cutr20171107_8k.htm

 

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

 

November 7, 2017

Date of Report (date of earliest event reported)

 

 

 


Cutera, Inc.

(Exact name of Registrant as specified in its charter)

 

 


 

Delaware

000-50644

77-0492262

(State or other jurisdiction of

incorporation or organization)

(Commission File Number)

(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):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

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 November 7, 2017, we are issuing a press release and holding a conference call regarding our financial results for the third quarter ended September 30, 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.

 

 

Exhibit No.

  

Description

 

 

99.1

  

Press Release of Cutera, Inc. dated as of November 7, 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.

 

 

 

CUTERA, INC.

 

 

Date: November 7, 2017

 /s/ Darren Alch

 

Darren Alch

 

Vice President, General Counsel and Corporate Secretary

 

ex_99507.htm

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

CONTACTS:

 

Cutera, Inc.

Sandra Gardiner

Consultant Chief Financial Officer

415-657-5500

 

Investor Relations

John Mills

Partner, ICR, Inc.

646-277-1254

john.mills@icrinc.com

 

 

Cutera Reports Third Quarter 2017 Financial Results

 

Generates Record Quarterly Revenue of $38.2 Million; Increase of 26%

North America Product Revenue Grows by 57%  

 

truSculpt® Leads North American Product Platform Revenue; Initial International Introduction

in 3rd Quarter 2017 with Further Geographic Expansion Expected in 4th Quarter 2017

 

Achieves 13th Consecutive Quarter of Year-over-Year Double-Digit Revenue Growth

 

BRISBANE, California, November 7, 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 third quarter and nine months ended September 30, 2017.

 

James Reinstein, President and Chief Executive Officer stated, “We are pleased with our third quarter financial and operational performance and the continued progress of our commercial teams. Our 26% revenue growth in the third quarter was again driven primarily by North American product sales. In addition, our International team produced systems revenue of $10 million – a single quarter record for this team. Much of our growth was fueled by recent product launches, including enlighten III and truSculpt 3D, however we continue to see growth in some of our legacy platforms such as xeo. We expect this momentum to continue throughout the fourth quarter.”  

 

 

 

 

Key operating highlights for the third quarter of 2017, compared to the third quarter of 2016:

 

 

 

Revenue increased 26%, to a record $38.2 million, primarily due to 57% growth in North America systems revenue;

 

 

o

13th consecutive quarter of year-over-year double-digit revenue growth;

 

 

Gross margin of 58%, consistent with previous guidance;

 

 

Research and Development increased 19% as we continue to invest in our product portfolio;

 

 

Operating income was $6.2 million, including a one-time $4 million benefit from our facility lease cancellation;

 

 

o

Excluding the one-time $4 million benefit, operating income was $2.2 million, an increase of 44% over the third quarter 2016;

 

 

Cash generated by operations was $3.7 million, including the one-time $4 million benefit from our facility lease cancellation;

     
 

o

Excluding the one-time $4 million benefit, cash used by operations was $300,000 due primarily to increased working capital investment to support higher revenue levels;

 

 

Net income was $6.2 million, or $0.42 per fully diluted share (including the $4 million income benefit from our previously announced facility lease cancellation);

 

 

o

Adjusted net income (non-GAAP*) was $3.5 million, or $0.24 per fully diluted share excluding non-cash stock based compensation, depreciation and the facility lease cancellation benefit (refer to the GAAP to Non-GAAP reconciliation provided).

 

Product Updates

 

Market acceptance for the Company’s truSculpt 3D system continues to be robust in North America as many practitioners believe it is the best-in-class system for body sculpting. The Company introduced truSculpt 3D in select International markets in September 2017, and plans to continue to execute regional expansion of the launch throughout the fourth quarter. This latest version of the truSculpt family includes a consumable product enabling the Company to participate in the procedure income with its customers. Although only launched in mid-May of this year, truSculpt leads all platforms in revenue generation during the quarter and year-to-date periods ended September 30, 2017, highlighting the importance of new products and new markets.

 

 

 

 

Sandra Gardiner, Consultant Chief Financial Officer, commented, “Our continued quarterly success allows us to invest in new product platform opportunities, as reflected in our increased research and development investments. We also continue to purchase our stock in the open market and have now repurchased $13.8 million of stock through the nine months ended September 30, 2017. We ended the third quarter with over $50 million in cash, cash equivalents and investments. Based on our strong third quarter results, we are reiterating our guidance ranges for the full year.”

 

 

Full-Year 2017 Outlook

 

 

We expect to be at the upper end of our previously announced revenue guidance range of $144 - $147 million;

 

 

Gross margin is expected to be in the range of 58% - 59%;

 

 

GAAP Earnings per Share is expected to be in the range of $0.77 - $0.81. This includes the benefit from the $4 million facility cancellation income received.

 

 

Conference Call

 

The conference call to discuss these results is scheduled to begin today at 1:30 p.m. PST (4:30 p.m. EST). Participating in the call will be James Reinstein, President and Chief Executive Officer and Sandra Gardiner, Consultant 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.cutera.com/, and will be archived online within one hour of its completion through November 21, 2017. In addition, you may call 1-877-705-6003 to listen to the live broadcast.

 

 

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.

 

Use of Non-GAAP Financial Measures

 

* To supplement our 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 per diluted share, which exclude non-cash expenses for stock-based compensation, depreciation and a non-recurring lease termination income. Company management uses these measurements as aids in monitoring the Company’s ongoing financial performance from quarter to quarter, and year to year, on a regular basis and for benchmarking against other medical technology 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.

 

 

 

 

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, our 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 a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our 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.

 

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, 2017, as discussed in this release, is preliminary and unaudited, and subject to adjustment.

 

 

 

 

CUTERA, INC. 

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands) 

(unaudited)

 

   

September 30,

   

June 30,

   

September 30,

 
   

2017

   

2017

   

2016

 

Assets

                       

Current assets:

                       

Cash and cash equivalents

  $ 14,784     $ 18,679     $ 11,275  

Marketable investments

    35,692       32,270       35,108  

Restricted investments

          2,290        

Cash, cash equivalents and investments

    50,476       53,239       46,383  
                         

Accounts receivable, net

    19,604       18,191       11,680  

Inventories

    23,728       16,913       16,478  

Other current assets and prepaid expenses

    2,894       2,840       2,507  

Total current assets

    96,702       91,183       77,048  
                         

Property and equipment, net

    1,842       1,867       1,720  

Deferred tax asset

    384       381       410  

Intangibles, net

                16  

Goodwill

    1,339       1,339       1,339  

Other long-term assets

    381       381       444  

Total assets

  $ 100,648     $ 95,151     $ 80,977  
                         

Liabilities and Stockholders' Equity

                       

Current liabilities:

                       

Accounts payable

  $ 5,805     $ 4,293     $ 3,283  

Accrued liabilities

    22,203       18,973       14,786  

Deferred revenue

    8,801       8,901       8,312  

Total current liabilities

    36,809       32,167       26,381  
                         

Deferred revenue, net of current portion

    1,950       1,982       1,426  

Income tax liability

    171       170       164  

Other long-term liabilities

    505       604       597  

Total liabilities

    39,435       34,923       28,568  
                         

Stockholders' equity

    61,213       60,228       52,409  

Total liabilities and stockholders' equity

  $ 100,648     $ 95,151     $ 80,977  

 

 

 

 

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

   

September 30,

   

September 30,

 
   

2017

   

2016

   

2017

   

2016

 

Net revenue

  $ 38,173     $ 30,281     $ 103,861     $ 80,181  

Cost of revenue

    15,963       12,538       45,084       33,959  

Gross profit

    22,210       17,743       58,777       46,222  

Gross margin %

    58 %     59 %     57 %     58 %
                                 

Operating expenses:

                               

Sales and marketing

    13,148       10,574       36,708       30,002  

Research and development

    3,467       2,914       9,393       8,335  

General and administrative

    3,379       2,716       10,143       9,933  

Lease termination

    (4,000 )           (4,000 )      

Total operating expenses

    15,994       16,204       52,244       48,270  

Income (loss) from operations

    6,216       1,539       6,533       (2,048 )

Interest and other income, net

    197       166       746       527  

Income (loss) before income taxes

    6,413       1,705       7,279       (1,521 )

Provision for income taxes

    225       61       166       115  

Net income (loss)

  $ 6,188     $ 1,644     $ 7,113     $ (1,636 )
                                 

Net income (loss) per share:

                               

Basic

  $ 0.44     $ 0.12     $ 0.51     $ (0.12 )

Diluted

  $ 0.42     $ 0.12     $ 0.48     $ (0.12 )
                                 

Weighted-average number of shares used in per share calculations:

                               

Basic and diluted

    13,973       13,163       13,917       13,102  

Diluted

    14,767       13,544       14,733       13,102  

 

 

 

 

CUTERA, INC.

RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

TO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

   

Three Months Ended September 30, 2017

 
   

GAAP

   

Adjustments*

   

Non-GAAP*

 

Net revenue

  $ 38,173     $     $ 38,173  

Cost of revenue

    15,963       (188 )(a)     15,775  

Gross profit

    22,210       188       22,398  

Gross margin %

    58 %             59 %
                         

Operating expenses:

                       

Sales and marketing

    13,148       (560 )(b)     12,588  

Research and development

    3,467       (162 )(c)     3,305  

General and administrative

    3,379       (345 )(d)     3,034  

Lease termination

    (4,000 )     4,000 (e)      

Total operating expenses

    15,994       2,933       18,927  

Income from operations

    6,216       (2,745 )     3,471  

Interest and other income, net

    197             197  

Income before income taxes

    6,413       (2,745 )     3,668  

Provision for income taxes

    225       (92 )(f)     133  

Net income

  $ 6,188     $ (2,653 )   $ 3,535  

Net income per share:

                       

Basic

  $ 0.44     $ (0.19 )   $ 0.25  

Diluted

  $ 0.42     $ (0.18 )   $ 0.24  
                         

Weighted-average number of shares used in per share calculations:

                       

Basic:

    13,973       13,973       13,973  

Diluted

    14,767       14,767       14,767  

 

* Fiscal third quarter 2017 Non-GAAP results exclude the effect of the below mentioned adjustments ($000s):

(a) Adjustment of $188 included non-cash expenses of $87 related to depreciation and $101 of stock based compensation.

(b) Adjustment of $560 included a non-cash expenses of $166 related to depreciation and $394 of stock based compensation.

(c) Adjustment of $162 included a non-cash expenses of $5 related to depreciation and $157 of stock based compensation.

(d) Adjustment of $345 related to stock based compensation.

(e) Adjustment of $4,000 represents non-recurring lease termination income

(f) Adjustment of $92 for income tax benefit relates to the net impact of excluding the Non-GAAP adjustments from our year-to-date tax provision.

 

 

 

 

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

   

September 30,

   

September 30,

 
   

2017

   

2016

   

2017

   

2016

 

Cash flows from operating activities:

                               

Net income (loss)

  $ 6,188     $ 1,644     $ 7,113     $ (1,636 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

                               

Stock-based compensation

    997       570       3,623       2,652  

Depreciation and amortization

    258       249       750       733  

Other

    (22 )     18       (67 )     (45 )

Changes in assets and liabilities:

                               

Accounts receivable

    (1,407 )     (525 )     (3,048 )     (61 )

Inventories

    (6,815 )     (1,776 )     (8,751 )     (4,400 )

Accounts payable

    1,512       531       3,207       1,324  

Accrued liabilities

    3,223       1,659       4,757       886  

Deferred revenue

    (132 )     (866 )     652       (1,187 )

Other

    (87 )     99       (631 )     (1,015 )

Net cash provided by (used in) operating activities

    3,715       1,603       7,605       (2,749 )
                                 

Cash flows from investing activities:

                               

Acquisition of property, equipment and software

    (233 )     (174 )     (443 )     (311 )

Disposal of property and equipment

    13       11       53       17  

Net change in marketable investments

    (1,093 )     711       4,610       2,344  

Net cash provided by (used in) investing activities

    (1,313 )     548       4,220       2,050  
                                 

Cash flows from financing activities:

                               

Repurchases of common stock

    (6,735 )     (2,008 )     (13,776 )     (4,873 )

Proceeds from exercise of stock options and employee stock purchase plan

    695       3,848       4,566       6,798  

Taxes paid related to net share settlement of equity awards

    (165 )     (45 )     (1,332 )     (601 )

Payments on capital lease obligations

    (92 )     (91 )     (274 )     (218 )

Net cash provided by (used in) financing activities

    (6,297 )     1,704       (10,816 )     1,106  
                                 

Net increase (decrease) in cash and cash equivalents

    (3,895 )     3,855       1,009       407  

Cash and cash equivalents at beginning of period

    18,679       7,420       13,775       10,868  

Cash and cash equivalents at end of period

  $ 14,784     $ 11,275     $ 14,784     $ 11,275  

 

 

 

 

CUTERA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in thousands, except percentage data)

(unaudited)

 

   

Three Months Ended

   

% Change

   

Nine Months Ended

   

% Change

 
   

Q3

   

Q3

   

Q3 '17 Vs

   

Q3

   

Q3

   

YTD Q3 '17 Vs

 
   

2017

   

2016

   

Q3 '16

   

2017

   

2016

   

YTD Q3 '16

 

Revenue By Geography:

                                               

United States

  $ 23,275     $ 15,356       +52 %   $ 64,058     $ 42,216       +52 %

Rest of World

    14,898       14,925       -0 %     39,803       37,965       +5 %
    $ 38,173     $ 30,281       +26 %   $ 103,861     $ 80,181       +30 %

Rest of World as a percentage of total revenue

    39 %     49 %             38 %     47 %        
                                                 

Revenue By Product Category:

                                               

Systems

                                               

- North America

  $ 21,869     $ 13,896       +57 %   $ 58,955     $ 36,808       +60 %

- International

    9,993       9,983       +0 %     26,014       24,448       +6 %

Total Systems

    31,862       23,879       +33 %     84,969       61,256       +39 %

Service

    4,687       4,788       -2 %     14,173       14,278       -1 %

Hand Piece Refills

    595       602       -1 %     1,743       1,886       -8 %

Skincare

    1,029       1,012       +2 %     2,976       2,761       8 %
    $ 38,173     $ 30,281       +26 %   $ 103,861     $ 80,181       +30 %

 

 

   

Three Months Ended

   

Nine Months Ended

 
   

Q3

   

Q3

   

Q3

   

Q3

 
   

2017

   

2016

   

2017

   

2016

 

Pre-tax Stock-Based Compensation Expense:

                               

Cost of revenue

  $ 101     $ 73     $ 377     $ 254  

Sales and marketing

    394       239       1,215       844  

Research and development

    157       131       633       416  

General and administrative

    345       127       1,398       1,138  
    $ 997     $ 570     $ 3,623     $ 2,652