Greetings, and welcome to XpresSpa Group's Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn this conference over to James Berry, Chief Financial Officer. Thank you, sir. You may begin.

Good afternoon. Thank you for joining us today and for your interest in XpresSpa Group. Before our new CEO, Scott Milford, offers his prepared remarks and I review fourth quarter and full year 2021 financial results, I first 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, 2021, which will be filed by the end of the month as well as our earnings release issued this afternoon, along with other current and periodic reports that we file with the SEC. Please note that the financials mentioned on this call are preliminary. Final financial results and other disclosures will be reported in our annual report on Form 10-K for the year ended December 31, 2021, and may differ from the results and disclosures in the document due to, among other things, the completion of final review procedures, the occurrence of subsequent events or the discovery of additional information. I would now like to turn the call over to Scott.

Thank you, James, and hello, everyone. We appreciate you taking the time to join us this afternoon. Since taking over as CEO in January, I have been working with my leadership team to develop a set of strategic imperatives that we believe will accelerate our evolution as a leading health and wellness provider for people on the go. I'm incorporating my prior experience with XpresSpa as well as my experience leading teams to help us realize the many opportunities we believe are achievable at this company as we pursue generating $500 million in revenue by 2025, and I'll share the strategic imperatives that I believe will get us there in just a moment. But first, I share the collective disappointment in our stock price and want our shareholders to know that we are doing everything we can to strengthen the foundation of our business to improve our stock value and return to our investors. We assured that the interests of the Board and management team are firmly aligned with your desire and that the efforts we engage in to accomplish are designed to have both short- and long-term positive impacts. In the near term, we will continue to be active in repurchasing shares under our prior authorization. We are doing this because we believe there is a disconnect between the stock's current price and our view of its value. Adding further to this, during most of the first quarter of this year, we were subject to blackout periods that restrained our ability to do so even as the share price has declined. However, because we were able to accelerate the delivery of our fourth quarter reporting by two weeks compared to when we would have reported it in previous years, we have a wider window to repurchase shares before the onset of our next blackout period, and we intend to do so. Briefly on the quarter, we generated our highest quarterly top line ever, with consolidated revenue surpassing $29 million, and achieved our second ever full quarter of profitability as measured by both net income and adjusted EBITDA. Net income came in at $3.3 million, and adjusted EBITDA reached $4.5 million. These are all incredible achievements. Our liquidity position also remains strong. Our cash balance has grown to $105.5 million, and we had positive working capital of $89.2 million with no long-term debt. And with a healthy balance sheet as a foundation, I would like to share how we intend to leverage our past accomplishments to grow our future. As we all know, the pandemic has proven to be the great equalizer. And we believe that now more than ever, consumers are focused on their well-being, safety, and health. And even as restrictions begin to lift, we are confident that the safety and wellness infrastructure we've built with our airport footprint as a start will serve our long-term growth. To ensure we're able to deliver on that expectation, our first strategic objective has to be to create and leverage a fully integrated set of products and services that are both profitable and scalable across our portfolio of brands. Being able to identify and execute a unified set of services, supported by a relevant retail offering and a technology platform to optimize efficiency and delivery across all three of our brands is critical to driving more customer traffic and more revenue. This will include efforts to invigorate post-COVID diagnostic health services and incorporating them into our XpresCheck and even certain XpresSpa locations. We will also incorporate wellness services such as hydration and vitamin IV therapies, all higher-margin services into our XpresCheck and XpresSpa locations. Additionally, we have already begun to expand our retail strategy, not only adding more products for sale but aligning those products more efficiently to our service offerings. For example, adding fortified water and hydration packets through the delivery of an on-site hydration IV or adding muscle relaxation patches to a neck or back massage, continued treatment even after delivery of the service. We have also begun to work on a set of health and wellness kits that customers will be able to purchase at our locations and online that are specifically designed to address issues affecting travelers, including sinus and respiratory issues, travel anxiety, sleep and well-being, all supported by an e-commerce platform that allows for purchase long after the customer leaves our location. This integration of products and services strategy also allows us to further advance our work to unify under a single brand name. We have already begun this effort and will report on our progress at a later date. Our second strategic imperative will be to build our capability for delivering health and wellness services outside the airport. We believe operating outside of the airport complements our offering and allows us to scale growth faster without many of the requirements imposed by airports and concessionaires to locate in an airport. We also believe we can accomplish this as a natural expansion of our Treat brand. We think there are opportunities in other travel venues like the cruise business as well. And we see businesses, which are starting to return to the office as an opportunity to sell Treat health and wellness services as well. We have already begun work towards this strategic priority, and we'll be announcing our first off-airport partnership soon. Aligned with our growth strategy outside of the airport, we are also looking to further expand internationally. And while international travel has not picked back up to pre-pandemic levels, we want to be opportunistic in our approach, taking advantage of the current market to grow in preparation for a full return of travel. We already have strong relationships with our partners, operating XpresSpa's in Dubai, Amsterdam, and soon in Istanbul, and expect to leverage those relationships further. We also intend to leverage our strong cash position to grow through acquisition. And as those opportunities arise, we will report our progress in subsequent calls. We believe a strategy for international expansion further advances our bio-surveillance efforts as well, especially as it relates to the work we are currently doing with the CDC. Despite the progress being made to manage the pandemic, there is still an ongoing threat, whether it's another variant or a new virus altogether. And having boots on the ground internationally will help to further efforts to protect our country when the next threat emerges. And finally, a strong growth platform like we are building has to be supported by an infrastructure that enables scalable and efficient growth. Our fourth strategic imperative is focused on building an organization that cannot only facilitate growth, but at a size and scale that optimizes cost and allows us to dedicate more of our available cash to drive shareholder value and long-term viability. Our efforts to date include investments we are in the process of making to build an efficient supply chain that serves our brands collectively, hiring key leaders with experience in brand and sales building, and further investments in technology to streamline an infrastructure that was largely manual and cost ineffective. My team and I are committed to delivering on these strategic imperatives, and I expect to report on our progress as milestones are reached and during our regular earnings calls. I am very fortunate to work with such a dedicated group of leaders in the pursuit of growth. And I want to thank the hard work and dedication of our support and field teams who each and every day deliver on our vision to transform care for people on the go. And now let me share our business update, beginning with XpresCheck. Testing volumes were strong during the fourth quarter, as James will address, resulting in second quarter revenue and record profitability. This was driven by increases in leisure travel during a rebounding holiday season and continued improvement in business travel, although at a slower pace. The rise of the Omicron variant certainly drove more testing. And because of the relationships we fostered with test kit providers, we didn't suffer as much as many of the other testing centers when lines increased at the end of the year. In the first quarter of this year, which is seasonally a weaker quarter for airport traffic than the fourth quarter following the holidays, we have seen a slight reduction in testing volumes. This is not surprising to us and perhaps compounded by hesitancy to embark on European travel, in particular, given what's going on with Russia and Ukraine. But even as vaccinations are now more widely available and the Omicron variant has waned in the U.S., we have not seen the same reduction overseas and are seeing only a modest relaxation in testing requirements. This demonstrates the continued need and importance for reliable and convenient bio-surveillance testing within an airport setting. Still, we recognize the importance of evolving XpresCheck into something that goes beyond COVID testing, which is why we are integrating our health and wellness services across our brands, including XpresCheck. Having already established a footprint with COVID testing, we now have a platform to augment our services for the traveling public, supplementing COVID testing with other higher-margin medical and wellness services such as vitamin IVs and boosters, all from the Treat model. Importantly, these services are sustainable by their very nature and will have a longer shelf life than COVID testing. XpresCheck, which is now led by Ezra Ernst, who also heads our recent HyperPointe acquisition, currently consists of 15 locations across 12 airports. It is the largest COVID testing company in U.S. airports. Most recently, we opened in Hartsfield-Jackson Atlanta Airport in October where we converted a legacy XpresSpa location located in Concourse E and in Denver International Airport in the Great Hall pre-security early this year in February. We have one XpresCheck that will open shortly in Orlando, pre-security in the South Walk area of the main terminal. Under previous leadership, we had shared the potential to open two to four additional XpresCheck locations this year. However, given our shift in thinking, our intention now is not to proceed with additional openings at this time, but we'll look at how we leverage existing locations across all our brands to integrate and support our bio-surveillance efforts. Notably, the overwhelming majority of patients are choosing the rapid PCR test, which is at a substantially higher price point of $200 to $275 versus the $75 standard PCR test. This has dramatically elevated the margin profile of the business and supported us generating $9.7 million in operating cash flow for the year. We also administered 1,116 rapid PCR tests per day during the fourth quarter, up from 789 rapid PCR tests per day during the third quarter and 402 tests per day during the second quarter. As a percentage of all COVID tests, rapid PCR tests accounted for 98% of those during the fourth quarter and 67% during the third quarter. Also driving XpresCheck success is our ability to form working relationships with major airlines and government agencies. Our initial contract for bio-surveillance with the CDC at our four major airports was for $2 million but has since been extended and expanded for an additional $3.6 million, totaling $5.6 million. This expansion included additional pool testing beyond the initial India pilot, adding the U.K., France, Germany, and South Africa, among other at-risk countries. Our bio-surveillance platform now has the ability to pivot rapidly to monitor additional countries as the threat of a new variant or virus changes. Most of the initial $2 million in revenue was recognized in the fourth quarter last year, but the remainder of the contract's revenue will be recognized during the first half of this year. We believe the program demonstrates the confidence that they have placed in us and are hopeful that it will lead to further expansion. We will be releasing data in the coming weeks, which will demonstrate the efficacy and value of the robust bio-surveillance platform we have built with our network of partners. Importantly, the program can similarly be implemented for any incoming port beyond airports upon CDC's direction. If this program eventually expands further, we could see this as a potentially significant business line extension for XpresCheck with the foundation of this government contract already in place. Now turning to our airport spa business. We currently have 16 spas operating domestically and have four to five additional locations slated to open. Performance continues to improve as we are still running modified operating hours, but we took a price increase in October, which is helping us as well. Our domestic XpresSpa locations are operating approximately eight hours per day during the busiest hours compared to up to 16 hours per day pre-pandemic. And sales volumes are about 50% of pre-pandemic levels, but sales per hour are tracking at about 90% of pre-pandemic levels. We are seeing renewed interest in wellness services among travelers, along with the willingness to spend additional dollars on products and services that will improve their well-being while they travel. And as we roll out new services that are more on-trend with today's travel consumer, we expect to see improvement in service sales and related retail revenue. Further, we expect to drive revenue due to delivery of integrated services where we're able to, which will dramatically improve the size of our service footprint. To bring this integrated strategy further to life and our spas, we are currently looking at our ability to deliver minor health services such as cold and flu diagnostics or hydration therapy in a spa environment. And we will look at other services we can add to the business to further drive a unified offering across all brands. Internationally, there are six XpresSpa locations operating. These consist of three in Dubai and three operating at Schiphol Amsterdam Airport. We are preparing for further expansion to other major global hubs, including our newest location in Istanbul, Turkey, where we have signed to build up to five locations at that airport and expect to open the first stores this summer. And now let's discuss Treat. Our newest brand is designed for people on the go, looking for a one-stop travel health and wellness solution through a suite of integrated services. Health and wellness services for travelers include diagnostic testing for viruses, cold, flu, and other illnesses as well as IV drip and hydration infusion therapy. Travelers can also purchase interactive wellness services like self-guided yoga, meditation, and low-impact weight exercises, all in a relaxing environment where they can unplug from the hectic pace of the airport and renew themselves before or after their trip. Through our analysis, we believe airport passengers typically have a dwell time of around 70 minutes once they clear security and board their flights. And with much more focus today on health and improving individual well-being, we see a clear opportunity to address these needs through Treat and the delivery of a more integrated product strategy in our other brands. We are currently open at JFK and will be opening soon in Phoenix Sky Harbor and Salt Lake City. While we originally anticipated a more limited demographic centered on an affluent organizer and manager of family travel, we believe there is an opportunity to attract a wider variety of discerning consumers to the Treat brand with a more varied array of products and services. Phoenix, unlike JFK, will be our first pre-security location, and we expect to learn a great deal as it relates to differences in customer buying patterns, pre versus post security. Our third Treat in Salt Lake City will be our first location value-engineered from our original JFK and Phoenix design. It is a post-security location in a former XpresSpa. It is also the first Treat to provide a more open floor plan and use hybrid rooms that can offer both health and wellness services in the same room, providing a greater opportunity to meet travel demand. It will also offer more retail products. We think the open floor plan with a cost-efficient design at about half that of JFK will be our default design going forward, creating a more inviting experience to passersby because they will be able to see more retail and more activity to catch one's eye. We intend to roll out additional Treat locations across other major U.S. airports this year and next. Our growth strategy will include both greenfield builds as well as leveraging existing spa and XpresCheck locations to convert to this brand. Treat also offers a website at www.treat.com and a mobile app to complement the offering with relevant health and wellness content designed to help people on the go with information that could impact their travel. The platform provides travelers access to a comprehensive online marketplace of services, including global illness tracker tools such as the COVID requirements map, on-demand track care by a licensed provider, a health wallet to store personal and family medical records, and a scheduler to arrange for direct care at one of our on-site locations. We will see a modest revenue contribution from Treat this year but view the brand as a mid-term play with long-term value creation. This is because it extends our health and wellness leadership position in travel, offering multiple revenue channels outside of just operating in the airports. Treat will be the brand we leverage in our out-of-airport strategy. Finally, we recall that in January, we acquired HyperPointe, a leading digital health care and data analytics relationship marketing agency, servicing the global health care and pharmaceutical industry. HyperPointe has significant experience in patient and health care professional marketing and deep technological experience with customer experience management and data analytics. We have been working with HyperPointe for nearly two years, and their teams and suite of services and technology were used to develop and deploy the technological infrastructure for XpresCheck. HyperPointe is now operating as a stand-alone entity led by its CEO, Ezra Ernst, who is also now serving as CEO of XpresCheck and reporting to me. In this capacity, he is spearheading efforts to integrate XpresCheck's COVID testing business with HyperPointe's customer experience management technology and data management know-how. This has the potential to further product and service offerings to additional airports, other travel centers and other business customers within the health care and pharmaceutical verticals. We look forward to sharing further details in upcoming quarters. And so, we now have a portfolio of health and wellness brands with a vision of expanding our services and products both inside and outside of the airports, pursuing accretive acquisitions and other strategic transactions where appropriate to further broaden our service and retail offerings. The outstanding results we are generating today are only the beginning, but they lay the foundation for the long-term success of this developing global omnichannel company and increasing value for its stakeholders. With that, I'll turn it over to James.

Thank you, Scott. As I will now detail, we generated incredibly strong financial results during the fourth quarter last year, marking a fantastic end to what was a great year for our business. Revenues rose to $29.4 million compared to $0.3 million in the fourth quarter of the prior year. The increase was primarily due to the recognition of and consolidation of revenue from the 14 XpresCheck locations plus the CDC contract totaling $26.9 million. We also generated revenue from services and products of $2.4 million related to reopen XpresSpa locations. Cost of sales increased to $15.8 million from $2.4 million in the prior year fourth quarter. The increase was primarily due to the cost of sales incurred in XpresCheck, offset by a decrease in the variable costs associated with the decline in the XpresSpa revenues and decreases in occupancy costs as a result of rent concessions received from the airports during COVID. General and administrative expenses were $9.8 million compared to approximately $5 million for the year ago comparable period. This increase was related primarily due to costs associated with XpresCheck, the development of Treat and staffing to the support the record revenues, somewhat offset by reduced variable costs related to the closed XpresSpa locations. We are proud to report we realized an operating profit in the quarter of $2.3 million compared to an operating loss of $17.4 million in the prior year fourth quarter, primarily due to higher revenue and recognized loss on revaluation of warrants and conversions options in the prior year in 2020. We generated net income attributable to common shareholders for the quarter of $3.3 million compared to a net loss attributable to common shareholders of $15.7 million in the prior year fourth quarter. Finally, with respect to our GAAP financials, our liquidity remains strong with cash and cash equivalents totaling $105.5 million as of December 31, 2021. We generated operating cash flow of $9.7 million from which we deployed $7.3 million for share repurchases. During the fourth quarter, we repurchased 4.5 million shares outside of the blackout period. As of the end of the year, 10.3 million shares remained available under the 15 million share repurchase program announced last August 31, 2021. In 2021, total, we repurchased 4.7 million shares but had been severely restricted due to blackout periods. Of course, if we have been able to do so, we would have repurchased far more. And given the current share price, which we view as vastly undervalued, we intend to be more active repurchasing our stock within the limits of our blackout periods because it presents such a good investment opportunity. On a non-GAAP basis, adjusted EBITDA was $4.5 million compared to the adjusted EBITDA loss of $6.7 million in the prior year fourth quarter. This represents an improvement of $11.2 million and is indicative of XpresCheck's profitability. We define adjusted EBITDA as earnings before interest, taxes, depreciation and amortization expense and adjusted for stock-based compensation and impairment and disposal of assets. We do consider adjusted EBITDA to be an important indicator for the performance of our operating business, XpresCheck. In particular, we believe it's useful for analysts and investors to understand that adjusted EBITDA excludes certain transactions not related to our core cash operating activities, which are primarily related to our XpresCheck Wellness Center. We believe that excluding these transactions allows investors to meaningfully analyze the performance of our core cash operations. We also furnished in the earnings release some interesting metrics with respect to the growth in patients that we have tested over the past fourth quarter, along with the percentages that are opting for rapid and rapid PCR tests. Please review these at your convenience, but we think the takeaway here is that we are serving more patients, and more of those patients are choosing the lucrative rapid PCR option. Finally, we are reiterating our revenue guidance. For 2022, we project over $100 million in revenue, while by 2025 we continue to project $500 million in revenue. Thank you for your time this afternoon. We would now be happy to take your questions. We'll begin by taking questions from our covering analysts, and then turn the call over to Investor Relations to ask questions from our retail shareholders who were invited to submit questions ahead of today's call.

At this time, we will be conducting a question-and-answer session. Our first question comes from the line of Thierry Wuilloud with Water Tower Research. You may proceed with your question.

Maybe if we can start with the CDC relationship. You've had basically an ad hoc contract with the CDC, but do you think they're looking to develop or to procure more permanent capability to deal with potential new viruses and so on?

I'm happy to answer that. I think the CDC has been very pleased with the work we've done together. Our ability to quickly adapt in the airports where we initially conducted our pilot and then expanded services demonstrates that. We were the first pooling service to identify the BA2 and BA3 viruses when they emerged. Because of this, we were able to deliver a sample to the CDC, which they processed within seven days. As a result, I believe the CDC is very satisfied with the progress made, and we look forward to continuing our partnership.

Great. Moving to the COVID test. Asian countries have had many restrictions on travel. I would imagine those might lift at some point and allow for more passenger volumes. Do you have any updates regarding primarily China and potentially India, the two largest destinations, about whether we are seeing any signs of easing travel and changing requirements?

I have not heard of any changing requirements for travel out of Asia. I think they're still requiring tests out of India. There was a report I read recently about them relaxing some of their requirements towards the end of this month. But I think if you read the news, both in Europe and in Asia, the Omicron variant is starting to grow again. And so, I'm unsure what additional relaxation will happen over time.

Okay. Well, maybe there's been some quarantine requirements. I think if still get relaxed, that might spur some more travel volume.

Yes.

Okay. Maybe just one more question. So XpresCheck has been focused on COVID-19 tests with obviously a lot of success in 2021. You mentioned in your remark that you were considering maybe adding to the menu there based on what you're seeing is in high demand with the Treat location and maybe with the spa location. Can you give us a bit more color there? How quickly could you add to the menu of services at XpresCheck?

Thank you for your question. Because of our XpresCheck locations, we have medical personnel and providers on site. This gives us a unique opportunity to roll out some of our Treat services more quickly. Initially, we plan to offer vitamin IVs, hydration therapy, and vitamin C and B12 injections. Over time, we will introduce additional health services, including cold and flu testing, as well as other diagnostic services that we have implemented in Treat and can easily incorporate into the XpresCheck setting.

Our next question comes from the line of Scott Buck with H.C. Wainwright. You may proceed with your question.

So my first question, Scott, given some of the, I guess, tweaks in the strategy, do you feel like the business on the corporate side, you have everything you need? Or is there a requirement of additional investment whether it's headcount or some type of cost infrastructure to help you grow the business like you'd like to?

Yes. So as we start to lay out the strategic imperatives, I think there's a couple of things that we're going to be looking to make investments in. We had already begun the process of looking for a marketing leader. We think that has been a part of the business that has not had a lot of attention paid to it in the past. And even though we have a group of eyes that walk around the airport that are somewhat contained, we still think that there's an opportunity to help customers identify need and then let them see that we are the provider of that need for them. So that's one of the areas that we're making some investments in. I think the other is investments in our supply chain capability and building a more robust fulfillment capability if we intend, and we fully intend, to improve and increase our retail offering. We need that infrastructure built so that we can optimize delivery and save us on margin, but it will also increase the quality of the products and the timing of when the products are delivered to consumers. So those are two of the areas that we're specifically looking to make investments in. And we'll continue to make investments in building up and showing up our digital infrastructure. And instead of it supporting three distinct brands, Treat, XpresCheck, and XpresSpa, we'll look to integrate that more holistically so that we can leverage things like our patient scheduler, etc., in a much more efficient way.

All right. That's great. That's really helpful color. I know it's early on Treat, and you mentioned we should think of it as a providing some incremental revenue this year but not a near-term play. But what has been kind of the initial feedback on that first store at JFK? And then what's been the initial feedback on the online store?

The feedback on our physical location has been positive, with customers showing a high level of engagement. This has influenced our discussions about the type of customer we are attracting. Initially, we focused on a generally affluent female demographic, often involved in organizing travel. However, we are noticing an increase in male customers visiting our location. Many are using our rooms not just for wellness services, but to take breaks, opting to relax in the room and utilize additional services like our shower. It’s worth noting that we only opened in December, so we’re still gathering early feedback. We are also observing interest in our vitamin IVs and B12 and C injections; these services are becoming popular, along with the standard COVID testing we offer. Additionally, there is interest in our retail offerings, and we see potential to raise awareness around these and expand our retail options on both the Treat side and the XpresCheck and XpresSpa side. While we have a strong online offering, there is room for improvement to reach more consumers and make Treats more accessible in other airports.

That's very helpful. Regarding M&A, you have quite a challenge ahead to reach $500 million in revenue by 2025. What specifically are you targeting with M&A? Are you considering acquiring a retail outlet with an existing presence, a technology piece, or any additional details you can share would be appreciated.

Yes. I think what we're going to be looking for acquisitions that are obviously accretive to revenue and that complement our core business. That may be, as you said, a piece of technology that greatly enhances the offering we're able to give to our consumers. But ideally, what we would likely be looking at is local regional players in markets where we can complement our existing health and wellness offering for the consumers, both inside and outside the airport.

I'd like to turn it back over to Investor Relations.

Thank you. I'm going to just read some of the questions that have come in to the email address. First question is the following: Why not change the name of the company and ticker to something more relevant to where you are headed?

I can take that, James. As I referenced earlier in our first strategic imperative, what we want to do is integrate a core set of products and services across all three brands. Once we start to do that, then it paves the way for us to begin to transition from a family of brands to a single brand with a single name. So it is absolutely our intention to do just that as it makes sense for us to do it and as consumers can relate more to the product offerings we're giving them.

Next question is, I'm pleased to see that you will be more actively repurchasing shares. I'm curious if your plan is to fully utilize this authorization and then seek approval for a new one.

James, would you like to answer that?

Sure. We firmly believe that our stock is undervalued compared to the value we see in our company. We will continue to buy back shares when it makes sense for the business. We need to effectively balance any necessary investments for business growth, including acquisitions, with our buyback investments, as both are aimed at improving shareholder value. This will be an ongoing effort, and we are committed to effectively managing both.

Right. Question on your XpresCheck leases. Are any of them coming due over the next few months? And will you renew them even if they cannot be converted to Treat locations?

Some of our express test leases are month-to-month while others are longer-term leases. It's worth mentioning that during the recent AXN Airport Concessionaires Conference, many airport partners expressed a desire to extend our leases in express test, believing that we're a valuable partner in the airport's longer-term pandemic and virus response program. We will continue to evaluate the integration of our product and service offerings across the three locations and aim to make informed decisions about which leases to extend or renew and how that might allow our other businesses to grow.

How do you know that lower testing volume is seasonal or due to relaxation of restrictions or maybe because there's more testing availability outside of the airport? How do you view the testing business now that case numbers are coming down? And maybe you can comment on testing numbers so far to date in the first quarter.

Yes. Good question. Normal airport traffic is lower during the first three months of the year as travelers tend to recover from the holidays. And what we have seen over the past two years is that COVID testing rates tend to rise and fall with seasonal changes in airport traffic. As you mentioned, some of the countries in Western Europe have begun relaxing testing requirements, allowing for more time and advance to travel to secure a test. And this will undoubtedly have an impact on testing levels as we move throughout the balance of the year. It's proven to be challenging to effectively plan ahead of this pandemic. We've already begun to evolve our testing business beyond managing just COVID testing to more of a holistic bio-surveillance brand, providing a broader array of health services and products while leveraging the infrastructure to initiate a bio-defense component giving us the opportunity to even work with the DoD. I think XpresCheck is uniquely suited in our airports as that frontline defense against the next microscopic invasion that hits our shores.

Question on Treat. When do you think you're going to see meaningful revenue from Treat? And then also, when do you think Treat and XpresSpa will be profitable as stand-alone businesses?

XpresSpa is already a profitable business, and we anticipate continued growth in the coming year due to our investments in new products and service offerings. We are also still learning about Treat. With only one unit currently operating, we are implementing changes while gaining insights into the business and evolving consumer preferences. I believe travelers are now more focused than ever on products that enhance their sense of well-being, especially while traveling. We believe Treat can meet this demand, and we will maintain our focus on it as we develop, expecting it to not only generate revenue but also become a significant driver of our future growth.

Can you explain how the HyperPointe acquisition helps the overall business?

Yes. So I think in two ways. I think the first is just the technical and organizational synergies created by the acquisition. And we fully intend to exploit one of the key strengths of the HyperPointe business, which is their deep history and relationship with the health care industry. Well, I think that's realized through our expansion of our bio-surveillance partnership with the CDC for the development of strategies to further leverage XpresCheck health data, for example, with health partners like the pharmaceutical industry. HyperPointe will be directly involved in building new revenue channels for us.

Okay. Question on inflation. Are you concerned about weaker demand for your services because of the high inflation we're experiencing, potentially rising airline prices, price of gas? And are you concerned that, that's going to result in less travel?

Like most other businesses that provide products and services to customers, we are acutely concerned with rising prices and all the inflationary pressures. But I think we're doing two things to help address that, one of which is building our out-of-airport strategy, which we think can help blunt some of the impact of rising fuel costs and potential travel disruptions. And then I think the second is developing a smarter supply chain process, making sure that we're integrating products and services aligning our business under a single consistent operating strategy. All of those things in concert will help us refine and reduce our cost but also help us drive new revenue outside of the airport should the airport be adversely impacted by continued rise in inflationary pressures.

How many more XpresSpas do you plan on reopening? And what do you plan to do with the remaining leases that you have? What are you seeing from these new touchless spa services? And could they be implemented across all of the XpresSpa locations?

We are currently planning to open four or five additional spas that are part of a reopening strategy. This number may increase as travel improves and our strategies begin to take effect. There are some spas we will not reopen, typically those sites that do not align with our integration strategy or are unlikely to be successful with additional products and services. We will also look for opportunities outside the airport, which will help us be more selective in our reopening strategy within the airport. By focusing on external opportunities, we can better determine which sites to open or close within the airport. Regarding the touchless services, we are just beginning to roll them out, and initial feedback from our teams has been positive. Once we receive customer feedback and assess sales, we will consider expanding these services to more spas and potentially other brands.

Will you convert all your spas into Treat?

So, the plan right now is to convert spa locations to Treat locations where it makes sense and that our strategy is to have a uniform core product and services offering that can be tailored to local demand. So for example, if nail kits are part of our core product offering in all our locations across the U.S., we may offer nail services in our Charlotte location to complement that retail offering, but not offer it in our New York locations where those services are less relevant, but our consumers still find the product to be relevant.

Okay. Final question. As you increase your retail presence inside airports, what does the margin profile look like?

As we aim to expand our retail products, our primary focus will be on understanding customer preferences. We will also take into account the associated margins while ensuring that our offerings remain affordable for travelers. We are not seeking to reduce margins; in fact, we'll prioritize products that can provide us with a solid margin in retail. There may be exceptions, as Scott pointed out, where there are tie-ins, but we expect margins to stay strong. We have excellent locations to showcase our retail offerings, and we anticipate either maintaining or increasing those margins.

I just want to emphasize that we have not fully utilized the valuable real estate we possess, and we plan to do so by enhancing our retail offerings. These offerings will come with margins that will support and grow the business. I wanted to share that final thought.

Those are all the questions that have come in. So I'll turn it back to Laura, operator.

Thank you everybody. I appreciate the opportunity to come and share the news of our fourth quarter and our year. We certainly had a successful year, and I'm looking forward as a new leader with a new leadership team to build on that great success. I appreciate everyone's time and joining our call today and I look forward to sharing our progress on our four strategic imperatives during our next call. Thank you very much.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.