Cutera Reports First Quarter 2019 Financial Results
Total truSculpt® Body Sculpting Revenue Grows 29%; Surpasses 1,000 Systems Sold-To-Date
Total International Sales Grows 20%
Key financial and operational highlights for the first quarter include:
- Revenue for the first quarter increased 6% over the prior year
first quarter, to
$36.0 million .- First quarter continues to reflect strong demand for our body sculpting platform, as total revenue for the truSculpt portfolio grew 29% over the prior year period.
-
Total recurring revenue, which includes service, skincare and
consumable revenue, was
$8.8 million , representing 28% growth over the first quarter 2018. Consumable revenues more than doubled year-on-year. -
International revenue grew 20% year-over-year in the first
quarter, reflecting strong growth in
Japan andAustralia . - US revenue declined by 3% in the first quarter over the prior year period, as continued strong demand for truSculpt iD and Secret RF systems were offset by challenging year-over-year comparisons for the Juliet women’s health system and the overall pricing environment.
- Successful launch of excel V+, the Company’s latest generation laser technology for vascular and pigmentation treatments.
- Gross Margin for the first quarter was48%, compared to 51% in the prior year period. The decrease in first quarter gross margin reflects a combination of geographic mix and pricing. Non-GAAP gross margin* was 49% for the first quarter compared to 51% for the prior year period.
- Operating expenses for the first quarter were 70% of revenue. This compares to 65% for the prior year period. Non-GAAP* operating expenses for the first quarter were 62% of revenue, compared to 59% for the same period in the prior year. The year-over-year increase in operating expenses was primarily due to select promotional activities, and the increase in commercial leadership from a year ago, including the North American regional sales leadership team and the expansion of our Practice Development Management team.
- GAAP Net Loss for the first quarter was
$8.2 million , or$0.59 per fully-diluted share. This compares to a loss of$2.0 million , or$0.15 per fully-diluted share in the prior year period. Non-GAAP* net loss was$4.9 million , or$0.35 per fully-diluted share as compared to a loss of$0.3 million or$0.02 per fully-diluted share in the first quarter 2018.
“Overall, I am pleased with many aspects of our first quarter
performance,” stated Chief Operating Officer and Interim CEO,
2019 Financial Outlook
-
We reiterate full year revenue to be in the range of
$165 to $175 million , a 2% - 8% increase over 2018; - Full year 2019 gross margin is expected to improve as compared to full year 2018 gross margin; and
-
Adjusted EBITDA* is expected to be in the range of
$2 million to $4 million .
Conference Call
The Company will host a live audio webcast for interested parties
commencing today at
About
*Use of Non-GAAP Financial Measures
In this press release, in order 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 (loss) per diluted share. Non-GAAP adjustments include stock-based compensation, depreciation, amortization, executive separation costs, customer relationship management (“CRM”) and enterprise resource planning (“ERP”) system implementation costs, as well as the net tax impact of excluding these items. From time to time in the future, there may be other items that we may exclude if we believe that doing so is consistent with the goal of providing useful information to investors and management. We have provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. We have 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. We define adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, stock-based compensation, executive separation costs, and charges related to CRM and ERP software implementation costs.
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 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. We have excluded the effect of stock-based compensation expenses in calculating our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. We record stock-based compensation expense related to grants of options, performance and restricted stock. Depending upon the size, timing and the terms of the grants, this expense may vary significantly but will recur in future periods. We believe that excluding stock-based compensation better allows for comparisons to our peer companies;
Depreciation and amortization. We have excluded depreciation and amortization expense in calculating our non-GAAP operating expenses and net income measures. Depreciation and amortization are non-cash charges to current operations;
Executive separation. We have excluded costs associated with the resignation of our former Chief Executive Officer in calculating our non-GAAP operating expenses and net income measures. We exclude these non-recurring 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; and
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.
We believe that excluding all of the items above allows users of our 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, 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
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, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
March 31, | December 31, | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 19,158 | $ | 26,052 | ||||
Marketable investments | 7,939 | 9,523 | ||||||
Accounts receivable, net | 19,136 | 19,637 | ||||||
Inventories | 26,659 | 28,014 | ||||||
Other current assets and prepaid expenses | 4,864 | 3,972 | ||||||
Total current assets | 77,756 | 87,198 | ||||||
Property and equipment, net | 2,407 | 2,672 | ||||||
Deferred tax asset | 451 | 457 | ||||||
Goodwill | 1,339 | 1,339 | ||||||
Operating lease right-of-use assets | 9,442 | - | ||||||
Other long-term assets | 5,960 | 5,971 | ||||||
Total assets | $ | 97,355 | $ | 97,637 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 10,337 | $ | 11,279 | ||||
Accrued liabilities | 21,788 | 23,300 | ||||||
Operating leases liabilities | 1,840 | - | ||||||
Extended warranty liabilities | 2,667 | 3,159 | ||||||
Deferred revenue | 10,263 | 9,882 | ||||||
Total current liabilities | 46,895 | 47,620 | ||||||
Deferred revenue, net of current portion | 2,828 | 2,684 | ||||||
Income tax liability | 399 | 394 | ||||||
Operating lease liabilities, net of current portion | 7,759 | - | ||||||
Other long-term liabilities | 354 | 553 | ||||||
Total liabilities | 58,235 | 51,251 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 14 | 14 | ||||||
Additional paid-in capital | 71,399 | 70,451 | ||||||
Accumulated deficit | (32,230 | ) | (24,010 | ) | ||||
Accumulated other comprehensive loss | (63 | ) | (69 | ) | ||||
Total stockholders' equity | 39,120 | 46,386 | ||||||
Total liabilities and stockholders' equity | $ | 97,355 | $ | 97,637 | ||||
CUTERA, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(in thousands, except per share data) | ||||||||
(unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2019 | 2018 | |||||||
Products | $ | 30,762 | $ | 29,264 | ||||
Service | 5,264 | 4,861 | ||||||
Total net revenue | 36,026 | 34,125 | ||||||
Products | 15,541 | 13,922 | ||||||
Service | 3,176 | 2,869 | ||||||
Total cost of revenue | 18,717 | 16,791 | ||||||
Gross profit | 17,309 | 17,334 | ||||||
Gross margin % | 48 | % | 51 | % | ||||
Operating expenses: | ||||||||
Sales and marketing | 16,104 | 13,088 | ||||||
Research and development | 3,706 | 3,556 | ||||||
General and administrative | 5,525 | 5,439 | ||||||
Total operating expenses | 25,335 | 22,083 | ||||||
Loss from operations | (8,026 | ) | (4,749 | ) | ||||
Interest and other income (expense), net | (79 | ) | 98 | |||||
Loss before income taxes | (8,105 | ) | (4,651 | ) | ||||
Income tax expense (benefit) | 115 | (2,619 | ) | |||||
Net loss | $ | (8,220 | ) | $ | (2,032 | ) | ||
Net loss per share: | ||||||||
Basic and Diluted | $ | (0.59 | ) | $ | (0.15 | ) | ||
Weighted-average number of shares used in per share calculations: | ||||||||
Basic and Diluted | 14,017 | 13,587 | ||||||
CUTERA, INC. |
|||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | |||||||||||
(in thousands, except percentage data) | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | % Change | ||||||||||
March 31, | March 31, | 2019 Vs | |||||||||
2019 | 2018 | 2018 | |||||||||
Revenue By Geography: | |||||||||||
United States | $ | 20,400 | $ | 21,136 | -3 | % | |||||
International | 15,626 | 12,989 | +20 | % | |||||||
Total Net Revenue | $ | 36,026 | $ | 34,125 | +6 | % | |||||
International as a percentage of total revenue | 43% | 38% | |||||||||
Revenue By Product Category: | |||||||||||
Systems | |||||||||||
- North America | $ | 17,580 | $ | 18,944 | -7 | % | |||||
- Rest of World | 9,629 | 8,295 | +16 | % | |||||||
Total Systems |
27,209 |
27,239 | 0 | % | |||||||
Consumables | 1,945 | 769 | +153 | % | |||||||
Skincare | 1,608 | 1,256 | +28 | % | |||||||
Total Products | 30,762 | 29,264 | +5 | % | |||||||
Service | 5,264 | 4,861 | +8 | % | |||||||
Total Net Revenue | $ | 36,026 | $ | 34,125 | +6 | % | |||||
Three Months Ended | |||||||||||
March 31, | March 31, | ||||||||||
2019 | 2018 | ||||||||||
Pre-tax Stock-Based Compensation Expense: | |||||||||||
Cost of revenue | $ | 269 | $ | 154 | |||||||
Sales and marketing | 718 | 489 | |||||||||
Research and development | 263 | 191 | |||||||||
General and administrative | 57 | 854 | |||||||||
$ | 1,307 | $ | 1,688 | ||||||||
CUTERA, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (8,220 | ) | $ | (2,032 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Stock-based compensation | 1,307 | 1,688 | ||||||
Depreciation of tangible assets | 411 | 254 | ||||||
Amortization of contract acquisition costs | 690 | 373 | ||||||
Change in deferred tax asset | 6 | (2,737 | ) | |||||
Provision for doubtful accounts receivable | 98 | 187 | ||||||
Other | 103 | (162 | ) | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 403 | 915 | ||||||
Inventories | 1,355 | (2,197 | ) | |||||
Other current assets and prepaid expenses | (916 | ) | 1,753 | |||||
Other long-term assets | (679 | ) | (2,150 | ) | ||||
Accounts payable | (942 | ) | 1,204 | |||||
Accrued liabilities | (1,467 | ) | (6,727 | ) | ||||
Extended warranty liabilities | (492 | ) | - | |||||
Other long-term liabilities | (140 | ) | 35 | |||||
Deferred revenue | 525 | (456 | ) | |||||
Income tax liability | 5 | 5 | ||||||
Net cash used in operating activities | (7,953 | ) | (10,047 | ) | ||||
Cash flows from investing activities: | ||||||||
Acquisition of property, equipment and software | (65 | ) | (104 | ) | ||||
Proceeds from sales of marketable investments | - | 13,044 | ||||||
Proceeds from maturities of marketable investments | 3,200 | - | ||||||
Purchase of marketable investments | (1,586 | ) | (4,390 | ) | ||||
Net cash provided by investing activities | 1,549 | 8,550 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options and employee stock purchase plan | 131 | 633 | ||||||
Taxes paid related to net share settlement of equity awards | (490 | ) | (2,288 | ) | ||||
Payments on finance lease obligations | (131 | ) | (122 | ) | ||||
Net cash used in financing activities | (490 | ) | (1,777 | ) | ||||
Net decrease in cash and cash equivalents | (6,894 | ) | (3,274 | ) | ||||
Cash and cash equivalents at beginning of period | 26,052 | 14,184 | ||||||
Cash and cash equivalents at end of period | $ | 19,158 | $ | 10,910 | ||||
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 March 31, 2019 | Three Months Ended March 31, 2018 | ||||||||||||||||||||||||||||||||||||||||
GAAP | Depreciation and Amortization |
Stock-Based Compensation |
CRM and ERP Implementation Costs |
Taxes and Other |
Non-GAAP | GAAP | Depreciation and Amortization |
Stock-Based Compensation |
Taxes and Other |
Non-GAAP | |||||||||||||||||||||||||||||||
Net revenue | $ | 36,026 | - | - | - | - | $ | 36,026 | $ | 34,125 | - | - | - | $ | 34,125 | ||||||||||||||||||||||||||
Cost of revenue | 18,717 | (129 | ) | (269 | ) | - | - | 18,319 | 16,791 | (85 | ) | (154 | ) | - | 16,552 | ||||||||||||||||||||||||||
Gross profit | 17,309 | 129 | 269 | - | - | 17,707 | 17,334 | 85 | 154 | - | 17,573 | ||||||||||||||||||||||||||||||
Gross margin % | 48 | % | 49 | % | 51 | % | 51 | % | |||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||
Sales and marketing | 16,104 | (868 | ) | (718 | ) | (85 | ) | - | 14,433 | 13,088 | (523 | ) | (489 | ) | - | 12,076 | |||||||||||||||||||||||||
Research and development | 3,706 | (21 | ) | (263 | ) | - | - | 3,422 | 3,556 | (15 | ) | (191 | ) | - | 3,350 | ||||||||||||||||||||||||||
General and administrative | 5,525 | (83 | ) | (57 | ) | (239 | ) | (614 | ) | (a) | 4,531 | 5,439 | (4 | ) | (854 | ) | - | 4,581 | |||||||||||||||||||||||
Total operating expenses | 25,335 | (972 | ) | (1,038 | ) | (324 | ) | (614 | ) | 22,387 | 22,083 | (542 | ) | (1,534 | ) | - | 20,007 | ||||||||||||||||||||||||
Income (loss) from operations | (8,026 | ) | 1,101 | 1,307 | 324 | 614 | (4,680 | ) | (4,749 | ) | 627 | 1,688 | - | (2,434 | ) | ||||||||||||||||||||||||||
Interest and other income (expense), net | (79 | ) | - | - | - | - | (79 | ) | 98 | - | - | - | 98 | ||||||||||||||||||||||||||||
Loss before income taxes | (8,105 | ) | 1,101 | 1,307 | 324 | 614 | (4,759 | ) | (4,651 | ) | 627 | 1,688 | - | (2,336 | ) | ||||||||||||||||||||||||||
Provision (benefit) for income taxes | 115 | - | - | - | 3 | 118 | (2,619 | ) | - | - | 566 | (2,053 | ) | ||||||||||||||||||||||||||||
Net loss | $ | (8,220 | ) | 1,101 | 1,307 | 324 | 611 | $ | (4,877 | ) | $ | (2,032 | ) | 627 | 1,688 | (566 | ) | $ | (283 | ) | |||||||||||||||||||||
Net loss per share: | |||||||||||||||||||||||||||||||||||||||||
Basic and diluted | $ | (0.59 | ) | $ | (0.35 | ) | $ | (0.15 | ) | $ | (0.02 | ) | |||||||||||||||||||||||||||||
Weighted-average number of shares used in per share calculations: | |||||||||||||||||||||||||||||||||||||||||
Basic and diluted | 14,017 | 14,017 | 13,587 | 13,587 | |||||||||||||||||||||||||||||||||||||
a)Other adjustment of $614 related to Executive separation costs. | |||||||||||||||||||||||||||||||||||||||||
Operating expenses as a % of net revenue | GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||||||||||||||||||||
Sales and marketing | 44.7 | % | 40.1 | % | 38.4 | % | 35.4 | % | |||||||||||||||||||||||||||||||||
Research and development | 10.3 | % | 9.5 | % | 10.4 | % | 9.8 | % | |||||||||||||||||||||||||||||||||
General and administrative | 15.3 | % | 12.6 | % | 15.9 | % | 13.4 | % | |||||||||||||||||||||||||||||||||
70.3 | % | 62.1 | % | 64.7 | % | 58.6 | % | ||||||||||||||||||||||||||||||||||
CUTERA, INC. | ||||||
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA | ||||||
(in thousands, except per share data) | ||||||
(unaudited) | ||||||
Three Months |
||||||
March 31, 2019 | ||||||
Net loss | $ | (8,220 | ) | |||
Adjustments: | ||||||
Stock-based compensation | 1,307 | |||||
Depreciation and amortization | 1,101 | |||||
CRM and ERP implementation costs | 324 | |||||
Other adjustments | 614 |
(a) |
||||
Interest and other (income) expense, net | 79 | |||||
Provision (benefit) for income taxes | 115 | |||||
Total adjustments | $ | 3,540 | ||||
Adjusted EBITDA | $ | (4,680 | ) | |||
a)Other adjustment of $614 related to Executive separation costs. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190509005865/en/
Source:
Cutera, Inc.
Matthew Scalo
Vice
President, Investor Relations & Corporate Development
415-657-5500
mscalo@cutera.com