Business Wire | Aug 4, 2021 04:01PM EDT

Cutera, Inc. Announces Second Quarter 2021 Financial Results with Record Revenue and Issues 2021 Guidance

Aug. 04, 2021

BRISBANE, Calif.--(BUSINESS WIRE)--Aug. 04, 2021--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, 2021.

Second Quarter 2021 Financial and Operational Highlights

* Revenue was $58.6 million, an increase of 122% from the prior-year period, driven by robust performance across the business, with strength in both capital equipment and recurring revenue segments. Capital Equipment revenue of $35.6 million increased 129% over the prior-year period. Recurring revenue was $23.0 million, an increase of 113% over the prior-year period: Skin Care revenue of $11.8 million increased 147% over prior-year period; Consumable Product revenue of $4.4 million grew 211% over prior-year period, and Service revenue of $6.8 million increased 47% over prior-year period. * Gross Margin was 57.7% for the quarter, an improvement of 13.6 points versus prior-year period, driven by further leverage of manufacturing volumes over a reduced fixed overhead expense base, resulting in the natural progression of our margin expansion efforts. * Adjusted EBITDA was $6.8 million in the period as compared to ($3.5) million in the prior-year period, a $10.3 million improvement over FY2020.

"I am proud of our team's performance during the second quarter, as our focus on our Vital Few initiatives and operational execution aligned with improving trends in our end markets, resulting in solid financial performance across the board," commented Dave Mowry, Chief Executive Officer of Cutera, Inc. "During the quarter, we saw steady global procedure volume growth, and we began to benefit from the early stages of increasing appetite for capital equipment purchases. We expect to deliver strong revenue performance in the latter half of the year, despite some slight and temporary deceleration from patient and practitioner vacations in 3Q21. We view a resumption of the historical practitioner vacation patterns in the third quarter favorably, as it reflects both restored customer confidence in the sustainability of patient traffic and proof of renewed financial health of the practice. Based upon the continuing recovery in our end markets, positive capital trends, and continued execution of our strategic priorities, we anticipate delivering steady performance in second half of 2021, with normal seasonal acceleration in the fourth quarter of 2021."

2021 Outlook

Given improved volumes through the first half of the year and better visibility into the second half of the year, management is issuing full-year 2021 revenue guidance. Full-year 2021 revenue is expected to be in the range of $215 million to $221 million, an increase of 46% to 50% over 2020 and 18% to 22% over pre-COVID 2019 levels.

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 and Rohan Seth, 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: 13721584.

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, Gain on extinguishment of PPP loan, customer relationship management and enterprise resource planning 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 the Company's 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 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;

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; and

Other Adjustments.We have excluded certain other amounts that we believe are non-recurring in nature. In the three months ended June 30, 2021, we recorded a gain on the extinguishment of our PPP loan. This gain has been excluded from the calculation of our non-GAAP operating net income.

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, 2021, as discussed in this release, is preliminary and unaudited, and subject to adjustment.

CUTERA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) June 30, March 31, December 31,

2021 2021 2020

Assets Current assets: $ $ $ Cash and cash equivalents 169,200 164,932 47,047

Accounts receivable, net 25,903 24,151 21,962

Inventories 34,591 34,578 28,508

Other current assets and prepaid expenses 8,856 10,339 8,779

Total current assets 238,550 234,000 106,296

Property and equipment, net 2,148 2,373 2,299

Deferred tax asset 592 598 643

Goodwill 1,339 1,339 1,339

Operating lease right-of-use assets 15,919 16,570 17,076

Other long-term assets 5,615 4,853 5,080

$ $ $ Total assets 264,163 259,733 132,733

Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 6,210 $ 5,031 $ 6,684

Accrued liabilities 41,346 41,329 31,079

Operating leases liabilities 2,422 2,351 2,260

PPP loan payable - 6,352 3,630

Extended warranty liabilities 649 1,039 1,216

Deferred revenue 9,695 10,019 9,489

Total current liabilities 60,322 66,121 54,358

Deferred revenue, net of current portion 1,708 1,718 1,748

PPP loan payable, net of current portion - 851 3,555

Operating lease liabilities, net of current 14,705 15,394 15,950 portion Convertible notes, net of unamortized debt 133,800 133,585 - issuance costs Other long-term liabilities 285 434 242

Total liabilities 210,820 218,103 75,853

Stockholders' equity: Common stock 18 18 18

Additional paid-in capital 106,173 102,206 117,097

Accumulated deficit (52,848 ) (60,594 ) (60,235 )

Total stockholders' equity 53,343 41,630 56,880

$ $ $ Total liabilities and stockholders' equity 264,163 259,733 132,733

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,

2021

2020

2021

2020

Products$51,811

$21,745

$95,362

$48,136

Service6,778

4,624

12,895

10,472

Total net revenue58,589

26,369

108,257

58,608

Products20,892

12,206

39,224

26,309

Service3,908

2,539

7,534

6,339

Total cost of revenue24,800

14,745

46,758

32,648

Gross margin33,789

11,624

61,499

25,960

Gross margin %57.7

%

44.1

%

56.8

%

44.3

%

Operating expenses:Sales and marketing18,410

11,035

33,478

25,823

Research and development4,850

2,991

8,962

6,862

General and administrative8,461

8,529

15,826

16,336

Total operating expenses31,721

22,555

58,266

49,021

Income (loss) from operations2,068

(10,931

)

3,233

(23,061

)

Interest and other income (expense), netAmortization of debt issuance costs(215

)

-

(267

)

-

Interest on Convertible notes(778

)

-

(969

)

-

Gain on extinguishment of PPP loan7,185

-

7,185

-

Other income (expense), net(392

)

3

(1,415

)

(204

)

Income (loss) before income taxes7,868

(10,928

)

7,767

(23,265

)

Income tax expense122

466

380

543

Net income (loss)$7,746

$(11,394

)

$7,387

$(23,808

)

Net Income (loss) per share:Basic$0.43

$(0.67

)

$0.41

$(1.51

)

Diluted$0.39

$(0.67

)

$0.40

$(1.51

)

Weighted-average number of shares used in per share calculations:Basic17,862

17,055

17,815

15,744

Diluted22,453

17,055

20,855

15,744

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)





Three Months Ended Six Months Ended

June 30, June 30, June 30, June 30,

2021 2020 2021 2020

Products $ 51,811 $ 21,745 $ 95,362 $ 48,136

Service 6,778 4,624 12,895 10,472

Total net revenue 58,589 26,369 108,257 58,608

Products 20,892 12,206 39,224 26,309

Service 3,908 2,539 7,534 6,339

Total cost of revenue 24,800 14,745 46,758 32,648

Gross margin 33,789 11,624 61,499 25,960

Gross margin % 57.7 % 44.1 % 56.8 % 44.3 %

Operating expenses: Sales and marketing 18,410 11,035 33,478 25,823

Research and 4,850 2,991 8,962 6,862 development General and 8,461 8,529 15,826 16,336 administrative Total operating 31,721 22,555 58,266 49,021 expenses Income (loss) from 2,068 (10,931 ) 3,233 (23,061 ) operations Interest and other income (expense), net Amortization of debt (215 ) - (267 ) - issuance costs Interest on Convertible (778 ) - (969 ) - notes Gain on extinguishment of 7,185 - 7,185 - PPP loan Other income (expense), (392 ) 3 (1,415 ) (204 ) net Income (loss) before 7,868 (10,928 ) 7,767 (23,265 ) income taxes Income tax expense 122 466 380 543

Net income (loss) $ 7,746 $ (11,394 ) $ 7,387 $ (23,808 )

Net Income (loss) per share: Basic $ 0.43 $ (0.67 ) $ 0.41 $ (1.51 )

Diluted $ 0.39 $ (0.67 ) $ 0.40 $ (1.51 )

Weighted-average number of shares used in per share calculations: Basic 17,862 17,055 17,815 15,744

Diluted 22,453 17,055 20,855 15,744

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Three Months Ended

Six Months Ended, June 30

June 30,

June 30,

June 30,

June 30,

2021

2020

2021

2020

Cash flows from operating activities:Net income (loss)$ 7,746

$ (11,394

)

$ 7,387

$ (23,808

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:Stock-based compensation2,919

4,095

4,765

6,075

Depreciation and amortization346

355

707

715

Amortization of contract acquisition costs458

675

1,003

1,392

Amortization of debt issuance costs215

-

267

-

Impairment of capitalized cloud computing costs-

805

182

805

Change in deferred tax asset6

(11

)

51

4

Provision for credit losses274

1,106

492

1,696

Loss on sale of Property and Equipment(23

)

-

(82

)

-

PPP loan forgiveness(7,185

)

-

(7,185

)

Change in right-of-use asset-

-

604

-

Other-

163

-

198

Changes in assets and liabilities:Accounts receivable(2,026

)

728

(4,433

)

6,034

Inventories63

5,701

(5,958

)

2,681

Other current assets and prepaid expenses1,483

(491

)

(77

)

316

Other long-term assets(1,220

)

(312

)

(1,720

)

(519

)

Accounts payable1,179

(2,923

)

(474

)

(1,004

)

Accrued liabilities21

(3,187

)

10,220

(9,754

)

Extended warranty liabilities(390

)

(105

)

(567

)

(339

)

Operating lease liabilities33

-

(530

)

-

Deferred revenue(334

)

(1,190

)

166

(2,443

)

Net cash provided by (used in) operating activities3,565

(5,985

)

4,818

(17,951

)

Cash flows from investing activities:Acquisition of property, equipment and software(269

)

(205

)

(370

)

(435

)

Disposal of property and equipment19

-

71

-

Proceeds from sales of marketable investments-

4,100

-

10,900

Purchase of marketable investments-

(12,237

)

-

(16,167

)

Net cash used in investing activities(250

)

(8,342

)

(299

)

(5,702

)

Cash flows from financing activities:Proceeds from exercise of stock options and employee stock purchase plan1,501

647

1,897

848

Proceeds from PPP loan-

7,149

-

7,149

Proceeds from equity offering-

26,496

-

26,496

Purchase of capped call-

-

(16,134

)

-

Proceeds from issuance of Convertible notes-

-

138,250

-

Payment of issuance costs of Convertible notes-

-

(4,717

)

-

Taxes paid related to net share settlement of equity awards(452

)

(883

)

(1,451

)

(3,117

)

Payments on finance lease obligations(96

)

(197

)

(211

)

(380

)

Net cash provided by financing activities953

33,212

117,634

30,996

Net increase in cash and cash equivalents4,268

18,885

122,153

7,343

Cash and cash equivalents at beginning of period164,932

14,774

47,047

26,316

Cash and cash equivalents at end of period$ 169,200

$ 33,659

$ 169,200

$ 33,659

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



Three Months Ended Six Months Ended, June 30



June 30, June 30, June 30, June 30,

2021 2020 2021 2020

Cash flows from operating activities: $ 7,746 $ ) $ 7,387 $ ) Net income (loss) (11,394 (23,808

Adjustments to reconcile net income (loss) to net cash used in operating activities: Stock-based compensation 2,919 4,095 4,765 6,075

Depreciation and amortization 346 355 707 715

Amortization of contract 458 675 1,003 1,392 acquisition costs Amortization of debt issuance 215 - 267 - costs Impairment of capitalized - 805 182 805 cloud computing costs Change in deferred tax asset 6 (11 ) 51 4

Provision for credit losses 274 1,106 492 1,696

Loss on sale of Property and (23 ) - (82 ) - Equipment PPP loan forgiveness (7,185 ) - (7,185 )

Change in right-of-use asset - - 604 -

Other - 163 - 198

Changes in assets and liabilities: Accounts receivable (2,026 ) 728 (4,433 ) 6,034

Inventories 63 5,701 (5,958 ) 2,681

Other current assets and 1,483 (491 ) (77 ) 316 prepaid expenses Other long-term assets (1,220 ) (312 ) (1,720 ) (519 )

Accounts payable 1,179 (2,923 ) (474 ) (1,004 )

Accrued liabilities 21 (3,187 ) 10,220 (9,754 )

Extended warranty liabilities (390 ) (105 ) (567 ) (339 )

Operating lease liabilities 33 - (530 ) -

Deferred revenue (334 ) (1,190 ) 166 (2,443 )

Net cash provided by (used 3,565 (5,985 ) 4,818 (17,951 ) in) operating activities Cash flows from investing activities: Acquisition of property, (269 ) (205 ) (370 ) (435 ) equipment and software Disposal of property and 19 - 71 - equipment Proceeds from sales of - 4,100 - 10,900 marketable investments Purchase of marketable - (12,237 ) - (16,167 ) investments Net cash used in investing (250 ) (8,342 ) (299 ) (5,702 ) activities Cash flows from financing activities: Proceeds from exercise of stock 1,501 647 1,897 848 options and employee stock purchase plan Proceeds from PPP loan - 7,149 - 7,149

Proceeds from equity offering - 26,496 - 26,496

Purchase of capped call - - (16,134 ) -

Proceeds from issuance of - - 138,250 - Convertible notes Payment of issuance costs of - - (4,717 ) - Convertible notes Taxes paid related to net share (452 ) (883 ) (1,451 ) (3,117 ) settlement of equity awards Payments on finance lease (96 ) (197 ) (211 ) (380 ) obligations Net cash provided by 953 33,212 117,634 30,996 financing activities Net increase in cash and cash 4,268 18,885 122,153 7,343 equivalents Cash and cash equivalents at 164,932 14,774 47,047 26,316 beginning of period Cash and cash equivalents at end $ $ $ $ of period 169,200 33,659 169,200 33,659

CUTERA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in thousands, except percentage data)

(unaudited)

Three Months Ended

% Change

Six Months Ended

% Change

June 30,

June 30,

2021 Vs

June 30,

June 30,

2021 Vs

2021

2020

2020

2021

2020

2020

Revenue By Geography:North America$26,786

$11,622

+130.5%$49,084

$26,995

+81.8%Japan17,421

8,517

+104.5%33,976

15,679

+116.7%Rest of World14,382

6,230

+130.9%25,197

15,934

+58.1%Total Net Revenue$58,589

$26,369

+122.2%$108,257

$58,608

+84.7%International as a percentage of total revenue54.3

%

55.9

%

54.7

%

53.9

%

Revenue By Product Category:Systems- North America$19,888

$8,214

+142.1%$36,673

$18,596

+97.2%- Rest of World (including Japan)15,680

7,328

+114.0%27,215

17,904

+52.0%Total Systems35,568

15,542

+128.9%63,888

36,500

+75.0%Consumables4,432

1,425

+211.0%7,357

3,958

+85.9%Skincare11,812

4,778

+147.2%24,118

7,678

+214.1%Total Products51,812

21,745

+138.3%95,363

48,136

+98.1%Service6,777

4,624

+46.6%12,894

10,472

+23.1%Total Net Revenue$58,589

$26,369

+122.2%$108,257

$58,608

+84.7%CUTERA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in thousands, except percentage data)

(unaudited)



Three Months Ended % Six Months Ended % Change Change

June 30, June 30, 2021 Vs June 30, June 30, 2021 Vs

2021 2020 2020 2021 2020 2020

Revenue ByGeography: North America $ 26,786 $ 11,622 +130.5% $ 49,084 $ 26,995 +81.8%

Japan 17,421 8,517 +104.5% 33,976 15,679 +116.7%

Rest of World 14,382 6,230 +130.9% 25,197 15,934 +58.1%

Total Net $ 58,589 $ 26,369 +122.2% $ 108,257 $ 58,608 +84.7% Revenue International as a 54.3 % 55.9 % 54.7 % 53.9 % percentage of total revenue Revenue ByProduct Category: Systems - North $ 19,888 $ 8,214 +142.1% $ 36,673 $ 18,596 +97.2% America - Rest of World 15,680 7,328 +114.0% 27,215 17,904 +52.0% (including Japan) Total Systems 35,568 15,542 +128.9% 63,888 36,500 +75.0%

Consumables 4,432 1,425 +211.0% 7,357 3,958 +85.9%

Skincare 11,812 4,778 +147.2% 24,118 7,678 +214.1%

Total 51,812 21,745 +138.3% 95,363 48,136 +98.1% Products Service 6,777 4,624 +46.6% 12,894 10,472 +23.1%

Total Net $ 58,589 $ 26,369 +122.2% $ 108,257 $ 58,608 +84.7% Revenue Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30

2021

2020

2021

2020

Pre-tax Stock-Based Compensation Expense:Cost of revenue$434

$743

$578

$1,033

Sales and marketing522

1,251

1,243

1,970

Research and development307

769

608

1,090

General and administrative1,656

1,332

2,336

1,982

$2,919

$4,095

$4,765

$6,075

Three Months Six Months Ended Ended

June June June June 30 30, 30, 30,

2021 2020 2021 2020

Pre-tax Stock-Based Compensation Expense: Cost of revenue $ 434 $ 743 $ 578 $ 1,033

Sales and marketing 522 1,251 1,243 1,970

Research and development 307 769 608 1,090

General and administrative 1,656 1,332 2,336 1,982

$ 2,919 $ 4,095 $ 4,765 $ 6,075

CUTERA, INC.RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSTO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data)(unaudited)Three Months Ended June 30, 2021Three Months Ended June 30, 2020GAAPDepreciationandAmortizationStock-BasedCompensationERPImplementation costSeverance (RIF)Legal - LutronicOther AdjustmentsNon-GAAPGAAPDepreciationandAmortizationStock-BasedCompensationCRM and ERPImplementation/write-offSeverance (RIF)Legal -Former CFO Settlement/LutronicOther AdjustmentsNon-GAAPNet revenue$ 58,589

-

-

-

-

-

-

$ 58,589

$ 26,369

-

-

-

-

-

-

$ 26,369

Cost of revenue24,800

(138

)

(434

)

-

-

-

346

24,574

14,745

(136

)

(743

)

-

(132

)

-

-

13,734

Gross margin33,789

138

434

-

-

-

(346

)

34,015

11,624

136

743

-

132

-

-

12,635

Gross margin %57.7

%

58.1

%

44.1

%

47.9

%

Operating expenses:Sales and marketing18,410

(600

)

(522

)

-

(638

)

-

-

16,650

11,035

(827

)

(1,251

)

-

(249

)

-

-

8,708

Research and development4,850

(45

)

(307

)

-

-

-

-

4,498

2,991

(38

)

(769

)

-

(63

)

-

-

2,121

General and administrative8,461

(21

)

(1,656

)

(407

)

-

(290

)

-

6,087

8,529

(29

)

(1,332

)

(729

)

(74

)

(1,018

)

-

5,347

Total operating expenses31,721

(666

)

(2,485

)

(407

)

(638

)

(290

)

-

27,235

22,555

(894

)

(3,352

)

(729

)

(386

)

(1,018

)

-

16,176

Income (loss) from operations2,068

804

2,919

407

638

290

(346

)

6,780

(10,931

)

1,030

4,095

729

518

1,018

-

(3,541

)

Interest and other income (expense), netAmortization of debt issuance costs(215

)

-

-

-

-

-

-

(215

)

-

-

-

-

-

-

-

-

Interest on Convertible notes(778

)

-

-

-

-

-

-

(778

)

-

-

-

-

-

-

-

-

Gain on extinguishment of PPP loan7,185

-

-

-

-

-

(7,185

)

-

-

-

-

-

-

-

-

-

Other expense(392

)

-

-

-

-

-

-

(392

)

3

3

Total interest and other income (expense), net5,800

-

-

-

-

-

(7,185

)

(1,385

)

3

-

-

-

-

-

-

3

Income (loss) before income taxes7,868

804

2,919

407

638

290

(7,531

)

5,395

(10,928

)

1,030

4,095

729

518

1,018

-

(3,538

)

Provision for income taxes122

-

-

-

-

-

-

122

466

-

-

-

-

-

2

468

Net income (loss)$ 7,746

804

2,919

407

638

290

(7,531

)

$ 5,273

$ (11,394

)

1,030

4,095

729

518

1,018

(2

)

$ (4,006

)

Net income (loss) per share:Basic$ 0.43

$ 0.30

$ (0.67

)

$ (0.23

)

Diluted$ 0.39

$ 0.28

$ (0.67

)

$ (0.23

)

Weighted-average number of shares used in per share calculations:Basic17,862

17,862

17,055

17,055

Diluted22,453

22,453

17,055

17,055

Operating expenses as a % of net revenueGAAPNon-GAAPGAAPNon-GAAPSales and marketing31.4

%

28.4

%

41.8

%

33.0

%

Research and development8.3

%

7.7

%

11.3

%

8.0

%

General and administrative14.4

%

10.4

%

32.3

%

20.3

%

54.1

%

46.5

%

85.5

%

61.3

%

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, 2021 Three Months Ended June 30, 2020 Depreciation ERP Depreciation CRM and ERP Legal -Former GAAP and Stock-Based Implementation Severance Legal - Other Non-GAAP GAAP and Stock-Based Implementation Severance CFO Settlement/ Other Non-GAAP Amortization Compensation cost (RIF) Lutronic Adjustments Amortization Compensation / (RIF) Lutronic Adjustments write-off $ - - - - - - $ $ - - - - - - $ Net revenue 58,589 58,589 26,369 26,369

Cost of revenue 24,800 (138 ) (434 ) - - - 346 24,574 14,745 (136 ) (743 ) - (132 ) - - 13,734

Gross margin 33,789 138 434 - - - (346 ) 34,015 11,624 136 743 - 132 - - 12,635

Gross margin % 57.7 % 58.1 % 44.1 % 47.9 %

Operating expenses: Sales and marketing 18,410 (600 ) (522 ) - (638 ) - - 16,650 11,035 (827 ) (1,251 ) - (249 ) - - 8,708

Research and development 4,850 (45 ) (307 ) - - - - 4,498 2,991 (38 ) (769 ) - (63 ) - - 2,121

General and administrative 8,461 (21 ) (1,656 ) (407 ) - (290 ) - 6,087 8,529 (29 ) (1,332 ) (729 ) (74 ) (1,018 ) - 5,347

Total operating expenses 31,721 (666 ) (2,485 ) (407 ) (638 ) (290 ) - 27,235 22,555 (894 ) (3,352 ) (729 ) (386 ) (1,018 ) - 16,176

Income (loss) from operations 2,068 804 2,919 407 638 290 (346 ) 6,780 (10,931 ) 1,030 4,095 729 518 1,018 - (3,541 )

Interest and other income (expense), net Amortization of debt issuance (215 ) - - - - - - (215 ) - - - - - - - - costs Interest on Convertible notes (778 ) - - - - - - (778 ) - - - - - - - -

Gain on extinguishment of PPP 7,185 - - - - - (7,185 ) - - - - - - - - - loan Other expense (392 ) - - - - - - (392 ) 3 3

Total interest and other income 5,800 - - - - - (7,185 ) (1,385 ) 3 - - - - - - 3 (expense), net Income (loss) before income 7,868 804 2,919 407 638 290 (7,531 ) 5,395 (10,928 ) 1,030 4,095 729 518 1,018 - (3,538 ) taxes Provision for income taxes 122 - - - - - - 122 466 - - - - - 2 468

$ 804 2,919 407 638 290 (7,531 ) $ $ ) 1,030 4,095 729 518 1,018 (2 ) $ ) Net income (loss) 7,746 5,273 (11,394 (4,006

Net income (loss) per share: $ 0.43 $ 0.30 $ (0.67 ) $ ) Basic (0.23

$ 0.39 $ 0.28 $ (0.67 ) $ ) Diluted (0.23

Weighted-average number of shares used in per share calculations: Basic 17,862 17,862 17,055 17,055

Diluted 22,453 22,453 17,055 17,055

Operating expenses as a % of GAAP Non-GAAP GAAP Non-GAAP net revenue Sales and marketing 31.4 % 28.4 % 41.8 % 33.0 %

Research and development 8.3 % 7.7 % 11.3 % 8.0 %

General and administrative 14.4 % 10.4 % 32.3 % 20.3 %

54.1 % 46.5 % 85.5 % 61.3 %

CUTERA, INC.RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSTO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data)(unaudited)Six Months Ended June 30, 2021Six Months Ended June 30, 2020GAAPDepreciationandAmortizationStock-BasedCompensationCRM and ERPImplementation costSeverance (RIF)Legal - LutronicOther AdjustmentsNon-GAAPGAAPDepreciationandAmortizationStock-BasedCompensationCRM and ERPImplementation/write-offSeverance (RIF)Legal -Former CFO Settlement/LutronicOther AdjustmentsNon-GAAPNet revenue$ 108,257

-

-

-

-

$ 108,257

$ 58,608

-

-

-

-

-

-

$ 58,608

Cost of revenue46,758

(300

)

(578

)

-

-

-

346

46,226

32,648

(277

)

(1,033

)

-

(132

)

-

-

31,206

Gross margin61,499

300

578

-

-

-

(346

)

62,031

25,960

277

1,033

-

132

-

-

27,402

Gross margin %56.8

%

57.3

%

44.3

%

47

%

Operating expenses:Sales and marketing33,478

(1,278

)

(1,243

)

(182

)

(638

)

-

-

30,137

25,823

(1,698

)

(1,969

)

-

(249

)

-

-

21,908

Research and development8,962

(84

)

(608

)

-

-

-

-

8,270

6,862

(76

)

(1,090

)

-

(63

)

-

-

5,633

General and administrative15,826

(48

)

(2,336

)

(477

)

-

(691

)

-

12,274

16,336

(57

)

(1,982

)

(1,139

)

(74

)

(1,018

)

(324

)

11,742

Total operating expenses58,266

(1,410

)

(4,187

)

(659

)

(638

)

(691

)

-

50,681

49,021

(1,830

)

(5,041

)

(1,139

)

(386

)

(1,018

)

(324

)

39,283

Income (loss) from operations3,233

1,710

4,765

659

638

691

(346

)

11,350

(23,061

)

2,107

6,075

1,139

518

1,018

324

(11,880

)

Interest and other income (expense), netAmortization of debt issuance costs(267

)

-

-

-

-

-

-

(267

)

-

-

-

-

-

-

-

-

Interest on Convertible notes(969

)

-

-

-

-

-

-

(969

)

-

-

-

-

-

-

-

-

Gain on extinguishment of PPP loan7,185

-

-

-

-

-

(7,185

)

-

-

-

-

-

-

-

-

-

Other expense(1,415

)

-

-

-

-

-

-

(1,415

)

(204

)

-

-

-

-

-

-

(204

)

Total interest and other income (expense), net4,534

-

-

-

-

(7,185

)

(2,651

)

(204

)

-

-

-

-

-

-

(204

)

Income (loss) before income taxes7,767

1,710

4,765

659

638

691

(7,531

)

8,699

(23,265

)

2,107

6,075

1,139

518

1,018

324

(12,084

)

Provision for income taxes380

-

-

-

-

-

-

380

543

-

-

-

7

550

Net income (loss)$ 7,387

1,710

4,765

659

638

691

(7,531

)

$ 8,319

$ (23,808

)

2,107

6,075

1,139

518

1,018

317

$ (12,634

)

Net income (loss) per share:Basic$ 0.41

$ 0.47

$ (1.51

)

$ (0.80

)

Diluted$ 0.40

$ 0.44

$ (1.51

)

$ (0.80

)

Weighted-average number of shares used in per share calculations:Basic17,815

17,815

15,744

15,744

Diluted20,855

20,855

15,744

15,744

Operating expenses as a % of net revenueGAAPNon-GAAPGAAPNon-GAAPSales and marketing30.9

%

27.9

%

44.1

%

37.4

%

Research and development8.2

%

7.5

%

11.7

%

9.6

%

General and administrative14.6

%

11.3

%

27.9

%

20.0

%

53.8

%

46.8

%

83.6

%

67.0

%

CUTERA, INC.RECONCILIATION OF GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSTO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data)(unaudited) Six Months Ended June 30, 2021 Six Months Ended June 30, 2020 Depreciation CRM and ERP Depreciation CRM and ERP Legal -Former GAAP and Stock-Based Implementation Severance Legal - Other Non-GAAP GAAP and Stock-Based Implementation Severance CFO Settlement/ Other Non-GAAP Amortization Compensation cost (RIF) Lutronic Adjustments Amortization Compensation / (RIF) Lutronic Adjustments write-off $ - - - - $ $ - - - - - - $ Net revenue 108,257 108,257 58,608 58,608

Cost of revenue 46,758 (300 ) (578 ) - - - 346 46,226 32,648 (277 ) (1,033 ) - (132 ) - - 31,206

Gross margin 61,499 300 578 - - - (346 ) 62,031 25,960 277 1,033 - 132 - - 27,402

Gross margin % 56.8 % 57.3 % 44.3 % 47 %

Operatingexpenses:Sales and 33,478 (1,278 ) (1,243 ) (182 ) (638 ) - - 30,137 25,823 (1,698 ) (1,969 ) - (249 ) - - 21,908 marketingResearch and 8,962 (84 ) (608 ) - - - - 8,270 6,862 (76 ) (1,090 ) - (63 ) - - 5,633 developmentGeneral and 15,826 (48 ) (2,336 ) (477 ) - (691 ) - 12,274 16,336 (57 ) (1,982 ) (1,139 ) (74 ) (1,018 ) (324 ) 11,742 administrativeTotal operating 58,266 (1,410 ) (4,187 ) (659 ) (638 ) (691 ) - 50,681 49,021 (1,830 ) (5,041 ) (1,139 ) (386 ) (1,018 ) (324 ) 39,283 expensesIncome (loss) 3,233 1,710 4,765 659 638 691 (346 ) 11,350 (23,061 ) 2,107 6,075 1,139 518 1,018 324 (11,880 )from operationsInterest andother income(expense), netAmortization of (267 ) - - - - - - (267 ) - - - - - - - - debt issuancecostsInterest on (969 ) - - - - - - (969 ) - - - - - - - - Convertible notesGain on 7,185 - - - - - (7,185 ) - - - - - - - - - extinguishment ofPPP loanOther expense (1,415 ) - - - - - - (1,415 ) (204 ) - - - - - - (204 )

Totalinterestand other 4,534 - - - - (7,185 ) (2,651 ) (204 ) - - - - - - (204 )income(expense),netIncome (loss) 7,767 1,710 4,765 659 638 691 (7,531 ) 8,699 (23,265 ) 2,107 6,075 1,139 518 1,018 324 (12,084 )before incometaxesProvision for 380 - - - - - - 380 543 - - - 7 550 income taxes $ 7,387 1,710 4,765 659 638 691 (7,531 ) $ 8,319 $ ) 2,107 6,075 1,139 518 1,018 317 $ )Net income (loss) (23,808 (12,634

Net income (loss)per share:Basic $ 0.41 $ 0.47 $ (1.51 ) $ (0.80 )

Diluted $ 0.40 $ 0.44 $ (1.51 ) $ (0.80 )

Weighted-averagenumber of sharesused in per sharecalculations:Basic 17,815 17,815 15,744 15,744

Diluted 20,855 20,855 15,744 15,744

Operatingexpenses as GAAP Non-GAAP GAAP Non-GAAPa % of netrevenueSales and 30.9 % 27.9 % 44.1 % 37.4 %marketingResearch 8.2 % 7.5 % 11.7 % 9.6 %anddevelopmentGeneral and 14.6 % 11.3 % 27.9 % 20.0 %administrative 53.8 % 46.8 % 83.6 % 67.0 %

CUTERA, INC.RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA(in thousands)(unaudited)Three Months EndedSix Months EndedJune 30, 2021Net income$ 7,746

$ 7,387

Adjustments:Stock-based compensation2,919

4,765

Depreciation and amortization804

1,710

ERP implementation Cost407

659

Severance (RIF)638

638

Legal -Lutronic290

691

Other adjustments(346

)

(346

)

Gain on extinguishment of PPP loan(7,185

)

(7,185

)

Interest and other expense, net1,385

2,651

Provision for income taxes122

380

Total adjustments(966

)

3,963

Adjusted EBITDA$ 6,780

$ 11,350

View source version on businesswire.com: https://www.businesswire.com/news/home/20210804005937/en/

CONTACT: Cutera, Inc. Anne Werdan Director, Corporate Communications 415-657-5500 awerdan@cutera.com