10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No.1)

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to_____.

Commission File Number: 000-50644

Cutera, Inc.

(Exact name of registrant as specified in its charter)

Delaware	77-0492262
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3240 Bayshore Blvd., Brisbane, California 94005

(Address of principal executive offices)

(415) 657-5500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.001 par value)	CUTR	The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    x    No    ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes x     No    ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes    ☐    No    x

The number of shares of Registrant’s common stock issued and outstanding as of August 5, 2023, was 19,943,875.

EXPLANATORY NOTE

Cutera, Inc., a Delaware corporation (“we”, “us”, “our”, the “Company” or “Cutera”), is filing this Amendment No. 1 to Form 10-Q (this “Amendment” or “Form 10Q/A”) to amend and restate certain items in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 originally filed with the Securities and Exchange Commission (the “SEC”) on August 9, 2023 (the “Original 10-Q”, and, as amended by this Amendment, the “Quarterly Report”) to reflect the restatement of the Company’s financial statements as of and for the quarter ended June 30, 2023 contained in the Original 10-Q (the “Restatement”).

Background of Restatement

As previously reported in the Form 8-K filed on December 21, 2023, the Company performed a physical inventory count at the end of the third quarter of its fiscal year ending December 31, 2023. The physical inventory count identified a shortfall of inventory relative to the Company's system of record, resulting in an error overstating the inventory in the condensed consolidated balance sheets as of March 31, 2023 and June 30, 2023 and corresponding understatement of cost of revenue in the condensed consolidated statements of operations for the periods then ended.

The Company concluded that a restatement was necessary to correct the misstatement in inventory, cost of revenue, and disclosures of basic and diluted earnings (loss) per share for the first and second quarters of the 2023 fiscal year. The Company also determined to correct other misstatements that were identified and deemed immaterial in previous periods, as further detailed in Note 1 – Restatement of Previously Issued Financial Statements.

On December 21, 2023, the Board of Directors of Cutera, upon recommendation of its Audit Committee, and in consultation with management of the Company and the Company’s independent registered public accounting firm, BDO USA, P.C. (“BDO”), concluded that certain items of the Company’s previously issued unaudited condensed consolidated interim financial statements as of and for the fiscal periods ended March 31, 2023 and June 30, 2023 included in the Company’s Quarterly Reports on Form 10-Q for such periods should no longer be relied upon and that the Company needed to restate these previously issued financial statements. Similarly, earnings releases, and investor communications describing the financial statements for the periods described above should no longer be relied upon.

For a more detailed description of the financial impact of the Restatement, see Note 1 – Restatement of Previously Issued Financial Statements, to the unaudited condensed consolidated financial statements contained in this Amendment and “Restatement of Previously Issued Financial Statements” under Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contained in this Amendment.

Concurrently with the filing of this Amendment, the Company is filing an amendment to its Quarterly Report on Form 10-Q as of and for the period ended March 31, 2023.

Internal Control Considerations

The Company’s management identified material weaknesses in its internal control over financial reporting, which were previously identified in connection with, and disclosed in, the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on April 7, 2023, as amended on May 1, 2023, and the Company’s, condensed consolidated financial statements as of and for the three months ended March 31, 2023, and as of and for the three and six months ended June 30, 2023.

In connection with the Company's review and preparation of its financial statements leading to the Restatement, management identified an additional material weakness. Specifically, the Company failed to design, maintain and monitor a risk assessment program at a sufficiently precise level and therefore failed to identify new and evolving risks related to accounting policies, procedures and related controls performed over areas including, but not limited to inventory, revenues and lease income, costs for leased devices, and testing of certain key reports used in controls. Consequently, the Company failed to timely implement new controls to respond to changes in the business and leadership.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. Therefore, the Company’s management concluded that material weaknesses remain in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective as of June 30, 2023. For further information regarding the effectiveness of the Company’s disclosure controls and procedures, see Part I, Item 4, “Controls and Procedures”, included in this Amendment.

Items Amended in the Form 10-Q/A

The following items are amended and restated in their entirety in this Amendment: (i) Part I, Item 1, “Financial Statements”; Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; and Item 4, “Controls and Procedures”; and (ii) Part II, Item 6, “Exhibits”.

Pursuant to Rule 12b-15 promulgated under the Securities Act of 1934, as amended (the “Exchange Act”), this Amendment also contains new currently dated certifications by the Company's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.

Except as described above, this Amendment does not amend, update or change any other disclosures in the Original 10-Q. In addition, the information contained in this Amendment does not reflect events occurring after the filing of the Original 10-Q and does not modify or update the disclosures therein. Among other things, forward-looking statements made in the Original 10-Q have not been revised to reflect events, results or developments that occurred or facts that became known to the Company after the date of the Original 10-Q, other than with respect to the Restatement, and such forward-looking statements should be read in conjunction with the Company's filings with the SEC, including those subsequent to the filing of the Original 10-Q. Unless otherwise stated or unless the context otherwise requires, defined terms used throughout this Amendment have the meanings ascribed to them in the Original 10-Q.

CUTERA, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4	Controls and Procedures	53
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	55
Item 1A	Risk Factors	55
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3	Defaults Upon Senior Securities	57
Item 4	Mine Safety Disclosures	57
Item 5	Other Information	57
Item 6	Exhibits	58
	Signature	59

In this Amendment, “Cutera,” “the Company,” “we,” “us” and “its” refer to Cutera, Inc. and its consolidated subsidiaries.

This report may contain references to its proprietary intellectual property, including among others, trademarks for its systems and ancillary products, “CUTERA®,” “AVI360®,” “AVICARE®," “AVICLEAR®," “AVICOOL®, "ACUTIP 500®," “COOLGLIDE®,” “CUCF®,” “CUTERA UNIVERSITY CLINICAL FORUM®,” “ENLIGHTEN®,” “EXCEL HR®,” “EXCEL V®,” “EXCEL V+™,” “GENESIS®,” “LASER GENESIS®,” “LIMELIGHT®,” "MYQ®," “PEARL®,” “PICO GENESIS®,” “PROWAVE 770®,” “SOLERA®,” “TITAN®,” “TRUBODY®,” “TRUFLEX™,” “TRUSCULPT®,” “TRUSCULPT ID®,” “TRUSCULPT FLEX®,” “VANTAGE®,” and “XEO®.

These trademarks and trade names are the property of Cutera or the property of its consolidated subsidiaries and are protected under applicable intellectual property laws. Solely for convenience, its trademarks and tradenames referred to in this Amendment may appear without the ® or symbols, but such references are not intended to indicate in any way that the Company will not assert, to the fullest extent under applicable law, its rights to these trademarks and tradenames.

2

PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS (UNAUDITED)

CUTERA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share, per share data and par value)

(Unaudited)

	June 30, 2023		December 31, 2022
	(As Restated)
Assets
Current assets:
Cash and cash equivalents	$	180,654	$	145,924
Marketable investments	41,949		171,390
Accounts receivable, net of allowance for credit losses of $4,411 and $2,497, respectively	53,679		45,562
Inventories, net	64,164		63,628
Other current assets and prepaid expenses	24,798		24,036
Restricted cash	700		700
Total current assets	365,944		451,240
Property and equipment, net	64,711		40,368
Deferred tax assets	547		590
Goodwill	1,339		1,339
Operating lease right-of-use assets	11,370		12,831
Other long-term assets	15,113		14,620
Total assets	$	459,024	$	520,988
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	34,240	$	33,736
Accrued liabilities	53,764		57,452
Operating lease liabilities	2,602		2,810
Deferred revenue	12,317		11,841
Total current liabilities	102,923		105,839
Deferred revenue, net of current portion	1,690		1,657
Operating lease liabilities, net of current portion	10,069		11,352
Convertible notes, net of unamortized debt issuance costs of $11,557 and $12,666, respectively	417,568		416,459
Other long-term liabilities	575		862
Total liabilities	532,825		536,169
Commitments and Contingencies (Note 14)
Stockholders’ deficit:
Common stock, $0.001 par value; authorized: 50,000,000 shares; issued and outstanding: 19,901,600 and 19,668,603 shares at June 30, 2023 and December 31, 2022, respectively	20		20
Additional paid-in capital	128,014		125,406
Accumulated other comprehensive income (loss)	4		(94)
Accumulated deficit	(201,839)		(140,513)
Total stockholders’ deficit	(73,801)		(15,181)
Total liabilities and stockholders’ deficit	$	459,024	$	520,988

See Accompanying Notes to Condensed Consolidated Financial Statements.

3

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
Net revenue:
Products	$	56,175	$	58,589	$	105,296	$	110,655
Service	5,650		5,635		11,055		11,583
Total net revenue	61,825		64,224		116,351		122,238
Cost of revenue:
Products	32,051		25,899		62,110		48,811
Service	3,691		3,281		6,526		6,595
Total cost of revenue	35,742		29,180		68,636		55,406
Gross profit	26,083		35,044		47,715		66,832
Operating expenses:
Sales and marketing	33,271		27,001		62,783		51,945
Research and development	5,784		6,859		12,252		13,358
General and administrative	18,191		11,248		30,444		24,750
Total operating expenses	57,246		45,108		105,479		90,053
Loss from operations	(31,163)		(10,064)		(57,764)		(23,221)
Interest and other expense, net:
Amortization of debt issuance costs	(557)		(298)		(1,109)		(517)
Interest on convertible notes	(2,958)		(1,149)		(5,897)		(1,927)
Loss on extinguishment of convertible notes	—		(34,423)		—		(34,423)
Interest income	2,179		382		4,658		395
Other expense, net	(453)		(1,910)		(616)		(2,678)
Total interest and other expense, net	(1,789)		(37,398)		(2,964)		(39,150)
Loss before income taxes	(32,952)		(47,462)		(60,728)		(62,371)
Income tax expense (benefit)	326		(186)		598		47
Net loss	$	(33,278)	$	(47,276)	$	(61,326)	$	(62,418)
Net loss per share:
Basic	$	(1.68)	$	(2.53)	$	(3.09)	$	(3.39)
Diluted	$	(1.68)	$	(2.53)	$	(3.09)	$	(3.39)
Weighted-average number of shares used in per share calculation:
Basic	19,858		18,700		19,819		18,392
Diluted	19,858		18,700		19,819		18,392

See Accompanying Notes to Condensed Consolidated Financial Statements.

4

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
Net loss	$	(33,278)	$	(47,276)	$	(61,326)	$	(62,418)
Other comprehensive income (loss):
Net change in unrealized gain (loss) on available-for-sale investments, net of tax	12		(172)		98		(183)
Other comprehensive income (loss), net of tax	12		(172)		98		(183)
Comprehensive loss	$	(33,266)	$	(47,448)	$	(61,228)	$	(62,601)

See Accompanying Notes to Condensed Consolidated Financial Statements.

5

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share amounts)

(Unaudited)

Three and Six Months Ended June 30, 2023

(As Restated)

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Deficit
	Shares	Amount
Balance at March 31, 2023	19,785,107	$	20	$	126,504	$	(168,561)	$	(8)	$	(42,045)
Issuance of common stock for employee purchase plan	51,786	—		711		—		—		711
Exercise of stock options	3,459	—		38		—		—		38
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	61,248	—		(789)		—		—		(789)
Stock-based compensation expense	—	—		1,550		—		—		1,550
Net change in unrealized loss on available-for-sale investments	—	—		—		—		12		12
Net loss	—	—		—		(33,278)		—		(33,278)
Balance at June 30, 2023	19,901,600	$	20	$	128,014	$	(201,839)	$	4	$	(73,801)

(As Restated)

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Deficit
	Shares	Amount
Balance at December 31, 2022	19,668,603	$	20	$	125,406	$	(140,513)	$	(94)	$	(15,181)
Issuance of common stock for employee purchase plan	51,786	—		711		—		—		711
Exercise of stock options	9,234	—		147		—		—		147
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	171,977	—		(3,186)		—		—		(3,186)
Stock-based compensation expense	—	—		4,936		—		—		4,936
Net change in unrealized loss on available-for-sale investments	—	—		—		—		98		98
Net loss	—	—		—		(61,326)		—		(61,326)
Balance at June 30, 2023	19,901,600	$	20	$	128,014	$	(201,839)	$	4	$	(73,801)

See Accompanying Notes to Condensed Consolidated Financial Statements.

6

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY(DEFICIT)

(In thousands, except share amounts)

(Unaudited)

Three and Six Months Ended June 30, 2022

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount
Balance at March 31, 2022	18,132,949	$	18	$	116,468	$	(73,315)	$	(11)	$	43,160
Issuance of common stock for employee purchase plan	27,810	—		1,063		—		—		1,063
Exercise of stock options	7,385	—		225		—		—		225
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	37,671	—		(1,784)		—		—		(1,784)
Stock-based compensation expense	—	—		4,733				—		4,733
Purchase of capped call	—	—		(32,024)		—		—		(32,024)
Issuance of common stock in extinguishment of convertible notes	1,354,348	2		55,947		—		—		55,949
Net change in unrealized loss on available-for-sale investments	—	—		—		—		(172)		(172)
Net loss	—	—		—		(47,276)		—		(47,276)
Balance at June 30, 2022	19,560,163	$	20	$	144,628	$	(120,591)	$	(183)	$	23,874

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2021	17,995,344	$	18	$	114,724	$	(58,173)	$	—	—	$	56,569
Issuance of common stock for employee purchase plan	27,810	—		1,063		—		—			1,063
Exercise of stock options	14,844	—		376		—		—			376
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	167,817	—		(4,234)		—		—			(4,234)
Stock-based compensation expense	—	—		8,776		—		—			8,776
Purchase of capped call	—	—		(32,024)		—		—			(32,024)
Issuance of common stock in repayment of convertible notes	1,354,348	2		55,947		—		—			55,949
Net change in unrealized loss on available-for-sale investments	—	—		—		—		(183)			(183)
Net loss	—	—		—		(62,418)		—			(62,418)
Balance at June 30, 2022	19,560,163	$	20	$	144,628	$	(120,591)	$	(183)		$	23,874

    See Accompanying Notes to Condensed Consolidated Financial Statements.

7

CUTERA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2023		2022
	(As Restated)
Cash flows from operating activities
Net loss	$	(61,326)	$	(62,418)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	4,936		8,776
Depreciation and amortization	3,238		929
Amortization of contract acquisition costs	4,069		1,219
Amortization of debt issuance costs	1,109		517
Deferred tax assets	43		80
Provision for credit losses	1,914		409
Loss on sale of property and equipment	—		63
Loss on extinguishment of convertible notes	—		34,423
Accretion of discount on investment securities and investment income, net	146		—
Changes in assets and liabilities:
Accounts receivable	(10,031)		(1,108)
Inventories, net	(536)		(17,501)
Other current assets and prepaid expenses	(776)		(3,034)
Other long-term assets	(4,782)		(1,071)
Accounts payable	(1,666)		14,771
Accrued liabilities	(3,806)		(6,878)
Operating leases, net	(30)		36
Deferred revenue	509		702
Net cash used in operating activities	(66,989)		(30,085)
Cash flows from investing activities
Acquisition of property and equipment	(25,108)		(8,238)
Proceeds from maturities of marketable investments	152,859		—
Purchase of marketable investments	(23,467)		(203,309)
Net cash provided by (used in) investing activities	104,284		(211,547)
Cash flows from financing activities
Proceeds from exercise of stock options and employee stock purchase plan	858		1,440
Taxes paid related to net share settlement of equity awards	(3,186)		(4,234)
Purchase of capped call	—		(31,671)
Proceeds from issuance of convertible notes	—		240,000
Payment of issuance costs of convertible notes	—		(6,956)
Extinguishment of convertible notes	—		(45,777)
Payments on finance lease obligations	(237)		(284)
Net cash provided by (used in) financing activities	(2,565)		152,518
Net increase (decrease) in cash, cash equivalents and restricted cash	34,730		(89,114)
Cash, cash equivalents, and restricted cash at beginning of period	146,624		164,864
Cash, cash equivalents, and restricted cash at end of period	$	181,354	$	75,750
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease	$	68	$	437
Assets acquired under operating lease	$	57	$	549
Transfer of inventory to property and equipment	$	—	$	12,180
Debt issuance costs accrued	$	—	$	646
Acquisition of property and equipment	$	6,301	$	—
Capped call costs accrued	$	—	$	353
Supplemental disclosure of cash flow information:
Cash paid for interest	$	5,731	$	1,903
Cash paid for income taxes	$	483	$	1,230

See Accompanying Notes to Condensed Consolidated Financial Statements.

8

CUTERA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Restatement of Previously Issued Financial Statements

Background of Restatement

The accompanying unaudited condensed consolidated financial statements have been restated to correct errors related to (1) an accounting error identified as a result of a physical inventory count performed by the Company and (2) other accounting adjustments identified that were deemed immaterial. The details of the errors are further described below:

1.The Company determined that, as a result of an accounting error identified by the physical inventory count, there was a shortfall of inventory relative to the Company's system of record. The effect of this error was an overstatement of $3.6 million of inventory on the condensed consolidated balance sheet as of June 30, 2023. This error resulted in an associated understatement of $2.4 million and $3.6 million of cost of revenue on the condensed consolidated statement of operations for the three and six months ended June 30, 2023, respectively.

2.The Company corrected certain other errors that were deemed immaterial to the related interim period and restated the financial statements for the quarter ended June 30, 2023. The details of these corrections are noted in the footnotes to the tables below.

The Company's basic and diluted losses per share increased by $0.08 and $0.24 per share for the three and six months ended June 30, 2023, respectively. The Company's income tax expenses for the three and six months ended June 30, 2023 did not change as a result of the restatement. The errors did not have an impact on the Company’s net cash or liquidity.

9

Effect of Restatement

The effects of the accounting error on the Company's condensed consolidated balance sheet as of June 30, 2023 are as follows (in thousands):

	June 30, 2023		Adjustments			June 30, 2023
	(As Reported)					(As Restated)
Assets
Current assets:
Cash and cash equivalents	$	180,654	$	—		$	180,654
Marketable investments	41,949		—			41,949
Accounts receivable, net of allowance	53,079		600		(h)	53,679
Inventories, net	68,668		(4,504)		(a), (c), (d)	64,164
Other current assets and prepaid expenses	24,900		(102)		(j)	24,798
Restricted cash	700		—			700
Total current assets	369,950		(4,006)			365,944
Property and equipment, net	65,511		(800)		(b), (e)	64,711
Deferred tax assets	547		—			547
Goodwill	1,339		—			1,339
Operating lease right-of-use assets	11,370		—			11,370
Other long-term assets	15,113		—			15,113
Total assets	$	463,830	$	(4,806)		$	459,024
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	34,240	$	—		$	34,240
Accrued liabilities	53,764		—			53,764
Operating lease liabilities	2,602		—			2,602
Deferred revenue	12,457		(140)		(g)	12,317
Total current liabilities	103,063		(140)			102,923
Deferred revenue, net of current portion	1,690		—			1,690
Operating lease liabilities, net of current portion	10,069		—			10,069
Convertible notes, net of unamortized debt issuance costs	417,568		—			417,568
Other long-term liabilities	575		—			575
Total liabilities	532,965		(140)			532,825
Stockholders’ deficit:
Common stock	20		—			20
Additional paid-in capital	128,014		—			128,014
Accumulated other comprehensive income (loss)	4		—			4
Accumulated deficit	(197,173)		(4,666)		(k)	(201,839)
Total stockholders’ deficit	(69,135)		(4,666)			(73,801)
Total liabilities and stockholders’ deficit	$	463,830	$	(4,806)		$	459,024

10

The effects of the accounting error on the Company's condensed consolidated income statement for the three-month period ended June 30, 2023 are as follows (in thousands, except per share data):

	Three Months Ended June 30, 2023		Adjustments			Three Months Ended June 30, 2023
	(As Reported)					(As Restated)
Net revenue:
Products	$	55,568	$	607	(f), (g)	$	56,175
Service	5,650		—			5,650
Total net revenue	61,218		607			61,825
Cost of revenue:
Products	29,473		2,578		(a), (c), (d), (j)	32,051
Service	3,691		—			3,691
Total cost of revenue	33,164		2,578			35,742
Gross profit	28,054		(1,971)			26,083
Operating expenses:
Sales and marketing	33,271		—			33,271
Research and development	5,784		—			5,784
General and administrative	18,528		(337)		(h)	18,191
Total operating expenses	57,583		(337)			57,246
Loss from operations	(29,529)		(1,634)			(31,163)
Interest and other expense, net:
Amortization of debt issuance costs	(557)		—			(557)
Interest on convertible notes	(2,958)		—			(2,958)
Interest income	2,179		—			2,179
Other expense, net	(453)		—			(453)
Total interest and other expense, net	(1,789)		—			(1,789)
Loss before income taxes	(31,318)		(1,634)			(32,952)
Income tax expense	326		—			326
Net loss	$	(31,644)	$	(1,634)	(k)	$	(33,278)
Net loss per share:
Basic	$	(1.59)	$	(0.08)		$	(1.68)
Diluted	$	(1.59)	$	(0.08)		$	(1.68)
Weighted-average number of shares used in per share calculation:
Basic	19,858		19,858			19,858
Diluted	19,858		19,858			19,858

11

The effects of the accounting error on the Company's condensed consolidated income statement for the six-month period ended June 30, 2023 are as follows (in thousands, except per share data):

	Six Months Ended June 30, 2023		Adjustments			Six Months Ended June 30, 2023
	(As Reported)					(As Restated)
Net revenue:
Products	$	105,156	$	140	(f), (g)	$	105,296
Service	11,055		—			11,055
Total net revenue	116,211		140			116,351
Cost of revenue:
Products	56,704		5,406		(a), (b), (c), (d), (e), (j)	62,110
Service	6,526		—			6,526
Total cost of revenue	63,230		5,406			68,636
Gross profit	52,981		(5,266)			47,715
Operating expenses:
Sales and marketing	62,783		—			62,783
Research and development	12,252		—			12,252
General and administrative	31,044		(600)		(h)	30,444
Total operating expenses	106,079		(600)			105,479
Loss from operations	(53,098)		(4,666)			(57,764)
Interest and other expense, net:
Amortization of debt issuance costs	(1,109)		—			(1,109)
Interest on convertible notes	(5,897)		—			(5,897)
Interest income	4,658		—			4,658
Other expense, net	(616)		—			(616)
Total interest and other expense, net	(2,964)		—			(2,964)
Loss before income taxes	(56,062)		(4,666)			(60,728)
Income tax expense	598		—			598
Net loss	$	(56,660)	$	(4,666)	(k)	$	(61,326)
Net loss per share:
Basic	$	(2.86)	$	(0.24)		$	(3.09)
Diluted	$	(2.86)	$	(0.24)		$	(3.09)
Weighted-average number of shares used in per share calculation:
Basic	19,819		19,819			19,819
Diluted	19,819		19,819			19,819

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The effects of the accounting errors on the Company's condensed consolidated statement of cash flows for the six-month period ended June 30, 2023 are as follows (in thousands):

	Six Months Ended June 30,
	2023		Adjustments			2023
	(As Reported)					(As Restated)
Cash flows from operating activities
Net loss	$	(56,660)	$	(4,666)	(k)	$	(61,326)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	4,936		—			4,936
Depreciation and amortization	3,238		—			3,238
Amortization of contract acquisition costs	4,069		—			4,069
Amortization of debt issuance costs	1,109		—			1,109
Deferred tax assets	43		—			43
Provision for credit losses	2,514		(600)		(h)	1,914
Accretion of discount on investment securities and investment income, net	(1,995)		2,141		(i)	146
Changes in assets and liabilities:
Accounts receivable	(10,031)		—			(10,031)
Inventories, net	(5,040)		4,504		(a), (c), (d)	(536)
Other current assets and prepaid expenses	(878)		102		(j)	(776)
Other long-term assets	(4,782)		—			(4,782)
Accounts payable	(1,666)		—			(1,666)
Accrued liabilities	(3,806)		—			(3,806)
Operating leases, net	(30)		—			(30)
Deferred revenue	649		(140)		(g)	509
Net cash used in operating activities	(68,330)		1,341			(66,989)
Cash flows from investing activities
Acquisition of property and equipment	(25,908)		800		(b), (e)	(25,108)
Proceeds from maturities of marketable investments	155,000		(2,141)		(i)	152,859
Purchase of marketable investments	(23,467)		—			(23,467)
Net cash provided by (used in) investing activities	105,625		(1,341)			104,284
Cash flows from financing activities
Proceeds from exercise of stock options and employee stock purchase plan	858		—			858
Taxes paid related to net share settlement of equity awards	(3,186)		—			(3,186)
Payments on finance lease obligations	(237)		—			(237)
Net cash provided by (used in) financing activities	(2,565)		—			(2,565)
Net increase (decrease) in cash, cash equivalents and restricted cash	34,730		—			34,730
Cash, cash equivalents, and restricted cash at beginning of period	146,624		—			146,624
Cash, cash equivalents, and restricted cash at end of period	$	181,354	$	—		$	181,354
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease	$	68	$	—		$	68
Assets acquired under operating lease	$	57	$	—		$	57
Acquisition of property and equipment	$	6,301	$	—		$	6,301
Supplemental disclosure of cash flow information:
Cash paid for interest	$	5,731	$	—		$	5,731
Cash paid for income taxes	$	483	$	—		$	483

Footnote to tables:

(a) Correction of the accounting error for the overstatement of inventory identified as a result of the physical inventory count ($2.4 million and $3.6 million for three and six months ended June 30, 2023, respectively)

(b) Correction of the accounting error related to AviClear devices identified as a result of the physical inventory count ($1.0 million)

(c) Correction of the overstatement of demonstration and field inventory ($0.4 million), net of quarterly amortization ($0.1 million)

(d) Correction of the overstatement of demonstration and field inventory ($0.1 million and $0.5 million for three and six months ended June 30, 2023, respectively)

(e) Correction of AviClear capitalized labor cost incorrectly expensed in previous period ($0.2 million)

(f) Correction of AviClear treatment revenue incorrectly recognized in the period ended June 30, 2023 ($0.7 million)

(g) Correction of AviClear sales and lease arrangements incorrectly allocated to deferred revenue in previous period ($0.2 million), net of quarterly amortization ($0.1 million)

13

(h) Correction of the overstatement of the provision for credit losses associated with other receivables ($0.3 million and $0.6 million for three and six months ended June 30, 2023, respectively)

(i) Correction of the classification error related to the cash interest received ($2.1 million)

(j) Correction of unapplied inventory prepayment upon receipt of inventory ($0.1 million)

(k) Net change in net loss for the three-month period or the six-month period ended June 30, 2023

The impact of the restatement and reclassification on the Company’s condensed consolidated statements of stockholders’ deficit and condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2023 are limited to the understatement of net loss, comprehensive loss, accumulated deficit, and total stockholders' deficit of $1.6 million and $4.7 million, respectively.

The related notes to the condensed consolidated financial statements have also been restated to reflect the error corrections described above.

Note 2. Summary of Significant Accounting Policies

Description of Operations and Principles of Consolidation

Cutera, Inc. (“Cutera” or the “Company”) develops, manufactures, distributes, and markets energy-based product platforms for medical practitioners, enabling them to offer treatments to their customers. In addition, the Company distributes third-party manufactured skincare products. The Company currently markets the following system platforms: AviClear, enlighten, excel, truSculpt, Secret PRO, Secret RF, and xeo. These platforms enable medical practitioners to perform procedures including treatment for acne, body contouring, skin resurfacing and revitalization, hair and tattoo removal, removal of benign pigmented lesions, and vascular conditions. Several of the Company’s systems offer multiple hand pieces and applications, providing customers the flexibility to upgrade their systems. The sales of systems, system upgrades, and hand pieces (collectively “Systems” revenue); the leasing of AviClear devices for acne treatment ("AviClear" revenue); the replacement hand pieces, Titan, truSculpt 3D,truSculpt and truFlex cycle refills, as well as single use disposable tips applicable to Secret PRO, and Secret RF (“Consumables” revenue); and the distribution of third-party manufactured skincare products (“Skincare” revenue); are collectively classified as “Products” revenue. In addition to Products revenue, the Company generates revenue from the sale of post-warranty service contracts, parts, detachable hand piece replacements (except for Titan, truSculpt 3D, truSculpt and truFlex) and service labor for the repair and maintenance of products that are out of warranty, all of which are collectively classified as “Service” revenue.

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 also maintains regional distribution centers (“RDCs”) in select locations across the U.S. These RDCs serve as forward warehousing for systems and service parts in various geographies. The Company markets, sells and services the Company’s 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. Sales and services outside of these direct markets are made through a worldwide distributor network in over 39 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 balance sheets as of June 30, 2023 and December 31, 2022, and its condensed consolidated statements of operations, condensed consolidated statements of comprehensive loss, condensed consolidated statements of changes in stockholders' equity (deficit), and condensed consolidated statements of cash flows, for the three and six months ended June 30, 2023, and 2022, respectively. The December 31, 2022 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, 2022, filed with the Securities and Exchange Commission (the “SEC”) on April 7, 2023, and as amended on May 1, 2023.

Risks and Uncertainties

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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, the Company's ability to obtain and maintain regulatory approvals, government regulations and oversight, patent and other types of litigation, the Company's ability to protect proprietary technology from counterfeit versions of the Company's products, the successful execution of new product launches, strategic relationships and dependence on key individuals.

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.

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 six months ended June 30, 2023, the Company capitalized $2.2 million of mobilization costs and $3.2 million of deferred commission costs related to placements of the AviClear device. 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. The amortization of the mobilization costs and amortization of deferred commission costs are recorded in cost of revenue and sales and marketing, respectively, in the Company's condensed consolidated statement of operations. Total capitalized mobilization costs were $2.6 million and $1.3 million as of June 30, 2023 and December 31, 2022, respectively. Total capitalized commissions as of June 30, 2023, and December 31, 2022, were $4.3 million and $3.3 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet.

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.

Supplier Concentration

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. In the six months ended June 30, 2023, and 2022, revenue from the distribution of skincare products represented 15% and 17% of the Company’s consolidated revenue, respectively.

The Company‘s exclusive distribution agreement with ZO to distribute ZO’s proprietary skincare products in Japan expires in June 2024. ZO has indicated its intent not to extend the distribution agreement and assume distribution of the ZO product line

15

beginning in the third quarter of 2024. The Company is currently negotiating the terms of the transition of the distribution of the ZO product line to ZO, but anticipates there may be an adverse effect to the Company’s future revenue, results of operations, cash flows and stock price beginning in July 2024.

Note 3. Cash, Cash Equivalents, Restricted Cash and Marketable Investments

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 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
June 30, 2023	Cost	Gains	Losses	Value
Cash and cash equivalents	N/A	N/A	N/A	$	180,654
Current restricted cash	N/A	N/A	N/A	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	N/A	N/A	N/A	181,354
Marketable investments - U.S. Treasury	41,945	74	(70)	41,949
Total				$	223,303

		Gross	Gross	Fair
	Amortized	Unrealized	Unrealized	Market
December 31, 2022	Cost	Gains	Losses	Value
Cash and cash equivalents	N/A	N/A	N/A	$	145,924
Current restricted cash	N/A	N/A	N/A	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	N/A	N/A	N/A	146,624
Marketable investments - U.S. Treasury	171,484	8	(102)	171,390
Total				$	318,014

At June 30, 2023 and December 31, 2022, net unrealized losses were nil and $0.1 million, 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. The restricted cash balance relates to an outstanding letter of credit provided to a supplier.

All the marketable investments will mature less than one year from June 30, 2023.

Note 4. 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:

16

•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 June 30, 2023, 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):

June 30, 2023	Level 1		Level 2
Cash equivalents:
Money market funds	$	155,330	$	—
Marketable investments:
Available-for-sale securities	41,949		—
Derivative assets:
Foreign exchange forward	—		—
Total	$	197,279	$	—

As of December 31, 2022, financial assets and liabilities 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):

December 31, 2022	Level 1		Level 2
Cash equivalents:
Money market funds	$	26,408	$	—
Marketable investments:
Available-for-sale securities	171,390		—
Derivative liabilities:
Foreign exchange forward	—		(558)
Total	$	197,798	$	(558)

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”), the 2.25% Convertible Senior Notes due 2028 (the “2028 Notes”), and the 4.00% Convertible Senior Notes due 2029 (the “2029 Notes”).

Note 5. 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

17

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.

At June 30, 2023, the Company did not have any foreign currency exchange forward contracts outstanding. At December 31, 2022, the following foreign exchange forward contract was outstanding:

December 31, 2022	Classification	Foreign Exchange Forward
(Dollars in thousands)
Gross notional amount	N/A	$	6,128
Fair value	Accrued liabilities	$	558
Unrealized loss	Other expense, net	$	(558)

Note 6. Balance Sheet Details (Restated)

Inventories, net (Restated)

As of June 30, 2023 and December 31, 2022, inventories consist of the following (in thousands):

	June 30, 2023		December 31, 2022
	(As Restated)
Raw materials	$	38,128	$	36,323
Work in process	892		2,117
Finished goods	25,144		25,188
Total	$	64,164	$	63,628

Other current assets and prepaid expenses (Restated)

Other current assets and a prepaid expenses, consists of the following (in thousands):

	June 30, 2023		December 31, 2022
	(As Restated)
Deposits with vendors	$	11,951	$	13,917
Foreign tax receivable	9,563		7,147
Prepayments	3,284		2,972
Total	$	24,798	$	24,036

Property and Equipment, net (Restated)

Property and equipment, net, consists of the following (in thousands):

18

	June 30, 2023		December 31, 2022
	(As Restated)
Leasehold improvements	$	793	$	793
AviClear devices	39,107		19,904
Office equipment and furniture	2,026		1,936
Machinery and equipment	5,697		5,106
Assets under construction	25,250		17,876
	72,873		45,615
Less: Accumulated depreciation	(8,162)		(5,247)
Property and equipment, net	$	64,711	$	40,368

Accrued Liabilities

As of June 30, 2023 and December 31, 2022, accrued liabilities consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Bonus and payroll-related accruals	$	18,709	$	18,951
Sales and marketing accruals	4,832		5,347
Liability for inventory in transit	3,762		7,028
Product warranty	3,104		3,254
Accrued sales tax	10,420		9,066
Other accrued liabilities	12,937		13,806
Total	$	53,764	$	57,452

Note 7. 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 six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Beginning Balance	$	3,154	$	3,874	$	3,254	$	3,947
Add: Accruals for warranties issued during the period	1,534		1,769		2,550		3,232
Less: Settlements made during the period	(1,584)		(1,454)		(2,700)		(2,990)
Ending Balance	$	3,104	$	4,189	$	3,104	$	4,189

Note 8. Deferred Revenue (Restated)

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 to three-year terms. Deferred revenue also includes payments for training. Approximately 88% of the Company’s deferred revenue balance of $14.0 million as of June 30, 2023 will be recognized over the next 12 months.

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The following table provides changes in the deferred revenue balance for the three and six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
Beginning balance	$	13,699	$	11,064	$	13,498	$	10,825
Add: Payments received	5,939		5,199		11,087		10,032
Less: Revenue from current period sales	(589)		(443)		(2,291)		(1,374)
Less: Revenue recognized from beginning balance	(5,042)		(4,293)		(8,287)		(7,956)
Ending balance	$	14,007	$	11,527	$	14,007	$	11,527

The fixed annual license fees received related to the AviClear contracts are deferred and recognized over the annual lease periods. The AviClear deferred license fee balance included in the total deferred revenue balance at June 30, 2023, and December 31, 2022, was $3.3 million and $2.3 million, respectively.

Costs for extended service contracts were $2.1 million and $3.7 million for the three and six months ended June 30, 2023, respectively, and were $1.5 million and $3.2 million for three and six months ended June 30, 2022, respectively.

Note 9. 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 9% and 9% of the Company's total revenue for the three and six months ended June 30, 2023, respectively and 7% and 8% for the three and six months ended June 30, 2022, respectively.

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, AviClear license agreements, 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.

The Company leases the AviClear device to customers and receives a fixed annual lease fee over the term of the arrangement and variable revenue related to the treatments performed by the lessee.

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.

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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. This provides customers the flexibility to upgrade their systems whenever they choose and provides the Company with a source of additional Systems revenue.

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's invoice terms typically require payment for its system consoles and other accessories within 30 days of shipment. Certain international distributor arrangements allow for longer payment terms.

AviClear

The Company leases the AviClear device to customers and receives a fixed annual license fee over the term of the arrangement and variable lease income related to the treatments performed by the lessee. The Company classifies its lease income as product revenue and classifies the AviClear contracts as operating leases. The fixed annual license fee is recognized evenly over the period of the lease contract on a straight-line basis. The treatment fee is recognized in the period the treatment protocol is initiated.

Consumables and other accessories

The Company classifies its customers' purchases of replacement cycles for truSculpt and truFlex, as well as replacement hand pieces, xeo 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.

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.

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 to three years. Service contract revenue is recognized over time, using a time-based measure of progress, as customers benefit from the service throughout the service period. 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.

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

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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 operates a customer loyalty program for qualified customers located in the U.S. and Canada. Under the loyalty program, customers accumulate points based on their purchasing levels which can be redeemed for such rewards as the right to attend the Company’s advanced training event for a product, 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 June 30, 2023 and December 31, 2022, the liability for the loyalty program included in accrued liabilities was $0.2 million and $0.3 million, respectively.

Deferred Sales Commissions

Incremental costs of obtaining a contract related to the sale of a system, which consist primarily 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, which is generally two to three years.

Total capitalized commissions as of June 30, 2023 and December 31, 2022 were $3.2 million and $3.8 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 $1.3 million during the three and six months ended June 30, 2023, respectively and $0.5 million and $1.2 million during the three and six months ended June 30, 2022, respectively. The amortization related to these capitalized costs is included in sales and marketing expense in the Company’s condensed consolidated statement of operations.

Note 10. 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.

Activity under the Company's equity incentive plans is summarized as follows:

	Shares Available for Grant
Balance, December 31, 2022	1,070,925
Options and RSUs granted	(735,978)
Stock awards canceled / forfeited / expired	279,567
Options canceled / forfeited / expired	84,629
Balance, June 30, 2023	699,143

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	Options Outstanding
	Number of Stock Options Outstanding	Weighted- Average Exercise Price		Weighted Average Remaining Term  (in Years)
Balance, December 31, 2022	513,935	$	34.41	6.63
Options granted	309,214	$	18.80
Options exercised	(9,234)	$	15.92
Options canceled / forfeited / expired	(84,629)	$	27.32
Balance, June 30, 2023	729,286	$	28.85	6.95

	Stock Awards Outstanding
	Number of Awards Outstanding	Weighted Average Grant Date Fair Value per Share
Balance, December 31, 2022	906,211	$	40.39
RSUs granted	426,764	$	20.03
Awards released	(262,629)	$	34.72
Stock awards canceled / forfeited / expired	(279,567)	$	43.08
Balance, June 30, 2023	790,779	$	30.32

Stock-based Compensation Expense

Stock-based compensation expense by department recognized during the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of revenue	$	361	$	500	$	725	$	959
Sales and marketing	1,283		1,638		2,431		2,214
Research and development	415		1,067		1,108		2,047
General and administrative	(509)		1,528		672		3,556
Total stock-based compensation expense	$	1,550	$	4,733	$	4,936	$	8,776

In the three months ended June 30, 2023, the Company had a significant number of executives and directors leave Cutera and this resulted in a reversal of previously-reported stock compensation expense related to forfeited awards. The total reversal of stock compensation expense in the three months ended June 2023 relating to all forfeited awards was $2.1 million, of which $1.9 million was categorized as general and administrative expense. In the first and second quarters of 2022 and first quarter of 2023, the aggregate stock compensation expense reversal related to forfeited awards was approximately $0.5 million in each quarter.

Note 11. Net Loss Per Share (Restated)

As of June 30, 2023, the Company’s Convertible Notes were potentially convertible into 8,696,792 shares of common stock.

The denominator for diluted net 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 six months ended June 30, 2023 and June 30, 2022, the if-converted method was not applied as the effect would have been anti-dilutive.

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For the three and six months ended June 30, 2023 and June 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.

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The following table sets forth the computation of basic and diluted net loss and the weighted average number of shares used in computing basic and diluted net loss per share (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
Numerator:
Net loss used in calculating net loss per share, basic	$	(33,278)	$	(47,276)	$	(61,326)	$	(62,418)
Denominator:
Weighted average shares of common stock outstanding used in computing net loss per share, basic	19,858		18,700		19,819		18,392
Dilutive effect of incremental shares and share equivalents:
Convertible notes	—		—		—		—
Options	—		—		—		—
RSUs	—		—		—		—
PSUs	—		—		—		—
ESPP	—		—		—		—
Weighted average shares of common stock outstanding used in computing net loss per share, diluted	19,858		18,700		19,819		18,392
Net loss per share:
Net loss per share, basic	$	(1.68)	$	(2.53)	$	(3.09)	$	(3.39)
Net loss per share, diluted	$	(1.68)	$	(2.53)	$	(3.09)	$	(3.39)

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 per common share for the periods presented because including them would have had an anti-dilutive effect (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Capped call	10,780	8,724	10,780	8,724
Convertible notes	8,697	6,640	8,697	6,640
Options	694	542	694	542
RSU's	489	550	489	550
PSU's	265	489	265	489
ESPP	45	29	45	29
Total	20,970	16,974	20,970	16,974

Note 12. Income Taxes

For the three and six months ended June 30, 2023, the Company's income tax expense was $0.3 million and $0.6 million, respectively, compared to $0.2 million tax benefit and $47 thousand expense, respectively, for the three and six months ended June 30, 2022.

The Company's income tax expense for the three and six months ended June 30, 2023 and 2022 is due to income taxes in foreign jurisdictions. The Company continues to maintain a full valuation allowance on its U.S. deferred tax assets.

Note 13. Leases (Restated)

The Company is a party to certain operating and finance leases for vehicles, office space and storage facilities. The Company’s material operating leases consist of office space, as well as storage facilities and finance leases consist of automobile leases. The Company’s leases generally have remaining terms of one to 10 years, some of which include options to renew the leases for up to five years. The Company leases space for operations in the United States, Japan, Belgium, France, and Spain.

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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.

Tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. 

Supplemental balance sheet information related to leases was as follows (in thousands):

Leases	Classification	June 30, 2023		December 31, 2022
Assets
Right-of-use assets	Operating lease right-of-use assets	$	11,370	$	12,831
Finance lease	Property and equipment, net	1,465		1,606
Total leased assets		$	12,835	$	14,437

Liabilities	Classification	June 30, 2023		December 31, 2022
Operating lease liabilities
Operating lease liabilities, current	Operating lease liabilities	$	2,602	$	2,810
Operating lease liabilities, non-current	Operating lease liabilities, net of current portion	10,069		11,352
Total Operating lease liabilities		$	12,671	$	14,162
Finance lease liabilities
Finance lease liabilities, current	Accrued liabilities	$	463	$	485
Finance lease liabilities, non-current	Other long-term liabilities	540		825
Total Finance lease liabilities		$	1,003	$	1,310

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Lease costs during the three and six months ended June 30, 2023 and 2022 (in thousands) was as follows:

		Three Months Ended June 30,				Six Months Ended June 30,
Lease costs	Classification	2023		2022		2023		2022
Finance lease cost	Amortization expense	$	148	$	178	$	298	$	339
Finance lease cost	Interest for finance lease	$	18	$	16	$	38	$	37
Operating lease cost	Operating lease expense	$	889	$	880	$	1,780	$	1,795

Cash paid for amounts included in the measurement of lease liabilities during the six months ended June 30, 2023 and 2022 was as follows (in thousands):

		Six Months Ended June 30,
Cash paid for amounts included in the measurement of lease liabilities	Classification	2023		2022
Operating cash flow	Finance lease	$	38	$	24
Financing cash flow	Finance lease	$	237	$	284
Operating cash flow	Operating lease	$	686	$	851

Operating leases

Maturities of facility leases were as follows as of June 30, 2023 (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	2,458
2024	2,929
2025	2,934
2026	3,029
2027	3,132
2028 and thereafter	468
Total lease payments	14,950
Less: imputed interest	2,279
Present value of lease liabilities	$	12,671

Finance Leases

As of June 30, 2023, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance (vehicle) leases as follows (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	266
2024	624
2025	314
2025	17
Total lease payments	1,221
Less: imputed interest	218
Present value of lease liabilities	$	1,003

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Weighted-average remaining lease term and discount rate, as of June 30, 2023, were as follows:

Lease Term and Discount Rate	June 30, 2023
Weighted-average remaining lease term (years)
Operating leases	4.6
Finance leases	2.0
Weighted-average discount rate
Operating leases	4.8	%
Finance leases	6.2	%

Lessor - AviClear (Restated)

Lessor revenue (Restated)

The Company leases the AviClear device to customers and receives a fixed annual license fee over the term of the arrangement and variable revenue related to the number of treatments performed by the lessee. The contractual term of the lease agreement is three years with a one-year auto-renewal feature. Certain lease agreements' terms in excess of one year can be terminated without financial penalty, and these agreements are accounted for as having a lease term of one year. The AviClear lease agreements are accounted for as operating leases. The fixed annual license fee is recognized evenly throughout the period of the lease agreement on a straight-line basis. The treatment revenue is recognized in the period the lessee has the ability to perform the patient treatment.

The following table summarizes the amount of operating lease income included in product revenue in the accompanying condensed consolidated statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
AviClear operating lease license fee revenue	$	1,367	$	39	$	2,592	$	39
AviClear operating lease revenue	3,236		97		5,939		97
Total AviClear revenue	$	4,603	$	136	$	8,531	$	136

The AviClear device being leased has a useful life of seven years. The Company expects that a device will be leased for two consecutive lease terms at the end of which its residual value will be immaterial.

The following is the minimum future lease payments as of June 30, 2023, under non-cancelable operating leases, assuming the minimum contractual lease term (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	2,463
2024	5,896
2025	3,434
Total AviClear revenue	$	11,793

Practical Expedients

The Company elected to apply a practical expedient to operating leases and elected not to separate lease and nonlease components as long as the lease and at least one nonlease component have the same timing and pattern of transfer. As such, updates or upgrades on a when-and-if available basis to the AviClear device are combined with the operating lease revenue. The combined component is being accounted for under ASC 842. Additionally, the Company made an accounting policy election to present AviClear revenue net of sales and other similar taxes.

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Capitalized sales commissions

Sales commissions related to obtaining AviClear lease agreements are accounted for as initial direct costs and are capitalized and amortized on a straight-line basis over the lease term. Amortization expenses for these assets were $1.1 million and $2.2 million for the three and six-month periods ended June 30, 2023, respectively, and nil for the comparative periods, and were included in Sales and marketing expense in the Company’s condensed consolidated statement of operations. Total capitalized commissions as of June 30, 2023, and December 31, 2022, were $4.3 million and $3.3 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet.

Lease installment costs (Restated)

The Company capitalizes fulfillment costs incurred before AviClear lease commencement and these costs include freight, installation, and training costs. Amortization expenses for these assets were $0.5 million and $1.0 million for the three and six-month periods ended June 30, 2023, respectively, and nil for the comparative periods, and were included in Cost of revenue in the Company’s condensed consolidated statement of operations. Total lease installment costs as of June 30, 2023, and December 31, 2022, were $2.6 million and $1.3 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet.

Note 14. Contingencies

The Company is named from time to time as a party to other legal proceedings, product liability, intellectual property disputes, commercial disputes, employee disputes, and contractual lawsuits. 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. Certain of the cases below are still in the preliminary stages, and the Company is not able to quantify the extent of its potential liability, if any, other than as described. The outcome of litigation is inherently unpredictable and subject to significant uncertainties. If any of these matters are resolved adversely to the Company, this could have a material adverse effect on its business, financial condition, results of operations, and cash flows. In addition, defending these legal proceedings is likely to be costly, which may have a material adverse effect on the Company's financial condition, results of operations and cash flows, and may divert management's attention from the day-to-day operations of its business.

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 Cutera 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 ("TRO") against Lutronic generally prohibiting it from using or disseminating the Company's confidential, proprietary, or trade secret information. The order also prohibited Lutronic, for two years, from using such information for the purpose of soliciting, or conducting business with, certain specified customers. On April 9, 2020, the parties stipulated to the entry of a preliminary injunction providing for the same relief afforded by the TRO. The Company filed a First Amended Complaint on September 14, 2020. On August 4, 2022, Cutera filed a second amended complaint. On April 24, 2023 Lutronic filed a complaint for trade libel, intentional interference with prospective economic advantage, misappropriation of trade secrets and unfair business practices in violation of California Business and Professions Code §17200 against Cutera in California State Court. The Company has not yet been served in this case. In addition to the above referenced claims, Cutera alleged claims for violation of the Lanham Act, unlawful business practices, false advertising and trademark infringement. Discovery is ongoing. No trial date has been scheduled.

In March 2023, Serendia, LLC (“Serendia”), filed patent infringement complaints against the Company with the International Trade Commission (“ITC”) and in U.S. District Court for the District of Delaware alleging infringement of six Serendia patents by the Secret RF and Secret Pro systems, which the Company distributes in the U.S. on behalf of ILOODA Co. Ltd., a Korean company. The Company is defending the lawsuits. Given the inherent uncertainties of litigation, the Company cannot guarantee that it will not be held liable for infringing one or more claims of Serendia patents. If the Company is held liable for infringement, it may be subject to monetary damages and/or an injunction prohibiting the applicable products in the United States.

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On April 11, 2023, J. Daniel Plants, the Company’s former Executive Chairperson, and David Mowry, the Company’s former Chief Executive Officer, filed a complaint in the Delaware Court of Chancery against directors Gregory Barrett, Sheila Hopkins, Timothy O’Shea, Juliane Park and Janet Widmann, as defendants, and the Company, as nominal defendant (the “Delaware Litigation”) seeking a declaration that the individual defendants breached their fiduciary duties and to enjoin them from enforcing the nomination deadline under the Company’s Amended and Restated Bylaws (the “Bylaws”) in connection with the 2023 annual meeting of stockholders, or in the alternative, a declaration that the Company must hold a special meeting of the stockholders on June 2, 2023. Mr. Plants and Mr. Mowry filed a motion for expedited proceedings with their complaint. Mr. Plants and Mr. Mowry subsequently agreed that the determination made by the Special Committee of the Board to hold a special meeting of the stockholders on June 9, 2023 mooted their request in the Delaware Litigation for a declaration that the Company hold a special meeting of the stockholders. On April 18, 2023, the Court of Chancery denied in part Mr. Plants and Mr. Mowry’s motion for expedited proceedings.

On May 16, 2023, Mr. Mowry filed a letter with the Court of Chancery disclosing that he had resolved his dispute with the defendants and agreed to dismiss his claims with prejudice. On May 17, 2023, the Court of Chancery granted an order for voluntary dismissal of Mr. Mowry as a plaintiff in the Delaware Litigation. Mr. Plants subsequently publicly voiced opposition to certain aspects of the Company's corporate governance and strategy but did not submit a notice of nomination of director candidates for the Company’s 2023 annual meeting of stockholders and did not purport to nominate any director candidates at the Company’s annual meeting of stockholders held on July 13, 2023. On August 7, 2023, the defendants filed a motion for an order to show cause why the Delaware Litigation should not be dismissed with prejudice. The Delaware litigation remains pending.

On May 24, 2023, purported shareholder Erie County Employees’ Retirement System filed a putative class action securities fraud complaint in the U.S. District Court for the Northern District of California against the Company, David H. Mowry, Rohan Seth, and J. Daniel Plants, asserting claims for violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The California litigation remains pending.

As of June 30, 2023, and December 31, 2022, the Company had accrued $0.6 million and $0.5 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.

Note 15. 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):

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	June 30, 2023		December 31, 2022
Notes due in 2026
Outstanding principal amount	$	69,125	$	69,125
Unamortized debt issuance costs	(1,320)		(1,553)
Carrying Value	$	67,805	$	67,572
Notes due in 2028
Outstanding principal amount	$	240,000	$	240,000
Unamortized debt issuance costs	(6,315)		(6,908)
Carrying Value	$	233,685	$	233,092
Notes due in 2029
Outstanding principal amount	$	120,000	$	120,000
Unamortized debt issuance costs	(3,922)		(4,205)
Carrying Value	$	116,078	$	115,795
Convertible notes, net	$	417,568	$	416,459

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. In May 2022, the Company entered into privately-negotiated exchange agreements with certain holders of the Company’s outstanding 2026 Notes. Following the exchange, approximately $69.1 million in aggregate principal amount of the 2026 Notes remained outstanding.

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 former 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 2028 Notes are presented as Convertible notes, net of unamortized debt issuance costs, on the condensed consolidated balance sheet. 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 will mature on June 1, 2028, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2028 Notes.

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Issuance of convertible notes due in 2029

In December 2022, the Company issued $120.0 million aggregate principal amount of 2029 Notes in a private placement offering. The 2029 Notes bear interest at a rate of 4.00% per year payable semiannually in arrears on June 1 and December 1 of each year. Upon conversion, the 2029 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 $115.8 million, net of issuance costs, including initial purchasers fees.

Each $1,000 principal amount of the 2029 Notes is initially convertible into 17.1378 shares of the Company’s common stock, which is equivalent to a conversion price of approximately $58.35 per share. The conversion rate for the 2029 Notes is subject to adjustment for certain events as set forth in the indenture governing the 2029 Notes. The 2029 Notes will mature on June 1, 2029, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2029 Notes.

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%

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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 not met during the first and second quarters of 2023. As of June 30, 2023, the 2026 Notes are not convertible. The 2026 Notes may become convertible in future periods. 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 June 30, 2024, the Company intends to settle such conversion requests in shares of common stock. Therefore, as of June 30, 2023, 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 and 2029 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 $58.4 million as of June 30, 2023, 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%

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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 circumstances described in the bullets in the paragraph above were not met during the first and second quarters of 2023. As of June 30, 2023, the 2028 Notes are not convertible. 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 June 30, 2024, the Company intends to settle such conversion requests in shares of common stock. Therefore, as of June 30, 2023, 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 and 2029 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 $149.9 million as of June 30, 2023, which the Company determined through consideration of market prices. The fair value measurement is classified as Level 2, as defined in Note 3.

2029 Notes:

Holders may convert their 2029 Notes at their option prior to the close of business on the business day immediately preceding March 1, 2029 in multiples of $1,000 principal amount, only under the following circumstances:

•During any fiscal quarter commencing after the fiscal quarter ending March 31, 2023 (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 2029 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 2029 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;

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•The Company calls such 2029 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, 2029, 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 2029 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 not met during the first and second quarters of 2023. As of June 30, 2023, the 2029 Notes are not convertible. The 2029 Notes may become convertible in future periods. Upon any conversion requests of the 2029 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 June 30, 2024, the Company intends to settle such conversion requests in shares of common stock. Therefore, as of June 30, 2023, the 2029 Notes have been included as Long-term debt on the consolidated balance sheet.

The Company may not redeem the 2029 Notes prior to December 5, 2025. On or after December 5, 2025, the Company may redeem for cash all or any portion of the 2029 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 2029 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 2029 Notes, at least $100.0 million aggregate principal amount of 2029 Notes must be outstanding and not subject to redemption as of the relevant redemption notice date.

If a specified corporate event occurs, 2029 Note holders have the option to require the Company to repurchase any portion or all of their 2029 Notes in $1,000 principal increments for cash. The price for such repurchase is calculated as 100% of the principal amounts of 2029 Notes, plus accrued and unpaid interest to the day immediately preceding the Fundamental Change repurchase date. Additionally, holders of the 2029 Notes who convert in connection with a fundamental change are, under certain circumstances, entitled to an increase in conversion rate.

The 2029 Notes are general senior unsecured obligations that rank senior to any of the Company’s indebtedness that is explicitly subordinated to the 2029 Notes. The 2029 Notes have equal rank in right of payment with all existing and future unsecured indebtedness that is not subordinated to the 2029 Notes (including the 2026 Notes and 2028 Notes). The 2029 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 2029 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 2029 Notes was approximately $76.2 million as of June 30, 2023, 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

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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.

In connection with the offering of the 2029 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 2029 Notes sold to the initial purchasers in the offering of 2029 Notes, with a strike price equal to the conversion price of the 2029 Notes and with an initial cap price equal to $99.21, which represents a 100% premium over the last reported sale price of the Company's common stock of $49.66 per share on December 7, 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, 2029. The capped calls were purchased for $25.1 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. The effective interest rates on the 2026 Notes, 2028 Notes, and 2029 Notes are 2.98%, 2.82%, and 4.63%, respectively. Interest expense for the three and six-month periods ended June 30, 2023 including the amortization of debt issuance cost, totaled approximately $3.5 million and $7.0 million, respectively. Interest expense for the three and six-month periods ended June 30, 2022, including the amortization of debt issuance cost, totaled approximately $1.4 million and $2.4 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.

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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.

The Loan and Security Agreement has been amended since inception to permit the issuance of the Convertible Notes and related capped call transactions and to remove the quarterly minimum revenue requirement. On March 26, 2023, the FDIC announced that it had entered into a purchase and assumption agreement with First Citizens Bank & Trust Company under which all deposits of the former Silicon Valley Bank were assumed by First Citizens Bank & Trust Company. In addition, under the purchase and assumption agreement, First Citizens Bank & Trust Company assumed Silicon Valley Bank’s obligations under the Company’s Loan and Security Agreement.

The Company and First Citizens Bank & Trust Company agreed to amend the requirement for Cutera to maintain substantially all of its funds with First Citizens Bank & Trust Company and allowed up to 50% of the Company’s funds to be invested with institutions other than First Citizens Bank & Trust Company.

As of June 30, 2023, the Company had not drawn on the loan facility and the Company is in compliance with all financial covenants.

Note 16. Segment Reporting (Restated)

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 maker ("CODM") is its Chief Executive Officer ("CEO"), who makes decisions on allocating resources and assessing performance.

Beginning in the fourth quarter of 2022, the Company segregates its operations into two reportable business segments: (i) Cutera Core and (ii) AviClear. This segregation aligns the Company’s operating business segments with the way the CEO reviews the Company's operations.

The Company measures the financial results of its reportable segments using an internal performance measure that excludes certain non-cash and non-recurring expenses.

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	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(Dollars in thousands)				(Dollars in thousands)
	(As Restated)				(As Restated)
Net revenue
Cutera Core	$	57,222	$	64,088	$	107,820	$	122,102
AviClear	4,603		136		8,531		136
Total net revenue	$	61,825	$	64,224	$	116,351	$	122,238
Income (loss) from operations
Cutera Core	(6,583)		5,871		(17,842)		10,221
AviClear	(6,653)		(7,507)		(12,952)		(15,662)
Segment loss from operations	(13,236)		(1,636)		(30,794)		(5,441)
Items not allocated to segments
Stock-based compensation	(1,550)		(4,733)		(4,936)		(8,776)
ERP implementation costs	(770)		(2,385)		(1,288)		(6,361)
Depreciation and amortization	(3,991)		(1,068)		(7,578)		(2,147)
Board of Directors legal and advisory fees	(7,709)		—		(7,709)		—
Retention plan costs	(2,972)		—		(2,972)		—
Legal fees, severance, and other	(935)		(242)		(2,487)		(496)
Consolidated loss from operations	(31,163)		(10,064)		(57,764)		(23,221)
Interest and other expense, net	(1,789)		(37,398)		(2,964)		(39,150)
Consolidated loss before income taxes	$	(32,952)	$	(47,462)	$	(60,728)	$	(62,371)
					Six Months Ended June 30,
					2023		2022
Capital spending					(As Restated)
Cutera Core					$	64	$	603
AviClear					25,044		7,635
Total segment capital spending					$	25,108	$	8,238
Corporate					—		—
Total capital spending					$	25,108	$	8,238
					June 30, 2023		December 31, 2022
Total assets					(As Restated)
Cutera Core					$	160,900	$	154,978
AviClear					74,274		47,406
Total segment assets					$	235,174	$	202,384
Corporate					223,850		318,604
Total assets					$	459,024	$	520,988

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The following table presents a summary of revenue by geography and product category for the three and six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue mix by geography:	(As Restated)				(As Restated)
United States	$	25,602	$	26,742	$	48,104	$	51,216
Japan	12,810		15,174		25,718		32,677
Asia, excluding Japan	4,323		5,106		11,054		8,715
Europe	5,495		5,925		10,613		10,116
Rest of the World, other than United States, Asia and Europe	13,595		11,277		20,862		19,514
Total consolidated revenue	$	61,825	$	64,224	$	116,351	$	122,238
Revenue mix by product category:	(As Restated)				(As Restated)
Systems	$	37,895	$	43,653	$	71,213	$	80,167
AviClear	4,603		136		8,531		136
Consumables	4,255		5,162		7,998		9,065
Skincare	9,422		9,638		17,554		21,287
Total product revenue	56,175		58,589		105,296		110,655
Service	5,650		5,635		11,055		11,583
Total consolidated revenue	$	61,825	$	64,224	$	116,351	$	122,238

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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis should be read in conjunction with the Company’s financial condition and results of operations in conjunction with the Company’s unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Amendment and the Company’s audited financial statements and notes thereto for the year ended December 31, 2022, included in its annual report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on April 7, 2023, as amended on May 1, 2023.

Unless otherwise indicated, all results presented are prepared in a manner that complies, in all material respects, with accounting principles generally accepted in the United States of America (“GAAP”). Additionally, unless otherwise indicated, all changes identified for the current-period results represent comparisons to results for the prior corresponding fiscal period.

Restatement of Previously Issued Financial Statements

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been amended and restated to give effect to the Restatement, as more fully described in Note 1 – Restatement of Previously Issued Financial Statements to the Company's accompanying unaudited condensed consolidated financial statements contained elsewhere in this Amendment. For further detail regarding the Restatement, see “Explanatory Note” and Part I, Item 4, “Controls and Procedures” contained in this Amendment.

Special Note Regarding Forward-Looking Statements

This report contains forward-looking statements that involve risks and uncertainties. The Company’s actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of the Company’s management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included under Part II, Item 1A below.

Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Introduction

The Management’s Discussion and Analysis, or MD&A, is organized as follows:

•Executive Summary. This section provides a general description and history of the Company’s business, a brief discussion of its product lines and the opportunities, trends, challenges and risks the Company focuses on in the operation of its business.

•Critical Accounting Policies and Estimates. This section describes the key accounting policies that are affected by critical accounting estimates.

•Results of Operations. This section provides the Company’s analysis and outlook for the significant line items on its condensed consolidated statements of operations.

•Liquidity and Capital Resources. This section provides an analysis of the Company’s liquidity and cash flows, as well as a discussion of its commitments that existed as of June 30, 2023.

Executive Summary

Company Description 

The Company develops, manufactures, distributes, and markets energy-based product platforms for medical practitioners, enabling them to offer safe and effective treatments to their customers. In addition, the Company distributes third-party manufactured skincare products. The Company currently markets the following system platforms: AviClear, enlighten, excel,

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truSculpt, Secret PRO, Secret RF, and xeo. These platforms enable medical practitioners to perform procedures including treatment for acne, body contouring, skin resurfacing and revitalization, hair and tattoo removal, removal of benign pigmented lesions, and vascular conditions. Several of the Company’s systems offer multiple hand pieces and applications, providing customers the flexibility to upgrade their systems.

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 also maintains regional distribution centers (“RDCs”) in selection locations across the U.S. These RDCs serve as forward warehousing for systems and service parts in various geographies. The Company markets sells and services the Company’s 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. Sales and services outside of these direct markets are made through a worldwide distributor network in over 39 countries. The consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company transactions and balances have been eliminated.

Products and Services

The Company derives revenue from the sale of products and services. Product revenue includes revenue from the sale of systems, hand pieces and upgrade of systems (collectively “Systems” revenue), leasing of AviClear devices for acne treatment ("AviClear" revenue), replacement hand pieces, truSculpt cycle refills, and truFlex cycle refills, as well as single use disposable tips applicable to Secret RF (“Consumables” revenue), and the sale of third-party manufactured skincare products (“Skincare” revenue). A system consists of a console that incorporates a universal graphic user interface, a laser and (or) an energy-based module, control system software and high voltage electronics, as well as one or more hand pieces. However, depending on the application, the laser or other energy-based module is sometimes contained in the hand piece such as with the Company’s Pearl and Pearl Fractional applications instead of within the console.

The Company currently markets the following key platforms: AviClear, enlighten, excel, truSculpt, Secret PRO, Secret RF, and xeo. These platforms enable medical practitioners to perform procedures including treatment for acne, body contouring, skin resurfacing and revitalization, hair and tattoo removal, removal of benign pigmented lesions, and vascular conditions.

Several of the Company’s systems offer multiple hand pieces and applications, providing customers the flexibility to upgrade their systems whenever they choose and provides the Company with a source of additional Systems revenue.

Skincare revenue relates to the distribution of ZO Skin Health, Inc's. ("ZO") skincare products in Japan. The skincare products are purchased from a third-party manufacturer and sold to medical offices and licensed physicians. 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.

Service includes prepaid service contracts, and labor, time and material on out-of-warranty products.

Significant Business Trends

The Company believes that the ability to grow revenue will be primarily impacted by the following:

•capturing market share in the acne space and capitalizing on the momentum in AviClear;

•continuing to expand the Company’s product offerings, both through internal development and sourcing from other vendors;

•ongoing investment in the Company’s global sales and marketing infrastructure;

•use of clinical results to support new aesthetic products and applications;

•enhanced physician development and reference selling efforts (to develop a location where Company’s products can be displayed and used to assist in selling efforts);

•customer demand for the Company’s products;

•consumer demand for the application of the Company’s products;

•marketing to physicians in the core dermatology and plastic surgeon specialties, as well as outside those specialties; and

•generating recurring revenue from the Company’s growing installed base of customers through the sale of system upgrades, services, hand piece refills, truSculpt cycles, skincare products and replacement tips for Secret RF products.

For a detailed discussion of the significant business trends impacting the Company’s business, please see the section titled “Results of Operations” below.

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Factors that May Impact Future Performance

The Company’s industry is impacted by numerous competitive, regulatory and other significant factors. The Company’s industry is highly competitive and the Company’s future performance depends on the Company’s ability to compete successfully. Additionally, the Company’s future performance is dependent upon the ability to continue to expand the Company’s product offerings with innovative technologies, obtain regulatory clearances for the Company’s products, protect the proprietary technology of the products and manufacturing processes, manufacture the products cost-effectively, and successfully market and distribute the products in a profitable manner. If the Company fails to execute on the aforementioned initiatives, the Company’s business would be adversely affected.

The Company supports any reasonable action that helps ensure patient safety going forward. The Company has a robust, multi-functional process that reviews its promotional claims and materials to ensure they are truthful, not misleading, fair and balanced, and supported by sound scientific evidence.

A detailed discussion of these and other factors that could impact the Company’s future performance are provided in (1) the Company’s Annual Report on Form 10-K for the year ended December 31, 2022- Part I, Item 1A “Risk Factors,” and (2) other announcements the Company makes from time to time.

Risks and Uncertainties

The world is currently experiencing widespread inflation. Household budgets are tight and cash is generally 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 months ended June 30, 2023. The Company will continue to monitor future conditions important to its assessment of potential impairment of its long-lived assets and goodwill. Impairments of the Company's goodwill or long-term assets could occur in future periods.

In 2021, the Company experienced a significant increase in sales of skincare products under the exclusive distribution agreement with ZO Skin Health, Inc., which allows the Company to sell ZO’s skincare products in Japan and which expires in June 2024. 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. 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.

Furthermore, there are certain economic requirements in the distribution agreement with ZO that were not met for the 2022 fiscal year. ZO has indicated its intent not to extend the distribution agreement and assume distribution of the ZO product line beginning in the third quarter of 2024. The Company is currently negotiating the terms of the transition of the distribution of the ZO product line to ZO, but anticipates there may be an adverse effect to the Company’s future revenue, results of operations, cash flows and stock price beginning in July 2024.

Critical Accounting Policies, Significant Judgments and Use of Estimates

The preparation of the Company’s consolidated financial statements and related notes requires the Company to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Company has based its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. The Company periodically reviews its estimates and makes adjustments when facts and circumstances dictate. To the extent that there are material differences between these estimates and actual results, its financial condition or results of operations will be affected.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. The Company believes that its critical accounting policies reflect the more significant estimates and assumptions used in the preparation of its audited consolidated financial statements.

The accounting policies and estimates that the Company considers to be critical, subjective, and requiring judgment in their application are summarized in “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of

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Operations” in its Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on April 7, 2023, as amended on May 1, 2023. There have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K that are of significance, or potential significance, to the Company.

The Company established new accounting policies to account for the 2.25% Convertible Senior Notes due 2026 (the “2026 Notes” and, together with the 2028 Notes and 2029 Notes, the “Convertible Notes”) and related transactions during the first quarter of 2021.

In March 2021, the Company issued $138.3 million aggregate principal amount of 2026 Notes in a private placement offering. In May 2022, the Company issued $240.0 million aggregate principal amount of 2028 Notes in a private placement offering. In December 2022, the Company issued $120.0 million aggregate principal amount of 2029 Notes in a private placement offering. The notes issued in March 2021 and May 2022 each bear interest at a rate of 2.25% per year and the notes issued in December 2022 bear interest at 4.00% per year. In accordance with ASU 2020-06, the Company recorded 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 are met for the note holders to have the option to redeem the notes early. To the extent there are any conversion requests, the Company intends to settle such conversion requests in shares of common stock. Therefore, the convertible notes have been included as Long-term debt on the condensed consolidated balance sheet.

The issuance costs related to the Convertible Notes are presented in the balance sheet as a direct deduction from the carrying amount of the Convertible Notes. See Note 15 of the unaudited condensed consolidated financial statements included in Item I, Part 1 of this Amendment.

Results of Operations (Restated)

The following table sets forth selected consolidated financial data for the periods indicated, expressed as a percentage of total net revenue. Percentages in this table and throughout its discussion and analysis of financial condition and results of operations may reflect rounding adjustments.

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
Net revenue	100	%	100	%	100	%	100	%
Cost of revenue	58	%	45	%	59	%	45	%
Gross margin	42	%	55	%	41	%	55	%
Operating expenses:
Sales and marketing	54	%	42	%	54	%	42	%
Research and development	9	%	11	%	11	%	11	%
General and administrative	29	%	18	%	26	%	20	%
Total operating expenses	93	%	70	%	91	%	74	%
Loss from operations	(50)	%	(16)	%	(50)	%	(19)	%
Amortization of debt issuance costs	(1)	%	—	%	(1)	%	—	%
Interest on convertible notes	(5)	%	(2)	%	(5)	%	(2)	%
Loss on extinguishment of convertible notes	—	%	(54)	%	0	%	(28)	%
Interest income	4	%	1	%	4	%	—	%
Other expense, net	(1)	%	(3)	%	(1)	%	(2)	%
Loss before income taxes	(53)	%	(74)	%	(52)	%	(51)	%
Income tax benefit	1	%	—	%	1	%	—	%
Net loss	(54)	%	(74)	%	(53)	%	(51)	%

Revenue (Restated)

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The timing of the Company’s revenue is significantly affected by the mix of system products, training, consumables and extended service contracts. The revenue generated in any given period is also impacted by whether the revenue is recognized over time or at a point in time. For an additional description on revenue, see Note 2 in the notes to consolidated financial statements on the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and Note 9 to the unaudited condensed consolidated financial statements included in Item I, Part 1 of this Amendment.

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 9% and 8% of the Company’s total revenue for the six months ended June 30, 2023 and 2022, respectively. Revenue recognized over time relates to revenue from the Company’s extended service contracts and marketing services. Revenue recognized upon delivery is primarily generated by the sales of systems, consumables and skincare.

Total Net Revenue

	Three Months Ended June 30,								Six Months Ended June 30,
(Dollars in thousands)	2023			% Change		2022			2023			% Change		2022
Revenue mix by geography:	(As Restated)			(As Restated)					(As Restated)			(As Restated)
North America	$	32,437		1	%	$	32,239		$	59,639		(2)	%	$	61,092
Japan	12,810			(16)	%	15,174			25,718			(21)	%	$	32,677
Rest of World	16,578			(1)	%	16,811			30,994			9	%	$	28,469
Consolidated total revenue	$	61,825		(4)	%	$	64,224		$	116,351		(5)	%	$	122,238
North America as a percentage of total revenue	52		%			50		%	51		%			50		%
Japan as a percentage of total revenue	21		%			24		%	22		%			27		%
Rest of World as a percentage of total revenue	27		%			26		%	27		%			23		%
Revenue mix by product category:	(As Restated)			(As Restated)					(As Restated)			(As Restated)
Systems - North America	$	22,243		(12)	%	$	25,232		$	40,203		(16)	%	$	47,939
Systems - Rest of World (including Japan)	15,652			(15)	%	18,421			31,010			(4)	%	32,228
Total Systems	37,895			(13)	%	43,653			71,213			(11)	%	80,167
AviClear	4,603			3,285	%	136			8,531			6,173	%	136
Consumables	4,255			(18)	%	5,162			7,998			(12)	%	9,065
Skincare	9,422			(2)	%	9,638			17,554			(18)	%	21,287
Total Products	56,175			(4)	%	58,589			105,296			(5)	%	110,655
Service	5,650			—	%	5,635			11,055			(5)	%	11,583
Total Net Revenue	$	61,825		(4)	%	$	64,224		$	116,351		(5)	%	$	122,238

The Company’s total net revenue decreased by $2.4 million, or 4%, in the three months ended June 30, 2023, compared to the same period in 2022. This decrease was primarily driven by Systems revenue, partially offset by AviClear revenue. In March 2022, the Company received FDA clearance for the AviClear treatment device and began limited commercial release in April 2022.

The Company's total net revenue decreased by $5.9 million, or 5%, in the six months ended June 30, 2023, compared to the same period in 2022. This decrease in the six-month comparison was primarily driven by Systems revenue and a decline in Japanese Skincare revenue, partially offset by AviClear revenue.

Revenue by Geography (Restated)

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The Company’s North America revenue increased by $0.2 million, or 1%, and decreased by $1.5 million, or 2%, in the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022. The $1.5 million, or 2%, decrease in the six-month comparison was primarily driven by a decline in Systems revenue, partially offset by AviClear revenue.

Revenue in Japan decreased by $2.4 million, or 16%, in the three months ended June 30, 2023, compared to the same period in 2022, due to a decrease in Systems revenue. Revenue in Japan decreased by $7.0 million, or 21% in six months ended June 30, 2023, compared to the same period in 2022, due to a decrease in Skincare revenue and systems revenue.

The Company’s Rest of World revenue decreased by $0.2 million, or 1%, in the three months ended June 30, 2023, compared to the same period in 2022. The Company’s Rest of World revenue increased by $2.5 million, or 9%, in the six months ended June 30, 2023, compared to the same period in 2022 driven by strong System sales in Europe and global distributor markets.

Revenue by Product Type (Restated)

Systems Revenue

Systems revenue in North America decreased by $3.0 million, or 12%, and $7.7 million, or 16%, in the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022, due to a decrease in average selling prices ("ASPs") and unit volumes in both the three-month and six-month comparisons and a $1.0 million increase in the Company's sale return reserve recorded in the three months ended June 30, 2023. The decrease in ASPs in the six months ended June 30, 2023, reflects financing challenges the Company's customers experienced and the Company's resulting decision to use price as a lever to close certain sales. Although the Company saw slight improvement in its ASPs in the three months ended June 30, 2023, compared to the preceding quarter, the Company expects continued pressure on its ASPs through the remainder of 2023.

System revenue in the Rest of the World (including Japan) decreased by $2.8 million, or 15%, and $1.2 million, or 4%, in the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022. The decrease in revenue in the three-month comparison reflects a decrease in Systems revenue in Japan, which was partially offset in the six-month comparison by increased revenue in the three months ended June 30, 2023, in Europe, the Middle East, and Asia.

AviClear Revenue (Restated)

The AviClear revenue in the three months ended June 30, 2023, consisted of $1.4 million of lease revenue related to the fixed annual license fees and variable lease revenue of $3.2 million related to treatments performed by the lessee.

The AviClear revenue in the six months ended June 30, 2023, consisted of $2.6 million of lease revenue related to the fixed annual license fees and variable lease revenue of $5.9 million related to treatments performed by the lessee.

Consumables Revenue

Consumables revenue decreased by $0.9 million, or 18%, and $1.1 million, or 12%, in the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022. The decrease in revenue in the three and six-month periods reflects a sales promotion that was in effect in the three months ended June 30, 2022, and that resulted in an increase in Consumable revenue for that period.

Skincare Revenue

The Company’s revenue from Skincare products in Japan decreased by $0.2 million, or 2%, and $3.7 million, or 18%, in the three and six-month periods ended June 30, 2023, respectively, compared to the same periods in 2022. The decrease in the three-month comparison included a $0.7 million adverse impact from the weakening Japanese Yen and also increased competition from alternative products. The decrease in the six-month comparison included a $2.0 million adverse impact from the weakening Japanese Yen and also reflects increased competition from alternative products and procedures that also contributed to the decrease in Skincare revenue.

Service Revenue

The Company’s Service revenue remained flat and decreased by $0.5 million, or 5%, in the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022. This decrease in the six-month comparison was due primarily to decreased sales of service contracts, and support and maintenance services.

Gross Profit (Restated)

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	Three Months Ended June 30,									Six Months Ended June 30,
(Dollars in thousands)	2023			2022			Change			2023			2022			Change
	(As Restated)						(As Restated)			(As Restated)						(As Restated)
Gross profit	$	26,083		$	35,044		$	(8,961)		$	47,715		$	66,832		$	(19,117)
As a percentage of total net revenue	42.2		%	54.6		%	(12.4)		%	41.0		%	54.7		%	(13.7)		%

The Company’s cost of revenue consists primarily of material, personnel expenses, product warranty costs, depreciation on AviClear devices, amortization of capitalized AviClear device mobilization costs, and manufacturing overhead expenses.

Gross profit as a percentage of revenue for the three months ended June 30, 2023, was 42.2% compared to 54.6% in the same period in 2022. This 12.4 percentage point decrease in gross profit in the three-month comparison mainly reflects the following factors:

•In April 2022, the Company began leasing the AviClear device. Depreciation expense on installed AviClear devices and amortization expense on capitalized lease installment costs adversely impacted the Company’s gross margin rate by 3.3 percentage points;

•Geographic and product revenue mix and increased pressure on ASPs adversely impacted the Company’s gross margin rate by 2.5 percentage points;

•Increases in the Company's reserve for excess inventory parts, partially driven by the an end of life decision on certain accessories, adversely impacted the Company's gross margin rate by 0.8 percentage points;

•Weakening foreign currencies adversely impacted the Company’s gross margin rate by 1.2 percentage points, primarily a result of the Company’s Skincare revenue being denominated in Japanese Yen and costs being dominated in U.S. Dollar; and

•Cost increases in parts and additional costs associated with lower cost absorption adversely impacted the Company's gross margin rate by 4.7 percentage points.

Gross profit as a percentage of revenue for the six months ended June 30, 2023, was 41.0% compared to 54.7% in the same period in 2022. This 13.7 percentage point decrease in gross profit in the six-month comparison mainly reflects the following factors:

◦In April 2022, the Company began leasing the AviClear device. Depreciation expense on installed AviClear devices and amortization expense on capitalized lease installment costs adversely impacted the Company’s gross margin rate by 3.1 percentage points in the three-month comparison;

◦Geographic and product revenue mix and increased pressure on ASPs adversely impacted the Company’s gross margin rate by 3.3 percentage points in the six-month comparison;

◦Weakening foreign currencies adversely impacted the Company’s gross margin rate by 1.7 percentage points in the six-month comparison. This was primarily a result of the Company’s Skincare revenue being denominated in Japanese Yen and costs being dominated in U.S. Dollars;

◦Cost increases in parts and additional costs associated with lower cost absorption adversely impacted the Company's gross margin rate by 6.3 percentage points;

◦Increases in the Company's reserve for excess inventory parts adversely impacted the Company's gross margin rate by 0.7 percentage points; and

◦Lower than planned production in the in the three months ended March 31, 2023, impacted the Company's inventory absorption by 1.1 percentage points.

The above adverse impacts on the Company's gross margin rate were partially offset by the positive impact of AviClear revenue on gross margin rate by 2.0 percentage points.

Sales and Marketing

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	Three Months Ended June 30,									Six Months Ended June 30,
(Dollars in thousands)	2023			2022			Change			2023			2022			Change
Sales and Marketing	$	33,271		$	27,001		$	6,270		$	62,783		$	51,945		$	10,838
As a percentage of total net revenue	53.8		%	42.0		%	11.8		%	54.0		%	42.5		%	11.5		%

Sales and marketing expenses consist primarily of personnel expenses, expenses associated with customer-attended workshops and trade shows, post-marketing studies, advertising, and training.

Sales and marketing expenses for the three and six months ended June 30, 2023, increased $6.3 million and $10.8 million, respectively, compared to the same periods in 2022. These increases reflect headcount growth related to the launch of AviClear, as payroll-related costs, including commission expense and consulting services, increased $4.4 million and $5.5 million, respectively, in the three and six-month comparisons. Also contributing to the increase in sales and marketing expenses was an increase in promotional and marketing activities of $1.7 million and $3.2 million, respectively, in the three and six-month comparisons.

Research and Development (“R&D”)

	Three Months Ended June 30,									Six Months Ended June 30,
(Dollars in thousands)	2023			2022			Change			2023			2022			Change
Research and development	$	5,784		$	6,859		$	(1,075)		$	12,252		$	13,358		$	(1,106)
As a percentage of total net revenue	9.4		%	10.7		%	(1.3)		%	10.5		%	10.9		%	(0.4)		%

R&D expenses consist primarily of personnel expenses, clinical research, regulatory and material costs. R&D expenses decreased by $1.1 million in both the three and six-month comparisons. These decreases reflect clinical research expense associated with the launch of the AviClear device in April 2022.

General and Administrative (“G&A”) (Restated)

	Three Months Ended June 30,									Six Months Ended June 30,
(Dollars in thousands)	2023			2022			Change			2023			2022			Change
	(As restated)						(As restated)			(As restated)						(As restated)
General and administrative	$	18,191		$	11,248		$	6,943		$	30,444		$	24,750		$	5,694
As a percentage of total net revenue	29.4		%	17.5		%	11.9		%	26.2		%	20.2		%	5.9		%

G&A expenses consist primarily of personnel expenses, legal, accounting, audit and tax consulting fees, as well as other general and administrative expenses. G&A expenses increased by $6.9 million and $5.7 million, respectively, for the three and six-month comparisons. These increases were primarily due to $7.7 million of legal and advisory expenses incurred during the three months ended June 30, 2023 in connection with the Company's response to litigation and shareholder activism related to the Company's 2023 annual meeting of stockholders. Bad debt expense associated with an increase in the Company's allowance for credit losses resulted in an increase in expense of $1.7 million and $1.8 million, respectively, in the three and six-month comparisons.

These increases in bad debt expense were offset by a decrease in stock compensation expense resulting from the departure of several executives and Board directors in the three months ended June 30, 2023, which resulted in the reversal of previously-recorded stock compensation expense related to forfeited awards.

Interest and Other Expense, Net

Interest and other expense, net, consists of the following:

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	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2023		2022		Change		2023		2022		Change
Amortization of debt issuance costs	$	(557)	$	(298)	$	(259)	$	(1,109)	$	(517)	$	(592)
Interest on convertible notes	(2,958)		(1,149)		(1,809)		(5,897)		(1,927)		(3,970)
Loss on extinguishment of convertible notes	—		(34,423)		34,423		—		(34,423)		34,423
Interest income	2,179		382		1,797		4,658		395		4,263
Other expense, net	(453)		(1,910)		1,457		(616)		(2,678)		2,062
Interest and other expense, net	$	(1,789)	$	(37,398)	$	35,609	$	(2,964)	$	(39,150)	$	36,186

Interest and other expense, net, decreased $35.6 million and $36.2 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022. In the three months ended June 30, 2022, the Company recorded a $34.4 million loss for the extinguishment of half of the 2026 Notes.

The issuance of the 2028 Notes and 2029 Notes in May 2022 and December 2022 resulted in an increase in interest income due to the increase in the Company's cash and marketable investments, and an increase in convertible note interest expense.

Provision for Income Taxes

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2023		2022		Change		2023		2022		Change
Income tax expense	$	326	$	(186)	$	512	$	598	$	47	$	551

The Company's income tax expense was $0.3 million and $0.6 million for the three and six months ended June 30, 2023, respectively, compared to a $0.2 million benefit and $47 thousand expense for the same periods in 2022.

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Segment Results of Operations (Restated)

	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
(Dollars in thousands)	Cutera Core		AviClear		Total		Cutera Core		AviClear		Total
	(As Restated)		(As Restated)		(As Restated)
Revenue	$	57,222	$	4,603	$	61,825	$	64,088	$	136	$	64,224
Loss from operations	$	(20,930)	$	(10,233)	$	(31,163)	$	(1,880)	$	(8,184)	$	(10,064)
Interest and other income (expense), net					(1,789)						(37,398)
Loss before income taxes					$	(32,952)					$	(47,462)

	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
(Dollars in thousands)	Cutera Core		AviClear		Total		Cutera Core		AviClear		Total
	(As Restated)		(As Restated)		(As Restated)
Revenue	$	107,820	$	8,531	$	116,351	$	122,102	$	136	$	122,238
Loss from operations	$	(38,354)	$	(19,410)	(57,764)		$	(6,752)	$	(16,469)	$	(23,221)
Interest and other income (expense), net					(2,964)						(39,150)
Loss before income taxes					$	(60,728)					$	(62,371)

Cutera Core (Restated)

The Cutera Core reportable segment consists of the Company’s systems, consumables, skincare, and service businesses. The Cutera Core segment develops and manufactures energy-based systems for medical practitioners in addition to distributing third-party manufactured skincare products in Japan. The installed base of systems provides opportunities for the segment to earn revenues through service contracts, consumables, and replacement hand pieces.

Three months ended June 30, 2023, compared to three months ended June 30, 2022

The Cutera Core segment’s revenue decreased by $6.9 million in the three months ended June 30, 2023, compared to the three months ended June 30, 2022. This decrease reflected a decrease in system sales of $5.8 million due to ASP and unit volume decreases, and a decrease in Consumables revenue of $0.9 million.

The Cutera Core segment recorded a loss from operations of $20.9 million in the three months ended June 30, 2023, compared to a loss from operations of $1.9 million in the three months ended June 30, 2022. This $19.0 million adverse change mainly reflects a decrease in gross margin contribution of $10.5 million, legal and advisory expenses of $7.7 million incurred in connection with the Company's response to litigation and shareholder activism related to the Company's 2023 annual meeting of stockholders, and an increase in bad debt expense of $1.7 million. The decrease in gross margin contribution reflects Geographic revenue mix, primarily lower North American volume sales and higher foreign distributor sales, an increase in the Company's reserve for excess inventory parts, the effects of a weakening Japanese Yen on the Company's Skincare business, and cost increases in parts.

Six months ended June 30, 2023, compared to six months ended June 30, 2022

The Cutera Core segment’s revenue decreased by $14.3 million in the six months ended June 30, 2023, compared to the six months ended June 30, 2022. This decrease reflected a decrease in system sales of $9.0 million due to ASP and unit volume decreases, a decrease of $3.7 million in Skincare revenue due mainly to the weakening Japanese Yen, and a $1.1 million decrease in Consumable revenue.

The Cutera Core segment recorded a loss from operations of $38.4 million in the six months ended June 30, 2023, compared to a loss from operations of $6.8 million in the six months ended June 30, 2022. This $31.6 million adverse change mainly reflects a decrease in gross margin contribution of $22.8 million, legal and advisory expenses of $7.7 million incurred in connection

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with the Company's response to litigation and shareholder activism related to the Company's 2023 annual meeting of stockholders, and an increase in bad debt expense of $1.8 million. The decrease in gross margin contribution reflects Geographic revenue mix, primarily lower North America volume sales and higher foreign distributor sales, an increase in the Company's reserve for excess inventory parts, the effects of a weakening Japanese Yen on the Company's Skincare business, and cost increases in manufacturing.

AviClear (Restated)

The Company’s AviClear reportable segment consists of the AviClear business. The Company’s acne solution, AviClear, is a prescription-free, drug-free laser treatment for the treatment of mild to severe acne. The Company began earning revenue from its AviClear device following FDA approval in March 2022. The Company leases the AviClear device to customers in North America and receives a fixed annual license fee over the term of the arrangement and variable revenue related to number of treatments performed by the lessee.

Three months ended June 30, 2023, compared to three months ended June 30, 2022

In the three months ended June 30, 2023, the Company recorded $1.4 million in lease license fee revenue and $3.2 million in treatment revenue.

The AviClear segment recorded a loss from operations of $10.2 million in the three months ended June 30, 2023, compared to a loss from operations of $8.2 million in the three months ended June 30, 2022. This $2.0 million adverse change reflects an increase in operating expenses of $4.1 million, partially offset by an increase of $1.5 million in gross margin contribution. The increase in operating expenses reflects additional sales and marketing headcount associated with the commercialization of the AviClear device.

Six months ended June 30, 2023, compared to six months ended June 30, 2022

In the six months ended June 30, 2023, the Company recorded $2.6 million in lease license fee revenue and $5.9 million in treatment revenue.

The AviClear segment recorded a loss from operations of $19.4 million in the six months ended June 30, 2023, compared to a loss from operations of $16.5 million in the three months ended June 30, 2022. This $2.9 million adverse change reflects an increase in operating expenses of $6.9 million, partially offset by an increase of $3.5 million in gross margin contribution. The increase in operating expenses reflects additional sales and marketing headcount associated with the commercialization of the AviClear device.

Liquidity and Capital Resources (Restated)

The Company’s principal source of liquidity in the three months ended June 30, 2023, was cash generated from net proceeds from the issuance of the Convertible Notes in March 2021, May 2022 and December 2022. The Company actively manages its cash usage to ensure the maintenance of sufficient funds to meet its cash requirements. The majority of the Company’s cash, cash equivalents, and investments are held in U.S. banks. The Company's foreign subsidiaries maintain a limited amount of cash in their local banks to cover short-term operating expenses.

As of June 30, 2023 and December 31, 2022, the Company had $263.0 million and $345.4 million of working capital, respectively. Cash, cash equivalents, restricted cash and marketable investments decreased by $94.7 million to $223.3 million as of June 30, 2023, from $318.0 million as of December 31, 2022, driven by net loss adjusted for non-cash items of $45.9 million, changes in assets and liabilities of $21.1 million and capital expenditures of $25.1 million.

Cash, Cash Equivalents, Restricted Cash and Marketable Investments

The following table summarizes the Company's cash, cash equivalents, restricted cash and marketable investments:

(Dollars in thousands)	June 30, 2023		December 31, 2022		Change
Cash and cash equivalents	$	180,654	$	145,924	$	34,730
Restricted cash	700		700		—
Marketable investments	41,949		171,390		(129,441)
Total	$	223,303	$	318,014	$	(94,711)

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Cash Flows (Restated)

	Six Months Ended June 30,
(Dollars in thousands)	2023		2022
	(As Restated)
Net cash flow provided by (used in):
Operating activities	$	(66,989)	$	(30,085)
Investing activities	104,284		(211,547)
Financing activities	(2,565)		152,518
Net increase (decrease) in cash and cash equivalents	$	34,730	$	(89,114)

Cash Flows from Operating Activities (Restated)

Net cash used in operating activities in the six months ended June 30, 2023, was $67.0 million, which reflected net loss adjusted for non-cash items of $45.9 million, and changes in assets and liabilities of $21.1 million. The change in assets and liabilities mainly reflect an increase in inventories, accounts receivable and other long-term assets.

Cash Flows from Investing Activities (Restated)

Net cash provided by investing activities was $104.3 million in the six months ended June 30, 2023, which was attributable to the net sale of marketable investments of $129.4 million, partially offset by an $26.6 million increase in the AviClear device and assets under construction balances.

Cash Flows from Financing Activities

Net cash used in financing activities was $2.6 million in the six months ended June 30, 2023, which was primarily due to taxes paid related to net share settlement of equity awards.

Adequacy of Cash Resources to Meet Future Needs

The Company had cash and cash equivalents of $180.7 million and marketable investments of $41.9 million as of June 30, 2023. For the three months ended June 30, 2023, the Company’s principal source of liquidity was cash generated from proceeds received from the issuance of the Convertible Notes in March 2021, May 2022, and December 2022. The Company intends to use the net proceeds of the issuances to fund growth initiatives and market development activities and to provide for general corporate purposes, which may include working capital, capital expenditures, clinical trials, other corporate expenses and acquisitions of complementary products, technologies, or businesses.

The Company believes that the existing cash and cash equivalents and the cash available under the revolving credit facility will be sufficient to meet the Company’s anticipated cash needs for at least the next 12 months from the date the financial statements are issued, but there can be no assurances.

Debt

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.

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, an entity affiliated with J. Daniel Plants, the Company’s former 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.

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In December 2022, the Company issued $120.0 million aggregate principal amount of 2029 Notes in a private placement offering. The 2029 Notes bear interest at a rate of 4.00% per year payable semiannually in arrears on June 1 and December 1 of each year. Upon conversion, the 2029 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 consolidated balance sheet. The aggregate proceeds from the offering were approximately $115.8 million, net of issuance costs, including initial purchasers fees.

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. See Note 14 – Debt in the accompanying notes to the Company's condensed consolidated financial statements for more information.

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 condition covenants.

The Loan and Security Agreement has been amended since inception to permit the issuance of the Convertible Notes and related capped call transactions and to remove the quarterly minimum revenue requirement. On March 26, 2023, the FDIC announced that it had entered into a purchase and assumption agreement with First Citizens Bank & Trust Company under which all deposits of the former Silicon Valley Bank were assumed by First Citizens Bank & Trust Company. In addition, under the purchase and assumption agreement, First Citizens Bank & Trust Company assumed Silicon Valley Bank’s obligations under the Company’s Loan and Security Agreement.

The Company and First Citizens Bank & Trust Company agreed to amend the requirement for Cutera to maintain substantially all of its funds with First Citizens Bank & Trust Company and allowed up to 50% of the Company’s funds to be invested with institutions other than First Citizens Bank & Trust Company.

As of June 30, 2023, the Company had not drawn on the loan facility and the Company is in compliance with all financial covenants.

Commitments and Contingencies

As of the date of this report, there were no material changes to the Company’s contractual obligations and commitments outside the ordinary course of business since April 7, 2023, the filing date of the Company’s Annual Report on Form 10-K, as amended May 1, 2023.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A summary of the key market risks facing the Company is disclosed below. For a detailed discussion, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on April 7, 2023, as amended on May 1, 2023, and other announcements the Company makes from time to time.

The conditional conversion feature of the Company's convertible notes, if triggered, may adversely affect the Company's financial condition and operating results.

The Company has outstanding the 2.25% Convertible Senior Notes due 2026 (the “2026 Notes”), the 2.25% Convertible Senior Notes due 2028, and the 4.00% Convertible Senior Notes due 2029. During any fiscal quarter commencing after the fiscal quarter ending on June 30, 2021 in the case of the 2026 Notes, commencing after the fiscal quarter ending on September 30, 2022 in the case of the 2028 Notes, and commencing after the fiscal quarter ending on March 31, 2023 in the case of the 2029 Notes, 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 conversion price for the applicable series of Convertible Notes on each applicable trading day then holders may convert their notes in the subsequent quarter. This condition was not met for any of the Company’s Convertible Notes in the three months ended June 30, 2023. Upon any future conversion requests of the Convertible 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.

Interest Rate and Market Risk

As of June 30, 2023, the Company had not drawn on the Original Revolving Line of Credit, as amended. Overall interest rate sensitivity is primarily influenced by any amount borrowed on the line of credit and the prevailing interest rate on the line of credit facility. The effective interest rate on the line of credit facility is based on a floating per annum rate equal to the Prime rate. The Prime rate was 8.25% as of June 30, 2023, and accordingly the Company may incur additional expenses if the Company has an outstanding balance on the line of credit and the Prime rate increases in future periods.

Inflation

The Company has experienced inflationary pressure on its business. If the Company’s costs were to become subject to significant inflationary pressures, the Company may not be able to fully offset such higher costs through price increases. The Company’s inability or failure to do so could harm the Company’s business, financial condition, and results of operations.

Foreign Exchange Fluctuations

The Company generates revenue in Japanese Yen, Euros, Australian Dollars, Canadian Dollars, British Pounds, and Swiss Francs. Additionally, a portion of the Company’s operating expenses, and assets and liabilities are denominated in each of these currencies. Therefore, fluctuations in these currencies against the U.S. dollar could materially and adversely affect the Company’s results of operations upon translation of the Company’s revenue denominated in these currencies, as well as the re-measurement of the Company’s international subsidiaries’ financial statements into U.S. dollars.

In 2022, the Company experienced an adverse impact on revenues and gross margin from the weakening Japanese Yen. The Company will continue to be exposed to fluctuations in the exchange rate between U.S. Dollars and Japanese Yen, as the Company's skincare revenue is denominated in Japanese Yen. In July 2022, the Company implemented a hedging program to mitigate this exposure to the Japanese Yen fluctuation against the U.S. Dollar.

ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure.

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Management identified material weaknesses in the year ended December 31, 2022, over the Company’s internal controls over financial reporting. These material weaknesses are related to information technology general controls (“ITGCs”) including, segregation of duties, user access, and reports produced by certain IT systems that support the Company's financial reporting process including those related to the implementation of an ERP system; inventory controls related to the completeness, existence, and cut-off of inventories held at third parties, inventories held by sales personnel, and inventories in transit, and controls related to the calculation of adjustments to inventory for items considered excessive and obsolete; and the completeness and accuracy of expense for routine and non-routine equity-based awards.

Additionally, in fiscal year 2023, and in conjunction with the Restatement, management identified an additional material weakness. Specifically, the Company failed to design, maintain and monitor a risk assessment program at a sufficiently precise level and therefore failed to identify new and evolving risks related to accounting policies, procedures and related controls performed over areas including, but not limited to inventory, revenues and lease income, costs for leased devices, and testing of certain key reports used in controls. Consequently, the Company failed to timely implement new controls to respond to changes in the business and leadership.

Although certain of these material weaknesses did not result in any material misstatement of the Company's consolidated financial statements for the periods presented, they could lead to a material misstatement of account balances or disclosures. Accordingly, management concluded that these deficiencies constitute material weaknesses.

As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Amendment. The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2023, at the reasonable assurance level, because of the material weaknesses in internal controls, which were disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and the additional material weakness identified in fiscal year 2023. Notwithstanding these material weaknesses, the Company’s management, including the CEO and CFO, has concluded that the condensed consolidated financial statements, included in the Form 10-Q/A, for the three months ended June 30, 2023, fairly present, in all material respects, the Company's financial condition, results of operations and cash-flows for the periods presented in conformity with generally accepted accounting principles.

Remediation Plans

Management continues to review and make changes to the overall design of its internal control environment, including implementing additional internal controls over ITGC’s, inventory, equity, and its risk assessment program over areas including but not limited to inventory, revenues and lease income, costs for leased devices, and certain key reports used in controls. The Company has added internal and external resources to its finance function to enhance the effectiveness of internal controls over financial reporting. The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period. The Company has made progress in the remediation efforts related to the three material weaknesses but cannot estimate when these efforts will be completed.

The Company’s efforts include:

ITGC remediation actions:

•Developed a training program addressing ITGCs and policies, including educating control owners concerning the principles and requirements of each control, with a focus on those related to user access and change-management over IT systems impacting financial reporting;

•Developed enhanced risk assessment procedures and controls related to changes in IT systems; and

•Implemented an IT management review and testing plan to monitor ITGCs with focus on systems supporting the financial reporting processes.

Inventory control remediation actions:

•Evaluated the effectiveness of the current annual inventory count program and controls;

•Implemented a global inventory count policy and standard operating procedures to ensure consistent communication of the inventory count process and adherence to these policies at facilities managed by the Company and third-party logistics service providers;

•Provided training of standard operating procedures and internal controls to key stakeholders within the supply chain, logistics, and inventory process; and

•Enhanced existing management review controls related to inventory reconciliation, inventory in transit, inventories held by sales personnel, and key reports used in in the inventory count process.

Equity-based awards expense calculation remediation actions:

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• Enhanced current review controls around the calculation of stock-based compensation expense.

Risk assessment remediation actions:

•Engaged third-party professionals to evaluate the design and operating effectiveness of the Company's risk assessment process in relation to the timely identification and assessment of changes in the business and leadership; and

•Provided training of standard operating procedures and internal controls to key stakeholders.

The actions the Company is taking are subject to ongoing executive management review and are also subject to audit committee oversight. If the Company is unable to successfully remediate these material weaknesses, or if in the future, the Company identifies further material weaknesses in its internal control over financial reporting, the Company may not detect errors on a timely basis, and its condensed consolidated financial statements may be materially misstated.

Changes in Internal Control over Financial Reporting

Except for the material weakness identified in 2023 and the remediation measures in connection with the material weaknesses described above, there were no changes in the Company's internal control over financial reporting during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Limitations on the Effectiveness of Controls

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Accordingly, the Company’s disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of the Company’s disclosure control system are met.

PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

From time to time, the Company may be involved in legal and administrative proceedings and claims of various types. For a description of the Company’s material pending legal and regulatory proceedings and settlements, see Note 11 to the Company’s consolidated financial statements entitled “Commitments and Contingencies,” in the Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on April 7, 2023, and Note 14 to the Company's condensed consolidated financial statements entitled "Contingencies", in this Amended Quarterly Report on Form 10-Q for the three and six months ended June 30, 2023.

ITEM 1A.    RISK FACTORS

There are no material changes from the Risk Factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on April 7, 2023 (the “Annual Report”), as amended on May 1, 2023, as supplemented by the additional Risk Factors included in the Company's Amended Quarterly Report for the period ended March 31, 2023, filed with the SEC on March 5, 2024, other than as noted below:

The Company's business could be negatively affected by litigation initiated by J. Daniel Plants in relation to his prior activist campaign to remove directors, as well as by potential actions of other activist stockholders.

On April 11, 2023, J. Daniel Plants and David H. Mowry, the Company's former Executive Chairperson and former Chief Executive Officer, respectively, filed a complaint in the Delaware Court of Chancery against five of the Company’s independent directors, Gregory Barrett, Sheila Hopkins, Timothy O’Shea, Juliane Park and Janet Widmann, as defendants, and the Company, as nominal defendant (the “Delaware Litigation”), seeking a declaration that the individual defendants breached their fiduciary duties and to enjoin them from enforcing the nomination deadline under the Company’s bylaws in connection with the 2023 annual meeting of stockholders, or in the alternative, a declaration that the Company must hold a special meeting of the stockholders on June 2, 2023. On May 16, 2023, Mr. Mowry filed a letter with the Court of Chancery disclosing that he had resolved his dispute with the defendants and agreed to dismiss his claims with prejudice. On May 17, 2023, the Court of Chancery granted an order for voluntary dismissal of Mr. Mowry as a plaintiff in the Delaware Litigation. The Delaware Litigation remains pending with respect to Mr. Plants. The Delaware Litigation was initiated by Mr. Plants in connection with the campaign of Mr. Plants and Voce Capital Management LLC to remove certain directors from the Company's Board of Directors at a special meeting of stockholders and subsequently nominate new directors for election at the Company’s 2023

55

annual meeting of stockholders. Mr. Plants withdrew his demand for a special meeting of stockholders, and the Company held the 2023 annual meeting of stockholders on July 13, 2023, having received no additional director nominations from Mr. Plants.

Activist campaigns that contest or conflict with the Company's strategic direction or seek changes in the composition of its Board or management could have an adverse effect on its operating results and financial condition. A proxy contest could require the Company to incur significant legal and advisory fees, proxy solicitation expenses and administrative and associated costs. In addition, proxy contests require significant time and attention by the Company's Board and management to address stockholder matters, diverting their attention from executing on the Company's business strategy. Any perceived uncertainties as to the Company's future direction and control, its ability to execute on its strategy, or changes to the composition of its Board or senior management team arising from a proxy contest could lead to the perception of a change in the direction of its business or instability which may result in the loss of potential business opportunities, be exploited by its competitors, cause concern for those enrolling in its clinical trials, make it more difficult to pursue its strategic initiatives, or limit its ability to attract and retain qualified personnel and business partners, any of which could adversely affect its business and operating results.

Actions such as those described above could cause significant fluctuations in the Company's stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of its business.

The Company's business could be negatively affected as a result of the pending securities fraud action brought against the Company and certain former officers and directors.

On May 24, 2023, purported shareholder Erie County Employees’ Retirement System filed a putative class action securities fraud complaint in the U.S. District Court for the Northern District of California against the Company, David H. Mowry, Rohan Seth, and J. Daniel Plants, asserting claims for violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The case is styled Erie County Employees’ Retirement System v. Cutera, Inc., et al., Case No. 4:23-cv-02560 (N.D. Cal.) (Tigar, J.).

The complaint purports to be brought on behalf of all investors who purchased or otherwise acquired Cutera stock between February 17, 2021 and May 9, 2023. According to the complaint, during that time period, defendants allegedly made materially false and misleading statements in SEC filings and press releases and during investor calls. In particular, the complaint alleges that defendants overstated the sustainability of the Company’s revenue growth and failed to disclose material adverse facts regarding conflicts among senior officers and the Board of Directors and regarding weaknesses in the Company’s internal controls over financial reporting. Additional information concerning this action is publicly available in court filings in the Northern District of California under docket number 4:23-cv-02560.

This action could divert the Company's management’s attention and resources from its ordinary business operations, and the Company could incur significant expenses associated with defending it (including, without limitation, substantial attorneys’ fees and other fees of professional advisors and potential obligations to indemnify current and former officers and directors who are or may become parties to this action, to the extent not covered by insurance). There can also be no assurance that the Company will be successful in any defense.

The Company also may be required to pay material damages, consent to injunctions on future conduct and suffer other penalties, remedies or sanctions. In addition, the action could adversely impact the Company's reputation and harm its ability to generate revenue. Accordingly, the ultimate resolution of this matter could have a material adverse effect on the Company's business, financial condition, results of operations and cash flow and, consequently, could negatively impact the trading price of the Company's common stock.

The Company have recently experienced turnover in its executive management and Board of Directors, which creates uncertainties and could harm its business.

The Company has experienced significant changes in its executive leadership and Board of Directors during 2023. As discussed above, on April 11, 2023, the Board of Directors terminated Mr. Plants as Executive Chairman and Mr. Mowry as Chief Executive Officer, and appointed Ms. Widmann as Chair of the Board and Ms. Hopkins as Interim Chief Executive Officer. On May 3, 2023, Rohan Seth, the Company’s Chief Financial Officer, resigned effective May 26, 2023 and Stuart Drummond was appointed as Interim Chief Financial Officer. Additionally, the Company appointed Kevin Cameron, Taylor Harris, Nicholas Lewin and Keith Sullivan to the Board in May 2023 and each of Mr. Mowry, Mr. Plants and Joseph Whitters resigned from the board of directors and Gregory Barrett and Timothy O’Shea did not stand for re-election at the 2023 annual meeting of stockholders. A new Board of Directors of Mmes. Hopkins, Widmann and Park, and Messrs. Cameron, Harris, Lewin and

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Sullivan were elected by the Company’s stockholders on July 13, 2023. Taylor Harris was subsequently announced as the full-time President and Chief Executive Officer on July 27, 2023.

Changes to strategic or operating goals, which can often times occur with the appointment of new executives, can create uncertainty, may negatively impact the Company's ability to execute quickly and effectively, and may ultimately be unsuccessful. In addition, executive leadership transition periods are often difficult as the new executives gain detailed knowledge of the Company's operations, and friction can result from changes in strategy and management style. Management turnover inherently causes some loss of institutional knowledge, which can negatively affect strategy and execution. If the Company does not integrate new executives and board members successfully, the Company may be unable to manage and grow its business, and its financial condition and profitability may suffer as a result. In addition, to the extent the Company experiences additional management turnover, competition for top management is high and it may take months to find a candidate that meets the Company's requirements. If the Company is unable to attract and retain qualified management personnel, its business could suffer.

The Company's distribution agreement with ZO requires the Company to meet certain minimum purchase requirements during each calendar year. Since the Company did not meet these minimum requirements in 2022 and has not reached a mutually agreed upon resolution with ZO, ZO has indicated its intent to terminate the distribution agreement and assume distribution of the ZO product line beginning in the third quarter of 2024.

The Company has an exclusive distribution agreement with ZO to distribute ZO’s proprietary skincare products in Japan, which distribution agreement requires the Company to meet certain minimum purchase requirements during each calendar year. Such minimum purchase requirements were not met for the 2022 fiscal year because of global economic factors, such as the unprecedented decline in the value of the Japanese Yen compared to the U.S. Dollar over the course of 2022. Since the Company did not meet these minimum purchase requirements in 2022 and has not reached a mutually agreed upon resolution with ZO whereby the Company would continue serving as a distributor of the ZO product line, ZO has indicated its intent to terminate the distribution agreement and assume distribution of the ZO product line beginning in the third quarter of 2024.

The Company is currently negotiating the terms of the transition of the distribution of the ZO product line to ZO, but anticipate there may be an adverse effect to the Company's future revenue, results of operations, cash flows and stock price beginning in July 2024.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

None.

ITEM 5.    OTHER INFORMATION

None.

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ITEM 6.    EXHIBITS

Exhibit No.	Description
3.2	Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.5 to its Quarterly Report on Form 10-Q filed on November 7, 2017 and incorporated herein by reference)
3.4	Amended and Restated Bylaws of the Registrant (filed as Exhibit 3.2 to its Annual Report on Form 10-K filed on April 7, 2023 and incorporated herein by reference).
4.1	Specimen Common Stock certificate of the Registrant (filed as Exhibit 4.1 to its Annual Report on Form 10-K filed on March 25, 2005 and incorporated herein by reference).
33.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
33.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
34.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.sch	Inline XBRL Taxonomy Extension Schema Document
101.cal	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.def	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.lab	Inline XBRL Taxonomy Extension Label Linkbase Document
101.pre	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*    Management contract or compensatory plan

58

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of The Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Brisbane, State of California, on the 5th day of March, 2024.

CUTERA, INC.

/s/ Stuart Drummond

Stuart Drummond

Interim Chief Financial Officer

59

EX-33.1

EXHIBIT 33.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Taylor Harris, certify that:

1.I have reviewed this quarterly report on Form 10-Q/A of Cutera, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under its supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under its supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report its conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s first fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on its most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting

Date: March 5, 2024	/s/ Taylor Harris
	Taylor Harris Chief Executive Officer

EX-33.2

EXHIBIT 33.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stuart Drummond, certify that:

1.I have reviewed this quarterly report on Form 10-Q/A of Cutera, Inc.:

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under its supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under its supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report its conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s first fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

6.The registrant’s other certifying officer and I have disclosed, based on its most recent evaluation of internal control over financial reporting, to the registrant’s auditor and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(e)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(f)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 5, 2024	/s/ Stuart Drummond
	Stuart Drummond Interim Chief Financial Officer

EX-34.1

Exhibit 34.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER

AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Taylor Harris, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

i.the accompanying Quarterly Report on Form 10-Q/A of the Company for the quarterly period ended June 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

ii.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 5, 2024	/s/ Taylor Harris
	Taylor Harris Chief Executive Officer

I, Stuart Drummond, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

i.the accompanying Quarterly Report on Form 10-Q/A of the Company for the quarterly period ended June 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

ii.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 5, 2024	/s/ Stuart Drummond
	Stuart Drummond Interim Chief Financial Officer

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended.

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Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 05, 2023
Cover [Abstract]
Document Type	10-Q/A
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
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		19,943,875
Entity Central Index Key	0001162461
Amendment Flag	true
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Amendment Description	EXPLANATORY NOTECutera, Inc., a Delaware corporation (“we”, “us”, “our”, the “Company” or “Cutera”), is filing this Amendment No. 1 to Form 10-Q (this “Amendment” or “Form 10Q/A”) to amend and restate certain items in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 originally filed with the Securities and Exchange Commission (the “SEC”) on August 9, 2023 (the “Original 10-Q”, and, as amended by this Amendment, the “Quarterly Report”) to reflect the restatement of the Company’s financial statements as of and for the quarter ended June 30, 2023 contained in the Original 10-Q (the “Restatement”).Background of RestatementAs previously reported in the Form 8-K filed on December 21, 2023, the Company performed a physical inventory count at the end of the third quarter of its fiscal year ending December 31, 2023. The physical inventory count identified a shortfall of inventory relative to the Company's system of record, resulting in an error overstating the inventory in the condensed consolidated balance sheets as of March 31, 2023 and June 30, 2023 and corresponding understatement of cost of revenue in the condensed consolidated statements of operations for the periods then ended. The Company concluded that a restatement was necessary to correct the misstatement in inventory, cost of revenue, and disclosures of basic and diluted earnings (loss) per share for the first and second quarters of the 2023 fiscal year. The Company also determined to correct other misstatements that were identified and deemed immaterial in previous periods, as further detailed in Note 1 – Restatement of Previously Issued Financial Statements.On December 21, 2023, the Board of Directors of Cutera, upon recommendation of its Audit Committee, and in consultation with management of the Company and the Company’s independent registered public accounting firm, BDO USA, P.C. (“BDO”), concluded that certain items of the Company’s previously issued unaudited condensed consolidated interim financial statements as of and for the fiscal periods ended March 31, 2023 and June 30, 2023 included in the Company’s Quarterly Reports on Form 10-Q for such periods should no longer be relied upon and that the Company needed to restate these previously issued financial statements. Similarly, earnings releases, and investor communications describing the financial statements for the periods described above should no longer be relied upon.For a more detailed description of the financial impact of the Restatement, see Note 1 – Restatement of Previously Issued Financial Statements, to the unaudited condensed consolidated financial statements contained in this Amendment and “Restatement of Previously Issued Financial Statements” under Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contained in this Amendment.Concurrently with the filing of this Amendment, the Company is filing an amendment to its Quarterly Report on Form 10-Q as of and for the period ended March 31, 2023.Internal Control ConsiderationsThe Company’s management identified material weaknesses in its internal control over financial reporting, which were previously identified in connection with, and disclosed in, the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on April 7, 2023, as amended on May 1, 2023, and the Company’s, condensed consolidated financial statements as of and for the three months ended March 31, 2023, and as of and for the three and six months ended June 30, 2023. In connection with the Company's review and preparation of its financial statements leading to the Restatement, management identified an additional material weakness. Specifically, the Company failed to design, maintain and monitor a risk assessment program at a sufficiently precise level and therefore failed to identify new and evolving risks related to accounting policies, procedures and related controls performed over areas including, but not limited to inventory, revenues and lease income, costs for leased devices, and testing of certain key reports used in controls. Consequently, the Company failed to timely implement new controls to respond to changes in the business and leadership.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. Therefore, the Company’s management concluded that material weaknesses remain in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective as of June 30, 2023. For further information regarding the effectiveness of the Company’s disclosure controls and procedures, see Part I, Item 4, “Controls and Procedures”, included in this Amendment.Items Amended in the Form 10-Q/AThe following items are amended and restated in their entirety in this Amendment: (i) Part I, Item 1, “Financial Statements”; Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; and Item 4, “Controls and Procedures”; and (ii) Part II, Item 6, “Exhibits”. Pursuant to Rule 12b-15 promulgated under the Securities Act of 1934, as amended (the “Exchange Act”), this Amendment also contains new currently dated certifications by the Company's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.Except as described above, this Amendment does not amend, update or change any other disclosures in the Original 10-Q. In addition, the information contained in this Amendment does not reflect events occurring after the filing of the Original 10-Q and does not modify or update the disclosures therein. Among other things, forward-looking statements made in the Original 10-Q have not been revised to reflect events, results or developments that occurred or facts that became known to the Company after the date of the Original 10-Q, other than with respect to the Restatement, and such forward-looking statements should be read in conjunction with the Company's filings with the SEC, including those subsequent to the filing of the Original 10-Q. Unless otherwise stated or unless the context otherwise requires, defined terms used throughout this Amendment have the meanings ascribed to them in the Original 10-Q.

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 180,654	$ 145,924
Marketable investments	41,949	171,390
Accounts receivable, net of allowance for credit losses of $4,411 and $2,497, respectively	53,679	45,562
Inventories, net	64,164	63,628
Other current assets and prepaid expenses	24,798	24,036
Restricted cash	700	700
Total current assets	365,944	451,240
Property and equipment, net	64,711	40,368
Deferred tax assets	547	590
Goodwill	1,339	1,339
Operating lease right-of-use assets	11,370	12,831
Other long-term assets	15,113	14,620
Total assets	459,024	520,988
Current liabilities:
Accounts payable	34,240	33,736
Accrued liabilities	53,764	57,452
Operating lease liabilities	2,602	2,810
Deferred revenue	12,317	11,841
Total current liabilities	102,923	105,839
Deferred revenue, net of current portion	1,690	1,657
Operating lease liabilities, net of current portion	10,069	11,352
Convertible notes, net of unamortized debt issuance costs of $11,557 and $12,666, respectively	417,568	416,459
Other long-term liabilities	575	862
Total liabilities	532,825	536,169
Commitments and Contingencies (Note 14)
Stockholders’ deficit:
Common stock, $0.001 par value; authorized: 50,000,000 shares; issued and outstanding: 19,901,600 and 19,668,603 shares at June 30, 2023 and December 31, 2022, respectively	20	20
Additional paid-in capital	128,014	125,406
Accumulated other comprehensive income (loss)	4	(94)
Accumulated deficit	(201,839)	(140,513)
Total stockholders’ deficit	(73,801)	(15,181)
Total liabilities and stockholders’ deficit	$ 459,024	$ 520,988

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for credit loss, current	$ 4,411	$ 2,497
Unamortized debt issuance costs	$ 11,557	$ 12,666
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)	19,901,600	19,668,603
Common stock outstanding (in shares)	19,901,600	19,668,603

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Net revenue:
Total net revenue	$ 61,825	$ 64,224	$ 116,351	$ 122,238
Cost of revenue:
Total cost of revenue	35,742	29,180	68,636	55,406
Gross profit	26,083	35,044	47,715	66,832
Operating expenses:
Sales and marketing	33,271	27,001	62,783	51,945
Research and development	5,784	6,859	12,252	13,358
General and administrative	18,191	11,248	30,444	24,750
Total operating expenses	57,246	45,108	105,479	90,053
Loss from operations	(31,163)	(10,064)	(57,764)	(23,221)
Interest and other expense, net:
Amortization of debt issuance costs	(557)	(298)	(1,109)	(517)
Interest on convertible notes	(2,958)	(1,149)	(5,897)	(1,927)
Loss on extinguishment of convertible notes			0	(34,423)
Interest income	2,179	382	4,658	395
Other expense, net	(453)	(1,910)	(616)	(2,678)
Total interest and other expense, net	(1,789)	(37,398)	(2,964)	(39,150)
Loss before income taxes	(32,952)	(47,462)	(60,728)	(62,371)
Income tax expense (benefit)	326	(186)	598	47
Net loss	$ (33,278)	$ (47,276)	$ (61,326)	$ (62,418)
Net loss per share:
Basic (USD per share)	$ (1.68)	$ (2.53)	$ (3.09)	$ (3.39)
Diluted (USD per share)	$ (1.68)	$ (2.53)	$ (3.09)	$ (3.39)
Weighted-average number of shares used in per share calculation:
Basic (in shares)	19,858	18,700	19,819	18,392
Diluted (in shares)	19,858	18,700	19,819	18,392
Convertible notes
Interest and other expense, net:
Loss on extinguishment of convertible notes	$ 0	$ (34,423)	$ 0	$ (34,423)
Total product revenue
Net revenue:
Total net revenue	56,175	58,589	105,296	110,655
Cost of revenue:
Total cost of revenue	32,051	25,899	62,110	48,811
Service
Net revenue:
Total net revenue	5,650	5,635	11,055	11,583
Cost of revenue:
Total cost of revenue	$ 3,691	$ 3,281	$ 6,526	$ 6,595

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Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net loss	$ (33,278)	$ (47,276)	$ (61,326)	$ (62,418)
Other comprehensive income (loss):
Net change in unrealized gain (loss) on available-for-sale investments, net of tax	12	(172)	98	(183)
Other comprehensive income (loss), net of tax	12	(172)	98	(183)
Comprehensive loss	$ (33,266)	$ (47,448)	$ (61,228)	$ (62,601)

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Condensed Consolidated Statements of Changes In Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Balance (in shares) at Dec. 31, 2021		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)		14,844
Exercise of stock options	376		376
Issuance of common stock in settlement of restricted and performance stock unites, net of shares withheld for employee taxes (in shares)		167,817
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	(4,234)		(4,234)
Stock-based compensation expense	8,776		8,776
Purchase of capped call	(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	(183)				(183)
Net loss	(62,418)			(62,418)
Balance (in shares) at Jun. 30, 2022		19,560,163
Balance at Jun. 30, 2022	23,874	$ 20	144,628	(120,591)	(183)
Balance (in shares) at Mar. 31, 2022		18,132,949
Balance at Mar. 31, 2022	43,160	$ 18	116,468	(73,315)	(11)
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)		7,385
Exercise of stock options	225		225
Issuance of common stock in settlement of restricted and performance stock unites, net of shares withheld for employee taxes (in shares)		37,671
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	(1,784)		(1,784)
Stock-based compensation expense	4,733		4,733
Purchase of capped call	(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	(172)				(172)
Net loss	(47,276)			(47,276)
Balance (in shares) at Jun. 30, 2022		19,560,163
Balance at Jun. 30, 2022	$ 23,874	$ 20	144,628	(120,591)	(183)
Balance (in shares) at Dec. 31, 2022	19,668,603	19,668,603
Balance at Dec. 31, 2022	$ (15,181)	$ 20	125,406	(140,513)	(94)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee purchase plan (in shares)		51,786
Issuance of common stock for employee purchase plan	$ 711		711
Exercise of stock options (in shares)	9,234	9,234
Exercise of stock options	$ 147		147
Issuance of common stock in settlement of restricted and performance stock unites, net of shares withheld for employee taxes (in shares)		171,977
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	(3,186)		(3,186)
Stock-based compensation expense	4,936		4,936
Net change in unrealized loss on available-for-sale investments	98				98
Net loss	$ (61,326)			(61,326)
Balance (in shares) at Jun. 30, 2023	19,901,600	19,901,600
Balance at Jun. 30, 2023	$ (73,801)	$ 20	128,014	(201,839)	4
Balance (in shares) at Mar. 31, 2023		19,785,107
Balance at Mar. 31, 2023	(42,045)	$ 20	126,504	(168,561)	(8)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee purchase plan (in shares)		51,786
Issuance of common stock for employee purchase plan	711		711
Exercise of stock options (in shares)		3,459
Exercise of stock options	38		38
Issuance of common stock in settlement of restricted and performance stock unites, net of shares withheld for employee taxes (in shares)		61,248
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	(789)		(789)
Stock-based compensation expense	1,550		1,550
Net change in unrealized loss on available-for-sale investments	12				12
Net loss	$ (33,278)			(33,278)
Balance (in shares) at Jun. 30, 2023	19,901,600	19,901,600
Balance at Jun. 30, 2023	$ (73,801)	$ 20	$ 128,014	$ (201,839)	$ 4

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities
Net loss	$ (61,326)	$ (62,418)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	4,936	8,776
Depreciation and amortization	3,238	929
Amortization of contract acquisition costs	4,069	1,219
Amortization of debt issuance costs	1,109	517
Deferred tax assets	43	80
Provision for credit losses	1,914	409
Loss on sale of property and equipment	0	63
Loss on extinguishment of convertible notes	0	34,423
Accretion of discount on investment securities and investment income, net	146	0
Changes in assets and liabilities:
Accounts receivable	(10,031)	(1,108)
Inventories, net	(536)	(17,501)
Other current assets and prepaid expenses	(776)	(3,034)
Other long-term assets	(4,782)	(1,071)
Accounts payable	(1,666)	14,771
Accrued liabilities	(3,806)	(6,878)
Operating leases, net	(30)	36
Deferred revenue	509	702
Net cash used in operating activities	(66,989)	(30,085)
Cash flows from investing activities
Acquisition of property and equipment	(25,108)	(8,238)
Proceeds from maturities of marketable investments	152,859	0
Purchase of marketable investments	(23,467)	(203,309)
Net cash provided by (used in) investing activities	104,284	(211,547)
Cash flows from financing activities
Proceeds from exercise of stock options and employee stock purchase plan	858	1,440
Taxes paid related to net share settlement of equity awards	(3,186)	(4,234)
Purchase of capped call	0	(31,671)
Proceeds from issuance of convertible notes	0	240,000
Payment of issuance costs of convertible notes	0	(6,956)
Extinguishment of convertible notes	0	(45,777)
Payments on finance lease obligations	(237)	(284)
Net cash provided by (used in) financing activities	(2,565)	152,518
Net increase (decrease) in cash, cash equivalents and restricted cash	34,730	(89,114)
Cash, cash equivalents, and restricted cash at beginning of period	146,624	164,864
Cash, cash equivalents, and restricted cash at end of period	181,354	75,750
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease	68	437
Assets acquired under operating lease	57	549
Transfer of inventory to property and equipment	0	12,180
Debt issuance costs accrued	0	646
Acquisition of property and equipment	6,301	0
Capped call costs accrued	0	353
Supplemental disclosure of cash flow information:
Cash paid for interest	5,731	1,903
Cash paid for income taxes	$ 483	$ 1,230

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Restatement of Previously Issued Financial Statements

6 Months Ended

Jun. 30, 2023

Accounting Changes and Error Corrections [Abstract]

Restatement of Previously Issued Financial Statements

Restatement of Previously Issued Financial Statements

Background of Restatement

The accompanying unaudited condensed consolidated financial statements have been restated to correct errors related to (1) an accounting error identified as a result of a physical inventory count performed by the Company and (2) other accounting adjustments identified that were deemed immaterial. The details of the errors are further described below:

1.The Company determined that, as a result of an accounting error identified by the physical inventory count, there was a shortfall of inventory relative to the Company's system of record. The effect of this error was an overstatement of $3.6 million of inventory on the condensed consolidated balance sheet as of June 30, 2023. This error resulted in an associated understatement of $2.4 million and $3.6 million of cost of revenue on the condensed consolidated statement of operations for the three and six months ended June 30, 2023, respectively.

2.The Company corrected certain other errors that were deemed immaterial to the related interim period and restated the financial statements for the quarter ended June 30, 2023. The details of these corrections are noted in the footnotes to the tables below.

The Company's basic and diluted losses per share increased by $0.08 and $0.24 per share for the three and six months ended June 30, 2023, respectively. The Company's income tax expenses for the three and six months ended June 30, 2023 did not change as a result of the restatement. The errors did not have an impact on the Company’s net cash or liquidity.

Effect of Restatement

The effects of the accounting error on the Company's condensed consolidated balance sheet as of June 30, 2023 are as follows (in thousands):

	June 30, 2023		Adjustments			June 30, 2023
	(As Reported)					(As Restated)
Assets
Current assets:
Cash and cash equivalents	$	180,654	$	—		$	180,654
Marketable investments	41,949		—			41,949
Accounts receivable, net of allowance	53,079		600		(h)	53,679
Inventories, net	68,668		(4,504)		(a), (c), (d)	64,164
Other current assets and prepaid expenses	24,900		(102)		(j)	24,798
Restricted cash	700		—			700
Total current assets	369,950		(4,006)			365,944
Property and equipment, net	65,511		(800)		(b), (e)	64,711
Deferred tax assets	547		—			547
Goodwill	1,339		—			1,339
Operating lease right-of-use assets	11,370		—			11,370
Other long-term assets	15,113		—			15,113
Total assets	$	463,830	$	(4,806)		$	459,024
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	34,240	$	—		$	34,240
Accrued liabilities	53,764		—			53,764
Operating lease liabilities	2,602		—			2,602
Deferred revenue	12,457		(140)		(g)	12,317
Total current liabilities	103,063		(140)			102,923
Deferred revenue, net of current portion	1,690		—			1,690
Operating lease liabilities, net of current portion	10,069		—			10,069
Convertible notes, net of unamortized debt issuance costs	417,568		—			417,568
Other long-term liabilities	575		—			575
Total liabilities	532,965		(140)			532,825
Stockholders’ deficit:
Common stock	20		—			20
Additional paid-in capital	128,014		—			128,014
Accumulated other comprehensive income (loss)	4		—			4
Accumulated deficit	(197,173)		(4,666)		(k)	(201,839)
Total stockholders’ deficit	(69,135)		(4,666)			(73,801)
Total liabilities and stockholders’ deficit	$	463,830	$	(4,806)		$	459,024

The effects of the accounting error on the Company's condensed consolidated income statement for the three-month period ended June 30, 2023 are as follows (in thousands, except per share data):

	Three Months Ended June 30, 2023		Adjustments			Three Months Ended June 30, 2023
	(As Reported)					(As Restated)
Net revenue:
Products	$	55,568	$	607	(f), (g)	$	56,175
Service	5,650		—			5,650
Total net revenue	61,218		607			61,825
Cost of revenue:
Products	29,473		2,578		(a), (c), (d), (j)	32,051
Service	3,691		—			3,691
Total cost of revenue	33,164		2,578			35,742
Gross profit	28,054		(1,971)			26,083
Operating expenses:
Sales and marketing	33,271		—			33,271
Research and development	5,784		—			5,784
General and administrative	18,528		(337)		(h)	18,191
Total operating expenses	57,583		(337)			57,246
Loss from operations	(29,529)		(1,634)			(31,163)
Interest and other expense, net:
Amortization of debt issuance costs	(557)		—			(557)
Interest on convertible notes	(2,958)		—			(2,958)
Interest income	2,179		—			2,179
Other expense, net	(453)		—			(453)
Total interest and other expense, net	(1,789)		—			(1,789)
Loss before income taxes	(31,318)		(1,634)			(32,952)
Income tax expense	326		—			326
Net loss	$	(31,644)	$	(1,634)	(k)	$	(33,278)
Net loss per share:
Basic	$	(1.59)	$	(0.08)		$	(1.68)
Diluted	$	(1.59)	$	(0.08)		$	(1.68)
Weighted-average number of shares used in per share calculation:
Basic	19,858		19,858			19,858
Diluted	19,858		19,858			19,858

The effects of the accounting error on the Company's condensed consolidated income statement for the six-month period ended June 30, 2023 are as follows (in thousands, except per share data):

	Six Months Ended June 30, 2023		Adjustments			Six Months Ended June 30, 2023
	(As Reported)					(As Restated)
Net revenue:
Products	$	105,156	$	140	(f), (g)	$	105,296
Service	11,055		—			11,055
Total net revenue	116,211		140			116,351
Cost of revenue:
Products	56,704		5,406		(a), (b), (c), (d), (e), (j)	62,110
Service	6,526		—			6,526
Total cost of revenue	63,230		5,406			68,636
Gross profit	52,981		(5,266)			47,715
Operating expenses:
Sales and marketing	62,783		—			62,783
Research and development	12,252		—			12,252
General and administrative	31,044		(600)		(h)	30,444
Total operating expenses	106,079		(600)			105,479
Loss from operations	(53,098)		(4,666)			(57,764)
Interest and other expense, net:
Amortization of debt issuance costs	(1,109)		—			(1,109)
Interest on convertible notes	(5,897)		—			(5,897)
Interest income	4,658		—			4,658
Other expense, net	(616)		—			(616)
Total interest and other expense, net	(2,964)		—			(2,964)
Loss before income taxes	(56,062)		(4,666)			(60,728)
Income tax expense	598		—			598
Net loss	$	(56,660)	$	(4,666)	(k)	$	(61,326)
Net loss per share:
Basic	$	(2.86)	$	(0.24)		$	(3.09)
Diluted	$	(2.86)	$	(0.24)		$	(3.09)
Weighted-average number of shares used in per share calculation:
Basic	19,819		19,819			19,819
Diluted	19,819		19,819			19,819

The effects of the accounting errors on the Company's condensed consolidated statement of cash flows for the six-month period ended June 30, 2023 are as follows (in thousands):

	Six Months Ended June 30,
	2023		Adjustments			2023
	(As Reported)					(As Restated)
Cash flows from operating activities
Net loss	$	(56,660)	$	(4,666)	(k)	$	(61,326)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	4,936		—			4,936
Depreciation and amortization	3,238		—			3,238
Amortization of contract acquisition costs	4,069		—			4,069
Amortization of debt issuance costs	1,109		—			1,109
Deferred tax assets	43		—			43
Provision for credit losses	2,514		(600)		(h)	1,914
Accretion of discount on investment securities and investment income, net	(1,995)		2,141		(i)	146
Changes in assets and liabilities:
Accounts receivable	(10,031)		—			(10,031)
Inventories, net	(5,040)		4,504		(a), (c), (d)	(536)
Other current assets and prepaid expenses	(878)		102		(j)	(776)
Other long-term assets	(4,782)		—			(4,782)
Accounts payable	(1,666)		—			(1,666)
Accrued liabilities	(3,806)		—			(3,806)
Operating leases, net	(30)		—			(30)
Deferred revenue	649		(140)		(g)	509
Net cash used in operating activities	(68,330)		1,341			(66,989)
Cash flows from investing activities
Acquisition of property and equipment	(25,908)		800		(b), (e)	(25,108)
Proceeds from maturities of marketable investments	155,000		(2,141)		(i)	152,859
Purchase of marketable investments	(23,467)		—			(23,467)
Net cash provided by (used in) investing activities	105,625		(1,341)			104,284
Cash flows from financing activities
Proceeds from exercise of stock options and employee stock purchase plan	858		—			858
Taxes paid related to net share settlement of equity awards	(3,186)		—			(3,186)
Payments on finance lease obligations	(237)		—			(237)
Net cash provided by (used in) financing activities	(2,565)		—			(2,565)
Net increase (decrease) in cash, cash equivalents and restricted cash	34,730		—			34,730
Cash, cash equivalents, and restricted cash at beginning of period	146,624		—			146,624
Cash, cash equivalents, and restricted cash at end of period	$	181,354	$	—		$	181,354
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease	$	68	$	—		$	68
Assets acquired under operating lease	$	57	$	—		$	57
Acquisition of property and equipment	$	6,301	$	—		$	6,301
Supplemental disclosure of cash flow information:
Cash paid for interest	$	5,731	$	—		$	5,731
Cash paid for income taxes	$	483	$	—		$	483

Footnote to tables:

(a) Correction of the accounting error for the overstatement of inventory identified as a result of the physical inventory count ($2.4 million and $3.6 million for three and six months ended June 30, 2023, respectively)

(b) Correction of the accounting error related to AviClear devices identified as a result of the physical inventory count ($1.0 million)

(c) Correction of the overstatement of demonstration and field inventory ($0.4 million), net of quarterly amortization ($0.1 million)

(d) Correction of the overstatement of demonstration and field inventory ($0.1 million and $0.5 million for three and six months ended June 30, 2023, respectively)

(e) Correction of AviClear capitalized labor cost incorrectly expensed in previous period ($0.2 million)

(f) Correction of AviClear treatment revenue incorrectly recognized in the period ended June 30, 2023 ($0.7 million)

(g) Correction of AviClear sales and lease arrangements incorrectly allocated to deferred revenue in previous period ($0.2 million), net of quarterly amortization ($0.1 million)

(h) Correction of the overstatement of the provision for credit losses associated with other receivables ($0.3 million and $0.6 million for three and six months ended June 30, 2023, respectively)

(i) Correction of the classification error related to the cash interest received ($2.1 million)

(j) Correction of unapplied inventory prepayment upon receipt of inventory ($0.1 million)

(k) Net change in net loss for the three-month period or the six-month period ended June 30, 2023

The impact of the restatement and reclassification on the Company’s condensed consolidated statements of stockholders’ deficit and condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2023 are limited to the understatement of net loss, comprehensive loss, accumulated deficit, and total stockholders' deficit of $1.6 million and $4.7 million, respectively.

The related notes to the condensed consolidated financial statements have also been restated to reflect the error corrections described above.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

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”) develops, manufactures, distributes, and markets energy-based product platforms for medical practitioners, enabling them to offer treatments to their customers. In addition, the Company distributes third-party manufactured skincare products. The Company currently markets the following system platforms: AviClear, enlighten, excel, truSculpt, Secret PRO, Secret RF, and xeo. These platforms enable medical practitioners to perform procedures including treatment for acne, body contouring, skin resurfacing and revitalization, hair and tattoo removal, removal of benign pigmented lesions, and vascular conditions. Several of the Company’s systems offer multiple hand pieces and applications, providing customers the flexibility to upgrade their systems. The sales of systems, system upgrades, and hand pieces (collectively “Systems” revenue); the leasing of AviClear devices for acne treatment ("AviClear" revenue); the replacement hand pieces, Titan, truSculpt 3D,truSculpt and truFlex cycle refills, as well as single use disposable tips applicable to Secret PRO, and Secret RF (“Consumables” revenue); and the distribution of third-party manufactured skincare products (“Skincare” revenue); are collectively classified as “Products” revenue. In addition to Products revenue, the Company generates revenue from the sale of post-warranty service contracts, parts, detachable hand piece replacements (except for Titan, truSculpt 3D, truSculpt and truFlex) and service labor for the repair and maintenance of products that are out of warranty, all of which are collectively classified as “Service” revenue.

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 also maintains regional distribution centers (“RDCs”) in select locations across the U.S. These RDCs serve as forward warehousing for systems and service parts in various geographies. The Company markets, sells and services the Company’s 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. Sales and services outside of these direct markets are made through a worldwide distributor network in over 39 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 balance sheets as of June 30, 2023 and December 31, 2022, and its condensed consolidated statements of operations, condensed consolidated statements of comprehensive loss, condensed consolidated statements of changes in stockholders' equity (deficit), and condensed consolidated statements of cash flows, for the three and six months ended June 30, 2023, and 2022, respectively. The December 31, 2022 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, 2022, filed with the Securities and Exchange Commission (the “SEC”) on April 7, 2023, and as amended on May 1, 2023.

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, the Company's ability to obtain and maintain regulatory approvals, government regulations and oversight, patent and other types of litigation, the Company's ability to protect proprietary technology from counterfeit versions of the Company's products, the successful execution of new product launches, strategic relationships and dependence on key individuals.

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.

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 six months ended June 30, 2023, the Company capitalized $2.2 million of mobilization costs and $3.2 million of deferred commission costs related to placements of the AviClear device. 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. The amortization of the mobilization costs and amortization of deferred commission costs are recorded in cost of revenue and sales and marketing, respectively, in the Company's condensed consolidated statement of operations. Total capitalized mobilization costs were $2.6 million and $1.3 million as of June 30, 2023 and December 31, 2022, respectively. Total capitalized commissions as of June 30, 2023, and December 31, 2022, were $4.3 million and $3.3 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet.

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.

Supplier Concentration

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. In the six months ended June 30, 2023, and 2022, revenue from the distribution of skincare products represented 15% and 17% of the Company’s consolidated revenue, respectively.

The Company‘s exclusive distribution agreement with ZO to distribute ZO’s proprietary skincare products in Japan expires in June 2024. ZO has indicated its intent not to extend the distribution agreement and assume distribution of the ZO product line

beginning in the third quarter of 2024. The Company is currently negotiating the terms of the transition of the distribution of the ZO product line to ZO, but anticipates there may be an adverse effect to the Company’s future revenue, results of operations, cash flows and stock price beginning in July 2024.

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Cash, Cash Equivalents, Restricted Cash and Marketable Investments

6 Months Ended

Jun. 30, 2023

Cash and Cash Equivalents [Abstract]

Cash, Cash Equivalents, Restricted Cash and Marketable Investments

Cash, Cash Equivalents, Restricted Cash and Marketable Investments

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 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
June 30, 2023	Cost	Gains	Losses	Value
Cash and cash equivalents	N/A	N/A	N/A	$	180,654
Current restricted cash	N/A	N/A	N/A	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	N/A	N/A	N/A	181,354
Marketable investments - U.S. Treasury	41,945	74	(70)	41,949
Total				$	223,303

		Gross	Gross	Fair
	Amortized	Unrealized	Unrealized	Market
December 31, 2022	Cost	Gains	Losses	Value
Cash and cash equivalents	N/A	N/A	N/A	$	145,924
Current restricted cash	N/A	N/A	N/A	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	N/A	N/A	N/A	146,624
Marketable investments - U.S. Treasury	171,484	8	(102)	171,390
Total				$	318,014

At June 30, 2023 and December 31, 2022, net unrealized losses were nil and $0.1 million, 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. The restricted cash balance relates to an outstanding letter of credit provided to a supplier.

All the marketable investments will mature less than one year from June 30, 2023.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2023

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 June 30, 2023, 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):

June 30, 2023	Level 1		Level 2
Cash equivalents:
Money market funds	$	155,330	$	—
Marketable investments:
Available-for-sale securities	41,949		—
Derivative assets:
Foreign exchange forward	—		—
Total	$	197,279	$	—

As of December 31, 2022, financial assets and liabilities 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):

December 31, 2022	Level 1		Level 2
Cash equivalents:
Money market funds	$	26,408	$	—
Marketable investments:
Available-for-sale securities	171,390		—
Derivative liabilities:
Foreign exchange forward	—		(558)
Total	$	197,798	$	(558)

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”), the 2.25% Convertible Senior Notes due 2028 (the “2028 Notes”), and the 4.00% Convertible Senior Notes due 2029 (the “2029 Notes”).

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Derivative Instruments

6 Months Ended

Jun. 30, 2023

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.

At June 30, 2023, the Company did not have any foreign currency exchange forward contracts outstanding. At December 31, 2022, the following foreign exchange forward contract was outstanding:

December 31, 2022	Classification	Foreign Exchange Forward
(Dollars in thousands)
Gross notional amount	N/A	$	6,128
Fair value	Accrued liabilities	$	558
Unrealized loss	Other expense, net	$	(558)

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Balance Sheet Details (Restated)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Details

Balance Sheet Details (Restated)

Inventories, net (Restated)

As of June 30, 2023 and December 31, 2022, inventories consist of the following (in thousands):

	June 30, 2023		December 31, 2022
	(As Restated)
Raw materials	$	38,128	$	36,323
Work in process	892		2,117
Finished goods	25,144		25,188
Total	$	64,164	$	63,628

Other current assets and prepaid expenses (Restated)

Other current assets and a prepaid expenses, consists of the following (in thousands):

	June 30, 2023		December 31, 2022
	(As Restated)
Deposits with vendors	$	11,951	$	13,917
Foreign tax receivable	9,563		7,147
Prepayments	3,284		2,972
Total	$	24,798	$	24,036

Property and Equipment, net (Restated)

Property and equipment, net, consists of the following (in thousands):

	June 30, 2023		December 31, 2022
	(As Restated)
Leasehold improvements	$	793	$	793
AviClear devices	39,107		19,904
Office equipment and furniture	2,026		1,936
Machinery and equipment	5,697		5,106
Assets under construction	25,250		17,876
	72,873		45,615
Less: Accumulated depreciation	(8,162)		(5,247)
Property and equipment, net	$	64,711	$	40,368

Accrued Liabilities

As of June 30, 2023 and December 31, 2022, accrued liabilities consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Bonus and payroll-related accruals	$	18,709	$	18,951
Sales and marketing accruals	4,832		5,347
Liability for inventory in transit	3,762		7,028
Product warranty	3,104		3,254
Accrued sales tax	10,420		9,066
Other accrued liabilities	12,937		13,806
Total	$	53,764	$	57,452

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Product Warranty

6 Months Ended

Jun. 30, 2023

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 six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Beginning Balance	$	3,154	$	3,874	$	3,254	$	3,947
Add: Accruals for warranties issued during the period	1,534		1,769		2,550		3,232
Less: Settlements made during the period	(1,584)		(1,454)		(2,700)		(2,990)
Ending Balance	$	3,104	$	4,189	$	3,104	$	4,189

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Deferred Revenue (Restated)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Deferred Revenue (Restated)

Deferred Revenue (Restated)

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 to three-year terms. Deferred revenue also includes payments for training. Approximately 88% of the Company’s deferred revenue balance of $14.0 million as of June 30, 2023 will be recognized over the next 12 months.

The following table provides changes in the deferred revenue balance for the three and six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
Beginning balance	$	13,699	$	11,064	$	13,498	$	10,825
Add: Payments received	5,939		5,199		11,087		10,032
Less: Revenue from current period sales	(589)		(443)		(2,291)		(1,374)
Less: Revenue recognized from beginning balance	(5,042)		(4,293)		(8,287)		(7,956)
Ending balance	$	14,007	$	11,527	$	14,007	$	11,527

The fixed annual license fees received related to the AviClear contracts are deferred and recognized over the annual lease periods. The AviClear deferred license fee balance included in the total deferred revenue balance at June 30, 2023, and December 31, 2022, was $3.3 million and $2.3 million, respectively.

Costs for extended service contracts were $2.1 million and $3.7 million for the three and six months ended June 30, 2023, respectively, and were $1.5 million and $3.2 million for three and six months ended June 30, 2022, respectively.

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Revenue (Restated)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue (Restated)

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 9% and 9% of the Company's total revenue for the three and six months ended June 30, 2023, respectively and 7% and 8% for the three and six months ended June 30, 2022, respectively.

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, AviClear license agreements, 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.

The Company leases the AviClear device to customers and receives a fixed annual lease fee over the term of the arrangement and variable revenue related to the treatments performed by the lessee.

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. This provides customers the flexibility to upgrade their systems whenever they choose and provides the Company with a source of additional Systems revenue.

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's invoice terms typically require payment for its system consoles and other accessories within 30 days of shipment. Certain international distributor arrangements allow for longer payment terms.

AviClear

The Company leases the AviClear device to customers and receives a fixed annual license fee over the term of the arrangement and variable lease income related to the treatments performed by the lessee. The Company classifies its lease income as product revenue and classifies the AviClear contracts as operating leases. The fixed annual license fee is recognized evenly over the period of the lease contract on a straight-line basis. The treatment fee is recognized in the period the treatment protocol is initiated.

Consumables and other accessories

The Company classifies its customers' purchases of replacement cycles for truSculpt and truFlex, as well as replacement hand pieces, xeo 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.

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.

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 to three years. Service contract revenue is recognized over time, using a time-based measure of progress, as customers benefit from the service throughout the service period. 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.

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 operates a customer loyalty program for qualified customers located in the U.S. and Canada. Under the loyalty program, customers accumulate points based on their purchasing levels which can be redeemed for such rewards as the right to attend the Company’s advanced training event for a product, 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 June 30, 2023 and December 31, 2022, the liability for the loyalty program included in accrued liabilities was $0.2 million and $0.3 million, respectively.

Deferred Sales Commissions

Incremental costs of obtaining a contract related to the sale of a system, which consist primarily 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, which is generally two to three years.

Total capitalized commissions as of June 30, 2023 and December 31, 2022 were $3.2 million and $3.8 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 $1.3 million during the three and six months ended June 30, 2023, respectively and $0.5 million and $1.2 million during the three and six months ended June 30, 2022, respectively. The amortization related to these capitalized costs is included in sales and marketing expense in the Company’s condensed consolidated statement of operations.

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Stockholders' Equity and Stock-based Compensation Expense

6 Months Ended

Jun. 30, 2023

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.

Activity under the Company's equity incentive plans is summarized as follows:

	Shares Available for Grant
Balance, December 31, 2022	1,070,925
Options and RSUs granted	(735,978)
Stock awards canceled / forfeited / expired	279,567
Options canceled / forfeited / expired	84,629
Balance, June 30, 2023	699,143

	Options Outstanding
	Number of Stock Options Outstanding	Weighted- Average Exercise Price		Weighted Average Remaining Term  (in Years)
Balance, December 31, 2022	513,935	$	34.41	6.63
Options granted	309,214	$	18.80
Options exercised	(9,234)	$	15.92
Options canceled / forfeited / expired	(84,629)	$	27.32
Balance, June 30, 2023	729,286	$	28.85	6.95

	Stock Awards Outstanding
	Number of Awards Outstanding	Weighted Average Grant Date Fair Value per Share
Balance, December 31, 2022	906,211	$	40.39
RSUs granted	426,764	$	20.03
Awards released	(262,629)	$	34.72
Stock awards canceled / forfeited / expired	(279,567)	$	43.08
Balance, June 30, 2023	790,779	$	30.32

Stock-based Compensation Expense

Stock-based compensation expense by department recognized during the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of revenue	$	361	$	500	$	725	$	959
Sales and marketing	1,283		1,638		2,431		2,214
Research and development	415		1,067		1,108		2,047
General and administrative	(509)		1,528		672		3,556
Total stock-based compensation expense	$	1,550	$	4,733	$	4,936	$	8,776

In the three months ended June 30, 2023, the Company had a significant number of executives and directors leave Cutera and this resulted in a reversal of previously-reported stock compensation expense related to forfeited awards. The total reversal of stock compensation expense in the three months ended June 2023 relating to all forfeited awards was $2.1 million, of which $1.9 million was categorized as general and administrative expense. In the first and second quarters of 2022 and first quarter of 2023, the aggregate stock compensation expense reversal related to forfeited awards was approximately $0.5 million in each quarter.

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Net Loss Per Share (Restated)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Net Loss Per Share (Restated)

Net Loss Per Share (Restated)

As of June 30, 2023, the Company’s Convertible Notes were potentially convertible into 8,696,792 shares of common stock.

The denominator for diluted net 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 six months ended June 30, 2023 and June 30, 2022, the if-converted method was not applied as the effect would have been anti-dilutive.

For the three and six months ended June 30, 2023 and June 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 loss and the weighted average number of shares used in computing basic and diluted net loss per share (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
Numerator:
Net loss used in calculating net loss per share, basic	$	(33,278)	$	(47,276)	$	(61,326)	$	(62,418)
Denominator:
Weighted average shares of common stock outstanding used in computing net loss per share, basic	19,858		18,700		19,819		18,392
Dilutive effect of incremental shares and share equivalents:
Convertible notes	—		—		—		—
Options	—		—		—		—
RSUs	—		—		—		—
PSUs	—		—		—		—
ESPP	—		—		—		—
Weighted average shares of common stock outstanding used in computing net loss per share, diluted	19,858		18,700		19,819		18,392
Net loss per share:
Net loss per share, basic	$	(1.68)	$	(2.53)	$	(3.09)	$	(3.39)
Net loss per share, diluted	$	(1.68)	$	(2.53)	$	(3.09)	$	(3.39)

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 per common share for the periods presented because including them would have had an anti-dilutive effect (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Capped call	10,780	8,724	10,780	8,724
Convertible notes	8,697	6,640	8,697	6,640
Options	694	542	694	542
RSU's	489	550	489	550
PSU's	265	489	265	489
ESPP	45	29	45	29
Total	20,970	16,974	20,970	16,974

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Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the three and six months ended June 30, 2023, the Company's income tax expense was $0.3 million and $0.6 million, respectively, compared to $0.2 million tax benefit and $47 thousand expense, respectively, for the three and six months ended June 30, 2022.

The Company's income tax expense for the three and six months ended June 30, 2023 and 2022 is due to income taxes in foreign jurisdictions. The Company continues to maintain a full valuation allowance on its U.S. deferred tax assets.

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Leases (Restated)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases (Restated)

Leases (Restated)

The Company is a party to certain operating and finance leases for vehicles, office space and storage facilities. The Company’s material operating leases consist of office space, as well as storage facilities and finance leases consist of automobile leases. The Company’s leases generally have remaining terms of one to 10 years, some of which include options to renew the leases for up to five years. The Company leases space for operations in the United States, Japan, Belgium, France, and Spain.

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.

Tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. 

Supplemental balance sheet information related to leases was as follows (in thousands):

Leases	Classification	June 30, 2023		December 31, 2022
Assets
Right-of-use assets	Operating lease right-of-use assets	$	11,370	$	12,831
Finance lease	Property and equipment, net	1,465		1,606
Total leased assets		$	12,835	$	14,437

Liabilities	Classification	June 30, 2023		December 31, 2022
Operating lease liabilities
Operating lease liabilities, current	Operating lease liabilities	$	2,602	$	2,810
Operating lease liabilities, non-current	Operating lease liabilities, net of current portion	10,069		11,352
Total Operating lease liabilities		$	12,671	$	14,162
Finance lease liabilities
Finance lease liabilities, current	Accrued liabilities	$	463	$	485
Finance lease liabilities, non-current	Other long-term liabilities	540		825
Total Finance lease liabilities		$	1,003	$	1,310

Lease costs during the three and six months ended June 30, 2023 and 2022 (in thousands) was as follows:

		Three Months Ended June 30,				Six Months Ended June 30,
Lease costs	Classification	2023		2022		2023		2022
Finance lease cost	Amortization expense	$	148	$	178	$	298	$	339
Finance lease cost	Interest for finance lease	$	18	$	16	$	38	$	37
Operating lease cost	Operating lease expense	$	889	$	880	$	1,780	$	1,795

Cash paid for amounts included in the measurement of lease liabilities during the six months ended June 30, 2023 and 2022 was as follows (in thousands):

		Six Months Ended June 30,
Cash paid for amounts included in the measurement of lease liabilities	Classification	2023		2022
Operating cash flow	Finance lease	$	38	$	24
Financing cash flow	Finance lease	$	237	$	284
Operating cash flow	Operating lease	$	686	$	851

Operating leases

Maturities of facility leases were as follows as of June 30, 2023 (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	2,458
2024	2,929
2025	2,934
2026	3,029
2027	3,132
2028 and thereafter	468
Total lease payments	14,950
Less: imputed interest	2,279
Present value of lease liabilities	$	12,671

Finance Leases

As of June 30, 2023, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance (vehicle) leases as follows (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	266
2024	624
2025	314
2025	17
Total lease payments	1,221
Less: imputed interest	218
Present value of lease liabilities	$	1,003

Weighted-average remaining lease term and discount rate, as of June 30, 2023, were as follows:

Lease Term and Discount Rate	June 30, 2023
Weighted-average remaining lease term (years)
Operating leases	4.6
Finance leases	2.0
Weighted-average discount rate
Operating leases	4.8	%
Finance leases	6.2	%

Lessor - AviClear (Restated)

Lessor revenue (Restated)

The Company leases the AviClear device to customers and receives a fixed annual license fee over the term of the arrangement and variable revenue related to the number of treatments performed by the lessee. The contractual term of the lease agreement is three years with a one-year auto-renewal feature. Certain lease agreements' terms in excess of one year can be terminated without financial penalty, and these agreements are accounted for as having a lease term of one year. The AviClear lease agreements are accounted for as operating leases. The fixed annual license fee is recognized evenly throughout the period of the lease agreement on a straight-line basis. The treatment revenue is recognized in the period the lessee has the ability to perform the patient treatment.

The following table summarizes the amount of operating lease income included in product revenue in the accompanying condensed consolidated statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
AviClear operating lease license fee revenue	$	1,367	$	39	$	2,592	$	39
AviClear operating lease revenue	3,236		97		5,939		97
Total AviClear revenue	$	4,603	$	136	$	8,531	$	136

The AviClear device being leased has a useful life of seven years. The Company expects that a device will be leased for two consecutive lease terms at the end of which its residual value will be immaterial.

The following is the minimum future lease payments as of June 30, 2023, under non-cancelable operating leases, assuming the minimum contractual lease term (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	2,463
2024	5,896
2025	3,434
Total AviClear revenue	$	11,793

Practical Expedients

The Company elected to apply a practical expedient to operating leases and elected not to separate lease and nonlease components as long as the lease and at least one nonlease component have the same timing and pattern of transfer. As such, updates or upgrades on a when-and-if available basis to the AviClear device are combined with the operating lease revenue. The combined component is being accounted for under ASC 842. Additionally, the Company made an accounting policy election to present AviClear revenue net of sales and other similar taxes.

Capitalized sales commissions

Sales commissions related to obtaining AviClear lease agreements are accounted for as initial direct costs and are capitalized and amortized on a straight-line basis over the lease term. Amortization expenses for these assets were $1.1 million and $2.2 million for the three and six-month periods ended June 30, 2023, respectively, and nil for the comparative periods, and were included in Sales and marketing expense in the Company’s condensed consolidated statement of operations. Total capitalized commissions as of June 30, 2023, and December 31, 2022, were $4.3 million and $3.3 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet.

Lease installment costs (Restated)

The Company capitalizes fulfillment costs incurred before AviClear lease commencement and these costs include freight, installation, and training costs. Amortization expenses for these assets were $0.5 million and $1.0 million for the three and six-month periods ended June 30, 2023, respectively, and nil for the comparative periods, and were included in Cost of revenue in the Company’s condensed consolidated statement of operations. Total lease installment costs as of June 30, 2023, and December 31, 2022, were $2.6 million and $1.3 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet.

Leases (Restated)

Leases (Restated)

The Company is a party to certain operating and finance leases for vehicles, office space and storage facilities. The Company’s material operating leases consist of office space, as well as storage facilities and finance leases consist of automobile leases. The Company’s leases generally have remaining terms of one to 10 years, some of which include options to renew the leases for up to five years. The Company leases space for operations in the United States, Japan, Belgium, France, and Spain.

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.

Tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. 

Supplemental balance sheet information related to leases was as follows (in thousands):

Leases	Classification	June 30, 2023		December 31, 2022
Assets
Right-of-use assets	Operating lease right-of-use assets	$	11,370	$	12,831
Finance lease	Property and equipment, net	1,465		1,606
Total leased assets		$	12,835	$	14,437

Liabilities	Classification	June 30, 2023		December 31, 2022
Operating lease liabilities
Operating lease liabilities, current	Operating lease liabilities	$	2,602	$	2,810
Operating lease liabilities, non-current	Operating lease liabilities, net of current portion	10,069		11,352
Total Operating lease liabilities		$	12,671	$	14,162
Finance lease liabilities
Finance lease liabilities, current	Accrued liabilities	$	463	$	485
Finance lease liabilities, non-current	Other long-term liabilities	540		825
Total Finance lease liabilities		$	1,003	$	1,310

Lease costs during the three and six months ended June 30, 2023 and 2022 (in thousands) was as follows:

		Three Months Ended June 30,				Six Months Ended June 30,
Lease costs	Classification	2023		2022		2023		2022
Finance lease cost	Amortization expense	$	148	$	178	$	298	$	339
Finance lease cost	Interest for finance lease	$	18	$	16	$	38	$	37
Operating lease cost	Operating lease expense	$	889	$	880	$	1,780	$	1,795

Cash paid for amounts included in the measurement of lease liabilities during the six months ended June 30, 2023 and 2022 was as follows (in thousands):

		Six Months Ended June 30,
Cash paid for amounts included in the measurement of lease liabilities	Classification	2023		2022
Operating cash flow	Finance lease	$	38	$	24
Financing cash flow	Finance lease	$	237	$	284
Operating cash flow	Operating lease	$	686	$	851

Operating leases

Maturities of facility leases were as follows as of June 30, 2023 (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	2,458
2024	2,929
2025	2,934
2026	3,029
2027	3,132
2028 and thereafter	468
Total lease payments	14,950
Less: imputed interest	2,279
Present value of lease liabilities	$	12,671

Finance Leases

As of June 30, 2023, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance (vehicle) leases as follows (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	266
2024	624
2025	314
2025	17
Total lease payments	1,221
Less: imputed interest	218
Present value of lease liabilities	$	1,003

Weighted-average remaining lease term and discount rate, as of June 30, 2023, were as follows:

Lease Term and Discount Rate	June 30, 2023
Weighted-average remaining lease term (years)
Operating leases	4.6
Finance leases	2.0
Weighted-average discount rate
Operating leases	4.8	%
Finance leases	6.2	%

Lessor - AviClear (Restated)

Lessor revenue (Restated)

The Company leases the AviClear device to customers and receives a fixed annual license fee over the term of the arrangement and variable revenue related to the number of treatments performed by the lessee. The contractual term of the lease agreement is three years with a one-year auto-renewal feature. Certain lease agreements' terms in excess of one year can be terminated without financial penalty, and these agreements are accounted for as having a lease term of one year. The AviClear lease agreements are accounted for as operating leases. The fixed annual license fee is recognized evenly throughout the period of the lease agreement on a straight-line basis. The treatment revenue is recognized in the period the lessee has the ability to perform the patient treatment.

The following table summarizes the amount of operating lease income included in product revenue in the accompanying condensed consolidated statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
AviClear operating lease license fee revenue	$	1,367	$	39	$	2,592	$	39
AviClear operating lease revenue	3,236		97		5,939		97
Total AviClear revenue	$	4,603	$	136	$	8,531	$	136

The AviClear device being leased has a useful life of seven years. The Company expects that a device will be leased for two consecutive lease terms at the end of which its residual value will be immaterial.

The following is the minimum future lease payments as of June 30, 2023, under non-cancelable operating leases, assuming the minimum contractual lease term (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	2,463
2024	5,896
2025	3,434
Total AviClear revenue	$	11,793

Practical Expedients

The Company elected to apply a practical expedient to operating leases and elected not to separate lease and nonlease components as long as the lease and at least one nonlease component have the same timing and pattern of transfer. As such, updates or upgrades on a when-and-if available basis to the AviClear device are combined with the operating lease revenue. The combined component is being accounted for under ASC 842. Additionally, the Company made an accounting policy election to present AviClear revenue net of sales and other similar taxes.

Capitalized sales commissions

Sales commissions related to obtaining AviClear lease agreements are accounted for as initial direct costs and are capitalized and amortized on a straight-line basis over the lease term. Amortization expenses for these assets were $1.1 million and $2.2 million for the three and six-month periods ended June 30, 2023, respectively, and nil for the comparative periods, and were included in Sales and marketing expense in the Company’s condensed consolidated statement of operations. Total capitalized commissions as of June 30, 2023, and December 31, 2022, were $4.3 million and $3.3 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet.

Lease installment costs (Restated)

The Company capitalizes fulfillment costs incurred before AviClear lease commencement and these costs include freight, installation, and training costs. Amortization expenses for these assets were $0.5 million and $1.0 million for the three and six-month periods ended June 30, 2023, respectively, and nil for the comparative periods, and were included in Cost of revenue in the Company’s condensed consolidated statement of operations. Total lease installment costs as of June 30, 2023, and December 31, 2022, were $2.6 million and $1.3 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet.

Leases (Restated)

Leases (Restated)

The Company is a party to certain operating and finance leases for vehicles, office space and storage facilities. The Company’s material operating leases consist of office space, as well as storage facilities and finance leases consist of automobile leases. The Company’s leases generally have remaining terms of one to 10 years, some of which include options to renew the leases for up to five years. The Company leases space for operations in the United States, Japan, Belgium, France, and Spain.

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.

Tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. 

Supplemental balance sheet information related to leases was as follows (in thousands):

Leases	Classification	June 30, 2023		December 31, 2022
Assets
Right-of-use assets	Operating lease right-of-use assets	$	11,370	$	12,831
Finance lease	Property and equipment, net	1,465		1,606
Total leased assets		$	12,835	$	14,437

Liabilities	Classification	June 30, 2023		December 31, 2022
Operating lease liabilities
Operating lease liabilities, current	Operating lease liabilities	$	2,602	$	2,810
Operating lease liabilities, non-current	Operating lease liabilities, net of current portion	10,069		11,352
Total Operating lease liabilities		$	12,671	$	14,162
Finance lease liabilities
Finance lease liabilities, current	Accrued liabilities	$	463	$	485
Finance lease liabilities, non-current	Other long-term liabilities	540		825
Total Finance lease liabilities		$	1,003	$	1,310

Lease costs during the three and six months ended June 30, 2023 and 2022 (in thousands) was as follows:

		Three Months Ended June 30,				Six Months Ended June 30,
Lease costs	Classification	2023		2022		2023		2022
Finance lease cost	Amortization expense	$	148	$	178	$	298	$	339
Finance lease cost	Interest for finance lease	$	18	$	16	$	38	$	37
Operating lease cost	Operating lease expense	$	889	$	880	$	1,780	$	1,795

Cash paid for amounts included in the measurement of lease liabilities during the six months ended June 30, 2023 and 2022 was as follows (in thousands):

		Six Months Ended June 30,
Cash paid for amounts included in the measurement of lease liabilities	Classification	2023		2022
Operating cash flow	Finance lease	$	38	$	24
Financing cash flow	Finance lease	$	237	$	284
Operating cash flow	Operating lease	$	686	$	851

Operating leases

Maturities of facility leases were as follows as of June 30, 2023 (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	2,458
2024	2,929
2025	2,934
2026	3,029
2027	3,132
2028 and thereafter	468
Total lease payments	14,950
Less: imputed interest	2,279
Present value of lease liabilities	$	12,671

Finance Leases

As of June 30, 2023, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance (vehicle) leases as follows (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	266
2024	624
2025	314
2025	17
Total lease payments	1,221
Less: imputed interest	218
Present value of lease liabilities	$	1,003

Weighted-average remaining lease term and discount rate, as of June 30, 2023, were as follows:

Lease Term and Discount Rate	June 30, 2023
Weighted-average remaining lease term (years)
Operating leases	4.6
Finance leases	2.0
Weighted-average discount rate
Operating leases	4.8	%
Finance leases	6.2	%

Lessor - AviClear (Restated)

Lessor revenue (Restated)

The Company leases the AviClear device to customers and receives a fixed annual license fee over the term of the arrangement and variable revenue related to the number of treatments performed by the lessee. The contractual term of the lease agreement is three years with a one-year auto-renewal feature. Certain lease agreements' terms in excess of one year can be terminated without financial penalty, and these agreements are accounted for as having a lease term of one year. The AviClear lease agreements are accounted for as operating leases. The fixed annual license fee is recognized evenly throughout the period of the lease agreement on a straight-line basis. The treatment revenue is recognized in the period the lessee has the ability to perform the patient treatment.

The following table summarizes the amount of operating lease income included in product revenue in the accompanying condensed consolidated statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
AviClear operating lease license fee revenue	$	1,367	$	39	$	2,592	$	39
AviClear operating lease revenue	3,236		97		5,939		97
Total AviClear revenue	$	4,603	$	136	$	8,531	$	136

The AviClear device being leased has a useful life of seven years. The Company expects that a device will be leased for two consecutive lease terms at the end of which its residual value will be immaterial.

The following is the minimum future lease payments as of June 30, 2023, under non-cancelable operating leases, assuming the minimum contractual lease term (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	2,463
2024	5,896
2025	3,434
Total AviClear revenue	$	11,793

Practical Expedients

The Company elected to apply a practical expedient to operating leases and elected not to separate lease and nonlease components as long as the lease and at least one nonlease component have the same timing and pattern of transfer. As such, updates or upgrades on a when-and-if available basis to the AviClear device are combined with the operating lease revenue. The combined component is being accounted for under ASC 842. Additionally, the Company made an accounting policy election to present AviClear revenue net of sales and other similar taxes.

Capitalized sales commissions

Sales commissions related to obtaining AviClear lease agreements are accounted for as initial direct costs and are capitalized and amortized on a straight-line basis over the lease term. Amortization expenses for these assets were $1.1 million and $2.2 million for the three and six-month periods ended June 30, 2023, respectively, and nil for the comparative periods, and were included in Sales and marketing expense in the Company’s condensed consolidated statement of operations. Total capitalized commissions as of June 30, 2023, and December 31, 2022, were $4.3 million and $3.3 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet.

Lease installment costs (Restated)

The Company capitalizes fulfillment costs incurred before AviClear lease commencement and these costs include freight, installation, and training costs. Amortization expenses for these assets were $0.5 million and $1.0 million for the three and six-month periods ended June 30, 2023, respectively, and nil for the comparative periods, and were included in Cost of revenue in the Company’s condensed consolidated statement of operations. Total lease installment costs as of June 30, 2023, and December 31, 2022, were $2.6 million and $1.3 million, respectively, and are included in Other long-term assets in the Company’s condensed consolidated balance sheet.

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Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

The Company is named from time to time as a party to other legal proceedings, product liability, intellectual property disputes, commercial disputes, employee disputes, and contractual lawsuits. 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. Certain of the cases below are still in the preliminary stages, and the Company is not able to quantify the extent of its potential liability, if any, other than as described. The outcome of litigation is inherently unpredictable and subject to significant uncertainties. If any of these matters are resolved adversely to the Company, this could have a material adverse effect on its business, financial condition, results of operations, and cash flows. In addition, defending these legal proceedings is likely to be costly, which may have a material adverse effect on the Company's financial condition, results of operations and cash flows, and may divert management's attention from the day-to-day operations of its business.

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 Cutera 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 ("TRO") against Lutronic generally prohibiting it from using or disseminating the Company's confidential, proprietary, or trade secret information. The order also prohibited Lutronic, for two years, from using such information for the purpose of soliciting, or conducting business with, certain specified customers. On April 9, 2020, the parties stipulated to the entry of a preliminary injunction providing for the same relief afforded by the TRO. The Company filed a First Amended Complaint on September 14, 2020. On August 4, 2022, Cutera filed a second amended complaint. On April 24, 2023 Lutronic filed a complaint for trade libel, intentional interference with prospective economic advantage, misappropriation of trade secrets and unfair business practices in violation of California Business and Professions Code §17200 against Cutera in California State Court. The Company has not yet been served in this case. In addition to the above referenced claims, Cutera alleged claims for violation of the Lanham Act, unlawful business practices, false advertising and trademark infringement. Discovery is ongoing. No trial date has been scheduled.

In March 2023, Serendia, LLC (“Serendia”), filed patent infringement complaints against the Company with the International Trade Commission (“ITC”) and in U.S. District Court for the District of Delaware alleging infringement of six Serendia patents by the Secret RF and Secret Pro systems, which the Company distributes in the U.S. on behalf of ILOODA Co. Ltd., a Korean company. The Company is defending the lawsuits. Given the inherent uncertainties of litigation, the Company cannot guarantee that it will not be held liable for infringing one or more claims of Serendia patents. If the Company is held liable for infringement, it may be subject to monetary damages and/or an injunction prohibiting the applicable products in the United States.

On April 11, 2023, J. Daniel Plants, the Company’s former Executive Chairperson, and David Mowry, the Company’s former Chief Executive Officer, filed a complaint in the Delaware Court of Chancery against directors Gregory Barrett, Sheila Hopkins, Timothy O’Shea, Juliane Park and Janet Widmann, as defendants, and the Company, as nominal defendant (the “Delaware Litigation”) seeking a declaration that the individual defendants breached their fiduciary duties and to enjoin them from enforcing the nomination deadline under the Company’s Amended and Restated Bylaws (the “Bylaws”) in connection with the 2023 annual meeting of stockholders, or in the alternative, a declaration that the Company must hold a special meeting of the stockholders on June 2, 2023. Mr. Plants and Mr. Mowry filed a motion for expedited proceedings with their complaint. Mr. Plants and Mr. Mowry subsequently agreed that the determination made by the Special Committee of the Board to hold a special meeting of the stockholders on June 9, 2023 mooted their request in the Delaware Litigation for a declaration that the Company hold a special meeting of the stockholders. On April 18, 2023, the Court of Chancery denied in part Mr. Plants and Mr. Mowry’s motion for expedited proceedings.

On May 16, 2023, Mr. Mowry filed a letter with the Court of Chancery disclosing that he had resolved his dispute with the defendants and agreed to dismiss his claims with prejudice. On May 17, 2023, the Court of Chancery granted an order for voluntary dismissal of Mr. Mowry as a plaintiff in the Delaware Litigation. Mr. Plants subsequently publicly voiced opposition to certain aspects of the Company's corporate governance and strategy but did not submit a notice of nomination of director candidates for the Company’s 2023 annual meeting of stockholders and did not purport to nominate any director candidates at the Company’s annual meeting of stockholders held on July 13, 2023. On August 7, 2023, the defendants filed a motion for an order to show cause why the Delaware Litigation should not be dismissed with prejudice. The Delaware litigation remains pending.

On May 24, 2023, purported shareholder Erie County Employees’ Retirement System filed a putative class action securities fraud complaint in the U.S. District Court for the Northern District of California against the Company, David H. Mowry, Rohan Seth, and J. Daniel Plants, asserting claims for violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The California litigation remains pending.

As of June 30, 2023, and December 31, 2022, the Company had accrued $0.6 million and $0.5 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.

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Debt

6 Months Ended

Jun. 30, 2023

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):

	June 30, 2023		December 31, 2022
Notes due in 2026
Outstanding principal amount	$	69,125	$	69,125
Unamortized debt issuance costs	(1,320)		(1,553)
Carrying Value	$	67,805	$	67,572
Notes due in 2028
Outstanding principal amount	$	240,000	$	240,000
Unamortized debt issuance costs	(6,315)		(6,908)
Carrying Value	$	233,685	$	233,092
Notes due in 2029
Outstanding principal amount	$	120,000	$	120,000
Unamortized debt issuance costs	(3,922)		(4,205)
Carrying Value	$	116,078	$	115,795
Convertible notes, net	$	417,568	$	416,459

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. In May 2022, the Company entered into privately-negotiated exchange agreements with certain holders of the Company’s outstanding 2026 Notes. Following the exchange, approximately $69.1 million in aggregate principal amount of the 2026 Notes remained outstanding.

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 former 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 2028 Notes are presented as Convertible notes, net of unamortized debt issuance costs, on the condensed consolidated balance sheet. 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 will mature on June 1, 2028, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2028 Notes.

Issuance of convertible notes due in 2029

In December 2022, the Company issued $120.0 million aggregate principal amount of 2029 Notes in a private placement offering. The 2029 Notes bear interest at a rate of 4.00% per year payable semiannually in arrears on June 1 and December 1 of each year. Upon conversion, the 2029 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 $115.8 million, net of issuance costs, including initial purchasers fees.

Each $1,000 principal amount of the 2029 Notes is initially convertible into 17.1378 shares of the Company’s common stock, which is equivalent to a conversion price of approximately $58.35 per share. The conversion rate for the 2029 Notes is subject to adjustment for certain events as set forth in the indenture governing the 2029 Notes. The 2029 Notes will mature on June 1, 2029, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2029 Notes.

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 not met during the first and second quarters of 2023. As of June 30, 2023, the 2026 Notes are not convertible. The 2026 Notes may become convertible in future periods. 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 June 30, 2024, the Company intends to settle such conversion requests in shares of common stock. Therefore, as of June 30, 2023, 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 and 2029 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 $58.4 million as of June 30, 2023, 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 circumstances described in the bullets in the paragraph above were not met during the first and second quarters of 2023. As of June 30, 2023, the 2028 Notes are not convertible. 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 June 30, 2024, the Company intends to settle such conversion requests in shares of common stock. Therefore, as of June 30, 2023, 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 and 2029 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 $149.9 million as of June 30, 2023, which the Company determined through consideration of market prices. The fair value measurement is classified as Level 2, as defined in Note 3.

2029 Notes:

Holders may convert their 2029 Notes at their option prior to the close of business on the business day immediately preceding March 1, 2029 in multiples of $1,000 principal amount, only under the following circumstances:

•During any fiscal quarter commencing after the fiscal quarter ending March 31, 2023 (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 2029 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 2029 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 2029 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, 2029, 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 2029 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 not met during the first and second quarters of 2023. As of June 30, 2023, the 2029 Notes are not convertible. The 2029 Notes may become convertible in future periods. Upon any conversion requests of the 2029 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 June 30, 2024, the Company intends to settle such conversion requests in shares of common stock. Therefore, as of June 30, 2023, the 2029 Notes have been included as Long-term debt on the consolidated balance sheet.

The Company may not redeem the 2029 Notes prior to December 5, 2025. On or after December 5, 2025, the Company may redeem for cash all or any portion of the 2029 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 2029 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 2029 Notes, at least $100.0 million aggregate principal amount of 2029 Notes must be outstanding and not subject to redemption as of the relevant redemption notice date.

If a specified corporate event occurs, 2029 Note holders have the option to require the Company to repurchase any portion or all of their 2029 Notes in $1,000 principal increments for cash. The price for such repurchase is calculated as 100% of the principal amounts of 2029 Notes, plus accrued and unpaid interest to the day immediately preceding the Fundamental Change repurchase date. Additionally, holders of the 2029 Notes who convert in connection with a fundamental change are, under certain circumstances, entitled to an increase in conversion rate.

The 2029 Notes are general senior unsecured obligations that rank senior to any of the Company’s indebtedness that is explicitly subordinated to the 2029 Notes. The 2029 Notes have equal rank in right of payment with all existing and future unsecured indebtedness that is not subordinated to the 2029 Notes (including the 2026 Notes and 2028 Notes). The 2029 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 2029 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 2029 Notes was approximately $76.2 million as of June 30, 2023, 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.

In connection with the offering of the 2029 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 2029 Notes sold to the initial purchasers in the offering of 2029 Notes, with a strike price equal to the conversion price of the 2029 Notes and with an initial cap price equal to $99.21, which represents a 100% premium over the last reported sale price of the Company's common stock of $49.66 per share on December 7, 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, 2029. The capped calls were purchased for $25.1 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. The effective interest rates on the 2026 Notes, 2028 Notes, and 2029 Notes are 2.98%, 2.82%, and 4.63%, respectively. Interest expense for the three and six-month periods ended June 30, 2023 including the amortization of debt issuance cost, totaled approximately $3.5 million and $7.0 million, respectively. Interest expense for the three and six-month periods ended June 30, 2022, including the amortization of debt issuance cost, totaled approximately $1.4 million and $2.4 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.

The Loan and Security Agreement has been amended since inception to permit the issuance of the Convertible Notes and related capped call transactions and to remove the quarterly minimum revenue requirement. On March 26, 2023, the FDIC announced that it had entered into a purchase and assumption agreement with First Citizens Bank & Trust Company under which all deposits of the former Silicon Valley Bank were assumed by First Citizens Bank & Trust Company. In addition, under the purchase and assumption agreement, First Citizens Bank & Trust Company assumed Silicon Valley Bank’s obligations under the Company’s Loan and Security Agreement.

The Company and First Citizens Bank & Trust Company agreed to amend the requirement for Cutera to maintain substantially all of its funds with First Citizens Bank & Trust Company and allowed up to 50% of the Company’s funds to be invested with institutions other than First Citizens Bank & Trust Company.

As of June 30, 2023, the Company had not drawn on the loan facility and the Company is in compliance with all financial covenants.

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Segment Reporting (Restated)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment Reporting (Restated)

Segment Reporting (Restated)

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 maker ("CODM") is its Chief Executive Officer ("CEO"), who makes decisions on allocating resources and assessing performance.

Beginning in the fourth quarter of 2022, the Company segregates its operations into two reportable business segments: (i) Cutera Core and (ii) AviClear. This segregation aligns the Company’s operating business segments with the way the CEO reviews the Company's operations.

The Company measures the financial results of its reportable segments using an internal performance measure that excludes certain non-cash and non-recurring expenses.

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(Dollars in thousands)				(Dollars in thousands)
	(As Restated)				(As Restated)
Net revenue
Cutera Core	$	57,222	$	64,088	$	107,820	$	122,102
AviClear	4,603		136		8,531		136
Total net revenue	$	61,825	$	64,224	$	116,351	$	122,238
Income (loss) from operations
Cutera Core	(6,583)		5,871		(17,842)		10,221
AviClear	(6,653)		(7,507)		(12,952)		(15,662)
Segment loss from operations	(13,236)		(1,636)		(30,794)		(5,441)
Items not allocated to segments
Stock-based compensation	(1,550)		(4,733)		(4,936)		(8,776)
ERP implementation costs	(770)		(2,385)		(1,288)		(6,361)
Depreciation and amortization	(3,991)		(1,068)		(7,578)		(2,147)
Board of Directors legal and advisory fees	(7,709)		—		(7,709)		—
Retention plan costs	(2,972)		—		(2,972)		—
Legal fees, severance, and other	(935)		(242)		(2,487)		(496)
Consolidated loss from operations	(31,163)		(10,064)		(57,764)		(23,221)
Interest and other expense, net	(1,789)		(37,398)		(2,964)		(39,150)
Consolidated loss before income taxes	$	(32,952)	$	(47,462)	$	(60,728)	$	(62,371)
					Six Months Ended June 30,
					2023		2022
Capital spending					(As Restated)
Cutera Core					$	64	$	603
AviClear					25,044		7,635
Total segment capital spending					$	25,108	$	8,238
Corporate					—		—
Total capital spending					$	25,108	$	8,238
					June 30, 2023		December 31, 2022
Total assets					(As Restated)
Cutera Core					$	160,900	$	154,978
AviClear					74,274		47,406
Total segment assets					$	235,174	$	202,384
Corporate					223,850		318,604
Total assets					$	459,024	$	520,988

The following table presents a summary of revenue by geography and product category for the three and six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue mix by geography:	(As Restated)				(As Restated)
United States	$	25,602	$	26,742	$	48,104	$	51,216
Japan	12,810		15,174		25,718		32,677
Asia, excluding Japan	4,323		5,106		11,054		8,715
Europe	5,495		5,925		10,613		10,116
Rest of the World, other than United States, Asia and Europe	13,595		11,277		20,862		19,514
Total consolidated revenue	$	61,825	$	64,224	$	116,351	$	122,238
Revenue mix by product category:	(As Restated)				(As Restated)
Systems	$	37,895	$	43,653	$	71,213	$	80,167
AviClear	4,603		136		8,531		136
Consumables	4,255		5,162		7,998		9,065
Skincare	9,422		9,638		17,554		21,287
Total product revenue	56,175		58,589		105,296		110,655
Service	5,650		5,635		11,055		11,583
Total consolidated revenue	$	61,825	$	64,224	$	116,351	$	122,238

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net loss	$ (33,278)	$ (47,276)	$ (61,326)	$ (62,418)

XML

Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

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”) develops, manufactures, distributes, and markets energy-based product platforms for medical practitioners, enabling them to offer treatments to their customers. In addition, the Company distributes third-party manufactured skincare products. The Company currently markets the following system platforms: AviClear, enlighten, excel, truSculpt, Secret PRO, Secret RF, and xeo. These platforms enable medical practitioners to perform procedures including treatment for acne, body contouring, skin resurfacing and revitalization, hair and tattoo removal, removal of benign pigmented lesions, and vascular conditions. Several of the Company’s systems offer multiple hand pieces and applications, providing customers the flexibility to upgrade their systems. The sales of systems, system upgrades, and hand pieces (collectively “Systems” revenue); the leasing of AviClear devices for acne treatment ("AviClear" revenue); the replacement hand pieces, Titan, truSculpt 3D,truSculpt and truFlex cycle refills, as well as single use disposable tips applicable to Secret PRO, and Secret RF (“Consumables” revenue); and the distribution of third-party manufactured skincare products (“Skincare” revenue); are collectively classified as “Products” revenue. In addition to Products revenue, the Company generates revenue from the sale of post-warranty service contracts, parts, detachable hand piece replacements (except for Titan, truSculpt 3D, truSculpt and truFlex) and service labor for the repair and maintenance of products that are out of warranty, all of which are collectively classified as “Service” revenue.

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 also maintains regional distribution centers (“RDCs”) in select locations across the U.S. These RDCs serve as forward warehousing for systems and service parts in various geographies. The Company markets, sells and services the Company’s 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. Sales and services outside of these direct markets are made through a worldwide distributor network in over 39 countries. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries.

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 balance sheets as of June 30, 2023 and December 31, 2022, and its condensed consolidated statements of operations, condensed consolidated statements of comprehensive loss, condensed consolidated statements of changes in stockholders' equity (deficit), and condensed consolidated statements of cash flows, for the three and six months ended June 30, 2023, and 2022, respectively. The December 31, 2022 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, 2022, filed with the Securities and Exchange Commission (the “SEC”) on April 7, 2023, and as amended on May 1, 2023.

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, the Company's ability to obtain and maintain regulatory approvals, government regulations and oversight, patent and other types of litigation, the Company's ability to protect proprietary technology from counterfeit versions of the Company's products, the successful execution of new product launches, strategic relationships and dependence on key individuals.

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. The Company uses the same accounting policies in preparing quarterly and annual financial statements.

Leases

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.

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 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.

Supplier Concentration

Supplier Concentration

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. In the six months ended June 30, 2023, and 2022, revenue from the distribution of skincare products represented 15% and 17% of the Company’s consolidated revenue, respectively.

The Company‘s exclusive distribution agreement with ZO to distribute ZO’s proprietary skincare products in Japan expires in June 2024.

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Restatement of Previously Issued Financial Statements (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Changes and Error Corrections [Abstract]

Schedule of Effects of the Accounting Error

The effects of the accounting error on the Company's condensed consolidated balance sheet as of June 30, 2023 are as follows (in thousands):

	June 30, 2023		Adjustments			June 30, 2023
	(As Reported)					(As Restated)
Assets
Current assets:
Cash and cash equivalents	$	180,654	$	—		$	180,654
Marketable investments	41,949		—			41,949
Accounts receivable, net of allowance	53,079		600		(h)	53,679
Inventories, net	68,668		(4,504)		(a), (c), (d)	64,164
Other current assets and prepaid expenses	24,900		(102)		(j)	24,798
Restricted cash	700		—			700
Total current assets	369,950		(4,006)			365,944
Property and equipment, net	65,511		(800)		(b), (e)	64,711
Deferred tax assets	547		—			547
Goodwill	1,339		—			1,339
Operating lease right-of-use assets	11,370		—			11,370
Other long-term assets	15,113		—			15,113
Total assets	$	463,830	$	(4,806)		$	459,024
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	34,240	$	—		$	34,240
Accrued liabilities	53,764		—			53,764
Operating lease liabilities	2,602		—			2,602
Deferred revenue	12,457		(140)		(g)	12,317
Total current liabilities	103,063		(140)			102,923
Deferred revenue, net of current portion	1,690		—			1,690
Operating lease liabilities, net of current portion	10,069		—			10,069
Convertible notes, net of unamortized debt issuance costs	417,568		—			417,568
Other long-term liabilities	575		—			575
Total liabilities	532,965		(140)			532,825
Stockholders’ deficit:
Common stock	20		—			20
Additional paid-in capital	128,014		—			128,014
Accumulated other comprehensive income (loss)	4		—			4
Accumulated deficit	(197,173)		(4,666)		(k)	(201,839)
Total stockholders’ deficit	(69,135)		(4,666)			(73,801)
Total liabilities and stockholders’ deficit	$	463,830	$	(4,806)		$	459,024

The effects of the accounting error on the Company's condensed consolidated income statement for the three-month period ended June 30, 2023 are as follows (in thousands, except per share data):

	Three Months Ended June 30, 2023		Adjustments			Three Months Ended June 30, 2023
	(As Reported)					(As Restated)
Net revenue:
Products	$	55,568	$	607	(f), (g)	$	56,175
Service	5,650		—			5,650
Total net revenue	61,218		607			61,825
Cost of revenue:
Products	29,473		2,578		(a), (c), (d), (j)	32,051
Service	3,691		—			3,691
Total cost of revenue	33,164		2,578			35,742
Gross profit	28,054		(1,971)			26,083
Operating expenses:
Sales and marketing	33,271		—			33,271
Research and development	5,784		—			5,784
General and administrative	18,528		(337)		(h)	18,191
Total operating expenses	57,583		(337)			57,246
Loss from operations	(29,529)		(1,634)			(31,163)
Interest and other expense, net:
Amortization of debt issuance costs	(557)		—			(557)
Interest on convertible notes	(2,958)		—			(2,958)
Interest income	2,179		—			2,179
Other expense, net	(453)		—			(453)
Total interest and other expense, net	(1,789)		—			(1,789)
Loss before income taxes	(31,318)		(1,634)			(32,952)
Income tax expense	326		—			326
Net loss	$	(31,644)	$	(1,634)	(k)	$	(33,278)
Net loss per share:
Basic	$	(1.59)	$	(0.08)		$	(1.68)
Diluted	$	(1.59)	$	(0.08)		$	(1.68)
Weighted-average number of shares used in per share calculation:
Basic	19,858		19,858			19,858
Diluted	19,858		19,858			19,858

The effects of the accounting error on the Company's condensed consolidated income statement for the six-month period ended June 30, 2023 are as follows (in thousands, except per share data):

	Six Months Ended June 30, 2023		Adjustments			Six Months Ended June 30, 2023
	(As Reported)					(As Restated)
Net revenue:
Products	$	105,156	$	140	(f), (g)	$	105,296
Service	11,055		—			11,055
Total net revenue	116,211		140			116,351
Cost of revenue:
Products	56,704		5,406		(a), (b), (c), (d), (e), (j)	62,110
Service	6,526		—			6,526
Total cost of revenue	63,230		5,406			68,636
Gross profit	52,981		(5,266)			47,715
Operating expenses:
Sales and marketing	62,783		—			62,783
Research and development	12,252		—			12,252
General and administrative	31,044		(600)		(h)	30,444
Total operating expenses	106,079		(600)			105,479
Loss from operations	(53,098)		(4,666)			(57,764)
Interest and other expense, net:
Amortization of debt issuance costs	(1,109)		—			(1,109)
Interest on convertible notes	(5,897)		—			(5,897)
Interest income	4,658		—			4,658
Other expense, net	(616)		—			(616)
Total interest and other expense, net	(2,964)		—			(2,964)
Loss before income taxes	(56,062)		(4,666)			(60,728)
Income tax expense	598		—			598
Net loss	$	(56,660)	$	(4,666)	(k)	$	(61,326)
Net loss per share:
Basic	$	(2.86)	$	(0.24)		$	(3.09)
Diluted	$	(2.86)	$	(0.24)		$	(3.09)
Weighted-average number of shares used in per share calculation:
Basic	19,819		19,819			19,819
Diluted	19,819		19,819			19,819

The effects of the accounting errors on the Company's condensed consolidated statement of cash flows for the six-month period ended June 30, 2023 are as follows (in thousands):

	Six Months Ended June 30,
	2023		Adjustments			2023
	(As Reported)					(As Restated)
Cash flows from operating activities
Net loss	$	(56,660)	$	(4,666)	(k)	$	(61,326)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	4,936		—			4,936
Depreciation and amortization	3,238		—			3,238
Amortization of contract acquisition costs	4,069		—			4,069
Amortization of debt issuance costs	1,109		—			1,109
Deferred tax assets	43		—			43
Provision for credit losses	2,514		(600)		(h)	1,914
Accretion of discount on investment securities and investment income, net	(1,995)		2,141		(i)	146
Changes in assets and liabilities:
Accounts receivable	(10,031)		—			(10,031)
Inventories, net	(5,040)		4,504		(a), (c), (d)	(536)
Other current assets and prepaid expenses	(878)		102		(j)	(776)
Other long-term assets	(4,782)		—			(4,782)
Accounts payable	(1,666)		—			(1,666)
Accrued liabilities	(3,806)		—			(3,806)
Operating leases, net	(30)		—			(30)
Deferred revenue	649		(140)		(g)	509
Net cash used in operating activities	(68,330)		1,341			(66,989)
Cash flows from investing activities
Acquisition of property and equipment	(25,908)		800		(b), (e)	(25,108)
Proceeds from maturities of marketable investments	155,000		(2,141)		(i)	152,859
Purchase of marketable investments	(23,467)		—			(23,467)
Net cash provided by (used in) investing activities	105,625		(1,341)			104,284
Cash flows from financing activities
Proceeds from exercise of stock options and employee stock purchase plan	858		—			858
Taxes paid related to net share settlement of equity awards	(3,186)		—			(3,186)
Payments on finance lease obligations	(237)		—			(237)
Net cash provided by (used in) financing activities	(2,565)		—			(2,565)
Net increase (decrease) in cash, cash equivalents and restricted cash	34,730		—			34,730
Cash, cash equivalents, and restricted cash at beginning of period	146,624		—			146,624
Cash, cash equivalents, and restricted cash at end of period	$	181,354	$	—		$	181,354
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease	$	68	$	—		$	68
Assets acquired under operating lease	$	57	$	—		$	57
Acquisition of property and equipment	$	6,301	$	—		$	6,301
Supplemental disclosure of cash flow information:
Cash paid for interest	$	5,731	$	—		$	5,731
Cash paid for income taxes	$	483	$	—		$	483

Footnote to tables:

(a) Correction of the accounting error for the overstatement of inventory identified as a result of the physical inventory count ($2.4 million and $3.6 million for three and six months ended June 30, 2023, respectively)

(b) Correction of the accounting error related to AviClear devices identified as a result of the physical inventory count ($1.0 million)

(c) Correction of the overstatement of demonstration and field inventory ($0.4 million), net of quarterly amortization ($0.1 million)

(d) Correction of the overstatement of demonstration and field inventory ($0.1 million and $0.5 million for three and six months ended June 30, 2023, respectively)

(e) Correction of AviClear capitalized labor cost incorrectly expensed in previous period ($0.2 million)

(f) Correction of AviClear treatment revenue incorrectly recognized in the period ended June 30, 2023 ($0.7 million)

(g) Correction of AviClear sales and lease arrangements incorrectly allocated to deferred revenue in previous period ($0.2 million), net of quarterly amortization ($0.1 million)

(h) Correction of the overstatement of the provision for credit losses associated with other receivables ($0.3 million and $0.6 million for three and six months ended June 30, 2023, respectively)

(i) Correction of the classification error related to the cash interest received ($2.1 million)

(j) Correction of unapplied inventory prepayment upon receipt of inventory ($0.1 million)

(k) Net change in net loss for the three-month period or the six-month period ended June 30, 2023

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Cash, Cash Equivalents, Restricted Cash and Marketable Investments (Tables)

6 Months Ended

Jun. 30, 2023

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
June 30, 2023	Cost	Gains	Losses	Value
Cash and cash equivalents	N/A	N/A	N/A	$	180,654
Current restricted cash	N/A	N/A	N/A	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	N/A	N/A	N/A	181,354
Marketable investments - U.S. Treasury	41,945	74	(70)	41,949
Total				$	223,303

		Gross	Gross	Fair
	Amortized	Unrealized	Unrealized	Market
December 31, 2022	Cost	Gains	Losses	Value
Cash and cash equivalents	N/A	N/A	N/A	$	145,924
Current restricted cash	N/A	N/A	N/A	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	N/A	N/A	N/A	146,624
Marketable investments - U.S. Treasury	171,484	8	(102)	171,390
Total				$	318,014

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
June 30, 2023	Cost	Gains	Losses	Value
Cash and cash equivalents	N/A	N/A	N/A	$	180,654
Current restricted cash	N/A	N/A	N/A	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	N/A	N/A	N/A	181,354
Marketable investments - U.S. Treasury	41,945	74	(70)	41,949
Total				$	223,303

		Gross	Gross	Fair
	Amortized	Unrealized	Unrealized	Market
December 31, 2022	Cost	Gains	Losses	Value
Cash and cash equivalents	N/A	N/A	N/A	$	145,924
Current restricted cash	N/A	N/A	N/A	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	N/A	N/A	N/A	146,624
Marketable investments - U.S. Treasury	171,484	8	(102)	171,390
Total				$	318,014

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
June 30, 2023	Cost	Gains	Losses	Value
Cash and cash equivalents	N/A	N/A	N/A	$	180,654
Current restricted cash	N/A	N/A	N/A	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	N/A	N/A	N/A	181,354
Marketable investments - U.S. Treasury	41,945	74	(70)	41,949
Total				$	223,303

		Gross	Gross	Fair
	Amortized	Unrealized	Unrealized	Market
December 31, 2022	Cost	Gains	Losses	Value
Cash and cash equivalents	N/A	N/A	N/A	$	145,924
Current restricted cash	N/A	N/A	N/A	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	N/A	N/A	N/A	146,624
Marketable investments - U.S. Treasury	171,484	8	(102)	171,390
Total				$	318,014

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Financial Assets Measured and Recognized at Fair Value on a Recurring Basis

As of June 30, 2023, 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):

June 30, 2023	Level 1		Level 2
Cash equivalents:
Money market funds	$	155,330	$	—
Marketable investments:
Available-for-sale securities	41,949		—
Derivative assets:
Foreign exchange forward	—		—
Total	$	197,279	$	—

As of December 31, 2022, financial assets and liabilities 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):

December 31, 2022	Level 1		Level 2
Cash equivalents:
Money market funds	$	26,408	$	—
Marketable investments:
Available-for-sale securities	171,390		—
Derivative liabilities:
Foreign exchange forward	—		(558)
Total	$	197,798	$	(558)

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

At December 31, 2022, the following foreign exchange forward contract was outstanding:

December 31, 2022	Classification	Foreign Exchange Forward
(Dollars in thousands)
Gross notional amount	N/A	$	6,128
Fair value	Accrued liabilities	$	558
Unrealized loss	Other expense, net	$	(558)

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Balance Sheet Details (Restated) (Tables)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Inventories , Net

As of June 30, 2023 and December 31, 2022, inventories consist of the following (in thousands):

	June 30, 2023		December 31, 2022
	(As Restated)
Raw materials	$	38,128	$	36,323
Work in process	892		2,117
Finished goods	25,144		25,188
Total	$	64,164	$	63,628

Schedule of Other Current Assets and Prepaid Expenses

Other current assets and a prepaid expenses, consists of the following (in thousands):

	June 30, 2023		December 31, 2022
	(As Restated)
Deposits with vendors	$	11,951	$	13,917
Foreign tax receivable	9,563		7,147
Prepayments	3,284		2,972
Total	$	24,798	$	24,036

Schedule of Property and Equipment, Net

Property and equipment, net, consists of the following (in thousands):

	June 30, 2023		December 31, 2022
	(As Restated)
Leasehold improvements	$	793	$	793
AviClear devices	39,107		19,904
Office equipment and furniture	2,026		1,936
Machinery and equipment	5,697		5,106
Assets under construction	25,250		17,876
	72,873		45,615
Less: Accumulated depreciation	(8,162)		(5,247)
Property and equipment, net	$	64,711	$	40,368

Schedule of Accrued Liabilities

As of June 30, 2023 and December 31, 2022, accrued liabilities consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Bonus and payroll-related accruals	$	18,709	$	18,951
Sales and marketing accruals	4,832		5,347
Liability for inventory in transit	3,762		7,028
Product warranty	3,104		3,254
Accrued sales tax	10,420		9,066
Other accrued liabilities	12,937		13,806
Total	$	53,764	$	57,452

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Product Warranty (Tables)

6 Months Ended

Jun. 30, 2023

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 six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Beginning Balance	$	3,154	$	3,874	$	3,254	$	3,947
Add: Accruals for warranties issued during the period	1,534		1,769		2,550		3,232
Less: Settlements made during the period	(1,584)		(1,454)		(2,700)		(2,990)
Ending Balance	$	3,104	$	4,189	$	3,104	$	4,189

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Deferred Revenue (Restated) (Tables)

6 Months Ended

Jun. 30, 2023

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 six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
Beginning balance	$	13,699	$	11,064	$	13,498	$	10,825
Add: Payments received	5,939		5,199		11,087		10,032
Less: Revenue from current period sales	(589)		(443)		(2,291)		(1,374)
Less: Revenue recognized from beginning balance	(5,042)		(4,293)		(8,287)		(7,956)
Ending balance	$	14,007	$	11,527	$	14,007	$	11,527

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Stockholders' Equity and Stock-based Compensation Expense (Tables)

6 Months Ended

Jun. 30, 2023

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 Available for Grant
Balance, December 31, 2022	1,070,925
Options and RSUs granted	(735,978)
Stock awards canceled / forfeited / expired	279,567
Options canceled / forfeited / expired	84,629
Balance, June 30, 2023	699,143

	Options Outstanding
	Number of Stock Options Outstanding	Weighted- Average Exercise Price		Weighted Average Remaining Term  (in Years)
Balance, December 31, 2022	513,935	$	34.41	6.63
Options granted	309,214	$	18.80
Options exercised	(9,234)	$	15.92
Options canceled / forfeited / expired	(84,629)	$	27.32
Balance, June 30, 2023	729,286	$	28.85	6.95

	Stock Awards Outstanding
	Number of Awards Outstanding	Weighted Average Grant Date Fair Value per Share
Balance, December 31, 2022	906,211	$	40.39
RSUs granted	426,764	$	20.03
Awards released	(262,629)	$	34.72
Stock awards canceled / forfeited / expired	(279,567)	$	43.08
Balance, June 30, 2023	790,779	$	30.32

Schedule of Stock-based Compensation Expense

Stock-based compensation expense by department recognized during the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of revenue	$	361	$	500	$	725	$	959
Sales and marketing	1,283		1,638		2,431		2,214
Research and development	415		1,067		1,108		2,047
General and administrative	(509)		1,528		672		3,556
Total stock-based compensation expense	$	1,550	$	4,733	$	4,936	$	8,776

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Net Loss Per Share (Restated) (Tables)

6 Months Ended

Jun. 30, 2023

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 loss and the weighted average number of shares used in computing basic and diluted net loss per share (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
Numerator:
Net loss used in calculating net loss per share, basic	$	(33,278)	$	(47,276)	$	(61,326)	$	(62,418)
Denominator:
Weighted average shares of common stock outstanding used in computing net loss per share, basic	19,858		18,700		19,819		18,392
Dilutive effect of incremental shares and share equivalents:
Convertible notes	—		—		—		—
Options	—		—		—		—
RSUs	—		—		—		—
PSUs	—		—		—		—
ESPP	—		—		—		—
Weighted average shares of common stock outstanding used in computing net loss per share, diluted	19,858		18,700		19,819		18,392
Net loss per share:
Net loss per share, basic	$	(1.68)	$	(2.53)	$	(3.09)	$	(3.39)
Net loss per share, diluted	$	(1.68)	$	(2.53)	$	(3.09)	$	(3.39)

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 per common share for the periods presented because including them would have had an anti-dilutive effect (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Capped call	10,780	8,724	10,780	8,724
Convertible notes	8,697	6,640	8,697	6,640
Options	694	542	694	542
RSU's	489	550	489	550
PSU's	265	489	265	489
ESPP	45	29	45	29
Total	20,970	16,974	20,970	16,974

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Leases (Restated) (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Schedule of Supplemental Balance Sheet Information

Supplemental balance sheet information related to leases was as follows (in thousands):

Leases	Classification	June 30, 2023		December 31, 2022
Assets
Right-of-use assets	Operating lease right-of-use assets	$	11,370	$	12,831
Finance lease	Property and equipment, net	1,465		1,606
Total leased assets		$	12,835	$	14,437

Liabilities	Classification	June 30, 2023		December 31, 2022
Operating lease liabilities
Operating lease liabilities, current	Operating lease liabilities	$	2,602	$	2,810
Operating lease liabilities, non-current	Operating lease liabilities, net of current portion	10,069		11,352
Total Operating lease liabilities		$	12,671	$	14,162
Finance lease liabilities
Finance lease liabilities, current	Accrued liabilities	$	463	$	485
Finance lease liabilities, non-current	Other long-term liabilities	540		825
Total Finance lease liabilities		$	1,003	$	1,310

Weighted-average remaining lease term and discount rate, as of June 30, 2023, were as follows:

Lease Term and Discount Rate	June 30, 2023
Weighted-average remaining lease term (years)
Operating leases	4.6
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 six months ended June 30, 2023 and 2022 (in thousands) was as follows:

		Three Months Ended June 30,				Six Months Ended June 30,
Lease costs	Classification	2023		2022		2023		2022
Finance lease cost	Amortization expense	$	148	$	178	$	298	$	339
Finance lease cost	Interest for finance lease	$	18	$	16	$	38	$	37
Operating lease cost	Operating lease expense	$	889	$	880	$	1,780	$	1,795

Cash paid for amounts included in the measurement of lease liabilities during the six months ended June 30, 2023 and 2022 was as follows (in thousands):

		Six Months Ended June 30,
Cash paid for amounts included in the measurement of lease liabilities	Classification	2023		2022
Operating cash flow	Finance lease	$	38	$	24
Financing cash flow	Finance lease	$	237	$	284
Operating cash flow	Operating lease	$	686	$	851

Schedule of Maturities of Facility Leases

Maturities of facility leases were as follows as of June 30, 2023 (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	2,458
2024	2,929
2025	2,934
2026	3,029
2027	3,132
2028 and thereafter	468
Total lease payments	14,950
Less: imputed interest	2,279
Present value of lease liabilities	$	12,671

Schedule of Minimum Finance Lease Payments

As of June 30, 2023, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance (vehicle) leases as follows (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	266
2024	624
2025	314
2025	17
Total lease payments	1,221
Less: imputed interest	218
Present value of lease liabilities	$	1,003

Schedule of Operating Lease Income

The following table summarizes the amount of operating lease income included in product revenue in the accompanying condensed consolidated statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(As Restated)				(As Restated)
AviClear operating lease license fee revenue	$	1,367	$	39	$	2,592	$	39
AviClear operating lease revenue	3,236		97		5,939		97
Total AviClear revenue	$	4,603	$	136	$	8,531	$	136

Schedule of Lessor, Operating Lease, Payment to be Received, Fiscal Year Maturity

The following is the minimum future lease payments as of June 30, 2023, under non-cancelable operating leases, assuming the minimum contractual lease term (in thousands):

As of June 30, 2023	Amount
Remainder of 2023	$	2,463
2024	5,896
2025	3,434
Total AviClear revenue	$	11,793

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Debt (Tables)

6 Months Ended

Jun. 30, 2023

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):

	June 30, 2023		December 31, 2022
Notes due in 2026
Outstanding principal amount	$	69,125	$	69,125
Unamortized debt issuance costs	(1,320)		(1,553)
Carrying Value	$	67,805	$	67,572
Notes due in 2028
Outstanding principal amount	$	240,000	$	240,000
Unamortized debt issuance costs	(6,315)		(6,908)
Carrying Value	$	233,685	$	233,092
Notes due in 2029
Outstanding principal amount	$	120,000	$	120,000
Unamortized debt issuance costs	(3,922)		(4,205)
Carrying Value	$	116,078	$	115,795
Convertible notes, net	$	417,568	$	416,459

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

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Segment Reporting (Restated) (Tables)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, Internal Performance Measure

The Company measures the financial results of its reportable segments using an internal performance measure that excludes certain non-cash and non-recurring expenses.

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(Dollars in thousands)				(Dollars in thousands)
	(As Restated)				(As Restated)
Net revenue
Cutera Core	$	57,222	$	64,088	$	107,820	$	122,102
AviClear	4,603		136		8,531		136
Total net revenue	$	61,825	$	64,224	$	116,351	$	122,238
Income (loss) from operations
Cutera Core	(6,583)		5,871		(17,842)		10,221
AviClear	(6,653)		(7,507)		(12,952)		(15,662)
Segment loss from operations	(13,236)		(1,636)		(30,794)		(5,441)
Items not allocated to segments
Stock-based compensation	(1,550)		(4,733)		(4,936)		(8,776)
ERP implementation costs	(770)		(2,385)		(1,288)		(6,361)
Depreciation and amortization	(3,991)		(1,068)		(7,578)		(2,147)
Board of Directors legal and advisory fees	(7,709)		—		(7,709)		—
Retention plan costs	(2,972)		—		(2,972)		—
Legal fees, severance, and other	(935)		(242)		(2,487)		(496)
Consolidated loss from operations	(31,163)		(10,064)		(57,764)		(23,221)
Interest and other expense, net	(1,789)		(37,398)		(2,964)		(39,150)
Consolidated loss before income taxes	$	(32,952)	$	(47,462)	$	(60,728)	$	(62,371)
					Six Months Ended June 30,
					2023		2022
Capital spending					(As Restated)
Cutera Core					$	64	$	603
AviClear					25,044		7,635
Total segment capital spending					$	25,108	$	8,238
Corporate					—		—
Total capital spending					$	25,108	$	8,238
					June 30, 2023		December 31, 2022
Total assets					(As Restated)
Cutera Core					$	160,900	$	154,978
AviClear					74,274		47,406
Total segment assets					$	235,174	$	202,384
Corporate					223,850		318,604
Total assets					$	459,024	$	520,988

Schedule of Revenue by Geography

The following table presents a summary of revenue by geography and product category for the three and six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue mix by geography:	(As Restated)				(As Restated)
United States	$	25,602	$	26,742	$	48,104	$	51,216
Japan	12,810		15,174		25,718		32,677
Asia, excluding Japan	4,323		5,106		11,054		8,715
Europe	5,495		5,925		10,613		10,116
Rest of the World, other than United States, Asia and Europe	13,595		11,277		20,862		19,514
Total consolidated revenue	$	61,825	$	64,224	$	116,351	$	122,238
Revenue mix by product category:	(As Restated)				(As Restated)
Systems	$	37,895	$	43,653	$	71,213	$	80,167
AviClear	4,603		136		8,531		136
Consumables	4,255		5,162		7,998		9,065
Skincare	9,422		9,638		17,554		21,287
Total product revenue	56,175		58,589		105,296		110,655
Service	5,650		5,635		11,055		11,583
Total consolidated revenue	$	61,825	$	64,224	$	116,351	$	122,238

XML

Restatement of Previously Issued Financial Statements - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Overstatement of inventory	$ (64,164)		$ (64,164)		$ (63,628)
Cost of revenue adjustment	35,742	$ 29,180	68,636	$ 55,406
Overstatement of property and equipment	$ (64,711)		$ (64,711)		$ (40,368)
Increase in loss per share, basic (in USD per share)	$ 1.68	$ 2.53	$ 3.09	$ 3.39
Increase in loss per share, diluted (in USD per share)	$ 1.68	$ 2.53	$ 3.09	$ 3.39
Adjustments to net revenue, increase (decrease)	$ 61,825	$ 64,224	$ 116,351	$ 122,238
Provision for credit losses			1,914	409
Overstatement of proceeds from maturities of marketable investments			(152,859)	0
Total product revenue
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of revenue adjustment	32,051	25,899	62,110	48,811
Adjustments to net revenue, increase (decrease)	56,175	$ 58,589	105,296	$ 110,655
Physical Inventory Count Shortfall
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Overstatement of inventory	3,600		3,600
Adjustments
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Overstatement of inventory	4,504		4,504
Cost of revenue adjustment	2,578		5,406
Overstatement of property and equipment	$ 800		$ 800
Increase in loss per share, basic (in USD per share)	$ 0.08		$ 0.24
Increase in loss per share, diluted (in USD per share)	$ 0.08		$ 0.24
Adjustments to net revenue, increase (decrease)	$ 607		$ 140
Provision for credit losses			(600)
Overstatement of proceeds from maturities of marketable investments			2,141
Adjustments | Total product revenue
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of revenue adjustment	2,578		5,406
Adjustments to net revenue, increase (decrease)	607		140
Adjustments | Physical Inventory Count Shortfall
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of revenue adjustment	2,400		3,600
Adjustments | Physical Inventory Count Shortfall | Total product revenue
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of revenue adjustment	2,400		3,600
Adjustments | AviClear Inventory Shortfall | Total product revenue
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of revenue adjustment	1,000
Adjustments | Classification Of Cash Interest Received
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Overstatement of proceeds from maturities of marketable investments			2,100
Adjustments | Field Inventory, Overstatement | Total product revenue
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of revenue adjustment			400
Quarterly amortization			100
Adjustments | Overstatement of Demonstration and Field Inventory | Total product revenue
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of revenue adjustment	100		500
Adjustments | AviClear Capitalized Labor Costs | Total product revenue
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of revenue adjustment			200
Adjustments | AviClear, Treatment Revenue Adjustment | Total product revenue
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Adjustments to net revenue, increase (decrease)			700
Adjustments | AviClear, Sales And Lease Arrangement Adjustments | Total product revenue
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Quarterly amortization			100
Adjustments to net revenue, increase (decrease)			(200)
Adjustments | Provision For Credit Losses Associated With Other Receivables
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Provision for credit losses	300		$ 600
Adjustments | Correction of Inventory Prepayment, Jabil | Total product revenue
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of revenue adjustment	$ 100

XML

Restatement of Previously Issued Financial Statements - Balance Sheets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 180,654		$ 145,924
Marketable investments	41,949		171,390
Accounts receivable, net of allowance	53,679		45,562
Inventories, net	64,164		63,628
Other current assets and prepaid expenses	24,798		24,036
Restricted cash	700		700
Total current assets	365,944		451,240
Property and equipment, net	64,711		40,368
Deferred tax assets	547		590
Goodwill	1,339		1,339
Operating lease right-of-use assets	11,370		12,831
Other long-term assets	15,113		14,620
Total assets	459,024		520,988
Current liabilities:
Accounts payable	34,240		33,736
Accrued liabilities	53,764		57,452
Operating lease liabilities	2,602		2,810
Deferred revenue	12,317		11,841
Total current liabilities	102,923		105,839
Deferred revenue, net of current portion	1,690		1,657
Operating lease liabilities, non-current	10,069		11,352
Convertible notes, net of unamortized debt issuance costs	417,568		416,459
Other long-term liabilities	575		862
Total liabilities	532,825		536,169
Stockholders’ deficit:
Common stock	20		20
Additional paid-in capital	128,014		125,406
Accumulated other comprehensive income (loss)	4		(94)
Accumulated deficit	(201,839)		(140,513)
Total stockholders’ deficit	(73,801)	$ (42,045)	(15,181)	$ 23,874	$ 43,160	$ 56,569
Total liabilities and stockholders’ deficit	459,024		$ 520,988
As Reported
Current assets:
Cash and cash equivalents	180,654
Marketable investments	41,949
Accounts receivable, net of allowance	53,079
Inventories, net	68,668
Other current assets and prepaid expenses	24,900
Restricted cash	700
Total current assets	369,950
Property and equipment, net	65,511
Deferred tax assets	547
Goodwill	1,339
Operating lease right-of-use assets	11,370
Other long-term assets	15,113
Total assets	463,830
Current liabilities:
Accounts payable	34,240
Accrued liabilities	53,764
Operating lease liabilities	2,602
Deferred revenue	12,457
Total current liabilities	103,063
Deferred revenue, net of current portion	1,690
Operating lease liabilities, non-current	10,069
Convertible notes, net of unamortized debt issuance costs	417,568
Other long-term liabilities	575
Total liabilities	532,965
Stockholders’ deficit:
Common stock	20
Additional paid-in capital	128,014
Accumulated other comprehensive income (loss)	4
Accumulated deficit	(197,173)
Total stockholders’ deficit	(69,135)
Total liabilities and stockholders’ deficit	463,830
Adjustments
Current assets:
Cash and cash equivalents	0
Marketable investments	0
Accounts receivable, net of allowance	600
Inventories, net	(4,504)
Other current assets and prepaid expenses	(102)
Restricted cash	0
Total current assets	(4,006)
Property and equipment, net	(800)
Deferred tax assets	0
Goodwill	0
Operating lease right-of-use assets	0
Other long-term assets	0
Total assets	(4,806)
Current liabilities:
Accounts payable	0
Accrued liabilities	0
Operating lease liabilities	0
Deferred revenue	(140)
Total current liabilities	(140)
Deferred revenue, net of current portion	0
Operating lease liabilities, non-current	0
Convertible notes, net of unamortized debt issuance costs	0
Other long-term liabilities	0
Total liabilities	(140)
Stockholders’ deficit:
Common stock	0
Additional paid-in capital	0
Accumulated other comprehensive income (loss)	0
Accumulated deficit	(4,666)
Total stockholders’ deficit	(4,666)
Total liabilities and stockholders’ deficit	$ (4,806)

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Restatement of Previously Issued Financial Statements - Income Statement (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Net revenue:
Total net revenue	$ 61,825	$ 64,224	$ 116,351	$ 122,238
Cost of revenue:
Total cost of revenue	35,742	29,180	68,636	55,406
Gross profit	26,083	35,044	47,715	66,832
Operating expenses:
Sales and marketing	33,271	27,001	62,783	51,945
Research and development	5,784	6,859	12,252	13,358
General and administrative	18,191	11,248	30,444	24,750
Total operating expenses	57,246	45,108	105,479	90,053
Loss from operations	(31,163)	(10,064)	(57,764)	(23,221)
Interest and other expense, net:
Amortization of debt issuance costs	(557)	(298)	(1,109)	(517)
Interest on convertible notes	(2,958)	(1,149)	(5,897)	(1,927)
Loss on extinguishment of convertible notes			0	(34,423)
Interest income	2,179	382	4,658	395
Other expense, net	(453)	(1,910)	(616)	(2,678)
Total interest and other expense, net	(1,789)	(37,398)	(2,964)	(39,150)
Loss before income taxes	(32,952)	(47,462)	(60,728)	(62,371)
Income tax expense (benefit)	326	(186)	598	47
Net loss	$ (33,278)	$ (47,276)	$ (61,326)	$ (62,418)
Net loss per share:
Basic (USD per share)	$ (1.68)	$ (2.53)	$ (3.09)	$ (3.39)
Diluted (USD per share)	$ (1.68)	$ (2.53)	$ (3.09)	$ (3.39)
Weighted-average number of shares used in per share calculation:
Basic (in shares)	19,858	18,700	19,819	18,392
Diluted (in shares)	19,858	18,700	19,819	18,392
As Reported
Net revenue:
Total net revenue	$ 61,218		$ 116,211
Cost of revenue:
Total cost of revenue	33,164		63,230
Gross profit	28,054		52,981
Operating expenses:
Sales and marketing	33,271		62,783
Research and development	5,784		12,252
General and administrative	18,528		31,044
Total operating expenses	57,583		106,079
Loss from operations	(29,529)		(53,098)
Interest and other expense, net:
Amortization of debt issuance costs	(557)		(1,109)
Interest on convertible notes	(2,958)		(5,897)
Interest income	2,179		4,658
Other expense, net	(453)		(616)
Total interest and other expense, net	(1,789)		(2,964)
Loss before income taxes	(31,318)		(56,062)
Income tax expense (benefit)	326		598
Net loss	$ (31,644)		$ (56,660)
Net loss per share:
Basic (USD per share)	$ (1.59)		$ (2.86)
Diluted (USD per share)	$ (1.59)		$ (2.86)
Weighted-average number of shares used in per share calculation:
Basic (in shares)	19,858		19,819
Diluted (in shares)	19,858		19,819
Adjustments
Net revenue:
Total net revenue	$ 607		$ 140
Cost of revenue:
Total cost of revenue	2,578		5,406
Gross profit	(1,971)		(5,266)
Operating expenses:
Sales and marketing	0		0
Research and development	0		0
General and administrative	(337)		(600)
Total operating expenses	(337)		(600)
Loss from operations	(1,634)		(4,666)
Interest and other expense, net:
Amortization of debt issuance costs	0		0
Interest on convertible notes	0		0
Interest income	0		0
Other expense, net	0		0
Total interest and other expense, net	0		0
Loss before income taxes	(1,634)		(4,666)
Income tax expense (benefit)	0		0
Net loss	$ (1,634)		$ (4,666)
Net loss per share:
Basic (USD per share)	$ (0.08)		$ (0.24)
Diluted (USD per share)	$ (0.08)		$ (0.24)
Weighted-average number of shares used in per share calculation:
Basic (in shares)	19,858		19,819
Diluted (in shares)	19,858		19,819
Total product revenue
Net revenue:
Total net revenue	$ 56,175	$ 58,589	$ 105,296	$ 110,655
Cost of revenue:
Total cost of revenue	32,051	25,899	62,110	48,811
Total product revenue | As Reported
Net revenue:
Total net revenue	55,568		105,156
Cost of revenue:
Total cost of revenue	29,473		56,704
Total product revenue | Adjustments
Net revenue:
Total net revenue	607		140
Cost of revenue:
Total cost of revenue	2,578		5,406
Service
Net revenue:
Total net revenue	5,650	5,635	11,055	11,583
Cost of revenue:
Total cost of revenue	3,691	$ 3,281	6,526	$ 6,595
Service | As Reported
Net revenue:
Total net revenue	5,650		11,055
Cost of revenue:
Total cost of revenue	3,691		6,526
Service | Adjustments
Net revenue:
Total net revenue	0		0
Cost of revenue:
Total cost of revenue	$ 0		$ 0

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Restatement of Previously Issued Financial Statements - Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities
Net loss	$ (33,278)	$ (47,276)	$ (61,326)	$ (62,418)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation			4,936	8,776
Depreciation and amortization			3,238	929
Amortization of contract acquisition costs			4,069	1,219
Amortization of debt issuance costs			1,109	517
Deferred tax assets			43	80
Provision for credit losses			1,914	409
Accretion of discount on investment securities and investment income, net			146	0
Changes in assets and liabilities:
Accounts receivable			(10,031)	(1,108)
Inventories, net			(536)	(17,501)
Other current assets and prepaid expenses			(776)	(3,034)
Other long-term assets			(4,782)	(1,071)
Accounts payable			(1,666)	14,771
Accrued liabilities			(3,806)	(6,878)
Operating leases, net			(30)	36
Deferred revenue			509	702
Net cash used in operating activities			(66,989)	(30,085)
Cash flows from investing activities
Acquisition of property and equipment			(25,108)	(8,238)
Proceeds from maturities of marketable investments			152,859	0
Purchase of marketable investments			(23,467)	(203,309)
Net cash provided by (used in) investing activities			104,284	(211,547)
Cash flows from financing activities
Proceeds from exercise of stock options and employee stock purchase plan			858	1,440
Taxes paid related to net share settlement of equity awards			(3,186)	(4,234)
Payments on finance lease obligations			(237)	(284)
Net cash provided by (used in) financing activities			(2,565)	152,518
Net increase (decrease) in cash, cash equivalents and restricted cash			34,730	(89,114)
Cash, cash equivalents, and restricted cash at beginning of period			146,624	164,864
Cash, cash equivalents, and restricted cash at end of period	181,354	$ 75,750	181,354	75,750
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease			68	437
Assets acquired under operating lease			57	549
Acquisition of property and equipment			6,301	0
Supplemental disclosure of cash flow information:
Cash paid for interest			5,731	1,903
Cash paid for income taxes			483	$ 1,230
As Reported
Cash flows from operating activities
Net loss	(31,644)		(56,660)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation			4,936
Depreciation and amortization			3,238
Amortization of contract acquisition costs			4,069
Amortization of debt issuance costs			1,109
Deferred tax assets			43
Provision for credit losses			2,514
Accretion of discount on investment securities and investment income, net			(1,995)
Changes in assets and liabilities:
Accounts receivable			(10,031)
Inventories, net			(5,040)
Other current assets and prepaid expenses			(878)
Other long-term assets			(4,782)
Accounts payable			(1,666)
Accrued liabilities			(3,806)
Operating leases, net			(30)
Deferred revenue			649
Net cash used in operating activities			(68,330)
Cash flows from investing activities
Acquisition of property and equipment			(25,908)
Proceeds from maturities of marketable investments			155,000
Purchase of marketable investments			(23,467)
Net cash provided by (used in) investing activities			105,625
Cash flows from financing activities
Proceeds from exercise of stock options and employee stock purchase plan			858
Taxes paid related to net share settlement of equity awards			(3,186)
Payments on finance lease obligations			(237)
Net cash provided by (used in) financing activities			(2,565)
Net increase (decrease) in cash, cash equivalents and restricted cash			34,730
Cash, cash equivalents, and restricted cash at beginning of period			146,624
Cash, cash equivalents, and restricted cash at end of period	181,354		181,354
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease			68
Assets acquired under operating lease			57
Acquisition of property and equipment			6,301
Supplemental disclosure of cash flow information:
Cash paid for interest			5,731
Cash paid for income taxes			483
Adjustments
Cash flows from operating activities
Net loss	(1,634)		(4,666)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation			0
Depreciation and amortization			0
Amortization of contract acquisition costs			0
Amortization of debt issuance costs			0
Deferred tax assets			0
Provision for credit losses			(600)
Accretion of discount on investment securities and investment income, net			2,141
Changes in assets and liabilities:
Accounts receivable			0
Inventories, net			4,504
Other current assets and prepaid expenses			102
Other long-term assets			0
Accounts payable			0
Accrued liabilities			0
Operating leases, net			0
Deferred revenue			(140)
Net cash used in operating activities			1,341
Cash flows from investing activities
Acquisition of property and equipment			800
Proceeds from maturities of marketable investments			(2,141)
Purchase of marketable investments			0
Net cash provided by (used in) investing activities			(1,341)
Cash flows from financing activities
Proceeds from exercise of stock options and employee stock purchase plan			0
Taxes paid related to net share settlement of equity awards			0
Payments on finance lease obligations			0
Net cash provided by (used in) financing activities			0
Net increase (decrease) in cash, cash equivalents and restricted cash			0
Cash, cash equivalents, and restricted cash at beginning of period			0
Cash, cash equivalents, and restricted cash at end of period	$ 0		0
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease			0
Assets acquired under operating lease			0
Acquisition of property and equipment			0
Supplemental disclosure of cash flow information:
Cash paid for interest			0
Cash paid for income taxes			0
Adjustments | Classification Of Cash Interest Received
Cash flows from investing activities
Proceeds from maturities of marketable investments			$ (2,100)

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Summary of Significant Accounting Policies - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($) country	Jun. 30, 2022	Dec. 31, 2022 USD ($)
Capitalized Contract Cost [Line Items]
Number of countries in which entity operates | country	39
ZO Skin Health | Revenue Benchmark | Customer Concentration Risk
Capitalized Contract Cost [Line Items]
Concentration risk, percentage	15.00%	17.00%
Other Noncurrent Assets | Capitalized Cloud Computing Set-up Cost
Capitalized Contract Cost [Line Items]
Capitalized contract costs	$ 4.3		$ 3.3
Other Noncurrent Assets | Mobilization Costs
Capitalized Contract Cost [Line Items]
Capitalized contract costs	2.6		$ 1.3
Mobilization Costs
Capitalized Contract Cost [Line Items]
Capitalized contract cost, accumulated amortization	2.2
Deferred Commission Costs
Capitalized Contract Cost [Line Items]
Capitalized contract cost, accumulated amortization	$ 3.2

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Cash, Cash Equivalents, Restricted Cash and Marketable Investments - Summary of Cash and Cash Equivalents and Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Debt Securities, Available-for-sale [Line Items]
Cash and cash equivalents	$ 180,654	$ 145,924
Restricted cash	700	700
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	181,354	146,624	$ 75,750	$ 164,864
Amortized cost		171,484
Marketable investments:		171,390
Total fair market value	223,303	318,014
Marketable investments - U.S. Treasury
Debt Securities, Available-for-sale [Line Items]
Amortized cost	41,945
Gross unrealized gains	74	8
Gross unrealized losses	(70)	$ (102)
Marketable investments:	$ 41,949

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Cash, Cash Equivalents, Restricted Cash and Marketable Investments - Narrative (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Cash and Cash Equivalents [Abstract]
Debt securities, available-for-sale, unrealized loss	$ 0.0	$ 0.1

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	May 31, 2022	Mar. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable investments:		$ 171,390
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%
Convertible Senior Notes Due 2029 | Convertible notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate	4.00%	4.00%
Level 1 | Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable investments:	$ 41,949	$ 171,390
Total	197,279	197,798
Level 1 | Fair Value, Recurring | Foreign exchange forward
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets:	0
Derivative liabilities:		0
Level 2 | Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable investments:	0	0
Total	0
Total		(558)
Level 2 | Fair Value, Recurring | Foreign exchange forward
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets:	0
Derivative liabilities:		(558)
Money market funds | Level 1 | Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	155,330	26,408
Money market funds | Level 2 | Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	$ 0	$ 0

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Derivative Instruments - Derivative Instruments Settlement (Details) - Foreign exchange forward $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Derivative [Line Items]
Gross notional amount	$ 6,128
Fair value	558
Unrealized loss	$ (558)

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Balance Sheet Details (Restated) - Inventories , Net (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 38,128	$ 36,323
Work in process	892	2,117
Finished goods	25,144	25,188
Total	$ 64,164	$ 63,628

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Balance Sheet Details (Restated) - Schedule of Other Current Assets and Prepaid Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Deposits with vendors	$ 11,951	$ 13,917
Foreign tax receivable	9,563	7,147
Prepayments	3,284	2,972
Other current assets and prepaid expenses	$ 24,798	$ 24,036

XML

Balance Sheet Details (Restated) - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 72,873	$ 45,615
Less: Accumulated depreciation	(8,162)	(5,247)
Property and equipment, net	64,711	40,368
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	793	793
AviClear devices
Property, Plant and Equipment [Line Items]
Property and equipment, gross	39,107	19,904
Office equipment and furniture
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,026	1,936
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	5,697	5,106
Assets under construction
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 25,250	$ 17,876

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Balance Sheet Details (Restated) - Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Bonus and payroll-related accruals	$ 18,709	$ 18,951
Sales and marketing accruals	4,832	5,347
Liability for inventory in transit	3,762	7,028
Product warranty	3,104	3,254
Accrued sales tax	10,420	9,066
Other accrued liabilities	12,937	13,806
Total	$ 53,764	$ 57,452

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Product Warranty - Summary of Warranties (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning Balance	$ 3,154	$ 3,874	$ 3,254	$ 3,947
Add: Accruals for warranties issued during the period	1,534	1,769	2,550	3,232
Less: Settlements made during the period	(1,584)	(1,454)	(2,700)	(2,990)
Ending Balance	$ 3,104	$ 4,189	$ 3,104	$ 4,189

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Deferred Revenue (Restated) - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Deferred revenue balance, amount	$ 14,000		$ 14,000
Contract with customer, liability	14,007	$ 11,527	14,007	$ 11,527	$ 13,699	$ 13,498	$ 11,064	$ 10,825
Costs for extended service contracts	2,100	$ 1,500	$ 3,700	$ 3,200
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
Deferred License Fee
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Contract with customer, liability	$ 3,300		$ 3,300			$ 2,300
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Deferred revenue balance, percentage	88.00%		88.00%
Expected timing of satisfaction, period	12 months		12 months

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Deferred Revenue (Restated) - Summary of Deferred Service Contract Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Change in Contract with Customer, Liability [Roll Forward]
Beginning balance	$ 13,699	$ 11,064	$ 13,498	$ 10,825
Add: Payments received	5,939	5,199	11,087	10,032
Less: Revenue from current period sales	(589)	(443)	(2,291)	(1,374)
Less: Revenue recognized from beginning balance	(5,042)	(4,293)	(8,287)	(7,956)
Ending balance	$ 14,007	$ 11,527	$ 14,007	$ 11,527

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Revenue (Restated) - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
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	$ 14,007	$ 11,527	$ 14,007	$ 11,527	$ 13,699	$ 13,498	$ 11,064	$ 10,825
Minimum
Disaggregation of Revenue [Line Items]
Extended service contract term			1 year
Capitalized costs, expected period of benefit	2 years		2 years
Maximum
Disaggregation of Revenue [Line Items]
Extended service contract term			3 years
Capitalized costs, expected period of benefit	3 years		3 years
Sales and marketing
Disaggregation of Revenue [Line Items]
Amortization expense	$ 600	$ 500	$ 1,300	$ 1,200
Other Assets
Disaggregation of Revenue [Line Items]
Capitalized contract costs	3,200		$ 3,200			3,800
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			$ 300
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	9.00%	7.00%	9.00%	8.00%

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Stockholders' Equity and Stock-based Compensation Expense - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reversal of stock compensation expense	$ 2.1	$ 0.5	$ 0.5	$ 0.5
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reversal of stock compensation expense	$ 1.9

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Stockholders' Equity and Stock-based Compensation Expense - Activity Of Options Outstanding Under the 2019 Plans (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Shares Available for Grant
Beginning balance (in shares)	1,070,925
Stock awards canceled / forfeited / expired (in shares)	279,567
Options canceled / forfeited / expired (in shares)	84,629
Ending balance (in shares)	699,143	1,070,925
Number of Stock Options Outstanding
Beginning balance (in shares)	513,935
Options granted in period (in shares)	309,214
Options exercised (in shares)	(9,234)
Options canceled / forfeited / expired (in shares)	(84,629)
Ending balance (in shares)	729,286	513,935
Weighted- Average Exercise Price
Beginning balance (in dollars per share)	$ 34.41
Granted (in dollars per share)	18.80
Options exercised (in dollars per share)	15.92
Options canceled / forfeited / expired (in dollars per share)	27.32
Ending balance (in dollars per share)	$ 28.85	$ 34.41
Weighted Average Remaining Term (in Years)
Weighted average remaining term (in years)	6 years 11 months 12 days	6 years 7 months 17 days
RSUs
Shares Available for Grant
RSUs granted (in shares)	(735,978)

XML

Stockholders' Equity and Stock-based Compensation Expense - Activity of Stock Awards Outstanding Under the 2019 Plans (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Number of Awards Outstanding
Stock awards canceled / forfeited / expired (in shares)	(279,567)
Stock awards
Number of Awards Outstanding
Beginning balance (in shares)	906,211
RSUs granted (in shares)	426,764
Awards released (in shares)	(262,629)
Stock awards canceled / forfeited / expired (in shares)	(279,567)
Ending balance (in shares)	790,779
Weighted Average Grant Date Fair Value per Share
Beginning balance (in dollars per share) | $ / shares	$ 40.39
RSUs granted (in dollars per share) | $ / shares	20.03
Awards released (in dollars per share) | $ / shares	34.72
Stock awards canceled / forfeited / expired (in dollars per share) | $ / shares	43.08
Ending balance (in dollars per share) | $ / shares	$ 30.32
RSUs
Number of Awards Outstanding
RSUs granted (in shares)	735,978

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Stockholders' Equity and Stock-based Compensation Expense - Stock-based Compensation Expense By Department (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 1,550	$ 4,733	$ 4,936	$ 8,776
Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	361	500	725	959
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	1,283	1,638	2,431	2,214
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	415	1,067	1,108	2,047
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ (509)	$ 1,528	$ 672	$ 3,556

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Net Loss Per Share (Restated) - Narrative (Details)	6 Months Ended
	Jun. 30, 2023 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)	8,696,792

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Net Loss Per Share (Restated) - Net (Loss) Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator:
Net loss used in calculating net loss per share, basic	$ (33,278)	$ (47,276)	$ (61,326)	$ (62,418)
Denominator:
Weighted average shares of common stock outstanding used in computing net (loss) income per share, basic (in shares)	19,858	18,700	19,819	18,392
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)	19,858	18,700	19,819	18,392
Net loss per share:
Net (loss) income per share, basic (USD per share)	$ (1.68)	$ (2.53)	$ (3.09)	$ (3.39)
Net (loss) income per share, diluted (USD per share)	$ (1.68)	$ (2.53)	$ (3.09)	$ (3.39)
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	0
RSUs
Dilutive effect of incremental shares and share equivalents:
Dilutive effect of share-based payment arrangements (in shares)	0	0	0	0
PSUs
Dilutive effect of incremental shares and share equivalents:
Dilutive effect of share-based payment arrangements (in shares)	0	0	0	0
ESPP
Dilutive effect of incremental shares and share equivalents:
Dilutive effect of share-based payment arrangements (in shares)	0	0	0	0

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Net Loss Per Share (Restated) - Antidilutive Securities Excluded From Computation of Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	20,970	16,974	20,970	16,974
Capped call
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	10,780	8,724	10,780	8,724
Convertible notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	8,697	6,640	8,697	6,640
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	694	542	694	542
RSU's
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	489	550	489	550
PSU's
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	265	489	265	489
ESPP
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	45	29	45	29

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 326	$ (186)	$ 598	$ 47

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Leases (Restated) - Narrative (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) lease_term	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Lessee, Lease, Description [Line Items]
Operating leases renewal terms (up to)	5 years		5 years
Finance leases renewal terms (up to)	5 years		5 years
Lease term (in years)	3 years		3 years
Duration of autorenewal features			1 year
Number of consecutive lease terms | lease_term			2
Sales and marketing
Lessee, Lease, Description [Line Items]
Amortization expense	$ 0.6	$ 0.5	$ 1.3	$ 1.2
AviClear Device
Lessee, Lease, Description [Line Items]
Cloud computing arrangement expected contract renewals (in years)	7 years		7 years
Capitalized Cloud Computing Set-up Cost | Other Noncurrent Assets
Lessee, Lease, Description [Line Items]
Capitalized contract costs	$ 4.3		$ 4.3		$ 3.3
Capitalized Cloud Computing Set-up Cost | Sales and marketing
Lessee, Lease, Description [Line Items]
Amortization expense	1.1	0.0	2.2	$ 0.0
Lease Installment Costs | Other Noncurrent Assets
Lessee, Lease, Description [Line Items]
Capitalized contract costs	2.6		2.6		$ 1.3
Lease Installment Costs | Sales and marketing
Lessee, Lease, Description [Line Items]
Amortization expense	$ 0.5	$ 0.0	$ 1.0
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms of operating leases	1 year		1 year
Remaining lease terms of finance leases	1 year		1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms of operating leases	10 years		10 years
Remaining lease terms of finance leases	10 years		10 years

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Leases (Restated) - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets
Right-of-use assets	$ 11,370	$ 12,831
Finance lease	$ 1,465	$ 1,606
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property and equipment, net	Property and equipment, net
Total leased assets	$ 12,835	$ 14,437
Operating lease liabilities
Operating lease liabilities, current	2,602	2,810
Operating lease liabilities, non-current	10,069	11,352
Present value of lease liabilities	12,671	14,162
Finance lease liabilities
Finance lease liabilities, current	$ 463	$ 485
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Accrued liabilities	Accrued liabilities
Finance lease liabilities, non-current	$ 540	$ 825
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other long-term liabilities	Other long-term liabilities
Total Finance lease liabilities	$ 1,003	$ 1,310

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Leases (Restated) - Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Finance lease cost, Amortization expense	$ 148	$ 178	$ 298	$ 339
Finance lease cost, Interest for finance lease	18	16	38	37
Operating lease cost	$ 889	$ 880	$ 1,780	$ 1,795

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Leases (Restated) - Cash Paid for Amounts Included in the Measurement of Lease Liabilities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Operating cash flow, Finance lease	$ 38	$ 24
Financing cash flow, Finance lease	237	284
Operating cash flow, Operating lease	$ 686	$ 851

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Leases (Restated) - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Remainder of 2023	$ 2,458
2024	2,929
2025	2,934
2026	3,029
2027	3,132
2027 and thereafter	468
Total lease payments	14,950
Less: imputed interest	2,279
Present value of lease liabilities	$ 12,671	$ 14,162

XML

Leases (Restated) - Maturities of Finance Leases Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Remainder of 2023	$ 266
2024	624
2025	314
2025	17
Total lease payments	1,221
Less: imputed interest	218
Present value of lease liabilities	$ 1,003	$ 1,310

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Leases (Restated) - Lease Information (Details)	Jun. 30, 2023
Weighted-average remaining lease term (years)
Operating leases	4 years 7 months 6 days
Finance leases	2 years
Weighted-average discount rate
Operating leases	4.80%
Finance leases	6.20%

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Leases (Restated) - Operating Lease Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Operating lease income	$ 4,603	$ 136	$ 8,531	$ 136
AviClear Operating Lease License Fee Revenue
Disaggregation of Revenue [Line Items]
Operating lease income	1,367	39	$ 2,592	$ 39
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration]			Total net revenue	Total net revenue
AviClear Operating Lease Recurring Revenue
Disaggregation of Revenue [Line Items]
Operating lease income	$ 3,236	$ 97	$ 5,939	$ 97
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration]			Total net revenue	Total net revenue
AviClear Revenue
Disaggregation of Revenue [Line Items]
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration]			Total net revenue	Total net revenue

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Leases (Restated) - Non-cancellable Operating Lease Income (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Leases [Abstract]
Remainder of 2023	$ 2,463
2024	5,896
2025	3,434
Total AviClear revenue	$ 11,793

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Contingencies - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($) patent	Dec. 31, 2022 USD ($)
Loss Contingencies [Line Items]
Number of patents allegedly infringed, | patent	6
Pending Litigation
Loss Contingencies [Line Items]
Accrued litigation liabilities | $	$ 0.6	$ 0.5

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Debt - Outstanding Debt and Carrying Value (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 01, 2022
Debt Instrument [Line Items]
Unamortized debt issuance costs	$ (11,557)	$ (12,666)
Convertible notes
Debt Instrument [Line Items]
Carrying Value	417,568	416,459
Convertible Senior Notes Due 2026 | Convertible notes
Debt Instrument [Line Items]
Outstanding principal amount	69,125	69,125
Unamortized debt issuance costs	(1,320)	(1,553)
Carrying Value	67,805	67,572	$ 69,100
Convertible Senior Notes Due 2028 | Convertible notes
Debt Instrument [Line Items]
Outstanding principal amount	240,000	240,000
Unamortized debt issuance costs	(6,315)	(6,908)
Carrying Value	233,685	233,092
Convertible Senior Notes Due 2029 | Convertible notes
Debt Instrument [Line Items]
Outstanding principal amount	120,000	120,000
Unamortized debt issuance costs	(3,922)	(4,205)
Carrying Value	$ 116,078	$ 115,795

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Debt - Narrative (Details)		1 Months Ended			3 Months Ended			6 Months Ended
	Jul. 09, 2020 USD ($)	Dec. 31, 2022 USD ($) $ / shares	May 31, 2022 USD ($) day $ / shares $ / item shares	Mar. 31, 2021 USD ($) day $ / shares $ / item	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 01, 2022 USD ($)	May 24, 2022 $ / shares	Mar. 04, 2021 $ / shares
Debt Instrument [Line Items]
Purchase of capped call								$ 0	$ 31,671,000
Interest on Convertible notes					$ 2,958,000		$ 1,149,000	5,897,000	1,927,000
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)				75.00%
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)			100.00%
Capped-call transaction term, consecutive trading days | day			40
Purchase of capped call			$ 32,000,000.0
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	5.00%
Debt instrument term	4 years
Maximum borrowing capacity	$ 30,000,000
Qualifying accounts receivable	80.00%
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%
Convertible Senior Notes Due 2029
Debt Instrument [Line Items]
Stock price (in USD per share) | $ / shares												$ 49.66
Cap price (in USD per per share) | $ / item			99.21
Premium over stock price (percent)			100.00%
Capped-call transaction term, consecutive trading days | day			40
Purchase of capped call			$ 25,100,000
Convertible Senior Notes Due 2029 | Common Stock
Debt Instrument [Line Items]
Conversion price (in dollars per share) | $ / shares		$ 58.35
Convertible notes
Debt Instrument [Line Items]
Carrying amount		$ 416,459,000			417,568,000			417,568,000
Interest expense					3,500,000		$ 1,400,000	7,000,000	$ 2,400,000
Convertible notes | Convertible Senior Notes Due 2026
Debt Instrument [Line Items]
Notes issued				$ 138,300,000
Carrying amount of convertible debt				$ 69,100,000
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		67,572,000			67,805,000			$ 67,805,000		$ 69,100,000
Redemption threshold percentage of stock price trigger				130.00%
Redemption threshold trading days | day				20
Redemption threshold consecutive trading days | day				30
Redemption price, percentage				100.00%
Required outstanding amount not subject to redemption				$ 50,000,000
Effective interest rate during period								2.98%
Convertible notes | Convertible Senior Notes Due 2026 | Occurrence of Fundamental Change
Debt Instrument [Line Items]
Redemption price, percentage				100.00%
Incremental repurchase amount				$ 1,000
Convertible notes | Convertible Senior Notes Due 2026 | Level 2
Debt Instrument [Line Items]
Convertible debt at fair value					58,400,000			$ 58,400,000
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				130.00%
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				98.00%
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		233,092,000			233,685,000			$ 233,685,000
Redemption threshold percentage of stock price trigger			130.00%
Redemption threshold trading days | day			20
Redemption threshold consecutive trading days | day			30
Redemption price, percentage			100.00%
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			100.00%
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					$ 149,900,000			$ 149,900,000
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			130.00%
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			98.00%
Convertible notes | Convertible Senior Notes Due 2029
Debt Instrument [Line Items]
Notes issued		$ 120,000,000
Interest rate		4.00%			4.00%			4.00%
Proceeds from convertible notes, net of unamortized debt issuance costs		$ 115,800,000
Convertible debt, conversion ratio						0.0171378
Carrying amount		$ 115,795,000			$ 116,078,000			$ 116,078,000
Required outstanding amount not subject to redemption				$ 100,000,000
Effective interest rate during period								4.63%
Convertible notes | Convertible Senior Notes Due 2029 | Level 2
Debt Instrument [Line Items]
Convertible debt at fair value						$ 76,200,000

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Debt - Components of the Loss on Debt Extinguishment (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	May 24, 2022	Mar. 04, 2021
Extinguishment of Debt [Line Items]
Loss on debt extinguishment				$ 0	$ (34,423)
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	$ (34,423)	$ 0	$ (34,423)
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	50.00%
Portion of 2026 Note principal exchanged	$ 1,824
Loss on debt extinguishment	$ 34,423

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Segment Reporting (Restated) - Narrative (Details)	6 Months Ended
	Jun. 30, 2023 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Segment Reporting (Restated) - Financial Results By Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Total net revenue	$ 61,825	$ 64,224	$ 116,351	$ 122,238
Operating income (loss)	(31,163)	(10,064)	(57,764)	(23,221)
Total stock-based compensation expense	(1,550)	(4,733)	(4,936)	(8,776)
ERP implementation costs	(770)	(2,385)	(1,288)	(6,361)
Depreciation and amortization	(3,991)	(1,068)	(7,578)	(2,147)
Board of Directors legal and advisory fees	(7,709)	0	(7,709)	0
Retention plan costs	(2,972)	0	(2,972)	0
Legal fees, severance, and other	(935)	(242)	(2,487)	(496)
Consolidated loss from operations	(31,163)	(10,064)	(57,764)	(23,221)
Interest and other expense, net	(1,789)	(37,398)	(2,964)	(39,150)
Consolidated loss before income taxes	(32,952)	(47,462)	(60,728)	(62,371)
Capital spending			25,108	8,238
Assets	459,024		459,024		$ 520,988
Operating Segments
Disaggregation of Revenue [Line Items]
Total net revenue	61,825	64,224	116,351	122,238
Operating income (loss)	(13,236)	(1,636)	(30,794)	(5,441)
Capital spending			25,108	8,238
Assets	235,174		235,174		202,384
Corporate, Non-Segment
Disaggregation of Revenue [Line Items]
Capital spending			0	0
Assets	223,850		223,850		318,604
Cutera Core | Operating Segments
Disaggregation of Revenue [Line Items]
Total net revenue	57,222	64,088	107,820	122,102
Operating income (loss)	(6,583)	5,871	(17,842)	10,221
Capital spending			64	603
Assets	160,900		160,900		154,978
AviClear | Operating Segments
Disaggregation of Revenue [Line Items]
Total net revenue	4,603	136	8,531	136
Operating income (loss)	(6,653)	$ (7,507)	(12,952)	(15,662)
Capital spending			25,044	$ 7,635
Assets	$ 74,274		$ 74,274		$ 47,406

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Segment Reporting (Restated) - Summary of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Total net revenue	$ 61,825	$ 64,224	$ 116,351	$ 122,238
Total product revenue
Disaggregation of Revenue [Line Items]
Total net revenue	56,175	58,589	105,296	110,655
Systems
Disaggregation of Revenue [Line Items]
Total net revenue	37,895	43,653	71,213	80,167
AviClear
Disaggregation of Revenue [Line Items]
Total net revenue	4,603	136	8,531	136
Consumables
Disaggregation of Revenue [Line Items]
Total net revenue	4,255	5,162	7,998	9,065
Skincare
Disaggregation of Revenue [Line Items]
Total net revenue	9,422	9,638	17,554	21,287
Service
Disaggregation of Revenue [Line Items]
Total net revenue	5,650	5,635	11,055	11,583
United States
Disaggregation of Revenue [Line Items]
Total net revenue	25,602	26,742	48,104	51,216
Japan
Disaggregation of Revenue [Line Items]
Total net revenue	12,810	15,174	25,718	32,677
Asia, excluding Japan
Disaggregation of Revenue [Line Items]
Total net revenue	4,323	5,106	11,054	8,715
Europe
Disaggregation of Revenue [Line Items]
Total net revenue	5,495	5,925	10,613	10,116
Rest of the World, other than United States, Asia and Europe
Disaggregation of Revenue [Line Items]
Total net revenue	$ 13,595	$ 11,277	$ 20,862	$ 19,514