cutr20200820_8ka.htm
Form 8-K/A date of report 08-06-20 true 0001162461 0001162461 2020-08-06 2020-08-06
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 

FORM 8-K/A
 

 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
August 6, 2020
 
 
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)
 
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock ($0.001 par value)
CUTR
The NASDAQ Stock Market, LLC
 
 
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))
 
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.  ☐
 
 

 
Explanatory Note
 
This Current Report on Form 8-K/A amends the Current Report on Form 8-K filed by Cutera, Inc. with the Securities and Exchange Commission on August 6, 2020 (the “Original Report”) and is being filed in order to provide a revised version of Exhibit 99.1 to correct the GAAP reconciliation tables. The Original Report otherwise remains unchanged.
 
Item 2.02. Results of Operations and Financial Condition.
 
On August 6, 2020, Cutera, Inc. issued a press release regarding its financial results for the second quarter ended June 30, 2020. A copy of the revised press release with the corrected tables is attached as Exhibit 99.1 to this Form 8-K.
 
This information is intended to be furnished under Item 2.02 of Form 8-K and 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
  
 
 

 
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: August 21, 2020
 
 
 
/s/ ROHAN SETH
 
 
 
 
Rohan Seth
 
 
 
 
Chief Financial Officer
 
 
ex_200846.htm

Exhibit 99.1

 

 

Cutera, Inc. Announces Second Quarter 2020 Financial Results

 

BRISBANE, California, August 6, 2020 ─ 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 second quarter ended June 30, 2020.

 

Second Quarter 2020 Financial and Operational Highlights

Revenue was $26.4 million, a 45% decrease from the prior-year period, as COVID-19 disruptions led to a year-over-year decline in procedures during the quarter

 

o

Capital Equipment revenue of $15.5 million, a decline of 59% over prior-year period

 

o

Recurring revenue grew 6% over prior-year period driven primarily by Skin Care revenue growth of 169% year-over-year offsetting declines in Service and Consumables revenue

 

Gross Margin was 44%, compared to 54% in the prior-year period, driven by lower production levels and substantially lower overhead absorption during the quarter, partially offset by strong pricing discipline and a reduction in manufacturing headcount

Net loss was $11.4 million, or $0.67 per fully diluted share, as compared to a net income of $0.6 million, or $0.04 per fully diluted share, in the prior-year period

Closed a public stock offering on April 21, 2020, resulting in approximately $26.5 million in net proceeds

Subsequent to the quarter, the Company secured a $30 million credit facility with Silicon Valley Bank, replacing the Company’s existing $25 million facility with Wells Fargo

 

“While our second quarter results were impacted by a decline in patient volumes associated with COVID-related shutdowns; I am encouraged by the recovery trends as patient volumes continue to rebound toward pre-COVID levels,” commented Dave Mowry, Chief Executive Officer of Cutera, Inc. “I am pleased with our increased customer outreach efforts which we implemented during the quarter, leading to improved customer engagement and enabled us to be highly responsive, helping accounts increase their patient traffic. I am amazed by the resilience and adaptability of our customers, and proud of the Cutera team’s work to steer the company and our clients through unprecedented adversity. We are continuing to manage the impacts of the pandemic effectively, and, with a recently strengthened balance sheet, we are well-positioned to drive a continued recovery in our business through the second half of the year despite the uncertain environment.”

 

 

 

2020 Financial Outlook

As previously announced on April 3, 2020, Cutera has withdrawn its previously announced full-year 2020 guidance due to uncertainty over the magnitude and duration of the impacts from the COVID-19 pandemic on its financial results. The Company will not be providing updated guidance at this time.

 

Conference Call

The Company’s management will host a conference call to the discuss these results and related matters today at 1:30 p.m. PT (4:30 p.m. ET) that same day. Participating on the call will be Dave Mowry, Chief Executive Officer, Jason Richey, President, and Fuad Ahmad, Interim Chief Financial Officer.

 

To participate in the conference call, dial 1-877-705-6003 (domestic) or + 1-201-493-6725 (international) and refer to the Conference Code: 13706585.

 

The call will also be 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 laser and other energy-based aesthetic systems for practitioners worldwide. Since 1998, Cutera has developed 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

 

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 separation costs, customer relationship management (“CRM”) and enterprise resource planning (“ERP”) system costs, non-recurring legal and litigation 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 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 (“CRM”) and enterprise resource planning (“ERP”) system costs, and non-recurring legal and litigation 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. 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 its employees, the Company continues to evaluate its business performance excluding stock-based compensation expenses. The Company records stock-based compensation expense related to grants of options, employee stock purchase plan, and 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. 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 separation 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; 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.

 

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

 

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, CFO and other senior leadership searches, 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 a number of 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, 2020, as discussed in this release, is preliminary and unaudited, and subject to adjustment.

 

 

 

Cutera, Inc.

Anne Werdan

Director, Investor Relations

415-657-5500

awerdan@cutera.com 

 

 

 

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 June 30, 2020

   

Three Months Ended June 30, 2019

 
   

GAAP

   

Depreciation
and
Amortization

   

Stock-Based
Compensation

   

CRM and ERP
Implementation/

write-off

   

Severance

(RIF)

   

Legal -

Former CFO

Settlement/

Lutronic

   

Taxes and
Other

Adjustments

   

Non-GAAP

   

GAAP

   

Depreciation
and
Amortization

   

Stock-Based
Compensation

   

CRM and ERP
Implementation

   

Taxes and
Other

Adjustments

   

Non-GAAP

 
                                                                                                                 

Net revenue

  $ 26,369       -       -       -                       -     $ 26,369     $ 47,774       -       -               -     $ 47,774  

Cost of revenue

    14,745       (136 )     (743 )     -       (132 )             -       13,734       21,943       (123 )     (404 )             -       21,416  

Gross profit

    11,624       136       743       -       132               -       12,635       25,831       123       404               -       26,358  

Gross margin %

    44 %                                                     47.9 %     54 %                                     55 %
                                                                                                                 

Operating expenses:

                                                                                                               

Sales and marketing

    11,035       (827 )     (1,251 )     -       (249 )             -       8,708       16,992       (912 )     (997 )     (27 )     -       15,056  

Research and development

    2,991       (38 )     (769 )     -       (63 )             -       2,121       3,273       (26 )     (370 )     -       -       2,877  

General and administrative

    8,529       (29 )     (1,332 )     (729 )     (74 )     (1,018 )     -       5,347       5,267       (65 )     (748 )     (460 )     -       3,994  

Total operating expenses

    22,555       (894 )     (3,352 )     (729 )     (386 )     (1,018 )     -       16,176       25,532       (1,003 )     (2,115 )     (487 )     -       21,927  

Income (loss) from operations

    (10,931 )     1,030       4,095       729       518       1,018       -       (3,541 )     299       1,126       2,519       487       -       4,431  

Interest and other income (expense), net

    3       -       -       -       -       -       -       3       46       -       -       -       -       46  

Loss before income taxes

    (10,928 )     1,030       4,095       729       518       1,018       -       (3,538 )     345       1,126       2,519       487       -       4,477  

Provision (benefit) for income taxes

    466       -       -       -       -       -       2       468       (243 )     -       -       -       (397 )     (640 )

Net income (loss)

  $ (11,394 )     1,030       4,095       729       518       1,018       (2 )   $ (4,006 )   $ 588       1,126       2,519       487       397     $ 5,117  
                                                                                                                 

Net income (loss) per share:

                                                                                                               

Basic

  $ (0.67 )                                                   $ (0.23 )   $ 0.04                                     $ 0.36  

Diluted

  $ (0.67 )                                                   $ (0.23 )   $ 0.04                                     $ 0.36  
                                                                                                                 

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

                                                                                                               

Basic

    17,055                                                       17,055       14,086                                       14,086  

Diluted

    17,055                                                       17,055       14,356                                       14,311  
                                                                                                                 
                                                                                                                 
                                                                                                                 
                                                                                                                 
Operating expenses as a % of net revenue  

GAAP

                                                   

Non-GAAP

   

GAAP

                                   

Non-GAAP

 

Sales and marketing

    41.8 %                                                     33.0 %     35.6 %                                     31.5 %

Research and development

    11.3 %                                                     8.0 %     6.9 %                                     6.0 %

General and administrative

    32.3 %                                                     20.3 %     11.0 %                                     8.4 %
      85.5 %                                                     61.3 %     53.4 %                                     45.9 %

 

 

 

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)

 

   

Six Months Ended June 30, 2020

           

Six Months Ended June 30, 2019

 
   

GAAP

   

Depreciation
and
Amortization

   

Stock-Based
Compensation

   

CRM and ERP
Implementation/

write-off

   

Severance

(RIF)

   

Legal -

Former CFO Settlement/

Lutronic

   

Taxes and
Other

Adjustments

   

Non-GAAP

   

GAAP

   

Depreciation
and
Amortization

   

Stock-Based
Compensation

   

CRM and ERP
Implementation

   

Taxes and
Othe
r

Adjustments

     

Non-GAAP

 
                                                                                                                   

Net revenue

  $ 58,608       -       -       -               -       -     $ 58,608     $ 83,800       -       -               -       $ 83,800  

Cost of revenue

    32,648       (277 )     (1,033 )     -       (132 )     -       -       31,206       40,660       (251 )     (673 )             -         39,736  
Gross profit     25,960       277       1,033       -       132       -       -       27,402       43,140       251       673               -         44,064  
Gross margin %     44 %                                                     46.8 %     51 %                                       53 %
                                                                                                                   

Operating expenses:

                                                                                                                 

Sales and marketing

    25,823       (1,698 )     (1,969 )     -       (249 )     -       -       21,907       33,096       (1,783 )     (1,715 )     (112 )     -         29,486  

Research and development

    6,862       (76 )     (1,090 )     -       (63 )     -       -       5,633       6,979       (46 )     (633 )     -       -         6,300  

General and administrative

    16,336       (56 )     (1,982 )     (1,139 )     (74 )     (1,018 )     (324 )     11,743       10,792       (147 )     (805 )     (699 )     (614 )

(a) 

    8,526  
Total operating expenses     49,021       (1,830 )     (5,042 )     (1,139 )     (386 )     (1,018 )     (324 )     39,282       50,867       (1,976 )     (3,153 )     (811 )     (614 )       44,313  

Loss from operations

    (23,061 )     2,107       6,075       1,139       518       1,018       324       (11,880 )     (7,727 )     2,227       3,826       811       614         (249 )

Interest and other income (expense), net

    (204 )     -       -       -       -       -       -       (204 )     (33 )     -       -       -       -         (33 )

Loss before income taxes

    (23,265 )     2,107       6,075       1,139       518       1,018       324       (12,084 )     (7,760 )     2,227       3,826       811       614         (282 )

Provision (benefit) for income taxes

    543       -       -       -       -       -       7       550       (128 )     -       -       -       282         154  

Net income (loss)

  $ (23,808 )     2,107       6,075       1,139       518       1,018       317     $ (12,634 )   $ (7,632 )     2,227       3,826       811       332       $ (436 )
                                                                                                                   

Net income (loss) per share:

                                                                                                                 

Basic

  $ (1.51 )                                                   $ (0.80 )   $ (0.54 )                                     $ (0.03 )

Diluted

  $ (1.51 )                                                   $ (0.80 )   $ (0.54 )                                     $ (0.03 )
                                                                                                                   

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

                                                                                                                 

Basic

    15,744                                                       15,744       14,051                                         14,051  

Diluted

    15,744                                                       15,744       14,051                                         14,298  
                                                                                                                   

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

    44.1 %                                                     37.4 %     39.5 %                                       35.2 %

Research and development

    11.7 %                                                     9.6 %     8.3 %                                       7.5 %

General and administrative

    27.9 %                                                     20.0 %     12.9 %                                       10.2 %
      83.6 %                                                     67.0 %     60.7 %                                       52.9 %