Good day, ladies and gentlemen, and welcome to The Joint Corp. Second Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I’d now like to turn the conference over to Peter Vozzo, Investor Relations. Sir, you may begin.

Thank you, Shannan. Good afternoon, everyone. Today after the close of the market The Joint Corp. released its financial results for quarter ended June 30, 2017. Before we begin, if you do not already have a copy of the press release announcing these financial results, it can be found in the Investor Relations section of our website at www.thejoint.com. Please be advised that today’s discussion includes forward-looking statements, including predictions, expectations, estimates, and other information that might be considered forward-looking. Throughout today’s discussion, we will present some important factors relating to our business which could affect these forward-looking statements. The forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from the statements we make today. As a result, we caution you against placing undue reliance on these forward-looking statements and would encourage you to review our filings with the SEC for a discussion of these factors and other risks that may affect our future results or the market price of our stock. Finally, we are not obligating ourselves to revise our results or publicly release any updates to these forward-looking statements in light of new information or future events. With that, I will turn the call over to Peter Holt, Chief Executive Officer.

Thank you, Peter, and thanks everyone for joining us on today’s call to discuss our 2017 second quarter results. Joining me to present is John Meloun, our Chief Financial Officer. I will provide the financial and operational highlights for the quarter and John will discuss our financial results in more detail. For the benefit of those of you who are listening to our quarterly call for the first time, our purpose of The Joint is to improve the quality of life for the patients we serve. We do that through our network of over 400 retail clinics utilizing over 800 fully licensed chiropractic doctors who performed more than 4 million chiropractic adjustments last year. Our doctors provide patient care focused on pain relief and ongoing wellness to promote a healthy lifestyle. As a retail concept, two of the most important measures of health of the business is system-wide comp sales and overall revenue growth. Comp sales are simply compared to retail sales to the same clinic or clinics, for the same period one year earlier to measure whether sales are expanding or contracting. Comp sales include only sales from clinics that have been opened for at least 13 full months and excludes any clinics that have been closed. To get a context of broad industry trends according to eMarketer, a research firm specializing in retail trend, the 65 retailers that they tracked had a combined comp sales of a negative 0.9% in the fiscal first quarter of 2017. During that same period, our system-wide comp sales were up 19%. And in a second quarter of 2017 our system-wide comp sales continued to be up 19% compared to the same period last year. This reflects the growing market acceptance of chiropractic services while bucking the trend of falling comp sales that…

Thanks Peter. We have provided detail on our financial performance for the quarter ended June 30, 2017 in the press release issued earlier today. I will now take a few moments and discuss some of the highlights broken down by the two operating segments corporate clinics and franchise operations as well as our unallocated corporate overhead. This segment data will be available in our 10-Q, which will be filed tomorrow August 11. Revenues increased 21% in the second quarter of 2017 or approximately $1 million to $6 million compared to the same period last year. This increase will split evenly between the corporate clinic segment and from our franchise operations. Revenue growth in the corporate clinic segment is attributed to an increasing sales in our existing clinic portfolio and from the six clinics that were acquired since the end of the first quarter of 2016. Franchise segment revenue increased due to higher sales from both existing clinics and from a net 56 clinics added since the end of the second quarter of 2016. The improvements in both our corporate clinic segment and franchise segment revenues are driven by the comp sales that our clinics continue to experience as they mature. As Peter mentioned, system-wide comp sales in the second quarter of 2017 increased by 19% over the same period last year. With the performance of our most mature clinics those have operated for 48 months or more continue their strong comp clinic sales growth increasing by 12% over the prior year. Further reflecting the growth of our business system-wide comp sales for all clinics were $30.5 million in the second quarter of 2017 an increase of $6.7 million or 28.4% from the same quarter of 2016. Our company-owned or managed clinic buybacks as a portfolio continue to be adjusted EBITDA…

Thanks, John. We remain on track to achieve our 2017 financial and operational goal, and our second quarter 2017 results shows a continuation of our overall positive growth and operating strategy. This progress would not be possible without the commitment and hard work of our franchise community and our employees. And I want to thank each and every one of them for their efforts, as we continue to improve the quality of life of our patients by providing affordable and routine chiropractic care. And with those comments, I’d like to open the floor to questions.

Thank you. [Operator Instructions] Our first question is from Mike Malouf with Craig-Hallum Capital. You may begin.

Great. Thanks guys for taking my questions.

Hi, Mike.

Can you – and you might have gone over this, and I made missed it. But could you kind of little bit more about franchise fees was down, sequentially down year-over-year, that’s kind of wonder, how volatile is that number and what you expected sort of play out of the next few quarters?

Yes. So Mike, franchise fees are really a function of the number of openings, we have in the period. Number of franchise openings – so really it’s more of a timing of 50 to 60 that we guided two in the year, when they’re actually opened. In the second quarter, we had 11 clinic openings. We do expect a larger number of openings in Q3 and Q4 to kind of balance out the 50 to 60 we guided to.

How many did you have in the Q1?

There was 12 in Q1.

Right, that 12…

In Q1, we had 12 new openings and then we sold six of the 11 clinics in Chicago. So there was a total of 18 franchises into Q1 but six of them were Corporate clinics, where turned over to our D group there. And then we had 11 clinics that opened in – our Q2 2017.

And Mike another function of the franchise – chiropractic franchise fees, the current license cost is $39,000 or $39,900 for an opening per for a license sale, in prior to that reason, so licenses at $29,000. So the mix of all older license openings versus new license openings does have an impact on that.

Okay. So there might have been a tougher mix in the second quarter?

Yes. I mean that does have an impact, yes.

Got it. Okay, that’s helpful. I was just doing the math and coming up at the right number, good. And then when you take a look at the 1,700 clinics that you’ve targeted out there. Can you give us a sense of where you think that percentage would end up being between franchised units and corporate down units?

Yes, Mike. That’s a great question. I actually get asset quite often from investors and talking to people interested in the company. And that right now with the 47 clinics against the 383 open that’s about 12% of it, that are corporately owned. And as I look forward, while there’s not a specific number that we’ve all agreed upon. But I would expect that to range over time depending on time and capital between 10% and 25% of the overall portfolio.

Okay, great. Thanks. That’s a pretty wide target to look at. And then…

But also Mike you guys can change over time. I mean just watching other franchise systems and you can see their strategy changes sometimes, they’re going to be really focused on more corporate clinics as opposed to franchising and you can see some major franchise order or so. I haven’t seen it works, as usually just this fixed number that you keep that, because it just the number of factors that are going to influence that.

Right, right. When you guys take a look at the back half of the year, you would expect to be up year-over-year in revenues in the back half, correct?

Absolutely.

So why do you keep – what scenario because a lot of companies will look at ranges of guidance as potential ranges, ranges that – things were a little slow, will be at the low end and the things could do little bit better, will be at the high-end and then may be a good target as in the middle. If you used last year’s numbers, you almost come up to the middle of that range. I’m just trying to understand the philosophy around the guidance, specifically on the top end, around the top line because it doesn’t seem like $22 million to $23 million that ranges sort of even in the possibility.

Yes. I mean the guidance that we’ve provided for revenue is currently where we see the business having, being a small company there’s fluctuation that we could experience. But right now, the performance for Q1 and Q2 of what we see, for Q3 and Q4 guidance that we feel as representative of the business and if we get to the point where the guidance need to be adjusted, we will do it at the time, but at this point in time, the $22 million, $24 million is what we saw is an accurate depiction where we’re heading.

Right. But you just said that, you thought – you would certainly be up year-over-year in the back half. So what would be accurate about you coming in within the $22.5 million? So what would be accurate about you coming in within the $22 million to $23 million range?

Well. One of the things, we’re trying to do here as well is to make sure that our guidance is accurate as possible. And as John said, we will change it, when we believe that it should be. But we also coming into this, certainly the new management is that some of the guidance that was previously provided was – wasn’t quite as accurate. And so that we’re trying to be very powerful about the expectations that we’re setting and still be truly reflective of our view of the business.

Got it. Okay. Just trying to understand that. That’s all I got. Thank you.

Thank you. [Operator Instructions] And I’m currently showing no further questions at this time, I’d like turn the call back over to Peter Holt for closing remarks.

I want to thank everyone for participating on today’s call and for your questions. And we look forward to keeping you up-to-date on all our progress. And have a great day.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation. Have a wonderful day.