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
May 1, 2017
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 1, 2017, we are issuing a press release and holding a conference call regarding our financial results for the first quarter ended March 31, 2017. 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.
Item 9.01. Financial Statements and Exhibits.
(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 May 1, 2017. |
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: May 1, 2017 |
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/s/ JAMES A. REINSTEIN |
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James A. Reinstein |
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President and Chief Executive Officer |
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACTS:
Cutera, Inc.
Ron Santilli
Chief Financial Officer
415-657-5500
Investor Relations
John Mills
ICR, Inc.
646-277-1254
john.mills@icrinc.com
Cutera Reports First Quarter 2017 Financial Performance
Company Achieves Record First Quarter Revenue, and Extends
Double-Digit Revenue Growth (Y-O-Y) to Eleven Consecutive Quarters
BRISBANE, California, May 1, 2017 ─ 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:
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Revenue: |
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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%. |
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Eleventh consecutive quarter of double-digit revenue growth. |
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Growth experienced by multiple products with particular strength from enlightenTM, the Company’s pico technology platform for tattoo removal and facial revitalization. |
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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: |
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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; |
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Higher initial costs of our enlighten III system, that are expected to decline throughout the year; and |
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| o | Continued increasing level of bundled transactions. |
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Continued discipline on expense and leveraging as Operating Expenses declined as a percent of revenue from 65% to 58%. |
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Profitability improved by $1.1 million, from a net loss of $2.1 million to a net loss of $1.0 million. |
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Cash, cash equivalents and marketable investments were $48.4 million, and the Company remains debt-free. |
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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:
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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. |
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Earnings Per Share: approximately $0.03 for the second quarter 2017, and $0.45 - $0.50 for the full year of 2017. |
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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. PST (5:00 p.m. EST) 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://www.ir.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 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.
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CUTERA, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except per share data) |
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(unaudited) |
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Three Months Ended |
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March 31, |
March 31, |
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2017 |
2016 |
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Net revenue |
$ | 29,299 | $ | 22,423 | ||||
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Cost of revenue |
13,778 | 9,949 | ||||||
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Gross profit |
15,521 | 12,474 | ||||||
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Gross margin % |
53 | % | 56 | % | ||||
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Operating expenses: |
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Sales and marketing |
10,773 | 8,716 | ||||||
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Research and development |
2,945 | 2,709 | ||||||
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General and administrative |
3,216 | 3,220 | ||||||
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Total operating expenses |
16,934 | 14,645 | ||||||
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Loss from operations |
(1,413 | ) | (2,171 | ) | ||||
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Interest and other income, net |
273 | 144 | ||||||
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Loss before income taxes |
(1,140 | ) | (2,027 | ) | ||||
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Provision (benefit) for income taxes |
(118 | ) | 24 | |||||
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Net loss |
$ | (1,022 | ) | $ | (2,051 | ) | ||
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Net loss per share: |
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Basic and diluted |
$ | (0.07 | ) | $ | (0.16 | ) | ||
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Weighted-average number of shares used in per share calculations: |
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Basic and diluted |
13,840 | 13,010 | ||||||
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CUTERA, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(in thousands) |
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(unaudited) |
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March 31, |
December 31, |
March 31, |
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2017 |
2016 |
2016 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 11,443 | $ | 13,775 | $ | 6,265 | ||||||
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Marketable investments |
36,990 | 40,299 | 38,184 | |||||||||
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Cash, cash equivalents and marketable investments |
48,433 | 54,074 | 44,449 | |||||||||
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Accounts receivable, net |
17,859 | 16,547 | 11,168 | |||||||||
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Inventories |
15,672 | 14,977 | 13,475 | |||||||||
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Other current assets and prepaid expenses |
2,403 | 2,251 | 1,953 | |||||||||
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Total current assets |
84,367 | 87,849 | 71,045 | |||||||||
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Property and equipment, net |
1,802 | 1,907 | 1,428 | |||||||||
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Deferred tax asset, net of current portion |
394 | 377 | 376 | |||||||||
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Intangibles, net |
- | 2 | 87 | |||||||||
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Goodwill |
1,339 | 1,339 | 1,339 | |||||||||
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Other long-term assets |
389 | 380 | 419 | |||||||||
| Total assets | $ | 88,291 | $ | 91,854 | $ | 74,694 | ||||||
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
$ | 3,089 | $ | 2,598 | $ | 2,570 | ||||||
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Accrued liabilities |
14,950 | 17,397 | 11,079 | |||||||||
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Deferred revenue |
8,275 | 8,394 | 8,836 | |||||||||
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Total current liabilities |
26,314 | 28,389 | 22,485 | |||||||||
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Deferred revenue, net of current portion |
1,801 | 1,705 | 1,986 | |||||||||
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Income tax liability |
169 | 168 | 127 | |||||||||
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Other long-term liabilities |
565 | 582 | 507 | |||||||||
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Total liabilities |
28,849 | 30,844 | 25,105 | |||||||||
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Stockholders' equity |
59,442 | 61,010 | 49,589 | |||||||||
| Total liabilities and stockholders' equity | $ | 88,291 | $ | 91,854 | $ | 74,694 | ||||||
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CUTERA, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(in thousands) |
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(unaudited) |
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Three Months Ended |
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March 31, |
March 31, |
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2017 |
2016 |
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Cash flows from operating activities: |
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Net loss |
$ | (1,022 | ) | $ | (2,051 | ) | ||
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation |
1,395 | 1,332 | ||||||
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Depreciation and amortization |
248 | 240 | ||||||
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Other |
(51 | ) | 12 | |||||
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Changes in assets and liabilities: |
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Accounts receivable |
(1,305 | ) | 472 | |||||
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Inventories |
(695 | ) | (1,397 | ) | ||||
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Accounts payable |
491 | 611 | ||||||
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Accrued liabilities |
(2,657 | ) | (2,758 | ) | ||||
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Deferred revenue |
(23 | ) | (103 | ) | ||||
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Other |
(166 | ) | (402 | ) | ||||
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Net cash used in operating activities |
(3,785 | ) | (4,044 | ) | ||||
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Cash flows from investing activities: |
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Acquisition of property, equipment and software |
(69 | ) | (97 | ) | ||||
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Disposal of property and equipment |
25 | - | ||||||
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Net change in marketable investments |
3,318 | (624 | ) | |||||
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Net cash provided by (used) in investing activities |
3,274 | (721 | ) | |||||
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Cash flows from financing activities: |
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Repurchases of common stock |
(2,700 | ) | (279 | ) | ||||
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Proceeds from exercise of stock options and employee stock purchase plan |
1,751 | 744 | ||||||
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Taxes paid related to net share settlement of equity awards |
(784 | ) | (233 | ) | ||||
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Payments on capital lease obligations |
(88 | ) | (70 | ) | ||||
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Net cash (used in) provided by financing activities |
(1,821 | ) | 162 | |||||
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Net decrease in cash and cash equivalents |
(2,332 | ) | (4,603 | ) | ||||
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Cash and cash equivalents at beginning of period |
13,775 | 10,868 | ||||||
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Cash and cash equivalents at end of period |
$ | 11,443 | $ | 6,265 | ||||
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CUTERA, INC. |
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CONSOLIDATED FINANCIAL HIGHLIGHTS |
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(in thousands, except percentage data) |
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(unaudited) |
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Three Months Ended |
% Change |
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Q1 |
Q1 |
Q1 '17 Vs |
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2017 |
2016 |
Q1 '16 |
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Revenue By Geography: |
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United States |
$ | 16,544 | $ | 11,054 |
+50% |
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International |
12,755 | 11,369 |
+12% |
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| $ | 29,299 | $ | 22,423 |
+31% |
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International as a percentage of total revenue |
44% | 51% | ||||||||||
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Revenue By Product Category: |
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Products |
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-North America |
$ | 14,460 | $ | 9,024 |
+60% |
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-International |
8,532 | 7,489 |
+14% |
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Total Products |
22,992 | 16,513 |
+39% |
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Service |
4,824 | 4,467 |
+8% |
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Hand Piece Refills |
499 | 564 | -12% | |||||||||
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Skincare |
984 | 879 |
+12% |
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| $ | 29,299 | $ | 22,423 |
+31% |
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Three Months Ended |
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Q1 |
Q1 |
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| 2017 | 2016 | |||||||||||
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Pre-tax Stock-Based Compensation Expense: |
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Cost of revenue |
$ | 129 | $ | 141 | ||||||||
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Sales and marketing |
420 | 376 | ||||||||||
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Research and development |
237 | 180 | ||||||||||
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General and administrative |
609 | 635 | ||||||||||
| $ | 1,395 | $ | 1,332 | |||||||||