cutr20170501_8k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 


FORM 8-K

 


CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

May 1, 2017

Date of Report (date of earliest event reported)

 

 


Cutera, Inc.

(Exact name of Registrant as specified in its charter)

 


 

Delaware

 

000-50644

 

77-0492262

(State or other jurisdiction of

incorporation or organization)

 

(Commission File Number)

 

(I.R.S. Employer

Identification Number)

 

3240 Bayshore Blvd.

Brisbane, California 94005

(Address of principal executive offices)

 

(415) 657-5500

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

 

Item 2.02.  Results of Operations and Financial Condition.

 

 

On May 1, 2017, we are issuing a press release and holding a conference call regarding our financial results for the first quarter ended March 31, 2017. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

 

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. 

 

Item 9.01.  Financial Statements and Exhibits.

 

(d)  Exhibits.

 

 

Exhibit No.

  

Description

   

99.1

  

Press Release of Cutera, Inc. dated as of May 1, 2017.

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

         
 

 

 

 

CUTERA, INC.

     

Date: May 1, 2017

 

 

 

 /s/ JAMES A. REINSTEIN

 

 

 

 

James A. Reinstein

 

 

 

 

President and Chief Executive Officer

 

 

 

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EXHIBIT 99.1

 

 

FOR IMMEDIATE RELEASE

 

CONTACTS:

 

Cutera, Inc.

Ron Santilli

Chief Financial Officer

415-657-5500

 

Investor Relations

John Mills

ICR, Inc.

646-277-1254

john.mills@icrinc.com

 

 

Cutera Reports First Quarter 2017 Financial Performance

 

Company Achieves Record First Quarter Revenue, and Extends

Double-Digit Revenue Growth (Y-O-Y) to Eleven Consecutive Quarters

 

BRISBANE, California, May 1, 2017 ─ 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, 2017.

 

Key operating highlights and financial performance for the first quarter of 2017, when compared to the first quarter of 2016, were as follows:

 

 

Revenue:

 

o

Increased 31% to a record first quarter $29.3 million, due primarily to 60% growth in North America product revenue. International product revenue also contributed growth of 14%.

 

o

Eleventh consecutive quarter of double-digit revenue growth.

 

o

Growth experienced by multiple products with particular strength from enlightenTM, the Company’s pico technology platform for tattoo removal and facial revitalization.

 

Gross Margin was 53%, lower than previous expectations, due primarily to a greater percentage of revenue coming from our enlighten systems and associated upgrades. Key reasons for the lower gross margin associated with enlighten products include:

 

o

Normal market seeding during the early launch phase inclusive of favorable pricing offered to our installed base to upgrade to enlighten III. The Company expects such upgrades to decline throughout the year;

 

o

Higher initial costs of our enlighten III system, that are expected to decline throughout the year; and

  o Continued increasing level of bundled transactions.

 

 

 

 

 

 

Continued discipline on expense and leveraging as Operating Expenses declined as a percent of revenue from 65% to 58%.

 

Profitability improved by $1.1 million, from a net loss of $2.1 million to a net loss of $1.0 million.

 

Cash, cash equivalents and marketable investments were $48.4 million, and the Company remains debt-free.

 

Repurchased $2.9 million of stock under our Board approved $10.0 million stock repurchase program.

 

James Reinstein, President and Chief Executive Officer of Cutera, stated, “We are very pleased to achieve a record level of revenue this past quarter resulting in our eleventh consecutive quarter of double-digit revenue growth, compared to the same period in the prior year. The growth is coupled with significant improvement in several operating metrics, illustrating the organization’s ability to leverage the strong revenue. Our 31% revenue growth was driven by multiple platforms within our product portfolio, with particular strength coming from our enlighten product in North America. Our financial performance in the first quarter of 2017, and overall trajectory, has the Company well positioned for continued growth in revenue, profits and cash generation.

 

“Lastly, I would be remiss if I did not mention my regret that Ron Santilli, EVP and Chief Financial Officer, informed me of his decision to resign. I greatly appreciate the short time that we have worked together as Ron has been very collaborative and welcoming of me in my early days at Cutera. Ron will remain with the Company until we find his successor and a smooth transition is complete. On behalf of everyone at Cutera, I’d like to thank Ron for his 16 years of service and wish him well.”

 

 

Product Updates

 

Initial market acceptance for the Company’s enlighten III system has been very positive and many practitioners believe it is the best-in-class three wavelength pico-laser on the market allowing them to remove all tattoo ink colors, enlighten III also provides PicoGenesisTM skin revitalization with improved efficacy and faster speeds than any other product on the market. The Company plans to continue to seek additional indications on its enlighten platform to increase the functionality and treatment options for our customers.

 

The Company continues to enhance its truSculptTM system for body sculpting. At the American Society for Laser Medicine & Surgery meeting in early April 2017, truSculpt 3D was launched with a new treatment method and higher frequency, resulting in increased efficacy and greater fat destruction. The truSculpt 3D will include a consumable revenue stream enabling the Company to share in the procedure income with its customers. This important technology improvement is critical for the Company to enable the truSculpt platform to become a more competitive offering in the body sculpting market. The Company expects to further enhance the platform in the second-half of this year to provide our customers with additional utility, efficacy and an improved return on their investment.

 

 

 

 

2017 Guidance:

 

The Company expects:

 

 

Revenue of approximately $32.0 million in the second quarter of 2017, and approximately $140.0 million for the full-year of 2017, compared to previous guidance of approximately $135.0 - $140.0 million.

 

Earnings Per Share: approximately $0.03 for the second quarter 2017, and $0.45 - $0.50 for the full year of 2017.  

 

To Repurchase sufficient shares to maintain the fully diluted share count at approximately 14.0 million during 2017.

 

 

Conference Call

 

The conference call to discuss these results is scheduled to begin at 2:00 p.m. PST (5:00 p.m. EST) on May 1, 2017. Participating in the call will be James Reinstein, President and Chief Executive Officer and Ron Santilli, Executive Vice President and Chief Financial Officer. The call will be broadcast live over the internet hosted at the Investor Relations section of Cutera's website at http://www.ir.cutera.com, and will be archived online within one hour of its completion through 8:59 p.m. PST (11:59 p.m. EST) on May 15, 2017. In addition, you may call 1-877-705-6003 if you wish to participate on the live 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 been developing 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.

 

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning Cutera's plans to introduce and commercialize new products, ability to increase revenue, gather clinical data, reduce expenses, improve financial results, grow the Company’s market share, realize benefits from additional investment, achieve financial guidance, expand market penetration, generate cash from operations, and statements regarding long-term prospects and opportunities in the laser and other energy-based equipment aesthetic market, are forward-looking statements within the meaning of the Safe Harbor. 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. Potential risks and uncertainties that could affect Cutera's business and cause its financial results to differ materially from those contained in the forward-looking statements include those related to the Company’s efforts to improve sales productivity, hire and retain qualified sales representatives, improve revenue growth, gross margins and profitability through leveraging operating expenses; the Company’s ability to successfully develop and launch new products and applications and market them to both its installed base and new customers; unforeseen events and circumstances relating to the Company’s operations; government regulatory actions; and those other factors described in the section entitled, “Risk Factors” in its most recent Form 10-Q as filed with the Securities and Exchange Commission on May 1st, 2017. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. 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. Cutera's financial performance for the first quarter ended March 31, 2017, as discussed in this release, is preliminary and unaudited, and subject to adjustment.

 

 

 

 

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

   

Three Months Ended

 
   

March 31,

   

March 31,

 
   

2017

   

2016

 

Net revenue

  $ 29,299     $ 22,423  

Cost of revenue

    13,778       9,949  

Gross profit

    15,521       12,474  

Gross margin %

    53 %     56 %
                 

Operating expenses:

               

Sales and marketing

    10,773       8,716  

Research and development

    2,945       2,709  

General and administrative

    3,216       3,220  

Total operating expenses

    16,934       14,645  

Loss from operations

    (1,413 )     (2,171 )

Interest and other income, net

    273       144  

Loss before income taxes

    (1,140 )     (2,027 )

Provision (benefit) for income taxes

    (118 )     24  

Net loss

  $ (1,022 )   $ (2,051 )
                 

Net loss per share:

               

Basic and diluted

  $ (0.07 )   $ (0.16 )
                 

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

               

Basic and diluted

    13,840       13,010  

 

 

 

 

 

CUTERA, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in thousands)

 

(unaudited)

 

   

March 31,

   

December 31,

   

March 31,

 
   

2017

   

2016

   

2016

 

Assets

                       

Current assets:

                 

Cash and cash equivalents

  $ 11,443     $ 13,775     $ 6,265  

Marketable investments

    36,990       40,299       38,184  

Cash, cash equivalents and marketable investments

    48,433       54,074       44,449  
                         

Accounts receivable, net

    17,859       16,547       11,168  

Inventories

    15,672       14,977       13,475  

Other current assets and prepaid expenses

    2,403       2,251       1,953  

Total current assets

    84,367       87,849       71,045  
                         

Property and equipment, net

    1,802       1,907       1,428  

Deferred tax asset, net of current portion

    394       377       376  

Intangibles, net

    -       2       87  

Goodwill

    1,339       1,339       1,339  

Other long-term assets

    389       380       419  
Total assets   $ 88,291     $ 91,854     $ 74,694  
                         

Liabilities and Stockholders' Equity

                 

Current liabilities:

                 

Accounts payable

  $ 3,089     $ 2,598     $ 2,570  

Accrued liabilities

    14,950       17,397       11,079  

Deferred revenue

    8,275       8,394       8,836  

Total current liabilities

    26,314       28,389       22,485  
                         

Deferred revenue, net of current portion

    1,801       1,705       1,986  

Income tax liability

    169       168       127  

Other long-term liabilities

    565       582       507  

Total liabilities

    28,849       30,844       25,105  
                         

Stockholders' equity

    59,442       61,010       49,589  
Total liabilities and stockholders' equity   $ 88,291     $ 91,854     $ 74,694  

 

 

 

 

 

CUTERA, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 

(unaudited)

 

   

Three Months Ended

 
   

March 31,

   

March 31,

 
   

2017

   

2016

 

Cash flows from operating activities:

               

Net loss

  $ (1,022 )   $ (2,051 )

Adjustments to reconcile net loss to net cash used in operating activities:

               

Stock-based compensation

    1,395       1,332  

Depreciation and amortization

    248       240  

Other

    (51 )     12  

Changes in assets and liabilities:

               

Accounts receivable

    (1,305 )     472  

Inventories

    (695 )     (1,397 )

Accounts payable

    491       611  

Accrued liabilities

    (2,657 )     (2,758 )

Deferred revenue

    (23 )     (103 )

Other

    (166 )     (402 )

Net cash used in operating activities

    (3,785 )     (4,044 )
                 

Cash flows from investing activities:

               

Acquisition of property, equipment and software

    (69 )     (97 )

Disposal of property and equipment

    25       -  

Net change in marketable investments

    3,318       (624 )

Net cash provided by (used) in investing activities

    3,274       (721 )
                 

Cash flows from financing activities:

               

Repurchases of common stock

    (2,700 )     (279 )

Proceeds from exercise of stock options and employee stock purchase plan

    1,751       744  

Taxes paid related to net share settlement of equity awards

    (784 )     (233 )

Payments on capital lease obligations

    (88 )     (70 )

Net cash (used in) provided by financing activities

    (1,821 )     162  
                 

Net decrease in cash and cash equivalents

    (2,332 )     (4,603 )

Cash and cash equivalents at beginning of period

    13,775       10,868  

Cash and cash equivalents at end of period

  $ 11,443     $ 6,265  

 

 

 

 

CUTERA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in thousands, except percentage data)

(unaudited)

 

   

Three Months Ended

   

% Change

 
   

Q1

   

Q1

   

Q1 '17 Vs

 
   

2017

   

2016

   

Q1 '16

 

Revenue By Geography:

                       

United States

  $ 16,544     $ 11,054    

+50%

 

International

    12,755       11,369    

+12%

 
    $ 29,299     $ 22,423    

+31%

 

International as a percentage of total revenue

    44%       51%          
                         

Revenue By Product Category:

                       

Products

                       

-North America

  $ 14,460     $ 9,024    

+60%

 

-International

    8,532       7,489    

+14%

 

Total Products

    22,992       16,513    

+39%

 

Service

    4,824       4,467    

+8%

 

Hand Piece Refills

    499       564       -12%  

Skincare

    984       879    

+12%

 
    $ 29,299     $ 22,423    

+31%

 

 


 

   

Three Months Ended

         
   

Q1

   

Q1

         
    2017     2016          

Pre-tax Stock-Based Compensation Expense:

                       

Cost of revenue

  $ 129     $ 141          

Sales and marketing

    420       376          

Research and development

    237       180          

General and administrative

    609       635          
    $ 1,395     $ 1,332