Good day, ladies and gentlemen, and welcome to the fourth quarter and full year 2016 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 reminder, this conference is being recorded. I would now turn the conference over to your host for today, Peter Vozzo, Joint Corp Investor Relations. You may begin.

Thank you, Sonia. Good afternoon, everyone. Today after the close of the market The Joint Corp released financial results for the fourth quarter and year ended December 31, 2016. 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 Web site 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. These forward-looking statements are also subject to the 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 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 today's call to discuss our 2016 fourth quarter and full year results. Joining me to present on the call is John Meloun, our Chief Financial Officer and George Vomentero, our Vice President of Operations, who joined the company in January. George brings more than 30 years' experience driving operational excellence and managing franchise relationships with national brand, such as McDonald, Dunkin brands, which are invaluable to The Joint, as we continue to open new clinic. Worked improved economics for our existing clinics and build our brand across the country. I will provide financial and operational highlights for the quarter and for the year, George will provide an overview of operational improvements going forward and John will discuss the financial results in more detail. During the fourth quarter we added a net 16 franchise clinics, bringing the total number of clinics to 370 as of December 31, 2016. This compares to 354 total clinics at September 30, 2016 and 312 at December 31, 2015. In January, we announced the sale of regional developer rights for the Chicago area and the transfer of 6 of the 11 Chicago clinics to a group that includes experienced an successful franchises of The Joint Corp. The remaining five clinics as well as three company managed clinics in upstate New York were consolidated or closed in January. The transfer and consolidation and closing of this clinic will improve cash usage and allow us to focus further on a company owned and managed clinics in other existing markets. Importantly, we believe these actions will accelerate the point to a point which the company will reach its adjusted EBITDA breakeven which we are working towards achieving during the first half of 2017 compared to our previous expectations at the end…

Thank you, Peter, I'd first like to thank Peter and the management team for appointing me as Vice President of Operations. I'm excited to be with the company to help build the success and participate in the continuing growth. As I reflect on my role within the organization my immediate goal is to focus on the California Greenfield clinics and to bring them to profitability as quickly as possible. To do this I will create a cross-functional team to design and implement core competencies to operations with emphasis on improved patient experience, which is a key to our success in the business or any retail business. While the Joint business model was unique, it in that is had it's offering a chiropractic service, the key across all retail platforms is customer service. At the Joint the number one source for new patients is generated from referrals from existing patients. Therefore, patient experience is significant and will have a significant impact on whether and how often patient recommends our services to friends and family, by focusing on a patient, creating a more uniform and highly high quality experience we believe that we will able to significantly improve our profitability, of our clinics. We will then hold ourselves and our teams accountable to implement these improvements across the entire network in the system. Another key area of focus is to increase the capability and efficiency of our franchisees and regional developers. What I have learned over the past 30 years of operational experience is that that solid base for a national chain can only be built by creating and utilizing and updating operating models of the business systems. This is accomplished through first establishing standards based on best practices in the network and secondly standardizing our clinics and field operations and finally refining our training programs to teach the new protocols. This is always a work in progress and requires continual improvement. We are also excited to re-energize and expand our regional developer program. Working with all of our key stakeholders in the company we're rebuilding from the ground up a more structure regional developer program, teaching franchise sales, training operational support to truly accelerate our growth through our regional developer community. I would now like to turn it over to John Meloun to discuss the 2016 fourth quarter and full year results and general outlook for 2017.

Thanks George. We have provided detail on our financial performance for the quarter and full year ended December 31, 2016 in the press release issued earlier today. I will now take few moments and discuss some of the highlights broken down by two operating segments, corporate clinic and franchise operations as well as our unallocated corporate overhead. This segment data will be available in our 10-K which we file by tomorrow March 10. Starting with the fourth quarter results, revenues increased 54% or 2 million or 5.8 million compared to the same period last year. 1.1 million of the increase is from the corporate clinic segment and 0.9 million from our franchise operations. The revenue growth in the corporate clinic segment is attributed to increasing sales in our existing clinic portfolio, complimented by 14 additional clinics that were acquired or new clinics open in 2016. The franchise segment revenue increased due to higher sales from both existing clinics and from the 44 additional clinics added in 2016. Cost of revenues increased slightly by 20,000 to 0.8 million compared to the fourth quarter of 2015, which is due to regional developer royalties from higher sales in our franchise operations. Selling and marketing expenses increased by 28% or 0.3 million to 1.2 million compared to 1 million in the same period last year primarily due to increased spending in our franchise operations and national marketing program. General and administrative expenses increased 73% or 3.8 million to 8.9 million compared to fourth quarters of 2015. However, 3.5 million of the increase is due to a non-cash imperilment and disposition charge associated with the transfer and closing of company managed clinics in Chicago and New York that we announced in January of 2017. The remaining increase of 0.3 million was driven by occupancy expenses…

Thank you, John. Overall, we made significant progress in the fourth quarter of 2016 strategically and financially. Our results show the continuation of our positive growth and operating strategy. This progress would not be possible without the commitment and perseverance of our franchise community and our employees and I want to thank each one of them for their efforts. We indeed are very passionate about our business and excited about the opportunities ahead. And with those comments, we'd like to open the floor to questions.

Thank you. [Operator Instructions] And our first question comes from Mark Smith of Salty Company. Your line is now open.

A couple of quick questions for you. First off looking at the growth of the franchise clinic openings in the guidance, how many of these are coming from existing franchises versus any from new franchises?

As I recall, when I was looking at this look at this, looking at the total number in 2016, I believe around 56% of them were from existing franchises. But I'll confirm that for you Mark, but at least over half of them were existing franchises who were purchasing additional clinics.

Excellent, and then just looking at kind of balance sheet and slowing down the cash burn and having some availability of debt, looking long-term, when do you guys think that you would be able to return to opening corporate clinics?

What we said to this steam, we'll continue to maintain is that we will go back to opening the corporate clinics when our overall portfolio of corporate clinics are profitable. And as we said, we are seeing -- we expect that to be taking place in 2017, and so as we prepare into 2017 and going into 2018, we really have that strategic opportunities to look at careful buybacks in additional corporate clinics and new markets.

Perfect. And then just looking at Q1 is there any seasonality that you guys see in first quarter also there is lack leap year this year or the Easter holiday shift making the impact on the model here in Q1?

It’s a great question coming out of the small box retail and for example I have involved in closing over it and [indiscernible] require well and the seasonality of that business as it's significant. One of the interesting things coming to the joint is while there is the only small changes in seasonality, it's really pretty steady throughout the year and we maybe have --maybe as we go into the end of the school season in May, we see a little drop up and sometimes a little bit of the drop offs into October/November. But it's I would have really said from -- looking at this in the normal small box usual environment, there is very, very little seasonality to this business.

And with those holiday shift is that just really just a day that you lose for leap year and maybe pick-up the day from Easter holiday?

Possibly. Now sometimes just talks about school, as people get out to school, they aren’t necessarily going back to the corporate clinic for going to our clinics for service, but it's very, very slight, if at all, I mean look at it over in a 12-months period.

Excellent. Thank you.

Thank you. [Operator Instructions] And we do have a question from Lucas Lee of Maxim Group. Your line is open.

So congrats on the quarter, so I have a quick question, you said January reaching your second highest system wide sales after November 2016 and it states that November 2016 was due to Black Friday promotion right? I don't know if I have missed it, but what the reason for January reaching one of your second highest system wide sales month? Is it due to the success in your franchisees or what was the reason for that?

Well I would say it's just a -- it’s a reflection of the continued same store sales that we experienced. As we said that our same store sales for 2016 system wide were 26% up and that you have more units, we opened up the 58 net units in 2016 and so certainly I think that we're getting better, we're getting more efficient, our same store sales are increasing, we're opening up new clinics and we're just seeing that monthly gross sales number increase, and that we would expect that to continue the trend as we go through 2017 and beyond.

I see, no that's great answer. And if a may ask one more thing, is your gross margin going to be improving going forward?

The gross margin will improve over time and purely because as the sales grow and revenue grows on the corporate side of the portfolio which doesn't have any cost of sales you'll see that improving in the gross margin. The only real gross margin we have is related to you know some of the regional developer costs we have on the franchise segment, but the revenue growth in the corporate segment will outpace the revenue growth in the franchise, in essence improving gross margin over time.

So if you could ball park it, should we be looking at like 88% to 90%, that's doable?

To be honest, let me follow up with you on that answer and kind of give you a range of where I expect it to be at.

Okay, and one last question, during last quarter you said that April and May will be on the softer quarter, is that still the case?

I'm sorry can you repeat the question one more time?

You said in last conference call that April and May maybe on the softer side in terms of revenue due to the ending schools, is that still the case?

Well I think, going back to the question that Mark Smith asked, is that, there is a slight seasonality to our business, but it's very -- not significant and so if we do see any kind of seasonality, there is a slight softness in kind of that May-ish time period. But what I would say about this business is it’s pretty consistent on a monthly basis in terms of usage of our patients, so you don't see those seasonalities, [indiscernible] accustomed to when I was working in smoothies or frozen desserts or even like a mailboxe, et cetera model or the UPS stores that as you can imagine with the holidays and the shipping, is that their December was a significantly higher revenue month for them compared to any other month of the year. And we just don't have any of those swings like that in The Joint model.

That's great, thank you for the answers, I’ll get back in the queue.

Great, thank you.

Thank you. And this does conclude our question and answer session, I would now like to turn the call back over to Peter Holt for any closing remarks.

I want to thank everyone for participating in our call today and your questions. We look forward to keeping you up to date on our progress. And have a great day. Thank you.

Ladies and gentlemen thank you for participating in today's conference. This conclude today's program. You may all disconnect. Everyone have a great day.