XWEL

Welcome to XWELL's Second Quarter 2025 Earnings Conference Call. During today's call, all parties will be in a listen-only mode. As a reminder, this conference call is being recorded on August 14, 2025. I would now like to turn the conference over to Ian Brown, XWELL's Chief Financial Officer. Please go ahead.

Good day, everyone. Welcome to XWELL's Conference Call to review our second quarter 2025 financial results. Joining me on today's call is Ezra Ernst, XWELL Chief Executive Officer. We have posted our earnings release on the Investor Relations section of our website, located at www.xwell.com. A link to the webcast of today's conference call can also be found on our site. Before turning the call over to Ezra for his prepared remarks, we need to advise you of the following. Comments made on today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934.

These forward-looking statements are based on current assumptions as of the date of this call and webcast, and opinions that involve a variety of known and unknown risks and uncertainties. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Important factors that might cause such differences include those set forth from time to time in our SEC filings, including our annual report on Form 10-K, as well as our other current and periodic reports that we file with the SEC. With that said, I'd now like to turn the call over to Ezra.

Thanks, Ian. We appreciate everyone joining us today. The XWELL team delivered a solid second quarter, underscoring the strong momentum and progress we're seeing across our business. We're currently executing a focused multi-prong strategy to broaden our operational footprint, expand access to our wellness services, and deepen engagement with new and existing customers. We believe these efforts are already translating into measurable results. Operationally, over the past several months, we've hit multiple key milestones that reflect our ability to scale beyond the airport and into dynamic, high-growth customer wellness markets. Florida is an example of one of those markets. In June, we were proud to be named the official wellness spa of the Orlando Magic. A multi-year partnership, this agreement significantly boosts our brand visibility through year-round exposure across the Magic's digital and in-arena assets, including their scoreboard, the LED signage, app integration, sweepstakes, and co-branded events.

We're particularly excited about the opportunity to host live activations this upcoming NBA season, directly engaging with fans and bringing our mission of accessible wellness to the community. As we've said, Florida is one of our strategic priority markets, and this partnership represents a pivotal step in expanding our reach and establishing the brand beyond travel-centric environments. We also recently deepened our partnership with Priority Pass, the world's leading airport experiences program. Our expanded relationship broadens member access to XWELL's offerings across our U.S., and international airport spa network. As part of this program, Priority Pass members can now enjoy a curated set of high-impact treatments ranging from zero-gravity massage chairs, hydro massage, Saragen therapeutic beds, and more, all designed to support circulation, stress release, and overall wellness.

This expanded offering aligns directly with our mission to transport airport time into moments of meaningful self-care and underscore XWELL's commitment to delivering high-impact wellness solutions to travelers where and when they need them the most. Additionally, we're also seeing nice momentum within our wellness retail, with particular success in high-demand categories such as transdermal patches and premium vitamins. These products are resonating well with our health-conscious customers and travelers. I'm also proud to share that XpresSpa was recently named one of Yelp's most loved airport brands, ranking number 10 out of 25 based on millions of traveler reviews. This recognition by our customer base reinforces the strong brand equity we've built and highlights the growing demand for accessible, high-quality wellness experiences. We also recently unveiled a redesigned digital platform at xwell.com. It integrates all of our brands into one seamless user-first experience.

Customers can now discover wellness locations, connect with spa staff, and schedule services with just a few clicks. Next, beginning with our New York JFK locations, we are rebranding our flagship XpresSpa stores under the XWELL name. As part of a broader digital and brand evolution, this initiative underscores our commitment to unifying all XWELL offerings under one cohesive, wellness-forward identity that better represents the breadth of services we provide and the vision guiding our future. As I shared in my December letter to shareholders, this transformation is more than just cosmetic. Whether a customer engages with us at an international airport terminal or steps into one of our brick-and-mortar retail locations, they will encounter a consistent, elevated standard of care, a standard that embodies XWELL core values of accessibility, innovation, and expert-led wellness.

We are also continuing plans to expand beyond the airport environment and into key local markets with the introduction of new brick-and-mortar retail wellness centers. These off-airport locations offer a curated array of health, wellness, and beauty treatments, each delivering a cohesive, elevated, expert-led XWELL experience to an even broader audience. This summer marked a major milestone with the opening of our new wellness center in Clearwater, Florida. This location was modeled after our successful Naples Wax Center. The Clearwater location delivers a premium experience focused on performance-based skincare and wellness treatments. Our guests can choose from waxing and facials with additional services such as massage, injectables, IV therapy, and compression services launching soon. All treatments are delivered by an experienced healthcare professional, reinforcing our commitment to expert-led care.

To further enhance accessibility and customer loyalty, we've also introduced a flexible membership model that provides seamless access across both our Clearwater center and our airport locations nationwide, making consistent self-care more accessible and rewarding. As we grow our wellness footprint, we're focusing on creating integrated, high-impact experiences that blend health, beauty, and convenience into a single cohesive offering. In addition, we're preparing to open our new tech-forward wellness destination in New York City's Penn Station. This grab-and-go tech-forward destination will be focused on serving commuters, neighborhood locals, and tourists with wellness-focused retail, autonomous massage chairs, and nail care services, enabling seamless and efficient experiences. We are also continuing to pursue strategic acquisitions of medical spas in key metropolitan markets. As possible entry points, we are targeting cities such as Orlando, Dallas, and Salt Lake City, each offering strong population growth, high disposable income, and a deeply embedded wellness culture.

Through MedSpa expansion, we aim to introduce state-of-the-art wellness and beauty treatments, AI-driven personalization, and innovative skincare. Services can range from facial aesthetics and injectables to body sculpting, laser therapy, massage, wellness recovery, and even physician-guided weight loss programs. Strategically, this initiative aligns with the rapidly expanding global medical spa market, which, as I discussed last December, is benefiting from strong momentum within the rapidly expanding wellness market and has an expected compound annual growth rate of more than 15% and a total addressable market projected to surpass approximately $49 billion by 2030. Next, through our ongoing partnership with the CDC, XWELL Inc. remains at the forefront of U.S., biosecurity. In March, we successfully secured a three-year extension of our traveler-based genomic surveillance program.

Through this engagement and in partnership with the CDC and Ginkgo Bioworks Holdings, Inc. We remain a vital contributor to national public health. Along with our partners, we're leveraging our infrastructure and expertise to support national biosecurity efforts, and we have shown value time and time again as an early warning system for dangerous pathogens. We are gratified that our TGS program was recognized as a critical initiative by the incoming administration and that funding for this program was included in the recently passed legislation. In summary, we've made meaningful progress against our priorities. We're diversifying access points, elevating brand relevance, and engaging with consumers wherever wellness matters the most, whether that's at an airport, in local communities, or across our digital platforms. Additionally, our operating results are beginning to reflect the strength of our execution.

This positive momentum has also been recognized by the market, as reflected by our successful compliance with the Nasdaq's minimum bid price requirement. Collectively, our success is driven by XWELL's exceptional team. Across every role, from our frontline public health and biosecurity professionals to our highly trained massage therapists and beauty and wellness consultants, XWELL's people are dedicated to helping our customers and communities thrive. We remain deeply committed to recognizing, developing, and supporting our team for the critical contributions they make every day. As we look ahead to the second half of 2025 and beyond, we remain committed to driving aligned growth, both in and out of the airport. With a differentiated brand, accelerated momentum, and a clear strategic roadmap, XWELL is uniquely positioned to lead the evolution of modern self-care.

Additionally, backed by our longstanding partnership with the CDC and continued operational discipline, I believe we are well-equipped to meet the increasing demand for integrated, high-impact wellness solutions. Just as important as we grow, we remain focused on managing resources responsibly and optimizing efficiencies to drive profitability. In short, I believe we have the right strategy, the right team, the right culture in place to drive sustained growth and create long-term value for our stakeholders. Now, Ian, I turn it over to you.

Thank you, Ezra. I'm now going to provide a brief synopsis of our second quarter financial results. However, for details, please refer to the 10-Q filed with the SEC. Turning to our performance, second quarter 2025 total revenue increased sequentially to approximately $7.7 million from $7.0 million in the first quarter of 2025. Second quarter 2025 revenue primarily consisted of approximately $4.9 million from XpresSpa locations, approximately $2.2 million from XpresTest, which includes XWELL's biosurveillance partnership and its HyperPointe business, in addition to approximately $647,000 from Naples Wax Center. From a year-over-year comparison, it's worth noting that our 2024 second quarter total revenue of $9.3 million included additional CDC revenue as we provided more services to airports than above the base contract amounts, which resulted in increased surge billing prices.

Turning to expenses, our second quarter 2025 total cost of sales decreased year-over-year to $5.9 million from $6.2 million, while general and administrative expenses decreased year-over-year to $4.3 million from $4.7 million. Demonstrating our cost-cutting efforts and initiatives, second quarter total operating expenses decreased year-over-year to $4.5 million from $5.0 million. We reported an operating loss of approximately $2.7 million compared to an operating loss of approximately $1.9 million in the prior year second quarter. Our net loss attributable to XWELL was approximately $2.3 million compared to a net loss of approximately $2.0 million in the prior year second quarter. Turning to our balance sheet, as of June 30, 2025, we had approximately $5.3 million of cash and cash equivalents and $2.9 million in marketable securities, total assets of approximately $11.8 million and no long-term debt. Looking ahead, we remain focused on continued improvements in execution, including enhanced operational processes.

Thank you for joining us, and we look forward to speaking with you all again in months ahead. We'll now turn the call back to the operator.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the XWELL, Inc. Third Quarter 2024 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Suzanne Scrabis, Chief Financial Officer. Please go ahead, ma’am.

Good day, everyone. Welcome to XWELL’s conference call to review our third quarter 2024 financial results. Joining me on today’s call is Ezra Ernst, XWELL’s Chief Executive Officer. We have posted our fiscal year earnings release on the Investor Relations section of our website located at www.xwell.com. A link to the webcast of today’s conference call can also be found on our site. Before turning the call over to Ezra for his prepared remarks, we need to advise you of the following. Comments made on today’s call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on current assumptions as of the date of this earnings conference call and webcast and opinions that involve a variety of known and unknown risks and uncertainties. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Important factors that might cause such differences include those set forth from time to time in our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2023, as well as our other current and periodic reports that we file with the SEC. With that said, I’d now like to turn the call over to Ezra.

Thank you so much, Suzanne. I want to thank everyone who’s joining us on the call today and also express our appreciation for your continued interest in XWELL. As this is my first earnings call as the company’s CEO, I’d like to give you a brief overview of my 25-plus year career. For those of you who may not know me, I’ve been with XWELL for several years, having first served as CEO of our HyperPointe brand beginning in March of 2020 and CEO of XpresCheck brand since January of 2022. Operationally, during this time, I led the collaboration with the Center for Disease Control and Prevention under which we helped establish the CDC’s Traveler-based Genomic Surveillance program. Initially, it was a small pilot. It was built on XpresCheck’s advanced COVID-19 testing capabilities and HyperPointe’s marketing expertise. Over time we evolved the program into a key component of the United States’ biosecurity infrastructure, and we continue to be very proud of the important work we are doing with our partners and the CDC. Prior to joining XWELL, I held multiple senior management positions, including CEO of Physician’s Weekly, Chief Commercial Officer of Treato, General Manager at WebMD, and President at OptumHealth Education, a UnitedHealthcare company, as well as a few others. With that color in mid-September, I was excited to take on the expanded role as sole Chief Executive Officer for XWELL. The transition from Scott has been very smooth and I’m pleased with XWELL’s continued momentum. From my perspective, by consolidating our dual CEO operating structure, we successfully realigned resources while creating a leaner, more agile decision-making structure. This streamlined approach also aligns with our broader cost reduction strategy and supports our efforts to return the company to profitability. At the same time, it advances the Board of Directors’ mandate to drive growth, innovation and expansion. In short, we have a talented, engaged team at XWELL and we have many compelling opportunities in front of us. Towards that end, I’d like to now spend a few minutes discussing several company initiatives we’re actively pursuing. We will continue to prioritize our out-of-airport brand strategy, which we believe to be a major contributor to top line growth over the long term. We’re planning to expand into several attractive markets in Florida. And by mid-2025, we expect to be in a position to operate up to 10 XWELL properties. In fact, we’re opening our first Naples Wax location in November and look forward to building on this momentum. Our team is also exploring opportunities to align additional XWELL properties with our existing in-airport markets. We believe that syncing our current geographic markets with additional XWELL properties will allow us to enhance our competitive positioning from a brand awareness, marketing and operating efficiency standpoint. Turning to our in-airport growth. Foot traffic and customer traction at our recently opened XpresSpa at Philadelphia International Airport has been solid. It’s a great location. It’s our first airport spa that fully leverages our tech-forward concept. And I’m pleased with the initial customer demand and overall feedback. Our autonomous massage chairs and robotic nail systems are showing promising performance indicators. As part of our strategic growth in other transit hubs, the company plans to open its Penn Station XpresSpa next year. This location, as previously discussed, will showcase a tech-forward, labor-lite spa designed to cater to commuters, local residents and tourists alike. It will offer wellness-focused retail, autonomous massage and nail care services. I expect we’ll have more to share regarding this as well as other XWELL growth initiatives in 2025. Furthermore, as we strategically build out our new locations, we also remain committed to driving higher sales and margins. For example, customers are taking advantage of our new partnership with Priority Pass, which we believe has enhanced brand awareness, broadened our reach and allowed us to engage with new customers. We're pleased with the resulting increase in foot traffic to our locations as well as the positive revenue implications. We're also committed to making sure that every guest enjoys an exceptional experience when they visit our stores. To deepen engagement, we've been expanding our service menu while emphasizing our selection of fully autonomous and innovative wellness solutions. Additionally, we've added new skilled retail and store management professionals to help us maintain a customer-first focus across all of our efforts. Our team has been focused on simplifying the way in which guests can reserve a spa appointment. Convenience is really the key, and we understand that pre-booking a service should be as seamless and as straightforward as possible. To help support this, our social media platforms have expanded in an effort to highlight how easy it is to interact with staff and our autonomous offerings. By embracing technology and mobile platforms, our goal is to make the process more frictionless and convenient, so our customers can just focus on relaxing and rejuvenating. As we look ahead, we remain focused on driving sustainable top line growth and believe we are taking the right steps to accomplish this goal. As we have discussed many times over the past year, we've been looking at every cost in an effort to improve efficiencies across all our brands and deliver a more profitable operating model. Towards this end, looking at our nine-month 2024 performance, we reduced total operating expenses by approximately 35% when compared with a similar 2023 nine-month period. We also reduced cost of sales by approximately 6% and our general and administrative expenses by approximately 5% when compared to the comparable nine-month period in 2023. This commitment to optimizing our business structure and holding our labor costs constant while delivering more revenue should benefit our bottom line as we enter and work our way through 2025. In summary, a lot has been accomplished over the year-to-date. We're excited about our tremendous growth potential. We're committed to executing on all levels. I really want to thank the entire organization for their continued hard work, dedication and commitment to our guests. I also want to assure our shareholders that we are making the right decisions consistent with the long-term health of the business and our brands. Thank you for your continued support. At this point, Suzanne can give you some additional details on the third quarter as well as our continued momentum reducing operating expenses and driving growth.

Thank you, Ezra. I'm now going to provide a brief synopsis of our third quarter results. However, for details, please refer to the 10-Q filed with the SEC. For the quarter, total revenue was approximately $8.4 million compared to $7.5 million in the prior year period. Third quarter 2024 revenue primarily consisted of approximately $4.9 million from XpresSpa locations and Treat locations; approximately $3.1 million from XpresTest, which includes XWELL's biosurveillance partnership and its HyperPointe business; and approximately $0.4 million from Naples Wax Center, which was acquired near the end of the 2023 third quarter. Turning to expenses. Salaries and benefits were approximately $1.9 million in the third quarter of 2024 compared to $1.2 million in the same period in 2023. It's important to note that our 2023 third quarter included approximately $1 million from a non-recurring Employee Retention Credit or ERC, which helped reduce salary and benefit costs last year. If you exclude the non-recurring ERC credit, our 2024 third quarter salaries and benefits would have decreased 4% year-over-year. Our general and administrative expenses were approximately $4.5 million, including over $2 million related to extraordinary legal expenses compared to approximately $3 million for the 2023 third quarter. Total operating expenses were approximately $6.8 million compared to approximately $13.2 million for the 2023 third quarter. We reported an operating loss for the third quarter of $4.8 million compared to an operating loss of $12.1 million in the prior year third quarter. Our net loss attributable to common shareholders was $4.8 million compared to $11.5 million in the prior year same period. Turning to our balance sheet. Our liquidity remains solid. Our cash and cash equivalents totaled $4.4 million, and we had $11.7 million in marketable securities. Our total current assets were approximately $19.5 million, and we have no long-term debt. Looking ahead, we remain focused on continued improvements in execution, including prudent cost management and enhanced operational processes. That concludes my remarks, and thanks again for joining our call today. Both Ezra and I look forward to speaking with you again in the months ahead. I'll now turn the call back to the operator.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Hello, and welcome to XWELL's Fiscal Year 2023 Earnings Results Conference Call. During today's presentation, all parties will be in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded on April 16, 2024. I would now like to turn the conference over to Suzanne Scrabis, Chief Financial Officer for XWELL. Please go ahead.

Good day, everyone. Welcome to XWELL's conference call to review our year-end 2023 financial results. Joining me on today's call is Scott Milford, XWELL's Chief Executive Officer. We have posted our fiscal year earnings on the Investor Relations section of our website located at www.xwell.com. A link to the webcast of today's call can also be found on our site. Before turning the call over to Scott for his prepared remarks, we need to advise you of the following. Comments made on today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on current assumptions as of the date of this earnings conference call and webcast and opinions that involve a variety of known and unknown risks and uncertainties. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Important factors that might cause such differences include those set forth from time to time in our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2023, as well as our other current and periodic reports that we file with the SEC. With that said, I'd now like to turn the call over to Scott.

Thanks, Suzanne. We appreciate everyone joining us today. Operationally, XWELL had a very productive year, during which we cost effectively integrated new products, technologies and services into our spas, expanded the scope and long-term value of our CDC biosurveillance partnership acquired an out of airport business that we're actively growing and evolving, expanded internationally, broadened our footprint to include spas and other transit hubs and made meaningful progress advancing a leaner business on our path towards profitability. Now let me turn to some of the specifics. Driven by more effective staff deployment and introduction of new services and technology to drive more passengers into our locations, our spas continue to perform better with XpresSpa delivering revenue growth of approximately 39% when compared to 2022. Our international airport spas also delivered solid operating performance, benefiting from enhanced operational efficiencies, new store growth and the integration with our U.S. retail strategy. Year-over-year, our international spas achieved revenue growth of approximately 40% when compared to 2022. We continue to capitalize on the growth of air travel in Europe and the Middle East as these countries begin to open their doors to more business and leisure travel. In Q4, we opened our 11th international location in the Abu Dhabi International Airport, one of the busiest airports in the Middle East and a key hub for both passenger and cargo traffic. We're pleased with this performance out of the gate, beating our expectations by approximately 25%. Our goal with the spa business continues to be improving our unit economics, improving profitability through operational efficiencies and the continued deployment of wellness products and services that we can sell at a higher margin. I'd now like to share our progress growing outside the airport. As we reported in mid-September 2023, we completed our acquisition of Naples Wax for approximately $1.5 million and have been very busy integrating its three premium aesthetic centers into our portfolio. It continues to perform well and it's executing above our initial expectations. During the fourth quarter of 2023, Naples Wax reported revenue growth of approximately 3% year-over-year and we've seen strong momentum as we head into 2024. In February of this year, we unveiled plans to open three additional Naples Wax locations, adding to our strong footprint in Southwest Florida and extending our reach into the vibrant and growing Tampa St. Petersburg Metro area. Since then, consistent with our projections, we've executed additional Florida leases, including further expansion into the center of the state. Our goal with the Naples Wax brand is to extend its reach across the Southeast with approximately 10 locations by early 2025. And as we open new locations, we intend to incorporate additional aesthetic services into the model to drive new revenue and broaden the offerings at those locations. Furthermore, as that business scales, we're hopeful it will provide frictionless alignment with our spa brand, allowing more customers to experience XWELL. But our Naples Wax brand isn't the only business model we're expanding outside the airport. I'm excited about our plans to take the XpresSpa brand out of the airport with a new labor light model in New York City's Penn Station, further solidifying our commitment to driving retail revenue growth and smart leverage of our brands beyond traditional venues. Having a spa in one of the busiest transit stations in the country, one that serves more than 600,000 passengers daily is an ideal test of the concept's potential in a non-airport venue. To ensure its success, we've customized the New York City Penn Station XpresSpa layout to provide rapid commuters with quick serve products and services including high-tech chair massage and 10-minute robotic manicures as well as curated retail aimed at the rail commuter. We also plan to accelerate other new growth strategies outside the airport, including the planned launch of Treat Studios later this year. The concept builds on our wellness focus, providing rentable space to established practitioners in a uniquely designed environment that caters to the practitioners' customers. We'll look to share details about Treat Studios in the coming months. Now, as I've highlighted on prior earnings calls, leveraging technology continues to play a critical role in our growth objectives, enabling us to cost effectively increase revenue, drive more retail traffic, while also delivering an efficient experience for our customers. I'm happy to share that we have deployed our new autonomous chairs across most of our U.S. spa portfolio. Autonomous massage brings higher margins and has represented nearly 10% of all XpresSpa services in 2023. We also expanded our partnership with Clockwork and launched autonomous manicure stations in our Las Vegas Harry Reid International Airport Spa, bringing our total count to three locations. Since the initial launch of this pilot, we've seen 15% to 20% blended growth in the service. And looking ahead to 2024, expect to continue our pilot in other U.S. locations, including potential expansion abroad. We've also expanded our service offerings with the introduction of a proprietary stretching service in several of our XpresSpa locations in the U.S. Introduced in September 2023, stretch complements the array of massage services already available and leverages the diverse expertise and capabilities of existing technicians. And despite its late launch in 2023, stretches already showing initial signs of growth as we expand this offering in other airports and continue to market the service across the business. We believe integrating new technologies and offerings coupled with the continued growth of our retail business further strengthens the viability of our XpresSpa business. Turning to our XpresSpa business. Since 2021, we've been helping the country in its effort to monitor and hopefully reduce the threat of pathogen transmission through the first ever national biosurveillance program in the United States. The initial collaboration with Ginkgo Bioworks and the CDC has evolved and expanded multiple times and today has grown to include seven of the nation's busiest airports. Together, we're leveraging voluntary nasal swabs, wastewater from aircraft, wastewater from airport waste tritteraters as well as air sampling from international travelers to detect more than 30 viral and bacterial pathogens. Additionally, the current program funding and scope were recently expanded to an estimated $36.7 million reflecting an expansion with new collection locations at U.S. international airports in Miami and Chicago and the rollout of multipathogen testing across the program. We take great pride in XWELL's ongoing support of this vital collaboration. And it's worth highlighting that the biosurveillance program continues to be one of the United States' first lines of defense against impending threats and has achieved several key milestones. For example, during 2023, XWELL conducted approximately 330,000 tests from travelers from over 130 countries. The TGS program is also collecting over 7,000 samples a week, leading to the discovery of new variants and pathogens ahead of other surveillance programs. Notably, the traveler based genomic surveillance program has survived multiple rounds of congressional callbacks with COVID-19 funding and the transition to multipathogen testing broadens the utility of the program and positions it for potential future growth. And while we're focused on growth and driving increased revenue, our primary goal continues to be returning to profitability. During 2023, we believe we've made meaningful strides in optimizing our cost structure, diligently managing expenses and enhancing our operating efficiencies. Throughout the past year, we have continued to take measured steps to optimize our U.S. spa count to reflect a more profitable business, closing locations that we believe will not support our long-term profit expectations. Further, our measured steps have also included reductions in our operating cost structure. In 2023, we removed $11 million from the business in a combination of headcount, system and process reductions. In 2024, we expect an additional $5 million in savings as a result of these efforts. One of the key strategies we deployed in 2023 was a new your business, your unit, your team, system-wide initiatives rolled out in mid-2023. The program is designed to position our wellness locations to operate more efficiently. The initiative fosters a culture of accountability by maximizing revenue, minimizing expenses and achieving unit profitability. For instance, by optimizing staffing and adjusting employee hours, we've achieved labor savings ranging from 10% to 50% within our U.S. spot portfolio. In addition, in spas where notable labor savings have been observed. We have experienced revenue increases of up to 3%, providing further proof of the success of the program. I'm pleased to report that initial results from our cost structure and return to profitability initiatives have been meaningful. As of December 31, 2023, total cost of sales decreased approximately 40% year-over-year. In 2023, salaries, general and administrative expenses decreased approximately 33% year-over-year. We continue to see opportunities for better performance in 2024 and we believe we're on a clear path to return to profitability. And to reiterate, we're focused on multiple long-term strategic priorities, including delivering improved results and increasing retail revenue, leveraging new retail products and technologies, smart expansion, both domestically and internationally, accelerating XWELL's out of airport portfolio growth, launching our new Treat Studios model, continuing our collaboration with global governments in biosecurity, optimizing efficiencies and driving strong operational execution and cultivating an efficient and cost-effective business model. In summary, we're confident in our direction and optimistic about XWELL's position. With that, I'd like to briefly turn the call over to Suzanne for a recap of certain of our 2023 financial results.

Thank you, Scott. I'm now going to provide a brief synopsis of our fiscal year results. However, for details, please refer to the 10-K filed with the SEC. In accordance with U.S. generally accepted accounting principles, 2023 results included non-cash goodwill and intangible asset impairment charges totaling approximately $8.9 million primarily related to our HyperPointe unit and other assets related to Treat and XpresSpa. As previously announced on April 12, 2024, the Audit Committee of the Board of Directors of the company after audit work performed in consultation with management and with its independent registered public accounting firm, determined that the company incorrectly applied U.S. GAAP as related to the determination of the impairment of the company's Treat Incorporated business segment for the three and nine months ended September 30, 2023, in the quarterly report on Form 10-Q for the period ended September 30, 2023. The cumulative effect is an understatement of the impairment expenses as related to the Treat business segment of $1.6 million. As part of its determination, the Audit Committee concluded that it was appropriate to correct the misapplication of GAAP described above for financial statements for Q3 2023 included in the third quarter quarterly report by restating such unaudited financial information because the errors in the financial statements are material to the financial statements for Q3 2023. As a result, unaudited financial statements for Q3 2023 should no longer be relied on. Similarly, any previously issued or filed reports, press releases, earnings releases and investor presentations or other communications describing the company's financial statements and other related financial information covering Q3 2023 should no longer be relied upon. These errors have no effect on the company's previously reported cash and cash equivalents or marketable to security balances or cash runway. Prior to the restatement, the company previously reported impairment charges of approximately $6.8 million associated with certain intangible assets in its quarterly report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 14, 2023. Turning to our results for fiscal year 2023. Total revenue was approximately $30.1 million and primarily consisted of approximately $19.5 million from XpresSpa locations and Treat locations, approximately $9.9 million from XpresTest, which includes XWELL's biosurveillance partnership and its HyperPointe business and $650,000 from Naples Wax center, which was required in the end of the third quarter. Turning to expenses. Our total cost of sales decreased to $26.4 million from $43.9 million in the prior year. Switching to salary, general and administrative expenses, demonstrating our cost-cutting efforts and initiatives, these expenses totaled $20.9 million compared to $31.2 million for the prior year. We reported an operating loss for the year of approximately $28.2 million compared to an operating loss of approximately $31.2 million in the prior year. As Scott has discussed in the past, and it is important to reiterate here that we continue to strategically invest in our long-term growth initiatives. Our net loss attributable to XWELL was approximately $28 million compared to a net loss of approximately $32.7 million in the prior year. Turning to our balance sheet at year-end, we had approximately $8.4 million of cash and cash equivalents, $14.6 million in marketable securities, total assets of approximately $26.6 million and no long-term debt. Looking ahead, we remain focused on continued improvements in execution, including prudent cost management and enhanced operational processes. I look forward to speaking with you all again in the months ahead. I'll now turn the call back to the operator.

Greetings. Welcome to XWELL's Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on August 14, 2023. I would now like to turn the conference over to Suzanne Scrabis, Chief Financial Officer for XWELL. Please go ahead.

Good day, everyone. Welcome to XWELL's conference call to review our second quarter 2023 operating results. Joining me on today's call is Scott Milford, XWELL's Chief Executive Officer. We have posted our fiscal year earnings release on the Investor Relations section of our website located at www.xwell.com. A link to the webcast of today's conference call can also be found on our site. Before turning the call over to Scott for his prepared remarks, we need to advise you of the following. Comments made on today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current assumptions and opinions that involve a variety of known and unknown risks and uncertainties. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Important factors that might cause such differences include those set forth from time to time in our SEC filings, including our report on Form 10-K for the year ended December 31, 2022, as well as other current and periodic reports that we file with the SEC. With that said, I'd now like to turn the call over to Scott.

Hello, everyone, and thank you for joining our second quarter 2023 earnings conference call. We had a productive second quarter and continue with our efforts towards profitability by improving revenue growth in our spa business, reducing expenses and honing in on EBITDA-accretive acquisitions that will help drive our future. As I've said before, there is still much work to do, but I'm encouraged by the progress we're making. The business delivered sequential revenue growth of approximately 15.7% and a sequential reduction in operating expenses of approximately 13%. Our net loss for the second quarter of 2023 on a GAAP basis, was approximately $5.7 million, representing a reduction of approximately $2.2 million or 28% compared to the same period in 2022. The changes we're making are beginning to take hold, and I believe we're on the right path to improve performance and profitability. As you may know, given our international operations, fluctuations in the U.S. dollar exchange rates can impact reported results. For example, a portion of XWELL's business is conducted in Turkish lira. While never converted into dollars, it's translated into dollars for U.S. GAAP reporting purposes, which results in foreign currency impact to earnings. I point this out as our Q2 earnings reflects the unfavorable impact of converting Turkish lira generated from our new spas in Turkey to U.S. dollars, which increased our second quarter 2023 net loss by approximately $1.1 million. Excluding this adjustment, our net loss would have been approximately $4.5 million on a currency-neutral non-GAAP basis, which would have represented a 43% reduction over Q2 of last year. Our spas are performing better compared to a year ago, driven by increases in staffing, and the introduction of new products and services that leverage technology and take advantage of growing wellness trends. Our spa business delivered sales growth of approximately 64% when compared to the same 6-month period last year. We also delivered a total product margin of 58% at our spa locations and our Treat segments. Our international airport spas remain an area of strong performance, delivering net sales growth of approximately 30% compared to the same 6-month period last year. This was driven by the addition of our Istanbul spa locations and increased passenger traffic at our Amsterdam and Dubai locations. On the innovation front, we continue to expand our relationships with autonomous service providers, enabling us to deliver a more efficient experience at a lower labor cost. We recently expanded our pilot with Clockwork and successfully launched autonomous manicures in our Miami location with our site set on launching in Orlando and Atlanta after that. Our autonomous massage chairs are also performing very well and have reduced the payback for these machines from 7 weeks to 5 weeks since launching late last year. These new technologies, coupled with the continued growth of our retail business, further strengthens the viability of the spa business in this space and enables us to take a modified concept of our spa with a lower labor cost to other transportation hubs, both here and abroad. Turning to our Express Test business. We continue to help the country in its effort to monitor and hopefully reduce the threat of pathogen transmission to its first-ever national biosurveillance program. Our 8 passenger screening centers continue to test incoming travelers in 6 of the nation's busiest airports. Biosurveillance continues to be a critical and profitable part of our business, delivering sequential revenue growth of 35% or $2.3 million in the second quarter. Further, we're pleased to continue our partnership with the CDC. The CDC has renewed the traveler-based SARS-CoV-2 genomic surveillance programs to a new 1-year contract awarded on August 12, 2023. The partnership will support public health and biosecurity services with a contract valued totaling approximately $15.9 million. As I've said on prior calls, our primary goal is to improve our profitability, and we continue to make strides in achieving that, as I've outlined earlier. Ultimately, however, our long-term strategic goal is to transform XWELL into a leading provider of wellness and lifestyle services for anyone on the go. And to do that, we must first build a sustainable and profitable foundation which we're working towards now and also smartly drive the growth of our brand. Even with our continued focus on expense management, we have made calculated decisions to grow our existing spa portfolio with the addition of a new spa at Philadelphia Airport and the opening of our 11th international location in Abu Dhabi. Further, we've created a model that we can now take into other transportation hubs that I believe leverages technology and retail expertise with a smaller footprint and a lower cost of labor. As we identify locations that we can bring this model to market, both domestically and internationally, I expect to share more details in the coming months. Next, we have made considerable strides in advancing our out of airport acquisition strategy. And while I'm unable to comment on any specific discussions we're having to potentially expand XWELL's health and wellness product offering, I'm confident we have the right team in place to execute our acquisition strategy. And I want to reiterate that we're pursuing opportunities on multiple fronts and that our path forward will potentially involve one or more businesses. We're committed to delivering improved results, which requires operational execution and a deep focus on balancing growth and profitability. To help us achieve this, I'd like to take a moment to formally welcome Suzanne Scrabis to our team. Suzanne joined XWELL as our new Chief Financial Officer in early July, bringing more than 25 years of deep financial and operating experience, including CFO at MAVERICK Technologies. She has an impressive track record of efficiently operating companies at scale, seamlessly integrating acquisitions and driving profitable growth. You'll hear from Suzanne again in a moment, but we believe our strategic value-oriented mindset makes her an invaluable asset to our leadership team. And we intend to fully leverage her unique combination of operations and financial expertise to help XWELL accelerate efforts to remove costs diligently and thoughtfully from our business, while also advancing our plans to build long-term profitability through continued innovation and acquisition. With that, I'd like to turn the call over to Suzanne for a quick introduction.

Awesome. Thank you, Scott. It's great to be here, and I look forward to working with you and the team across XWELL as we continue to drive value for all of our stakeholders. In my first few weeks at XWELL, I've had the opportunity to learn about the company from the inside, visiting spa locations and spending time with our customers and our employees. I've also been meeting with the executive team to understand in detail our operational footprint and plans for the remainder of the year. As I reflect on my experiences so far, I want to highlight a few things. First, I'm quickly learning as much as possible about our health and wellness brands, our customers and the opportunities before us. These opportunities include investing in high-growth areas that will further capitalize on our strengths and our connection with our consumers but also opportunities to improve efficiencies. Second, I want to reiterate Scott's remarks regarding operational excellence and execution. It is my firm belief that continued improvements in execution, including prudent cost management and enhanced operational processes are keys to unlocking sustainable value and profitability. Further, putting all of this into better balance will strengthen our ability to execute against the appropriate external and organic growth strategies that will position XWELL for success today and in the long term. We're focused and moving forward towards a compelling business transformation, and I look forward to speaking with you all again in the months ahead. Thanks again for joining our call. I'll now turn it back to Scott.

Thank you, Suzanne. As I close our second quarter earnings call, I want to reiterate that I firmly believe there is ongoing opportunity for XWELL to drive growth and unlock shareholder value. We're excited about our plans to build upon our continued momentum in the second half of 2023 and beyond. As I reflect on my time as CEO, in 2022, we committed to optimizing our cost structure, rebuilding our retail strategy, growing internationally and expanding our business outside of our airport spa locations. I'm pleased we have met 3 of our 4 goals, but I share your disappointment that we have not closed an acquisition. My commitment remains strong around this key driver of long-term growth. And I look forward to sharing further news about our progress soon. In the meantime, we're focused on smart expansion, both domestically and internationally. We're leveraging new retail products and technologies, and we're making considerable progress managing efficiencies. And further, to provide XWELL additional financial flexibility down the road and as a measure of good corporate governance, we filed a new shelf registration with the SEC earlier this month. Before I conclude today's earnings call, I would like to highlight a few near-term activities on our investor calendar. XWELL's Annual Shareholder Meeting is scheduled for Tuesday, August 22, at 11 a.m. Eastern Time. Some proposals on the ballot include a proposed reverse split, selection of our public accounting firm and election of our Board members. Also, as detailed in the proxy statement we filed with the SEC, the proposed reverse stock split is intended to increase the per share trading price of our common stock to satisfy the $1 minimum bid price requirement for continued listing on the NASDAQ stock market. As outlined in our proxy statement, the Board believes that if we're delisted, it could adversely affect the market for our stock resulting in decreased liquidity for the stock as well as potentially lower prices and larger spreads in the bid and ask prices for our common stock. Additionally, as outlined in our proxy statement, the company and the Board believes that maintaining our listing on NASDAQ is important in maintaining our ability to raise additional necessary capital to equity or debt financing and may provide a broader market for our common stock. Next, further communicate our strategy and the attractiveness of an investment in XWELL, we plan to get out on the road in the months ahead, and we'll be looking to host virtual investor roadshows and attend investor conferences. It's our intention that these meetings will provide a better opportunity to tell our story and will be useful to investors in understanding how we're moving forward as a company. Further, it's our hope that engaging in meaningful dialogue with potential investors will have a positive impact on expanding our investor base. At the same time, we plan to slightly modify the frequency of our earnings conference calls to 2 times a year. While we'll continue our regular cadence of issuing detailed earnings release quarterly in conjunction with our 10-Qs, and 10-K, we'll plan to host year-end earnings calls in March 2024, followed by a second quarter midyear update in August 2024. We believe this approach when combined with face-to-face and virtual investor presentations will allow for more frequent updates and broader discussions regarding our goals, objectives and achieve progress. In summary, we're very excited about our future, and we look forward to spending time with investors in the coming months, discussing XWELL and its growth opportunities. I'll now turn the call back over to the operator.