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By Svea Herbst-Bayliss
NEW YORK (Reuters) -Tarsadia Investments wants Cue Health 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.”
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