Cutera: Medical Aesthetics Pioneer Sheds $400M Debt in 57-Day Prepack

Cutera, Inc. completed a prepackaged chapter 11 restructuring in 2025, eliminating approximately $400 million in debt—over 90% of its obligations—and emerging as a private company in 57 days. The Brisbane, California-based medical aesthetics company filed for bankruptcy on March 5, 2025 with the support of noteholders representing 74% of its outstanding debt. By May 1, the company had confirmed its plan, converted its DIP financing into an exit facility, raised $30 million through an equity rights offering, and delisted from Nasdaq to begin private ownership.

The restructuring used a prepackaged chapter 11 after creditor support was secured in advance. Cutera entered bankruptcy with $429 million in debt, negative free cash flow exceeding $120 million annually, and a stock price that had declined 95% over the prior year to $0.12 per share. The company reported unsuccessful product launches and the termination of a Japanese distribution partnership, and rising interest rates reduced practitioners' willingness to finance equipment purchases costing $50,000 to $200,000. The company's product portfolio included the FDA-cleared AviClear acne laser and it operated in more than 65 countries. The restructuring reduced debt and added new capital.

Company Background and Product Portfolio

Cutera traces its origins to 1998, when Kevin P. Connors and colleagues from Coherent Medical Group founded the company as Acme Medical, Inc. The founding team focused on developing longer-wavelength lasers to treat aesthetic conditions without the epidermal heating associated with earlier devices, addressing safety concerns tied to epidermal heating. Early investment from Campbell-White, which took a 43% stake for $3.75 million in the late 1990s, provided capital for product development.

The company achieved its first commercial success in 2000 with the CoolGlide CV System for hair removal, followed by the xeo multi-application platform in 2003. The company renamed itself to Cutera, Inc. in 2004. Over the following two decades, Cutera expanded its product lines and distribution, operating in more than 65 countries.

Product portfolio. Cutera's key product platforms address multiple aesthetic and dermatologic conditions. AviClear received FDA clearance in March 2022 as the first 1726nm laser cleared for the treatment of mild, moderate, and severe acne—the first acne therapy to claim long-term effectiveness across all severity levels. The device uses selective photothermolysis to target sebaceous glands, with clinical data suggesting that future breakout episodes are shorter, less intense, and less frequent following treatment. The truSculpt platform addresses body contouring through radiofrequency technology, while excel V and excel V+ systems treat vascular and pigmentation conditions. The enlighten platform handles tattoo removal and skin revitalization, and Secret delivers RF microneedling for skin rejuvenation. The portfolio covers acne, body contouring, vascular and pigmentation conditions, tattoo removal, skin revitalization, and RF microneedling.

Public company challenges. Cutera's financial and governance challenges intensified between 2021 and 2024. In June 2023, a class action lawsuit was filed in the U.S. District Court for the Northern District of California on behalf of investors who acquired Cutera securities between February 2021 and May 2023. The complaint alleged that defendants overstated the sustainability of Cutera's revenue growth, concealed significant conflicts among senior leadership and the Board of Directors, and failed to disclose material weaknesses in the company's internal controls over financial reporting. In March 2023, the company had disclosed non-compliance with Nasdaq listing rules due to its inability to timely file its Form 10-K for fiscal year 2022. This disclosure preceded the chapter 11 filing.

Financial performance deteriorated through 2024. Third quarter 2024 results revealed consolidated revenue of $32.5 million, down 30% from the prior year period. The geographic breakdown showed North America revenue declined 41%, while Japan declined 70% following the termination of a skincare distribution partnership that had contributed $7.1 million in the year-ago quarter. Gross profit fell to $1.8 million (6% of revenue), compared to $6.5 million (14%) in Q3 2023. GAAP operating loss for the quarter reached $36.2 million. For the nine months ended September 30, 2024, net losses totaled $86.5 million, following net losses of $162.8 million for the full year 2023. Cash declined from $143.6 million at year-end 2023 to $59.0 million by September 2024, narrowing liquidity.

Causes of Financial Distress

Cutera's path to bankruptcy reflected company-specific operational issues and broader market forces that reduced demand for capital equipment in the medical aesthetics sector.

Operational missteps. Industry analysis identified several factors that undermined Cutera's financial performance. The company experienced unsuccessful product launches that failed to generate anticipated returns on R&D investment. High executive and board turnover coincided with leadership changes—Taylor Harris was appointed CEO in August 2023 as the fourth person to hold the role in just over a year, following Sheila Hopkins's interim tenure that began in April 2023. The termination of a skincare distribution partnership in Japan reduced revenue in a major international market. By February 2025, accounts receivable data showed 43.92% of invoices were 1–30 days overdue, while 22.18% were 31–60 days delinquent.

Market and financing pressures. The macroeconomic environment compounded Cutera's company-specific challenges. Rising interest rates reduced practitioners' willingness to finance capital equipment purchases. Medical aesthetic devices carry price tags ranging from $50,000 to $200,000 for top-tier equipment—purchases that practices typically finance rather than pay upfront. Increased competition in the aesthetic medical device market from established players and new entrants added pressure on sales.

Capital structure strain. By the time of filing, Cutera carried a debt burden of approximately $433 million across three series of senior notes maturing in 2026, 2028, and 2029. Negative free cash flow of $120.38 million in the trailing twelve months made servicing this debt unsustainable. The stock price had declined 95% over the prior year to $0.12. With liquidity narrowing, the company pursued an in-court restructuring.

Prepackaged Restructuring

Cutera pursued a prepackaged chapter 11 after negotiating a restructuring agreement with key creditors before filing, then used the bankruptcy process to implement the agreed terms.

Restructuring support agreement. On March 4, 2025—one day before the bankruptcy filing—Cutera entered into a Restructuring Support Agreement with Consenting 2026 Senior Noteholders. The supporting creditors represented approximately 74% of the company's outstanding notes, providing the requisite supermajority needed for plan confirmation. The RSA established the framework for all key terms: debt reduction exceeding 90%, new money financing, an equity rights offering, and the company's transition to private ownership. The agreement supported a 42-day confirmation process.

DIP financing. The debtors secured $25 million in debtor-in-possession financing from existing lenders, with Wilmington Savings Fund Society, FSB serving as DIP agent. The facility was structured as a super-priority secured new-money term loan, providing immediate liquidity to fund operations and bankruptcy expenses. The DIP terms contemplated conversion to permanent capital: at the effective date, the facility would roll over cashless into an exit facility, eliminating the need for refinancing during emergence. Interest, fees, and expenses accrued under the DIP were paid in full in cash at emergence. The bankruptcy court entered an Interim DIP Order on March 6, 2025—one day after filing—followed by a Final DIP Order on March 28, 2025.

Equity rights offering. Beyond the DIP facility, the restructuring included a $30 million equity rights offering that would provide equity capital to the reorganized company. New shares were priced at $7.55 per share. The offering was backstopped by the supporting noteholders, who received a 10% backstop premium (approximately $3 million) payable in either reorganized common equity or cash. Together with the $25 million DIP conversion, the rights offering meant that Cutera would emerge with $65 million in new capital.

Common equity convenience buyout. The plan included a convenience buyout mechanism. Existing shareholders could elect to sell their shares at $5.00 per share—below the $7.55 rights offering price and above the $0.12 pre-filing trading price. A 10% premium (approximately $704,000) supplemented the base buyout pool. The buyout was capped at $7.04 million in aggregate, providing an exit option for shareholders as the company became private.

Plan Classification and Treatment

The Prepackaged Plan divided claims and interests into several classes, with Senior Notes Claims constituting the only impaired voting class.

Voting Results.

The voting results demonstrated creditor support that allowed confirmation:

Of 89 votes cast in Class 3, 87 creditors holding $374.8 million in claims voted to accept the plan. Only 2 creditors holding $675,000 voted to reject. Acceptance exceeded the Bankruptcy Code's requirements of more than one-half in number and two-thirds in amount, and the court entered the Confirmation Order on day 42 of the case.

Treatment by Class.

Treatment of secured and priority claims. Classes 1 and 2 were unimpaired under the plan, with secured claims paid in full or reinstated and priority non-tax claims paid in full in cash.

Senior notes treatment. Class 3 creditors—holders of the 2026, 2028, and 2029 Senior Notes that comprised Cutera's approximately $400 million debt stack—received the primary recovery under the plan. In exchange for cancellation of their note claims, these creditors received new equity in the reorganized private company and the right to participate in the $30 million equity rights offering. The debt-for-equity conversion eliminated over 90% of Cutera's prepetition obligations.

Trade claims unimpaired. General unsecured trade claims were left unimpaired under the plan, meaning vendors and suppliers would receive payment in the ordinary course.

Securities Litigation Claims.

Holders of Section 510(b) claims—including plaintiffs in the Erie County Employees' Retirement System v. Cutera, Inc. securities class action filed in Northern California—received no distribution under the plan. Section 510(b) of the Bankruptcy Code subordinates claims for damages arising from the purchase or sale of a debtor's securities to all claims or interests that are senior or equal to the claim represented by the security, with specified exceptions. For Cutera, this meant that shareholders' securities fraud claims ranked below existing equity interests that were themselves being cancelled. With insufficient value to fully satisfy even senior noteholder claims at par, there was nothing left for the subordinated securities litigation class.

Third-Party Releases.

The Confirmed Plan included consensual third-party releases under Section 9.3(b). These releases were deemed consensual for parties that did not timely object or opt out of the release provisions. The bankruptcy court approved the releases as sufficiently specific and granted in exchange for substantial contributions to the restructuring. Cutera's Special Committee of the Board of Directors recommended approval of the releases, providing independent governance support for the release structure.

Professional Retentions and Case Administration

Cutera retained the following professionals in the prepackaged case.

Ropes & Gray represented Cutera in negotiating the prepetition RSA and representing the company in the prepackaged plan process before the bankruptcy court. Hunton Andrews Kurth provided Delaware bankruptcy co-counsel services for the District of Delaware cases. Houlihan Lokey served as investment banker, while FTI Consulting handled financial advisory work. BDO USA continued as the company's auditor through the restructuring.

No official committee of unsecured creditors was appointed in the cases. The prepackaged nature of the restructuring—with key creditors already bound by the RSA and general unsecured claims left unimpaired—meant the cases proceeded without a UCC.

Case closure. Following emergence on May 1, 2025, final fee applications for all retained professionals were filed in late June 2025, with final fee orders entered in mid-July. The bankruptcy court entered a Final Decree in July 2025, formally closing the cases approximately four months after the effective date.

Emergence and Post-Restructuring Status

Cutera emerged from chapter 11 on May 1, 2025, completing its financial restructuring in 57 days, under the 60-day target communicated at filing. The company emerged with approximately $400 million in debt eliminated (representing over 90% of prepetition obligations) and $65 million in new financing from the converted DIP facility and equity rights offering.

Transition to private ownership. As contemplated by the restructuring, Cutera transitioned from a publicly traded company to private ownership upon emergence. The company had notified Nasdaq of its intent to voluntarily delist on March 10, 2025, with trading of common stock suspended at the opening of business on March 13, 2025. Form 25-NSE was filed with the SEC to effect the delisting, which became effective on March 30, 2025. Existing public shareholders were either bought out through the convenience buyout mechanism or received new equity in the private reorganized company.

Management continuity. Taylor Harris, who had been appointed CEO in August 2023, continued in that role post-emergence. Harris previously served as CFO of MyoKardia (acquired by Bristol Myers Squibb in 2020), Senior Vice President and CFO of ZELTIQ Aesthetics, and CFO at Thoratec Corporation. Her decade at JP Morgan Chase focused on the medical device industry.

New ownership and strategic direction. The reorganized Cutera is backed by a consortium of investment firms—the former noteholders who converted their debt claims into equity. CEO Taylor Harris stated that the company aims to leverage its enhanced capital structure to drive innovation and growth, focusing on expanding access to its aesthetic and dermatology solutions for practitioners worldwide. Industry commentary described the restructuring completion as the single biggest catalyst for Cutera's recovery, and said the company must regain market trust and execute on its strategy.

Medical Aesthetics Industry Context

Cutera's restructuring occurred against the backdrop of a growing and competitive medical aesthetics market. The global medical aesthetics market was valued at $17.16 billion in 2024 and is projected to reach $35.32 billion by 2030, representing a compound annual growth rate of 12.8%. Key growth drivers include the rising popularity of minimally invasive procedures, technological advancements in cosmetic surgery technologies, and increasing consumer willingness to invest in aesthetic treatments.

High barriers to entry and adoption. Despite market growth, the industry presents financial barriers. Advanced medical aesthetic devices carry price tags ranging from $50,000 to $200,000 for top-tier equipment, which can limit access for smaller clinics and practitioners. When interest rates rose between 2022 and 2024, financing costs increased for capital equipment. The FDA will enforce ISO 13485:2016-aligned Quality System Regulation requirements by February 2026.

Competitive landscape. Cutera competes against well-capitalized global players including Allergan Aesthetics (an AbbVie subsidiary), Candela Medical, Cynosure, Merz Aesthetics, Revance Therapeutics, and Evolus. These competitors range from large pharmaceutical conglomerates with extensive distribution networks to focused aesthetic device companies.

Post-restructuring positioning. The company's AviClear acne laser is the first FDA-cleared device for all acne severity levels. The portfolio includes truSculpt for body contouring and excel V systems for vascular and pigmentation conditions, alongside platforms for tattoo removal, skin revitalization, and RF microneedling.

Key Timeline

Frequently Asked Questions

What caused Cutera to file for bankruptcy?

Cutera's bankruptcy resulted from a combination of operational challenges and market headwinds. Unsuccessful product launches, high executive turnover, and the termination of a Japanese distribution partnership reduced revenue—which declined 30% year-over-year to $32.5 million in Q3 2024. Rising interest rates made practitioners reluctant to finance equipment purchases. With $429 million in debt, negative free cash flow exceeding $120 million annually, and cash declining from $143.6 million to $59 million over nine months, the company pursued a prepackaged chapter 11 to address its capital structure.

How much debt did Cutera eliminate through bankruptcy?

Cutera eliminated approximately $400 million in debt—representing over 90% of the company's prepetition obligations. The debt consisted primarily of 2026, 2028, and 2029 Senior Notes that were converted to equity in the reorganized company through the prepackaged plan.

Is Cutera still operating after bankruptcy?

Yes. Cutera emerged from chapter 11 on May 1, 2025 and continues to operate as a private company. The restructuring addressed the capital structure rather than an operational wind-down. The company retained its product portfolio and key management under CEO Taylor Harris.

What happened to Cutera shareholders?

Existing Cutera shareholders faced dilution or cancellation of their interests. The plan offered a convenience buyout mechanism allowing shareholders to sell their shares at $5.00 per share (capped at $7.04 million total), providing an exit option compared to the $0.12 pre-filing trading price. Shareholders who did not participate in the buyout received equity in the reorganized private company, subject to dilution from the noteholder debt-to-equity conversion and the $30 million rights offering.

How long did Cutera's bankruptcy take?

Cutera's prepackaged chapter 11 took 57 days from the petition date (March 5, 2025) to the effective date (May 1, 2025). The confirmation order was entered on day 42. The timeline reflected the restructuring support agreement with 74% of its noteholders before filing and prepetition solicitation of the plan.

What is a prepackaged bankruptcy?

A prepackaged chapter 11 is a restructuring where the debtor negotiates plan terms with key creditors and conducts voting before the bankruptcy petition is filed. Because creditors have already approved the plan, the court process focuses on confirming that the prepetition solicitation met legal requirements and the plan satisfies confirmation standards. Prepackaged cases typically conclude in 30-60 days, compared to 12-24 months for traditional chapter 11 proceedings.

Who provided Cutera's new financing?

Existing noteholders provided both the $25 million DIP financing (which converted to an exit facility at emergence) and backstopped the $30 million equity rights offering. The rights offering was priced at $7.55 per share with a 10% backstop premium paid to the supporting creditors. Together, Cutera emerged with $65 million in new capital.

What happened to the securities litigation against Cutera?

The class action lawsuit filed in June 2023—Erie County Employees' Retirement System v. Cutera, Inc.—sought damages from shareholders who purchased Cutera securities between February 2021 and May 2023. Under Section 510(b) of the Bankruptcy Code, securities fraud claims arising from the purchase or sale of a debtor's securities are subordinated below general unsecured claims. Because the plan did not provide full recovery even to senior noteholders, there was no value available for the subordinated securities litigation class, which received no distribution.

Who are Cutera's main competitors?

Cutera competes in the medical aesthetics device market against Allergan Aesthetics (owned by AbbVie), Candela Medical, Cynosure, Merz Aesthetics, Revance Therapeutics, and Evolus, among others. These range from large pharmaceutical companies with aesthetic divisions to focused device manufacturers.

What products does Cutera offer?

Cutera's key product platforms include AviClear (the first FDA-cleared 1726nm laser for all acne severity levels), truSculpt (body contouring), excel V and excel V+ (vascular and pigmentation treatment), enlighten (tattoo removal and skin revitalization), and Secret (RF microneedling). The company designs, manufactures, and markets these laser and energy-based aesthetic treatment systems through a global distribution network spanning more than 65 countries.

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