Good day, ladies and gentlemen, and welcome to The Joint Corporation's fourth quarter 2018 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 follow at that time. If anyone should require assistance during the conference, please press star then zero on your touch-tone telephone. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Kirsten Chapman, LHA Investor Relations. Ma'am, you may begin.
Thank you, Lauren. 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 2018 operating metrics and our growth strategy. CFO Jake Singleton will detail our financial performance and 2019 guidance. Peter will close with our long-term vision and open the call for questions. Please note we are using a slide presentation that can be found at ir.thejoint.com/events. Today, after the close of market, The Joint issued its financial results for the quarter ended December 31, 2018. If you do not already have a copy of this press release, it can be found in the investor relations section of the company's website. As provided on slide two, please be advised today's discussion includes forward-looking statements, including statements concerning our strategy, future operations, future financial position, and plans and objectives of management.
Throughout today's discussion, we will present some important factors relating to our business that could affect these forward-looking statements. The forward-looking statements are made based on current predictions, expectations, estimates, and assumptions and 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 encourage you to review our filings with the SEC for the discussion of these factors and other risks that may affect our results or 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 any new information or future events. Management uses EBITDA and adjusted EBITDA, which are non-GAAP financial measures.
These are presented because they are important measures used by management to assess financial performance. Management believes they provide a more transparent view of the company's underlying operating performance and operating trends. A reconciliation of net income or loss to EBITDA and adjusted EBITDA are presented in the press release. The company defines adjusted EBITDA as EBITDA before acquisition-related expenses, bargain purchase gains, loss on disposition or impairment, and stock-based compensation expenses. The company defines EBITDA as net income or loss before net interest, tax expense, depreciation, and amortization expenses. Please note, the restatement required in accordance with ASC 606, which changed the way franchisors recognize revenue, led to some minor changes in the numbers reported in 2017. To have a more meaningful comparison, we will use the restated figures in this presentation. The company expects to file the 10-K with the SEC on Friday, March 8th.
Now turning to slide three, it's my pleasure to turn the call to CEO Peter Holt. Please go ahead, sir.
Thank you, Kirsten, and thank you all for joining us. I'm delighted to speak with you today. In 2018, we delivered strong growth reflecting the increasing momentum of our business model. Two and a half years ago, we rolled up our sleeves and did the hard work necessary to stabilize our company. We improved franchise relations, restructured operations, and reinvested in franchise sales and development. In 2018, we specifically focused on accelerating franchise sales, building upon our regional developer strategy, and reinitiating our efforts to expand our corporate clinic portfolio within clustered locations in a deliberate and measured manner. These focused efforts enabled us to meet and exceed our financial and business plans. As a result, we strengthened our foundation, laying the groundwork for our ongoing growth. In 2019, we plan to capitalize on this momentum.
We'll execute a more aggressive plan to accelerate our brand building through clinic expansion. First, let's review our 2018 results. As we've said before, more franchise sales, more clinics, more new patients, and more patient visits have powered our growth. For example, in 2018, we almost tripled the number of franchise license sales to 99, up from 37 in 2017. We increased our year-end clinic count by over 10% compared to a year ago, adding a net of 43 clinics for a total of 442 at December 31, 2018. In 2018, we grew our total number of patients treated to 1.8 million, including 434,000 new patients. The number of new patients increased 25% compared to 2017. According to our most recent survey completed last month, 26% of our new patients have never seen a chiropractor before they visited The Joint. That was up from 22% from 2017.
We increased the number of adjustments made in the year by over one million, from nearly five million in 2017 to six million in 2018. All this contributed to our strong financial results. Turning to slide four, I'll highlight the fourth quarter 2018 compared to the same period last year. Gross system-wide sales grew 29% quarter-over-quarter. System-wide comp sales, or same-store retail sales of clinics that have been open for more than 13 months, increased 24%. Revenue grew 32%. Our bottom line continues to improve, driving us towards sustainable profitability. For the first time since being public, we achieved a positive GAAP net income of almost $1 million to $835,000. Adjusted EBITDA was positive for the sixth consecutive quarter at $1.5 million. Further, our unrestricted cash grew to $8.7 million at December 31, 2018, more than double compared to the $4.2 million on December 31, 2017.
The increase once again represents our growing momentum and strong fourth quarter results. We'll use this strengthened balance sheet to support our expansion strategy. Before we get into details, I'd like to welcome our newer investors and provide some background on our company. The premise of The Joint is to revolutionize access to chiropractic care. We do this in a convenient retail setting, providing concierge style, no appointment, walk-in only, no insurance, membership-based services. The Joint's purpose is to alleviate pain and help move our patients towards a healthier lifestyle, the sweet spot in the growing health and wellness industry. The Joint is distinguished among its consumers for our accessibility, credibility, and empathy based on extensive market research that we completed in 2018. In 2019, this brand architecture will guide us as we build this business.
Turning to slide five, regarding our portfolio during the fourth quarter, we opened 22 franchise clinics, which is the most in any quarter since going public, and is another reflection of our increasing momentum. Our total number of franchises opened for the year was 47, approaching the top end of our guidance range of 40-50. As of December 31, 2018, we were in 32 states, having opened in Maryland in the fourth quarter and Oklahoma earlier in the year. For our franchise system, we continue to enjoy unusually low clinic closure rates of less than 1%, and during the quarter, we closed only two franchise clinics. At December 31, 2018, we had a total of 442 clinics, of which 394 or 89% were franchise clinics and 48 or 11% were company owned or managed clinics.
In 2018, our goal was to begin a deliberate and measured expansion plan for company owned or managed clinics in clustered locations that could benefit from the infrastructure and the marketing of other nearby clinics. To that end, we started developing new company owned or managed clinics known as greenfields. During 2018, we conducted site selection, engaged with landlords, and began construction, setting the stage for our 2019 clinic opening plans. In 2019, we plan to accelerate our company owned or managed clinic expansion to 8-12 clinics through a combination of both greenfields and buybacks. We're well on our way as we opened our first new greenfield since 2016 in Carlsbad, California in February, and the second in Azusa, California last week.
To further support our greenfield development, to date we've signed two additional leases and have begun construction on one of the units and expect to take position on the second next month. We have nine letters of intent in play for additional sites. Turning to slide six, we continue to prioritize operational execution. The fourth quarter is historically our strongest quarter in both gross sales and clinic openings, and the same held true this year. In fact, system-wide gross sales for the fourth quarter in 2018 were the best in the company's history. Our two annual promotions, the Black Friday package sale and the year-end membership drive, both occur in the fourth quarter and have become incrementally stronger each year. Their remarkable success continues to bolster franchisee participation in these promotions.
Reviewing clinic operations, those that start strong tend to stay strong. As such, our goal is to optimize all clinic openings. Success is evidenced by our trend in reducing average clinic time to break even. Our historical average from time open to break even has been 18 - 24 months. Our 2017 class of 41 clinics achieved estimated break even in an average of nine months. As you can see on the chart, they continue to accelerate growth well above the historical performance. Our 2018 cohort has increased to 47 clinics and achieved estimated break even of six months on average.
While we're also working to reduce the time between the signing of the franchise agreement to the opening of that clinic, we found that external factors such as construction permitting, landlord responsiveness, and municipal approvals have lengthened the average window of signed agreement to open clinic from between six and nine months to between seven and 11 months. Nonetheless, we will continue to implement and improve programs within our control, such as identifying clinic locations even before the prospective franchisees have signed the franchise agreements to shorten this process. Turning to slide seven, growth of our regional developer, or RD program, continues to have positive impact on our franchise license sales and development. In 2016, we finished the year with eight RDs, who were responsible for 50% of the 22 franchise license sales for that year.
In 2017, we ended with 18 RDs, who were responsible for 49% of the 37 franchise license sales for that year. In the fourth quarter of 2018, we added three additional RDs, one in Northern California, one in Southern Florida, and one in Kentucky, bringing our total RD count to 21 as of December 31, 2018. These RDs were responsible for 89% of the 99 franchise licensed sales for that year. This growth in franchise sales reflects the power of our RD program to accelerate clinic development across this country. The fast ramp of our franchise sales also reflects an increase in franchisees who sign two or more agreements at the same time. In 2017, approximately 30% of our franchise sales were multi-unit sales. In 2018, they grew to 57% of sales, which includes 15 multi-unit sales, one containing double-digit clinics.
While the magnitude has increased, it's important to note that multi-unit development tends to open in a linear succession rather than all at once. Therefore, are granted a longer time period to open. That said, we believe multi-unit agreements are important and valuable as they create micro ecosystems and leverage of the infrastructure marketing in clustered locations. Our RDs continue to be a key driver to ramp our growth. In 2019, we expect to further expand our overall RD program. In fact, this month, we sold the RD rights to Pittsburgh, Pennsylvania, and most of Virginia, with a minimum 10-year development schedule of 40 open units. However, as RD territories mature, there's potential for repurchase. In February of 2019, we opportunistically bought back their RD rights for South Carolina, which had 23 operating clinics.
Today, our RDs cover almost half the metropolitan statistical areas of the country and already support three-quarters of our franchisees. In aggregate, our total 10-year minimum development schedule for the 15 new RDs comes to 421 open clinics. This large foundation of unit commitment bodes well for our continued clinic expansion and sales growth in 2019 and beyond. Turning to slide eight, let's review the innovative marketing program. Our mission to improve quality of life through routine and affordable chiropractic care can only be accomplished by delivering on three critical brand pillars. First, accessibility, as defined by convenience and affordability, the very foundation of our category differentiation. Second, credibility, or the promise of consistent quality chiropractic care, no matter where or when you visit one of our clinics.
Third, empathy, which is the ultimate objective in patient experience, personal, intuitive treatment oriented toward helping our patients achieve their wellness goals. Together, these three pillars form the how of our mission statement, when we deliver on all three, we enable our patients to live the best version of themselves, which becomes the why of our mission statement. This new brand architecture will help guide our strategic initiatives, operational training, and consumer advertising as we seek to create a robust health and wellness brand with a clear, consistent, and recognizable marketplace identity. We continue to strengthen our digital marketing practice through innovation and reinvestment. Organic search alone creates hundreds of thousands of leads for our clinics every year. Our paid digital advertising also has made significant gains in lead generation and new patient conversion.
In 2019, we'll add to this an increased emphasis on our CRM efforts to improve the one-on-one lead nurturing and patient relationship marketing. We believe these gains in digital marketing performance are positively impacting our same-store sales performance and our new clinic ramp to profitability. Turning to slide nine, as discussed, in 2018, with our portfolio approaching critical mass, third-party IT SaaS platform costs decreasing and external cybersecurity risks increasing, we decided to purchase a proven, well-maintained CRM platform to replace our existing proprietary system. We chose a system with a simple user interface, leader in industry customer experience, and an intuitive customization platform. It should improve our ability to quickly and consistently provide important feature enhancements, system upgrades, and state-of-the-art security across our entire clinic portfolio as it continues to grow. We've concluded the discovery phase of the implementation process and are well into the design and development.
We expect to complete implementation by the end of 2019. Overall, 2018, we built momentum that we will believe continue to drive brand awareness, financial growth, and shareholder value. With that, I'll turn the call over to Jake Singleton, our CFO, to review the financial results.
Thank you, Peter. Turning to slide 10. As Peter mentioned, we continue to deliver strong growth across all our metrics. For this section, I will compare fourth quarter 2018 to fourth quarter 2017. Gross sales for all clinics, open for any amount of time, grew 29% to $46.5 million. System-wide comp sales for all clinics open 13 months or more increased 24%. System-wide comp sales for mature clinics, for us, those open 48 months or more, increased 16%, further pushing the boundaries of our business model. Turning to slide 11, revenue for the fourth quarter of 2018 grew to $9.1 million, up $2.2 million or 32%. Company-owned or managed clinics contributed revenue of $4.3 million, increasing 43% from a year ago.
As we added one clinic in April, our growth is largely attributable to our continued focus on operational excellence, consistency and impactful marketing, as well as the increasing adoption of chiropractic care. Franchised operations contributed $4.8 million, up 23% compared to last year. This growth is fueled by the same factors as our company-owned or managed clinics, which resulted in greater sales from existing clinics. Additional growth factors included sales from 47 new franchise clinics and the increased participation in our successful fourth quarter promotions. Cost to revenues was $1.2 million, increasing 30% over the same period last year. As cost of revenue is largely driven by regional developer royalties and commissions, this cost increase reflects the success of the RD program. As Peter noted, at December 31st, we had 21 RDs responsible for 89% of 2018 franchise sales, and they are now supporting 77% of our 394 franchise clinics.
Selling and marketing expenses were $1.2 million, or 14% of revenue in the fourth quarter of 2018, compared to $1.3 million, or 19% of revenue in the fourth quarter of 2017. General and administrative expenses were $5.3 million, or 59% of revenue, compared to $4.4 million, or 64% of revenue in the fourth quarter of 2017. We posted positive GAAP net income for the first time since being public. Net income of $835,000, or $0.06 per diluted share, which improved $1 million when compared to a net loss of $213,000, or a loss of $0.02 per share for the fourth quarter of 2017. Total adjusted EBITDA for the fourth quarter of 2018 was positive for the sixth consecutive quarter at $1.5 million, improving $1.1 million compared to adjusted EBITDA of $404,000 in the same quarter last year. Franchise-adjusted EBITDA income increased 23% to $2.2 million.
Company-owned or managed clinics' adjusted EBITDA income more than quadrupled compared to last year, increasing to $1.4 million. Corporate expense adjusted EBITDA loss increased 22% to $2 million. Turning to slide 12, for the year, gross sales for all clinics open for any amount of time grew 30% to $165.1 million. System-wide comp sales for all clinics open 13 months or more increased 25%. Significantly, system-wide comp sales for mature clinics open 48 months or more increased 17%, which is remarkable in today's retail environment. Turning to slide 13, for the year, revenue increased 28% to $31.8 million. The bottom line improved greatly. The company delivered annual net income for the first time since being public. Net income improved $3.7 million to $253,000. Adjusted EBITDA grew $3.3 million - $3 million.
Regarding the balance sheet as of December 31st, 2018, unrestricted cash was $8.7 million, more than double the $4.2 million we held at December 31st, 2017. The increase reflects strong cash flow from operations, including increased individual franchise license sales and additional RD territory sales. Also noteworthy, at December 31st, 2018, we had $23.1 million of federal net operating losses, or NOLs, available to offset future taxable income. Turning to slide 14, our 2019 guidance reflects our accelerated momentum. We expect our revenue to increase between 26% and 32% compared to $31.8 million in 2018. Adjusted EBITDA to grow between 67% and 100% compared to $3 million in 2018. For franchise clinic openings to range from 70 to 80, and company-owned or managed clinic expansion to range from eight to 12. This could be through a combination of both greenfields and buybacks.
The projected new clinic total nearly doubles the 2018 expansion of 47. Overall, our strong 2018 results and $5.5 million of cash flow from operations have strengthened our balance sheet and positioned us well for growth. With that, I'll turn the call back over to Peter.
Thank you, Jake. Turning to slide 15, I'd like to take a minute to talk about our expanding market opportunity. The opioid epidemic, the obesity epidemic, and quite frankly, the pain epidemic all make chiropractic care that delivers drug-free therapies meaningful, particularly to employers. In fact, the majority of employers report that workers have expressed interest in chiropractic services, according to a recent survey by the National Association of Worksite Health. A short time ago, they hosted a workshop on how to expand health center services to include and integrate chiropractic care for acute care, occupational health, pain management, and rehabilitation. The sessions included new clinical guidelines for pain management aimed at reducing the need for opioids. Our increasing retail footprint and our ability to leverage our marketing infrastructure expands the opportunity to lead increased adoption of chiropractic care.
As discussed on the last call, the 2018 Gallup-Palmer study reported that at some point in their life, about two-thirds of U.S. adults have had neck or back pain significant enough to seek healthcare, while 25% had done so in the last 12 months. Also, eight out of 10 adults prefer to try drug-free options before prescription medication. However, most people are unaware of the efficacy of chiropractic adjustments. They did not know where to find it. They did not know the benefits of it. They did not know they could afford it. The Joint is helping people to overcome these hurdles with accessible, affordable, and convenient chiropractic care in neighborhood daily use shopping centers. Our data reinforces the increase in people seeking alternatives, demonstrated as an openness to non-drug remedies.
For example, in 2013, 13% of our patients were new to chiropractic care, which grew to 21% in 2016, 22% in 2017, and 26% to our most recent survey completed last month. Turning to slide 16. Overall, our hybrid model of franchise and company-owned managed clinics enables us to expand in a capital-light fashion. This is essential in helping us to build brand awareness and name recognition, establish a predictable revenue stream, increase scale, and improve shareholder value. As we plan ahead, our strategy to continue to build upon the foundation we laid in 2016. In 2019, we intend to continue our focus on franchise sales, to further leverage our RD strategy, and to accelerate the expansion of our corporate clinic portfolio within clustered locations.
To increase the size of our footprint through clinic expansion, we plan to expand our patient base to be the career path of choice for chiropractors, foster a robust regional developer community, and enhance individual clinic performance and service. Before I open up for Q&A, I'd like to mention that this month we plan to be at the 31st Annual Roth Conference on March 17th through the 19th in Dana Point, California, and the Cowen Annual Future of the Consumer Conference in April 2nd in New York City. In closing, I'd like to recognize The Joint Chiropractic teams for their collective engagement. To our franchise community, to our RDs, our corporate team, and The Joint colleagues across this country, I thank you. Our significant progress in making chiropractic care more accessible for patients and the strengthening of our company would not be possible without your commitment and dedicated efforts.
The leadership team and I are grateful for all of your hard work. Lauren, I'm ready to take the Q&A.
Thank you. Ladies and gentlemen, if you have a question at this time, please press the star, then the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Again, that's star then one to ask a question. To prevent any background noise, we ask that you please place your line on mute once your question has been stated. Our first question comes from Mike Malouf with Craig-Hallum Capital. Your line is open.
Great. Thanks, guys. Very impressive quarter. It's nice to see the corporate stores are starting to accelerate. Good news.
Thank you very much.
My first question is actually on the corporate stores. As I look at my numbers, really impressed with the revenue per average clinic move in those corporate stores, not only year-over-year, but just sequentially. I'm just wondering if you could give us a little bit of color on why that number's going up so high on a per store basis and whether or not that's a sustainable level there.
Yeah, Mike, this is Jake. We think it is. When we look at it year-over-year on a per store basis, we're really encouraged with the overall growth. The corporate clinic mix is a mix of those that we've acquired and those that we developed ourselves, those greenfield units. Really, the year-over-year growth in those greenfield units is really something that we're proud of. They averaged a 38% year-over-year gross sales growth. I think those are really coming up to speed, and we're really encouraged by those efforts. Absolutely, we think the momentum is there. The corporate portfolio has an average age of 58 months. We're certainly excited to get the new ones up and ramping, and we certainly hope to mirror the success of those breakeven numbers from the 2018 and 2017 cohorts from our franchises.
Well, Mike, I can tell you, it's all about execution. You can go right back to our VP of Operations, Jorge Armenteros, that he's completely restructured the operational team, that he's completely restructured the support that they put out in the field. He's restructured the protocols, the very way we're operating the business, and it's working. It's reflected in the corporate clinic performance, quite frankly, it's reflected in the franchise clinic performance as well.
Yeah, that's great. That's really good news. Just moving to on the franchise licenses sold, we've got 99 sold in 2018. That's probably in part because of the big push in the RDs in 2017 continuing on to 2018. When you take a look at that 99, is that sort of a blip up because you went from 8- 18 that they sold a lot of it in 2018? Do you think that that momentum continues on those franchise units sold?
I think it's absolutely a reflection of momentum. If it's anything like any other program I've had where you have a strong, robust concept that's driven by a strong, robust RD community, you're absolutely right. I kind of ran through those numbers, is that of the 2016, it was about half of them were sold, or 30% were sold by the RDs. For 2017, half of them were. For 2018, 89% of them were sold by the RDs. That is because they're in the field, they're operating, they're doing their job, that it's working. They'll continue to do that. From my perspective, that's not a blip. That's, again, we have re-engaged in our franchise development.
We talked about this before, that for several years when we were focused more on our corporate clinic performance, is that we didn't put as much energy on the development of the franchise program, let alone the RD program. That was one of the fundamental changes we put in place in 2016, that we are starting to reap the results. Absolutely, I would believe that this is a reflection of increased momentum, not a one-off that just had an incredible year in 2018.
Okay, congrats again. Thanks for the call.
No problem at all.
Pardon me. Our next question comes from Brooks O'Neil with Lake Street Capital. Your line is open.
Good evening. Thanks for taking my questions. You have Frank Takkinen on for Brooks O'Neil.
Hi, Frank, how are you?
Hey, Frank. How's it going?
Good. I have a couple questions. First, can you please touch on the seasonality a little bit on how you expect the new openings to pan out in the next 12 months? Obviously, in 2018, we saw Q4 very heavy with openings, and I was just curious if this is a good proxy to think about 2019.
Frank, I think, as we look at the quarters in the pipeline, traditionally we have seen that ramp up in the fourth quarter, deadlines spur action. When we look at the portfolio right now, I think we're expecting a little bit more even spread, and maybe just kind of an incremental build with each quarter. The first quarter of 2019 is off to a good start and we think there'll be a sequential increase quarter-over-quarter, but it shouldn't be quite as drastic as it was in 2018.
I think also as I mentioned that we did experience a lengthening of that time, and I think that was part of why we had such a crowded fourth quarter compared to the full year, because if you look at it, what did we do? We opened up 25 units in the first three quarters and 22 in the fourth quarter. Part of that was, as I was talking about, unresponsiveness of landlords issues, municipalities being slow to give the approvals. It's interesting because a lot of these cities and states don't have the resources, the people to be able to get your permitting done in a timely fashion. I think all of retail is kind of experiencing that. As that pipeline builds, it gives us, I think, a greater opportunity to spread it out for the full year.
As Jake said, it certainly hasn't been historically unusual for us that the fourth quarters are the strongest quarter for openings.
Great. Secondly, thinking about profitability, obviously with the resurgence in corporate-owned stores, I was wondering if you could tell us how you guys are kind of thinking about profitability in 2019.
Profitability on what level? On a unit level?
Just earnings, basically. What I'm kind of getting at is if you're investing more into these corporate-owned stores and having to deploy more operating expenses, how do you think about your breakeven level, and do you think you'll kind of fluctuate some above, some below, and kind of that sense?
Sure. Yeah. When I think about the portfolio, we're certainly hoping, as I mentioned before, to mimic that time to breakeven. When I look at it at a higher level, as we make the investments in those greenfield units, traditionally in the year that we're opening those are going to be a suppression on our earnings. In the early months, they're taking those losses, and hopefully the faster times to breakeven will reduce those. The greenfield units, they do take time to ramp, and so in those early months, those will be a suppression on earnings. If the mix shifts more towards the buybacks or the acquisitions, typically those are additive much sooner in the process, so it'll depend on kind of the mix of the clinic expansion, and we will be opportunistic as we look at those opportunities.
For the greenfields we control, historically those are going to be a suppression in the near term, kind of depending on when they open throughout the year.
Great. My last question, thinking about same-store sales, obviously 20%+ same-store sales has been great, but can you share with us your thoughts on a little bit more of a normalized long-term view? Is the 48+ same-store sales may be a good proxy for that?
It's a great question, quite frankly, that we don't know the top of this business model. I think there's a number of factors that are going on, and I've talked about this several times. There's no question that we are getting more efficient at what we're doing, where our patients are seeing us more often. We're more efficient in our lead generation of new patients, so we have more patients coming in the door. That more fundamentally, we have a market that's opening up. That right now, today, 50% according to that same study that I mentioned in the conversation, the Palmer-Gallup study, that 50% of the American people don't even know what the word chiropractic means. 30% are scared. They know, okay, that's some kind of bone manipulation, but they're scared to try it.
16% are using chiropractic in the last 12 months. As we take this concept into a retail environment and we put it where they're shopping and where they're going to their daily use center where they get a haircut, buy a frozen yogurt or send a package, now they're looking at it and, "Oh my gosh, there's The Joint. That's not cannabis, that's chiropractic. I'll go try it." That's really reflective of those 26% of our new patients who have never tried a chiropractic before. When we come back to comps and you have this incredible market that's opening up, it's really hard to say how long can we sustain these kind of comps? I don't know. If we just look historically, our comps in 2016 were 26%, comps in 2017 were 21%, comps for the full year 2018 were 25%.
Again, okay, your mature clinics, okay, those over 48 months, as Jake mentioned, that was 17% for the full year of 2018. I mean, I'm going to tell you, I've never worked in a concept that's had those strong comps. I've worked in concepts that have had consistent, really strong same-store sales growth, especially when you are bringing a new product or service into the market. Okay, we're not revolutionizing chiropractic. We're obviously revolutionizing access to chiropractic. It'll be interesting to see where that goes. I don't know if that answers your question-
Great.
It suggests that we've got a long runway in front of us.
No, that's great. That helps a lot. Thanks for taking my questions, and congratulations on the quarter.
Thank you.
Appreciate it.
Our next question comes from David Bain with ROTH Capital Partners. Your line is open.
Great. Thank you. I also wish you congratulations on another great quarter and forward metrics. First, I was hoping we could start with the corporate-owned strategy. Just given the average cost to open a corporate-owned location, the acquisition multiples you've paid in the past. The continued comp results, the recurring nature of visibility in your business, looking at the $8.7 million of cash, I'm hoping you can provide a little bit of color around the thought process behind the 8-12 guidance range. Seems like you could have gone a lot higher. Is that something that is going to be staying at a 10% base of overall clinics, or how are you viewing that at this point? Do you look at that again in the near term?
It's a great question, David, The way that we're looking at it is that we obviously profoundly believe in the corporate portfolio as a part of the mix. It's kind of funny, franchising really is a business of learning from your own mistakes and then trying to share that with your franchisees so they don't make them, We certainly have had significant mistakes we've made in terms of trying to grow aggressively beyond our capacity to support. I think that we have certainly shown ourselves to be able to build and manage those buybacks, and they're doing phenomenally well. We've now turned around those greenfields. This is the first year that we're actually going out and building for the first time since 2016, a greenfield portfolio. Now, do we believe that we're capable of doing it?
Yes. Do we think we can learn from mistakes? Do we have a restructured operational program in place? Absolutely. We also believe that it takes time to build up that infrastructure to be able to support it. To go from one greenfield, or let's say, just a handful of greenfields and then all of a sudden go to 20, it's an enormous amount of work and infrastructure, That has to take place behind that, and it takes time to actually build that if you're building it for the long term. We are building this for the long term, We are cautiously developing this. Again, we're very measured and strategic in 2018. In 2019, we're clearly accelerating much stronger than just one clinic in 2018. We're doing the 8-12, for 2019. We talked about already, we've opened two greenfields.
We've got two leases signed. We've got nine LOIs out there. We have all kinds of opportunistic franchises from time to time if they fit within the portfolio of where we want to be geographically. You're going to see it continue to grow, We want to, again, prove to ourselves and to the community that we can, in fact, have the same results on the greenfields that we had with the buybacks.
Great. Okay. Thank you. I guess just to follow up on the same-store sales question. I too had a question on that. I know it's hard to heat boiling water. At the same time, you cited that survey where you went to 26% of new patients, up from 22% in 2013. Are new patients, are they the primary driver of same-store sale growth, or is it more increased visit from existing customers, or are they more just like a backbone to the clinics at this point? I'm just trying to understand that number a little bit better as a metric. In your guidance, how do you think about same-store sales?
Sure. I would argue that it's both. Obviously we have enormously increasing, because when I talk about new to chiropractic, that's just not new patients. I mentioned that in 2018, we had 434,000 new patients walk in the door for the first time. Of that 434,000, 26% of them had never seen a chiropractor before. I think that, again, as people get more accustomed to routine and affordable chiropractic care, so that they're coming in and enjoying that membership. If you look at our membership, I think in last year, it was 76% of the average sales of the clinic was membership-based. I think that went up to 97%-99% in 2018, and that's a reflection of more existing patients utilizing the membership base as a way of getting routine and affordable chiropractic care.
We have our existing patient base who are using us more often. We have more patients who are coming in the door for the first time, whether it's new to chiropractic or just new to The Joint. As that footprint expands, you're educating more and more people about the idea that you can even try chiropractic. You have so many factors out there that we as a society are truly looking for more and more non-invasive, holistic ways to get out of pain. We've talked in other calls about the millennials are such a core group of our patients, and they continue to represent almost 40% of all the patients that come in the door. They are driving that interest in avoiding the knife and avoiding drugs to be able to manage their pain. How long can you sustain such strong comps?
I think you can sustain it for a while, as long as your market's increasing. I think that as we continue to expand into these markets, we have the clustering effect. We see the store sales of those clinics increase because there's just more availability of going into the clinic and more awareness of that. We've been more effective with our co-ops. We've introduced more and more co-ops in those markets where we're starting to get a clustering of our clinics, and they're spending more money in that local store market, which is, again, raising the awareness in that market about The Joint as an alternative. I think as we talk through the call, there's this momentum that's just at a moment where you have this great interest in these non-invasive ways to get out of pain, and that we're in a perfect position to take advantage of it.
Yeah.
Right.
David, the only thing I would add is the relative youth of our system. We've got 442 clinics as of December. The RDs alone have signed up for 421 to be open by the end of their respective terms. Naturally by the youth of the system, you have those clinics that are going to be very young coming into the comp base, and with the ramps that we have right now, are just going to be strong contributors to that. Naturally with the youth and the growth of the system, you're going to have that comp base propped up by that phenomenon.
Great. If I can just ask one more. I know you don't typically do this, but is there any way you could help us bifurcate EBITDA from corporate and franchise in 2018, with your guidance?
We have revenue.
Right. No, we haven't historically provided that split. You can certainly look at the segment performance.
Right.
From 2018 as a relative proxy, and depending on how you're modeling corporate clinic revenues and the franchise base, it may give you a slight shift in mix, but you can certainly use the historical segment information to give you a little bit of a proxy of that.
Okay, fair enough. Thanks again. Great quarter.
Thanks, David.
Thanks, David.
Our next question comes from Alexander Scharff with Maxim Group. Your line is open.
Hi, Peter and Jake. Just to piggyback on a prior question about revenue per corporate clinic, are you going to potentially face a headwind as you open more greenfields and the average age of your corporate portfolio decreases, or is that not really going to move the needle that much?
Statistically it'll move the needle, right? We're going to have some that are three, four, five, six, seven, eight months old, as we kind of creep out through the end of 2019. It'll have to affect it some. Really, we've seen those strong ramps with the 2018 cohort. Really, as we're looking at the metrics, the overall average per unit, given that the majority of the portfolio will be so significantly, so much older than the newer subset, we're really looking at those as two different things. To do a blended average, that's not currently how I'm evaluating it. I'm looking at how they're starting with this younger set.
Okay, that's helpful. Are there any metrics you could talk about the two greenfields that opened in 2019, like the cost or the time it took to open it? I may have missed this, but did you provide the details of the second greenfield, like the location or the date it opened up?
Sure. From a location perspective, the first one in February was in Carlsbad, California. The one that just opened last week was in Azusa, California. What we're seeing from a cost perspective is that it's relatively in line with the numbers we've quoted in our historical decks from a build-out perspective. We also saw the same phenomenon in terms of the ramp from start to finish, the same issues with the landlord responsiveness and the construction permitting and approvals and the things. We saw that phenomenon ourselves, so we can echo that from across our franchise base. The cost, we didn't see a material change in that.
No.
Great. Thanks for taking the questions.
Thank you. As a reminder, ladies and gentlemen, that's star then one to ask a question. Our next question comes from Michael Calamaro with D.A. Davidson. Your line is open.
Yeah. Hey, guys. Thanks for taking my questions.
Hey, Michael.
Absolutely. How you doing, Michael?
Hey, doing well. Just one of your last comments in the prepared remarks, Peter, saying that companies are saying that employees are asking for chiropractic care or looking for non-drug treatments. Have you thought about partnering with some of these employers just to help their employees find a good chiropractor?
We've looked at it a little differently in the sense that there's some wellness programs out there that we can participate in, that we become a service that they're offering to their employees as an added benefit. We've had various discussions over the years of trying to put those programs together. I do think that there's some opportunities there. I think the real message there was just, again, the growing awareness and interest of chiropractic care as a way to help an employee, your employment base stay active, healthy, and show up at work.
Yeah. All right. Just building on the marketing side, you talked about the University of Houston partnership on the last call. Is there any other big partnerships you're going to do this year, or how are you thinking about using the ad fund for 2019?
We're certainly looking at various, more of those kind of softer public relations opportunities that come up from time to time, that there's nothing that I'm in a position to be able to say, "Okay, we're going to do that or that, or we're going to sign up with this group or that group." That particular group with the University of Houston actually was driven by a very strong co-op. Houston's one of our strongest markets in terms of just the number of units, and they collectively came together and entered into that relationship with the University of Houston. We have other co-ops who are exploring, with some of the teams in their market, that they could do the same. There's such a natural connection between sports and chiropractic, so that we do see the interest in where it's feasible to put those relationships together.
The bigger we get, the more opportunities we have to really bring that to the fore.
We are encouraged. We continue to encourage each of our markets, certainly as they grow, to form those co-ops. It's a great way for us, and we continue to expand in what I'll call awareness marketing. It's an important tactic for us to get the brand out there and more exposure. We'll continue to encourage those co-ops to seek those opportunities as well.
All right. Thanks, guys, and best of luck for the rest of the year.
Thank you very much.
Thank you. Our next question comes from Alexander Clausen with the Disco Value Capital. Your line is open.
Thanks so much. How are you today?
Very good.
Very good. How are you?
Yeah, absolutely, fantastic. Thanks for taking my question. Again, congratulations, just what everybody else said, fantastic quarter and great year. Glad to see that cash is being generated at this point. You mentioned in a side note, Peter, that there was an opportunity taken to purchase a regional developership, and I wonder if you can provide a little more flavor on that, how accretive that will be to results for the year going forward, and then also if there might be other opportunities like that in other more developed or older markets. Thank you.
Sure. What I would tell you in any franchise system that utilizes a regional developer program to accelerate growth, it's really a natural progression for those RDs to either consolidate among other RDs or for the franchisor to buy them back from time to time. The buyback only makes sense when they're in a mature market. Obviously, when they're coming on board for the first time, they're paying that initial franchise fee or that territorial fee, and that there's no real value to buy back an RD that's not really mature. From time to time, some of those RD programs started when we almost started franchising back in 2010 and 2011. In that case, there was the opportunity for South Carolina, which we obviously exercised. That had 23 units in that market.
You can acknowledge that it certainly will have some overhead that we'll have to put in place to support that. Not a lot, but we have a franchise business consultant that would be now doing the work that the regional developer themselves did, and then you're pulling back that 3% royalty on those 23 units. That would be the impact on the company financially.
Okay, thank you. About 20%. Are there any other markets that you might be opportunistically looking at as well when predicting this year?
We do not have any opportunistically buybacks budgeted for this year. My experience is in franchising, there's all kinds of things that drive a franchisee or regional developer to be at a point where they want to sell their franchise or their RD. That in every franchise system, you always have that first right of refusal. Are there opportunities that could pop up that I am not aware of today? Of course. Are we anticipating additional buybacks of RDs in 2019? No.
Thanks so much. Again, congratulations on a great quarter.
All right. Thank you.
Thanks, Alex.
Thank you. I'm not showing any further questions at this time. I'd now like to turn the call back over to Peter Holt for any closing remarks.
Thank you very much. Appreciate all of your interest. We've been adding patient testimonials to The Joint Corp.'s YouTube channel, and today I'll leave you with a summary of a recent poignant case. Richard Moore from Dallas, Texas, was always healthy and active. In fact, as an adult, he became very passionate about triathlons and being outdoors. When he was diagnosed with fibromyalgia, the muscle pain completely changed his life. As a triathlete, he could no longer compete and be active as he once was. Richard's condition caused him great pain, and he believes if he had not received care from the chiropractors at The Joint, he'd likely be in a wheelchair today. Now he maintains a fitness regime and credits his compassionate chiropractic care team at The Joint for saving his life. Thank you, and stay well-adjusted.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect.