Cutera Reports First Quarter 2017 Financial Performance

May 1, 2017 at 4:05 PM EDT
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Company Achieves Record First Quarter Revenue, and Extends Double-Digit Revenue Growth (Y-O-Y) to Eleven Consecutive Quarters

BRISBANE, Calif., May 01, 2017 (GLOBE NEWSWIRE) -- 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:

  • 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%.
  • Eleventh consecutive quarter of double-digit revenue growth.
  • 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:

  • 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;
  • Higher initial costs of our enlighten III system, that are expected to decline throughout the year; and
  • 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. PDT (5:00 p.m. EDT) 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://ir.cutera.com, and will be archived online within one hour of its completion through 8:59 p.m. PDT (11:59 p.m. EDT) 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        
                            


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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