Cue the End Credits for This COVID-19 Test Maker

After years of financial struggle post-COVID-19’s diagnostic boom, Cue Health seems to have begrudgingly hung the white flag of defeat, announcing recently that it would shut down operations and lay off the remainder of its employees and leadership by the end of this week, according to a report from The San Diego Union-Tribune, which first published the news.

Founded in 2010, the company saw sharp growth during the pandemic after nabbing government and private contracts for its point-of-care COVID-19 tests, raising $200 million in a 2021 IPO, and a valuation approaching $3 billion.

Post-pandemic, however, Cue has seen a steady decline of its COVID-19 testing sales. In 2023, “the company saw an 85% decrease year over year in revenue ($70.9 million) — of which its COVID-19 tests account for the majority of sales. That same year, it reported a net loss of $373.5 million,” according to previous MD+DI reporting.

Cue did see a win when it became the first company to go through the traditional regulatory process for its COVID-19 test, obtaining de novo clearance in 2023. Unfortunately, the authorization came about a month before the World Health Organization declared that the virus was no longer a public health emergency of international concern, although still a global threat.

The company has also seen multiple layoffs over the last few years. In 2022, Cue laid off 170 employees amid “economic challenges” and a decline in COVID-19 testing, and 2023 saw an additional cut of 388 people as testing demand fell further. In January 2024, the company cut more than 200 across two rounds of layoffs, and only recently implemented an employee reduction of 230 people — 49% of its global workforce.

Additional hiccups in 2024 are the loss of two C-suite members — CEO Ayub Khattak who stepped down in March, and CFO Aasim Javed who resigned on earlier in May.

Last week, it seems Cue was hit with the straw that broke the camel’s back when FDA published a warning letter urging test users, caregivers, and healthcare providers to not use Cue Health’s COVID-19 tests for home and over-the-counter use and its COVID-19 test intended for patient care settings due to increased risk of false results.

The agency reported that after an inspection, it was revealed that Cue had made changes to these tests which reduced the reliability to detect the SARS-CoV-2 virus. FDA told users to throw away any Cue COVID-19 tests they had on hand.

With the announcement the company is shutting down operations, a WARN notice filed with the state of California detailed that at least 180 employees will be let go, with their last day being May 24. The San Diego Union-Tribune reported that laid off employees will received their final paycheck on that day covering compensation they would have received through July.

Cue did not respond to MD+DI’s request for comment.