Cue Health Inc. ("Cue") (Nasdaq: HLTH), a healthcare technology
company, today reported financial results for the second quarter
2023.
Recent Highlights
- Reported second quarter total revenue of $10 million at the
top-end of our guidance.
- Received landmark first, over-the-counter De Novo authorization
from the FDA for the Cue COVID-19 Molecular Test.
- Awarded a new $28.3 million contract from BARDA, the U.S.
Biomedical Advanced Research and Development Authority, to
accelerate the development, validation, and regulatory
authorization of a Flu A/B + RSV + COVID-19 molecular multiplex
test for both at-home and point-of-care setting.
- Submitted the Cue RSV Molecular Test as a De Novo submission to
the FDA for at-home and point-of-care use during the second
quarter.
- Flu + COVID combo test under review at FDA.
- Chlamydia + Gonorrhea molecular test is on track for a
submission to the FDA planned for the fourth quarter of 2023.
- Achieved our previously announced cost reduction goal of $150
million of annualized run rate cost savings during the second
quarter ahead of our original plan.
- Ended the second quarter with cash and cash equivalents of
$128.6 million and no debt obligations.
“We achieved the top-end of our guidance in the quarter, and
expect to return to growth in the second half of the year. We
achieved the industry-first FDA De Novo authorization for
over-the-counter use of our COVID-19 test, a positive signal for
our menu expansion objectives. These include our combination Flu +
COVID molecular test and our standalone RSV test, both of which are
now under FDA review,” said Ayub Khattak, Chairman and CEO of Cue
Health. “Another recent achievement driving our momentum is our new
contract with BARDA to develop a Flu + COVID + RSV multiplex test
for over-the-counter and point-of-care use. We continue to make
good progress on our sexual health menu, with the EUA for our mpox
test and our chlamydia & gonorrhea molecular test, which is
on-track to submit to the FDA in the fourth quarter. These
milestones, together with the early positive signs we’re seeing
from Cue Lab and Cue Pharmacy, gives us optimism and confidence in
the future of the Cue Health platform.”
Second Quarter 2023 Financial Results
Revenue was $9.9 million for the second quarter of 2023. Private
sector revenue was $7.6 million or 76% of total revenue with strong
ordering from existing customers. Public sector revenue was $2.3
million and disposable test cartridge revenue was $7.3 million.
GAAP product gross profit was a loss of $21.8 million in the
second quarter of 2023 impacted by lower manufacturing volumes and
a $11.7 million write-down of excess inventory.
GAAP operating expenses in the second quarter of 2023 were $65.9
million, excluding cost of revenue, including $6.6 million of
restructuring expense related to the cost reduction plan. On an
adjusted basis, excluding the impact of the restructuring expense,
operating expenses were $59.3 million, a sequential decrease of 19%
compared to the first quarter and a 37% decrease from $94.6 million
in the fourth quarter of 2022. As of the end of the second quarter,
the company has achieved the full amount of the previously
announced cost reduction goal of $150 million annualized run rate
cost savings.
GAAP net loss in second quarter of 2023 was $83.9 million and
earnings per diluted share was a loss of $0.55 or an improvement of
$0.12 from the second quarter of 2022. Cue's adjusted net loss was
$77.2 million and adjusted earnings per diluted share was a loss of
$0.51. Adjusted EBITDA was a loss of $53.1 million.
Cash and cash equivalents were $128.6 million as of June 30,
2023 and the company continues to operate with no debt
obligations.
Guidance
Cue Health expects third quarter 2023 revenues in the range of
$11 million to $13 million.
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,
expectations related to testing volumes, the ability to achieve
growth in the future, our contract with BARDA, and future results
of operations and performance and our guidance, including third
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 June
30, 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 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 Operating Expenses, 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 loss before interest expense,
income tax 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, inventory charges –
inventory reserves / warranty reserves.
Adjusted operating expenses is defined as operating expenses
before cost of revenue, restructuring expense.
Adjusted net loss is defined as Net loss, 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
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Revenue
Product revenue
$
7,591
$
84,351
$
32,085
$
261,805
Grant and other revenue
2,305
3,349
2,576
5,305
Total revenue
9,896
87,700
34,661
267,110
Operating costs and expenses:
Cost of product revenue
29,346
101,898
69,169
188,595
Sales and marketing
8,059
16,971
19,307
51,139
Research and development
36,536
44,000
81,269
72,787
General and administrative
14,703
25,411
31,641
52,321
Restructuring expense
6,645
1,883
14,518
1,883
Total operating costs and expenses
95,289
190,163
215,904
366,725
Loss from operations
(85,393)
(102,463)
(181,243)
(99,615)
Interest expense
(291)
(16)
(511)
(67)
Other income, net
1,820
43
3,692
49
Net loss before income taxes
(83,864)
(102,436)
(178,062)
(99,633)
Income tax benefit
—
(3,386)
—
(3,386)
Net loss
(83,864)
(99,050)
(178,062)
(96,247)
Net loss per share – basic
$
(0.55)
$
(0.67)
$
(1.18)
$
(0.65)
Weighted-average number of shares used in
computation of net loss per share – basic
151,869,131
147,498,162
151,478,593
147,014,951
Net loss per share – diluted
$
(0.55)
$
(0.67)
$
(1.18)
$
(0.65)
Weighted-average number of shares used in
computation of net loss per share – diluted
151,869,131
147,498,162
151,478,593
147,014,951
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
amounts and share data)
June 30,
2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
128,551
$
241,530
Restricted cash
800
800
Accounts receivable, net
1,707
18,751
Inventories, current
68,373
82,210
Prepaid expenses
9,318
15,728
Other current assets
3,326
12,134
Total current assets
212,075
371,153
Non-current inventories
28,014
25,436
Property and equipment, net
175,447
189,275
Operating lease right-of-use assets
82,752
85,321
Intangible assets, net
21,769
16,867
Other non-current assets
3,802
6,528
Total assets
$
523,859
$
694,580
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
11,210
$
7,150
Accrued liabilities and other current
liabilities
35,924
52,378
Deferred revenue, current
468
1,566
Operating lease liabilities, current
7,672
7,739
Finance lease liabilities, current
1,756
2,362
Total current liabilities
57,030
71,195
Operating leases liabilities, net of
current portion
41,655
44,045
Finance lease liabilities, net of current
portion
—
849
Other non-current liabilities
1,997
1,997
Total liabilities
100,682
118,086
Stockholders’ Equity
Common stock
2
1
Additional paid-in-capital
819,311
794,567
Accumulated deficit
(396,136)
(218,074)
Total stockholders’ equity
423,177
576,494
Total liabilities and stockholders’
equity
$
523,859
$
694,580
Non-GAAP Measures (In thousands,
except share data)
The following table presents the
reconciliation of Net loss to Adjusted EBITDA, for the periods
presented:
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Net loss
$
(83,864)
$
(99,050)
$
(178,062)
$
(96,247)
Interest expense
291
16
511
67
Income tax benefit
—
(3,386)
—
(3,386)
Depreciation and amortization
12,356
10,979
24,420
21,585
Stock-based compensation
11,502
16,792
25,910
32,826
Restructuring expense
6,645
1,883
14,518
1,883
Disputed vendor payment
—
—
12,000
—
Inventory charges
—
42,844
—
42,844
Adjusted EBITDA
$
(53,070)
$
(29,922)
$
(100,703)
$
(428)
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
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Product revenue
$
7,591
$
84,351
$
32,085
$
261,805
Cost of product revenue
29,346
101,898
69,169
188,595
Product gross profit (loss)
(21,755)
(17,547)
(37,084)
73,210
Product gross profit (loss) margin
(287) %
(21) %
(116) %
28 %
Disputed vendor payment
—
—
12,000
—
Inventory charges - inventory reserves /
warranty reserves
—
42,844
—
42,844
Adjusted product gross profit (loss)
$
(21,755)
$
25,297
$
(25,084)
$
116,054
Adjusted product gross profit (loss)
margin
(287) %
30 %
(78) %
44 %
The following table presents the
reconciliation of Net loss / diluted EPS to Adjusted net loss /
diluted EPS, for the periods presented:
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2023
Dollar
Amount
Per Diluted Share
Dollar
Amount
Per Diluted Share
Net loss / diluted EPS
$
(83,864)
$
(0.55)
$
(178,062)
$
(1.18)
Disputed vendor payment
—
—
12,000
0.08
Restructuring expense
6,645
0.04
14,518
0.10
Tax effects
—
—
—
—
Adjusted net loss / diluted EPS
$
(77,219)
$
(0.51)
$
(151,544)
$
(1.00)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809628167/en/
Lorna Williams ir@cuehealth.com Cue Health
press@cuehealth.com
Cue Health (NASDAQ:HLTH)
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