The Joint Corp. (NSD:JYNT) recently released its 2022 Q4 results, which showcased the company’s resilience amidst macroeconomic headwinds. The positive results included an 18% increase in system-wide sales to reach $120 million and an 8% growth rate for comparable sales of clinics open for over 13 months, surpassing Q3’s 6% growth rate. Furthermore, the total revenue increased by 26% to $27.8 million, with company-owned or managed clinics contributing $16.5 million, a remarkable 39% increase. Meanwhile, franchise operations exhibited a growth of 10%, contributing $11.3 million to the total revenue. These results demonstrate JYNT’s ability to drive growth through effective management and expansion strategies.
JYNT’s Resilience Amidst Negative Macro Trends
JYNT’s high growth rates amidst negative macro trends are a testament to the resilience of its business model. The company’s owned and managed clinics are experiencing accelerated growth, while the growth of franchise stores has slowed somewhat. This is evidence that JYNT’s strategy of acquiring the best quality stores is effective since they possess data on the workings of each location. By leveraging this data, The joint corp. (NSD:JYNT) is able to optimize its growth strategy and maintain its momentum even in challenging market conditions.
JYNT’s Profitability and Margin Rates
The JYNT maintains its high level of profitability with a strong gross margin rate of 90.65%. Which is particularly noteworthy given that the company operates in the retail industry. The operating margin has also improved, rising from 2.88% to 4.78%. Although G&A costs did increase by 20.8%, this was a slower rate of growth compared to the previous quarter, where the increase was 36%.
JYNT’s Tech and Data Advancements
JYNT has been making strategic moves in its business operations, particularly in automating its processes and collecting data from its customers. The company launched its IT platform Axis 1.0 in 2021 Q3, which is a licensed and scalable CRM platform that allows JYNT to offer mobile check-ins, patient portals, and individualized marketing to its customers. JYNT is well-positioned to get lots of value out of its customer data due to its large national network and scale. The CEO shared the company’s vision on the importance of harnessing the power of data to drive business growth during the quarter. JYNT launched the first version of its intelligent business intelligence and analytical reporting tool, which will provide insights and actionable recommendations to help clients make data-driven decisions. The company also plans to create an automated marketing program and launch a patient portal later in the year.
JYNT’s Outlook and Risks in 2023
The JYNT expects revenue to be between $123M and $128M, representing a 20% increase. However, adjusted EBITDA is expected to decline in comparison to the previous quarter, with estimates ranging from $12.5M to $14M, due to cost headwinds. JYNT has experienced a high turnover rate of doctors, which was 56% in 2021. For 2022, JYNT aims to reduce the turnover rate to 34% which will inevitably impact margins. JYNT’s ongoing investment in people, technology, and new market expansions is a clear indication that the company is still in a fast transformation phase. While developing new capabilities is generally a good thing. JYNT faces competition from various players, including other franchise models and independent clinics. In addition, telehealth providers may also emerge as a significant threat in the future. JYNT should stay vigilant and continue to innovate to stay ahead of the competition.
The Joint Corp Stock Analysis
According to forecasts from one analyst, the average target price for The Joint Corp’s stock over the next 12 months is USD 15.00. The average rating given by analysts for The Joint Corp’s stock is “Hold.” Stock Target Advisor has conducted its own analysis of The Joint Corp’s stock and has given it a “Neutral” rating based on 5 positive signals and 6 negative signals. The Joint Corp’s stock closed at USD 16.20 in the last trading session. The stock’s price has increased by +2.14% over the past week, +5.47% over the past month, but has decreased by -49.74% over the last year.
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