XpresSpa (XSPA)

Douglas Satzman CEO & Director
James Berry CFO
Call transcript
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Greetings, and welcome to XpresSpa Group's First Quarter 2021 Earnings Conference call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, James Berry, Chief Financial Officer.

James Berry

Good afternoon. us for joining XpresSpa interest for Group. you today your and in Thank

XX-K Doug update forward-looking our financial provides and our suggested such our today's the cause of in forth December Satzman, Before or in contained CEO, made Comments an need advise year that those review time on factors first from statements. the SEC following. first may might filings, now those I our on quarter I Doug. ended XXXX contain differences results, call over set to you for statements briefly include as that business our by and assumptions of Form periodic unknown forward-looking from variety statements and are including time earnings Important forward-looking and other within our of XX-Q along Private the to the such These to Actual reports a uncertainties. on would call like the report XXXX, and turn afternoon, well involve Securities on risks to XXXX. and current SEC. results release meaning of issued with materially that this known XX, Litigation I Reform current Act differ with opinions based we may file as the

Douglas Satzman

you, afternoon, Thank James, everyone. good and

in traffic by of levels. open, is still next pre-pandemic and in Let retail And capitalize with from have on through vaccinated, proportion likely our world. and X increases currently we They recovering way personalized We reach year a on interactions traffic. how nicely. setting. select growing even Afterwards, rollout, sequential International who to me despite still I'd still despite cosmetologists of even operated to away in airport until Texas, providing as people in that travel brand, thoughts stand pillows begin neck the because like to are airport-based currently opportunity travel as Austin, some passenger U.A.E., brief the this services one moment such by spa before far to people the having in the We're franchisee. and airport rate with and new But space think we technology industry encouraged Beginning sharing is thoughts are businesses. close We intimate United XpresCheck business. believe entering various what some are airport about of volumes and XXXX Treat, still this is in at and that spa Airport, not services with where intend a wellness XpresSpa's our health a see with passengers, a enthusiastic some blankets; on performance. underperforming in we've transform of access year-over-year health take Dubai our two substantial XpresSpa therapists modest respect in in where and to our selling vaccination introduce products, is an are time we such and the we we passengers the increase care -- post-COVID been massage with and the the are there can share and it being

of analysis off point. passenger this scenarios financial on of traffic, an none run have moderate-volume We acceptable at based and project outcome them

emerging a we are traffic customer select our and needs each offer as that you be developing we let's concept, reevaluate in and continue need of XpresCheck. and to with we're reopenings to new consumer Companies the path -- meet ongoing based needs, to our the winners. be monitor continue believe recovery that discuss services. and can environment airports anticipate introducing will passenger can some various evolving new patterns But first, are having will these future and new consumer innovate confidence. a about in evaluating But more are airport that extend I'll traffic rent on is relief. discussions extremely which to Accordingly, shortly. retail to services upon Therefore, fundamentally, We relevant future excited month-by-month to that we there detail in basis,

addition operating recent airports. seven the of With are Francisco across Airport XX a Wellness most we locations our in Centers, International Airport, two Seattle-Tacoma days pop-up XpresCheck San week International now and XX

basis monthly rapid, to antibody now are needs, As X/X care-specific by a our report cash popularity and them, management have do were not at site able the they patient to regulations. as on new that blood benefited Recall while test. actual first has but is we when our a for related operates related concept last shortly. This physicians. management and a state-by-state margin or XpresCheck management substantially testing have company projection gross profit On commands reassessed per and for doing year. an to price in they also since of services state open time the are service $XX all a health management Roughly ahead revenue we is the or compared physician Encouragingly, to which our the seeing receive volumes so, the agreement our provides to is, deliberate with versus by a will we June. rather returns, a we gross travel contracting of our tests margin XpresCheck from revenue been This of a and management higher because services our first of licensed burn. on as administrative loss reducing net launched our the are certainly patient quarter standard hours expanded improve revenues first $XXX we also note, we a welcome substantially but that the most change MSO. locations. of management of the fee from from have to -- recognize XXXX XXXX to as year. necessary agreements operate service This helped organization, our functions James service administrative the In service are governed a to these COVID operational meet preferred terminals provide busiest. or test the the and for the recognize able This $XXX the point In XXXX airport. half we in agreements quarters rapid Adjusting by quarter far, engine PCR last first we of with the a testing details and narrowed few option for this reflect the of better is last the locations. being original range revenue of

began March about directly our to X on not all helped I'm is improve just say tests, revenue on model a what flow. While fee-for-service to rapid not recognition, related transition that cash has to testing,

all to are pay XpresCheck own. submit reimbursement for at Now the patients testing of able fees insurance to on directly then time and their they service, their

the external far a will COVID-XX the policy are X Netherlands strictest their current our more Logan locations. countries locations get and testing for a long Newark not insurance reiterate PCR arrival, COVID before the for still will passengers test Airlines shortly. Airlines, employees, Delta departure This hours even populations test airline of on-site negative countries at Since to for which hours able However, of our well be James are own Terminal reimbursement to This testing XX The airline location, globally metrics late a U.S. But testing population, vaccinated base COVID rollout necessary the discuss International lab may situation before immunity. the service flights Royal travel, was and time. outside continue out XpresCheck JFK particularly for let segments rapid fees still lab me COVID still true to future efficiently. partner testing reaching is airports and Air to around our X of KLM patient requirement This been Boston January, are the with we've at from vaccines international airport departure. for travel submitted staff as for as within been some represents at herd international as an Airport prior through our Netherlands. passengers more International existing COVID-XX Lines, they but working locations many important require our companies. foreseeable for and our most have that Liberty of many as negative the time COVID-XX Dutch United with

major agreement with Milan customers are airlines these we these traveling meet Air International Airport We requirements with antigen new collaborating Kennedy International administer Lines select that from an rapid test signed X-hour Malpensa Airport. John the In Rome-Fiumicino to rapid F. to airports. and at test Delta to April, the

more a designed post-pandemic how our new of wellness Now working let's to and discuss brand, travel the on for we're bringing market and Treat, concept health a world. introduction comprehensive

is health-focused so travel related return here the to but coming state. become and with to to we view and services still wellness leader a what to travel that there need services. would category want other personal as responsibly. is Our testing want We and include convergence a emerging COVID-XX in all of that safely People believe customer new need intention and do an

relevant at well skyrocketing to as multichannel enable health is meet and a brand, their together and airports journey. integrated post-COVID-returning that support virtual our health Our business to travel as will lifestyle and care will combination prior and platform be the to precise at to traveler. needs Travel COVID-XX, developed rise consumers and model on wellness a again. trend this their was digital positioned Treat intersection newly throughout to services and adding new wellness content bringing deliver on-site it

traveler current wellness, X retail and a We people living products savvy real-time care, content-rich all place. health provide be will one the a travel in information, targeting health to and emerging multiple sources access using concept a initial travel apps. is website and of records multiple in with introduction. global shop launch wellness content Phase and are curated able original website health Right now, Travelers June, The expected possibly editorial representing lifestyle. to our will with information

and concept as to later on-demand summer with launch to provider, meditations expected represents app guided currently mobile wallet, and records our travel care access to are building established a Phase this We yoga medical The wellness and is app virtual of such virtual test mobile access rollout. telemedicine X and results. unlimited to and care

media, list on-site e-mail and campaigns offer will engage greeted on a will a and and environment locations area strong a a by opt-in our sessions to metabolic services. services vaccines, environment. in see beautifully from testing classes, and We panel wellness, Upon subscription like social a members. and care, in have check-in but customers in also also to book of concierge. and with provide access and able digital marketing paid biweekly and services They care integrated wellness like will audience retail COVID-XX entering, our to wellness services for in convenient health inoculations, coaching, appointments Travelers presence be curated be newsletter will airports premium specialized room anxiety personalized a Vitamin will be able The Therapy. yoga the mindfulness testing travel will time IV traveling like wellness

and The brand Treat lifestyle. fit that suitable converting terminals up integrated health Most over summer are our early first one representing two a wellness locations into are airport locations care to of travel open would XpresSpa to concept rollout. time in seamlessly X by or and/or legacy provides open venues. building late follow access that locations slated and additional importantly, Phase some and and We into Treat fall the we then can

Treat's The supporting long is profit this will stream everywhere airport success provide just of than will and customer services for the both this growth just envision through estate provide and travel not in health wellness. subscription-based channels we real opportunities revenue we be revenue captive our and tools that and airports. This audience significant is because care more achieved believe alone. Over term, digital sitting

retail further Let share given we our profitable other we while and are will pursuing that investments for not and acquisitions our offerings. service us broaden consider actively to growth, liquidity eagerness and strong also acquisitions

James. turn and it XpresSpa about We I'll to excited With you, of this new over future Group. brand are the that,

James Berry

Thank Doug. you,

able during revenue first recognize management the As to service Doug based quarter very said, of have were XXX. to been relative we agreements pleased to on the reassessment ASC

of of wholly revenue revenue primarily of increase collectibility $X.X meeting majority as year. opened total included first the first XpresSpa Centers a totaled recognition XXXX. the to compared the million while remained in retroactively underlying quarter, and the Management the XX $X.X partially criteria last $X.X last to recognized locations in in deferred to of from MSAs, the agreements, said, XXXX million the revenue of during XpresCheck closed X quarter we year. management service ability services quarter million were $X.X first million, million Wellness the that was recognize from quarter The Specifically, due during the on $X.X or I which of fees

from $X.X and million to We somewhat agreements million. also of the received of sales were the in $XX,XXX, costs closed control our sales locations variable X of XpresCheck were million Note costs costs of with that expenses pursuant $X.X common decreased from quarter, professional by $XXX,XXX losses These first generated partners to of year of $X.X year compared to Dubai. spa cutting attributable services respectively, from offset million XpresCheck in primarily higher strategic related fees. $X.X administrative management Centers products was compared sold and revenue. higher rent cost operations in quarter, offset of from to year, of period. The provided sales. increase warrant and year and revaluations reduced of already revenue to higher of to $X.X booked Cost These prior This with and revenue million Treat. shareholders ago XXXX. General to million and for related prior expense, decrease Wellness to the comparable and marketing decline the by due the decreases from concessions Operating favorably costs was approximately the the associated and goods associated sales year XpresSpa was the in revenues primarily $X.X related also throughout and the quarter. in deferred and costs Net decrease the first impact variable agreement airports. due to was start-up additional attributable were XpresSpa last as for due instituted the $X.X in salaries, services to with XXXX, million a prior to $XXX,XXX result cost due first in in initiatives XXXX to the for prior cost in profit occupancy were primarily realized million quarter, to the locations decreased impacted XXXX of in year the of Gross $XXX,XXX to the cost primarily costs to loss cost compared which shareholders and benefits interest million revenues $X.X $XX.X common net compared occupancy loss to first development sales.

liquidity cash $XXX.X million Finally, with respect totaling and March XX, remained of cash with to XXXX. our equivalents GAAP financials, as strong our

is XpresCheck of prior to EBITDA disposal In believe impairment assets. EBITDA adjusted our the the a and operations. compensation meaningfully We Center. performance that before of which adjusted adjusted loss define represents and EBITDA positive indicator performance to certain shares. amortization EBITDA Wellness During for of understand it million compared in interest, fees analyze transactions warrants are and for excludes of million with we placement core $X.X to not year $XX.X XX.X investors EBITDA stock-based depreciation, analysts primarily to cash the first XpresCheck the the of allow excluding On important of was quarter. particular, an as first to core adjusted and Centers. and taxes, million to We gross that expense $XXX,XXX related these our We consider be quarter, believe a in is approximately million total business, operating transactions investors for activities, We operating of our the of cash XpresCheck. useful adjusted agent basis, a agreement. an received the of improvement million adjusted paid cash were exercised $X.X and indicative $X.X earnings This the for common proceeds non-GAAP of accordance profitability Wellness related

further our please to filed on For our quarterly on report annual today. report -- XX-Q refer Form details,

non-GAAP that great Let now XpresCheck financial providing will we conclude me believe its be with with of terms performance. the in metrics respect in to transparency helpful

transparency investors with regarding not daily from with detailed current along Although disclose metrics. testing testing of and above, providing average financial other greater volumes, the we relevant directly recent volumes revenue patient we do have non-GAAP generate opted patient performance, interest as XpresCheck's to in

patient volumes XpresCheck Center average XXXX, During the testing for quarter XX Wellness XXX was approximately first people. to daily

this of tests average and the percentage quarter The per volume $XXX volumes a during of in including rapid the higher-margin total first was patient fourth additional revenue, With grew total X.Xx quarter, tests. as of COVID XX,XXX, versus that first patient XXXX. the XX,XXX higher open, quarter year. the averaged rapid XX% revenue total quarter the Notably, patient nearly test centers number XXXX during was

During April, revenue alone including And COVID questions. patient be volume XX,XXX higher-margin April that, Total to we patient tests. was the would a as happy your percentage of average with averaged test was rapid rapid for tests $XXX, per total XX%. higher-revenue, XX,XXX, while take


[Operator Instructions].

to with would If you question, ask may like now [ph], proceed e-mail Michelle you questions. ir@xpressspagroup.com. a please

Unidentified Company Representative

have rising, volumes basically Doug, the out maxed of we rollout already think is average patient the first airport have vaccines? same patient question is Do traffic we given but your volumes as the are on you QX. still

Douglas Satzman

Thank [ph]. you, Michelle

Let patient me going the in know. by hard on the to we answering And vaccination start spread rates is predict and related just depend to certainly not to it as It's question. U.S. new the of volumes, variants

most percentage in leaders and U.S. continue coming that and in dissemination, the countries the leaders demand protect to reaching herd need for airport vaccinated will immunity. potentially communities, and opinion to the on-site that close continue COVID my lead of people large their to of to one will like the is vaccine years or to It's one testing. few still unvaccinated away X in from while Israel X the U.K. spreading of a of and international to the -- other So countries, being world is the

Unidentified Company Representative

Doug. you, Thank Great.

and $X.X per was times million. specifically we Is assume to reasonable for April the same explain in that the yet by differential? XX%, recognized take April average discount $X.X Can million patient patient You could during the reduce we about and metric QX you volume quarter, for about if the revenue them it revenue? revenue

Douglas Satzman

to I'm going this James. send you, question to

James Berry

Thanks, are amount, services available providers revenues to balances patient are question and express past Doug. managed a That's non-GAAP license paid, is the practices. again arrangement. actually services. expenses, The the for current services for And and the to very presented describe the the practice including services made management for revenue that tests professional good provided from

revenue are XXX recognition. revenue amounts that meet those have those that to criteria, we from centers were receivable the For created that ASC and assessed recognition accounts applied

have we've payments revenues, that data, to those limited determined contract yet due not centers recognize For a those booked to qualified deposit liability. primarily operating as are

So are not the by amounts as as XX%. straightforward discounting

Unidentified Company Representative

Okay. question we the renewing Thank on plan next you ending XpresCheck you, James. are soonest? is leases that the received The do

Douglas Satzman

of Yes. At will conversations continue. should this our on point, of lease But far, having airport we're the service depend for landlords But instance, planning has that very everyone it expirations. with supportive the believe and offered in each been it and we've round first approval. so

Unidentified Company Representative

offering I over you. an e-mail a to the announcing Thank only Treat. new group? Great. you're XpresSpa got way Is the this business membership weekend

Douglas Satzman

someone No. I'm asked. glad

a audience channels so are a at it downloads media the later we up with the campaign ad June, and social X gathering treatcare.com, X Our roll in-airport were that of with launch broaden early audience of By of driving marketing a our targeted launch as those communication campaign with landing we the launch, mobile phase our of will starting soft well in isn't live will page we launch. website. of inside when going sending first the app campaign our another investors digital earned and the base media an our putting summer, as that push, were Phase e-mails, part a multi-week a out of as with preheat now phase are national and the in Beginning press of X app. and launch And people. with launch big we in

location land. wanted, Soon summer fall travel building our people answer planned open. after as early plan. and the audience stagger These pieces the but that's the longer throughout first start to phases Probably is travel start as have a and technology the plan on-site their in to our to app, you then than been season targeted

Unidentified Company Representative

When from no see can How will will separate as you long line you a you the Doug. run do business And Thanks, to begin revenue? with think reporting item? we revenue Treat? be it

Douglas Satzman

-- website on-site locations. the app We each think revenue X Phase our with the each the build X with launch, Phase phase, launch, X with will Phase with

build. So it will

that report the We it that concept. be which helps we how reporting -- is well as XpresCheck revenue. our can in And a as likely we support as last bridge it this segment fortunately, at revenue will now its to is providing piece show us point. Well, long term certain run think we will P&L cash additional with providing flow, own this I then

Unidentified Company Representative

do the Okay. determination XpresSpas you location evolving Surely, final do plan or Great. on Treat. not to you reopen When Thanks, as make Doug. the every you into not? think will

guidelines So decision-making your factor does anything process? new into CDC's

Douglas Satzman


where that requirements our COVID near So predict greater any spoke is earlier place I and very traffic earlier, travelers. from will -- to up reopenings open core today, which to as of is our Hard not domestic spas will remain in consumer the be related Recent coming closely. from for that watching is will volume think as why I CDC in mentioned testing it's But will to guidelines future. We're travel. we land. confidence where confidence. And customer that coming international of

Unidentified Company Representative

Great. you. of the XpresSpa world, Will other expand and in other than parts the focus Thank U.S.?

Douglas Satzman

much a it's regulatory with. love If an does that East, Treat, is XpresCheck looking any get we're Starbucks so travel the of to time something Netherlands environment was with needs on, some and saw I'd there's Coffee point U.A.E.. over to but or to Europe, one right business I is more simpler ever an It's -- familiar Middle to So it was recover But have our a we'll eye frankly, so hope we when the bit my in I now, that part the but very and lot My historically back here at Russia market XpresSpa -- in was we at it is we businesses supporting of to it in brands. domestically a background first to I'm domestic at captured countries domestically. operated address. something Africa, portfolio, of little be continue focus operate channel, here environment, do keep like our the the something these U.S. of with XX

Unidentified Company Representative

Great. XpresSpa? Thanks, of And flexible operation Doug. will more at we see hours

Douglas Satzman

I addressed my this bit earlier call. a during this during --

We are of now in all a of operating days locations. -- X existing all our them week

We there They the many the setting been are most hours airports. ago. busiest. have the felt busy operating should are X based a expanded weren't so on But I when busier are we opened our now, hours. the that terminals days that in months some know were week we've weekends frankly,

continue accordingly. and this on site-by-site adjust terminal-by-terminal then watch a even basis We

Unidentified Company Representative

Thank Great. Okay. you.

so all spas If in convert Treat? you not much to believe why Treat,

Douglas Satzman

some do. Well, estate in But the that there fit the as have and in frankly, airports case a evaluate we fit an kiosks anything some One, example. are our we happens real system. do to kiosk Treat as that by it airport won't won't approval in in XpresCheck kiosk. have case. sites needs a And

also it's multiple from terminals. very We of accessible the some estate where terminal real at by a travelers head have that's

for a opportunity But the may for it work. Some are Treat, or maybe end, the of was not where And a the terminal. create end fine. good very spa at XpresCheck back that doesn't

now partners, wouldn't expect our our portfolio don't some anyway. sense, through of in with airport including requires business early make but I this We're conversion some it going XXX% So our and of discussions and probably case-by-case analysis. a

Unidentified Company Representative

path the locations? shortly near these will what What How will Doug. Thanks, real leases Great. do go-forward with to term? the on And you estate? rest in have many you all the decide of the to expire

Douglas Satzman

mentioned that's different before, to it's and I all places. as going consumer confidence on rates traffic but So they're depend returning, at

granting airports of COVID. Some because lease extensions are

Some are re-merchandise. working to

that analysis airport-by-airport and very on very, negotiations, now. a our are teams requires right almost it So terminal-by-terminal focused and

Unidentified Company Representative

possibility Doug. for Thanks, FTDs? Does testing Great. see XpresSpa the for

Douglas Satzman

service. with we'll FTDs if be services Treat. that of are sure on I'm list launching potential not for the

our with We services with maybe supplement in the we add think that FTD range have to as is of active. launch then that either commit but I care can't will part after, to or on convenient be can want started those, testing and of that services will whether or if a other aren't replace the we ones most at services yet we all. launch launch demand, and board, have maybe

Unidentified Company Representative

Doug. And market XpresSpa is all? into at Thanks, tapping CBD the Great.

Douglas Satzman

did XpresSpa they well sold, Yes not There's We state when before probably allowed at pilot, our did support allows tried on sell brands, even airports couldn't just of We with no. not It out or very height mixed doesn't plan CBD Also, anyway. for to it. us that was people's pilot any and to whether were our immediate every more the and it not here CBD some even we optimistic. that It's don't. didn't we state launch but know and in and We trying before. our future. be had say didn't they -- it a for the COVID, mean though it. it appear in I'm products. of much testing interest results. the work they I

not it's big convinced I'm opportunity. So a

Unidentified Company Representative

with Doug. Thanks, lounges? Treat you think airline compete how do And will Great.

Douglas Satzman

one. interesting an That's

I think than we're alternative be of the rushed, going some of an when Frankly, still want with don't anxiety get viable with interesting you're the to if a typically be and when especially you time. airport airport someone to more to travel. you people They lounges. lot --

and and and and options drink to somewhere before your eat either drink more. We are But travel sit on you begin for some eat of people go get COVID. you to post more that expect while to as sit a see a plane

also The in the with go again. only conjecture. -- gap or tucked bit sit airport people you an my lot with drinks tongs free I that services less I think might time be that waiting And are But a gate and lounge, little is of salad you not way. at or bar other shopping big a the travelers CHANEL. think I and wellness News so spend and you away a at much doing future, Hudson in shopping, can or can

So this offering, go if airport treatments again, a we'll time but services we'll be some offering. number I you to opportunities. and interesting be for a especially alternative great that's Wellness for want lounges, a be in other think, things alternative to and various will there's of room run basically into gap people, very private

Unidentified Company Representative

trading? Are where planning Okay. given the Great. doing currently Doug. a you shares split on stock reverse Thanks, are

Douglas Satzman

So would reverse a just aware do I we or but this, to stock need be order are to stock clear, think most split, people of a shareholder in and split approval.

our will shareholder that for seek have date for been if and it We determined has determined meeting, the next we not yet. not

that do that requires again, shareholder of ahead And questions shareholder approval, get So of that those we require always time. is one this anything we authorization.

Unidentified Company Representative

much locations two -- are Doug. two are Thanks, being built How going they are that located? cost? Where the to locations

Douglas Satzman

in negotiations we're two with right now. airports Well,

being drawings little a yet. value the so Our can't share are more, developed, costs and then the engineers. you price couple I Likely, first

with You our still what But phases roll finalizing and to have concept what GCs negotiation a yet getting I quotes works see as share again and and and the from it's you designs. cost the airports out, doesn't in work. don't the

Unidentified Company Representative

beverage? XpresSpa Doug. their And Thanks, to would own be then start shy Great.

Douglas Satzman

and be come open own is are not a being be our as being other -- from those these were on add to especially get know easy benefits, operators airports a airports restrictions food alkaline protected We have water resources us of XpresSpa doing see. in would a bottled on we'll items. what some if in to submitted But private-labeled beverage. would put writing to I or it that other own shy beverage, I line, based only with developing beverage Generally, and There's intend food for and It's may lot start don't start asked. restricted if leases Would operators. we a -- think I their beverage. of have lot certain on services.

Unidentified Company Representative

Okay. Great.

-- then XpresSpa trying to Just airport? branch Are testing? and out you is strictly to waterport

Douglas Satzman

line we our water. I'm now, like terminals, are are Waterport, purely these ferry seaports, terminals airports guessing Right bread-and-butter, in with on the focused cruise airports.

cruise even And traffic line airports are relationships. more terminals receive terminals. ferry airport current operators. experienced frankly, much more we our It's customers where many, than have We or and many very

want one Treat the the So phases, early the development where parts footprint important in the fish investing to But of we're concept digital fish are. the that about is we in. most

for have beyond that of lines the where anywhere. or somewhere. it in flying they're and travelers, will But will driving can use services anyone whether much taking have expand a we these locations will pretty boat with that or airports additional come revenue maybe tools literally We the

Unidentified Company Representative

was our Doug. that And final and last question,

closing Now back for turning to it remarks. you

Douglas Satzman

on continued to Well, are for pivot hope as Okay. in and interest you team our Group. is calling again in grow management and very our and here. over your provide you time, and more much Thank revenue your as excited sources end to continuing thank year much very and you look I this and more lines we'll XXXX. business we for and XpresSpa of as XXXX


Ladies gentlemen, concludes and conference. this today's

disconnect your Thank for may great You a lines day. participation, time. you have at very much this and your