Financial News

Cutera, Inc. Announces First Quarter 2021 Financial Results

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, 2021.

First Quarter 2021 Financial and Operational Highlights

  • Revenue was $49.7 million, an increase of 54.1% from the prior-year period, driven by strong performance across the business, with particular strength in capital equipment and skincare sales.
    • Capital Equipment revenue of $28.3 million increased 35.1% over the prior-year period.
    • Recurring revenue, defined by the combination of Skincare, Consumable Products, and Service, was $21.3 million, an increase of 89.2% over the prior-year period:
      • Skincare revenue of $12.3 million increased 324.4% over the prior-year period;
      • Consumable Product revenue of $2.9 million grew 15.5% over prior-year period, reflecting the continued recovery of energy-based treatment volumes; and
      • Service revenue of $6.1 million increased 4.6% over the prior-year period.
  • Gross Margin was 55.8%, compared to 44.5% in the prior-year period, due to ongoing improvements in manufacturing efficiencies, offset by mix shift associated with growth of skincare during the quarter;
  • Operating Expenses were $26.5 million in the quarter, flat to prior-year period;
  • Adjusted EBITDA was $4.6 million in the period as compared to $(8.3) million, a $12.9 million improvement over prior-year period; and
  • Net loss was ($0.4) million, or ($0.02) per fully diluted share, compared to a net loss of ($12.4) million, or ($0.86) per fully diluted share, in the prior-year period;
  • Announced pricing of offering of $138.3 million of convertible senior notes.

“I am pleased with our first-quarter results, which reflect the continued progress we have made since the onset of the COVID-19 pandemic,” commented Dave Mowry, Chief Executive Officer of Cutera, Inc. “In the first-quarter, we achieved broad strength across our business, driven by consistent execution from our commercial teams, strength in the skincare business, and a slow but steady improvement in our end markets. Building upon the tremendous work from our team, in 2021 we plan to continue to improve gross margins by reducing manufacturing costs; increase sales and sales productivity with our focus on people and process; and deliver innovative products through our increased R&D investments. As we execute these vital few initiatives, our objective is to deliver strong performance despite the remaining pandemic uncertainties that will likely be headwinds for many of us in this market.”

2021 Outlook

Company management remains cautious with the lingering uncertainty related to COVID-19. Global Energy-based Aesthetics end markets continued to improve over the course of the first quarter, but the pace and extent of customer recovery varied by geography. With several geographies still under activity restrictions, management is not issuing full-year guidance at this time.

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 and Rohan Seth, Chief Financial Officer.

To participate in the conference call, dial 1-877-705-6003 (domestic) or + 1-201-493-6725 (international) and refer to the Conference Code: 13719080.

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 Companys 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 and other non-recurring separation costs, customer relationship management (CRM) and enterprise resource planning (ERP) system costs, non-recurring legal and litigation 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 and other non-recurring separation costs, customer relationship management and enterprise resource planning system costs, and non-recurring legal and litigation costs.

Company management uses these measurements as aids in monitoring the Companys 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 the Company's 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 and other non-recurring separation costs. We have excluded costs associated with the resignation of our former Executive Officers in calculating our non-GAAP operating expenses and net income measures. We exclude these and other non-recurring employee 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;

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 and litigation costs. We have excluded costs incurred related to third party litigation and disputes, that are of a non-recurring nature.

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, Cuteras 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 Companys 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 Companys 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 first quarter ended March 31, 2021, 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,
Reporting Unit Balance Sheet  

2021

  

2020

Assets      
Current assets:      
Cash and cash equivalents $

                   164,932

  $ 

                  47,047

Accounts receivable, net  

                     24,151

  

                  21,962

Inventories  

                     34,578

  

                  28,508

Other current assets and prepaid expenses  

                     10,339

  

                    8,779

Total current assets  

                   234,000

  

                106,296

        
Property and equipment, net  

                       2,373

  

                    2,299

Deferred tax asset  

                          598

  

                       643

Goodwill  

                       1,339

  

                    1,339

Operating lease right-of-use assets  

                     16,570

  

                  17,076

Other long-term assets  

                       4,853

  

                    5,080

Total assets $

                   259,733

  $ 

                132,733

      
Liabilities and Stockholders' Equity      
Current liabilities:      
Accounts payable $

                       5,031

  $ 

                    6,684

Accrued liabilities  

                     41,329

  

                  31,079

Operating leases liabilities  

                       2,351

  

                    2,260

PPP Loan Payable  

                       6,352

  

                    3,630

Extended warranty liabilities  

                       1,039

  

                    1,216

Deferred revenue  

                     10,019

  

                    9,489

Total current liabilities  

                     66,121

  

                  54,358

      
Deferred revenue, net of current portion  

                       1,718

  

                    1,748

PPP Loan payable, net of current portion  

                          851

  

                    3,555

Operating lease liabilities, net of current portion  

                     15,394

  

                  15,950

Convertible note, net of unamortized debt issuance costs of $4,665  

                   133,585

  

 - 

Other long-term liabilities  

                          434

  

                       242

Total liabilities  

                   218,103

  

                  75,853

      
Stockholders’ equity:      
Common stock  

                            18

  

                         18

Additional paid-in capital  

                   102,206

  

                117,097

Accumulated deficit  

                    (60,594)

  

                (60,235)

Total stockholders' equity  

                     41,630

  

                  56,880

Total liabilities and stockholders' equity $

                   259,733

  $ 

                132,733

      
  

                       -

  

                    -

CUTERA, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited) 
          
     
 Three Months Ended
      
 March 31, March 31,
 

2021

 

2020

     
Products $

           43,551

 $

26,391

Service  

             6,117

  

5,848

Total net revenue  

           49,668

  

32,239

      
Products  

           18,331

  

14,103

Service  

             3,627

  

3,800

Total cost of revenue  

           21,958

  

17,903

Gross profit  

           27,710

   

14,336

Gross margin %  

56%

  

44%

     
Operating expenses:      
Sales and marketing  

           15,068

  

14,789

Research and development  

             4,112

  

3,870

General and administrative  

             7,365

  

7,806

Total operating expenses  

           26,545

   

26,465

Income (loss) from operations  

             1,165

   

(12,129)

Interest and other expense, net     
Amortization of debt issuance costs  

                (52)

  

-

Interest on convertible notes  

              (191)

  

-

Other expense, net  

           (1,023)

  

(207)

Total Interest and other expense, net  

           (1,266)

  

(207)

Loss before income taxes  

              (101)

   

(12,336)

Income tax expense  

                258

  

78

Net loss $

              (359)

  $

(12,414)

     
Net loss per share:     
Basic $

             (0.02)

  $ 

(0.86)

Diluted $

             (0.02)

  $ 

(0.86)

     
Weighted-average number of shares used in per share calculations:     
Basic  

           17,768

  

14,433

Diluted  

           17,768

  

14,433

CUTERA, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) 
(unaudited) 
  
   Three Months Ended
  March 31, March 31,
 

2021

 

2020

Cash flows from operating activities:      
Net loss $

                      (359)

 $

         (12,414)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:   
Stock-based compensation  

                     1,846

  

             1,980

Depreciation of tangible assets  

                        361

  

                360

Amortization of contract acquisition costs  

                        545

  

                717

Amortization of  debt issuance costs  

                          52

  

 - 

Impairment of capitalized cloud computing costs  

                        182

  

                     -

Change in deferred tax asset  

                          45

  

                  15

Provision for credit losses  

                        218

  

                590

Gain on sale of property and equipment  

                        (59)

  

 - 

Change in right-of-use asset  

                        604

  

                645

Other  

 - 

  

                  35

Changes in assets and liabilities:      
Accounts receivable  

                   (2,407)

  

             5,306

Inventories  

                   (6,021)

  

           (3,020)

Other current assets and prepaid expenses  

                   (1,560)

  

                807

Other long-term assets  

                      (500)

  

              (207)

Accounts payable  

                   (1,653)

  

             1,919

Accrued liabilities  

                   10,199

  

           (6,567)

Extended warranty liabilities  

                      (177)

  

              (234)

Operating lease liabilities  

                      (563)

  

              (645)

Deferred revenue  

                        500

  

           (1,253)

Net cash provided by (used in) operating activities  

                     1,253

  

         (11,966)

      
Cash flows from investing activities:      
Acquisition of property, equipment and software  

                      (101)

  

              (230)

Proceeds from disposal of property and equipment  

                          52

  

                     -

Proceeds from sales of marketable investments  

 - 

  

             6,800

Purchase of marketable investments  

 - 

  

           (3,930)

Net cash provided by (used in) investing activities  

                        (49)

  

             2,640

         
Cash flows from financing activities:      
Proceeds from exercise of stock options and employee stock purchase plan 

                        396

  

                201

Purchase of capped call  

                 (16,134)

  

                     -

Proceeds from issuance of convertible notes  

                 138,250

  

 - 

Payment of issuance costs of convertible notes  

                   (4,717)

  

 - 

Taxes paid related to net share settlement of equity awards  

                      (999)

  

           (2,234)

Payments on finance lease obligations  

                      (115)

  

              (183)

Net cash provided by (used in) financing activities  

                 116,681

  

           (2,216)

      
Net increase (decrease) in cash and cash equivalents  

                 117,885

  

         (11,542)

Cash and cash equivalents at beginning of period  

                   47,047

  

           26,316

Cash and cash equivalents at end of period $

                 164,932

  $ 

           14,774

CUTERA, INC. 
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in thousands, except percentage data)
(unaudited) 
  
 Three Months Ended  % Change
 March 31,  March 31,  2021 Vs
 

2021

 

2020

 

2020

Revenue By Geography:        
North America $

                    22,396

 $

                  15,373

 +46%
Japan  

                    16,555

  

                    7,162

 +131%
Rest of World  

                    10,717

  

                    9,704

 +10%
Total Net Revenue $

                    49,668

 $

                  32,239

 +54%
Rest of World (including Japan) as a percentage of total revenue  

55%

  

52%

  
           
Revenue By Product Category:        
Systems        
- North America $

                    16,785

 $

                  10,382

 +62%
- Rest of World (including Japan)  

                    11,536

  

                  10,576

 +9%
Total Systems  

                    28,321

  

                  20,958

 +35%
Consumables  

                      2,925

  

                    2,533

 +15%
Skincare  

                    12,306

  

                    2,900

 +324%
Total Products  

                    43,552

  

                  26,391

 +65%
        
Service  

                      6,116

  

                    5,848

 +5%
Total Net Revenue $

                    49,668

 $

                  32,239

 +54%
        
        
         
 Three Months Ended   
  March 31,  March 31,   
  

2021

 

2020

  
Pre-tax Stock-Based Compensation Expense:        
Cost of revenue $

                         144

 $

                       290

  
Sales and marketing  

                         721

  

                       719

  
Research and development  

                         301

  

                       321

  
General and administrative

                         680

                       650

 $

                      1,846

 $

                    1,980

  

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, 2021 Three Months Ended March 31, 2020
GAAP Depreciation
and
Amortization
 Stock-Based
Compensation
 CRM and ERP
Implementation
/write-off
 Legal - Lutronic Taxes and
Other
Adjustments
  Non-GAAP GAAPDepreciation
and
Amortization
 Stock-Based
Compensation
 CRM and ERP
Implementation/
write-off
 Taxes and
Other
Adjustments
Non-GAAP
        
Net revenue

 $

     49,668

                        -

 

                                -

 

                             -

 

                                     -

 

                        -

 $

              49,668

 

 $

          32,239

                        -

 

                           -

 

                                         -

 

                       -

 $

      32,239

Cost of revenue

        21,958

                 (162

)

 

                          (144

)

 

                             -

 

                                     -

 

                        -

                 21,652

 

             17,903

                 (140

)

 

                     (290

)

 

                                         -

 

                       -

         17,473

Gross profit

        27,710

                   162

 

                           144

 

                             -

 

                                     -

 

                        -

                 28,016

 

             14,336

                   140

 

                       290

 

                                         -

 

                       -

         14,766

Gross margin %

56%

    

56%

 

44%

   

46%

        
Operating expenses:        
Sales and marketing

        15,068

                 (678

)

 

                          (721

)

 

                      (182

)

 

                                     -

 

                        -

                 13,487

 

             14,789

                 (871

)

 

                     (718

)

 

                                   (165

)

 

                       -

         13,035

Research and development

          4,112

                   (39

)

 

                          (301

)

 

                             -

 

                                     -

 

                        -

                   3,772

 

               3,870

                   (38

)

 

                     (321

)

 

                                         -

 

                       -

           3,511

General and administrative

          7,365

                   (27

)

 

                          (680

)

 

                        (70

)

 

                               (401

)

 

                        -

                   6,187

 

               7,806

                   (28

)

 

                     (651

)

 

                                   (244

)

 

                 (324

)

           6,559

Total operating expenses

        26,545

                 (744

)

 

                       (1,702

)

 

                      (252

)

 

                               (401

)

 

                        -

                 23,446

 

             26,465

                 (937

)

 

                  (1,690

)

 

                                   (409

)

 

                 (324

)

         23,105

Income (loss) from operations

          1,165

                   906

 

                        1,846

 

                        252

 

                                 401

 

                        -

                   4,570

 

           (12,129

)

                1,077

 

                    1,980

 

                                    409

 

                  324

         (8,339

)

Interest and other expense, net        
Amortization of debt issuance costs

             (52

)

                        -

 

                                -

 

                             -

 

                                     -

 

                        -

                      (52

)

 

                      -

                        -

 

                           -

 

                                         -

 

                       -

                  -

Interest on convertible notes

           (191

)

                        -

 

                                -

 

                             -

 

                                     -

 

                        -

                    (191

)

 

                      -

                        -

 

                           -

 

                                         -

 

                       -

                  -

Other expense, net

        (1,023

)

                       -

 

                               -

 

                            -

 

                                     -

 

                       -

                 (1,023

)

 

                (207

)

                       -

 

                           -

 

                                        -

 

                      -

            (207

)

Total interest and other expense, net

        (1,266

)

                        -

 

                                -

 

                             -

 

                                     -

 

                        -

                 (1,266

)

 

                (207

)

                        -

 

                           -

 

                                         -

 

                       -

            (207

)

Income (loss) before income taxes

           (101

)

                   906

 

                        1,846

 

                        252

 

                                 401

 

                        -

                   3,304

 

           (12,336

)

                1,077

 

                    1,980

 

                                    409

 

                  324

         (8,546

)

Provision for income taxes

             258

                       -

 

                               -

 

                            -

 

                                     -

 

                       -

                      258

 

                    78

                       -

 

                           -

 

                                        -

 

                      5

                83

Net income (loss)

 $

        (359

)

 $

                906

 

 $

                     1,846

 

 $

                     252

 

 $

                              401

 

 $

                     -

 $

                3,046

 

 $

        (12,414

)

                1,077

 

                    1,980

 

                                    409

 

                  319

 $

      (8,629

)

        
Net income (loss) per share:        
Basic

 $

       (0.02

)

    

 $

                  0.17

 

 $

            (0.86

)

   

 $

        (0.60

)

Diluted

 $

       (0.02

)

    

 $

                  0.15

 

 $

            (0.86

)

   

 $

        (0.60

)

        
Weighted-average number of shares used in per share calculations:        
Basic

        17,768

    

                 17,768

 

             14,433

   

         14,433

Diluted

        17,768

    

                 22,266

 

             14,433

   

         14,433

        
        
                           
                   
Operating expenses as a % of net revenue GAAP            Non-GAAP GAAP   Non-GAAP
Sales and marketing 

30.3%

            

27.2%

 

45.9%

   

40.4%

Research and development 

8.3%

            

7.6%

 

12.0%

   

10.9%

General and administrative 

14.8%

            

12.5%

 

24.2%

   

20.3%

 

53.4%

            

47.2%

 

82.1%

   

71.7%

CUTERA, INC. 
RECONCILIATION OF LOSS TO ADJUSTED EBITDA
(in thousands)
(unaudited) 
  
  
 Three Months
Ended
 

March 31, 2021

  
Net loss 

 $

              (359

)

Adjustments:  
Stock-based compensation 

                1,846

Depreciation and amortization 

                   906

CRM and ERP implementation/ write off 

                   252

Legal - Lutronic 

                   401

Interest and other expense, net 

                1,266

Provision for income taxes 

                   258

Total adjustments 

 $

             4,929

  
Adjusted EBITDA 

 $

             4,570

Contacts:

Cutera, Inc.
Anne Werdan
Director, Investor Relations
415-657-5500
awerdan@cutera.com

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