The Joint Corp. (NASDAQ:JYNT) Q4 2022 Earnings Call Transcript

Jake Singleton: Brooks it’s a great question and I think that it’s a combination of things. Again, we’re, it’s a focus for us on the clinic level is, is to, is to help, make sure that patient continues to stay on their membership and come in on a regular basis. And we have a whole series of activities on the clinic level to, to reach out to those patients that seem to be slowing down in the use of their adjustments per month, for example, and making those phone calls and making them aware or just bring to their attention to stay in. I think also that we’re seeing, we talked, Jake mentioned that 56% of our patient base right now is on that new price list and that we’ve seen that improving attrition. I think part of that is drawn by, or it’s caused by those patients on those lower rates are hanging on longer because they know if they drop off and come back.

And that’s such a traditional experience in our network. We’ve talked about this before. So if the average patient stays with us for six months, that and then they use us, let’s say a little under three times a month in that period that we know that at least 25% of them will come back within the next six months. And I think with that price change is that’s given a little pause of, okay, do I really want to let go of that, that lower price rate knowing that I’m going to probably come back in the future. So I think that’s one of the factors that’s helping improve that retention rate. And I do think we’re getting better at, on a clinic level of, of, of, of educating our con our patients about, the, the value of that ongoing, chiropractic care, not simply the pain remediation, but to truly as a part of a, a health and wellness program.

Brooks O’Neil: Absolutely. Great. Thank you very much.

Operator: Next question will come from Jeremy Hamblin, Craig-Hallum Capital Group. Please go ahead.

Jeremy Hamblin: Thanks, and thanks for taking the questions. I wanted to start with the EBITDA guide for ’23. I think it implies about a 75 basis point decline versus the ’22 results. And in terms of understanding the interplay there whether it’s your gross margins, the franchise cost of revenues sales and marketing and G&A, just as your kind of your key line items driving that. I wanted to get a sense for that decline is that coming like exclusively from G&A ramping further because it does look like your gross margins were still pretty solid in Q4 and your franchise cost of revenue was actually lower than it’s been in in the past couple of years. So just wanted to understand that your sales and marketing cost con, just wanted to understand that your sales and marketing cost controls also look like they’re pretty solid. So any color you can share?

Jake Singleton: Absolutely, Jeremy. Thanks for the question. The way I would categorize the growth is really, it’s going to be rolled into that GNA line item. For us, all of our clinic level costs flow through G&A and so cost of revenue or our gross margin is relatively predictable and we expect that to be in that 90% plus range again. And so that up, up and through that of the p and we expect to be relatively predictable. Where you’re seeing the cost come into play is again the continued investment in our people, our corporate segment. While I do expect margin expansion we are continuing to invest in that outside the four wall overhead and making sure that we have the, the correct infrastructure in place to continue to allow these units to ramp as we know they can.