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United States securities and exchange commission logo
June 28, 2021
Ayub Khattak
Chief Executive Officer
Cue Health Inc.
4980 Carroll Canyon Rd.
Suite 100
San Diego, CA 92121
Re: Cue Health Inc.
Amendment No. 2 to
Draft Registration
Statement on Form S-1
Submitted June 16,
2021
CIK No. 0001628945
Dear Mr. Khattak:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amendment No. 2 to Draft Registration Statement on Form S-1
Non-GAAP Financial Measures, page 107
1. We understand that in
response to our prior comment, you have deleted your
characterization of
Adjusted product gross profit margin as a measure of cash flow. Your
revised disclosure
states that removing the depreciation and amortization expense "results
in operating
performance comparability across periods" and is helpful in understanding
your ongoing operating
performance. Please revise your disclosure to clarify how you
reasonably concluded
that these objectives are achieved by treating depreciation and
amortization expense
differently from amortization income. In this regard, we note the
Ayub Khattak
Cue Health Inc.
June 28, 2021
Page 2
disclosure on page 101 that the DoD Advance which you are amortizing
as income
was intended to finance the expansion of your manufacturing
capabilities. Presumably the
Advance was primarily spent to acquire the manufacturing equipment and
facilities which
largely comprises the depreciation and amortization expenses included
in your cost of
product revenue account (page 118). Consequently, absent clarifying
disclosure to the
contary, it appears that this measure is primarily designed to merely
include the income
you earned by acquiring the manufacturing assets while completely
excluding the
corresponding costs of these assets. See Item 10(e)(1)(i)(C) of
Regulation S-K.
Your revised disclosure specifically characterizes the depreciation
and amortization
expense as "non-cash" but omits this characterization in your
description of the
amortization of deferred revenue. Please revise.
Please balance the disclosure regarding the usefulness of this measure
in understanding
ongoing operating performance to clearly state that the non-cash
amortization of deferred
revenue has, and may, materially impact your 2021-2022 reported
revenue and that this
amortization of your DoD deferred revenue balance is not expected to
recur after 2022. In
this regard, we note that the long-term deferred revenue balance has
fallen to $48 million
at March 31, 2021.
You may contact Sasha Parikh at 202-551-3627 or Al Pavot at 202-551-3738
if you have
questions regarding comments on the financial statements and related matters.
Please contact
Donald Field at 202-551-3680 or Erin Jaskot at 202-551-3442 with any other
questions.
FirstName LastNameAyub Khattak Sincerely,
Comapany NameCue Health Inc.
Division of
Corporation Finance
June 28, 2021 Page 2 Office of Life
Sciences
FirstName LastName