Cutera, Inc. (Nasdaq: CUTR) (“Cutera” or the “Company”), a
leading provider of aesthetic and dermatology solutions, today
reported financial results for the fourth quarter and full-year
ended December 31, 2023.
- Consolidated revenue for the fourth quarter of 2023 of $49.5
million
- Full-year 2023 revenue of $212.4 million, ahead of guidance of
approximately $205 million
- Cash and marketable securities of $143.6 million as of December
31, 2023, ahead of guidance of approximately $135 million
- Completion of corporate restructuring program, allowing for
both an improved cost structure and better organizational
alignment
- Successful execution of the North American limited commercial
release of the enhanced AviClear product and business model
offering during the fourth quarter of 2023
“Thanks to the hard work of the team, Cutera finished a
challenging year with fourth quarter financial performance ahead of
our guidance range, and we have also completed the key elements of
our corporate restructuring, including a reduction in force,
bringing critical manufacturing operations in-house, and a
transition of our Skincare business,” commented Taylor Harris,
Chief Executive Officer of Cutera, Inc. “We are now squarely
focused on our most important priorities, which are operational
excellence and building a successful AviClear franchise across the
globe.”
Fourth Quarter 2023 Financial Highlights
Consolidated revenue for the fourth quarter of 2023 was $49.5
million, a decrease of 26% compared to the fourth quarter of 2022.
Revenue related to capital equipment systems declined 32%, while
recurring sources of revenue declined 16%. AviClear revenue for the
fourth quarter of 2023 was $3.9 million.
Gross profit was $6.2 million, or 12.6% of revenue, for the
fourth quarter of 2023, compared to a gross profit of $38.7
million, or 57.5% of revenue, for the fourth quarter of 2022. On a
non-GAAP basis, gross profit was $9.9 million, or 20.0% of revenue,
for the fourth quarter of 2023, compared to $40.0 million, or 59.4%
of revenue, for the fourth quarter of 2022. Gross profit in the
fourth quarter, on both a GAAP and a non-GAAP basis, was negatively
affected by approximately $8.4 million, or 16.9% of revenue, of
non-cash expense related to excess and obsolete inventory.
Operating expenses were $50.6 million for the fourth quarter of
2023, compared to $44.3 million in the prior year period. On a
non-GAAP basis, operating expenses were $36.0 million for the
fourth quarter of 2023, compared to $39.7 million for the prior
year period.
Non-GAAP operating income was a loss of $26.1 million for the
fourth quarter of 2023, compared to a gain of $0.2 million in the
fourth quarter of 2022.
Cash and marketable securities were $143.6 million as of
December 31, 2023, compared to $317.3 million as of December 31,
2022, and $179.5 million as of September 30, 2023.
Full-Year 2023 Financial Highlights
Consolidated revenue for the full-year 2023 was $212.4 million,
a decrease of 16% compared to the full-year 2022. Revenue related
to capital equipment systems declined 21%, while recurring sources
of revenue declined 7%. Revenue excluding Skincare was $178.4
million and decreased 15% versus the prior year period.
Gross profit was $60.4 million or 28.4% of revenue, for the
full-year 2023, compared to a gross profit of $139.8 million, or
55.4% of revenue, for the full-year 2022. On a non-GAAP basis,
gross profit was $71.4 million, or 33.6% of revenue, for the
full-year 2023, compared to $142.8 million, or 56.6% of revenue,
for the full-year 2022.
Operating expenses were $203.4 million for the full-year 2023,
compared to $178.0 million in the prior year period. On a non-GAAP
basis, operating expenses were $157.1 million for the full-year
2023, compared to $150.0 million for the prior year period.
Non-GAAP operating income was a loss of $85.7 million for the
full-year 2023, compared to a loss of $7.2 million in the full-year
2022.
2024 Outlook
The Company expects 2024 annual revenue in the range of $160
million to $170 million, including $4 million of Skincare revenue
recorded through the February transition date, and ending 2024 with
cash and marketable securities 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: 1-800-319-4610 or +1-631-891-4304. It’s
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.
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 depreciation and amortization including contract
acquisition costs, stock-based compensation, enterprise resource
planning (“ERP”) implementation costs, certain legal and litigation
costs, executive and other non-recurring severance costs, retention
plan costs, expenses related to manufacturing agreement
termination, and Board of Director legal and advisory fees. 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, costs related to certain litigation, executive and
non-recurring severance costs, retention plan costs, expenses
related to manufacturing agreement termination, and legal and
advisory fees related to litigation and shareholder activism.
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;
Executive and other non-recurring severance costs. 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;
Expenses related to manufacturing agreement termination.
The Company has excluded expenses related to a manufacturing
agreement termination incurred as part of a settlement agreement
related to the non-renewal of a manufacturing service agreement
with Jabil Inc., a third-party manufacturing provider that
manufactured excel V+ and AviClear devices for the Company. The
Company excluded 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;
and
Board of Director legal and advisory fees. The Company
has excluded costs associated with the litigation and shareholder
activism related to its 2023 annual meeting of shareholders. The
Company excluded these costs as the costs do not relate to ongoing
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, 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 “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. We undertake no
obligation to update the information made in this release in the
event facts or circumstances subsequently change after the date of
this release. Our audited consolidated financial statements for the
year ended December 31, 2023 are not yet available. As a result,
all financial results described in this earnings release should be
considered preliminary, and are subject to change to reflect any
necessary adjustments or changes in accounting estimates, that are
identified prior to the time we file our Form 10-K.
CUTERA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited)
December 31,
December 31,
2023
2022
Assets Current assets: Cash and cash equivalents
$
143,612
$
145,924
Marketable securities
-
171,390
Accounts receivable, net
43,371
45,562
Inventories, net
61,725
63,628
Other current assets and prepaid expenses
19,627
24,036
Restricted cash
-
700
Total current assets
268,335
451,240
Long-term inventories, net
26,011
-
Property and equipment, net
37,275
40,368
Deferred tax asset
579
590
Goodwill
1,339
1,339
Operating lease right-of-use assets
10,055
12,831
Other long-term assets
11,575
14,620
Total assets
$
355,169
$
520,988
Liabilities and Stockholders' Deficit Current
liabilities: Accounts payable
$
19,829
$
33,736
Accrued liabilities
51,930
57,452
Operating leases liabilities
2,441
2,810
Deferred revenue
10,422
11,841
Total current liabilities
84,622
105,839
Deferred revenue, net of current portion
1,494
1,657
Operating lease liabilities, net of current portion
8,887
11,352
Convertible notes, net of unamortized debt issuance costs
418,695
416,459
Other long-term liabilities
1,298
862
Total liabilities
514,996
536,169
Stockholders’ deficit: Common stock
20
20
Additional paid-in capital
131,496
125,406
Accumulated other comprehensive loss
-
(94
)
Accumulated deficit
(291,343
)
(140,513
)
Total stockholders' deficit
(159,827
)
(15,181
)
Total liabilities and stockholders' deficit
$
355,169
$
520,988
CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share data)
(unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
December 31,
December 31,
2023
2022
2023
2022
Products
$
43,528
$
61,601
$
189,813
$
228,796
Service
6,012
5,752
22,556
23,603
Total net revenue
49,540
67,353
212,369
252,399
Products
40,684
26,188
139,380
100,254
Service
2,615
2,416
12,576
12,316
Total cost of revenue
43,299
28,604
151,956
112,570
Gross margin
6,241
38,749
60,413
139,829
Gross margin %
12.6
%
57.5
%
28.4
%
55.4
%
Operating expenses: Sales and marketing
24,412
28,514
113,003
106,947
Research and development
4,564
5,408
21,408
25,155
General and administrative
21,581
10,363
69,029
45,917
Total operating expenses
50,557
44,285
203,440
178,019
Loss from operations
(44,316
)
(5,536
)
(143,027
)
(38,190
)
Interest and other income (expense), net
Interest on convertible notes
(2,944
)
(1,992
)
(11,780
)
(5,658
)
Loss on extinguishment of
convertible notes
-
-
-
(34,423
)
Amortization of debt issuance
costs
(566
)
(438
)
(2,236
)
(1,355
)
Interest income, net
1,761
1,535
8,707
2,914
Other income (expense), net
1,604
(593
)
(960
)
(3,990
)
Loss before income taxes
(44,461
)
(7,024
)
(149,296
)
(80,702
)
Income tax expense
769
764
1,534
1,638
Net loss
$
(45,230
)
$
(7,788
)
$
(150,830
)
$
(82,340
)
Net loss per share: Basic
$
(2.27
)
$
(0.40
)
$
(7.59
)
$
(4.39
)
Diluted
$
(2.27
)
$
(0.40
)
$
(7.59
)
$
(4.39
)
Weighted-average number of shares used in per share
calculations: Basic
19,958
19,642
19,885
18,747
Diluted
19,958
19,642
19,885
18,747
CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands) (unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
December 31,
December 31,
2023
2022
2023
2022
Cash flows from operating activities: Net loss
$
(45,230
)
$
(7,788
)
$
(150,830
)
$
(82,340
)
Adjustments to reconcile net loss to net cash provided used in
operating activities: Stock-based compensation
1,512
1,379
8,064
14,400
Depreciation and amortization
3,350
1,018
8,575
2,621
Amortization of contract acquisition costs
1,762
1,385
8,847
3,200
Amortization of debt issuance costs
566
438
2,236
1,355
Deferred tax assets
(51
)
36
11
188
Provision for credit losses
1,893
1,110
7,381
1,787
Loss on sale of property and equipment
-
82
-
168
Accretion of discount on investment securities and investment
income, net
-
-
1,048
-
Loss on extinguishment of convertible notes
-
-
-
34,423
Changes in assets and liabilities: Accounts receivable
4,565
(10,796
)
(5,190
)
(15,900
)
Inventories, net
5,171
(7,690
)
6,952
(36,305
)
Other current assets and prepaid expenses
10
(364
)
4,362
(9,491
)
Other long-term assets
(601
)
(4,447
)
(6,243
)
(8,091
)
Accounts payable
(10,131
)
537
(14,866
)
20,979
Accrued liabilities
4,617
6,966
(6,346
)
3,282
Operating leases, net
(14
)
10
(58
)
56
Deferred revenue
(1,192
)
1,097
(1,582
)
2,673
Net cash used in operating activities
(33,773
)
(17,027
)
(137,639
)
(66,995
)
Cash flows from investing activities: Acquisition of
property and equipment
(2,599
)
(8,591
)
(33,241
)
(22,698
)
Purchase of marketable investments
-
(77,202
)
(23,467
)
(233,511
)
Proceeds from maturities of marketable investments
-
111,000
193,903
62,027
Net cash provided by (used in) investing activities
(2,599
)
25,207
137,195
(194,182
)
Cash flows from financing activities: Proceeds from
exercise of stock options and employee stock purchase plan
-
1,036
1,323
2,723
Proceeds from issuance of convertible notes
-
120,000
-
360,000
Purchase of capped call
-
-
-
(31,671
)
Payment of issuance costs of capped call
-
(25,009
)
-
(25,362
)
Payment of issuance costs of convertible notes
-
(3,600
)
-
(11,202
)
Extinguishment of convertible notes
-
-
-
(45,777
)
Taxes paid related to net share settlement of equity awards
(24
)
(436
)
(3,297
)
(5,256
)
Payments on capital lease obligations
(208
)
(127
)
(594
)
(518
)
Net cash provided by (used in) financing activities
(232
)
91,864
(2,568
)
242,937
Net increase (decrease) in cash, cash equivalents and
restricted cash
(36,604
)
100,044
(3,012
)
(18,240
)
Cash, cash equivalents, and restricted cash at beginning of period
180,216
46,580
146,624
164,864
Cash, cash equivalents, and restricted cash at end of period
$
143,612
$
146,624
$
143,612
$
146,624
CUTERA, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (in
thousands, except percentage data) (unaudited)
Three Months Ended
% Change
Twelve Months Ended
% Change
December 31,
December 31,
2023 Vs
December 31,
December 31,
2023 Vs
2023
2022
2022
2023
2022
2022
Revenue By Geography: North America
$
22,292
$
34,076
-34.6
%
$
106,786
$
128,426
-16.9
%
Japan
14,887
16,980
-12.3
%
52,134
64,920
-19.7
%
Rest of World
12,361
16,297
-24.2
%
53,449
59,053
-9.5
%
Total Net Revenue
$
49,540
$
67,353
-26.4
%
$
212,369
$
252,399
-15.9
%
International as a percentage of
total revenue
55.0
%
49.4
%
49.7
%
49.1
%
Revenue By Product Category: Systems - North America
$
15,456
$
25,684
-39.8
%
$
75,206
$
99,267
-24.2
%
- Rest of World (including Japan)
13,668
17,438
-21.6
%
55,322
65,292
-15.3
%
Total Systems
29,124
43,122
-32.5
%
130,528
164,559
-20.7
%
Consumables
5,116
6,702
-23.7
%
25,302
21,737
+16.4% Skincare
9,288
11,777
-21.1
%
33,983
42,500
-20.0
%
Total Products
43,528
61,601
-29.3
%
189,813
228,796
-17.0
%
Service
6,012
5,752
+4.5%
22,556
23,603
-4.4
%
Total Net Revenue
$
49,540
$
67,353
-26.4
%
$
212,369
$
252,399
-15.9
%
Three Months Ended
Twelve Months Ended
December 31,
December 31,
December 31,
December 31,
2023
2022
2023
2022
Pre-tax Stock-Based Compensation Expense: Cost of revenue
$
45
$
235
$
751
$
1,665
Sales and marketing
363
1,143
3,388
4,998
Research and development
152
(108
)
1,082
2,405
General and administrative
952
109
2,843
5,332
$
1,512
$
1,379
$
8,064
$
14,400
CUTERA, INC. RECONCILIATION OF GAAP GROSS PROFIT, GROSS
MARGIN AND OPERATING INCOME TO NON-GAAP GROSS PROFIT, GROSS MARGIN
AND OPERATING INCOME (in thousands) (unaudited)
Three Months Ended December 31, 2023
Gross Profit
Gross Margin
Operating Income
Twelve Months Ended December
31, 2023
Gross Profit
Gross Margin
Operating Income
Reported
$
6,241
12.6
%
$
(44,316
)
Reported
$
60,413
28.4
%
$
(143,027
)
Adjustments: Adjustments: Depreciation and amortization including
contract acquisition costs
3,237
6.5
%
5,112
Depreciation and amortization including contract acquisition costs
9,205
4.3
%
17,422
Stock-based compensation
45
0.1
%
1,512
Stock-based compensation
751
0.4
%
8,064
ERP implementation costs
-
-
780
ERP implementation costs
-
-
3,525
Legal
-
-
864
Legal
-
-
2,472
Severance
337
0.7
%
1,132
Severance
607
0.3
%
2,023
Retention plan costs
34
0.1
%
1,029
Retention plan costs
129
0.1
%
5,367
Expenses related to manufacturing agreement termination
-
-
5,724
Expenses related to manufacturing agreement termination
-
-
5,724
Board of Directors legal and advisory fees
-
-
1,827
Board of Directors legal and advisory fees
-
-
11,566
Other adjustments
-
-
227
Other adjustments
307
0.1
%
1,213
Total adjustments
3,653
7.4
%
18,207
Total adjustments
10,999
5.2
%
57,376
Adjusted
$
9,894
20.0
%
$
(26,109
)
Adjusted
$
71,412
33.6
%
$
(85,651
)
Three Months Ended December 31, 2022
Gross Profit
Gross Margin
Operating Income
Twelve Months Ended December
31, 2022
Gross Profit
Gross Margin
Operating Income
Reported
$
38,749
57.5
%
$
(5,536
)
Reported
$
139,829
55.4
%
$
(38,190
)
Adjustments: Adjustments: Depreciation and amortization including
contract acquisition costs
997
1.5
%
2,479
Depreciation and amortization including contract acquisition costs
1,593
0.6
%
5,821
Stock-based compensation
235
0.3
%
1,379
Stock-based compensation
1,665
0.7
%
14,400
ERP implementation costs
-
-
1,498
ERP implementation costs
-
-
9,210
Legal
-
-
222
Legal
-
-
1,284
Severance
-
-
200
Severance
26
0.0
%
615
Other adjustments
-
-
-
Other adjustments
(290
)
-0.1
%
(290
)
Total adjustments
1,232
1.8
%
5,778
Total adjustments
2,994
1.2
%
31,040
Adjusted
$
39,981
59.4
%
$
242
Adjusted
$
142,823
56.6
%
$
(7,150
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240321616845/en/
Cutera, Inc. Greg Barker VP, Corporate FP&A and
Investor Relations 415-657-5500 IR@cutera.com
Cutera (NASDAQ:CUTR)
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