Q1 2024 Joint Corp Earnings Call

Participants

David Barnard; IR; LHA

Peter Holt; President, Chief Executive Officer; Joint Corp

Jake Singleton; Chief Financial Officer; Joint Corp

George Kelly; Analyst; ROTH Capital Partners

Anthony Vendetti; Analyst; Maxim Group LLC

CJ Dipollino; Analyst; Craig-Hallum Capital Group LLC

Presentation

Operator

Good day and welcome to The Joint Corp first quarter 2024 financial results conference call. All participants are in listen only mode seeking 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. You may press star, then one on your touchtone phone and to withdraw your question, please press star and Please note this event is being recorded. I would now like to turn the conference over to David Bernard with LHA Investor Relations, please go ahead.

David Barnard

Thank you, Carrie. Good afternoon, everyone 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're using a slide presentation that can be found at h. t. t. p. s. Ir dot joint.com under Events today, after the close of market, The Joint Corporation issued its results for the quarter ended March 31, 2024. If you not already have a copy of the press release, it can be found in the Investor Relations section of the company's website as provided on Slide 2, 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. All statements other than statements of historical fact may be considered forward-looking statements. Although the Company believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, it can make no assurances that such expectations or assumptions will prove to have been correct. 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. 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 Forms 10-K and 10-Q, as well as other reports that the Company files from time to time with the SEC. Finally, any forward-looking statements included in this earnings call are made only as of the date of this call and we do not take any obligation 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, a 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 re-acquired regional developer rights, stock-based compensation, bargain purchase gain, net gain or loss on disposition or impairment costs related to restatement filings, restructuring costs 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 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. System-wide comp sales include the revenues from both company-owned or managed clinics and franchise clinics, and in each case have been open at least 13 full months and exclude any clinics that have closed.
Turning to slide 3, it's my pleasure to turn the call over to Peter Holt.

Peter Holt

Thank you, David, and I welcome everybody to the call. The Joint is revolutionizing access to chiropractic care by providing affordable concierge style, membership-based services and convenient retail settings. We began 2024 with a vision to be the champions of chiropractic. And we focused on increasing new patient counts, improving existing patient engagement and positioning to refranchise the vast majority of our corporate portfolio, and we're making solid progress.
Additionally, during the first quarter, we grew revenue, improve the bottom line and tripled our franchise sales look sequentially.
Turning to Slide 4, I'll review the first quarter of 2024 compared to the same period 2023. System-wide sales grew to $126.3 million, increasing 9% system-wide comp sales for clinics that have been opened for at least a full 13 months increased 3%, revenue increased 5%. Adjusted EBITDA was $3.5 million for Q1 2024, up 74% over the same over the same period last year. On March 31, 2024, our unrestricted cash was $18.7 million compared to $18.2 million at December 31, 2023.
Turning to slide 5, I'll discuss our clinic metrics. We opened 23 franchise clinics and closed four in the first quarter of 2024 compared to 29 franchise clinics opened and one closed in the first quarter of 2023. At March 31, 2024, our total clinic count reached 954 units, consisting of 819 franchised and 135 corporate, up from 935 opened clinics, 800 of which were franchised at the end of the year 2023 credit portfolio mix remains 86% franchised and 14% Company-owned or managed. And although it's expected to shift during the year as we execute our refranchising strategy.
Turning to slide 6, we're focused on refranchising strategy as our primary initiative in 2024. As discussed, we received over 100 requests for information have been vetting opportunities to identify the most effective franchisee. We're going through a structured process to continue to conduct negotiations with multiple qualified franchisees, and we are in with regards to the sales of our corporate clinics. There's been a strong interest in larger transactions as these more comps. As these are more complex, we've identified an investment bank specializing in refranchising to help us working together, we expect to ensure we refranchise through the rest of our franchisees, accelerate their process and create value for all of our stakeholders. We are well on our way to generating capital to be reinvested in brand marketing, RD territory acquisitions and our stock repurchases among other options.
Turning to Slide 7, I'll review our franchise license sales. During Q1, we sold 15 franchise licenses compared to 17. In Q1 2023 of the licenses sold, 87% of the franchisees were new to the joint. This reflects investment and validation of our franchise content, Q1 2024 tripled sales compared to Q4 2023, a solid increase given its ongoing given the ongoing high interest rates, inflation and strong employment. I do want to note that franchise sales may also be in part impacted by our refranchising strategy. On March 31, 2024, we had 166 live franchise licenses in active development as well as 17 regional developers with an aggregate 10 minimum 10-year minimum development schedule for 674 clinics. We do not plan to establish any new additional regional territories, and we'll consider opportunities to require territories as the RD territories mature.
Turning to slide 8, I'll review our marketing efforts. In Q1, we conducted our annual patient survey, which provided great insights into our brand perception. We're proud of the results of the survey, and we remain committed to doing even better. First to join continues to demonstrate our ability to grow the market with 36% of our patients being new to chiropractic in 2023.
Next, patients gave the joint strong Net Promoter Score of 64% and an amazing 92% of patients with prior Hyprotech experience where the joint is better or as equal to the previous care that we see. Additionally, research led us to redirect some of our marketing resources from older campaigns to new social media influencer efforts with strong positive reception from consumers, new and not new to chiropractic as well as our existing patient data indicates that the biggest opportunity is to drive awareness of chiropractic care in general and consideration of the joint in particular, in light of this data, we've made a strategic decision to forego our in-clinic new patient contest this past March to invest in driving consideration in April. We're doing that through evolving our to-go MARKETS approach at all levels of the marketing funnel at the top of the funnel, we've introduced social media influencers last month. Our lineup features both health and wellness as well as athlete influencers, including cherry Hopkins US track and field Olympian. We're partnering with these influences to develop to reach their broad audiences as well as to showcase the benefits of chiropractic care in a relevant way In addition, several clubs will feature regional influencers influencers to support the national campaign, driving consideration in their local markets by leveraging relevant personalities. We're also testing a variety of new promotions, channels and tactics in our clubs to better optimize our promotions and media mix based upon the market and the patient base.
In Q1, we continued testing digital initiatives with our patient experience roadmap. We're seeing success in driving new patients in our initial visit bookings test by providing the opportunity for new patients to book an appointment to complete their initial exam and visit patients who have participated indicated that the booking was a positive experience and important to their choosing the joint. We've also made progress in replacing our patient paper intake forms with an enhanced digital intake process and are now in the next phase of rollout before the next phase of testing before our rollout.
Finally, the team is hard at work and creating stronger local store marketing tools, working with the development team and leveraging the wealth of data that we have about as patients. We're implementing a clinical segmentation strategy to provide more effective local store marketing program.
And with that, Jake, I'll turn it over to you.

Jake Singleton

Thanks, Peter. And let's turn to Slide 9. I'll review our clinic comps for Q1 2024 compared to Q1 2023, system-wide sales for all clinics opened for any amount of time increased to $126.3 million, up 9%. System-wide comp sales for all clinics opened 13 months increased 3%. System-wide comp sales for mature clinics opened 48 months or more decreased 3% and revenue was $29.7 million, up $1.4 million or 5%. Revenue from franchised operations increased 9%, contributing contributing $12.2 million. Company owned or managed clinic revenue increased 2%, contributing $17.5 million. The increases represent continued year-over-year growth in both the franchise base and the corporate portfolio. Cost of revenues was $2.7 million, up 10% over the same period last year, reflecting the associated higher regional developer royalties and commissions.
Selling and marketing expenses were $3.9 million, down 7% year over year, reflecting the timing of the advertising spend.
Depreciation and amortization amortization expenses decreased $811,000 or 37% compared to the prior year period, reflecting the accounting for corporate clinics that are being held for sale as part of the refranchising efforts.
G&a expenses were $20.3 million, up only 1% compared to the same period last year, reflecting the lower rent for corporate clinics held for sale, as well as the continued cost control initiatives, offsetting the majority of increased expense to support more clinic.
Loss on disposition or impairment was $362,000 related to the ongoing quarterly impairment analysis of clinics held for sale as part of the refranchising efforts as compared to $65,000 in Q1 2023, operating income was $1.1 million compared to operating loss of $653,000 in Q1 2023. Other income was $35,000 compared to $3.8 million in Q1 23, which reflected the receipt of employee retention credits in the year ago period. Income tax expense was $179,000 compared to $841,000 in Q1 '23. Net income was $947,000 or $0.06 per diluted share compared to net income of $2.3 million, including the aforementioned employee retention credits received in Q1 2023 or $0.16 per diluted share. Adjusted EBITDA was $3.5 million, up 74% from $2 million in Q1 2023. Franchise clinic adjusted EBITDA was up 15% at $5.6 million. Company owned or managed clinic adjusted EBITDA, reflecting the aforementioned accounting for rent expense related to the clinics held for sale increased 94% to $3.1 million. Corporate expense as a component of adjusted EBITDA was $5.1 million $738,000 higher than Q1 '23 related to higher legal and accounting and greater professional services related to our refranchising efforts and IT maintenance.
On to review of our balance sheet and cash flow at March 31, 2024, our unrestricted cash was $18.7 million compared to $18.2 million at December 31, 2023. Cash flow from operations was partially offset by the $2 million repayment of the line of credit to JPMorgan Chase through this facility, we retain immediate access to $20 million through February 2027.
On to Slide 10, we are reiterating all elements of our guidance. System-wide sales are expected to be between $530 million 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 refranchise clinics, are expected to be between 60 and 75 compared to 104 and 2023. The difference reflecting the impact of our refranchising efforts.
And with that, I'll turn the call back over to you, Peter.

Peter Holt

Thanks, Jake. Turning to slide 11, at this point, a joint We're committed to continually improving our brand, our people and our performance to truly be the champion of chiropractic care.
As I discussed earlier, our revitalized co-ops and digital marketing programs have positioned to drive brand awareness as well as enhance our performance by furthering our objectives to increase new patient counts and improve existing care patient engagement. Additionally, we continue to identify potential agent products and services that patients want and have a viable business case. Our goal is to build brand equity and generate incremental revenue streams for all of our clinics.
Regarding people, one of the ways in which we support our existing team of doctors of chiropractic is by providing continuing education. We also empower the next generation of DCs in a variety of ways as a part of our ongoing effort to educate the chiropractic community about the advantages of the joint offers patients. We've increased our interactions with the chiropractic University in addition to participating and job fairs We supported the schools with scholarships and donations to key chiropractic colleges such as life Palmer, Parker, Sherman, Texas, chiropractic college and life.
Additionally, last month, we announced our first endowment, the Joint Chiropractic endowed scholarship for Logan University. This is another way to support the profession and the greater community enhance our relationships with the schools, invest in the future of graduating doctors of chiropractic and fueled the growth of our future pool of DC. Cordova down scholarship will provide much-needed tuition assistance for generations of students or $10,000 annually to a student who demonstrates academic achievement and a passion for chiropractic and quality patient care. We also have our preceptorship program. We found that most car protect students and new graduates want to learn more about owning and operating the practice, we developed a learning path, which combines real patient and business experience to our students are building their clinical skills. The program has two components, patient care completed under the supervision of joint receptors in the clinics and 18 online training modules covering advanced clinical business, self-development topics such as goal-setting business planning and creating enhanced patient experiences. These classes are presented by joint subject matter experts as well as clinical experts in the car project field.
In summary, in 2024, we stay focused on the re-franchising of our corporate portfolio, fostering our strong franchise base and improving clinic economics and increasing productivity.
Before I begin questions, I'd like to invite you to meet to meet with us at B. Riley 24th Annual Institutional Investor Conference later this month and the Oppenheimer 24 Annual Consumer growth and e-commerce conference in June. And with that, Kelly, I'm ready to begin the Q&A.

Question and Answer Session

Operator

Thank you. We will now begin the question and answer session to ask a question. You may press star then one on your touch tone phone. If you are using a speakerphone, please pick up the handset to ask your question. If at any time your question has been addressed and you would like to withdraw your question, please press star then to your first question comes from George Kelly with ROTH.

George Kelly

Thanks for taking my question.

Peter Holt

Hi, George.

George Kelly

Hi, Peter. So maybe if we could start on comp growth, a couple of questions on that topic. I was curious what you've seen so far in Q2? And then secondly, what gives you confidence that you can achieve a mid-single digit percent on comp growth rate in that year you mentioned as your target for this fiscal year?

Peter Holt

Sure. I think that the answer to the first part of that question is yes, and how the first part of that question was

George Kelly

what do we see in Q2

Peter Holt

We've seen in Q2? And I would say that you typically would not comment too much on future clinics, but we obviously had a 3% in Q1. We have been talking about that. We're cautiously optimistic as we reflect on 2024 performance. And I would say that we're seeing a continued improvement in that number. As we think as we look forward, that's certainly what we're expecting.
And the second part of that question is why would you expect that and I think that's that's really because we're continually focusing on the biggest challenge I think we faced in the last couple years is that new patient count drop. And I think we've got some great programs taking place will really help us address that issue to bring those new patients in than we would look at those three metrics that device that govern our concept or the new patient count, the conversion in Nutrition, we're continually seeing positive results on our conversion and our attrition. Our patients are staying with us longer. If you look at our new patient count for Q1, it was down 3% compared to the same period last period. So I think that was also related to just the challenges of March March had five Sundays in it, one of those Sundays with Easter. And we also stopped our new patient program or promotion that we ran last year that we did not run this year. So I think that hit that number a little bit for that last month. But I think looking at what we have, these programs that we're putting in place are influencers I think I feel very good and then we'll be able to see an improvement in that new patient count, which is so important for us for our comps.

George Kelly

Okay. That's helpful. And then, Peter, you mentioned in your prepared remarks and that you are sort of assessing different products or services that might potentially work with the model.
In the past. You've talked about and perhaps taking a little pricing on some of your oldest legacy and members that are in a much lower price points. I'm curious if either of those initiatives are contemplated in that mid-single digit comp guidance? And are there things that if they're not even still are there things you might do you might put in place later this year?

Peter Holt

The answer is yes, that we could get some of them put in place this year, probably towards end of the year because if we're talking about any kind of Graham changing our grandfathering policy or any price increases, there's going to be some testing involved with that before. We were to implement a program like that, but that is possible and the same with our idea of any kind of an ancillary product or services that we would add to the clinics. And we certainly are looking for ways to do that. We want to be very thoughtful about that. We want to make sure that what we're adding is accretive to the bottom line and not creating complexity in the business model that is not necessary. So we're still in those early stages of identifying the different programs that we can put in place to increase those sales through those additional products and services. So more to come on that as we are, it's we've designed our kind of a committee that's looking through that to help us make those those good decisions.
And the final part of the answer is no and our guidance on the on the comps did not and did not include or take into account any change in the pricing structure or additional products or services that would be sold in the clinic in 2024.

George Kelly

Okay. I appreciate it. I'll hop back in the queue.

Peter Holt

Thank you.

Operator

Qinnan comes from Anthony Vendetti with Maxim.

Anthony Vendetti

Thank you. So just a couple of quick questions here. So the clinics you same-store sales at 13 months, those are up around 3%, but the ones open about four years are down. What what do you think that's attributed to? Is that done sort of a leveling off? And then maybe just a little bit into the reasoning in general for the for the closures, I mean, this quarter you had for this quarter last year was one or do you wait to see how with the ones that are down? Are you looking at at revenue trends and profitability or just profitability, how do you look at those in terms of in terms of the closures?
middle of, I have a couple of follow-ups.

Peter Holt

Okay. To specifically speak to the closures that yes, we have foreclosures this year and that again for a system of our size, nearly 1,000 units from foreclosure during one quarter, still unbelievably low number closer to what's going to happen is your system matures. You've had situations where the market itself is changing, so they may lose an anchor where they've been located or you have demographics of that market fundamentally change, which just does not justify that clinic staying open. And from time to time, you also have just some personal issues that come up that route that forced the franchise to call the clinic. So I'm not concerned if I compare Okay, one unit closed in Q3 20 -- our Q1 2023 compared to the foreclosures in two one 2024, but it's something that we look at very carefully. And certainly the other part of that question is looking at our boat or what's what is our concern is the top line revenue that profitability the clinic. And the answer, of course, is both that we wanted to make sure that we are continuing looking at ways to increase that profitability of that unit because what I can tell you in any system I have ever worked with and franchisee unit economics is one of the most important things that you have to stay focused and you have a couple of things you can do to influence that one increased revenue and the other is to reduce costs. So those are the areas that we're focused focusing on right now. Now we know that and we've talked a lot about this in the past that when we look at the margins of our clinics, is that one of the challenges we've been facing is the increased cost of our labor and specifically our doctors and that suppress the margin. And so now we're looking at ways to increase that margin. One of the things we did in March of '22 is do a price increase across the board. And one of the reasons the main reason for that was to help address this issue of the increased top line. We're now looking at ways to be more streamlined on the clinic experience itself. And so we spent a lot of time focusing on that new patient count. But what we're recognizing is that we can do this with our new CMO is that we can also focus on our existing patients in our last patients. And so with our existing patients to make sure they're staying with us longer and with our last patient to make sure they come in earlier because what we do know that average patient stays with us for roughly six months and then they drop. We also see that 25% of them on average will come back within the next six months because they're paying comes back until we feel there's some opportunities there with some of the marketing materials we're having and some automated marketing programs that we can influence those those those decisions about how long our franchisee our patients stay with us and how quickly that can come back.

Anthony Vendetti

Okay. And just on the 48 month peer, um, how many how many of your clinics are or four years or older? And then the in aggregate, I guess they're down 3% in terms of revenue. What do you attribute that to?

Peter Holt

Well, I think part of it is a maturing of the system, a part of that. I think I directly attributed to the the new patient count and so are the new patient counts that are in those more mature clinics we had where they've got, they've been established and they've gotten they've drawn the core of patients that are in that area. It's harder to get newer new newer patients to come in into that territory or into that into that clinic. So I think that's one of the reasons you're seeing kind of a drop in those clinics opened more than 48 months compared to a clinic that's open. That's no less than that. I think that that's probably the main thing I would look at right now.
I know Jake. If you --

Jake Singleton

Okay. Yes, I would say you think about '23, we did a 4% comp for the full year and the mature stores did negative one, 3% to 5% spread there because of rounding, it was a 6% spread here in Q1. And but I think I would just point to because we're on a fiscal calendar in March, just having the Sundays with Easter and us not rolling over what was a long-standing new patient contest and allocating those dollars to some marketing efforts in the April-May timeframe, I think had an impact on that, that March period in particular, that drove down the comp for the quarter, but the spread was relatively close.

Anthony Vendetti

Okay. That's helpful. And then just lastly, very big picture. Obviously, we saw Starbucks come in very late in terms of sales. And they were saying the occasional customer harm has not frequent at Starbucks as often as they used to do you think the economy in general is having some negative impact in terms of are getting getting new patients to come in the door? Maybe just to the extent that you're able to measure that, is that is that something you're seeing? Because I see it's not just Starbucks. We're seeing that across other franchise as well. This quarter?

Peter Holt

Yes, no, no, I'm saying I think that the real issue is that we know that.
Okay. If you go back to fourth quarter GPV growth, I think was the old what 4.3%. And this quarter is still like 2.3% of GDP and toward we're not in a recession, that's very clear, but you still have half the American people saying that, you know, I am personally that I'm paying more of the grocery store and pay more to fill up your car with gas and pay more if I might my interest rate on my credit card or my mortgage rents are going up. And so I think that if you look at the demographics of the economic demographics of our patient base, the average income is somewhere between [50,000] and 105,000. And so that group is, in fact being hit by these increasing costs and feeling more uncertain about the economy and that they are back to our patient base. And I have talked about this before on some of the other calls that we do think one of the factors that we've seen in our lower patient count, it is the fact that they are feeling that it was that economic uncertainty, they're holding back so that there's going to always kind of medicine before they come in and not coming in at all. For those that do come in, they're converting at a higher rate. Those that do come in are staying longer as a member. So I think that there's still great value and importance of the service that we're offering. But I just think in this kind of economic uncertainty that it does impact specifically the demographics of our patients are the economics --

Anthony Vendetti

That are very helpful for sure, that makes sense.
I'll hop back in the queue. Thank you. Appreciate it.

Operator

Your next question comes from C.J Dipollino with Craig-Hallum Group.

CJ Dipollino

Everyone. I'm on now for Jeremy Hamblin. I had a couple of questions for you. Wanted to start with the refranchising effort. Seems like you're still fairly early on the process, but just curious if you have a time line on when you start to see those transactions go through and anything you can share on kind of expected deal economics would be would be really helpful.

Peter Holt

Sure, and I will both answer this, but I would say that we're well into the process. And as I said on the call that we have with a lot of interest from our franchisees. We've also opened this up to franchisees outside the joint world. And so we've been looking at hiring an investment banker who specializes in refranchising effort because of what I've talked about this before. This is not a fire sale. We're not just trying to get these off our books. These are valuable assets that we want to put them in the hands of the franchisees who can most effectively run and I don't need to trade problems. And so we are, in fact, going through a very structured process to make sure that we have in hands of the right franchisees. But we're also looking at some of the some of the interest. It's been out, especially as we've opened this outside of the group, the joint franchisees from some very sophisticated groups who are interested in larger territory of our clinics. We've got 135 corporate clinics. We've talked about them the vast majority being up for sale. So I think that we have some real opportunities to look at those transactions and so those transactions a quarter a little more take a little more due diligence, take a little more time to put together. But what I would say is that we're certainly pleased with the interest in this refranchising effort and that from our perspective, having said all that, I just said we'd like to get this done as quickly as possible. So it does take a toll on continuing to run these units when they know that they are your employees are outside the four wall employed for those units. It creates uncertainty and people don't like uncertainty. And so we would expect that the majority of those employees will be hired by the new owners, but it creates that uncertainty that you just don't want to minimize as we go through this effort.
I know, Jake, if you had anything more to add.

Jake Singleton

I think there was a part of the question there on on valuation and we are in active negotiations. So I probably don't want to give too much out there, but we've done a historical look-back analysis and we were purchasers of clinics for a lot of years. And we also see all the franchisee to franchisee transfers that happen within our system because we do hold that right of first refusal. So we have a pretty good sense for historical multiples of EBITDA that these trade for. And we'll continue to you'll partner with the right groups that can maximize that value and generate the proceeds that these quality assets deserve.

CJ Dipollino

Okay, understood. Thank you. And then moving on to the P&L, it looks like general and administrative was up year over year on an absolute basis. Curious how you guys are thinking about G&A moving forward? And if we should expect some more and more absolute increases year over year?

Jake Singleton

Yes. I think Q1 last year was $20.3 million or $20 million. I think it was $20.3 million for this quarter, so up slightly. We did have some accounting and legal and professional service costs associated with some of the refranchising effort and we do have a year's worth of of additional headcount that's that's rolling over on a 100 plus unit increase base. I think the critical piece of that question is we understand that for the refranchising strategy to work, we have to be critically focused on on cutting the necessary G&A to reach those profitability targets that we have. So that will be something that we consistently monitor as you gleaned from the call. We have not executed through March 31st a ton of those deals yet, and you'll expect to see that G&A begin to taper as we continue our progress through that refranchising effort. So it'll really be dependent on when the refranchising transactions, how large they are and then we'll be able to shed the associated G&A, but that will be a critical focus of management as we continue this process.

CJ Dipollino

Okay, cool. Thank you. And then out one more. And so the FAST Act came into place about a month ago. I'm curious, especially with the California stores, curious, are you seeing any attrition of labor of maybe some of the lower-paying jobs going on funding funding work elsewhere?

Jake Singleton

Yes, I think I think from our perspective, that had been rumored for a long time. So I think we start to see we started to see the wage pressures on that?
Certainly before the bill was officially executed, we haven't seen really an uptick in turnover as it relates to our roles, knowing that they now have kind of a competitive benchmark out there for some other QSR type concepts, something that we'll continue to monitor. But we haven't really felt a direct and immediate impact so far as it relates to our our wage levels because I think we have largely absorbed a lot of that pressure kind of leading up to the actual finalization, I mean, through impacting the market but Jessica Lao specifically to QSR.

CJ Dipollino

Okay, right. Thank you. I'll hop back in the queue.

Operator

It does conclude our question and answer session. I would like to turn the conference back over to Peter for any closing remarks.

Peter Holt

Thank you, Carrie, and thank you all for attending the call today. I'd like to share I know from our VP of chiropractic and compliance he received from a prior student who went through a Precept or ship program at the joint and is now a full-time employee. And I'm quoting my preceptorship with the Joint Chiropractic was an enriching experience that provided invaluable hands-on practice and deepen my understanding of patient care. The mentorship I received was top notch with so many different doctors providing helpful input and my technique and flow the opportunity to work with a diverse patient population, allow me a home, my adjusting skills and tailor my treatment plans to individual needs. This preceptorship bolstered my confidence and my chiropractic abilities and reinforce my commitment to this healing profession, and we're so pleased to have had that Dr. join our team. You say, well, adjusted.

Operator

That does conclude our conference for today, and thank you for participating. You may now disconnect.