Diagnostics, Startups

Buoyed by Covid-19 tests, Cue files for IPO 

The San Diego-based company began marketing its first product, a portable Covid-19 test, after receiving an emergency use authorization last year. Now, it’s filing the initial paperwork to go public as it scales up manufacturing. 

Cue Health is filing to go public. The company currently has one authorized Covid-19 test for its portable testing platform that sends results to users’ smartphones. Photo credit: Cue Health

Cue Health, a company developing a portable testing system, is preparing to go public. The San Diego-based company filed paperwork for an IPO with the Securities and Exchange Commission, though it hasn’t yet priced its stock.

Currently, Cue has just one product: its rapid, molecular Covid-19 test. The company began bringing in revenue for the first time last year after getting an emergency use authorization (EUA) for that test. It includes cartridges that can be inserted into a reader device, with results sent to users’ smartphones. In March, it received authorization to offer that test at home and over-the-counter.

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It also won over a $481 million contract from the Department of Defense to provide 6 million test kits and 30,000 readers. The initial deadline for the contract was in March, but that was extended to October. To fulfill the contract, Cue will need to ramp up production to 100,000 Covid-19 tests per day by October 12, according to its prospectus. By the end of August, it was producing a little less than half of that.

By far, the DoD contract makes up most of Cue’s business. In the first half of 2021, the company brought in $201.9 million in revenue, 83% of which was from public sector entities, according to the filing.

But that’s still a lot more than last year, when it made a little over $15 million for the entire year.

The company also reported $32.8 million in net income in the first half of 2021, compared to a $47.4 million net loss in 2020. It currently has $77.6 million in debt.

Since all of Cue’s revenue currently stems from its Covid-19 tests, an important next step for the company will be getting FDA 510(k) clearance. To do that, it would need to conduct studies with a larger enrollment and more Covid-19 positive cases, according to the filing.

Cue also has five other tests in late-stage development. Before the pandemic, it had been developing an at-home flu test, and had launched a clinical trial in early 2020. But it stopped the study after enrollment was hindered by Covid-19.

Cue said it plans to resume the study later this year, with the goal of completing it next spring. It also plans to seek an EUA for a combined Influenza A/B and Covid-19 test.

Some other tests that are in late-stage development include RSV, fertility, pregnancy and inflammation, though Cue has not yet begun trials for these.

When it goes public, Cue will trade on the Nasdaq under the stock ticker “HLTH.”