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The Joint (JYNT) Buys Northern California Regional Developer Zone

The Joint Corp. JYNT recently announced that it has acquired regional developer rights for the Northern California region on Apr 1. The medical care facility provider acquired the rights for $2.4 million.

The company expects the region to hold 75 clinics, including its right to oversee 56 franchisee clinics, of which 36 are in the active development phase and 20 are currently operating. The overall demographic modeling of the region incorporates additional 19 sites for future development.

The latest acquisition is a strong move from JYNT to enhance its footprint in the Northern California region. This is expected to improve the company’s margin contribution in the franchisee business and support its sites in the region. The move will likely accelerate The Joint’s greenfield project growth.

The latest acquisition follows its Mar 17 deal to acquire the regional developer territory of Northern New Jersey. By 2023-end, the company aims to open a total of 1,000 clinics. It intends to achieve the target through new greenfield projects and franchise clinic openings. The company is currently present in 700 locations in the United States. It witnesses around 11 million patient visits per annum, which is expected to rise in the future.

While new greenfield projects boost the company’s bottom line in the long run, they suppress profits in the short run. The Zacks Consensus Estimate for earnings for the current year is pegged at 33 cents per share, indicating a decline of 31.3% year over year. The bottom line has witnessed two downward movements in the past 60 days against none in the opposite direction.

Price Performance

Shares of JYNT have declined 26% in the past year against a 37.3% rise of the industry it belongs to.

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Zacks Rank & Key Picks

The Joint currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the medical space include Humana Inc. HUM, UnitedHealth Group Incorporated UNH and NextGen Healthcare, Inc. NXGN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Headquartered in Louisville, KY, Humana is one of the largest healthcare plan providers in the United States. HUM’s acquisitions and dispositions, efficient capital deployment, and strong Medicaid business position it for long-term gains. Humana beat earnings estimates in each of the last four quarters, with the average being 3.1%.

UnitedHealth’s global business is witnessing a recovery in membership and revenue figures. UNH’s favorable government business and strong capital position are other positives. Based in Minnetonka, MN, UnitedHealth beat earnings estimates in each of the last four quarters, with the average being 8.4%.

Headquartered in Irvine, CA, NextGen Healthcare develops and markets healthcare information systems. The Zacks Consensus Estimate for NXGN’s bottom line for the current quarter is pegged at 99 cents per share, indicating an increase from the year-ago level. NextGen Healthcare beat earnings estimates in each of the last four quarters, with the average being 17.5%.


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