High-Tech’s Business Model Hasn’t Worked for the Cue Covid Test

Eric Taub

“I’ve received this,” coos Gal Gadot in Cue Health’s Tremendous Bowl Television set business. Cue employed the “Wonder Woman” actress to be the voice of the company’s new superior-tech covid-19 testing unit. The advert pushes the idea that the at-house covid examination generates results equivalent in precision to a lab-based PCR test and surpasses it in advantage.

What it doesn’t point out is the price: $249 for the reusable machine and $195 for a pack of 3 tests.

Even as the amount of covid conditions waned all through the wintertime, many folks who saw the ads wondered no matter whether the device — no issue how effortless or technologically wondrous it might be — has the appropriate technique. Higher-tech startups keen to disrupt the wellness care field are relying on a experimented with-and-accurate internet marketing technique: price it large for early adopters and then decreased the price tag as the marketplace grows.

To take the Cue check, customers swab their nostrils with a distinctive wand, insert the wand into a cartridge, and then the cartridge into a white, dice-formed reader. Inside of 20 minutes, effects are transmitted through Bluetooth to Cue’s smartphone application. These who obtain a $900 annual subscription can obtain a medical doctor by way of the app, to certify the effects as valid for journey or other functions.

A extremely exact at-property covid test undoubtedly has its pros. And Cue, a publicly traded organization primarily based in San Diego, suggests that 97.8% of the time its check benefits agreed with a positive PCR lab take a look at outcome, nevertheless regarded as between the most exact. (The cost of a PCR check differs but can be $100 or far more, and effects normally get at minimum 24 hrs, even though faster effects can be received for a lot more cash.)

But even the most inexpensive pricing — yearlong subscriptions, which start off at $480 for 10 checks (and a discounted unit for $149) — is noticeably extra than the charge of much less-exact antigen assessments, which Us residents can now normally procure at no charge.

Cue’s rate puts it out of the attain of most consumers. But it suits an elite organization model that seeks to entice attention and assumes that the value will fall at some level as the market place grows and demand from customers rises.

For now, except employers give them, customers will have to foot the monthly bill for the Cue exams simply because overall health insurance coverage companies, which generally address lab-centered PCR checks and speedy antigen checks, do not reimburse policyholders for the Cue program. “We are proactively functioning with overall health coverage organizations to get coverage for Cue Overall health methods,” stated Dan Bank, a company spokesperson. But the company has but to announce an arrangement with any insurance provider.

Though Cue’s Tremendous Bowl commercial implies that its screening product is aimed for the at-property consumer, its major customer has been the Office of Protection, whilst its governing administration contract has finished. The exam has also been picked up by sporting activities leagues and business enterprises getting models for their workforce, together with Main League Baseball, the Nationwide Basketball Affiliation, Netflix, and Google.

In the 1st quarter of 2022, non-federal government income grew to 98% of gross sales, or $175.8 million out of a complete of $179.4 million. Net income for the quarter was $2.8 million, in contrast with $13 million for the exact quarter previous yr, as the business stepped up paying on staff, advertising, and product or service development. 2nd-quarter income is also envisioned to fall, the organization said, falling to about $50 million.

The enterprise, which offered inventory to the public previous yr, has viewed its share value (enviable inventory image HLTH) fall from $22 at its September debut to around $5.

The company’s other, even additional basic, dilemma is that much less individuals are fascinated in having tested for covid regularly. “There was enthusiasm when covid was in full swing, but now that folks perception the omicron strain is not so negative, the concentration on testing has improved,” mentioned Charles Rhyee, an analyst with Cowen. (Cowen, a Wall Street financial investment organization, helped consider Cue community but does not have a monetary marriage with the company.)

It’s attainable, he claimed, that Cue is like other organizations that zoomed through the pandemic only to drop to Earth. “The firm is previously seeking like Peloton, and a whole lot of that emotion is by now baked into the price of the inventory,” Rhyee mentioned.

Cue details out that covid testing is just the first use of its item. It desires to build and acquire Fda approval for other checks that can use the $249 product, which include for flu respiratory syncytial virus, or RSV fertility and pregnancy. If a flu test arrived back again favourable, Cue officers said, the smartphone application may be ready to link the patient to a medical professional early sufficient to acquire the reward from having an anti-flu medicine this kind of as Tamiflu.

“Just like at-house being pregnant exams fully changed how gals get responses and glucose meters permanently altered how diabetics keep track of their glucose stages, we believe the paradigm has forever shifted for infectious sickness tests at property, and Cue is nicely positioned to satisfy these demands,” Financial institution said.

Still none of individuals checks will be readily available or crank out any income in 2022. The enterprise expects to post checks for influenza A and B in late summer months or autumn. The business has pointed out that the speed at which it can appraise new sorts of tests to present the Food and drug administration could be adversely affected by the prevalence of covid, most likely limiting its potential to come across take a look at subjects or have personnel in its facilities.

To maximize product sales, the company in February reduced the cost of its regular monthly subscription and particular person exams by $15.

But Charles Rhyee thinks substantially even larger value cuts are necessary for success. The shorter-expression remedy, he explained, is for Cue to offer you its reader device at small or no price tag and make its income from tests, utilizing a basic promoting approach that predated the higher-tech period by practically a century: the razor-razor blade model, in which the true money is built on large-priced blades soon after providing buyers a low cost proprietary deal with to hold them.

KHN (Kaiser Health and fitness News) is a national newsroom that generates in-depth journalism about overall health issues. Together with Plan Assessment and Polling, KHN is 1 of the a few big operating programs at KFF (Kaiser Relatives Foundation). KFF is an endowed nonprofit corporation delivering information on wellness problems to the country.

USE OUR Content

This tale can be republished for absolutely free (aspects).