# EDGAR Filing Document

**Accession Number:** 0001628945
**File Stem:** 0001628945-23-000061
**Filing Date:** 2023-3
**Character Count:** 27129
**Document Hash:** 2348cd44c86d2bb762fc1c11f27863ac
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001628945-23-000061.hdr.sgml**: 20230315

**ACCESSION NUMBER**: 0001628945-23-000061

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230315

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230315

**DATE AS OF CHANGE**: 20230315

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Cue Health Inc.
- **CENTRAL INDEX KEY:** 0001628945
- **STANDARD INDUSTRIAL CLASSIFICATION:** LABORATORY ANALYTICAL INSTRUMENTS [3826]
- **IRS NUMBER:** 271562193
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40824
- **FILM NUMBER:** 23735069

**BUSINESS ADDRESS:**
- **STREET 1:** 4980 CARROLL CANYON ROAD
- **STREET 2:** SUITE 100
- **CITY:** SAN DIEGO
- **STATE:** CA
- **ZIP:** 92121
- **BUSINESS PHONE:** (858) 412-8151

**MAIL ADDRESS:**
- **STREET 1:** 4980 CARROLL CANYON ROAD
- **STREET 2:** SUITE 100
- **CITY:** SAN DIEGO
- **STATE:** CA
- **ZIP:** 92121

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Cue Inc.
- **DATE OF NAME CHANGE:** 20141223

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Cue, Inc.
- **DATE OF NAME CHANGE:** 20141222

?xml version="1.0" ? hlth-20230315

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K**<br>

**CURRENT REPORT**

**PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

Date of Report (Date of earliest event reported): **March 15, 2023** 

**CUE HEALTH INC.**

(Exact name of Registrant, as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Delaware** | **001-40590** | **27-1562193** |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |

---

Mailing address:

**4980 Carroll Canyon Rd.**

**Suite 100**

**San Diego, CA 92121**

(Address of principal executive

offices)

Registrant's telephone number, including area code: **(858) 412-8151**

Former name or address, if changed since last report: **Not Applicable.**

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Common Stock, par value $0.00001 per share | HLTH | **Nasdaq Global Stock Market** |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

------

**Item 2.02&nbsp;&nbsp;&nbsp;&nbsp;Results of Operations and Financial Condition.**

On March 15, 2023, Cue Health Inc. ("Cue Health" or the "Company"), issued a press release announcing the Company's financial results for the fourth quarter and full year ended December 31, 2022. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.

The information contained this Current Report on Form 8-K and in the accompanying exhibit are "furnished" and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

**Item 9.01&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits.**

(d) Exhibits

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| <u>[99.1](hlthq42022earningspressrel.htm)</u> | Press Release issued by Cue Health dated March 15, 2023. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL Document). |

---

------

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:&nbsp;&nbsp;&nbsp;&nbsp;March 15, 2023

**Cue Health Inc.**

---

| | |
|:---|:---|
| **By:** | /s/ Ayub Khattak |
| **Name:** | Ayub Khattak |
| **Title:** | Chief Executive Officer |

---

## Exhibit 99.1

![cuelogograyjpga.jpg](cuelogograyjpga.jpg)

**Cue Health Reports Fourth Quarter and Full-Year 2022 Financial Results**

**____________________**

**SAN DIEGO, CA – March 15, 2023 –** <u>Cue Health Inc.</u> ("Cue") (Nasdaq: HLTH), a healthcare technology company, today reported financial results for the fourth quarter and full-year 2022.

**Recent and Full-Year 2022 Highlights**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Reported fourth quarter revenue of $146.8 million, including $92.4 million in deferred revenue related to our agreement with the U.S. Department of Defense. Full-year 2022 revenue was $483.5 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Achieved all test menu expansion milestones for 2022 including four molecular diagnostic tests submissions to the U.S. Food and Drug Administration (FDA):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ COVID-19 de novo submission for full clearance in the second quarter of 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Flu A/B de novo submission in the third quarter of 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Flu A/B + COVID multiplex submission for emergency use authorization (EUA) in the third quarter of 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Mpox, formerly known as monkeypox, submission for EUA for point-of-care use in the first quarter of 2023

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ RSV molecular test clinical studies completed in the first quarter of 2023

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Chlamydia + Gonorrhea molecular clinical studies began in the fourth quarter of 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Strep Throat molecular clinical studies began in the fourth quarter of 2022

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Launched Cue Care<sup>TM</sup> our foundational diagnostic-to-treatment solution, enabling individuals to consult with a healthcare professional and get treatment delivered to their home within hours, if medically indicated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Introduced a new collection of at-home diagnostic test kits for a variety of health conditions, including sexually transmitted infections, heart health, and food sensitivities, providing personalized care from the convenience and privacy of home. Individuals order tests online, collect samples, mail to a CLIA-certified laboratory partner, and get results delivered to their Cue Health App, with the option to access Cue Care for clinical consultation and prescriptions, if medically indicated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Executed a cost reduction plan, which is expected to result in cash savings of approximately $100 million on an annualized basis, while prioritizing near-term revenue generating opportunities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Cash and cash equivalents of $241.5 million as of December 31, 2022, while the $100 million secured revolving credit facility remains undrawn and company continues to operate with no debt obligations.

------

"Our full year 2022 results reflect the success we've seen with our first product and the investments we've made to execute on all of our strategic priorities, which position us well to become the category leader in diagnostic testing both in the home and at the point of care," said Ayub Khattak, Chairman and CEO of Cue Health. "From diagnostic testing to virtual care to the procurement of treatment for a range of infectious diseases as well as a growing menu of general health and wellness concerns, Cue has strengthened its integrated care platform to empower people to live their healthiest lives."

**Fourth Quarter 2022 Financial Results**

Revenue was $146.8 million for the fourth quarter of 2022, including $92.4 million of deferred revenue recognized in the quarter from our agreement with the U.S. Department of Defense.

Excluding deferred revenue, fourth quarter of 2022 revenue was $54.4 million from ongoing operations, driven by stronger than anticipated COVID-19 testing orders from existing customers.

Private sector revenue was $52.4 million, 36% of total revenue or 96% of revenue from ongoing operations. Public sector revenue was $94.4 million or $1.9 million excluding deferred revenue. Disposable test cartridge revenue was $50.5 million.

GAAP product gross profit margin was 38% in the fourth quarter of 2022. Adjusted product gross profit margin was 18% excluding the impact of deferred revenue and one-time adjustments to inventory reserves related to excess readers and reader components.

Operating expenses in the fourth quarter of 2022 were $94.6 million, excluding cost of revenues, reflecting an increase in research and development spend to support product development, software technology, and menu expansion investments.

GAAP net income in the fourth quarter of 2022 was a loss of $31.5 million and earnings per diluted share was a loss of $0.21. Cue's adjusted net income was a loss of $74.4 million and adjusted earnings per diluted share was a loss of $0.50. Adjusted EBITDA was a loss of $54.0 million.

**Full-Year 2022 Financial Results**

Revenue was $483.5 million for the full year of 2022 or $391.1 million when excluding deferred revenue.

Private sector revenue was $374.7 million, or 77% of total revenue. Public sector revenue was 23% of total revenue or $108.8 million. Disposable test cartridge revenue was $358.1 million for the full year 2022.

GAAP product gross profit margin was 30% for the full year 2022. Adjusted product gross profit margin was 38% after excluding one-time inventory charges of $92.8 million and the impact from deferred revenue.

Operating expenses for the full year 2022 were $359.2 million including $2.0 million of restructuring expenses taken during the fiscal year.

GAAP net income for the full year 2022 was a loss of $194.1 million and earnings per diluted share was a loss of $1.31. Cue's Adjusted net income was a loss of $191.8 million and Adjusted earnings per diluted share was a loss of $1.29. Adjusted EBITDA was a loss of $91.5 million.

------

Cash and cash equivalents were $241.5 million as of December 31, 2022. In addition, Cue Health's $100 million secured revolving credit facility remains undrawn and Cue Health operates with no debt obligations.

**Guidance** 

Cue Health expects first quarter 2023 revenues in the range of $20 million to $25 million.

**About Cue Health**

Cue is a healthcare technology company that makes it easy for individuals to access health information and places diagnostic information at the center of care. Cue enables people to manage their health through real-time, actionable, and connected health information, offering individuals and their healthcare providers easy access to lab-quality diagnostics anywhere, anytime, in a device that fits in the palm of the hand. Cue's first-of-its-kind COVID-19 test was the first FDA-authorized molecular diagnostic test for at-home and over-the-counter use without a prescription and physician supervision. Outside the United States, Cue has received the CE mark in the European Union, Interim Order authorization from Health Canada, regulatory approval from India's Central Drugs Standard Control Organization, and PSAR authorization from Singapore's Health Sciences Authority. Cue was founded in 2010 and is headquartered in San Diego. For more information, please visit www.cuehealth.com.

**Forward-Looking Statements**

Statements in this press release about future expectations, plans and prospects, including statements related to the submission of any FDA applications and expectations around receiving clearance, growth in our customer base, expectations regarding production capacity, potential technology enhancements and future performance and our guidance, including first quarter 2023 guidance, as well as any other statements regarding matters that are not historical facts, may constitute "forward-looking statements". The words, without limitation, "continue," "estimate," "expect," "intend," "may," "plan," "potential," "would," "develop," "pave," "seek," "offer," "grow", "expand" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these or similar identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including those related to the expected capabilities of the flu A/B standalone, flu A/B + Covid multiplex, RSV test, Strep Throat test, mpox test and Chlamydia + Gonorrhea multiplex test, the expansion of Cue Care, our ability to maintain customer growth rates, our ability to increase private sector revenue, our ability maintain or replace the revenue historically generated from our government contracts, our ability to effectively scale our manufacturing capacity to meet contractual obligations with our customers and market demand, our ability to realize operating expense annualized savings as a result of the previously announced cost reduction program, and the factors discussed in the "Risk Factors" section of Cue's Annual Report on Form 10-K for the year ended December 31, 2022 to be filed with the SEC. Any forward-looking statements contained in this press release are based on the current expectations of Cue's management team and speak only as of the date hereof, and Cue specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

*This product has not been FDA cleared or approved; but has been authorized by FDA under an Emergency Use Authorization, or EUA. This product has been authorized only for the detection of nucleic acid from SARS-CoV-2, not for any other viruses or pathogens. The emergency use of this product is only authorized for the duration of the declaration that circumstances exist justifying the authorization of emergency use of in vitro diagnostics for detection and/or diagnosis of COVID-19 under Section 564(b)(1) of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 360bbb-3(b)(1), unless the declaration is terminated or authorization is revoked sooner.*

------

**Use of Non-GAAP Financial Measures**

To supplement our financial information presented in accordance with GAAP, we consider certain financial measures that are not prepared in accordance with GAAP, including Adjusted Product Gross Profit Margin, Adjusted Net (loss) Income, Adjusted Diluted EPS and Adjusted EBITDA (loss). We use these financial measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our business and financial performance. We believe that these non-GAAP financial measures provide useful information to investors about our business and financial performance, enhance their overall understanding of our past performance and future prospects, and allow for greater transparency with respect to metrics used by our management in their financial and operational decision making. We are presenting these non-GAAP financial measures to assist investors in seeing our business and financial performance through the eyes of management, and because we believe that these non-GAAP financial measures provide an additional tool for investors to use in comparing results of operations of our business over multiple periods with other companies in our industry.

Adjusted EBITDA is defined as net income before interest expense, income tax expense (benefit), depreciation and amortization, stock-based compensation, restructuring expense, inventory charges – inventory reserves/warranty reserves, DoD deferred revenue release, banking and finance-related items including fair value adjustments - convertible notes.

Adjusted product gross profit is defined as product gross profit, before DoD deferred revenue release and inventory charges – inventory reserves / warranty reserves.

Adjusted net (loss) income is defined as Net (loss) income, before Inventory charges – inventory reserves / warranty reserves, DoD deferred revenue release, restructuring expense and tax effects.

Adjusted diluted EPS is defined as Diluted EPS before Inventory charges – inventory reserves / warranty reserves, DoD deferred revenue release, restructuring expense and tax effects.

Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Further, these metrics have certain limitations in that they do not include the impact of certain expenses that are reflected in our consolidated statements of operations. Thus, these non-GAAP metrics should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP. For reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures see the financial tables below.

**Contact Us**

Lorna Williams

<u>ir@cuehealth.com</u>

Cue Health

<u>press@cuehealth.com</u>

------

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except share data)

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended <br>December 31,** | **Three Months Ended <br>December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Revenue |  |  |  |  |
| &nbsp;&nbsp;Product revenue | $145701 | $191280 | $474166 | $615796 |
| &nbsp;&nbsp;Grant and other revenue | 1076 | 1226 | 9310 | 2311 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue | 146777 | 192506 | 483476 | 618107 |
| Operating costs and expenses: |  |  |  |  |
| &nbsp;&nbsp;Cost of product revenue | 90783 | 102796 | 329973 | 276542 |
| &nbsp;&nbsp;Sales and marketing | 19312 | 21198 | 88580 | 28729 |
| &nbsp;&nbsp;Research and development | 56149 | 21679 | 171452 | 42829 |
| &nbsp;&nbsp;General and administrative | 19157 | 23452 | 97103 | 79788 |
| &nbsp;&nbsp;Restructuring Expense |  |  | 2020 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating costs and expenses | 185401 | 169125 | 689128 | 427888 |
| Income (loss) from operations | (38624) | 23381 | (205652) | 190219 |
| Interest expense | (232) | (57) | (645) | (9809) |
| &nbsp;&nbsp;Change in fair value of redeemable convertible preferred stock warrants |  |  |  | 53 |
| &nbsp;&nbsp;Change in fair value of convertible notes |  |  |  | (59560) |
| &nbsp;&nbsp;Loss on extinguishment of debt |  |  |  | (1998) |
| &nbsp;&nbsp;Other income (expense), net | 2035 | 291 | 2493 | 272 |
| &nbsp;&nbsp;Net income (loss) before income taxes | (36821) | 23615 | (203804) | 119177 |
| Income tax expense (benefit) | (5315) | (10615) | (9748) | 32759 |
| Net income (loss) | $(31506) | $34230 | $(194056) | $86418 |
| Net income (loss) per share attributable to common stockholders – basic | $(0.21) | $0.23 | $(1.31) | $0.63 |
| Weighted-average number of shares used in computation of net income (loss) per share attributable to common stockholders – basic | 149711419 | 146367756 | 148024749 | 52815449 |
| Net income (loss) per share attributable to common stockholders – diluted | $(0.21) | $0.22 | $(1.31) | $0.59 |
| Weighted-average number of shares used in computation of net income (loss) per share attributable to common stockholders – diluted | 149711419 | 152531173 | 148024749 | 59635384 |

---

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CONDENSED BALANCE SHEETS

(In thousands, except share amounts and share data)

---

| | | |
|:---|:---|:---|
| | **December 31,<br>2022** | **December 31,<br>2021** |
| **Assets** | | |
| Current assets: |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $241530 | $409873 |
| &nbsp;&nbsp;Restricted cash | 800 | 13837 |
| &nbsp;&nbsp;Accounts receivable | 18751 | 104589 |
| &nbsp;&nbsp;Inventories | 82210 | 88388 |
| &nbsp;&nbsp;Prepaid expenses | 15728 | 45889 |
| &nbsp;&nbsp;Other current assets | 12134 | 7446 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 371153 | 670022 |
| Non-current inventories | 25436 |  |
| Property and equipment, net | 189275 | 177456 |
| Operating lease right-of-use assets | 85321 | 79474 |
| Intangible assets, net | 16867 | 7673 |
| Other non-current assets | 6528 | 5435 |
| Total assets | $694580 | $940060 |
| **Liabilities and Stockholders' Equity (Deficit)** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;Accounts payable | $7150 | $37208 |
| &nbsp;&nbsp;Accrued liabilities and other current liabilities | 52378 | 29498 |
| &nbsp;&nbsp;Income taxes payable |  | 8297 |
| &nbsp;&nbsp;Deferred revenue, current | 1566 | 82165 |
| &nbsp;&nbsp;Operating lease liabilities, current | 7739 | 7147 |
| &nbsp;&nbsp;Finance lease liabilities, current | 2362 | 2621 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 71195 | 166936 |
| Deferred revenue, net of current portion |  | 10283 |
| Operating leases liabilities, net of current portion | 44045 | 46464 |
| Finance lease liabilities, net of current portion | 849 | 3271 |
| Other non-current liabilities | 1997 | 6356 |
| Total liabilities | 118086 | 233310 |
| **Stockholders' Equity (Deficit)** |  |  |
| Common stock, $0.00001 par value; 500,000,000 and 500,000,000 shares authorized, 150,406,014 and 146,402,991 issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 1 | 1 |
| Additional paid-in-capital | 794567 | 730767 |
| Accumulated deficit | (218074) | (24018) |
| Total stockholders' equity (deficit) | 576494 | 706750 |
| Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) | $694580 | $940060 |

---

------

Non-GAAP Net Income (Loss)

(In thousands, except share data)

The following table presents the reconciliation of Net (loss) income to Adjusted EBITDA, for the periods presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Net (loss) income | $(31506) | $34230 | $(194056) | $86418 |
| &nbsp;&nbsp;Interest expense | 232 | 57 | 645 | 9809 |
| &nbsp;&nbsp;Income tax expense (benefit) | (5315) | (10615) | (9748) | 32759 |
| &nbsp;&nbsp;Depreciation and amortization | 11953 | 6430 | 44942 | 32509 |
| &nbsp;&nbsp;Stock-based compensation | 15776 | 17421 | 64291 | 42979 |
| &nbsp;&nbsp;Restructuring expense |  |  | 2020 |  |
| &nbsp;&nbsp;Inventory charges - inventory reserves / warranty reserves | 47352 |  | 92806 |  |
| &nbsp;&nbsp;DoD deferred revenue release | (92448) |  | (92448) |  |
| &nbsp;&nbsp;Fair value adjustment - convertible notes |  |  |  | 59560 |
| &nbsp;&nbsp;Forgiveness of promissory notes |  |  |  | 12880 |
| &nbsp;&nbsp;Banking and finance-related items |  |  |  | 7998 |
| Adjusted EBITDA | $(53956) | $47523 | $(91548) | $284912 |

---

------

The following table presents the reconciliation of Product gross profit margin to Adjusted product gross profit margin, for the periods presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Product revenue | $145701 | $191280 | $474166 | $615796 |
| &nbsp;&nbsp;Cost of product revenue | 90783 | 102796 | 329973 | 276542 |
| &nbsp;&nbsp;Product gross profit | 54918 | 88484 | 144193 | 339254 |
| &nbsp;&nbsp;Product gross profit margin | 38% | 46% | 30% | 55% |
| &nbsp;&nbsp;DoD deferred revenue release | (92448) |  | (92448) |  |
| Adjusted product revenue | 53253 | 191280 | 381718 | 615796 |
| &nbsp;&nbsp;Inventory charges - inventory reserves / warranty reserves | 47352 |  | 92806 |  |
| Adjusted product gross profit | $9822 | $88484 | $144551 | $339254 |
| Adjusted product gross profit margin | 18% | 46% | 38% | 55% |

---

The following table presents the reconciliation of Net (loss) income / diluted EPS to Adjusted net (loss) income / diluted EPS, for the periods presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2022** | **2022** | **2022** |
| | **Dollar Amount** | **Per Diluted Share** | **Dollar Amount** | **Per Diluted Share** |
| Net (loss) income / diluted EPS | $(31506) | $(0.21) | $(194056) | $(1.31) |
| &nbsp;&nbsp;Inventory charges - inventory reserves / warranty reserves | 47352 | 0.32 | 92806 | 0.63 |
| &nbsp;&nbsp;DoD deferred revenue release | (92448) | (0.62) | (92448) | (0.62) |
| &nbsp;&nbsp;Restructuring expense |  |  | 2020 | 0.01 |
| &nbsp;&nbsp;Tax effects | 2165 | 0.01 | (114) |  |
| Adjusted net (loss) income / diluted EPS | $(74437) | $(0.50) | $(191792) | $(1.29) |

---