Executive Summary / Key Takeaways

• Strategic Transformation Underway: The Joint Corp. is executing a pivotal shift to become a pure-play franchisor, divesting its corporate clinics to streamline operations, reduce overhead, and enhance operating leverage, with the goal of completing this transition by the end of 2025.
• Improved Profitability in Core Operations: Despite macroeconomic challenges, the company's continuing franchise operations are demonstrating improved financial health, evidenced by a significant increase in Adjusted EBITDA from continuing operations in Q3 2025.
• Enhanced Patient Acquisition and Retention: New patient growth is being targeted through a revamped, pain-focused national marketing campaign, bolstered digital strategies, and a new patient-facing mobile app designed to elevate experience and extend membership longevity.
• Dynamic Revenue Management: The company is actively piloting tiered pricing adjustments and new service offerings, like the "Kickstart plan," to optimize revenue per visit and offset inflationary pressures while maintaining affordability.
• Strong Capital Allocation and Future Outlook: With a robust cash position and an expanded stock repurchase program, The Joint Corp. is committed to shareholder value creation, anticipating increased profitability for its continuing operations in 2026 as its franchise-centric model fully takes hold.

The Joint Corp.'s Vision and Market Dominance

The Joint Corp. (NASDAQ:JYNT) stands as a distinctive and rapidly expanding franchisor within the chiropractic care industry, operating on a private pay, non-insurance, cash-based model. Established in 2010, the company's mission is to improve the quality of life through routine and affordable chiropractic care, with a bold vision to become America's most accessible health and wellness services company. This vision is underpinned by a unique operating model featuring convenient retail locations, walk-in adjustment-only care, and accommodating hours, including evenings and weekends. This approach has enabled The Joint Corp. to achieve significant scale, boasting over 960 clinics nationwide by 2024, making it larger than its next ten competitors combined. This scale provides substantial brand awareness, easy consumer access, and economies of scale in management and marketing.

The market opportunity for chiropractic care is substantial, with Americans spending an estimated $20.6 billion annually on these services, of which 37% to 42% is out-of-pocket. The Joint Corp. currently captures approximately 6% to 7% of this market. Demographic projections suggest considerable "white space" for growth, indicating the potential to more than double its U.S. clinic base to approximately 1,950 locations, alongside international expansion opportunities. The company's model resonates with a target patient demographic with household incomes between $50,000 and $100,000, who are increasingly seeking effective, affordable, natural solutions for general wellness and pain relief. This trend, coupled with a growing preference among chiropractic doctors to move away from insurance-based models, creates a favorable environment for The Joint Corp.'s continued network expansion.

Technological Edge: Enhancing Patient Experience and Operational Efficiency

A cornerstone of The Joint Corp.'s strategy to strengthen its core and reignite growth is its commitment to technological differentiation, which enhances both patient experience and operational efficiency. The company leverages its proprietary chiropractic software for clinic management and is making significant strides in patient-facing technology.

The patient-facing mobile app, launched in July 2025, represents a key technological differentiator. By the end of Q3 2025, the app had achieved an 18% adoption rate among wellness plan holders and over 178,000 downloads. This app provides tangible benefits such as frictionless in-clinic check-ins, access to visit balances, plan types, visit history, and progress reports. Future enhancements, including credit card updates and gamification features like badges for adjustments or check-ins, are designed to further engage patients, foster referrals, and extend membership longevity. For investors, this technology contributes to a competitive moat by improving customer loyalty and reducing friction in the patient journey, which can translate into higher lifetime value.

Beyond the app, The Joint Corp. is strengthening its digital marketing infrastructure through accelerated SEO initiatives and new clinic microsites. A pilot rollout of microsites for 35 clinics in September 2025 demonstrated a 20% to 40% increase in organic search traffic within the first two weeks. These efforts are crucial for improving search visibility, page authority, and discovery, particularly in an AI-driven search environment, thereby driving organic traffic and leads to clinics. This digital prowess is vital for efficient patient acquisition and maintaining a competitive edge against both traditional and tech-savvy healthcare providers.

Strategic Metamorphosis: The Pure-Play Franchisor Model (Joint 2.0)

The Joint Corp. is undergoing a profound strategic transformation, dubbed "Joint 2.0," to become a pure-play franchisor. This initiative, which began in 2023 and expanded in Q3 2024, involves refranchising its entire portfolio of company-owned or managed clinics. The rationale behind this strategic shift is to sharpen management focus, reduce the operational complexities and expenses associated with directly managing clinics, and ultimately increase operating leverage.

Significant progress has been made in this refranchising effort. As of September 30, 2025, 40 clinics had been refranchised year-to-date, reducing the corporate clinic portfolio from 13% to 8% of the total network. A notable transaction included the sale of 31 corporate clinics in Arizona and New Mexico to Joint Ventures, LLC for $8.3 million in cash, which also involved the reacquisition of Northwest regional developer rights for $2.8 million. Further, on November 2, 2025, the company entered into an Asset Purchase Agreement to sell 45 corporate clinics in Southern California to Elite Chiro Group for $4.5 million. The company has signed Letters of Intent (LOIs) for 93% of its remaining corporate clinics, with most in the due diligence phase, and aims to complete the refranchising process by the end of 2025. This transition is expected to significantly reduce unallocated General & Administrative (G&A) expenses, thereby improving the company's bottom line and profitability profile in the coming years.

The company is also leveraging its regional developer program to accelerate clinic sales and openings. To improve new clinic performance, robust pre-opening protocols have been implemented, which have successfully reduced the average time to breakeven from approximately two years to under one year for clinics opened in 2025. This operational efficiency is crucial for driving sustainable network growth and ensuring franchisee success.

Revenue Reinvention: Dynamic Management and Targeted Marketing

To reignite growth and improve profitability, The Joint Corp. is implementing a multi-pronged approach to revenue management and marketing. Recognizing that approximately 80% of new patients seek chiropractic care due to aches and pains, the company launched its "Life, Unpaused" brand awareness campaign in August 2025. This campaign strategically shifts marketing content from broad wellness-focused communications to a message centered on chiropractic care for pain relief, aiming to drive stronger new patient demand and lead generation. To amplify this national message, franchisees collectively elected in October 2025 to reallocate $500 per clinic per month (approximately 1% of their gross sales) from local advertising to this new national marketing effort, without increasing their total contributions.

In July 2025, the company introduced the "Kickstart plan," allowing new patients to purchase supplemental adjustment packages (4, 8, or 12 adjustments) beyond their standard wellness plans. This initiative helps patients achieve rapid pain relief affordably and has seen approximately 25% adoption among new patients, generating additional revenue for clinics. Building on this, a pricing pilot was launched in early November 2025, testing three different levels of price increases (ranging from $2 to $10) across diverse demographic areas. The insights from this pilot are expected to inform a nationwide pricing optimization strategy, likely to be rolled out in Q1 2026, enabling the company to take more frequent, smaller price adjustments to offset inflationary costs while maintaining its value proposition. The appointment of Debbie Gonzalez as Chief Marketing Officer in October 2025, with her extensive experience in transforming global brand strategies and developing recurring revenue membership models, further underscores the company's commitment to these initiatives.

Financial Performance: A Glimpse of the Transition

The Joint Corp.'s financial performance in Q3 2025 and year-to-date reflects a company in active transition, with continuing operations showing promising improvements despite a challenging macroeconomic backdrop. For the three months ended September 30, 2025, revenue from continuing operations increased by 6% year-over-year to $13.38 million, driven primarily by the expanding franchise base and sales growth in existing franchised clinics. Net income from continuing operations turned positive, reaching $290,370, a significant improvement from a loss of $414,383 in the prior-year period. Adjusted EBITDA from continuing operations saw a substantial increase to $1.4 million, up from $262,000 in Q3 2024.

Year-to-date for the nine months ended September 30, 2025, total revenues from continuing operations grew by 6.1% to $39.73 million, and Adjusted EBITDA from continuing operations improved to $1.5 million from $300,000 in the same period last year. Consolidated Adjusted EBITDA for Q3 2025 increased by 36% to $3.3 million, and for the nine-month period, it expanded by $1.3 million to $9.4 million. This profitability improvement reflects diligent efforts to rightsize the cost structure, including a 6% reduction in cost of revenues in Q3 2025 due to lower regional developer royalties following territory repurchases, and a 3% decrease in general and administrative expenses.

As of September 30, 2025, the company maintained a strong liquidity position with $29.70 million in unrestricted cash and short-term bank deposits. It also has access to a $20 million line of credit with JPMorgan Chase (JPM), which remained undrawn, and whose maturity was extended to August 31, 2027.

While net cash used in operating activities for the nine months ended September 30, 2025, was $1.10 million, this was primarily influenced by non-recurring items such as a change in accrued expenses related to a medical injury claim settlement and prepaid expenses. Investing activities provided $6.60 million in cash, largely from clinic sales, demonstrating the capital-generating aspect of the refranchising strategy.

The company is actively returning value to shareholders through a stock repurchase program, completing a $5 million repurchase by October 21, 2025, and authorizing an additional $12 million on November 4, 2025.

Competitive Landscape: Differentiating in a Crowded Market

The chiropractic industry is highly competitive, characterized by numerous well-established independent practitioners and a growing number of specialized chains. The Joint Corp. distinguishes itself through its unique retail healthcare business model, which emphasizes convenience, affordability, and a no-appointment, cash-pay approach. This model has allowed it to build a premier brand and achieve significant scale, positioning it as a leader in accessible chiropractic care.

Compared to broader outpatient physical therapy providers like U.S. Physical Therapy, Inc. (USPH), ATI Physical Therapy, Inc. (ATIP), and Select Medical Holdings Corporation (SEM), The Joint Corp. maintains a specialized focus on chiropractic adjustments. While USPH and SEM offer a wider array of rehabilitative services and often operate on a larger scale through acquisitions, The Joint Corp.'s franchise model enables rapid market penetration and a streamlined, cost-efficient service delivery for basic chiropractic needs. Its gross profit margin of 68.45% (TTM) indicates strong unit economics for its service offerings.

However, The Joint Corp. faces vulnerabilities due to its relatively smaller overall scale compared to diversified healthcare giants and a dependence on franchisee performance. Competitors like ATIP, with their focus on technology integration for patient engagement and therapy tracking, highlight areas where The Joint Corp. is actively investing to catch up and build a "tech-differentiated competitive moat." The company's strategic shift to a pure-play franchisor aims to mitigate some of these challenges by reducing operational distractions and leveraging its core strength in franchise development.

Indirect competitors, including alternative wellness providers, telehealth platforms, and AI-driven health apps, also pose a threat by offering alternative solutions for pain management and musculoskeletal care. The Joint Corp.'s response, including its pain-focused marketing and mobile app development, is designed to reinforce its position as a primary destination for immediate and ongoing chiropractic needs. The company's ability to maintain its unique value proposition of convenience and affordability, while enhancing its technological capabilities, will be critical in sustaining its competitive advantage.

Outlook and Risks: Charting the Path Forward

The Joint Corp.'s outlook for 2025 reflects a year of strategic transition and investment, with management anticipating increased profitability for its continuing operations in 2026. The revised 2025 guidance projects system-wide sales between $530 million and $534 million and comparable sales in the range of negative 1% to flat. Consolidated Adjusted EBITDA is maintained between $10.8 million and $11.8 million, and new clinic openings are expected to be between 30 and 35. This revised guidance acknowledges softer sales trends and macroeconomic headwinds, including stubborn inflation, labor shortages, and elevated interest rates, which have impacted new patient acquisition.

A key assumption for the improved 2026 outlook is the successful completion of the refranchising efforts and the subsequent rationalization of unallocated G&A expenses. Management expects to shed significant overhead, transforming the company into a more profitable entity. The ongoing pricing pilot and the "Life, Unpaused" marketing campaign are expected to contribute to future revenue growth and improved comp sales, with a national pricing rollout likely in Q1 2026. The company also plans to provide detailed 2026 guidance and the attributes of its 100% franchise model with its Q4 2025 earnings report.

However, several risks could impact this outlook. The company has identified a material weakness in its internal controls over financial reporting, specifically concerning the accounting for non-routine transactions and impairment charges related to assets held for sale. While a remediation plan is in place, its successful implementation is crucial for accurate financial reporting and investor confidence. Macroeconomic volatility, including potential reductions in discretionary spending due to inflation and interest rates, remains a concern, as The Joint Corp.'s target demographic is susceptible to these pressures. Delays in the refranchising process, potentially due to lender dynamics impacting buyers, could also defer the anticipated financial benefits. Furthermore, ongoing litigation, such as multiple lawsuits filed in California, presents an unquantifiable potential liability, though insurance coverage may limit exposure.

Conclusion

The Joint Corp. is at a transformative juncture, strategically pivoting to a pure-play franchisor model to unlock significant operating leverage and enhance long-term profitability. This "Joint 2.0" strategy, encompassing aggressive refranchising, dynamic revenue management, and targeted technological and marketing investments, is designed to strengthen its core business and reignite growth in a competitive and evolving healthcare landscape. While macroeconomic headwinds and internal control challenges present risks, the company's unique, accessible chiropractic model, substantial market white space, and commitment to shareholder value through capital allocation initiatives underscore a compelling investment thesis. The successful execution of its refranchising plan and the realization of anticipated G&A reductions, coupled with the impact of its strategic growth drivers, position The Joint Corp. for a more profitable future as a focused, franchise-first leader in the chiropractic industry.