Cue Health Inc. ("Cue") (Nasdaq: HLTH), a healthcare technology
company, today reported financial results for the second quarter of
2022.
Recent Highlights
- Revenue of $87.7 million in the second quarter of 2022 exceeds
guidance with stronger than anticipated ordering from existing
customers
- 250,000+ Cue Readers shipped through the end of the second
quarter of 2022
- Flu standalone clinical studies completed and preparations are
underway for a de novo submission to the U.S. Food and Drug
Administration (FDA) for at-home and point-of-care use
- Flu + COVID multiplex clinical studies started in the second
quarter of 2022 and on track for submission for U.S. FDA emergency
use authorization (EUA) in the third quarter of 2022
- RSV scheduled to begin clinical studies in the third quarter of
2022
- Chlamydia + Gonorrhea multiplex clinical studies expected to
begin in the second half of 2022
- Began phased rollout of Cue CareTM, closing the home-based
virtual care loop from diagnostics, to telehealth, to medication
delivery service
- Ended the quarter with cash and cash equivalents of $363.1
million and further increased financial flexibility by entering a
$100 million secured revolving credit facility
“We achieved stronger-than expected revenue performance in the
quarter and continued to deliver on our pipeline programs,” said
Ayub Khattak, Chairman and CEO of Cue Health. “We are very excited
about our upcoming full launch of Cue Care, closing the virtual
health care loop by allowing customers to conduct a molecular
diagnostic test, consult a medical professional, and get treatment
delivered, all within the Cue Health platform. With the addition of
e-prescription fulfillment and delivery to our product offerings,
Cue has taken another important step forward on our mission to
enable personalized, proactive and informed healthcare that empower
people to live their healthiest lives."
Second Quarter 2022 Financial Results
Revenue in the second quarter of 2022 was $87.7 million which
exceeded our guidance due to stronger than anticipated COVID-19
testing orders from existing customers.
Private sector revenue was $80.5 million, or 91.8% of total
revenue, an increase of $48.1 million over last year. Public sector
revenue was 8.2% of total revenue or $7.2 million. Disposable test
cartridge revenue was $82.9 million in the second quarter of
2022.
GAAP product gross profit margin was a loss of 20.8% in the
second quarter of 2022. Adjusted product gross profit margin was
30.0% after excluding one-time inventory charges of $42.8
million.
Operating expenses in the second quarter of 2022 were $88.3
million, excluding cost of revenues, driven by product development,
software technology, and menu expansion investments. In the
quarter, there was a one-time restructuring charge of $1.9 million
related to manufacturing workforce reduction.
GAAP net income in the second quarter of 2022 was a loss of
$99.1 million and earnings per diluted share was a loss of $0.67.
Cue's Adjusted net income was a loss of $55.2 million and earnings
per diluted share was a loss of $0.37. Adjusted EBITDA was a loss
of $29.9 million.
Cash and cash equivalents were $363.1 million as of June 30,
2022.
Guidance
Cue Health expects third quarter 2022 revenues in the range of
$55 to $60 million, excluding any adjustment to deferred revenue
held on the balance sheet.
About Cue Health
Cue is a healthcare technology company that makes it easy for
individuals to access health information and places diagnostic
information at the center of care. Cue enables people to manage
their health through real-time, actionable, and connected health
information, offering individuals and their healthcare providers
easy access to lab-quality diagnostics anywhere, anytime, in a
device that fits in the palm of the hand. Cue’s first-of-its-kind
COVID-19 test was the first FDA-authorized molecular diagnostic
test for at-home and over-the-counter use without a prescription
and physician supervision. Outside the United States, Cue has
received the CE mark in the European Union, Interim Order
authorization from Health Canada, regulatory approval from India's
Central Drugs Standard Control Organization, and PSAR authorization
from Singapore's Health Sciences Authority. Cue was founded in 2010
and is headquartered in San Diego. For more information, please
visit www.cuehealth.com.
Forward-Looking Statements
Statements in this press release about future expectations,
plans and prospects, including statements related to the submission
of any FDA applications and expectations around receiving
clearance, growth in our customer base, expectations regarding
production capacity, potential technology enhancements and future
performance and our guidance, including third quarter 2022
guidance, as well as any other statements regarding matters that
are not historical facts, may constitute “forward-looking
statements”. The words, without limitation, “continue,” “estimate,”
“expect,” “intend,” “may,” “plan,” “potential,” “would,” “develop,”
“pave,” “seek,” “offer,” “grow”, “expand” and similar expressions
are intended to identify forward-looking statements, although not
all forward-looking statements contain these or similar identifying
words. Actual results may differ materially from those indicated by
such forward-looking statements as a result of various important
factors, including those related to the expected capabilities of
the flu standalone, flu + Covid multiplex, RSV and Chlamydia +
Gonorrhea multiplex test, the rollout of Cue Care, our ability to
maintain customer growth rates, our ability to increase private
sector revenue, our ability maintain or replace the revenue
historically generated from our government contracts, our ability
to effectively scale our manufacturing capacity to meet contractual
obligations with our customers and market demand, and the factors
discussed in the "Risk Factors" section of Cue’s Annual Report on
Form 10-K for the year ended December 31, 2021 and Quarterly Report
on Form 10-Q for the quarter ended June 30, 2022 to be filed with
the SEC. Any forward-looking statements contained in this press
release are based on the current expectations of Cue’s management
team and speak only as of the date hereof, and Cue specifically
disclaims any obligation to update any forward-looking statement,
whether as a result of new information, future events or
otherwise.
*This product has not been FDA cleared or approved; but has been
authorized by FDA under an Emergency Use Authorization, or EUA.
This product has been authorized only for the detection of nucleic
acid from SARS-CoV-2, not for any other viruses or pathogens. The
emergency use of this product is only authorized for the duration
of the declaration that circumstances exist justifying the
authorization of emergency use of in vitro diagnostics for
detection and/or diagnosis of COVID-19 under Section 564(b)(1) of
the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §
360bbb-3(b)(1), unless the declaration is terminated or
authorization is revoked sooner.
Use of Non-GAAP Financial Measures
To supplement our financial information presented in accordance
with GAAP, we consider certain financial measures that are not
prepared in accordance with GAAP, including Adjusted Product Gross
Profit Margin, Adjusted Net (loss) Income, Adjusted Diluted EPS and
Adjusted EBITDA (loss). We use these financial measures in
conjunction with GAAP measures as part of our overall assessment of
our performance, including the preparation of our annual operating
budget and quarterly forecasts, to evaluate the effectiveness of
our business strategies and to communicate with our board of
directors concerning our business and financial performance. We
believe that these non-GAAP financial measures provide useful
information to investors about our business and financial
performance, enhance their overall understanding of our past
performance and future prospects, and allow for greater
transparency with respect to metrics used by our management in
their financial and operational decision making. We are presenting
these non-GAAP financial measures to assist investors in seeing our
business and financial performance through the eyes of management,
and because we believe that these non-GAAP financial measures
provide an additional tool for investors to use in comparing
results of operations of our business over multiple periods with
other companies in our industry.
Adjusted EBITDA is defined as net income before interest
expense, income tax expense (benefit), depreciation and
amortization, stock-based compensation, restructuring expense,
inventory charges – inventory reserves/warranty reserves, banking
and finance-related items including fair value adjustments -
convertible notes.
Adjusted product gross profit is defined as product gross profit
(loss), before inventory charges – inventory reserves / warranty
reserves.
Adjusted net (loss) income is defined as Net (loss) income,
before Inventory charges – inventory reserves / warranty reserves,
restructuring expense and tax effects.
Adjusted diluted EPS is defined as Diluted EPS before Inventory
charges – inventory reserves / warranty reserves, restructuring
expense and tax effects.
Our definitions may differ from the definitions used by other
companies and therefore comparability may be limited. In addition,
other companies may not publish these or similar metrics. Further,
these metrics have certain limitations in that they do not include
the impact of certain expenses that are reflected in our
consolidated statements of operations. Thus, these non-GAAP metrics
should be considered in addition to, not as substitutes for, or in
isolation from, measures prepared in accordance with GAAP. For
reconciliations of these non-GAAP financial measures to their most
directly comparable GAAP financial measures see the financial
tables below.
CONDENSED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except share
data)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Revenue
Product revenue
$
84,351
$
137,423
$
261,805
$
201,922
Grant and other revenue
3,349
—
5,305
—
Total revenue
87,700
137,423
267,110
201,922
Operating costs and expenses:
Cost of product revenue
101,898
55,142
188,595
85,177
Sales and marketing
16,971
1,529
51,139
1,959
Research and development
44,000
4,662
72,787
12,071
General and administrative
25,411
11,382
52,321
23,252
Restructuring expense
1,883
—
1,883
—
Total operating costs and expenses
190,163
72,715
366,725
122,459
Income (loss) from operations
(102,463
)
64,708
(99,615
)
79,463
Interest expense
(16
)
(9,429
)
(67
)
(9,964
)
Change in fair value of redeemable
convertible preferred stock warrants
—
(190
)
—
(190
)
Change in fair value of convertible
notes
—
(23,254
)
—
(23,254
)
Other income, net
43
24
49
61
Net income (loss) before income taxes
(102,436
)
31,859
(99,633
)
46,116
Income tax expense (benefit)
(3,386
)
12,050
(3,386
)
13,276
Net income (loss)
$
(99,050
)
$
19,809
$
(96,247
)
$
32,840
Net income (loss) per share attributable
to common stockholders – basic
$
(0.67
)
$
0.14
$
(0.65
)
$
0.23
Weighted-average number of shares used in
computation of net income (loss) per share attributable to common
stockholders – basic
147,498,162
18,822,474
147,014,951
18,617,247
Net income (loss) per share attributable
to common stockholders – diluted
$
(0.67
)
$
0.14
$
(0.65
)
$
0.22
Weighted-average number of shares used in
computation of net income (loss) per share attributable to common
stockholders – diluted
147,498,162
26,241,564
147,014,951
26,036,337
CONDENSED BALANCE
SHEETS
(Unaudited)
(In thousands, except share
amounts and share data)
June 30, 2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents
$
363,124
$
409,873
Restricted cash
1,334
13,837
Accounts receivable
54,008
104,589
Inventory
139,047
88,388
Prepaid expenses
50,436
45,889
Other current assets
12,186
7,446
Total current assets
620,135
670,022
Property and Equipment, Net
190,131
177,456
Operating lease right-of-use assets
85,971
79,474
Intangible assets, net
10,936
7,673
Other non-current assets
6,902
5,435
Total assets
$
914,075
$
940,060
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
38,351
$
37,208
Accrued liabilities and other current
liabilities
75,820
29,498
Income taxes payable
—
8,297
Deferred revenue, current
85,576
82,165
Operating lease liabilities, current
7,679
7,147
Finance lease liabilities, current
2,605
2,621
Total current liabilities
210,031
166,936
Deferred revenue, net of current
portion
10,283
10,283
Operating leases liabilities, net of
current portion
46,455
46,464
Finance lease liabilities, net of current
portion
1,990
3,271
Other non-current liabilities
4,943
6,356
Total liabilities
273,702
233,310
Stockholders’ Equity (Deficit)
Common stock, $0.00001 par value;
500,000,000 and 500,000,000 shares authorized, 147,834,377 and
146,402,991 issued and outstanding at June 30, 2022 and December
31, 2021, respectively
1
1
Additional paid-in-capital
760,637
730,767
Accumulated deficit
(120,265
)
(24,018
)
Total stockholders’ equity
640,373
706,750
Total liabilities and Stockholders’
Equity
$
914,075
$
940,060
Non-GAAP
Reconciliation
(In thousands)
The following table presents the
reconciliation of Net (loss) income to Adjusted EBITDA, for the
periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net (loss) income
$
(99,050
)
$
19,809
$
(96,247
)
$
32,840
Interest expense
16
9,429
67
9,964
Income tax expense (benefit)
(3,386
)
12,050
(3,386
)
13,276
Depreciation and amortization
10,979
9,616
21,585
14,500
Stock-based compensation
16,792
2,569
32,826
5,591
Restructuring expense
1,883
—
1,883
—
Inventory charges - inventory reserves /
warranty reserves
42,844
—
42,844
—
Fair value adjustment - convertible
notes
—
23,254
—
23,254
Banking and finance-related items
—
7,998
—
7,998
Adjusted EBITDA
$
(29,922
)
$
84,725
$
(428
)
$
107,423
The following table presents the
reconciliation of Product gross profit (loss) margin to Adjusted
product gross profit margin, for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Product revenue
$
84,351
$
137,423
$
261,805
$
201,922
Cost of product revenue
101,898
55,142
188,595
85,177
Product gross profit (loss)
(17,547
)
82,281
73,210
116,745
Product gross profit (loss) margin
(21
)%
60
%
28
%
58
%
Inventory charges - inventory reserves /
warranty reserves
42,844
—
42,844
—
Adjusted product gross profit
$
25,297
$
82,281
$
116,054
$
116,745
Adjusted product gross profit margin
30
%
60
%
44
%
58
%
The following table presents the
reconciliation of Net (loss) income / diluted EPS to Adjusted net
(loss) income / diluted EPS, for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
2022
2022
Dollar Amount
Per Diluted Share
Dollar Amount
Per Diluted Share
Net (loss) income / diluted EPS
$
(99,050
)
(0.67
)
$
(96,247
)
(0.65
)
Inventory charges - inventory reserves /
warranty reserves
42,844
0.29
42,844
0.29
Restructuring expense
1,883
0.01
1,883
0.01
Tax effects
(868
)
(0.01
)
(868
)
(0.01
)
Adjusted net (loss) income / diluted
EPS
$
(55,191
)
(0.37
)
$
(52,388
)
(0.36
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220810005650/en/
Lorna Williams ir@cuehealth.com
Cue Health press@cuehealth.com
Cue Health (NASDAQ:HLTH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Cue Health (NASDAQ:HLTH)
Historical Stock Chart
From Jul 2023 to Jul 2024