Atlanta, Georgia – The Joint Corp (NASDAQ: JYNT) has experienced some recent share price growth, although it remains 88% lower than its peak in 2021. Despite market sentiment being subdued towards the stock, after the recent Q4 earnings call, there are signs that JYNT still presents a buying opportunity due to its potential for future earnings growth. The company’s strategic shift to improve margins adds to its overall appeal, which will be discussed further below.

In 2023, JYNT concluded the year with strong growth and operational expansion. System-wide sales increased by 11% to $488 million, with revenue reaching $117.7 million. Additionally, the company’s adjusted EBITDA improved to $12.2 million. Operational metrics showed notable progress, with total patient visits rising to 13.6 million and new patient treatments increasing to 932,000. A significant portion of new patients were first-time visitors to any chiropractic service, demonstrating JYNT’s role in expanding the reach of chiropractic care.

While there was a slight slowdown in comparable sales growth to 4% from the previous year, JYNT aggressively expanded its clinic network. By the end of the year, the company operated 935 clinics, up from 838, including both franchised and company-owned or managed clinics. This growth indicates a positive trajectory for the company, despite some challenges.

However, indications suggest that the pace of expansion may be moderating, evidenced by a 6% decrease in new patient counts from the previous year. Rising interest rates and high employment levels are impacting consumer behavior more than previously anticipated, affecting JYNT’s growth momentum. The company’s shift towards refranchising its corporate-owned clinics is seen as a strategic move to minimize capital expenditures and maximize margins, showcasing a transition towards a more conservative business approach.

The refranchise strategy allows JYNT to stabilize its earnings by transferring operational costs and complexities to franchisees. This shift also enables the company to potentially reacquire Regional Developer (RD) territories, further optimizing its financial model. The strategic shift towards refranchising and reacquiring RD territories could significantly impact JYNT’s profitability in the long term.

In conclusion, The Joint Corp (JYNT) remains a robust business with strategic initiatives in place to sustain growth. The management’s decision to refranchise their corporate portfolio and focus on optimizing financial performance sets a positive trajectory for the company. While growth may be slower in the near future, JYNT’s well-managed working capital and lack of long-term debt position it favorably for sustained success.