Cutera, Inc. (NASDAQ: CUTR) (“Cutera” or the “Company”), a
leading provider of laser and other energy-based aesthetic systems
for practitioners worldwide, today reported financial results for
the first quarter ended March 31, 2020.
First Quarter 2020 Financial and Operational
Highlights
- Revenue was $32.2 million, an 11% decrease from prior-year
period on reduced capital equipment sales due to COVID-19
disruption, partially offset by
- truSculpt portfolio revenue growth of 11%
- Recurring revenue growth of 28% and
- International revenue growth of 18%
- Gross Margin was 44% compared to 48% in the prior-year period,
on reduced capital sales volume
- Net loss was $12.4 million, or $0.86 per fully diluted share,
as compared to a net loss of $8.2 million, or $0.59 per fully
diluted share, in the prior-year period.
- Closed public stock offering on April 21, 2020 resulting in
approximately $27 million net proceeds
“Our first quarter results reflected strength and momentum
exiting 2019, offset by the significant impacts of the COVID-19
pandemic that flowed through the global economy during the
quarter,” commented Dave Mowry, Chief Executive Officer of Cutera,
Inc. “We have taken a number of steps to adapt our business to the
current environment, and I am extremely proud of our team’s
response. With a strong balance sheet and a culture of innovation,
we are well-positioned to strengthen our competitive advantage as
we move through this crisis. During this time, we have dedicated
ourselves to providing critical support to our customers as they
navigate the reopening of their practices and prepare to
accommodate pent-up demand for procedures. Our recent capital raise
will ensure that we are able to continue investing in our strong
pipeline of new products and build upon our technology leadership
position in the body sculpting market.”
2020 Financial Outlook
As previously announced on April 3, 2020, Cutera has withdrawn
its previously announced full-year 2020 guidance due to uncertainty
over the magnitude and duration of the impacts from the COVID-19
pandemic on its financial results.
Conference Call
The Company’s management will host a conference call to discuss
these results and related matters today at 1:30 p.m. PT / 4:30 p.m.
ET. Participating on the call will be Dave Mowry, Chief Executive
Officer, Jason Richey, President, and Fuad Ahmad, Interim Chief
Financial Officer.
To participate in the conference call, dial 1-833-423-0434
(domestic) or +1 918-922-6619 (international) and refer to the
Conference Code: 2339504
The call will also be webcast and can be accessed from the
Investor Relations section of Cutera’s website at
http://www.cutera.com/. The webcast replay of the call will be
available at the same site approximately one hour after the end of
the call.
About Cutera, Inc.
Brisbane, California-based Cutera is a leading provider of laser
and other energy-based aesthetic systems for practitioners
worldwide. Since 1998, Cutera has developed innovative, easy-to-use
products that enable physicians and other qualified practitioners
to offer safe and effective aesthetic treatments to their patients.
For more information, call 1-888-4CUTERA or visit
www.cutera.com.
*Use of Non-GAAP Financial
Measures
In this press release, in order to supplement the Company’s
condensed consolidated financial statements presented in accordance
with Generally Accepted Accounting Principles, or GAAP, management
has disclosed certain non-GAAP financial measures for the statement
of operations and net income (loss) per diluted share. Non-GAAP
adjustments include stock-based compensation, depreciation,
amortization, executive separation costs, customer relationship
management (“CRM”) and enterprise resource planning (“ERP”) system
implementation costs, as well as the net tax impact of excluding
these items. From time to time in the future, there may be other
items that we may exclude if the Company believes that doing so is
consistent with the goal of providing useful information to
investors and management. The Company has provided a reconciliation
of each non-GAAP financial measure used in this earnings release to
the most directly comparable GAAP financial measure. The Company
has not provided a reconciliation of non-GAAP guidance measures to
the corresponding GAAP measures on a forward-looking basis due to
the potential significant variability, limited visibility,
unpredictability, or unique non-recurring nature of the items.
Forward-looking non-GAAP measures include adjusted EBITDA. The
Company defines adjusted EBITDA as earnings before interest, taxes,
depreciation and amortization, stock-based compensation, executive
separation costs, and charges related to CRM and ERP software
implementation costs.
Company management uses these measurements as aids in monitoring
the Company’s ongoing financial performance from quarter to
quarter, and year to year, on a regular basis and for benchmarking
against other similar companies. Non-GAAP financial measures used
by the Company may be calculated differently from, and therefore
may not be comparable to, similarly titled measures used by other
companies. These non-GAAP financial measures should be considered
along with, but not as alternatives to, the operating performance
measure as prescribed by GAAP. Non-GAAP financial measures for the
statement of operations and net income per diluted share exclude
the following:
Non-cash expenses for stock-based compensation. The
Company has excluded the effect of stock-based compensation
expenses in calculating its non-GAAP operating expenses and net
income measures. Although stock-based compensation is a key
incentive offered to its employees, the Company continues to
evaluate its business performance excluding stock-based
compensation expenses. The Company records stock-based compensation
expense related to grants of options, employee stock purchase plan,
and performance and restricted stock. Depending upon the size,
timing and the terms of the grants, this expense may vary
significantly but will recur in future periods. The Company
believes that excluding stock-based compensation better allows for
comparisons to its peer companies;
Depreciation and amortization. The Company has excluded
depreciation and amortization expense in calculating its non-GAAP
operating expenses and net income measures. Depreciation and
amortization are non-cash charges to current operations;
Executive separation. We have excluded costs associated
with the resignation of our former Chief Executive Officer in
calculating our non-GAAP operating expenses and net income
measures. We exclude these non-recurring separation costs because
we believe that these items do not reflect future operating
expenses;
Customer Relationship Management. We have excluded CRM
system costs related to direct and incremental costs incurred in
connection with our multi-phase implementation of a new CRM
solution and the related technology infrastructure costs. We
exclude these costs because we believe that these items do not
reflect future operating expenses and will be inconsistent in
amounts and frequency making it difficult to contribute to a
meaningful evaluation of our operating performance; and
Enterprise Resource Planning. We have excluded ERP system
costs related to direct and incremental costs incurred in
connection with our multi-phase implementation of a new ERP
solution and the related technology infrastructure costs. We
exclude these costs because we believe that these items do not
reflect future operating expenses and will be inconsistent in
amounts and frequency making it difficult to contribute to a
meaningful evaluation of our operating performance; and
Non-Recurring Legal Expenses. We have excluded legal
expenses related to our pending litigation with Lutronic. We
believe these expenses are non-recurring and do not reflect future
operating expenses.
The Company believes that excluding all of the items above
allows users of its financial statements to better review and
assess both current and historical results of operations.
Safe Harbor Statement
Certain statements in this press release, other than purely
historical information, are “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
These statements include, but are not limited to, Cutera’s plans,
objectives, strategies, financial performance and outlook, CFO and
other senior leadership searches, product launches and performance,
trends, prospects or future events and involve known and unknown
risks that are difficult to predict. As a result, the Company’s
actual financial results, performance, achievements or prospects
may differ materially from those expressed or implied by these
forward-looking statements. In some cases, you can identify
forward-looking statements by the use of words such as “may,”
“could,” “seek,” “guidance,” “predict,” “potential,” “likely,”
“believe,” “will,” “should,” “expect,” “anticipate,” “estimate,”
“plan,” “intend,” “forecast,” “foresee” or variations of these
terms and similar expressions, or the negative of these terms or
similar expressions. Forward-looking statements are based on
management's current, preliminary expectations and are subject to
risks and uncertainties, which may cause Cutera's actual results to
differ materially from the statements contained herein. These
statements are not guarantees of future performance, and
stockholders should not place undue reliance on forward-looking
statements. There are a number of risks, uncertainties and other
important factors, many of which are beyond the Company’s control,
that could cause its actual results to differ materially from the
forward-looking statements contained in this press release,
including those described in the “Risk Factors” section of Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, the Registration Statement on Form S-8 and
other documents filed from time to time with the United States
Securities and Exchange Commission by Cutera.
All information in this press release is as of the date of its
release. Accordingly, undue reliance should not be placed on
forward-looking statements. Cutera undertakes no obligation to
update publicly any forward-looking statements to reflect new
information, events or circumstances after the date they were made,
or to reflect the occurrence of unanticipated events. If the
Company updates one or more forward-looking statements, no
inference should be drawn that it will make additional updates with
respect to those or other forward-looking statements. Cutera's
financial performance for the fourth quarter and full year ended
December 31, 2019, as discussed in this release, is preliminary and
unaudited, and subject to adjustment.
CUTERA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited)
March 31,
December 31,
2020
2019
Assets Current assets: Cash and cash equivalents
$
14,774
$
26,316
Marketable investments
4,746
7,605
Accounts receivable, net
15,660
21,556
Inventories
36,941
33,921
Other current assets and prepaid expenses
4,831
5,648
Total current assets
76,952
95,046
Property and equipment, net
2,687
2,817
Deferred tax asset
408
423
Goodwill
1,339
1,339
Operating lease right-of-use assets
7,143
7,702
Other long-term assets
5,901
6,411
Total assets
$
94,430
$
113,738
Liabilities and Stockholders' Equity Current
liabilities: Accounts payable
$
14,604
$
12,685
Accrued liabilities
23,663
30,307
Operating leases liabilities
2,204
2,800
Extended warranty liabilities
1,765
1,999
Deferred revenue
10,180
10,831
Total current liabilities
52,416
58,622
Deferred revenue, net of current portion
2,789
3,391
Income tax liability
93
93
Operating lease liabilities, net of current portion
5,149
5,112
Other long-term liabilities
447
578
Total liabilities
60,894
67,796
Stockholders’ equity: Common stock
15
14
Additional paid-in capital
82,292
82,346
Accumulated deficit
(48,772)
(36,358)
Accumulated other comprehensive income (loss)
1
(60)
Total stockholders' equity
33,536
45,942
Total liabilities and stockholders' equity
$
94,430
$
113,738
CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
March 31,
2020
2019
Products
$
26,391
$
30,762
Service
5,848
5,264
Total net revenue
32,239
36,026
Products
14,103
15,541
Service
3,800
3,176
Total cost of revenue
17,903
18,717
Gross profit
14,336
17,309
Gross margin %
44%
48%
Operating expenses: Sales and marketing
14,789
16,104
Research and development
3,870
3,706
General and administrative
7,806
5,525
Total operating expenses
26,465
25,335
Loss from operations
(12,129
)
(8,026
)
Interest and other expense, net
(207
)
(79
)
Loss before income taxes
(12,336
)
(8,105
)
Income tax expense
78
115
Net loss
(12,414
)
(8,220
)
Net loss per share: Basic
(0.86
)
(0.59
)
Diluted
(0.86
)
(0.59
)
Weighted-average number of shares used in per share
calculations: Basic
14,433
14,017
Diluted
14,433
14,017
CUTERA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (in
thousands, except percentage data) (unaudited)
Three Months Ended
% Change
March 31,
March 31,
2020 Vs
2020
2019
2019
Revenue By Geography: United States
$
13,784
$
20,400
-32%
International
18,455
$
15,626
+18%
Total Net Revenue
$
32,239
$
36,026
-11%
International as a percentage of total revenue
57%
43%
Revenue By Product Category: Systems - North America
$
10,382
$
17,580
-41%
- Rest of World
10,576
$
9,629
+10%
Total Systems
20,958
27,209
-23%
Consumables
2,533
$
1,945
+30%
Skincare
2,900
$
1,608
+80%
Total Products
26,391
30,762
-14%
Service
5,848
$
5,264
+11%
Total Net Revenue
$
32,239
$
36,026
-11%
Three Months Ended
March 31,
March 31,
2020
2019
Pre-tax Stock-Based Compensation Expense: Cost of revenue
$
290
$
269
Sales and marketing
718
718
Research and development
321
263
General and administrative
650
57
$
1,980
$
1,307
CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands) (unaudited)
Three Months Ended
March 31,
March 31,
2020
2019
Cash flows from operating activities: Net loss
$
(12,414)
$
(8,220)
Adjustments to reconcile net loss to net cash used in operating
activities: Stock-based compensation
1,980
1,307
Depreciation of tangible assets
360
411
Amortization of contract acquisition costs
717
690
Change in deferred tax asset
15
6
Provision for doubtful accounts receivable
590
98
Other
35
103
Changes in assets and liabilities: Accounts receivable
5,306
403
Inventories
(3,020)
1,355
Other current assets and prepaid expenses
807
(916)
Other long-term assets
(207)
(679)
Accounts payable
1,919
(942)
Accrued liabilities
(6,567)
(1,467)
Extended warranty liabilities
(234)
(492)
Other long-term liabilities
-
(140)
Deferred revenue
(1,253)
525
Income tax liability
-
5
Net cash used in operating activities
(11,966)
(7,953)
Cash flows from investing activities: Acquisition of
property, equipment and software
(230)
(65)
Disposal of property and equipment
-
-
Proceeds from sales of marketable investments
-
-
Proceeds from maturities of marketable investments
6,800
3,200
Purchase of marketable investments
(3,930)
(1,586)
Net cash provided by investing activities
2,640
1,549
Cash flows from financing activities: Proceeds from
exercise of stock options and employee stock purchase plan
201
131
Taxes paid related to net share settlement of equity awards
(2,234)
(490)
Payments on finance lease obligations
(183)
(131)
Net cash used in financing activities
(2,216)
(490)
Net decrease in cash and cash equivalents
(11,542)
(6,894)
Cash and cash equivalents at beginning of period
26,316
26,052
Cash and cash equivalents at end of period
$
14,774
$
19,158
CUTERA, INC. RECONCILIATION OF GAAP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS TO NON-GAAP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share data) (unaudited)
Three Months Ended March 31, 2020 Three Months
Ended March 31, 2019 GAAP
DepreciationandAmortization Stock-BasedCompensation
CRM and ERPImplementation Taxes andOtherAdjustments
Non-GAAP GAAP DepreciationandAmortization
Stock-BasedCompensation CRM and ERPImplementation
Taxes andOtherAdjustments Non-GAAP Net revenue
$
32,239
-
-
-
-
$
32,239
$
36,026
-
-
-
-
$
36,026
Cost of revenue
17,903
(140
)
(290
)
-
-
17,473
18,717
(129
)
(269
)
-
-
18,319
Gross profit
14,336
140
290
-
-
14,766
17,309
129
269
-
-
17,707
Gross margin %
44
%
46
%
48
%
49
%
Operating expenses: Sales and marketing
14,789
(871
)
(718
)
(165
)
-
13,035
16,104
(868
)
(718
)
(85
)
-
14,433
Research and development
3,870
(38
)
(321
)
-
-
3,511
3,706
(21
)
(263
)
-
-
3,422
General and administrative
7,806
(28
)
(650
)
(245
)
(324
)
(a)
6,559
5,525
(83
)
(57
)
(239
)
(614
)
(b)
4,531
Total operating expenses
26,465
(937
)
(1,690
)
(409
)
(324
)
23,105
25,335
(972
)
(1,038
)
(324
)
(614
)
22,387
Loss from operations
(12,129
)
1,077
1,980
409
324
(8,339
)
(8,026
)
1,101
1,307
324
614
(4,680
)
Interest and other expense, net
(207
)
-
-
-
-
(207
)
(79
)
-
-
-
-
(79
)
Loss before income taxes
(12,336
)
1,077
1,980
409
324
(8,546
)
(8,105
)
1,101
1,307
324
614
(4,759
)
Provision for income taxes
78
-
-
-
5
83
115
-
-
-
3
118
Net loss
$
(12,414
)
1,077
1,980
409
319
$
(8,629
)
$
(8,220
)
1,101
1,307
324
611
$
(4,877
)
Net loss per share: Basic
$
(0.86
)
$
(0.60
)
$
(0.59
)
$
(0.35
)
Diluted
$
(0.86
)
$
(0.60
)
$
(0.59
)
$
(0.35
)
Weighted-average number of shares used in per share
calculations: Basic
14,433
14,433
14,017
14,017
Diluted
14,433
14,433
14,017
14,017
a) Other adjustment of $324
related to certain non-recurring legal expenses.
b) Other adjustment of $614
related to Executive separation costs.
Operating expenses as a % of net revenue
GAAP Non-GAAP GAAP Non-GAAP
Sales and marketing
45.9
%
40.4
%
44.7
%
40.1
%
Research and development
12.0
%
10.9
%
10.3
%
9.5
%
General and administrative
24.2
%
20.3
%
15.3
%
12.6
%
82.1
%
71.7
%
70.3
%
62.1
%
CUTERA, INC. RECONCILIATION OF LOSS TO ADJUSTED
EBITDA (in thousands) (unaudited)
Three Months
Ended
March 31, 2020
Net loss
$
(12,414
)
Adjustments: Stock-based compensation
1,980
Depreciation and amortization
1,077
CRM and ERP implementation costs
409
Other adjustments
324
Interest and other expense, net
207
Provision for income taxes
78
Total adjustments
$
4,075
Adjusted EBITDA
$
(8,339
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507005285/en/
Cutera, Inc. Anne Werdan Director, Investor Relations
415-657-5500 awerdan@cutera.com
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