XWELL, Inc. Q1 FY2023 earnings call

• Implemented strategies to make the spa business leaner and more profitable, focusing on driving retail revenue, expanding internationally, adding new customers, and reducing infrastructure costs. - Diligently executing bio-surveillance partnership with 9 stations in 7 busiest airports. - XpresSpa business had good operating momentum with revenue growth, international spas performed profitably despite Turkey earthquake. - New retail strategy in airports and online driving retail revenue growth, with retail sales at XpresSpa locations up 44.3% year-over-year and 10.5% increase in April over March at U.S. locations. - Integrated new technologies into XpresSpas, with Novo XT massage chairs and HydroMassage units deployed, and robotic manicure machines in trial. - Closed underperforming locations, reduced G&A expenses by $0.9 million sequentially and $4.1 million year-over-year through cost-cutting initiatives. - Exploring M&A opportunities in health and wellness space, with focus on accretive EBITDA, considering larger transformative acquisitions and bolt-on opportunities.

First quarter revenue of XpresSpa business increased 7.4% sequentially and 70.2% versus prior year due to expanded hours and hiring efforts. International spas delivered net sales growth of over 8.9% compared to same period prior year, with new spa locations in Istanbul Airport performing well despite Turkey earthquake, achieving net sales over $249,000. Retail sales at XpresSpa locations increased 44.3% compared to same period prior year in first quarter, with a total product margin of 63.5%. Sales from new Novo XT massage chairs in 7 XpresSpa locations in Q1 were approximately $51,000, and there's an estimate of over $1 million incremental revenue potential once deployed system-wide with a 75% service margin. HydroMassage units were deployed at JFK XpresSpa and Dubai International Airport, and robotic manicure machines in JFK airport showed incremental improvement in manicure sales.

• Focused on expanding internationally, adding new products and technologies to drive profit in spas. - Upgrading spa physical aesthetic to drive more revenue. - Solidifying relationship with CDC and partners for bio-surveillance business. - Continuing to make progress managing cost structure. - Exploring M&A opportunities within health and wellness space to strengthen growth profile.

• Execution of sizable, highly complex M&A takes time and timing is driven by the seller. - Macro-economic uncertainty and volatility within the banking sector may impact pursuit of M&A opportunities.