Cue Health Inc. ("Cue") (Nasdaq: HLTH), a healthcare technology
company, today reported financial results for the third quarter
2023.
Recent Highlights
- Reported third quarter total revenue of $17.5 million,
approximately 50% above the midpoint of our guidance range of $11
to $13 million.
- Three tests in review with the FDA:
- Cue® Flu A/B + COVID-19 Multiplex Molecular Test Emergency Use
Authorization (EUA) for at-home and point-of-care use.
- Cue Flu A/B Molecular Tests De Novo application for at-home and
point-of-care use.
- Cue RSV Molecular Test De Novo application for at-home and
point-of-care use.
- Flu A/B, RSV, and COVID Multiplex Molecular Test development
program is progressing with plans for an EUA submission and an
initial objective of having this multiplex available for the
2024-2025 respiratory season.
- Announced the Herpes + Mpox Multiplex Molecular Test
development program with initial plans to enter the market in 2024
with an EUA regulatory pathway.
- Publication of an independent, peer-reviewed study in
Microbiology Spectrum, which finds that Cue’s COVID-19 test
demonstrates accuracy comparable to laboratory PCR, while being
fast and easy-to-use in the point-of-care setting.
- Annualized run rate cost savings of approximately $165 million,
overachieving our previously stated cost reduction goal of $150
million.
- Net change in cash for the quarter was $(17.1) million.
- Ended the third quarter with cash and cash equivalents of
$111.5 million.
“In the third quarter our revenue exceeded our expectations, and
we continued to execute on our strategic priorities with strong
financial discipline. Our cost lowering program has now achieved
$165 million in annualized savings, above our $150 million target,”
said Ayub Khattak, Chairman and CEO of Cue Health. “We have our Flu
+ COVID Multiplex Molecular Test, Flu De Novo, and RSV De Novo all
deep in review with the FDA. I’m proud of the Cue team for the
strong execution across all fronts.”
Third Quarter 2023 Financial Results
Revenue was $17.5 million for the third quarter of 2023. Private
sector revenue was $14.4 million or 82% of total revenue with
strong ordering from existing customers. Public sector revenue was
$3.1 million and disposable test cartridge revenue was $13.2
million.
GAAP product gross profit was a loss of $7.4 million in the
third quarter of 2023.
GAAP operating expenses in the third quarter of 2023 were $60.0
million, excluding cost of revenue, in line with second quarter
spend and a 37% decrease from $94.6 million in the fourth quarter
of 2022.
Received employee retention credit of $20.9 million during the
third quarter and recognized in tax credits on the income
statement.
GAAP net loss in the third quarter of 2023 was $47.0 million and
earnings per diluted share was a loss of $0.31, an improvement of
$0.24 from the second quarter of 2023. Cue's adjusted net loss was
$63.6 million and adjusted earnings per diluted share was a loss of
$0.42. Adjusted EBITDA was a loss of $36.6 million.
Cue ended the third quarter with cash of $111.5 million and the
company continues to operate with no debt obligations.
Guidance
Cue Health expects fourth quarter 2023 revenues in the range of
$16 million to $18 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 received De
Novo authorization from the U.S. Food and Drug Administration (FDA)
for its COVID-19 test, which became the first home use respiratory
test to receive this FDA approval. Cue also received Emergency Use
Authorization from the FDA for its molecular Mpox test at the
point-of-care. To further expand its test menu, Cue has made other
submissions that are now under review by the FDA, including for the
Cue® Flu A/B + COVID-19 Molecular Test and the Cue® RSV Molecular
Test, both of which are designed for at-home and point-of-care use.
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 and authorization, growth
in our customer base, expectations regarding production capacity,
potential technology enhancements, expectations related to
availability of our programs and testing volumes, the ability to
achieve growth in the future, and future results of operations and
performance and our guidance, including fourth 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,” “design” 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
September 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 expense (benefit), depreciation and amortization,
stock-based compensation, tax credits, restructuring expense,
disputed vendor payment, inventory charges – inventory reserves /
warranty reserves.
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 tax credits,
disputed vendor payment, restructuring expense and tax effects.
Adjusted diluted EPS is defined as Diluted EPS before tax
credits, 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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
Product revenue
$
14,757
$
66,660
$
46,842
$
328,465
Grant and other revenue
2,720
2,929
5,296
8,234
Total revenue
17,477
69,589
52,138
336,699
Operating costs and expenses:
Cost of product revenue
22,180
50,595
91,349
239,190
Sales and marketing
7,051
18,129
26,358
69,268
Research and development
37,103
42,516
118,372
115,303
General and administrative
15,848
25,625
47,489
77,946
Restructuring expense
—
137
14,518
2,020
Total operating costs and expenses
82,182
137,002
298,086
503,727
Loss from operations
(64,705
)
(67,413
)
(245,948
)
(167,028
)
Interest expense
(304
)
(346
)
(815
)
(413
)
Tax credits
20,939
—
20,939
—
Other income, net
1,833
409
5,525
458
Net loss before income taxes
(42,237
)
(67,350
)
(220,299
)
(166,983
)
Income tax expense (benefit)
4,733
(1,047
)
4,733
(4,433
)
Net loss
$
(46,970
)
$
(66,303
)
$
(225,032
)
$
(162,550
)
Net loss per share – basic
$
(0.31
)
$
(0.45
)
$
(1.48
)
$
(1.10
)
Weighted-average number of shares used in
computation of net loss per share – basic
153,699,408
148,285,721
152,226,999
147,443,196
Net loss per share – diluted
$
(0.31
)
$
(0.45
)
$
(1.48
)
$
(1.10
)
Weighted-average number of shares used in
computation of net loss per share – diluted
153,699,408
148,285,721
152,226,999
147,443,196
CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands, except share amounts and share data)
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
111,454
$
241,530
Restricted cash
800
800
Accounts receivable, net
1,320
18,751
Inventories, net - current
63,555
82,210
Prepaid expenses
9,862
15,728
Other current assets
5,248
12,134
Total current assets
192,239
371,153
Non-current inventories, net
27,640
25,436
Property and equipment, net
166,311
189,275
Operating lease right-of-use assets
80,829
85,321
Intangible assets, net
21,539
16,867
Other non-current assets
3,735
6,528
Total assets
$
492,293
$
694,580
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
11,109
$
7,150
Accrued liabilities and other current
liabilities
39,920
52,378
Deferred revenue, current
623
1,566
Operating lease liabilities, current
5,109
7,739
Finance lease liabilities, current
1,646
2,362
Total current liabilities
58,407
71,195
Operating leases liabilities, net of
current portion
42,961
44,045
Finance lease liabilities, net of current
portion
—
849
Other non-current liabilities
2,091
1,997
Total liabilities
103,459
118,086
Stockholders’ Equity
Common stock
2
1
Additional paid-in-capital
831,938
794,567
Accumulated deficit
(443,106
)
(218,074
)
Total stockholders’ equity
388,834
576,494
Total liabilities and stockholders’
equity
$
492,293
$
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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net loss
$
(46,970
)
$
(66,303
)
$
(225,032
)
$
(162,550
)
Interest expense
304
346
815
413
Income tax expense (benefit)
4,733
(1,047
)
4,733
(4,433
)
Depreciation and amortization
13,572
11,404
37,992
32,989
Stock-based compensation
12,687
15,690
38,597
48,515
Tax credits
(20,939
)
—
(20,939
)
—
Restructuring expense
—
137
14,518
2,020
Disputed vendor payment
—
—
12,000
—
Inventory charges - inventory reserves /
warranty reserves
—
2,610
—
45,454
Adjusted EBITDA
$
(36,613
)
$
(37,163
)
$
(137,316
)
$
(37,592
)
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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Product revenue
$
14,757
$
66,660
$
46,842
$
328,465
Cost of product revenue
22,180
50,595
91,349
239,190
Product gross profit (loss)
(7,423
)
16,065
(44,507
)
89,275
Product gross profit (loss) margin
(50
)%
24
%
(95
)%
27
%
Disputed vendor payment
—
—
12,000
—
Inventory charges - inventory reserves /
warranty reserves
—
2,610
—
45,454
Adjusted product gross profit (loss)
$
(7,423
)
$
18,675
$
(32,507
)
$
134,729
Adjusted product gross profit (loss)
margin
(50
)%
28
%
(69
)%
41
%
The following table presents the reconciliation of Net loss /
diluted EPS to Adjusted net loss / diluted EPS, for the periods
presented:
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2023
Dollar Amount
Per Diluted Share
Dollar Amount
Per Diluted Share
Net loss / diluted EPS
$
(46,970
)
$
(0.31
)
$
(225,032
)
$
(1.48
)
Tax credits
(20,939
)
(0.14
)
(20,939
)
(0.14
)
Disputed vendor payment
—
—
12,000
0.08
Restructuring expense
—
—
14,518
0.10
Tax effects
4,325
0.03
4,325
0.03
Adjusted net loss / diluted EPS
$
(63,584
)
$
(0.42
)
$
(215,128
)
$
(1.41
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108612800/en/
Contact Us Lorna Williams ir@cuehealth.com
Cue Health press@cuehealth.com
Cue Health (NASDAQ:HLTH)
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