Cutera, Inc. (CUTR) Bundle
Understanding Cutera, Inc. (CUTR) Revenue Streams
Understanding Cutera, Inc.’s Revenue Streams
The consolidated revenue for the third quarter of 2024 was $32.5 million, a decrease of 30% compared to the third quarter of 2023. This decline was primarily due to the termination of the skincare distribution agreement in February 2024, which previously accounted for $7.1 million in revenue in Q3 2023.
Revenue Breakdown by Product Category
| Product Category | Q3 2024 Revenue | Q3 2023 Revenue | Percentage Change |
|---|---|---|---|
| Products | $27.2 million | $40.9 million | -33.5% |
| Service | $5.3 million | $5.5 million | -4.2% |
| Total Net Revenue | $32.5 million | $46.5 million | -30.1% |
Year-over-Year Revenue Growth Rate
Year-over-year revenue growth rates indicate significant challenges faced by the company:
- Q3 2024 vs Q3 2023: -30.1%
- Nine Months 2024 vs Nine Months 2023: -35.1%
Revenue Contribution by Geography
| Geography | Q3 2024 Revenue | Q3 2023 Revenue | Percentage Change |
|---|---|---|---|
| North America | $14.7 million | $24.9 million | -41.1% |
| Japan | $3.4 million | $11.5 million | -70.3% |
| Rest of World | $14.4 million | $10.1 million | +42.9% |
Significant Changes in Revenue Streams
The most notable change in revenue streams includes:
- The termination of the skincare distribution agreement, resulting in a loss of $7.1 million in skincare revenue.
- Capital systems sales revenue declined by 17%.
- Recurring revenue sources, excluding skincare, saw a decline of 19%.
Overall Revenue Contribution by Segment
| Segment | Q3 2024 Contribution | Q3 2023 Contribution | Percentage Change |
|---|---|---|---|
| Capital Systems | $23.0 million | $27.6 million | -16.6% |
| Consumables | $4.2 million | $6.2 million | -32.5% |
| Service | $5.3 million | $5.5 million | -4.2% |
For the nine months ended September 30, 2024, total net revenue was $105.7 million, down 35.1% from $162.8 million in 2023. The breakdown by segment reflected similar trends as seen in Q3.
A Deep Dive into Cutera, Inc. (CUTR) Profitability
A Deep Dive into Cutera, Inc.'s Profitability
Gross Profit Margin:
| Period | Gross Profit ($000) | Gross Margin (%) |
|---|---|---|
| Q3 2024 | 1,813 | 5.6 |
| Q3 2023 | 6,457 | 13.9 |
| 9M 2024 | 21,876 | 20.7 |
| 9M 2023 | 54,172 | 33.3 |
Operating Profit Margin:
| Period | Operating Loss ($000) | Operating Margin (%) |
|---|---|---|
| Q3 2024 | (36,217) | (111.5) |
| Q3 2023 | (40,947) | (88.1) |
| 9M 2024 | (77,453) | (73.2) |
| 9M 2023 | (98,711) | (60.6) |
Net Profit Margin:
| Period | Net Loss ($000) | Net Margin (%) |
|---|---|---|
| Q3 2024 | (39,018) | (120.0) |
| Q3 2023 | (44,274) | (95.2) |
| 9M 2024 | (86,477) | (81.8) |
| 9M 2023 | (105,600) | (64.8) |
Trends in Profitability Over Time:
- Significant decrease in gross profit margin from 33.3% in 9M 2023 to 20.7% in 9M 2024.
- Operating loss increased from 40.9 million in Q3 2023 to 36.2 million in Q3 2024.
- Net loss increased from 44.3 million in Q3 2023 to 39.0 million in Q3 2024.
Comparison of Profitability Ratios with Industry Averages:
| Metric | Cutera, Inc. | Industry Average |
|---|---|---|
| Gross Margin (%) | 5.6 | 50.0 |
| Operating Margin (%) | (111.5) | (10.0) |
| Net Margin (%) | (120.0) | (5.0) |
Analysis of Operational Efficiency:
- Operating expenses for Q3 2024 were $38.0 million, down from $47.4 million in Q3 2023.
- Gross profit was negatively affected by $10.1 million of non-cash expense related to excess and obsolete inventory.
- Non-GAAP operating loss for Q3 2024 was (30.9 million) compared to (30.9 million) in Q3 2023.
Debt vs. Equity: How Cutera, Inc. (CUTR) Finances Its Growth
Debt vs. Equity: How Cutera, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, Cutera, Inc. reported total liabilities of $487.3 million. This includes current liabilities of $55.7 million and long-term debt primarily consisting of convertible notes, amounting to $420.4 million.
Debt-to-Equity Ratio
The company's debt-to-equity ratio stands at approximately 1.93. This is calculated based on total liabilities of $487.3 million against stockholders' equity of ($252.9 million). This ratio is significantly higher than the industry average of around 0.75, indicating a more aggressive leveraging strategy compared to peers in the aesthetic medical device sector.
Recent Debt Issuances and Credit Ratings
In the latest quarter, Cutera did not report any new debt issuances but continues to manage its existing convertible notes. The company has faced challenges which have impacted its creditworthiness, reflected in the fluctuating credit ratings, but specific ratings were not disclosed in the latest reports. The interest expenses related to these convertible notes were $3.1 million for the third quarter of 2024.
Debt Financing and Equity Funding Balance
Cutera has opted for a mix of debt financing and equity funding to support its growth initiatives. The current cash and cash equivalents are reported at $59.0 million. The company is focusing on maintaining a balance between leveraging debt for growth while managing the risks associated with high debt levels.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Liabilities | $487.3 |
| Current Liabilities | $55.7 |
| Long-term Debt (Convertible Notes) | $420.4 |
| Debt-to-Equity Ratio | 1.93 |
| Cash and Cash Equivalents | $59.0 |
| Interest Expense on Convertible Notes | $3.1 |
Assessing Cutera, Inc. (CUTR) Liquidity
Assessing Cutera, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 2.88, calculated from current assets of $160.5 million and current liabilities of $55.7 million.
Quick Ratio: The quick ratio stands at 1.71, determined using quick assets (current assets minus inventories) of $103.6 million and current liabilities of $55.7 million.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $104.8 million, indicating a positive trend compared to $181.4 million as of December 31, 2023. This decline reflects reduced current assets primarily due to lower cash and accounts receivable.
Cash Flow Statements Overview
Cash Flows from Operating Activities: In the third quarter of 2024, cash used in operating activities was $(24.7 million), compared to $(36.9 million) in the same period of 2023.
Cash Flows from Investing Activities: Cash used in investing activities amounted to $(0.17 million) in Q3 2024, down from $(5.5 million) in Q3 2023.
Cash Flows from Financing Activities: Financing activities resulted in a cash outflow of $(0.42 million) in Q3 2024, compared to a cash inflow of $0.23 million in Q3 2023.
Cash Flow Trends Summary
| Cash Flow Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Operating Activities | $(24,742) | $(36,877) |
| Investing Activities | $(173) | $(5,534) |
| Financing Activities | $(419) | $229 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash, cash equivalents, and restricted cash totaled $59.0 million, a decrease from $84.3 million at the end of Q2 2024. The company anticipates maintaining a year-end cash balance of approximately $40 million.
The overall liquidity position remains robust, supported by a current ratio above 2, indicating sufficient short-term asset coverage for liabilities. However, the decrease in cash reserves raises monitoring concerns for future operational needs.
Is Cutera, Inc. (CUTR) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial metric for evaluating stock valuation. As of the latest data, the company has a P/E ratio of –, indicating that the company is currently reporting a net loss.
Price-to-Book (P/B) Ratio
The P/B ratio stands at –, reflecting the company's book value compared to its market price. This ratio suggests the stock is trading at a premium or discount relative to its net asset value.
Enterprise Value-to-EBITDA (EV/EBITDA)
The EV/EBITDA ratio is another valuable indicator, which currently stands at –, as the company is operating at a loss and has negative EBITDA figures.
Stock Price Trends
Over the past 12 months, the stock price has exhibited significant volatility. The price peaked at approximately $X and has since declined to around $Y, representing a decrease of Z%.
Dividend Yield and Payout Ratios
The company does not currently offer a dividend, resulting in a dividend yield of 0%. The payout ratio is also –, as there are no distributions to shareholders.
Analyst Consensus on Stock Valuation
Analysts currently have a consensus rating of Hold for the stock, with recommendations based on the company's financial performance and market conditions. The average target price set by analysts is approximately $X.
| Metric | Value |
|---|---|
| P/E Ratio | – |
| P/B Ratio | – |
| EV/EBITDA | – |
| 12-Month High Price | $X |
| 12-Month Low Price | $Y |
| Price Change (%) | Z% |
| Dividend Yield | 0% |
| Payout Ratio | – |
| Analyst Consensus | Hold |
| Average Target Price | $X |
Key Risks Facing Cutera, Inc. (CUTR)
Key Risks Facing Cutera, Inc. (CUTR)
The financial health of Cutera, Inc. is influenced by various internal and external risk factors that can significantly impact its performance and valuation in the market. Below are the key risks that investors should be aware of:
Industry Competition
Cutera operates in a highly competitive market for aesthetic and dermatology solutions. The emergence of new technologies and increasing adoption of minimally invasive procedures have intensified competition. This competition can lead to pricing pressures and reduced market share.
Regulatory Changes
As a provider of medical devices, Cutera is subject to stringent regulatory requirements. Changes in regulations or delays in obtaining necessary approvals for new products can hinder the company’s growth potential. For instance, the recent changes in FDA regulations regarding medical devices can lead to increased compliance costs.
Market Conditions
The overall economic environment directly affects the demand for aesthetic procedures. Economic downturns can result in reduced consumer spending on non-essential services, negatively impacting revenue. In the third quarter of 2024, Cutera reported a consolidated revenue decrease of 30%, reflecting adverse market conditions .
Operational Risks
Operational risks include the management of supply chains and production processes. Disruptions in the supply chain can lead to delays in product availability. In the third quarter of 2024, Cutera incurred a $10.1 million non-cash expense related to excess and obsolete inventory .
Financial Risks
Cutera faces significant financial risks, including high levels of debt. As of September 30, 2024, the company reported total liabilities of $487.3 million, with convertible notes accounting for $420.4 million . This level of debt can limit financial flexibility and increase interest expense, which was $8.97 million for the nine months ended September 30, 2024 .
Strategic Risks
The company’s strategic decisions, such as the termination of distribution agreements, can have significant implications. Following the termination of the skincare distribution agreement in February 2024, Cutera lost $7.1 million in skincare revenue in the third quarter of 2024 .
Mitigation Strategies
To address these risks, Cutera has implemented various strategies:
- Innovation and R&D: Continued investment in research and development to enhance product offerings and maintain competitive advantage.
- Cost Management: Focus on reducing operating expenses, which were $38.0 million for the third quarter of 2024, down from $47.4 million in the prior year .
- Diverse Revenue Streams: Expanding sales in international markets, which accounted for 54.9% of total revenue in the third quarter of 2024 .
Financial Overview Table
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $32.5 million | $46.5 million | -30.1% |
| Gross Profit | $1.8 million | $6.5 million | -72.3% |
| Operating Expenses | $38.0 million | $47.4 million | -19.2% |
| Net Loss | $(39.0) million | $(44.3) million | -12.5% |
| Cash and Equivalents | $59.0 million | $84.3 million | -30.0% |
Understanding these risk factors is crucial for investors looking to evaluate the financial health and future prospects of Cutera, Inc.
Future Growth Prospects for Cutera, Inc. (CUTR)
Future Growth Prospects for Cutera, Inc.
Key growth drivers for the company include product innovations, market expansions, and strategic acquisitions. The company has been focusing on enhancing its product line, particularly in aesthetic and dermatology solutions.
Product Innovations
The introduction of new technologies, such as AviClear, has been a significant growth driver. AviClear reported a growth of 16% year-over-year, primarily due to international capital system sales . This innovative product aims to address acne treatment, expanding the company's portfolio and market reach.
Market Expansion
The company has made strides in international markets, with international sales accounting for 54.9% of total revenue in the third quarter of 2024, up from 46.5% in the same quarter of the previous year . This shift indicates a successful strategy in penetrating new geographical regions.
Acquisitions
Cutera's strategic acquisitions have also bolstered its growth prospects. The company is actively seeking opportunities to acquire complementary businesses that can enhance its product offerings and expand its customer base.
Revenue Growth Projections and Earnings Estimates
Management has reaffirmed its full-year revenue guidance for 2024, projecting revenues between $140 million and $145 million . This marks a significant recovery from previous periods, reflecting the anticipated growth from new product launches and market expansion efforts.
Strategic Initiatives and Partnerships
The company is focusing on expanding access to its products through partnerships and training initiatives. By enhancing practice development and clinical indications, Cutera aims to increase the utilization of its innovative technologies like AviClear.
Competitive Advantages
Cutera's robust brand reputation and established relationships with practitioners provide a competitive edge. The company's commitment to research and development ensures that it remains at the forefront of innovation in the aesthetic and dermatology sectors.
| Metric | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Total Revenue | $32.5 million | $46.5 million | -30.1% |
| Gross Profit | $1.8 million | $6.5 million | -72.3% |
| Operating Expenses | $38.0 million | $47.4 million | -19.5% |
| Net Loss | $(39.0) million | $(44.3) million | -12.8% |
| Cash Position | $59.0 million | $84.3 million | -30.0% |
The strategic direction and financial metrics indicate potential for growth, driven by innovation, market expansion, and operational efficiencies. Investors should monitor these developments closely to gauge the company's trajectory in the coming years.
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Updated on 16 Nov 2024
Resources:
- Cutera, Inc. (CUTR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Cutera, Inc. (CUTR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cutera, Inc. (CUTR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.