Progress on the Cost-Control Front in 3Q23; Aiming for Profitability in 2024
XWELL reported revenues of $7.5 million, consisting primarily of $5.0 million from XpresSpa and Treat locations, and $2.4 million from XpresTest, which includes XWELL’s biosurveillance unit and HyperPointe. Naples Wax Center revenue contribution was nominal as the acquisition closed near the end of the quarter. Importantly, XWELL’s G&A expenses decreased 35% Y/Y. Management believes it is now on track to bring the business to profitability in 2024 through revenue growth and further cost control. The company completed the acquisition of Naples Wax Center during the quarter and plans to open eight to 10 units during the next 12 months (see our recent Management Series for acquisition details). XWELL indicated it might expand the range of services offered in the Naples Wax Center stores to possibly include Botox and filler injections. XWELL continues to grow locations internationally, with the recent opening of its eleventh international location, which is in Abu Dhabi International Airport. The company does well overseas thanks to longer airport dwell times and favorable international traveler demographics. Management indicated it will continue to expand its out-of-airport strategy even beyond the planned Naples Wax Center unit growth. XWELL is looking for other transportation locations (e.g. railway stations) and is also looking at a new format in the US that would gather independent wellness providers under one roof, while providing them with shared services. XWELL maintains a strong balance sheet with $26.1 million of cash and short-term securities and no debt. The negative enterprise value is a sign of meaningful negative sentiment, which could change with cash burn reduction and the evidence of a steady path to profitability.
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