XpresSpa Group Provides Business Update and Announces Second Quarter 2020 Financial Results
Views Addressable Market for XpresCheck™ of 60 U.S. Airports in Addition to International Opportunities
Preparing to Implement Rapid COVID-19 Testing and Begin Expanding into
Files SEC Form 10-Q for the Second Quarter ending
Conference Call and Webcast Scheduled for
XpresSpa Traditional Services
The Company did not reopen any domestic spa locations during the second quarter 2020 for traditional spa services nor does it anticipate reopening any domestic spas in the third quarter 2020 for traditional spa services. The Company did reopen its
During the first quarter 2020, the Company announced that it was in advanced conversations with certain COVID-19 testing partners to develop a model for testing in
The Company believes that similar to how the 9/11 terrorist attacks forever changed security protocol in travel, COVID-19 will have a similar impact on health and security protocols in travel, and that given its lease portfolio the Company is well-positioned to help assist on this societal change.
There are approximately 30 major
The Company is in active discussions with multiple
Importantly, the Company is beginning its XpresCheck concept rollout and expansion of services by addressing the urgent needs caused by the COVID-19 pandemic that adds risk and uncertainty related to domestic and international air travel as well as to our front line airport workforce while intending to build out more comprehensive health and wellness service capabilities over time.
- For example, XpresCheck is in the planning stages to expand testing to other communicable diseases as well as administer vaccinations such as flu shots.
- The Company further views itself as well-positioned to be part of the national rollout of a COVID-19 vaccination when it becomes available in the market.
- The modular constructed testing facility hosts nine separate testing rooms with a capacity to administer over 500 COVID-19 tests per day.
- COVID-19 testing was initially offered to airline employees, contractors and workers, airport concessionaires and their employees,
TSAofficers, and U.S. Customs and Border Protectionagents, but was expanded to the traveling public effective August 10, 2020. Patients can either register for an appointment at XpresCheck.com or stop by for a walk-in. We are targeting our public testing to help passengers meet testing requirements in select states and countries.
- The modular constructed facility hosts six separate testing rooms with a capacity to administer over 350 tests per day.
- Similar to JFK, initial testing is limited to airline employees and related parties, but over time will expand to the public as well.
COVID-19 Testing and Expansion of Medical Services
The Company is currently using polymerase chain reaction (PCR) testing, also known as a nasal swab test, and blood antibody testing, which looks for markers in the blood (IgG, IgM) that suggests a person might have had COVID-19. These tests are sent to outside laboratories. All insurance plans are accepted and all information remains private and HIPAA compliant.
- The Company is committed to reviewing and pursuing the latest COVID-19 testing technology and offering the best available testing on the market including FDA-approved quick testing, as well as new, emerging testing protocols that may provide high accuracy, simplicity and speed, such as antigen testing.
- The Company is in on-going conversations with multiple quick testing companies that would complement the airport environment. The Company plans to deploy these emerging technologies to current and future XpresCheck sites as soon as reasonably possible although we cannot assure you whether this will occur in the near term or at all.
- The Company is actively lobbying elected officials and consulting with government agencies as its advocates specifically for COVID-19 testing funding at
U.S.airports as part of the next stimulus bill.
Liquidity and Financial Condition
During the quarter ended
During the second quarter,
Summary of Second Quarter 2020 Financial Results
As previously disclosed, effective
- As a result, the Company reported de minimis revenues during the three months ended
June 30, 2020of $143,000compared to $12.9 millionin the corresponding period in 2019. The decrease in revenue was primarily due the negative adverse impact of COVID-19 as discussed above. The decrease was partially offset by the revenues generated by recently activated sales and marketing agreements with strategic spa partners and the pro-rated monthly fee associated with the management services agreement associated with XpresCheck in connection with the JFK opening on June 22, 2020.
- General and administrative expenses increased to
$3.4 millionin 2020 compared to $2.5 millionin the prior year second quarter. The increase was primarily due to start-up costs associated with XpresCheck and additional legal fees incurred related to the successful resolution of certain litigation matters. These increases are partially offset by the realized benefits of cost cutting and control initiatives instituted throughout 2019 and 2020, primarily in salaries, occupancy and professional fees.
- Operating loss from operations increased to
$9.7 millioncompared to $1.9 millionin the prior year second quarter, inclusive of an impairment taken on leasehold improvements in XpresSpaspa locations of $1.8 million and operating lease right of use assets of $2.2 million.
- Loss on revaluation of warrants and conversion options was
$48.3 millioncompared to $0.8 million in the prior year second quarter. Loss on revaluation of warrants and conversion options represents the non-cash loss resulting from the mark to market adjustments of derivative securities upon conversion to Common Stock and the fair market value of the conversion option outstanding as of June 30, 2020. The significant non-cash increase of the loss on revaluation of warrants and conversion options compared to the prior year was due to the increase in the Company’s stock price at certain fair value measurement dates relative to the conversion price of the related warrants and convertible debt.
- Net loss of
$58.5 millioncompared to net loss of $6.1 millionin the prior year second quarter.
Please refer to the Quarterly Report on Form on 10-Q filed on
Conference Call and Webcast Today
The Company will host conference call and webcast today at
The conference call can be accessed live by dialing 1-201-689-8263. 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.
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. In particular, these statements include, without limitation, statements about our future operating or financial performance, market opportunity and growth strategy, in particular statements about our expectations relating to our new XpresCheck™ concept, our ability to identify and convert spa locations to XpresCheck™ sites on a timely and cost-efficient basis, being able to expand testing to other communicable diseases as well as administer vaccinations for the seasonal flu, our positioning to be part of the national rollout of a COVID-19 vaccination when it becomes available (including whether such vaccination becomes available in the near term or at all), the degree to which our public testing model assists passengers meet testing requirements in select states and countries, our ability to identify and gain access to the latest and best COVID-19 testing methodologies, and our ability expand our initial sites at
Source: XpresSpa Group, Inc.