our senior leadership team), and litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the normal course of our business). We have provided Adjusted EBITDA, a non-GAAP measure of financial performance, because it is commonly used for comparing companies in our industry. You should not consider Adjusted EBITDA as a substitute for operating profit as an indicator of our operating performance or as an alternative to cash flows from operating activities as a measure of liquidity. We may calculate Adjusted EBITDA differently from other companies.

Previous 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.

Current wording

As of September 30, 2025, we had unrestricted cash and short-term bank deposits of $29.7 million. We used $1.1 million of cash flow from operating activities from both continuing and discontinued operations in the nine months ended September 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

While the interruptions, delays and/or cost increases resulting from political instability and geopolitical tensions, adverse weather conditions, economic weakness, inflationary pressures, increase in interest rates and other factors have created uncertainty as to general economic conditions for the remainder of 2025, as of the date of this Quarterly Report on Form 10-Q, we believe that we have adequate capital resources and sufficient access to external financing sources to satisfy our current and reasonably anticipated requirements for funds to conduct our operations and meet other needs in the ordinary course of our business. For the remainder of 2025, we expect to use or redeploy our cash resources to support our business within the context of prevailing market conditions, which, given the ongoing uncertainties described above, could rapidly and materially deteriorate or otherwise change. Our long-term capital requirements, primarily for acquisitions and other corporate initiatives, could be dependent on our ability to access additional funds through the debt and/or equity markets. If the equity and credit markets deteriorate, including as a result of economic weakness, political unrest or war, or any other reason, it may make any necessary equity or debt financing more difficult to obtain in a timely manner and on favorable terms, if at all, and if obtained, it may be more costly or more dilutive. From time to time, we consider and evaluate transactions related to our portfolio and capital structure, including debt financings, equity issuances, purchases and sales of assets, and other transactions. Given the ongoing uncertainties described above, the levels of our cash flows from operations for the remainder of 2025 may be impacted. There can be no assurance that we will be able to generate sufficient cash flows or obtain the capital necessary to meet our short and long-term capital requirements.

Current wording

While the interruptions, delays and/or cost increases resulting from political instability and geopolitical tensions, adverse weather conditions, economic weakness, inflationary pressures, elevated interest rates and other factors have created uncertainty as to general economic conditions for the remainder of 2025, as of the date of this Quarterly Report on Form 10-Q, we believe that we have adequate capital resources and sufficient access to external financing sources to satisfy our current and reasonably anticipated requirements for funds to conduct our operations and meet other needs in the ordinary course of our business. For the remainder of 2025, we expect to use or redeploy our cash resources to support our business within the context of prevailing market conditions, which, given the ongoing uncertainties described above, could rapidly and materially deteriorate or otherwise change. Our long-term capital requirements, primarily for acquisitions and other corporate initiatives, could be dependent on our ability to access additional funds through the debt and/or equity markets. If the equity and credit markets deteriorate, including as a result of economic weakness, political unrest or war, or any other reason, it may make any necessary equity or debt financing more difficult to obtain in a timely manner and on favorable terms, if at all, and if obtained, it may be more costly or more dilutive. From time to time, we consider and evaluate transactions related to our portfolio and capital structure, including debt financings, equity issuances, purchases and sales of assets, and other transactions. Given the ongoing uncertainties described above, the levels of our cash flows from operations for the remainder of 2025 may be impacted. There can be no assurance that we will be able to generate sufficient cash flows or obtain the capital necessary to meet our short and long-term capital requirements.

Previous 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.

Current wording

Net cash used in operating activities for both continuing and discontinued operations decreased by $6.3 million to $1.1 million for the nine months ended September 30, 2025, compared to net cash provided by operating activities of $5.3 million for the nine months ended September 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 $1.9 million for insurance recoveries, a change in prepaid expenses and other current assets of $0.4 million due to the payment of our annual director and officers insurance premiums during the first quarter of 2025 and a change in accounts payable of $0.6 million primarily due to the timing of payments during the third quarter of 2025.

Previous 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.

Current wording

Net cash provided by investing activities was $6.6 million and net cash used by investing activities was $0.5 million for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, this included proceeds from sales of clinics of $7.8 million, partially offset by purchases of property and equipment of $1.2 million. For the nine months ended September 30, 2024, this included purchases of property and equipment of $0.9 million and proceeds from sales of clinics of $0.4 million.

Previous 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.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2025 was $0.8 million, compared to $2.0 million in net cash used in financing activities for the nine months ended September 30, 2024. For the nine months ended September 30, 2025, net cash used in financing activities included $2.3 million of common stock purchases under the 2025 SRP, partially offset by cash receipts from stock option exercises of $1.5 million. For the nine months ended September 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 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.

Current wording

During the nine months ended September 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.