Skip to main content
Premium Trial:

Request an Annual Quote

Cue Health Anticipates Multiple Upcoming Test Launches as Q3 Revenues Fall 75 Percent

Note: This story has been updated to correct information about year-over-year comparisons for cartridge sales.

NEW YORK – Cue Health said Wednesday after the market closed that its third quarter revenues declined 75 percent year over year but exceeded internal and analyst expectations as it looks ahead to multiple test launches in the coming months.

The San Diego-based diagnostic developer currently has three molecular tests under review at the US Food and Drug Administration: a combination COVID-19 and influenza test, an influenza test, and a respiratory syncytial virus test, all of which will run on the company's Cue Reader. Cue CEO Ayub Khattak said on a conference call to discuss the firm's financial results that during the quarter the company provided additional influenza B clinical samples for the COVID/influenza and influenza standalone tests that were obtained by a clinical study conducted in the Southern Hemisphere. 

Khattak noted that with the additional data, it has exceeded the performance criteria and required prospective clinical samples for the multiplex COVID/influenza test and thinks there is a "good chance" it will receive regulatory approval during this respiratory season. The influenza standalone test is also expected to receive de novo approval during the current respiratory season.

In addition, the company received feedback on its RSV test submission and believes it can address all of the feedback within Q4 and continue the review. It expects approval later this respiratory season, Khattak said.

Once the tests receive FDA approval, the company is ready to launch the tests and manufacture them on its automated production line without significant additional capital investment, he said.

While the firm has also completed development of a Streptococcus test, Khattak said that the company made the decision to delay the start of a clinical validation study for the assay in an effort to save costs.

The company is also working on a multiplex COVID-19/influenza/RSV test for the Cue Reader, with plans to launch that test for the 2024-2025 respiratory season with Emergency Use Authorization from the FDA. Cue received a $28 million grant from the US Department of Health and Human Services' Biomedical Advanced Research and Development Authority to develop and commercialize the assay.

When asked about the market for both individual disease tests and multiplex tests, Khattak said that customers, particularly healthcare providers, want multiple options and are used to having access to both combination tests and single-disease tests. The development of both types of assays is part of Cue's regulatory strategy, he noted.

On the sexual health side of the portfolio, the company's combined chlamydia and gonorrhea assay is undergoing clinical studies and will likely be submitted to the FDA in the first half of 2024. The firm is also developing a multiplex herpes and monkeypox test it believes will be eligible for EUA and hopes to get on the market in 2024.

The new regulatory approvals will also likely boost the momentum of the firm's other offerings, including its Cue Care, Cue Lab, and Cue Pharmacy services, CFO Aasim Javed said on the conference call. The company's Cue Care service provides telehealth and prescriptions in addition to diagnostic testing, and its Cue Lab offerings are for broader laboratory-based testing.

For the three months ended Sept. 30, Cue Health posted $17.5 million in revenues, down from $69.6 million in Q3 a year ago but exceeding previous guidance of $11.0 million to $13.0 million and analysts' average estimate of $16.7 million.

Product revenues decreased 78 percent to $14.8 million from $66.7 million in Q3 2022, while grant and other revenues fell 7 percent to $2.7 million from $2.9 million. Khattak said that the company saw stronger-than-expected COVID-19 revenues during the quarter, as well as non-COVID-19-related revenue.

The company recorded public sector revenue of $3.1 million compared to $3.7 million in Q3 2022. It posted $14.4 million in private sector revenue, down 78 percent from $65.9 million in the prior quarter and making up 82 percent of total revenue.

Disposable test cartridge revenue in Q3 2023 was $13.2 million, down nearly 79 percent from $61.4 million in the year-ago quarter.

Cue Health had a Q3 net loss of $47.0 million, or $.31 per share, compared to a net loss of $66.3 million, or $.45 per share, a year ago. Adjusted loss per share was $.42, beating the consensus Wall Street estimate of a loss per share of $.45.

Cue Health exited the third quarter with $111.5 million in cash and cash equivalents.

The firm said it expects Q4 2023 revenues between $16 million and $18 million.

In August, company shareholders submitted a letter to Cue calling for significant cash reduction and a reevaluation of the business plan. A second group of shareholders submitted a letter in October reiterating these requests due to concerns about the company's cash burn and strategic direction. Khattak noted that the board of directors and management team value shareholder feedback and "take it very seriously," adding that the firm "has been executing with really strong fiscal discipline." Khattak added that Cue has brought costs down by $165 million on an annualized basis, beating its $150 million target.

According to its form 10-Q filed with the US Securities and Exchange Commission, the company had an accumulated deficit of $443.1 million as of Sept. 30. The "tempering of COVID-19 testing demand has resulted in a loss from operations," it noted, and despite the number of tests submitted to the FDA and in late-stage development phases, the receipt of regulatory approvals "is outside our control."

Management's plans to help alleviate these factors include obtaining regulatory approvals, reducing spending, and pursuing additional capital, it noted. However, there's no guarantee that the current operating plan will be achieved, and thus "substantial doubt exists about our ability to continue as a going concern" for more than the next year, it stated in its regulatory filing.