Shares of Cue Health have experienced a noteworthy increase following the publication of a letter from a shareholder, urging the diagnostic maker’s board to carefully consider potential strategic alternatives. In afternoon trading, the stock rose by 15% to 51 cents, providing a positive turn amidst a year that has seen shares decline by almost 75%.
Tarsadia Investments, representing early investors in Cue Health, expressed their concerns in the letter, stating that the company “has failed to adapt to a rapidly changing post-Covid reality.” The firm has encouraged the board to initiate a strategic alternatives process, realign costs, and enhance the board’s operations.
Cue Health, known for developing one of the earliest over-the-counter Covid-19 tests, recently reported its second-quarter results. As of June 30, the company’s cash reserves decreased to $128.6 million from $363.1 million the previous year. However, it is worth noting that Cue Health has no debt obligations.
The company’s second-quarter report revealed a loss of $83.9 million, or 55 cents per share, compared to a loss of $99.1 million, or 67 cents per share, during the same period last year.
In response to Tarsadia Investments’ letter, Cue Health stated, “Cue’s Board of Directors consistently reviews our strategy to ensure that we are on the best path to creating long-term shareholder value and appreciates constructive feedback on our business.” The company also mentioned its engagement with Tarsadia Investments in the past and its commitment to evaluating the letter, acting in the best interests of all shareholders while executing their strategic plan.