Tarsadia Investments urges Cue Health board to undertake strategic review

Tarsadia sent an open letter to the board of directors of Cue, which read in part, “Today, we are recommending the Board take the following immediate actions: Conduct a strategic review of management’s standalone long-term business plan and the capital required to execute upon that plan. It is the Board’s responsibility to address whether the execution risk and capital required to execute the current business plan will create more value than other strategic alternatives. In order to properly vet these paths, we believe the Board must form a special committee of independent directors and retain financial advisers to help in this review. Review the Company’s flawed approach to capital allocation and realign its unsustainable cost structure. We believe Cue must achieve an additional $50 million in annualized cost savings to extend its liquidity runway into 2025. The Company’s cost structure does not reflect the reality of a post-COVID revenue environment and Cue’s valuable remaining cash resources must be focused on its core businesses. Cue should focus on supporting its diagnostic products and curtail its non-core businesses: Cue Lab and Cue Pharmacy. Additionally, Cue should focus its sales efforts on large-scale commercial deals that include up-front payments while eliminating the infrastructure and marketing spend supporting direct-to-consumer and small and medium sized customers that have historically generated limited revenues. Cue must appoint independent stockholder representatives to the Board who can contribute a sense of urgency and fresh perspective to Board deliberations. These independent stockholder representatives should be appointed to the special committee that will explore strategic alternatives. With these appointments, working together, the directors can exercise their duty to act as independent fiduciaries for stockholders, set the Company’s strategy, determine its capital allocation approach and hold management accountable. Call for Action Members of the Board, Cue’s trajectory is not sustainable and puts all stockholders at risk. We are strong believers in the technology that Cue has developed and have great respect for the critical role the Company played in providing testing during the pandemic. We believe that Cue’s industry-leading technology has the potential to substantially improve the way we diagnose acute and chronic conditions. However, immediate action must be taken to preserve and grow this potential. As fiduciaries and representatives of stockholders, we hope that you will reflect on the destruction in stockholder value that has occurred under your stewardship and listen to the many stockholder voices, representing substantial stockholdings, calling for an urgent and immediate change of course. Concurrently, with this letter, our legal counsel is submitting to the Board a Section 220 demand request to inspect the Company’s “Books and Records” to investigate potential breaches of fiduciary duty and/or other wrongdoing related to mismanagement and test the propriety of the Company’s public disclosures.”