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 7, 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)

 

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))

 

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

 

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 7, 2020, Cutera, Inc. (“Cutera” or the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2020. Cutera hereby incorporates by reference herein the information set forth in its press release dated May 7, 2020, a copy of which is attached hereto as Exhibit 99.1. Except as otherwise provided in the press release, the press release speaks only as of the date of such press release and it shall not create any implication that the affairs of Cutera have continued unchanged since such date.

 

The Company will host a live audio webcast for interested parties commencing Thursday, May 7, 2020 at 1:30 p.m. PDT (4:30 p.m. EDT), during which the Company will discuss the financial results. The conference call will be available to interested parties through a live audio webcast and accessible through the Investor Relations section of the Cutera corporate website at www.cutera.com.

 

The information provided pursuant to this Item 2.02 is to be considered “furnished” pursuant to Item 2.02 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, nor shall it be deemed incorporated by reference into any of Cutera’s reports or filings with the Securities and Exchange Commission, whether made before or after the date hereof, except as expressly set forth by specific reference in such report or filing.

 

Except for the historical information contained in this report, the statements made by Cutera are forward-looking statements that involve risks and uncertainties. All such statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Cutera’s future financial performance could differ significantly from the expectations of management and from results expressed or implied in the press release. Please refer to the last paragraph of the text portion of the press release for further discussion about forward-looking statements. For further information on risk factors, please refer to “Risk Factors” contained in Cutera’s most recently filed Form 10-K and its subsequent filings with the Securities and Exchange Commission, as well as in the press release attached as Exhibit 99.1 hereto. Cutera disclaims any obligation or duty to update or modify these forward-looking statements. 

 

Item 9.01.  Financial Statements and Exhibits.

 

(d)  Exhibits.

 

 

Exhibit No.

  

Description

 

 

99.1

  

Press Release of Cutera, Inc. dated as of May 7, 2020.

 

 

 

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: May 7, 2020, 2020

 

 

 

 /s/ DARREN W. ALCH

 

 

 

 

Darren W. Alch

 

 

 

 

General Counsel & Corporate Secretary

 

 
ex_185373.htm

Exhibit 99.1

 

 

Cutera, Inc. Announces First Quarter 2020 Financial Results

 

BRISBANE, California, May 7, 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 first quarter ended March 31, 2020.

 

 

First Quarter 2020 Financial and Operational Highlights

Revenue was $32.2 million, an 11% decrease from prior-year period on reduced capital equipment sales due to COVID-19 disruption, partially offset by

 

o

truSculpt portfolio revenue growth of 11%

 

o

Recurring revenue growth of 28% and

 

o

International revenue growth of 18%

Gross Margin was 44% compared to 48% in the prior-year period, on reduced capital sales volume

Net loss was $12.4 million, or $0.86 per fully diluted share, as compared to a net loss of $8.2 million, or $0.59 per fully diluted share, in the prior-year period.

Closed public stock offering on April 21, 2020 resulting in approximately $27 million net proceeds

 

“Our first quarter results reflected strength and momentum exiting 2019, offset by the significant impacts of the COVID-19 pandemic that flowed through the global economy during the quarter,” commented Dave Mowry, Chief Executive Officer of Cutera, Inc. “We have taken a number of steps to adapt our business to the current environment, and I am extremely proud of our team’s response. With a strong balance sheet and a culture of innovation, we are well-positioned to strengthen our competitive advantage as we move through this crisis. During this time, we have dedicated ourselves to providing critical support to our customers as they navigate the reopening of their practices and prepare to accommodate pent-up demand for procedures. Our recent capital raise will ensure that we are able to continue investing in our strong pipeline of new products and build upon our technology leadership position in the body sculpting market.”

 

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.

 

Conference Call

The Company’s management will host a conference call to discuss these results and related matters today at 1:30 p.m. PT / 4:30 p.m. ET. 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

1-833-423-0434 (domestic) or +1 918-922-6619 (international) and refer to the Conference Code: 2339504

 

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.

 

 

 

 

Cutera, Inc.

Anne Werdan

Director, Investor Relations

415-657-5500

awerdan@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 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 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 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. 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 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; and

 

Non-Recurring Legal Expenses. We have excluded legal expenses related to our pending litigation with Lutronic.  We believe these expenses are non-recurring and do not reflect future operating expenses.

 

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 fourth quarter and full year ended December 31, 2019, as discussed in this release, is preliminary and unaudited, and subject to adjustment.

 

 

 

CUTERA, INC. 

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands) 

(unaudited) 

 

   

March 31,

   

December 31,

 
   

2020

   

2019

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 14,774     $ 26,316  

Marketable investments

    4,746       7,605  

Accounts receivable, net

    15,660       21,556  

Inventories

    36,941       33,921  

Other current assets and prepaid expenses

    4,831       5,648  

Total current assets

    76,952       95,046  
                 

Property and equipment, net

    2,687       2,817  

Deferred tax asset

    408       423  

Goodwill

    1,339       1,339  

Operating lease right-of-use assets

    7,143       7,702  

Other long-term assets

    5,901       6,411  

Total assets

  $ 94,430     $ 113,738  
                 

Liabilities and Stockholders' Equity

               

Current liabilities:

               

Accounts payable

  $ 14,604     $ 12,685  

Accrued liabilities

    23,663       30,307  

Operating leases liabilities

    2,204       2,800  

Extended warranty liabilities

    1,765       1,999  

Deferred revenue

    10,180       10,831  

Total current liabilities

    52,416       58,622  
                 

Deferred revenue, net of current portion

    2,789       3,391  

Income tax liability

    93       93  

Operating lease liabilities, net of current portion

    5,149       5,112  

Other long-term liabilities

    447       578  

Total liabilities

    60,894       67,796  
                 

Stockholders’ equity:

               

Common stock

    15       14  

Additional paid-in capital

    82,292       82,346  

Accumulated deficit

    (48,772 )     (36,358 )

Accumulated other comprehensive income (loss)

    1       (60 )

Total stockholders' equity

    33,536       45,942  

Total liabilities and stockholders' equity

  $ 94,430     $ 113,738  

 

 

 

CUTERA, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited) 

 

   

Three Months Ended

 
   

March 31,

   

March 31,

 
   

2020

   

2019

 
                 

Products

  $ 26,391     $ 30,762  

Service

    5,848       5,264  

Total net revenue

    32,239       36,026  
                 

Products

    14,103       15,541  

Service

    3,800       3,176  

Total cost of revenue

    17,903       18,717  

Gross profit

    14,336       17,309  

Gross margin %

    44 %     48 %
                 

Operating expenses:

               

Sales and marketing

    14,789       16,104  

Research and development

    3,870       3,706  

General and administrative

    7,806       5,525  

Total operating expenses

    26,465       25,335  

Loss from operations

    (12,129 )     (8,026 )

Interest and other expense, net

    (207 )     (79 )

Loss before income taxes

    (12,336 )     (8,105 )

Income tax expense

    78       115  

Net loss

    (12,414 )     (8,220 )
                 

Net loss per share:

               

Basic

    (0.86 )     (0.59 )

Diluted

    (0.86 )     (0.59 )
                 

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

 

Basic

    14,433       14,017  

Diluted

    14,433       14,017  

 

 

 

CUTERA, INC. 

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in thousands, except percentage data)

(unaudited) 

 

   

Three Months Ended

   

% Change

 
   

March 31,

   

March 31,

   

2020 Vs

 
   

2020

   

2019

   

2019

 

Revenue By Geography:

                       

United States

  $ 13,784     $ 20,400       -32 %

International

    18,455     $ 15,626    

+18%

 

Total Net Revenue

  $ 32,239     $ 36,026       -11 %

International as a percentage of total revenue

    57 %     43 %        
                         

Revenue By Product Category:

                       

Systems

                       

- North America

  $ 10,382     $ 17,580       -41 %

- Rest of World

    10,576     $ 9,629    

+10%

 

Total Systems

    20,958       27,209       -23 %

Consumables

    2,533     $ 1,945    

+30%

 

Skincare

    2,900     $ 1,608    

+80%

 

Total Products

    26,391       30,762       -14 %
                         

Service

    5,848     $ 5,264    

+11%

 

Total Net Revenue

  $ 32,239     $ 36,026       -11 %

 

   

Three Months Ended

 
   

March 31,

   

March 31,

 
   

2020

   

2019

 

Pre-tax Stock-Based Compensation Expense:

               

Cost of revenue

  $ 290     $ 269  

Sales and marketing

    718       718  

Research and development

    321       263  

General and administrative

    650       57  
    $ 1,980     $ 1,307  

 

 

 

CUTERA, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) 

(unaudited) 

 

   

Three Months Ended

 
   

March 31,

   

March 31,

 
   

2020

   

2019

 

Cash flows from operating activities:

               

Net loss

  $ (12,414 )   $ (8,220 )

Adjustments to reconcile net loss to net cash used in operating activities:

               

Stock-based compensation

    1,980       1,307  

Depreciation of tangible assets

    360       411  

Amortization of contract acquisition costs

    717       690  

Change in deferred tax asset

    15       6  

Provision for doubtful accounts receivable

    590       98  

Other

    35       103  

Changes in assets and liabilities:

               

Accounts receivable

    5,306       403  

Inventories

    (3,020 )     1,355  

Other current assets and prepaid expenses

    807       (916 )

Other long-term assets

    (207 )     (679 )

Accounts payable

    1,919       (942 )

Accrued liabilities

    (6,567 )     (1,467 )

Extended warranty liabilities

    (234 )     (492 )

Other long-term liabilities

    -       (140 )

Deferred revenue

    (1,253 )     525  

Income tax liability

    -       5  

Net cash used in operating activities

    (11,966 )     (7,953 )
                 

Cash flows from investing activities:

               

Acquisition of property, equipment and software

    (230 )     (65 )

Disposal of property and equipment

    -       -  

Proceeds from sales of marketable investments

    -       -  

Proceeds from maturities of marketable investments

    6,800       3,200  

Purchase of marketable investments

    (3,930 )     (1,586 )

Net cash provided by investing activities

    2,640       1,549  
                 

Cash flows from financing activities:

               

Proceeds from exercise of stock options and employee stock purchase plan

    201       131  

Taxes paid related to net share settlement of equity awards

    (2,234 )     (490 )

Payments on finance lease obligations

    (183 )     (131 )

Net cash used in financing activities

    (2,216 )     (490 )
                 

Net decrease in cash and cash equivalents

    (11,542 )     (6,894 )

Cash and cash equivalents at beginning of period

    26,316       26,052  

Cash and cash equivalents at end of period

  $ 14,774     $ 19,158  

 

 

 

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, 2020

   

Three Months Ended March 31, 2019

 
   

GAAP

   

Depreciation
and
Amortization

   

Stock-Based
Compensation

   

CRM and ERP
Implementation

   

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

  $ 32,239       -       -       -       -       $ 32,239     $ 36,026       -       -       -       -       $ 36,026  

Cost of revenue

    17,903       (140 )     (290 )     -       -         17,473       18,717       (129 )     (269 )     -       -         18,319  

Gross profit

    14,336       140       290       -       -         14,766       17,309       129       269       -       -         17,707  

Gross margin %

    44 %                                       46 %     48 %                                       49 %
                                                                                                     

Operating expenses:

                                                                                                   

Sales and marketing

    14,789       (871 )     (718 )     (165 )     -         13,035       16,104       (868 )     (718 )     (85 )     -         14,433  

Research and development

    3,870       (38 )     (321 )     -       -         3,511       3,706       (21 )     (263 )     -       -         3,422  

General and administrative

    7,806       (28 )     (650 )     (245 )     (324 )

(a)

    6,559       5,525       (83 )     (57 )     (239 )     (614 )

(b)

    4,531  

Total operating expenses

    26,465       (937 )     (1,690 )     (409 )     (324 )       23,105       25,335       (972 )     (1,038 )     (324 )     (614 )       22,387  

Loss from operations

    (12,129 )     1,077       1,980       409       324         (8,339 )     (8,026 )     1,101       1,307       324       614         (4,680 )

Interest and other expense, net

    (207 )     -       -       -       -         (207 )     (79 )     -       -       -       -         (79 )

Loss before income taxes

    (12,336 )     1,077       1,980       409       324         (8,546 )     (8,105 )     1,101       1,307       324       614         (4,759 )

Provision for income taxes

    78       -       -       -       5         83       115       -       -       -       3         118  

Net loss

  $ (12,414 )     1,077       1,980       409       319       $ (8,629 )   $ (8,220 )     1,101       1,307       324       611       $ (4,877 )
                                                                                                     

Net loss per share:

                                                                                                   

Basic

  $ (0.86 )                                     $ (0.60 )   $ (0.59 )                                     $ (0.35 )

Diluted

  $ (0.86 )                                     $ (0.60 )   $ (0.59 )                                     $ (0.35 )
                                                                                                     

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

                                                                                                   

Basic

    14,433                                         14,433       14,017                                         14,017  

Diluted

    14,433                                         14,433       14,017                                         14,017  

 

a)

Other adjustment of $324 related to certain non-recurring legal expenses.

b)

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

    45.9 %     40.4 %     44.7 %     40.1 %

Research and development

    12.0 %     10.9 %     10.3 %     9.5 %

General and administrative

    24.2 %     20.3 %     15.3 %     12.6 %
      82.1 %     71.7 %     70.3 %     62.1 %

 

 

 

CUTERA, INC. 

RECONCILIATION OF LOSS TO ADJUSTED EBITDA

(in thousands)

(unaudited) 

 

   

Three Months Ended

 
   

March 31, 2020

 
         

Net loss

  $ (12,414 )

Adjustments:

       

Stock-based compensation

    1,980  

Depreciation and amortization

    1,077  

CRM and ERP implementation costs

    409  

Other adjustments

    324  

Interest and other expense, net

    207  

Provision for income taxes

    78  

Total adjustments

  $ 4,075  
         

Adjusted EBITDA

  $ (8,339 )