Investor Tarsadia urges Cue Health to review options, add new director

Cue Health

31/08/2023 14:00

By Svea Herbst-Bayliss
       NEW YORK, Aug 31 (Reuters) - Tarsadia Investments is
urging Cue Health  HLTH.O  to review its strategy, including
options for a possible sale, to help reverse its stock plunge of
98% in the last two years, according to a letter seen by
Reuters.
    The investment firm, which owns just under 5% of the
diagnostic company's shares and invests for wealthy families,
also wants it to cut costs and add a shareholder director, said
the letter, which was sent to the board on Thursday.  
    Tarsadia wants drastic action after Cue Health's value has
been nearly wiped out since it went public in September 2021.
    The stock closed at 44 cents on Wednesday, leaving the
company with a market value of $67 million. Its stock was priced
at $16 a share at its initial public offering and climbed to $20
on the first day of trading.
    While Cue Health's COVID tests were in high demand during
the pandemic, a rapid decline in testing recently led to a drop
in revenue even as operating expenses, including research and
development, remained high.
    "We are recommending the Board ... conduct a strategic
review of management's standalone long-term business plan and
the capital required to execute on that plan," Tarsadia wrote in
the letter.
    A representative for Cue Health did not immediately respond
to a request for comment.
    To reverse the company's downward spiral, Tarsadia urged it
to hire financial advisers, to "realign its unsustainable cost
structure" and to add a shareholder to its seven-member board to
help evaluate strategic alternatives.
    Tarsadia's lawyers are also filing a request to inspect the
company's books and records, the letter said.
    The investment firm wrote that "Cue's industry-leading
technology has the potential to transform how acute and chronic
conditions are diagnosed and managed."
    But at the moment, Cue Health is in "dire financial straits"
and its "trajectory is not sustainable and puts all stockholders
at risk," the letter said.
    
    

 (Reporting by Svea Herbst-Bayliss in New York
Editing by Matthew Lewis)
 ((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))