Q3 2020 XpresSpa Group Inc Earnings Call
Good afternoon, ladies and gentlemen, thank you for standing by.
Welcome to the express Spar group third quarter 2020 earnings Conference call. At this time, all participants are in listen only mode and question and answer session will follow the for presentation should.
Should you require operator assistance during the conference. Please press star zero to see non operator. Please note. This conference is being recorded and I'll turn the conference over to your host accounts, that's and C. O for express progress. Thank you you may begin.
Good afternoon, and thank you for joining us today and for your interest and express spar group.
Before I provide an update on our business and briefly review our third quarter 2020 financial results.
I personally true I do you have the following day.
Comments made on today's call may contain forward looking statements and the meaning of the private Securities Litigation Reform Act of 1995.
These forward looking statements are based on current assumptions and opinions and involve a variety of known and.
And uncertainties.
Actual results may differ materially from those contained and or suggested by such forward looking statements.
Important factors that might cause such differences include those assets for from time to time and our assets. These filings, including our report on form 10-K for the year ended December 31st 2019.
Our third quarter 2020 financial report on form 10-Q issued this afternoon and.
As well as our earnings release also issued this afternoon.
Along with other current and periodic reports that we file with the FCC.
In particular, we call your attention to the risks associated with our forward looking statements regarding our express checkout brand and continued or and contract included in our form 10-Q and earnings release filings. This afternoon.
One additional point before.
Before I Oh from arc.
And I'd like to reiterate that we very much appreciate the interest regarding our business and are often asked why we do not issue updates more frequently.
As a public company, we take our responsibility and obligation to keep our shareholders informed regarding our affairs very seriously and look to provide updates as often as we can and only one we have information that rises to the level of materiality.
Therefore, we have and will continue to issue public statements and responsible manner and in compliance with the federal Securities law, and NASDAQ rules and guidance.
This will be done via press release or on occasion for a media interview as well as security filings with the FCC.
And while there will be points in time and more frequent updates will be made there will also be points in time, where there might be fewer updates. This is the nature of executing a pivot and operating what is essentially a startup business within a public company setting.
All while dealing with and make an announcement in conjunction with government and regulatory eight regulatory agencies like airports.
Given the inherent bureaucracy related to secure and approvals and sign off for multiple people and that's public agencies, our progress cannot always be communicated and regular and predictable intervals.
Now let's begin.
I'd like to start off by thanking our shareholders for overwhelming uproot overwhelmingly approved and all of our proposals as part of the annual shareholder meeting last month and.
No credit the election of directors and.
Ratification of our independent registered public accounting from.
Our 2020 equity incentive plan.
And I and advisory vote, the compensation of our named executive officers.
We greatly appreciate your support during these most unusual times as we transition our company to focus on the significant long term opportunities, we see and travel health and wellness and I will explain shortly.
As I'm sure you are all aware the airline industry showed minimal improvements during the third quarter.
And mid April and.
Hi, and the first peak and isolation and number of passengers going through U.S. airports was down 96% year over year.
We had hoped to see some signs of recovery and airport traffic and the third quarter, but unfortunately, the increase and infection rates across most states cash.
Coupled with the men with mandatory 14 day corn and teams for incoming travelers and many states suppressed air travel to historic lows true this summer.
This resulted in fewer passengers and moving through the terminals and fewer airport and airline employees returning to work.
And particular passenger traffic and New York airports, where we operate and our first two express true wellness centers for all or part of the third quarter remains deeply depressed.
Well the attractions like Broadway shows closed restaurant options limited and the mandatory 14 day quarantine vacationers have fewer reasons 'cause it and locals are discouraged from leaving facing and extensive quarantine upon their return.
And there's almost no business travel happening, which is a big factor for New York much for area in Q3 and.
And Q4.
Figures from the Port Authority of New York, and New Jersey show very little rebound and August compared with the previous August.
JFK was down 88% Laguardia was down 87% and Newark was down 76% when compared with the National August average being down 70%.
And these statistics, where before the latest increase and COVID-19 cases pretty much of the country. This fall.
Okay and more broadly the number of paid ticket passengers carried by airlines, such as American United and southwest and the third quarter was down by about two thirds compared to.
Third quarter of 2019.
And down even more and then New York area. According to media reports.
As previously noted in early July we reopened true of our express locations as a test and Dubai International Airport, and Dubai, United Arab Emirates.
Where we were offering limited services.
And selling various spot products, such as net pillows and travel blankets.
And not surprisingly its performance has been underwhelming given the continued weakness in global airport traffic.
Our sole domestic express a franchisee reopened and Austin Burks from International Airport on September 21st and Austin, Texas also with and satisfactory results.
As a result of the limited airport traffic, we chose not to reopen any further expressed by locations globally. During the third quarter and further we do not anticipate opening a reopening any of those spots before year end for traditional spot services.
As you know have expressed bar as our legacy health and wellness business.
We launched express check this year focusing on COVID-19 testing and airports as a new wholly owned subsidiary I Express test Inc. and express spar group.
Against this backdrop, we had heard we had our first express check opened and JFK for the full quarter and our second express check and Newark open for approximately half of the third quarter growth.
During which we offered only to COVID-19 tests.
A PCR test and a blood antibody test.
Yes recall that the rapid molecular codes for testing did not launch until Q4 on October 7th.
We also expanded beyond curve and 19 testing and late October to include additional rapid testing services for other communicable diseases that include influenza mine and nuclear assets and group a strep dukakis.
We are also now offering and Q4 the seasons 2000, 2021 flu vaccination as well as the quadrivalent high dose flu vaccine recommended for seniors.
Well our capacity to service patients was approximately 300 to 500 350 to 500 people per day.
At these two modular sites our volume range is starting late third quarter were 30 to 50 people per day, given and reduced airport.
Passenger volumes and the smaller number of airport staff and needed to run the airports themselves.
However, the rollout of rapid molecular codes for testing, our and our average patient volume has increased substantially to approximately 50 to 100 people per day and November.
Despite continued weakness and airport traffic and rising infections across the country.
This is obviously very encouraging as we are now providing more needed services than before but we clearly have a long way to go before we reach our maximum capacity.
Additionally, we have not seen mandatory testing protocols incorporated into airport employee or airline employee policies, but.
But it is still being considered by various agencies and companies as their workforce continue to return to work and alignment with the return of air travel.
At the same time, we continue to discuss passenger testing programs with various major airlines, whose volumes can be accommodated and our current and outcome and express check wellness centers.
Regarding our management service agreement.
If you have already seen our earnings release. This afternoon, you will have noticed that we did not report any revenue associated with the express check segment during the third quarter.
This may be confusing to some of our investors. So I will now provide some additional explanation.
As we first detailed and our 10-Q filing for second quarter based on state by State regulations, we do not report revenue on a per patient basis for services, but instead, we receive our revenues as a management service fee from the position.
So for example, if a patient had requested a PCR test and an antibody test we do not.
Buck $90 and revenue for these tests and another 50 to $100 and external lab fees to process the results.
This is because express check operates as a management services organization or and and that's so which is common and the industry.
Which is a healthcare specific administrative and management services engine and provides a range of administrative and management functions within the company management service agreement with the physician as governed by state by State regulations.
Specifically, most states do not allow companies to practice medicine, but instead doctors and other license and medical health care providers are permitted to practice medicine.
Therefore express check contracts, one for medical health care practice that for.
Irvine and health care services to the patients and employees the state license medical professionals doctors and nurse practitioners.
And pay their malpractice insurance.
And medical healthcare practice collects directly from patients and from their insurance providers for the medical services that they have provided.
The same medical healthcare practice and pays a regular fee to express check for administrative and management functions, which includes reimbursement for rent the clinic investment.
The salaries of the majority of the staff, including medical assistance corporate administrative support.
Marketing support other insurances and an assortment of other functions.
And reporting of revenue by US is determined by revenue recognition criteria under U.S. GAAP.
On a routine basis, we assess the revenue that they collect and the costs that they incur are to determine.
If we can reasonably expect there will be sufficient cash flow to pay our management service fee.
However, because the medical healthcare practice did not surface and sufficient number of patients during the third quarter due to the low daily traffic volumes. We concluded that the word and we were not in a position to remit our FY two assets under the management service agreement.
Its fee if it hadn't met the Collectability Craig.
Criteria to qualify as a contract under U.S. GAAP was 1.2 million.
We will only recognize the management fee as revenue and for subsequent reassessment of results.
The physician's practice meets the Collectability of a criteria, which of course is dependent on the medical practices available cash from achieving higher patient volumes.
And so we are encouraged that patient volumes are increasing overall and a greater number of patients are opting for the more expensive rapid molecular co. The test that is paid and advance notwithstanding a great number of other services beyond recovery testing and.
In fact with the introduction of the rapid molecular cover test, we saw Incrementality and tests with very little cannibalization of the PCR and blood antibody.
Said another way, it's new express check segment is essentially operating as a startup business building the foundation for a range of medical services, starting with co the testing.
For the testing and by extension and the other services that we recently began to provide our serving as the starting point for a much larger and broader health and wellness offering that we intend to implement over time.
I realize that our and ability to generate revenue and the near term will surely come as a disappointment for some however, with our recent capital raises we have sufficient capital to see our vision through implementation.
We're hopeful that your patience and being part of this major paradigm shift and travel related health and wellness services will ultimately be rewarded for a much stronger business model and we ever had before that.
That in turn should hopefully result, and increase shareholder value as well.
And as well over the long term.
And as I said before we're current we operated express check wellness centers and Jeff can Newark during the third quarter.
We have also set up and in Boston Logans International Airport and late October.
Looking ahead, we now expect the fourth express check first in the West and late November and Phoenix International Airport and this location will then be followed by additional openings through the end of December and throughout the spring.
As you May remember from past calls there are approximately 30 large hub U.S. airports with an average of 22 million annual travelers and another 30 30 medium hub U.S. airports with an average of 5 million annual travel travelers historically.
We consider the top six C.U.S. airports as our priority target market.
In addition to various international locations as we develop express check.
We now have expressed spa and express check facilities and 21 of the large hub.
21 of the 30 large hub airports and for of the 30 medium hub airports and continue to offer many of our existing expressed by locations for express check conversions.
To our surprise and excitement many airports have been offering us better spaces and we currently control with our express spot portfolio at more favorable rent structures, which is where we have focused the development of our express check pipeline.
As you know airport real estate is very difficult to attain invaluable and valuable contract to gain control of which is a net enhancing the overall value of the express spar group portfolio.
We are now announcing today and we have developed and new pop up clinic, a prototype that takes our learnings from the first three express check units and to better and faster solutions that can operate on its own and an open space, that's less utility requirements or fit inside and existing vacant.
Space.
This new prototype employs a non structural construction methodology, well being regulatory compliant offering a significantly faster approval and construction timeline.
Further these units can be built with a substantially lower build out cost of under $200000 when compared to the higher cost of constructing the initial clinics as we did and JFK, Newark, and Boston, which each average between 500000 to $1 million and build out cost.
This new design supports our ability to unlock additional real estate opportunities faster and with less capital, thereby accelerating the rollout of COVID-19 testing and there are other current services. In addition to additional airports more easily.
We have learned how to improve the process and meet more airports airport requirements faster as well. She is this new prototype for additional rapid testing and locations within the same airports to support anticipated airline collaborations.
We're also continuing to work with major airlines to create a creation of air bridges between you and cities and international destinations, including but not limited to New York to London.
This is an ongoing process, although we have nothing more specific to provide at this time.
However.
This past Friday, we were pleased to announce that express check was designated as a state and Hawaii.
Trusted testing partner.
Travelers to Hawaii must be tested within three days before arrival and can only be tested by certified partners. This is fantastic news as direct flights to Hawaii, we'll be starting and again in the near future from JFK, Newark, and Logan and Boston Logan International airports, well travelers, who originate from any of these.
At airports and RT connect true another stop over airport with our tests on her way to Hawaii.
We also remain actively engaged in discussions with multiple emerging health passport apps like the common pass.
And would link COVID-19 test results from its partnered labs directly into these apps.
Passengers would then be able to show their test results through these apps to airlines and destinations so as to ensure a hassle free entry and avoid quarantines where applicable.
These emerging technologies will be deployed to current and future Express check wellness centers as soon as reasonably possible.
And if you recall that we are also lobbing senior elected officials and consulting with government agencies as its advocates specifically for COVID-19 testing funding at U.S. airports as part of the next stimulus Bill there's.
And there's a significant opportunity to increase testing at the airports with government financial assistance less and the financial burden on the testing centers and the patience.
While we cannot say with certainty that this will be included in the final bill at the very least we believe that the new incoming administration will be more engaged and our cause of getting more test in up and running as part of restoring confidence and safe air travel and bringing the industry back to the state of normalcy.
This return to normalcy, it's critical for both our industry and the economy as a whole.
According to department of Transportation 1.1 billion passengers pass through us airports and domestic and for airlines and 2019 either.
Even if only a fraction of these passengers travel this year and next year, it can fill and onto a significant opportunity for testing and other services.
Now I would like to share something new that has not been discussed publicly.
While our rollout of express check again on account of a sudden onset of a pandemic we.
We eagerly await the dissemination of assays COVID-19 vaccine I would look to administer as well. We believe there is a clear long term opportunity to build the leading global travel health and wellness brand.
We will continue to grow express check.
Express check business, but based on the early air travel numbers that were seeing unfold. Our internal leadership team has started has started the concept work to develop a long term plan, bringing together our unique position of our historic travel wellness experience and our new found healthcare expertise.
Yes.
We see this upcoming concept evolution as a significant future opportunity to create a new niche industry.
And the future industry of travel health and wellness, we can leverage our existing real estate airport expertise as well as technology to be a category leader and providing travelers with peace of mind.
We are very early in the process, but I'm eager to share that our strategic brand plant brand pillars will be health wellness and travel highlighting our experience and assets directly and the sweet spot at the intersection of these three categories.
For the first one and health care, we are differentiated because we are travel focused and and airports, while and wellness. We are differentiated because we are travel industry.
And travel we are differentiated because we have health and wellness experience and capabilities as well as the medical data we generate.
Our health services plans include.
Include going beyond covet testing flu shots and infectious disease testing.
And include vaccines.
And travel and meeting Immunizations, additional health services and treatments and convenient care services with tele follow ups and health passport functions through no through a new mobile application.
In terms of wellness services. This could entail developing an aspirational brand that reaches consumers upstream and the travel planning process.
We envision focusing wellness services and traveling variety stress release follow ups and therapies through Tele health.
We also aim to partner with airlines for custom travel wellness programs.
Onsite, we may offer wellness therapies sessions coaching hi, and retail products and travel focused wellness treatments.
And the offered as well through a future app.
In order to deliver on many of these opportunities we plan to round out our management team by bringing in external executives with experience and health care technology and concept development.
While we do not have any specific details to share today, we hope to be able to make leadership announcements over the next few months if not sooner.
As I referenced earlier as we discuss our third quarter results, we had negligible revenue during the third quarter, given very limited operations and our Afro mentioned inability to recognize revenue under our management services agreement.
As a result, our operating losses increased to 9.2 million.
Which included impairment costs related to our expressed by segment and higher general and administrative costs compared to the $1.8 million in the prior year third quarter.
We also reported a net loss attributable to common shareholders of $6.1 million versus 4.6 million and the year ago period.
I will refrain from walking through the full PNM low, but encourage you to do so interview, our and DNA section and the 10-Q.
I will note that more importantly, the more than 70 million and net proceeds that we have raised this year through a series of registered direct equity offerings have been truly transformational provided us with the means to re imagine our health and wellness service offerings.
The company's liquidity remains strong with cash and cash equivalents totalling approximately 61.9 million as of September Thirtyth 2020.
The company does not have any plans or need to raise capital at this time and believes that continued improvement and quarterly cash burn rate continued focus on managing expenses and a healthy cash position should provide the company with ample ability to execute for the foreseeable future.
With that.
Let me thank our investors for their continued support and express my enthusiasm for share any further updates on our progress and brand vision as appropriate.
I'd be happy to take your questions. If you have any I'll turn it over to the operator.
Thank you at this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad and confirmation tell indicate your line is and the question queue. If anytime you wish to remove your question and from the Q. Please press star two for participants using speaker equipment, and maybe necessary to pick up.
For your handset before pressing the star case, one of them have weighs only poll for questions.
Our first question is from Robert Davis private Investor.
Thank you for colds and my class from I'm curious as to why you wouldn't want to reopen the traditional spas after the roll out of the vaccine and traveler.
Isn't that a lower risk option because you could then add some of the incremental services under the original for airborne versus trying to completely reimagine the entire business model.
And thank you Rob for.
Your question.
This is a big debate, we have with our leadership team.
Naturally we would love to reopen our spas as a viable business. We've identified how we might change services and retail and a post covet environment, but we do need to see.
Significant lift and and.
Travelers coming through through the airports.
You know as we as we model out.
These incremental services and Reimagine the business model, we're keeping a keen eye on.
What we think will come out of this and a post co bid work.
World and environment.
And.
You May have heard me before non media say lower were 911.
Changed security protocol and travel I do believe Kobe and will change travel and security protocol and other parts of travel for a long time, so were building and.
A range of solutions, whether its reopening in some of our past spas converting them to express check in the meantime, as the highest and best use is cover testing right now, but further developing a future concept that we.
We think will be a big idea and highly relevant.
Having medical and health and wellness services and airports and a postcode world.
Very helpful. Thank you very much.
Thank you. Our next question is from Alexander Thomas Private Investor.
Hi, Thanks for taking my question I was wondering what level of patient volume or average patients spend would be needed in order for you to recognize your management fee and any color you could provide would be helpful.
So essentially and as we've been watching this bill you know.
We remind ourselves and I remind you.
The listeners that when we first off and it was a proof of concept and it was too airport employees and airline employees only and it was during the slowest period of traffic.
We then expanded to passengers first to JFK.
But then soon we opened our second location and Newark, and that was only opened airport employees.
And airline employees and then towards the end of the quarter and expanded to travelers.
Then we added and a rapid tests.
Which are.
Our first task the PCR and the blood antibody test people.
People and submitted to insurance and.
We have a range of re insurance reimbursables that will will be collected or will be collected through the physician.
And then but with the rapid test, we're not putting that through insurance and the patient would pay $200 upfront and the position that then gets built up into the management fees.
The point is these newer services that we're adding have different.
Different benefits.
Or or weight to the model some of these rapid.
Mono and strep tests. These are relatively inexpensive tests. These are added on and the fall typically when people are symptomatic. So all of this is to say there is not.
And average patient volume and because it really depends on what services. They opt for let alone flu shots being added on which is a very recent and for us but.
But but I would say that you know any time, we're averaging over 100 patients a day.
That is a that's a good mark.
To be at.
So we can recognize that management fee again.
I'm speaking very generally relate depends but when you start seeing them north of 100, that's a healthier.
Healthier place to be.
Thank you Alexandra.
Thank you Mike.
Thank you.
Our next question is from Carl put private investor.
Hi, Doug Thanks for taking the time to speak to us today actually there's a bit of a follow up from the previous question, but given the limited airport traffic and maybe even possible for them and ready to be reached and with that said Ken can you renegotiate the free threshold.
Yeah.
Well.
Yes for the met and the management threshold can be reach so the way. It works is again I I shared earlier companies can't practice medicine doctors can practice medicine. So most states almost all of and you have a a state license physician they provide through their nurse practitioner themselves rather mid levels.
They provide to the medical service.
They are the only ones, who can get paid for their medical service and they hold back there the cost for the Doctor and other.
And medical professionals, who have to be understaffed like a nurse practitioner the cost for their malpractice insurance.
And there's a couple other minor hold backs, but then the balance of the revenues that come into the practice they get their accounts get swept and it comes and and it comes to us as a management fee.
So because this is new and keep in mind I talked about how we been opening up to a broader range of patients unit going from employees to then include passengers, we're adding services.
And Eric.
Air traffic is coming back slowly. So that's another variable you know, we're starting to see that that tipping point ahead and again each the airports and the three airports we have so far.
Have different rates have been used for typically and they start off a little slow as people find the find the business employers start sending folks the airline start sending folks and then it and then it's a we saw and our first two builds up.
Pretty nicely and we're seeing.
The same thing for Boston.
We do have the ability to renegotiate the management fees. So this is a highly regulated.
Non environment, mostly it's it's on the medical side to make sure.
Anti kickback provisions regulations on doctors arch triggered.
But we can periodically and we will periodically you go back and revise the management fees based on the level of business.
That we see.
So, but frankly, we need a little more time and a little more data because the environment is.
Moving.
So often again as we layer and more services and more people start coming back and other airports.
Hopefully that was a little simpler and excellence and.
And what I tried to do on the call is trying to be very thorough but it's it's actually quite simple and it's a very calm and model for clinics and.
Health care providers all around the country.
Oh no. Thank you for the color I appreciate it.
Thank you. Our next question is from March for Austin private Investor.
Hi, Doug Thanks for taking the question and testing is currently not profitable and it may never be profitable that is an airport traffic does not increase substantially why don't you just skip the interim data.
That is burning a lot of cash and move directly into the health and wellness concept, which can be implemented while the cobot vaccine is widely available.
The next day air.
A question a fair question.
We I mentioned my leadership team before we are constantly.
[noise] evaluating the the environment, we're constantly speaking with peers.
Peers being area.
Airport operators Airlines and.
Other operators and airports.
Clinics outside of airports and the communities to try to get a bead on where things are going and then to plan. Accordingly. So we have this new concept.
And is being developed and likely it will be and evolution of of what we have learned and with our historic business and kind of spawn beauty and wellness and health and airports and what we've learned with medicine.
I feel I feel I've been very excited to like share. This is me with the investment community for a while.
But its going its its.
Ah I think going to be ideally positioned to.
Be aligned with expectations of travelers and the future.
But it's not going to be a up and running like in a month or two so right now the highest and best use of our resources is going towards covert testing as we see and payments coming up and once.
And if he wants EPS.
A couple of its EBITDA airline deals come through I'm going to be worried about potentially the capacity to do for 500 tests and today. So you know it's easy to see that.
You know I have by Jeff Kagan, It can do up to 500, a day, but let's say.
And one or two airlines decides to include code for testing on certain international flights or.
Mandated as part of their policy very quickly I can blow through that capacity. That's why this pop up.
The concept that we developed and so helpful because now and a much lower.
Investment vehicle, we can justify adding a second pop up or adding a pop up where we already have our for clinic or maybe going to new airport with two pop ups.
And then we can increase our capacity to meet.
The testing requirements of of the that that might be coming with the airlines and and hopefully as traffic ex up you will see that demand naturally pick up as well.
I want to make sure I answer your questions and I think it was.
And I can get off track is why not skip this interim steps you said, that's burning cash factors, there's no revenue coming in right now like a lot of businesses theres going to be some.
Cash burn in and we worked very carefully to minimize that as much as possible off and landlords are airports, where we've been getting a free rent.
And that kind of extending a month or two months at a time most of our workforce has been for load.
So a lot of our big costs have been.
Laid for the time being.
The airports are looking for help with cobot testing. So if we werent able to offer this and again I know you don't have visibility to the wide range of airports that we're speaking to there.
They are highly focused on on some on getting called the testing up and running and once you get your foot in the door and we've demonstrated our our chops being a medical provider or service providers for express check that opens the door for this whole next.
Concept for it that we're doing so I do think.
And if it is.
Has the ability to be a profitable venture the express check.
Cobra testing, even with the vaccine coming out it's going to be covered and other infectious disease testing is going to be here to stay for a long time, but.
But it.
It does remain this important interim step while we developed a much more attractive model off of what we've developed and learned with express check.
Thanks for the question.
And I realize and started blending a few topics, but they all kind of start to fit together to reveal the picture.
Thank you. Our next question is from coal Perkins private investor.
Hi, Doug and I mean, you.
For opening remarks, and we're talking to us about the air Bridge.
And the evolving medical passport apps.
I was wondering if you could give us a little bit more color around those evolving.
Adams and how those will work with express check and the future.
So this is this is where I see kind of the short and mid term.
Of course for testing evolving.
And in airports domestically, but even internationally, especially for the long haul flights and you know it's been the airlines, who have stepped up to provide some leadership.
And creating the path it hasn't been the federal government hasn't really been a state governments hasn't been the airports.
And you know I have.
And my team has good visibility because we talk to all of these groups very regularly.
But it's really the airlines and what an air bridges and you will it can be difficult define different ways, but it's it's.
When a passenger can combine ticket with a major carrier and.
And they know what is required on entry and the destination and they have an easy path and then are.
Their return flight home is assured and they can manage the quarantine regulations on both sides of the bridge.
And what makes it sounds like and easy concept you know you could just see what test as required and take it for you go but what happens is you have a lot of these.
Jurisdictions countries states with evolving requirements. So the Hawaii example is a good one because Hawaii you know if you read the press you can take a flight to Hawaii income with the negative call. The test and you can eliminate your 14 day quarantine, but when you actually look into it.
You discover and you can only get Acos and test from a very few select partners that have been vetted by the state of Hawaii, and we're very pleased to be able to get on that list. It was very hard to get and because they limited to or at least now a small number of quote unquote trusted partners. So.
The average to Hawaii from San Francisco that United helped pioneer was working with the state Department and the.
The department the state of Hawaii Health Department to understand what kind of pass and what criteria would be required for them to start sending you know people over from EFO could EFO offer testing.
On site to make sure that connecting passenger.
Passengers from other cities finally through FFO, because that's kind of the beginning of this this bridge can either come with the right test or they can get it on site and then United tell them. You know we if you follow our staffs, we can get you to Hawaii and you can go on your vacation.
And we will get you back you know for.
From Hawaii back through San Francisco and help you meet the requirements of your return trip.
So.
And it's.
It's not that it's not that hard, but it's complicated and takes a lot of coordination so.
There is some testing centers in London, where I've been now working with.
The the CEO of that company.
See where we can work out.
The different cities that we might open and and help facilitate these air bridges.
For the major airlines were all going about it different ways and frankly, there's a couple of major airlines that are sitting and waiting for others to figure it out it feels like to me.
And and whereas the health outcomes and the play is it adds one more point of convenience.
For.
That traveler to say, Okay, you need this type of test and you need to 72 hours before you depart and guess what here is a pre approved and that will automatically import the results from the lab. If you go to one of these you know a few labs that are designated.
And then you you walk up to the gate you Flash your phone.
It shows that you are using the approved one of the approved apps on your results are there you get on the fly you land and that Internet.
International destination that health agency is that government recognizes that's an approved and who knows.
They've already vetted the type of test thats required for entry into the country with and 72 hours et cetera et cetera. So you can see how the pieces are coming together testing is just one important part and I can tell you testing and airports is a key unlock and that's why we're so bullish on the future of of just.
Infectious disease testing and airports, whether it's called the 19 today, maybe there's a cover 20 all it needs to do is have a have another strain ex discovered this fall or.
Our other infectious diseases and people are worried about I guarantee you well as Americans and the past when Oh, we read about swine flu or bird flu and some exotic country, a faraway places and that's never going to come here I guarantee you as soon as three people are discovered somewhere remote and the world, Let's say.
Some new something is going to be over this kind to be an overreaction. So.
Probably for years. So the idea of medical use has been an integral part of travel is going to be a reality and a post covered environment, it's very complicated to do and multiple states and multiple cities, especially in airports, but that is where we are uniquely positioned.
To do it and takes a little bit of time to build the structure, but once it's there it's going to be the tracks that I think.
A lot of people will be using as part of their their travel.
And regimen for sure.
Thank you.
Coal.
Well, thank you Doug.
Our next question is from our and Schumacher private investor.
Yes, I had a question about the health and wellness brand and its relevance perhaps outside of the airport environment. What's just gives you confidence that passengers are going to kind of.
Triangulate.
Which provide and the airport to something external I mean is and.
Kind of airport services really only relevant to customers and they address those needs when their captive inside the airport use cash up from one of them and your thinking there.
Yeah, I'm going to say kind of high level, and then maybe unsatisfying not to get enough details because I.
I am not at that point, yet to unveil all the pieces or many of the pieces and frankly, we're still putting some together now.
But the point is.
Travel is a huge segment pre covered more people are traveling and every year.
The world's getting smaller and people have more access you know.
Around the world through travel health and wellness.
A growing segment already on its own nothing.
Nothing to with travel just health and wellness it's.
Not just for baby Boomers, who are trying to live longer it's not just for millennials, who want to see the world.
Assets.
And take care of themselves edge and they're big growing segments now if you put together travel and health and wellness together in a sub segment.
Thats, what we think is going to emerge.
And and.
One piece is having real estate and airports that you can offer a range of a wellness experiences some medical some mental health some other health and wellness cutting technologies and new cool therapies.
But.
But.
Travel planning.
Happens outside the airport.
And when you're deciding to go on vacation, especially if its health and wellness focused there's a lot of work thats done.
And it occurs and there's not a lot of resources go on Google and see how easy it is to find.
A lot of consolidated information that's easy to Digest, if you want to a low travel and julieta health and wellness lifestyle theres little bit little bits here and there, but that's where theres an opportunity to provide content upstream and to monetize that upstream is enough we do a good.
Job with it with a lot of traffic and clicks.
And now we're starting to build a model that's bigger than just being an airport service provider. We are starting to touch people upstream and then they come through.
The airport and they stop and for for a service or a need could be.
Could be or your travel net adds that you need to go and Safari with your family to a whole range of things, but when you're in the airport, especially during a layover when you have a lot of time.
There are a range of.
Compelling services. Some that you may need for a trip, but others you may choose to because it is part.
Part of this travel how from honest lifestyle and and then you can continue post on your trip for telemedicine and other technologies that are available.
To to.
Continue to engage with maybe a provider that you started with.
And one of our wellness centers, so it's starting to connect the dots of.
Kind of the pre trip planning and how do you capture.
Mine share there.
While they're on their journey through airports on their way out on their return, but even when they're out.
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Away from home, you know having tools and.
Services that that make it easier as well.
Thank you.
Our next question is from lower growth private investor.
Hi, and I was just wondering if you had any more insight when we can expect that for studies to Reimagine health and wellness centers to open.
They will be and 2021.
The concept work is happening now we've identified.
Potential.
Pieces of real estate and our portfolio.
But the timing I can't set a date, yet, but we will likely do with express check and lack of done and my past development and other companies do.
Do a couple of proof of concept models.
And variably, you'll need to refine it and develop it further.
All the while we will continue to.
Pushing too.
Okay, and testing and infectious disease testing, especially with the pop up our prototype that's been developed.
And continue to evaluate the express check business model with some of the and.
For the services and retail that we're prepared to offer if we decide it.
It's time to reopen.
Okay. That's helpful. Thank you and then just as a follow up can you explain a little more why now is the right time to be higher and more senior level people.
Just knowing that they'll be expensive.
You know now is absolutely the time.
And anyone that's higher there will be an expected return on that investment.
With.
Bringing on and medical director was critical for Us getting express check off the ground.
And then other and other specialized professionals because it was a part of health and wellness that we didnt have a lot of experience and.
What we plan to develop with technology and services.
There are certainly some very strong.
Thought leaders and that we're talking to that can help accelerate and go into your first question you know when can we expect net.
To see with this concept looks like.
It's done by a combination of all of our internal talent, but certainly there is going to be some external talent that we need to bring in.
It's not expensive when you consider.
The the return on investment and what what what the unlock of the model will be.
And so.
Thank you did I.
Did you have another question on that.
And I'm good thank you.
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Ladies and gentlemen, we have reached the end of the question and answer session and are out of time for todays call Express spar group. Thanks, you for your time and your participation you may disconnect your lines and this time and have a good day.
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