Cue Health will lay off 388 employees, about 26% of its workforce, as part of a larger cost-reduction plan.

The cuts mark another round of layoffs for the home diagnostics company, which laid off 170 manufacturing workers in the summer. In a filing with the Securities and Exchange Commission, Cue said the layoffs are expected to take place in March.

"For the past several months, the Cue Health leadership team has been evaluating how best to position the company for the future given our rapid growth over the last three years and the current challenging macroeconomic environment," a Cue spokesperson told MobiHealthNews.

"We have made the very difficult decision to reduce our global workforce by approximately 26%, which means 388 employees are departing Cue. We remain confident in our long-term strategy to improve how healthcare is delivered, ultimately leading to better outcomes for people’s health."

THE LARGER TREND

A number of digital health and health tech companies announced layoffs in 2022, many citing the larger economy as investment in the sector slowed. 

Cue went public in 2021, not long after it received emergency use authorization for its at-home, over-the-counter COVID-19 test. The company received an EUA for a point-of-care rapid test in 2020.

It reported $69.6 million in revenue in the third quarter, driven by stronger-than-expected COVID-19 test orders from its existing customers. But Cue also posted a GAAP net loss of $66.3 million. 

In a letter to staff, Cue cofounder and CEO Ayub Khattak said the diagnostics startup grew quickly during the pandemic from about 100 workers in 2020 to more than 1,500 employees. The company has recently submitted to the FDA for new tests, including for an EUA for a combination flu and COVID-19 diagnostic as well as De Novo clearances for its flu and COVID-19 standalone tests. 

"Despite all this amazing progress that each of you have helped achieve, regulatory approval timelines for new Cue products are uncertain, and we need to lower our costs so that Cue can successfully bring these important products to market and succeed," he wrote.

"With an expanded menu and the additional services we are building on the software platform side to enable broader testing and treatment capabilities, we believe we can sustainably grow into the future in all seasons."