The high-tech business model Q Covid did not work for the test

Cos Gal Gadot in Q Health’s Super Bowl TV ad “I got it.” Q has hired “Wonder Woman” actress to be the voice of the company’s new high-tech Covid-19 testing device. The ad pushes the notion that the Covid test at home yields results equal to the accuracy of lab-based PCR tests and surpasses it in terms of convenience.

What it doesn’t mention is the price: 9 249 for a reusable device and $ 195 for a pack of three tests.

Even as the number of cove cases decreased in the winter, many who saw the ads wondered if the device – no matter how convenient or technically surprising – had the right approach. High-tech startups interested in disrupting the healthcare industry rely on a tried and true marketing strategy: high prices for early adopters and then lowering prices as the market grows.

To test the cue, users rub their nostrils with a special stick, insert the stick into a cartridge, and then insert the cartridge into a white, thick-shaped reader. Within 20 minutes, the results are sent via Bluetooth to Cue’s smartphone app. Those who purchase the $ 900 annual subscription can access a physician through the app to validate the results for travel or other purposes.

Covid testing in a highly accurate home certainly has its advantages. And Cue, a San Diego-based publicly traded company, says that 97.8% of the time, its test results agree with a positive PCR lab test result, which is still considered the most accurate. (PCR test costs vary but can be 100 or more, and results usually take at least 24 hours, although faster results can be obtained for more money.)

But even the cheapest prices – year-round subscriptions, starting at $ 480 for 10 tests (and a discounted device for $ 149) – are much higher than the cost of low-precision antigen testing, which Americans can now often collect for free.

The price of Cue keeps it out of the reach of most consumers. However, it adapts to an elite business model that seeks to attract attention and assumes that prices will fall at some point as market growth and demand increase.

For now, unless employers pay them, consumers must pay the Q-test bill because health insurance companies, which typically cover lab-based PCR tests and rapid antigen tests, do not reimburse policyholders for the Q system. “We’re working closely with health insurance companies to get coverage for Q Health Solutions,” said Dan Banks, a company spokesman. But the company has not yet announced a deal with any insurer.

Although Cue’s Super Bowl commercial implies that its testing product is for at-home users, its biggest customer is the Department of Defense, even though its official contract has expired. Major League Baseball, the National Basketball Association, Netflix and Google have also taken the test by purchasing sports league and commercial enterprise units for their employees.

In the first quarter of 2022, private revenue sales increased 98% to $ 175.8 million out of a total of $ 179.4 million. Net income for the quarter was $ 2.8 million, compared to $ 13 million for the same quarter last year, as the company increased spending on staff, marketing and product development. Second-quarter revenue is also expected to decline, the company said, falling to about 50 million.

The company, which sold the stock to the public last year, has seen its share price (the enviable stock symbol HLTH) drop from $ 22 to about $ 5 at the time of its launch in September.

Another, even more fundamental, problem with the company is that fewer people are interested in testing Covid regularly. “There was excitement when Covid was in full swing, but now people are realizing that the Omicron strain is not so bad, the focus on testing has changed,” said Charles Rye, an analyst at Quinn. (Coin, a Wall Street investment firm, helped Q take over but has no financial ties to the company.)

It’s possible, he said, that Q, like other companies that zoomed in during the epidemic, just to read Earth. “The company is already looking like a Peloton, and a lot of that feeling has already been baked into stock prices,” Rye said.

Q indicates that the Covid test is just the first use of its product. It wants to create and obtain FDA approval for other tests that could use the $ 249 device, including Flu; Respiratory syncytial virus, or RSV; Fertility; And pregnancy. If a flu test returns positive, Q officials say the smartphone app could enable the patient to contact a physician to take advantage of anti-flu medications such as Tamiflu.

“As pregnancy tests at home have completely changed, how women get answers and glucose meters change forever, how diabetics monitor their glucose levels, we think this paradigm has shifted permanently to infectious disease testing at home, and Q is good to meet these needs. Is in position, ”the bank said.

Yet in 2022 none of these tests will be available or generate any revenue The company expects to submit tests for influenza A and B in late summer or autumn. The company noted that the speed at which it could evaluate new types of tests to offer the FDA could be adversely affected by the prevalence of covid, potentially limiting the ability to find test subjects or hire staff at its facilities.

To boost sales, the company cut its monthly subscription and individual test costs by $ 15 in February.

But Charles Rye thinks a lot of big cuts are needed for success. The short-term solution, he said, is to offer Cue’s reader device at low or no cost and use a classic marketing strategy that dates back nearly a century before the high-tech era: the razor-razor blade model, where customers sell a cheap proprietary handle -Precious blades make real money.

KHN (Kaiser Health News) is a national newsroom that creates in-depth journalism about health issues. KHN is one of the three major operating programs of KFF (Kaiser Family Foundation), including policy analysis and polling. KFF is a non-profit organization that provides health information to the nation.

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