Pain Relief Marketing And Refranchising Will Transform This Chiropractic Network Over The Next Decade

Catalysts

About Joint

The Joint Corp. operates a national network of franchised chiropractic clinics that offer affordable, routine care focused on pain relief and ongoing wellness.

What are the underlying business or industry changes driving this perspective?

• The shift in marketing toward pain relief, supported by a national brand campaign and franchisee funded reallocation of about 1% of clinic gross sales to central advertising, is aimed at capturing a share of the US$20b back pain spend and can support system wide sales and royalty revenue.
• Expanded digital efforts, including SEO upgrades, new clinic microsites and optimization for AI driven search, are already showing 20% to 40% higher organic traffic in pilots. This can lift lead volumes, patient counts and ultimately clinic level revenue.
• The rollout of Kickstart treatment packages and a broad wellness plan pricing pilot across roughly 200 clinics is focused on increasing revenue per patient and monetizing early stage care, which can support system wide sales and franchisee margins.
• Ongoing refranchising toward a 100% franchise model, together with lower regional developer royalties and targeted G&A reductions, is intended to create a leaner cost base that can support higher adjusted EBITDA margins and earnings from continuing operations.
• Investments in patient facing technology, including a mobile app with growing adoption and features that simplify visits and records access, are designed to deepen engagement and lengthen membership duration, which can support recurring revenue and more stable clinic level cash flow.

Assumptions

This narrative explores a more optimistic perspective on Joint compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Joint's revenue will grow by 4.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -0.4% today to 20.2% in 3 years time.
• The bullish analysts expect earnings to reach $12.5 million (and earnings per share of $0.74) by about January 2029, up from $-218.9 thousand today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 19.2x on those 2029 earnings, up from -604.5x today. This future PE is lower than the current PE for the US Healthcare industry at 23.3x.
• The bullish analysts expect the number of shares outstanding to decline by 2.03% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.96%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• System wide sales and same store sales are currently under pressure, with system wide sales down 1.5% to US$127 million and comps down 2% in Q3 2025, and full year 2025 comp guidance revised to a range of 1% decline to flat. This could limit revenue growth and weigh on earnings if this trend persists.
• The refranchising plan depends on buyers securing financing in what management describes as a tougher lending environment, and the sale of 45 Southern California clinics plus 33 remaining corporate clinics is still in negotiation. Any prolonged delay or weaker than expected terms could reduce royalty growth and slow margin improvement in income from continuing operations.
• The national marketing refresh and SEO and microsite program are designed to address lower new patient counts. However, management acknowledges that brand awareness campaigns tend to take longer to show results, so if patient acquisition does not improve, clinics may continue to see softer comps, which would pressure royalty revenue and clinic level profitability.
• The wellness plan pricing pilots, including US$2 to US$10 increases and a broader Q1 2026 rollout, are being tested while comps are slightly negative. If patient sensitivity to price is higher than expected, higher churn or weaker new patient conversion could offset pricing benefits and impact revenue per patient and net margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Joint is $14.0, which represents up to two standard deviations above the consensus price target of $10.67. This valuation is based on what can be assumed as the expectations of Joint's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $14.0, and the most bearish reporting a price target of just $9.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $61.9 million, earnings will come to $12.5 million, and it would be trading on a PE ratio of 19.2x, assuming you use a discount rate of 7.0%.
  
• Given the current share price of $8.9, the analyst price target of $14.0 is 36.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.