Good day, and welcome to The Joint Corp Q1 2023 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to David Barnard of LHA Investor Relations. Please go ahead. Thank you, Dave. Good afternoon, everyone. This is David Barnard of LHA Investor Relations. Call today, President and CEO Peter Holt will review our Q1 of 2023 performance metrics and provide an update on the business. CFO Jake Singleton will detail our financial results and guidance. Peter will close with a summary and open the call for questions. Please note we're using a slide presentation that can be found at https://ir.thejoint.com/events. Today, after the close of the market, The Joint Corporation issued its financial results for the quarter ended March 31st, 2023. If you do not already have a copy of this press release, it can be found in the investor relations section of the company's website. As provided on Slide 2, please be advised today's discussion includes forward-looking statements, including statements concerning our strategy, future operations, future financial positions, and plans and objectives of management. Throughout today's discussion, we present some important factors relating to our business that could affect these forward-looking statements. The forward-looking statements are made based on our current predictions, expectations, estimates, and assumptions and are also subject to risks and uncertainties that may cause actual results to differ materially from the statements we make today. Factors that could contribute to these differences include, but are not limited to, our inability to identify and recruit enough qualified chiropractors and other personnel to staff our clinics, due in part to the nationwide labor shortage and an increase in operating expenses due to measures we may need to take to address such shortage. Inflation, exacerbated by COVID-19 and the current war in Ukraine, which has increased our costs and which otherwise could negatively impact our business. The potential for further disruption to our operations and the unpredictable impact on our business of the COVID-19 outbreak and outbreaks of other contagious diseases. Our failure to develop or acquire company-owned or managed clinics as rapidly as we intend. Our failure to profitably operate company-owned or managed clinics. Short-selling strategies and negative opinions posted on the internet, which could drive down the market price of our common stock and result in class action lawsuits. Our failure to mediate future material weaknesses in our internal control over financial reporting, which could negatively impact our ability to accurately report our financial results, prevent fraud, or maintain confidence as and other factors described in our filings with the SEC, including the section entitled Risk Factors in our annual report on Form 10-K for the year ended December 31st, 2022, filed with the SEC on March 10th, 2023, and subsequently filed current and quarterly reports. As a result, we caution you against placing undue reliance on these forward-looking statements and encourage you to review our filings with the SEC for a discussion of these factors and other risks that may affect our future results or the market price of our stock. We're not obligating ourselves to revise our results or publicly release any updates to these forward-looking statements in light of new information or future events. 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. Management believes they provide a more transparent view of the company's underlying operating performance and operating trends than GAAP 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, stock-based compensation expense, bargain purchase gain, net gain or loss on disposition or impairment, and other income related to the Employee Retention Credit. Management also includes commonly discussed performance metrics. System-wide sales include revenues at all clinics, whether operated by the company or by franchisees. While franchised sales are not recorded as revenues by the company, Joint 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. Comp sales include revenues from both company-owned or managed clinics and franchise clinics that in each case have been open at least 13 full months and exclude any clinics that have closed. Turning to Slide 3. It's now my pleasure to turn the call over to Peter Holt. Thank you, David. I welcome everybody to the call. As we noted in March, we entered 2023 with a fortified foundation to support our clinics as well as our long-term clinic expansion and financial growth. Today, I'm pleased to report on Q1 2023. We performed well during the continued economic uncertainty and expect our robust underlying clinic model and unit economics to thrive as markets improve. For those investors who are new to the company, The Joint is revolutionizing access to chiropractic care by providing affordable, concierge-style, membership-based services in convenient retail settings. Turning to slide four, let's review our financial metrics for the Q1 2023, compared to Q1 2022. system-wide sales grew 17%. comp sales for clinics have been open for at least 13 full months, increased 8%. Revenue grew 27%. Adjusted EBITDA improved to $2 million. On March 31, 2023, our unrestricted cash was $14.8 million compared to $9.7 million on December 31, 2022. Turning to Slide 5, I'll discuss our clinic metrics. During Q1 2023, we opened 33 clinics, 29 franchised and 4 greenfields. This compares to 31 clinics, 27 franchised and 4 greenfields in Q1 2022. Our greenfield strategy is to locate clinic sites where they'll capture pent-up demand in new markets where they can rapidly build a solid presence. This quarter, we augmented existing clinic clusters in California, Georgia, Missouri, and North Carolina. As previously stated, in 2023, we are focusing on supporting our existing greenfield clinic portfolio as it matures and moderating our pace of new greenfield openings. In the Q1 of 2023, we closed one franchise clinic, which will be relocated. That compares to closing one franchise clinic in the Q1 of 2022. Once again, our closure rate is one of the lowest in franchise community at less than 1%. In summary, March 31, 2023, we had 870 clinics in operation, consisting of 740 franchise clinics and 130 company-owned or managed clinics. The portfolio mix remained 85% franchise clinics and 15% company-owned or managed clinics. At quarter end, we had 218 franchise licenses in active development, which is a solid pipeline for our future franchise clinic openings. Subsequent to quarter end, in April, we opened one greenfield clinic at Fort Dix in New Jersey. This is our fourth location opened in conjunction with the Army and Air Force Exchange Service. Turning to Slide 6, in Q1 2023, we sold 17 franchise licenses, which is the same number as Q4 2022 and compared to 22 licenses sold in Q1 2022. This past quarter, existing franchisees bought approximately 59% of our new licenses. This means that even in uncertain environments, those that are intimately involved in our network are reinvesting in the brand. This is a powerful indicator of the strength of our business model, demonstrating the health and viability of our franchise system. On March 31, our RD count remained 18, with our aggregate 10-year minimum development schedule for the new RD territories established since 2017 at 626 clinics. Turning to Slide 7, let's review our marketing efforts. New patient acquisition continues to be a focus. For Q1 of 2023, the average number of new patients per clinic was down approximately 7% from the same quarter a year ago. To further improve new patient leads and conversions, our marketing team has invested in pay channel maximization and new paid digital tactics, as well as prioritizing non-digital approaches such as guerrilla marketing. We've created multiple learning modules to effectively walk our franchisees through best practices in digital marketing, guerrilla marketing, traditional awareness marketing, and referrals. In February, we held our annual Love The Joint social media campaign and giveaway, where 12 lucky winners received a gift of one year of free chiropractic care. During this promotion, we saw significant increases in our overall engagement in The Joint's national Instagram account, where we gained almost 15,000 entries and comments and more than 20,000 likes and attracted over 13,000 new followers. In March, we held our new patient contest. This event incentivized clinic teams to promote The Joint's $29 new patient offer via signage, referral cards, and local business partnerships and community events. For March, the network increased new patients over 19% compared to the prior three-month average. In terms of our digital efforts, in March, we also launched a test to capture leads through a chat technology, as well as leverage enhanced doctor of chiropractic profiles on an online medical site as a new source for new patient leads. For the quarter, organic traffic to the site increased 14% year-over-year. As a part of our PR effort, we continue to focus on the education and benefits of chiropractic care and generate brand awareness about The Joint. Our PR strategies are reaching new highs, in Q1 alone, we surpassed 1 billion in earned editorial impressions. With that, Jake, I'll turn it over to you. Thank you, Peter. Turning to Slide 8. I'll review the financial results for Q1 2023 compared to Q1 2022. System-wide sales for all clinics open for any amount of time increased to $115.4 million, up 17%. System-wide comp sales for all clinics open 13 months or more increased 8%. System-wide comp sales for mature clinics open 48 months or more increased 1%. Revenue was $28.5 million, up $6 million or 27%. Company-owned or managed clinic revenue increased 36%, contributing $17.1 million. Revenue from franchise operations increased 15%, contributing $11.3 million. The increases represent continued growth in both the corporate portfolio and franchise base. Cost of revenues was $2.6 million, up 13% over the same period last year, reflecting the associated higher regional developer royalties and commissions. Selling and marketing expenses were $4.2 million, up 27% over the same period last year, driven by an increase in advertising fund expenditures from a larger franchise base, an increase in local marketing expenditures by the company-owned or managed clinics, and the timing of our national marketing fund spend. Depreciation and amortization expenses increased $713,000, up 44% compared to the prior year period, primarily due to the increase in the number of greenfield clinics developed and franchise clinics acquired. G&A expenses were $19.9 million compared to $15.4 million, up 30%, reflecting the cost to support the increased clinic count, revenue growth and higher payroll to remain competitive in the tight labor market. Operating loss was $678,000, compared to a loss of $176,000 in Q1 2022, mostly driven by the previously mentioned higher depreciation and amortization expenses. Other income was $3.8 million, reflecting the receipt of Employee Retention Credit, compared to other expense of $16,000 in Q1 of 2022. Income tax expense, including the impact of the Employee Retention Credit, was $842,000, compared to $13,000 in Q1 of 2022. Net income was $2.3 million or $0.16 per diluted share, compared to a net loss of $206,000 or $0.01 per diluted share in Q1 of 2022. Adjusted EBITDA was $2 million, compared to $1.8 million in the same period last year. Franchise clinic Adjusted EBITDA increased 6% to $4.8 million. Company owned or managed clinic Adjusted EBITDA increased 68% to $1.6 million, reflecting the maturation of our clinics in the corporate greenfield portfolio, as well as our concentrated effort to optimize labor. Corporate expense as a component of Adjusted EBITDA was $4.4 million, up $671,000 or 15% higher than Q1 2022. On to a review of our balance sheet and cash flow. At March 31, 2023, our unrestricted cash was $14.8 million, compared to $9.7 million at December 31, 2022. This reflects $6 million in cash flow from operations, which included the receipt of the Employee Retention Credit of $3.9 million. These were net of $1.2 million of investment in opening greenfield clinics and upgrading existing clinics. We continue to have access to additional cash through our line of credit with JPMorgan Chase. To date, we've drawn $2 million and have an additional $18 million available. On to slide 9. We are reiterating our guidance for 2023. We continue to expect to grow revenue to between $123 million and $128 million, compared to $101.9 million in 2022. We continue to expect Adjusted EBITDA to be between twelve and a half million dollars and $14 million, compared to eleven and a half million dollars in 2022. We continue to expect franchise clinic openings to be between 100 and 120, compared to 121 in 2022. Please note, historically, guidance for company owned or managed clinic openings included a combination of both greenfields and acquisitions. While we continue to acquire previously franchised clinics, these transactions are opportunistic and are no longer included in our guidance. For greenfield clinic openings, we continue to expect to open between 8 and 12, compared to 16 in 2022. With that, I'll turn the call back over to you, Peter. Thanks, Jake. Turning to Slide 10. While managing today's uncertain economic conditions, including inflation and wage pressure, we remain focused on what we can control and continue to execute programs to improve performance and drive long-term growth. We continue to methodically implement our multi-year corporate initiatives. To forge the chiropractic dream, over the past several years, we've been increasing our educational outreach efforts with associations and schools of chiropractic to drive awareness and support recruitment. As our relationships with these institutions continue to improve, these endeavors are being felt across the network nationwide. In fact, we have more interest than ever from doctors in these recent graduating classes, and we're attracting new doctors to the of chiropractic to The Joint. To harness the power of our data, we've launched our business intelligence and analytical reporting tool, and we're shortly launching our automated marketing program. This will reach existing, lapsed and potential patients to ensure that we send the right message to the right patient at the right time. To accelerate the pace of our clinic growth, we remain focused on our franchise sales in addition to opening greenfield clinics. As reported this quarter, we continue to increase the number of our clinics opened year-over-year. Our network is well positioned for expansion as the economy improves. Frankly, with only 16% of Americans using chiropractic care in the last 12 months and spending $19.5 billion on it annually, the chiropractic patient need is growing and our market opportunity is considerable. Based on our current patient demographics, we are approaching our near-term target of 1,000 clinics and are well positioned for our longer-term goal of 2,000 clinics. We will expand our network and potential base by developing rural, urban and possibly international clinic models that will broaden our long-term market potential. We are committed to capturing a greater share in growing the overall market. With that, Dave, I'm ready to begin the Q&A. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Jeremy Hamblin with Craig-Hallum Capital Group. Please go ahead. Thanks so much for taking the questions. Wanted to start by asking about, you know, the sales and marketing, you know, it was up about $900,000 sequentially from Q4 and about that same amount on a year-over-year basis. You noted there was a change in the timing of the national marketing, you know, fund spend. Wanted to see if you could provide a little bit more detail on how, on what that was and how it may impact the rest of the year, if there's any other kind of timing differences that we should expect looking forward. Yeah, Jeremy, great question. I would say the majority of that is just the increase of the collections from the increased clinic count. There is a chunk of that that is really just timing quarter-to-quarter, right? It depends on the timing of certain campaigns or when we're pushing collateral out to the clinics. I would categorize that as just a slight front-loading in Q1, but we expect that to normalize as we continue on. There's really no kind of one-time, you know, item to call out there. I think it's just a slight quarter-over-quarter timing variance. Got it. Okay. Then, also wanted to just get a little bit more color on the net Employee Retention Credit, which I believe was like $3.9 million. You know, I don't know if that's related back to like, you know, FICA, you know, credits from, you know, COVID still, which is similar to what we've seen in the past with other businesses. You know, wanted to just see if you could provide a little bit of color on that as well. Sure. Yeah. It is related to some of the JOBS Act credits that were made available. Our qualification period was for periods in the first 2 quarters of 2021. Really the timing of both the application and then the processing through the IRS. We just happened to receive the funds in the Q1 of 2023, which kind of triggered our particular recognition. Got it. If we back that out, that's about the EPS on a normalized basis would be like a 4 cent per share loss or so? That's about right. Yeah. It's really that net $3.9. We recorded that in other income. Adjusted EBITDA neutral, but it does have that boost, to net income. Got it. Last question I'd wanted to, before I hop out of the queue, I wanted to just get an understanding in terms of what you're seeing for clinic performance, you know, corporate versus franchise. It looked like you saw a nice little step forward here on the company-operated clinics, like if we're thinking about it on a, you know, let's call it revenue per average clinic basis, whereas you saw maybe a little bit of a step down overall, maybe in the franchisee performance, or at least certainly on the royalties that you earned from that basis. I just wanted to get a sense in terms of what you're seeing, you know, company-operated versus franchise performance. Yeah. I think in both cases, it's reflecting some of the youth within our system, you know. Our corporate portfolio, you know, with the number of clinic additions we've made over the last two years, I think we're gonna have a natural leg up on the overall system average, just based on our younger greenfield clinics continuing their maturation. Again, when you're talking about overall growth, we added another 29 franchise units in the quarter. Again, if you're using that end of quarter number as your final denominator there, you know, that's gonna kinda decrease the revenue on a per clinic basis. We still posted, you know, same-store sales of 8% as a system, and again, not a huge disparity there between corporate and franchise performance. you know, we're still pleased with the organic growth of the units, but as you look at the denominators and the number of new clinics we have coming into the system, I think you could get some fluctuation there on a revenue per clinic basis. What I'd add to that, Jeremy, is that historically, the what's been interesting and unusual for a franchise system is that our corporate portfolio has you know, has operated parallel or equal to or slightly better than our franchise segment. We saw that change a little bit in as we were coming into the end of 2021, we made some corrections. If you look at kind of the overall performance of 2022, particularly by the end of the year in 2022, we got our corporate portfolio operating equal or better to our franchise portfolio. We have seen kind of that dip that we went through. We made some changes in those operations, then we're now seeing that come back. When you look at some of the key metrics, whether we're talking about conversion or attrition, is that the corporate portfolio continues to do equal or better than our franchise community. The one area where I think that the franchisees continue to do better than corporate, which we're still focused on, is our new patient count. We're seeing our franchisees have a higher new patient per clinic per month than the corporate portfolio at the moment. Got it. That's great color. Just one more, you know, if I could sneak in here. In terms of thinking about, you know, kind of the mature store, you know, comps, the, you know, you're seeing just like a little bit of degradation there, and I wanted to get a sense, in terms of, you know, that price increase that you took, last March. You know, what% of your patients are on a legacy pricing plan? At this point in time. Yeah, we continue to see about a 5% shift per quarter of our active members moving on to that new price point. I think as I look at the legacy mix now, I think we're trending about 35% of our system is still on some legacy price point. The majority of those being on the pricing one tier ago, but because we have an existing current policy to grandfather in active members at their sign-up rate, we do have some that are below that last tier. The majority are one tier ago or now on the higher price point. Yeah, and we've talked about that before, and that group that's been there for a long time is probably around 15%, that we don't see that moving much over time. Got it. Thanks so much for taking the questions, and best wishes. Thank you very much. Next question comes from Jeff Van Sinderen with B. Riley. Please go ahead. Hi, everyone, and congratulations. It's great to see the 8% comp. Multi-part question here, if you can bear with me. Wanted to ask a little bit more on the patient retention, attrition, new patient ad metrics. I guess any more color you can share around that. What do you think will drive the new patient ads back up? Maybe also, how are you faring in terms of the Google Search and location elements that I know were, you know, there were some changes there. Any change you're seeing in terms of influencing new patient ads given the macro backdrop? Would it make sense to promote more on price to get new patient ads? I know a lot there. Apologize. I'm gonna try to remember all of those components. I mean, and what you're really saying is. Okay. -you're really focused on, Jeff, is, of course, new patient counts, and so are we. And. Right. If you look at the in terms of where do our new patients counts come from? There are really three sources, as we talked about before. Number one, referral. You know, it's just, you know, it's existing patients who refer their friends and family to come in and use the services of our clinic. That's in all medical professions, that's probably the Number 1 source of new patient counts. For us, that's probably averaging right around 35% on a network basis of are coming into the clinics because they've been referred by a friend or family. What's interesting to watch over time is how increasingly the digital marketing campaign is essentially a part of our new patient count. Right now, we can track today that roughly 63% of our new patients have touched us digitally. Okay. And which, where we can measure. And, patient attribution is always a little tricky because did you go online because you saw the ad, or you used the TV or whatever it was, or the coupon. That's increasingly more important to us, and that's when we really saw that change in algorithm with Google, where the vicinity became a higher rating or a higher metric to push you up in the SEO search, and that we did make a series of changes to address that. Some of them we can't, because if it's vicinity, it's vicinity. If you've got three clinics in front of you, wherever that patient who's doing that search is, that's gonna change that search order. What we can do is get really focused on optimizing our, you know, microsites and making sure that we've got, you know, backlinks, and we've got videos and updated photographs, which again, helps very much in your ranking. We've been working very closely with our franchisees to make sure they're doing that really critical effort. That, where also one of the changes was that in the old days, before the algorithmic changes, that a lot of weight was given to your overall publishing on the Internet. We continue to this day are the largest publisher on online on chiropractic. It was more what we call short-form activity, and that's been changing. Now what we're doing is seeing that you're getting greater recognition or greater waiting for what's called long-form. We're changing the way in which we're publishing online to make sure that we're able to grab that attention when you're getting that search and being on the top of that list. We're also looking at different methodologies that we haven't used before. We've got a campaign now where TikTok is where we have a program that actually launched on May 1st. We'll see the results of that. We're also launching at the end of this month our automated marketing campaign. What we're doing now is that those patients that are touching our, you know, our website or they're existing patients or lapsed patients, we can automatically direct to them specific messaging so that, again, we're getting that right message to the right person at the right time in their patient journey. You know, more to come on the results of that program, but we're really excited to see that launch at the end of this month. These are some of the key activities that we're doing to ensure that we're increasing that patient count. The other, that last bucket of new patients for us is what I'll call that guerrilla marketing. You know, it's that sign thrower, it's the coupon drop, it's the outreach to the gym or to the hospital or to the apartment building to make sure that you're educating that potential customer who lives, works, and travels in that 5-15 minute radius around that clinic, that they're aware that you're there when they need that, you know, that relief from pain. Those are just, you know, I hope I kinda caught most of your questions as it relates to the new patient count. Mm-hmm. That's what we're doing to make sure we're addressing this critical issue for the organization. Okay, that's really helpful. Then any color you can give us if there are any changes you're seeing in underlying trends so far in Q2? Maybe that you're seeing versus Q1 or Q2 last year. Just any other color here since the quarter ended. Well, we typically obviously don't comment on upcoming quarters 'cause you will get to that in about three months. Mm-hmm. But, uh- Right ... what I'd say is for all of us is that we're in a time of kinda economic uncertainty, and you know, I don't know, I know we're not in a recession, but there's a lot of concern about it. We've got, you know, the bank failures that are spooking everybody and that. I think for all of us, we're trying to figure out what comes next in the Q2 or the Q3 or the Q4. What we're really focused on, Jeff, is all the things that we can control. All the activities associated with new patient count, making sure that we're as effective as possible in one of our key metrics, which is conversion. You know, converting new patients to our membership. For the last year, 84% of our sales were new membership. We're really happy. We're seeing, for example, for the quarter is our new pace, our conversion rate is running over 50%, which is, you know, it's a very, very high number for us. We're really excited about that. The other metric that we really pay attention to is that attrition rate. How long do they stay with us? When do they drop off? We've seen that attrition rate continue to stay very low or to improve. Those are the things that we can really focus on as we all try to figure out what's gonna happen in Q2 and beyond. Mm-hmm. Mm-hmm. I mean, just as a follow-up to that, Peter, what don't you think that, I mean, let's just say we do go into recession, you know, maybe high probability that we do. You know, people still are not gonna wanna live with pain even in a recession. Don't you think they'd prioritize getting that pain handled? Absolutely. Then again, we haven't really, as a system, ever gone through a full recession. I follow that logic, Jeff, is that as people are tightening their belts and making decisions, it feels like they're gonna be more willing to give up that cup of coffee or that frozen yogurt than pain relief. I think another thing that too, that we think about as we go through whatever this economic uncertainty is going to be, is that right now, that our ideal family income is between $50,000 and $105,000. So that's, that is not a, you know, that high-end person who is our typical customer or patient. What that means is very often when we go into those markets where you have a really high income per capita, is that we're quite frankly too inexpensive for them. It's like, "No, no. My son's gonna have a $125 to adjustment, not a $29 adjustment." I think as that, as that economic concern filters through a greater part of the economy and more people are in fact changing those decisions or trying to be more thoughtful in their spend, I think you are gonna see the top of that funnel open up a little bit and say, "Well, you know, how bad can that $29 adjustment be?" We'll see that. I do think that there's a real opportunity for the upper end of that funnel open up a little bit as the bottom of that funnel as it relates to income per capita, you know, tightens up. Mm-hmm. Makes sense. Okay, thanks for taking my questions. I'll take the rest offline. Thank you very much. The next question comes from George Kelly with Roth Capital Partners. Please go ahead. Hey, everybody. Thanks for taking my question. Maybe to start with a couple on the owned segment. Just curious on the profitability there. How much visibility do you have? It seems like, you know, the whole plan of the maturation of these new stores and everything, you know, the margin improvement has been kind of spotty. Another quarter of, I would call kind of mixed. You know, it looks like there was negative operating income in that segment again. I guess two-part question is: What is the visibility like there for the rest of the year? And aside from the maturation of these new clinics, what else can you do to drive margin in that business? Good question, George. We have, you know, clear visibility, you know, down to the individual clinic level, and we're going through a lot of efforts, with a key focus on trying to maintain and drive, you know, sequential improvement in that profitability. That's really the expectation. You know, we're still in a period where we have a lot of young units in that portfolio, and they're still working through their growth curves. With that, you're still gonna have the margin suppression. As we look throughout the remainder of the year, you know, I am gonna be looking for sequential improvement in that segment. We mentioned it in the transcript. We're also kind of looking at our labor optimization, and trying to make sure that we have the correct staffing levels given our volumes, to make sure that we're, that we're optimized as it relates to that inside the four-wall labor component. Those are... You know, when you have labor that's 50% or more of your unit level cost, depending on age, you know, that's a critical component that we're staying focused on because that's a real way that we can control the profitability within each of the units themselves. It's a critical focus of ours. We're gonna continue to work with our, with our operators and continue to drive that. You know, again, as the clinics mature, you know, we're looking for that sequential improvement quarter-over-quarter. Okay. A second question, same kind of topic. If we stripped out the new clinics and just, you talked about your legacy-owned business. Mm-hmm. Is the four-wall margin on that store base, has that stabilized or is that still, you know, seeing labor pressure and it still is compressing a bit? I think we are starting to see some stabilization there. As I look at four-wall margin numbers, you know, for my mature base, and I'll call that, you know, greater than 4 years, you know, we're still doing that mid 20% four-wall margin, which again, you know, factors in the labor pressures that we've seen over the last 2 years, and I've seen it kind of settle in there. We just released our Franchise Disclosure Document for 2023. I think as you look at the P&Ls that were submitted by our franchisees, I think they put up a four-wall margin in the high 20%, as I look at the 358 P&Ls we collected as part of that Item 19 exercise. You know, we're still seeing, you know, overall holding power, for our units, even at maturity, and still putting off that strong four-wall, you know, margin potential that we've always talked about. The good news is, I think we are starting to see some of the labor pressures start to plateau a little bit. I'm encouraged by that. You know, we just have to continue to focus on driving the same top line, growth to those clinics. Okay, that's helpful. Last one. Back to the new patient discussion. I'm still a little unclear exactly sort of what the issue is there. I guess just to be more specific, are there any kind of competitive issues that you see that have arisen, people become, you know, more challenging that you're facing in certain markets or anything? Anything else you can isolate just that's impacting new new patients? Sure, George, I'll take that. I'm gonna answer your second question first, is that are we seeing an impact of competitive markets on clinic performance or new patient counts? What I would say is that I have never worked for a franchise system that has a higher or greater first-mover advantage than this one. Yes, we are seeing increasingly some competitors. They're still very small and very localized. If I look at it at the overall basis, I would answer no. I don't think that's been a factor influencing the performance of the clinics. If we look at a specific market where, let's say, a chain has a presence in the Chicago market or in a specific Atlanta market, sure, there's definitely gonna be some competitors there. We are seeing them grow. I mean, I'm not saying they're not there, but I'm surprised on how slow they're growing. That, yes, over time, I would expect them to have impact on the overall market. I think there's so much potential for the market itself, I think that's our biggest opportunity is to grow the market. To answer your question on the kind of the new patient count or what's driving that is that there's no question that as digital marketing campaign becomes more and more important in our new patient drive, is that we really did see that impact with Google when they changed that algorithm because the majority of our online patients were driven by that SEO search. Now we have both paid and organic search. Our paid search continues to perform well. we're seeing a close rate of that's been continuing to stay strong. That's working for us, but that's been a smaller portion of those leads that are coming online towards us. It's organic search that was the greater portion of those new patients. We are seeing recovery from the changes that Google made. This wasn't the first time that Google made changes in their algorithm, and it won't be the last. That we're just as you're continually focusing on making those changes so that we can maximize the opportunity specifically in that digital realm, which is only becoming more and more critical for us in terms of that new patient drive. Thank you. Our next question comes from Anthony Vendetti with Maxim Group. Please go ahead. Yes, thanks. First, I guess on the patient volumes, you mentioned, Peter, that, and I think you've mentioned this in past calls as well, that patients are more likely to forego the cup of coffee or something else than their joint treatment. Do you still feel that's the case? They may have to forego, you know, the cup of coffee and the joint treatment with inflation and higher interest rates, right? I'm just wondering, is your data up to date with what's been transpiring over the last couple months? Has any of that changed? If so, how? It's a great question, Anthony, and the challenge is I don't have a lot of data in the sense that this company, we were formed in 2010. We've never gone through a recession other than the quick dip in the COVID period, which, you know, I'm not sure, you know, would be relevant to the conversation. We have yet to really go through a traditional recession as an organization so that I could give you data on what the impact had on our overall sales. What I would say as well is that I know we are in this time of economic uncertainty, and there's a lot of people out there that believe a recession is imminent. But at least in the terms of the traditional measurement of that, one of them being a high unemployment rate, we're not there yet. When we look at, okay, what impact that's had, if we talk about the full year for last 2022, we had an overall 9% increase in comps, and that was kind of that year of uncertainty 'cause that gives us a sense of what's going on in the clinic level. If we look at Q1 2023, we had an 8% comp rate, which again gives, you know, an indication that they're still coming into the clinic, using our services in this environment of whatever is influencing the decisions they're making as consumers. You're right, and it's more anecdotal than data-driven when we think about what people choices that they're going to make with their discretionary income. I, and it really is a belief that pain relief is gonna take a greater weight than some of these other, you know, more optional choices that we make as people start tightening their belt. Pain's a huge issue, and it's not going away. That's, I think, again, one of the drivers of the success of this concept, is just how effective it is in helping people manage that pain and stay out of pain. Yeah, no, fair point. Just last question on the digital marketing initiatives. I know you measure things very closely. Just can you talk about, you know, Do you have this measurement where, you know, as you're spending dollars on digital marketing, which platforms and sites, what's working better? How have you transitioned from one to another? Do you feel like in this environment you have to spend more to get the same type of patient interaction than eventual conversion? You know, a really great question. There's no the short answer is yes. Our whole digital marketing strategy is evolving by the day. You know, just think a few years ago, TikTok wasn't even a word that we'd be talking about. Now it's a very, you know, 1 billion users and all kinds of issues around it, but it seems to be effective way of marketing for us. That's where we're putting more dollars in. Before, I'd say in terms of the overall spend, you see that in the P&L, is that it's not so much that we are increasing the overall marketing spend, but what we're doing is reallocating that into those sources where we see having a greater impact. One of the trends that we're seeing is our spend on Meta, which at one point was kind of being pulled back, and that's really where we didn't think our customers were. We've been doing some more work with that. We've been increasing allocating more of the spend toward Meta, and that we are, quite frankly, seeing some really positive results of that. Going forward the next quarter or two, we're gonna continue to see an increase on that Meta spend and maybe less on the YouTube spend, which we do a lot. We're constantly evaluating where are those leads coming from. That's the power of marketing today. When I first got into my career, I've never been in the marketing discipline, but you do this spend, you had no idea what impact it would have. I do my radios or I do my TV and hopefully get a 2% return on whatever. Well, in this day and age, everything is measurable, that's where that automated marketing, I think, can be so essential in terms of making sure we're getting that right message to that right patient at the right time and then measuring its impact. We can change that message on the fly almost and say, "Okay, is this message more effective than that message?" Do that AB, you know, test in a very short period of time and continually be refining the effectiveness of that project or of that platform or whatever we're using. Overarchingly, what I would say to you is that these activities are only more and more important as it relates to our digital marketing campaign. 'Cause look at who's our customer, and we've talked about this before. Our customer is not that older person who's looking to get out of pain and using their insurance. The median age of our 1.6 million patients or active patients was 37.6 years old. We're almost equally between male and female. 45% are Millennials. You know, 16% are Gen Z and growing. When they're looking for their alternative from pain and trying to figure out, "Where do I go to address it?" They're online. You know, they're doing that search. They're putting in "chiropractor near me," close to home, you know, pain relief. That's why I think this will continually be only more and more important because that's actually where all of our patients are. Okay, great. Thanks, Peter. I really appreciate that. I'll hop back in the queue. Thank you very much. Appreciate the support. This concludes our question and answer session. I would like to turn the conference over to Peter Holt for any closing remarks. Thank you. Before I close, I want to note that we will hold our annual meeting of stockholders on May 25th here in Scottsdale, Arizona, and we'll also present and conduct meetings at the B. Riley Securities Investor Conference on May 24th in Los Angeles, and the Virtual Oppenheimer Consumer Growth and E-commerce Conference on June 13th. Finally, as we're constantly receiving patient testimonials, in this spring, an athlete and parent managing several ailments caught our attention. Miriam from California wrote us and said, "I can't say enough about these healers. I have significant and severe chronic spine injuries, including degenerative disc disease, bone spurs, osteoarthritis, and bulging herniated discs. I'm an athlete and live a very healthy life that demands a high level of activity and energy output daily. The Joint doctors have been treating me for over a year now, along with my son who's five. These magical masters help me bring my body back in alignment so it's not in agonizing pain and limiting my demanding life. They are always immensely kind and playful with my little one and never mind of me bringing him in or rush me. I'm very picky about my care team, and I promise you won't be sorry coming in for relief from these gems. With my new breast cancer diagnosis, I'm even more vigilant about self-care, and these angels are my supportive network for good." Thank you, and stay well adjusted. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.