A securities class action has been filed against Cutera, Inc. (CUTR) on behalf of investors who purchased or acquired Cutera common stock between February 17, 2021 through May 9, 2023. This case has been filed in the USDC – N.D.CA.
Cutera is a medical aesthetic device company that provides equipment for beauty treatments. Throughout the Class Period, Defendants repeatedly assured investors that the company would deliver sustainable revenue growth in the wake of the COVID-19 pandemic while concealing that the company maintained inadequate internal control over financial reporting and significant conflicts among certain members of the company’s senior leadership and board of directors (the “Board”).
Investors began to learn the truth about the company on January 9, 2023, when Cutera reported its preliminary financial results for full‑year 2022, including the fact that Cutera had failed to meet its revenue guidance for 2022. On this news, the price of Cutera common stock declined $9.41 per share, or more than 23%, from a close of $40.45 per share on January 6, 2023, to close at $31.04 per share on January 9, 2023.
After the market closed on February 28, 2023, Cutera filed a Notification of Late Filing with the SEC, reporting that the company would not be able to timely file its annual financial report on Form 10-K by the March 1, 2023 deadline. Cutera further disclosed that it “ha[d] identified and expect[ed] to disclose in the Form 10-K material weaknesses in its internal control over financial reporting related to . . . ineffective inventory count controls.” On this news, the price of Cutera common stock declined $0.32 per share, or approximately 1%, from a close of $32.43 per share on February 28, 2023, to close at $32.11 per share on March 1, 2023.
Then, on March 16, 2023, Cutera announced that it would not meet the extended deadline for filing its 2022 annual report, and would endeavor to file its 2022 annual report “as soon as practicable.” The company also revealed that, in addition to the material weaknesses previously identified, Cutera had identified material weaknesses related to stock-based compensation. On this news, the price of Cutera common stock declined $3.49 per share, or approximately 12.5%, from a close of $27.85 per share on March 16, 2023, to close at $24.36 per share on March 17, 2023.
A week later, on March 24, 2023, Cutera disclosed that Nasdaq notified the company that it was “not in compliance with Nasdaq Listing Rule 5250(c)(1)” for failing to timely file its 2022 annual financial report. On this news, the price of Cutera common stock declined $0.92 per share, or approximately 3.4%, from a close of $27.07 per share on March 24, 2023, to close at $26.15 per share on March 27, 2023.
On April 7, 2023, Cutera disclosed that the company’s Executive Chairman and Chairman of the Board, Defendant J. Daniel Plants (“Plants”), demanded a special meeting of the company’s stockholders to vote on the removal of five members of the Board.
On April 10, 2023, Defendant Plants and Defendant David H. Mowry (“Mowry”), the company’s Chief Executive Officer, issued statements in support of their separate demands calling for the Board to remove five of its directors. In connection with their demands, Defendants Plants and Mowry cited concerns that the Board had not made progress on a succession plan for the role of Chief Executive Officer, and Mowry stated that “the approach the Entrenched Directors have taken to these matters has been detrimental to the business and served no purpose other than to position certain Directors closer to the CEO title that they seem to covet for themselves.”
Then, on April 12, 2023, Cutera revealed that it had terminated Defendant Plants as the company’s Executive Chairman and Chairman of the Board and Defendant Mowry as Chief Executive Officer, appointing current Board members Janet D. Widmann and Sheila A. Hopkins as Independent Chair of the Board and Interim Chief Executive Officer, respectively. In connection with this announcement, Cutera also formally withdrew its full‑year 2023 financial guidance. On this news, the price of Cutera common stock declined $7.63 per share, or more than 28%, from a close of $27.07 per share on April 11, 2023, to close at $19.44 per share on April 12, 2023.
Then, on May 9, 2023, Cutera reported disappointing financial results for the first quarter 2023 that were “below expectations due to execution challenges in the business” and announced that Defendant Rohan Seth had resigned as the company’s Chief Financial Officer. On this news, the price of Cutera common stock declined $6.06 per share over two trading sessions, or 30%, from a close of $20.20 per share on May 9, 2023, to close at $14.14 per share on May 11, 2023.
The Complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts, about Cutera’s business and operations. Specifically, Defendants overstated the sustainability of Cutera’s revenue growth, failed to disclose significant conflicts among members of the company’s senior leadership and Board, and failed to disclose several material weaknesses in Cutera’s internal control over financial reporting. As a result of Defendant’s wrongful acts and omissions, and the significant decline in the market value of the company’s common stock, Cutera’s investors have suffered significant damages.