Cue Health plots next at-home tests while still raking in COVID profits for now

Fresh off the announcement that it would be slimming down its operations, with 170 manufacturing workers laid off this summer, Cue Health is back to focusing on long-term growth.

Amid somewhat surprising financial results from its portable COVID-19 diagnostic kits during the second quarter of this year, the San Diego-based company is working on quite a queue of future additions to its at-home and point-of-care tests.

Its revenues clocked in at $87.7 million: That's 36% lower than the $137.4 million it made during the same three months in 2021 but still well higher than what Cue had predicted earlier this year, when it forecast quarterly earnings between $50 million and $55 million.

The overwhelming bulk of that haul—$82.9 million, to be exact—came from sales of Cue’s disposable test cartridges. But the addition of new customers has slowed, and, between April and June, the company only shipped about 15,000 analyzers, down from 72,000 in the quarter before.

Cue’s diagnostic tests rely on a compact, reusable PCR analyzer and single-use, disease-specific cartridges. The reader retails for $250, while a bundle of three COVID tests comes to just under $200.

Meanwhile, the makeup of Cue's sales has shifted in the past year, with nearly 92% of Cue’s quarterly revenue now coming from private-sector sales. That $80.5 million segment is more than double the company’s private-sector revenues during the same period in 2021, when Cue was flush with government supply contracts.

Still, despite higher-than-expected earnings, the testmaker’s net income plummeted. It registered a net loss of $99.1 million, compared to a positive income last quarter of $2.8 million. With heavy operating expenses likely to continue as Cue develops and expands its diagnostic slate, the company may be sitting in the red for quite some time until those new test cartridges are ready.

In the future, Cue plans to add tests for flu, respiratory syncytial virus and certain sexually transmitted infections to the platform.

Clinical studies of its standalone flu test were completed in the second quarter, the company said, opening the door for a de novo submission to the FDA. Meanwhile, a combined test for COVID and the flu began its own studies at the same time, and Cue is now eyeing an emergency use authorization submission sometime before the end of September. The company plans to launch clinical studies for its RSV test before the end of the year as well, along with a diagnostic for chlamydia and gonorrhea.

Also included in Cue’s expansion plans is the recent early rollout of Cue Care, an all-in-one virtual care program that’ll give users access to diagnostics, telehealth services and prescription deliveries, all from a single platform. The full U.S. launch of the program will occur in “the next few weeks,” CEO Ayub Khattak said in a call with investors Wednesday, according to a Seeking Alpha transcript.