XWELL, INC. This Quarterly Report on Form 10-Q contains "forward-looking statements" that
involve risks and uncertainties, as well as assumptions that, if they never
materialize or prove incorrect, could cause our results to differ materially
from those expressed or implied by such forward-looking statements. The
statements contained herein that are not purely historical are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are often identified by the use of words such as, but
not limited to, "anticipates," "believes," "can," "continues," "could,"
"estimates," "expects," "intends," "may," "will be," "plans," "projects,"
"seeks," "should," "targets," "will," "would," and similar expressions or
variations intended to identify forward-looking statements. These statements are
based on the beliefs and assumptions of our management based on information
currently available to management. Such forward-looking statements are subject
to risks, uncertainties and other important factors that could cause actual
results and the timing of certain events to differ materially from future
results expressed or implied by such forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those identified below, and those discussed in the section titled "Risk Factors"
included in our Annual Report on Form 10-K for the year ended
All references in this Quarterly Report on Form 10-Q to "we," "us" and "our"
refer to
Overview
In
Since the beginning of the temporary closure of our
Effective
Furthermore,
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hectic pace of the airport and renew themselves before or after their trip. The integration and expansion of services and products, both domestically and internationally, is part of our objective to grow airport business.
Treat offers a website (www.treat.com) and mobile app to complement the offering with relevant health and wellness content designed to help people on the go with information that could impact their travel. The platform provides travelers access to a comprehensive online marketplace of services including global illness tracker tools such as the COVID-19 Requirements Map, on-demand chat care by licensed providers, a health wallet to store personal and family health records (including COVID-19 testing results), and a scheduler to arrange for direct care at one of our on-site locations. The information on the Treat website is not incorporated by reference into this Quarterly Report on Form 10-Q and does not constitute a part of this Form 10-Q.
Our HyperPointe segment, which we acquired in
Although we recognize four segments of business, our strategy for the future, is to create and leverage a fully integrated set of products and services that are both profitable and scalable across our portfolio of brands. Additionally, we will expand our retail strategy, not only adding more products for sale but aligning those products more efficiently to our service offerings. For example, adding fortified water and hydration packets to the delivery of an onsite hydration IV or adding muscle relaxation patches to a neck or back massage to continue treatment after the delivery of the service. The integration and expansion of services and products, both domestically and internationally, is part of our objective to grow airport business.
We also plan to build our capability for delivering health and wellness services outside the airport. We believe operating outside of the airport complements our offering and allows us to scale growth faster.
These strategic imperatives will be accomplished through development of an infrastructure specifically focused on enabling scalable and efficient growth.
While management has used all currently available information in assessing our
business prospects, the ultimate impact of the COVID-19 pandemic on our
Recent DevelopmentsXpresCheck Wellness Centers
XpresCheck's business has management services agreements with state licensed
physicians and nurse practitioners, under which we administer COVID-19 testing
options, including a Polymerase Chain Reaction (PCR) test and a rapid PCR test.
As of the date of this report, there are 15 operating XpresCheck locations in 12
airports, including the following locations opened since
In
? pre-security in the Great Hall. It contains six separate testing rooms to
provide diagnostic COVID-19 testing.
In
? pre-security, in the South Walk area of the
separate testing rooms to provide diagnostic COVID-19 testing.
During 2021, XpresCheck initiated a
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2022 and the fourth quarter of 2021, respectively. The Company anticipates that
the remaining
There are currently nineteen operating
During the fourth quarter of 2021, we began testing several new services to take advantage of a growing interest in non-traditional spa services and expansion of our retail offering to align more closely with the services we provide. We are evaluating the success of these new initiatives at each airport on an on-going basis and will incorporate changes to our approach as more of the portfolio is reactivated.
There are also six international locations operating, including three
The Company has received rent concessions from landlords on a majority of its
leases, allowing for the relief of minimum guaranteed payments in exchange for
percentage-of-revenue rent or providing relief from rent through payment
deferrals. Currently, the period of relief from these payments range from three
to thirty one months and began in
Treat
Treat is our new travel, health and wellness brand transforming the way we access care through a suite of health and wellness services supported by an integrated digital platform and a relevant retail offering to the traveling public.
Treat's on-site centers (currently located in
Treat offers a website (www.treat.com) and mobile app to complement the offering with relevant health and wellness content designed to help people on the go with information that could impact their travel. The platform provides travelers access to a comprehensive online marketplace of services including global illness tracker tools such as the COVID-19 Requirements Map, on-demand chat care by licensed providers, a health wallet to store personal and family health records (including COVID-19 testing results), and a scheduler to arrange for direct care at one of our on-site locations.
HyperPointe Acquisition
In
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continues to serve the XpresCheck business and will play a critical role in the expansion of on-going biosurveillance efforts.
The purchase price in the transaction consisted of
HyperPointe currently operates as a new segement within Xpre,
Adjusted EBITDA
Adjusted EBITDA is a supplemental measure of financial performance that is not required by or presented in accordance with GAAP but is a measurement used by management to assess the trends in our business. In evaluating our performance as measured by Adjusted EBITDA, we recognize and consider the limitations of this measurement.
We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization expense, non-cash charges, and stock-based compensation expense.
We consider Adjusted EBITDA to be an important indicator for the performance of our operating business, but it is not a measure of performance or liquidity calculated in accordance with GAAP. We have included this non-GAAP financial measure because management utilizes this information for assessing our performance and liquidity, and as an indicator of our ability to make capital expenditures and finance working capital requirements. We believe that Adjusted EBITDA is a measurement that is commonly used by analysts and some investors in evaluating the performance and liquidity of growth companies such as ours.
In particular, we believe that it is useful for analysts and investors to
understand that Adjusted EBITDA excludes certain transactions not related to our
core cash operating activities, which are primarily related to our
Adjusted EBITDA should not be considered in isolation or as an alternative to cash flow from operating activities or as an alternative to operating income or as an indicator of operating performance or any other measure of performance derived in accordance with GAAP. Adjusted EBITDA does not reflect our obligations for the payment of income taxes, interest expense, or other obligations such as capital expenditures.
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A reconciliation of operating income (loss) from operations presented in
accordance with GAAP for the three-month periods ended
Q1 2022 Results of Operations and Adjusted EBITDA (loss)
(amounts in thousands)
Three months ended March 31,
Revenue: 2022 2021
Managed services fees $ - $ 8,174
Patient service revenue 19,389 -
Services 3,777 265
Products 345 65
Other 537 8
Total revenue 24,048 8,512
Cost of sales
Labor 5,462 1,215
Occupancy 1,068 481
Product and other operating costs 8,517 2,463
Total cost of sales 15,047 4,159
Depreciation and amortization 1,264 744
Impairment/disposal of assets - 22
General and administrative 10,188 4,508
Total operating expense 26,499 9,433
Loss from operations (2,451) (921)
Interest income, net 7 12
Other non-operating (expense)/income, net (318) 102
Loss before income taxes (2,762) (807)
Income tax expense - (1)
Net loss (2,762) (808)
Net loss attributable to noncontrolling interests (1,521) (248)
Net loss attributable to common shareholders
Loss from operations$ (2,451) $ (921) Add back: Depreciation and amortization 1,264 744 Impairment/disposal of assets - 22 Stock-based compensation expense 1,543 1,005 Adjusted EBITDA $ 356 $ 850 Results of Operations Revenue
We recognize revenue from the sale of
We have entered into managed services agreements with professional medical
services companies that provide healthcare services to patients in our
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under ASC 606 was not met, and no revenue associated with the monthly management
fee was recognized for the year ending
Cost of sales
Cost of sales for our
General and administrative
General and administrative expenses include management and administrative personnel, overhead and occupancy costs, insurance and various professional fees, as well as stock-based compensation for directors, management and administrative personnel.
Three-month period ended
Revenue
Three months ended March 31,
2022 2021 Inc/(Dec)
Total revenue
The increase in revenue of
Cost of sales
Three months ended March 31,
2022 2021 Inc/(Dec)
Cost of sales $ 15,047 $ 4,159 $ 10,888 The increase in cost of sales of
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Depreciation and amortization
Three months ended March 31,
2022 2021 Inc/(Dec)
Depreciation and amortization $ 1,264 $ 744 $ 520
The increase in depreciation and amortization of approximately 70% was primarily
due to depreciation and amortization related to the recently opened XpresCheck
and Treat Wellness Centers .
General and administrative
Three months ended March 31,
2022 2021 Inc/(Dec)
General and administrative $ 10,188 $ 4,508 $ 5,680 The increase of approximately 126% was primarily due to functional costs
associated with the operations of XpresCheck and Treat wellness centers,
Other non-operating (expense) income, net
Three months ended March 31,
2022 2021 Inc/(Dec)
Other non-operating (expense) /income, net
The following is a summary of the transactions included in other non-operating
(expense) income, net for the three months ended
Three months ended March 31,
2022 2021
(Loss)/gain on equity investments $ (273) $ 99
Bank fees and financing charges (45) -
Other - 3
Total $ (318) $ 102
Interest income, net
Three months ended March 31,
2022 2021 Inc/(Dec)
Interest income, net $ 7 $ 12 $ (5) Interest income decreased as a result of a significantly lower interest income related to lower cash balance.
Liquidity and Capital Resources
As of
While we have addressed our working capital deficiency and long-term debt, and continue to focus on our overall operating profitability, we expect to incur net losses in the foreseeable future. In addition, the ultimate duration and severity of the ongoing COVID-19 pandemic are uncertain at this time, and may result in additional material adverse impacts on our liquidity position and access to capital.
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Critical Accounting Estimates
These condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements included in our Annual Report
on Form 10-K for the year ended
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