Company description

Fri, 15 Jun 2018 15:17:08 GMT

The Joint Corp. develops, owns, operates, supports, and manages chiropractic clinics in the United States. It operates through direct ownership, management arrangements, franchising, and the sale of regional developer rights. As of December 31, 2017, the company operated 352 franchised clinics and 47 company-owned or managed clinics. The company was founded in 2010 and is headquartered in Scottsdale, Arizona.

Research

Fri, 15 Jun 2018 15:16:36 GMT

The Joint Corp. (NASDAQ:JYNT) ($8.20; $111.4M market cap) is the largest franchisor of chiropractor locations in the US. The company currently has 400 locations, the vast majority of which are franchises. They just reached breakeven, which is a big deal for a franchisor, because they can now simply open up new franchises and take fees without incurring any significant added expenses. Because of this, I expect the majority of future franchise-fee revenue growth to drop straight down to the bottom line. Their locations are unique in the industry for a variety of reasons, including no-appointment scheduling, cash (rather than insurance)-based payment, and 33% lower costs than competitors. This has allowed them to achieve same store sales growth of 15-20%, even on some of their oldest and largest locations. This is simply a story about getting the execution right and opening up new locations strategically; if they can accomplish that, the margins on their business could be tremendous. The CEO recently bought $50,000 worth of shares on the open market.

Caveat:

Shares appear valued aggressively at 35x forward EBITDA. However, you have to remember the leverage inherent in this business. Because of that, earnings for this business have the potential to grow triple digits.

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Company description

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