- Revenue Increased 22% to $27.5 million
- Eighth Consecutive Quarter of Double-Digit Revenue Growth
BRISBANE, Calif., Aug. 01, 2016 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2016.
Key operating highlights and financial performance for the second quarter of 2016, when compared to the second quarter of 2015, were as follows:
- Revenue increased 22% to a Company record for the second quarter of $27.5 million. This resulted due to strong product revenue growth from the majority of our key products in North America. Gross Margin increased to 58%. This improvement resulted primarily from the leverage caused by our revenue growth.
- GAAP Net Loss was $1.2 million, which included $1.2 million for a legal settlement and associated fees.
- Non-GAAP* Net Income was $1.0 million, after adjusting for $1.0 million of non-cash expenses related to stock-based compensation, depreciation and amortization of intangibles, and $1.2 million for a legal settlement and associated fees.
- Cash used by operations was $308,000, which included $1.2 million of cash paid for a legal settlement and associated fees.
- Repurchased 251,000 shares of our common stock for $2.6 million from our $10 million board-approved stock repurchase program.
Kevin Connors, President and Chief Executive Officer of Cutera, stated, “We are pleased with our record second quarter revenue, which was the eighth consecutive quarter of double-digit revenue growth. In addition, our gross margin and profitability improved. Our financial performance in the second quarter has the Company on track with our previously stated goals of strong revenue growth and GAAP profitability for the full-year of 2016.”
Product revenue grew by $4.9 million, or 55%, in North America reflecting our strengthening sales team and its ability to increase market share in this growing market. ‘Rest of World’ product revenue declined 9% primarily from our distributor network which experiences quarterly fluctuations. From a product perspective, the Company experienced strong revenue contributions from all major product lines, including its recently released enlightenTM and excel HRTM.
“The tattoo removal market continues to experience rapid growth and we are on track to launch our second generation, market leading, enlighten system during the fourth quarter of this year. It will include a third visible 'true red' wavelength, 670nm, that will provide our customers with unprecedented speed, removal of all tattoo ink colors, a revitalization capability, and an expanded offering to better meet our customer’s needs and budget requirements. We remain committed to advancing our technology and will provide our customers with an attractive path to allow them to upgrade their current systems to include new capabilities.
“We are pleased with our strong revenue growth trajectory. We plan to continue to execute on the various initiatives for bringing new products to market, improving profitability, and expanding our market share in the growing aesthetic medical equipment market,” 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 measures for the statement of operations and net income (loss) per diluted share, which exclude non-cash expenses for stock-based compensation, depreciation and amortization of intangibles, and non-recurring settlement and associated legal fees. 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 measures on how management evaluates the results of operations, as well as is 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. PDT (5:00 p.m. EDT) on August 1, 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 at http://www.cutera.com, and will be archived online within one hour of its completion through 8:59 p.m. PDT (11:59 p.m. EDT) on August 15, 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 and commercialize new products, ability to increase revenue, reduce expenses, improve financial results, grow the Company’s market share, realize benefits from additional investment, achieve financial guidance, expand market penetration, generate cash from operations, 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 August 1st, 2016. 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 second quarter ended June 30, 2016, 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 | |||||||||||||
| June 30, | June 30, | ||||||||||||
| 2016 | 2015 | ||||||||||||
| Net revenue | $ | 27,477 | $ | 22,563 | |||||||||
| Cost of revenue | 11,472 | 9,687 | |||||||||||
| Gross profit | 16,005 | 12,876 | |||||||||||
| Gross margin % | 58 | % | 57 | % | |||||||||
| Operating expenses: | |||||||||||||
| Sales and marketing | 10,712 | 9,066 | |||||||||||
| Research and development | 2,712 | 2,728 | |||||||||||
| General and administrative | 3,997 | 3,014 | |||||||||||
| Total operating expenses | 17,421 | 14,808 | |||||||||||
| Loss from operations | (1,416 | ) | (1,932 | ) | |||||||||
| Interest and other income, net | 217 | 96 | |||||||||||
| Loss before income taxes | (1,199 | ) | (1,836 | ) | |||||||||
| Provision for income taxes | 30 | 53 | |||||||||||
| Net loss | $ | (1,229 | ) | $ | (1,889 | ) | |||||||
| Net loss per share: | |||||||||||||
| Basic and diluted | $ | (0.09 | ) | $ | (0.13 | ) | |||||||
| Weighted-average number of shares used in per share calculations: | |||||||||||||
| Basic and diluted | 13,131 | 14,441 | |||||||||||
| 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, 2016 | ||||||||||||
| GAAP | Adjustments | Non-GAAP* | ||||||||||
| Net revenue | $ | 27,477 | $ | — | $ | 27,477 | ||||||
| Cost of revenue | 11,472 | (139 | ) | (a) | 11,333 | |||||||
| Gross profit | 16,005 | 139 | 16,144 | |||||||||
| Gross margin % | 58 | % | 59 | % | ||||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 10,712 | (365 | ) | (b) | 10,347 | |||||||
| Research and development | 2,712 | (114 | ) | (c) | 2,598 | |||||||
| General and administrative | 3,997 | (1,620 | ) | (d) | 2,377 | |||||||
| Total operating expenses | 17,421 | (2,099 | ) | 15,322 | ||||||||
| Income (loss) from operations | (1,416 | ) | 2,238 | 822 | ||||||||
| Interest and other income, net | 217 | — | 217 | |||||||||
| Income (loss) before income taxes | (1,199 | ) | 2,238 | 1,039 | ||||||||
| Provision for income taxes | 30 | — | 30 | |||||||||
| Net income (loss) | $ | (1,229 | ) | $ | 2,238 | $ | 1,009 | |||||
| Net income (loss) per share: | ||||||||||||
| Basic | $ | (0.09 | ) | $ | 0.17 | $ | 0.08 | |||||
| Diluted | $ | (0.09 | ) | $ | 0.16 | $ | 0.07 | |||||
| Weighted-average number of shares used in per share calculations: | ||||||||||||
| Basic: | 13,131 | 13,131 | 13,131 | |||||||||
| Diluted | 13,131 | 13,606 | 13,606 | |||||||||
| * Fiscal second quarter 2016 Non-GAAP results exclude the effect of the below mentioned adjustments. | ||||||||||||
| a) Adjustment of $139,000 included non-cash expenses of $99,000 related to depreciation and amortization and $40,000 of stock based compensation. | ||||||||||||
| b) Adjustment of $365,000 included a non-cash expenses of $136,000 related to depreciation and $229,000 of stock based compensation. | ||||||||||||
| c) Adjustment of $114,000 included non-cash expenses of $9,000 related to depreciation and $105,000 of stock based compensation. | ||||||||||||
| d) Adjustment of $1,620,000 included a charge for a legal settlement and associated fees, and a non-cash expense of $376,000 for stock based compensation. | ||||||||||||
| CUTERA, INC. | |||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||
| (in thousands) | |||||||||||||
| (unaudited) | |||||||||||||
| June 30, | March 31, | June 30, | |||||||||||
| 2016 | 2016 | 2015 | |||||||||||
| Assets | |||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | $ | 7,420 | $ | 6,265 | $ | 11,627 | |||||||
| Marketable investments | 35,902 | 38,184 | 54,708 | ||||||||||
| Cash, cash equivalents and marketable investments | 43,322 | 44,449 | 66,335 | ||||||||||
| Accounts receivable, net | 11,181 | 11,168 | 8,919 | ||||||||||
| Inventories | 14,702 | 13,475 | 13,521 | ||||||||||
| Deferred tax asset | - | - | 27 | ||||||||||
| Other current assets and prepaid expenses | 2,619 | 1,953 | 1,625 | ||||||||||
| Total current assets | 71,824 | 71,045 | 90,427 | ||||||||||
| Property and equipment, net | 1,577 | 1,428 | 1,512 | ||||||||||
| Deferred tax asset, net of current portion | 401 | 376 | 283 | ||||||||||
| Intangibles, net | 44 | 87 | 332 | ||||||||||
| Goodwill | 1,339 | 1,339 | 1,339 | ||||||||||
| Other long-term assets | 448 | 419 | 351 | ||||||||||
| Total assets | $ | 75,633 | $ | 74,694 | $ | 94,244 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||||
| Current liabilities: | |||||||||||||
| Accounts payable | $ | 2,752 | $ | 2,570 | $ | 3,597 | |||||||
| Accrued liabilities | 13,201 | 11,079 | 10,308 | ||||||||||
| Deferred revenue | 8,919 | 8,836 | 8,659 | ||||||||||
| Total current liabilities | 24,872 | 22,485 | 22,564 | ||||||||||
| Deferred revenue, net of current portion | 1,685 | 1,986 | 3,107 | ||||||||||
| Income tax liability | 157 | 127 | 180 | ||||||||||
| Other long-term liabilities | 587 | 507 | 699 | ||||||||||
| Total liabilities | 27,301 | 25,105 | 26,550 | ||||||||||
| Stockholders' equity | 48,332 | 49,589 | 67,694 | ||||||||||
| Total liabilities and stockholders' equity | $ | 75,633 | $ | 74,694 | $ | 94,244 | |||||||
| CUTERA, INC. | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (in thousands) | |||||||||||
| (unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| June 30, | June 30, | ||||||||||
| 2016 | 2015 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (1,229 | ) | $ | (1,889 | ) | |||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
| Stock-based compensation | 750 | 982 | |||||||||
| Depreciation and amortization | 244 | 295 | |||||||||
| Other | (75 | ) | 139 | ||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | (8 | ) | 1,481 | ||||||||
| Inventories | (1,227 | ) | (1,666 | ) | |||||||
| Accounts payable | 182 | 742 | |||||||||
| Accrued liabilities | 1,985 | 2,095 | |||||||||
| Deferred revenue | (218 | ) | (919 | ) | |||||||
| Other | (712 | ) | 120 | ||||||||
| Net cash provided by (used in) operating activities | (308 | ) | 1,380 | ||||||||
| Cash flows from investing activities: | |||||||||||
| Acquisition of property, equipment and software | (40 | ) | (271 | ) | |||||||
| Disposal of property and equipment | 6 | - | |||||||||
| Net change in marketable investments | 2,257 | 7,778 | |||||||||
| Net cash provided by investing activities | 2,223 | 7,507 | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repurchases of common stock | (2,586 | ) | (13,194 | ) | |||||||
| Proceeds from exercise of stock options and employee stock purchase plan | 1,883 | 2,506 | |||||||||
| Payments on capital lease obligations | (57 | ) | (34 | ) | |||||||
| Net cash used in financing activities | (760 | ) | (10,722 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents | 1,155 | (1,835 | ) | ||||||||
| Cash and cash equivalents at beginning of period | 6,265 | 13,462 | |||||||||
| Cash and cash equivalents at end of period | $ | 7,420 | $ | 11,627 | |||||||
| CUTERA, INC. | ||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||||||||||||
| (in thousands, except percentage data) | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| Three Months Ended | % Change | |||||||||||||||||
| Q2 | Q2 | Q2 '16 Vs | ||||||||||||||||
| 2016 | 2015 | Q2 '15 | ||||||||||||||||
| Revenue By Geography: | ||||||||||||||||||
| United States | $ | 15,806 | $ | 11,036 | +43 | % | ||||||||||||
| International | 11,671 | 11,527 | +1 | % | ||||||||||||||
| $ | 27,477 | $ | 22,563 | +22 | % | |||||||||||||
| International as a percentage of total revenue | 42 | % | 51 | % | ||||||||||||||
| Revenue By Product Category: | ||||||||||||||||||
| Products | ||||||||||||||||||
| -North America | $ | 13,888 | $ | 8,973 | +55 | % | ||||||||||||
| -Rest of the World | 6,976 | 7,646 | -9 | % | ||||||||||||||
| Total Products | 20,864 | 16,619 | +26 | % | ||||||||||||||
| Service | 5,023 | 4,521 | +11 | % | ||||||||||||||
| Hand Piece Refills | 720 | 769 | -6 | % | ||||||||||||||
| Skincare | 870 | 654 | +33 | % | ||||||||||||||
| $ | 27,477 | $ | 22,563 | +22 | % | |||||||||||||
| Three Months Ended | ||||||||||||||||||
| Q2 | Q2 | |||||||||||||||||
| 2016 | 2015 | |||||||||||||||||
| Pre-tax Stock-Based Compensation Expense: | ||||||||||||||||||
| Cost of revenue | $ | 40 | $ | 114 | ||||||||||||||
| Sales and marketing | 229 | 231 | ||||||||||||||||
| Research and development | 105 | 180 | ||||||||||||||||
| General and administrative | 376 | 457 | ||||||||||||||||
| $ | 750 | $ | 982 | |||||||||||||||