- Consolidated revenues were $16.4 million in the second quarter of fiscal 2017
- Revenues in the Wellness segment, which consists of XpresSpa, were $12.9 million for the second quarter of 2017, representing a 17% increase from first quarter 2017 revenues of $11.0 million¿ Wellness segment operating loss was $2.0 million as compared to $2.4 million in the first quarter¿ Wellness segment Adjusted EBITDA* was $1.1 million, up from a loss of $0.2 million in the first quarter, driven by aggressive cost reductions and increase in gross profit¿ Wellness segment general & administrative expenses were reduced by $1.2 million, or 43%, from the first quarter of 2017, of which $0.7 million relates to ongoing operations¿ XpresSpa year-over-year revenue grew 16% (compared to the pre-acquisition second quarter 2016)¿ Approximately 20% segment-level gross profit margin¿ Ended the quarter with 52 locations in 23 airports¿ For the balance of fiscal 2017, the Company currently has nine new unit openings scheduled, and an additional nine units under negotiation, some of which may open in 2017
- Revenues in the Technology segment, which consists of Group Mobile, were approximately flat at $3.5 million for the second quarter of 2017 compared to the first quarter of 2017¿ Group Mobile revenue grew 40.8% on a year-over-year basis compared to second quarter 2016¿ Technology segment doubled gross margins to 22% in the second quarter 2017 from 11% in the same period last year - we anticipate annual margins in the range of 15% to 20%¿ FLI Charge is now reflected as assets and liabilities held for disposal and discontinued operations in the Company's financials as a result of an offer from a third party to finance its ongoing operations
- Subsequent to June 30, 2017, the Company completed a public offering of 6,900,000 shares of common stock, at $1.10 per share, for net proceeds of approximately $6.7 million
- Consolidated operating loss from continued operations was $5.1 million and Adjusted EBITDA loss* was $1.0 million for the second quarter of fiscal 2017
Mr. Perlman continued, "I'm proud of our team's efforts to leverage our resources to realize the synergies that drove the marked improvement in our business compared to our first quarter, particularly within our Wellness segment. We expect to demonstrate further expense leverage in the third quarter, when we benefit from a full quarter of our cost savings actions that were implemented in the second quarter."We have increased our XpresSpa unit growth plans for the balance of 2017, from two units to nine units. In addition, we are in varying degrees of negotiations for another nine locations, some of which may fall in 2017 as well. We continue to strengthen our capital structure, including our recent equity offering, which added approximately $6.7 million in net proceeds to the Company's balance sheet and will allow us to implement our accelerated growth strategy. "Revenue results in our Technology segment were flat as compared to first quarter of 2017, primarily due to the timing of certain contracts that shifted into the third quarter. However, the execution of several contracts early in the third quarter gives us confidence in our outlook for 2017 and beyond. We are committed to focusing on the growing health and wellness industry and parting with non-core assets, which begins with a potential sale of FLI Charge. These efforts are ongoing, but our intention is to take the necessary steps to create a pure-play health and wellness services company, led by our core XpresSpa asset, and we are planning to complete this process by the end of the first quarter of fiscal 2018." 2017 Outlook The Company is reaffirming its previously issued guidance for 2017 of over $70 million of consolidated revenue, of which approximately $50 million is expected to come from Wellness (XpresSpa), and the remaining $20 million from Technology (Group Mobile). Additionally, the Company has established preliminary 2018 revenue guidance for its Wellness segment of $60 million, which represents (i) a 20% increase from its 2017 revenue guidance, (ii) a further acceleration of approximately 15% revenue growth that the Company expects to achieve in 2017 as compared to 2016, and (iii) a preceding three-year revenue CAGR (compound annual growth rate) of approximately 9% (as generated prior to FORM's ownership of XpresSpa). The Company expects its new locations to perform at rates that are in-line or better than existing stores and to revise its 2018 guidance prior to year-end and provide further insight into revenue and other targets. Mr. Perlman concluded, "As we look at the balance of fiscal 2017, we remain confident in our outlook and ability to build upon our leadership position in the fast growing health and wellness industry. We will continue to pursue growth through our highly productive XpresSpa store model, while also seeking out new avenues of growth that are complementary to our core competencies. In the near-term, our focus remains on delivering a best-in-class customer experience, while maintaining careful control of our expenses in order to leverage our cost structure and fund incremental investments. Accordingly, we expect our sales and margins will continue to grow throughout the remainder of 2017, which in turn will drive improving cash flow for the benefit of our business and shareholders."
Operating ResultsFor the second quarter of fiscal 2017, the Company reported total revenue of $16.4 million, an increase of 44% as compared to the same period in the prior year, primarily driven by the acquisition of XpresSpa in December 2016 and Excalibur in February 2017. Revenue for the second quarter of 2016 includes a one-time payment of $8.9 million associated with an intellectual property license agreement and does not include revenue from XpresSpa. Operating loss from continuing operations was $5.1 million for the second quarter of fiscal 2017 as compared to a loss of $9.7 million in the second quarter of fiscal 2016. The Company's operating loss from continuing operations for the second quarter of fiscal 2017 included approximately $0.3 million of merger integration costs and $0.7 million of stock-based compensation expense. The second quarter of fiscal 2016 included $0.5 million of stock-based compensation expense. Balance Sheet & Cash Flows As of June 30, 2017, the Company had current assets of $15.9 million, a cash balance of $8.0 million and long-term debt of $6.5 million, which does not give effect to the equity offering completed after quarter-end. On July 26, 2017, the Company entered into an underwriting agreement with Roth Capital Partners, LLC, acting as the representative of the several underwriters named therein (collectively, the "Underwriters"), relating to the issuance and sale of 6,900,000 shares of the Company's common stock, par value $0.01 per share, including 900,000 shares subject to the Underwriters' over-allotment option, which was exercised on August 2, 2017 and closed on August 4, 2017. The price to the public in the offering was $1.10 per share. The net proceeds to the Company from the offering were approximately $6.7 million after deducting underwriting discounts and commissions and other estimated offering expenses. Conference Call Information FORM will host a conference call and audio webcast today, August 9, 2017, at 4:30 p.m. ET, to discuss financial results for the second quarter of fiscal 2017.
Join the Conference Call via Webcast
- Visit the Investor Relations section of the Company's website at www.formholdings.com. Visitors to the website should select the "Investors" tab and navigate to the "Events" link to access the webcast.
- Enter your First Name, Last Name, Company, and Email Address and select "Submit".
- Select the "Launch Webcast" icon to view the event.
A reconciliation to the nearest US GAAP measure is noted below.
|Wellness||Three months ended (unaudited)|
|Cost of sales|
|Other operating costs||843||1,511|
|Total cost of sales||8,835||10,401|
|Gross profit as a % of total revenue||19.6||%||19.6||%|
|Depreciation and amortization|
|Total depreciation and amortization||1,715||2,919|
|Merger and acquisition and integration costs||484||200|
|General and administrative||2,321||1,399|
|Total general and administrative||2,805||1,599|
|Depreciation and amortization||1,715||2,919|
|Merger and acquisition, integration and one-time costs||484||200|
|Adjusted EBITDA income (loss)||(172||)||1,127|
|Three Months Ended June 30, 2017|
|Depreciation and amortization||2,919||162||6||7||3,094|
|Merger and acquisition, integration and one-time costs||200||—||—||110||310|
|Adjusted EBITDA income (loss)||$||1,127||$||(580||)||$||(120||)||$||(1,421||)||$||(994||)|
ContactsFORM HoldingsJeff SonnekICR646-277-1263Jeff.Sonnek@icrinc.com