Portable diagnostics company Cue Health raised $200 million in its IPO on Friday. The San Diego-based company is currently trading on the Nasdaq for $18.63, under the ticker “HLTH.” It had originally sought an offering of 12.5 million shares, priced at $16 each.
Founded in 2010, Cue had initially set out to develop an at-home flu test. But with its plans disrupted by the pandemic, the company found success after its portable Covid-19 test was authorized for at-home use by the FDA. It comes with cartridges that can be inserted into a portable reader, which sends results to users’ smartphones.
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Cue struck a $481 million contract with the Department of Defense last year to provide 6 million test kits and 30,000 readers. That’s coming due next month, after the initial deadline for the contract was extended from March to October.
A regulatory filing also mentions that the SEC subpoenaed Cue in 2018 for certain documents and information, though it did not elaborate on the investigation.
“We have been cooperating fully with the SEC’s investigation,” Cue wrote in the filing.
Currently, Covid-19 tests are the main source of the company’s revenue. It brought in $201.9 million in revenue and $32.8 million in net income for the first half of 2021. While it still has an emergency use authorization (EUA) for these tests, it will need to seek FDA clearance to continue to offer them in the longer term.
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In the meantime, Cue Health is working on its influenza A/B test, as well as a bevy of other at-home tests, including tests for RSV, fertility, pregnancy and inflammation. It plans to seek an EUA for a combined flu and Covid-19 test by early 2022, according to an SEC filing.
For the longer term, Cue is looking to build out a broader digital health platform using its at-home testing services. For instance, the company envisions patients using its services managing chronic conditions, by tracking their results on its app, and clinicians being able to view results through a separate dashboard. It also plans to add telemedicine and e-prescription services to its app.
Venture capital firm ACME Capital remains Cue Health’s largest shareholder, holding roughly 10.6% of shares after the offering. Its CEO, Ayub Khattak, would get a total of $7.47 million in compensation, and Chief Product Officer Clint Server would see $4.2 million.
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