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
February 5, 2015
Date of Report (date of earliest event reported)
Cutera, Inc.
(Exact name of Registrant as specified in its charter)
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Delaware |
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000-50644 |
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77-0492262 |
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(State or other jurisdiction of incorporation or organization) |
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(Commission File Number) |
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(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):
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☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02. |
Results of Operations and Financial Condition. |
On February 5, 2015, we are issuing a press release and holding a conference call regarding our financial results for the fourth quarter ended December 31, 2014. 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.
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Item 9.01. |
Financial Statements and Exhibits. |
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(d) |
Exhibits. |
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Exhibit No. |
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Description |
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99.1 |
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Press Release of Cutera, Inc. dated as of February 5, 2015. |
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.
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CUTERA, INC. | ||
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Date: February 5, 2015 |
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/s/ KEVIN P. CONNORS | |
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Kevin P. Connors | ||
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President and Chief Executive Officer | ||
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACTS:
Cutera, Inc.
Ron Santilli
Chief Financial Officer
415-657-5500
Investor Relations
John Mills
Integrated Corporate Relations, Inc.
646-277-1254
john.mills@icrinc.com
Cutera Reports Fourth Quarter 2014 Results
U.S. Revenue Grew 33%, Compared to Prior Year, Driven by Sales of enlighten™ and excel HR™
BRISBANE, California, February 5, 2015 ─ Cutera, Inc. (NASDAQ: CUTR), a leading provider of laser and other energy-based aesthetic systems for practitioners worldwide, today reported financial results for the fourth quarter ended December 31, 2014.
Key financial measures and operating highlights for the fourth quarter of 2014 were as follows:
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Revenue increased 15% to $25.5 million, compared to the same period last year, driven by 33% growth in the U.S. resulting primarily from our recently launched new products — enlighten and excel HR. |
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Gross margin, was 54% and included $1.1 million of non-recurring, non-cash, charge. Excluding the non-recurring charges, on a Non-GAAP adjusted basis, gross margin was 59%. |
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Net loss on a GAAP basis was $1.6 million, or $0.11 per diluted share, and this includes $1.4 million of the following non-recurring charges: |
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$1.1 million non-cash impairment charge relating to a previous acquisition |
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$346,000 of legal fees for an un-anticipated legal matter. |
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Net loss on a Non-GAAP basis, after excluding the previously mentioned $1.4 million non-recurring charges, was $177,000, or $0.01 per share. This loss includes $1.3 million of non-cash expenses related to stock-based compensation, depreciation and intangible amortization. |
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Cash generated from operations: $468,000. |
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Cash and investments balance: $81.1 million. |
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Enlighten FDA 510(k) clearance for tattoo removal, the only cleared dual-wavelength, dual pulse width, product on the market. This was the second FDA cleared indication. |
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Commenced commercial shipments of enlighten in December, 2014. |
Kevin Connors, President and Chief Executive Officer of Cutera, stated, “We are pleased with the revenue growth and improved financial performance in the fourth quarter of 2014. We believe our recent new product introductions, combined with our recently augmented commercial leadership, are driving improved operating performance. Gross margin was negatively impacted by higher than expected manufacturing ramp-up and other interim costs for our recently launched products. We anticipate cost structure improvements of these products in 2015.
“In 2014, we made several strategic investments in our global sales and marketing functions, including sales force expansion. In 2015, we expect to achieve higher revenue growth, while leveraging our sales and marketing expenses as we anticipate productivity improvements. Our research and development team delivered two new platforms in 2014, which represents a product launch milestone for the Company. We maintain our commitment to continued investments in product and clinical innovation that drive exciting new product introductions.
Mr. Connors concluded, “While there are certain unpredictable factors that may impact our global business, including volatile currency concerns, we believe the market for aesthetic light-and-energy-based-systems is a healthy and an expanding market.”
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 February 5, 2015. Participating in the call will be Kevin Connors, 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 www.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 February 19, 2015. In addition, you may call 1-877-705-6003 to listen to the live broadcast.
Non-GAAP Income Statement Measures (Unaudited)
*To supplement our consolidated financial statements presented in accordance with Generally Accepted Accounting Principles, or GAAP, Cutera has provided below Non-GAAP income statement measures for gross profit, operating expenses, loss from operations, net loss and loss per share. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The Non-GAAP income statement measures included in this press release exclude a non-cash charge for the impairment of separately identified intangible assets and inventories relating to a previous acquisition; and non-recurring legal fees for a litigation matter in the fourth quarter of 2014. After excluding these expenses, management believes that the adjusted financial results are more reflective of our ongoing operations as well as comparable to similar measures used by other companies.
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 ability to increase revenue, reduce expenses, make productivity improvements, develop and commercialize existing and new products and applications, grow the Company’s market share, and realize benefits from additional investment 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 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; the length of the sales cycle process; 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 November 3rd, 2014. 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 fourth quarter ended December 31, 2014, as discussed in this release, is preliminary and unaudited, and subject to adjustment.
CUTERA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
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December 31, |
September 30, |
December 31, |
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2014 |
2014 |
2013 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 9,803 | $ | 11,377 | $ | 16,242 | ||||||
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Marketable investments |
71,343 | 69,321 | 66,831 | |||||||||
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Cash, cash equivalents and marketable investments |
81,146 | 80,698 | 83,073 | |||||||||
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Accounts receivable, net |
11,137 | 8,736 | 9,679 | |||||||||
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Inventories |
10,988 | 11,106 | 9,006 | |||||||||
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Deferred tax asset |
26 | 29 | 31 | |||||||||
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Other current assets and prepaid expenses |
1,591 | 1,947 | 1,507 | |||||||||
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Total current assets |
104,888 | 102,516 | 103,296 | |||||||||
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Property and equipment, net |
1,461 | 1,301 | 1,362 | |||||||||
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Deferred tax asset, net of current portion |
269 | 316 | 329 | |||||||||
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Intangibles, net |
595 | 1,438 | 2,019 | |||||||||
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Goodwill |
1,339 | 1,339 | 1,339 | |||||||||
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Other long-term assets |
361 | 13 | 324 | |||||||||
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Total assets |
$ | 108,913 | $ | 106,923 | $ | 108,669 | ||||||
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
$ | 3,083 | $ | 2,718 | $ | 1,820 | ||||||
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Accrued liabilities |
11,007 | 8,975 | 9,328 | |||||||||
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Deferred revenue |
8,898 | 8,745 | 7,494 | |||||||||
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Total current liabilities |
22,988 | 20,438 | 18,642 | |||||||||
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Deferred revenue, net of current portion |
4,346 | 4,596 | 4,340 | |||||||||
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Income tax liability |
145 | 151 | 108 | |||||||||
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Other long-term liabilities |
926 | 1,029 | 1,314 | |||||||||
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Total liabilities |
28,405 | 26,214 | 24,404 | |||||||||
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Stockholders’ equity: |
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Stockholders' equity |
80,508 | 80,709 | 84,265 | |||||||||
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Total liabilities and stockholders' equity |
$ | 108,913 | $ | 106,923 | $ | 108,669 | ||||||
CUTERA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
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Three Months Ended |
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December 31, |
September 30, |
December 31, |
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2014 |
2014 |
2013 |
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Net revenue |
$ | 25,499 | $ | 18,726 | $ | 22,239 | ||||||
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Cost of revenue |
11,679 | 7,935 | 9,202 | |||||||||
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Gross profit |
13,820 | 10,791 | 13,037 | |||||||||
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Gross margin % |
54 | % | 58 | % | 59 | % | ||||||
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Operating expenses: |
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Sales and marketing |
9,356 | 7,805 | 7,804 | |||||||||
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Research and development |
2,649 | 2,628 | 2,438 | |||||||||
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General and administrative |
3,407 | 2,897 | 3,135 | |||||||||
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Total operating expenses |
15,412 | 13,330 | 13,377 | |||||||||
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Loss from operations |
(1,592 | ) | (2,539 | ) | (340 | ) | ||||||
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Interest and other income, net |
8 | — | 105 | |||||||||
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Loss before income taxes |
(1,584 | ) | (2,539 | ) | (235 | ) | ||||||
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Provision for income taxes |
41 | 97 | 43 | |||||||||
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Net loss |
$ | (1,625 | ) | $ | (2,636 | ) | $ | (278 | ) | |||
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Net loss per share: |
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Basic and diluted |
$ | (0.11 | ) | $ | (0.18 | ) | $ | (0.02 | ) | |||
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Weighted-average number of shares used in per share calculations: |
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Basic and diluted |
14,425 | 14,334 | 14,016 | |||||||||
CUTERA, INC.
RECONCILIATION OF GAAP INCOME STATEMENT MEASURES
TO NON-GAAP INCOME STATEMENT MEASURES
(in thousands, except per share data)
(unaudited)
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Three Months Ended 12/31/2014 |
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GAAP |
Adjustments |
Non-GAAP As Adjusted* |
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Net revenue |
$ | 25,499 | $ | — | $ | 25,499 | |||||||
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Cost of revenue |
11,679 | (1,102 | ) |
(a) |
10,577 | ||||||||
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Gross profit |
13,820 | 1,102 | 14,922 | ||||||||||
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Gross margin % |
54 | % | 59 | % | |||||||||
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Operating expenses: |
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Sales and marketing |
9,356 | — | 9,356 | ||||||||||
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Research and development |
2,649 | — | 2,649 | ||||||||||
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General and administrative |
3,407 | (346 | ) |
(b) |
3,061 | ||||||||
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Total operating expenses |
15,412 | (346 | ) | 15,066 | |||||||||
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Income (loss) from operations |
(1,592 | ) | 1,448 | (144 | ) | ||||||||
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Interest and other income, net |
8 | — | 8 | ||||||||||
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Income (loss) before income taxes |
(1,584 | ) | 1,448 | (136 | ) | ||||||||
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Provision for income taxes |
41 | — |
(c) |
41 | |||||||||
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Net income (loss) |
$ | (1,625 | ) | $ | 1,448 | $ | (177 | ) | |||||
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Net loss per share: |
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Basic and diluted |
$ | (0.11 | ) | $ | 0.10 | $ | (0.01 | ) | |||||
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Weighted-average number of shares used in per share calculations: |
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Basic and diluted |
14,425 | 14,425 | 14,425 | ||||||||||
a) Adjustments of $1,102,000 included a non-cash charge of $650,000 for the impairment of separately identified intangible assets and a $452,000 write down of inventories related to a prior acquisition.
b) Adjustment of $346,000 related to non-recurring legal fees associated with a litigation.
c) There was no impact to the Company's income tax provision relating to the aforementioned adjustments given the Company carries a full valuation allowance against its U.S. federal and state net deferred tax assets.
* Fiscal fourth quarter 2014 Non-GAAP pro-forma results, exclude the effect of the aforementioned adjustments.
CUTERA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
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Three Months Ended |
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December 31, |
September 30, |
December 31, |
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2014 |
2014 |
2013 |
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Cash flows from operating activities: |
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Net loss |
$ | (1,625 | ) | $ | (2,636 | ) | $ | (278 | ) | |||
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation |
1,001 | 980 | 740 | |||||||||
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Depreciation and amortization |
347 | 329 | 331 | |||||||||
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Impairment of intangible assets |
650 | — | — | |||||||||
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Other |
(16 | ) | 129 | 200 | ||||||||
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Changes in assets and liabilities: |
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Accounts receivable |
(2,305 | ) | (1,234 | ) | (2,204 | ) | ||||||
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Inventories |
118 | (1,076 | ) | 1,415 | ||||||||
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Accounts payable |
365 | 690 | (280 | ) | ||||||||
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Accrued liabilities |
2,035 | 1,500 | 1,506 | |||||||||
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Deferred revenue |
(97 | ) | 202 | 1,244 | ||||||||
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Other |
(5 | ) | (146 | ) | 141 | |||||||
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Net cash provided by (used in) operating activities |
468 | (1,262 | ) | 2,815 | ||||||||
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Cash flows from investing activities: |
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Acquisition of property, equipment and software |
(344 | ) | (107 | ) | (24 | ) | ||||||
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Disposal of property and equipment |
— | — | 63 | |||||||||
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Acquisition of intangible |
— | — | (155 | ) | ||||||||
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Net change in marketable investments |
(2,099 | ) | 1,226 | 239 | ||||||||
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Net cash provided by (used in) investing activities |
(2,443 | ) | 1,119 | 123 | ||||||||
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Cash flows from financing activities: |
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Repurchases of common stock |
— | — | (2,408 | ) | ||||||||
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Proceeds from exercise of stock options and employee stock purchase plan |
436 | 655 | 589 | |||||||||
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Payments on capital lease obligations |
(35 | ) | (37 | ) | (37 | ) | ||||||
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Net cash provided by (used in) financing activities |
401 | 618 | (1,856 | ) | ||||||||
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Net increase (decrease) in cash and cash equivalents |
(1,574 | ) | 475 | 1,082 | ||||||||
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Cash and cash equivalents at beginning of period |
11,377 | 10,902 | 15,160 | |||||||||
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Cash and cash equivalents at end of period |
$ | 9,803 | $ | 11,377 | $ | 16,242 | ||||||
CUTERA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in thousands, except percentage data)
(unaudited)
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Three Months Ended |
% Change |
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Q4 |
Q3 |
Q4 |
Q4 '14 Vs. |
Q4 '14 Vs |
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2014 |
2014 |
2013 |
Q3 '14 |
Q4 '13 |
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Revenue By Geography: |
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United States |
$ | 13,761 | $ | 7,607 | $ | 10,338 | +81 | % | +33 | % | ||||||||||
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International |
11,738 | 11,119 | 11,901 | +6 | % | -1 | % | |||||||||||||
| $ | 25,499 | $ | 18,726 | $ | 22,239 | +36 | % | +15 | % | |||||||||||
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International as a percentage of total revenue |
46 | % | 59 | % | 54 | % | ||||||||||||||
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Revenue By Product Category: |
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Products and upgrades |
$ | 19,334 | $ | 12,922 | $ | 15,703 | +50 | % | +23 | % | ||||||||||
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Service |
4,532 | 4,317 | 4,390 | +5 | % | +3 | % | |||||||||||||
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Titan and truSculpt hand piece refills |
844 | 824 | 1,044 | +2 | % | -19 | % | |||||||||||||
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Dermal fillers and cosmeceuticals |
789 | 663 | 1,102 | +19 | % | -28 | % | |||||||||||||
| $ | 25,499 | $ | 18,726 | $ | 22,239 | +36 | % | +15 | % | |||||||||||
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Three Months Ended |
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Q4 |
Q3 |
Q4 |
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2014 |
2014 |
2013 |
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Pre-tax Stock-Based Compensation Expense: |
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Cost of revenue |
$ | 144 | $ | 145 | $ | 154 | ||||||
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Sales and marketing |
227 | 195 | 165 | |||||||||
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Research and development |
175 | 167 | 104 | |||||||||
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General and administrative |
455 | 473 | 317 | |||||||||
| $ | 1,001 | $ | 980 | $ | 740 | |||||||