XpresSpa Group, Inc. (Nasdaq: XSPA), a travel health and wellness
company, today provided a business update and announced that it has
filed financial results on Form 10-Q for the first quarter ending
March 31, 2021.
Doug Satzman, XpresSpa Group CEO, stated, “We
are pleased to have reported $8.5 million in total revenue during
the first quarter. This included $8.2 million recognized from
XpresCheck, of which $3.2 million was deferred from 2020. We also
substantially narrowed our net loss compared to the prior year.
Revenue recognition for XpresCheck this quarter was made possible
due to a reassessment of our management services agreements under
applicable accounting rules. The reassessment was driven by rising
patient testing volumes and higher average revenue per patient, due
to greater patient preference for the rapid PCR test and rapid
antigen test.”
Mr. Satzman continued, “As the economy reopens,
and with continued testing requirements for international travel,
we are encouraged to see higher passenger flow due to the growing
desire of people to resume personal and leisure travel in a safe
manner and believe that this will lead to a strong recovery in the
second half of 2021. Importantly, XpresCheck’s gross profit margin
is higher than even XpresSpa’s peak business performance during the
pre-pandemic era. This is enabling us to support both existing
XpresCheck operations as well as make ongoing investments in
Treat™, our new travel health and wellness concept, to meet the
emerging needs of travelers in a post-COVID-19 environment.”
Mr. Satzman added, “Treat is being designed to
transform the way people access healthcare through technology and
personalized services. The concept is a multi-channel business and
lifestyle brand, bringing together virtual and on-site integrated
care services at airports, as well as content and support in our
new digital platform being developed which will be highly relevant
to the returning traveler. Treat is intended to reach consumers at
all phases of travel, including planning, while providing access to
travel care and medical documentation throughout their
journey.”
Mr. Satzman concluded, “We strongly believe that
there is a convergence of ‘need’ and ‘want’ states in travel --
people ‘want’ to get out of their house and back to traveling and
‘need’ to do so safely and responsibly. This creates a dynamic
opportunity for a new white space in which we intend to lead. We
will be introducing many of the digital assets integral to this
brand in the next few months, beginning with a new website and
social media presence (Phase One), and will then follow up with the
mobile app (Phase Two) and the opening of our first two integrated
health and wellness airport locations in late summer / early fall
(Phase Three).”
Business Update
XpresSpa ServicesThere are currently two
company-operated XpresSpa locations operating in Dubai
International Airport, UAE for select spa services and one single
franchised location operating in Austin, TX. These locations
continue to underperform given limited airport traffic and changes
in consumer behavior due to the pandemic. The Company does not
anticipate reopening other spas for traditional services in the
near-term, but will re-evaluate possible re-openings of select spas
in the future on a location-by-location basis, based on the
economic viability of each location.
The Company is having ongoing discussions with
various airports to monitor passenger traffic and recovery as some
continue to extend rent relief.
XpresCheck Wellness CentersThe Company launched
the XpresCheck™ brand to provide COVID-19 testing to frontline
airport workforce and passengers. XpresCheck’s medical team of
state licensed physicians and nurse practitioners operate under
management services agreements, currently administer COVID-19
testing options including a rapid molecular COVID-19 test, a
Polymerase Chain Reaction (PCR) test, a blood antibody test, a
rapid PCR test, and a rapid antigen test.
The Company operates thirteen locations in
eleven airports, including the most recent “popup” XpresCheck
Wellness Centers that opened in Seattle-Tacoma International
Airport and San Francisco International Airport. The Company
believes that COVID-19 testing will remain an important and
necessary service for airline employees, airport staff, and
passengers for the foreseeable future, particularly as it relates
to international travel.
Developments since the onset of the first
quarter 2021 include:
- The Company opened a total of six
XpresCheck Wellness Center during the three-month period. These
include a second center at each of Logan International Airport and
Newark Liberty International Airport, in addition to Dulles
International Airport, George Bush Intercontinental Airport, Reagan
National Airport, and Salt Lake City International Airport.
Seattle-Tacoma International Airport and San Francisco
International Airport both opened in April.
- In January, the Company began
working with United Airlines, Delta Air Lines and KLM Royal Dutch
Airlines out of John F. Kennedy International’s Terminal 4, Newark
Liberty International Airport and Boston’s Logan International
Airport to meet the Netherlands’ COVID-19 testing policy for
incoming international passengers. This policy requires a negative
COVID-19 PCR test within 72 hours before departure as well as a
negative COVID-19 rapid test four hours before departure.
- Effective March 8, 2021, XpresCheck
transitioned to a full “fee for service” model for all tests. Under
this model, patients pay XpresCheck directly at the time of service
and then are able submit their testing fees for insurance
reimbursement. Prior to March 8, 2021 only the rapid molecular test
had been on a fee for service model.
- On March 29, 2020, XpresCheck
expanded its COVID-19 testing line up by adding a rapid PCR test at
select airports which was then followed by another rapid antigen
test.
- On April 5, 2021, XpresCheck
announced that it had recently signed an agreement with Delta Air
Lines to administer the new rapid antigen test to customers
traveling from John F. Kennedy International Airport to Milan
Malpensa and Rome–Fiumicino International Airports.
Treat™: Vision for New Travel Health and
Wellness Brand The Company is pleased to introduce its new travel
health and wellness brand: Treat. Treat is positioned for a
post-pandemic world and designed to deliver on-demand access to
integrated healthcare through technology and personalized services.
Travelers will be able to access health care, records and real-time
information all in one place, as well as book appointments in our
on-site wellness centers as they open.
Treat will include a mobile app with access to
immediate/ on-demand virtual care, including chat care, video
tele-health and a “travel wallet” with medical records and test
results. The brand will also provide a content-rich website with
current global travel health information, original travel health
and wellness editorial content, and a curated retail shop with
emerging products targeting the savvy traveler living a wellness
lifestyle.
Treat will also have a strong presence on social
media, engage in e-mail and paid marketing campaigns, and provide a
newsletter to our opt-in audience and subscription members.
The Company expects to launch the initial
website in June (Phase One) and to have the mobile app launched
later in the summer (Phase Two) ahead of the first two
brick-and-mortar location openings in late summer / early fall
(Phase Three).
The future on-site Treat locations in airports
will offer integrated health and wellness personalized services in
a premium environment. Upon entering, customers will see a
beautifully curated retail and check in area and will be greeted by
Treat Wellness concierges. Well-appointed treatment rooms will
allow a respite from the airport environment and offer a list of
health and wellness services to travelers. Over time, the Company
intends to convert some of its legacy XpresSpa footprint into
Treat, where feasible, as well as open additional locations in
other suitable terminals and airport venues.
Travelers will be able to access appointments
for COVID-19 testing, but also services like travel vaccines,
travel anxiety care, inoculations, metabolic panel testing, and a
list of convenient care services. They will also be able to book
time in a wellness room, with services like wellness coaching, yoga
classes, mindfulness sessions and specialized services like Vitamin
IV Therapy.
Over time, the Company envisions that Treat’s
digital channels will provide more significant growth opportunities
for revenue and profit than its brick and mortar airport locations.
The success of this revenue stream will be achieved through both
subscription-based services that provide on-demand virtual care and
tools supporting travel health and wellness.
Given its strong liquidity position and poise
for growth, the Company would also consider accretive acquisitions
and other investments to further broaden its service and retail
offerings and would invest in new opportunities beyond this new
evolving concept.
Liquidity and Financial
ConditionAs of March 31, 2021, the Company had cash and
cash equivalents, excluding restricted cash, of $102.6 million,
total current assets of $107.8 million and total current
liabilities of $13.8 million.
During the three months ended March 31, 2021,
holders of the Company’s warrants exercised a total of 11,223,529
warrants for common shares. The Company received proceeds of
approximately $17.0 million, which was net of $2.2 cash fees paid
in accordance with agreements with the Company’s placement
agents.
Summary of First Quarter 2021 Financial
ResultsReported revenue during the three months ended
March 31, 2021 was $8.5 million compared to $7.7 million in the
corresponding period in 2020. The increase in revenue was primarily
due to the recognition of revenue from eight of eleven XpresCheck
Wellness Centers. Accordingly, we were able to recognize $3.2
million of 2020 deferred revenue on underlying management services
agreements (MSAs) meeting the collectability criteria during the
first quarter 2021. The most recent openings in March will be
reassessed with more operating history.
Explanation of Management Services
AgreementsDuring 2020, the Company entered into MSAs with
professional medical services companies that provide health care
services to patients in connection with XpresCheck. The medical
services companies pay XpresCheck a monthly fee to operate in the
XpresCheck Wellness Centers over the term of the relevant MSA.
Under the terms of the MSAs, the Company provides office space,
equipment, supplies, non-licensed staff, and management services to
be used for the purpose of COVID-19 and other medical diagnostic
testing in return for a management fee.
As of March 31, 2021, the Company reassessed its
original MSAs and made modifications that better reflect the actual
patient volumes that it is seeing at its XpresCheck Wellness
Centers. Therefore, the Company was able to recognize revenue
during the first quarter 2021, including revenues deferred in 2020,
for new and existing MSAs which meet the collectability
criteria.
Cost of SalesCost of sales decreased to $4.2
million from $7.2 million in the prior year first quarter. The
decrease was due to the reduction in variable costs associated with
the decline in XpresSpa spa revenues and decreases in occupancy
costs as a result of rent concessions received from airports. These
were offset somewhat by cost of sales of $2.7 million incurred
pursuant to the XpresCheck MSAs. Costs associated with the deferred
revenues of 2020, were booked in 2020 also favorably impacting cost
of sales.
Gross ProfitGross profit was $4.4 million
compared to $.6 million in the prior year first quarter, primarily
due to higher revenue and the impact of 2020 cost of sales.
General and Administrative ExpensesGeneral and
administrative expenses was $4.5 million compared to $3.2 million
in the prior year first quarter for each of the comparable periods.
The increase was primarily due to continued start-up costs
associated with the XpresCheck Wellness Centers and development
costs of Treat, as well as additional legal fees related to the
resolution of certain past XpresSpa litigation matters, offset by
reduced variable costs related to the closed XpresSpa locations and
the realized benefits of cost cutting and control initiatives
instituted throughout 2020, primarily in salaries, occupancy and
professional fees.
Loss from OperationsOperating loss from
operations decreased to $0.9 million compared to $3.9 million in
the prior year first quarter, primarily due to higher revenue.
Net Loss Attributable to Common ShareholdersNet
loss attributable to common shareholders was $1.1 million compared
to net loss attributable to common shareholders of $10.6 million in
the prior year first quarter, primarily due to higher interest
expense, warrant revaluations, and cost of goods sold in 2020.
Please refer to the Quarterly Report on Form on
10-Q filed on May 17, 2021 for more financial information related
to the first quarter ending March 31, 2021. It can be accessed at
https://investors.xpresspa.com/sec-filings or at
https://www.sec.gov/
XpresCheck Non-GAAP Financial
Metrics Although the Company does not generate revenue
directly from patient testing volume, as detailed above, in the
interest of providing investors with greater transparency regarding
XpresCheck’s performance, the Company has opted to disclose recent
and current average daily patient testing volumes and Adjusted
EBITDA, along with other relevant non-GAAP financial metrics.
During the first quarter 2021, average daily
patient testing volume for existing XpresCheck Wellness Center
continued at approximately 70 to 100 people. With the additional
centers opened, total patient volume grew nearly 2.5X in the first
quarter 2021 versus the fourth quarter of 2020.
During the first quarter 2021, the average
revenue per patient increased to $160 due to the continued demand
for higher revenue / higher margin COVID-19 rapid tests as a
percentage of total tests averaged 74%. Total patient volume was
38,755 including 28,338 rapid tests.
During April, the average revenue per patient
was $170 while higher revenue / higher margin COVID-19 rapid tests
(Molecular and PCR) as a percentage of total tests averaged 81%.
Total patient volume was 23,166 including 18,802 rapid test
volume.
Adjusted EBITDAOn a
non-GAAP basis, Adjusted EBITDA was $0.9 million in the first
quarter 2021, compared to a loss of $2.6 million in the prior year
first quarter, an improvement of $3.5 million and indicative of the
profitability of the XpresCheck Wellness Centers compared to the
legacy XpresSpa spa segment.
The Company defines
Adjusted EBITDA as earnings before interest, taxes, depreciation
and amortization expense, non-cash charges and stock-based
compensation expense.
The Company considers
Adjusted EBITDA to be an important indicator for the performance of
its operating business, XpresCheck. In particular, it believes that
it is useful for analysts and investors to understand that Adjusted
EBITDA excludes certain transactions not related to core cash
operating activities, which are primarily related to our XpresCheck
Wellness Centers. We believe that excluding these transactions
allows investors to meaningfully analyze the performance of our
core cash operations. For a reconciliation to our GAAP EBITDA
please refer to our 10-Q filed this afternoon.
Webcast and Conference Call
TodayThe Company will host a webcast and conference call
at 4:30 p.m. Eastern Time today.
The Company encourages investors and interested
parties to listen via webcast as there is a limited capacity to
access the conference call by dialing 1-201-689-8263. To submit a
question, please email ir@xpresspagroup.com.
The live and later archived webcast can be
accessed from the Investor Relations section of the Company’s
website at http://xpresspagroup.com. Visitors to the website should
select the “Investors” tab and navigate to the “Events” link to
access the webcast.
About XpresSpa Group, Inc.
XpresSpa Group, Inc. (Nasdaq: XSPA) is a
leading global health and wellness holding company. XpresSpa
Group’s core asset, XpresSpa, is a leading airport retailer of
spa services and related health and wellness products, with 45
locations in 23 airports globally. Through its XpresTest,
Inc. subsidiary, the Company provides COVID-19 screening and
testing under the XpresCheck™ brand at thirteen locations in eleven
airports: Boston Logan International
Airport (2), Denver International Airport, Dulles
International Airport, George Bush Intercontinental
Airport, JFK International Airport, Newark Liberty
International Airport (2), Phoenix Sky Harbor
International Airport, Reagan National Airport, Salt Lake
City International Airport, San Francisco International
Airport, and Seattle-Tacoma International Airport. To learn
more about XpresSpa Group,
visit: www.XpresSpaGroup.com.
Twitter: @xprescheck and Instagram:
@realxprescheck
Forward-Looking StatementsThis
press release may contain "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, and Section
21E of the Securities Exchange Act of 1934. These include
statements preceded by, followed by or that otherwise include the
words "believes," "expects," "anticipates," "estimates,"
"projects," "intends," "should," "seeks," "future," "continue," or
the negative of such terms, or other comparable terminology.
Forward-looking statements relating to expectations about future
results or events are based upon information available to XpresSpa
Group as of today's date and are not guarantees of the future
performance of the Company, and actual results may vary materially
from the results and expectations discussed. Additional information
concerning these and other risks is contained in XpresSpa Group’s
most recently filed Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, and other Securities
and Exchange Commission filings. All subsequent written and oral
forward-looking statements concerning XpresSpa Group, or other
matters and attributable to XpresSpa Group or any person acting on
its behalf are expressly qualified in their entirety by the
cautionary statements above. XpresSpa Group does not undertake any
obligation to publicly update any of these forward-looking
statements to reflect events or circumstances that may arise after
the date hereof.
Investor Relations:ICRRaphael
Grossir@xpresspagroup.com(203) 682-8253
MediaJulie FergusonJulie@jfprmedia.com(312)
385-0098
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