Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 31, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 000-50644 | |
Entity Registrant Name | Cutera, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 77-0492262 | |
Entity Address, Address Line One | 3240 Bayshore Blvd. | |
Entity Address, City or Town | Brisbane | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94005 | |
City Area Code | 415 | |
Local Phone Number | 657-5500 | |
Title of 12(b) Security | Common Stock ($0.001 par value) | |
Trading Symbol | CUTR | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 19,615,478 | |
Entity Central Index Key | 0001162461 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 45,880 | $ 164,164 |
Marketable investments | 204,946 | 0 |
Accounts receivable, net of allowance for credit losses of $1,504 and $899, respectively | 35,876 | 31,449 |
Inventories, net | 55,938 | 39,503 |
Other current assets and prepaid expenses | 23,672 | 14,545 |
Total current assets | 366,312 | 249,661 |
Property and equipment, net | 34,479 | 3,019 |
Deferred tax assets | 626 | 778 |
Goodwill | 1,339 | 1,339 |
Operating lease right-of-use assets | 13,033 | 14,627 |
Other long-term assets | 11,668 | 10,169 |
Restricted cash | 700 | 700 |
Total assets | 428,157 | 280,293 |
Current liabilities: | ||
Accounts payable | 34,176 | 7,891 |
Accrued liabilities | 50,791 | 54,100 |
Operating lease liabilities | 2,712 | 2,419 |
Deferred revenue | 10,579 | 9,490 |
Total current liabilities | 98,258 | 73,900 |
Deferred revenue, net of current portion | 1,822 | 1,335 |
Operating lease liabilities, net of current portion | 11,642 | 13,483 |
Convertible notes, net of unamortized debt issuance costs of $8,869 and $4,007, respectively | 300,256 | 134,243 |
Other long-term liabilities | 685 | 763 |
Total liabilities | 412,663 | 223,724 |
Commitments and Contingencies (Note 13) | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value; authorized: 50,000,000 shares; issued and outstanding: 19,607,751 and 17,995,344 shares at September 30, 2022 and December 31, 2021, respectively | 20 | 18 |
Additional paid-in capital | 148,535 | 114,724 |
Accumulated other comprehensive loss | (336) | 0 |
Accumulated deficit | (132,725) | (58,173) |
Total stockholders’ equity | 15,494 | 56,569 |
Total liabilities and stockholders’ equity | $ 428,157 | $ 280,293 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for credit loss, current | $ 1,504 | $ 899 |
Unamortized debt issuance costs | $ 8,869 | $ 4,007 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock issued (in shares) | 19,607,751 | 17,995,344 |
Common stock outstanding (in shares) | 19,607,751 | 17,995,344 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net revenue: | ||||
Total net revenue | $ 62,808 | $ 57,384 | $ 185,046 | $ 165,641 |
Cost of revenue: | ||||
Total cost of revenue | 28,560 | 23,959 | 83,966 | 70,717 |
Gross profit | 34,248 | 33,425 | 101,080 | 94,924 |
Operating expenses: | ||||
Sales and marketing | 26,488 | 19,190 | 78,433 | 52,668 |
Research and development | 6,389 | 5,802 | 19,747 | 14,764 |
General and administrative | 10,804 | 7,807 | 35,554 | 23,633 |
Total operating expenses | 43,681 | 32,799 | 133,734 | 91,065 |
(Loss) income from operations | (9,433) | 626 | (32,654) | 3,859 |
Interest and other (expense) income, net: | ||||
Amortization of debt issuance costs | (400) | (225) | (917) | (492) |
Interest on convertible notes | (1,739) | (768) | (3,666) | (1,737) |
Other income (expense), net | 265 | (561) | (2,018) | (1,976) |
Total interest and other (expense) income, net | (1,874) | (1,554) | (41,024) | 2,980 |
(Loss) income before income taxes | (11,307) | (928) | (73,678) | 6,839 |
Income tax expense | 827 | 462 | 874 | 842 |
Net (loss) income | $ (12,134) | $ (1,390) | $ (74,552) | $ 5,997 |
Net (loss) income per share: | ||||
Basic (USD per share) | $ (0.62) | $ (0.08) | $ (3.95) | $ 0.34 |
Diluted (USD per share) | $ (0.62) | $ (0.08) | $ (3.95) | $ 0.33 |
Weighted-average number of shares used in per share calculations: | ||||
Basic (in shares) | 19,593 | 17,945 | 18,897 | 17,860 |
Diluted (in shares) | 19,593 | 17,945 | 18,897 | 18,327 |
Convertible notes | ||||
Interest and other (expense) income, net: | ||||
Gain (loss) on extinguishment of debt | $ 0 | $ 0 | $ (34,423) | $ 0 |
PPP Loan | ||||
Interest and other (expense) income, net: | ||||
Gain (loss) on extinguishment of debt | 0 | 0 | 0 | 7,185 |
Total product revenue | ||||
Net revenue: | ||||
Total net revenue | 56,540 | 50,694 | 167,195 | 146,056 |
Cost of revenue: | ||||
Total cost of revenue | 25,255 | 20,259 | 74,066 | 59,483 |
Service | ||||
Net revenue: | ||||
Total net revenue | 6,268 | 6,690 | 17,851 | 19,585 |
Cost of revenue: | ||||
Total cost of revenue | $ 3,305 | $ 3,700 | $ 9,900 | $ 11,234 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income (Loss) Attributable to Parent | $ (12,134) | $ (1,390) | $ (74,552) | $ 5,997 |
Available-for-sale investments | ||||
Net change in unrealized loss on available-for-sale investments | (153) | 0 | (336) | 0 |
Other comprehensive loss, net of tax | (153) | 0 | (336) | 0 |
Comprehensive (loss) income | $ (12,287) | $ (1,390) | $ (74,888) | $ 5,997 |
Consolidated Statements of Chan
Consolidated Statements of Changes In Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss |
Balance (in shares) at Dec. 31, 2020 | 17,679,232 | ||||
Balance at Dec. 31, 2020 | $ 56,880 | $ 18 | $ 117,097 | $ (60,235) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock for employee purchase plan (in shares) | 38,991 | ||||
Issuance of common stock for employee purchase plan | 648 | 648 | |||
Exercise of stock options (in shares) | 57,498 | ||||
Exercise of stock options | 1,408 | 1,408 | |||
Issuance of common stock in settlement of restricted and performance stock unites, net of shares withheld for employee taxes (in shares) | 175,813 | ||||
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes | (1,963) | (1,963) | |||
Stock-based compensation expense | 8,507 | 8,507 | |||
Purchase of capped call, inclusive of issuance cost of $353 | (16,134) | (16,134) | |||
Net income (loss) | 5,997 | 5,997 | |||
Balance (in shares) at Sep. 30, 2021 | 17,951,534 | ||||
Balance at Sep. 30, 2021 | 55,343 | $ 18 | 109,563 | (54,238) | 0 |
Balance (in shares) at Jun. 30, 2021 | 17,933,020 | ||||
Balance at Jun. 30, 2021 | 53,343 | $ 18 | 106,173 | (52,848) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock for employee purchase plan | 3 | 3 | |||
Exercise of stock options (in shares) | 3,900 | ||||
Exercise of stock options | 156 | 156 | |||
Issuance of common stock in settlement of restricted and performance stock unites, net of shares withheld for employee taxes (in shares) | 14,614 | ||||
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes | (511) | (511) | |||
Stock-based compensation expense | 3,742 | 3,742 | |||
Net income (loss) | (1,390) | (1,390) | |||
Balance (in shares) at Sep. 30, 2021 | 17,951,534 | ||||
Balance at Sep. 30, 2021 | $ 55,343 | $ 18 | 109,563 | (54,238) | 0 |
Balance (in shares) at Dec. 31, 2021 | 17,995,344 | 17,995,344 | |||
Balance at Dec. 31, 2021 | $ 56,569 | $ 18 | 114,724 | (58,173) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock for employee purchase plan (in shares) | 27,810 | ||||
Issuance of common stock for employee purchase plan | $ 1,063 | 1,063 | |||
Exercise of stock options (in shares) | 27,023 | 27,023 | |||
Exercise of stock options | $ 624 | 624 | |||
Issuance of common stock in settlement of restricted and performance stock unites, net of shares withheld for employee taxes (in shares) | 203,226 | ||||
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes | (4,820) | (4,820) | |||
Stock-based compensation expense | 13,021 | 13,021 | |||
Purchase of capped call, inclusive of issuance cost of $353 | (32,024) | (32,024) | |||
Issuance of common stock in extinguishment of convertible notes (in shares) | 1,354,348 | ||||
Issuance of common stock in extinguishment of convertible notes | 55,949 | $ 2 | 55,947 | ||
Net change in unrealized loss on available-for-sale investments | (336) | (336) | |||
Net income (loss) | $ (74,552) | (74,552) | |||
Balance (in shares) at Sep. 30, 2022 | 19,607,751 | 19,607,751 | |||
Balance at Sep. 30, 2022 | $ 15,494 | $ 20 | 148,535 | (132,725) | (336) |
Balance (in shares) at Jun. 30, 2022 | 19,560,163 | ||||
Balance at Jun. 30, 2022 | 23,874 | $ 20 | 144,628 | (120,591) | (183) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of stock options (in shares) | 12,179 | ||||
Exercise of stock options | 248 | 248 | |||
Issuance of common stock in settlement of restricted and performance stock unites, net of shares withheld for employee taxes (in shares) | 35,409 | ||||
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes | (586) | (586) | |||
Stock-based compensation expense | 4,245 | 4,245 | |||
Net change in unrealized loss on available-for-sale investments | (153) | (153) | |||
Net income (loss) | $ (12,134) | (12,134) | |||
Balance (in shares) at Sep. 30, 2022 | 19,607,751 | 19,607,751 | |||
Balance at Sep. 30, 2022 | $ 15,494 | $ 20 | $ 148,535 | $ (132,725) | $ (336) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net Income (Loss) Attributable to Parent | $ (74,552) | $ 5,997 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Stock-based compensation | 13,021 | 8,507 |
Depreciation and amortization | 1,603 | 1,014 |
Amortization of contract acquisition costs | 1,815 | 1,430 |
Amortization of debt issuance costs | 917 | 492 |
Unrealized gain on foreign exchange forward | (292) | 0 |
Impairment of capitalized cloud computing costs | 0 | 182 |
Change in deferred tax assets | 152 | 54 |
Provision for excess and obsolete inventories | 110 | 1,335 |
Provision for credit losses | 677 | 101 |
Loss (gain) on sale of property and equipment | 86 | (45) |
Change in right-of-use assets | 1,976 | 1,681 |
Changes in assets and liabilities: | ||
Accounts receivable | (5,104) | (8,899) |
Inventories, net | (28,725) | (8,261) |
Other current assets and prepaid expenses | (8,835) | (4,571) |
Other long-term assets | (3,644) | (3,487) |
Accounts payable | 20,442 | 575 |
Accrued liabilities | (3,684) | 11,782 |
Operating lease liabilities | (1,930) | (1,573) |
Deferred revenue | 1,576 | (557) |
Net cash used in operating activities | (49,968) | (1,428) |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (14,107) | (382) |
Proceeds from disposal of property and equipment | 0 | 71 |
Proceeds from maturities of marketable investments | 47,000 | 0 |
Purchase of marketable investments | (252,282) | 0 |
Net cash used in investing activities | (219,389) | (311) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options and employee stock purchase plan | 1,687 | 2,056 |
Taxes paid related to net share settlement of equity awards | (4,820) | (1,963) |
Purchase of capped call | (31,671) | (16,134) |
Payment of issuance costs of capped call | (353) | 0 |
Proceeds from issuance of convertible notes | 240,000 | 138,250 |
Payment of issuance costs of convertible notes | (7,602) | (4,717) |
Extinguishment of convertible notes | (45,777) | 0 |
Payments on finance lease obligations | (391) | (314) |
Net cash provided by financing activities | 151,073 | 117,178 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (118,284) | 115,439 |
Cash, cash equivalents, and restricted cash at beginning of period | 164,864 | 47,047 |
Cash, cash equivalents, and restricted cash at end of period | 46,580 | 162,486 |
Supplemental non-cash investing and financing activities: | ||
Assets acquired under finance lease | 689 | 271 |
Assets acquired under operating lease | 549 | 123 |
Transfer of inventories to property and equipment | 12,180 | 0 |
Acquisition of property and equipment | 5,843 | 0 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 2,685 | 0 |
Income tax paid | 1,909 | 763 |
PPP Loan | ||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Gain on extinguishment of PPP loan | 0 | (7,185) |
Convertible notes | ||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Gain on extinguishment of PPP loan | $ 34,423 | $ 0 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes In Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||
Payment of issuance costs of capped call | $ 353 | $ 0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Description of Operations and Principles of Consolidation Cutera, Inc. (“Cutera” or the “Company”) is a leading provider of aesthetic and dermatology solutions for practitioners worldwide. The Company develops, manufactures, distributes, and markets energy-based product platforms for use by medical practitioners, enabling them to offer safe and effective treatments to their customers. The Company currently markets the following system platforms: enlighten, excel, Secret PRO, Secret RF, truSculpt and xeo . Several of the Company’s systems offer multiple hand pieces and applications, providing customers the flexibility to upgrade their systems. The sales of (i) systems, system upgrades, and hand pieces (collectively “Systems” revenue); (ii) replacement hand pieces, Titan, truSculpt 3 D, truSculpt iD and truSculpt flex cycle refills, and single use disposable tips applicable to Secret PRO and Secret RF , as well as AviClear (“Consumables” revenue); and (iii) the distribution of third party manufactured skincare products (“Skincare” revenue); are collectively classified as “Products” revenue. In addition to Product revenue, the Company generates revenue from the sale of post-warranty service contracts, parts, detachable hand piece replacements (except for Titan, truSculpt 3D, truSculpt iD and truSculpt flex) and service labor for the repair and maintenance of products that are out of warranty, all of which are collectively classified as “Service” revenue. In March 2022, the Company received 510(k) clearance from the U.S. Food and Drug Administration for the AviClear acne treatment device ("AviClear"). AviClear is a laser treatment that offers a safe, prescription-free solution for acne. AviClear is currently available in a limited commercial capacity in the U.S. and the Company expects a full commercial launch by the end of the current calendar year. The Company’s corporate headquarters and U.S. operations are located in Brisbane, California, where the Company conducts manufacturing, warehousing, research and development, regulatory, sales and marketing, service, and administrative activities. The Company markets, sells and services its products through its sales and service employees in North America (including Canada), Australia, Austria, Belgium, France, Germany, Hong Kong, Japan, the Netherlands, Spain, Switzerland, and the United Kingdom. Sales and services outside of these direct markets are made through a worldwide distributor network in over 42 countries. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Basis of Presentation In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements included in this report reflect all adjustments necessary for a fair statement of its condensed consolidated statements of financial position as of September 30, 2022 and December 31, 2021, and its condensed consolidated statements of results of operations, comprehensive income (loss), changes in equity, and cash flows for the three and nine months ended September 30, 2022, and 2021. The December 31, 2021 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The results for interim periods are not necessarily indicative of results for the entire year or any other interim period. Presentation of certain prior year balances have been updated to conform with the current year presentation. All intercompany accounts and transactions have been eliminated upon consolidation. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s previously filed audited financial statements and the related notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2022. Risks and Uncertainties The Company's future results of operations involve a number of risks and uncertainties. Factors that could affect the Company's future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, continued acceptance of the Company's products, stability of global financial markets, cybersecurity breaches and other disruptions that could compromise the Company’s information or results, business disruptions that are caused by natural disasters or pandemic events, management of international activities, competition from substitute products and larger companies, ability to obtain and maintain regulatory approvals, government regulations and oversight, patent and other types of litigation, product liability matters, ability to protect proprietary technology from counterfeit versions of the Company's products, strategic relationships and dependence on key individuals. The COVID-19 outbreak and related variants have negatively affected the United States and global economies. The Company cannot presently predict the scope and severity of any impacts in future periods from business shutdowns or disruptions due to the COVID-19 pandemic, but the impact on economic activity including the possibility of recession or financial market instability could have a material adverse effect on the Company’s business, revenue, operating results, cash flows and financial condition. In addition, the world is currently experiencing widespread inflation. Household budgets could become tight with cash being conserved and spent on essential items like housing, gas, food, clothing and healthcare. Given the inflationary environment, fewer funds may be spent on aesthetic treatments, which may translate into less demand for the Company's products and less revenue as a result. The Company continues to assess whether any impairment of its goodwill or its long-lived assets has occurred and has determined that no charges were necessary during the three and nine months ended September 30, 2022. The Company will continue to monitor future conditions important to its assessment of potential impairment of its long-lived assets and goodwill. In 2021, the Company experienced a significant increase in sales of skincare products under the exclusive distribution agreement with ZO Skin Health, Inc. (“ZO”), which allows the Company to sell ZO’s skincare products in Japan. The Company relies on ZO as the sole supplier for skincare products. The reason for the increase in skincare products sales may have been the result of the COVID-19 pandemic changing customers’ spending habits, resulting in customers purchasing aesthetic treatments that were able to be applied at home, due to limitations on in-person aesthetic procedures. Future growth in sales of skincare products depends on customers maintaining spending habits adopted during the COVID-19 pandemic. If customers revert to original spending habits after the COVID-19 pandemic, such changes may have a material adverse effect on the Company’s revenue, operating results, and cash flows. Accounting Policies These unaudited condensed consolidated financial statements are prepared in accordance with the rules and regulations of the SEC applicable to interim financial statements. While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Company uses the same accounting policies in preparing quarterly and annual financial statements. Unless otherwise noted, amounts presented within the notes to condensed consolidated financial statements refer to the Company’s continuing operations. Derivatives Derivatives are recognized at fair value and reported on a gross basis. The Company enters into forward currency exchange contracts to mitigate the impact of currency fluctuations on transactions denominated in nonfunctional currencies, thereby limiting the Company's risk that would otherwise result from changes in exchange rates. Forward currency exchange contracts are recorded at their fair value each period. Leases The Company incurs costs to fulfill its lease agreement obligations with its AviClear device lessees. These costs consist of freight, installation, and training. In addition to these mobilization costs, the Company incurs commission costs associated with the placement of the AviClear device. The Company capitalizes commission costs and has made a policy election to capitalize the mobilization costs. In the three months ended September 30, 2022, the Company capitalized $0.7 million of mobilization costs and $1.3 million of deferred commission costs. These costs are recorded in Other long-term assets in the Company's condensed consolidated balance sheets and will be amortized over the expected lease term. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the accompanying notes, and the reported amounts of revenue and expenses during the reported periods. Actual results could differ materially from those estimates. On an ongoing basis, management evaluates its estimates, including those related to warranty obligations, sales commissions, allowance for credit losses, sales allowances, fair value of investments, valuation of inventories, fair value of goodwill, useful lives of property and equipment, impairment testing for long-lived-assets, implicit and incremental borrowing rates related to the Company’s leases, variables used in calculating the fair value of the Company's equity awards, expected achievement of performance based vesting criteria and management performance bonuses, assumptions used in operating and sales-type lease classifications, the standalone selling price of the Company's products and services, the period of benefit used to capitalize and amortize contract acquisition costs, variable considerations, contingent liabilities, recoverability of deferred tax assets, residual value of leased equipment, lease term and effective income tax rates. Management bases estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Recently Adopted Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-6, Debt – Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815), to simplify the accounting for convertible debt instruments by removing the beneficial conversion and cash conversion separation models for convertible instruments. Under the amendment, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives or that do not result in substantial premiums accounted for as paid-in capital. The update also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the computation of diluted earnings per share. The Company early adopted the guidance on a prospective basis effective January 1, 2021. See Note 14 – Debt. |
Cash, Cash Equivalents and Mark
Cash, Cash Equivalents and Marketable Investments | 9 Months Ended |
Sep. 30, 2022 | |
Cash and Cash Equivalents [Abstract] | |
Cash, Cash Equivalents and Marketable Investments | Cash, Cash Equivalents and Marketable Investments The Company invests its cash primarily in money market funds and in highly liquid debt instruments of U.S. federal and municipal governments and their agencies. All highly liquid investments with stated maturities of three months or less from date of purchase are classified as cash equivalents and all highly liquid investments with stated maturities of greater than three months are classified as marketable investments. The majority of the Company’s cash and investments are held in U.S. banks and U.S. Treasuries. The Company's foreign subsidiaries maintain a limited amount of cash in their local banks to cover their short term operating expenses. The Company determines the appropriate classification of its investments in marketable securities at the time of purchase and re-evaluates such designation at each balance sheet date. The Company’s marketable securities have been classified and accounted for as available-for-sale securities. Investments with remaining maturities of more than one year are viewed by the Company as available to support current operations and are classified as current assets under the caption marketable investments in the accompanying condensed consolidated balance sheets. Investments in available-for-sale debt securities are measured at fair value under the guidance in ASC 320. Credit losses on impaired available-for-sale debt securities are recognized through an allowance for credit losses. Under ASC 326, credit losses recognized on an available-for-sale debt security should not reduce the net carrying amount of the available-for-sale debt security below its fair value. Any changes in fair value unrelated to credit are recognized as an unrealized gain or loss in other comprehensive income. The following table summarizes the Company's cash and cash equivalents and marketable investments (in thousands): Gross Gross Fair Amortized Unrealized Unrealized Market September 30, 2022 Cost Gains Losses Value Cash and cash equivalents $ 45,880 $ — $ — $ 45,880 Non-current restricted cash 700 — — 700 Cash, cash equivalents, and restricted cash as reported within the Consolidated Statements of Cash Flows 46,580 — — 46,580 Marketable investments - U.S. Treasury 205,282 13 (349) 204,946 Total $ 251,862 $ 13 $ (349) $ 251,526 Gross Gross Fair Amortized Unrealized Unrealized Market December 31, 2021 Cost Gains Losses Value Cash and cash equivalents $ 164,164 $ — $ — $ 164,164 Non-current restricted cash 700 — — 700 Cash, cash equivalents, and restricted cash as reported within the Consolidated Statements of Cash Flows $ 164,864 $ — $ — $ 164,864 At September 30, 2022 and December 31, 2021, net unrealized losses were $0.3 million and nil, respectively, and were related to interest rate changes on available-for-sale marketable investments. The Company has concluded that it is more-likely-than-not that the securities will be held until maturity or the recovery of their cost basis. No securities were in an unrealized loss position for more than 12 months. T he restricted cash balance relates to an outstanding letter of credit for $0.7 million provided to a supplier. The following table summarizes the contractual maturities of the Company’s available-for-sale securities, classified as marketable investments, as of September 30, 2022 (in thousands): September 30, 2022 Amount Due in less than one year $ 205,282 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures certain financial assets at fair value, including cash and cash equivalents. The fair value hierarchy contains the following three levels of inputs that may be used to measure fair value, in accordance with ASC 820: • Level 1 inputs, which include quoted prices in active markets for identical assets or liabilities; • Level 2 inputs, which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data; and • Level 3 inputs, which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies, or similar valuation techniques, as well as significant management judgment or estimation. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considering counterparty credit risk in its assessment of fair value. As of September 30, 2022, financial assets measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above were as follows (in thousands): September 30, 2022 Level 1 Level 2 Cash equivalents: Money market funds $ 960 $ — Marketable investments: Available-for-sale securities 204,946 — Derivative assets: Foreign exchange forward 292 Total $ 205,906 $ 292 At December 31, 2021, the Company had no money market funds, marketable investments or derivative assets. See Note 14 - Debt for the carrying amount and estimated fair value of the Company’s 2.25% Convertible Senior Notes due 2026 (the “2026 Notes”) and 2.25% Convertible Senior Notes due 2028 (the “2028 Notes” and, together with the 2026 Notes, the “Convertible Notes”). |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company uses foreign currency exchange forward contracts to manage the impact of currency exchange fluctuations on earnings and cash flow. The Company does not enter into derivative instruments for speculative purposes. The Company is exposed to potential credit loss in the event of nonperformance by counterparties on its outstanding derivative instruments but the Company does not anticipate nonperformance by any of its counterparties. Should a counterparty default, the Company's maximum loss exposure would be the potential asset balance of the instrument. The cash flow effect of the derivative instruments settlement is recorded in cash flow from operations. September 30, 2022 Classification Foreign Exchange Forward (Dollars in thousands) Gross notional amount N/A $ 6,596 Fair value Other current assets and prepaid expenses $ 292 Unrealized gain Other income (expense), net $ 292 |
Balance Sheet Details
Balance Sheet Details | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Details | Balance Sheet Details Inventories, net As of September 30, 2022 and December 31, 2021, inventories consist of the following (in thousands): September 30, December 31, Raw materials $ 30,707 $ 24,035 Work in process 2,126 2,124 Finished goods 23,105 13,344 Total $ 55,938 $ 39,503 Other current assets and prepaid expenses Other current assets and a prepaid expenses, consists of the following (in thousands): September 30, December 31, Deposits with vendors $ 12,905 $ 4,389 Foreign tax receivable 5,606 7,612 Prepayments 4,863 2,544 Foreign exchange forward 292 — Other 6 — Total $ 23,672 $ 14,545 Property and Equipment, net Property and equipment, net, consists of the following (in thousands): September 30, December 31, Leasehold improvements $ 776 $ 826 Equipment leasing — 107 AviClear devices 9,454 — Office equipment and furniture 1,928 1,527 Machinery and equipment 5,328 3,140 Assets under construction 21,550 843 39,036 6,443 Less: Accumulated depreciation (4,557) (3,424) Property and equipment, net $34,479 $3,019 Materials related to the AviClear acne treatment device were classified as inventories at December 31, 2021. The Company received 510(k) clearance from the U.S. Food and Drug Administration in March 2022 and in April 2022 placed the first devices in service. From April 2022, the materials used in the construction of the AviClear device have been classified as Assets under construction and the manufactured devices, including devices available for lease and devices placed in service, have been classified as AviClear devices. Accrued Liabilities As of September 30, 2022 and December 31, 2021, accrued liabilities consist of the following (in thousands): September 30, December 31, Bonus and payroll-related accruals $ 17,719 $ 21,649 Sales and marketing accruals 6,055 4,808 Accrued inventory in transit 5,171 4,265 Product warranty 3,802 3,947 Accrued sales tax 6,298 9,110 Other accrued liabilities 11,746 10,321 Total $ 50,791 $ 54,100 |
Product Warranty
Product Warranty | 9 Months Ended |
Sep. 30, 2022 | |
Product Warranties Disclosures [Abstract] | |
Product Warranty | Product Warranty The Company has a direct field service organization in North America (including Canada). Internationally, the Company provides direct service support in Australia, Austria, Belgium, France, Germany, Hong Kong, Japan, the Netherlands, Spain, Switzerland, and the United Kingdom. In several other countries, where the Company does not have a direct presence, the Company provides service through a network of distributors and third-party service providers. After the original warranty period, maintenance and support are offered on an extended service contract basis or on a time and materials basis. The Company provides the estimated cost to repair or replace products under standard warranty at the time of sale. Costs incurred in connection with extended service contracts are generally recognized at the time when costs are incurred. The following table provides the changes in the product warranty accrual for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Beginning Balance $ 4,189 $ 4,438 $ 3,947 $ 4,124 Add: Accruals for warranties issued during the period 1,235 803 4,467 4,145 Less: Settlements made during the period (1,622) (1,315) (4,612) (4,343) Ending Balance $ 3,802 $ 3,926 $ 3,802 $ 3,926 |
Deferred Revenue
Deferred Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Revenue | Deferred Revenue The Company records deferred revenue when revenue is to be recognized subsequent to invoicing. For extended service contracts, the Company generally invoices customers at the beginning of the extended service contract term. The Company’s extended service contracts typically have one The following table provides changes in the deferred revenue balance for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Beginning balance $ 11,527 $ 11,403 $ 10,825 $ 11,237 Add: Payments received 5,738 3,880 14,755 13,226 Less: Revenue from current period sales (487) (2,576) (4,569) (4,851) Less: Revenue recognized from beginning balance (4,377) (2,027) (8,610) (8,932) Ending balance $ 12,401 $ 10,680 $ 12,401 $ 10,680 Costs for extended service contracts were $1.4 million and $4.6 million for the three and nine months ended September 30, 2022, respectively, and were $2.1 million and $6.3 million for the three and nine months ended September 30, 2021, respectively. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s performance obligations are satisfied either over time or at a point in time. Revenue from performance obligations that are transferred to customers over time accounted for approximately 8% and 7% of the Company's total revenue for the three and nine months ended September 30, 2022, respectively, and 12% for each of the three and nine months ended September 30, 2021. The Company has certain system sale arrangements that contain multiple products and services. For these bundled sale arrangements, the Company accounts for individual products and services as separate performance obligations if they are distinct. The Company’s products and services are distinct if a customer can benefit from the product or service on its own or with other resources that are readily available to the customer, and if the Company’s promise to transfer the products or service to the customer is separately identifiable from other promises in the sale arrangements. The Company’s system sale arrangements can include all or a combination of the following performance obligations: the system and software license (considered one performance obligation), system accessories (hand pieces), training, other accessories, extended service contracts, marketing services, and time and materials services. For the Company’s system sale arrangements that include an extended service contract, the period of service commences at the expiration of the Company’s standard warranty offered at the time of the system sale. The Company considers the extended service contracts terms in the arrangements that are legally enforceable to be performance obligations. Other than extended service contracts and marketing services, which are satisfied over time, the Company generally satisfies all performance obligations at a point in time. Systems, system accessories (hand pieces), service contracts, training, and time and materials services are also sold on a stand-alone basis. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price basis. Nature of Products and Services Systems Systems revenue is generated from the sale of systems and from the sale of upgrades to existing systems. A system consists of a console that incorporates a universal graphic user interface, a laser or other energy-based module, control system software and high voltage electronics, as well as one or more hand pieces. In certain applications, the laser or other energy-based module is contained in the hand piece rather than within the console. The Company offers customers the ability to select the system that best fits their practice at the time of purchase and then to cost-effectively add applications to their system as their practice grows. The system or upgrade and the right to use the embedded software represent a single performance obligation as the software license is integral to the functionality of the system or upgrade. For systems sold directly to end-customers that are credit approved, revenue is recognized when the Company transfers control to the end-customer, which occurs when the product is shipped to the customer or when the customer receives the product, depending on the nature of the arrangement. When collectability is not established in advance of receipt of payment from the customer, revenue is recognized upon the later of the receipt of payment or the satisfaction of the performance obligation. For systems sold through credit approved distributors, revenue is recognized at the time of shipment to the distributor. The Company typically receives payment for its system consoles and other accessories within 30 days of shipment. Certain international distributor arrangements allow for longer payment terms. Skincare products The Company sells third-party manufactured skincare products in Japan. The skincare products are purchased from a third-party manufacturer and sold to medical offices and licensed physicians. The Company warrants that the skincare products are free of significant defects in workmanship and materials for 90 days from shipment. The Company acts as the principal in this arrangement, as the Company determines the price to charge customers for the skincare products and controls the products before they are transferred to the customer. The Company recognizes revenue for skincare products at a point in time upon shipment. Consumables and other accessories The Company classifies its customers' purchases of replacement cycles for truSculpt iD and truSculpt flex, as well as replacement hand pieces, x eo and truSculpt 3D hand pieces, and single use disposable tips applicable to Secret PRO, and Secret RF as Consumable revenue. The Secret PRO and Secret RF products' single use disposable tips must be replaced after every treatment. The Company’s systems offer multiple hand pieces and applications, which allow customers to upgrade their systems. Extended service contract The Company offers post-warranty services to its customers through extended service contracts that cover parts and labor for a term of one Training Sales of systems to customers include training on the use of the system to be provided within 180 days of purchase. The Company considers training a separate performance obligation as customers can immediately benefit from the training together with the customer’s system. Training is also sold separately from systems. The Company recognizes revenue for training when the training is provided. Significant Judgments The Company determines standalone selling price ("SSP") for each performance obligation as follows: • Systems: The SSPs for systems are based on directly observable sales in similar circumstances to similar customers. • Extended warranty/Service contracts: SSP is based on observable price when sold on a standalone basis to similar customers. Loyalty Program The Company has a customer loyalty program for qualified customers located in the U.S., Canada, Australia and New Zealand. Under the loyalty program, based on their purchasing levels, customers accumulate points that can be redeemed for such rewards as the right to attend the Company’s advanced training event for truSculpt , or a ticket for the Company’s annual forum. A customer’s account must be in good standing to receive the benefits of the rewards program. Rewards are earned on a quarterly basis and must be used in the following quarter. All unused rewards are forfeited. The fair value of the reward earned by loyalty program members is included in accrued liabilities and recorded as a reduction of net revenue at the time the reward is earned. As of September 30, 2022 and December 31, 2021, the liability for the loyalty program included in accrued liabilities was $0.2 million and $0.5 million, respectively. Deferred Sales Commissions Incremental costs of obtaining a contract, which consist of commissions and related payroll taxes, are capitalized and amortized on a straight-line basis over the expected period of benefit, except for costs that are recognized when product is sold. The Company uses the portfolio method to recognize the amortization expense related to these capitalized costs related to initial contracts and such expense is recognized over a period associated with the revenue of the related portfolio. Total capitalized costs as of September 30, 2022 and December 31, 2021 were $5.1 million and $4.2 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet. Amortization expense for these assets was $0.6 million and $1.8 million during the three and nine months ended September 30, 2022, respectively, and $0.4 million and $1.4 million during three and nine months ended September 30, 2021, respectively. The amortization related to these capitalized costs is included in sales and marketing expense in the Company’s condensed consolidated statement of operations. |
Stockholders' Equity and Stock-
Stockholders' Equity and Stock-based Compensation Expense | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Stockholders' Equity and Stock-based Compensation Expense | Stockholders ’ Equity and Stock-based Compensation Expense The Company’s equity incentive plans are broad-based, long-term programs intended to attract and retain talented employees and align stockholder and employee interests. The 2019 Equity Incentive Plan (the "2019 Plan") provides for the grant of incentive stock options, non-statutory stock options, restricted stock units (“RSUs”), performance stock units ("PSUs"), and other stock or cash awards. The Company’s Board of Directors granted the Company's executive officers, senior management and certain employees 166,421 PSUs during the nine months ended September 30, 2022. The majority of these PSUs vest subject to the Company’s achievement of certain operational goals for the 2022 fiscal year related to product and commercial milestones. In addition, there is a service requirement related to half of the granted quantity that requires the grant recipient to provide one year of service subsequent to the milestone achievement date. The Company’s Board of Directors also granted its executive officers and senior management 184,313 RSUs and 278,903 non-qualified stock options (“NQs”) during the nine months ended September 30, 2022 . The RSUs and NQs vest over four years with one-fourth vesting on the first anniversary of the vesting commencement date of January 1, 2022 and 1/36 th of the remaining underlying shares vest each month thereafter. Activity under the Company's equity incentive plans is summarized as follows: Shares Balance, December 31, 2021 947,347 Additional shares reserved 600,000 RSUs granted (184,313) PSUs granted (166,421) Options granted (278,903) Stock awards canceled / forfeited / expired 123,151 Options canceled / forfeited / expired 18,033 Balance, September 30, 2022 1,058,894 Options Outstanding Number of Weighted- Weighted Average Remaining Term Balance, December 31, 2021 287,175 $ 25.89 4.92 Options granted 278,903 $ 40.87 Options exercised (27,023) $ 23.09 Options canceled / forfeited / expired (18,033) $ 39.94 Balance, September 30, 2022 521,022 $ 33.57 6.76 Stock Awards Outstanding Number of Awards Outstanding Weighted Average Grant Date Fair Value per Share Balance, December 31, 2021 1,032,904 $ 35.00 RSUs granted 184,313 $ 46.62 PSUs granted 166,421 $ 45.98 Awards released (307,485) $ 28.39 Stock awards canceled / forfeited / expired (118,710) $ 41.22 Balance, September 30, 2022 957,443 $ 40.12 Stock-based Compensation Expense Stock-based compensation expense by department recognized during the three and nine months ended September 30, 2022 and 2021 was as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Cost of revenue $ 471 $ 330 $ 1,430 $ 908 Sales and marketing 1,641 711 3,855 1,954 Research and development 466 1,020 2,513 1,628 General and administrative 1,667 1,681 5,223 4,017 Total stock-based compensation expense $ 4,245 $ 3,742 $ 13,021 $ 8,507 |
Net (Loss) Income Per Share
Net (Loss) Income Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Net (Loss) Income Per Share | Net (Loss) Income Per Share On January 1, 2021, the Company adopted the accounting standard update to simplify the accounting for convertible debt instruments. The Company now uses the if-converted method for its Convertible Notes in calculating the diluted net income (loss) per share, and includes the effect of potential share settlement for the convertible notes, if the effect is dilutive. Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and the if-converted method. Dilutive potential common shares include outstanding stock options, restricted stock units, performance stock units, ESPP shares and conversion shares under the convertible notes. The diluted EPS is computed with the assumption that the Company will settle the convertible debt in shares, rather than cash. As of September 30, 2022, the Company’s Convertible Notes were initially convertible into 6,640,256 shares of common stock. The denominator for diluted net income (loss) per share does not include any effect from the capped call transactions the Company entered into concurrently with the issuances of convertible notes, as this effect would be anti-dilutive. In the event of conversion of a convertible note, shares delivered to the Company under the capped call will offset the dilutive effect of the shares that the Company would issue under the convertible notes. In the three and nine months ended September 30, 2022, the if-converted method was not applied as the effect would have been anti-dilutive. For the three and nine months ended September 30, 2022, a basic loss per common share and diluted loss per common share are the same in each period as the inclusion of any potentially issuable shares would be anti-dilutive. The following table sets forth the computation of basic and diluted net income (loss) and the weighted average number of shares used in computing basic and diluted net (loss) income per share (in thousands, except per share data): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Numerator: Net (loss) income used in calculating net (loss) income per share, basic $ (12,134) $ (1,390) $ (74,552) $ 5,997 Denominator: Weighted average shares of common stock outstanding used in computing net (loss) income per share, basic 19,593 17,945 18,897 17,860 Dilutive effect of incremental shares and share equivalents: Convertible notes — — — — Options — — — 70 RSUs — — — 297 PSUs — — — 81 ESPP — — — 19 Weighted average shares of common stock outstanding used in computing net (loss) income per share, diluted 19,593 17,945 18,897 18,327 Net (loss) income per share: Net (loss) income per share, basic $ (0.62) $ (0.08) $ (3.95) $ 0.34 Net (loss) income per share, diluted $ (0.62) $ (0.08) $ (3.95) $ 0.33 The following numbers of shares outstanding, prior to the application of the treasury stock method and the if-converted method, were excluded from the computation of diluted net (loss) income per common share for the periods presented because including them would have had an anti-dilutive effect (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Capped call 8,724 4,167 8,724 4,167 Convertible notes 6,640 4,167 6,640 4,167 Options to purchase common stock 521 308 521 187 Restricted stock units 488 528 488 72 Performance stock units 470 455 470 24 Employee stock purchase plan shares 22 22 22 — Total 16,865 9,647 16,865 8,617 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the three and nine months ended September 30, 2022, the Company's income tax expense was $0.8 million and $0.9 million, respectively, compared to tax expense of $0.5 million and $0.8 million for the three and nine months ended September 30, 2021, respectively. The Company's income tax expense for the three and nine months ended September 30, 2022 and 2021 is due to income taxes in foreign jurisdictions. The Company continues to maintain a full valuation allowance on its U.S. deferred tax assets. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | LeasesThe Company is a party to certain operating and finance leases for vehicles, office space and storage facilities. The Company’s operating leases consist of office space, as well as storage facilities and finance leases consist of automobiles. The Company’s leases generally have remaining terms of one to the above facility leases, the Company also routinely leases automobiles for certain sales and field service employees under finance leases. The Company determines if a contract contains a lease at inception. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates the incremental secured borrowing rates corresponding to the maturities of the leases. The Company based the rate estimates on prevailing financial market conditions, credit analysis, and management judgment. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use (“ROU”) asset related to the lease. These are amortized through the ROU asset as reductions of expense over the lease term. Supplemental balance sheet information related to leases was as follows (in thousands): Leases Classification September 30, December 31, Assets Right-of-use assets Operating lease right-of-use assets $ 13,033 $ 14,627 Finance lease Property and equipment, net 1,791 392 Total leased assets $ 14,824 $ 15,019 Liabilities Classification September 30, December 31, Operating lease liabilities Operating lease liabilities, current Operating lease liabilities $ 2,712 $ 2,419 Operating lease liabilities, non-current Operating lease liabilities, net of current portion 11,642 13,483 Total Operating lease liabilities $ 14,354 $ 15,902 Finance lease liabilities Finance lease liabilities, current Accrued liabilities $ 786 $ 554 Finance lease liabilities, non-current Other long-term liabilities 685 730 Total Finance lease liabilities $ 1,471 $ 1,284 Lease costs during the three and nine months ended September 30, 2022 and 2021 (in thousands) was as follows: Three Months Ended Nine Months Ended Lease costs Classification 2022 2021 2022 2021 Finance lease cost Amortization expense $ 148 $ 103 $ 487 $ 340 Finance lease cost Interest for finance lease $ 17 $ 12 $ 54 $ 40 Operating lease cost Operating lease expense $ 883 $ 882 $ 2,678 $ 2,641 Cash paid for amounts included in the measurement of lease liabilities during the nine months ended September 30, 2022 and 2021 was as follows (in thousands): Nine Months Ended Cash paid for amounts included in the measurement of lease liabilities Classification 2022 2021 Operating cash flow Finance lease $ 56 $ 38 Financing cash flow Finance lease $ 391 $ 314 Operating cash flow Operating lease $ 1,682 $ 2,324 Facility leases Maturities of facility leases were as follows as of September 30, 2022 (in thousands): As of September 30, 2022 Amount Remainder of 2022 $ 824 2023 3,344 2024 2,912 2025 2,875 2026 2,970 2027 and thereafter 3,338 Total lease payments 16,263 Less: imputed interest 1,909 Present value of lease liabilities $ 14,354 Vehicle Leases As of September 30, 2022, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance leases as follows (in thousands): As of September 30, 2022 Amount Remainder of 2022 $ 150 2023 542 2024 604 2025 294 Total lease payments 1,590 Less: imputed interest 119 Present value of lease liabilities $ 1,471 Weighted-average remaining lease term and discount rate, as of September 30, 2022, were as follows: Lease Term and Discount Rate September 30, 2022 Weighted-average remaining lease term (years) Operating leases 5.1 Finance leases 2.0 Weighted-average discount rate Operating leases 4.8 % Finance leases 6.2 % |
Leases | LeasesThe Company is a party to certain operating and finance leases for vehicles, office space and storage facilities. The Company’s operating leases consist of office space, as well as storage facilities and finance leases consist of automobiles. The Company’s leases generally have remaining terms of one to the above facility leases, the Company also routinely leases automobiles for certain sales and field service employees under finance leases. The Company determines if a contract contains a lease at inception. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates the incremental secured borrowing rates corresponding to the maturities of the leases. The Company based the rate estimates on prevailing financial market conditions, credit analysis, and management judgment. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use (“ROU”) asset related to the lease. These are amortized through the ROU asset as reductions of expense over the lease term. Supplemental balance sheet information related to leases was as follows (in thousands): Leases Classification September 30, December 31, Assets Right-of-use assets Operating lease right-of-use assets $ 13,033 $ 14,627 Finance lease Property and equipment, net 1,791 392 Total leased assets $ 14,824 $ 15,019 Liabilities Classification September 30, December 31, Operating lease liabilities Operating lease liabilities, current Operating lease liabilities $ 2,712 $ 2,419 Operating lease liabilities, non-current Operating lease liabilities, net of current portion 11,642 13,483 Total Operating lease liabilities $ 14,354 $ 15,902 Finance lease liabilities Finance lease liabilities, current Accrued liabilities $ 786 $ 554 Finance lease liabilities, non-current Other long-term liabilities 685 730 Total Finance lease liabilities $ 1,471 $ 1,284 Lease costs during the three and nine months ended September 30, 2022 and 2021 (in thousands) was as follows: Three Months Ended Nine Months Ended Lease costs Classification 2022 2021 2022 2021 Finance lease cost Amortization expense $ 148 $ 103 $ 487 $ 340 Finance lease cost Interest for finance lease $ 17 $ 12 $ 54 $ 40 Operating lease cost Operating lease expense $ 883 $ 882 $ 2,678 $ 2,641 Cash paid for amounts included in the measurement of lease liabilities during the nine months ended September 30, 2022 and 2021 was as follows (in thousands): Nine Months Ended Cash paid for amounts included in the measurement of lease liabilities Classification 2022 2021 Operating cash flow Finance lease $ 56 $ 38 Financing cash flow Finance lease $ 391 $ 314 Operating cash flow Operating lease $ 1,682 $ 2,324 Facility leases Maturities of facility leases were as follows as of September 30, 2022 (in thousands): As of September 30, 2022 Amount Remainder of 2022 $ 824 2023 3,344 2024 2,912 2025 2,875 2026 2,970 2027 and thereafter 3,338 Total lease payments 16,263 Less: imputed interest 1,909 Present value of lease liabilities $ 14,354 Vehicle Leases As of September 30, 2022, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance leases as follows (in thousands): As of September 30, 2022 Amount Remainder of 2022 $ 150 2023 542 2024 604 2025 294 Total lease payments 1,590 Less: imputed interest 119 Present value of lease liabilities $ 1,471 Weighted-average remaining lease term and discount rate, as of September 30, 2022, were as follows: Lease Term and Discount Rate September 30, 2022 Weighted-average remaining lease term (years) Operating leases 5.1 Finance leases 2.0 Weighted-average discount rate Operating leases 4.8 % Finance leases 6.2 % |
Leases | LeasesThe Company is a party to certain operating and finance leases for vehicles, office space and storage facilities. The Company’s operating leases consist of office space, as well as storage facilities and finance leases consist of automobiles. The Company’s leases generally have remaining terms of one to the above facility leases, the Company also routinely leases automobiles for certain sales and field service employees under finance leases. The Company determines if a contract contains a lease at inception. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates the incremental secured borrowing rates corresponding to the maturities of the leases. The Company based the rate estimates on prevailing financial market conditions, credit analysis, and management judgment. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use (“ROU”) asset related to the lease. These are amortized through the ROU asset as reductions of expense over the lease term. Supplemental balance sheet information related to leases was as follows (in thousands): Leases Classification September 30, December 31, Assets Right-of-use assets Operating lease right-of-use assets $ 13,033 $ 14,627 Finance lease Property and equipment, net 1,791 392 Total leased assets $ 14,824 $ 15,019 Liabilities Classification September 30, December 31, Operating lease liabilities Operating lease liabilities, current Operating lease liabilities $ 2,712 $ 2,419 Operating lease liabilities, non-current Operating lease liabilities, net of current portion 11,642 13,483 Total Operating lease liabilities $ 14,354 $ 15,902 Finance lease liabilities Finance lease liabilities, current Accrued liabilities $ 786 $ 554 Finance lease liabilities, non-current Other long-term liabilities 685 730 Total Finance lease liabilities $ 1,471 $ 1,284 Lease costs during the three and nine months ended September 30, 2022 and 2021 (in thousands) was as follows: Three Months Ended Nine Months Ended Lease costs Classification 2022 2021 2022 2021 Finance lease cost Amortization expense $ 148 $ 103 $ 487 $ 340 Finance lease cost Interest for finance lease $ 17 $ 12 $ 54 $ 40 Operating lease cost Operating lease expense $ 883 $ 882 $ 2,678 $ 2,641 Cash paid for amounts included in the measurement of lease liabilities during the nine months ended September 30, 2022 and 2021 was as follows (in thousands): Nine Months Ended Cash paid for amounts included in the measurement of lease liabilities Classification 2022 2021 Operating cash flow Finance lease $ 56 $ 38 Financing cash flow Finance lease $ 391 $ 314 Operating cash flow Operating lease $ 1,682 $ 2,324 Facility leases Maturities of facility leases were as follows as of September 30, 2022 (in thousands): As of September 30, 2022 Amount Remainder of 2022 $ 824 2023 3,344 2024 2,912 2025 2,875 2026 2,970 2027 and thereafter 3,338 Total lease payments 16,263 Less: imputed interest 1,909 Present value of lease liabilities $ 14,354 Vehicle Leases As of September 30, 2022, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance leases as follows (in thousands): As of September 30, 2022 Amount Remainder of 2022 $ 150 2023 542 2024 604 2025 294 Total lease payments 1,590 Less: imputed interest 119 Present value of lease liabilities $ 1,471 Weighted-average remaining lease term and discount rate, as of September 30, 2022, were as follows: Lease Term and Discount Rate September 30, 2022 Weighted-average remaining lease term (years) Operating leases 5.1 Finance leases 2.0 Weighted-average discount rate Operating leases 4.8 % Finance leases 6.2 % |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company is named from time to time as a party to other legal proceedings, product liability, commercial disputes, employee disputes, and contractual lawsuits in the normal course of business. A liability and related charge are recorded to earnings in the Company’s consolidated financial statements for legal contingencies when the loss is considered probable and the amount can be reasonably estimated. The assessment is re-evaluated each accounting period and is based on all available information, including discussion with outside legal counsel. If a reasonable estimate of a known or probable loss cannot be made, but a range of probable losses can be estimated, the low-end of the range of losses is recognized if no amount within the range is a better estimate than any other. If a material loss is reasonably possible, but not probable and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. The Company expenses legal fees as incurred. On January 31, 2020, the Company filed a lawsuit against Lutronic Aesthetics in the United States District Court for the Eastern District of California. Lutronic employs numerous former Company employees. The complaint against Lutronic generally alleges claims for (1) misappropriation of trade secrets in violation of state and federal law; (2) violation of the Racketeer Influenced and Corrupt Organizations Act (RICO); (3) interference with contractual relations; (4) interference with prospective economic advantage; (5) unfair competition; and (6) aiding and abetting. On March 13, 2020, the court entered a temporary restraining order against Lutronic generally prohibiting it from using or disseminating the Company's confidential, proprietary, or trade secret information. The order also prohibits Lutronic, for two years, from using such information for the purpose of soliciting, or conducting business with, certain specified customers. At the parties’ request, the Court subsequently entered a preliminary injunction providing for the same restrictions in the restraining order. The Company will soon file a second amended complaint against Lutronic Aesthetics. In addition to the above-referenced claims against it, the amended complaint will allege the following additional claims: (1) violation of the Lanham Act; (2) unlawful business practices; (3) false advertising; and (4) trademark infringement. The Company also seeks to amend the complaint to add Lutronic Corporation (the Korean parent company of Lutronic Aesthetics) as an additional defendant, and allege against it the above-described claims for misappropriation of trade secrets, violation of RICO, interference with contractual relations and prospective economic advantage, unfair competition, and aiding and abetting. Discovery is ongoing and no trial date has been scheduled. As of September 30, 2022 and December 31, 2021, the Company had accrued $0.6 million and $0.7 million, respectively, related to various pending commercial and product liability lawsuits. The Company does not believe that a material loss in excess of accrued amounts is reasonably likely. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt Convertible notes, net of unamortized debt issuance costs The following table presents the outstanding principal amount and carrying value of the Company’s Convertible Notes (in thousands): September 30, December 31, Notes due in 2026 Outstanding principal amount $ 69,125 $ 138,250 Unamortized debt issuance costs (1,667) (4,007) Carrying Value $ 67,458 $ 134,243 Notes due in 2028 Outstanding principal amount $ 240,000 $ — Unamortized debt issuance costs (7,202) — Carrying Value $ 232,798 $ — Convertible notes, net $ 300,256 $ 134,243 Issuance of convertible notes due in 2026 In March 2021, the Company issued $138.3 million aggregate principal amount of 2026 Notes in a private placement offering. The 2026 Notes bear interest at a rate of 2.25% per year payable semiannually in arrears on March 15 and September 15 of each year. Upon conversion, the 2026 Notes will be convertible into either cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. The Convertible notes are presented as Convertible notes, net of unamortized debt issuance costs, on the condensed consolidated balance sheet. The aggregate proceeds from the offering were approximately $133.6 million, net of issuance costs, including initial purchasers fees. Each $1,000 principal amount of the 2026 Notes is initially convertible into 30.1427 shares of the Company’s common stock, which is equivalent to a conversion price of approximately $33.18 per share. The conversion rate for the 2026 Notes is subject to adjustment for certain events as set forth in the indenture governing the 2026 Notes. The 2026 Notes will mature on March 15, 2026, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2026 Notes. Issuance of convertible notes due in 2028 In May 2022, the Company issued $240.0 million aggregate principal amount of 2028 Notes. A total of $230.0 million of aggregate principal amount of 2028 Notes was issued in a private placement offering and concurrently with this private placement, the Company entered into a purchase agreement with Voce Capital Management LLC ("Voce"), an entity affiliated with J. Daniel Plants, the Company’s Executive Chairperson, pursuant to which the Company issued to Voce $10.0 million aggregate principal amount of 2028 Notes on the same terms and conditions. The aggregate proceeds from the offering of 2028 Notes were approximately $232.4 million, net of issuance costs, including initial purchaser fees. The 2028 Notes bear interest at a rate of 2.25% per year payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2022. Upon conversion, the 2028 Notes will be convertible into either cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. Each $1,000 principal amount of the 2028 Notes is initially convertible into 18.9860 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $52.67 per share. The conversion rate for the 2028 Notes is subject to adjustment for certain events as set forth in the indenture governing the 2028 Notes. The 2028 Notes are presented as Convertible notes, net of unamortized debt issuance costs, on the condensed consolidated balance sheet. 2026 Notes exchange In May 2022, the Company entered into privately-negotiated exchange agreements with certain holders of the Company’s outstanding 2026 Notes with respect to the exchange of $45.8 million in cash (excluding $0.3 million in cash for the payment of accrued interest) and 1,354,348 shares of common stock for $69.1 million in aggregate principal amount of the Company’s outstanding 2026 Notes (the “2026 Notes Exchange”). Immediately following the closing of the 2026 Notes Exchange, approximately $69.1 million in aggregate principal amount of the 2026 Notes remained outstanding. The 2026 Notes Exchange was accounted for as an extinguishment of debt. The Company recorded the difference between the proceeds paid and the carrying amount of the debt as an extinguishment loss, with a corresponding entry to common stock and Additional-paid-in capital for the issuance of the shares at the then-trading price of $41.31 per share. The table below presents the components of the Loss on debt extinguishment recorded in the Company's condensed consolidated statements of operations in the three months ended June 30, 2022 (amounts in thousands, except share and per share amounts): Shares issued for repurchase 1,354,348 Closing price of Cutera common stock on May 24, 2022 $ 41.31 Value of shares issued $ 55,948 Cash used for repurchase 45,776 Total shares and cash $ 101,724 2026 Note principal exchanged (69,125) 32,599 2026 Notes: Unamortized debt issuance costs on May 24, 2022 $ 3,648 Portion of 2026 Note principal exchanged 50 % 1,824 Loss on debt extinguishment $ 34,423 Conversion and other features 2026 Notes: Holders may convert their 2026 Notes at their option prior to the close of business on the business day immediately preceding December 15, 2025, in multiples of $1,000 principal amount, only under the following circumstances: • During any fiscal quarter (and only during such fiscal quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including, the last trading day of the immediately preceding fiscal quarter, is greater than or equal to 130% of the conversion price for the 2026 Notes on each applicable trading day; • During the five-business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” per $1,000 principal amount of 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; • The Company calls such 2026 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or • Upon the occurrence of specified corporate events. On or after December 15, 2025, and until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2026 Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. The circumstances described in the first bullet of the paragraph above were met during the third quarter of 2022. As of September 30, 2022, the 2026 Notes are convertible. Upon any conversion requests of the 2026 Notes, the Company would be required to pay or deliver, as the case may be, cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election with respect to such conversion requests. To the extent there are any conversion requests during the twelve months ending September 30, 2023, the Company intends to settle such conversion requests in shares of common stock. Therefore, as of September 30, 2022, the 2026 Notes have been included as Long-term debt on the condensed consolidated balance sheet. The Company may not redeem the 2026 Notes prior to March 20, 2024. On or after March 20, 2024, the Company may redeem for cash all or any portion of the 2026 Notes, at the Company’s option, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company elects to redeem fewer than all of the outstanding 2026 Notes, at least $50.0 million aggregate principal amount of 2026 Notes must be outstanding and not subject to redemption as of the relevant redemption notice date. If a specified corporate event occurs, 2026 Note holders have the option to require the Company to repurchase any portion or all of their 2026 Notes in $1,000 principal increments for cash. The price for such repurchase is calculated as 100% of the principal amounts of 2026 Notes, plus accrued and unpaid interest to the day immediately preceding the Fundamental Change repurchase date. Additionally, holders of the 2026 Notes who convert in connection with a fundamental change are, under certain circumstances, entitled to an increase in conversion rate. The 2026 Notes are general senior unsecured obligations that rank senior to any of the Company’s indebtedness that is explicitly subordinated to the 2026 Notes. The 2026 Notes have equal rank in right of payment with all existing and future unsecured indebtedness that is not subordinated to the 2026 Notes (including the 2028 Notes). The 2026 Notes will be junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness. The 2026 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company. The estimated fair value of the 2026 Notes was approximately $186.2 million as of September 30, 2022, which the Company determined through consideration of market prices. The fair value measurement is classified as Level 2, as defined in Note 3. 2028 Notes: Holders may convert their 2028 Notes at their option, in multiples of $1,000 principal amount, only under the following circumstances: • During any fiscal quarter commencing after the fiscal quarter ending on September 30, 2022 (and only during such fiscal quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including, the last trading day of the immediately preceding fiscal quarter, is greater than or equal to 130% of the conversion price for the 2028 Notes on each applicable trading day; • During the five-business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” per $1,000 principal amount of 2028 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; • The Company calls such 2028 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or • Upon the occurrence of specified corporate events. On or after March 1, 2028, and until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2028 Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. The 2028 Notes may become convertible in future periods. Upon any conversion requests of the 2028 Notes, the Company would be required to pay or deliver, as the case may be, cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election with respect to such conversion requests. To the extent there are any conversion requests during the twelve months ending September 30, 2023, the Company intends to settle such conversion requests in shares of common stock. Therefore, as of September 30, 2022, the 2028 Notes have been included as long-term debt on the condensed consolidated balance sheet. The Company may not redeem the 2028 Notes prior to June 5, 2025. On or after June 5, 2025, the Company may redeem for cash all or any portion of the 2028 Notes, at the Company’s option, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2028 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company elects to redeem fewer than all of the outstanding 2028 Notes, at least $100.0 million aggregate principal amount of 2028 Notes must be outstanding and not subject to redemption as of the relevant redemption notice date. If a specified corporate event occurs, note holders have the option to require the Company to repurchase any portion or all of their 2028 Notes in $1,000 principal increments for cash. The price for such repurchase is calculated as 100% of the principal amounts of 2028 Notes, plus accrued and unpaid interest to the day immediately preceding the Fundamental Change repurchase date. Additionally, holders of the 2028 Notes who convert in connection with a fundamental change are, under certain circumstances, entitled to an increase in conversion rate. The 2028 Notes are general senior unsecured obligations that rank senior to any of the Company’s indebtedness that is explicitly subordinated to the 2028 Notes. The 2028 Notes have equal rank in right of payment with all existing and future unsecured indebtedness that is not subordinated to the 2028 Notes (including the 2026 Notes). The 2028 Notes will be junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness. The 2028 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company. The estimated fair value of the 2028 Notes was approximately $246.0 million as of September 30, 2022, which the Company determined through consideration of market prices. The fair value measurement is classified as Level 2, as defined in Note 3. Capped Call Transactions In connection with the issuance of each series of the Convertible Notes, the Company entered into capped call transactions with certain option counterparties. The capped call transactions are generally intended to reduce the potential dilution of the Company's common stock upon any conversion or settlement of the applicable series of Convertible Notes or to offset any cash payment the Company is required to make in excess of the principal amount upon conversion of the applicable series of Convertible Notes, as the case may be, with such reduction or offset subject to a cap based on the cap price. If the market price per share of the Company’s common stock exceeds the cap price of the applicable capped call transactions, then the Company’s stock would experience some dilution and/or such capped call transactions would not fully offset the potential cash payments, in each case, to the extent the then-market price per share of its common stock exceeds the applicable cap price. In connection with the offering of the 2026 Notes, the Company purchased from the option counterparties capped call options that in the aggregate relate to the total number of shares of the Company's common stock underlying the convertible notes, with a strike price equal to the conversion price of the convertible notes and with an initial cap price equal to $45.535, which represented a 75% premium over the last reported sale price of the Company's common stock of $26.02 per share on March 4, 2021, with certain adjustments to the settlement terms that reflect standard anti-dilution provisions. The capped call transactions expire over 40 consecutive scheduled trading days ended on March 12, 2026. The capped calls were purchased for $16.1 million. In connection with the offering of the 2028 Notes, the Company purchased from the option counterparties capped call options that in the aggregate related to the total number of shares of the Company's common stock underlying the 2028 Notes sold to the initial purchasers in the offering of 2028 Notes, with a strike price equal to the conversion price of the 2028 Notes and with an initial cap price equal to $82.62, which represents a 100% premium over the last reported sale price of the Company's common stock of $41.31 per share on May 24, 2022, with certain adjustments to the settlement terms that reflect standard anti-dilution provisions. These capped call transactions expire over 40 consecutive scheduled trading days ended on May 30, 2028. The capped calls were purchased for $32.0 million, net of issuance costs. The Company evaluated the capped call transactions under authoritative accounting guidance and determined that they should be accounted for as a separate transaction and classified as a net reduction to Additional paid-in capital within stockholders’ equity with no recurring fair value measurement recorded. The Company early adopted ASU 2020-6, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) on January 1, 2021. In accordance with Subtopic 470-20 and 815-40, as revised by ASU 2020-6, the Company records the convertible notes in long-term debt with no separation between the Notes and the conversion option. Each reporting period, the Company will determine whether any criteria is met for the note holders to have the option to redeem the Notes early, which could result in a change in the classification of the Notes to current liabilities. Debt Issuance Cost The issuance costs related to the Convertible Notes are presented in the condensed consolidated balance sheet as a direct deduction from the carrying amount of the Convertible Notes. The issuance costs are amortized using an effective interest method basis over the term of the Convertible Notes and accordingly the Company recorded approximately $0.4 million and $0.9 million of amortization of debt issuance costs during the three and nine months ended September 30, 2022, respectively. As noted under “2026 Notes Exchange” above, $1.8 million of unamortized debt issuance costs related to the 2026 Notes was included in the loss on debt extinguishment in the three months ended June 30, 2022. The effective interest rates on the 2026 Notes and 2028 Notes are 2.98% and 2.82%, respectively. Interest expense for the three and nine months ended September 30, 2022, including the amortization of debt issuance cost, totaled approximately $2.1 million and $4.6 million, respectively. Interest expense for the three and nine months ended September 30, 2021, including the amortization of debt issuance cost, totaled approximately $1.0 million and $2.2 million, respectively. Loan and Security Agreement On July 9, 2020, the Company entered into a Loan and Security Agreement with Silicon Valley Bank for a four-year secured revolving loan facility (“SVB Revolving Line of Credit”) in an aggregate principal amount of up to $30.0 million. The SVB Revolving Line of Credit matures on July 9, 2024. In order to draw on the full amount of the SVB Revolving Line of Credit, the Company must satisfy certain liquidity ratios. If the Company is unable to meet these liquidity ratios, then availability under the revolving line is calculated as 80% of the Company’s qualifying accounts receivable. The proceeds of the revolving loans may be used for general corporate purposes. The Company’s obligations under the Loan and Security Agreement with Silicon Valley Bank are secured by substantially all of the assets of the Company. Interest on principal amount outstanding under the revolving line shall accrue at a floating per annum rate equal to the greater of either 1.75% above the Prime Rate or five percent (5.0%). The Company paid a non-refundable revolving line commitment fee of $0.3 million, on the effective date of the Loan and Security Agreement with Silicon Valley Bank of July 9, 2020, and the Company is required to pay an anniversary fee of $0.3 million on each twelve-month anniversary of the effective date of the Loan and Security Agreement. The Loan and Security Agreement with Silicon Valley Bank contains customary affirmative covenants, such as financial statement reporting requirements and delivery of borrowing base certificates, as well as customary covenants that restrict the Company’s ability to, among other things, incur additional indebtedness, sell certain assets, guarantee obligations of third parties, declare dividends, or make certain distributions, and undergo a merger or consolidation or certain other transactions. The Loan and Security Agreement also contains certain financial covenants, including maintaining a quarterly minimum revenue of $90.0 million, determined in accordance with GAAP on a trailing twelve-month basis, but which is only applicable if the Company has an outstanding balance under the loan facility. On March 4, 2021, the Loan and Security Agreement dated July 9, 2020 was amended to (i) permit the Company to issue the convertible notes and perform its obligations in connection therewith, and (ii) permit the capped call transactions. On May 27, 2021, the Loan and Security Agreement was amended. The amendment removed the quarterly minimum revenue requirement but kept in place the other financial covenants. On May 24, 2022, the Loan and Security Agreement was amended. The amendment to the Loan and Security Agreement permitted the issuance of the 2028 Notes, the capped call transactions related to the 2028 Notes and the 2026 Notes Exchange. On August 10, 2022, the Loan and Security Agreement was amended. The amendment to the Loan and Security Agreement waived a violation of a covenant and revised the Loan Agreement to permit the issuance of the 2028 Notes. As of September 30, 2022, the Company had not drawn on the SVB Revolving Line of Credit and the Company is in compliance with all financial covenants of the SVB Revolving Line of Credit. The Paycheck Protection Program (PPP) Loan On April 22, 2020, the Company received loan proceeds of $7.2 million pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The loan, which was in the form of a promissory note dated April 21, 2020, between the Company and Silicon Valley Bank as the lender, originally matured on April 21, 2022 and bore interest at a fixed rate of 1.00% per annum, payable monthly commencing September 2021. There was no prepayment penalty. Under the terms of the PPP, all or a portion of the principal may have been forgiven if the loan proceeds were used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits, rent, and utilities. |
Segment reporting
Segment reporting | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment reporting Segment reporting is based on the “management approach,” following the method that management organizes the Company’s reportable segments for which separate financial information is made available to, and evaluated regularly by, the chief operating decision maker in allocating resources and in assessing performance. The Company’s chief operating decision makers ("CODM") are its Chief Executive Officer ("CEO") and Chief Financial Officer (“CFO”), who make decisions on allocating resources and in assessing performance. The CEO and CFO review the Company's consolidated results as one operating segment. In making operating decisions, the CODM primarily considers consolidated financial information, accompanied by disaggregated information about revenues by geography and product. All of the Company’s principal operations and decision-making functions are located in the U.S. The Company’s CODM view its operations, manages its business, and uses one measurement of profitability for its operating segment, which develops, manufactures, distributes, and markets energy-based product platforms for use by medical practitioners. Substantially all of the Company’s long-lived assets are located in the U.S. The following table presents a summary of revenue by geography and product category for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Revenue mix by geography: United States $ 28,074 $ 22,737 $ 79,290 $ 64,553 Japan 15,263 19,335 47,940 53,311 Asia, excluding Japan 6,166 3,790 14,881 9,869 Europe 4,711 3,651 14,827 12,703 Rest of the World, other than United States, Asia and Europe 8,594 7,871 28,108 25,205 Total consolidated revenue $ 62,808 $ 57,384 $ 185,046 $ 165,641 Revenue mix by product category: Systems $ 40,985 $ 32,191 $ 121,152 $ 96,079 Consumables 6,119 3,684 15,320 11,040 Skincare 9,436 14,819 30,723 38,937 Total product revenue 56,540 50,694 167,195 146,056 Service 6,268 6,690 17,851 19,585 Total consolidated revenue $ 62,808 $ 57,384 $ 185,046 $ 165,641 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Operations and Principles of Consolidation | Description of Operations and Principles of Consolidation Cutera, Inc. (“Cutera” or the “Company”) is a leading provider of aesthetic and dermatology solutions for practitioners worldwide. The Company develops, manufactures, distributes, and markets energy-based product platforms for use by medical practitioners, enabling them to offer safe and effective treatments to their customers. The Company currently markets the following system platforms: enlighten, excel, Secret PRO, Secret RF, truSculpt and xeo . Several of the Company’s systems offer multiple hand pieces and applications, providing customers the flexibility to upgrade their systems. The sales of (i) systems, system upgrades, and hand pieces (collectively “Systems” revenue); (ii) replacement hand pieces, Titan, truSculpt 3 D, truSculpt iD and truSculpt flex cycle refills, and single use disposable tips applicable to Secret PRO and Secret RF , as well as AviClear (“Consumables” revenue); and (iii) the distribution of third party manufactured skincare products (“Skincare” revenue); are collectively classified as “Products” revenue. In addition to Product revenue, the Company generates revenue from the sale of post-warranty service contracts, parts, detachable hand piece replacements (except for Titan, truSculpt 3D, truSculpt iD and truSculpt flex) and service labor for the repair and maintenance of products that are out of warranty, all of which are collectively classified as “Service” revenue. In March 2022, the Company received 510(k) clearance from the U.S. Food and Drug Administration for the AviClear acne treatment device ("AviClear"). AviClear is a laser treatment that offers a safe, prescription-free solution for acne. AviClear is currently available in a limited commercial capacity in the U.S. and the Company expects a full commercial launch by the end of the current calendar year. |
Basis of Presentation | Basis of Presentation In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements included in this report reflect all adjustments necessary for a fair statement of its condensed consolidated statements of financial position as of September 30, 2022 and December 31, 2021, and its condensed consolidated statements of results of operations, comprehensive income (loss), changes in equity, and cash flows for the three and nine months ended September 30, 2022, and 2021. The December 31, 2021 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The results for interim periods are not necessarily indicative of results for the entire year or any other interim period. Presentation of certain prior year balances have been updated to conform with the current year presentation. All intercompany accounts and transactions have been eliminated upon consolidation. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s previously filed audited financial statements and the related notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2022. |
Risks and Uncertainties | Risks and Uncertainties The Company's future results of operations involve a number of risks and uncertainties. Factors that could affect the Company's future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, continued acceptance of the Company's products, stability of global financial markets, cybersecurity breaches and other disruptions that could compromise the Company’s information or results, business disruptions that are caused by natural disasters or pandemic events, management of international activities, competition from substitute products and larger companies, ability to obtain and maintain regulatory approvals, government regulations and oversight, patent and other types of litigation, product liability matters, ability to protect proprietary technology from counterfeit versions of the Company's products, strategic relationships and dependence on key individuals. The COVID-19 outbreak and related variants have negatively affected the United States and global economies. The Company cannot presently predict the scope and severity of any impacts in future periods from business shutdowns or disruptions due to the COVID-19 pandemic, but the impact on economic activity including the possibility of recession or financial market instability could have a material adverse effect on the Company’s business, revenue, operating results, cash flows and financial condition. In addition, the world is currently experiencing widespread inflation. Household budgets could become tight with cash being conserved and spent on essential items like housing, gas, food, clothing and healthcare. Given the inflationary environment, fewer funds may be spent on aesthetic treatments, which may translate into less demand for the Company's products and less revenue as a result. The Company continues to assess whether any impairment of its goodwill or its long-lived assets has occurred and has determined that no charges were necessary during the three and nine months ended September 30, 2022. The Company will continue to monitor future conditions important to its assessment of potential impairment of its long-lived assets and goodwill. In 2021, the Company experienced a significant increase in sales of skincare products under the exclusive distribution agreement with ZO Skin Health, Inc. (“ZO”), which allows the Company to sell ZO’s skincare products in Japan. The Company relies on ZO as the sole supplier for skincare products. The reason for the increase in skincare products sales may have been the result of the COVID-19 pandemic changing customers’ spending habits, resulting in customers purchasing aesthetic treatments that were able to be applied at home, due to limitations on in-person aesthetic procedures. Future growth in sales of skincare products depends on customers maintaining spending habits adopted during the COVID-19 pandemic. If customers revert to original spending habits after the COVID-19 pandemic, such changes may have a material adverse effect on the Company’s revenue, operating results, and cash flows. |
Accounting Policies | Accounting Policies These unaudited condensed consolidated financial statements are prepared in accordance with the rules and regulations of the SEC applicable to interim financial statements. While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by GAAP for complete financial statements. |
Derivatives | Derivatives Derivatives are recognized at fair value and reported on a gross basis. The Company enters into forward currency exchange contracts to mitigate the impact of currency fluctuations on transactions denominated in nonfunctional currencies, thereby limiting the Company's risk that would otherwise result from changes in exchange rates. Forward currency exchange contracts are recorded at their fair value each period. |
Leases | LeasesThe Company incurs costs to fulfill its lease agreement obligations with its AviClear device lessees. These costs consist of freight, installation, and training. In addition to these mobilization costs, the Company incurs commission costs associated with the placement of the AviClear device. The Company capitalizes commission costs and has made a policy election to capitalize the mobilization costs. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the accompanying notes, and the reported amounts of revenue and expenses during the reported periods. Actual results could differ materially from those estimates. On an ongoing basis, management evaluates its estimates, including those related to warranty obligations, sales commissions, allowance for credit losses, sales allowances, fair value of investments, valuation of inventories, fair value of goodwill, useful lives of property and equipment, impairment testing for long-lived-assets, implicit and incremental borrowing rates related to |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-6, Debt – Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815), to simplify the accounting for convertible debt instruments by removing the beneficial conversion and cash conversion separation models for convertible instruments. Under the amendment, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives or that do not result in substantial premiums accounted for as paid-in capital. The update also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the computation of diluted earnings per share. The Company early adopted the guidance on a prospective basis effective January 1, 2021. See Note 14 – Debt. |
Cash, Cash Equivalents and Ma_2
Cash, Cash Equivalents and Marketable Investments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table summarizes the Company's cash and cash equivalents and marketable investments (in thousands): Gross Gross Fair Amortized Unrealized Unrealized Market September 30, 2022 Cost Gains Losses Value Cash and cash equivalents $ 45,880 $ — $ — $ 45,880 Non-current restricted cash 700 — — 700 Cash, cash equivalents, and restricted cash as reported within the Consolidated Statements of Cash Flows 46,580 — — 46,580 Marketable investments - U.S. Treasury 205,282 13 (349) 204,946 Total $ 251,862 $ 13 $ (349) $ 251,526 Gross Gross Fair Amortized Unrealized Unrealized Market December 31, 2021 Cost Gains Losses Value Cash and cash equivalents $ 164,164 $ — $ — $ 164,164 Non-current restricted cash 700 — — 700 Cash, cash equivalents, and restricted cash as reported within the Consolidated Statements of Cash Flows $ 164,864 $ — $ — $ 164,864 |
Schedule of Restricted Cash and Cash Equivalents | The following table summarizes the Company's cash and cash equivalents and marketable investments (in thousands): Gross Gross Fair Amortized Unrealized Unrealized Market September 30, 2022 Cost Gains Losses Value Cash and cash equivalents $ 45,880 $ — $ — $ 45,880 Non-current restricted cash 700 — — 700 Cash, cash equivalents, and restricted cash as reported within the Consolidated Statements of Cash Flows 46,580 — — 46,580 Marketable investments - U.S. Treasury 205,282 13 (349) 204,946 Total $ 251,862 $ 13 $ (349) $ 251,526 Gross Gross Fair Amortized Unrealized Unrealized Market December 31, 2021 Cost Gains Losses Value Cash and cash equivalents $ 164,164 $ — $ — $ 164,164 Non-current restricted cash 700 — — 700 Cash, cash equivalents, and restricted cash as reported within the Consolidated Statements of Cash Flows $ 164,864 $ — $ — $ 164,864 |
Schedule of Available-for-Sale Securities | The following table summarizes the Company's cash and cash equivalents and marketable investments (in thousands): Gross Gross Fair Amortized Unrealized Unrealized Market September 30, 2022 Cost Gains Losses Value Cash and cash equivalents $ 45,880 $ — $ — $ 45,880 Non-current restricted cash 700 — — 700 Cash, cash equivalents, and restricted cash as reported within the Consolidated Statements of Cash Flows 46,580 — — 46,580 Marketable investments - U.S. Treasury 205,282 13 (349) 204,946 Total $ 251,862 $ 13 $ (349) $ 251,526 Gross Gross Fair Amortized Unrealized Unrealized Market December 31, 2021 Cost Gains Losses Value Cash and cash equivalents $ 164,164 $ — $ — $ 164,164 Non-current restricted cash 700 — — 700 Cash, cash equivalents, and restricted cash as reported within the Consolidated Statements of Cash Flows $ 164,864 $ — $ — $ 164,864 The following table summarizes the contractual maturities of the Company’s available-for-sale securities, classified as marketable investments, as of September 30, 2022 (in thousands): September 30, 2022 Amount Due in less than one year $ 205,282 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets Measured and Recognized at Fair Value on a Recurring Basis | As of September 30, 2022, financial assets measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above were as follows (in thousands): September 30, 2022 Level 1 Level 2 Cash equivalents: Money market funds $ 960 $ — Marketable investments: Available-for-sale securities 204,946 — Derivative assets: Foreign exchange forward 292 Total $ 205,906 $ 292 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The cash flow effect of the derivative instruments settlement is recorded in cash flow from operations. September 30, 2022 Classification Foreign Exchange Forward (Dollars in thousands) Gross notional amount N/A $ 6,596 Fair value Other current assets and prepaid expenses $ 292 Unrealized gain Other income (expense), net $ 292 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventories | As of September 30, 2022 and December 31, 2021, inventories consist of the following (in thousands): September 30, December 31, Raw materials $ 30,707 $ 24,035 Work in process 2,126 2,124 Finished goods 23,105 13,344 Total $ 55,938 $ 39,503 |
Schedule of Other Current Assets and Prepaid Expenses | Other current assets and a prepaid expenses, consists of the following (in thousands): September 30, December 31, Deposits with vendors $ 12,905 $ 4,389 Foreign tax receivable 5,606 7,612 Prepayments 4,863 2,544 Foreign exchange forward 292 — Other 6 — Total $ 23,672 $ 14,545 |
Schedule of Property and Equipment, Net | Property and equipment, net, consists of the following (in thousands): September 30, December 31, Leasehold improvements $ 776 $ 826 Equipment leasing — 107 AviClear devices 9,454 — Office equipment and furniture 1,928 1,527 Machinery and equipment 5,328 3,140 Assets under construction 21,550 843 39,036 6,443 Less: Accumulated depreciation (4,557) (3,424) Property and equipment, net $34,479 $3,019 |
Schedule of Accrued Liabilities | As of September 30, 2022 and December 31, 2021, accrued liabilities consist of the following (in thousands): September 30, December 31, Bonus and payroll-related accruals $ 17,719 $ 21,649 Sales and marketing accruals 6,055 4,808 Accrued inventory in transit 5,171 4,265 Product warranty 3,802 3,947 Accrued sales tax 6,298 9,110 Other accrued liabilities 11,746 10,321 Total $ 50,791 $ 54,100 |
Product Warranty (Tables)
Product Warranty (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Product Warranties Disclosures [Abstract] | |
Schedule of Product Warranty Liability Accrual | The following table provides the changes in the product warranty accrual for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Beginning Balance $ 4,189 $ 4,438 $ 3,947 $ 4,124 Add: Accruals for warranties issued during the period 1,235 803 4,467 4,145 Less: Settlements made during the period (1,622) (1,315) (4,612) (4,343) Ending Balance $ 3,802 $ 3,926 $ 3,802 $ 3,926 |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Deferred Service Contract Revenue | The following table provides changes in the deferred revenue balance for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Beginning balance $ 11,527 $ 11,403 $ 10,825 $ 11,237 Add: Payments received 5,738 3,880 14,755 13,226 Less: Revenue from current period sales (487) (2,576) (4,569) (4,851) Less: Revenue recognized from beginning balance (4,377) (2,027) (8,610) (8,932) Ending balance $ 12,401 $ 10,680 $ 12,401 $ 10,680 |
Stockholders' Equity and Stoc_2
Stockholders' Equity and Stock-based Compensation Expense (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Activity under the 2019 Plan | Activity under the Company's equity incentive plans is summarized as follows: Shares Balance, December 31, 2021 947,347 Additional shares reserved 600,000 RSUs granted (184,313) PSUs granted (166,421) Options granted (278,903) Stock awards canceled / forfeited / expired 123,151 Options canceled / forfeited / expired 18,033 Balance, September 30, 2022 1,058,894 Options Outstanding Number of Weighted- Weighted Average Remaining Term Balance, December 31, 2021 287,175 $ 25.89 4.92 Options granted 278,903 $ 40.87 Options exercised (27,023) $ 23.09 Options canceled / forfeited / expired (18,033) $ 39.94 Balance, September 30, 2022 521,022 $ 33.57 6.76 Stock Awards Outstanding Number of Awards Outstanding Weighted Average Grant Date Fair Value per Share Balance, December 31, 2021 1,032,904 $ 35.00 RSUs granted 184,313 $ 46.62 PSUs granted 166,421 $ 45.98 Awards released (307,485) $ 28.39 Stock awards canceled / forfeited / expired (118,710) $ 41.22 Balance, September 30, 2022 957,443 $ 40.12 |
Schedule of Stock-based Compensation Expense | Stock-based compensation expense by department recognized during the three and nine months ended September 30, 2022 and 2021 was as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Cost of revenue $ 471 $ 330 $ 1,430 $ 908 Sales and marketing 1,641 711 3,855 1,954 Research and development 466 1,020 2,513 1,628 General and administrative 1,667 1,681 5,223 4,017 Total stock-based compensation expense $ 4,245 $ 3,742 $ 13,021 $ 8,507 |
Net (Loss) Income Per Share (Ta
Net (Loss) Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Net Loss | The following table sets forth the computation of basic and diluted net income (loss) and the weighted average number of shares used in computing basic and diluted net (loss) income per share (in thousands, except per share data): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Numerator: Net (loss) income used in calculating net (loss) income per share, basic $ (12,134) $ (1,390) $ (74,552) $ 5,997 Denominator: Weighted average shares of common stock outstanding used in computing net (loss) income per share, basic 19,593 17,945 18,897 17,860 Dilutive effect of incremental shares and share equivalents: Convertible notes — — — — Options — — — 70 RSUs — — — 297 PSUs — — — 81 ESPP — — — 19 Weighted average shares of common stock outstanding used in computing net (loss) income per share, diluted 19,593 17,945 18,897 18,327 Net (loss) income per share: Net (loss) income per share, basic $ (0.62) $ (0.08) $ (3.95) $ 0.34 Net (loss) income per share, diluted $ (0.62) $ (0.08) $ (3.95) $ 0.33 |
Schedule of Antidilutive Securities Excluded from Computation of Loss Per Share | The following numbers of shares outstanding, prior to the application of the treasury stock method and the if-converted method, were excluded from the computation of diluted net (loss) income per common share for the periods presented because including them would have had an anti-dilutive effect (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Capped call 8,724 4,167 8,724 4,167 Convertible notes 6,640 4,167 6,640 4,167 Options to purchase common stock 521 308 521 187 Restricted stock units 488 528 488 72 Performance stock units 470 455 470 24 Employee stock purchase plan shares 22 22 22 — Total 16,865 9,647 16,865 8,617 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases was as follows (in thousands): Leases Classification September 30, December 31, Assets Right-of-use assets Operating lease right-of-use assets $ 13,033 $ 14,627 Finance lease Property and equipment, net 1,791 392 Total leased assets $ 14,824 $ 15,019 Liabilities Classification September 30, December 31, Operating lease liabilities Operating lease liabilities, current Operating lease liabilities $ 2,712 $ 2,419 Operating lease liabilities, non-current Operating lease liabilities, net of current portion 11,642 13,483 Total Operating lease liabilities $ 14,354 $ 15,902 Finance lease liabilities Finance lease liabilities, current Accrued liabilities $ 786 $ 554 Finance lease liabilities, non-current Other long-term liabilities 685 730 Total Finance lease liabilities $ 1,471 $ 1,284 Weighted-average remaining lease term and discount rate, as of September 30, 2022, were as follows: Lease Term and Discount Rate September 30, 2022 Weighted-average remaining lease term (years) Operating leases 5.1 Finance leases 2.0 Weighted-average discount rate Operating leases 4.8 % Finance leases 6.2 % |
Schedule of Lease Costs | Lease costs during the three and nine months ended September 30, 2022 and 2021 (in thousands) was as follows: Three Months Ended Nine Months Ended Lease costs Classification 2022 2021 2022 2021 Finance lease cost Amortization expense $ 148 $ 103 $ 487 $ 340 Finance lease cost Interest for finance lease $ 17 $ 12 $ 54 $ 40 Operating lease cost Operating lease expense $ 883 $ 882 $ 2,678 $ 2,641 Cash paid for amounts included in the measurement of lease liabilities during the nine months ended September 30, 2022 and 2021 was as follows (in thousands): Nine Months Ended Cash paid for amounts included in the measurement of lease liabilities Classification 2022 2021 Operating cash flow Finance lease $ 56 $ 38 Financing cash flow Finance lease $ 391 $ 314 Operating cash flow Operating lease $ 1,682 $ 2,324 |
Schedule of Maturities of Facility Leases | Maturities of facility leases were as follows as of September 30, 2022 (in thousands): As of September 30, 2022 Amount Remainder of 2022 $ 824 2023 3,344 2024 2,912 2025 2,875 2026 2,970 2027 and thereafter 3,338 Total lease payments 16,263 Less: imputed interest 1,909 Present value of lease liabilities $ 14,354 |
Schedule of Minimum Finance Lease Payments | As of September 30, 2022, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance leases as follows (in thousands): As of September 30, 2022 Amount Remainder of 2022 $ 150 2023 542 2024 604 2025 294 Total lease payments 1,590 Less: imputed interest 119 Present value of lease liabilities $ 1,471 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes | The following table presents the outstanding principal amount and carrying value of the Company’s Convertible Notes (in thousands): September 30, December 31, Notes due in 2026 Outstanding principal amount $ 69,125 $ 138,250 Unamortized debt issuance costs (1,667) (4,007) Carrying Value $ 67,458 $ 134,243 Notes due in 2028 Outstanding principal amount $ 240,000 $ — Unamortized debt issuance costs (7,202) — Carrying Value $ 232,798 $ — Convertible notes, net $ 300,256 $ 134,243 |
Schedule of Components of the Loss on Debt Extinguishment | The table below presents the components of the Loss on debt extinguishment recorded in the Company's condensed consolidated statements of operations in the three months ended June 30, 2022 (amounts in thousands, except share and per share amounts): Shares issued for repurchase 1,354,348 Closing price of Cutera common stock on May 24, 2022 $ 41.31 Value of shares issued $ 55,948 Cash used for repurchase 45,776 Total shares and cash $ 101,724 2026 Note principal exchanged (69,125) 32,599 2026 Notes: Unamortized debt issuance costs on May 24, 2022 $ 3,648 Portion of 2026 Note principal exchanged 50 % 1,824 Loss on debt extinguishment $ 34,423 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geography | The following table presents a summary of revenue by geography and product category for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Revenue mix by geography: United States $ 28,074 $ 22,737 $ 79,290 $ 64,553 Japan 15,263 19,335 47,940 53,311 Asia, excluding Japan 6,166 3,790 14,881 9,869 Europe 4,711 3,651 14,827 12,703 Rest of the World, other than United States, Asia and Europe 8,594 7,871 28,108 25,205 Total consolidated revenue $ 62,808 $ 57,384 $ 185,046 $ 165,641 Revenue mix by product category: Systems $ 40,985 $ 32,191 $ 121,152 $ 96,079 Consumables 6,119 3,684 15,320 11,040 Skincare 9,436 14,819 30,723 38,937 Total product revenue 56,540 50,694 167,195 146,056 Service 6,268 6,690 17,851 19,585 Total consolidated revenue $ 62,808 $ 57,384 $ 185,046 $ 165,641 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Narrative (Details) $ in Millions | Sep. 30, 2022 USD ($) country |
Capitalized Contract Cost [Line Items] | |
Number of countries in which entity utilizes a distributor network | country | 42 |
Mobilization Costs | |
Capitalized Contract Cost [Line Items] | |
Capitalized contract Cost, accumulated amortization | $ 0.7 |
Deferred Commission Costs | |
Capitalized Contract Cost [Line Items] | |
Capitalized contract Cost, accumulated amortization | $ 1.3 |
Cash, Cash Equivalents and Ma_3
Cash, Cash Equivalents and Marketable Investments - Summary of Cash and Cash Equivalents and Available-for-Sale Securities (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||||
Cash and cash equivalents | $ 45,880,000 | $ 164,164,000 | ||
Restricted cash | 700,000 | 700,000 | ||
Cash, cash equivalents, and restricted cash as reported within the Consolidated Statements of Cash Flows | 46,580,000 | 164,864,000 | $ 162,486,000 | $ 47,047,000 |
Gross unrealized gains | 13,000 | |||
Gross unrealized losses | (349,000) | $ 0 | ||
Total amortized cost | 251,862,000 | |||
Total fair market value | 251,526,000 | |||
Due in less than one year | 205,282,000 | |||
Marketable investments - U.S. Treasury | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 205,282,000 | |||
Gross unrealized gains | 13,000 | |||
Gross unrealized losses | (349,000) | |||
Fair market value | $ 204,946,000 |
Cash, Cash Equivalents and Ma_4
Cash, Cash Equivalents and Marketable Investments - Narrative (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Cash and Cash Equivalents [Abstract] | ||
Gross unrealized losses | $ (349,000) | $ 0 |
Outstanding letter of credit | $ 700,000 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | May 31, 2022 | Mar. 31, 2021 |
Convertible Senior Notes Due 2026 | Convertible notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate | 2.25% | 2.25% | |
Convertible Senior Notes Due 2028 | Convertible notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate | 2.25% | ||
Level 1 | Fair Value, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair market value | $ 204,946 | ||
Total assets | 205,906 | ||
Level 1 | Fair Value, Recurring | Foreign exchange forward | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative assets | |||
Level 2 | Fair Value, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair market value | 0 | ||
Total assets | 292 | ||
Level 2 | Fair Value, Recurring | Foreign exchange forward | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative assets | 292 | ||
Money market funds | Level 1 | Fair Value, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | 960 | ||
Money market funds | Level 2 | Fair Value, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | $ 0 |
Derivative Instruments - Deriva
Derivative Instruments - Derivative Instruments Settlement (Details) - Foreign exchange forward $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Derivative [Line Items] | |
Gross notional amount | $ 6,596 |
Fair value | 292 |
Unrealized gain | $ 292 |
Balance Sheet Details - Invento
Balance Sheet Details - Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 30,707 | $ 24,035 |
Work in process | 2,126 | 2,124 |
Finished goods | 23,105 | 13,344 |
Total | $ 55,938 | $ 39,503 |
Balance Sheet Details - Schedul
Balance Sheet Details - Schedule of Other Current Assets and Prepaid Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Total | $ 23,672 | $ 14,545 |
Deposits with vendors | ||
Total | 12,905 | 4,389 |
Foreign tax receivable | ||
Total | 5,606 | 7,612 |
Prepayments | ||
Total | 4,863 | 2,544 |
Foreign exchange forward | ||
Total | 292 | 0 |
Other | ||
Total | $ 6 | $ 0 |
Balance Sheet Details - Sched_2
Balance Sheet Details - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 39,036 | $ 6,443 |
Less: Accumulated depreciation | (4,557) | (3,424) |
Property and equipment, net | 34,479 | 3,019 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 776 | 826 |
Equipment leasing | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 0 | 107 |
AviClear devices | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 9,454 | 0 |
Office equipment and furniture | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,928 | 1,527 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,328 | 3,140 |
Assets under construction | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 21,550 | $ 843 |
Balance Sheet Details - Accrued
Balance Sheet Details - Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Bonus and payroll-related accruals | $ 17,719 | $ 21,649 |
Sales and marketing accruals | 6,055 | 4,808 |
Accrued inventory in transit | 5,171 | 4,265 |
Product warranty | 3,802 | 3,947 |
Accrued sales tax | 6,298 | 9,110 |
Other accrued liabilities | 11,746 | 10,321 |
Total | $ 50,791 | $ 54,100 |
Product Warranty - Summary of W
Product Warranty - Summary of Warranties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Beginning Balance | $ 4,189 | $ 4,438 | $ 3,947 | $ 4,124 |
Add: Accruals for warranties issued during the period | 1,235 | 803 | 4,467 | 4,145 |
Less: Settlements made during the period | (1,622) | (1,315) | (4,612) | (4,343) |
Ending Balance | $ 3,802 | $ 3,926 | $ 3,802 | $ 3,926 |
Deferred Revenue - Narrative (D
Deferred Revenue - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Deferred revenue balance, amount | $ 12.4 | $ 12.4 | ||
Costs for extended service contracts | $ 1.4 | $ 2.1 | $ 4.6 | $ 6.3 |
Minimum | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Extended service contract term | 1 year | |||
Maximum | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Extended service contract term | 3 years | |||
Service | Minimum | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Extended service contract term | 1 year | |||
Service | Maximum | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Extended service contract term | 3 years | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Deferred revenue balance, percentage | 85% | 85% | ||
Expected timing of satisfaction, period | 12 months | 12 months |
Deferred Revenue - Summary of D
Deferred Revenue - Summary of Deferred Service Contract Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Change in Contract with Customer, Liability [Roll Forward] | ||||
Beginning balance | $ 11,527 | $ 11,403 | $ 10,825 | $ 11,237 |
Add: Payments received | 5,738 | 3,880 | 14,755 | 13,226 |
Less: Revenue from current period sales | (487) | (2,576) | (4,569) | (4,851) |
Less: Revenue recognized from beginning balance | (4,377) | (2,027) | (8,610) | (8,932) |
Ending balance | $ 12,401 | $ 10,680 | $ 12,401 | $ 10,680 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||||||||
Typical payment receipt, period post shipment | 30 days | |||||||
Training provided with sale of system, period | 180 days | |||||||
Contract with customer, liability | $ 12,401 | $ 10,680 | $ 12,401 | $ 10,680 | $ 11,527 | $ 10,825 | $ 11,403 | $ 11,237 |
Minimum | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Extended service contract term | 1 year | |||||||
Maximum | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Extended service contract term | 3 years | |||||||
Sales and marketing | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Amortization expense | 600 | $ 400 | $ 1,800 | $ 1,400 | ||||
Other Assets | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Capitalized contract costs | 5,100 | $ 5,100 | 4,200 | |||||
Service | Minimum | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Extended service contract term | 1 year | |||||||
Service | Maximum | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Extended service contract term | 3 years | |||||||
Loyalty | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Contract with customer, liability | $ 200 | $ 200 | $ 500 | |||||
Skincare | Japan | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Sale of third-party product, warranty period | 90 days | |||||||
Transferred over Time | Service | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Revenue from performance obligations transferred to customers, percent | 8% | 12% | 7% | 12% |
Stockholders' Equity and Stoc_3
Stockholders' Equity and Stock-based Compensation Expense - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options granted in period (in shares) | 278,903 |
Vesting period | 4 years |
Share-based Payment Arrangement, Tranche One | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting rights (percentage) | 25% |
Share-based Payment Arrangement, Tranche Two | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting rights (percentage) | 3% |
PSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted (in shares) | 166,421 |
RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted (in shares) | 184,313 |
Stockholders' Equity and Stoc_4
Stockholders' Equity and Stock-based Compensation Expense - Activity Of Options Outstanding Under the 2019 Plans (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Shares Available for Grant | ||
Beginning balance (in shares) | 947,347 | |
Additional shares reserved (in shares) | 600,000 | |
Options granted (in shares) | (278,903) | |
Stock awards canceled (in shares) | 123,151 | |
Options canceled / forfeited / expired (in shares) | (18,033) | |
Ending balance (in shares) | 1,058,894 | 947,347 |
Number of Stock Options Outstanding | ||
Beginning balance (in shares) | 287,175 | |
Options granted (in shares) | 278,903 | |
Options exercised (in shares) | (27,023) | |
Options canceled / forfeited / expired (in shares) | (18,033) | |
Ending balance (in shares) | 521,022 | 287,175 |
Weighted- Average Exercise Price | ||
Beginning balance (in dollars per share) | $ 25.89 | |
Granted (in dollars per share) | 40.87 | |
Options exercised (in dollars per share) | 23.09 | |
Options canceled / forfeited / expired (in dollars per share) | 39.94 | |
Ending balance (in dollars per share) | $ 33.57 | $ 25.89 |
Weighted Average Remaining Term (in Years) | ||
Weighted average remaining term (in years) | 6 years 9 months 3 days | 4 years 11 months 1 day |
RSUs | ||
Shares Available for Grant | ||
Awards granted (in shares) | (184,313) | |
PSUs | ||
Shares Available for Grant | ||
Awards granted (in shares) | (166,421) |
Stockholders' Equity and Stoc_5
Stockholders' Equity and Stock-based Compensation Expense - Activity of Stock Awards Outstanding Under the 2019 Plans (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Number of Awards Outstanding | |
Stock awards canceled / forfeited / expired (in shares) | (123,151) |
Stock awards | |
Number of Awards Outstanding | |
Beginning balance (in shares) | 1,032,904 |
Awards released (in shares) | (307,485) |
Stock awards canceled / forfeited / expired (in shares) | (118,710) |
Ending balance (in shares) | 957,443 |
Weighted Average Grant Date Fair Value per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 35 |
Awards released (in dollars per share) | $ / shares | 28.39 |
Stock awards canceled / forfeited / expired (in dollars per share) | $ / shares | 41.22 |
Ending balance (in dollars per share) | $ / shares | $ 40.12 |
RSUs | |
Number of Awards Outstanding | |
Milestone (in shares) | 184,313 |
Weighted Average Grant Date Fair Value per Share | |
Stock awards granted (in dollars per share) | $ / shares | $ 46.62 |
PSUs | |
Number of Awards Outstanding | |
Milestone (in shares) | 166,421 |
Weighted Average Grant Date Fair Value per Share | |
Stock awards granted (in dollars per share) | $ / shares | $ 45.98 |
Stockholders' Equity and Stoc_6
Stockholders' Equity and Stock-based Compensation Expense - Stock-based Compensation Expense By Department (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 4,245 | $ 3,742 | $ 13,021 | $ 8,507 |
Cost of revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 471 | 330 | 1,430 | 908 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 1,641 | 711 | 3,855 | 1,954 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 466 | 1,020 | 2,513 | 1,628 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 1,667 | $ 1,681 | $ 5,223 | $ 4,017 |
Net (Loss) Income Per Share - N
Net (Loss) Income Per Share - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 shares | |
Convertible Senior Notes Due 2026 | Convertible notes | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Debt convertible to common shares (in shares) | 6,640,256 |
Net (Loss) Income Per Share -_2
Net (Loss) Income Per Share - Net (Loss) Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||
Net (loss) income used in calculating net (loss) income per share, basic | $ (12,134) | $ (1,390) | $ (74,552) | $ 5,997 |
Denominator: | ||||
Weighted average shares of common stock outstanding used in computing net (loss) income per share, basic (in shares) | 19,593 | 17,945 | 18,897 | 17,860 |
Dilutive effect of incremental shares and share equivalents: | ||||
Weighted average shares of common stock outstanding used in computing net (loss) income per share, diluted (in shares) | 19,593 | 17,945 | 18,897 | 18,327 |
Net (loss) income per share: | ||||
Net (loss) income per share, basic (USD per share) | $ (0.62) | $ (0.08) | $ (3.95) | $ 0.34 |
Net (loss) income per share, diluted (USD per share) | $ (0.62) | $ (0.08) | $ (3.95) | $ 0.33 |
Convertible notes | ||||
Dilutive effect of incremental shares and share equivalents: | ||||
Dilutive effect of share-based payment arrangements (in shares) | 0 | 0 | 0 | 0 |
Options | ||||
Dilutive effect of incremental shares and share equivalents: | ||||
Dilutive effect of share-based payment arrangements (in shares) | 0 | 0 | 0 | 70 |
RSUs | ||||
Dilutive effect of incremental shares and share equivalents: | ||||
Dilutive effect of share-based payment arrangements (in shares) | 0 | 0 | 0 | 297 |
PSUs | ||||
Dilutive effect of incremental shares and share equivalents: | ||||
Dilutive effect of share-based payment arrangements (in shares) | 0 | 0 | 0 | 81 |
ESPP | ||||
Dilutive effect of incremental shares and share equivalents: | ||||
Dilutive effect of share-based payment arrangements (in shares) | 0 | 0 | 0 | 19 |
Net (Loss) Income Per Share - A
Net (Loss) Income Per Share - Antidilutive Securities Excluded From Computation of Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 16,865 | 9,647 | 16,865 | 8,617 |
Capped call | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 8,724 | 4,167 | 8,724 | 4,167 |
Convertible notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 6,640 | 4,167 | 6,640 | 4,167 |
Options to purchase common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 521 | 308 | 521 | 187 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 488 | 528 | 488 | 72 |
Performance stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 470 | 455 | 470 | 24 |
Employee stock purchase plan shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 22 | 22 | 22 | 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 827 | $ 462 | $ 874 | $ 842 |
Leases - Narrative (Details)
Leases - Narrative (Details) | Sep. 30, 2022 |
Lessee, Lease, Description [Line Items] | |
Operating leases renewal terms (up to) | 5 years |
Finance leases renewal terms (up to) | 5 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms of operating leases | 1 year |
Remaining lease terms of finance leases | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms of operating leases | 10 years |
Remaining lease terms of finance leases | 10 years |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Right-of-use assets | $ 13,033 | $ 14,627 |
Finance lease | $ 1,791 | $ 392 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Total leased assets | $ 14,824 | $ 15,019 |
Operating lease liabilities | ||
Operating lease liabilities, current | 2,712 | 2,419 |
Operating lease liabilities, non-current | 11,642 | 13,483 |
Present value of lease liabilities | 14,354 | 15,902 |
Finance lease liabilities | ||
Finance lease liabilities, current | $ 786 | $ 554 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued liabilities | Accrued liabilities |
Finance lease liabilities, non-current | $ 685 | $ 730 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other long-term liabilities | Other long-term liabilities |
Total Finance lease liabilities | $ 1,471 | $ 1,284 |
Leases - Lease Costs (Details)
Leases - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Finance lease cost, Amortization expense | $ 148 | $ 103 | $ 487 | $ 340 |
Finance lease cost, Interest for finance lease | 17 | 12 | 54 | 40 |
Operating lease cost | $ 883 | $ 882 | $ 2,678 | $ 2,641 |
Leases - Cash Paid for Amounts
Leases - Cash Paid for Amounts Included in the Measurement of Lease Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||
Operating cash flow, Finance lease | $ 56 | $ 38 |
Financing cash flow, Finance lease | 391 | 314 |
Operating cash flow, Operating lease | $ 1,682 | $ 2,324 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Remainder of 2022 | $ 824 | |
2023 | 3,344 | |
2024 | 2,912 | |
2025 | 2,875 | |
2026 | 2,970 | |
2027 and thereafter | 3,338 | |
Total lease payments | 16,263 | |
Less: imputed interest | 1,909 | |
Present value of lease liabilities | $ 14,354 | $ 15,902 |
Leases - Maturities of Finance
Leases - Maturities of Finance Leases Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Remainder of 2022 | $ 150 | |
2023 | 542 | |
2024 | 604 | |
2025 | 294 | |
Total lease payments | 1,590 | |
Less: imputed interest | 119 | |
Present value of lease liabilities | $ 1,471 | $ 1,284 |
Leases - Lease Information (Det
Leases - Lease Information (Details) | Sep. 30, 2022 |
Weighted-average remaining lease term (years) | |
Operating leases | 5 years 1 month 6 days |
Finance leases | 2 years |
Weighted-average discount rate | |
Operating leases | 4.80% |
Finance leases | 6.20% |
Contingencies - Narrative (Deta
Contingencies - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Pending Litigation | ||
Loss Contingencies [Line Items] | ||
Accrued litigation liabilities | $ 0.6 | $ 0.7 |
Debt - Outstanding Debt and Car
Debt - Outstanding Debt and Carrying Value (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Jun. 01, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | |||
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | $ (8,869) | $ (4,007) | |
Convertible notes | |||
Debt Instrument [Line Items] | |||
Long-term Debt, Total | 300,256 | 134,243 | |
Convertible Senior Notes Due 2026 | Convertible notes | |||
Debt Instrument [Line Items] | |||
Long-term Debt, Gross | 69,125 | 138,250 | |
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | (1,667) | (4,007) | |
Long-term Debt, Total | 67,458 | $ 69,100 | 134,243 |
Convertible Senior Notes Due 2028 | Convertible notes | |||
Debt Instrument [Line Items] | |||
Long-term Debt, Gross | 240,000 | 0 | |
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | (7,202) | 0 | |
Long-term Debt, Total | $ 232,798 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||
Jul. 09, 2020 USD ($) | Apr. 22, 2020 USD ($) | May 31, 2022 USD ($) day $ / shares $ / item shares | Jun. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) day $ / shares $ / item | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Jun. 01, 2022 USD ($) | May 24, 2022 $ / shares | Dec. 31, 2021 USD ($) | Mar. 04, 2021 $ / shares | |
Debt Instrument [Line Items] | |||||||||||||
Purchase of capped call | $ 31,671,000 | $ 16,134,000 | |||||||||||
Common Stock | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Stock price (in USD per share) | $ / shares | $ 41.31 | ||||||||||||
Convertible Senior Notes Due 2026 | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Convertible debt, conversion ratio | 0.0301427 | ||||||||||||
Stock price (in USD per share) | $ / shares | $ 26.02 | ||||||||||||
Cap price (in USD per per share) | $ / item | 45.535 | ||||||||||||
Premium over stock price (percent) | 75% | ||||||||||||
Capped-call transaction term, consecutive trading days | day | 40 | ||||||||||||
Purchase of capped call | $ 16,100,000 | ||||||||||||
Convertible Senior Notes Due 2026 | Common Stock | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 33.18 | ||||||||||||
Convertible Senior Notes Due 2028 | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Convertible debt, conversion ratio | 0.018986 | ||||||||||||
Stock price (in USD per share) | $ / shares | $ 41.31 | ||||||||||||
Cap price (in USD per per share) | $ / item | 82.62 | ||||||||||||
Premium over stock price (percent) | 100% | ||||||||||||
Capped-call transaction term, consecutive trading days | day | 40 | ||||||||||||
Purchase of capped call | $ 32,000,000 | ||||||||||||
Convertible Senior Notes Due 2028 | Common Stock | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 52.67 | ||||||||||||
Loan and Security Agreement | Silicon Valley Bank | Revolving Credit Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate | 5% | ||||||||||||
Debt instrument term | 4 years | ||||||||||||
Maximum borrowing capacity | $ 30,000,000 | ||||||||||||
Qualifying accounts receivable | 80% | ||||||||||||
Commitment fee amount | $ 300,000 | ||||||||||||
Anniversary fee amount | 300,000 | ||||||||||||
Quarterly minimum revenue | $ 90,000,000 | ||||||||||||
Loan and Security Agreement | Silicon Valley Bank | Revolving Credit Facility | Prime Rate | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Basis spread on variable rate | 1.75% | ||||||||||||
PPP Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate | 1% | ||||||||||||
Loan proceeds | $ 7,200,000 | ||||||||||||
Gain (loss) on extinguishment of debt | $ 7,200,000 | 0 | 7,185,000 | ||||||||||
Convertible notes | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Carrying amount | $ 300,256,000 | 300,256,000 | $ 134,243,000 | ||||||||||
Amortization of debt issuance costs | 400,000 | 900,000 | |||||||||||
Interest expense including amortization of debt issuance costs | 2,100,000 | $ 1,000,000 | 4,600,000 | 2,200,000 | |||||||||
Gain (loss) on extinguishment of debt | 0 | $ 0 | (34,423,000) | $ 0 | |||||||||
Convertible notes | Convertible Senior Notes Due 2026 | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Notes issued | $ 138,300,000 | ||||||||||||
Interest rate | 2.25% | 2.25% | |||||||||||
Proceeds from convertible notes, net of unamortized debt issuance costs | $ 133,600,000 | ||||||||||||
Cash exchanged | $ 45,776,000 | ||||||||||||
Payment of accrued interest | 300,000 | ||||||||||||
Extinguishment of debt | $ 69,125,000 | ||||||||||||
Shares issued in debt conversion (in shares) | shares | 1,354,348 | ||||||||||||
Carrying amount | 67,458,000 | $ 67,458,000 | $ 69,100,000 | 134,243,000 | |||||||||
Redemption threshold percentage of stock price trigger | 130% | ||||||||||||
Redemption threshold trading days | day | 20 | ||||||||||||
Redemption threshold consecutive trading days | day | 30 | ||||||||||||
Redemption price, percentage | 100% | ||||||||||||
Required outstanding amount not subject to redemption | $ 50,000,000 | ||||||||||||
Portion of 2026 Note principal exchanged | $ 1,824,000 | ||||||||||||
Effective interest rate during period | 2.98% | ||||||||||||
Gain (loss) on extinguishment of debt | 34,423,000 | ||||||||||||
Convertible notes | Convertible Senior Notes Due 2026 | Occurrence of Fundamental Change | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Redemption price, percentage | 100% | ||||||||||||
Incremental repurchase amount | $ 1,000 | ||||||||||||
Convertible notes | Convertible Senior Notes Due 2026 | Level 2 | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Convertible debt at fair value | 186,200,000 | $ 186,200,000 | |||||||||||
Convertible notes | Convertible Senior Notes Due 2026, First Conversion Trigger | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Conversion threshold trading days | day | 20 | ||||||||||||
Threshold Consecutive trading days | day | 30 | ||||||||||||
Conversion threshold percentage of stock price trigger | 130% | ||||||||||||
Convertible notes | Convertible Senior Notes Due 2026, Second Conversion Trigger | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Conversion threshold trading days | day | 5 | ||||||||||||
Threshold Consecutive trading days | day | 5 | ||||||||||||
Conversion threshold percentage of stock price trigger | 98% | ||||||||||||
Convertible notes | Convertible Senior Notes Due 2028 | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Notes issued | $ 240,000,000 | ||||||||||||
Interest rate | 2.25% | ||||||||||||
Proceeds from convertible notes, net of unamortized debt issuance costs | $ 232,400,000 | ||||||||||||
Additional principal | $ 10,000,000 | ||||||||||||
Carrying amount | 232,798,000 | $ 232,798,000 | $ 0 | ||||||||||
Redemption threshold percentage of stock price trigger | 130% | ||||||||||||
Redemption threshold trading days | day | 20 | ||||||||||||
Redemption threshold consecutive trading days | day | 30 | ||||||||||||
Redemption price, percentage | 100% | ||||||||||||
Required outstanding amount not subject to redemption | $ 100,000,000 | ||||||||||||
Effective interest rate during period | 2.82% | ||||||||||||
Convertible notes | Convertible Senior Notes Due 2028 | Occurrence of Fundamental Change | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Redemption price, percentage | 100% | ||||||||||||
Incremental repurchase amount | $ 1,000 | ||||||||||||
Convertible notes | Convertible Senior Notes Due 2028 | Voce Capital Management LLC | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Notes issued | $ 230,000,000 | ||||||||||||
Convertible notes | Convertible Senior Notes Due 2028 | Level 2 | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Convertible debt at fair value | $ 246,000,000 | $ 246,000,000 | |||||||||||
Convertible notes | Convertible Senior Notes Due 2028, First Conversion Trigger | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Conversion threshold trading days | day | 20 | ||||||||||||
Threshold Consecutive trading days | day | 30 | ||||||||||||
Redemption threshold percentage of stock price trigger | 130% | ||||||||||||
Convertible notes | Convertible Senior Notes Due 2028, Second Conversion Trigger | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Conversion threshold trading days | day | 5 | ||||||||||||
Threshold Consecutive trading days | day | 5 | ||||||||||||
Conversion threshold percentage of stock price trigger | 98% |
Debt - Components of the Loss o
Debt - Components of the Loss on Debt Extinguishment (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
May 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | May 24, 2022 | Mar. 04, 2021 | |
Common Stock | |||||||
Extinguishment of Debt [Line Items] | |||||||
Stock price (in USD per share) | $ 41.31 | ||||||
Convertible notes | |||||||
Extinguishment of Debt [Line Items] | |||||||
Loss on debt extinguishment | $ 0 | $ 0 | $ (34,423) | $ 0 | |||
Convertible Senior Notes Due 2026 | |||||||
Extinguishment of Debt [Line Items] | |||||||
Stock price (in USD per share) | $ 26.02 | ||||||
Convertible Senior Notes Due 2026 | Convertible notes | |||||||
Extinguishment of Debt [Line Items] | |||||||
Shares issued in debt conversion (in shares) | 1,354,348 | ||||||
Value of shares issued | $ 55,948 | ||||||
Cash exchanged | 45,776 | ||||||
Total shares and cash | 101,724 | ||||||
Extinguishment of debt | (69,125) | ||||||
Net proceeds | 32,599 | ||||||
Unamortized debt issuance costs | $ 3,648 | ||||||
Portion of 2026 Note principal exchanged | 50% | ||||||
Portion of 2026 Note principal exchanged | $ 1,824 | ||||||
Loss on debt extinguishment | $ 34,423 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Segment Reporting - Summary of
Segment Reporting - Summary of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | $ 62,808 | $ 57,384 | $ 185,046 | $ 165,641 |
Total product revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 56,540 | 50,694 | 167,195 | 146,056 |
Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 40,985 | 32,191 | 121,152 | 96,079 |
Consumables | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 6,119 | 3,684 | 15,320 | 11,040 |
Skincare | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 9,436 | 14,819 | 30,723 | 38,937 |
Service | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 6,268 | 6,690 | 17,851 | 19,585 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 28,074 | 22,737 | 79,290 | 64,553 |
Japan | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 15,263 | 19,335 | 47,940 | 53,311 |
Asia, excluding Japan | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 6,166 | 3,790 | 14,881 | 9,869 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | 4,711 | 3,651 | 14,827 | 12,703 |
Rest of the World, other than United States, Asia and Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenue | $ 8,594 | $ 7,871 | $ 28,108 | $ 25,205 |