Q2 2024 The Joint Corp Earnings Call
Good day and welcome to the Joint Corporation Second Quarter 2024 Financial Results Conference Call.
Speaker Change: All participants will be in listen-only mode.
Speaker Change: If you need assistance, please signal a conference specialist by pressing the star key followed by zero.
After today's presentation, I'll be an opportunity to ask questions. Please note that this event has been recorded.
Operator: All participants will be in listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, we'll have an opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the conference over to Mr. David Barnard, Jake A, and Ambassador Relations. Please go ahead, sir.
Speaker Change: I'd like to turn the conference over to Mr. David Barnard, L.H.A. and Investor Relations. Please go ahead, sir.
David Barnard: Good afternoon, everyone. Again, this is David Barnard of LHA Investor Relations. Joining us on the call today are President and CEO Peter Holt and CFO Jake Singleton. Please note we are using a slide presentation that can be found at HTTPS, ir.thejoint.com under the events section. Today, after the close of market, the joint corporation issued its results for the quarter ended June 30, 2024. If you do not already have a copy of the press release, it can be found in the investor relations section of the company's web site. As provided on slide two, please be advised that today's discussion includes forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Speaker Change: Thank you, Nick. Good afternoon, everyone. Again, this is David Barnard of LHA Investor Relations.
Speaker Change: Joining us on the call today are President and CEO Peter Holt and CFO Jake Singleton.
Speaker Change: Please note we are using a slide presentation that can be found at HTTPS.
Speaker Change: ir.thejoint.com under the events section. Today, after the close of market, the Joint Corporation issued its results for the quarter ended June 30, 2024. If you do not already have a copy of the press release, it can be found in the investor relations section of the company's website.
David Barnard: All statements, other than statements of historical facts, may be considered for looking purposes. Although the company believes that the expectations and assumptions reflected in these four looking statements are reasonable, it can make no assurances that such expectations or assumptions will prove to have been correct.
David Barnard: Our true results may differ materially from those expressed or implied in forward-looking statements due to various risks and uncertainties. As a result, we caution you against placing undue reliance on these forward-looking statements. For a discussion of the risks and uncertainties that could cause actual results to differ from those expressed or implied in the forward-looking statements, please refer to the risk factors detailed in the company's reports on Form 10K and 10Q. As well as other reports that the company files from China time with the SECs.
Speaker Change: As provided on slide two, please be advised that today's discussion includes forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Speaker Change: All statements, other than statements of historical facts, may be considered forward-looking statements, although the company believes that the expectations and assumptions reflected in these forward-looking statements are reasonable.
Speaker Change: It can make no assurances that such expectations or assumptions will prove to have been correct.
Speaker Change: Actual results may differ materially from those expressed or implied in forward-looking statements due to various risks and uncertainties. As a result, we caution you against placing undue reliance on these forward-looking statements.
Speaker Change: For a discussion of the risks and uncertainties that could cause actual results to differ from those expressed or implied in the forward-looking statements, please review the risk factors detailed in the company's reports on Form 10-K and 10-Q, as well as other reports that the company files from time to time with the SEC.
David Barnard: Finally, any forward-looking statements included in this earnings call are made only as of the date of this call, and we do not undertake any obligation to revise the results or publicly release any updates to these forward-looking statements in light of new information or future events. Management uses Eva Dawn and Justin Dawn, which are non-gap financial measures. These are presented because they are important measures used by management to assess financial performance.
Speaker Change: Finally, any forward-looking statements included in this earnings call are made only as of the date of this call, and we do not undertake any obligation to revise a results or publicly release any updates to these forward-looking statements in light of new information for future events.
Speaker Change: Management uses EBITDA and adjusted EBITDA, which are non-GAAP financial measures. These are presented because they are important measures used by management to assess financial performance.
David Barnard: Management believes they provide a more transparent view of the company's underlying operating performance and operating trends than gap measures alone. Reconciliation of net income to EBITDA and adjusted EBITDA is presented in the press release. The company defines EBITDA as net income or loss before net interest, tax expense, depreciation, and amortization expenses. The company defines adjusted EBITDA as EBITDA before acquisition-related expenses, which includes contract termination costs associated with reacquired regional developer rights.
Speaker Change: Management Police, they provide a more transparent view of the company's underlying operating performance and operating trends and gap measures alone. Reconciliation of net income to EBITDA and adjust to EBITDA is presented in the press release.
Speaker Change: The company defines EBITDA as net income or loss before net interest, tax expense, depreciation, and amortization expenses.
Speaker Change: The company defines it just as EBITDA, as EBITDA before acquisition-related expenses, which includes contract termination costs associated with reacquired regional developer rights.
David Barnard: Stock-Based Compensation Expense, Bargain Purchase Gain, Net Gain or Loss on Disposition or Impairment, Costs Related to Restatement Filings, Restructuring Costs, Litigation Expenses consisting of legal and related fees for specific proceedings that arise outside of the company's ordinary course of business, and other income related to the employee retention credit. Management also includes commonly discussed performance. System-wide sales include revenues at all clinics, whether operated by the company or by franchisees. While franchise sales are not recorded as revenues by the company, management believes the information is important in understanding the company's financial performance because these sales are the basis on which the company calculates and records royalty fees and are indicative of the financial health of the franchisee base.
Speaker Change: Stock Based Compensation Expense.
Speaker Change: Bargain Purchase Gain, Net Gain, or Laws on Disposition, or Improvement, cost related to restatement violence, restructuring cost, litigation expenses.
Speaker Change: consisting of legal and related fees for specific proceedings that arise outside of the company's ordinary course of business and other income related to the employee retention credits.
Speaker Change: Management also includes commonly discussed performance metrics.
Speaker Change: System-wide sales include revenues at all clinics, whether operated by the company or by franchisees. While franchise sales are not recorded as revenues by the company, management believes the information is important in understanding the company's financial performance.
Speaker Change: Because these sales are the basis on which the company calculates and records royalty fees and are indicative of the financial health of the franchisee base.
David Barnard: System-wide consoles include the revenues from both company-owned or managed clinics and franchise clinics, which in each case have been open for at least 13 full months and exclude any clinics that have closed. Turning to slide three, it is my pleasure to turn the call over to Peter Holt.
Speaker Change: System-wide concels include the revenues from both company-owned or managed clinics, and franchise clinics, then in each case have been open at least 13 full months, and exclude any clinics that have closed. Turning to slide 3, it is my pleasure to turn the call over to Peter Holt.
Peter Holt: Thank you, David, and I welcome everybody to the call. The Joint continues to revolutionize access to chiropractic care. Our nationwide network of 960 clinics, 86% of which are franchised, provides affordable concierge-style membership-based services in convenient retail settings. During Q2 2024, we furthered our strategies to improve unique economics and re-franchise the vast majority of our corporate clinics. We also continue to deliver growth, even during the ongoing macroeconomic pressure. Q2-2024 revenue increased 3%, and the same story of comps grew 2% compared to the prior year period. Q2 adjusted even though it was $2.1 million, and in a moment, Jake will provide greater detail on our financials.
Peter Holt: Thank you, David, and I welcome everybody to the call. The Joint continues to revolutionize access to chiropractic care. Our nationwide network of 960 clinics, 86% of which are franchised, provides affordable concierge-style membership-based services in convenient retail settings.
Speaker Change: During Q2 2024, we furthered our strategies to improve unique economics and to re-franchise the vast majority of our corporate clinics.
Speaker Change: We also continue to deliver growth even during the ongoing macroeconomic pressure. Q2 2024 revenue increased 3% and same-store comps grew 2% compared to the prior year period.
Speaker Change: Q2 adjusted EBITDA was $2.1 million and in a moment Jake will provide greater detail to our financials.
Peter Holt: To increase clinic profitability, we're embracing new innovation in operations, IT, and marketing that leverage the size of our network on national and local levels. Turning to slide four, I'll review our recent activity. As we approached having a thousand clinics, we increased our purchasing power, which we were leveraging to the benefit of our clinics. For example, our unit economics task force created a clinic in a box to optimize the time and cost of our new openings.
Speaker Change: To increase credit profitability, we're embracing new innovation and operations, IT and marketing that leveraged the size of our network on national and local levels.
Jake Singleton: Turning to slide four, I'll review the recent activity.
Jake Singleton: As we approached having a thousand clinics, we increased our purchasing power, which we were leveraging to the benefit of our clinics.
Speaker Change: For example, our Unit Economics Task Force created a clinic-in-a-box to optimize the time and cost of our new openings. We redesigned the interiors with lower-cost material and sizes that can be shipped more economically. Now our vendor can produce and ship all of the elements to open a clinic.
Peter Holt: We redesigned the interiors with lower cost materials and sizes that can be shipped more economically. Now, our vendor can produce and ship all the elements to open the clinic. We expect to both shorten the time to opening and significantly lower the build-out cost.
Peter Holt: In IT, we're supporting more financial tools that help franchisees automate and manage their business, and recent patient innovations include adjusting the elements of our business models to better align with current consumer preferences. An important part of growing patient loyalty is creating a frictionless experience. While our patients love the convenience of our model, we've learned a subset of patients who would like to schedule their first visit to ensure that they can get in, out, and on their way. To answer this need, and after testing earlier this year, we launched the initial visit booking system-wide last month.
Speaker Change: We expect to both shorten the time to opening and significantly lower the build.cast.
Speaker Change: In IT, we're supporting more financial tools that help franchisees automate and manage their businesses.
Speaker Change: And our recent patient innovations include adjusting elements of our business model to better align with current consumer preferences.
Speaker Change: An important part of growing patient loyalty is creating a frictionless experience.
Speaker Change: While our patients love the convenience of our model, we've learned a subset of patients would like to schedule their first visit to ensure that they can get in, out, and on their way.
Speaker Change: To answer this need, and after testing earlier this year, we launched the initial visit booking system-wide last month.
Peter Holt: Patients who had booked their first visit indicated that booking was both a positive experience and important to their choosing a joint. We've extensively tested our enhanced digital intake forms now that enable new patients to use their own mobile devices when completing their intake forms, with a plan to roll this out system-wide later this month. Our trials have proven this process is easier and less time-consuming for patients as well as our wellness coordinators. We're aggressively developing our mobile check-in, and in Q4, we'll beta-test the app.
Speaker Change: Patients who had booked their first visit indicated that booking was both a positive experience and important to their choosing a joint.
Speaker Change: We've extensively tested our enhanced digital intake forms now that enable new patients to use their own mobile devices when completing their intake form with a plan to roll this out system-wide later this month.
Speaker Change: A trial that's proven this process is easier and less time-consuming for patients as well as their well-discoordinators.
Peter Holt: Additionally, we'll be evaluating different membership options and policies. We're assessing pricing and discount strategies, such as our walk-in rate, changes to hours and days of operation, as well as our legacy pricing policy. Turning to slide 5, I'll review our refranchising goals and efforts. As discussed previously, we're focused on driving long-term growth by selecting the most effective partners for a refranchised clinic. In May, we engaged Capstone Partners, a full-service middle market investment bank with specialization in refranchising, and recently finalized the confidential information memorandum package for marketing clusters of our clinics.
Speaker Change: We're aggressively developing our mobile check-in and in Q4 we'll be there to app.
Speaker Change: Additionally, we'll be evaluating different membership options and policies. We're assessing pricing and discount strategies, such as our walk-in rate, changes to hours and days of operation, as well as our legacy pricing policy.
Speaker Change: Turning to slide 5, I'll review our re-franchise goals and efforts.
Speaker Change: As discussed previously, we're focused on driving long-term growth by selecting the most effective partners for our refranchised clinics.
Speaker Change: In May, we engaged Capstone Partners, the full service middle market investment bank, with specialization and refranchising, and recently finalized the confidential information memorandum packets for marketing clusters of our clinics.
Peter Holt: In the meantime, we have considerable interest in the number of markets. Currently, two transactions with nine clinics have been approved and are moving through the letter of intent process in Savannah and Kansas City. These transactions will address two smaller clusters that we can tie to existing franchisees.
Speaker Change: In the meantime, we have considerable interest in the number of markets. Currently, two transactions with nine clinics have been approved and moving through the letter of intent process. In Savannah and Kansas City, these transactions will address two smaller clusters that we can tie to existing franchisees.
Peter Holt: Also, based on earlier conversations during the quarter, we sold two clinics in California and Arizona to existing franchisees for net proceeds of $224,000. We are well on our way to generating capital to be reinvested in brand marketing, our D. Terry Acquisitions, and our stock purchases, among other options. Turning to slide 6, I'll review our marketing efforts. In the last nine months, we've conducted significant research and formulated programs to amplify patient acquisition and retention, engage fewer patients, increase referrals, and improve conversion and attrition.
Speaker Change: Also, based on earlier conversations during the quarter, we sold two clinics in California and Arizona to existing franchisees for net proceeds of $224,000.
Speaker Change: Well, in our way to generating capital to be reinvested in brand marketing, RD Terry Joy acquisition, and our stock purchases among other options.
Speaker Change: Turning to slide six, I'll review our marketing efforts. In the last nine months, we've conducted significant research and formulated programs to amplify patient acquisition and retention, engage-lapse patients, increase referrals, and improve conversion and attrition.
Peter Holt: We realize we need to optimize our market investment to better support the marketing funnel and shift resources from lead generation toward consideration and awareness campaigns. This is an important adjustment to our marketing strategy as 49% of adults in the United States have never been to a chiropractor, even though 80% have back pain at some point in their lives. Similarly, while the Joint has 1.67 million active patients, which represents less than 1% of adults in the United States, we're constantly working to educate more people about the efficacy of chiropractic care.
Speaker Change: We realized we need to optimize our marketing investment to better support the marketing funnel and shift resources from lead generation toward consideration and awareness campaigns.
Speaker Change: This is an important adjustment to our marketing strategy as 49% of adults in the United States have never been to a chiropractor, even though 80% have back pain at some point in their lives.
Speaker Change: Similarly, while the joint has 1.67 million active patients, which represents less than one percent of adults in the United States, we're constantly working to educate more people about the efficacy of chiropractic care.
Peter Holt: Currently, we have a first-mover advantage, and our goal is to make the joint synonymous with chiropractic, like Kleenexes to tissue, as we focus on building our brand strategy that defines and leverages our unique strengths to grow clinic profitability and patient loyalty. Additionally, we know an important part of driving patient loyalty is affordability. In June, we began our 5 plus 1 summer sale, giving our patients access to a free month of care when they purchase five months in advance. This promotion exceeded our expectations. What makes these results even more impressive is that in that year for this year.
Speaker Change: Currently, we have first mover advantage and our goal is to make the joint synonymous with car practice by Queenick's statistician. As we focus on building our brand strategy that defines and leverages our unique strengths to go Queenick profitability and patient loyalty.
Speaker Change: Additionally, we know an important part of driving patient loyalty is affordability. In June , we again offered our 5 plus 1 summer sale, giving our patients access to a free month of care when they purchase five months in advance.
Peter Holt: The sale was not valid for legacy priced membership. This exclusion is part of our ongoing commitment to drive clinic-level profitability, and even without the discounting of legacy members, we had a strong demand for the promotion. We've continued to work with our co-ops to provide a more robust marketing-level strategy. Leveraging what we know about those patients new to chiropractic and those not new to chiropractic, as well as their behavior, we've worked with our largest co-ops to implement new channels in tech.
Speaker Change: This promotion exceeded our expectations.
Speaker Change: Well, make these results even more impressive is in that year for this year, the sale was not valid for legacy priced memberships. This exclusion is part of our ongoing commitment to drive clinical, profitable profitability and even without the discounting of legacy members, we had a strong demand for the promotion.
Speaker Change: We've continued to work with our co-ops to provide a more robust marketing level strategy.
Speaker Change: Leveraging what we know about those patients new to chiropractic and those not new to chiropractic with their behavior, we worked with our largest co-ops to implement new channels and tactics.
Peter Holt: This increase includes a tick-tock spend market-wide to reduce costs and increase impressions, as well as the introduction of new channels aimed at driving awareness and consideration and lowering patient acquisition cost. Turning to slide seven, let's discuss our clinic metrics. In Q2 2024, we opened nine franchise clinics, refranchised two clinics, and closed three clinics, one franchise and two corporate, for a net increase of six clinics. In the same period a year ago, we opened 23 franchised and 3 greenfield clinics, acquired 3 previously franchised clinics for our corporate portfolio, and closed 6 clinics, 4 franchised and 2 corporate, for a net increase of 20 clinics.
Speaker Change: This increase includes a TikTok spend market-wide to reduce costs and increase impressions as well as the introduction of new channels aimed at driving awareness and consideration and lowering the patient acquisition costs.
Speaker Change: Turning to slide 7, let's discuss our clinic metrics.
Speaker Change: In Q2 2024, we open 9 franchise clinics, refranchised 2 clinics, and close 3 clinics, 1 franchise, and 2 corporate for net increase of 6 clinics.
Speaker Change: In the same period a year ago, we opened 23 franchised and 3 greenfield clinics, acquired 3 previously franchised clinics for our corporate portfolio, and closed 6 clinics, 4 franchised and 2 corporate, for a net increase of 20 clinics.
Peter Holt: On June 30, 2024, our total clinic count reached 960, consisting of 829 franchised and 131 corporate. The clinic portfolio mix remains at 86% franchised and 14% company owner managed, although it's expected to shift during the year as we execute our re-franchising strategy. Turn to our viewer franchise license sales slightly. As previously indicated, we expect viewer franchise license sales to be impacted by a refranchising stretch. During Q2, we sold 7 franchise licenses compared to 21 in Q2 2023.
Speaker Change: On June 30, 2024, our total clinic count reached 960 consisting of 829 franchised and 131 corporate.
Speaker Change: The clinic portfolio makes remain the 86% franchise and 14% company owner managed, although expected to shift during the years, we execute our refranchising strategy.
Speaker Change: Turn to Slight 8, our viewer franchise licensed sales. As previously indicated, we expect franchise licensed sales to be impacted by a refranchising strategy.
Speaker Change: During Q2, we sold 7 franchise licenses compared to 21 in Q2 2023. Of the licenses sold, 73% of the franchisees were new to the joint.
Peter Holt: Of the licenses sold, 73% of the franchisees were new to the joint. As of June 30, 2024, we had 158 franchise licenses in active development, as well as 17 regional developers with an aggregate 10-year minimum development schedule for 674 clinics. In July, for approximately half a million dollars, the Maryland D.C. R.D. territory was re-acquired, with 17 open clinics and the potential for another 31 clinics. This reduced the number of R.D.s to 16 and the coverage to approximately 59% of the network. And with that, I'll turn it over to Jake.
Speaker Change: At June 30, 2024, we had 158 franchise licenses in active development, as well as 17 regional developers with an aggregate 10-year minimum development schedule for 674 clinics.
Speaker Change: In July, for approximately a half a million dollars, were re-acquired the Maryland DCRD territory with 17 open clinics in a potential for another 31 clinics. This reduced the number of RDS to 16 in the coverage of approximately 59% of the network.
Jake Singleton: Thank you, Peter. And let's turn to slide nine. I'll review our clinic comps for Q2 2024 compared to Q2 2023. System-wide sales for all clinics open for any amount of time increased to $129.6 million, up 8%. System White Comps sales for all clinics open 13 months increased 2%. Systemide Comcells from mature clinics, open 48 months or more, decreased by 2%.
Speaker Change: And with that, I'll turn it over to Jake.
Jake Singleton: Thank you, Peter. And let's turn to slide 9. I'll review our clinic comps for Q2 2024 compared to Q2 2023.
Jake Singleton: System-wide sales for all clinics open for any amount of time, increase to $129.6 million, up 8%. System-wide comp sales for all clinics open 13 months, increased 2%.
Speaker Change: Sift my comp sales from mature clinics, open 48 months or more, decreased 4%.
Jake Singleton: Revenue was $30.3 million, up $1 million, or 3%. Revenue from franchised operations increased 10%, contributing $12.6 million. Company-owned or managed clinic revenue decreased 1%, contributing $17.7 million. Cost of revenue was $2.8 million, up 9% over the same period last year, reflecting the associated higher regional developer royalties and commissions. Selling and marketing expenses were $5.4 million, up 15% year-over-year, reflecting the costs associated with the in-person national conference and the timing of advertising spend. Depreciation and amortization expenses decreased $805,000 or 35% compared to the prior year period.
Speaker Change: Revenue was $30.3 million, up $1 million, or 3%.
Speaker Change: Revenue from franchise operations increased 10%, contributing 12.6 million dollars.
Speaker Change: Company owned or managed clinic revenue decreased 1% contributing 17.7 million dollars.
Speaker Change: Cost of revenues was $2.8 million, up 9% over the same period last year, reflecting the associated higher regional developer royalties and commissions.
Speaker Change: Delling and marketing expenses were $5.4 million, up 15% year over year, reflecting the cost associated with the in-person national conference and the timing of advertising spend.
Speaker Change: Depreciation and Amortization expenses decreased $805,000 or 35% compared to the prior year period.
Jake Singleton: This reflects the accounting for corporate clinics that are being held for sale as part of the re-franchising effort. The G&A expenses were $22.6 million, up 13% compared to the same period last year, primarily due to the increased expenses to support more clinics, plus $1.5 million in legal expenses associated with a class action settlement related to time and wages in the state of California, which reflects the ongoing complexity of doing business in California.
Speaker Change: This reflects the accounting for corporate clinics that are being held for sale as part of the re-franchising effort.
Speaker Change: The G&A expenses were $22.6 million, up 13% compared to the same period last year.
Speaker Change: primarily due to the increased expense to support more clinics, plus $1.5 million in legal expenses associated with a class action settlement related to time and wages in the state of California, which reflects the ongoing complexity of doing business in California.
Jake Singleton: Loss on disposition or impairment was $1.4 million, related to two corporate clinic closures and our quarterly analysis of clinics held for sale as part of the re-franchising effort. This compares to $144,000 in Q2 2023. Income Tax Expense was $178,000, compared to Income Tax Benefit of $161,000 in 22 2023.
Speaker Change: Loss on disposition or impairment was $1.4 million, related to two corporate clinic closures, and our quarterly analysis of clinics held for sale as part of the re-franchising effort. This compares to $144,000 in Q2 2023.
Speaker Change: Income tax expense was $178,000 compared to income tax benefit of $161,000 in 22, 2023.
Jake Singleton: The net loss was $3.6 million, including the aforementioned $1.5 million litigation expense, $1.4 million in loss on disposition or impairment, and the expense associated with the in-person national conference for a loss of $0.24 per share. This compares to a net loss of $320,000, including a loss on disposition or impairment of $144,000, or a loss of two cents per share in Q2 to 2023, adjusted even though it was $2.1 million, Franchise Clinic-adjusted EBITDA was $4.7 million, compared to $5.1 million, reflecting the increased marketing expense related to the National Conference.
Speaker Change: Net loss was $3.6 million, including the aforementioned $1.5 million litigation expense, $1.4 million in loss on disposition or impairment, and the expense associated with the in-person national conference, for a loss of $0.24 per share.
Jake Singleton: This compares to net loss of $320,000, including loss on disposition or impairment of $144,000, or a loss of two cents per share in Q2 2023.
Jake Singleton: Adjusted EBITDA was $2.1 million, compared to $3.2 million.
Speaker Change: Franchise Clinic adjusted EBITDA was $4.7 million, compared to $5.1 million, reflecting the increased marketing expense related to the National Conference.
Jake Singleton: Company-owned or managed clinic adjusted EBITDA increased 15% to $2.5 million. Corporate Expenses, a component of adjusted EBITDA, was $5 million, compared to $4.1 million in Q2203. This reflects ongoing IT maintenance and higher legal and professional service expenses related to our reframing efforts.
Speaker Change: Company-owned or managed clinic-adjusted EBITDA increased 15% to 2.5 million dollars.
Jake Singleton: Corporate expenses that component budgeted EBITDA was $5 million, compared to $4.1 million in Q2-2023. Reflecting ongoing IT maintenance, and higher legal and professional service expenses related to our refranchising efforts.
Jake Singleton: On to slide 10, to review our balance sheet and cash flow. At June 30th, 2024, our unrestricted cash was $17.5 million, compared to $18.2 million at December 31st, 2023. Cashflow from Operations for the six-month period was $1.8 million. In addition, the net proceeds of the sales of two clinics were partially offset by ongoing IT CapEx and a $2 million Q1 repayment on the line of credit with JP Morgan Chase. Through this facility, we have retained immediate access to $20 million through February of 2027.
Speaker Change: On Decide 10, to review our balance sheet and cash flow, at June 30, 2024, our unrestricted cash with $17.5 million, compared to $18.2 million, at December 31, 2023.
Jake Singleton: Cash flow from operations for the six-month period was $1.8 million. In addition, the net proceeds of the sale of two clinics was partially offset by ongoing IT CapEx and a $2 million Q1 repayment on the line of credit with JPMorgan Chase.
Through this facility, we have retained immediate access to $20 million through February of 2027.
Jake Singleton: On slide 11, a review of our financial results for the sixth month ended June 30, 2024, compared to the same period in 2023. Revenue increased by 4% to $60 million. The net loss was $2.6 million, including $1.8 million and lost on this positionary impairment. And that's not to mention $1.5 million in litigation expenses and the cost of the in-person national franchise conference for a loss of 18 cents a cent. This compares to net income for the first half of $23 of $2 million, which included the $3.9 million employee retention credit and $210,000 on loss of disposition, or 13 cents per diluted share. Adjusted EBITDA was $5.6 million, compared to $5.3 million in the same period of 2023. Now on to slide 12.
Jake Singleton: on the slide 11 for a review of our financial results for the six months in June 30, 2024. Compared to the same period in 2023.
Jake Singleton: Revenue was $16 million, up 4%. Net loss was $2.6 million, including $1.8 million and loss on dispositionary impairment, and that's for mention $1.5 million litigation expense, and the cost of the in-person national franchise conference for a loss of 18 cents per share.
Jake Singleton: This compares to Medincone for the first half of 2023 of $2 million, which included the $3.9 million and employee retention credit and $210,000 on loss of disposition or 13 cents per diluted share.
Jake Singleton: Adjusted EBITDA was $5.6 million, compared to $5.3 million in the same period of 2023.
Peter Holt: With the strong constant July and anticipation of our fourth quarter promotions, we are reiterating all elements of our guidance. System-wide sales are expected to be between $530 and $545 million, compared to $488 million in 2023. System-wide comp sales for all clinics open 13 months or more are expected to increase in the mid-single digits, compared to an increase of 4% in 2023. New franchise clinic openings, excluding the impact of refranchised clinics, are expected to be between 60 and 75, compared to 104 in 2023. The difference reflects the impact of our refranchising efforts. And with that, I'll turn the call back over to you, Peter.
Peter Holt: On to slide 12.
Peter Holt: With the strong confs in July and anticipation of our fourth quarter promotions, we are reiterating all elements of our guidance.
Peter Holt: System-wide sales are expected to be between $530 and $545 million, compared to $488 million in 2023.
Peter Holt: System-wide comp sales for all clinics open 13 months or more are expected to increase in the mid-single digits, compared to an increase of 4% in 2023.
Peter Holt: New franchise clinic openings, excluding the impact of re-franchise clinics, are expected to be between 60 and 75 compared to 104 in 2023. The difference reflects the impact of our re-franchising efforts.
Peter Holt: Thanks Jake, and in late May at our annual French ID conference, we discussed strategies to increase clinic profitability and recognize clinics without standing performance. Our conference theme, inspire, influence, and imagine, captured the passion of our French ID RDs and employees.
Peter Holt: and with that I'll turn the cold back over to you Peter.
Peter Holt: Thanks, Jake. In late May at our annual Franchisee Conference, we discussed strategies to increase clinic profitability and recognize clinics with outstanding performance. Our conference theme, Inspire, Influence, and Imagine, captured the passion of our franchisees, RDs, and employees.
Peter Holt: As franchising is like-minded people building a brand, we're thrilled to be partnered with some of the most talented franchisees and doctors of chiropractic in the United States. During our 2020-2024 awards ceremony, we honored over 180 inspirational clinics that generated over $750,000 in 2023. This compares to recognizing 14 high-performing clinics with sales exceeding $550,000 in 2015. This year's award winners included 56 gold clinics with sales between a million and $1.49 million, a marked increase from the only one clinic at this level in 2017. And this year, we honored two platinum clinics with sales over $1.5 million.
Peter Holt: As franchising as like-minded people building a brand, we're thrilled to be partnered with some of the most talented franchises and doctors of Carpathic in the United States.
Peter Holt: During our 2020-2024 award ceremony, we honored over a hundred and eighty, eighty inspirational clinics that generated over $750,000 in 2023.
Peter Holt: This compares to recognizing 14 high-performing clinics with sales exceeding $550,000 in 2015.
Peter Holt: This year's award winners included 56 gold clinics with sales between $1,000,001.49 million, a marked increase from the only one clinic at this level in 2017.
Peter Holt: Part of the success is attributed to the substantial improvement in our chiropractic community's perception of the joint. Since 2018, we've taken action to influence the views of carpetic care in general and the joint in particular. We've endeavored to forge better relationships with the carpetic schools and associations, and have educated them about our model, our commitment to patient service, and our mission to improve quality of life through routine and affordable carpetic care.
Peter Holt: And this year we honored two platinum clinics with sales over 1.5 million dollars.
Peter Holt: Part of the success is attributed to the substantial improvement in our Chiropractic Community's perception of the joint.
Peter Holt: Since 2018, we've taken action to influence the views of chiropractic care in general and the joint in particular.
Peter Holt: We've endeavored to forge better relationships with the chiropractic schools and associations and have educated them about our model, our commitment to patient service, and our mission to improve quality of life through routine and affordable chiropractic care.
Peter Holt: Now with a growing number of joint doctors participating in the school's preceptorship programs, which mentors undergraduate doctors of chiropractic, is increasingly sought after. We also foster these relationships by providing support for educational, athletic, and relief programs. Between 2018 and May 2024, the Joint donated over a million dollars in the carpark to the school, including a recent student scholarship endowment.
Speaker Change: Now, with a growing number of joint doctors participating in the school's preceptorship programs, which mentors undergraduate doctors are carepracting, is increasingly thought after.
Peter Holt: We also foster these relationships by providing support for education, athletic and relief programs. Between 2018 and May 2024, the joint has donated over a million dollars to the carparker schools.
Peter Holt: We've grown to be the largest provider of information on chiropractic on the internet, which contributes to the fact that over 36% of our new patients in 2023 had never been to a chiropractor before. This also means around 65% have chosen our practice over other providers. Now I'll look to the future.
Speaker Change: Including a recent student scholarship endowment.
Peter Holt: We've grown to be the largest provider of information on chiropractic on the internet, which contributes to the fact that over 36% of our new patients in 2023 had never been to a chiropractor before. This also means around 65% have chosen a joint over other providers.
Peter Holt: With our better relationships and enhanced marketing, we're approaching having 1,000 clinics open. The more clinics we open, the more patients we serve, the more referrals we receive, and the more people we educate about the power and efficacy of chiropractic. Currently, about 16% of the adults in the U.S. have utilized chiropractic care in the last year, according to the Palmer Gallup study. Imagine what would happen to our business when, under these numbers, we reach 18% or 20% and beyond.
Peter Holt: Now I'll look to the future. With our better relationships and enhanced marketing, we're approaching having 1,000 clinics open. The more clinics we open, the more patients we serve, the more referrals we receive, and the more people we educate about the power and efficacy of chiropractic.
Speaker Change: Currently, about 16% of the adults of the U.S. have utilized carpenter care in the last year, according to the Palmer Gallet Study.
Peter Holt: That's when chiropractic care becomes a mainstream choice, and we truly begin to experience exponential growth. As more and more people discover chiropractic care, our reach is boundless. In summary, in 2024, our highest priorities are re-franchising the corporate clinics and improving unit economics. Through streamlined operations, resource optimization, and continuous improvement, we expect to maximize profitability at the unit level while delivering exceptional experiences to our patients. Before we begin, I'd like to invite you to visit us at the B-Rally 7th Annual Consumer and TMT Conference in New York City in September. And with that, Nick, I'm ready to begin the Q&A. Thank you, and I'll begin the procedure
Peter Holt: Imagine what would happen to our business when under these numbers we reach 18% or 20% and beyond. That's when chiropractic care becomes a mainstream choice and we truly begin to experience an exponential growth. As more and more people discover chiropractic care, our reach is boundless.
Peter Holt: In summary, in 2024, our highest priorities are re-franchising the corporate clinics and improving unit economics. Through streamlined operations, resource optimization, and continuous improvement, we expect to maximize profitability at the unit level while delivering exceptional experiences to our patients.
Peter Holt: Before we begin, I'd like to invite you to visit us at the B-Rally 7th Annual Consumer and TMT Conference in New York City this September . And with that, Nick, I'm ready to begin the Q&A.
Operator: Thank you. Now we begin the question and answer session. To ask a question, you may press star on your touch-tone phone. Using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then too. This time we'll pause momentarily to assemble a roster. Unknown Speaker. Thank you. The first question will be from J.P. Woolham, Roth Capital Partners. Please go
Operator: Thank you. Now begin the question and answer session. To ask a question, you may press star, the one in your touch-tone phone. Using a speakerphone, please pick up your handset before pressing the keys.
Operator: To withdraw your question, please press star then 2. This time we'll pause momentarily to assemble a roster.
Operator: [inaudible]
Speaker Change: First class, you don't be from J.P. Wolf Capital Partners, please go ahead.
J.P. Woolham: Great. Hi Peter. Hi Jake.
J.P. Woolham: Thanks for taking my questions here. If we could maybe just start on the re-franchising? You know, not sure exactly kind of what you want to share or how much you'll share about the process, but I'm just hoping, you know, we're a bit into the process here, and I think maybe the number of re-franchises is a little lower than we might have thought at this point in time, but I was hoping you could maybe just talk about how the conversations are going.
Speaker Change: Great. Hi, Peter. Hi, Jake. Thanks for taking my questions here.
J.P. Woolham: If we could maybe just start on the re-franchising.
J.P. Woolham: You know not sure exactly kind of what you want to share or how much you'll share on the process, but
J.P. Woolham: I'm just hoping, you know, we're a bit into the process here.
J.P. Woolham: and I think...
J.P. Woolham: Maybe the number of re-franchises is a little lower than where we might have thought at this point in time, but
J.P. Woolham: It sounds like you've got a couple more units that are about to be under LOI, but just talk broadly about, you know, are you finding more success with existing franchisees? Are people looking to do just larger-scale transactions that are taking more time? Any details and kind of information you could share about the process would be great.
Speaker Change: I was hoping you could maybe just talk about how the conversations are going. It sounds like you've got a couple more units that are...
J.P. Woolham: about to be under LOI.
J.P. Woolham: But just talk broadly about, you know, are you finding more success with existing franchisees? Are people looking to do just larger scale transactions that are taking more time? Any details and kind of information you could share about the process would be great.
Peter Holt: Sure. It's great to talk with you about how the process has probably taken a little longer than we would expect. I would have loved to be further along in this process than we are, and it's really a combination. So we have, you know, that portfolio of roughly 131 clinics that we've broken up into clusters. We're talking to our existing franchisees who want to pick up, you know, maybe a couple of clinics that are around them.
Peter Holt: Sure. It's great to talk with you in that the process has probably taken a little longer than we would expect it. I would have loved to be further along in this process than we are, and it's really a combination. So we have, you know, that portfolio of roughly 131 clinics.
Peter Holt: That we've broken up into clusters, we're talking to our existing franchise that you want to pick up, you know, maybe a couple of clinics that around them. The reason we went into the relationship with Capstone is to really widen the market and you do have a number of multi-unit operators out there that are looking to diversify and invest in other franchise concepts and they are looking for that larger cluster of clinics.
Peter Holt: The reason we went into the relationship with Capstone is to really widen the market, and we do have a number of multi-unit operators out there that are looking to diversify and invest in other franchise concepts, and they are looking for that larger cluster of clinics. And so it's taken us some time to put together, you know, the simulation that we're using to market the program, and so we're really now very aggressively starting to market to some of those larger players.
Peter Holt: It's taken us some time to put together the SIEM that we're using to market the program. We're really now very aggressively starting to market to some of those larger players. At the same time, we have a couple of very large players in our own system that are also interested in the acquisition of clinics.
Peter Holt: And at the same time, we have a couple of very large players in our own system that are also interested in the acquisition of clinics. So it has taken a little longer than anticipated. I think that there is obviously a lot of interest in these clinics. These are well-performing clinics, so this isn't a fire sale where we're just trying to get them off the books. These are valuable assets that we obviously want to put in the hands of the franchisees who can most effectively run them. And so I think those are the real drivers of this process that we're going through.
Peter Holt: So it has taken a little longer than anticipated.
Peter Holt: I think that there is obviously a lot of interest in these clinics. These are well-performing clinics, so this isn't a fire cell, we're just trying to get them off the books.
Peter Holt: These are valuable assets that we obviously want to put in the hands of the franchisees who can most effectively run them. And so I think those are the real drivers of this process that we're going through.
Peter Holt: Great, that's very helpful. If we jump over to innovation and the conversation around the changes to the box and some of the IT innovation, if maybe I could focus a little bit more on the box. And I think you made a comment about reducing costs and reducing time to open. Could you just maybe share, you know, is there any way to quantify, I guess, what the impact would be on, maybe on a cash on cash return basis going forward, or any way that you can quantify the impact?
Peter Holt: Great, that's very helpful.
Peter Holt: If we jump over to the innovation and the conversation around the
Peter Holt: changes to the box and some of the IT innovation. If maybe I could focus a little bit more on the box. And I think you made a comment about reducing costs and reducing time to open.
Peter Holt: Could you just maybe share, you know, is there any way to quantify, I guess what the impact would be on, maybe on a cash-on-cash return base is going forward or any way that you can quantify the impact.
Peter Holt: Well, I'm not ready to give out specific numbers, but what we've done is that we've really streamlined the whole process of the build-out of the clinic, so we've really had where it was before. First of all, our build-out is relatively simple. And so this isn't, you know, a QSR where we have a lot of equipment that's required to open up the clinic. I mean, it's really a very simple operation, but we have, for example, been building the front desk, which is a big segment of the build-out, individually for each clinic.
Peter Holt: Well, I'm not really ready to give out specific numbers, but what we've done is that we've really streamlined the whole process of the build-out of the clinic. So we've really had where before, first of all, our build-out is relatively simple.
Peter Holt: And so this isn't a QSR, we have a lot of equipment that's required to open up the clinic. It's really a very simple operation, but then if we have, for example, been building the front desk, which is a big segment of the build-out.
Peter Holt: Now what we've done is we've streamlined that process so it's modular, so it's easy to ship, and you don't have to have it built uniquely for each of the clinics that open. And we really looked at every element of what is part of that build-out and looked at ways that we can. The Streamline at Lord's Cost, make it easier to install, and so in that case, we're being able to lower the cost, and also we had all these different elements of their tables or the debt that's your building, coming from different vendors, and so that when you're trying to consolidate that, are you trying to get your ships to the location of the clinic, that's increasing your cost, and we really reduce significantly the shipping costs associated with the build-out, and then because this is all consolidated, you can really feel that clinic out in the past.
Peter Holt: Individuals for each clinic. Now what we've done is we streamline that process, so it's modular, so that's easy to ship, and you don't have to have it built uniquely for each of the clinics that open.
Peter Holt: and we really look at every element of what is part of that build out and try to look at ways that we can.
Peter Holt: The Streamline at Lord's Cost, make it easier to install.
Peter Holt: And so, in that case, we're being able to lower the cost. And also, we had all these different elements, whether they were tables or the...
Peter Holt: That's what you're building, coming from different vendors and so that when you're trying to consolidate that Are you trying to get your shifts to the location of the clinic?
Peter Holt: That's increasing your cost, so we've really reduced significantly the shipping costs associated with the build-out.
Peter Holt: And then because this is all consolidated, you can really build that clinic out in a faster manner. So is that faster by a month or two months? We'll see as we go forward with this program. But we're really excited about what that does for streamlining the process of getting these clinics open at a lower cost.
Jake Singleton: Okay, understood. And if I could slide one last one in, maybe this is for Jake, but just in terms of the comp improvements in the back half of the year to kind of get us to that mid-simil digit, I would think maybe July has performed well. I think there's maybe a little bit of an easier comp in Q3, but are there any kind of meaningful levers that are needing to be pulled to kind of get to comp guidance in the back half, or is it really the easier comp and then the seasonal promotions that you meant?
Jake Singleton: Okay understood and if I could slide one last one in just on maybe this is for Jake but just in terms of the comp improvements in the back half of the year to kind of get us to that mid single digit I would think maybe it sounds like July has
Jake Singleton: was performed well. I think there's maybe a little bit of an easier comp in Q3 but are there any kind of meaningful levers that are needing to be pulled to kind of get to comp guidance in the back half or is it really the easier comp and then the seasonal promotions that you mentioned?
Jake Singleton: Yeah, I think you've got most of the pieces there. July did start off strong with us. We posted a greater than 5% comp for the system, with our franchise this closer to 6%. So happy to see how the third quarter's starting out.
Jake Singleton: Yeah, I think you've got most of the pieces there. July did start off strong with us. We posted a greater than 5% comp for the system.
Jake Singleton: with our franchisees closer to six percent. So happy to see how the third quarter is starting out. Really from a lever's perspective, it's really, you know, like you mentioned, you know, a softer Q3 in the 2023 period. So we're rolling over, you know, an easier comp there, theoretically. We always perform well in terms of our fourth quarter.
Speaker Change: Product Promotions that are planned, but as Peter mentioned, you know, we're consistently looking at, you know, the pricing levers to see if that's something that we, that we need to do.
Speaker Change: that we need to touch base with. So, you know, those are potentials that we're in evaluation mode right now, looking at whether the legacy policy, you know, walk-in pricing, things of that nature.
Speaker Change: So we have those levers at our disposal, and then, you know, always the ability to layer on an incremental promotion, you know, should we need a little bit of a boost. So mostly, you know, levering with the existing things that you mentioned.
Speaker Change: Great, really appreciate it, best of luck guys.
C. J. Dippell: Thank you, our next question will be from C. J. Dippell, no, of Crank Helen Capital Group, please go ahead.
Speaker Change: Thanks, great to see you with you!
Speaker Change: Thank you. Our next question will be from C.J. DiBellino of Crankhallen Capital Group. Please go ahead.
C. J. Dippell: Hey guys, C.J. DiPolino on for Jeremy Hamblin.
C.J. Dipolino: Hey guys, CJA DiPolino on for Jeremy Hamblin.
C.J. Dipolino: I want to touch again on the re-franchising. It sounds like you're just starting to get going with some of these larger transactions. I want to see, is there a world where you get any of these larger transactions done in 2024? Or are you looking more out towards next year?
C. J. Dippell: Wanted to touch again on the refranchising. Sounds like you're just, you know, starting to get going with some of these larger transactions. Is there a world where you get any of these larger transactions done in 2024? Or are you looking more out towards next year?
Peter Holt: You know, ideally, we'd like to see as much done at the end of 24 hours as possible. And the larger the deal, typically, the more due diligence you're doing, the little more difficult the time it takes to get everybody aligned on price and legal structure. So, we are now, you know, pushing as hard as possible to make all these deals, you know, complete. It's also hard on the system to have these clinics up for sale, and you want to minimize the time this is going to take just because of the uncertainty that it creates for your employees and outside the four-wall support. So can we get everything done by the end of the year? Can we get significant things done by the end of the year? I think it's possible. Will this go into 25? I think it's probable.
Peter Holt: You know, ideally, we'd like to see as much done in the end of 24 as possible, and the larger the deal, typically, the more due diligence you're doing, the little more difficult the time it takes to get everybody aligned on.
Peter Holt: Price and Legal Structure.
Peter Holt: that we are now pushing as hard as possible to make all these deals complete. It's also hard on the system to have these clinics up for sale, that you want to minimize the time this is going to take just because of the uncertainty it creates for your employees and outside the four-wall support.
Peter Holt: So can we get everything done by the end of the year? Can we get significant things done by the end of the year? I think it's possible. Will this go into 2025? I think it's probable.
Jake Singleton: Yeah, CJ, the only thing I would add on there is, you know, we have taken a considerable amount of time to create an exceptionally detailed sim. And we've had a lot of time now to, you know, kind of get the, you know, the workrooms and the due diligence materials in place. And so we feel confident that, you know, as we have strong, you know, interests, we've put together a lot of the materials and resources to streamline that process as best we can. And as Peter mentioned, you know, larger transactions, by nature, are going to take a little bit more time.
Jake Singleton: Yeah, CJ the only thing I would layer on there is, you know, we have taking considerable amount of time.
Jake Singleton: to create an exceptionally detailed sim, and we've had a lot of time now to kind of get the
Jake Singleton: You know, the work rooms and the due diligence materials in place, and so we feel confident that, you know, as we have strong interest.
Jake Singleton: We've put together a lot of the materials and resources to streamline that process as best that we can. But as Peter mentioned, you know, larger transactions by nature are going to take a little bit more time.
C. J. Dippell: Got it, okay, that makes sense. And then moving towards comps and, you know, more specifically traffic, a lot of peers have called out sort of slowing traffic starting in May going into June. Could you maybe just give a little color on the, you know, cadence of comps through Q2?
C. J. Dippell: Got it. Okay, that makes sense. And then moving towards comps and, you know, more specifically traffic, a lot of peers have called out sort of slowing traffic starting in May going into June. Could you maybe just give a little color on on the, you know, cadence of comps through Q2?
Jake Singleton: Yeah, we did see a slowing of comps throughout the quarter, a little bit nuanced for us in this particular quarter, as Peter mentioned in his prepared remarks, we have a promotion that we run in June, which is a promotion by promotion. So, you know, our patients are buying, you know, six months of care for the price of five, if you will. And so that recurred, you know, year over year.
Jake Singleton: Yeah, we did see a slowing of calm throughout the quarter, a little bit nuanced for us and this, in this particular quarter, Peter mentioned in his prepared remarks.
Jake Singleton: We have a promotion that we run in June, which is a forward-by promotion, so our patients are buying six months of care for the price of five if you will, and so that recurred year over year, but as Peter mentioned, we did not honor any of our legacy pricing as it relates to that promotion, so what that meant for us in this particular period was that we had a quite lead lower.
Jake Singleton: But, as Peter mentioned, we did not honor any of our legacy pricing as it relates to that promotion. So what that meant for us in this particular period was that we had a slightly lower uptake in terms of people capitalizing on the promotion. But what that does for us is means they stay on their current plan, and then their recurring billings roll in to the preceding months that follow. So really kind of a push out of some revenue period over period, which I think resulted in the slightly lower comp for June and I think is helping us here in July. I mentioned the strong comps that we've seen so far.
Jake Singleton: Uptake in terms of people capitalizing on the promotion, but what that does for us is we stay on their current plan and then their recurring buildings roll in to the proceeding months that follow. So, really kind of a push out of some revenue period over period, which I think resulted in the slightly lower comp for June, and I think is helping us here in July, which I mentioned the strong concept we've seen so far.
C. J. Dippell: Great. Okay. That's very helpful. Thank you. I'll hop back in the queue. Best of luck with the rest of the quarter.
C. J. Dippell: Great. Okay. That's very helpful. Thank you. I'll hop back in the queue. Best of luck with the rest of the quarter. Thank you.
Nick Sherwood: Thank you. Again, if you have a question, please press the star rather than 1. The next question will be from Nick Sherwood, Maxim Group. Please go ahead.
Nick Sherwood: Thank you. Again, if you have a question, please press star rather than 1.
Nick Sherwood: Good evening. Can you talk about the loss in sales for mature clinic comps? And are you seeing that rebound in July? Or are you seeing a lot of that expected comp sales growth to be from new clinics?
Nick Sherwood: Next question will be from Nick Sherwood, Maxim.
Nick Sherwood: World, please go ahead.
Nick Sherwood: Good evening. My question is, can you talk about the loss in sales for the matrachlinic comps, and are you seeing that rebounds in July or are you seeing a lot of that expected comp sales growth to be from the clinics?
Jake Singleton: Yeah, all of our contact metrics improved in July, as it relates to the results for the quarter. In Q1, we posted a 3% total system comp, negative 3% for mature, each of those metrics fell by a percent in the second quarter. So, as we look at the KPI build, which drives the growth sales of our clinics, you know, the softness that we continue to see is in that new patient metric. If we're getting in the door, we're still converting at a great rate, and our attrition is as good as it's ever been, so it's really just that new patient traffic that we're trying to consistently draw, and that's really where we saw the headwind, and it seemed like the headwind and recent period. So, you know, sequentially down 1%, but it still posted a 2% comp and a tough consumer environment out there, and we have seen a nice rebound here in July.
Jake Singleton: Yeah, we, all of our Contmetrics improved in July.
Jake Singleton: as it relates to
Jake Singleton: You know, the results for the quarter, you know, Q1, we pushed to the 3% total system count, negative 3% for mature, in each of those metrics fell by a percent in the second quarter, so 2% for the system, negative 4% as it relates to the mature clinics. And so, you know, as we look at the KPI build, you know, what drives the growth sales of our clinics, you know, the softness that we continue to see is in that new patient metric.
Jake Singleton: If we're getting him in the door, we're still converting it at a great rate.
Jake Singleton: And our attrition is as good as it's ever been. So it's really just that new patient traffic that we're trying to consistently draw.
Jake Singleton: That's really where we saw the headwind and it seemed the headwind and recent period. So, you know, it's a quintual down 1% you know, still posted a 2% component and a tough consumer environment out there and we have seen a nice rebound here in July.
Peter Holt: So do you have any plans going forward to stabilize the comp sales for these mature clinics? Or do you think we're still going to look at contraction going through the rest of the year for these mature clinics? Absolutely not.
Speaker Change: So do you have any plans going forward to stabilize the comp sales for these mature clinics or do you think we're still going to look at contraction going through the rest of the year for the mature clinics?
Peter Holt: No, absolutely. Now, some of the things we talked about. So, for example, we've seen some really great success with what we're calling our initial visit bookings, so that instead of just coming in as a new patient, you can now actually book an appointment, and we find that has significantly increased the new patient counts, and the clinic that have been testing with that, and we're now rolling that out across the system, that we are looking at really all of the different ways that we market this business to those new patients and to our existing patients.
Peter Holt: No, absolutely, now it's some of the things we talked about. So, for example, we've seen some really great success with what we're calling our initial visit bookings, so that instead of just coming in as a new patient, you can now actually book an appointment and we find that has significantly increased the new patient counts and the clinic that have been testing with that and we're now rolling that out across the system.
Peter Holt: that we are looking at really all of the different ways that we market this business to those new patients and to our existing patients. And one of the areas we've been focused on is those lapsed patients. We talked about we have 1.67 million active users.
Peter Holt: And one of the areas we've been focused on is those LAPS patients. We talked about how we have 1.67 million active users, and that of those, a lot of those are LAPS patients. They could be just walk-ins. They could be people that we can kind of recontact using some automated marketing programs that we put in place to be able to bring them in earlier or after they've dropped off because we know that the average patient stays with us on membership for about six months.
Peter Holt: We also know that 25% of them will be back in the next six months because their pain comes back. We think through this automated marketing, we can specifically try to draw those in earlier. And because those mature clinics that have such a huge membership base and a whole number of patients who've been through those clinics, they have a greater base of potential patients to bring back in than a newer clinic. So we think that could significantly help our older clinics as we continue to go through this kind of economic uncertainty with our patient base.
Peter Holt: And that of those, a lot of those are LAPS patients, they could be just walk-ins, they could be people that we can kind of recontact using some automated marketing programs that we put in place.
Peter Holt: to be able to bring them in earlier, or after they've dropped, because we know that the average patient stays with us on membership for about six months. We also know that 25% of them will be back in the next six months because their pain comes back.
Peter Holt: We think through this automated marketing.
Peter Holt: We can specifically try to draw those in earlier, and because of those mature clinics that have such a huge membership base and a whole number of patients who've been through those.
Peter Holt: Clinics, is they have a greater base of potential patients to bring back in than a newer clinic. So we think that could significantly help our older clinics as we continue to go through this kind of economic uncertainty with our patient base.
Nick Sherwood: And my last question is, how are you managing your cells and marketing spend going into this third quarter and beginning of the fourth quarter with the presidential election and, generally, you see advertising expenses going up, and I don't end there. So how are you making sure that you're getting these promotions out there without overspending on adding customers because of these higher advertising costs?
Nick Sherwood: Understood. Thank you. And my last question is how are you...
Nick Sherwood: Managing yourselves and marketing spend going into this third quarter and beginning of the fourth quarter with the Presidential election and which generally you see advertising expenses going up and I don't end.
Nick Sherwood: So how are you making sure that you're getting these promotions out there without overspending on adding customers because of these higher advertising costs?
Jake Singleton: Sure, I mean, you have to really think about the full funnel in terms of how we drive new patient traffic, you know, as a healthcare service as a business, we have a lot of referral traffic, and that really isn't, you know, at the whim of advertising price points. The largest channel for us probably right now is in the digital space, and so we may see that, from an overall dollars perspective, whether it be, you know And so as we go through this cycle, you know, I think, you know, we could see some slightly higher, you know, slightly higher up tick, but again, a lot of that doesn't flow through our corporate P&Ls, and we have a lot of channels in the mix in terms of how we disperse that marketing spend. And certainly new channels.
Jake Singleton: Sure, I mean you have to really think about the full funnel
Jake Singleton: and the healthcare service in the business.
Jake Singleton: We have a lot of referral traffic, and that really isn't, you know, at the whim of advertising price points, you know, the largest channel for us probably right now is in the digital space. And so we may see that, you know, from an overall dollars perspective, whether it be, you know, our national marketing fund spend, or those of our co-ops, right, each of our franchise units has a requirement to spend, you know.
Speaker Change: as much as $3,000 per month per clinic on their local advertising.
Jake Singleton: So as we go through this cycle, you know, I think, you know, could we see some slightly higher?
Jake Singleton: you know, slightly higher uptick, but again, a lot of that doesn't flow through our corporate P&Ls, and we have a lot of channels in the mix in terms of how we disperse that marketing spend. And some of these new channels like TikTok or problematic, we've done some work with influencers, you know, that are in some ways a little outside of that traditional spend that is being so absorbed by the national elections.
Peter Holt: and 70 new channels like TikTok or Automobic. We've done some work with influencers that are, in some ways, a little outside of that traditional spend that is being so absorbed by the national elections. So it is something that we're watching carefully, but we do have a whole series of these other venues, especially in the digital space, to be able to reach, in general, those new patients.
Peter Holt: So, it is something that we're watching carefully, but we do have a whole series of these other venues, especially in the digital space, to be able to spend and generate those new patients.
Nick Sherwood: Sounds great. Thank you for all the detail. I'll return to the queue.
Speaker Change: Sounds great. Thank you for all the detail. I'll return to the queue.
Operator: Thank you. This concludes our question and answer session. I'd like to turn the call back over to Mr. Peter Holt for closing remarks.
Speaker Change: Thank you. This concludes our question and answer session. I'd like to turn the call back over to Mr. Peter Holt for closing remarks.
Peter Holt: Thank you very much. In April, we announced the Joint Influencer Campaign, where athletes would share their own authentic stories about how chiropractic helps them enhance their athletic performance. And we're excited to report that one of the Joint's influencers, track and field athlete Cherie Hawkins, qualified for the 2024 Olympics in Paris. At the US Olympic team trials in Eugene, Oregon, she finished second in HEPTA alone with a career high. In addition, she achieved personal records in three of the seven events, the 800-meter run, the javelin, and the shot. Please join me in cheering on Cherie and all the athletes at the Paris Olympics. Thank you, and stay well adjusted.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Thank you very much. In April, we announced the joint influencer campaign which athletes would share their own authentic stories about how chiropractic helps them enhance their athletic performance.
Operator: And we're excited to report that one of the Joint's influencers, track and field athlete Sharique Hawkins, qualified for the 2024 Olympics in Paris.
Operator: At the U.S. Olympic team trials in Eugene, Oregon, Cherie finished second in HEPTA alone with a career high. In addition, she achieved personal records in three of the seven events, the 800-meter run, the javelin, and the shot put.
Operator: Please join me in cheering on Cherie and all the athletes of the Paris Olympics. Thank you and stay well-adjusted.
Operator: Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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J.P. Woolham: Great, I really appreciate it; best of luck, guys.
J.P. Woolham: Really, from a levers perspective, it's really, you know, like you mentioned, a softer Q3 in the 2023 period, so we're rolling over, you know, and it's easier to compare theoretically. We always perform well in terms of our fourth quarter promotions that are planned. But as Peter mentioned, we're consistently looking at the pricing levers to see if that's something that we need to touch base on.
Peter Holt: So that's faster by a month or two months; we'll see as we go forward with this program. We're really excited about what that does for the Streamline in the process of getting these clinics open, and at a lower cost.
J.P. Woolham: So, you know, those are potentials that we're in evaluation mode right now, looking at whether the legacy policy walks in pricing things of that nature. So we have those levers at our disposal, and then, you know, always the ability to layer on an incremental promotion, you know, should we need a little bit of a boost. So, mostly, you know, leveraging the existing things that you mentioned. Great. I really appreciate it.