XpresSpa (XSPA) Stock Has Room To Run Ahead

XpresSpa XSPA Stock News

XpresSpa Group Inc (NASDAQ: XSPA) is having a strong start to the trading session this morning, and for good reason. The company issued its financial report late yesterday, and while some concerns where there, it painted a pretty bright picture. Here’s what’s going on:

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XSPA Stock Reports Financial Results

In the press release, XpresSpa announced the publication of its first quarter financial results. While revenues were down substantially, this was to be expected as a result of the COVID-19 pandemic. Nonetheless, there were plenty of positive points that investors seem to be paying attention to here.

Cash Position Looks Positive

First and foremost, XSPA pointed to a strong cash position. While the company only had about $3.9 million in cash at the end of the quarter, following the close of the quarter, it said that it raised about $43 million in gross proceeds from registered direct equity offerings.

At the same time, the company reduced debt by $9.1 million, which was comprised of:

  • $5.7 million of the B3D Note converted to common stock.
  • The entire $2.5 million Calm Note has been converted to common stock.
  • $910,000 was paid to Credit Cash, resulting in a discount of approximately $91,000.

Pilot Program Moving Forward

XSPA also reminded investors that it has launched a pilot program of its in-airport, XpressCheck COVID-19 testing facility at JFK International.

At the moment, the pilot is making coronavirus testing available to airport workers. However, as I’ve been saying over the past few articles, if all goes well with the pilot, the testing is likely to be made available to consumers, and spread to other airport locations across the United States.

Discussions To Expand XpressCheck To New Locations

Perhaps the most telling statement about the future of XpresSpa, at least in the short term was this:

The Company is in active discussions with multiple U.S. airports to open new testing centers or convert existing spas, to XpresCheck facilities. However, the likelihood and timing of these possible openings has not been determined and no assurance can be given that the Company will expand its XpresCheck brand beyond the current facility at JFK.

The ultimate goal here is that the company’s XpressCheck airport testing brand will spread across the United States. It is clear that the company is making an effort, and making progress in achieving this goal.

Management Commentary

In a statement, Doug Satzman, CEO at XpresSpa, had the folllowing to offer:

The approximately $48 million in gross proceeds that we have raised since January, through a series of registered direct equity offerings have been truly transformational for XpresSpa and we appreciate the investment community’s confidence in us as we work to reimagine our health and wellness service offerings. These series of transactions have substantially strengthened our financial condition and enhanced our flexibility by significantly increasing our cash position. Our near-term objective with these proceeds is to explore emerging health and wellness opportunities that we can rollout to our portfolio as well as consider additional COVID-19 testing sites through our XpresCheck brand. In addition, we saw the Company’s balance sheet further strengthened by investors converting all preferred stock into common shares, and elimination by conversions of a substantial majority of its outstanding debt.

We are thrilled that our pilot COVID-19 testing has launched at JFK International Airport in our new modular constructed testing facility in the Arrivals Hall at Terminal 4. We also remain in active discussions with other U.S. airports regarding the potential roll out of this concept.

The Bottom Line

The bottom line here is simple. The COVID-19 pandemic has been painful for just about everyone. While it did put pressure on revenue, XSPA has been making moves to bring this figure back up through its XpressCheck brand.

With progress through the first and second quarters, things are starting to look great, and XSPA stock is looking less and less like a speculative play. The company is working on a relatively strong foundation due to recent transactions and is making serious progress with regard to its in-airport COVID-19 testing plans. All in all, it should be on your watchlist.

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