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Cue Health Reports Third Quarter 2021 Financial Results
[November 10, 2021]

Cue Health Reports Third Quarter 2021 Financial Results


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 (News - Alert) 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 (News - Alert). 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

 


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