Business Wire | Nov 3, 2021 04:02PM EDT

Cutera, Inc. Announces Third Quarter 2021 Financial Results; Raises Full-year Revenue Guidance

Nov. 03, 2021

BRISBANE, Calif.--(BUSINESS WIRE)--Nov. 03, 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 third quarter ended September 30, 2021.

Third Quarter 2021 Financial and Operational Highlights

* Revenue was $57.4 million, an increase of 47% from the prior-year period, driven by strong performance across the business, with strength occurring in capital equipment and recurring revenue. Capital Equipment revenue of $32.2 million increased 33% over the prior-year period. Recurring revenue, defined as the combination of Skincare, Consumable Products, and Service, was $25.2 million, an increase of 68% over the prior-year period: Skincare revenue of $14.8 million increased 117% over the prior-year period; Consumable Product revenue of $3.7 million grew 60% over prior-year period, reflecting the continued recovery of energy-based treatment volumes; and Service revenue of $6.7 million increased 14% over the prior-year period.

* Gross Margin was 58.2%, compared to 55.6% in the prior-year period, driven by capital equipment and consumable volumes, reduced fixed overhead expenses and the continual progression of our margin expansion efforts;

* Net loss was $1.4 million, or ($0.08) per fully diluted share, compared to a net loss of $2.3 million, or ($0.13) per fully diluted share, in the prior-year period; and

* Adjusted EBITDA more than doubled to $5.1 million in the period as compared to $2.4 million in the prior-year period.

"I am pleased with the strong results achieved by our team during the third quarter, as we expand our commercial team, drive improved profitability, and maintain our laser-focus on our vital few initiatives," commented Dave Mowry, Chief Executive Officer of Cutera, Inc. "We are encouraged by the positive momentum in capital equipment demand and the continuing improvement in global treatment volumes, despite the anticipated seasonality. Looking to the balance of 2021 and into early 2022, we are confident in the strength of our business as we continue onboarding new members of our commercial team and executing on our robust pipeline of capital equipment deals as patient volumes trend above pre-COVID levels."

2021 OutlookGiven the strength of our results in the third quarter of 2021 and management's confidence in our fourth quarter outlook, management is raising full-year 2021 revenue guidance to be in the range of $224 million to $228 million, up from our prior expectation of $215 million to $221 million.

Conference CallThe 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: 13723851.

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 basic and 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, and non-recurring legal and litigation costs. 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.

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 our 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; and

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.

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 StatementCertain 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)



September June 30, December 30, 31,

2021 2021 2020

AssetsCurrent assets:Cash and cash equivalents $ 162,486 $ 169,200 $ 47,047

Accounts receivable, net 30,760 25,903 21,962

Inventories 35,493 34,591 28,508

Other current assets and prepaid 13,350 8,856 8,779 expensesTotal current assets 242,089 238,550 106,296

Property and equipment, net 2,205 2,148 2,299

Deferred tax asset 589 592 643

Goodwill 1,339 1,339 1,339

Operating lease right-of-use assets 15,269 15,919 17,076

Other long-term assets 6,955 5,615 5,080

Total assets $ 268,446 $ 264,163 $ 132,733

Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable $ 7,259 $ 6,210 $ 6,684

Accrued liabilities 44,295 41,995 32,295

Operating leases liabilities 2,394 2,422 2,260

PPP loan payable - - 3,630

Deferred revenue 9,188 9,695 9,489

Total current liabilities 63,136 60,322 54,358

Deferred revenue, net of current portion 1,492 1,708 1,748

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

Operating lease liabilities, net of 14,117 14,705 15,950 current portionConvertible notes, net of unamortized 134,025 133,800 - debt issuance costsOther long-term liabilities 333 285 242

Total liabilities 213,103 210,820 75,853

Stockholders' equity:Common stock 18 18 18

Additional paid-in capital 109,563 106,173 117,097

Accumulated deficit (54,238 ) (52,848 ) (60,235 )

Total stockholders' equity 55,343 53,343 56,880

Total liabilities and stockholders' $ 268,446 $ 264,163 $ 132,733 equity CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2021

2020

2021

2020

Products$50,694

$33,254

$146,056

$81,390

Service6,690

5,878

19,585

16,350

Total net revenue57,384

39,132

165,641

97,740

Products20,259

14,017

59,483

40,326

Service3,700

3,369

11,234

9,708

Total cost of revenue23,959

17,386

70,717

50,034

Gross margin33,425

21,746

94,924

47,706

Gross margin %58.2

%

55.6

%

57.3

%

48.8

%

Operating expenses:Sales and marketing19,190

12,286

52,668

38,109

Research and development5,802

3,432

14,764

10,294

General and administrative7,807

7,239

23,633

23,575

Total operating expenses32,799

22,957

91,065

71,978

Income (loss) from operations626

(1,211

)

3,859

(24,272

)

Interest and other income (expense), netAmortization of debt issuance costs(225

)

-

(492

)

-

Interest on Convertible notes(768

)

-

(1,737

)

-

Gain on extinguishment of PPP loan-

-

7,185

-

Other expense, net(561

)

(382

)

(1,976

)

(586

)

Income (loss) before income taxes(928

)

(1,593

)

6,839

(24,858

)

Income tax expense462

664

842

1,207

Net income (loss)$(1,390

)

$(2,257

)

$5,997

$(26,065

)

Net Income (loss) per share:Basic$(0.08

)

$(0.13

)

$0.34

$(1.59

)

Diluted$(0.08

)

$(0.13

)

$0.33

$(1.59

)

Weighted-average number of shares used in per share calculations:Basic17,945

17,603

17,860

16,368

Diluted17,945

17,603

18,327

16,368

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)



Three Months Ended Nine Months Ended

September September September September 30, 30, 30, 30,

2021 2020 2021 2020

Products $ 50,694 $ 33,254 $ 146,056 $ 81,390

Service 6,690 5,878 19,585 16,350

Total net revenue 57,384 39,132 165,641 97,740

Products 20,259 14,017 59,483 40,326

Service 3,700 3,369 11,234 9,708

Total cost of revenue 23,959 17,386 70,717 50,034

Gross margin 33,425 21,746 94,924 47,706

Gross margin % 58.2 % 55.6 % 57.3 % 48.8 %

Operating expenses:Sales and marketing 19,190 12,286 52,668 38,109

Research and development 5,802 3,432 14,764 10,294

General and administrative 7,807 7,239 23,633 23,575

Total operating expenses 32,799 22,957 91,065 71,978

Income (loss) from 626 (1,211 ) 3,859 (24,272 )operationsInterest and other income(expense), netAmortization of debt (225 ) - (492 ) - issuance costsInterest on Convertible (768 ) - (1,737 ) - notesGain on extinguishment of - - 7,185 - PPP loanOther expense, net (561 ) (382 ) (1,976 ) (586 )

Income (loss) before income (928 ) (1,593 ) 6,839 (24,858 )taxesIncome tax expense 462 664 842 1,207

Net income (loss) $ (1,390 ) $ (2,257 ) $ 5,997 $ (26,065 )

Net Income (loss) pershare:Basic $ (0.08 ) $ (0.13 ) $ 0.34 $ (1.59 )

Diluted $ (0.08 ) $ (0.13 ) $ 0.33 $ (1.59 )

Weighted-average number of shares used in per share calculations:Basic 17,945 17,603 17,860 16,368

Diluted 17,945 17,603 18,327 16,368

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2021

2020

2021

2020

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

(1,390

)

$

(2,257

)

$

5,997

$

(26,065

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:Stock-based compensation3,742

1,982

8,507

8,057

Depreciation and amortization307

341

1,014

1,056

Amortization of contract acquisition costs427

625

1,430

2,017

Amortization of debt issuance costs225

-

492

-

Impairment of capitalized cloud computing costs-

-

182

805

Change in deferred tax asset3

(81

)

54

(77

)

Provision for credit losses(391

)

54

101

1,750

Loss on sale of property and equipment37

-

(45

)

-

PPP loan forgiveness-

-

(7,185

)

-

Change in right-of-use asset1,077

249

1,681

250

Other-

129

-

327

Changes in assets and liabilities:Accounts receivable(4,466

)

(5,064

)

(8,899

)

2,209

Inventories(968

)

1,907

(6,926

)

4,588

Other current assets and prepaid expenses(4,494

)

(350

)

(4,571

)

(1,273

)

Other long-term assets(1,767

)

(1,182

)

(3,487

)

(1,701

)

Accounts payable1,049

(4,882

)

575

(5,886

)

Accrued liabilities2,129

5,033

11,782

(5,061

)

Operating lease liabilities(1,043

)

-

(1,573

)

-

Deferred revenue(723

)

45

(557

)

(2,398

)

Net cash provided by (used in) operating activities(6,246

)

(3,451

)

(1,428

)

(21,402

)

Cash flows from investing activities:Acquisition of property, equipment and software(12

)

(339

)

(382

)

(774

)

Disposal of property and equipment-

-

71

-

Proceeds from maturities of marketable investments-

8,100

-

19,000

Purchase of marketable investments-

(8,244

)

-

(24,411

)

Net cash used in investing activities(12

)

(483

)

(311

)

(6,185

)

Cash flows from financing activities:Proceeds from exercise of stock options and employee stock purchase plan158

8

2,056

856

Proceeds from PPP loan-

18

7,167

Proceeds from equity offering-

(1

)

-

28,798

Offering costs on the equity offering-

-

-

(2,303

)

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(511

)

(223

)

(1,963

)

(3,340

)

Payments on finance lease obligations(103

)

(133

)

(314

)

(513

)

Net cash provided by (used in) financing activities(456

)

(331

)

117,178

30,665

Net increase / (decrease) in cash and cash equivalents(6,714

)

(4,265

)

115,439

3,078

Cash and cash equivalents at beginning of period169,200

33,659

47,047

26,316

Cash and cash equivalents at end of period$

162,486

$

29,394

$

162,486

$

29,394

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



Three Months Ended Nine Months Ended



September September September September 30, 30, 30, 30,

2021 2020 2021 2020

Cash flows fromoperating activities:Net income (loss) $ (1,390 ) $ (2,257 ) $ 5,997 $ (26,065 )

Adjustments to reconcilenet income (loss) to netcash used in operatingactivities:Stock-based compensation 3,742 1,982 8,507 8,057

Depreciation and 307 341 1,014 1,056 amortizationAmortization of contract 427 625 1,430 2,017 acquisition costsAmortization of debt 225 - 492 - issuance costsImpairment of - - 182 805 capitalized cloudcomputing costsChange in deferred tax 3 (81 ) 54 (77 )assetProvision for credit (391 ) 54 101 1,750 lossesLoss on sale of property 37 - (45 ) - and equipmentPPP loan forgiveness - - (7,185 ) -

Change in right-of-use 1,077 249 1,681 250 assetOther - 129 - 327

Changes in assets andliabilities:Accounts receivable (4,466 ) (5,064 ) (8,899 ) 2,209

Inventories (968 ) 1,907 (6,926 ) 4,588

Other current assets and (4,494 ) (350 ) (4,571 ) (1,273 )prepaid expensesOther long-term assets (1,767 ) (1,182 ) (3,487 ) (1,701 )

Accounts payable 1,049 (4,882 ) 575 (5,886 )

Accrued liabilities 2,129 5,033 11,782 (5,061 )

Operating lease (1,043 ) - (1,573 ) - liabilitiesDeferred revenue (723 ) 45 (557 ) (2,398 )

Net cash provided by (6,246 ) (3,451 ) (1,428 ) (21,402 )(used in) operatingactivities Cash flows frominvesting activities:Acquisition of property, (12 ) (339 ) (382 ) (774 )equipment and softwareDisposal of property and - - 71 - equipmentProceeds from maturities - 8,100 - 19,000 of marketableinvestmentsPurchase of marketable - (8,244 ) - (24,411 )investmentsNet cash used in (12 ) (483 ) (311 ) (6,185 )investing activities Cash flows fromfinancing activities:Proceeds from exerciseof stock options and 158 8 2,056 856 employee stock purchaseplanProceeds from PPP loan - 18 7,167

Proceeds from equity - (1 ) - 28,798 offeringOffering costs on the - - - (2,303 )equity offeringPurchase of capped call - - (16,134 ) -

Proceeds from issuance - - 138,250 - of Convertible notesPayment of issuance - - (4,717 ) - costs of ConvertiblenotesTaxes paid related to (511 ) (223 ) (1,963 ) (3,340 )net share settlement ofequity awardsPayments on finance (103 ) (133 ) (314 ) (513 )lease obligationsNet cash provided by (456 ) (331 ) 117,178 30,665 (used in) financingactivities Net increase / (6,714 ) (4,265 ) 115,439 3,078 (decrease) in cash andcash equivalentsCash and cash 169,200 33,659 47,047 26,316 equivalents at beginningof periodCash and cash $ 162,486 $ 29,394 $ 162,486 $ 29,394 equivalents at end ofperiod CUTERA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in thousands, except percentage data)

(unaudited)

Three Months Ended

% Change

Nine Months Ended

% Change

September 30,

September 30,

2021 Vs

September 30,

September 30,

2021 Vs

2021

2020

2020

2021

2020

2020

Revenue By Geography:North America$26,710

$18,488

+44.5%

$75,794

$45,483

+66.6%

Japan19,335

11,497

+68.2%

53,311

27,176

+96.2%

Rest of World11,339

9,147

+24.0%

36,536

25,081

+45.7%

Total Net Revenue$57,384

$39,132

+46.6%

$165,641

$97,740

+69.5%

International as a percentage of total revenue53.5

%

52.8

%

54.2

%

53.5

%

Revenue By Product Category:Systems- North America$20,680

$13,700

+50.9%

$57,353

$32,296

+77.6%

- Rest of World (including Japan)11,511

10,421

+10.5%

38,726

28,325

+36.7%

Total Systems32,191

24,121

+33.5%

96,079

60,621

+58.5%

Consumables3,684

2,304

+59.9%

11,040

6,263

+76.3%

Skincare14,819

6,829

+117.0%

38,937

14,506

+168.4%

Total Products50,694

33,254

+52.4%

146,056

81,390

+79.5%

Service6,690

5,878

+13.8%

19,585

16,350

+19.8%

Total Net Revenue$57,384

$39,132

+46.6%

$165,641

$97,740

+69.5%

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2021

2020

2021

2020

Pre-tax Stock-Based Compensation Expense:Cost of revenue$330

$326

$908

$1,359

Sales and marketing711

648

1,954

2,617

Research and development1,020

254

1,628

1,344

General and administrative1,681

754

4,017

2,736

$3,742

$1,982

$8,507

$8,057

CUTERA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in thousands, except percentage data)

(unaudited)



Three Months Ended % Nine Months Ended % Change Change

September September 2021 Vs September September 2021 Vs 30, 30, 30, 30,

2021 2020 2020 2021 2020 2020

Revenue ByGeography:North America $ 26,710 $ 18,488 +44.5% $ 75,794 $ 45,483 +66.6%

Japan 19,335 11,497 +68.2% 53,311 27,176 +96.2%

Rest of World 11,339 9,147 +24.0% 36,536 25,081 +45.7%

Total Net $ 57,384 $ 39,132 +46.6% $ 165,641 $ 97,740 +69.5%RevenueInternationalas a 53.5 % 52.8 % 54.2 % 53.5 % percentage oftotal revenue

Revenue By ProductCategory:Systems

- North $ 20,680 $ 13,700 +50.9% $ 57,353 $ 32,296 +77.6%America- Rest ofWorld 11,511 10,421 +10.5% 38,726 28,325 +36.7%(includingJapan)Total Systems 32,191 24,121 +33.5% 96,079 60,621 +58.5%

Consumables 3,684 2,304 +59.9% 11,040 6,263 +76.3%

Skincare 14,819 6,829 +117.0% 38,937 14,506 +168.4%

Total Products 50,694 33,254 +52.4% 146,056 81,390 +79.5%



Service 6,690 5,878 +13.8% 19,585 16,350 +19.8%

Total Net $ 57,384 $ 39,132 +46.6% $ 165,641 $ 97,740 +69.5%Revenue Three Months Ended Nine Months Ended

September September September September 30, 30, 30, 30,

2021 2020 2021 2020

Pre-taxStock-BasedCompensationExpense:Cost of $ 330 $ 326 $ 908 $ 1,359 revenueSales and 711 648 1,954 2,617 marketingResearch and 1,020 254 1,628 1,344 developmentGeneral and 1,681 754 4,017 2,736 administrative $ 3,742 $ 1,982 $ 8,507 $ 8,057

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 September 30, 2021

Three Months Ended September 30, 2020

GAAP

Depreciation and Amortization

Stock-Based Compensation

ERP Implementation cost

Severance (RIF)

Legal - Lutronic

Other Adjustments

Non-GAAP

GAAP

Depreciation and Amortization

Stock-Based Compensation

CRM and ERP Implementation/ write-off

Severance (RIF)

Legal -Former CFO Settlement/Lutronic

Other Adjustments

Non-GAAP

Net revenue$

57,384

-

-

-

-

-

-

$

57,384

$

39,132

-

-

-

-

-

-

$

39,132

Cost of revenue23,959

(132

)

(330

)

-

-

-

445

23,942

17,387

(140

)

(326

)

-

(186

)

-

-

16,735

Gross margin33,425

132

330

-

-

-

(445

)

33,442

21,746

140

326

-

186

-

-

22,398

Gross margin %58.2

%

58.3

%

55.6

%

57.2

%

Operating expenses:Sales and marketing19,190

(549

)

(711

)

-

-

-

-

17,930

12,286

(756

)

(648

)

-

(25

)

-

-

10,857

Research and development5,802

(49

)

(1,020

)

-

-

-

-

4,733

3,432

(39

)

(254

)

-

(67

)

-

-

3,072

General and administrative7,807

(8

)

(1,681

)

(128

)

-

(288

)

-

5,702

7,239

(28

)

(754

)

-

(27

)

(341

)

-

6,089

Total operating expenses32,799

(606

)

(3,412

)

(128

)

-

(288

)

-

28,365

22,957

(823

)

(1,656

)

-

(119

)

(341

)

-

20,018

Income (loss) from operations626

738

3,742

128

-

288

(445

)

5,077

(1,211

)

963

1,982

-

305

341

-

2,380

Interest and other income (expense), netAmortization of debt issuance costs(225

)

-

-

-

-

-

-

(225

)

-

-

-

-

-

-

-

-

Interest on Convertible notes(768

)

-

-

-

-

-

-

(768

)

-

-

-

-

-

-

-

-

Gain on extinguishment of PPP loan-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Other expense(561

)

-

-

-

-

-

-

(561

)

(382

)

-

-

-

-

-

-

(382

)

Total interest and other income (expense), net(1,554

)

-

-

-

-

-

-

(1,554

)

(382

)

-

-

-

-

-

-

(382

)

Income (loss) before income taxes(928

)

738

3,742

128

-

288

(445

)

3,523

(1,593

)

963

1,982

-

305

341

-

1,998

Provision for income taxes462

-

-

-

-

-

-

462

664

-

-

-

-

-

2

666

Net income (loss)$

(1,390

)

$

738

$

3,742

$

128

$

-

$

288

$

(445

)

$

3,061

$

(2,257

)

$

963

$

1,982

$

-

$

305

$

341

$

(2

)

$

1,332

Net income (loss) per share:Basic$

(0.08

)

$

0.17

$

(0.13

)

$

0.08

Weighted-average number of shares used in per share calculations:Basic17,945

17,945

17,603

17,603

Operating expenses as a % of net revenueGAAP

Non-GAAP

GAAP

Non-GAAP

Sales and marketing33.4

%

31.2

%

31.4

%

27.7

%

Research and development10.1

%

8.2

%

8.8

%

7.9

%

General and administrative13.6

%

9.9

%

18.5

%

15.6

%

57.2

%

49.4

%

58.7

%

51.2

%

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 September 30, 2021 Three Months Ended September 30, 2020

Severance (RIF)



Legal -Former CFO Depreciation ERP Depreciation CRM and ERP Settlement/Lutronic GAAP and Stock-Based Implementation Severance Legal - Other Non-GAAP GAAP and Stock-Based Implementation Amortization Compensation cost (RIF) Lutronic Adjustments Amortization Compensation / write-off Other Adjustments



Non-GAAP

-





-



Net revenue $ 57,384 - - - - - - $ 57,384 $ 39,132 - - -

-



$

39,132



(186

)



-



Cost of revenue 23,959 (132 ) (330 ) - - - 445 23,942 17,387 (140 ) (326 ) -

-





16,735



186





-



Gross margin 33,425 132 330 - - - (445 ) 33,442 21,746 140 326 -

-





22,398





Gross margin % 58.2 % 58.3 % 55.6 % 57.2

%

Operating expenses: (25

)



-



Sales and marketing 19,190 (549 ) (711 ) - - - - 17,930 12,286 (756 ) (648 ) -

-





10,857



(67

)



-



Research and development 5,802 (49 ) (1,020 ) - - - - 4,733 3,432 (39 ) (254 ) -

-





3,072



(27

)



(341

)

General and administrative 7,807 (8 ) (1,681 ) (128 ) - (288 ) - 5,702 7,239 (28 ) (754 ) -

-





6,089



(119

)



(341

)

Total operating expenses 32,799 (606 ) (3,412 ) (128 ) - (288 ) - 28,365 22,957 (823 ) (1,656 ) -

-





20,018



305





341



Income (loss) from operations 626 738 3,742 128 - 288 (445 ) 5,077 (1,211 ) 963 1,982 -

-





2,380



Interest and other income (expense),net -





-



Amortization of debt issuance costs (225 ) - - - - - - (225 ) - - - -

-





-



-





-



Interest on Convertible notes (768 ) - - - - - - (768 ) - - - -

-





-



-





-



Gain on extinguishment of PPP loan - - - - - - - - - - - -

-





-



-





-



Other expense (561 ) - - - - - - (561 ) (382 ) - - -

-





(382

)

-





-



Total interest and other income (1,554 ) - - - - - - (1,554 ) (382 ) - - - (expense), net -





(382

)

305





341



Income (loss) before income taxes (928 ) 738 3,742 128 - 288 (445 ) 3,523 (1,593 ) 963 1,982 -

-





1,998



-





-



Provision for income taxes 462 - - - - - - 462 664 - - -

2





666



305



$

341



Net income (loss) $ (1,390 ) $ 738 $ 3,742 $ 128 $ - $ 288 $ (445 ) $ 3,061 $ (2,257 ) $ 963 $ 1,982 $ - $ $

(2

)

$

1,332



Net income (loss) per share: $

Basic $ (0.08 ) $ 0.17 $ (0.13 ) 0.08



Weighted-average number of shares usedin per share calculations:

Basic 17,945 17,945 17,603 17,603



Operating expenses as a % of net GAAP Non-GAAP GAAP Non-GAAPrevenue

Sales and marketing 33.4 % 31.2 % 31.4 % 27.7

%



Research and development 10.1 % 8.2 % 8.8 % 7.9

%



General and administrative 13.6 % 9.9 % 18.5 % 15.6

%



57.2 % 49.4 % 58.7 % 51.2

%

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)

Nine Months Ended September 30, 2021

Nine Months Ended September 30, 2020

GAAP

Depreciation and Amortization

Stock-Based Compensation

CRM and ERP Implementation cost

Severance (RIF)

Legal - Lutronic

Other Adjustments

Non-GAAP

GAAP

Depreciation and Amortization

Stock-Based Compensation

CRM and ERP Implementation/ write-off

Severance (RIF)

Legal -Former CFO Settlement/Lutronic

Other Adjustments

Non-GAAP

Net revenue$

165,641

-

-

-

-

$

165,641

$

97,740

-

-

-

-

-

-

$

97,740

Cost of revenue70,717

(432

)

(908

)

-

-

-

791

70,168

50,034

(417

)

(1,359

)

-

(318

)

-

-

47,940

Gross margin94,924

432

908

-

-

-

(791

)

95,473

47,706

417

1,359

-

318

-

-

49,800

Gross margin %57.3

%

57.6

%

48.8

%

51.0

%

Operating expenses:Sales and marketing52,668

(1,827

)

(1,954

)

(182

)

(638

)

-

-

48,067

38,109

(2,454

)

(2,617

)

-

(274

)

-

-

32,764

Research and development14,764

(133

)

(1,628

)

-

-

-

-

13,003

10,294

(115

)

(1,344

)

-

(130

)

-

-

8,705

General and administrative23,633

(56

)

(4,017

)

(605

)

-

(979

)

-

17,976

23,575

(84

)

(2,736

)

(1,139

)

(101

)

(1,359

)

(324

)

17,832

Total operating expenses91,065

(2,016

)

(7,599

)

(787

)

(638

)

(979

)

-

79,046

71,978

(2,653

)

(6,698

)

(1,139

)

(505

)

(1,359

)

(324

)

59,300

Income (loss) from operations3,859

2,448

8,507

787

638

979

(791

)

16,427

(24,272

)

3,070

8,057

1,139

823

1,359

324

(9,500

)

Interest and other income (expense), netAmortization of debt issuance costs(492

)

-

-

-

-

-

-

(492

)

-

-

-

-

-

-

-

-

Interest on Convertible notes(1,737

)

-

-

-

-

-

-

(1,737

)

-

-

-

-

-

-

-

-

Gain on extinguishment of PPP loan7,185

-

-

-

-

-

(7,185

)

-

-

-

-

-

-

-

-

-

Other expense(1,976

)

-

-

-

-

-

-

(1,976

)

(586

)

-

-

-

-

-

-

(586

)

Total interest and other income (expense), net2,980

-

-

-

-

-

(7,185

)

(4,205

)

(586

)

-

-

-

-

-

-

(586

)

Income (loss) before income taxes6,839

2,448

8,507

787

638

979

(7,976

)

12,222

(24,858

)

3,070

8,057

1,139

823

1,359

324

(10,086

)

Provision for income taxes842

-

-

-

-

-

-

842

1,207

-

-

-

-

-

9

1,216

Net income (loss)$

5,997

2,448

8,507

787

638

979

(7,976

)

$

11,380

$

(26,065

)

3,070

8,057

1,139

823

1,359

315

$

(11,302

)

Net income (loss) per share:Basic$

0.34

$

0.64

$

(1.59

)

$

(0.69

)

Weighted-average number of shares used in per share calculations:Basic17,860

17,860

16,368

16,368

Operating expenses as a % of net revenueGAAP

Non-GAAP

GAAP

Non-GAAP

Sales and marketing31.8

%

29.0

%

39.0

%

33.5

%

Research and development8.9

%

7.9

%

10.5

%

8.9

%

General and administrative14.3

%

10.9

%

24.1

%

18.2

%

55.0

%

47.7

%

73.6

%

60.7

%

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)

Nine Months Ended September 30, 2021 Nine Months Ended September 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 Amortization Compensation cost (RIF) Lutronic Adjustments Amortization Compensation / (RIF) Lutronic Adjustments Non-GAAP write-off

$

Net revenue $ 165,641 - - - - $ 165,641 $ 97,740 - - - - - - 97,740





Cost of revenue 70,717 (432 ) (908 ) - - - 791 70,168 50,034 (417 ) (1,359 ) - (318 ) - - 47,940





Gross margin 94,924 432 908 - - - (791 ) 95,473 47,706 417 1,359 - 318 - - 49,800





Gross margin % 57.3 % 57.6 % 48.8 % 51.0

%

Operating expenses:

Sales and marketing 52,668 (1,827 ) (1,954 ) (182 ) (638 ) - - 48,067 38,109 (2,454 ) (2,617 ) - (274 ) - - 32,764





Research and development 14,764 (133 ) (1,628 ) - - - - 13,003 10,294 (115 ) (1,344 ) - (130 ) - - 8,705





General and administrative 23,633 (56 ) (4,017 ) (605 ) - (979 ) - 17,976 23,575 (84 ) (2,736 ) (1,139 ) (101 ) (1,359 ) (324 ) 17,832





Total operating expenses 91,065 (2,016 ) (7,599 ) (787 ) (638 ) (979 ) - 79,046 71,978 (2,653 ) (6,698 ) (1,139 ) (505 ) (1,359 ) (324 ) 59,300





Income (loss) from operations 3,859 2,448 8,507 787 638 979 (791 ) 16,427 (24,272 ) 3,070 8,057 1,139 823 1,359 324 (9,500

)

Interest and other income(expense), net

Amortization of debt issuance (492 ) - - - - - - (492 ) - - - - - - - -costs



Interest on Convertible notes (1,737 ) - - - - - - (1,737 ) - - - - - - - -





Gain on extinguishment of PPP 7,185 - - - - - (7,185 ) - - - - - - - - -loan



Other expense (1,976 ) - - - - - - (1,976 ) (586 ) - - - - - - (586

)



Total interest and other income 2,980 - - - - - (7,185 ) (4,205 ) (586 ) - - - - - - (586(expense), net )



Income (loss) before income 6,839 2,448 8,507 787 638 979 (7,976 ) 12,222 (24,858 ) 3,070 8,057 1,139 823 1,359 324 (10,086taxes )



Provision for income taxes 842 - - - - - - 842 1,207 - - - - - 9 1,216



$

Net income (loss) $ 5,997 2,448 8,507 787 638 979 (7,976 ) $ 11,380 $ (26,065 ) 3,070 8,057 1,139 823 1,359 315 (11,302

)

Net income (loss) per share: $

Basic $ 0.34 $ 0.64 $ (1.59 ) (0.69

)

Weighted-average number ofshares used in per sharecalculations:

Basic 17,860 17,860 16,368 16,368



Operating expenses as a % of GAAP Non-GAAP GAAP net revenue Non-GAAP



Sales and marketing 31.8 % 29.0 % 39.0 % 33.5

%



Research and development 8.9 % 7.9 % 10.5 % 8.9

%



General and administrative 14.3 % 10.9 % 24.1 % 18.2

%



55.0 % 47.7 % 73.6 % 60.7

%

CUTERA, INC.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(in thousands)

(unaudited)

Three Months Ended

Nine Months Ended

September 30, 2021

Net income (loss)$

(1,390

)

$

5,997

Adjustments:Stock-based compensation3,742

8,507

Depreciation and amortization738

2,448

ERP implementation Cost128

787

Severance (RIF)-

638

Legal -Lutronic288

979

Other adjustments(445

)

(791

)

Gain on extinguishment of PPP loan-

(7,185

)

Interest and other expense, net1,554

4,205

Provision for income taxes462

842

Total adjustments6,467

10,430

Adjusted EBITDA$

5,077

$

16,427

View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005984/en/

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