Cutera stock slides after earnings; company appoints interim CFO, reaches board deal with big investors

By Bill Peters

Shares of Cutera Inc. fell hard after hours on Tuesday after the maker of skincare and body-sculpting devices -- currently engulfed in drama over a leadership changeover -- reported weaker quarterly results than expected and announced a new interim chief financial officer as well as plans to appoint new board directors.

The company lost $1.26 a share during its first quarter, compared with 84 cents in the same quarter last year, on sales of around $55 million, down from $58 million a year earlier. The results were below FactSet forecasts for a 39-cent per-share loss and sales of $59.8 million.

Management blamed "execution challenges" and "an extended plant shutdown" for the results, which it said were below its own expectations.

The company also said it appointed Stuart Drummond as interim CFO, replacing Rohan Seth, who stepped down from the company.

Cutera shares (CUTR) sank 12.8% after hours on Tuesday.

Separately, Cutera said it had entered an agreement with two shareholders -- Pura Vida Investments and RTW Investments, who together own more than 15% of the company -- under which Cutera would appoint four directors following the company's June 9 special shareholder meeting. The two investors, meanwhile, will agree to vote against removing directors at that meeting and support Cutera's slate of director nominees.

Shareholders were set to vote on a proposal to remove five directors, amid concerns the company wasn't moving quickly on CEO succession plans. Those proposals were offered by two higher-ups that the company fired last month -- executive chair Daniel Plants and chief executive David Mowry.

The dismissals of those two executives, as MarketWatch reported earlier, came amid allegations from Cutera's management that the two waged "an apparent campaign to seize control of the company," following its decision to seek an external candidate for the top spot. That campaign, Cutera alleged, involved the disclosure of "highly confidential internal deliberations of the board in direct violation of their employment agreements."

Cutera said that as it began exploring options for a leader last year, Plants called for Mowry's "immediate termination" and indicated he wanted to replace Mowry as CEO. Plants had made a similar move earlier, the company alleged.

On April 17, in a letter to shareholders, Cutera said that Mowry was unsuited for the role of CEO. And the company said that Plants had no experience as a chief executive and was asking for compensation that was too high.

-Bill Peters

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05-10-23 0744ET

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