XpresSpa Group(US:XWEL)2020-11-17 02:48Financial Data and Key Metrics Changes - The company reported negligible revenue during Q3 2020 due to limited operations, resulting in an operating loss of $9.2 million compared to $1.8 million in the prior year [51] - The net loss attributable to common shareholders was $6.1 million, up from $4.6 million in the same period last year [51] - Cash and cash equivalents totaled approximately $61.9 million as of September 30, 2020, with no immediate plans to raise additional capital [53] Business Line Data and Key Metrics Changes - The XpresCheck segment did not report any revenue during Q3 2020, as the management service agreement did not meet revenue recognition criteria [22][51] - Patient volume at XpresCheck locations ranged from 30 to 50 people per day during late Q3, but increased to approximately 50 to 100 people per day in November following the rollout of rapid molecular COVID testing [19][20] - The company has opened XpresCheck locations in JFK, Newark, and Boston Logan International Airport, with plans for further expansion [31][32] Market Data and Key Metrics Changes - Passenger traffic in New York's airports remained deeply depressed, with JFK down 88%, LaGuardia down 87%, and Newark down 76% compared to the previous year [14] - The airline industry saw a two-thirds decline in paid ticket passengers compared to Q3 2019, with even greater declines in the New York area [15] Company Strategy and Development Direction - The company is transitioning to focus on long-term opportunities in travel, health, and wellness, with plans to develop a new health and wellness brand [10][44] - A new pop-up clinic prototype has been developed to facilitate faster and more cost-effective COVID-19 testing rollouts in airports [37] - The company aims to leverage its existing real estate and airport expertise to create a new niche industry in travel health and wellness [46][49] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the pandemic, including low airport traffic and the impact on traditional spa services [12][13] - The company remains optimistic about the future of travel and health services, anticipating a significant opportunity for testing and wellness services as air travel resumes [39][43] - Management emphasized the importance of adapting to a post-COVID environment, suggesting that travel security protocols will change permanently [57] Other Important Information - The company has raised over $70 million in net proceeds through equity offerings, which has been transformational for its operations [52] - The management service agreement operates under a model where revenue is recognized based on the physician's practice performance, not on a per-patient basis [24][27] Q&A Session Summary Question: Why not reopen traditional spas after the vaccine rollout? - Management indicated that reopening spas is contingent on a significant increase in airport traffic and the evolving travel environment post-COVID [57] Question: What level of patient volume is needed to recognize management fees? - Management stated that averaging over 100 patients a day would be a healthy mark to recognize management fees, but it varies based on services opted by patients [60] Question: Is it possible for the management fee to be reached given limited airport traffic? - Management confirmed that the management fee threshold can be reached and that they can renegotiate fees based on business levels [64][69] Question: Why not skip COVID testing and move directly to health and wellness? - Management explained that COVID testing is currently the highest and best use of resources, providing a foundation for future health and wellness services [73][78] Question: Can you elaborate on air bridges and health passport apps? - Management described air bridges as coordinated efforts between airlines and health authorities to facilitate travel, with health apps providing convenience for travelers [81][86] Question: What gives confidence that health and wellness services will be relevant outside airports? - Management believes that the growing segments of travel and health and wellness can be integrated, creating opportunities for services both in and out of airports [94][96]