Placed more than 350 AviClear devices during Q1
2023, and generated $4.4M in AviClear revenue in the quarter
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,
2023.
First Quarter 2023 Financial and Operational
Highlights
- Consolidated revenue of $55.0 million, a decrease of 5% as
reported and a decrease of 1% in constant currency from the
prior-year period.
- During Q1 2023, the Company generated $4.4 million in AviClear
revenue, consisting of treatment revenue and device license
fees.
- AviClear placements exceeded 350 during Q1 2023, bringing
cumulative placements to over 950 units.
- GAAP Gross margin of 45.3% in the quarter, compared to 54.8% in
the prior-year period.
- In constant currency terms, Q1 2023 GAAP Gross Margin was
47.4%, and non-GAAP Gross Margin was 51.0%
- GAAP Operating expenses were $48.5 million in the quarter,
compared to $44.9 million in the prior-year period. Operating
expenses during the period included $10.1 million in AviClear
spending.
- GAAP Net loss was $25.0 million, compared to a Net loss of
$15.1 million in the prior-year period.
- Adjusted EBITDA was a loss of $14.5 million, compared to a loss
of $3.8 million in the prior-year period.
- Core adjusted EBITDA was a loss of $8.5 million as reported and
a loss of $6.8 million in constant currency.
- AviClear adjusted EBITDA was a loss of $6.0 million.
Three Months Ended March 31,
2023
% Change vs Three Months Ended
March 31, 2022
Three Months Ended March 31,
2023
Key Revenue Metrics
Reported
Constant Currency
Key Profit Metrics
Reported
Constant Currency
Capital Equipment
$33.3
-9%
-6%
GAAP Margin %
45.3%
47.4%
Skincare
$8.1
-30%
-19%
Non-GAAP Margin %
49.1%
51.0%
Consumables
$3.7
-4%
-1%
Adjusted EBITDA - Core
($8.5)
($6.8)
Service
$5.4
-9%
-6%
Adjusted EBITDA - AviClear
($6.0)
($6.0)
AviClear
$4.4
N/A
N/A
Adjusted EBITDA - Total
($14.5)
($12.8)
Recurring
$21.7
1%
8%
Adjusted EBITDA Margin %
-26.4%
-22.1%
Total Revenue
$55.0
-5%
-1%
“First quarter performance was below expectations due to
execution challenges in the business and certain operational events
including an undue focus on AviClear placements that diverted
attention from North America core capital sales, as well as an
extended plant shutdown that affected sales and margin. However,
even though it’s been only a few weeks since I stepped into the
Interim CEO role, it is clear to me that Cutera has great potential
and that we can overcome our execution and operational challenges.
I believe our core business continues to have great potential and I
am especially encouraged by the placement of over 350 AviClear
devices during Q1 2023, bringing cumulative placements to nearly
1,000 and highlighting the strong market acceptance of this
revolutionary new offering for the treatment of acne,” commented
Sheila Hopkins, Interim Chief Executive Officer of Cutera, Inc.
Hopkins continued, “I remain excited about the future of Cutera
and confident in our ability to improve our performance. We have
technology and products that are excellent, differentiated, and
well-liked by our customers, and we have a talented team that
shares a strong commitment to our mission and a belief in the
long-term vision for the business. As we look ahead, we believe our
focus on improving execution will allow us to increase adoption and
utilization of AviClear while driving growth in our core
business.”
CFO Transition
Cutera also announced the appointment of Stuart Drummond as
Interim Chief Financial Officer, succeeding Rohan Seth, who has
stepped down from the Company. Mr. Drummond brings over 20 years of
experience leading and developing finance teams in the technology
and manufacturing sectors. He joined Cutera in 2021 as Vice
President and Corporate Controller and has been a senior leader of
the finance team.
Hopkins added, “We appreciate Stuart’s willingness to step up as
Interim CFO and ensure continuity of leadership at such a critical
time for our Company. Stuart knows our Company well, and we are
fortunate to have someone of his caliber lead the finance team
during this transitional period. A CFO search process has been
underway as part of ongoing leadership planning and is being
overseen by the Audit Committee of the Board and with the
assistance of a leading executive search firm. We look forward to
identifying the right candidate for the role.”
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 Sheila Hopkins, Interim
Chief Executive Officer, Stuart Drummond, Interim Chief Financial
Officer, and Greg Barker, Vice President of FP&A and Investor
Relations.
To participate in the conference call, dial 1-800-319-4610
(domestic) or +1-631-891-4304 (international).
The call will also be a 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
aesthetic and dermatology solutions for practitioners worldwide.
Since 1998, Cutera has been developing innovative, easy-to-use
products that harness the power of science and nature to enable
medical practitioners to offer safe and effective treatments to
their patients. 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 operating income. Non-GAAP adjustments
include stock-based compensation, depreciation and amortization
including contract acquisition costs, executive and other
non-recurring severance costs, enterprise resource planning (“ERP”)
implementation costs, and certain legal and litigation costs. 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 defines adjusted EBITDA as operating income before
depreciation and amortization, stock-based compensation, executive
and non-recurring severance costs, ERP implementation costs, and
costs related to a specific litigation.
Company management uses non-GAAP measurements 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:
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;
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;
Executive and other non-recurring severance costs. We
have excluded costs associated with restructuring activities and
the separation of our officers and other executives in calculating
our non-GAAP operating expenses and non-GAAP Operating Income. We
have excluded restructuring costs because a restructuring
represents a discrete event that signifies a change in our
strategy, but its costs are not indicative of the ongoing financial
performance of our business. We exclude executive separation costs
because executive separations are unpredictable and not part of our
business strategy but could have a significant impact on the
results of operation;
ERP implementation costs. 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
Certain legal and litigation costs. We have excluded
costs incurred related to our litigation against Lutronic
Aesthetics, which is not part of our ordinary course of business.
Our 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. We exclude these costs because this litigation is
a result of a discrete event that was not part of our 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 our core operations.
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, 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 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, 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
concerning those or other forward-looking statements. Cutera's
financial performance for the first quarter ended March 31, 2023,
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,
2023
2022
Assets Current assets: Cash and cash equivalents
$
166,828
$
145,924
Marketable securities
100,823
171,390
Accounts receivable, net
52,138
45,562
Inventories
71,819
63,628
Other current assets and prepaid expenses
26,156
24,036
Restricted cash
700
700
Total current assets
418,464
451,240
Property and equipment, net
53,016
40,368
Deferred tax asset
577
590
Goodwill
1,339
1,339
Operating lease right-of-use assets
12,059
12,831
Other long-term assets
14,343
14,620
Total assets
$
499,798
$
520,988
Liabilities and Stockholders' Equity Current
liabilities: Accounts payable
$
35,169
$
33,736
Accrued liabilities
58,660
57,452
Operating leases liabilities
2,722
2,810
Deferred revenue
12,243
11,841
Total current liabilities
108,794
105,839
Deferred revenue, net of current portion
1,643
1,657
Operating lease liabilities, net of current portion
10,652
11,352
Convertible notes, net of unamortized debt issuance costs
417,011
416,459
Other long-term liabilities
711
862
Total liabilities
538,811
536,169
Stockholders’ equity: Common stock
20
20
Additional paid-in capital
126,504
125,406
Accumulated other comprehensive loss
(8
)
(94
)
Accumulated deficit
(165,529
)
(140,513
)
Total stockholders' equity
(39,013
)
(15,181
)
Total liabilities and stockholders' equity
$
499,798
$
520,988
CUTERA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share data)
(unaudited)
Three Months Ended
March 31,
March 31,
2023
2022
Products $
49,588
$
52,066
Service
5,405
5,948
Total net revenue
54,993
58,014
Products
27,231
22,912
Service
2,835
3,314
Total cost of revenue
30,066
26,226
Gross margin
24,927
31,788
Gross margin %
45.3
%
54.8
%
Operating expenses: Sales and marketing
29,512
24,944
Research and development
6,468
6,499
General and administrative
12,516
13,502
Total operating expenses
48,496
44,945
Loss income from operations
(23,569
)
(13,157
)
Interest and other expense, net Interest on convertible notes
(2,939
)
(778
)
Amortization of debt issuance costs
(552
)
(219
)
Interest income (expense), net
2,479
(144
)
Other expense, net
(163
)
(611
)
Loss before income taxes
(24,744
)
(14,909
)
Income tax expense
272
233
Net loss $
(25,016
)
$
(15,142
)
Net loss per share: Basic $
(1.26
)
$
(0.84
)
Diluted $
(1.26
)
$
(0.84
)
Weighted-average number of shares used in per share
calculations: Basic
19,776
18,080
Diluted
19,776
18,080
CUTERA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
March 31,
March 31,
2023
2022
Cash flows from operating activities: Net loss
$
(25,016
)
$
(15,142
)
Adjustments to reconcile net loss to net cash provided used in
operating activities: Stock-based compensation
3,386
4,043
Depreciation and amortization
1,409
427
Amortization of contract acquisition costs
2,178
652
Amortization of debt issuance costs
552
219
Deferred tax assets
13
41
Provision for credit losses
488
192
Loss on sale of property and equipment
-
14
Unrealized gain on foreign exchange forward
(623
)
-
Non-cash interest income
(880
)
-
Changes in assets and liabilities: Accounts receivable
(7,064
)
(1,912
)
Inventories
(8,191
)
(12,177
)
Other current assets and prepaid expenses
(2,053
)
(5,611
)
Other long-term assets
(2,011
)
(385
)
Accounts payable
(1,330
)
5,755
Accrued liabilities
1,706
(5,989
)
Operating leases ,net
(16
)
30
Deferred revenue
388
239
Net cash used in operating activities
(37,064
)
(29,604
)
Cash flows from investing activities: Acquisition of
property, equipment and software
(11,153
)
(321
)
Purchase of marketable investments
(23,467
)
(74,058
)
Proceeds from maturities of marketable investments
95,000
-
Net provided by (used in) cash used in investing activities
60,380
(74,379
)
Cash flows from financing activities: Proceeds from
exercise of stock options and employee stock purchase plan
109
151
Taxes paid related to net share settlement of equity awards
(2,397
)
(2,450
)
Payments on capital lease obligation
(124
)
(150
)
Net cash used in financing activities
(2,412
)
(2,449
)
Net increase (decrease) in cash, cash equivalents and
restricted cash
20,904
(106,432
)
Cash, cash equivalents, and restricted cash at beginning of period
146,624
164,864
Cash, cash equivalents, and restricted cash at end of period
$
167,528
$
58,432
CUTERA, INC.
CONSOLIDATED FINANCIAL
HIGHLIGHTS
(in thousands, except
percentage data)
(unaudited)
Three Months Ended
% Change
March 31,
March 31,
2023 Vs
2023
2022
2022
Revenue By Geography: North America $
27,669
$
28,853
-4.1
%
Japan
12,908
17,503
-26.3
%
Rest of World
14,416
11,658
+23.7
%
Total Net Revenue $
54,993
$
58,014
-5.2
%
International as a percentage of total revenue
49.7
%
50.3
%
Revenue By Product Category:
Systems
- North America $
17,959
$
22,707
-20.9
%
- Rest of World (including Japan)
15,358
13,807
+11.2
%
Total Systems
33,317
36,514
-8.8
%
AviClear
4,395
-
NA
Consumables
3,744
3,903
-4.1
%
Skincare
8,132
11,649
-30.2
%
Total Products
49,588
52,066
-4.8
%
Service
5,405
5,948
-9.1
%
Total Net Revenue $
54,993
$
58,014
-5.2
%
Three Months Ended
March 31,
March 31,
2023
2022
Pre-tax Stock-Based Compensation Expense: Cost of revenue $
364
$
459
Sales and marketing
1,148
576
Research and development
693
980
General and administrative
1,181
2,028
$
3,386
$
4,043
CUTERA, INC.
Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measure
(in thousands)
(unaudited)
Three Months Ended March 31, 2023
Gross Profit
Gross Margin
Operating Income
Reported
$
24,927
45.3
%
$
(23,569
)
Adjustments: Depreciation and amortization including contract
acquisition costs
1,599
3.0
%
3,587
Stock-based compensation
364
0.6
%
3,386
ERP implementation cost
-
-
518
Legal - Lutronic
-
-
652
Severance
119
0.2
%
315
Other adjustments
-
-
585
Total adjustments
2,082
3.8
%
9,043
Adjusted
$
27,009
49.1
%
$
(14,526
)
Three Months Ended March 31, 2022
Gross Profit
Gross Margin
Operating Income
Reported
$
31,788
54.8
%
$
(13,157
)
Adjustments: Depreciation and amortization including contract
acquisition costs
76
0.1
%
1,079
Stock-based compensation
459
0.8
%
4,043
ERP implementation cost
-
-
3,976
Legal - Lutronic
-
-
254
Severance
-
-
-
Other adjustments
-
-
-
Total adjustments
535
0.9
%
9,352
Adjusted
$
32,323
55.7
%
$
(3,805
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005512/en/
Cutera, Inc. Greg Barker VP, Corporate FP&A and
Investor Relations 415-657-5500 IR@cutera.com
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