XWELL, Inc. Q4 FY2022 earnings call

• Retail momentum: Q4 2022 retail revenue at XpresSpa up 48% y-o-y, product margin 67%, with new higher value-add products added. January 2023 same-store sales up 90%, February up 50% due to expanded hours, staffing, and new retail offerings.
• Therapeutic chairs: Novo XT massage chairs installed in 7 locations, paying for themselves in 1.5 months vs 3-4 months for prior lounges; estimated $1M+ revenue with 75% service margin once deployed system-wide.
• International spas: 10 locations outside US, new Istanbul locations performing well (net sales over $70k in Jan, ~$80k in Feb), targeting high single-digit unit growth through 2025 and opening 11th international location in Abu Dhabi Airport Q3 2023.
• Retail strategy: Enhanced retail approach with new products added, including health-focused grab-and-go food items planned for 2023.
• Biosurveillance: 7 testing centers in busiest airports, expanded to monitor influenza in addition to SARS-CoV-2.
• Cost-cutting: Closed 12 underperforming spas, 15 XpresCheck locations, reduced G&A expenses by 11% in H2 2022 compared to prior year and 25% compared to H1 2022.

For fiscal year 2022, total revenue was $55.9 million. Revenue breakdown: approximately $15 million from XpresSpa and Treat locations, $2 million from acquisition of HyperPointe, $7 million from biosurveillance partnership, and $32 million from XpresCheck locations. XpresSpa's retail revenue in Q4 2022 increased 48% vs prior year with a product margin of 67%. Biosurveillance had 7 testing centers in busiest airports. XpresCheck revenue declined due to soft demand. Treat locations saw closures of underperforming ones.

• Target high single-digit unit growth through 2025 and aim to open 11th international location at Abu Dhabi Airport in Q3 2023.
• Expect retail revenue to continue growing with addition of new products throughout 2023.
• Anticipate revenue from therapeutic chairs to exceed $1 million with a 75% service margin once deployed across the entire system.

• Uncertainties in M&A discussions as potential acquisition opportunities are in preliminary stages and not ready to comment on specific details.
• Delays in B2B revenue generation as relationships with airlines and airports are taking longer than expected and have not generated meaningful revenue yet.
• Stock price concerns and potential NASDAQ delisting risks, with future share repurchases contingent on Board approval and monitoring stock for NASDAQ compliance.

Q: About M&A plans A: Looking at revenue and EBITDA-accretive acquisitions in health and wellness space, but no specific details as opportunities are in preliminary discussions or diligence stages Q: About B2B efforts A: Made inroads with partnerships like NFL Players Association and national coworker space provider, but generated ~$348k in 2022 revenue, less than expected, continuing to leverage relationships Q: About CDC program A: Recognize communication challenges with federal contracts, but in Q4 2022 recognized $1.7M revenue under biosurveillance partnership and expect over $1.7M in Q1 2023 Q: About stock repurchases and NASDAQ delisting A: Repurchased ~19.5 million shares in 2022, future repurchases contingent on Board approval, monitoring stock for NASDAQ compliance and considering options to regain compliance