Cue Health Inc. ("Cue") (Nasdaq: HLTH), a healthcare technology
company, today reported financial results for the first quarter
2023.
Recent Highlights
- Reported first quarter revenue of $24.8 million
- Granted U.S. Food and Drug Administration (FDA) Emergency Use
Authorization (EUA) for Cue Mpox (Monkeypox) Molecular Test for
point-of-care use
- Submitted the Cue RSV Molecular Test as a De Novo submission to
the FDA for home and point-of-care use during the second quarter,
as planned
- Launched Cue Pharmacy, a new Cue Integrated Care Platform
expansion to enable individuals to connect with a healthcare
provider and be prescribed common medications as a
subscription
- Launched Cue Lab, a collection of at-home test kits for a wide
variety of diagnostic panels and standalone tests providing
personalized care from the convenience and privacy of home
- Cue Strep Molecular Test is on track with clinical studies
ongoing and a submission to the FDA expected in the second half of
2023
- Cue Chlamydia + Gonorrhea Molecular Test is on track with
clinical studies ongoing and a submission to the FDA expected in
the second half of 2023
- Achieved our previously announced cost reduction goal of $100
million of annualized run rate cost savings in the first quarter,
earlier than anticipated
- Initiated additional cost reduction efforts expected to
contribute an additional $50 million of annualized savings,
bringing the total goal to $150 million of annualized cost
savings
- Ended the first quarter with cash and cash equivalents of
$178.2 million and no debt obligations
“We reached several significant milestones including launching
Cue Pharmacy, Cue Lab, and receiving authorization for the Cue Mpox
test, our second FDA authorization,” said Ayub Khattak, Chairman
and CEO of Cue Health. “We have four Cue tests submitted to the
FDA, including for RSV and a Flu + COVID combo test. We are
executing our strategic plan including expanding the menu on the
Cue Health Monitoring System as well as expanding the offering for
the Cue Integrated Care Platform. We have cut our annualized costs
by an expected $150 million to weather the macroeconomic climate as
we make significant progress on our plan.”
First Quarter 2023 Financial Results
Revenue was $24.8 million for the first quarter of 2023. Private
sector revenue was $24.2 million or 98% of total revenue with
strong ordering from existing customers. Public sector revenue was
$0.6 million and disposable test cartridge revenue was $22.4
million.
GAAP product gross profit margin was a loss of 63% in the first
quarter of 2023. Adjusted product gross profit margin was a loss of
14% excluding a disputed payment charge impacting cost of product
revenue.
GAAP operating expenses in the first quarter of 2023 were $80.8
million, excluding cost of revenue, including $7.9 million of
restructuring expense related to the implementation of the cost
reduction plan. On an adjusted basis, excluding the impact of the
restructuring expense, operating expenses were $72.9 million or a
23% decrease compared to $94.6 million in the fourth quarter of
2022.
GAAP net loss in the first quarter of 2023 was $94.2 million and
earnings per diluted share was a loss of $0.62. Cue's adjusted net
loss was $74.3 million and adjusted earnings per diluted share was
a loss of $0.48. Adjusted EBITDA was a loss of $47.6 million.
Cash and cash equivalents were $178.2 million as of March 31,
2023 and the company continues to operate with no debt
obligations.
Guidance
Cue Health expects second quarter 2023 revenues in the range of
$8 million to $10 million reflecting an expected shift to a
seasonal respiratory pattern for COVID testing volumes.
About Cue Health
Cue Health Inc. (Nasdaq: HLTH) is a healthcare technology
company that uses diagnostic-enabled care to empower people to live
their healthiest lives. The Cue Health platform offers individuals
and healthcare providers convenient and personalized access to
lab-quality diagnostic tests at home and at the point of care, as
well as on-demand telehealth consultations and treatment options
for a wide range of health and wellness needs. Cue’s customers
include federal and state public sector agencies and the private
sector, which includes healthcare providers, enterprises, and
individual consumers. Cue’s COVID-19 test was the first
FDA-authorized molecular diagnostic test for at-home and
over-the-counter use without a prescription. Cue has since received
Emergency Use Authorization from the FDA for its molecular mpox
test at the point of care and, to expand its test menu, the company
has a number of other submissions under review by the FDA. Cue,
founded in 2010, owns over 100 patents 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 second quarter 2023
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”, “look forward”,
“believe” 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, mpox test and Chlamydia + Gonorrhea multiplex test,
the expansion 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, our ability to realize operating
expense annualized savings as a result of the previously announced
cost reduction program, and the factors discussed in the "Risk
Factors" section of Cue’s Annual Report on Form 10-K for the year
ended December 31, 2022, filed with the SEC on March 16, 2023 and
of Cue’s Quarterly Report on Form 10-Q for the quarter ended March
31, 2023 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.
The Cue COVID-19 Molecular Test 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.
The Cue Mpox (Monkeypox) Molecular Test has not been FDA cleared
or approved, but has been authorized for emergency use by FDA under
an EUA. This product has been authorized only for the detection of
nucleic acid from monkeypox virus, 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 infection with the monkeypox virus,
including in vitro diagnostics that detect and/or diagnose
infection with non-variola Orthopoxvirus, 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,
disputed vendor payment.
Adjusted product gross profit (loss) is defined as product gross
profit (loss), before disputed vendor payment.
Adjusted net (loss) income is defined as Net (loss) income,
before disputed vendor payment, restructuring expense and tax
effects.
Adjusted diluted EPS is defined as Diluted EPS before disputed
vendor payment, 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 CONSOLIDATED STATEMENTS
OF OPERATIONS
(In thousands, except share
data)
Three Months Ended
March 31,
2023
2022
Revenue
Product revenue
$
24,494
$
177,454
Grant and other revenue
271
1,956
Total revenue
24,765
179,410
Operating costs and expenses:
Cost of product revenue
39,823
86,697
Sales and marketing
11,248
34,168
Research and development
44,733
28,787
General and administrative
16,938
26,910
Restructuring expense
7,873
—
Total operating costs and expenses
120,615
176,562
(Loss) income from operations
(95,850
)
2,848
Interest expense
(220
)
(51
)
Other income, net
1,872
6
Net (loss) income before income taxes
(94,198
)
2,803
Income tax (benefit) expense
—
—
Net (loss) income
$
(94,198
)
$
2,803
Net (loss) income per share – basic
$
(0.62
)
$
0.02
Weighted-average number of shares used in
computation of net (loss) income per share – basic
151,083,716
146,526,370
Net (loss) income per share – diluted
$
(0.62
)
$
0.02
Weighted-average number of shares used in
computation of net (loss) income per share – diluted
151,083,716
153,036,804
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
amounts and share data)
March 31, 2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
178,201
$
241,530
Restricted cash
800
800
Accounts receivable, net
9,799
18,751
Inventories, current
82,006
82,210
Prepaid expenses
11,617
15,728
Other current assets
4,574
12,134
Total current assets
286,997
371,153
Non-current inventories
27,718
25,436
Property and equipment, net
184,197
189,275
Operating lease right-of-use assets
84,542
85,321
Intangible assets, net
19,774
16,867
Other non-current assets
5,333
6,528
Total assets
$
608,561
$
694,580
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
16,644
$
7,150
Accrued liabilities and other current
liabilities
40,173
52,378
Deferred revenue, current
754
1,566
Operating lease liabilities, current
7,739
7,739
Finance lease liabilities, current
2,148
2,362
Total current liabilities
67,458
71,195
Operating leases liabilities, net of
current portion
42,826
44,045
Finance lease liabilities, net of current
portion
417
849
Other non-current liabilities
1,997
1,997
Total liabilities
112,698
118,086
Stockholders’ Equity
Common stock, $0.00001 par value;
500,000,000 and 500,000,000 shares authorized, 151,567,650 and
150,406,014 issued and outstanding at March 31, 2023 and December
31, 2022, respectively
2
1
Additional paid-in-capital
808,133
794,567
Accumulated deficit
(312,272
)
(218,074
)
Total stockholders’ equity
495,863
576,494
Total liabilities and stockholders’
equity
$
608,561
$
694,580
Non-GAAP Measures (In thousands, except share
data)
The following table presents the reconciliation of Net (loss)
income to Adjusted EBITDA, for the periods presented:
Three Months Ended March
31,
2023
2022
Net (loss) income
$
(94,198
)
$
2,803
Interest expense
220
51
Depreciation and amortization
12,064
10,606
Stock-based compensation
14,407
16,035
Restructuring expense
7,873
—
Disputed vendor payment
12,000
—
Adjusted EBITDA
$
(47,634
)
$
29,495
The following table presents the reconciliation of Product gross
profit (loss) margin to Adjusted product gross profit (loss)
margin, for the periods presented:
Three Months Ended March
31,
2023
2022
Product revenue
$
24,494
$
177,454
Cost of product revenue
39,823
86,697
Product gross profit (loss)
(15,329
)
90,757
Product gross profit (loss) margin
(63
)%
51
%
Disputed vendor payment
12,000
—
Adjusted product gross profit (loss)
$
(3,329
)
$
90,757
Adjusted product gross profit (loss)
margin
(14
)%
51
%
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 March
31,
2023
Dollar Amount
Per Diluted Share
Net (loss) income / diluted EPS
$
(94,198
)
$
(0.62
)
Disputed vendor payment
12,000
0.08
Restructuring expense
7,873
0.06
Tax effects
—
—
Adjusted net (loss) income / diluted
EPS
$
(74,325
)
$
(0.48
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005832/en/
Lorna Williams ir@cuehealth.com
Cue Health press@cuehealth.com
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