Cue Health is implementing a cost-cutting plan that involves reducing the employee base by 388, or 26 percent of the company’s global workforce.
The plan, described in a document filed Thursday with the US Securities and Exchange Commission, follows a review of the business, its operating expenses and macroeconomic environment.
Cue shares ended the day on Nasdaq Friday at $1.94, down more than 13% from last Wednesday’s high of $2.25.
Shares of the San Diego-based developer of molecular diagnostic tests had soared to $13.41 as of early December 2021.
The company developed one of the first molecular tests licensed for home use during the COVID-19 pandemic by the US Food and Drug Administration (FDA). It later launched a digital test-to-treat system and counts healthcare institutions, technology companies, sports leagues and consumers as part of its client base.
Last month, Cue announced that the Minnesota Department of Health had selected him to provide a statewide COVID-19 treatment telehealth program at no cost to Minnesota residents.
“During the pandemic, Cue has grown very rapidly… from approximately 100 employees in 2020 to over 1,500 employees,” Ayub Khattak, the company’s co-founder, president and CEO, said in a letter to employees last week. “[However]In today’s challenging economic environment and with concerns about the transition of COVID to additional respiratory viruses and other health challenges, the demand for COVID testing has declined from [the] peak days of the pandemic”.
The company expects to post an aggregate restructuring charge related to one-time termination benefits of approximately $6 million to $8 million. The majority of charges will involve cash expenses in connection with the cost reduction plan, including payments for salary, benefits and unused paid time off for affected employees from January 6 through the termination date. The company said it expects payments related to the cost reduction plan to be completed by the end of the second quarter.
“As the heavy burden of the tripledemic ([respiratory syncytial virus]flu, and COVID) has had on our healthcare system, we believe there is massive demand for the products we are building,” Khattak said in the letter, part of the filing with the SEC. “We now have a number of submissions under review with the FDA for the expanded respiratory menu, including our Flu + COVID multiplex test, self-submissions for full clearance for both influenza and COVID, and we recently introduced our RSV test for pre-[Emergency Use Authorization] revision. In addition, our clinical trials for sore throat have begun. In sexual health, clinical trials in chlamydia and gonorrhea have begun, and we expect our Mpox (monkeypox) test to be submitted to the FDA for EUA shortly.
Last September, Cue Health announced that it had applied still FDA clearance for its Cue Flu Molecular Test. The clearance would allow the test to be used at home and elsewhere at the point of care when the FDA’s emergency use authorizations expire. In August, the company announced a partnership with Fresenius Kidney Care to provide immunocompromised patients and their clinical care teams with COVID-19 self-tests. Fresenius is using the Cue Health Monitoring System and Cue COVID-19 testing in two states and three territories — Hawaii, Alaska, Puerto Rico, Guam and Saipan — to screen employees and provide early testing for vulnerable patients. Earlier last year, Cue said he tapped health tech company Cardinal Health to expand the distribution of his COVID-19 tests.
Cue was the second molecular diagnostics company to announce layoffs within a week. On Friday, Biocept said it is evaluating strategic alternatives and implementing a restructuring plan that includes cutting staff by about 35%.