UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

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FORM 8-K

 

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 CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

February 8, 2016

Date of Report (date of earliest event reported)

 

 

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 Cutera, Inc.

(Exact name of Registrant as specified in its charter)

 

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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)

 

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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))

 

 

Item 2.02.

Results of Operations and Financial Condition.

 

On February 8, 2016, we are issuing a press release and holding a conference call regarding our financial results for the fourth quarter ended December 31, 2015. 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 February 8, 2016.

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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: February 8, 2016	/s/ KEVIN P. CONNORS
	Kevin P. Connors
	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 Fourth Quarter 2015 Results

●

Sixth Consecutive Quarter of Double-Digit Revenue Growth

●

Revenue Increased 18% to $30.0 million

●

EPS: $0.15 and Non-GAAP EPS: $0.25

●

Generated $3.9 Million of Cash from Operations

●

Board Approved $10 million of Stock Repurchase Program

 

BRISBANE, California, February 8, 2016 ─ Cutera, Inc. (NASDAQ: CUTR) (“Cutera” or the “Company”), a leading provider of laser and energy-based aesthetic systems for practitioners worldwide, today reported financial results for the fourth quarter ended December 31, 2015.

 

Key highlights for the fourth quarter of 2015 were as follows:

 

●

Revenue increased 18% to $30.0 million and was driven by both product portfolio strength as well as global sales productivity improvements;

-

Product revenue grew 24%, led by a 30% increase in North America and 14% in Rest of World (“ROW”);

-

For 2015, Product revenue grew by 49% in North America, compared to 2014;

●

Gross margin improved to 60% —the highest quarterly gross margin since 2009;

●

GAAP Net income was $2.1 million, or $0.15 per diluted share;

●

Non-GAAP* Net income was $3.4 million, or $0.25 per diluted share, after adjusting for $1.4 million of non-cash expenses related to stock-based compensation, depreciation and amortization of intangibles;

 

 

●

Cash and investments: generated $3.9 million of cash from operations during the quarter and used $3.5 million in the stock repurchase program bringing the balance as of December 31, 2015 to $48.4 million, or $3.73 per outstanding share;

●

Stock repurchase program: Board approved an incremental $10 million. In 2015, the Company repurchased $40 million of stock.

 

Kevin Connors, President and Chief Executive Officer of Cutera, stated, “We are pleased to conclude 2015 with our sixth consecutive quarter of double-digit revenue growth, and essentially on par with our highest revenue quarter in our history. Our return to profitability demonstrated our ability to expand revenue, while controlling operating expense levels, enabling us to realize operating leverage in our business model. Our steady improvement in gross margin during 2015 is an indicator of our ability to improve operating leverage through a balance of strong revenue growth and cost reduction initiatives by our Engineering and Operations teams.”

 

Product revenue grew by $3.5 million, or 30%, in North America and $1.1 million, or 14%, in ROW despite continued currency headwinds, compared to the fourth quarter of 2014. The Company estimates that its international revenue was negatively impacted in the fourth quarter of 2015 by approximately $1.0-$1.5 million due to the appreciation of the US dollar, compared to the fourth quarter of 2014. From a product perspective, the Company experienced strong growth from several of its legacy products as well as the recently launched products. In particular, enLighten^TM, the flagship picosecond and nanosecond tattoo removal and benign pigmented lesion treatment laser, continued to demonstrate global appeal and has become a major revenue contributor for the Company.

 

Gross margin improved to 60%, which was one of management’s key goals for 2015. The improved gross margin was a critical driver in the Company returning to profitability and generating cash from operations. In addition, a higher ratio of direct versus distributed business, contributed to improved fourth quarter 2015 gross margin performance.

 

“In 2015, we made very deliberate choices to drive revenue growth organically through investing internally in people and projects. The present strength and breadth of our product offering, as well as our commercial results, validate the path we chose. In 2016, we plan to make a new product announcement at the March American Academy of Dermatology meeting in Washington DC, expand the sales headcount to facilitate continued revenue growth, improve the productivity of our sales team further and continue to drive our product costs down to improve gross margins.

 

“We look forward to a strong 2016 as we continue to expand market share and improve financial results. I would like to take this opportunity to thank all of our global customers for their belief and partnership with Cutera, as well as our worldwide employees for their dedication and commitment to building our Company,” concluded Mr. Connors.

 

Non-GAAP Income Statement Measures (Unaudited)

 

*To supplement our condensed consolidated financial statements presented in accordance with Generally Accepted Accounting Principles, or GAAP, Cutera has provided certain Non-GAAP income statement measures for net income and net income per diluted share, which exclude non-cash expenses for stock-based compensation, depreciation and amortization of intangibles. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management believes that the adjusted financial results are more reflective of the cash-basis results of operations as well as comparable to similar measures used by other companies.

 

 

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 February 8, 2016. Participating in the call will be Kevin Connors, 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, and will be archived online within one hour of its completion through 8:59 p.m. PST (11:59 p.m. EST) on February 22, 2016. 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.

 

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 new products, expand its salesforce, ability to increase revenue, reduce expenses, improve financial results, make productivity improvements, grow the Company’s market share, realize benefits from additional investment, improve or maintain profitability, penetrate the market, generate cash from operations, plans for stock repurchases 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 November 2^nd, 2015. 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 fourth quarter ended December 31, 2015, as discussed in this release, is preliminary and unaudited, and subject to adjustment.

  

 

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

		Three Months Ended
		December 31,				December 31,
		2015				2014
Net revenue		$	30,042			$	25,499
Cost of revenue			12,145				11,679
Gross profit			17,897				13,820
Gross margin %			60	%			54	%
Operating expenses:
Sales and marketing			9,899				9,356
Research and development			2,812				2,649
General and administrative			3,189				3,407
Total operating expenses			15,900				15,412
Income (Loss) from operations			1,997				(1,592	)
Interest and other income, net			105				8
Income (Loss) before income taxes			2,102				(1,584	)
Provision for income taxes			52				41
Net income (loss)		$	2,050			$	(1,625	)
Net income (loss) per share:
Basic		$	0.16			$	(0.11	)
Diluted		$	0.15			$	(0.11	)
Weighted-average number of shares used in per share calculations:
Basic			12,978				14,425
Diluted			13,591				14,425

 

 

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 December 31, 2015
		GAAP				Adjustments					Non-GAAP As Adjusted*
Net revenue		$	30,042			$	—				$	30,042
Cost of revenue			12,145				(272	)	(a)			11,873
Gross profit			17,897				272					18,169
Gross margin %			60	%								60	%
Operating expenses:
Sales and marketing			9,899				(438	)	(b)			9,461
Research and development			2,812				(160	)	(c)			2,652
General and administrative			3,189				(501	)	(d)			2,688
Total operating expenses			15,900				(1,099	)				14,801
Income from operations			1,997				1,371					3,368
Interest and other income, net			105				—					105
Income before income taxes			2,102				1,371					3,473
Provision for income taxes			52				—		(e)			52
Net income		$	2,050			$	1,371				$	3,421
Net income per share:
Basic		$	0.16			$	0.10				$	0.26
Diluted		$	0.15			$	0.10				$	0.25
Weighted-average number of shares used in per share calculations:
Basic			12,978				12,978					12,978
Diluted			13,591				13,591					13,591

 

a) Adjustment of $272,000 included a non-cash charge of $154,000 related to depreciation and amoritizaiton expense and $118,000 of stock based compensation expense.

b) Adjustment of $438,000 included a non-cash charge of $111,000 related to depreciation expense and $327,000 of stock based compensation expense.

c) Adjustment of $160,000 included a non-cash charge of $8,000 related to depreciation expense and $152,000 of stock based compensation expense.

d) Adjustment of $501,000 included a non-cash charge of $1,000 related to depreciation expense and $500,000 of stock based compensation expense.

e) There was no material impact to the Company's income tax provision resulting from the aforementioned adjustments, given the Company carries a full valuation allowance against its U.S. federal and state net deferred tax assets.

* Fiscal fourth quarter 2015 Non-GAAP pro-forma results exclude the effect of the aforementioned adjustments.

 

 

CUTERA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

		December 31,				September 30,				December 31,
		2015				2015				2014
Assets
Current assets:
Cash and cash equivalents		$	10,868			$	10,055			$	9,803
Marketable investments			37,539				37,689				71,343
Cash, cash equivalents and marketable investments			48,407				47,744				81,146
Accounts receivable, net			11,669				9,013				11,137
Inventories			12,078				13,479				10,988
Deferred tax asset			-				69				26
Other current assets and prepaid expenses			1,675				1,977				1,591
Total current assets			73,829				72,282				104,888
Property and equipment, net			1,473				1,386				1,461
Deferred tax asset, net of current portion			350				291				269
Intangibles, net			143				227				595
Goodwill			1,339				1,339				1,339
Other long-term assets			384				392				361
Total assets		$	77,518			$	75,917			$	108,913
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	1,959			$	2,659			$	3,083
Accrued liabilities			13,834				12,234				11,007
Deferred revenue			8,638				8,470				8,898
Total current liabilities			24,431				23,363				22,988
Deferred revenue, net of current portion			2,287				2,495				4,346
Income tax liability			182				187				145
Other long-term liabilities			584				538				926
Total liabilities			27,484				26,583				28,405
Stockholders' equity			50,034				49,334				80,508
Total liabilities and stockholders' equity		$	77,518			$	75,917			$	108,913

 

 

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

		Three Months Ended
		December 31,				December 31,
		2015				2014
Cash flows from operating activities:
Net income (loss)		$	2,050			$	(1,625	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation			1,097				1,001
Depreciation and amortization			274				347
Impairment of intangible assets			—				650
Other			14				(16	)
Changes in assets and liabilities:
Accounts receivable			(2,660	)			(2,305	)
Inventories			1,401				118
Accounts payable			(700	)			365
Accrued liabilities			2,143				2,035
Deferred revenue			(40	)			(97	)
Other			310				(5	)
Net cash provided by operating activities			3,889				468
Cash flows from investing activities:
Acquisition of property, equipment and software			(43	)			(344	)
Net change in marketable investments			(16	)			(2,099	)
Net cash used in investing activities			(59	)			(2,443	)
Cash flows from financing activities:
Repurchases of common stock			(3,469	)			—
Proceeds from exercise of stock options and employee stock purchase plan			507				436
Payments on capital lease obligations			(55	)			(35	)
Net cash provided by (used in) financing activities			(3,017	)			401
Net increase (decrease) in cash and cash equivalents			813				(1,574	)
Cash and cash equivalents at beginning of period			10,055				11,377
Cash and cash equivalents at end of period		$	10,868			$	9,803

 

 

CUTERA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in thousands, except percentage data)

(unaudited)

 

		Three Months Ended								% Change
		Q4				Q4				Q4 '15 Vs
		2015				2014				Q4 '14
Revenue By Geography:
United States		$	16,882			$	13,761			+23		%
International			13,160				11,738			+12		%
		$	30,042			$	25,499			+18		%
International as a percentage of total revenue			44	%			46	%
Revenue By Product Category:
Products
-North America		$	15,048			$	11,538			+30		%
-Rest of the World			8,926				7,796			+14		%
Total Products			23,974				19,334			+24		%
Service			4,562				4,532			+1		%
Hand Piece Refills			706				844				-16	%
Skincare			800				789			+1		%
		$	30,042			$	25,499			+18		%

 

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		Three Months Ended
		Q4				Q4
		2015				2014
Pre-tax Stock-Based Compensation Expense:
Cost of revenue		$	118			$	144
Sales and marketing			327				227
Research and development			152				175
General and administrative			500				455
		$	1,097			$	1,001