XpresSpa Group(XWEL) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2021, the company recognized $8.5 million in revenue, an increase from $7.7 million in the same quarter last year, primarily due to the recognition of revenue from XpresCheck Wellness Centers [28] - Gross profit increased to $4.4 million compared to $550,000 in the prior year, driven by higher revenue and improved cost management [32] - The net loss attributable to common shareholders narrowed to $1.1 million from $10.6 million in the prior year, reflecting improved operational performance [33] - Adjusted EBITDA was positive at $900,000, a significant improvement from an adjusted EBITDA loss of $2.6 million in the prior year [35] Business Line Data and Key Metrics Changes - The XpresSpa business currently operates three locations, which are underperforming despite a modest increase in airport traffic [7][8] - XpresCheck expanded to 13 Wellness Centers across 11 airports, benefiting from the popularity of rapid COVID testing, which commands a higher price point [11][12] - Average daily patient testing volumes for XpresCheck grew nearly 2.5 times in Q1 2021 compared to Q4 2020, with rapid tests making up 74% of total tests [37] Market Data and Key Metrics Changes - Airport traffic is recovering, but passenger volumes are still far from pre-pandemic levels, with expectations that full recovery may take until next year [6] - The company is focusing on international travelers, as many countries still require COVID testing prior to arrival, impacting demand for on-site testing services [16][17] Company Strategy and Development Direction - The company is introducing a new brand, Treat, aimed at capitalizing on the travel health and wellness market, integrating technology and personalized services [19][21] - Treat will offer a multichannel business model, including virtual and on-site care services, with a focus on wellness and health information for travelers [22][24] - The company plans to convert some legacy XpresSpa locations into Treat and expand its presence in suitable airport venues [24][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of airport traffic but acknowledged the uncertainty due to new COVID variants and vaccination rates globally [41] - The company believes that on-site COVID testing will remain essential for the foreseeable future, particularly for international travel [16] - Management is closely monitoring consumer confidence and traffic patterns to make decisions regarding the reopening of XpresSpa locations [50] Other Important Information - The company has a strong liquidity position with cash and cash equivalents totaling $102.6 million as of March 31, 2021 [34] - The initial website for Treat is expected to launch in June, with a mobile app to follow later in the summer [22][48] Q&A Session Summary Question: Is there a concern that patient volumes have maxed out given the vaccine rollout? - Management indicated that predicting patient volumes is challenging and will depend on the spread of new variants and global vaccination rates [41] Question: Can you explain the revenue differential between recognized revenue and patient volume? - Management clarified that the revenue presented is related to managed services agreements and is not straightforward to calculate [43] Question: Will you renew the XpresCheck leases that are expiring soon? - Management confirmed that they are in discussions with landlords regarding lease renewals [45] Question: When will revenue from Treat begin to be recognized? - Revenue is expected to build with each phase of the Treat rollout, and it will likely be reported as a separate segment [49] Question: Will XpresSpa expand internationally? - Management stated that while they have operated in the Netherlands and U.A.E., the focus remains on domestic growth for now [51] Question: How will Treat compete with airline lounges? - Management believes Treat will offer a unique alternative by providing wellness services that are not typically available in airport lounges [60]