Press Release: XpresSpa Group Provides Business Update and Announces Second Quarter 2020 Financial Results
4:45 pm ET August 19, 2020 (Dow Jones)
XpresSpa Group Provides Business Update and Announces Second Quarter 2020 Financial Results
Views Addressable Market for XpresCheck(TM) of 60 U.S. Airports in Addition to International Opportunities
Preparing to Implement Rapid COVID-19 Testing and Begin Expanding into Additional Health and Wellness Services
Files SEC Form 10-Q for the Second Quarter ending June 30, 2020
Conference Call and Webcast Scheduled for 5:00 PM ET Today
NEW YORK, Aug. 19, 2020 (GLOBE NEWSWIRE) -- XpresSpa Group, Inc. (Nasdaq: XSPA), a health and wellness company, today provided a business update and announced that it has filed financial results on SEC Form 10-Q for the second quarter ending June 30, 2020.
Doug Satzman, XpresSpa Group CEO, stated, "Our vision for XpresCheck is taking shape and we see a significant opportunity to expand the concept across the country as we capitalize on the societal changes coming to U.S. airports as a result of COVID-19. We are now operating XpresCheck in both JFK and Newark and are in active discussions with other airports for further development. We are also lobbying our elected officials and consulting with related government agencies to support COVID-19 testing specifically at U.S. airports as part of the next stimulus bill."
Mr. Satzman added, "While providing COVID-19 testing is a critical starting point for XpresCheck, and we are committed to offering the latest and best testing available on the market, we believe the possibilities for advancing health and wellness care within airports is much greater. In the near-term, we are looking to expand testing to other communicable diseases as well as administer vaccinations for the seasonal flu. We also see ourselves as well positioned to be part of the national rollout of a COVID-19 vaccination when it becomes available. However, our overarching and longer-term goal will be for XpresCheck to expand into health and wellness services and amplify care for airport employees and the traveling public as they pass through the largest U.S. airports."
Business Update
XpresSpa Traditional Services
On March 24, 2020, XpresSpa temporarily closed all of its global spa locations. This was largely due to the categorization of such spa locations by local jurisdictions as "non-essential services" in connection with COVID-19. The Company had hoped to see some signs of a recovery in airport traffic as early as May and continuing through the balance of the quarter and beyond; however the increase in infections in most states coupled with mandated 14-day quarantines for incoming travelers across many states has resulted in minimal air travel to date. This in turn resulted in fewer passengers in the terminals.
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 XpresSpa spas in Dubai International Airport, UAE on July 7, 2020 for select spa services. However, the performance over the last several weeks has been muted given limited airport traffic.
XpresCheck Opportunity
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 U.S. airports. The Company subsequently launched the XpresCheck brand under its newly formed XpresTest, Inc. subsidiary.
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 U.S. airports with an average of 30,000 employees who support airport activity ("Large Hubs") airports. There are also another 30 secondary U.S. airports with an average of 15,000 employees who support airport activity ("Medium Hubs") airports. The Company considers these 60 U.S. airports as initial priority, in addition to various international locations, as it develops the XpresCheck concept. The Company currently has XpresSpa facilities in 19 of the Tier One airports and 4 of the Tier Two airports.
The Company is in active discussions with multiple U.S. airports (primarily Large Hubs) to open new testing centers or convert existing XpresSpa spas to XpresCheck. However, the timing of these possible openings has not been finalized.
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.
On June 22, 2020, the Company opened XpresCheck at JFK International Airport in the Arrivals Hall of Terminal 4.
-- 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, TSA officers,
and U.S. Customs and Border Protection agents, 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.
On August 17, 2020, the Company opened its second XpresCheck testing facility, located at Newark Liberty International Airport in Terminal B.
-- 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
As of June 30, 2020, XpresSpa Group had cash and cash equivalents, excluding restricted cash, of $37.8 million, total current assets of $39.0 million, total current liabilities of $19.6 million, and positive working capital of $25.8 million (which includes a $6.4 million non-cash derivative liability) compared to a working capital deficiency of $12.3 million as of December 31, 2019.
During the quarter ended June 30, 2020, to address XpresSpa Group's historical working capital deficiencies, and outstanding long-term debt, the Company raised net proceeds of approximately $38.4 million, net of approximately $4.7 million in offering expenses, in a series of registered direct equity offerings, which eliminated the working capital deficiency and resulted in the positive working capital position as of June 30, 2020.
During the second quarter, XpresSpa Group settled its long-term debt owed as of March 31, 2020 by converting $5.7 million of its senior secured note due in May 2021 to Common Stock and by converting its $2.5 million unsecured note due in May 2022 to Common Stock. The Company also paid in full its short-term $0.9 million advance funding, realizing a discount in the principal repayment amount of approximately $91,000. Finally, on May 1, 2020, the Company entered into a U.S. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") promissory note in the principal amount of $5.7 million.
As of June 30, 2020, the Company has approximately 56.5 million shares of common stock outstanding (adjusted to reflect the impact of the 1:3 reverse stock split that became effective on June 11, 2020) and warrants to purchase up to an aggregate of 8.5 million shares of common stock that are immediately exercisable at an average price of approximately $5.38 per share.
Summary of Second Quarter 2020 Financial Results
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