About Cutera

Cutera, Inc. operates as a global provider of laser and energy-based aesthetic systems for practitioners. The company designs, develops, manufactures, distributes, and markets light and energy-based product platforms for use by physicians and other qualified practitioners (collectively, practitioners), enabling them to offer safe and effective aesthetic treatments to their customers. In addition, the company distributes third-party manufactured skincare products. The company offers easy-to-use products based on various key platforms, such as enlighten, enlighten SR, excel HR, excel V, excel V+, truSculpt iD, truSculpt flex, Secret PRO, Secret RF, and xeo — each of which enables physicians and other qualified practitioners to perform safe and effective aesthetic procedures, including treatment for body contouring, skin resurfacing and revitalization, tattoo removal, removal of benign pigmented lesions, vascular conditions, hair removal, and toenail fungus. The company’s platforms are designed to be easily upgraded to add additional applications and hand pieces, which provide flexibility for its customers as they expand their practices. The company’s ongoing research and development activities primarily focus on developing new products and improving and enhancing its portfolio of existing products. The company also explores ways to expand its product offerings through alternative arrangements with other companies, such as distribution arrangements. The company introduced Secret RF, a fractional RF microneedling device for skin revitalization, in January 2018; enlighten SR in April 2018; truSculpt iD in July 2018; excel V+ in February 2019 and truSculpt flex in June 2019; Secret PRO in July 2020; and a product extension of excel V+ during the fourth quarter of 2020. In 2021 the company introduced truSculpt flex+, a treatment mode that decreased the treatment time from approximately 45 minutes to 15 minutes. The company’s trademarks include Cutera, AccuTip 500, CoolGlide, CoolGlide excel, enlighten, excel HR, excel V, excel V+, LimeLight, MyQ, Pearl, PICO Genesis, ProWave 770, Solera, Titan, truSculpt, truSculpt iD, truSculpt flex, Secret PRO, Secret RF, and xeo. A description of each of the company’s devices and a summary of the features of its primary platforms are as follows: Secret PRO: In 2020, the company expanded its distribution of the Secret PRO device. Secret PRO features two proven technologies – RF microneedling and fractional CO2. Secret PRO utilizes fractional CO2 for skin resurfacing and radio frequency microneedling for deep dermal remodeling. The pairing of technologies provides practitioners the ability to tailor each treatment for a patients individual skin concerns. Used individually or in combination for best outcomes with minimal downtime. Each time a procedure is performed, the physician must use a new handpiece tip. The sale of the replacement tip results in recurring revenue. truSculpt flex: In June 2019, the company introduced the truSculpt flex for the muscle-sculpting market. This product is a bio-electrical muscle stimulation device designed to strengthen, firm and tone the abdomen, buttocks and thighs, and can treat patients at all fitness levels. The truSculpt flex delivers Multi-Direction Stimulation with truControl, inducing muscle hypertrophy and hyperplasia. Johari Digital Healthcare Ltd. (the company’s contract manufacturing organization) received 510(k) clearance from the United States (U.S.) Food and Drug Administration (FDA) for muscle conditioning in 2013. It is sold in the U.S.A., Canada, Japan, certain the Asia Pacific markets, and the European Union (EU); and is expected to be sold to a broader international customer base upon required regulatory approvals. The truSculpt flex includes a consumable handpiece that needs to be refilled after a set number of treatments are performed, resulting in recurring revenue. In 2021, the company introduced truSculpt flex+, a treatment mode that decreased the treatment time from approximately 45 minutes to 15 minutes. excel V+: In February 2019, the company introduced the excel V+, a new iteration of the excel V vascular platform originally introduced in 2011. Excel V+ is a high-performance, vascular and benign pigmented lesion treatment platform explicitly designed for the market of dermatologists and plastic surgeons. The excel V+ has 50% more power than its predecessor and provides a greater range of parameters for faster, more customizable treatments. The excel V and excel V+ are solid-state laser platforms providing a combination of the 532 nanometers (nm) green laser with 1064 nm Nd:YAG technology to provide a single, compact and efficient system that treats the entire range of cosmetic vascular and benign pigmented lesion conditions. In 2020, the company introduced a product extension to its excel V+ platform, which included a new, 1 mm Dermastat handpiece and expanded specifications. The new excel V+, expanded treatment capabilities and provided dermatologists and aesthetic providers a higher level of precision and versatility for vascular and pigmented lesions. The excel V+ continues to boast 50% more power than its predecessor (excel V) and provides a greater range of parameters for faster, more customizable treatments. excel V+ is a solid-state laser platform combining the 532 nanometers (nm) green laser with 1064 nm Nd:YAG technology to provide a single, compact and efficient system that treats the entire range of cosmetic vascular and benign pigmented lesion conditions. The excel V+ device includes the company’s signature laser genesis treatment, and introduced the ‘green genesis’ treatment – a micro-pulsed 532 treatment. truSculpt iD: In July 2018, the company introduced a hands-free version of its truSculpt platform, the truSculpt iD, for the non-surgical body sculpting market. It includes consumable cycles that need to be ordered by the practitioner after a set number of treatments are performed, resulting in recurring revenue. This product is a high-powered radio frequency (RF) system designed for circumferential reduction, lipolysis, and deep tissue heating and can treat all body and skin types. The truSculpt iD delivers targeted energy at 2 MHz, causing subcutaneous adipose tissue lipolysis. The company received 510(k) clearance from the FDA for lipolysis of abdominal fat in 2018. Prior truSculpt platforms include the truSculpt 3D, a 2 MHz device for tissue heating and circumferential reduction of fat in the abdomen and flank, and the original truSculpt platform launched in August 2012 and delivered treatments at 1 MHz. In December 2016, the company received 510(k) clearance from the FDA to market the truSculpt platform for the temporary reduction in circumference of the abdomen. The truSculpt 3D includes a consumable handpiece that needs to be refilled after a set number of treatments are performed, resulting in recurring revenue. Secret RF: In January 2018, the company introduced a new fractional RF microneedling device that delivers heat into the deeper layers of the skin using controlled RF energy. The targeted energy revitalizes the tissue, via hemostasis, and coagulation of the tissue, minimizing downtime. Each time a procedure is performed, the physician must use a new handpiece tip. The sale of the replacement tip results in recurring revenue. The company is the distributor of Secret RF. enlighten: In December 2014, the company introduced the enlighten laser platform with a dual wavelength (1064 nm + 532 nm). In December 2016, the company introduced a three wavelength model (1064 nm + 532 nm + 670 nm), enlighten III. The enlighten system is a dual pulse duration (750 picoseconds, or ps, and two nanoseconds, or ns) laser system cleared for multi-colored tattoo removal and the treatment of benign pigmented lesions and acne scars. In 2018, the company introduced an expanded performance enlighten III, and in April 2018, the company introduced enlighten SR, a lighter version of enlighten with reduced optical performance. Clinical studies were conducted to support an FDA clearance in October 2018 for the treatment of acne scars on patients with Fitzpatrick skin types II-V when used with the PICO Genesis FX Micro Lens Array (MLA) handpiece attachment. excel HR: In June 2014, the company introduced the excel HR platform, a premium hair removal solution for all skin types, combining its proven long-pulse 1064 nm Nd:YAG laser and a high-power 755 nm Alexandrite laser with sapphire contact cooling. xeo: In 2003, the company introduced the xeo platform, which combines intense pulsed light technology with laser applications in a single system. The xeo is a multi-application platform on which a customer can purchase hand piece applications for the removal of unwanted hair, the treatment of vascular lesions, and skin revitalization by treating discoloration, fine lines, and laxity. In addition to the primary systems, the company generates revenue from the distribution of skincare products, which are manufactured by ZO Skin Health, Inc. (ZO), and sold in the Japanese market. The company also generates revenue from the sale of post-warranty services. The company offers its customers the ability to select the systems and applications that best fit their practice and subsequently upgrade their systems to add new applications. This upgrade path allows the company’s customers to build their aesthetic practices and provides it with a source of incremental revenue. Strategy The key elements of the company’s strategy are to continue to expand its product offering; increase focus on practitioners with established medical offices; leverage the company’s installed base; generate revenue from services and refillable, consumable, hand pieces; and generate revenue from skincare products. The company’s strategy of providing a broad range of therapeutic capabilities requires a wide variety of technologies, products, and capabilities. Products The company’s enlighten, excel, Secret PRO, Secret RF, truSculpt, and xeo platforms allow for the delivery of laser light and/or RF energy for aesthetic applications from a single system. With the company’s xeo platform, practitioners can purchase customized systems with a variety of its multi-technology applications. Each of the company’s products consists of a control console and one or more hand pieces, depending on the model. Upgrades The company’s xeo, excel V and trusculpt flex products, are designed to allow customers to upgrade to its newest technologies or add applications to their system, each of which provides it with a source of additional revenue. Extended Contract Services and Support The company offers post-warranty services to its customers through extended service contracts that cover parts and labor for terms of one to four years. The company also offers services on a time-and-materials basis for systems and detachable hand piece replacements. Revenue related to services performed on a time-and-materials basis is recognized when performed. These post-warranty services serve as additional sources of recurring revenue from the company’s installed product base. The company’s products are engineered to enable quick and efficient service and support. There are several separate components of its products, each of which can be removed and replaced. In countries where the company is represented by distribution partners, customers are serviced through the distributor. Distributors are generally provided warranty coverage for parts only, with labor customarily provided to the end customer by the distributor. The company’s Titan, truSculpt 3D, truSculpt iD, and truSculpt flex hand pieces generally include a warranty for a set number of shots, rather than for a period of time. Training The sale of systems to customers, except system sales through distributors, include training on the use of the system to be provided within 180 days of purchase. Training is also sold separately from systems. The company recognizes revenue for training once the training has been provided. Consumables (Other Accessories) The company treats its customers' purchases of replacement cycles for truSculpt iD and truSculpt flex, as well as replacement Titan and truSculpt 3D hand pieces, as consumable revenue, which provides it with a source of recurring revenue from existing customers. The Secret RF and Secret PRO products have single use disposable tips, which must be replaced after every treatment. The sale of these consumable tips further enhance the company’s recurring revenue. Applications and Procedures The company’s products are designed to allow the practitioner to select an appropriate combination of energy level, spot size and pulse duration for each treatment. The ability to manipulate the combinations of these parameters allows the company’s customers to treat the broadest range of conditions available with a single energy-based system. Non-Invasive Body Contouring: The company’s truSculpt technology allows practitioners to apply a hand piece directly to the skin and deliver high-powered RF energy that results in the deep and uniform heating of the subcutaneous fat tissue at sustained therapeutic temperatures. This heating can cause selective destruction of fat cells, which are eliminated from the treatment area through the body’s natural wound healing processes. The treatment takes approximately 15 minutes and two or more treatments may be required to obtain the desired aesthetic results. The company’s CE Mark allows it to market truSculpt in the EU, Australia and certain other countries outside the U.S. for fat reduction, body shaping, body contouring and circumferential reduction. In the U.S., truSculpt has 510(k) clearance for topical heating for the purpose of elevating tissue temperature for the treatment of selected medical conditions, such as the relief of pain and muscle spasms and increase in local circulation. Additionally, the 2 MHz setting for the 40 cm2 hand piece is indicated for reduction in circumference of the abdomen and non-invasive lipolysis (breakdown of fat) of the abdomen. The truSculpt massage device is intended to provide a temporary reduction in the appearance of cellulite. Tattoo Removal: The company’s enlighten systems, delivering picosecond or dual picosecond and nanosecond pulse durations are used for tattoo removal, the treatment of benign pigmented lesions, and a laser skin toning procedure that it refers to as PICO Genesis. Hair Removal: The company has two platforms, excel HR and xeo, which address hair removal for all skin types, as well as hair thicknesses. The company’s xeo platform allows practitioners to select between the 1064 nm mode for darker, course hair, and the ProWave LX hand piece designed to address finer, vellus hair. Contact cooling is present on both hand pieces for epidermal protection. excel HR employs both a 1064 nm Nd:YAG, as well as a 755 nm Alexandrite for hair removal. Like the xeo, the 1064 nm wavelength addresses darker, course hair while the 755 nm wavelength is used for finer, lighter hair. Both wavelengths are transmitted through the same CoolView hand piece with spot sizes up to 18 mm for the 755 nm wavelength and up to 18 mm for the 1064 nm wavelength. The CoolView hand piece employs sapphire as a means of contact cooling – epidermal protection. Both platforms are cleared for treating all skin types. Vascular Lesions: Both the company’s xeo, as well as excel V and excel V+ platforms are capable of treating a wide range of aesthetic vein conditions, including spider and reticular veins, and small facial veins. xeo employs the LimeLight hand piece for addressing small veins, as well as vascular lesions while the Nd:YAG is appropriate for deeper, larger vessels. LimeLight is a fixed spot size Intense Pulsed Light (IPL) while the Nd:YAG has adjustable spot sizes up to 10mm. The excel V and excel V+ devices are a dual wavelength laser – 1064 nm and 532 nm – with adjustable spot sizes ranging from 2 mm to 12 mm for excel V and 1 mm - 16 mm for the excel V+. The 532 nm and 1064 wavelength can be used to treat over 20 conditions ranging from small veins and vessels to a variety of vascular lesions. For both of these devices, patients receive on average between one and six treatments, with six weeks or longer between treatments. Skin Revitalization: The company’s xeo, excel V, excel HR and enlighten platforms, utilizing an Nd:YAG laser, allow its customers to perform non-invasive and minimally-invasive treatments that reduce redness, dyschromia, fine lines, improve skin texture, and treat other aesthetic conditions. A large number of pulses are directed at the treatment site, repeatedly covering an area, such as the cheek. By delivering many pulses of laser light to a treatment area, a gentle heating of the dermis occurs and collagen growth is stimulated to rejuvenate the skin and reduce wrinkles. Patients typically receive four to six treatments for this procedure. The treatment typically takes less than a half hour with a spacing of two to four weeks between treatments. Skin revitalization was expanded with the introduction of 'green genesis', a micro-pulsed 532 nm treatment on the excelV+. Texture, Lines and Wrinkles: The xeo platform can address fine lines and wrinkles using the Pearl and Pearl Fractional hand pieces. When treating fine lines, texture and wrinkles with a Pearl hand piece, the hand piece is held at a controlled distance from the skin and the scanner delivers a preset pattern of spots to the treatment area. Additionally, the company’s Secret RF and Secret PRO platforms feature Radio Frequency microneedling device that employs fractionated RF energy (2 MHz) delivered at different pre-programmed depths in the dermis to produce new collagen. The Secret devices come with four treatment tips: a 25-pin tip, both insulated and semi-insulated, and a semi-insulated 64-pin tip. The treatment has minimal side effects, negligible downtime and results in improved skin tone and texture, as well as improvement in acne scars. Dyschromia: The company’s pulsed-light technologies allow its customers to safely and effectively treat red and brown dyschromia (skin discoloration), benign pigmented lesions, and rosacea. The practitioner delivers a narrow spectrum of light to the surface of the skin through the company’s LimeLight hand pieces. These hand pieces include one of the company’s proprietary wavelength filters, which reduce the energy level required for therapeutic effect and minimize the risk of skin injury. The 532 nm wavelength green laser option of the excel V and enlighten systems, as well as the 755 nm infrared wavelength of the excel HR, can be used to treat benign pigmented lesions in substantially the same way. In treating benign pigmented lesions, the hand piece is placed directly on the skin and then the pulse is triggered. The cells forming the pigmented lesion absorb the light energy, darken and then flake off over the course of two to three weeks. Several treatments may be required to completely remove the lesion. The treatment takes a few minutes per area treated and there are typically three to four weeks between treatments. Practitioners can also treat dyschromia and other skin conditions with the company’s Pearl hand piece. During these treatments, the heat delivered by the Pearl hand piece will remove the outer layer of the epidermis while coagulating a portion of the epidermis. That coagulated portion will gently peel off over the course of a few days, revealing a new layer of skin underneath. Treatment of the full face can usually be performed in 15 to 30 minutes. Patients receive on average between one and three treatments at monthly intervals. Skin Quality: The company’s Titan technology allows it customers to use deep dermal heating to tighten lax skin. The practitioner delivers a spectrum of light to the skin through its Titan hand piece. This hand piece includes the company’s proprietary light source and wavelength filter which tailors the delivered spectrum of light to provide heating at the desired depth in the skin. In treating compromised skin, the hand piece is placed directly on the skin and then the light pulse is triggered. A sustained pulse causes significant heating in the dermis. This heating can cause immediate collagen contraction while also stimulating long-term collagen regrowth. Several treatments may be required to obtain the desired degree of tightening of the skin. The company’s CE Mark allows it to market the Titan in the EU, Australia and certain other countries outside the U.S. for the treatment of wrinkles through skin tightening. However, in the U.S., the company has a 510(k) clearance only for deep dermal heating. Sales and Marketing The company markets, sells, and services its products through direct 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. International sales and services outside of these direct markets are made through a network of distributors in over 42 countries, as well as a direct international sales force. The company internally manages its the U.S. and Canadian sales organization as one North American sales region. The company also sells certain items like hand piece refills, cycle refills, consumable tips, and marketing brochures through its web site www.mycutera.com. Customers generally demand quality, performance, ease of use and high productivity. The company responds to these customer demands by introducing new products focused on these requirements in the markets it serves. In addition, the company provides attractive upgrade pricing to new product families. To increase market penetration, the company also markets to non-core practitioners in addition to its core specialties of plastic surgeons and dermatologists. The company primarily targets its marketing efforts to practitioners through office visits, workshops, trade shows, webinars and trade journals. The company also markets to potential patients through brochures, workshops and its website. In addition, the company offers clinical forums with recognized expert panelists to promote advanced treatment techniques using its products to further enhance customer loyalty and uncover new sales opportunities. Competition The company’s products compete against conventional non-energy-based treatments, such as electrolysis, Botox and collagen injections, chemical peels, microdermabrasion and sclerotherapy. The products also compete against laser and other energy-based products offered by other public companies, such as Abbvie (acquired Allergan and its division Zeltiq), Bausch Health, Vieve, Soliton, InMode, and Lutronic, as well as private companies, including Sisram, Candela, Sciton, BTL Industries and several others. The company also sells skincare products in Japan under the exclusive distribution agreement with ZO, which granted it the exclusive right to promote, market, sell, and distribute the products produced by ZO in Japan. ZO’s skincare products compete against other Physician-dispensed skincare brands developed and marketed by other companies, such as Environ, Navision and Revision Skincare, among others. Patents and Proprietary Technology As of January 19, 2022, the company had 28 issued and unexpired U.S. patents, eight pending U.S. patent applications, and four pending international applications under the Patent Cooperation Treaty (PCT). The company has also obtained certain trademarks and trade names for its products and maintain certain details about its processes, products, and strategies as trade secrets. In the U.S. and several foreign countries, the company registers its company name and certain of its product names as trademarks, including Cutera, AcuTip, CoolGlide, CoolGlide excel, enlighten, excel V+, LimeLight, myQ, Pearl, PICO Genesis, ProWave 770, truSculpt, truSculpt iD, truSculpt flex, Secret PRO, SecretRF, and xeo. Government Regulation The company’s products are medical devices subject to regulation by numerous government agencies, including the FDA and counterpart agencies outside the U.S. The company is required to manufacture the company’s products in compliance with the FDA’s Quality System Regulation (QSR) and the international quality management standard for medical systems ISO 13485:2016. The QSR and ISO 13485 cover the methods and documentation of the design, testing, control, manufacturing, labeling, quality assurance, packaging, storage and shipping of the company’s products. The company is subject to unannounced inspections by the FDA and the Food and Drug Branch of the California Department of Health Services (or CDHS), to determine its compliance with the QSR and other applicable regulations, which may include the manufacturing facilities of the company’s subcontractors. In the past, the company’s manufacturing facility has been inspected by the FDA and the CDHS. The FDA and the CDHS noted observations, but there were no findings that involved a material violation of regulatory requirements. The company’s responses to those observations have been accepted by the FDA and CDHS. The company is also regulated under the Radiation Control for Health and Safety Act, which requires laser products to comply with performance standards, including design and operation requirements, and manufacturers to certify in product labeling and in reports to the FDA that their products comply with all such standards. The regulations also require laser manufacturers to file. In Japan, the company is actively seeking approvals for products to supplement its existing approvals for enlighten, excel V, excel HR, LimeLight, ProWave, Solera, Titan, truSculpt iD and xeo. The company’s worldwide business is subject to the U.S. Foreign Corrupt Practices Act of 1977 (the FCPA), the United Kingdom Bribery Act of 2010 (the UK Bribery Act), and other anti-corruption laws and regulations applicable in the jurisdictions where it operates. History Cutera, Inc. was founded in 1988 as a Delaware corporation. The company was incorporated in 1988.