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Cue Health Reports Strong Fourth Quarter and Full Year 2021 Financial Results

Cue Health Inc. (Nasdaq: HLTH), a healthcare technology company, (“Cue") today reported financial results for fourth quarter and full year 2021.

Key Highlights

  • Reported total revenue of $192.5 million for the fourth quarter of 2021, compared to $13.3M in the fourth quarter of 2020
  • Full year revenue of $618.1 million in 2021, compared to $23.0 million in 2020
  • Diluted EPS of $0.22 for the fourth quarter of 2021, compared to a loss of $1.16 in the fourth quarter of 2020
  • Full year diluted EPS of $0.59 in 2021, compared to a loss of $2.90 in 2020
  • Shipped more than 230,000 Cue Readers to date, almost doubling the number of readers shipped through Q3 2021
  • Today we have more than 220 directly contracted organizations as customers, up from more than 80 at the end of the third quarter 2021
  • Successfully launched virtual health platform to individual consumers across the US
  • Ended 2021 with cash and cash equivalents of $409.9 million
  • Q1 FY22 revenue guidance range of $170 million to $180 million

“In the fourth quarter, we made great progress across our growth drivers: building and diversifying our customer base, progressing the expansion of our test menu, and introducing new digital enhancements to our platform,” said Ayub Khattak, Chief Executive Office and Co-Founder of Cue Health. “We’re driving this momentum into 2022 as we plan to launch a number of clinical studies and make multiple FDA submissions before year-end. With our growing install base of nearly a quarter million Cue Readers and the further integration of our diagnostics with virtual care capabilities, we are executing on our strategy and advancing Cue’s mission of making healthcare more timely and accessible for people around the world.”

Fourth Quarter 2021 Financial Results

Revenue was $192.5 million for the fourth quarter of 2021, an increase from $13.3 million in the fourth quarter of 2020. The growth was driven by our production capacity ramp through 2021, delivery on our U.S. Department of Defense (“U.S. DoD”) contract, and expansion of our customer base across all customer categories.

Private Sector revenue grew to 54.0%, or $104.0M, for the fourth quarter of 2021. This is the first time Private Sector revenues surpassed the Public Sector, reflecting growth in our customer base.

Public Sector revenue was $88.5 million, and accounted for 46.0% of revenues for the fourth quarter of 2021. During the quarter we completed shipment of our contract with the U.S. DoD.

Disposable test cartridge revenue was $165.4 million for the fourth quarter of 2021.

Product gross margin was 46.3% for the fourth quarter of 2021, up from 7.2% in the fourth quarter 2020 due to the scale up production and related efficiencies that resulted in more favorable absorption of fixed costs on a per unit basis in 2021.

Operating expenses for the fourth quarter of 2021 were $66.3 million, excluding cost of revenues, compared to $19.0 million for the fourth quarter of 2020. The increase was driven by growth in our overall organization, digital marketing spend, and spend related to product development.

Net income was $34.2 million for the fourth quarter of 2021 compared to net loss of $19.5 million in the fourth quarter of 2020. Earnings per diluted share was $0.22 for the fourth quarter of 2021 compared to a loss of $1.16 per diluted share in the fourth quarter 2020.

Full Year 2021 Financial Results

Revenue was $618.1 million for the full year 2021, an increase from $23.0 million for the full year 2020.

Public Sector revenue was $385.3 million, an increase from $16.4 million for the prior year.

Private Sector revenue was $232.8 million, an increase from $6.5 million for the prior year.

Product gross margin was 55.1%, an increase from 2.9% for the prior year.

Operating expenses, excluding cost of revenues, were $151.3 million, compared to $53.1 million for the prior year.

Net income was $86.4 million, an increase from a net loss $47.4 million for the prior year. Earnings per diluted share was $0.59, compared to a loss of $2.90 for the prior year.

Adjusted net income was $164.5 million, an increase from a net loss of $47.4 million for the prior year.

Cash and cash equivalents were $409.9 million as of December 31, 2021.

Guidance

Cue Health expects first quarter 2022 revenues in the range of $170 million to $180 million.

About Cue Health

Cue Health (Nasdaq: HLTH) is a healthcare technology company that makes it easy for individuals to access 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 a prescription and physician supervision. Outside the United States, Cue Health has received the CE mark in the European Union, Interim Order authorization from Health Canada, regulatory approval from India’s Central Drugs Standard Control Organisation, and PSAR authorization from Singapore’s Health Sciences Authority. 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, including statements related to the commencement of any clinical studies, the submission of any FDA applications, potential technology enhancements and future performance and our guidance, including first quarter 2022 guidance, 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,” “develop,” “progress,” “expand” 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 new Omicron-specific genotyping Cue test, 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, and the factors discussed in the "Risk Factors" section of Cue’s Annual Report on Form 10-K for the year ended December 31, 2021 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.

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)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

Revenue

 

 

 

 

 

 

 

Product revenue

$

191,280

 

 

$

13,263

 

 

$

615,796

 

 

$

15,391

 

Grant and other revenue

 

1,226

 

 

 

 

 

 

2,311

 

 

 

7,562

 

Total revenue

 

192,506

 

 

 

13,263

 

 

 

618,107

 

 

 

22,953

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of product revenue

 

102,796

 

 

 

12,310

 

 

 

276,542

 

 

 

14,951

 

Sales and marketing

 

21,198

 

 

 

650

 

 

 

28,729

 

 

 

714

 

Research and development

 

21,679

 

 

 

1,920

 

 

 

42,829

 

 

 

28,478

 

General and administrative

 

23,452

 

 

 

16,478

 

 

 

79,788

 

 

 

23,936

 

Total operating costs and expenses

 

169,125

 

 

 

31,358

 

 

 

427,888

 

 

 

68,079

 

Income (loss) from operations

 

23,381

 

 

 

(18,095

)

 

 

190,219

 

 

 

(45,126

)

 

 

 

 

 

 

 

 

Interest expense

 

(57

)

 

 

(100

)

 

 

(9,809

)

 

 

(374

)

Change in fair value of redeemable convertible preferred stock warrants

 

 

 

 

(1,289

)

 

 

53

 

 

 

(1,289

)

Change in fair value of convertible notes

 

 

 

 

 

 

 

(59,560

)

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

(1,998

)

 

 

(610

)

Other income (expense), net

 

291

 

 

 

(52

)

 

 

272

 

 

 

47

 

Net income (loss) before income taxes

 

23,615

 

 

 

(19,536

)

 

 

119,177

 

 

 

(47,352

)

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

(10,615

)

 

 

 

 

 

32,759

 

 

 

 

Net income (loss)

$

34,230

 

 

$

(19,536

)

 

$

86,418

 

 

$

(47,352

)

Net income (loss) per share attributable to common stockholders – basic

$

0.23

 

 

$

(1.16

)

 

$

0.63

 

 

$

(2.90

)

Weighted-average number of shares used in computation of net income (loss) per share attributable to common stockholders – basic

 

146,367,756

 

 

 

16,878,866

 

 

 

52,815,449

 

 

 

16,315,730

 

Net income (loss) per share attributable to common stockholders – diluted

$

0.22

 

 

$

(1.16

)

 

$

0.59

 

 

$

(2.90

)

Weighted-average number of shares used in computation of net income (loss) per share attributable to common stockholders – diluted

 

152,531,173

 

 

 

16,878,866

 

 

 

59,635,384

 

 

 

16,315,730

 

 

CONDENSED BALANCE SHEETS

(In thousands, except share amounts and share data)

 

 

December 31,

2021

 

December 31,

2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

409,873

 

 

$

121,578

 

Restricted cash

 

13,837

 

 

 

6,000

 

Accounts receivable, net

 

104,589

 

 

 

4,168

 

Inventory

 

88,388

 

 

 

36,842

 

Prepaid expenses

 

45,889

 

 

 

13,847

 

Other current assets

 

7,446

 

 

 

1,263

 

Total current assets

 

670,022

 

 

 

183,698

 

 

 

 

 

Restricted cash, non-current

 

 

 

 

1,677

 

Property and equipment, net

 

177,456

 

 

 

103,683

 

Prepaid rent

 

1,567

 

 

 

16,771

 

Operating lease right-of-use assets

 

79,474

 

 

 

8,281

 

Intangible assets, net

 

7,673

 

 

 

2,038

 

Other non-current assets

 

3,868

 

 

 

180

 

Total assets

$

940,060

 

 

$

316,328

 

 

 

 

 

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

37,208

 

 

$

23,847

 

Accrued liabilities and other current liabilities

 

29,498

 

 

 

8,822

 

Income taxes payable

 

8,297

 

 

 

 

Deferred revenue, current

 

82,165

 

 

 

115,747

 

Debt, current

 

 

 

 

5,434

 

Operating lease liabilities, current

 

7,147

 

 

 

797

 

Finance lease liabilities, current

 

2,621

 

 

 

1,249

 

Total current liabilities

 

166,936

 

 

 

155,896

 

 

 

 

 

Redeemable convertible preferred stock warrant liabilities

 

 

 

 

1,331

 

Deferred revenue, net of current portion

 

10,283

 

 

 

67,349

 

Operating leases liabilities, net of current portion

 

46,464

 

 

 

10,472

 

Finance lease liabilities, net of current portion

 

3,271

 

 

 

1,857

 

Other non-current liabilities

 

6,356

 

 

 

4,500

 

Total liabilities

 

233,310

 

 

 

241,405

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Total redeemable convertible preferred stock

 

 

 

 

176,323

 

 

 

 

 

Stockholders’ Equity (Deficit)

 

 

 

Preferred stock, $0.00001 par value; 50,000,000 and no shares authorized, no shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively

 

 

 

 

 

Common stock, $0.00001 par value; 500,000,000 and 129,030,355 shares authorized, 146,402,991 and 27,995,780 issued and outstanding at December 31, 2021 and December 31, 2020, respectively

 

1

 

 

 

 

Additional paid-in-capital

 

730,767

 

 

 

9,036

 

Accumulated deficit

 

(24,018

)

 

 

(110,436

)

Total stockholders’ equity (deficit)

 

706,750

 

 

 

(101,400

)

Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)

$

940,060

 

 

$

316,328

 

 

Non-GAAP Net Income (Loss)

(In thousands, except share data)

 

 

Year Ended December 31,

 

2021

 

2020

 

Dollar

Amount

 

Per

Diluted

Share

 

Dollar

Amount

 

Per

Diluted

Share

 

 

Net income (loss)/diluted EPS

$

86,418

 

 

 

0.59

 

 

$

(47,352

)

 

 

(2.90

)

Fair value adjustments of convertible notes

 

59,560

 

 

 

0.47

 

 

 

 

 

 

 

Banking and financing-related items

 

7,998

 

 

 

0.07

 

 

 

 

 

 

 

Forgiveness of promissory notes

 

12,880

 

 

 

0.10

 

 

 

 

 

 

 

Tax effects

 

(2,315

)

 

 

(0.02

)

 

 

 

 

 

 

Adjusted net income (loss)/adjusted diluted EPS

$

164,541

 

 

$

1.21

 

 

$

(47,352

)

 

$

(2.90

)

 

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