XpresSpa Group, Inc. (Nasdaq: XSPA), a travel health and wellness
company, today announced that it has filed financial results on
Form 10-Q for the second quarter ending June 30, 2021 and provided
a business update.
Doug Satzman, XpresSpa Group CEO, stated, “We
are pleased to have reported $9.1 million in total revenue during
the second quarter, including $8.7 million related to XpresCheck,
and to have substantially narrowed our Adjusted EBITDA loss and net
loss compared to the prior year. At the onset of the pandemic last
March, we saw an opportunity for COVID-19 testing at major U.S.
airports and moved quickly to realize that vision. Since then,
XpresCheck has vastly surpassed our expectations as testing numbers
continue to increase due to the resumption of travel. The MSA
patient practice fees alone increased to $17.1 million in Q2 over
$6.3 million in Q1. Additionally, our collaborations with
major airlines and government agencies demonstrates their
confidence in XpresCheck. We firmly believe that due to the
emergence of more highly contagious COVID-19 variants such as
Delta, along with break-through vaccination infections, testing
will remain an important part of travel, especially international
travel, for the foreseeable future. In addition, we have seen
encouraging results after re-opening our first four high performing
legacy XpresSpa locations and see a path towards restoring
profitability which is leading us to re-open the next wave of
previously high performing stores this fall.”
Mr. Satzman added, “We are thrilled to have
launched Phases 1 and 2 of our new travel, health and wellness
brand, Treat, ahead of schedule. Phase 1, our website and brand
campaign, launched on June 1, and today, we launched Phase 2, our
mobile app. Phase 3, the opening of our first two integrated health
and wellness Treat airport locations, will occur this fall. Through
Treat, we are leveraging XpresSpa’s historic travel wellness
experience and XpresCheck’s healthcare expertise to provide 24/7,
on-demand access to integrated healthcare through technology and
personalized services. We believe Treat can ultimately become a
leader in this emerging new category of travel health and
wellness.”
Mr. Satzman concluded, “We believe that there is
significant opportunity for three sustainable growth brands, with
healthy unit level economics, that can run adjacent to each other
and leverage an efficient corporate structure as well as our
relationships and experience operating in global airports. With a
clear vision and a strong management team in place, we remain
focused on elevating our brands, being nimble, further expanding
our services and products to increase market share and increase
value for shareholders.”
Business Update
XpresCheckTM Wellness Centers
XpresCheck provides COVID-19 testing to the
frontline airport workforce and passengers across thirteen
locations in eleven airports. XpresCheck’s medical team of state
licensed physicians and nurse practitioners operate under
management services agreements and administer COVID-19 testing
options including a rapid molecular COVID-19 test, a Polymerase
Chain Reaction (PCR) test, and a rapid PCR test.
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. This is
due to various factors including COVID-19 variants, international
travel requirements, and break-through vaccination infection
rates.
Developments since the onset of the second
quarter 2021 include:
- On April 5th, XpresCheck announced
that it had signed an agreement with Delta Air Lines to administer
the new rapid antigen test to passengers traveling from JFK
International Airport to Milan Malpensa and Rome–Fiumicino
International Airports.
- On April 7th, XpresCheck opened a
COVID-19 testing facility at Seattle-Tacoma International Airport
(SEA) pre-security inside the terminal, in the Baggage Claim area
near Carousel 9.
- On April 21st, XpresCheck opened a
COVID-19 testing facility at San Francisco International
Airport (SFO) pre-security, near the baggage claim area on the
Arrivals level at Terminal 3.
- On July 30th, XpresCheck announced
its collaboration with the World Health Organization (WHO)
Foundation to promote the “Go Give One” campaign, dedicated to
delivering COVID-19 vaccines worldwide in the fight to reduce the
growing vaccine equity gap. As a kick-off to the campaign, the
Company is matching customer donations up to $100,000
cumulative.
- On August 5th, XpresCheck launched
a pilot program with EL AL Israel Airlines, the national airline of
Israel. The State of Israel requires negative COVID-19 PCR tests
from passengers departing the US and arriving at Ben-Gurion
International Airport in Israel. XpresCheck provided pre-travel PCR
testing services onsite at JFK International Airport for EL AL
passengers. This is designed to safely eliminate the required PCR
test upon landing in Tel Aviv saving passengers time exiting the
airport.
- On August 13th, XpresCheck
announced the approval of a $2 million, 8-week pilot program with
the Centers for Disease Control and Prevention (CDC). The program
will conduct bio surveillance monitoring at three U.S. airports
operating XpresCheck™ COVID-19 testing facilities, and will be
aimed at identifying existing and new COVID-19 variants, including
the highly contagious Delta variant and other new variants
surfacing in the U.S.
XpresSpaTM Services
On July 1st, the Company re-opened four
historically top performing XpresSpa locations with modified hours
and top selling services such as massage, manicure and pedicures.
The following locations reopened:
- Hartsfield-Jackson Atlanta Int’l Airport (ATL) Concourse A
- Dallas/Fort Worth Int’l Airport (DFW) Concourse A
- Charlotte Douglas International Airport (CLT) Concourse
D
- Las Vegas McCarran Int’l Airport (LAS) Concourse D
In addition, there 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. We also opened a new
XpresSpa expanded concept on June 17 in the Dubai International
Airport. To date, this brings us up to eight XpresSpa locations
currently operating.
We now have plans to open the next wave of 8-10
high performing XpresSpas by early fall. We will continue to
re-evaluate each airport on a month by month basis as well as
review continued learnings as our portfolio continues to be
re-activated.
Treat™: Vision for New Travel Health and
Wellness Brand
Treat, the Company’s new travel health and
wellness brand, is designed to deliver on-demand access to
integrated healthcare through technology and personalized services.
Travelers will be able to access 24/7 on-demand, virtual health
care, a travel health wallet with your medical records and
real-time global COVID travel requirements all in one place, as
well as book appointments in our on-site airport wellness centers
as they open. The brand is being launched in three distinct
phases:
- Phase 1: Website
and brand campaign- Launched on June 1st. The Treat website
(www.treatcare.com) currently features original content, access to
resources about global COVID-19 requirements, and curated
e-commerce products targeting the savvy traveler living a wellness
lifestyle. The website also allows consumers to opt in for the
bi-weekly Treat newsletter, The Treatment.
- Phase 2: Treat’s
mobile app- Launched today, August 16th. The mobile app provides
access to on-demand virtual care, including chat care, video care
and a “travel wallet” with access to a person’s medical records and
test results. Memberships are available for a subscription to the
mobile app and start at $200 for 3 months or can be $720 for 12
months. Included within the membership is unlimited virtual care
services plus one free PCR COVID-19 test and one free flu vaccine
per year. Additional features such as prescription discounts and
scheduling appointments at Treat in-person facilities will be
available upon their respective openings.
- Phase 3: Treat
In-Airport Wellness Centers- First location to open in mid-Q4 at
JFK International Airport followed by Phoenix Sky Harbor
International Airport by the holidays. The 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.Treat in-airport
Wellness Centers will offer services such as COVID-19 testing,
travel vaccines, anxiety care, emergency prescriptions, vitamin IV
therapies, as well as private, technology led wellness sessions
including fitness, yoga, meditation, and mindfulness sessions in a
premium hospitality 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 break from the hectic airport
environment and offer a list of health and wellness services
designed for travelers.
The Company is evaluating converting some legacy
XpresSpa footprint into Treat, where feasible, as well as open
additional locations in other suitable terminals and airport venues
in 2022 and 2023.
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 strategic transactions to further broaden its service and
retail offerings and would invest in new opportunities beyond this
new evolving concept. The Company may also consider a potential
stock repurchase program.
Liquidity and Financial
ConditionAs of June 30, 2021, the Company had cash and
cash equivalents, excluding restricted cash, of $102.5 million,
total current assets of $107.6 million and total current
liabilities of $18.6 million.
Summary of Second Quarter 2021 Financial
ResultsReported revenue during the three months ended June
30, 2021 was $9.1 million compared to $143,000 in the corresponding
period in 2020. The increase in revenue was primarily due to the
recognition of revenue from twelve XpresCheck locations totaling
$8.7 million and related to managed services fees. However, the
Company also generated $338,000 in services related to two reopened
XpresSpa locations and $85,000 related to products and other.
Explanation of Management Services Agreements
(“MSAs”)During 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.
However, as a result of uncertainties around the
cash flows of XpresCheck, the Company concluded in 2020 that the
collectability criteria to qualify as a contract under ASC 606 was
not met, and therefore, revenue associated with the monthly
management fee would not be recognized until a subsequent
reassessment resulted in the MSAs meeting the collectability
criteria. XpresCheck recognized revenue of $8.7 million during the
three months ended June 30, 2021, under the MSAs, pursuant to
reassessments in 2021 of MSA agreements executed in 2020, and
assessments of MSA agreements executed in 2021, resulting in
management’s conclusion that all but 1 location met the
collectability criteria.
Cost of SalesCost of sales increased to $7.7
million from $978,000 in the prior year second quarter. The
increase in cost of sales was primarily due to the cost of sales
incurred in XpresCheck pursuant to the MSAs, offset by the decrease
in variable costs associated with the decline in XpresSpa revenues,
and decreases in occupancy costs as a result of rent concessions
received from airports.
Gross ProfitGross profit was $1.4 million
compared to negative gross profit of $835,00 in the prior year
second quarter, primarily due to higher revenue.
General and Administrative ExpensesGeneral and
administrative expenses were $4.6 million compared to approximately
$3.4 million for the year ago comparable period. The increase was
related primarily due to start-up costs associated with XpresCheck,
development of Treat, and additional legal fees related to the
resolution of certain 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 2019, primarily in salaries, occupancy and
professional fees.
Loss from OperationsOperating loss from
operations decreased to $4.7 million compared to $58.5 million in
the prior year second quarter, primarily due to a loss on
revaluation of warrants and conversion options totaling $48.3
million in the prior year second quarter.
Net Loss Attributable to Common ShareholdersNet
loss attributable to common shareholders was $4.5 million compared
to net loss attributable to common shareholders of $58.1 million in
the prior year second quarter.
Please refer to the Quarterly Report on Form on
10-Q filed on August 16, 2021 for more financial information
related to the second quarter ending June 30, 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, 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 second quarter 2021, average daily
patient testing volume at XpresCheck rose to over 1,000 people.
With additional centers opened, total patient volume grew nearly
146% in the second quarter 2021 compared to the first quarter of
2021.
During the second quarter 2021, the number of
higher revenue, higher-margin COVID-19 rapid tests increased from
just over 300 per day in Q1 to more than 800 per day in Q2 (176%).
Total patient volume was over 92,000 visits including more than
75,000 rapid tests.
The impact of the above is that at the Practices
level, Patient Services’ fees topped $17.5 Million in the second
Quarter 2021, versus $6.3 Million in the first quarter of 2021.
While these amounts are not recognizable by GAAP and the MSA’s,
they reflect on the overall success of XpresCheck. Applying this
impact on a proforma basis to our revenues, the impact beyond
Revenues, Quarter 2 EBITDA and Net Income would be positively
impacted by $6.7 million.
During July, higher revenue / higher margin
COVID-19 rapid tests (Molecular and PCR) as a percentage of total
tests averaged 97%. Total patient volume was over 33,700 including
more than 33,000 rapid test volume.
Adjusted EBITDAOn a
non-GAAP basis, Adjusted EBITDA loss was $2.3 million in the second
quarter 2021, compared to an Adjusted EBITDA loss of $3.4 million
in the prior year second quarter. The improvement of $1.1 million
is indicative of the profitability of XpresCheck 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 XpresCheck.
The Company believes that excluding these transactions allows
investors to meaningfully analyze the performance of core cash
operations. For a reconciliation to GAAP EBITDA, please refer to
the 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 1-412-317-6026. 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 operating three distinct
brands: Treat™, XpresCheck™, and XpresSpa™. Treat is a travel
health and wellness brand that will be providing on-demand access
to healthcare through technology and personalized services.
XpresCheck is a leading on-site airport provider of COVID-19
screening and testing with 13 locations in 11 domestic airports.
XpresSpa is a leading airport retailer of spa services and related
health and wellness products, with 43 locations in 21 airports
globally.
To learn more about XpresSpa Group, visit:
www.XpresSpaGroup.com.To learn more about Treat, visit:
www.TreatCare.com.To learn more about XpresCheck, visit:
www.XpresCheck.com.To learn more about XpresSpa, visit
www.XpresSpa.com.
Twitter: @Treat_Care and Instagram:
@treat_careTwitter: @xprescheck and Instagram:
@realxprescheckTwitter: @XpresSpa and Instagram: @XpresSpa
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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