XWELL, Inc. (XWEL) Earnings Call Transcript & Summary

Correct. Correct. And conversely, Thierry, although this is about Treat, I now look at this as almost one brand, if you will, and there might be spa services that we're introducing as we reopen and reenergize our spa business that we could then apply into our Treat location because we don't have that service yet, and I'll give you a good example. We're experimenting now looking at light therapy as a service we're offering in our spa locations. We could very easily bring that same light therapy in one of our wellness rooms in our Treat location as well as our XpresCheck location. We'll look at those things, obviously, real estate, a big part of how and what services you can deliver in each one of the locations and that's part of the work that we have to do ahead of us.

How are the Treat locations staffed? One of the interesting aspect of the business is the medical or the health component, and I think it's interesting because it makes it difficult to compete. You need -- I don't know, you need a doctor or you need a nurse practitioner, a specific regulation. What's the staffing at a Treat location? How easy is it for somebody else to replicate that or how difficult?

So here's where I think we are very much capitalizing on the expertise we built in growing our XpresCheck brand. Our JFK location for Treat is -- has a bit of a hybrid staff model compared to spa or check. We are leveraging our friendly physician model within Treat, something we learned how to do out of XpresCheck. We have a physician that oversees the practice and they have a set of health care professionals, generally nurse practitioners or PAs, that are on-site and provide care when care is required to be delivered by a nurse practitioner or other provider. We also have medical assistants that administer most of the health services, including some of the diagnostic testing that we provide. I want to share a little bit about the kinds of health services that we offer at Treat to give folks a better understanding of how we use our physician model. So in our XpresCheck location, we provide PCR testing for COVID. We also provide flu testing. In Treat, we've actually enhanced that testing capability, and we do 4 tests for 4 different illnesses using one swab. We use a new 4-Plex methodology that tests for flu versions A and B, RSV and COVID. And so that is one of the services that we provide from a health standpoint. We also provide general diagnostic testing, blood pressure, temperature. We can diagnose gastrointestinal issues if you have them in the airport before you get on a plane; UTIs, and STDs. And then we also provide general episodic care for some of the more convenience issues that might come up. Somebody cuts themselves, somebody falls and skins their knee and might need a butterfly or appropriate bandage based on that. And so those are the health services that our providers offer. And just referencing synergies real quick, we are also looking at those services and determining whether or not some of those services can live and exist within our check environment and/or whether or not some of those services can exist even in our spa environment. And so that's the health side of the Treat experience. We then have experienced coordinators that really manage all of the execution of our wellness services. And so our wellness services include, we have a wellness room. You can come into that room. We have an interactive device similar to, I'll use Mero because most everyone knows what a Mero device is. It is an interactive system and individuals can come in and use the room, and through that interactive modality, they can do yoga classes at varying levels of skill and proficiency. They can do kickboxing classes if they wish to. They can -- we have weights available for them to actually do low-impact weights. But we can also, in keeping with wellness and mindfulness, we also provide self-guided meditation that is also available through this device. And so these wellness services can be delivered by one of these experienced coordinators, and then our experienced manager oversees the entire operation. They're responsible for making sure that everything goes off without a hitch, and also for upholding our standards and our health protocols. And as we evolve the model, we'll be able to leverage specific efficiencies in our labor model. And so as we think about this, there could be a Treat, there could be a check, there could be a spa that currently exists. JFK is a -- JFK Airport is a good example of that. We could conceivably and will create a labor model that leverages resources across all 3 of those businesses as opposed to just looking at a labor model for a discrete location. And that actually allows us to share team members across the business and also better leverage things, new technology like telehealth, which isn't all that new anymore, but it's certainly much more widely accepted as a way to deliver care. And that allows us -- telehealth allows us to leverage the cost and to optimize the cost of health care, which is very expensive in those locations.

The -- how do you assess the partnership opportunities for Treat? Do you think it can become a benefit for credit card memberships or corporate travel, or maybe for airlines that they would provide that to frequent fliers and so on? Any thoughts there, any preliminary discussions?

Yes. We're actually well on our way to building out a business development strategy, and we absolutely believe that Treat benefits can play a significant role in not only augmenting premium credit card benefits but also on frequent flyer programs, and even employee benefit programs with our airline partners. And as you know, the development time required to turn one of these relationships into a revenue stream can be lengthy, but we're already working on that, and we're working with several airlines and credit companies to bring some of those things into light. We also believe there's opportunities outside the airport to sell Treat benefits. Those could include cruise ships. But even more directly, businesses that will be eventually turning back on their travel programs and getting their folks back out on the road, and they could benefit from Treat benefits or discounts to their employees who may still be nervous about traveling for work, and we're actively and aggressively in that space right now. Working with a few -- working to close a few of those customers right now.

Interesting question from the audience. Is the Treat going to be primarily through a membership or somebody can walk in a store and just purchase services discretely one at a time?

So it's actually both. We started off offering a membership, and we're -- we've actually learned quite a bit in the last 6 to 9 months about how we want to leverage that membership, and the value that we want to provide within that membership. So we're currently offering a membership, but stay tuned. That likely will be changing to be a better benefit for consumers. But the other side of your question was you absolutely can use any one of our brick-and-mortar locations to get any service that you wish to get that's being offered by one of our locations. And you mentioned discretely, I would also add discretely as well.

Okay. Maybe a couple of housekeeping questions. You have -- so you have JFK opened. I know you're working on Phoenix. Any other -- can you share anything about the pipeline beyond that?

Sure. We -- as you referenced, we're currently under construction at Phoenix Sky Harbor. We'll be opening that as a second flagship location in the next month. This location is going to have a similar look and feel to JFK, primarily because the supply chain is so questionable right now across the U.S. and across the world that we wanted to make sure that we could get the first couple open, and so the first 2 will likely look very similar to one another. The key difference, however, and one of the things that we're going to be learning from is the JFK location is post-security. The Phoenix Sky Harbor location is pre-security. And having a pre-security location enables us to see how differently consumers may behave towards a Treat experience. And it will likely force us to think differently about how we want to market to consumers and even influence the types of services that we may want to offer to our consumers in both a pre-security and post-security world. Our third location is actually going to be in Salt Lake City, which is a really large wellness market and a very good airport partner for us. It will be our first redesigned Treat, and what I mean by that is things like right now at JFK, our service rooms are divided into health and wellness, and we have a couple of each. And we only do health services in the health rooms and wellness services in the other. We're actually designing our Salt Lake City location to have a hybrid room that we're employing a couple of new pieces of technology into that allow us to deliver both health and wellness services in the same room. And that actually affords us more opportunity to meet traveler demand by having hybrid rooms. Salt Lake City location is also going to feature a much larger retail section in front, along with an open floor plan to allow customers to see directly into the center. One of the things we learned in JFK, while very beautiful, it's hard to see what happens behind the curtain, so to speak, where all of the real magic happens with our services. And so we're going to take that away, and we're going to give our customers that are walking by an opportunity to, A, get their -- let their eyes get caught by our retail offering and some of the technology that's in front of our location. But also see activity and more activity that's happening behind the scenes, and that will invite more people into the location and take up the services that we want to provide. In terms of cost, we expect the cost of the new design to be about half of what we spent and what we're spending on our flagship locations. And we do expect, if all of our preliminary analysis is accurate, we do expect this will be our new default design moving forward as we look at Treat. But I also want to mention that while we're doing -- while we're certainly looking at new locations and building new locations, we're also going to be looking at taking existing real estate that we have, and where it makes sense, retrofitting that also to a Treat concept so that, again, you're starting to see and hopefully feel this integration of the brands and the integration of the experience together.

Well, great, Scott. That was very interesting, and thanks for the comment and the insights on Treat. I was just offering you a chance for some closing statements, if you -- any comments, again, wrapping it up, and with the biosurveillance effort going on, I think that's -- we're very interested in that. And yes, a whole new set of opportunities with Treat. So thanks for sharing your thoughts, and yes, if you want to have any closing remarks there, that would be great.

Sure. I will say in closing, first, thank you so much for the time to come and talk about Treat. We are all very excited about advancing this effort. We're continuing to evolve as a business. We are excited that Treat will play a significant role in our continued reinvention. We believe that biosurveillance expansion of health services and spa services can all exist in the same ecosystem, and we want Treat to be that ecosystem. And we'll continue to adapt and change with an ever-changing travel health and wellness environment, but focus still has not changed. We are in the business of providing travel health and wellness experiences to our customers, and that is what we intend to do. I'm super excited to lead the team, and I hope that this discussion raised awareness around what the Treat product is, but also help lay a little bit of the foundation for our strategic future. So I want to thank you again for the time and your generosity. I appreciate it.

Thanks, Scott. We appreciate your time, too, and thank you for our audience, the live audience and the recorded audience. Again, we will have a transcript posted on our website, watertowerresearch.com. That concludes this fireside chat. Thank you to everyone. Have a good rest of the day. Bye.

Thank you. Be well.