By Svea Herbst-Bayliss
NEW YORK (Reuters) – Tarsadia Investments is urging Cue Health 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)
