Cutera Reports First Quarter 2013 Results

BRISBANE, Calif., May 6, 2013 (GLOBE NEWSWIRE) -- Cutera, Inc. (Nasdaq:CUTR), 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, 2013.

Key financial highlights for the first quarter of 2013 were as follows:
  • Revenue grew 2% to $16.0 million, compared to the first quarter of 2012 in what is historically the seasonally lowest quarter of the year.
  • Gross margin was 54%, compared to the 50% in the first quarter of 2012, due primarily to the elimination of non-recurring acquisition start-up expenses associated with the Iridex asset purchase that were included in the first quarter of 2012.
  • Net loss was $2.2 million, or $0.15 per diluted share. Stock-based compensation, intangible, and depreciable items totaled $1.1 million for the quarter.
  • Cash and marketable securities increased $2.5 million in the quarter, resulting in $88.1 million at the end of the quarter.

Kevin Connors, President and CEO of Cutera, stated, "Our U.S. and international revenue increased by 3% and 1%, respectively, when compared to the same period one year ago. While our U.S. and international revenue modestly expanded, we are targeting higher growth rates in the future. As we believe that market conditions remain sound, we are planning to expand the size of our North American sales team in the second half of 2013. Our growth this quarter was driven primarily by ExcelV and truSculpt products and the growth of our Service revenue. The international growth was propelled primarily by our operations in France and our distributor network in Asia Pacific. 

Our engineering team continues to make great advances in new product development activities and applications that include:
  1. Launching a new disposable applicator for the truSculpt system to treat the smaller cosmetic areas of the body. truSculpt has the commercial advantage of being a platform where we are able to launch new applicators to better treat different parts of the body, as well as the potential to pursue other aesthetic applications.
  2. Introducing a new high performance laser system that is planned to be launched near the end of the year. More details on this project will be forthcoming with the release of our second quarter 2013 results.
  3. Our Picosecond research program for the tattoo and pigmented lesion removal market continues to make progress. We have built a working prototype, have started conducting clinical trials, and are now in the process of working on a 510(k) submission for this product. We recently met with the FDA to discuss our regulatory path and are encouraged with the direction from the Agency."

Mr. Connors concluded, "We believe the market outlook for the aesthetic laser and other energy-based equipment continues to expand and we are well positioned to capitalize on the improving market and to take advantage of our business model. We remain focused on many initiatives in order to expand revenue growth, improved gross and operating margins, as well as cash generation in 2013 and beyond."

Conference Call

The conference call to discuss these results is scheduled to begin at 2:00 p.m. PT (5:00 p.m. ET) on May 6, 2013. 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 www.cutera.com , and will be archived online within one hour of its completion through 8:59 p.m. PT (11:59 p.m. ET) on May 20, 2013.  In addition, you may call 877-407-3982 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 ability to increase revenue, improve cash generation from operations, improve gross and net operating margins, develop and commercialize existing and new products and applications, experience market adoption for its products, realize benefits from additional investment, expand its sales force 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, revenue growth and profitability improvement through the leverage of its 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; the length of the sales cycle process; 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 May 6, 2013. 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 first quarter ended March 31, 2013, as discussed in this release, is preliminary and unaudited, and subject to adjustment.
       
       
CUTERA, INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) 
(unaudited) 
       
       
  March 31, 2013 December 31, 2012 March 31, 2012
Assets      
Current assets:      
Cash and cash equivalents  $ 17,272  $ 23,546  $ 12,787
Marketable investments  70,821  62,026  66,137
Accounts receivable, net  6,814  8,841  4,496
Inventories  11,091  11,114  13,434
Deferred tax asset  39  40  50
Other current assets and prepaid expenses  1,511  1,439  1,363
Total current assets  107,548  107,006  98,267
       
Property and equipment, net  1,312  933  1,019
Long-term investments  --  --  2,928
Deferred tax asset, net of current portion  518  553  450
Intangibles, net  2,392  2,566  3,504
Goodwill  1,339  1,339  1,339
Other long-term assets  362  397  458
Total assets  $ 113,471  $ 112,794  $ 107,965
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Accounts payable  $ 2,161  $ 2,107  $ 2,674
Accrued liabilities  7,087  9,493  8,936
Deferred revenue  6,766  6,618  5,770
Total current liabilities  16,014  18,218  17,380
       
Deferred revenue, net of current portion  2,538  2,102  917
Income tax liability  320  412  469
Other long-term liabilities  1,449  1,288  1,450
Total liabilities  20,321  22,020  20,216
       
Stockholders' equity:      
Common stock  14  14  14
Additional paid-in capital  105,089  100,552  97,043
Accumulated deficit  (12,036)  (9,873)  (8,592)
Accumulated other comprehensive income (loss)  83  81  (716)
Total stockholders' equity  93,150  90,774  87,749
Total liabilities and stockholders' equity  $ 113,471  $ 112,794  $ 107,965
       
       
CUTERA, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited) 
       
       
  Three Months Ended
  March 31, 2013 December 31, 2012 March 31, 2012
Net revenue  $ 15,967  $ 22,533  $ 15,727
Cost of revenue  7,417  9,790  7,845
Gross profit  8,550  12,743  7,882
Operating expenses:      
Sales and marketing  6,456  7,101  7,437
Research and development  2,121  2,122  2,216
General and administrative  2,289  2,452  3,495
Total operating expenses  10,866  11,675  13,148
Income (loss) from operations  (2,316)  1,068  (5,266)
Interest and other income, net  135  105  96
Income (loss) before income taxes  (2,181)  1,173  (5,170)
Provision (benefit) for income taxes  (18)  96  97
Net income (loss)   $ (2,163)  $ 1,077  $ (5,267)
       
Net income (loss) per share:      
Basic   $ (0.15)  $ 0.08  $ (0.38)
Diluted  $ (0.15)  $ 0.08  $ (0.38)
       
Weighted-average number of shares used in per share calculations:    
Basic  14,408  14,173  13,960
Diluted  14,408  14,272  13,960
       
       
CUTERA, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) 
(unaudited) 
       
       
  Three Months Ended
  March 31, 2013 December 31, 2012 March 31, 2012
Cash flows from operating activities:      
Net income (loss)  $ (2,163)  $ 1,077  $ (5,267)
Adjustments to reconcile net loss to net cash used in operating activities:      
Stock-based compensation  820  826  738
Tax benefit from stock-based compensation  --  6  --
Excess tax benefit related to stock-based compensation  --  (6)  --
Depreciation and amortization  320  420  343
Other  34  26  14
Changes in assets and liabilities:      
Accounts receivable  2,027  (992)  640
Inventories  23  1,363  (1,153)
Other current assets and prepaid expenses  60  142  444
Other long-term assets  35  120  28
Accounts payable  54  (190)  101
Accrued liabilities  (2,504)  (14)  (661)
Other long-term liabilities  259  (38)  27
Deferred revenue  584  1,010  (118)
Income tax liability  (92)  (59)  (9)
Net cash provided by (used in) operating activities  (543)  3,691  (4,873)
       
Cash flows from investing activities:      
Acquisition of property and equipment  (525)  (158)  (277)
Business acquisition   --  --  (5,091)
Proceeds from sales of marketable and long-term investments  500  5,203  10,729
Proceeds from maturities of marketable investments  11,050  8,564  11,135
Purchase of marketable investments  (20,473)  (18,949)  (13,442)
Net cash provided by (used in) investing activities  (9,448)  (5,340)  3,054
       
Cash flows from financing activities:      
Proceeds from exercise of stock options and employee stock purchase plan  3,717  855  586
Excess tax benefit related to stock-based compensation  --  6  --
Net cash provided by financing activities  3,717  861  586
       
Net decrease in cash and cash equivalents  (6,274)  (788)  (1,233)
Cash and cash equivalents at beginning of period  23,546  24,334  14,020
Cash and cash equivalents at end of period  $ 17,272  $ 23,546  $ 12,787
             
             
CUTERA, INC. 
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in thousands, except percentage data)
(unaudited) 
             
             
  Three Months Ended 
  March 31,  2013 % of  Revenue December 31,  2012 % of  Revenue March 31,  2012 % of  Revenue
Revenue By Geography:            
United States  $ 6,488 41%  $ 10,008 44%  $ 6,311 40%
International  9,479 59%  12,525 56%  9,416 60%
   $ 15,967    $ 22,533    $ 15,727  
             
Revenue By Product Category:            
Products and upgrades  $ 9,197 58%  $ 15,326 68%  $ 9,258 59%
Service   4,444 28%  4,614 20%  3,873 25%
Titan and truSculpt hand piece refills  1,190 7%  1,235 6%  1,130 7%
Dermal fillers and cosmeceuticals  1,136 7%  1,358 6%  1,466 9%
   $ 15,967    $ 22,533    $ 15,727  
             
 
             
  Three Months Ended   
  March 31,  2013   December 31,  2012   March 31,  2012  
Pre-tax Stock-Based Compensation Expense:          
Cost of revenue  $ 159    $ 178    $ 143  
Sales and marketing  199    181    140  
Research and development  101    95    146  
General and administrative  361    372    309  
   $ 820    $ 826    $ 738  
CONTACT: Cutera, Inc.         Ron Santilli         Chief Financial Officer         415-657-5500                  Investor Relations         John Mills         Integrated Corporate Relations, Inc.         310-954-1105         john.mills@icrinc.com