JYNT Q3 2026 earnings call transcript, November 5, 2026

...were negative 1.9% versus negative 2.8% in the second quarter. Net income from continuing operations increased by $1.2 million to $1.5 million, compared with $290,000 in the third quarter of 2025. Adjusted EBITDA from continuing operations increased by $900,000 to $2.3 million, compared with... $1.4 million in the prior year period. Together, these results reflect the improving operating leverage of our franchisor model. Turning to slide 6. Now, turning to membership and patient metrics, we saw encouraging progress during the quarter. Conversion and retention improved, supporting active membership growth. Active members... ...per clinic increased compared with prior year period and compared with the second quarter of 2026. We also increased the average number of months per active member and total dollars per active member, improving patient lifetime value. In short, members are staying with us longer and spending more over their relationship with the joint. However, lower average patient spend per month partially... offset these benefits, which is why the underlying gains have not yet translated into positive comms. While the longer-term value of the patient relationship is improving, near-term spending remains under pressure. Our focus remains on building the active member base and delivering value in a way that supports patients and the franchisees through the current environment. Turning to slide 7.

We are pursuing growth in three ways. Improving comp sales, expanding our clinic network, and responding to growing consumer interest in longevity and health span. I'll start with comp sales, where our initiatives follow the patient journey, attracting new patients, converting them to members, and keeping them engaged longer. Fun. We are improving new patient acquisition by strengthening lead management. We are on track to launch a new AI-powered lead management platform supported by six AI agents in January 2027. We believe it can begin contributing to comp sales growth during 2027. Among other things, it has the capability to follow up on leads, book appointments, and answer frequently asked questions. This builds on our broader digital efforts to help more patients find the joint and understand how we can help. Our SEO and AI visibility work continues to support online discovery, with our AI visibility score remaining in the mid-70s ahead of competitors across key search topics. We also recently updated our website to highlight our doctor's experience and address common patient questions. about pain and specific conditions helping turn online interest into clinic visits. Second, we are improving conversion through flexible membership plans. Our flexible membership options give patients more choice while preserving the affordability and accessibility of the joint model. Lowering the barrier to joining helps us convert more first-time visitors into members and gives

information. Existing members a reason to stay rather than cancel. Third, we are improving retention and winning back lapsed patients. These patients already know the joint and have benefited from our membership model when they were previously in discomfort. During the third quarter, targeted outreach and promotions helped drive higher lapsed patient win back compared with the prior year period, supporting active membership growth. The cost to bring back a lapsed patient is significantly lower compared to the cost to acquire someone new to the joint. And finally, we are also improving member engagement by personalizing the experience for our MVPs, or most valuable patients, to increase their lifetime value. During the third quarter, we launched new app features, addressing some of their most requested needs, including adding clinic wages, week times, which doctor is on schedule, in-app registration, along with birthday and membership anniversary recognition. Turning to slide eight, beyond improving comp sales, we are also focused on expanding our clinic network using three strategies. First, we are improving new clinic economics. Our 2025 clinic class continues to outperform prior year cohorts, and clinics opened in 2026 are performing even better. For example, our recent average time to break even for new 2026 clinics is approximately three months compared with approximately 18 months historically. This performance has been supported by more disciplined site selection and more rigorous pre-opening protocols. Second, we are attracting franchisees with the capacity to expand. We are

targeting well-capitalized, experienced multi-site operators while supporting strong existing franchisees that are interested in adding locations. Our compact clinic footprint, low capital requirement, and lean staffing model are well-suited to multi-unit ownership. And third, we are advancing development in reacquired regional developer territories. Buying back RD rights allows us to support franchisees directly strengthen clinic performance and recruit operators for specific markets. Across the five territories reacquired this year, we have identified potential for more than 150 additional clinics providing a meaningful development opportunity. Supporting all three, we recently signed with a franchise broker network to accelerate franchisee recruitment and drive the company. New clinic openings. Turning to slide nine. Our third growth opportunity is to elevate the patient experience and our care offerings to align with growing consumer interest in longevity, health span, mobility, and non-invasive whole body care. As Americans live longer, there is a growing consumer need for improving health span. We believe that the joint model of improving patient mobility and lowering pain is relevant to this need. We are using consumer research to better understand patient needs and personalize the experience, which is helping us to match our offerings with patients' demands. Pain relief and improved mobility remain central to our message alongside the quality of the patient experience. Our goal is to help patients get back to doing the things they love and encourage long-term.

engagement. We are in early stages of testing proprietary clinical care protocols with measurable health outcomes. This includes mobility scores, giving patients clear visibility into their improvement in mobility, pain, and functional health over time, all with the intent of providing our patients with more personalized care and the motivation for consistent ongoing care. And finally, we are piloting complementary retail offerings, including orthotics and nutritional supplements, as we evaluate additional ways to address patient needs and supporting our positioning around mobility and whole body care. Let's turn to slide 10. Now, moving on to refranchising efforts. Supporting these growth priorities is our... ...transition to a capital-like, pure-play franchisor model. With refranchising substantially complete, our management team is focusing more directly on franchisee support, patient acquisition, and network development with less operational complexity from company-owned clinics. The ownership transfers for our 15 remaining company-owned or managed clinics continue to progress as lease assignments... ...and related steps are completed. Once those transfers are complete, we will have no remaining company-owned or managed clinics. The benefits of the model are increasingly visible in our results. Through the first nine months of 2026, net income from continuing operations improved to $2.3 million from a net loss of $1.2 million a year ago.

While adjusted EBITDA from continuing operations... increased to $5.9 million from $1.5 million. This structure is helping to improve margins, profitability, and cash generation from continuing operations. While we still have work to do to restore consistent system-wide growth, the business is leaner and better positioned to convert future growth into earnings and cash flow. With that, I'll turn it over to Scott.

In the prior year period. Adjusted EBITDA from continuing operations increased to $2.3 million from $1.4 million a year ago, reflecting the improved operating leverage of our franchisor model. Now on to the balance sheet and liquidity. Unrestricted cash at the end of the third quarter was $18.3 million, compared with $22.2 million at the end of the second quarter. Subsequent at quarter end. We paid $8 million at closing to reacquire the Texas RD rights. Operating cash flow was negative $128,000, and free cash flow was negative $509,000 in the third quarter, primarily reflecting a $1.5 million payment in the quarter for a legal settlement from 2024. This compares the operating cash flow of $1.8 million and free cash flow of $1.5 million in the price. per year period. We expect free cash flow to improve as the remaining ownership transfers are completed. We maintain our $20 million line of credit with JPMorgan Chase, which remains fully undrawn and available through August 2029. Together, our cash position and undrawn credit facility provides flexibility to execute our capital allocation framework while maintaining appropriate liquidity. During this slide 15, our approach to capital allocation remains balanced. Our first priority is to invest in initiatives that support sustainable system-wide growth. We also evaluate regional developer territory buybacks and share repurchases based on their expected returns, strategic value, and the liquidity needs of the business.

RD territory buybacks improve our economics by allowing us to recapture approximately two-thirds of the royalty. These previously paid to the regional developer. They also give us a more direct relationship with franchisees, supporting the operating and development priorities Sanjeev outlined. As I just noted, on October 1st, we reacquired the regional developer rights for Texas, our largest RD territory, representing 141 franchise clinics, for $8 million in cash at closing and up to $2 million in potential additional consideration. Tied to gross sales in the region over the next two years. Including Texas, we have announced five RD territory buybacks in 2026, totaling 189 clinics. Together, these territories are expected to reduce RD royalties by approximately $3 million on an annualized basis, with about one-third of that benefit offset by internal costs to manage them. Share repurchases are another way to create value. And return capital to shareholders when market conditions make them an attractive use of cash. During the third quarter, we repurchased approximately 461,000 shares for $3.8 million at an average price of $830 per share, completing the $12 million authorization approved in November 2025. Subsequent to quarter end, our board approved an additional $5 million authorization, giving us continued flexibility to... repurchase shares opportunistically. We will continue to balance these uses of capital while preserving appropriate liquidity in the capacity to invest in the business.

On to slide 16, let's discuss our clinic count. Total clinic count was 930 at the end of the third quarter. During the quarter, we opened four clinics, closed 15 clinics, and refranchised 26 clinics. Our newer clinics continue to... We perform well, supporting our confidence that our more disciplined approach to operator quality, site selection, and opening support is producing a healthier foundation for future unit growth. We continue to work with franchise owners to optimize the existing clinic base. This includes closing underperforming clinics, which we expect will result in the overall clinic count at year-end, being approximately 50 clinics below year-end 2025. We expect to get back to clinic growth beginning next year. On slide 17, I would like to briefly revisit the financial profile of our PurePlay franchisor model. The joint is now operating with a capital-like structure with lower GNA expense and improved profitability from continuing operations. We continue to view the model parameters previously introduced as starting points once the remaining ownership transfers are complete, rather than... ...long-term targets. As a reminder, these starting points include gross margin of 83% to 85% of revenue, GNA expense of 40% to 42% of revenue, capital expenditures of approximately 3% of revenue, and free cash flow conversion of 60% to 70%. Together, these starting points would imply an adjusted EBITDA margin of 19% to 21% and a net income margin...

...of 13% to 15%. We intend to build on this profile in 2027 and beyond. On slide 18, we are updating our full year 2026 financial guidance to reflect results through the first nine months and continued macroeconomic pressure on consumer spending. We now expect system-wide sales of $508 million to $512 million compared with our prior range of $519 million to $515 million. System-wide comp sales are expected to be in the range of negative 3.5% to negative 2.5% compared with our prior range of negative 3% to positive 3%. We are reiterating our consolidated adjusted EBITDA guidance of $12.5 million to $13.5 million. As noted earlier, we expect total clinic count at year-end 2026 to be approximately 50 units below. year-end 2025 as we continue to optimize the existing clinic base. Our updated outlook reflects continued pressure on consumer spending. At the same time, improvements in active membership, retention, patient lifetime value, and newer clinic performance give us confidence that the business is well positioned to return to growth as our initiatives take hold. With that, I'll turn it back over to Sanjeev.

Let's look at slide 20. The third quarter reflects meaningful progress in the areas that will support the long-term health of the business. We grew our active membership count with members staying with us longer, total dollars per active member increased, and conversion and retention are improving. Together with stronger new clinic performance, these are important building blocks for future growth. We are confident that the underlying operating indicators are moving in the right direction. The business is structurally stronger, and our priorities remain clear. Our priority for 2027 is clear. We are single-mindedly focused on improving comp sales. With that, operator, we are ready for questions.

The first question comes from Jeremy Perlman from Maxim Group. Please go ahead.

Thank you all for joining us today. Have a great day. And remember, at the joint, we always have your back.