Cue Health was founded in 2010 in San Diego by Ayub Khattak and Clint Sever as a molecular diagnostics company.37 The company grew rapidly during the COVID-19 pandemic after receiving emergency use authorization for its at-home COVID-19 test and securing contracts with the NBA, NFL, US military, and CDC.67 Cue Health filed for Chapter 7 bankruptcy on May 28, 2024, after shutting down operations and laying off all remaining employees.134141517
Timeline
| Date | Event | Source |
|---|---|---|
| 2010-01 | Cue Health was founded in San Diego by Ayub Khattak and Clint Sever. | 37 |
| 2014-11-19 | Cue Health raised $7.7 million in a Series A round from Immortalana and Sherpa Ventures. | 8 |
| 2018-07-10 | Cue Health raised $66.29 million in a Series B round from investors including Johnson & Johnson Innovation and Pritzker Group Venture Capital. | 8 |
| 2020-06-10 | Cue Health raised $100 million in a Series C-1 round at a post-money valuation of $455.86 million. | 8 |
| 2020-08 | FDA granted Cue Health Emergency Use Authorization for its at-home COVID-19 molecular test. | 7 |
| 2020-10 | Cue Health announced a $481 million deal with the US government to provide COVID-19 tests. | 6 |
| 2021-09-24 | Cue Health completed its IPO on NASDAQ under ticker HLTH at an implied valuation of $2.33 billion. | 8 |
| 2021-09-28 | Cue Health raised $200 million in its IPO, offering 12.5 million shares at $16 each. | 9 |
| 2022-01 | COVID testing demand began collapsing globally, and Cue's revenue fell approximately 97% from 2021 levels in the first half of 2022. | 7 |
| 2022-07-22 | Cue Health suddenly ceased all operations with approximately 600 employees, providing minimal advance notice to staff. | 7 |
| 2022-12 | FDA recalled Cue's COVID-19 test citing a higher-than-acceptable false negative rate. | 7 |
| 2023 | Cue Health won FDA de novo authorization for its COVID-19 test, the first for a home-use COVID-19 test. | 34 |
| 2023 | Cue Health reported an 85% decrease year over year in revenue to $70.9 million and a net loss of $373.5 million. | 3 |
| 2024-01 | Cue Health cut more than 200 employees across two rounds of layoffs. | 3 |
| 2024-03 | CEO Ayub Khattak stepped down and was replaced by co-founder Clint Sever. | 4 |
| 2024-05-09 | FDA issued a warning letter and told consumers and healthcare providers to discard unused Cue Health COVID-19 tests due to increased risk of false results. | 4 |
| 2024-05-14 | Co-founder Ayub Khattak resigned from the board. | 4 |
| 2024-05-15 | Board director Rishi Reddy resigned. | 4 |
| 2024-05-22 | Cue Health told all U.S. employees they would lose their jobs as of May 24. | 4 |
| 2024-05-24 | Cue Health shut down operations and laid off the remainder of its employees and leadership. | 3 |
| 2024-05-28 | Cue Health filed for Chapter 7 bankruptcy in Delaware Bankruptcy Court. | 11415 |
Money raised
Cue Health raised $7.7 million in a Series A round on November 19, 2014, from Immortalana and Sherpa Ventures.8 Cue Health raised $66.29 million in a Series B round on July 10, 2018, from investors including Johnson & Johnson Innovation and Pritzker Group Venture Capital.8 Cue Health raised $100 million in a Series C-1 round on June 10, 2020, at a post-money valuation of $455.86 million.8 Cue Health raised $5.57 million in a Series C-2 round on June 10, 2020, at a post-money valuation of $455.86 million.8 Cue Health raised $200 million in its IPO on September 28, 2021, offering 12.5 million shares at $16 each.9 Cue Health went public in 2021 at a valuation of nearly $2.3 billion.4 Cue Health raised approximately $430 million from investors including SoftBank Vision Fund, Danaher, and Foresite Capital.7 In 2023, Cue Health reported revenue of $70.9 million, an 85% decrease year over year, and a net loss of $373.5 million.3
Investors named in the sources: Immortalana8, Sherpa Ventures8, Johnson & Johnson Innovation8, Pritzker Group Venture Capital8, Acme Capital8, Decheng Capital8, Foresite Capital Management8, Madrone Capital Partners8, SoftBank Vision Fund7, Danaher7, Perceptive Advisors9, MSD Capital9, Koch Strategic Platforms9, CAVU Ventures9.
What happened
Cue Health was founded in 2010 in San Diego by Ayub Khattak and Clint Sever as a molecular diagnostics company.37 For its first decade, the company operated relatively quietly, developing portable diagnostic technology.7 The COVID-19 pandemic transformed the company's trajectory.7 Cue developed an at-home COVID-19 PCR test and received Emergency Use Authorization from the US FDA in August 2020.7 The company secured contracts with the NFL, NBA, the US military, and the CDC to provide COVID testing at scale.7
Cue raised approximately $430 million from investors including SoftBank Vision Fund, Danaher, and Foresite Capital.7 The company operated seven testing labs across the United States and expanded to over 600 employees.7 Revenue in 2021 was approximately $350 million.7 Cue Health went public in 2021 at a valuation of nearly $2.3 billion.4 Cue Health raised $200 million in its IPO on September 28, 2021.9
In the course of 2022, COVID testing demand fell off a cliff as vaccination rates rose, infection severity declined, and testing fatigue set in.7 Cue's revenue dropped approximately 97% from 2021 levels in the first half of 2022.7 On July 22, 2022, Cue Health suddenly ceased operations with nearly 600 employees, announcing the shutdown with minimal advance notice.7 In December 2022, the FDA recalled Cue's COVID test due to concerns about accuracy, specifically that the test had a higher-than-expected false negative rate.7 In 2023, Cue Health won FDA de novo authorization for its COVID-19 test, the first for a home-use COVID-19 test.34
In 2023, Cue Health reported an 85% decrease year over year in revenue to $70.9 million and a net loss of $373.5 million.3 In 2022, Cue laid off 170 employees amid economic challenges and a decline in COVID-19 testing.3 In 2023, Cue laid off an additional 388 people as testing demand fell further.3 In January 2024, Cue cut more than 200 employees across two rounds of layoffs.3 In March 2024, CEO Ayub Khattak stepped down and was replaced by co-founder Clint Sever.4
In May 2024, CFO Aasim Javed resigned.3 On May 9, 2024, the FDA issued a warning letter and told consumers and healthcare providers to discard unused Cue Health COVID-19 tests due to increased risk of false results.4 The FDA said 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.3 On May 14, 2024, co-founder Ayub Khattak resigned from the board.4 On May 15, 2024, board director Rishi Reddy resigned.4
On May 22, 2024, Cue Health told all U.S. employees they would lose their jobs as of May 24.4 Cue Health shut down operations and laid off the remainder of its employees and leadership by the end of the week of May 24, 2024.3 A WARN notice filed with the state of California detailed that at least 180 employees would be let go, with their last day being May 24.3 Laid off employees received their final paycheck on that day covering compensation they would have received through July.3 On May 28, 2024, Cue Health filed for Chapter 7 bankruptcy in Delaware Bankruptcy Court.11415
As a result of filing the petition, a Chapter 7 trustee was appointed.14 Heritage Global Partners announced two major online auctions of Cue Health's assets on August 12, 2024.16 Cue Health shipped more than 275,000 readers, according to the company's website.4 Readers were still posted for sale at $199 each, though test kits were listed as out of stock.4 The company's homepage did not mention the FDA issues, and customer service agents responded to refund requests by saying they had no further information to share.4
Cue Health had a deal to provide readers and test kits to Google employees through December 2024.4
Legal outcomes
- filedCue Health filed for Chapter 7 bankruptcy on May 28, 2024.11415
- filedThe FDA issued a warning letter to Cue Health on May 9, 2024, and told consumers and healthcare providers to discard unused Cue Health COVID-19 tests due to increased risk of false results.4
- filedIn December 2022, the FDA recalled Cue's COVID-19 test citing a higher-than-acceptable false negative rate.7
Where the founders are now
Ayub Khattak stepped down as president, chair and CEO in March 2024 and resigned from the board on May 14, 2024.4 Clint Sever became CEO in March 2024.4
Sources
- Cue Health Plays Its Final Note: Another Victim of VC's ' ..., medium.com
- ☠️ Why healthcare startups fail, halletecco.substack.com, 2 years ag
- Cue the End Credits for This COVID-19 Test Maker, Medical Device and Diagnostic Industry, May 23, 20
- Cue Health lays off remaining employees after FDA warning on COVID-19 tests, MassDevice, 2024-05-22
- Cue Health rode Covid-19 to an NBA deal and a $3 billion valuation. Now it faces layoffs and a rocky future, STAT, 2022-06-27
- Why Cue Health Failed: Founder Chaos | Startup Autopsy, UnicornBurn, 2022-01-01
- Cue Health IPO Timeline and Financing Details - Forge, forgeglobal.com, Sep 24, 20
- Cue Health Raises $200 Million in IPO At $2.3 Billion Valuation - Mercom Capital Group, Mercom Capital Group, 2021-09-29
- 8-K, sec.gov
- Cue Health Inc. and Techouts, Inc. Bankruptcy (1:24-bk-11096), Delaware Bankruptcy Court, pacermonitor.com, May 28, 20
- HGP to Conduct Two Major Online Auctions of Cue Health’s Assets | Heritage Global Partners, Heritage Global Partners, 2024-08-12
- San Diego COVID-19 test maker Cue Health files for bankruptcy following company closure, San Diego Union-Tribune, 2024-06-07
How this case file was put together
Every statement on this page carries a numbered note, and every note points to a court record, a regulatory filing or a named publication in the list of sources. Each statement was checked against the text of the sources it cites before it was published: a figure, a date or a name the cited source does not contain was cut rather than kept. Allegations are shown as allegations, with their status at the time of the source (filed, charged, convicted, pleaded, settled, dismissed or pending). Quoted lessons are the words of the person or publication named with them, copied from the cited source; nothing here is our own opinion of why the company failed.
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