San Diego biotech Cue Health is laying off half of its workforce, including C-suite executives, to reduce costs and focus on core technology. This comes after a leadership shakeup and strategic review, with declining revenue and investor pushback.
The company, known for its rapid COVID-19 test, has struggled financially as demand for tests has decreased. Cue plans to focus on its diagnostic products and health technology platform moving forward.
Cue Health, a San Diego biotech that ascended during the pandemic through mega funding and partnerships for its rapid COVID-19 test, said Wednesday that it is laying off half of its workforce as it aims to reduce costs and focus on its core technology.
The diagnostic test maker said in a regulatory filing that it would lay off 230 employees, about 49 percent of its workforce, including several C-suite executives and manufacturing roles.
These layoffs come on the heals of a leadership shakeup at Cue
It’s longtime CEO was replaced and the chief financial officer resigned. Last month, Cue’s board also initiated a strategic review of its options going forward, including the potential sale of the company.
This is the third round of layoffs at Cue this year. In January, the company cut the workforce by 388 employees and then again by 30 percent, or 245 employees. After this week’s job cuts, Cue will have about 249 workers.
Early in the pandemic, Cue inked major partnerships to supply rapid COVID-19 tests for the NBA and big companies, like Google. The biotech grew its headcount from 99 employees in January 2020 to 1,515 full-time employees at the end of 2022.
But, the company has struggled financially since the ubiquitous demand for COVID-19 tests has shriveled and the spigot for government funding has dried up. Declining revenue and push back from investors have led Cue’s board to conduct multiple rounds of job cuts and leadership changes.
In March, Cue’s co-founder and CEO Ayub Khattak, stepped down from leading the company after a strategic review by the company’s board of directors. Khattak, who remains on the company’s board, was succeeded by Cue co-founder and chief product officer, Clint Sever.
Additionally, the company’s chief financial officer, Aasim Javed, resigned on April 19, according to an SEC filing. Javed’s resignation is effective May 13 and he will be succeeded by Randall Pollard, Cue’s chief accounting officer.
Cue launched an approximately $200 million IPO
Khattak and Sever founded the company in 2010 to integrate high tech into health care. In September 2021, Cue launched an approximately $200 million IPO and was among the windfall of startups going public that year.
Prior to the pandemic, Cue Health didn’t have a commercial, FDA-approved product on the market.
Cue’s COVID-19 test — which was the first at-home coronavirus test to receive full regular-use clearance — and its mpox, formerly called monkeypox, test are its only commercially available diagnostic tests. Its most recent application for an RSV molecular test was denied by the U.S. Food and Drug Administration.
Specialists in diagnostic testing menu and health technology platform
Following the success of its COVID-19 molecular test — its primary source of revenue — Cue has made efforts to expand its diagnostic testing menu and health technology platform.
It offers a variety of at-home tests for sexual health, heart health and metabolic tests where samples are sent to a lab and the results go straight to the user’s phone.
Cue also enabled its smartphone application to connect patients with medication and telehealth services.
A company spokesperson said in an emailed statement to the Union-Tribune that in addition to the workforce reduction, Cue is moving its focus away from “non-assay related products and services.” The company also said it’s not planning additional rounds of layoffs.
“In close collaboration with Cue’s Board of Directors and strategic advisers, the company has made the decision to refocus its business on its core technology offering, the Cue Health Monitoring System, specifically on developing and deploying its diagnostic products into the Point of Care market,” the company said Thursday. “In alignment with this strategy, Cue has significantly reduced, or removed altogether, functions that don’t directly support this strategy.”
The layoffs are effective July 1, according to Cue’s Worker Adjustment and Retraining Notification Act (WARN) letter filed with the state. Cue reports in the notice that the local layoffs will not result in the closure of its eight impacted facilities in Vista and San Diego.
Cue will cut 114 jobs in San Diego, 41 remote workers in California and 34 out-of-state workers, according to the WARN notice, which only covers Cue’s job losses in the U.S.
The local workforce reduction hit all levels of the organization, including many machine operators, engineers, managers and vice presidents.
The company also let go its chief marketing officer, chief software architect and chief technology officer. Cue Health will release its first quarter earnings report on Monday.
However, the company will not be holding a conference call, which is when executives present the results and take questions from investors, typically on the same day.