8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

February 26, 2020 

Date of Report (date of earliest event reported)

Cutera, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	000-50644	77-0492262
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

3240 Bayshore Blvd.

Brisbane, California 94005

(Address of principal executive offices)

(415) 657-5500

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.001 par value)	CUTR	The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02.  Results of Operations and Financial Condition.

On February 26, 2020, Cutera, Inc. (“Cutera” or the “Company”) issued a press release announcing its financial results for the quarter and year ended December 31, 2019. Cutera hereby incorporates by reference herein the information set forth in its press release dated February 26, 2020, a copy of which is attached hereto as Exhibit 99.1. Except as otherwise provided in the press release, the press release speaks only as of the date of such press release and it shall not create any implication that the affairs of Cutera have continued unchanged since such date.

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

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

Item 9.01.  Financial Statements and Exhibits.

(d)  Exhibits.

Exhibit No.	Description
99.1	Press Release of Cutera, Inc. dated as of February 26, 2020.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CUTERA, INC.
Date: February 26, 2020	/s/ DARREN W. ALCH
	Darren W. Alch
	General Counsel & Corporate Secretary

EX-99.1

Exhibit 99.1

Cutera, Inc. Announces Fourth Quarter and Full-Year 2019 Financial Results

Strong fourth quarter results conclude year of balanced growth and expanding margins

BRISBANE, California, February 26, 2020 ─ Cutera, Inc. (NASDAQ: CUTR) (“Cutera” or the “Company”), a leading provider of laser and other energy-based aesthetic systems for practitioners worldwide, today reported financial results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 Financial and Operational Highlights

● Revenue was $51.8 million, an increase of 14% over the prior-year period, driven by:

o truSculpt portfolio revenue growth of 52%

o Recurring revenue growth of 28%, and

o International revenue growth of 19%.

● Gross Margin was 56%, compared to 41% in the prior-year period, driven by commercial discipline, favorable product mix and period cost improvements.

● Net loss was $2.1 million, or $0.15 per fully diluted share, as compared to a net loss of $26.3 million, or $1.89 per fully diluted share, in the prior-year period.

Full-Year 2019 Financial and Operational Highlights

● Revenue was $181.7 million, an increase of 12% over the prior-year period, driven by:

o truSculpt portfolio revenue growth of 44%

o Recurring revenue growth of 37%, and

o International revenue growth of 24%.

● Gross Margin was 54%, compared to 49% in the prior-year period, driven by commercial pricing discipline, favorable product mix and other cost of sales expense reductions.

● Net loss was $12.3 million, or $0.88 per fully diluted share, as compared to a net loss of $30.8 million, or $2.23 per fully diluted share, in the prior-year period.

“Our strong fourth quarter results reflect the entire organization’s commitment to the execution of our commercial and operational initiatives,” commented Dave Mowry, Chief Executive Officer. “The Cutera team delivered solid results across multiple commercial segments, with particular strength in our Body Sculpting franchise, the International business, and recurring revenue, which saw continued expansion during the fourth quarter. Additionally, the team has established a strong foundation for sustained gross margin expansion and improved profitability moving forward. As we move into 2020, we look to build upon the solid momentum created in 2019 with focus, energy, and a commitment to excellence.”

2020 Financial Outlook

● Full-year 2020 revenue is expected in the range of $194 million to $200 million, an increase of 7% to 10% over 2019.

● Full-year 2020 non-GAAP* gross margin is expected to improve over the-full year 2019 non-GAAP gross margin.

● Full-year 2020 adjusted EBITDA* is expected in the range of $6 million to $7 million.

Conference Call

The Company’s management will host a conference call to discuss these results and related matters today at 1:30 p.m. PT (4:30 p.m. ET). Participating on the call will be Dave Mowry, Chief Executive Officer, Jason Richey, President, and Fuad Ahmad, Interim Chief Financial Officer.

To participate in the conference call, dial 1-877-705-6003 (domestic) or +1 201-493-6725 (international) and refer to the Conference Code: 13699205.

The call will also be webcast and can be accessed from the Investor Relations section of Cutera’s website at http://www.cutera.com/. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.

About Cutera, Inc.

Brisbane, California-based Cutera is a leading provider of laser and other energy-based aesthetic systems for practitioners worldwide. Since 1998, Cutera has developed innovative, easy-to-use products that enable physicians and other qualified practitioners to offer safe and effective aesthetic treatments to their patients. For more information, call 1-888-4CUTERA or visit www.cutera.com.

Cutera, Inc.

Anne Werdan

Director, Investor Relations

415-657-5500

awerdan@cutera.com 

*Use of Non-GAAP Financial Measures

In this press release, in order to supplement the Company’s condensed consolidated financial statements presented in accordance with Generally Accepted Accounting Principles, or GAAP, management has disclosed certain non-GAAP financial measures for the statement of operations and net income (loss) per diluted share. Non-GAAP adjustments include stock-based compensation, depreciation, amortization, executive separation costs, customer relationship management (“CRM”) and enterprise resource planning (“ERP”) system implementation costs, as well as the net tax impact of excluding these items. From time to time in the future, there may be other items that we may exclude if the Company believes that doing so is consistent with the goal of providing useful information to investors and management. The Company has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. The Company has not provided a reconciliation of non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis due to the potential significant variability, limited visibility, unpredictability, or unique non-recurring nature of the items. Forward-looking non-GAAP measures include adjusted EBITDA. The Company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, stock-based compensation, executive separation costs, and charges related to CRM and ERP software implementation costs.

Company management uses these measurements as aids in monitoring the Company’s ongoing financial performance from quarter to quarter, and year to year, on a regular basis and for benchmarking against other similar companies. Non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP financial measures should be considered along with, but not as alternatives to, the operating performance measure as prescribed by GAAP. Non-GAAP financial measures for the statement of operations and net income per diluted share exclude the following:

Non-cash expenses for stock-based compensation. The Company has excluded the effect of stock-based compensation expenses in calculating its non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to its employees, the Company continues to evaluate its business performance excluding stock-based compensation expenses. The Company records stock-based compensation expense related to grants of options, employee stock purchase plan, and performance and restricted stock. Depending upon the size, timing and the terms of the grants, this expense may vary significantly but will recur in future periods. The Company believes that excluding stock-based compensation better allows for comparisons to its peer companies;

Depreciation and amortization. The Company has excluded depreciation and amortization expense in calculating its non-GAAP operating expenses and net income measures. Depreciation and amortization are non-cash charges to current operations;

Executive separation. We have excluded costs associated with the resignation of our former Chief Executive Officer in calculating our non-GAAP operating expenses and net income measures. We exclude these non-recurring separation costs because we believe that these items do not reflect future operating expenses;

Customer Relationship Management. We have excluded CRM system costs related to direct and incremental costs incurred in connection with our multi-phase implementation of a new CRM solution and the related technology infrastructure costs. We exclude these costs because we believe that these items do not reflect future operating expenses and will be inconsistent in amounts and frequency making it difficult to contribute to a meaningful evaluation of our operating performance; and

Enterprise Resource Planning. We have excluded ERP system costs related to direct and incremental costs incurred in connection with our multi-phase implementation of a new ERP solution and the related technology infrastructure costs. We exclude these costs because we believe that these items do not reflect future operating expenses and will be inconsistent in amounts and frequency making it difficult to contribute to a meaningful evaluation of our operating performance.

The Company believes that excluding all of the items above allows users of its financial statements to better review and assess both current and historical results of operations.

Safe Harbor Statement

Certain statements in this press release, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include, but are not limited to, Cutera’s plans, objectives, strategies, financial performance and outlook, CFO and other senior leadership searches, product launches and performance, trends, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, the Company’s actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” “believe,” “will,” “should,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “forecast,” “foresee” or variations of these terms and similar expressions, or the negative of these terms or similar expressions. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause Cutera's actual results to differ materially from the statements contained herein. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements. There are a number of risks, uncertainties and other important factors, many of which are beyond the Company’s control, that could cause its actual results to differ materially from the forward-looking statements contained in this press release, including those described in the “Risk Factors” section of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, the Registration Statement on Form S-,8 and other documents filed from time to time with the United States Securities and Exchange Commission by Cutera.

All information in this press release is as of the date of its release. Accordingly, undue reliance should not be placed on forward-looking statements. Cutera undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Cutera's financial performance for the fourth quarter and full year ended December 31, 2019, as discussed in this release, is preliminary and unaudited, and subject to adjustment.

CUTERA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

	December 31,		September 30,		December 31,
	2019		2019		2018(1)(2)
Assets
Current assets:
Cash and cash equivalents	$	26,316	$	22,879	$	26,052
Marketable investments		7,605		6,448		9,523
Accounts receivable, net		21,556		23,222		19,637
Inventories		33,921		34,042		28,014
Other current assets and prepaid expenses		5,648		5,334		3,972
Total current assets		95,046		91,925		87,198
Property and equipment, net		2,817		2,771		2,672
Deferred tax asset		423		459		457
Goodwill		1,339		1,339		1,339
Operating lease right-of-use assets		7,702		8,332		-
Other long-term assets		6,411		6,410		5,971
Total assets	$	113,738	$	111,236	$	97,637
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	12,685	$	14,140	$	11,279
Accrued liabilities		30,307		28,096		23,300
Operating leases liabilities		24		634		-
Extended warranty liabilities		1,999		2,232		3,159
Deferred revenue		10,831		10,164		9,882
Total current liabilities		55,846		55,266		47,620
Deferred revenue, net of current portion		3,391		3,309		2,684
Income tax liability		93		93		394
Operating lease liabilities, net of current portion		7,888		7,888		-
Other long-term liabilities		578		690		553
Total liabilities		67,796		67,246		51,251
Stockholders’ equity:
Common stock		14		14		14
Additional paid-in capital		82,346		78,305		70,451
Accumulated deficit		(36,358)		(34,270)		(24,010)
Accumulated other comprehensive loss		(60)		(59)		(69)
Total stockholders' equity		45,942		43,990		46,386
Total liabilities and stockholders' equity	$	113,738	$	111,236	$	97,637

(1) As of January 1, 2019, the Company adopted the requirements of ASC 842 Leases using the modified retrospective method, and as a result, there is a lack of comparability to the prior periods presented.

(2) As of April 1, 2019, the Company adopted the requirements of ASU 2018-15 Intangible - Goodwill and Other - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract on a prospective basis, and as a result, there is a lack of comparability to the prior periods presented.

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended						Twelve Months Ended
	December 31,			December 31,			December 31,			December 31,
	2019			2018			2019			2018
Products	$	45,593			39,946			158,638			142,535
Service		6,202			5,523			23,074			20,185
Total net revenue		51,795			45,469			181,712			162,720
Products		18,415			19,967			64,693			66,843
Service		4,590			6,716			18,856			15,495
Total cost of revenue		23,005			26,683			83,549			82,338
Gross profit		28,790			18,786			98,163			80,382
Gross margin %		56	%		41	%		54	%		49	%
Operating expenses:
Sales and marketing		20,323			15,318			71,109			58,420
Research and development		4,463			3,464			15,085			14,359
General and administrative		5,933			5,494			24,033			20,995
Total operating expenses		30,719			24,276			110,227			93,774
Loss from operations		(1,929)			(5,490)			(12,064)			(13,392)
Interest and other expense, net		(20)			(44)			(199)			(123)
Loss before income taxes		(1,949)			(5,534)			(12,263)			(13,515)
Income tax expense (benefit)		139			20,759			85			17,255
Net loss		(2,088)			(26,293)			(12,348)			(30,770)
Net loss per share:
Basic		(0.15)			(1.89)			(0.88)			(2.23)
Diluted		(0.15)			(1.89)			(0.88)			(2.23)
Weighted-average number of shares used in per share calculations:
Basic		14,261			13,932			14,096			13,771
Diluted		14,261			13,932			14,096			13,771

CUTERA, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in thousands, except percentage data)

(unaudited)

	Three Months Ended				% Change			Twelve Months Ended				% Change
	December 31,		December 31,		2019 Vs			December 31,		December 31,		2019 Vs
	2019		2018		2018			2019		2018		2018
Revenue By Geography:
United States	$	31,271	$	28,265		+11	%	$	106,243	$	101,862		+4	%
International		20,524		17,204		+19	%		75,469		60,858		+24	%
Total Net Revenue	$	51,795	$	45,469		+14	%	$	181,712	$	162,720		+12	%
International as a percentage of total revenue		40%		38%					42%		37%
Revenue By Product Category:
Systems
- North America	$	28,526	$	26,519		+8	%	$	96,718	$	93,977		+3	%
- Rest of World		12,246		10,349		+18	%		43,760		38,618		+13	%
Total Systems		40,772		36,868		+11	%		140,478		132,595		+6	%
Consumables		2,539		1,281		+98	%		9,648		4,162		+132	%
Skincare		2,282		1,797		+27	%		8,512		5,778		+47	%
Total Products		45,593		39,946		+14	%		158,638		142,535		+11	%
Service		6,202		5,523		+12	%		23,074		20,185		+14	%
Total Net Revenue	$	51,795	$	45,469		+14	%	$	181,712	$	162,720		+12	%

	Three Months Ended				Twelve Months Ended
	December 31,		December 31,		December 31,		December 31,
	2019		2018		2019		2018
Pre-tax Stock-Based Compensation Expense:
Cost of revenue	$	469	$	167	$	1,572	$	743
Sales and marketing		1,430		360		4,510		2,105
Research and development		460		208		1,536		824
General and administrative		469		897		2,214		3484
	$	2,828	$	1,632	$	9,832	$	7,156

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended				Twelve Months Ended
	December 31,		December 31,		December 31,		December 31,
	2019		2018		2019		2018
Cash flows from operating activities:
Net loss	$	(2,088)	$	(26,293)	$	(12,348)	$	(30,770)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		2,828		1,632		9,832		7,156
Depreciation of tangible assets		364		360		1,548		1,209
Amortization of contract acquisition costs		746		530		2,915		1,834
Change in deferred tax asset		36		20,945		34		17,438
Provision for doubtful accounts receivable		(57)		380		590		1,257
Other		72		26		127		241
Changes in assets and liabilities:
Accounts receivable		1,723		5,427		(2,509)		(117)
Inventories		121		3,308		(5,907)		768
Other current assets and prepaid expenses		(339)		(273)		(1,762)		(1,070)
Other long-term assets		(747)		(453)		(3,355)		(2,754)
Accounts payable		(1,455)		(2,042)		1,406		4,277
Accrued liabilities		2,257		396		7,157		(3,781)
Extended warranty liabilities		(233)		3,159		(1,160)		3,159
Other long-term liabilities		-		35		(140)		140
Deferred revenue		749		1,247		1,656		1,305
Income tax liability		-		42		(301)		15
Net cash provided by (used in) operating activities		3,977		8,426		(2,217)		307
Cash flows from investing activities:
Acquisition of property, equipment and software		(467)		(274)		(991)		(1,488)
Disposal of property and equipment		-		-		45		41
Proceeds from sales of marketable investments		-		-		-		13,044
Proceeds from maturities of marketable investments		3,250		2,000		14,700		10,050
Purchase of marketable investments		(4,383)		(6,484)		(12,687)		(10,874)
Net cash provided by (used in) investing activities		(1,600)		(4,758)		1,067		10,773
Cash flows from financing activities:
Proceeds from exercise of stock options and employee stock purchase plan		1,294		796		2,894		4,399
Taxes paid related to net share settlement of equity awards		(81)		(157)		(831)		(3,128)
Payments on finance lease obligations		(153)		(121)		(649)		(483)
Net cash provided by financing activities		1,060		518		1,414		788
Net increase in cash and cash equivalents		3,437		4,186		264		11,868
Cash and cash equivalents at beginning of period		22,879		21,866		26,052		14,184
Cash and cash equivalents at end of period	$	26,316	$	26,052	$	26,316	$	26,052

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 December 31, 2019																		Three Months Ended December 31, 2018
	GAAP			Depreciation and Amortization			Stock-Based Compensation			CRM and ERP Implementation			Taxes and Other Adjustments			Non-GAAP			GAAP			Depreciation and Amortization			Stock-Based Compensation			CRM and ERP Implementation			Taxes and Other Adjustments			Non-GAAP
Net revenue	$	51,795			-			-			-			-		$	51,795		$	45,469			-			-			-			-		$	45,469
Cost of revenue		23,005			(136	)		(469	)		-			-			22,400			26,683			(94	)		(167	)		-			(4,956	)		21,466
Gross profit		28,790			136			469			-			-			29,395			18,786			94			167			-			4,956			24,003
Gross margin %		56	%														57	%		41	%														53	%
Operating expenses:
Sales and marketing		20,323			(910	)		(1,430	)		(124	)		-			17,859			15,318			(692	)		(360	)		-			-			14,266
Research and development		4,463			(35	)		(460	)		-			-			3,968			3,464			(23	)		(208	)		-			-			3,233
General and administrative		5,933			(29	)		(469	)		41			-			5,476			5,494			(81	)		(897	)		(216	)		-			4,300
Total operating expenses		30,719			(974	)		(2,359	)		(83	)		-			27,303			24,276			(796	)		(1,465	)		(216	)		-			21,799
Income (loss) from operations		(1,929	)		1,110			2,828			83			-			2,092			(5,490	)		890			1,632			216			4,956			2,204
Interest and other expense, net		(20	)		-			-			-			-			(20	)		(44	)		-			-			-			-			(44	)
Income (loss) before income taxes		(1,949	)		1,110			2,828			83			-			2,072			(5,534	)		890			1,632			216			4,956			2,160
Provision (benefit) for income taxes		139			-			-			-			(201	)		(62	)		20,759			-			-			-			(17,037	)		3,722
Net income (loss)	$	(2,088	)		1,110			2,828			83			201		$	2,134		$	(26,293	)		890			1,632			216			21,993		$	(1,562	)
Net income (loss) per share:
Basic	$	(0.15	)													$	0.15		$	(1.89	)													$	(0.11	)
Diluted	$	(0.15	)													$	0.14		$	(1.89	)													$	(0.11	)
Weighted-average number of shares used in per share calculations:
Basic		14,261															14,261			13,932															13,932
Diluted		14,261															14,904			13,932															13,932

Operating expenses as a % of net revenue	GAAP			Non-GAAP			GAAP			Non-GAAP
Sales and marketing		39.2	%		34.5	%		33.7	%		31.4	%
Research and development		8.6	%		7.7	%		7.6	%		7.1	%
General and administrative		11.5	%		10.6	%		12.1	%		9.5	%
		59.3	%		52.7	%		53.4	%		47.9	%

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)

	Twelve Months Ended December 31, 2019																		Twelve Months Ended December 31, 2018
	GAAP			Depreciation and Amortization			Stock-Based Compensation			CRM and ERP Implementation			Taxes and Other Adjustments			Non-GAAP			GAAP			Depreciation and Amortization			Stock-Based Compensation			CRM and ERP Implementation			Taxes and Other Adjustments			Non-GAAP
Net revenue	$	181,712			-			-			-			-		$	181,712		$	162,720			-			-			-			-		$	162,720
Cost of revenue		83,549			(522	)		(1,572	)		-			-			81,455			82,338			(319	)		(743	)		-			(4,956	)		76,320
Gross profit		98,163			522			1,572			-			-			100,257			80,382			319			743			-			4,956			86,400
Gross margin %		54	%														55	%		49	%														53	%
Operating expenses:
Sales and marketing		71,109			(3,627	)		(4,510	)		(325	)		-			62,647			58,420			(2,458	)		(2,104	)		-			-			53,858
Research and development		15,085			(109	)		(1,536	)		-			-			13,440			14,359			(74	)		(825	)		-			-			13,460
General and administrative		24,033			(205	)		(2,214	)		(1,089	)		(614	)(a)		19,911			20,995			(192	)		(3,484	)		(216	)		-			17,103
Total operating expenses		110,227			(3,941	)		(8,260	)		(1,414	)		(614	)		95,998			93,774			(2,724	)		(6,413	)		(216	)		-			84,421
Income (loss) from operations		(12,064	)		4,463			9,832			1,414			614			4,259			(13,392	)		3,043			7,156			216			4,956			1,979
Interest and other expense, net		(199	)		-			-			-			-			(199	)		(123	)		-			-			-			-			(123	)
Income (loss) before income taxes		(12,263	)		4,463			9,832			1,414			614			4,060			(13,515	)		3,043			7,156			216			4,956			1,856
Provision (benefit) for income taxes		85			-			-			-			87			172			17,255			-			-			-			(16,906	)		349
Net income (loss)	$	(12,348	)		4,463			9,832			1,414			527		$	3,888		$	(30,770	)		3,043			7,156			216			21,862		$	1,507
Net income (loss) per share:
Basic	$	(0.88)														$	0.28		$	(2.23)														$	0.11
Diluted	$	(0.88)														$	0.27		$	(2.23	)													$	0.11
Weighted-average number of shares used in per share calculations:
Basic		14,096															14,096			13,771															13,771
Diluted		14,096															14,512			13,771															14,305

a) Other adjustment of $614 related to Executive separation costs.

Operating expenses as a % of net revenue	GAAP		Non-GAAP		GAAP		Non-GAAP
Sales and marketing		39.1%		34.5%		35.9%		33.1%
Research and development		8.3%		7.4%		8.8%		8.3%
General and administrative		13.2%		11.0%		12.9%		10.5%
		60.7%		52.8%		57.6%		51.9%

CUTERA, INC.

RECONCILIATION OF LOSS TO ADJUSTED EBITDA

(in thousands)

(unaudited)

	Three Months Ended		Twelve Months Ended
	December 31, 2019
Net loss	$	(2,088)	$	(12,348)
Adjustments:
Stock-based compensation		2,828		9,832
Depreciation and amortization		1,110		4,463
CRM and ERP implementation costs		83		1,414
Other adjustments		-		614	(a)
Interest and other expense, net		20		199
Provision (benefit) for income taxes		139		85
Total adjustments	$	4,180	$	16,607
Adjusted EBITDA	$	2,092	$	4,259

a)  Other adjustment of $614 related to Executive separation costs.