San Diego COVID-19 test maker Cue Health files for bankruptcy following company closure – San Diego Union-Tribune

San Diego’s Cue Health, which made high-tech COVID-19 test kits, filed for bankruptcy following news that it would shut down and lay off all employees.

It officially marks the winding down of one of San Diego’s most high-profile COVID-19 test providers during the pandemic. The local firm was once worth $2.3 billion when it went public in 2021. But declining demand for COVID-19 tests battered Cue and similar diagnostic businesses.

The local biotech company filed for Chapter 7 bankruptcy in Delaware — where it is incorporated — last week as it seeks to liquidate its remaining assets. At the time of its closure last month, Cue employed approximately 250 workers — most in San Diego — and operated eight facilities across the county.

The voluntary bankruptcy filing comes after months of Cue trying to cut costs through layoffs. It also explored selling the business. But a financial remedy didn’t come through in time. Cue laid off all of its employees, including its leadership, and abruptly shuttered operations on May 24.

“Despite its best efforts and after a comprehensive review, Cue’s Board of Directors in consultation with the Company’s advisors, has concluded that it is in the best interest of the Company and its stakeholders to file for Chapter 7 relief,” the company stated in a May 28 press release.

Cue has $100 million to $500 million worth of assets, according to the bankruptcy court filing. The company also reported having $50 million to $100 million in debt.

The court filing also says Cue has about 200 to 999 creditors, which are people and entities who could be paid as a result of the liquidation. On Friday, the judge approved the payment of former employees, who are owed compensation and benefits following the company’s closure.

In the filing, Cue noted that it has facilities in San Diego, Vista and Boca Raton, Fla.

San Diego COVID-19 test maker Cue Health — once worth $2.3B — lays off entire company and shuts downCue Health, founded in San Diego in 2010, grew quickly during the coronavirus pandemic through multi-million dollar government and private contracts. The company supplied COVID-19 test kits to the U.S. Department of Defense and big-name organizations like Google and the NBA.

The biotech grew its headcount from 99 employees in January 2020 to 1,515 full-time employees at the end of 2022.

But, when those contracts ended, government funding pulled back and the general public’s demand for COVID-19 testing dropped off, Cue struggled to sustain its business model.

The company’s sleek COVID-19 test that sent results directly to a patient’s smartphone in 15 minutes, was its only fully FDA-approved product. The company disclosed in financial filings that its future success and survival hinged on the COVID-19 test and efforts to get other products approved.

Those approvals for other test products for flu, RSV and other diseases didn’t pan out. Then, in mid-May, the U.S. Food and Drug Administration told consumers to throw away Cue’s COVID-19 tests because the company changed its test without prior approval.

The letter from the FDA was the final nail in the coffin for Cue, which had already slashed its workforce and shaken up its C-suite in its futile attempts to appease investors and save the company.

Cue Health is being represented by Wilson Sonsini Goodrich & Rosati in the bankruptcy proceedings and FTI Consulting, Inc. is acting as financial adviser. The company said in the filing it agreed to pay approximately $1.2 million in legal fees related to the bankruptcy proceedings and business closure.

Originally Published: June 7, 2024 at 6:05 PM PST