Cue Health, Google’s provider of Covid-19 tests, just held its IPO

Cue Well being, which makes at-home Covid-19 testing kidds, made its public market debut Friday.

Cue Well being

In April, Google began sending at-home Covid-19 exams to its U.S. workers from a little-known start-up in San Diego known as Cue Well being.

Most of Cue Well being’s enterprise as much as that time had come from a take care of the U.S. Division of Protection to supply speedy exams to the federal authorities. Google immediately grew to become the health-tech firm’s greatest personal sector buyer.

Cue Well being has used that relationship to assist construct a narrative compelling sufficient for public market buyers. On Friday, the corporate debuted on the Nasdaq underneath ticker image “HLTH,” and the inventory climbed 25% to $20 on the shut. That values Cue Well being at $2.9 billion.

Based in 2010, Cue Well being had solely a tiny quantity of income previous to the Covid-19 pandemic. It spent the higher a part of a decade as a diagnostic testing firm in analysis mode.

All the pieces modified in 2020, when the worst pandemic in a century instantly made entry to instantaneous testing important. In June 2020, the corporate obtained its first emergency use authorization from the Meals and Drug Administration for Covid-19 exams.

Cue Well being’s check package features a wand, cartridge and reader. Customers take a nasal swab with the wand and insert it within the small field, the place a reader feeds outcomes to a smartphone app inside about 20 minutes. There isn’t any want for processing at a lab.

In July 2020, a month after the emergency authorization, the Nationwide Basketball Affiliation started utilizing Cue Well being exams for its “NBA bubble” in Orlando, the place video games had been restarting with out followers. Three months after that, the corporate signed a $480.9 million take care of the DoD, to “meet the unprecedented demand for speedy and correct molecular diagnostic testing,” based on the prospectus.

Cue Well being Covid-19 check

Cue Well being

The corporate continues to be working underneath emergency use authorization because the merchandise haven’t been totally FDA cleared or accredited.

“We have been actually working onerous by the pandemic,” Cue Well being CEO Ayub Khattak mentioned in an interview with CNBC on Friday after the IPO. The group “confirmed nice willpower to scale within the midst of the pandemic, which was fairly a problem.”

Khattak based the corporate with product chief Clint Sever initially underneath the title Ruubix. Earlier than final 12 months, they had been principally targeted on analysis and growth.

The newest boon to the enterprise got here from Google, a deal that wasn’t introduced publicly and was first disclosed in a single sentence in Cue Well being’s IPO prospectus earlier this month.

“In April 2021, the Firm and Google LLC entered into an settlement to supply Cue Well being Readers and Cue COVID-19 Check Kits to Google’s U.S.-based workers by 12 months finish,” the submitting mentioned.

Cue mentioned that income within the first half of the 12 months, reached $201.9 million, up from $5 million in the identical interval a 12 months earlier. Some 84% of its income got here from gross sales to the general public sector. Of the remaining $34.8 million in income, $28.9 million was from a “single enterprise buyer,” Cue Well being mentioned.

Khattak declined to call that buyer, however individuals acquainted with the matter confirmed to CNBC that it is Google. The individuals requested to not be recognized as a result of the knowledge is confidential.

Google didn’t reply to requests for remark.

Scaling up manufacturing

As of August, Cue had offered 5 million testing kits and mentioned that it is manufacturing cartridges at a fee that exceeds 15 million a 12 months.

“We anticipate rising our manufacturing capability to a fee equal to tens of tens of millions of Cue Cartridges per 12 months by the top of 2021,” the submitting mentioned.

Cue Well being has needed to rent to fulfill scaling calls for. The corporate had fewer than 100 workers in 2020 and now has greater than 1,250. In April, Glenn Wada, a senior vp at Salesforce, was named chief industrial officer. Khattak mentioned that regardless of the competitiveness for tech expertise, Cue Well being has been capable of recruit as a result of it is addressing such a tangible world drawback. 

Past Covid-19, Cue Well being says it is engaged on quite a few exams that may be accomplished utilizing saliva, urine and blood samples and nasal swabs. These diagnostic exams will cowl issues like respiratory well being, sexual well being and figuring out danger of power diseases similar to coronary heart illness.

Khattak mentioned the corporate hopes to supply direct-to-consumer digital care and testing for frequent diseases like strep throat.

For Google, the settlement with Cue Well being has allowed workers to order extra check strips by the corporate’s inside assets portal. With out the supply of in-office perks like free meals or different facilities, the corporate has tried different methods to attraction to workers, providing assets for psychological and bodily well being.

Google had deliberate for workers to return to the workplace in September, however that date acquired pushed to Jan. 10, 2022.

Khattak mentioned the Google partnership started as a result of his firm was utilizing the Google Cloud Platform, which competes with Amazon Net Companies and Microsoft Azure. Google approached Cue Well being when it realized that its workforce wanted the form of testing product Khattak’s group was growing.

“It form of converged at that time,” Khattak mentioned. “We had been doing all the pieces we may to scale up and meet calls for of our clients so we weren’t essentially in outreach mode. However given the connection we had, we selected them and so they selected us.”

Their work collectively goes deeper.

In August of this 12 months, Cue and Google Cloud entered right into a partnership to develop real-time variant monitoring and sequencing of Covid-19, the prospectus says.

They goal to create an “superior respiratory biothreat detection system spanning from the Firm’s at-home diagnostic testing to full real-time viral sequencing in addition to analytical and predictive functionality utilizing Google Cloud powered options,” based on the submitting.

One other testing firm on trial

Cue’s public debut comes as Elizabeth Holmes, the founding father of defunct blood-testing firm Theranos, is on legal trial for wire fraud and conspiracy to commit wire fraud. She has pleaded not responsible.

Khattak mentioned Theranos naturally comes up in dialog, given the timing of the 2 occasions.

“As an organization rising and having that form of in your yard, mainly, it is one thing that primarily creates a a lot increased hurdle,” Khattak mentioned. “However, we’re within the lucky place that we’ve a product that is broadly used, There isn’t any black field which you could’t perceive what is going on on.”

Cue Well being additionally has impartial scientific research from the Mayo Clinic and has been totally vetted by well being validations.

“We’re excited to be by numerous these hurdles,” Khattak mentioned.

WATCH: Cue Well being CEO on FDA emergency authorization for Covid at-home exams

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