Cue Health Inc. ("Cue") (Nasdaq: HLTH), a healthcare technology
company, today reported financial results for the third quarter of
2022.
Recent Highlights
- Revenue of $69.6 million in the third quarter of 2022,
exceeding guidance
- Flu A/B molecular test de novo submission to the U.S. Food and
Drug Administration (FDA) for full clearance for at-home and
point-of-care use
- Flu A/B + COVID multiplex molecular test submission to the FDA
for emergency use authorization (EUA) for at-home and point-of-care
use
- RSV molecular test clinical studies began in the third quarter
of 2022 as planned
- Strep Throat molecular test development completed and expect to
begin clinical studies during the current respiratory season
- Chlamydia + Gonorrhea multiplex molecular test clinical studies
on track to begin in the fourth quarter of 2022
- Monkeypox molecular test developed with analytical and clinical
studies planned to support an EUA submission in the first quarter
of 2023
- Cue CareTM launched, offering nationwide test-to-treat solution
for patients who test positive on any COVID-19 test
- Cash and cash equivalents of $304.7 million while the $100
million secured revolving credit facility remains undrawn at
quarter end and company continues to operate with no debt
obligations
“We continue to make significant progress advancing our pipeline
of future tests, having completed U.S. regulatory submissions for
both our Flu A/B + COVID and Flu A/B molecular tests, started our
RSV clinical study, and completed development in other respiratory
and sexual health programs,” said Ayub Khattak, Chairman and CEO of
Cue Health. “I am pleased with the rapid pace of development, which
we believe will enable early detection and early treatment for a
variety of common health concerns, leading to better outcomes for
patients and furthering our mission of empowering people to live
their healthiest lives.”
Third Quarter 2022 Financial Results
Revenue in the third quarter of 2022 was $69.6 million, driven
by stronger than anticipated COVID-19 testing orders from existing
customers.
Private sector revenue was $65.9 million, or 94.7% of total
revenue. Public sector revenue was 5.3% of total revenue or $3.7
million. Disposable test cartridge revenue was $61.4 million in the
third quarter of 2022.
GAAP product gross profit margin was 24.1% in the third quarter
of 2022. Adjusted product gross profit margin was 28.0% after
excluding one-time inventory charges of $2.6 million.
Operating expenses in the third quarter of 2022 were $86.4
million, excluding cost of revenues, reflecting product
development, software technology, and menu expansion
investments.
GAAP net income in the third quarter of 2022 was a loss of $66.3
million and earnings per diluted share was a loss of $0.45. Cue's
Adjusted net income was a loss of $63.6 million and Adjusted
earnings per diluted share was a loss of $0.43. Adjusted EBITDA was
a loss of $37.2 million.
Cash and cash equivalents were $304.7 million as of September
30, 2022.
Guidance
Cue Health expects fourth quarter 2022 revenues in the range of
$45 to $50 million, excluding any adjustment to the deferred
revenue balance of $92.4 million related to our agreement with the
U.S. Department of Defense.
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 fourth 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 A/B standalone, flu A/B + Covid multiplex, RSV test, Strep
Throat test, Monkeypox test 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, Quarterly Report on Form 10-Q for the
quarter ended June 30, 2022 and Quarterly Report on Form 10-Q for
the quarter ended September 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, 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
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Revenue
Product revenue
$
66,660
$
222,594
$
328,465
$
424,516
Grant and other revenue
2,929
1,085
8,234
1,085
Total revenue
69,589
223,679
336,699
425,601
Operating costs and expenses:
Cost of product revenue
50,595
88,569
239,190
173,746
Sales and marketing
18,129
5,572
69,268
7,531
Research and development
42,516
9,079
115,303
21,150
General and administrative
25,625
33,084
77,946
56,336
Restructuring expense
137
—
2,020
—
Total operating costs and expenses
137,002
136,304
503,727
258,763
Income (loss) from operations
(67,413
)
87,375
(167,028
)
166,838
Interest expense
(346
)
(1,786
)
(413
)
(9,752
)
Change in fair value of redeemable
convertible preferred stock warrants
—
243
—
53
Change in fair value of convertible
notes
—
(36,306
)
—
(59,560
)
Loss on extinguishment of debt
—
—
—
(1,998
)
Other income, net
409
(80
)
458
(19
)
Net income (loss) before income taxes
(67,350
)
49,446
(166,983
)
95,562
Income tax expense (benefit)
(1,047
)
30,098
(4,433
)
43,374
Net income (loss)
$
(66,303
)
$
19,348
$
(162,550
)
$
52,188
Net income (loss) per share attributable
to common stockholders – basic
$
(0.45
)
$
0.14
$
(1.10
)
$
0.37
Weighted-average number of shares used in
computation of net income (loss) per share attributable to common
stockholders – basic
148,285,721
31,554,720
147,443,196
22,997,311
Net income (loss) per share attributable
to common stockholders – diluted
$
(0.45
)
$
0.13
$
(1.10
)
$
0.35
Weighted-average number of shares used in
computation of net income (loss) per share attributable to common
stockholders – diluted
148,285,721
39,304,978
147,443,196
30,747,569
CONDENSED BALANCE
SHEETS
(Unaudited)
(In thousands, except share
amounts and share data)
September 30,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents
$
304,654
$
409,873
Restricted cash
1,334
13,837
Accounts receivable, net
24,779
104,589
Inventories
133,309
88,388
Prepaid expenses
44,355
45,889
Other current assets
13,441
7,446
Total current assets
521,872
670,022
Property and equipment, net
194,259
177,456
Operating lease right-of-use assets
85,284
79,474
Intangible assets, net
16,044
7,673
Other non-current assets
7,577
5,435
Total assets
$
825,036
$
940,060
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
32,521
$
37,208
Accrued liabilities and other current
liabilities
47,105
29,498
Income taxes payable
—
8,297
Deferred revenue, current
84,899
82,165
Operating lease liabilities, current
8,356
7,147
Finance lease liabilities, current
2,581
2,621
Total current liabilities
175,462
166,936
Deferred revenue, net of current
portion
10,283
10,283
Operating leases liabilities, net of
current portion
44,235
46,464
Finance lease liabilities, net of current
portion
1,268
3,271
Other non-current liabilities
3,828
6,356
Total liabilities
235,076
233,310
Stockholders’ Equity (Deficit)
Common stock, $0.00001 par value;
500,000,000 and 500,000,000 shares authorized, 149,177,691 and
146,402,991 issued and outstanding at September 30, 2022 and
December 31, 2021, respectively
1
1
Additional paid-in-capital
776,527
730,767
Accumulated deficit
(186,568
)
(24,018
)
Total stockholders’ equity
589,960
706,750
Total liabilities and stockholders’
equity
$
825,036
$
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
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Net (loss) income
$
(66,303
)
$
19,348
$
(162,550
)
$
52,188
Interest expense
346
1,786
413
9,752
Income tax expense (benefit)
(1,047
)
30,098
(4,433
)
43,374
Depreciation and amortization
11,404
11,579
32,989
26,079
Stock-based compensation
15,690
19,967
48,515
25,558
Restructuring expense
137
—
2,020
—
Inventory charges - inventory reserves /
warranty reserves
2,610
—
45,454
—
Fair value adjustment - convertible
notes
—
36,306
—
59,560
Forgiveness of promissory notes
—
12,880
—
12,880
Banking and finance-related items
—
—
—
7,998
Adjusted EBITDA
$
(37,163
)
$
131,964
$
(37,592
)
$
237,389
The following table presents the
reconciliation of Product gross profit margin to Adjusted product
gross profit margin, for the periods presented:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Product revenue
$
66,660
$
222,594
$
328,465
$
424,516
Cost of product revenue
50,595
88,569
239,190
173,746
Product gross profit
16,065
134,025
89,275
250,770
Product gross profit margin
24
%
60
%
27
%
59
%
Inventory charges - inventory reserves /
warranty reserves
2,610
—
45,454
—
Adjusted product gross profit
$
18,675
$
134,025
$
134,729
$
250,770
Adjusted product gross profit margin
28
%
60
%
41
%
59
%
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
September 30,
Nine Months Ended
September 30,
2022
2022
Dollar
Amount
Per Diluted
Share
Dollar
Amount
Per Diluted
Share
Net (loss) income / diluted EPS
$
(66,303
)
(0.45
)
$
(162,550
)
(1.10
)
Inventory charges - inventory reserves /
warranty reserves
2,610
0.02
45,454
0.31
Restructuring expense
137
—
2,020
0.01
Tax effects
(55
)
—
(954
)
(0.01
)
Adjusted net (loss) income / diluted
EPS
$
(63,611
)
(0.43
)
$
(116,030
)
(0.79
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221109005877/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