Good afternoon, everybody. Thanks so much for coming. Matt O'Brien, I cover MedTech here at Piper, and we're fortunate to have the Cutera management team here with us. From the company, Taylor, who is the CEO of the company, and then Greg, who's VP of IR and FP&A. Gents, thanks for coming all the way across country for us. Thank you for having us. Thank you. You bet. So let's talk a little bit about what you've seen, Taylor. I don't even know how long you've been in the seat now, like four, five- Four months - six months. Yeah. So what have you seen under the hood versus before you got into the organization, and what surprised you, the upside or the downside? Sure. So, Cutera, been around for 25 years, long history in the laser-based aesthetics market, and so it's a company that I'd known for a long time. It has always been known for great products, great technology, and so going in, I thought, there's gonna be a good platform here, a good chassis to build on, and I think that's absolutely the case. Still feel that way. We just had our biggest customer event of the year back in earlier in November, the Cutera Clinical Forum. It's our opportunity to have the, you know, bunch of customers, people who have been around Cutera for a long time, and consistently, I hear from that group that why they are Cutera customers, because they believe we've got the best products. They love their lasers, and so that's been encouraging. I also knew that there were some situational point-in-time challenges that the company was going through, and, so directionally, that, you know, we knew that, and we're addressing those. And a lot of that had to do with, the way that the company had launched an exciting new product that we have, and we'll talk more about that later. It's a product called AviClear for the treatment of acne. Great technology, great clinical results, but we are reworking the business model and our overall approach, to the market, and we're just backing it out with a new approach that we're piloting right now. So we'll talk a little bit more about that. So that was something we knew that we were gonna need to change, and we're in the process. There are also some operational challenges that the company had run into, more focused on service, reliability, the underlying operational foundation, manufacturing. So, you know, you turn over different rocks, and you find a different thing you need to address, but it all falls into a bucket that we knew we needed to tackle, and we're doing that. So we've brought in some really good new senior leaders, a new Chief Operating Officer, who is tackling all of these operational challenges and already starting to make good progress on it. A new commercial leader for international, who has also been helping the North America team with our redesigned plan for AviClear and how we're gonna grow the procedure base for AviClear. Just hired a new general counsel, and then we've got a great core of leaders at the organization who are really committed to Cutera. So I think the energy feels good, and the challenges were known. The macro environment is for sure challenging. I'd say that's the one area that I didn't foresee what the second half of the year could be from a macro financing environment type perspective. So we, you know, dealt with that in the third quarter. We've adjusted our expectations. We're adjusting our cost structure. Did a fairly large restructuring to just right-size the organization to this reality that we're in. So I think we're dealing with everything, and the company is ready to move forward. Okay. Okay, very helpful. Appreciate that. Let's talk about the historical core business, excluding AviClear. It's tough out there right now. I hear about it a lot in the channel as far as just the ability to sell boxes. It seems like the treatment numbers are really good, but the box area is gonna be challenging for a while. So, you know, given your position in the market right now, I don't think you have any new products that I can remember coming into that space anytime soon. Difficult environment, and then, you know, high interest rates. I don't think you have the balance sheet to really share some of the risk with your customers. How are you successful with that backdrop? I mean, how's anybody successful with that backdrop? Well, we saw a decline in our core capital business in the third quarter. We have, as we built out our guidance for the fourth quarter, as well as our preliminary thoughts on 2024, we've just assumed we're gonna be in a challenging macro environment, and so our job is to deal with that. We have dealt with that on the cost structure front. We're gonna be realistic about expectations for the core, but I think what's great for Cutera right now is we do have this, we've got a new product in AviClear that should be less economically sensitive than other parts of the portfolio and really provides an opportunity for us to migrate the business in that direction. So it's a lead product that I think will offer a. It's a great conversation starter. It's a great way to introduce other parts of the portfolio. We're definitely gonna be drafting behind AviClear. Okay. Drafting behind AviClear in the core business. With the core, too. Okay. Yeah. So, where are we at as far as the adjustment to the model? I know you've got a... You had a lot of systems out there. I know some are coming back. And then changing to a, you know, more capital type model, I mean, is this-... Where are we at in that process? What kind of feedback are you getting from customers? Yeah, so I'll, I'll just describe with AviClear, the initial go-to-market approach, and then what we're, what we're doing. So, initially, the company pursued a lease model with the goal of putting really, as much capital out into the field as we could. It was capital owned by the company, and then rented for $5,000 a year to a customer practice. And the idea behind that model, it could work really well, as long as you got utilization up to a point where both the customer and the company were benefiting. Because the, the share model was about 50/50 on downstream utilization across the system. So it was about a $1,500 per patient, charge that would, that would come to Cutera. It's a three-cycle, treatment, so roughly $500 per, per cycle, per treatment. The challenge was, I think, both because of that business model, as well as because of some other dynamics related to moving perhaps too quickly, flooding the engine, not having enough support for the systems in the field, utilization didn't grow the way that we wanted it to. So we're addressing with this return to market multiple elements of the plan, and one was the business model. So we're moving, and we're gonna give customers the option of purchasing the equipment from us and then having a reduced cost of utilization over time. So list price on the treatment would get cut in half, to $250 per treatment. And at that level, the... Given the research that we've done, the unit economics on treatment really change, and we've heard a lot of positive feedback so far from the customer base on the new model. But beyond just the business model, what we're also doing is we're creating some more flexibility in the software. It's gonna be an easier-to-use system. There are some hardware changes that will also enhance the system. And then on the support front, we're really focused on helping customers build great, thriving AviClear franchises. And so we've moved to a unified team approach with our capital and our procedural support, or our KAM, our key account managers. The KAMs are the ones whose day-to-day job is to help customers grow, to help them build their practice, build the base of AviClear treatments. We're also going to be adding a co-op marketing program in 2024, which will allow the company, Cutera, to invest alongside of our customer base in marketing that grows the overall business, for the benefit of everyone. So that'll be a new business building initiative that we're putting money into. And I think really importantly, the last leg of that will be an enhanced training and education program, Cutera University style, day, day-and-a-half-long program that just fully immerses the customer, including all staff at the customer, in how to run an AviClear program, beginning, beginning to end. Not just the treatment itself, but how do you talk to customers about it? How do you, how do you market this as part of your practice? How do you make it an efficient part of your, your workflow? Because I think when you're dealing with small numbers, you know, one treatment here, one treatment there, it's really hard- Mm. to build sustainability. The goal of this is gonna be to jumpstart programs and really kick that utilization into higher gear. So we're very early. Q4, we're still, as I said, in a limited pilot kind of mode, but initial feedback on the approach is very encouraging. How many of the systems did you have out in the field? How many will come back, and then when do you get to... I don't know if you're gonna go back to those accounts and try to get them to buy them or how that's gonna look. Sure. So there are about 1,250 AviClear machines in the field, and we know that a number of them, a good percentage, are likely to not be ongoing parts of the installed base. And then there is a percentage of the installed base that is, that's much more motivated, and we think are gonna be great ongoing sites for AviClear. It's hard to know exactly what the installed base will trim down to, but just to frame it, I think it could be up to half of those machines that come back. We know that in the third quarter, about 40% of machines, there was not a treatment done across those machines. So that was probably an account that took it on early, low cost of entry, and then just decided it wasn't gonna be part of their practice. And so that machine may come back. And I think that's gonna be good for the overall health of the business. Because what we wanna do is align motivation to build AviClear practices with our resources, and so we're gonna absolutely direct support to the installed base, to customers who wanna grow with the practice. And so then we are giving an option, as I said, as you referenced, to purchase. We don't know where the mix will fall in terms of staying on the rental model or migrating to a capital purchase model. But we are gonna start giving that option more broadly in the first quarter of next year, and then we'll also start going to new customers. As we go to new customers, it will just be with the purchase model. Got it. You're talking about the 625 that they're gonna continue to use? Right. They're gonna go back to them and say, "You need to purchase or- That's right. Stick with the leasing model." Okay. That's right. Okay. So if you stick with $625, and they're doing 20 cases a year at your new number, I think it's $750, is how much you're gonna realize? Yep. Something like that. That's still $10 million in AviClear revenue next year, just on the utilization side, not including new people, all this other stuff and capital. So I mean, how do we start framing up what to think about AviClear, the demand for it, and what you need to do to really kinda get that going again? Yeah. So, utilization is the number one area that, that we're focused on. For sure, we do expect there to be some capital revenue next year, but we know that the long-term health is gonna be dictated by thriving practices. So Cutera will view ourselves as a, an AviClear treatment organization. We're gonna help practices grow. And so where that means that the average account gets to in terms of utilization next year, we're not ready, we're not ready to say, but we do feel really confident that this is a... It's a procedure where appropriate training, appropriate expectation setting, which you learn through a university-type program, appropriate marketing support that is really specific, tailored at the practice level, and that's what we're gonna be doing with our co-op marketing, should be sensitive and yield better results than what we've seen in utilization. So that'll... That's what we're driving to- Okay -next year. So you've got some experience with, in the aesthetic space historically at ZELTIQ. What are you taking from the ZELTIQ days that you're applying now to Cutera? I don't remember a CoolSculpting University or anything else like that, but what are some of the things that you're taking there that give you the confidence in implementing this strategy? Everything that I've mentioned were parts of the CoolSculpting- Okay And I think important parts of the CoolSculpting go-to-market approach. So those were absolutely lessons learned. We have, I think, the architect of that commercial strategy on our board. We have one of the senior members of the commercial team at our company, and so there has been a lot of lessons learned from that positive experience that are getting applied to AviClear. Okay. Okay, and then, how do we think about the business, for 2024? I mean, obviously, you've got a couple of, you know, soft, soft quarters in Q3 and Q4 here. Do we think of Q4 as kinda the baseline, as like a, a steady state for next year, or can you... Do you start to even grow off of- of those depressed levels? So if you think about our business in 2023, there are. I'll just give you three components of it and talk about how they might move in 2024. So there's our core capital business, so the portfolio excluding AviClear, and then we have a distributed skincare business in Japan, and then we have AviClear. So the skincare business in Japan, that distribution agreement is ending in June of next year, so we're assuming that that business goes away. That was about, it's about a $35 million revenue run rate, so our planning assumes that we have no revenue from that in June onwards of next year. Core capital took a step down in the second half of the year, and that was, I think, primarily macro-driven, also had some impact from the operational challenges that I referenced earlier. We are assuming that the macro environment doesn't get better and that stepped-down performance in the second half of the year forms the baseline for 2024. Okay. And then offsetting those dynamics will be growth in AviClear, where we do, we do see opportunity. We don't think that. So we think revenue will be down in 2024. We said on our last call that we thought it would be under $200 million, but we haven't pegged exactly where that will be. But the moving parts are what I mentioned, and I think the opportunity is to set AviClear in the right trajectory so that when you do have more wind in your sails on the macro front, when we do lap this exit from the skincare business, you can start to see better growth across the entire portfolio. Got it. Okay. Better profitable growth. Right. So the mantra through the company really, really is, let's focus on running the business in the right way. So with a set of decisions that are where we're driving towards profitability and cash, as opposed to just trying to chase revenue. Yep. That's a different operating mentality, and I think it will set us up well, especially with this new AviClear model, for profitable growth in the years to come. Okay. How do you think about demand for AviClear going forward? I mean, is it, is it still there? I mean, can you get a lot of new customers? Sure. Yeah, absolutely. I mean, think about how many patients suffer from acne in our country. It's millions. So there's a huge unmet need here. I love this for Cutera, that AviClear provides us an opportunity to get into an area of real unmet medical need. And there are lots of people out there who do not want themselves or their kids to go on systemic drug therapy with the attendant side effect profile, and AviClear provides a great option in this arsenal. There are 10,000-12,000 dermatologists across the country, a little under half of whom are aesthetically focused, but we think that, and who are maybe a more natural utilizer of AviClear in the near term. But over time, we will be making strides in this, in this direction next year, toward the broader medical dermatology community and building some thought leadership, the clinical data profile to support the procedure. So we do think there are, there are a lot of practices where AviClear could be a great home. The key for us is gonna be to support the practices well, create success stories, and prove out the business model, in 2024, and then we do see, we do see good opportunity beyond that. Okay. Okay. I know this is never easy with these restructurings, but can you talk a little bit about where you had to make some of the cuts between sales and internally? Yes. So we did a restructuring back in October, started in October. It’s still ongoing in parts of the organization, especially parts in our international operations, and it’s affecting close to 25% of personnel at the company. So a fairly significant reduction, really, in response to two things. One was just the macro and the revenue environment that we were operating under. But importantly, we really saw the opportunity to create some efficiencies inside the company, and that’s what’s been energizing from my viewpoint as part of this, is that there we found several opportunities to consolidate functions where you’re getting efficiencies, but you’re also getting clarity of ownership and accountability, single points of accountability. We saw that. We’ve seen this in our field service, our customer service, in our selling organization. We've combined our capital and our key account management teams. And so I believe that in addition to pure cost savings, we are getting better performance, more energized, and more accountable sense of ownership of certain functions. So it was across the board, all geographies, all functions, but we did have some areas where we were consolidating that we were able to get a larger reduction out of. Understood. And you kind of alluded to this early on, was the R&D function of the company. Historically, it's been really, really good, right? What kind of adjustments did you have to make to that group? And then what should we expect from a new product flow? Because you know this, in the aesthetic space, new product flow is vital to growth. So we did. The restructuring affected the R&D organization. We took one project that was in our portfolio off of the near-term table. However, it's one that, at the right time, could be restarted, I think, with minimal loss of timing. Okay. So, that was the one main adjustment that we made. But we also were able to reorient team structure and time to have a delivery schedule of new products that we think is gonna work well for the company. For 2024, AviClear is our primary new product opportunity, and we're gonna be driving hard at that. But we will have, I'd say, at least one new product per year that we that's still on the schedule to be launched. Okay, understood. And I don't know if this, this question's for you or for Greg, but just on the, on the burn rate side of things, I mean, obviously, a big focus coming out of Q2. Everybody was stunned by the, the burn in Q2, got better in Q3. How do we think about that metric, and then how do we think about capital needs, especially, I think you have a debt facility, that's, that's outstanding as well? Sure. I'll take a stab- Okay ... and then if I screw up, Greg can, Correct Chime in. Exactly. So, burn will remain elevated for Q4. Mm-hmm ... and for Q1 of next year, and the primary reasons for that are a working capital need that has been driving part of the burn earlier this year. But the two parts of that working capital need are, there was a significant purchase commitment or set of purchase commitments made for AviClear inventory, and so we are fulfilling those. We're building up an asset of AviClear inventory. Cash is going out the door now and through early next year, but then we're gonna be able to pivot after that and start turning that asset into cash. So that is the primary reason for what we see as an ability to turn the cash flow dynamic around after this period of build. And the other is our payables had gotten extended, and we're paying those down. There are some other one-time costs that our business is incurring right now due to some of the transition that we had at the board and senior management level earlier this year. There are retention payments that are being paid. There were payments related to the board, the legal fees settlement with some of the boardroom activity that we had earlier in the year. Yeah. So what we see, we're very focused, laser focused on this, and the primary driver of a turn in our cash position is gonna be AviClear, as we said, but the other big, the big one, is the cost structure and the restructuring activity that we did, which we think sets us up well for 2024. Understood. Appreciate it. I don't, I don't think you screwed up, Greg. I think you got it right. I think you're right. All right. As I look at the clock, we're out of time, so I'll have to wrap up there. Gents, thanks so much for all the time. Appreciate it. Good to see you, Matt. Thank you. Thank you. Thanks, everyone.