During the COVID-19 pandemic, the at-home medical test went from a niche product to a household staple. With a quick swab, we gained the confidence to visit family or board a plane. At the forefront of this revolution was Lucira Health, the company that developed the very first at-home COVID-19 test authorized by the FDA.
Lucira was a pioneer, a symbol of rapid innovation when the world needed it most. Yet its story took a shocking turn. How could a company that achieved a historic public health milestone collapse into bankruptcy almost overnight? The saga of Lucira Health offers a series of stunning lessons about the harsh realities that exist between a breakthrough idea and market success.
1. You Can Get Landmark Approval and Go Bankrupt in the Same Week
Lucira Health’s collapse unfolded with the brutal irony of a Greek tragedy. On February 22, 2023, the company officially filed for Chapter 11 bankruptcy protection. It seemed like the end of the road for the struggling diagnostics firm.
Then, just two days later, on February 24, 2023, the U.S. Food and Drug Administration (FDA) issued an Emergency Use Authorization (EUA) for Lucira’s most ambitious product yet: the first-ever over-the-counter test that could detect and differentiate between COVID-19 and Influenza A/B from a single sample. The approval was hailed as a monumental achievement.
“Today’s authorization of the first OTC test that can detect Influenza A and B, along with SARS-CoV-2, is a major milestone in bringing greater consumer access to diagnostic tests that can be performed entirely at home.” — Jeff Shuren, M.D., J.D., director of the FDA’s Center for Devices and Radiological Health.
So, how could a company achieve a “major milestone” while simultaneously going bankrupt? The answer lies in a perfect storm of regulatory delays and high-stakes financing.
- Lucira’s Explanation: The company stated that the “protracted EUA process” for the combination test was incredibly costly, draining its resources and forcing it into bankruptcy before the approval finally came through.
- The FDA’s Response: Officials countered that the delay was necessary. An early version of the test submitted by Lucira allegedly contained a “toxic substance” that made it unsuitable for home use. After a redesign, a subsequent version lacked sufficient clinical data to assess its performance, causing further delays.
- The Hidden Condition: The final blow was a critical, undisclosed term in Lucira’s loan agreement with Silicon Valley Bank. The agreement reportedly required Lucira to secure FDA approval for its combo test by a specific deadline. Missing that deadline triggered a massive interest rate hike that made the company’s financial situation untenable.
2. The Highest Bidder Doesn’t Always Win
What followed Lucira’s bankruptcy was a tense, two-day courtroom showdown over its assets that proved to be as dramatic as its collapse. Two main bidders emerged: the pharmaceutical giant Pfizer and a much smaller company, Pearsanta, Inc., a subsidiary of Aditxt.
After the initial auction on April 13, 2023, the bids were in. Pearsanta had submitted a staggering final offer of approximately $35.9 million. Pfizer’s bid was a distant $21.2 million. Yet, in a stunning gamble, Lucira declared Pfizer the winner, rejecting the much higher offer.
The reasoning came down to one critical factor: certainty. The debtor’s financial advisor, Jeffrey A. Nerland, testified that there were severe doubts about Pearsanta’s ability to actually pay what it had bid.
- Financial Fragility: Pearsanta’s parent company, Aditxt, had a market capitalization of less than $4 million—a tiny fraction of its nearly $36 million bid.
- Uncertain Funding: Pearsanta had no committed financing. Its plan was to raise the entire amount over a single weekend through a stock offering that was set to expire the following Monday. Nerland assessed this plan as having a “very low probability of closing.”
But the drama wasn’t over. The presiding judge questioned the logic of designating Pearsanta’s higher bid as a backup if it was deemed too unqualified to win in the first place. This skepticism forced a shocking twist: the hearing was continued to the next day, triggering a new round of bidding.
Pearsanta’s high-risk bid, while ultimately rejected as the winner, had fundamentally changed the game. It forced the global giant back to the table. In the dramatic final round on April 14, Pfizer was compelled to raise its offer by over $15 million, finally securing the assets with a winning bid of $36.4 million. The lesson was profound: even a financially questionable bidder can create immense value by challenging the front-runner, nearly doubling the return for creditors.
3. A Titan’s Embrace Can Be the Kiss of Death
Pfizer officially acquired Lucira’s assets for $36.4 million, with the sale closing on April 20, 2023. The innovative technology behind the first at-home combo test was now in the hands of a global pharmaceutical leader with vast resources and market reach. For a moment, it seemed like the technology, if not the original company, had been saved.
The story, however, had one last twist. Less than two years later, in February 2025, Pfizer announced its decision to shut down the Lucira business entirely by the end of the first quarter of 2025.
After a landmark approval, a bankruptcy, and a dramatic auction fight, the world-changing technology was ultimately shelved. The reason wasn’t a flaw or failure, but a simple line on a spreadsheet. A Pfizer spokesperson stated it was “purely a business decision related to the cost associated with these molecular tests.” The advanced technology that made the tests accurate also made them expensive to produce.
From a consumer perspective, it was a frustrating end. Online forums on Reddit showed users lamenting the discontinuation, noting that the combo test sold for around $60, a significant jump from the original $38 COVID-only test.
Conclusion: A Cautionary Tale of Innovation and Market Reality
The rise and fall of Lucira Health is a powerful cautionary tale. Its story demonstrates that even groundbreaking, desperately needed technology can be defeated by a combination of regulatory hurdles, fragile financing, and the cold, hard calculations of the market. A historic FDA approval couldn’t save it, a high-stakes auction only highlighted its precarity, and even an acquisition by a global giant wasn’t enough to secure its future.
Lucira’s fate is not unique. Other diagnostic companies that saw meteoric rises during the pandemic, such as Cue Health and Ellume, have also faced bankruptcy as testing demand waned and funding dried up. The pattern reveals a critical challenge at the intersection of public health and business.
It leaves us with a vital question: In a world that desperately needs rapid innovation in public health, what can be done to prevent the next breakthrough technology from suffering the same fate?