Cutera Reports 30% Revenue Decline, Net Loss in Latest Quarter, Raises Concerns Over Going Concern Status

Cutera, Inc. reported significant financial challenges in its latest 10-Q filing for the quarter ending September 30, 2024. The company experienced a notable decline in revenue, with net revenue for the three months at $32.5 million, down 30% from $46.5 million in the same period of 2023. For the nine months, revenue fell 35% to $105.7 million from $162.8 million year-over-year. This decline was attributed to decreased sales across key markets, particularly in North America and Japan, where revenues dropped by 41% and 70%, respectively.

The company's gross profit also suffered, decreasing to $1.8 million for the third quarter, compared to $6.5 million in 2023. The gross margin for the quarter was 5.6%, down from 13.9% a year earlier, primarily due to increased reserves for excess inventory and reduced manufacturing activity. Operating expenses decreased to $38 million from $47.4 million in the prior year, reflecting cost-cutting measures, including workforce reductions.

Cutera reported a net loss of $39 million for the third quarter, an improvement from a loss of $44.3 million in the same quarter of 2023. For the nine months, the net loss was $86.5 million, compared to $105.6 million in the previous year. The company’s accumulated deficit grew to $389.8 million as of September 30, 2024.

Strategically, Cutera has made several significant changes, including the termination of its distribution agreement with ZO Skin Health, which impacted skincare product revenues, leading to a complete drop in skincare revenue for the quarter. The company is transitioning its AviClear product line to a direct sales model, moving away from leasing arrangements, which is expected to stabilize revenue streams.

Cutera's liquidity position has weakened, with cash and cash equivalents decreasing to $57.6 million from $143.6 million at the end of 2023. The company raised concerns about its ability to continue as a going concern, citing ongoing losses and cash flow challenges. Additionally, Cutera is not in compliance with Nasdaq's continued listing requirements, having received a deficiency notice due to its stock price falling below $1.00 per share.

Overall, Cutera's financial performance reflects a challenging environment, with strategic shifts aimed at stabilizing revenue and addressing operational inefficiencies.