Q4 2023 Joint Corp Earnings Call

Participants

Peter Holt; President, CEO & Director; Joint Corp

Jake Singleton; Chief Financial Officer; Joint Corp

Kirsten Chapman; IR; Lippert/Heilshorn & Associates, Inc

George Kelly; Analyst; ROTH Capital Partners

Ryan Meyers; Analyst; Lake Street Capital Markets, LLC

Jeff Van Sinderen; Analyst; B. Riley & Co

Jeremy Hamblin; Analyst; Craig-Hallum Capital Group LLC

Thomas McGovern; Analyst; Maxim Group LLC

Presentation

Operator

Good afternoon, everyone, and welcome to The Joint core Fourth Quarter and Full Year 2023 financial results conference call. All participants will be in a 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. Ask a question. You may press star and then one on your touchtone telephone withdraw your questions, you may press star in two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Kirsten Chapman with LHA Investor Relations division of Alliance Advisors. Please go ahead.

Kirsten Chapman

Thank you, Jamie, and good afternoon, everyone. This is Kirsten Chapman of LHA Investor Relations. The division of Alliance Advisors. 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 our data join.com/today after the market closed joint issued its results for the quarter and year ended December 31st, 2023. You can find that press release on 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. Although the Company believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, it can make no research and assurance as 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 uncertainty. As a result, we caution you against placing undue reliance on the forward looking 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 and forms 10 K and 10 Q, as well as other reports the Company files from time to time with the SEC.
Finally, any forward-looking statements included in this call are made only as of the date of this call, and we do not undertake any obligation to revise our results or publicly release any updates to the forward-looking statements in light of any new information or future 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 the financial performance. Management believes they provide a more transparent view of the company's underlying operating performance and operating trends than GAAP measures. A reconciliation of the net income to EBITDA and adjusted EBITDA is presented in the press release the Company defines EBITDA as net income or loss before debt, interest tax expense, depreciation and amortization. The Company defines adjusted EBITDA as EBITDA before acquisition related expenses, which includes contract termination costs associated with reacquire regional developer rights, stock-based compensation expense, bargain purchase gain, net loss or gain on disposition of impairment costs related to restatement filings, restructuring costs and other income related to employee retention Management also uses commonly discussed performance metrics. System-wide sales includes revenues of all clinics, whether operated by the Company or by franchisees. While franchise sales are not recorded as revenues by the company. Management believes this information is important in the understanding of the Company's financial performance because the sales, our base in which the Company calculates and records royalty fees are indicative of the financial health of the franchisee base. System-wide comp sales include the revenue from both company-owned, our managed clinics and franchise clinics that, in each case have been opened at least 13 full months and exclude any clinics that have been closed.
Turning to slide 3, it's my pleasure to turn the call over to Peter Holt.

Peter Holt

Please go ahead, Peter Thank you, Kirsten, and I welcome everybody to the call. As we review 2023, I'd like to begin by acknowledging how proud I am of our whole team. Our doctors wellness coordinators, corporate employees, franchisees and regional developers for their steadfast commitment to supporting our patients in a market of ongoing uncertainty among our patient demographic, we delivered growth in system-wide sales revenue, adjusted EBITDA, the number of new patients and the number of patients treated. Also, we improved our patient conversion and existing patient attrition rates. I'm even more impressed as they embraced our enhanced marketing strategies targeted to increasing new patient count and improving existing patient engagement. Our efforts are beginning to gain traction and were augmented by our year end campaigns. The Joint is revolutionizing access to chiropractic care by providing affordable concierge style, membership-based services and convenient retail settings. And this franchise concept remains strong. In fact, there's been significant interest in our re-franchising strategy as we announced that the last at the end of last year, we put a thoughtful process in place to ensure that we are getting these clinics into the hands of our franchisees who can most effectively run them as we move into 2024, we've renewed our mission to improve quality of life through routine and affordable chiropractic care. And we've advanced our vision to be the champion of chiropractic, Jack and I will elaborate. But first, I'd like to review our 2023 operating metrics during the year. The doctors of chiropractic at the joint performed 13.6 million adjustments, up from 12.2 million patient visits in 2022. We treated 1.75 million unique patients from 1.6 million in 2022. And of those treated over 932,000 were new to patients new patients up from approximately 845,000 in 2022 of our new patients, 36% or approximately 336,000 people had never been to a chiropractor before visiting the joint Our model is literally expanding the market of chiropractic users.
Finally, during 2023, our monthly memberships contributed 85% of our system-wide gross sales, up from 84% in 2022.
Turning to Slide 4, I'll review our financial highlights for the full year 2023. System-wide sales grew to $488 million, increasing 12% compared to 2020 to comp sales for clinics that have been more opened more than 13 full months increased 4% compared to 2022. Revenue increased 16% compared to 2022. Adjusted EBITDA was $12.2 million for 2023, up 6% over last year. At December 31st, 2023, our unrestricted cash was $18.2 million compared to $9.7 million at December 31st, 2022.
Turning to slide 5, I'll discuss our clinic metrics for 2023 we opened 114 clinics, 104 franchised and 10 greenfields. This compares to 2022 with 137 clinics, open 110 franchised and 20 greenfields, we closed 13 franchised and four corporate units, which is less than 2% of our portfolio. This reflects the fact that some of the market's condition changed. For example, a retail center may lose an anchor tenant or other demographic changes impact the viability of the site. Having said that, we're working on a number of profitability initiatives to improve financial performance of our clinics. We added three previously franchise clinics to our corporate portfolio. At December 31st, 2023, we had 935 clinics in operation consisting of a 800 franchise clinics and 130 Company-owned or managed clinics. Current portfolio mix shifted slightly to 86% franchise and 14% Company-owned or managed from 85% to 15% at the end of 2022. As we execute our refranchising strategy, the portfolio mix will shift more significantly regarding our corporate portfolio while I know of no longer proactively pursuing a greenfield expansion strategy, we're actively supporting the three greenfield clinics are in the process of being opened. We will uphold our various obligations related to their leases and build-outs.
Turning to slide 6 regarding our franchise restaurant, our refranchising strategy. As noted before, many of these clinics are quality assets of high value, and we will allow the necessary time to capture that best value. Our team has prepared the framework for the sale of the majority of our corporate clinics. We've organized units in clusters and generated comprehensive disclosure package for marketing efficiently. We gave initial preference to existing franchisees and have broadened the net to potential buyers outside the existing joint community. The majority of our corporate clinics are in various stages of sales negotiations. We intend to sell these clinics to our franchisees who can most effectively run them today. We've received significant interest with over 100 requests for information later this month, we'll be marketing at the multi-unit Franchise Conference in Las Vegas. Ultimately, our goal is to get these clinics in the hands of our best performing franchisees can generate capital that can be used for many purposes, such as reinvesting in the brand marketing, reacquiring RD territories and or repurchasing stock among other options.
Turning to slide 7, let's review our franchise license sales. As expected, when we announced our new franchise refranchising strategy, we experienced a slowdown in new franchise license sales. While there will be some franchisees that want to start with a brand new clinic and continue to purchase new licenses. We expect the speed of new franchise sales to be impacted while the refranchising is in full swing during Q4, we sold five franchise licenses, bringing the 2023 sales to 55 compared to 75 in 2022. The year-over-year change reflects the continued impact of the higher interest rates inflation, strong employment rates, in addition to our newly announced refranchising strategy of licenses sold, 58% were sold to existing franchisees who reinvested into joint reflecting their belief in our business. At year end, we had 172 licensed franchise licenses in active development. Our marketing efforts, which I'll detail more in a moment, our build to support our nationwide brand building efforts. Our regional developer strategy remains consistent. We have demonstrated over the past several years is the natural progression of territory development can lead to the reacquisition of certain RD. regions and will continue to execute as criteria is met. We do not plan to add additional RD territories and as such, over time, we'd expect our DE share of franchise royalty fees to decrease as we acquire.
Those are the rights. We ended 2023 with an RD count of 17 and the aggregate 10-year minimum development schedule for the RD territories is 674.
Turning to slide 8, let's review our key performance indicators. We've taken great measures to increase our new patient conversion rates, grow new patient counts and lower patient attrition. In 2023 compared to 2022, we improved attrition by 20 basis points to 11%. Also, conversions rose 160 basis points to 52.1%, and we're continuing to work hard to increase our new patient counts. I'll review our marketing efforts related to that on slide 9, Black Friday and year end wellness sales were both strong promotions for us in 2023, resulting in a new record-breaking totals in several areas. Total sales for the Black Friday packages increased 31% compared to 2022. The annual the end-of-year wellness sale helps the patient start the new year with wellness in mind, this promotion enable their patients to purchase 10 months of membership and received two months free total end-of-year promotional sales increased 21% compared to 2022 and 2024 is shaping up to be an exciting year for marketing as our joint effort joint led by our new CMO.
Lori, I do have the we focused on initiatives to drive new patients, including increasing our media efficiency by adjusting our channel mix and increasing our working media spend to reach even more prospective patients. This adjusted media mix pairs with our patient strategy to ensure that we're delivering the message of affordable, convenient chiropractic care to those most likely consumers. Additionally, we plan new promotions and offers aimed directly adding new patients to take advantage of our local differences. We're creating more robust local store marketing programs by providing proven tactics and more nuanced tools for our system. Finally, to ensure that we maximize convenience for our patients, we're testing an initiative to enable initial patient bookings, something that we're learning is important to a subset of our prospective patients. Additionally, we're putting a greater focus on existing and lapsed patient engagement, we will introduce new promotions aimed at reengaging former patients. Moreover, we'll apply our learnings about the patient lifecycle to automated automated messages to retain patients during the critical phases of their journey in partnership with our marketing co-op. We're testing new programs and channels to increase our club synergies and overall brand awareness. The marketing team has been working hard on expanding the brand architecture. We continue to evolve our brand positioning and defining the brand essence to deepen our competitive advantage. During Q4, we had several workshops to define current consumer perceptions. Our target consumers and unique benefits that we can offer as a brand. More recently, we had an opportunity to work with our franchisees to incorporate their feedback into the process were refining language and defining impact areas to leverage this new positioning. We expect these efforts to have a positive impact on performance in 2024.
And with that, I'll turn the call over to Jake.

Jake Singleton

Thanks, Peter. Let's turn to Slide 10. I'll review our clinic comps for Q4 23 compared to Q4 22. System-wide sales for all clinics open for any amount of time increased to $133.1 million, up 11%. System-wide comp sales for all clinics opened 13 months increased 5%. System-wide comp sales for mature clinics opened 48 months or more decreased 1%. Revenue was $30.6 million, up $2.9 million or 11%. Revenue from franchised operations increased 14%, contributing $12.7 million. Company-owned or managed clinic revenue increased 9%, contributing $17.9 million. The increases represent continued year-over-year growth in both the franchise base and the corporate portfolio cost of revenues was $2.9 million, up 16% over the same period last year, reflecting the associated higher regional developer, royalty royalties and commissions, selling and marketing expenses were $3.4 million, up 2% year over year and down 22% compared to Q3 23. This reflects our Q4 cost management efforts to offset selling and marketing spending earlier in the year.
Depreciation and amortization expenses decreased $379,000 or 18% compared to the prior year period, reflecting the corporate clinics that are being held for sale as part of the refranchising efforts.
General and administrative expenses were $21.3 million compared to $18.3 million, reflecting the cost to support the increased clinic count. These were partially offset by cost control initiatives such as hiring freezes, travel reductions and the elimination of non-core projects.
Loss on disposition or impairment was $1.5 million compared to $50,000 in Q4 22. The increase is related to our refranchising efforts, which include those additional corporate clinics that were announced to be held for sale in November of 2023. Operating loss was $147,000 compared to operating income of $1.5 million in Q4 2022, reflecting the aforementioned impairment charges. During Q4, we recorded a non-cash valuation allowance of $10.8 million against our deferred tax assets.
A valuation allowance is a non-cash accounting entry to record a reserve against existing deferred tax assets. As we mentioned earlier, there is uncertainty regarding the timing of our refranchising transactions. When you introduce uncertainty, the GAAP accounting guidance indicates you should review the potential realizability or our ability to benefit from those future tax assets. Until such time that those uncertainties are resolved, it's more prudent to record a valuation allowance at this time, it's important to know that we still maintain these tax assets that will be available to utilize in the future as we return to profitability. As a result Income tax expense was $10.9 million compared to $629,000 in Q4 2022 to Q4 2023. Net loss was $11.0 million or $0.75 per share compared to Q4 2022 net income of $763,000 or $0.05 per diluted share. Adjusted EBITDA was $4 million for both Q4 2023 and 2022. Franchise clinic adjusted EBITDA was up 11% at $6.6 million. Company owned or managed clinic adjusted EBITDA increased 15% to $1.8 million. Corporate expense as a component of adjusted EBITDA was $4.4 million $814,000 higher than Q4 2022 related to increased headcount to support the larger clinic count.
On to Slide 11 for the year ended December 31st, 2023 compared to 2022 system-wide sales for all clinics opened for any amount of time increased 12%. System-wide comp sales for all clinics opened 13 months or more increased 4%. System-wide comp sales for mature clinics opened 48 months or more decreased 1%. Revenue was $117.7 million, up $16.4 million or 16% 2023 net loss, including the non-cash valuation allowance was $9.8 million or $0.66 per basic share. This compares to 2022 net income of $627,000 or $0.04 per diluted share. Adjusted EBITDA was $12.2 million, up $691,000 or 6%.
On a review of our balance sheet and cash flow. At December 31st, 2023, our unrestricted cash was $18.2 million compared to $9.7 million at December 31st, 22. This reflects $14.7 million in cash from operations, including the receipt of employee retention credits of $4.8 million, net of $6.2 million investment in clinic acquisitions.
Yes, development of greenfield clinics and the improvement of existing clinics and corporate assets.
At December 31st, 2023, we had that we had $2 million drawn on our line of credit with JPMorgan Chase since year end. Based on our high closing cash balance and our projected proceeds from the refranchising strategy, we decided to reduce our interest expense and repaid the $2 million line of credit balance. We continue to have immediate access to $20 million of additional cash through this line of credit with JPMorgan Chase on slide 12 for a review of our guidance. As Peter discussed, we are well into our refranchising strategy because of the timing of the corporate clinic. Sales is uncertain and will impact the revenue and adjusted EBITDA in 2024, we have modified financial guidance to be system-wide gross sales and system-wide comp sales. We will continue to provide guidance on new franchise openings, excluding the impact of refranchise clinics 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 opened 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 in 2023. The difference reflects the impact of the refranchising effort. As we think about the financial impacts of the refranchising efforts, please note that our cost of sales is primarily related to regional developer fees, and we expect it to remain fairly static. We expect our sales and marketing expenses to decrease as we reduce the scale of our corporate portfolio. Currently, our corporate clinics spend about $3,000 per clinic per month in local advertising.
Regarding general and administrative expenses, we expect to see significant reductions in our clinic level four, while operating expenses are outside the four-wall expenses and in our unallocated corporate overhead. These expenses will be reduced proportionately as we reduce the scale of our corporate portfolio. As such, the timing of these G&A reductions will be gradual and incremental overall while we reduced our top line revenue, we expect reductions in G&A to expand our operating margins and increase profitability in the long run.
Finally, it's important to note that while some of our underperforming clinic valuations may result in non-cash impairment charges, the better the clinic performs. However, the better clinic performs it will create higher sales proceeds and the opportunity for a gain on sale in the St. Peter, I will turn the call back over to you.

Peter Holt

Thank you, Jake. As I noted on the onset of this call, we've expanded our vision to be the champion of chiropractic care by providing consumers expanding access to chiropractic services that meet the demands and improve our strategic pillars, our brand, our people and our performance to elevate our brand equity and drive awareness. We'll strive to increase our active patient count by improving the intake process by testing book booking, new visit patient initial visits and by optimizing local clinic marketing. We plan to lengthen the time patient stay engaged with the joint and to reactivate lapsed patients by leveraging new content, automated messaging and additional promotions. Also, we intend to employ new media campaigns to increase our new patient leads. Our goal is to ensure we assemble and retain the strongest team. We are continually building our lead pipeline to our doctors of chiropractic to share with our whole franchise system by cultivating professional relationships and mentoring programs. We're evaluating and recommending enhanced incentives and benefits, including creating the joint first continuing education platform for doctors. Additionally, we're employing programs that better align staff with our patient experience division. These initiatives are being implemented to improve our performance. We expect to drive total system sales by increasing new patient counts and optimizing sales per patient. Additionally, we're evaluating the line extensions and ancillary products. Ultimately, we expect to foster our strong franchise base, improve unit economics increase productivity and expand margins at the clinic and company level.
Finally, the joint is consistently recognized for our excellence. Most recently, Entrepreneur Magazine ranked the joint number one franchise in chiropractic services number 61 for veterans number 83 of the top 500 franchise systems in the United States.
Before taking questions, I'd like to invite you to meet us at the Roth Annual Growth Conference later this month in Orange County.
And with that, Jamie, I'm ready to take the Q&A.

Question and Answer Session

Operator

Ladies and gentlemen, at this time, we'll begin the question and answer session to ask a question, you may press star and then one on your touchtone telephones. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. To withdraw your questions, you may press R&T. Once again, that is star and then one to join the question queue. And our first question today comes from George Kelly from ROTH MKM. Please go ahead with your question.

George Kelly

Everybody, thanks for taking my questions. Tom, maybe I'll start with trying to just get a feel for the process, the refranchising process underway. And there was a comment in your prepared remarks and in the slide deck as well, just about how you're sort of broadening the scope of potential and buyers of those businesses. And I'm just curious, is it fair to interpret that as like the initial interest has maybe lacked your previous expectation and for how should I interpret that a comment in the presentation? And then the second part of the question, same topic is on, do you have a better sense of timing when when this process should be complete, are you comfortable should it be a year-end thing or could this be several.

Peter Holt

Two great questions. To answer your first question is that is somehow by the idea of broadening the people that could potentially be interested in our franchised clinics that we're selling a reflection of lower interest and expected of our franchise community Absolutely not. And what we've also recognized is the most important thing for us to get these clinics, not just off our balance of our off our books, but to get them in the hands of franchisees who can most effectively run it. And we recognize that it makes sense at the same time as working closely with the interest in our franchisees in terms of requiring that some of these clusters that we've created, but they also be open to some other alternatives.
And so that was really the purpose. There is just to broaden the scope of what we're looking for to make sure that we're getting the best franchisees in the system.
And your second question was, I'm getting a better sense of the timing of it. And I would say that we're still a little early in the process. As I said, we've got of our systems in place. We've done the clustering where you're in our conversations with our franchisees that though what we saw, I don't have an exact time line to give you. But I would expect you would say where you should see a significant amount of the screen. So by this year, but I would expect it to also go into 2025.

George Kelly

Okay, thanks. And then just one other question for you, Tom wondering if you could I appreciate the guidance you gave. That's helpful. Just those key metrics for the year, but curious if you could just maybe give a little more on what you've seen so far and in this year, just in the couple of months on same-store sales growth and has it improved from what you just reported in Q4? Is it kind of consistent. Just any observations there would be helpful and that's all I had. Thank you.

Peter Holt

As we look at the IO, typically, George, we do not guide outside of quarters but as we look in the first two months of 2024. Okay. We've And I kind of referenced in the call is that we're kind of seeing or turning the corner in our new patient counts. And so I think that we're seeing some improvement as we go look forward for this year and beyond.

George Kelly

That's correct. Thank you.

Operator

And our next question comes from Ryan Meyers from Lake Street Capital. Please go ahead with your question.

Ryan Meyers

Again, thanks for taking my questions. It's a little bit of a follow-up to the last question but as we look to the slide deck, it looks like the more mature clinics once greater opened greater than 48 months and saw a slight decline in same-store sales.
Just wondering if you could maybe unpack that a little bit if there's any more commentary. Bye there.

Peter Holt

Yes. Consistent result to last quarter, Ryan, we have seen that trend for the last couple of quarters. And I think that's why you see the continued emphasis on our marketing efforts, not only trying to show the rebound in those new patient prospects, but also increasing our focus on our lapsed or in trying to increase engagement of our existing patient base as clinics mature in your markets become more dense, you have that you have a greater amount of prospects in order to kind of refill the bucket, if you will, from an attrition standpoint. So it has to remain a critical focus of ours. And I think you heard that in terms of our renewed interest and focus in some of those marketing initiatives.

Ryan Meyers

Got it. And then just kind of as a brief follow-up to that question. Obviously, the marketing strategy remains kind of a priority like you just mentioned. You know, as this is a newer initiative, how have you seen some of those results Pehong? And are you seeing positive trends there?

Peter Holt

Absolutely. As we've talked about at the one key metric, we look at three key metrics for our business, patient counts, conversion and attrition and no one metric that we've had the most challenge with and certainly in 23. And as I said, we're improving the new patient.
And if we look at our new patient count for the full year of 2023, we were 6% below where we were in 22 and 22 compared to 21, it was 14%. So we had an improvement from a negative 6% in 22.
In the last four months, our new patient counts were flat. So if we look at 2023 are we had 86 new patients per clinic per month compared to 91 in 2022. So we are seeing a flattening of that curve. I think we'll see that continue to improve as some of the marketing programs that our new CMO is putting in place really start taking effect.
We're also really looking more at a focus in a way we hadn't done before, not just simply a new patient focusing on making sure that we keep those patients in with us for a longer period. Right now, the average patient stays as a member a little over six months. And so my wife, Lori, has put in a new programs that will help extend that period.
And the final part of that is we're also really focused on our laps to patients because what we know is when those patients come, they stay with us that roughly that six months very often their pain goes away. So they and their membership. But we can see about 25% of them will come back in the next six months.
And so we've got programs that are being designed to really focus on that lapped lapsed patients to make sure that we're bringing them in sooner than they otherwise would. So I think we have some real opportunities there to develop in 2024.

Ryan Meyers

Got it. Well, thank you for taking my questions.

Operator

Our next question comes from Jeff Van Sinderen from B. Riley. Please go ahead with your question.

Jeff Van Sinderen

As everyone I realize some of these questions may be a little tough due to the refranchising efforts, but all things considered on how many new licenses do you think you would sell or expect to sell this year, maybe a targeted range, there would be helpful.

Peter Holt

And Jeff, thanks for the question and that we do not guide on on franchise sales, as you know, and we talked about that. Let's say we had 55 sales for the full year 23. We know that some of the things that impacted those new sales is the economic environment to higher interest rates and the other just the high employment because there's always been kind of a relationship between unemployment and growth in franchise sales. And so there's a lot of factors there that that had impacted where we were in 2023 compared to 2022, we've sold 35 license. And so when we say that we're expecting there to be an impact on new license sales in 2024. And we had 25 we had 55 in 2023.
I should kind of triangulate kind of where we expect that to be. And so that that's kind of the way I would look at it.

Jeff Van Sinderen

Okay. That's helpful. And then sort of along the same lines of guidance and again, realize this is a little bit of a moving target, but based on the refranchise cadence or work that you're doing there so far and the interest levels, and I know you said it will continue into 2025. But is there a way you can help us understand? I mean, I know you gave the system wide sales, but just I guess maybe trying to get to a you now reported sales line decline our rate for FY 24. Just maybe order of magnitude there and in helping give us a.

Jake Singleton

Yes, I mean that's the tough part, Jeff feel as the GAAP revenues are going to move from being 100% recognized for our corporate location to a royalty stream as we execute the transactions. And so the depth and the breadth of that GAAP revenue decline will really be predicated on the pace and the size of some of these early transactions, which made it really hard. I'm trying to determine from a guidance perspective for 2024. And so that's why you saw us change the guidance metrics to overall sales figures because that's where we have the predictability now. So we're not going to put out a target from a GAAP revenue basis because it's really so predicated on the timing of those transactions.

Jeff Van Sinderen

Okay. Sure enough.

Peter Holt

And as a consequence, we finished this. I think we can get back to go to the Trinity that has at least for us, the traditional metrics that we guide on.
But there's just a there's there's just too much uncertainty in terms of how this unfolds to be able to give you relevant guidance right now on EBITDA and revenue.

Jeff Van Sinderen

Understood. And then if we could shift to marketing for a minute, and I know you've you spoke to that, but I'm just wondering, is there any other color you can give us in terms of to the degree that you want to come, how you're shifting the marketing? I know you mentioned maybe new channels and just any other color you can give us there.

Peter Holt

Sure. And I think it's really exciting to see our currency. We have a strong CMO that's come into place, who is the CMO of Sonic, which also should bring fresh ACV interest programs and quite frankly, different disciplines.
So one of the first things she has done is to go in and do an audit of all of our media buys to make sure that we're getting them the full power of them. We'll be doing some RFPs on just some of those key vendors in marketing to make sure that we're working with a partner that can most effectively support our business that she's designed.
Some new program is putting out there. That is where we are going to be working more with influencers as I think she's really focused on the power of our co-ops. We have a lot of these great clusters and what they put their funds together that you can put an impact in that market that quite frankly, then computable compared to anybody else in all those independents in that local market.
Because if you have 30 or 40 units, all contributing to that local marketing spend, what you can spend that on is very different than a pure sole practitioner trying to market to your clinic.
So I think there's a lot of some really exciting things that will be coming down the pike, and we'll get more details as we go forward.
And I also think it's just that focus on our last patients and focusing on making the patient experience better so that we can keep that patient longer could have huge implications for us.
I mean, if you think about the last seven or eight years. We've always been so focused on new patients and really haven't and the time we could have on that lapsed and on that on trying to extend the time for that patient to stay with it.
So there's some real opportunities, I think, to really focus on the quite frankly, the improvement of the bottom line, what you should be hearing as we are highly focused on improving unit economics on that clinic level. We know we've had some challenges with higher costs on labor over the last several years.
We know we've had some issues with new patients.
And so it's really incumbent upon us as a franchise or just a laser-like focus on improving those unit economics for our franchisees. And of course, our corporate units as well.

Jeff Van Sinderen

Kash, I appreciate you taking my questions and best of luck. Thank you very much.

Operator

And our next question comes from CJD. Molino from Craig-Hallum Capital. Please go ahead with your question.

Jeremy Hamblin

for Gus CJ, definitely no on for Jeremy Hamblin. I wanted to ask a quick question about sales and marketing. Looks like it was down about $1 million sequentially from Q3 to Q4. Could you give a little color on that drop and then maybe how we should think about it into the new year?

Jake Singleton

Sure. I think I think you'll see that normalize. As we see. We've tried to put it in the commentary a little bit through the first three quarters of 23. We were running a little bit hot in terms of our overall plans spend for the year in sales and marketing. So Q4, you just saw some of that normalize as we think about our national marketing fund. The goal is to really spend that entire pool each period. And so when you've kind of accelerated some of your expenses into the earlier parts of the year, you kind of see a natural step back in Q4. So really, I think you're just seeing the timing of that play out quarter to quarter through 2023.
So as we get back into 2024. I think you'll see that normalize again into the quarter-by-quarter cadence where that typically falls as Q2 and Q3 are usually a little bit heavier Q1 and Q4 are a little bit lighter.

Peter Holt

I think it's also important to always remember is the bulk of the marketing that takes place in the franchise system and certainly in our case is that local store marketing, which is completely off our P&L until yes, we have intimate that runs through the P&L, but it's really that local store marketing that each of those franchisees spending on average $3,000 or more a month is where you're seeing the real spend in our franchise is there as it relates to marketing.

Jeremy Hamblin

Okay, very helpful. And then just one more on the P & L, I'm thinking about G&A moving forward. As it looks in 2023, it jumped up to about 69%, 70% of sales, how would you think about that moving forward in 24?

Jake Singleton

Yes. Again, I think the overall with the refranchising strategy, we expect to see the overall G&A burden reduce considerably for the consolidated organization. Again, the timing of when we can start to reduce that G&A is really predicated on the timing of those refranchising transactions. So as we move through 24 and 25, and we begin to execute on the refranchising will all of the clinic level. G&a costs will come off the books and then we'll begin to curtail that outside the four-wall overhead as well as the corporate unallocated overhead. We expect those to reduce as we move through. And that's really the critical focus of management, understanding that for that strategy to work. We'll have to curtail the G&A expenses accordingly, and we'll stay focused on that.

Jeremy Hamblin

Okay. Very helpful. Thanks, guys, and best of luck.

Operator

Thank you, Raj, and our final question today comes from Thomas McGovern from Maxim Group.
Please go ahead with your question.

Thomas McGovern

Hey, guys. So real quick, I wanted to touch back on some that employee retention so based, yes, fairly considerable reduction in skilled medical professions. It's over the coming years. So maybe you could just go into a little bit more color on some.

Peter Holt

Yes, yes. No, it's a great question is there's no question it because our doctors are the core of our business without doctors of chiropractic deals. We have no business because that's obviously the core of what we do and that we are very much focused on working with the schools and working with associations to make them aware of the joint and why we are a good place for them to either become a franchisee if they have the resources or come and work for us.
If you just look at the overall market doctors of chiropractic, there's 16 accredited schools, the United States today that the graduate doctors of chiropractic is usually about a 3.5 year program. And those 16 schools graduate roughly between 2,400 and 2,500 doctors a year. If we come back to the joint with our 935 clinics at the end of the year, we had a little over 3,000 doctors who are under the umbrella of the joint, either full or part-time. And so does that suggest to us in addition to that, there's 40,000 odd actually the 70,000 licensed practitioners in the United States in the United States today, and they have to have to register that the license with this data they want to practice, not all of them are practicing. So we know there's roughly about 40,000 that are active. And so that if you look at it from the broadest scope there, is there enough doctors who have failed the growth of the joint in the United States today, absolutely. But are the doctors where we want them the high quality doctors and making sure that they stay with us not just be recruited. So this is a hugely important effort for us is to maintain and recruit to recruit and retain the best doctors in the world. But I think it's incumbent upon us to create those environment where they want to come work with us and they stay with us as opposed to they're just theoretically not enough LICENSE doctors to fulfill our growth.

Thomas McGovern

Appreciate the color. I guess the last thing you guys mentioned on the call there, your portfolio slightly 14% of total clinic. Yes. You also mentioned that you expect that to logically, yes, more dramatically as you guys move through this refranchising initiative, I was just wondering if you guys have a maybe a targeted portfolio mix or what you when it does, where are you guys?

Peter Holt

Certainly, we haven't had any way guidance on our expected percentage. But what's very clear is we've said the majority of our corporate portfolio we expect to refranchise. And so if we ended last year with 135, I would say to him by majority, we're talking about more than 51% we don't have a final number, but it's going to be the vast majority of those corporate units will impact ultimately be refranchised. So you can see that that number is going to be pretty significantly lower than it where it is today at 14%.

Thomas McGovern

Appreciate you guys taking the time to answer my question. Thank you.

Operator

And ladies and gentlemen, at this time, I'd like to turn the floor back over to management for any closing remarks.

Peter Holt

Saying, Jamie, in February, we ran our annual loved the joint campaign during which our patients share their comments of the joint on our social media. We receive thousands of posts each week, so it's hard to pick the best, but I'll read a few that highlight our patient value proposition. Casey noted, if I missed this session, I feel terrible my life revolves around the joint now it's helped me so much with my headaches.
I sleep better.
I feel better mentally and physically by doctors incredibly helpful and sending me home with stretches to do in ways to treat my body better. I could imagine my life without the joint, Julie said I like that no matter where you travel the chances are the joint will be there as well. This and I've been a member for six years, and I don't know how to manage my health wise and financially without the joint I'm 69 years old on a fixed budget and being a member that has truly improved my body. I'm certain it save me money and I have and I'll continue to promote the joy. There is nothing like the joint whoever thought up this and made it happen.
I thank you and finally, Caleb reported the staff and my local joint Kirkpatrick facility are fantastic. They've always made me feel welcome and focus on the problems that I need them to. They've been a great help in my healing journey as the disabled veterans. Thank you and stay.

Operator

Well, adjusted, ladies and gentlemen, with that, we'll be concluding today's conference call and presentation, and we do thank you for joining. You may now disconnect your line.