Cutera, Inc. (Nasdaq: CUTR) (“Cutera” or the “Company”), a
leading provider of aesthetic and dermatology solutions, today
reported financial results for the first quarter ended March 31,
2024.
- Consolidated revenue for the first quarter of 2024 of $38.8
million.
- Strong sequential increase in AviClear revenue, driven by a
business model shift in North America and a successful initiation
of the International limited commercial release, during the first
quarter of 2024.
- Recent highlights include the launch of xeo+ and the inaugural
session of Cutera Academy, focused on equipping customers with the
tools to build successful AviClear practices.
“I am pleased with our progress in the first quarter of 2024,
highlighted by a strong sequential gain in our AviClear revenue, as
well as improvement in our gross margin relative to the second half
of 2023, reflecting our clear focus on building a culture of
operational excellence,” commented Taylor Harris, Chief Executive
Officer of Cutera, Inc. “We’re excited to build momentum in
AviClear as we move through 2024, with new programs such as Cutera
Academy helping us optimize our support for customers and through
expansion of our launch in international markets.”
First Quarter 2024 Financial Highlights
Consolidated revenue for the first quarter of 2024 was $38.8
million, a decrease of 29% compared to the first quarter of 2023,
and included $4.2 million of Skincare revenue recorded through the
February distribution agreement termination date. Revenue related
to capital equipment systems declined 30%, while recurring sources
of revenue declined 27%.
Gross profit was $12.4 million, or 32.0% of revenue, for the
first quarter of 2024, compared to a gross profit of $21.6 million,
or 39.7% of revenue, for the first quarter of 2023. On a non-GAAP
basis, gross profit was $14.8 million, or 38.2% of revenue, for the
first quarter of 2024, compared to $23.7 million, or 43.5% of
revenue, for the first quarter of 2023. Gross profit in the first
quarter, on both a GAAP and a non-GAAP basis, was negatively
affected by approximately $0.7 million, or 1.8% of revenue, of
non-cash expense related to excess and obsolete inventory.
Operating expenses were $31.9 million for the first quarter of
2024, net of a $9.7 million gain on early termination of the
skincare distribution agreement, compared to $48.2 million in the
prior year period. On a non-GAAP basis, operating expenses were
$35.2 million for the first quarter of 2024, compared to $41.3
million for the prior year period.
Non-GAAP operating loss was $20.4 million for the first quarter
of 2024, compared to a loss of $17.6 million in the first quarter
of 2023.
Cash and cash equivalents were $105.4 million as of March 31,
2024, compared to $143.6 million as of December 31, 2023.
2024 Outlook
Management is reiterating its 2024 annual revenue guidance of
$160 million to $170 million, including $4 million of Skincare
revenue recorded through the February transition date, and ending
2024 with cash and cash equivalents of approximately $55 million to
$60 million.
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 in the call will be Taylor Harris, Chief
Executive Officer, Stuart Drummond, Interim Chief Financial
Officer, and Greg Barker, Vice President of FP&A and Investor
Relations.
Participants can register for the conference call at the
following registration link. Upon registering, a calendar booking
will be provided by email including the dial-in details and a
unique PIN to access the call. Using this process will by-pass the
operator and avoid the call queue. Registration will remain open
until the end of the live conference call.
If participants prefer to dial in and speak with an operator,
dial Canada/USA Toll Free: 1-844-763-8274 or +1-647-484-8814. It is
recommended that you call in 10 minutes prior to the scheduled
start time if you are using one of these operator-assisted phone
numbers.
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.
Cutera is a leading provider of aesthetic and dermatology
solutions for practitioners worldwide. For over 25 years, Cutera
has strived to improve lives through medical aesthetic technologies
that are driven by science and powered through partnerships. For
more information, call +1-415-657-5500 or 1-888-4CUTERA or visit
www.cutera.com.
*Use of Non-GAAP Financial
Measures
In this press release, 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 gross margin,
gross margin rate, and income or loss from operations. Non-GAAP
adjustments include depreciation and amortization including
contract acquisition costs, stock-based compensation, enterprise
resource planning (“ERP”) implementation costs, certain legal and
litigation costs, certain executive and non-recurring severance
costs, retention plan costs, gain on termination of a distribution
agreement, and certain other adjustments. From time to time in the
future, there may be other items that the Company 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 defines non-GAAP financial measure, also commonly
known as adjusted EBITDA, as operating income before depreciation
and amortization, stock-based compensation, ERP implementation
costs, certain legal and litigation costs, severance, retention
plan costs, gain on early termination of distribution agreement,
and other adjustments.
Company management uses non-GAAP measures as aids in monitoring
the Company’s ongoing financial performance from quarter to
quarter, and year to year, 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 share exclude the following:
Depreciation and amortization, including contract acquisition
costs. 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;
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 the
Company's employees, the Company continues to evaluate its business
performance excluding stock-based compensation expenses. The
Company records stock-based compensation expenses related to grants
of options, employee stock purchase plans, and performance and
restricted stock. Depending upon the size, timing, and 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;
ERP implementation costs. The Company has excluded ERP
system costs related to direct and incremental costs incurred in
connection with its multi-phase implementation of a new ERP
solution and the related technology infrastructure costs. The
Company excludes these costs because it believes 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 the Company’s operating performance;
Certain legal and litigation costs. The Company has
excluded costs incurred related to its litigation against Lutronic
Aesthetics, which is not part of the Company’s ordinary course of
business. The Company’s complaint against Lutronic alleges
misappropriation of trade secrets, violation of the Racketeer
Influenced and Corrupt Organizations Act (RICO), interference with
contractual relations and other claims. The Company excludes these
costs because this litigation is a result of a discrete event that
was not part of the Company’s business strategy, but has a
significant effect on the results of operations. Its costs are
incidental to and do not reflect the efficiencies and effectiveness
of the Company’s core operations;
Severance. The Company has excluded costs associated with
restructuring activities and the separation of its officers and
other executives in calculating its non-GAAP operating expenses and
non-GAAP Operating Income. The Company has excluded restructuring
costs because a restructuring represents a discrete event that
signifies a change in the Company’s strategy, but its costs are not
indicative of the ongoing financial performance of the business.
The Company excludes executive separation costs because executive
separations are unpredictable and not part of the Company’s
business strategy but could have a significant impact on the
results of operation;
Retention plan costs. The Company has excluded the
expense related to a retention plan implemented in April 2023.
Approximately $11 million was made available to sales personnel and
key employees and will be paid in quarterly installments through
October 2024. The Company has excluded expense related to this
retention plan as such costs are not considered part of ongoing
operations; and
Gain on early termination of distribution agreement. The
Company has excluded a gain recorded in connection with the early
termination of a distribution agreement with ZO USA in calculating
its non-GAAP operating expenses and non-GAAP operating income. The
Company recorded the net gain of $9.7 million in the Company's
condensed consolidated statement of operations for the three months
ended March 31, 2024. The Company has excluded this gain as it is
not indicative of the ongoing financial performance of the
business, and not part of the Company’s business strategy.
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, guidance and
outlook, 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, but not limited to, “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 several 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, and other documents filed from time to time
with the United States Securities and Exchange Commission by
Cutera.
All statements made in this release are made only as of the date
set forth at the beginning of this 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 concerning those or other
forward-looking statements. Cutera's financial performance for the
first quarter ended March 31, 2024, 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,
2024
2023
Assets Current assets: Cash and cash equivalents
$
105,444
$
143,612
Accounts receivable, net
37,019
43,121
Inventories
73,469
62,600
Other current assets and prepaid expenses
19,294
19,852
Total current assets
235,226
269,185
Long-term inventories
20,582
16,283
Property and equipment, net
31,964
37,275
Deferred tax asset
534
579
Goodwill
1,339
1,339
Operating lease right-of-use assets
12,034
10,055
Other long-term assets
10,313
11,575
Total assets
$
311,992
$
346,291
Liabilities and Stockholders' Deficit Current
liabilities: Accounts payable
$
13,316
$
19,829
Accrued liabilities
47,119
55,055
Operating leases liabilities
3,231
2,441
Deferred revenue
9,038
10,422
Total current liabilities
72,704
87,747
Deferred revenue, net of current portion
1,417
1,494
Operating lease liabilities, net of current portion
10,046
8,887
Convertible notes, net of unamortized debt issuance costs
419,266
418,695
Other long-term liabilities
1,122
1,298
Total liabilities
504,555
518,121
Stockholders’ deficit: Common stock
20
20
Additional paid-in capital
133,541
131,496
Accumulated deficit
(326,124
)
(303,346
)
Total stockholders' deficit
(192,563
)
(171,830
)
Total liabilities and stockholders' deficit
$
311,992
$
346,291
CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share data)
(unaudited) Three Months Ended March
31, March 31,
2024
2023
Products
$
33,115
$
49,121
Service
5,678
5,405
Total net revenue
38,793
54,526
Products
23,289
30,059
Service
3,085
2,835
Total cost of revenue
26,374
32,894
Gross margin
12,419
21,632
Gross margin %
32.0
%
39.7
%
Operating expenses: Sales and marketing
23,677
29,512
Research and development
5,001
6,468
General and administrative
12,881
12,253
Gain on early termination of distribution agreement
(9,708
)
-
Total operating expenses
31,851
48,233
Loss from operations
(19,432
)
(26,601
)
Interest and other expense, net Interest on convertible notes
(2,939
)
(2,939
)
Amortization of debt issuance costs
(571
)
(552
)
Interest income
1,455
2,636
Other expense, net
(1,316
)
(320
)
Loss before income taxes
(22,803
)
(27,776
)
Income tax expense
(25
)
272
Net loss
$
(22,778
)
$
(28,048
)
Net loss per share: Basic
$
(1.14
)
$
(1.42
)
Diluted
$
(1.14
)
$
(1.42
)
Weighted-average number of shares used in per share
calculations: Basic
19,991
19,776
Diluted
19,991
19,776
CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands) (unaudited) Three
Months Ended March 31, March 31,
2024
2023
Cash flows from operating activities: Net loss
$
(22,778
)
$
(28,048
)
Adjustments to reconcile net loss to net cash provided used in
operating activities: Stock-based compensation
2,109
3,386
Depreciation and amortization
1,991
1,409
Amortization of contract acquisition costs
1,391
2,178
Amortization of debt issuance costs
571
552
Deferred tax assets
45
13
Provision for credit losses
2,181
225
Accretion of discount on investment securities and investment
income, net
-
(34
)
Changes in assets and liabilities: Accounts receivable
3,921
(6,410
)
Inventories
(2,461
)
(6,163
)
Other current assets and prepaid expenses
560
(2,676
)
Other long-term assets
(240
)
(2,011
)
Accounts payable
(6,513
)
(1,330
)
Accrued liabilities
(16,916
)
1,706
Operating leases ,net
(30
)
(16
)
Deferred revenue
(1,461
)
201
Net cash used in operating activities
(37,630
)
(37,018
)
Cash flows from investing activities: Acquisition of
property and equipment
(335
)
(10,353
)
Proceeds from disposal of property and equipment
57
-
Purchase of marketable investments
-
(23,467
)
Proceeds from maturities of marketable investments
-
94,154
Net cash provided by (used in) investing activities
(278
)
60,334
Cash flows from financing activities: Proceeds from
exercise of stock options and employee stock purchase plan
-
109
Taxes paid related to net share settlement of equity awards
(64
)
(2,397
)
Payments on capital lease obligations
(196
)
(124
)
Net cash used in financing activities
(260
)
(2,412
)
Net increase (decrease) in cash, cash equivalents and
restricted cash
(38,168
)
20,904
Cash, cash equivalents, and restricted cash at beginning of period
143,612
146,624
Cash and cash equivalents at end of period
$
105,444
$
167,528
CUTERA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (in
thousands, except percentage data) (unaudited)
Three Months Ended
% Change
March 31, March 31,
2024 vs.
2024
2023
2023
Revenue By Geography: North America
$
18,391
$
27,202
-32.4%
Japan
7,598
12,908
-41.1%
Rest of World
12,804
14,416
-11.2%
Total Net Revenue
$
38,793
$
54,526
-28.9%
International as a percentage of
total revenue
52.6%
50.1%
Revenue By Product Category: Systems - North America
$
11,859
$
19,170
-38.1%
- Rest of World (including Japan)
12,401
15,372
-19.3%
Total Systems
24,260
34,542
-29.8%
Consumables
4,655
6,447
-27.8%
Skincare
4,200
8,132
-48.4%
Total Products
33,115
49,121
-32.6%
Service
5,678
5,405
+5.1% Total Net Revenue
$
38,793
$
54,526
-28.9%
Three Months Ended March 31, March
31,
2024
2023
Pre-tax Stock-Based Compensation Expense: Cost of revenue
$
149
$
364
Sales and marketing
567
1,148
Research and development
304
693
General and administrative
1,089
1,181
$
2,109
$
3,386
CUTERA, INC. Reconciliation of GAAP Financial Measures to
Non-GAAP Financial Measures (in thousands)
(unaudited) Three Months Ended March 31, 2024
Gross Profit Gross Margin OperatingExpenses
OperatingLoss Reported
$
12,419
32.0
%
$
31,851
$
(19,432
)
Adjustments: Depreciation and amortization including contract
acquisition costs
2,095
5.4
%
1,287
3,382
Stock-based compensation
149
0.4
%
1,960
2,109
Severance
92
0.2
%
127
219
Retention plan costs
48
0.1
%
2,751
2,799
Gain on early termination of distribution agreement
-
-
(9,708
)
(9,708
)
Other adjustments
-
-
263
263
Total adjustments
2,384
6.1
%
(3,320
)
(936
)
Non-GAAP
$
14,803
38.2
%
$
35,171
$
(20,368
)
Three Months Ended March 31, 2023 Gross Profit
Gross Margin OperatingExpenses OperatingLoss
Reported
$
21,632
39.7
%
$
48,233
$
(26,601
)
Adjustments: Depreciation and amortization including contract
acquisition costs
1,599
2.9
%
1,988
3,587
Stock-based compensation
364
0.7
%
3,022
3,386
ERP implementation cost
-
-
518
518
Legal - Lutronic
-
-
652
652
Severance
119
0.2
%
196
315
Other adjustments
-
-
585
585
Total adjustments
2,082
3.8
%
6,961
9,043
Non-GAAP
$
23,714
43.5
%
$
41,272
$
(17,558
)
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version on businesswire.com: https://www.businesswire.com/news/home/20240509427457/en/
Cutera, Inc. Greg Barker VP, Corporate FP&A and
Investor Relations 415-657-5500 IR@cutera.com
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