XWELL, Inc. (XWEL) Q3 2020 Earnings Report, Transcript and Summary

Good afternoon ladies and gentlemen and thank you for standing by. Welcome to the XpresSpa Group Third Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host; Dougl Satzman, CEO for XpresSpa Group. Thank you. You may begin.

Good afternoon and thank you for joining us today and for your interest in XpresSpa Group. Before I provide an update on our business and briefly review our third quarter 2020 financial results, I first need to advise you of the following. The comments made on today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current assumptions and opinions and involve a variety of known and unknown risks and uncertainties. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Important factors that might cause such differences include those set forth from time-to-time in our SEC filings, including our report on Form 10-K for the year ended December 31, 2019, our third quarter 2020 financial report on Form 10-Q issued this afternoon, as well as our earnings release also issued this afternoon, along with other current and periodic reports that we file with the SEC. In particular, we call your attention to the risks associated with our forward-looking statements regarding our XpresCheck brand and continued or -- and concept included in our Form 10-Q and earnings release filing this afternoon. One additional point before I offer my remarks, I'd like to reiterate that we very much appreciate the interest regarding our business and are often asked why we do not issue updates more frequently. As a public company, we take our responsibility and obligation to keep our shareholders informed regarding our affairs very seriously and look to provide updates as often as we can, but only when we have information that rises to the level of materiality. Therefore, we have and will continue to issue public statements in a responsible manner and in compliance with the Federal Securities Law and NASDAQ rules and guidance. This will be done via press release or on occasion through a media interview as well as security filings with the SEC. And while there will be points in time when more frequent updates will be made, there will also be points in time where there might be fewer updates. This is the nature of executing a pivot and operating what is essentially a start-up business within a public company setting, all while dealing with and making announcements in conjunction with government and regulatory agencies like airports. Given the inherent bureaucracy related to securing approvals and sign-offs for multiple people within those public agencies our progress cannot always be communicated in regular and predictable intervals. Now let's begin. I'd like to start off by thanking our shareholders for overwhelmingly approving all of our proposals as part of the Annual Shareholder Meeting last month. This included the election of Directors, the ratification of our independent registered public accounting firm, our 2020 equity incentive plan; and by an advisory vote, the compensation of our named executive officers. We greatly appreciate your support during these most unusual times as we transition our company to focus on the significant long-term opportunities we see in travel, health and wellness as I will explain shortly. As I'm sure you are all aware the airline industry showed minimal improvements during the third quarter. In mid-April at the height of the first peak in isolation the number of passengers going through U.S. airports was down 96% year-over-year. We had hoped to see some signs of recovery in airport traffic in the third quarter, but unfortunately the increase in infection rates across most states coupled with mandatory 14-day quarantines for incoming travelers in many states, suppressed air travel to historic lows through the summer. This resulted in fewer passengers moving through the terminals, and fewer airport and airline employees returning to work. In particular, passenger traffic in New York's airports, where we operated our first two XpresCheck Wellness Centers for all, or part of the third quarter remains deeply depressed. With attractions like broadway shows closed, restaurant options limited, and a mandatory 14-day quarantine vacationers have fewer reasons to visit, and locals are discouraged from leaving, facing an extensive quarantine upon their return. And there's almost no business travel happening, which is a big factor for New York metro area in Q3 and Q4. Figures from the Port Authority of New York and New Jersey show very little rebound in August compared with the previous August. JFK was down 88%, Laguardia was down 87%, and Newark was down 76%, when compared with the national August average of being down 70%. And these statistics were before the latest increase in COVID-19 cases, hitting much of the country this fall. Looking more broadly, the number of paid ticket passengers carried by airlines such as American, United and Southwest in the third quarter was down by about two-thirds compared to third quarter of 2019 and down even more in the New York area according to media reports. As previously noted in early July, we reopened two of our XpresSpa locations as a test in Dubai International Airport in Dubai United Arab Emirates, where we were offering limited services and selling various spot products, such as neck pillows and travel blankets. And not surprisingly, its performance has been underwhelming given the continued weakness in global airport traffic. Our sole domestic XpresSpa franchisee reopened in Austin-Bergstrom International Airport on September 21 in Austin Texas, also with unsatisfactory results. As a result of the limited airport traffic, we chose not to reopen any further XpresSpa locations globally during the third quarter. And further, we do not anticipate opening or reopening any of those spas before year-end for traditional spa services. As you know of XpresSpa, as our legacy health and wellness business, we launched XpresCheck this year focusing on COVID-19 testing in airports, as a new wholly-owned subsidiary XpresTest Inc. of XpresSpa Group. Against this backdrop, we had heard – we had our first XpresCheck opened in JFK for the full quarter and our second XpresCheck in Newark opened for approximately half of the third quarter, during which we offered only two COVID-19 tests, a PCR test and a blood antibody test. Please recall that the rapid molecular COVID testing did not launch until Q4 on October 7. We also expanded beyond COVID-19 testing in late October, to include additional rapid testing services for other communicable diseases that include influenza, mononucleosis and group A streptococcus. We are also now offering in Q4 the season's 2020/2021 flu vaccination, as well as a quadrivalent high-dose flu vaccine recommended for seniors. While our capacity to service patients was approximately 300 to 500 – 350 to 500 people per day at these two modular sites, our volume ranges during late third quarter were 30 to 50 people per day given reduced airport passenger volumes and the smaller number of airport staff needed to run the airports themselves. However, the rollout of rapid molecular COVID testing our average patient volume has increased substantially to approximately 50 to 100 people per day in November, despite continued weakness in airport traffic and rising infections across the country. This is obviously very encouraging as we're now providing more needed services than before, but we clearly have a long way to go before we reach our maximum capacity. Additionally, we have not seen mandatory testing protocols incorporated into airport employee, or airline employee policies. But it is still being considered by various agencies and companies as the workforce continue to return to work in alignment with the return of air travel. At the same time, we continue to discuss passenger testing programs with various major airlines whose volumes can be accommodated in our current and upcoming XpresCheck Wellness Centers. Regarding our management service agreement, if you've already seen our earnings release this afternoon, you will have noticed that we did not report any revenue associated with the XpresCheck segment during the third quarter. This may be confusing to some of our investors, so I will now provide some additional explanation. As we first detailed in our 10-Q filing for second quarter based on state-by-state regulations, we do not report revenue on a per patient basis for services, but instead we receive our revenues as a management service fee from the physician. So for example, if a patient had requested a PCR test and an antibody test, we do not book $90 in revenue for these tests and another $50 to $100 in external lab fees to process the results. This is because XpresCheck operates as a management service organization or an MSO, which is common in the industry which is a health care-specific administrative and management services engine that provides a range of administrative and management functions with an accompanying management service agreement with the physician as governed by state-by-state regulations. Specifically most states do not allow companies to practice medicine, but instead doctors and other licensed medical health care providers are permitted to practice medicine. Therefore XpresCheck contracts with the medical health care practice that provides the health care services to the patients and employees, the state license medical professionals, doctors and nurse practitioners and pays their malpractice insurance. The medical health care practice collects directly from patients and from their insurance providers for the medical services that they have provided. The same medical health care practice then pays a regular fee to XpresCheck for administrative and management functions which includes reimbursement for rent, the clinic investment, the salaries of the majority of the staff including medical assistance, corporate administrative support, marketing support, other insurances and an assortment of other functions. The reporting of revenue by us is determined by revenue recognition criteria under U.S. GAAP. On a routine basis, we assess the revenue that they collect and the costs that they incur are to determine if we can reasonably expect there will be sufficient cash flow to pay our management service fee. However because the medical health care practice did not service a sufficient number of patients during the third quarter due to the low daily traffic volumes, we concluded that we were not in a position to remit our fee to us under the management service agreement. This fee if it had met the collectibility criteria to qualify as a contract under U.S. GAAP was $1.2 million. We will only recognize the management fee as revenue if a subsequent reassessment of results, the physician's practice meets the collectibility of criteria which of course is dependent on the medical practices available cash from achieving higher patient volumes. And so we are encouraged that patient volumes are increasing overall and a greater number of patients are opting for the more expensive rapid molecular COVID test that is paid in advance, notwithstanding a great number of other services beyond our COVID testing. In fact, with the introduction of the rapid molecular COVID test, we saw incrementality in tests with very little cannibalization of the PCR and blood antibody. Said another way, this new XpresCheck segment is essentially operating as a startup business building its foundation for a range of medical services starting with COVID testing. COVID testing and by extension the other services that we recently began to provide are serving as the starting point for a much larger and broader health and wellness offering that we intend to implement over time. I realize that our inability to generate revenue in the near-term will surely come as a disappointment for some. However, with our recent capital raises, we have sufficient capital to see our vision through implementation. We are hopeful that your patience and being part of this major paradigm shift in travel related health and wellness services will ultimately be rewarded through a much stronger business model than we ever had before. That in turn should hopefully result in increased shareholder value as well over the long-term. As I said before, we are current -- we operated XpresCheck Wellness Centers in JFK and Newark during the third quarter. We have also since opened in Boston Logan's International airport in late October. ooking ahead, we now expect a fourth XpresCheck first in the West in late November in Phoenix International Airport and this location will then be followed by additional openings through the end of December and throughout the spring. As you may remember from past calls there are approximately 30 large hub U.S. airports with an average of 22 million annual travelers and another 30 medium hub U.S. airports with an average of five million annual travelers historically. We consider the top 60 U.S. airports as our priority target market in addition to various international locations as we develop XpresCheck. We now have XpresSpa and XpresCheck facilities in 21 of the large hub -- in 21 of the 30 large hub airports and four of the 30 medium hub airports and continue to offer many of our existing XpresSpa locations for XpresCheck conversions. To our surprise and excitement, many airports have been offering us better spaces than we currently control with our XpresSpa portfolio at more favorable rent structures, which is where we have focused the development of our XpresCheck pipeline. As you know airport real estate is very difficult to attain in valuable contract to gain control, of which is enhancing the overall value of the XpresSpa Group portfolio. We are now announcing today that we have developed a new pop-up clinic prototype that takes our learnings from the first three XpresCheck units into better and faster solutions that can operate on its own in an open space with less utility requirements or fit inside an existing vacant space. This new prototype employs a nonstructural construction methodology, while being regulatory compliant offering a significantly faster approval in construction time line. Further, these units can be built with a substantially lower build-out cost of under $200,000 when compared to the higher cost of constructing the initial clinics as we did in JFK, Newark and Boston, which each averaged between $500,000 to $1 million in build-up cost. This new design supports our ability to unlock additional real estate opportunities faster and with less capital, thereby, accelerating the rollout of COVID-19 testing and our other current services in addition to additional airports more easily. We've learned how to improve the process and meet more airport requirements faster, as well as use this new prototype traditional rapid testing locations within the same airports to support anticipated airline collaborations. We're also continuing to work with major airlines to create a creation of air bridges between U.S. cities and international destinations including but not limited to New York to London. This is an ongoing process, although we have nothing more specific to provide at this time. However, this past Friday, we were pleased to announce that XpresCheck was designated as a state of Hawaii Trusted Testing Partner. Travelers to Hawaii must be tested within three days before arrival and can only be tested by certified partners. This is fantastic news as direct flights to Hawaii will be starting again in the near future from JFK, Newark and Logan -- and Boston, Logan International airports while travelers who originate from any of these airports can already connect through another stopover airport with our test on their way to Hawaii. We also remain actively engaged in discussions with multiple emerging health passport apps like the Common Pass that would link COVID-19 test results from its partnered labs directly into these apps. Passengers would then be able to show their test results through these apps to airlines and destinations so as to ensure a hassle-free entry and avoid quarantines where applicable. These emerging technologies will be deployed to current and future XpresCheck Wellness Centers as soon as reasonably possible. And if you recall, that we are also lobbying senior elected officials in consulting with government agencies, as its advocates, specifically for COVID-19 testing, funding at U.S. airports as part of the next stimulus bill. There is a significant opportunity to increase testing at the airports with government financial assistance to lessen the financial burden on the testing centers and the patients. While we cannot say with certainty that this will be included in the final bill, at the very least we believe that the new incoming administration will be more engaged in our cause of getting more testing up and running as part of restoring confidence in safe air travel and bringing the industry back to a state of normalcy. This return to normalcy is critical for both our industry and the economy as a whole. According to Department of Transportation, 1.1 billion passengers passed through U.S. airports on domestic and foreign airlines in 2019. Even if only a fraction of these passengers travel this year and next year, it can still amount to a significant opportunity for testing and other services. Now I'd like to share something new that has not been discussed publicly. While our rollout of XpresCheck began on account of a sudden onset of a pandemic, we eagerly await the dissemination of a safe COVID-19 vaccine that would look to administer as well. We believe there is a clear, long-term opportunity to build the leading global, travel, health and wellness brand. We will continue to grow XpresCheck, the XpresCheck business but based on the early air travel numbers that we're seeing unfold our internal leadership team has started the concept work to develop a long-term plan bringing together our unique position of our historic travel wellness experience and our newfound health care expertise. We see this upcoming concept evolution as a significant future opportunity to create a new niche industry. In this future industry of travel health and wellness, we can leverage our existing real estate, airport expertise, as well as technology to be a category leader in providing travelers with peace of mind. We are very early in the process but I'm eager to share that our strategic brand pillars will be health, wellness and travel, highlighting our experience and assets directly in the sweet spot at the intersection of these three categories. So the first one in health care, we are differentiated because we are travel-focused and in airports. While in wellness, we are differentiated because we are travel, industry retailers and experts. In travel, we are differentiated because we have health and wellness experience and capabilities, as well as the medical data we generate. Our health services plans include going beyond COVID testing, flu shots and infectious disease testing to include vaccines and traveling immunizations, additional health services and treatments and convenient care services with tele, follow-ups and health passport functions through a new mobile application. In terms of wellness services, this could entail developing an aspirational brand that reaches consumers upstream in the travel planning process. We envision focusing wellness services on traveling, anxiety, stress release, follow-ups and therapies through telehealth. We also aim to partner with airlines for custom travel wellness programs. On site, we may offer wellness therapies, sessions coaching, high-end retail products and travel-focused wellness treatments may be offered as well through a future app. In order to deliver on many of these opportunities we plan to round out our management team by bringing in external executives with experience in health care technology and concept development. While we do not have any specific details to share today, we hope to be able to make leadership announcements over the next few months if not sooner. As I referenced earlier, as we discuss our third quarter results, we had negligible revenue during the third quarter, given very limited operations and our aforementioned inability to recognize revenue under our management services agreement. As a result, our operating loss increased to $9.2 million, which included impairment costs related to our XpresSpa segment and higher general and administrative costs compared to the $1.8 million in the prior year third quarter. We also reported a net loss attributable to common shareholders of $6.1 million versus $4.6 million in the year ago period. I will refrain from walking through the full P&L, but encourage you to do so and review our MD&A section in the 10-Q. I will note that more importantly, the more than $70 million in net proceeds that we have raised this year through a series of registered direct equity offerings have been truly transformational and provided us with the means to reimagine our health and wellness service offerings. The company's liquidity remains strong with cash and cash equivalents totaling approximately $61.9 million as of September 30, 2020. The company does not have any plans or need to raise capital at this time. It believes the continued improvement in quarterly cash burn rate, continued focus on managing expenses in a healthy cash position should provide the company with ample ability to execute for the foreseeable future. With that, let me thank our investors for their continued support and express my enthusiasm for sharing further updates on our progress and brand vision as appropriate. I'd be happy to take your questions. If you have any I'll turn it over to the operator.

Thank you for taking my question. I'm curious as to why you wouldn't want to reopen the traditional spas after the rollout of the vaccine and once travel resumes. Isn't that a lower risk option? Because you could then add some of these incremental services under the original framework versus trying to completely reimagine the entire business model?

Thank you, Rob for your question. This is a big debate we have with our leadership team. Naturally, we would love to reopen our spas as a viable business. We've identified how we might change services and retail in a post-COVID environment, but we do need to see a significant lift in travelers coming through the airports. As we model out these incremental services and reimagine the business model, we're keeping a keen eye on what we think will come out of this in a post-COVID world an environment. And some may have heard me before even media say where 9/11 changed security protocol on travel, I do believe COVID will change travel security protocol and other parts of travel for a long time. So we're building in a range of solutions, whether it's reopening some of our past spas, converting them to XpresCheck in the meantime is the highest and best use is COVID testing right now. But further developing a future concept that we think will be a big idea and highly relevant having medical and health and wellness services in airports in a post-COVID world.

Very helpful. Thank you very much.

Thank you. Our next question is from Alexandra Thomas [ph] Private Investor.

Hi. Thanks for taking my question. I was wondering what level of patient volume or what average patient spend would be needed in order for you to recognize your management fee? Any color you could provide would be helpful?

So it's interesting as we've been watching this build, we remind ourselves and I remind you the listeners that when we first opened, it was a proof of concept and it was to airport employees and airline employees only and it was during the slowest period of traffic. We then expanded to passengers, first at JFK, but then soon we opened our second location in Newark and that was only open to airport employees and airline employees. And then, towards the end of the quarter, it expanded to travelers. Then we added in a rapid test, which -- our first test the PCR and the blood antibody test, people can submit it to insurance. And we have a range of insurance reimbursables that will be collected or will be collected through the physician. And then, -- but with the rapid test, we're not putting that through insurance. And the patient would pay $200 upfront into the physician that then gets built-up into the management fees. The point is, these newer services that we're adding have different benefits or weight to the model. Some of these rapid mono and strep tests, these are relatively inexpensive tests. These are added on in the fall typically, when people are symptomatic. So all of this is to say, there's not an average patient volume, because it really depends on what services they opt for, let alone flu shots being added on which is a very recent thing for us. But I would say that, even anytime we're averaging over 100 patients a day, that's a good mark to be at. So we can recognize that management fee. Again, I'm speaking very generally. It really depends. But when, you start seeing them north of 100, that's a healthier place to be. Thank you, Alexandra.

Thank you.

Thank you. Our next question is from Carl Plit [ph], Private Investor.

Hi Doug, thanks for taking the time you speak with us today. Actually this is a bit of a follow-up to the previous question. But given the limited airport traffic, is it even possible for the management fee to be reached? And with that said, can you renegotiate the free threshold?

Yeah. Well, yes, the management threshold can be reached. So the way it works is again I shared earlier, companies can't practice medicine, doctors can practice medicine. So in most states almost all of them you have a state-licensed physician, they provide through their nurse practitioner, themselves or other mid-levels. They provide the medical service. They're the only ones who can get paid for their medical service. And they hold back their -- the cost of the doctor and other medical professionals, who have to be on their staff like a nurse practitioner, the cost of their malpractice insurance. There's a couple of other minor holdbacks. But then, the balance of the revenues that come into the practice they get -- their accounts get swept. And it comes to us as a management fee. So because this is new and keep in mind, I talked about, how we've been opening up to a broader range of patients going from employees to then include passengers, we're adding services. And air traffic is coming back slowly, so that's another variable. We're starting to see that tipping point ahead. And again each of the airports, the three airports we have so far have different rates of being used. But typically they start off a little slow as people find the business, the employers start sending folks, the airlines start sending folks. And then we saw it in our first two build up pretty nicely. And we're seeing the same thing for Boston. We do have the ability to renegotiate the management fees. So this is a highly regulated environment, mostly it's on the medical side to make sure anti-kickback provisions, regulations when doctors aren't triggered. But we can periodically and we will periodically go back and revise, the management fees based on the level of business that we see. So -- but frankly we need a little more time and a little more data, because the environment is moving so often. Again as we layer in more services and more people start coming back into the airports. Hopefully that was a little simpler of an explanation than what I tried to do on the call. I was trying to be very thorough, but it's actually quite simple and it's a very common model for clinics and healthcare providers all around the country.

No. Thank you for the color. Appreciate it.

Thank you. Our next question is from Marge Rolsten [ph], Private Investor.

Hi, Doug. Thanks for taking the question. If COVID testing is currently not profitable and it may never be profitable that is if airport traffic does not increase substantially. Why don't you just skip this interim step that is burning a lot of cash and move directly into the health and wellness concept, which could be implemented once the COVID vaccine is widely available?

The -- fair question fair question. We -- I mentioned my leadership team before we are constantly evaluating the environment. We're constantly speaking with peers, peers being airport operators airlines other operators and airports, clinics outside of airports in the communities to try to get a bead on where things are going and then to plan accordingly. So we have this new concept that is being developed and likely it will be an evolution of what we have learned with our historic business and kind of spawn, beauty and wellness and health and airports than what we've learned with medicine. I feel -- I've been very excited to like share this is me with the investor community for a while. But it's going. It's I think going to be ideally positioned to be aligned with expectations of travelers in the future. But it's not going to be up and running like in a month or two. So right now the highest and best use of our resources is going towards COVID testing. As we see employments coming up and once and if once -- if a couple of these airline deals come through, I'm going to be worried about potentially the capacity to do 400 or 500 tests in a day. So it's easy to see that I have a -- my JFK unit can do up to 500 a day. But let's say, one or two airlines decides to include COVID testing on certain international flights or mandated as part of their policy very quickly I can blow through that capacity. That's why this pop-up the concept that we developed is so helpful because now in a much lower investment vehicle, we can justify adding a second pop-up or adding a pop-up where we already have our full clinic or maybe going to a new airport with two pop-ups and then we can increase our capacity to meet the testing requirements of the that might be coming with the airlines. And hopefully as traffic picks up, you'll see that demand naturally pick up as well. I want to make sure I answer your questions. And I think it was because I feel like I'm getting off track is why not skip this interim step you said that's burning cash. The fact is there's no revenue coming in right now. Like a lot of businesses there's going to be some cash burn. We worked very carefully to minimize it as much as possible. Often landlords or airports we've been getting free rents. They're kind of extending a month or two months at a time. Most of our workforce has been furloughed. So a lot of our big costs have been allayed for the time being. The airports are looking for help with COVID testing. So if we weren't able to offer this. And again I know you don't have visibility to the wide range of airports that we're speaking to. They're highly focused on some on getting COVID testing up and running. And once you get your foot in the door and we've demonstrated our chops being a medical provider or service provider through XpresCheck that opens the door for this whole next concept work that we're doing. So I do think it is -- has the ability to be a profitable venture the XpresCheck COVID testing. Even with the vaccine coming out, it's going to be COVID and other infectious disease testing is going to be here to stay for a long time. But, it does remain this important interim step while we develop a much more attractive model, off of what we've developed and learned with XpresCheck. Thanks for the question. And I realize, I started blending a few topics, but they all kind of start to fit together to reveal the picture.

Thank you. Our next question is from Kole Perkins, Private Investor.

Hi, guys. In your opening remarks, you were talking to us about the air bridge and the evolving medical passport apps. I was wondering if you could give us a little bit more color around those evolving items. And how those will work with XpresCheck in the future?

So, this is where I see kind of a short and mid-term of COVID testing evolving in airports domestically, but even internationally, especially for the long-haul flights. And it's been the airlines, who have stepped up to provide some leadership in creating the path at haven't been the federal government, hasn't really been the state government, hasn't been the airports. And I have and my team has good visibility because we talk to all of these groups very regularly, but it's really the airlines. And what an air bridge is and you'll -- it can be defined different ways, but it's when a passenger can buy a ticket with a major carrier, and they know what is required on entry in the destination and they have an easy path and then their return flight home is assured and they can manage the quarantine regulations on both sides of the bridge. And what makes it -- it sounds like an easy concept, you can just see what test is required and take it before you go. But what happens is you have a lot of these jurisdictions country states with evolving requirements. So, the Hawaii example is a good one. Because Hawaii, if you read the press, you can take a flight to Hawaii and come with a negative COVID test and you can eliminate your 14-day quarantine. But when you actually look into it, you discover you can only get a COVID test from a very few select partners that have been vetted by the state of Hawaii. And we are very pleased to be able to get on that list. It was very hard to get in, because they limit it to at least now a small number of "trusted partners". So, the average to Hawaii from San Francisco that United helped pioneer was working with the State Department, the department -- the state of Hawaii's Health Department to understand what kind of tests and what criteria would be required for them to start sending people over from SFO. Could SFO offer testing on-site to make sure that connecting passengers from other cities funneling through FFO, because that's kind of the beginning of this bridge, can either come with the right test or they can get it on site? And then, United tells them, we -- if you follow our steps we can get you to Hawaii and you can go on your vacation and we will get you back from Hawaii back through San Francisco and help you meet the requirements of your return trip. So it's not that hard, but it's complicated and takes a lot of coordination. So, there is some testing centers in London where I've been now working with the CEO of that company to see where we can work out the different cities that we might open in and help facilitate these averages for the major airlines. So, we're all going about it different ways. And frankly, there's a couple of major airlines that are sitting and waiting for others to figure it out, it feels like to me. And where the health app comes into play, is it adds one more point of convenience for that traveler to say, okay, you need this type of test and you need it 72 hours before you depart. And guess what, here is a pre-approved app that will automatically import the results from the lab if you go to one of these few labs that are designated and then you walk up to the gate, you flash your phone, it shows that you're using the approved -- one of the approved apps and your results are there, you get on flight, you land in that international destination, that health agency of that government recognizes that's an approved app who knows they've already vetted the type of test that's required for entry into the country within 72 hours, et cetera, et cetera. So you can see how the pieces are coming together, testing is just one important part. But I can tell you testing on airports is a key unlock and that's why we're so bullish on the future of just infectious disease testing in airports, whether it's COVID-19 today, maybe there's a COVID-2020. All it needs to do is have another strain that's discovered this fall, or other infectious diseases that people are worried about. I guarantee you -- well, as Americans in the past when we read about swine flu or bird flu in some exotic country or a far away place, that's never going to come here. I guarantee you, as soon as three people are discovered somewhere remote in the world with some news something is going over -- there's going to be an overreaction. So -- probably for years. So the idea of medical-use as being an integral part of travel is going to be a reality in a post COVID environment. It's very complicated to do in multiple states and multiple cities, especially in airports, but that is where we are uniquely positioned to do it and it takes a little bit of time to build this structure. But once it's there, it's going to be the tracks that I think a lot of people will be using as part of their travel regimen for sure. Thank you, Cole.

Well, thank you, Doug.

Our next question is from Alan Schumacher [ph] a private investor.

Yes. I had a question about the health and wellness brand and its relevance, perhaps outside of the airport environment. What just gives you confidence that passengers are going to kind of triangulate what you provide in the airport to something external? I mean, isn't -- aren't kind of airport services really only relevant to customers if they address those needs when they're captive inside the airport? Can you just kind of shed some light on your thinking there?

Yes. I'm going to stay kind of high level and it may be unsatisfying not to get enough details, because I'm not at that point yet to unveil all the pieces or many of the pieces. And frankly, we're still putting some together now. But the point is travel is a huge segment. Pre-COVID, more people are traveling every year. The world is getting smaller and people have more access around the world through travel. Health and wellness, big growing segment, already on its own. It's nothing to do with travel, it just health and wellness. It's not just for baby boomers who are trying to live longer. It's not just for millennials who want to see the world. It's -- and take care of themselves. It's -- they're big growing segments. Now if you put together travel and health and wellness together in a subsegment, that's what we think is going to emerge. And one piece is having real estate and airports that you can offer a range of wellness experiences, some medical, some mental health, some other health and wellness cutting technologies in new cool therapies. But travel planning happens outside the airport. And when you're deciding to go on a vacation, especially, if its health and wellness-focused, there's a lot of work that's done ahead of the curve. And there's not a lot of resources. Go Google and see how easy it is to find a lot of consolidated information that's easy to digest. If you want to travel and you lead a health and wellness lifestyle, there's a little bits here and there, but that's where there's an opportunity to provide content upstream and to monetize that upstream is if, we do a good job with it with a lot of traffic and clicks. Now we're starting to build a model that's bigger than just being an airport service provider. We're starting to touch people upstream. Then they come through the airport and they stop in for a service or a need. It could be your travel meds that you need to go on safari with your family to a whole range of things. But when you're in the airport especially during the layover when you have a lot of time, there are a range of compelling services some that you may need for a trip but others you may choose to because it is part of this travel help ones lifestyle. And then you can continue post on your trip through telemedicine and other technologies that are available to continue to engage with maybe a provider that you started with in one of our wellness centers. So it's starting to connect the dots of kind of the pre-trip planning and how do you capture mind share there, while they're on their journey through airports, going their way out on their return, but even when they're out away from home having tools and services that make it easier as well.

Thank you. Our next question is from Laura Grif [ph] private investor. Q – Unidentified Analyst: I was just wondering if you had any more insight when we can expect the first of these reimagine health and wellness centers to open?

They will be in 2021. The concept work is happening now. We've identified potential pieces of real estate in our portfolio. But the timing I can't set a date yet but we will. Like we do with XpresCheck and like I've done in my past development and other companies you do a couple of proof-of-concept models. Invariably you'll need to refine it and develop it further. All the while, we will continue to push into COVID testing and infectious disease testing especially with the pop-up prototype that's been developed and then continue to evaluate the XpresCheck business model with some of other services in retail that we're prepared to offer, if we decide it's time to reopen. Q – Unidentified Analyst: Okay. That's helpful. Thank you. And then just as a follow-up can you explain a little more why now it's the right time to be hiring more senior level people, just knowing that they'll be expensive?

Now is absolutely the time. And anyone that's hired there will be an expected return on that investment. With bringing on a Medical Director was critical for us getting XpresCheck off the ground and other specialized professionals because it was a part of health and wellness that we didn't have a lot of experience in. And what we plan to develop with technology and services there are certainly some very strong thought leaders that we're talking to that can help accelerate. Go into your first question. When can we expect to see what this concept looks like? It's done by a combination of our internal talent, but certainly there's going to be some external talent that we need to bring in. It's not expensive when you consider the return on investment and what the unlock of the model will be. So, thank you. Did I -- did you have another question on that? Q – Unidentified Analyst: I am good. Thank you. That was helpful.

Ladies and gentlemen we have reached the end of the question-and-answer session and are out of time for today's call. XpresSpa Group thanks you for your time and your participation. You may disconnect your lines at this time and have a good day.