Cue Health Reports Fourth Quarter 2023 Financial Results
- None.
- - Cue Health Inc. reported a GAAP net loss of $148.4 million in the fourth quarter of 2023, indicating significant financial challenges despite revenue growth.
- - Cue's adjusted net loss for the full year 2023 was $267.2 million, reflecting continued financial struggles.
- - The company's GAAP product gross profit showed a loss of $62.9 million for the full year 2023, highlighting profitability concerns.
- - Cue's adjusted EBITDA was a loss of $24.4 million in the fourth quarter of 2023, indicating operational inefficiencies.
- - Despite revenue growth, Cue Health Inc. faces substantial financial losses, with a GAAP net loss of $373.5 million for the full year 2023.
Insights
The financial results reported by Cue Health Inc. for the fourth quarter and full year 2023 reflect a challenging period for the company, with significant net losses and operating costs. The reported net loss of $148.4 million for the fourth quarter and $373.5 million for the full year indicate substantial financial pressure, exacerbated by one-time inventory charges and impairment of long-lived assets. The adjusted EBITDA loss of $24.4 million for the quarter and $163.8 million for the year further underscores the need for stringent cost management and operational efficiency.
From an investment perspective, the company's cost reduction plans, which are projected to save approximately $200 million annually, could be a strategic move to improve financial health. However, investors should closely monitor the company's ability to generate revenue from its pipeline of diagnostic tests and the expansion of its Integrated Care Platform. The anticipated launch of new products, such as the Herpes + Mpox Multiplex Molecular Test, could provide additional revenue streams, but the success of these launches is not guaranteed.
The guidance for the first quarter of 2024, with revenues projected between $9 million to $11 million, suggests a continued downward trend in revenue, which could be a point of concern for stakeholders. The company's current cash reserves of $80.9 million, with no debt obligations, provide some buffer, but the burn rate will be a critical factor to watch in the coming quarters.
Examining Cue Health Inc.'s performance within the broader healthcare technology market, the company's focus on developing multiplex molecular tests for various diseases positions it within a competitive and high-growth potential segment. The demand for accurate, rapid diagnostic solutions, especially for conditions like Flu, RSV and COVID-19, is likely to remain high in the post-pandemic era.
However, the company's significant gross profit losses, both GAAP and adjusted, indicate pricing pressures or inefficiencies in the cost of goods sold. The private sector revenue, constituting 91% of total revenue, suggests a strong reliance on this segment, which could be both an opportunity and a risk, depending on the market dynamics and competition.
Given the anticipated product launches and the expansion of the Integrated Care Platform, the company's ability to capture market share and establish a strong customer base will be crucial. The 49% decrease in adjusted operating costs year-over-year is a positive sign of cost control, but it is essential to balance this with investments in marketing and sales to drive revenue growth.
From a medical research and regulatory standpoint, Cue Health's progress in submitting additional clinical samples and stability data for RSV and Flu A/B to the FDA is a critical step towards expanding its product portfolio. The de novo submission process is a rigorous FDA pathway for novel devices that can be lengthy and uncertain, but successful authorization can significantly enhance the company's market presence.
The development of a Herpes + Mpox Multiplex Molecular Test is particularly noteworthy, as it addresses emerging healthcare needs. The planned submission for Emergency Use Authorization (EUA) in the second quarter of 2024 could expedite the test's availability, which is essential during public health emergencies.
It is important to note that the company has already secured two FDA authorizations for its COVID-19 and Mpox Molecular Tests, which demonstrates a track record of regulatory success. However, the financial investment required for research and development, as well as the regulatory approval process, must be weighed against the potential market demand and revenue generation capabilities of these new products.
Recent Highlights
-
Reported fourth quarter total revenue of
$18.8 million $70.9 million - Submitted additional clinical samples and stability data for RSV to the FDA in support of de novo submission
- Submitted additional clinical samples and gathering additional stability data for Flu A/B to the FDA in support of de novo submission
- In late stage development of Herpes + Mpox Multiplex Molecular Test with plan to submit for EUA in 2Q24
-
Executed cost reduction plans, resulting in cash savings of approximately
$200 million -
Reported cash and cash equivalents of
$80.9 million
“We made progress executing on our strategic priorities in 2023. We obtained two FDA authorizations including a de novo approval for our COVID-19 Molecular Test and an EUA for our Mpox Molecular Test, and made two de novo submissions for our RSV and Flu standalone molecular tests. We also drove significant development progress on our all-in-one Flu + COVID-19 + RSV test, our Herpes + Mpox multiplex test, and we expanded our Integrated Care Platform with a new suite of at-home diagnostics tests and treatments, all while streamlining our cost structure,” said Ayub Khattak, Chairman and CEO of Cue. “We believe that these successes have positioned us well for 2024.”
Fourth Quarter 2023 Financial Results
Revenue was
GAAP product gross profit was a loss of
GAAP operating costs and expenses in the fourth quarter of 2023 were
GAAP net loss in the fourth quarter of 2023 was
Full-Year 2023 Financial Results
Revenue was
GAAP product gross profit was a loss of
GAAP operating costs and expenses for the full year 2023 were
GAAP net loss for the full year 2023 was
Cash and cash equivalents were
Guidance
Cue expects first quarter 2024 revenues in the range of
Webcast and Conference Call Information
Cue will host a conference call to discuss the fourth quarter and full year 2023 financial results, after market close on Wednesday, March 13, 2024, at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time.
To access the live call via telephone, please register in advance using the link here. Upon registering, each participant will receive an email confirmation with dial-in numbers and a unique personal PIN that can be used to join the call.
The live webinar may be accessed by visiting the “Events” section of the Company’s website at investors.cuehealth.com. A replay of the webinar will be available on the Company’s website shortly after the conclusion of the call.
About Cue
Cue Health Inc. (Nasdaq: HLTH) is a healthcare technology company that uses diagnostic-enabled care to empower people to live their healthiest lives. Cue’s 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
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 and timing of such clearance, authorization and submissions, growth in our customer base, expectations regarding production capacity and product launches, 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 first quarter 2024 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 expectations around FDA submissions, applications, authorizations and timing, 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, 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 (Loss) Margin, Adjusted Operating Expenses, Adjusted Net Loss, 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 income, interest expense, income tax expense (benefit), depreciation and amortization, stock-based compensation, impairment of long-lived assets, restructuring expense, tax credits, disputed vendor payment, inventory charges,
Adjusted product gross profit (loss) is defined as product gross profit (loss), before DoD deferred revenue release, disputed vendor payment, inventory charges.
Adjusted operating costs and expenses is defined as operating costs and expenses before cost of product revenue, impairment of long-lived assets, restructuring expense.
Adjusted net loss is defined as Net loss, before impairment of long-lived assets, restructuring expense, tax credits, disputed vendor payment, inventory charges and tax effects.
Adjusted diluted EPS is defined as Diluted EPS before impairment of long-lived assets, restructuring expense, tax credits, disputed vendor payment, inventory charges 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.
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share data) |
|||||||||||||||
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenue |
|
|
|
|
|
|
|
||||||||
Product revenue |
$ |
17,381 |
|
|
$ |
145,701 |
|
|
$ |
64,223 |
|
|
$ |
474,166 |
|
Grant and other revenue |
|
1,417 |
|
|
|
1,076 |
|
|
|
6,713 |
|
|
|
9,310 |
|
Total revenue |
|
18,798 |
|
|
|
146,777 |
|
|
|
70,936 |
|
|
|
483,476 |
|
|
|
|
|
|
|
|
|
||||||||
Operating costs and expenses: |
|
|
|
|
|
|
|
||||||||
Cost of product revenue |
|
35,742 |
|
|
|
90,783 |
|
|
|
127,091 |
|
|
|
329,973 |
|
Sales and marketing |
|
6,226 |
|
|
|
19,312 |
|
|
|
32,584 |
|
|
|
88,580 |
|
Research and development |
|
32,248 |
|
|
|
56,149 |
|
|
|
150,620 |
|
|
|
171,452 |
|
General and administrative |
|
9,866 |
|
|
|
19,157 |
|
|
|
57,355 |
|
|
|
97,103 |
|
Impairment of long-lived assets |
|
83,639 |
|
|
|
— |
|
|
|
83,639 |
|
|
|
— |
|
Restructuring expense |
|
(18 |
) |
|
|
— |
|
|
|
14,500 |
|
|
|
2,020 |
|
Total operating costs and expenses |
|
167,703 |
|
|
|
185,401 |
|
|
|
465,789 |
|
|
|
689,128 |
|
Loss from operations |
|
(148,905 |
) |
|
|
(38,624 |
) |
|
|
(394,853 |
) |
|
|
(205,652 |
) |
|
|
|
|
|
|
|
|
||||||||
Interest income |
|
1,084 |
|
|
|
1,988 |
|
|
|
6,240 |
|
|
|
3,328 |
|
Interest expense |
|
(344 |
) |
|
|
(232 |
) |
|
|
(1,159 |
) |
|
|
(645 |
) |
Tax credits |
|
— |
|
|
|
— |
|
|
|
20,939 |
|
|
|
— |
|
Other income (expense), net |
|
(207 |
) |
|
|
46 |
|
|
|
162 |
|
|
|
(835 |
) |
Net loss before income taxes |
|
(148,372 |
) |
|
|
(36,821 |
) |
|
|
(368,671 |
) |
|
|
(203,804 |
) |
|
|
|
|
|
|
|
|
||||||||
Income tax expense (benefit) |
|
60 |
|
|
|
(5,315 |
) |
|
|
4,793 |
|
|
|
(9,748 |
) |
Net loss |
$ |
(148,432 |
) |
|
$ |
(31,506 |
) |
|
$ |
(373,464 |
) |
|
$ |
(194,056 |
) |
Net loss per share – basic & diluted |
$ |
(0.96 |
) |
|
$ |
(0.21 |
) |
|
$ |
(2.44 |
) |
|
$ |
(1.31 |
) |
Weighted-average number of shares used in computation of net loss per share – basic & diluted |
|
154,807,021 |
|
|
|
149,711,419 |
|
|
|
152,877,306 |
|
|
|
148,024,749 |
|
CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts and share data) |
|||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
80,889 |
|
|
$ |
241,530 |
|
Restricted cash |
|
800 |
|
|
|
800 |
|
Accounts receivable, net |
|
1,352 |
|
|
|
18,751 |
|
Inventories, net - current |
|
14,039 |
|
|
|
82,210 |
|
Prepaid expenses |
|
8,479 |
|
|
|
15,728 |
|
Other current assets |
|
4,803 |
|
|
|
12,134 |
|
Total current assets |
|
110,362 |
|
|
|
371,153 |
|
Non-current inventories, net |
|
56,273 |
|
|
|
25,436 |
|
Property and equipment, net |
|
72,096 |
|
|
|
189,275 |
|
Operating lease right-of-use assets |
|
78,519 |
|
|
|
85,321 |
|
Intangible assets, net |
|
19,644 |
|
|
|
16,867 |
|
Other non-current assets |
|
2,893 |
|
|
|
6,528 |
|
Total assets |
$ |
339,787 |
|
|
$ |
694,580 |
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
7,705 |
|
|
$ |
7,150 |
|
Accrued liabilities and other current liabilities |
|
29,300 |
|
|
|
52,378 |
|
Deferred revenue, current |
|
162 |
|
|
|
1,566 |
|
Operating lease liabilities, current |
|
5,142 |
|
|
|
7,739 |
|
Finance lease liabilities, current |
|
1,157 |
|
|
|
2,362 |
|
Total current liabilities |
|
43,466 |
|
|
|
71,195 |
|
Operating leases liabilities, net of current portion |
|
41,640 |
|
|
|
44,045 |
|
Finance lease liabilities, net of current portion |
|
— |
|
|
|
849 |
|
Other non-current liabilities |
|
4,429 |
|
|
|
1,997 |
|
Total liabilities |
|
89,535 |
|
|
|
118,086 |
|
Stockholders’ Equity |
|
|
|
||||
Common stock |
|
2 |
|
|
|
1 |
|
Additional paid-in-capital |
|
841,788 |
|
|
|
794,567 |
|
Accumulated deficit |
|
(591,538 |
) |
|
|
(218,074 |
) |
Total stockholders’ equity |
|
250,252 |
|
|
|
576,494 |
|
Total liabilities and stockholders’ equity |
$ |
339,787 |
|
|
$ |
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 December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net loss |
$ |
(148,432 |
) |
|
$ |
(31,506 |
) |
|
$ |
(373,464 |
) |
|
$ |
(194,056 |
) |
Interest income |
|
(1,084 |
) |
|
|
(1,988 |
) |
|
|
(6,240 |
) |
|
|
(3,328 |
) |
Interest expense |
|
344 |
|
|
|
232 |
|
|
|
1,159 |
|
|
|
645 |
|
Income tax expense (benefit) |
|
60 |
|
|
|
(5,315 |
) |
|
|
4,793 |
|
|
|
(9,748 |
) |
Depreciation and amortization |
|
15,219 |
|
|
|
14,337 |
|
|
|
56,278 |
|
|
|
48,972 |
|
Stock-based compensation |
|
10,138 |
|
|
|
15,776 |
|
|
|
48,735 |
|
|
|
64,291 |
|
Impairment of long-lived assets |
|
83,639 |
|
|
|
— |
|
|
|
83,639 |
|
|
|
— |
|
Restructuring expense |
|
(18 |
) |
|
|
— |
|
|
|
14,500 |
|
|
|
2,020 |
|
Tax credits |
|
— |
|
|
|
— |
|
|
|
(20,939 |
) |
|
|
— |
|
Disputed vendor payment |
|
— |
|
|
|
— |
|
|
|
12,000 |
|
|
|
— |
|
Inventory charges |
|
15,705 |
|
|
|
47,352 |
|
|
|
15,705 |
|
|
|
92,806 |
|
DoD deferred revenue release |
|
— |
|
|
|
(92,448 |
) |
|
|
— |
|
|
|
(92,448 |
) |
Adjusted EBITDA |
$ |
(24,429 |
) |
|
$ |
(53,560 |
) |
|
$ |
(163,834 |
) |
|
$ |
(90,846 |
) |
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 December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Product revenue |
$ |
17,381 |
|
|
$ |
145,701 |
|
|
$ |
64,223 |
|
|
$ |
474,166 |
|
Cost of product revenue |
|
35,742 |
|
|
|
90,783 |
|
|
|
127,091 |
|
|
|
329,973 |
|
Product gross profit (loss) |
$ |
(18,361 |
) |
|
$ |
54,918 |
|
|
$ |
(62,868 |
) |
|
$ |
144,193 |
|
Product gross profit (loss) margin |
|
(106 |
)% |
|
|
38 |
% |
|
|
(98 |
)% |
|
|
30 |
% |
|
|
|
|
|
|
|
|
||||||||
DoD deferred revenue release |
|
— |
|
|
|
(92,448 |
) |
|
|
— |
|
|
|
(92,448 |
) |
Adjusted product revenue |
|
17,381 |
|
|
|
53,253 |
|
|
|
64,223 |
|
|
|
381,718 |
|
Disputed vendor payment |
|
— |
|
|
|
— |
|
|
|
12,000 |
|
|
|
— |
|
Inventory charges |
|
15,705 |
|
|
|
47,352 |
|
|
|
15,705 |
|
|
|
92,806 |
|
Adjusted product gross profit (loss) |
$ |
(2,656 |
) |
|
$ |
9,822 |
|
|
$ |
(35,163 |
) |
|
$ |
144,551 |
|
Adjusted product gross profit (loss) margin |
|
(15 |
)% |
|
|
18 |
% |
|
|
(55 |
)% |
|
|
38 |
% |
The following table presents the reconciliation of Operating costs and expenses to Adjusted operating costs and expenses, for the periods presented: |
||||||||||||
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||
Operating costs and expenses |
$ |
167,703 |
|
|
$ |
185,401 |
|
$ |
465,789 |
|
$ |
689,128 |
Cost of product revenue |
|
35,742 |
|
|
|
90,783 |
|
|
127,091 |
|
|
329,973 |
Operating costs and expenses excluding cost of product revenue |
|
131,961 |
|
|
|
94,618 |
|
|
338,698 |
|
|
359,155 |
Impairment of long-lived assets |
|
83,639 |
|
|
|
— |
|
|
83,639 |
|
|
— |
Restructuring expense |
|
(18 |
) |
|
|
— |
|
|
14,500 |
|
|
2,020 |
Adjusted operating costs and expenses |
$ |
48,340 |
|
|
$ |
94,618 |
|
$ |
240,559 |
|
$ |
357,135 |
The following table presents the reconciliation of Net loss / diluted EPS to Adjusted net loss / diluted EPS, for the periods presented: |
|||||||||||||||
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
2023 |
|
2023 |
||||||||||||
|
Dollar Amount |
|
Per Diluted Share |
|
Dollar Amount |
|
Per Diluted Share |
||||||||
Net loss / diluted EPS |
$ |
(148,432 |
) |
|
$ |
(0.96 |
) |
|
$ |
(373,464 |
) |
|
$ |
(2.44 |
) |
Impairment of long-lived assets |
|
83,639 |
|
|
|
0.54 |
|
|
|
83,639 |
|
|
|
0.55 |
|
Restructuring expense |
|
(18 |
) |
|
|
— |
|
|
|
14,500 |
|
|
|
0.09 |
|
Tax credits |
|
— |
|
|
|
— |
|
|
|
(20,939 |
) |
|
|
(0.14 |
) |
Disputed vendor payment |
|
— |
|
|
|
— |
|
|
|
12,000 |
|
|
|
0.08 |
|
Inventory charges |
|
15,705 |
|
|
|
0.10 |
|
|
|
15,705 |
|
|
|
0.10 |
|
Tax effects |
|
40 |
|
|
|
— |
|
|
|
1,364 |
|
|
|
0.01 |
|
Adjusted net loss / diluted EPS |
$ |
(49,066 |
) |
|
$ |
(0.32 |
) |
|
$ |
(267,195 |
) |
|
$ |
(1.75 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240313695867/en/
Press
Cue Health
press@cuehealth.com
Investors
ICR Westwicke
Caroline Corner
+1-415-202-5678
caroline.corner@westwicke.com
Source: Cue Health Inc.
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