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 third quarter ending September 30, 2021.
Doug Satzman, XpresSpa Group CEO, stated, “We
are extremely pleased with our record results and sincerely thank
our entire team for making them possible. For the third quarter, we
generated our highest ever revenue of $26.8 million as well as our
first ever quarter of profitability, with net income of $5.6
million. In fact, XpresSpa Group has reached a year-to-date,
nine-month consolidated revenue of $44.4 million and year-to-date
net income of $74 thousand. We are projecting a strong end to 2021
as we approach the holiday season, which would make this a banner
year for our Company.”
Mr. Satzman continued, “Strong testing numbers,
concurrent with the resumption of travel, have enabled XpresCheck
to vastly surpass our expectations to-date. We firmly believe that
COVID-19 testing at major U.S. airports will remain an important
part of travel, especially international travel, for the
foreseeable future. This is due to the emergence of highly
contagious COVID-19 variants, such as Delta, along with
break-through vaccination infections. Our $2 million Centers for
Disease Control and Prevention (“CDC”) pilot program, which is not
reflected in these quarterly financials, is also showing positive
results and we expect to recognize approximately 75% of the revenue
during this fourth quarter. We also anticipate that this CDC
program will be expanded.”
Mr. Satzman added, “As we look to the future of
XpresSpa Group, along with XpresCheck, we envision Treat becoming a
leader in the emerging new category of travel health and wellness
by providing 24/7, on-demand access to integrated healthcare
through technology and personalized services. Having already
launched our Treat website and mobile app, we are now focused on
opening our first Treat In-Airport Wellness Centers. Treat at JFK
Terminal 4 is scheduled to open next month while Treat at Phoenix
Sky Harbor is now scheduled during the first quarter next year.
Additional location openings are planned for 2022 and 2023.”
Mr. Satzman concluded, “Ultimately, we believe
that the Company has significant opportunities utilizing three
sustainable growth brands that can collectively generate annualized
revenue of $500 million by 2025. We believe each can have healthy
unit level economics and can operate adjacent to the others while
leveraging an efficient corporate structure, coupled with our
relationships and experience operating in global airports. In
realizing our growth target, we intend to elevate these brands and
remain nimble, but also further expanding our services and
products, resulting in increased market share and attendant
XpresCheckTM Wellness Centers
XpresCheck’s business has entered into
management services agreements with state licensed physicians and
nurse practitioners, under which we administer COVID-19 testing
options, including a Polymerase Chain Reaction (PCR) test and a
rapid PCR test. As of today, there are 14 operating XpresCheck
locations in 12 airports.
Recent developments since the beginning of the
third quarter of 2021 include:
- XpresCheck opened a COVID-19
testing facility at Hartsfield-Jackson Atlanta International
Airport (ATL) inside a legacy XpresSpa located in Concourse E.
- XpresCheck initiated its $2
million, eight-week pilot program with the CDC in collaboration
with Concentric by Ginkgo. Under this program, XpresCheck is
conducting biosurveillance monitoring at three major U.S. airports
(JFK International Airport, Newark Liberty International Airport
and San Francisco International Airport) aimed at identifying
existing and new SARS-CoV-2 variants, including the highly
contagious Delta variant and other new variants surfacing in the
- The revenue on this contract is
based on certain milestones specified in the contract and no
revenue was recorded during the third quarter of 2021. However, the
Company believes that approximately 75% of the revenue will be
recorded during the fourth quarter of 2021. The Company is pleased
with the initial results of the CDC pilot program as the number of
participants continues to increase.
By July 1st 2021, the Company re-opened four
top-performing domestic XpresSpa locations with modified hours and
top selling services such as massage, manicure, and pedicures.
There were two additional locations opened during the third
During the fourth quarter of 2021, another four
locations were reopened and an additional three XpresSpa
reopening’s are planned for the remainder of the year. As of today,
there are currently 10 (domestic) XpresSpa company locations and
one franchise location operating:
- Austin-Bergstrom International
Airport (AUS) Section J (franchised)
- Charlotte Douglas International
Airport (CLT) Concourse A/B
- Charlotte Douglas International
Airport (CLT) Concourse D
- Dallas/Fort Worth Int’l Airport
(DFW) Concourse A
- Dallas/Fort Worth International
Airport (DFW) Concourse D
- Hartsfield-Jackson Atlanta Int’l
Airport (ATL) Concourse A
- Hartsfield-Jackson Atlanta
International Airport (ATL) Concourse C
- William P. Hobby Airport (HOU)
- John F. Kennedy International
Airport (JFK) Terminal 4
- McCarran International Airport
(LAS) Concourse D
- Orlando International Airport (MCO)
There are also three XpresSpa locations
operating in Dubai International Airport in the United Arab
Emirates as well as three XpresSpa locations operating in Schiphol
Amsterdam Airport in the Netherlands.
A majority of the domestic XpresSpa locations
are operating approximately eight hours per day during the busiest
hours (compared to up to 16 hours per day pre-pandemic) with sales
volumes about 30% to 60% of pre-pandemic levels. The Company
implemented a price increase in mid-October and is planning to test
some new touchless massage services and new retail items during the
The Company will re-evaluate each airport on a
month by month basis as well as review continued learnings as the
portfolio is re-activated.
Treat™: A New Travel Health and Wellness
Treat, the Company’s new travel health and
wellness brand, provides access to integrated care services that
can seamlessly fit into a health and wellness lifestyle. Empowering
travelers to take a health-first approach to the journey ahead,
Treat acts as a wellness concierge, providing medical care and
wellness services to consumers as they return to travel.
The Treat website (www.treat.com) features
original content, access to resources about global COVID-19
requirements, and curated e-commerce. The Treat mobile app provides
access to on-demand virtual care to board-certified physicians,
including chat care and video care. The app also has a “travel
wallet” providing access to a person’s medical records,
vaccinations and test results. Eventually, we expect to expand the
app and benefits to include in-app premium wellness content
including meditations and workouts as well a Smart Health Card
online shopping and prescription discounts.
Over the long-term, the Company envisions that
digital channels will provide growth opportunities beyond the
airport locations, which would be achieved through
subscription-based services that offer care and tools supporting
travel health and wellness. The Company also anticipates offering
upstream content that can be monetized through affiliate revenue as
well as curated ecommerce retail through www.treat.com.
Treat In-airport Wellness Centers will offer
services such as, travel vaccines, anxiety care, emergency
prescriptions, vitamin IV therapies, as well as private virtual
wellness services including fitness, yoga and guided meditation
sessions. Treat Wellness Centers will also include a highly curated
assortment of premium health and wellness travel items in their
onsite retail collection.
The first Treat In-Airport Wellness Center is
now set to launch at JFK International Airport in December and will
be followed by Phoenix Sky Harbor International Airport in the
first quarter 2022. The Company is in negotiations for several
additional locations, including some XpresSpa conversions, at major
airports across the U.S. for 2022 and 2023.
Given its strong liquidity position and poise
for growth, the Company is also considering 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.
Share Repurchase ProgramDuring
the third quarter of 2021, the Company repurchased 250,000 shares
of its common stock outside of black-out periods. As of
September 30, 2021, 14.75 million shares remained available under
the 15 million share repurchase program announced on August 31,
2021. Management has discretion in determining the conditions under
which shares may be purchased from time to time, if at all.
Liquidity and Financial
ConditionAs of September 30, 2021, the Company had cash
and cash equivalents, excluding restricted cash, of $109.2 million,
and total current assets of $113.1 million and total current
liabilities of $17.2 million reflecting strong working capital.
Summary of Third Quarter 2021 Financial
ResultsTotal revenue during the three months ended
September 30, 2021 was $26.8 million compared to $0.2 million in
the corresponding period in 2020. The increase in revenue was
primarily due to the recognition of revenue from twelve XpresCheck
locations totaling $25.4 million. The Company also generated $1.4
million in services related to reopened XpresSpa locations.
Explanation of Management Services Agreements
(“MSAs”) and Variable Interest Entities (“VIEs”)Through XpresCheck
and under the terms of the MSA with Professional Corporations
(“PCs”) that in turn contract with physicians and other
professional healthcare Providers, the Company offers testing
services to airline employees, contractors, concessionaire
employees, TSA officers and U.S. Customs and Border Protection
agents, as well as the traveling public. The Company has entered
into MSAs with PCs that provide healthcare services to patients.
Under the terms of the MSAs which may be modified according to
market conditions, XpresTest provides office space, equipment,
supplies, non-licensed staff, and management services to support
and facilitate the PC’s provision of COVID-19 and other medical
diagnostic testing in return for a management fee.
Effective July 1, 2021, the Company determined
that the PCs are variable interest entities (“VIE”), and the
Company has a variable interest in the PCs. In pursuance, the total
revenue of $25.4 million for the PCs for the three months ended
September 30, 2021 were consolidated on the books of the
Until June 30, 2021, MSA fees were commensurate
with the expected level of activity required to be billed by
XpresCheck. Therefore, the PCs were assessed not to be variable
interest entities prior to July 1, 2021.
Effective July 1, 2021, contractual arrangements
between the Company, the Company’s affiliated medical group and
nominated shareholder were changed in a manner that changes the
characteristics or adequacy of the Nominee Shareholders equity
investment at risk and residual returns. Notwithstanding their
legal form of ownership of equity interests in the PC of the
Nominee Shareholder, the primary beneficiary of the affiliated
medical group is the Company. Therefore, due to reassessment
triggered by the development on July 1, 2021, the Company
determined that the PCs were variable interest entities as of such
date. The Company consolidated the PCs under the VIE model since
the Company has the power to direct activities that most
significantly impact the PCs economic performance and the right to
receive benefits or the obligation to absorb losses that could
potentially be significant to the PCs.
Cost of SalesCost of sales increased to $13.7
million from $1.4 million in the prior year third quarter. The
increase in cost of sales was primarily due to the cost of sales
incurred in XpresCheck pursuant to the MSAs.
General and Administrative ExpensesGeneral and
administrative expenses were $5.2 million compared to $4.4 million
for the year ago comparable period. The increase was 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
and 2020, primarily in salaries, occupancy and professional
Income from OperationsIncome from operations
increased to $7.1 million compared to a loss from operations of
$9.2 million in the prior year third quarter, an increase of $16.3
million. Income from operations consists of $12.0 million
contributed by our Xprescheck business offset by losses at our
XpresSpa and Treat divisions and corporate-level expenses.
Net Income Attributable to Common
ShareholdersNet income attributable to common shareholders was $5.6
million compared to a net loss attributable to common shareholders
of $6.1 million in the prior year third quarter.
Please refer to the Quarterly Report on Form on
10-Q filed on November 15, 2021 for more financial information
related to the third quarter ending September 30, 2021. It can be
accessed at https://investors.xpresspa.com/sec-filings or at
XpresCheck Non-GAAP Financial
The assessment that the PCs qualify as VIEs, and
are presented as consolidated information in the Company’s
financial statements, results in a clearer view on the full
COVID-19 testing economics. Additional information of note and
shown below includes Total Patient Encounters; Total NAAT Rapid
Tests (Antigen and PCR); and PCR % of Total NAAT Rapid.
Total Patients By Quarter
Total Rapid Test (Antigen and PCR) / Percent of
Total Patients By Quarter
Rapid PCR Tests / Percent of Total Rapid Tests
Adjusted EBITDAOn a
non-GAAP basis, Adjusted EBITDA was $8.7 million during the third
quarter 2021, compared to an Adjusted EBITDA loss of $5.1 million
in the prior year third quarter. The improvement of $13.8 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
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.
Revenue Target of $500 Million by 2025
The Company reiterated
its long-term revenue target of $500 million by 2025 that was first
introduced at the HC Wainwright 23rd Annual Global Investment
Conference in September 2021.
Webcast and Conference Call
The 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 email@example.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 14 locations in 12 domestic airports.
XpresSpa is a leading airport retailer of spa services and related
health and wellness products, with 43 locations in 21 airports
To learn more about XpresSpa Group, visit:
www.XpresSpaGroup.com.To learn more about Treat, visit:
www.Treat.com.To learn more about XpresCheck, visit:
www.XpresCheck.com.To learn more about XpresSpa, visit
Twitter: @Treat_Care and Instagram:
@treat_careTwitter: @xprescheck and Instagram:
@realxprescheckTwitter: @XpresSpa and Instagram: @XpresSpa
This 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.
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