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

Cue Health

31/08/2023 19:41

(Updates with statement from Cue Health in paragraph 7, updates
share move in paragraph 4)
    By Svea Herbst-Bayliss
       NEW YORK, Aug 31 (Reuters) - Tarsadia Investments wants
Cue Health  HLTH.O  to review its strategy, including a possible
sale, to help reverse its stock plunge of 98% in the last two
years.
    The investment firm, which owns just under 5% of the
diagnostic company's shares, also wants it to cut costs and add
a shareholder director, according to a letter, sent on Thursday.
 
    Cue Health's value has been nearly wiped out since it went
public in September 2021.
    The stock jumped nearly 17% to 52 cents a share on Thursday,
representing a market value of $79 million. Its stock was priced
at $16 a share at its initial public offering and climbed to $20
on the first day of trading.
    Cue Health's COVID tests were in high demand during the
pandemic, but testing has dropped dramatically, cutting revenue
even as operating expenses have 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.
    Cue Health said it "consistently reviews" its strategy and
appreciates constructive feedback. It said it has enhanced
research and development and is ahead of plan on some cost cuts.
It also said it met with Tarsadia several times and that the
board will "continue to act in the best interests of all
shareholders."
    To reverse the company's downward spiral, Tarsadia urged it
to hire financial advisers, "realign its unsustainable cost
structure" and 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."

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