Cue Health Reports Third Quarter 2021 Financial Results

Rhea-AI Summary

Cue Health Inc. (HLTH) reported a record total revenue of $223.7 million for Q3 2021, marking a 63% increase compared to Q2 2021. Public sector revenue grew by 23% to $129.5 million, while private sector revenue surged by 191% to $94.2 million. The product gross margin increased to 60.2%. The company added over 50 new customers, nearly tripling its customer base. Operating expenses rose to $47.7 million, leading to a slight net income decrease to $19.3 million. Cue Health provides a revenue guidance of $580 million to $590 million for the full year.

Positive

• Record Q3 total revenue of $223.7 million, a 63% increase from Q2 2021.
• Public sector revenue of $129.5 million, up 23% from Q2 2021.
• Private sector revenue of $94.2 million, up 191% from Q2 2021.
• Increased product gross margin to 60.2%.
• Added over 50 new customers, increasing customer base to over 80.
• Raised $213.9 million from IPO.

Negative

• Operating expenses rose significantly to $47.7 million, from $17.6 million in Q2 2021.
• Net income slightly decreased to $19.3 million from $19.8 million in Q2 2021.
• Earnings per diluted share decreased to $0.13 from $0.14 in Q2 2021.

SAN DIEGO--(BUSINESS WIRE)-- Cue Health Inc. (Nasdaq: HLTH), a mission-driven healthcare technology company, today reported financial results for the third quarter ended September 30, 2021.

Third Quarter and Recent Highlights

• Reported record total revenue of $223.7 million for the third quarter of 2021, a 63% increase compared to the second quarter of 2021
  • Public sector revenue of $129.5 million, up 23% for the third quarter of 2021 compared to the second quarter of 2021
  • Private sector revenue of $94.2 million, up 191% for the third quarter of 2021 compared to the second quarter of 2021
• Increased product gross margin to 60.2%, up from 59.9% in the second quarter of 2021
• Added over 50 enterprise, healthcare provider and public sector customers during the third quarter, nearly tripling our direct customer base to over 80
• Completed an initial public offering of 14,375,000 shares, raising $213.9 million in proceeds after underwriting fees
• Strong balance sheet, ending the quarter with cash and cash equivalents of $446.6 million

“In the last few months, we generated record quarterly revenue while entering the public markets, growing our customer base, readying to launch our direct-to-consumer offering with integrated virtual care and in-app travel proctoring, and expanding our team,” said Ayub Khattak, CEO and co-founder of Cue Health. “We’re confident we’ve laid a solid foundation for long-term value creation at Cue and look forward to delivering on our mission of empowering people to live their healthiest lives through personalized, proactive, and informed healthcare.”

Third Quarter 2021 Financial Results

Revenue was $223.7 million for the third quarter of 2021, compared to $137.4 million for the prior quarter and $4.7 million for the prior year. The increase over the prior quarter was made possible by growth in both the public and private sector.

Public Sector revenue was $129.5 million, compared to $105.0 million for the prior quarter. The increase over the prior quarter was driven by additional deliveries to DOD / HHS under the existing agreement.

Private Sector revenue was $94.2 million, compared to $32.4 million for the prior quarter. The increase over the prior quarter was driven by significant additions to the enterprise and provider customer base.

Disposable test cartridge revenue was $179.0 million for the third quarter of 2021, up 74% from the prior quarter.

Product gross margin was 60.2% for the third quarter of 2021, up from 59.9% in the prior quarter due to the increase in production partially offset by higher labor and material costs.

Operating expenses for the third quarter of 2021 were $47.7 million, compared to $17.6 million for the third quarter of 2021. The increase was driven by growth in our overall organization including Sales and Marketing, R&D, and G&A and includes a one-time equity expense of $12.9 million.

Net income was $19.3 million for the third quarter of 2021 compared to $19.8 million in the second quarter. Earnings per diluted share was $0.13 for the third quarter of 2021 compared to $0.14 in the second quarter.

Cash and cash equivalents were $446.6 million as of September 30, 2021.

Guidance

Cue Health expects full year 2021 revenues in the range of $580.0 million to $590.0 million.

About Cue Health

Cue Health (Nasdaq: HLTH) is a mission-driven healthcare technology company that puts consumers in control of their health information and places diagnostic information at the center of care. Cue Health 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 Health’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 physician supervision. Outside the United States, Cue Health has received the CE mark in the European Union, Interim Order authorization from Health Canada, and regulatory approval from India’s Central Drugs Standard Control Organisation. Cue Health 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, as well as any other statements regarding matters that are not historical facts, may constitute “forward-looking statements”. The words, without limitation, “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” 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 Cue Health Platform, the benefits that may be realized from Cue Health’s collaboration with Google Cloud, our ability to maintain customer growth rates, our ability to increase our private sector revenue, and the factors discussed in the “Risk Factors” section of the prospectus dated September 23, 2021 filed by Cue Health 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.

CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Revenue
Product revenue	$	222,594		$	2,128		$	424,516		$	2,128
Grant and other revenue		1,085			2,602			1,085			7,562
Total revenue		223,679			4,730			425,601			9,690
Operating costs and expenses:
Cost of product revenue		88,569			2,641			173,746			2,641
Sales and marketing		5,572			19			7,531			64
Research and development		9,079			6,878			21,150			26,558
General and administrative		33,084			3,694			56,336			7,458
Total operating costs and expenses		136,304			13,232			258,763			36,721
Income (loss) from operations		87,375			(8,502	)		166,838			(27,031	)
Interest expense		(1,786	)		514			(9,752	)		(274	)
Change in fair value of redeemable convertible preferred stock warrants		243			20			53			—
Change in fair value of convertible notes		(36,306	)		—			(59,560	)		—
Loss on extinguishment of debt		—			(610	)		(1,998	)		(610	)
Other income (expense), net		(80	)		40			(19	)		99
Net income (loss) before income taxes		49,446			(8,538	)		95,562			(27,816	)
Income tax expense		30,098			—			43,374			—
Net income (loss)	$	19,348		$	(8,538	)	$	52,188		$	(27,816	)
Net income (loss) per share attributable to common stockholders – basic	$	0.14		$	(0.52	)	$	0.37		$	(1.72	)
Weighted-average number of shares used in computation of net income (loss) per share attributable to common stockholders – basic		31,554,720			16,556,343			22,997,311			16,126,647
Net income (loss) per share attributable to common stockholders – diluted	$	0.13		$	(0.52	)	$	0.35		$	(1.72	)
Weighted-average number of shares used in computation of net income (loss) per share attributable to common stockholders – diluted		39,304,978			16,556,343			30,747,569			16,126,647

CONDENSED BALANCE SHEETS
(In thousands, except share amounts and share data)
(Unaudited)
		September 30, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents		$	446,589		$	121,578
Restricted cash			12,000			6,000
Accounts receivable, net			90,190			4,168
Inventory			70,739			36,842
Prepaid expenses			47,922			13,847
Other current assets			2,088			1,263
Total current assets			669,528			183,698
Restricted cash, non-current			—			1,677
Property and equipment, net			168,642			103,683
Prepaid rent			161			16,771
Operating lease right-of-use assets			78,555			8,281
Intangible assets, net			3,691			2,038
Other non-current assets			1,407			180
Total assets		$	921,984		$	316,328

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable		$	35,148		$	23,847
Accrued liabilities and other current liabilities			26,212			8,822
Income taxes payable			37,365			—
Deferred revenue, current			76,341			115,747
Debt, current			—			5,434
Operating lease liabilities, current			3,960			797
Finance lease liabilities, current			2,603			1,249
Total current liabilities			181,629			155,896
Redeemable convertible preferred stock warrant liabilities			—			1,331
Deferred revenue, net of current portion			31,225			67,349
Operating leases liabilities, net of current portion			50,027			10,472
Finance lease liabilities, net of current portion			3,841			1,857
Other non-current liabilities			884			4,500
Total liabilities			267,606			241,405
Commitments and contingencies
Total redeemable convertible preferred stock			—			176,323
Stockholders’ Equity (Deficit)
Common stock, $0.00001 par value; 500,000,000 and 129,030,355 shares authorized, 146,362,598 and 27,995,780 issued and outstanding at September 30, 2021 and December 31, 2020, respectively			1			—
Additional paid-in-capital			712,625			9,036
Accumulated deficit			(58,248)			(110,436)
Total stockholders’ equity (deficit)			654,378			(101,400)
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)		$	921,984		$	316,328

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211110006317/en/

ICR Westwicke

Caroline Corner

ir@cuehealth.com

(415) 202-5678



Cue Health

press@cuehealth.com

Source: Cue Health Inc.

FAQ

What were Cue Health's Q3 2021 earnings results?

Cue Health reported a total revenue of $223.7 million for Q3 2021, with a net income of $19.3 million and earnings per diluted share of $0.13.

How did Cue Health perform in the public and private sectors in Q3 2021?

In Q3 2021, Cue Health's public sector revenue was $129.5 million (up 23%) and private sector revenue was $94.2 million (up 191%) compared to Q2 2021.

What is Cue Health's revenue guidance for 2021?

Cue Health expects full-year 2021 revenues in the range of $580 million to $590 million.