XWELL, Inc. Q2 FY2022 earnings call

• Strategic Rebranding: Selected a new name, logo, and ticker symbol, with the rebrand campaign set to launch in Q4 2022 after clearing legal requirements.
• Airport Locations: 26 spas open globally, with 5 scheduled to reopen in Q3 (including Istanbul Airport); 2 Treat locations open, with a third set to open in Salt Lake City in fall 2022; 15 Express Check locations open. Plans to integrate Treat and spa offerings, introduce new tech like VR and therapeutic equipment, and refresh spa looks.
• Treat Segment: 2 locations open (New York JFK and Phoenix Sky Harbor), with a third in Salt Lake City set to open in late Q3; offers wellness services like vitamin shots, IV drips, and diagnostic testing.
• New Retail Strategy: New products hit shelves in early August, with over 90 SKUs available in-store and online, and plans to add 30 more SKUs by holiday season; focuses on traveler wellness kits addressing stress, immunity, etc.
• Acquisitions: Actively pursuing revenue-accretive acquisitions, with ongoing discussions with potential targets.
• Cost Savings: Eliminated approximately $1 million per month in costs, expecting benefits to materialize in Q3 and beyond.
• CDC Partnership: New $16 million contract (up to $61 million over 2 years) for biosurveillance, operating in 4 airports, expanding pool testing, and including wastewater surveillance from aircraft.

In the second quarter of 2022, XpresSpa Group reported revenue of $13.6 million. Revenue breakdown: $7.4 million came from Express Check locations, $3.7 million from reopened XpresSpa and Treat locations, and $0.7 million from the strategic acquisition of Hype Point earlier in the year. Cost of sales increased to $12.4 million from $7.7 million in the prior year's second quarter, primarily due to higher operating costs for Express Check and reopened XpresSpa locations. General and administrative expenses totaled $7.6 million, resulting in an operating loss of $7.8 million and a net loss attributable to common shareholders of $7.9 million compared to prior year's $4.5 million net loss.

• Plan to close unprofitable Express Check locations while maintaining biosurveillance efforts.
• Expect 3 Treat locations and 31 XpresSpa locations open by end of Q3 2022; include opening locations in Istanbul, Phoenix, Atlanta, and working on Philadelphia Airport.
• CDC contract to expand to Washington, Dallas International Airport, and incorporate wastewater surveillance from aircraft.
• Intend to bring optimized labor model and technology to international locations.
• Rebrand campaign set to launch in Q4 2022 after clearing legal hurdles.

• Forward-looking statements subject to risks and uncertainties outlined in SEC filings.
• Legal challenges in completing the rebranding process.
• Potential impact of COVID-19 on testing volumes affecting Express Check performance.
• Dependence on successful execution of new retail strategy and acquisition efforts.

Q: Any guidance on the scope of the CDC contract?

A: We'll operate in 4 busiest international airports in the U.S. (JFK, Newark, San Francisco, Atlanta), expand pool testing, add locations in Washington and Dallas, and include wastewater surveillance from aircraft.

Q: How many XpresSpa and Treat locations will be open by the end of Q3?

A: By end of Q3, expecting 3 Treat locations and 31 XpresSpa locations; last week opened fourth Treat in JFK, with plans to reopen locations in Phoenix, Atlanta, Istanbul, and work on Philadelphia Airport.

Q: Updates on airport acquisition plans?

A: Actively pursuing revenue-accretive acquisitions outside the airport, had discussions with potential targets but waiting for realistic valuations, and continue to seek complementary opportunities.

Q: What's the capital allocation strategy?

A: Balance organic and external growth, invest in expanding outside the airport, technology, advanced services, product enhancements, and facility improvements to refresh locations.

Q: Details on the strategic rebranding?

A: New brand and ticker symbol reserved, finalizing trademarks, launch set for Q4 2022, with unit level branding to align with the parent brand.

Q: Can the CDC program be expanded to include Monkeypox testing?

A: Working with CDC and Ginkgo Bioworks to investigate incorporating Monkeypox testing, though logistical hurdles exist.

Q: Perspective on XpresSpa's direction?

A: Confident in the direction, excited about team's agility, focus on refreshing spas, integrating Treat and spa offerings, and executing imperatives for wellness on the go.