Business Wire | Nov 10, 2021 04:01PM EST

Cue Health Reports Third Quarter 2021 Financial Results

Nov. 10, 2021

SAN DIEGO--(BUSINESS WIRE)--Nov. 10, 2021--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 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. 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 1,085 2,602 1,085 7,562 revenue

Total revenue 223,679 4,730 425,601 9,690

Operating costs and expenses:

Cost of product 88,569 2,641 173,746 2,641 revenue

Sales and marketing 5,572 19 7,531 64

Research and 9,079 6,878 21,150 26,558 development

General and 33,084 3,694 56,336 7,458 administrative

Total operating 136,304 13,232 258,763 36,721 costs and expenses

Income (loss) from 87,375 (8,502 ) 166,838 (27,031 )operations

Interest expense (1,786 ) 514 (9,752 ) (274 )

Change in fairvalue of redeemableconvertible 243 20 53 - preferred stockwarrants

Change in fairvalue of (36,306 ) - (59,560 ) - convertible notes

Loss onextinguishment of - (610 ) (1,998 ) (610 )debt

Other income (80 ) 40 (19 ) 99 (expense), net

Net income (loss) 49,446 (8,538 ) 95,562 (27,816 )before income taxes

Income tax expense 30,098 - 43,374 -

Net income (loss) $ 19,348 $ (8,538 ) $ 52,188 $ (27,816 )

Net income (loss)per shareattributable to $ 0.14 $ (0.52 ) $ 0.37 $ (1.72 )common stockholders- basic

Weighted-averagenumber of sharesused in computationof net income 31,554,720 16,556,343 22,997,311 16,126,647 (loss) per shareattributable tocommon stockholders- basic

Net income (loss)per shareattributable to $ 0.13 $ (0.52 ) $ 0.35 $ (1.72 )common stockholders- diluted

Weighted-averagenumber of sharesused in computationof net income 39,304,978 16,556,343 30,747,569 16,126,647(loss) per shareattributable tocommon stockholders- diluted

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

CONDENSED BALANCE SHEETS

(In thousands, except share amounts and share data)

(Unaudited)

September 30, December 31, 2021 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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CONTACT: ICR Westwicke Caroline Corner ir@cuehealth.com (415) 202-5678 Cue Health press@cuehealth.com