Edward Chang of Pledge Capital presented his in-depth investment thesis on The Joint Corp. (US: JYNT) at Best Ideas 2019.

Thesis summary:

The Joint Corp. is the largest chiropractic chain in the U.S., employing over one thousand of the sixty thousand licensed chiropractors in the country.

The largely franchised chain has a low-cost direct-payor model that eliminates most paper-work and is focused on short convenient visits. Their clinics charges less than the out of pocket expense or co-payment / consumer’s share of co-insurance; and significantly less than total fee charged by other chiropractors. This has helped the chain grow franchise system sales from ~$22 million to ~$150 million in the last five years, a ~45% CAGR.

With new unit economics improving, unit growth is accelerating. There is still substantial room for the chain to grow into its long-term unit potential (4x+).

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About the instructor:

Edward Chang is the founder and portfolio manager at Pledge Capital. He is a graduate of New York University Leonard N. Stern School of Business with a Bachelor’s degree in Finance & Accounting. He also completed a Master’s degree in accounting during the same time. Before founding Pledge Capital in 2016, he worked on the sell side at UBS Equity Research covering consumer retail companies. He had previous work experience covering a wide breath of companies on the buy-side as well. He is also a CPA.