A Scottsdale-based chain of chiropractor practices with both franchised and corporate locations is rapidly expanding its reach while validating chiropractic care as a legitimate form of pain management.
The Joint made its debut in Tucson in 1999. Since then, the brand has worked tirelessly to change the business model — and public image — of chiropractic care.
“We had a doctor of chiropractics that had this really brilliant idea that he wanted to take chiropractics to the masses — that he wanted to make it affordable; he wanted to make it accessible; he wanted to make it convenient,” said Peter Holt, CEO of The Joint Corp.
The chiropractor Holt mentioned is Dr. Fred Gerretzen, The Joint’s founder, who quickly realized the opportunities in franchising. He began franchising the company to private entrepreneurs in 2003.
Fast-forward to March 2010: The Joint is re-founded as a corporate entity with the acquisition of the original eight franchised locations.
According to Holt, two brothers from Austin, Texas, purchased the concept from Gerretzen and hired master franchisor John Leonesio to help. Leonesio founded Massage Envy in 2002 and currently serves as CEO of RedLine Athletics.
“From 2010, when we were formed, to November of 2014, when we went public, we had 242 franchised units on the ground,” Holt said.
The profitability of The Joint’s retail-based model was not lost on the ambitious leaders of the new corporate entity, and in November 2014, The Joint Corp. went public in order to begin opening new corporate clinics. A second public offering round took place in November 2015.
“Between those two rounds we raised about $30 million, and in 18 months we built about 61 corporate clinics,” Holt said. “It’s a phenomenal achievement, and this is actually much of why I was brought in, and I’ve been here now since May of 2016… and in that process of growing the corporate side of our business so quickly, a couple things were happening.”
First, The Joint’s franchisees “stopped feeling the love” while the company focused on its corporate endeavors, and it was Holt’s responsibility to remedy that.
Second, The Joint was opening corporate clinics so quickly and aggressively it needed additional oversight and support, and Holt took lead on that, too.
Holt said the new corporate clinics were split into two categories. “Buybacks” — locations purchased by corporate from existing franchisees — are easier to manage because they are already performing well with their established doctors, patients and staff. “Greenfields” are new locations; these require a more hands-on approach to meet expectations.
“I was brought in to help improve relations with our franchise community and then turn around and make sure that the corporate clinics that we put out there — those greenfields — became profitable,” Holt said. “Because when you’re building a new clinic, of course, you have upfront costs, you’re expecting it to break even in a certain amount of time, and that timeline was extended beyond what our expectations were, which was putting financial pressure on the company.”
This was in 2016, when Holt first started as CEO. By the end of 2017, The Joint had just about broken even, reporting $300,000 in adjusted EBITDA for the full year.
Adjusted EBITDA refers to the company’s earnings before interest, tax, depreciation and amortization, not including various one-time or irregular gains or losses.
The following year, those same clinics generated $2.7 million in adjusted EBITDA, Holt said.
Now, The Joint has 35 clinics in Arizona — one in Flagstaff, three in Tucson and 31 in the Phoenix metro area. The company employs 389 people at its corporate clinics and another 53 at the corporate office in Scottsdale.
There were 468 total clinics open by the end of 2019’s second quarter, with combined sales of more than $100 million — slightly higher than the system’s sales for the entirety of 2016.
“That’s just a reflection of really digging in, restructuring, supporting our corporate clinics and accelerating their time to profitability and continued growth,” he said. “The really exciting thing that’s going on here is this is a model that is just so ripe for the time that we’re operating in, because chiropractic care is only becoming more and more accepted as a practice of getting out of pain.”
When asked what in particular made The Joint so popular, Holt said the company was bringing solutions to where people are, because people need pain management.
“Particularly the millennials, they’re looking for more holistic, natural ways to get out of pain,” Holt said. “Pain is an epidemic in this country, whether it’s the opioid overdose epidemic, or whether it’s a diabetes epidemic or an obesity epidemic — we are a country in pain.”
Holt said the United States population spends more than $650 billion to combat pain, $90 billion of which is for back pain.
At The Joint, 39 percent of patients are millennials, 34 percent belong to Generation X, and just 19 percent are Baby Boomers. Part of that is due to the fact that younger people don’t have the same stigma against chiropractics as older generations do, he said.
He said he grew up with the understanding that chiropractics were “quackery” and not real medicine, but the traditional medical community has become more and more accepting of the practice, recently acknowledging that “chiropractic care can, in fact, be a really helpful solution before you go under surgery or go with opioids to deal with lower back pain,” Holt said.
The Joint is a retail concept, meaning it does not use the same model as a typical doctor’s office. Holt calls it a direct-pay concierge service; i.g., insurance is not involved.
This is how it works: A patient comes to The Joint to address an issue, and the doctor will perform a consultation and examination before making a recommendation. If the doctor recommends more chiropractic adjustments, the patient may sign up for a monthly membership, allowing the patient to return for additional visits as frequently as desired.
“As a member, you’ll pay $69 a month, and for that $69 you will get four adjustments that month,” Holt explained.
Additional adjustments are just $10 each until the next month kicks in.
The idea is that adjustments should be available to patients on a regular basis rather than just when they are in pain.
“It’s very convenient, it’s inexpensive, and as a member you can now have access to chiropractic care on a monthly basis,” Holt said. “And it turns out that, of all those clinics across the country, the average clinic is generating 80 percent of the sales of that clinic by membership.”
In 2018, The Joint had 434,000 new patients walk through the doors of their clinics, and 26 percent of them had never visited a chiropractor before.
There is still a lot of misunderstanding about the efficacy and value of chiropractics, but 16 percent of Americans use chiropractics on a daily basis, Holt said.
“Our company mission is that we improve quality of life through routine and affordable chiropractic care,” he said.
This is the bottom line, according to Holt: “I’ve been going to chiropractors for over 30 years. I’d get this lower back pain; it would help me. And, historically, how have I used my doctors? I’ve used them as handymen.
“I’d get this lower back pain; I’d feel broken; I’d go into my doctor; he’d give me a series of adjustments; I’d get out of pain. When would I see him again? Well, I’d see him again when I was back in pain. And so, he was my handyman. I was broken; I went in; he or she would fix me.”
But The Joint doesn’t provide handymen, it provides gardeners, Holt said.
“We want you to join as that member, we want you to have those routine and affordable chiropractic adjustments, and you don’t have to wait until you’re in pain with us,” he said. “We can actually help keep you out of pain, help alleviate the stresses so that you are, in fact, living that mobile, more pain-free life.”
Holt said The Joint provides high-quality service by stripping away the traditional modalities of chiropractics and sticking to the most important part — the adjustments — allowing for quick and effective treatment.
Arizona sales are about 25 percent higher than the national average, due at least in part to the state embracing chiropractics as a genuine solution, he said.
“The Valley in Arizona specifically is a very business-friendly environment,” Holt said. “We’re able to draw a great pool of talented people to support our business here.”