CUTERA, INC. (Nasdaq: CUTR), a leading provider of aesthetic and
dermatology solutions, today reported financial results for the
third quarter ended September 30, 2024.
- Consolidated revenue for the third quarter of 2024 of $32.5
million
- Cash, cash equivalents, and restricted cash of $59.0
million
- AviClear growth of 16% vs prior year period driven by
international capital system sales
- Global core capital growth of 7% on a sequential quarterly
basis
- Full-year guidance maintained for both revenue and year-end
cash balance
“Our third quarter reflects consistent execution against our
strategic priorities, with core capital sales improving on a
sequential basis, AviClear continuing to grow year-over-year driven
by strong sales and utilization in international markets, and
favorable underlying trends in our gross margin and operating
expense profile,” commented Taylor Harris, Chief Executive Officer
of Cutera, Inc. “We remain focused on expanding access to AviClear,
our breakthrough technology for the treatment of acne, through
training and education, practice development, and clinical
indication expansion.”
Third Quarter 2024 Financial Highlights
Consolidated revenue for the third quarter of 2024 was $32.5
million, a decrease of 30% compared to the third quarter 2023.
Revenue in the third quarter of 2023 included skincare revenue of
$7.1 million; following the termination of our skincare
distribution agreement in February 2024, the third quarter of 2024
did not include skincare revenue. Revenue related to capital
systems sales declined 17%, while recurring sources of revenue,
excluding skincare, declined 19%.
Gross profit was $1.8 million, or 6% of revenue for the third
quarter of 2024, compared to a gross profit of $6.5 million, or 14%
of revenue, for the third quarter of 2023. On a non-GAAP basis,
gross profit was $3.7 million, or 12% of revenue, for the third
quarter of 2024, compared to $9.0 million, or 19%, for the third
quarter of 2023. Gross profit in the third quarter, on a GAAP and a
non-GAAP basis, was negatively affected by $10.1 million, or 31% of
revenue, of non-cash expense related to excess and obsolete
inventory.
Operating expenses were $38.0 million for the third quarter of
2024, compared to $47.4 million in the prior year period. On a
non-GAAP basis, operating expenses were $34.7 million for the third
quarter of 2024, compared to $39.8 million for the prior year
period. Operating expenses for the third quarter of 2024, on a GAAP
and non-GAAP basis, include a $5.4 million charge related to
doubtful accounts receivable. The Company no longer adjusts for
costs related to a retention plan implemented in April 2023, in its
Reconciliation of Non-GAAP Financial Measures. Accordingly, the
Company has not adjusted for $0.4 million of retention plan costs
incurred in the third quarter of 2024. Further, the Company has
revised the presentation of current and prior year periods to
remove adjustments related to retention plan costs of $4.0 million
for the nine months ending September 30, 2024, and $1.4 million and
$4.3 million, in the three and nine months ended September 30,
2023, respectively.
GAAP operating loss was $36.2 million and $40.9 million for the
third quarters of 2024 and 2023, respectively. Non-GAAP operating
loss was $31.0 million for the third quarter of 2024, compared to a
Non-GAAP operating loss of $30.9 million for the third quarter of
2023.
Cash, cash equivalents, and restricted cash, were $59.0 million
as of September 30, 2024, compared to $84.3 million as of June 30,
2024.
2024 Outlook
Management is reaffirming full-year revenue guidance of $140
million to $145 million, as well as guidance for year-end 2024
cash, cash equivalents and restricted cash of approximately $40
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 Shelby Eckerman, Vice President, Finance.
Participants can register for the conference call at this
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 1-888-4-CUTERA or visit 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 (“GAAP”), management has
disclosed certain non-GAAP financial measures for gross profit,
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, costs associated with restructuring activities
and the separation of its officers and other executives, 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 operating income (loss), also
commonly known as adjusted EBITDA, as operating income (loss)
before depreciation and amortization, stock-based compensation, ERP
implementation costs, certain legal and litigation costs,
severance, gain on early termination of distribution agreement, and
other adjustments.
Company management uses non-GAAP financial 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 as well as the settlement of $5.8 million, which is not
part of the Company’s ordinary course of business. The Company’s
complaint against Lutronic alleged 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 as well as the
settlement 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. The 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 these 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 operations;
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
(loss). 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. The
Company no longer adjusts for costs related to a retention plan
implemented in April 2023, as such costs represent a normal,
recurring, operating cost, and accordingly, has not adjusted for
$0.4 million of retention plan costs incurred in the third quarter
of 2024. Further, the Company has revised the presentation of the
prior year periods to remove adjustments for retention plan costs
of $1.4 million and $4.3 million, in the three and nine months
ended September 30, 2023, respectively.
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 express or implied
statements regarding expanding access to AviClear, and full year
revenues and cash, cash equivalents and restricted cash, along with
other express or implied statements regarding Cutera’s plans,
objectives, strategies, financial performance, guidance and
outlook, product launches and performance, trends, prospects, or
future events. 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 expectations and beliefs and are subject to
risks and uncertainties, which are difficult to predict and may
cause Cutera's actual results to differ materially from the express
or implied forward-looking statements herein. These forward-looking
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 Cutera’s control, that
could cause its actual results to differ materially from the
forward-looking statements, including risks involved with continued
expansion of AviClear, Cutera’s financial position and debt service
requirements, and making financial projections, as well as the
other risks 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 Cutera 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 third quarter
ended September 30, 2024, as discussed in this release, is
preliminary and unaudited, and subject to adjustment.
CUTERA, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) (unaudited)
September 30, December 31,
2024
2023
Assets Current assets: Cash and cash equivalents
$
57,614
$
143,612
Accounts receivable, net
33,150
43,121
Inventories
56,908
62,600
Other current assets and prepaid expenses
12,842
19,852
Total current assets
160,514
269,185
Long-term inventories
28,664
16,283
Property and equipment, net
23,521
37,275
Deferred tax asset
590
579
Restricted cash
1,363
-
Goodwill
1,339
1,339
Operating lease right-of-use assets
10,593
10,055
Other long-term assets
7,834
11,575
Total assets
$
234,418
$
346,291
Liabilities and Stockholders' Deficit Current
liabilities: Accounts payable
$
7,949
$
19,829
Accrued liabilities
35,972
55,055
Operating leases liabilities
3,386
2,441
Deferred revenue
8,382
10,422
Total current liabilities
55,689
87,747
Deferred revenue, net of current portion
1,689
1,494
Operating lease liabilities, net of current portion
8,397
8,887
Convertible notes, net of unamortized debt issuance costs
420,422
418,695
Other long-term liabilities
1,095
1,298
Total liabilities
487,292
518,121
Stockholders’ deficit: Common stock
20
20
Additional paid-in capital
136,929
131,496
Accumulated deficit
(389,823
)
(303,346
)
Total stockholders' deficit
(252,874
)
(171,830
)
Total liabilities and stockholders' deficit
$
234,418
$
346,291
CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share data)
(unaudited) Three Months Ended Nine Months
Ended September 30, September 30, September
30, September 30,
2024
2023
2024
2023
Products $
27,242
$
40,989
$
88,714
$
146,285
Service
5,258
5,489
16,956
16,544
Total net revenue
32,500
46,478
105,670
162,829
Products
27,991
36,586
75,045
98,696
Service
2,696
3,435
8,749
9,961
Total cost of revenue
30,687
40,021
83,794
108,657
Gross profit
1,813
6,457
21,876
54,172
Gross margin %
5.6
%
13.9
%
20.7
%
33.3
%
Operating expenses: Sales and marketing
18,928
25,808
63,269
88,591
Research and development
4,353
4,592
13,817
16,844
General and administrative
14,749
17,004
31,951
47,448
Gain on early termination of distribution agreement
-
-
(9,708
)
-
Total operating expenses
38,030
47,404
99,329
152,883
Loss from operations
(36,217
)
(40,947
)
(77,453
)
(98,711
)
Amortization of debt issuance costs
(580
)
(561
)
(1,726
)
(1,670
)
Interest expense on convertible notes
(3,071
)
(2,939
)
(8,969
)
(8,836
)
Interest income
768
2,288
3,248
6,946
Other expense (income), net
575
(1,948
)
(1,128
)
(2,564
)
Loss before income taxes
(38,525
)
(44,107
)
(86,028
)
(104,835
)
Income tax expense
493
167
449
765
Net loss $
(39,018
)
$
(44,274
)
$
(86,477
)
$
(105,600
)
Net loss per share: Basic $
(1.94
)
$
(2.22
)
$
(4.31
)
$
(5.32
)
Diluted $
(1.94
)
$
(2.22
)
$
(4.31
)
$
(5.32
)
Weighted-average number of shares used in per share
calculations: Basic
20,154
19,932
20,079
19,858
Diluted
20,154
19,932
20,079
19,858
CUTERA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS
(in thousands, except percentage data) (unaudited)
Three Months Ended % Change Nine Months
Ended % Change September 30, September 30,
2024 Vs September 30, September 30, 2024
Vs
2024
2023
2023
2024
2023
2023
Revenue By Geography: North America $
14,651
$
24,855
-41.1
%
$
49,150
$
84,494
-41.8
%
Japan
3,420
11,529
-70.3
%
14,847
37,247
-60.1
%
Rest of World
14,429
10,094
+42.9
%
41,673
41,088
+1.4
%
Total Net Revenue $
32,500
$
46,478
-30.1
%
$
105,670
$
162,829
-35.1
%
International as a percentage of total revenue
54.9
%
46.5
%
53.5
%
48.1
%
Revenue By Product Category: Systems - North America $
9,253
$
16,982
-45.5
%
$
30,926
$
59,750
-48.2
%
- Rest of World (including Japan)
13,771
10,618
+29.7
%
40,258
41,654
-3.4
%
Total Systems
23,024
27,600
-16.6
%
71,184
101,404
-29.8
%
Consumables
4,218
6,248
-32.5
%
13,330
20,186
-34.0
%
Skincare
-
7,141
-100.0
%
4,200
24,695
-83.0
%
Total Products
27,242
40,989
-33.5
%
88,714
146,285
-39.4
%
Service
5,258
5,489
-4.2
%
16,956
16,544
+2.5
%
Total Net Revenue $
32,500
$
46,478
-30.1
%
$
105,670
$
162,829
-35.1
%
CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (in thousands) (unaudited)
Three Months Ended Nine Months Ended September
30, September 30, September 30, September
30,
2024
2023
2024
2023
Cash flows from operating activities: Net loss
$
(39,018
)
$
(44,274
)
$
(86,477
)
$
(105,600
)
Adjustments to reconcile net loss to net cash used in operating
activities: Stock-based compensation
1,841
1,616
5,543
6,552
Depreciation and amortization
1,669
1,987
5,464
5,225
Amortization of contract acquisition costs
1,113
3,016
3,882
7,085
Amortization of debt issuance costs
581
561
1,727
1,670
Deferred tax assets
(82
)
19
(11
)
62
Provision for credit losses
4,931
3,574
9,739
5,488
Accretion of discount on investment securities and investment
income, net
-
902
-
1,048
Changes in assets and liabilities: Accounts receivable
(3,402
)
276
232
(9,755
)
Inventories
11,841
2,317
3,259
1,781
Other current assets and prepaid expenses
118
5,128
7,010
4,352
Other long-term assets
(142
)
(860
)
(472
)
(5,642
)
Accounts payable
(9,668
)
(3,069
)
(11,880
)
(4,735
)
Accrued liabilities
5,737
(7,157
)
(18,704
)
(10,963
)
Operating leases ,net
(27
)
(14
)
(83
)
(44
)
Deferred revenue
(234
)
(899
)
(1,845
)
(390
)
Net cash used in operating activities
(24,742
)
(36,877
)
(82,616
)
(103,866
)
Cash flows from investing activities: Acquisition of
property and equipment
(173
)
(5,534
)
(1,390
)
(30,642
)
Proceeds from disposal of property and equipment
-
-
63
-
Proceeds from maturities of marketable investments
-
41,044
193,903
Purchases of marketable investments
-
-
-
(23,467
)
Net provided by (used in) cash used in investing activities
(173
)
35,510
(1,327
)
139,794
Cash flows from financing activities: Proceeds from exercise
of stock options and employee stock purchase plan
-
465
-
1,323
Taxes paid related to net share settlement of equity awards
(26
)
(87
)
(110
)
(3,273
)
Payments on finance lease obligation
(393
)
(149
)
(582
)
(386
)
Net cash provided by (used in) financing activities
(419
)
229
(692
)
(2,336
)
Net increase (decrease) in cash, cash equivalents and restricted
cash
(25,334
)
(1,138
)
(84,635
)
33,592
Cash, cash equivalents, and restricted cash at beginning of period
84,311
181,354
143,612
146,624
Cash, cash equivalents, and restricted cash at end of period
$
58,977
$
180,216
$
58,977
$
180,216
CUTERA, INC.
Reconciliation of Non-GAAP
Financial Measures to the Most Directly Comparable GAAP Financial
Measure
(in thousands)
Three Months Ended September 30, 2024 Gross
Profit Gross Margin OperatingExpenses
OperatingIncome Reported
$
1,813
5.6
%
$
38,030
$
(36,217
)
Adjustments: Depreciation and amortization including contract
acquisition costs
1,643
5.1
%
1,138
2,781
Stock-based compensation
102
0.3
%
1,739
1,841
Legal - Lutronic settlement
-
0.0
%
-
-
Severance
189
0.6
%
454
643
Gain on early termination of distribution agreement
-
0.0
%
-
-
Other adjustments
-
0.0
%
-
-
Total adjustments
1,934
6.0
%
3,331
5,265
Non-GAAP
$
3,747
11.5
%
$
34,699
$
(30,952
)
Three Months Ended September 30, 2023 Gross
Profit Gross Margin OperatingExpenses
OperatingIncome Reported
$
6,457
13.9
%
$
47,404
$
(40,947
)
Adjustments: Depreciation and amortization including contract
acquisition costs
2,371
5.1
%
2,361
4,732
Stock-based compensation
(19
)
0.0
%
1,636
1,617
ERP implementation cost
-
0.0
%
1,456
1,456
Legal - Lutronic expense
-
0.0
%
561
561
Severance
151
0.3
%
191
342
Board of Directors legal and advisory fees
-
0.0
%
1,280
1,280
Other adjustments
-
0.0
%
97
97
Total adjustments
2,503
5.4
%
7,582
10,085
Non-GAAP
$
8,960
19.3
%
$
39,822
$
(30,862
)
Nine Months Ended September 30, 2024 Gross Profit
Gross Margin OperatingExpenses OperatingIncome
Reported
$
21,876
20.7
%
$
99,329
$
(77,453
)
Adjustments: Depreciation and amortization including contract
acquisition costs
5,564
5.3
%
3,782
9,346
Stock-based compensation
395
0.4
%
5,148
5,543
Legal - Lutronic settlement
-
0.0
%
(5,750
)
(5,750
)
Severance
285
0.3
%
1,257
1,542
Gain on early termination of distribution agreement
-
0.0
%
(9,708
)
(9,708
)
Other adjustments
-
0.0
%
263
263
Total adjustments
6,244
5.9
%
(5,008
)
1,236
Non-GAAP
$
28,120
26.6
%
$
104,337
$
(76,217
)
Nine Months Ended September 30, 2023 Gross
Profit Gross Margin OperatingExpenses
OperatingIncome Reported
$
54,172
33.3
%
$
152,883
$
(98,711
)
Adjustments: Depreciation and amortization including contract
acquisition costs
5,968
3.7
%
6,342
12,310
Stock-based compensation
706
0.4
%
5,847
6,553
ERP implementation cost
-
0.0
%
2,744
2,744
Legal - Lutronic expense
-
0.0
%
1,607
1,607
Severance
270
0.2
%
621
891
Board of Directors legal and advisory fees
-
0.0
%
8,989
8,989
Other adjustments
307
0.2
%
682
989
Total adjustments
7,251
4.5
%
26,832
34,083
Non-GAAP
$
61,423
37.7
%
$
126,051
$
(64,628
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241107740612/en/
Cutera Investor Relations Contact: Shelby Eckerman, VP,
Finance IR@Cutera.com
Cutera (NASDAQ:CUTR)
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