Cutera Announces Second Quarter 2022 Financial Results

Record second-quarter revenue driven by ongoing momentum in Capital Equipment and Consumable Product segments

Over one hundred new patients treated during the first quarter of AviClear’s availability

Management reiterates full-year revenue guidance despite $15 million of annual foreign exchange headwinds

BRISBANE, Calif.--(BUSINESS WIRE)--Aug. 4, 2022-- Cutera, Inc. (Nasdaq: CUTR) (“Cutera” or the “Company”), a leading provider of aesthetic and dermatology solutions, today reported financial results for the second quarter ended June 30, 2022.

Second Quarter 2022 Financial and Operational Highlights

• Consolidated revenue of $64.2 million driven by strength in capital equipment and consumable product demand.
• Over 50 AviClear devices were placed and activated during the first quarter of the product’s limited commercial release.
• Gross margin of 54.6% in the quarter, compared to 57.7% in the prior-year period.
  • Excluding the 190 basis point impact from the AviClear program and foreign exchange headwinds of approximately 180 basis points, the gross margin would have been 58.3%.
• Operating expenses were $45.1 million in the quarter, compared to $31.7 million in the prior-year period. Operating expenses during the period included $7.0 million in AviClear program spending in addition to $2.4 million of ERP implementation expenses.
• GAAP Net loss was $47.3M, inclusive of a non-recurring charge of $34.4 million for the extinguishment of 50% of the 2026 convertible notes.
• Adjusted EBITDA was a loss of $1.6 million, compared to a gain of $6.8 million in the prior-year period.
  • Excluding AviClear program impacts of $7.5 million in the quarter and foreign exchange headwinds of $2.4 million over the prior year period, comparable adjusted EBITDA would have been $8.3 million.
• Completed $240 million in convertible debt financing, ending the quarter with $278.2 million in cash, cash equivalents, and marketable securities on the balance sheet after retiring $69.1 million in convertible notes due 2026.

“I am excited by the momentum we continue to see in our core business, as prior investments in our sales force drove strong results in capital and consumables product segments in North America, Europe, and Australia/New Zealand in particular. Our team is further encouraged by the resiliency and strength of underlying demand trends in the marketplace,” commented Dave Mowry, Chief Executive Officer of Cutera, Inc. “During the quarter, our team achieved the successful launch of AviClear, our first-mover product for the treatment of acne. In the first three months of our limited commercial release of AviClear, we were able to validate successful clinical outcomes in the hands of our customers, verify patient satisfaction with AviClear post-treatment patient survey data, and onboard dozens of practices in the use of the AviClear Laser as they look to provide their patients with a drug-free solution for acne while enhancing the profitability of their practices. We are looking forward to expanding the footprint of new AviClear practices during the next phase of the limited commercial release and significantly ramping the utilization of the device.”

2022 Outlook

Management is reiterating its 2022 revenue guidance of $255 million to $260 million, entirely absorbing the impact of the unprecedented foreign exchange headwinds of $15 million, implying constant currency growth of 17% to 19%. This guidance does not include revenue from our AviClear device as we continue with its limited commercial release. The company plans to add over 100 new AviClear devices into the market during the course of the third quarter of 2022. Based on current AviClear trends, management expects to move into a full commercial launch by the end of the current calendar year.

Conference Call

The Company’s management will host a conference call to discuss these results and related matters today at 1:15 p.m. PT (4:15 p.m. ET). Participating in the call will be Dave Mowry, Chief Executive Officer, and Rohan Seth, Chief Financial Officer.

To participate in the conference call, dial 1-800-319-4610 (domestic) or + 1-631-891-4304 (international).

The call will also be a webcast and can be accessed from the Investor Relations section of Cutera’s website at http://www.cutera.com/. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.

About Cutera, Inc.

Brisbane, California-based Cutera is a leading provider of aesthetic and dermatology solutions for practitioners worldwide. Since 1998, Cutera has been developing innovative, easy-to-use products that harness the power of science and nature to enable medical practitioners to offer safe and effective treatments to their patients. For more information, call +1-415-657-5500 or 1-888-4CUTERA or visit www.cutera.com.

*Use of Non-GAAP Financial Measures

In this press release, in order to supplement the Company’s condensed consolidated financial statements presented in accordance with Generally Accepted Accounting Principles, or GAAP, management has disclosed certain non-GAAP financial measures for the statement of operations and net income (loss) per diluted share. Non-GAAP adjustments include stock-based compensation, depreciation, amortization, executive and other non-recurring severance costs, customer relationship management (“CRM”) and enterprise resource planning (“ERP”) system costs, non-recurring legal and litigation costs, and the loss on extinguishment of convertible notes. From time to time in the future, there may be other items that we may exclude if the Company believes that doing so is consistent with the goal of providing useful information to investors and management. The Company has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. The Company has not provided a reconciliation of non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis due to the potential significant variability, limited visibility, unpredictability, or unique non-recurring nature of the items. Forward-looking non-GAAP measures include adjusted EBITDA. The Company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, stock-based compensation, executive and other non-recurring separation costs, customer relationship management and enterprise resource planning system costs, non-recurring legal and litigation costs, and losses on the extinguishment of convertible notes.

Company management uses these measurements as aids in monitoring the Company’s ongoing financial performance from quarter to quarter, and year to year, regularly and for benchmarking against other similar companies. Non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP financial measures should be considered along with, but not as alternatives to, the operating performance measure as prescribed by GAAP. Non-GAAP financial measures for the statement of operations and net income per diluted share exclude the following:

Non-cash expenses for stock-based compensation. The Company has excluded the effect of stock-based compensation expenses in calculating its non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to the Company's employees, the Company continues to evaluate its business performance excluding stock-based compensation expenses. The Company records stock-based compensation expenses related to grants of options, employee stock purchase plans, and performance and restricted stock. Depending upon the size, timing, and terms of the grants, this expense may vary significantly but will recur in future periods. The Company believes that excluding stock-based compensation better allows for comparisons to its peer companies;

Depreciation and amortization. The Company has excluded depreciation and amortization expense in calculating its non-GAAP operating expenses and net income measures. Depreciation and amortization are non-cash charges to current operations;

Executive and other non-recurring severance costs. We have excluded costs associated with the resignation of our former Executive Officers in calculating our non-GAAP operating expenses and net income measures. We exclude these and other non-recurring employee separation costs because we believe that these items do not reflect future operating expenses;

Customer Relationship Management. We have excluded CRM system costs related to direct and incremental costs incurred in connection with our multi-phase implementation of a new CRM solution and the related technology infrastructure costs. We exclude these costs because we believe that these items do not reflect future operating expenses and will be inconsistent in amounts and frequency making it difficult to contribute to a meaningful evaluation of our operating performance;

Enterprise Resource Planning. We have excluded ERP system costs related to direct and incremental costs incurred in connection with our multi-phase implementation of a new ERP solution and the related technology infrastructure costs. We exclude these costs because we believe that these items do not reflect future operating expenses and will be inconsistent in amounts and frequency making it difficult to contribute to a meaningful evaluation of our operating performance;

Non-recurring legal and litigation costs. We have excluded costs incurred related to third-party litigation and disputes, that are non-recurring; and

Loss on extinguishment of convertible notes. We have excluded the loss on extinguishment of convertible notes. We excluded this loss because we believe it is non-recurring.

The Company believes that excluding all of the items above allows users of its financial statements to better review and assess both current and historical results of operations.

Safe Harbor Statement

Certain statements in this press release, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include but are not limited to, Cutera’s plans, objectives, strategies, financial performance and outlook, product launches and performance, trends, prospects, or future events and involve known and unknown risks that are difficult to predict. As a result, the Company’s actual financial results, performance, achievements, or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” “believe,” “will,” “should,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “forecast,” “foresee” or variations of these terms and similar expressions or the negative of these terms or similar expressions. 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. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements. There are several risks, uncertainties, and other important factors, many of which are beyond the Company’s control, that could cause its actual results to differ materially from the forward-looking statements contained in this press release, including those described in the “Risk Factors” section of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, the Registration Statement on Form S-8 and other documents filed from time to time with the United States Securities and Exchange Commission by Cutera.

All information in this press release is as of the date of its release. Accordingly, undue reliance should not be placed on forward-looking statements. 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. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Cutera's financial performance for the second quarter ended June 30, 2022, as discussed in this release, is preliminary and unaudited, and subject to adjustment.