UPDATE: Home COVID testmaker Cue Health shuts down operations, lays off staff

Cue Health is taking last week’s FDA warning letter—and the agency’s public missive urging users to throw its central product in the trash—as its cue to leave the diagnostics business. According to a report from the San Diego Union-Tribune, the company will shutter operations at the end of this week while laying off its remaining staff and leadership.

The portable COVID-19 test maker reached great heights during the peak of the pandemic, supplying its high-tech screeners to organizations such as the NBA, the MLB and the Department of Defense, while collecting groundbreaking FDA green lights for its palm-sized cartridges and readers that aimed to provide lab-quality PCR results.

Investors were also once enthusiastic, sending the former Fierce 15 winner $100 million in a June 2020 funding round—the same year the company scored a nearly half-billion-dollar federal contract to scale up its manufacturing capacity. Not long after, Cue went public through a $200 million IPO and a valuation approaching $3 billion, with the pitch that its coronavirus test was only the first step toward providing a wide range of diagnostics without forcing patients to leave their homes.

However, as the public’s attention turned away from the pandemic, its appetite for testing went with it. Diagnostics manufacturers across the industry have reported massive declines in that area of sales—but, for Cue, its COVID test was essentially its only product. 

The company’s share price fell steadily as a result, and layoffs followed. Meanwhile, its annual revenue dropped from more than $480 million in 2022 to about $70 million in 2023.

Earlier this month, the FDA handed Cue a warning letter saying the company made undisclosed changes to the reagents and design of its reader that could affect the accuracy of its over-the-counter COVID test. 

After praising the company less than a year ago for kick-starting “a new era of consumer access to diagnostic tests,” the agency ultimately recommended that anyone who still has Cue’s cartridges should dispose of them.

Now, a WARN notice filed by Cue with the state of California said at least 180 employees will be let go. That follows the company cutting about 230 of its staff earlier this month and after a string of layoffs beginning in January 2023.

According to the San Diego Union-Tribune, Cue’s remaining workers were notified Monday that their last day will be May 24, when they will receive their final paycheck covering the compensation they would have received through July. 

The company had once counted more than 1,200 global employees in 2022.

Cue files for bankruptcy

In a May 28 filing with the Securities and Exchange Commission, Cue announced that it is filing for bankruptcy—and confirmed that it had previously terminated all of its employees as well as its executive leadership, including co-founder and CEO Clint Sever, Chief Business Officer Chris Achar and Chief Accounting Officer Randall Pollard. The company’s members of its board of directors have also resigned.

Cue said in a release that it has filed Chapter 7 in Delaware bankruptcy court and now plans to liquidate what remains of the company, after “an extensive process to locate additional financing or effect a strategic transaction” by seeking a willing buyer.

“Cue is grateful to its employees for their contributions, hard work, and commitment to the business, and thankful to its customers and vendors for their partnership over the years,” the company said in its statement. “A bankruptcy trustee will be appointed shortly to gather and sell the Company’s assets and use the proceeds to pay creditors in accordance with the provisions of the Bankruptcy Code.”

The company also disclosed that it received a delisting notice from the Nasdaq earlier this month after failing to publish its quarterly financial results on time, as well as for having a share price below the stock exchange’s one-dollar minimum, under its "HLTH" ticker. While Cue would otherwise have through late July to submit a plan to regain compliance, the company said it does not intend to submit one.

Editor's note: This story was updated May 29 with Cue's bankruptcy filing announcement.