Cutera Reports Fourth Quarter and Full-Year 2016 Record Revenue and Financial Results

February 13, 2017 at 4:01 PM EST
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Company Provides First Quarter and Full-Year 2017 Guidance

BRISBANE, Calif., Feb. 13, 2017 (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 fourth quarter ended December 31, 2016. 

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

  • Revenue:
    - Increased 26% for the fourth quarter to a record $37.9 million, due primarily to a 45% growth in North American product revenue
    - Tenth consecutive quarter of double-digit revenue growth
    - Increased 25% for the full year of 2016 to a record $118.1 million
    - Two consecutive years of 20%+ year-over-year growth
  • Gross Margin of 58% was slightly lower than previous expectations due primarily to higher initial manufacturing costs and seeding of key opinion leader transactions to build reference sites with its enlighten III launch for PicoGenesisTM and tattoo removal treatments
  • Achieved $0.30 EPS and $4.7 million of operating cash flow in the fourth quarter
  • Cash, cash equivalents and marketable investments were $54.1 million, and no debt
  • Hired James Reinstein as its new President, CEO and eighth board member

Ron Santilli, Executive Vice President and Chief Financial Officer of Cutera, stated, “We are pleased with our tenth consecutive quarter of double-digit revenue growth, full year profitability and solid operating cash flow, illustrating the leverage in our business model.  In the fourth quarter of 2016, our 26% revenue growth was driven by the breadth of our product portfolio throughout North America, with particular growth coming from our enlightenTM product.”

In December 2016, the Company commenced shipments of its enlighten III platform that provides a new third visible “true red” 670nm wavelength, in addition to the 1064nm and 532nm wavelengths presently available.  Initial market acceptance has been very positive and many practitioners believe it is the best-in-class three wavelength pico-laser in the market and will allow practitioners the ability to remove all tattoo ink colors, and provide PicoGenesis skin revitalization with improved efficacy and faster speeds than any products on the market.

Additionally, in December of 2016, the Company received 510(k) clearance from the Food and Drug Administration (FDA) to market its RF energy-based truSculptTM system for the temporary reduction in circumference of the abdomen.  truSculpt is based on the Company’s proprietary RF technology, which selectively heats subcutaneous adipose tissue making it ideally suited for treating fat. truSculpt will enable the company to participate in the fast growing body-sculpting market as well as adding a consumable revenue stream.  In 2017 the company will work with key opinion leaders to gather additional clinical data to demonstrate superior fat burning capabilities. 

Mr. James Reinstein, Chief Executive Officer stated, “We remain committed to advancing our technologies and providing our customers with an attractive path for upgrading their current systems to the new capabilities. Our financial performance in the fourth quarter, and overall trajectory, has the Company positioned well for continued growth in revenue, profits and cash generation.”

Guidance:

The Company expects:

  • Revenue of $26.0 - $27.0 million in the first quarter of 2017 and $135.0 - $140.0 million for the full-year of 2017.
  • Earnings (Loss) Per Share of ($0.06) – ($0.08) for the first quarter 2017, given the seasonality of our business, and $0.45 - $0.50 for the full-year of 2017.   
  • To Repurchase shares to a level that maintains the fully diluted share count at approximately 14.0 million for the full-year of 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 February 13, 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://ir.cutera.com/phoenix.zhtml?c=130892&p=irol-EventDetails&EventId=5247490, and will be archived online within one hour of its completion through 8:59 p.m. PST (11:59 p.m. EST) on February 27, 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, 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, plans for stock repurchase, 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 7th, 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 fourth  quarter ended December 31, 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   Twelve Months Ended
          December 31,   December 31,   December 31,   December 31,
          2016
   2015
   2016
   2015
  Net revenue   $ 37,875     $ 30,042     $ 118,056     $ 94,761  
  Cost of revenue     15,962       12,145       49,921       40,478  
      Gross profit     21,913       17,897       68,135       54,283  
      Gross margin %     58 %     60 %     58 %     57 %
                               
  Operating expenses:                        
    Sales and marketing     11,561       9,899       41,563       35,942  
    Research and development     2,897       2,812       11,232       10,733  
    General and administrative     3,010       3,189       12,943       12,129  
      Total operating expenses   17,468       15,900       65,738       58,804  
  Income (loss) from operations     4,445       1,997       2,397       (4,521 )
  Interest and other income, net     (204 )     105       323       293  
  Income (loss) before income taxes   4,241       2,102       2,720       (4,228 )
  Provision for income taxes     28       52       143       212  
  Net income (loss)   $ 4,213     $ 2,050     $ 2,577     $ (4,440 )
                               
  Net income (loss) per share:                        
    Basic   $ 0.31     $ 0.16     $ 0.19     $ (0.32 )
    Diluted   $ 0.30     $ 0.15     $ 0.19     $ (0.32 )
                               
  Weighted-average number of shares                  
  used in per share calculations:                      
    Basic and diluted     13,591       12,978       13,225       13,960  
    Diluted     14,201       13,591       13,753       13,960  
                               

 

  CUTERA, INC.   
  CONDENSED CONSOLIDATED BALANCE SHEETS  
  (in thousands)   
  (unaudited)   
     
              December 31,     September 30,     December 31,  
              2016     2016     2015  
  Assets                      
  Current assets:                    
    Cash and cash equivalents   $ 13,775   $ 11,275   $ 10,868  
    Marketable investments     40,299     35,108     37,539  
      Cash, cash equivalents and marketable investments     54,074     46,383     48,407  
                             
    Accounts receivable, net     16,547     11,680     11,669  
    Inventories     14,977     16,478     12,078  
    Other current assets and prepaid expenses     2,251     2,507     1,675  
      Total current assets     87,849     77,048     73,829  
                             
  Property and equipment, net     1,907     1,720     1,473  
  Deferred tax asset, net of current portion     377     410     350  
  Intangibles, net     2     16     143  
  Goodwill       1,339     1,339     1,339  
  Other long-term assets     380     444     384  
        Total assets   $ 91,854   $ 80,977   $ 77,518  
                             
  Liabilities and Stockholders' Equity                    
  Current liabilities:                    
    Accounts payable   $ 2,598   $ 3,283   $ 1,959  
    Accrued liabilities     17,397     14,786     13,834  
    Deferred revenue     8,394     8,312     8,638  
      Total current liabilities     28,389     26,381     24,431  
                             
  Deferred revenue, net of current portion     1,705     1,426     2,287  
  Income tax liability     168     164     182  
  Other long-term liabilities     582     597     584  
      Total liabilities     30,844     28,568     27,484  
                             
  Stockholders' equity     61,010     52,409     50,034  
        Total liabilities and stockholders' equity   $ 91,854   $ 80,977   $ 77,518  
                             

 

  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,  
        2016
   2015
   2016
   2015
  
  Cash flows from operating activities:                        
  Net income (loss) $ 4,213     $ 2,050     $ 2,577     $ (4,440 )  
  Adjustments to reconcile net income (loss) to net cash provided by operating activities:                        
    Stock-based compensation   1,061       1,097       3,713       4,084    
    Depreciation and amortization   249       274       982       1,186    
    Other   60       14       15       227    
  Changes in assets and liabilities:                        
    Accounts receivable   (4,838 )     (2,660 )     (4,899 )     (536 )  
    Inventories   1,501       1,401       (2,899 )     (1,090 )  
    Accounts payable   (685 )     (700 )     639       (1,124 )  
    Accrued liabilities   2,575       2,143       3,461       2,687    
    Deferred revenue   361       (40 )     (826 )     (2,319 )  
    Other   244       310       (771 )     (34 )  
      Net cash provided by (used in) operating activities   4,741       3,889       1,992       (1,359 )  
                               
  Cash flows from investing activities:                        
  Acquisition of property, equipment and software   (226 )     (43 )     (537 )     (746 )  
  Disposal of property and equipment   3       -       20       -    
  Net change in marketable investments   (5,219 )     (16 )     (2,875 )     33,392    
      Net cash provided by (used) in investing activities   (5,442 )     (59 )     (3,392 )     32,646    
                               
  Cash flows from financing activities:                        
  Repurchases of common stock   —       (3,469 )     (4,873 )     (40,085 )  
  Proceeds from exercise of stock options and employee stock purchase plan 3,296       507       9,493       10,061    
  Payments on capital lease obligations   (95 )     (55 )     (313 )     (198 )  
      Net cash provided by (used in) financing activities   3,201       (3,017 )     4,307       (30,222 )  
                               
  Net increase in cash and cash equivalents   2,500       813       2,907       1,065    
  Cash and cash equivalents at beginning of period   11,275       10,055       10,868       9,803    
  Cash and cash equivalents at end of period $ 13,775     $ 10,868     $ 13,775     $ 10,868    
                               

 

  CUTERA, INC. 
  CONSOLIDATED FINANCIAL HIGHLIGHTS
  (in thousands, except percentage data)
  (unaudited) 
                         
          Three Months Ended    % Change   Twelve Months Ended    % Change
          Q4     Q4   Q4 '16 Vs   FY     FY   FY '16 Vs
          2016
     2015
   Q4 '15   2016
     2015
   FY '15
  Revenue By Geography:                                    
      United States   $ 23,297       $ 16,882     +38 %   $ 65,513       $ 48,916     +34 %
      International     14,578         13,160     +11 %     52,543         45,845     +15 %
          $ 37,875       $ 30,042     +26 %   $ 118,056       $ 94,761     +25 %
      International as a percentage of total revenue     38 %       44 %         45 %       48 %    
                                           
  Revenue By Product Category:                                    
    Products                                    
      -North America   $ 21,787       $ 15,048     +45 %   $ 58,595       $ 40,528     +45 %
      -International     9,678         8,926     +8 %     34,126         30,695     +11 %
        Total Products     31,465         23,974     +31 %     92,721         71,223     +30 %
    Service     4,750         4,562     +4 %     19,028         17,739     +7 %
    Hand Piece Refills     612         706     -13 %     2,498         2,910     -14 %
    Skincare     1,048         800     +31 %     3,809         2,889     +32 %
          $ 37,875       $ 30,042     +26 %   $ 118,056       $ 94,761     +25 %
                                           
                                           
                                           
        Three Months Ended        Twelve Months Ended     
          Q4     Q4       FY     FY    
          2016
     2015
       2016
     2015
    
  Pre-tax Stock-Based Compensation Expense:                                    
      Cost of revenue   $ 87       $ 118         $ 341       $ 447      
      Sales and marketing     335         327           1,179         1,054      
      Research and development     180         152           596         662      
      General and administrative     459         500           1,597         1,921      
          $ 1,061       $ 1,097         $ 3,713       $ 4,084      
                                            
CONTACTS:

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

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

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