The Joint Corp. (JYNT) Q4 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. And welcome to Q4 and Full Year 2017 The Joint Corp Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Kirsten Chapman at LHA, Investor Relations. Ma’am, you may begin.

Thank you, Ashley. Good afternoon, everyone. This is Kirsten Chapman of LHA, Investor Relations. On the call today, President and CEO, Peter Holt, will review our fourth quarter and year-end 2017 operating metrics and our 2018 growth strategy. CFO, John Meloun, will detail our performance and Peter will close with our long-term vision and open the call for questions. Please note we are using the slide presentation that can be found at ir.thejoint.com events and presentations upcoming events. Today, after the close of market, The Joint Corp. issued its financial results for the quarter ended December 31, 2017. If you have not already received a copy of this press release, it can be found in the Investor Relations section of the Company’s Web site at www.thejoint.com. As provided on slide two, please be advised 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 that could affect those forward-looking statements. The forward-looking statements are also subject to risks and uncertainties that may cause actual results to differ materially from 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 the factors and other risks that may affect our future results or the market price of our stock. Finally, we’re 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. Management uses EBITDA and adjusted EBITDA, which are non-GAAP financial measures. These are presented because they are important metrics used by management to assess financial performance as management beliefs they provide a more transparently of the Company’s underlying operating performance and operating trends. The reconciliation of net loss to EBITDA and adjusted EBITDA is presented in the press release and in the accompanying presentation. The Company defines adjusted EBITDA as EBITDA before acquisition-related expenses, bargain purchase gain, loss on disposition or impairment, and stock-based compensation expenses. The Company defines EBITDA as net income or loss before net interest, tax, depreciation, and amortization expenses. It should be noted that the revenue and adjusted EBITDA guidance metrics provided for 2018 already reflects the financial accounting standards for accounting standard codification 606 impact. Now turning to slide three. It’s my pleasure to turn the call over to Peter Holt. Please go ahead, sir.

Thank you, Kirsten, and thank you for all joining the call today. Our business is alleviating pain and moving our patients toward a healthier lifestyle. The sweet spot of growing health and wellness industry and our 2017 achievements highlight our significant progress. We delivered eight consecutive quarters of financial improvements, we continue to experience strong same-store sales and we’re building our regional developer network, essentially a coil spring for future development. In the nearly 24 months that benefit Joint, we’ve rebuilt the management team with a franchise centric focus. Together, we’ve addressed the financing concerns, managed the necessary clinic transition in Chicago, implemented standard operating procedures to improve efficiencies both corporate and for franchise clinics, bettered our relationships with our franchisees and reinvigorated the regional developer program. In 2017, we opened 41 new franchise clinics, bringing the year in total of 399 clinics. We partnered with 10 regional developers more than doubling the regional developer territories to 18. We achieved a positive adjusted EBITDA for two consecutive quarters. We established $5 million non-dilutive line of credit to support our working capital and implemented procedures that improve the time to breakeven for newly opening clinics. Turning to slide four. When I joined The Joint, my one major concern with our business model was the time that our clinics were taking to reach breakeven. And you can see here that the 2016 class, following our historical ramp, took an average of 18 months to achieve profitability, which increased the risk of franchisees running out of cash. To our efforts and recommended centralization, the 2017 class of those 41 newly franchised clinics reached our estimated breakeven on average in nine months, which of course means some did it faster. Thus, we improved the time to profitability for our franchisees, which had positive implications for corporate greenfield clinic as well. Simply put, during 2017, we’ve moved beyond stabilizing the business. We positioned the business so that we can accelerate growth in 2018 and beyond. Turning to slide five, I’d like to quickly review some important metrics for 2017 compared to 2016. System-wide sales grew 29%, delivering a 77% eight-year compounded annual growth. System-wide comp sales or retail sales of the same clinics that have been open for at least 13 months increased 21%, demonstrating the continued validation of our business model. Our revenue grew 23%, our net loss improved $11.9 million and adjusted EBITDA improved $7.6 million over the last year. Combined with positive results for the third and fourth quarters, we’re demonstrating that the drive toward sustainable profitability has taken hold. Further, at December 31, 2017, cash and cash equivalents reached $4.2 million, up from $3 million compared to December 31, 2016. The increase includes the $1 million from our new line of credit, but more importantly over $200,000 of cash was generated over the year. These are all driven by strong operational metrics. We increased our unique patients serve to nearly 1.4 million by the end of 2017. We performed nearly 5 million adjustments with 22% of our patients new to chiropractic care and adding the strength of the business model 76% of our system-wide gross sales were generated from monthly membership. Turning to slide six. As our performance continues to drive interest from new investors, I’d like to take a moment and provide an overview of our business. The Joint Corp’s purpose is to improve quality of life for patients we serve by providing quality and affordable chiropractic care. Our doctors focus on patient care on pain release and ongoing wellness to promote a healthy lifestyle. We do this in a convenient retail setting that uses no appointment, walking only, no insurance, membership based services. Our network of clinics is comprised of franchise and company-owned and managed clinics. This hybrid model enables us to expand on a capitalized fashion, which in turn is quite powerful in helping to build the brand awareness and name recognition establish and predictable revenue stream and increased scale at an accelerating pace. We’re excited that we’ve achieved that significant milestone of opening of our 400 clinics this past January. During 2017, The Joint clinics were serviced by over 1,000 fully licensed chiropractic doctors who performed those nearly 5 million chiropractic adjustments. We have a broad patient base and demographic profile that when extrapolated creates a significant basis for growth. And turning to slide seven, we serve a dynamic yet fragmented market influenced by several drivers. First, the market is estimated to include 39,000 independent practitioners. Chiropractic care itself continues to move to the mainstream population, 62 million Americans saw a chiropractor in the last five years, 35.5 million in the last 12 months and millennials who are looking for more non-invasive natural holistic alternative are the largest segment leading that pack. Today, pain costs destination more than $650 billion annually, $90 billion is spent on back pain alone and $15 billion is spent in chiropractic care. People are actively looking for better solutions for pain. This is tragically reflected on the statistics that more than 64,000 people died of an opioid overdose in 2016 or seven people an hour. According to the Gallup Poll recently conducted by Palmer College of Chiropractic, nearly 80% of the public surveys want a non-pharmacological approach to physical pain. The traditional medical community is also increasingly acknowledging that prescription drugs are not necessarily the most effective solution for back pain management. The study title’s association between utilization of chiropractic services and the use to prescription opioids among patients with low back pain, found a 55% reduction in the likelihood of people filling prescription for opioid, but those who received chiropractic care compared to those who did not. Turning to slide eight. During the fourth quarter, franchise openings increased 12 units, up from six in the third quarter. We closed two franchise clinics in the quarter. During the year, we opened 41 clinics bringing the December 31, 2017 total of franchise clinics to 352 or 88% of our portfolio of 399 clinics. And as noted earlier, in January 2018, we passed out 400 clinic mark. This is important as study show that thousand franchise units tend to be a tipping for national recognition that can further drive accelerated growth. Our growth indicators remain strong as we sold 37 franchise licenses in 2017, 68% more than we did in 2016. This increase bodes well for our 2018 growth. Turning to slide nine. During the fourth quarter, we continued to expand our regional developer program. As a reminder, we sell regional developers the rights to open a minimum number of clinics in a defined territory. They in turn help us identify and qualify new potential franchisees in that territory and assist us in providing field training, clinic opening, and ongoing support. And for that assistance, we share part of the initial franchise fee collected and part the ongoing royalties. Now this program have been deemphasized prior to my tenure. And I truly believe and steady supports that our regional developers when effectively managed accelerate the ramp to scale. I’m excited to report that during the quarter, we signed two additional resource developer territory agreements, bringing the total to 18 territories, which is more than double our regional developer count compared to the end of 2016. Both of our new regional developer territories are with existing successful franchisees who wanted to expand their reach. The first regional developer license paired a successful multi-clinic franchisee in North Carolina with an existing regional developer to purchase the RD rights for the State of Tennessee. The second developer license saw the balance of the RD rights to Texas and State of Oklahoma. With these additions, we ended the year with a combined development schedule of these 10 new regional developers requiring them to open and operate a minimum of 259 clinics over the 10 years of their regional developer terms. Collectively, the territory is encompassed Chicago, Minneapolis St. Paul, Philadelphia, Central Florida, Maryland and DC, Northern New Jersey, Ohio, Tennessee, Texas, Oklahoma and Washington State. Turning to slide 10, franchising at its core is an exercise and brand building. And in 2018, we’re focused on elevating our brand awareness and name recognition to drive long-term growth using three revenue acceleration strategies. First, we’ll continue to accelerate franchise sales. We’ve made great progress in 2017 with our new VP of franchise sales Eric Simon who has nearly 20 years experience in franchise development. Earlier this year, we were delighted to welcome Jason Greenwood as our new VP of Marketing. Jason also has nearly 20 years of franchise marketing experience. Next, we’ll continue to build on our regional developer strategy. We added 10 new RDs in 2017 and today roughly one-third of the country is covered under RD agreement and we’ll continue to expand that in 2018. Finally, as our transformation efforts achieved a positive adjusted EBITDA in our corporate clinic segment, we will return to expanding this portfolio. Initially, we’ll look at strategically acquiring buyback clinic and secondarily, building greenfield. The target price will be in clustered location in which we already operate company-owned or managed clinics, leveraging the market and operational infrastructure support of existing corporate clinic already in place. And with that, I’d like to turn the call over to John to review our financial results.

Thank you, Peter. We have provided detail on our financial performance for the fourth quarter of 2017 compared to the fourth quarter of 2016. I will take a few moments to discuss some of the highlights broken down by the two operating segments, corporate clinics and franchise operations, as well as our unallocated corporate overheads. Turning to slide 11. This segment data will be available in our 10-K, which we will file on Friday, March 9th. As a reminder, for our retail contract two of the most important health measures of the business are overall system wide comp sales and revenue growth. As Peter mentioned, our metrics comparing fourth quarter 2017 to 2016 were strong, further reflecting the growth of our business. Gross sales for all clinics opened for any amount of time grew 32% to $36.1 million. System-wide comp sales for all clinics opened 13 months or more increased 26% in Q4 and more significantly, system-wide comp sales for mature clinics opened 48 months or more increased 17%, further pushing the boundaries of our business model. Our corporate clinic segment, which consists of 47 clinics, 31 are buybacks meaning we bought them from existing franchisees and 16 are Greenfields, which we built from the ground up. This segment adjusted EBITDA income was [$0.3 million] and now positive for the second consecutive quarter. Gross sales of our corporate credits since the months higher to when they required have increased on average 68% through Q4 2017 compared to 58% in Q3, demonstrating our capacity to successfully manage our clinic portfolio. Turing to side 12. Revenue in the fourth quarter of 2017 grew 20% to $6.9 million from $5.8 million in the same period last year. Of the $1.1 million increase, corporate clinics contributed 53% and franchise operations 47%. The improvements in both our corporate clinic and franchise operations segment revenues are driven by the increasing comp sales that our clinics continue to experience as they mature. Increased sales in our corporate clinic portfolio is attributed to the marketing and operational improvements we have implementing in our clinics resulting in revenue growth. Franchise operations segment revenue growth was due to higher sales in both existing clinics and from adding 41 clinics since the fourth quarter of 2016. Cost of revenues in the fourth quarter of 2017 was $1 million, increasing 30% over the same period last year, primarily due to higher regional developer royalties from increased growth sales of franchised clinics in their respective territories. Gross profit was $5.9 million, increasing 18%. Selling and marketing expenses were $1.3 million in the fourth quarter of 2017 and $1.2 million in the fourth quarter of 2016. The 4% increase reflects slightly higher marketing spend related to our national marketing program. General and administrative expenses were $4.4 million, more than 50% lower than the $8.9 million in Q4 of 2016, which included a $3.5 million loss on disposition or impairment related to the closer from company managed clinics in Chicago and New York, and non-operating lease costs for temporarily halting and greenfield clinic development. The increase also reflects lower payroll and occupancy costs due to 14 fewer corporate clinics operating in the fourth quarter of 2017 compared to the prior year. Total depreciation and amortization expenses also decreased due to the already mentioned 14 fewer corporate clinics this year. Consolidated loss from operations improved 226,000, up $5.5 million from a consolidated loss from operations of $5.7 million in the fourth quarter of 2016, which included the already mentioned $3.5 million in Greenfield clinic loss on disposition impairment. Net loss from the fourth quarter of 2017 was $213,000 or $0.02 per share compared to a net loss of $5.8 million or $0.45 per share in the same quarter last year. Total adjusted EBITDA income in the fourth quarter of 2017 was $419,000, improving $1.8 million compared to the adjusted EBITDA loss of $1.4 million in the same quarter last year. Of the $1.8 million improvement, corporate clinics contributed 60% or $1.1 million, franchise operations contributed 22% or $414,000 and unallocated corporate overhead contributed 18% or $328,000. Now turning to slide 13. For the full year of 2017 compared to 2016; gross system-wide sales were up $126.9 million, up 29%; system-wide comp sales for all clinics open 13 months or more increased 21%; system-wide comp sales for mature clinics open 48 months or more increased 13%; revenues were up 25.2 million, growing 23%; gross profit was $21.9 million, increasing 24%; general and administrative expenses were $18.5 million, improving 28%. Noting that G&A as a percent of revenue has now decreased from 125% in 2016 to 74% in 2017, demonstrating improving operating leverage that we expect to continue with the maturing of our total systems. Net loss improved 78% to $3.3 million from $15.3 million or $0.25 per share for the full year compared to $1.20 per share in 2016. Adjusted EBITDA loss was $91,000 compared to a loss of $7.7 million last year, representing a 99% improvement, demonstrating that our drive toward safe sustainable profitability have taken hold. As of December 31, 2017, cash and cash equivalents were $4.2 million compared to $3 million December 31, 2016. Pursuant to the terms of our credit agreement, during the first quarter of 2017, the company borrowed $1 million as required on its line of credit. This balance remains unused on the balance sheet at year-end. As Peter noted, we generated over $200,000 in cash during the year and with our line of credit increased our liquidity position and improved our balance sheet by $1.2 million at year-end. Now turning to slide 14 to discuss our guidance for 2018. The growth indicators for 2018 remained strong. First, we sold 37 franchise licensees in 2017, which is 68% more than 2015. Second, we now have 18 regional developers more than double that of last year who are committed to opening a minimum of 259 clinics over their 10-year terms to reclaim our development rights. And finally, since we achieved our goal of adjusted EBITDA positive performance from our corporate claims portfolio, we are now reengaging in an opportunistic buyback and/or Greenfield strategy. With that, I’ll provide our 2018 guidance. Total new clinic openings are expected to be in the range of 40 to 52, including 40 to 50 new franchised clinics, up to two corporate-owned or managed Greenfield clinics and up to three buyback clinics, which are existing clinics acquired from franchisees and therefore neutral to the total clinic count. We expect revenue to be between $31 million and $32 million compared to $25.2 million in 2017. And we expect positive adjusted EBITDA to range between $2.5 million to $3.5 million, improving from a loss $91,000 in 2017. It should be noted that the revenue and adjusted EBITDA guidance metrics provided for 2018 already reflect the financial accounting standards board accounting standards codification 606 impact known as ASC 606. ASC 606 changes the revenue and cost recognition of franchise and regional developer licensees from an event based recognition to a time based recognition, essentially spreading the revenues and costs over the term of their respective agreements. We will be providing additional details related to ASC 606 and its impact on our financials in the Form 10-K being filed tomorrow, March 9th. Thanks everyone for your time. And I’ll now turn the call back over to Peter.

Thanks John. Now turning to slide 15. The Joint is a unique brand in a small box retail franchise environment. Because we offer healthcare services, we have access to a level of customer detail that most franchise systems could only dream about possessing. Each and every one of our patients are required to provide a detailed information about themselves, including their name, home address, their employer, hobbies, pains and we document every time that they use our services as a part of their medical record. With this information, we know that we have a very broad demographic profile. Our patients come from all walks of life; they skews slightly female similar to the U.S. population; they index higher amongst Hispanic and Asian, they’re between 25 and 55 years old and they’re doing aerobic exercise; they’re more likely to posses the bachelor degree or more; and they’re both white collar and blue collar; and the family household income is typically between $50,000 and $100,000 annually. Turning to slide 16. This data is a gold mine to help fuel growth. Our data analytics team utilizes our patient profiles to extrapolate and very specifically determine the best locations of future growth. Based on our detailed analysis, we believe we have a minimum 1,700 clinic opportunity in the United States. Frankly, we expect our patient demographic to continue to expand as The Joint and chiropractic care both become better know and more widely accepted. According to our most recent survey, 22% of our patients have visited Join for the first time have never seen a chiropractor before. In addition to increasing the footprint of our clinic, we’ll continue our emphasis on professionalizing our standard procedures and controlling costs. Our goal is to remain our focus and improving profitability through ongoing lead generation, marketing and expense management. Further, we will un-fittingly work with our franchise community to share these best practices. To that end, we expect to invest further in our infrastructure in 2018. Projects include digital intake form, mobile apps for check-in and wait time estimates and a general software upgrade to the proprietary software platform to enable scale and enhance functionality, stability and security. Turning to slide 17. Overall, we continue to execute on our long-term vision, which is to be the premier provider of chiropractic care and wellness and health plans. To accelerate our footprint to corporate and franchise strategy, to be the carrier passive choice for chiropractors, to build a world class organizational culture, to foster a robust regional developer community and to build and maintain a world class IT platform. Over the past year, we’ve made significant progress toward addressing the key challenges that face this company; rebuilding our franchise development strategy; improving our corporate clinic performance; increasing our new patient count; stabilizing and improving the security of our IT platform; preserving cash; obtain non-dilutive financing to strengthen our balance sheet; achieving company-wide adjusted EBITDA profitability and increasing shareholder value. Most importantly, our progress would not be possible without the commitment and hard work of our franchise community and employees. Before I’d open it up to Q&A, I’d like to note that we’ll be at the ROTH Capital Partners Annual Conference in Dana Point, California next week. If you have any questions or would like meeting, please reach out to LHA Investor Relations. And if you like the complementary adjustment, just by our booth. Ashley, I’m now ready to begin the Q&A.

Thank you [Operator Instructions]. Our first question comes from Mike Malouf of Craig-Hallum. Your line is open.

If I could start off on that chart that you put up with regard to getting to breakeven, nine months for all 41, that’s a significant change from where you were. Can you talk a little bit about how you’ve got there and whether you think that’s a sustainable model of what you’ve done? I remember talking to you about some of your existing federal set still lagging a little bit. So I’d love to hear about that.

We really looked at the whole process of what we were doing for grand opening design. And that we went out there and we took best practices from some of our clinics that were in fact opening in that short amount of time. We took those practices and then we rolled it into a program. We started making sure to enforce that full grand opening spend. So that franchisee that really kick off period have to spend that $15,000 with that grand opening period. And then we’ve really put together about whole program and how to spend those dollars. And the other thing that we’ve done is our whole SEO strategy, because what happens is this isn’t a floating your concept for if you’re doing a grand opening, when do you start that. Well, you start it just before you’re going to open, because you don’t need to create all the level of awareness when your clinic or your store won’t be opening for three or four months. But where chiropractic care is and so what happens is when somebody comes into utilize our services that’s not going to -- that's going to only happen when they’re in pain if they’re initial new patient. And so what we’re doing is a much more effective outreach. Once we’ve identified the location itself long before its open so that you’re building on that awareness of the people who live, work and travel that 5 minute to 50 minute radius around that clinic and so that that accelerates the number of patients and as much shorter period of time.

And then the RD network has really ramped up. So how long do you think that will take to start open -- that whole network to start really ramping up the number of clinics open and are they again two or three years to start get going as forward first or do you think it will happen sooner than that?

Well, I think there is no question there’s a ramp up to it. Is that as you’re starting a new RD territory, they’ve required to open up their first pilot center or pilot clinic that gives them the set of experience so then they start really aggressively selling franchises and helping getting those franchises open and operating. So that you’re going to see the time to get those first couple of clinic to open. One thing that it will accelerate it if you look at those 10 new RDs that we’ve sold, of the 10 only one can completely from outside The Joint community. So like I mentioned last to this quarter, they were existing franchisees or an existing RD coupling with or pairing with one of our multi-unit franchisee. So in a way that accelerates understanding of the business model and how to build it out and how to support it. So I would expect compared to a more traditional, if I just had 10 brand new regional developers that put into market, because they are so experienced in our own business model, I would expect a fastest development. But it still takes that two years, one to two years to really start getting that in a market and then that’s when you start seeing the accelerated growth.

And then with regards to company owned clinics, it sounds like you’re entertaining perhaps buying back some of these clinics or a few of them? And I am just wondering if you could talk a little bit about is there a pent up demand for sale, because obviously you are the first buyer for these clinics and I know before you were buying them back here and there, that it’s been a while since you bought any back and I would imagine that there might be some for all different reasons that might be interested in selling?

The short answer is yes, and that -- I don’t know if I would call it a pent up demand because a franchisee can sell their clinic whether we acquire it or not. So that’s something that any franchise can do in any network. Typically and certainly, we retain that right that every franchise owner will take -- has the first line refusal once that franchisee decides to sell their clinic and we certainly -- we came out right now of our franchise units. I would say that -- there for all the reasons that are out there, in my experience overtime has been franchisee got no reason to sell and overtime -- every system I’ve been in has a certain amount for sell at any given time, whether it’s a health issue, whether they want to pass it on to their children, whether they want to exercise the value they’ve created in the clinic. I’ve seen all those happen and I don’t expect from a percentage to be any different than what we faced here at The Joint.

And then as far as greenfield ramps -- and do you have some identified right now?

Well, we’re just starting to look at that. I mean, obviously that just based on the experience that we’ve had with the greenfield and buybacks is there is no question that the buybacks are immediately accretive to our balance sheet that we’ve a got a track record of being able to take them over and run them profitably and that we know that green bags take more capital, or isn’t more capital but they certainly take more time to get to that point of breakeven. And that I feel fully confident that this team can build a greenfield and run it profitably and get it in a breakeven time in a very short period of time. But that’s also something that we’re going to work into. Most importantly, when we go into this marketplace, we’re going to go where we already have strength. We’re not going to go right into a brand new market that we never touched before. We’re going to take the three markets that we’re in, Arizona, New Mexico and California, and really leverage our existing network to add whether it’s a buyback or greenfield in those markets. And so yes, we have started to do the work on that.

And then and just a final follow-up. Roughly what is the average age of the clinics at this point?

So the total portfolio is averaging about 45 months at in trade now. The buybacks are just about 56 and our greenfield are averaging 24 months in operations.

[Operator instructions] Our next question comes from Peter Rabover of Artko Capital. Your line is open.

So I wanted to talk a little bit about the guidance. So you had -- so your revenue guidance increases about $5.3 million to $6.3 million and your delta for the EBITDA increases $2.6 million to $3.6 million. So I am just -- I guess which is about 45% to 50% flow through. And so I am just wondering what are the increases in costs that are making that flow through less than 100%?

When you look into 2018 and beyond, one of the things that you have to take into account compared to the historical 2017 numbers we presented is, the 2018 guidance now takes into account the new ASC 606 accounting standards. So it’s a slightly different lens from which you’d look at how the openings and the RDs impact our revenue. As we move forward into 2018, we look at the P&L and total from an operating expense standpoint as we return to developing corporate clinics, there is some additive costs related to some costs that we have to put in place to support building our Greenfield. So that plays into not from a material standpoint but there is additional costs here that we budget in for greenfield and the costs of buybacks. So those are some of that the variables that sway into the top side increase but some of the additional costs you need to add for developing clinics.

And so if I am just looking into slide, if you go again to your guidance from $31 million to $32 million, is that what you get to $31 million the next million it’s a 100% flow through? Is that they way to look at it?

Yes it’s quite a safe way to look at it. I mean one of the things that our clinics are still leveraging when you look at the existing portfolio of clinics that we have, the 47, they are not at the point where they are fully leveraged from an operating costs standpoint. So we still have some opportunity as I mentioned in my script that the general and administrative costs as a percent of revenue have improved greatly from ’16 to ’17 and we expect to see that from ’17 to ’18 as well.

And I am showing no further questions in queue at this time. I’d like to turn the call back to Peter for any closing remarks.

Thank you, Ashley. Again, I want to thank all of you for your interest. We are making chiropractic services assessable to communities than never have them before. Patients frequently report that the impact is life changing and at least in one instance, life saving. Recently a 48 year old fitness and a membership plan patient came to one of our clinics for an adjustment to alleviate some calf pain. Our doctor of chiropractic quickly assessed the situation as a potential blood clot and immediately arranged for transportation to emergency room. Our patient recognized that without our doctor’s quick intervention, that clot could have travel to his lungs and caused injury or even death. He stated a nice quote, that’s a big deal anyway you sliced this she diagnosed it and saved my life. We’re proud to contribute to patients’ well being and we continue our pursuit to deliver quality, convenient and affordable chiropractic care. We are accelerating growth and plan to use direct franchise sales as well as potential new company owned and managed clinic to achieve scale. Again, thank you for your time today and stay well adjusted.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program, you may all disconnect. Everyone have a great day.