Cutera Reports Record Third Quarter 2016 Results

November 7, 2016 at 4:04 PM EST
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  • Revenue increased 31% year-over-year to $30.3 million
  • Revenue achievement represents record  third quarter, and second highest quarter in Company’s history
  • Ninth consecutive quarter of double-digit revenue growth
  • Achieved GAAP profitability and significant operating cash flow

                                     
BRISBANE, Calif., Nov. 07, 2016 (GLOBE NEWSWIRE) -- Cutera, Inc. (NASDAQ:CUTR) (“Cutera” or the “Company”), a leading provider of laser and energy-based aesthetic systems for practitioners worldwide, today reported financial results for the third quarter ended September 30, 2016. 

Key operating highlights and financial performance for the third quarter of 2016, when compared to the third quarter of 2015, were as follows:

  • Revenue increased 31% to $30.3 million, due to strong growth in Product revenue in North America and Rest of World of 28% and 52%, respectively.
  • Gross Margin increased to 59%, primarily due to leverage from revenue growth.
  • GAAP Net Income increased $2.6 million from a net loss of $1.0 million a year ago, to a $1.6 million profit. Earnings per diluted share were $0.12, compared to a loss per share of $0.07.   
  • Cash generated by operations was $1.6 million.
  • Repurchased 176,000 shares of common stock for $1.9 million from the $10.0 million board-approved stock repurchase program.  Remaining balance on the authorized $10.0 million program was $5.1 million.
  • Cash, cash equivalents and marketable investments were $46.4 million, and no debt.

Ron Santilli, Interim Chief Executive Officer and Chief Financial Officer of Cutera, stated, “We are pleased with our ninth consecutive quarter of double-digit revenue growth and the improved financial performance.  We are particularly excited about our return to profitability and cash generation, which illustrates the leverage in our business model.  Our financial performance in the third quarter, and overall trajectory, has the Company on track with our previously stated goals of strong revenue growth and GAAP profitability for the full-year of 2016.”

In the third quarter of 2016, the Company’s Product revenue grew substantially in the North American and Rest-of-World regions, as well as across all of the major product platforms, including the newly released products as well as our legacy products.  

“We continue to expand the functionality of our enlighten platform. In October 2016, we expanded its utility into skin revitalization by adding PicoGenesisTM  and we just recently received a 510(k) clearance from the FDA for a third wavelength, “a true red” 670nm, for benign pigmented lesions. The 670nm wavelength will allow for greater clinical capabilities to our customers. We are in the process of finalizing our launch plans for a three wave length enlighten III platform, which we expect will start shipping commercially towards the end of the fourth quarter of 2016. We believe this new product will be the best-in-class, three wavelength laser in the market that will allow our customers the ability to remove all tattoo ink colors and provide PicoGenesis skin revitalization — with improved efficacy and faster treatment than any other system in the market,” said Mr. Santilli.

Mr. Santilli concluded, “We remain committed to advancing our technologies and to providing our customers with an attractive path for upgrading their current systems to the new capabilities. We are well positioned to achieve continued year-over-year profitable growth in the fourth quarter as we continue to execute on the various initiatives for expanding our market share in the growing aesthetic medical equipment 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 November 7, 2016. Participating in the call will be Ron Santilli, Interim Chief Executive Officer 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://ir.cutera.com/phoenix.zhtml?c=130892&p=irol-EventDetails&EventId=5241837  and will be archived online within one hour of its completion through 8:59 p.m. PST (11:59 p.m. EST) on November 21, 2016.  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, 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 November 7, 2016. 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 third  quarter ended September 30, 2016, 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  
          September 30,   September 30,  
          2016   2015  
  Net revenue   $   30,281     $   23,085    
  Cost of revenue       12,538         9,594    
      Gross profit       17,743         13,491    
      Gross margin %       59 %       58 %  
                     
  Operating expenses:              
    Sales and marketing       10,574         8,790    
    Research and development       2,914         2,748    
    General and administrative       2,716         2,937    
      Total operating expenses       16,204         14,475    
  Income (Loss) from operations       1,539         (984 )  
  Interest and other income, net       166         84    
  Income (Loss) before income taxes         1,705           (900 )  
  Provision for income taxes         61           57    
  Net income (loss)   $     1,644     $     (957 )  
                     
  Net income (loss) per share:              
    Basic    $      0.12     $      (0.07 )  
    Diluted   $      0.12     $      (0.07 )  
                     
  Weighted-average number of shares used in per share calculations:              
    Basic and diluted         13,163           13,827    
    Diluted         13,544           13,827    
                     

 

  CUTERA, INC.   
  CONDENSED CONSOLIDATED BALANCE SHEETS  
  (in thousands)   
  (unaudited)   
     
              September 30,     June 30,     September 30,  
              2016     2016     2015  
  Assets                      
  Current assets:                    
    Cash and cash equivalents   $ 11,275   $ 7,420   $ 10,055  
    Marketable investments     35,108     35,902     37,689  
      Cash, cash equivalents and marketable investments     46,383     43,322     47,744  
                             
    Accounts receivable, net     11,680     11,181     9,013  
    Inventories     16,478     14,702     13,479  
    Deferred tax asset     -     -     69  
    Other current assets and prepaid expenses     2,507     2,619     1,977  
      Total current assets     77,048     71,824     72,282  
                             
  Property and equipment, net     1,720     1,577     1,386  
  Deferred tax asset, net of current portion     410     401     291  
  Intangibles, net     16     44     227  
  Goodwill       1,339     1,339     1,339  
  Other long-term assets     444     448     392  
        Total assets   $ 80,977   $ 75,633   $ 75,917  
                             
  Liabilities and Stockholders' Equity                    
  Current liabilities:                    
    Accounts payable   $ 3,283   $ 2,752   $ 2,659  
    Accrued liabilities     14,786     13,201     12,234  
    Deferred revenue     8,312     8,919     8,470  
      Total current liabilities     26,381     24,872     23,363  
                             
  Deferred revenue, net of current portion     1,426     1,685     2,495  
  Income tax liability     164     157     187  
  Other long-term liabilities     597     587     538  
      Total liabilities     28,568     27,301     26,583  
                             
  Stockholders' equity     52,409     48,332     49,334  
        Total liabilities and stockholders' equity   $ 80,977   $ 75,633   $ 75,917  
                             

 

  CUTERA, INC.   
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
  (in thousands)   
  (unaudited)   
                   
        Three Months Ended  
        September 30,   September 30,  
        2016   2015  
  Cash flows from operating activities:            
  Net income (loss) $   1,644     $   (957 )  
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities:            
    Stock-based compensation     570         1,044    
    Depreciation and amortization     249         290    
    Other     18         (32 )  
  Changes in assets and liabilities:            
    Accounts receivable     (525 )       (94 )  
    Inventories     (1,776 )       42    
    Accounts payable     531         (938 )  
    Accrued liabilities     1,659         1,230    
    Deferred revenue     (866 )       (801 )  
    Other     99         (398 )  
      Net cash provided by (used in) operating activities     1,603         (614 )  
                   
  Cash flows from investing activities:            
  Acquisition of property, equipment and software     (174 )       (25 )  
  Disposal of property and equipment     11         -    
  Net change in marketable investments     711         16,941    
      Net cash provided by investing activities     548         16,916    
                   
  Cash flows from financing activities:            
  Repurchases of common stock     (2,008 )       (18,872 )  
  Proceeds from exercise of stock options and employee stock purchase plan     3,803         1,046    
  Payments on capital lease obligations     (91 )       (48 )  
      Net cash provided by (used in) financing activities     1,704         (17,874 )  
                   
  Net increase (decrease) in cash and cash equivalents     3,855         (1,572 )  
  Cash and cash equivalents at beginning of period     7,420         11,627    
  Cash and cash equivalents at end of period $   11,275     $    10,055    
                   
                   

 

  CUTERA, INC.   
  CONSOLIDATED FINANCIAL HIGHLIGHTS  
  (in thousands, except percentage data)  
  (unaudited)   
         
          Three Months Ended    % Change  
          Q3     Q3   Q3 '16 Vs  
          2016     2015   Q3 '15  
  Revenue By Geography:                    
      United States   $     15,356       $     13,206       +16 %  
      International         14,925             9,879       +51 %  
          $     30,281       $     23,085       +31 %  
      International as a percentage of total revenue       49 %         43 %      
                           
  Revenue By Product Category:                    
    Products                    
      -North America   $     13,896       $     10,830       +28 %  
      -Rest of the World         9,983             6,562       +52 %  
      Total Products         23,879             17,392       +37 %  
    Service         4,788             4,288       +12 %  
    Hand Piece Refills          602             671       -10 %  
    Skincare         1,012             734       +38 %  
          $     30,281       $     23,085       +31 %  
                           
                           
                           
        Three Months Ended       
          Q3   Q3      
          2016     2015      
  Pre-tax Stock-Based Compensation Expense:                    
      Cost of revenue   $   73       $   112        
      Sales and marketing       239             311        
      Research and development       131             148        
      General and administrative       127             473        
          $     570       $     1,044        
                            
CONTACTS:

Cutera, Inc.Ron Santilli
Interim Chief Executive Officer and Chief Financial Officer
415-657-5500

Investor Relations
John MillsICR, Inc.
646-277-1254
john.mills@icrinc.com

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