Cutera Inc. (NASDAQ:CUTR) Q2 2010 Earnings Call August 2, 2010 5:00 PM ET
Executives
John Mills - IR, Integrated Corporate Relations
Kevin Connors - President and CEO
Ron Santilli - EVP and CFO
Analysts
Tom Gunderson - Piper Jaffray
Dalton Chandler - Needham & Company
Anthony Vendetti - Maxim Group
Phil Nalbone - Wedbush
Chris Sassouni - Eagle Asset Management
Larry Haimovitch - Haimovitch Medical Technology Consultants
Operator
Greetings and welcome to the Cutera Incorporated second quarter 2010 earnings conference call. (Operator instructions) It is now my pleasure to introduce your host, Mr. John Mills of Integrated Corporate Relations.
John Mills
Thank you. By now, everyone should have access to the second quarter 2010 earnings release, which went out today at approximately 4:00 p.m. Eastern Time. The release is available on the Investor Relations portion of Cutera's website at cutera.com and with its Form 8-K filed today with the SEC and available on its website at sec.gov.
Before we begin, Cutera would like to remind everyone that these prepared remarks contain forward-looking statements, including statements concerning domestic and international growth opportunities and strategies for improving sales productivity; future spending, expense management and execution on various aspects of our operations and business; expectations for increasing revenue, generating cash and achieving profitability; the development and commercialization of existing and new products; and potential revenue growth from recently announced strategic alliances and new product launches; and obtaining regulatory clearances. Also, management may make additional forward-looking statements in response to your questions.
These forward-looking statements do not guarantee future performance and therefore you should not rely on them in making an investment decision without considering the risks associated with such statements. Cutera also cautions you to not place undue reliance on forward-looking statements, which speak only as of the date they were made. Cutera undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.
For a more complete list of risk factors that could cause Cutera's actual results to differ materially from the forward-looking statements, please refer to the section entitled Risk Factors in our most recent 10-Q filed today on August 2, 2010, with the Securities and Exchange Commission.
With that, I'll turn the call over to the company's President and Chief Executive Officer, Mr. Kevin Connors.
Kevin Connors
Thank you, John. Good afternoon, everyone, and thanks for joining us today to discuss Cutera's results for the second quarter ended June 30, 2010. On today's call, I'll provide an overview of the results. Then Ron Santilli, our CFO, will provide additional details on our operation and financial results. Finally, I will provide some closing comments and open the call to your questions.
Our revenue for the second quarter 2010 was $12.2 million or 5% higher than the $11.7 million reported in the second quarter of 2009. This was a result of our U.S. revenue increasing 5% and international revenue increasing 4%. Our quarterly U.S. revenue grew year-over-year for the first time in over two years, but we are not satisfied with this level of revenue growth. We're encouraged by the positive year-over-year trend.
We're continuing to monitor our U.S. performance. We'll remain focused on key initiatives to increase revenue. We'll discuss new product introductions later in the call. Historically, we have experienced positive revenue impact from our new product introductions. We're certainly looking to leverage us as a catalyst for increasing our U.S. revenue.
Our international revenue increased 4% in the second quarter of 2010 compared to the second quarter 2009, representing 61% of the total revenue in both the second quarters of 2009 and 2010. In the second quarter of 2010, we achieved record revenue in Japan. We have a strong presence in Canada where our revenue volume was lower than expected in the second quarter due to some local tax laws that made it advantageous for customers to defer their purchases in the third quarter. As a result, we expect a stronger third quarter performance from the Canadian market. We're pleased with the geographical diversification that our international business is producing.
Turning to our cosmeceutical sales, in the second quarter 2010, we sold approximately $800,000 of these products. As a reminder, Japan restarted distributing Obagi physician dispensed cosmeceutical products from February 2010 and has been distributing BioForm's Radiesse products since late 2008. These products augment Cutera laser and light-based products. Currently, the cosmeceutical filler and Cutera laser and light-based installed base has riddled all the labs.
This is providing us with a unique opportunity to cross-sell cosmeceutical fillers to our light-based installed base as well as an opportunity to cross-sell light-based equipment and into the cosmeceutical filler customer base. We are pleased with the initial revenue contribution from this product category.
As we had discussed on previous calls, we've continued to target the core market segments of dermatologists and plastic surgeons as well as other establishment of our office, as we believe they offer the best growth opportunities in the current market environment.
In the second quarter of 2010, we sourced approximately 40% of our U.S. and Canadian orders from core physicians. Our international business is virtually comprised of core physicians.
Turning to research and development, we believe that strategic ongoing investments in product research and development are critical to our future success. In line with that principle, we're continuing to invest in research and development for the next generation of technology and have ramped up our engineering and clinical research headcount to develop innovative solutions and expand the clinical understanding on the applications of our current products.
As we had made significant stride towards the commercialization of several engineering programs, we are now in a position to discuss some near term opportunities in our R&D pipeline.
In the next 18 months, we are planning on launching three new products, two of which we will discuss today. Later this month, we'll begin a staged launch of our product targeted at toenail fungus removal called Genesis Plus. We believe the toenail fungus market is fast growing and this product will be primarily targeted at podiatrists and rheumatology specialists.
We further believe this market could expand into family practice. Our new product utilizes our Nd:YAG technology. It has a hand piece delivery device for the temperature sensor to improve the practitioner and patient experience with the procedure. We are finalizing our marketing and clinical launch plans now.
We have current FDA clearances that allow us to sell this product to all licensed practitioners, including dermatologists and podiatrists for skin rejuvenation, vascular lesions and warts. We have plans to pursue a specific FDA indication for toenail fungus removal, but it is unclear when or if we'll be able to achieve this milestone given the current regulatory uncertainty.
We presently have a pending CE Mark clearance, with a proposed indication, including treatment of toenail fungus. We plan to launch another product at the American Academy of Dermatology meeting in February 2011. Our launch plan is to introduce an exciting laser technology designed with core physicians in mind.
We believe we have developed a best-in-class vascular laser, and we look to introduce the product to key opinion leaders and begin building our clinical experience in the coming months. We'll share more with you as we near the AAD meeting in 2010.
Lastly, we plan to add another product launch the second half of 2011, and we'll discuss this in more detail as we approach our launch.
Now I'd like to turn the call over to Ron to discuss our financials in more detail.
Ronald Santilli
Thanks, Kevin, and thanks to you all for joining us today on our second quarter 2010 conference call. Second quarter 2010 revenue increased by 5% to $12.2 million compared to the second quarter of 2009. This is our first quarterly year-over-year revenue growth since the second quarter of 2008.
Net loss for the second quarter was $3.8 million or $0.28 per diluted share. Product revenue increased by 10% for the second quarter of 2010 when compared to the first quarter of 2009. We sold more systems than we did in the same quarter a year ago. This is particularly exciting, because each new product sales expands our installed base of customers, which provides us with the opportunity to stop and upgrade service or Titan refill in the future.
Upgrade revenue for the second quarter of 2010 increased 11% when compared to the second quarter of 2009. We are seeing customers purchase a variety of our upgrade products without any one product upgrade dominating.
Service revenue for the second quarter of 2010 compared to the second quarter of 2009 was relatively flat at approximately $3.4 million. The primary components of our service revenue are the revenue associated with extended service contract amortization. This revenue has remained flat over the past several quarters, due primarily to lower service contract amortization as a result of lower ASPs on our service contracts offset by higher revenue from consumable and Titan material purchases.
Titan annuity revenue for the second quarter of 2010 was $960,000, down from the same quarter in the prior year. This decrease was primarily due to the voluntary recall of certain Titan XL hand pieces in the second quarter of 2010. We provided our eligible customers with a fully refilled Titan XL hand piece which resulted in a lower than normal Titan refill revenue.
We expect the third quarter of 2010 will be a similar revenue level to that of the second quarter, and expect this revenue category to begin ramping up in the fourth quarter and return to the historical run rate level of approximately $1.4 million in the first quarter of 2011.
Revenue derived from fillers and cosmeceuticals revenue was $806,000 for the second quarter of 2010, which is up 54% from the second quarter of 2009. We started selling Obagi products in Japan in February 2010, and are pleased with the ramp up of this revenue source in addition to the cross-selling opportunities this provides.
A significant percentage of our revenue is sourced from existing customers. During the second quarter of 2010, 54% of our revenue was derived from sales of service upgrades, Titan refills, filler and cosmeceutical products. We remain committed to strong customer satisfaction, and believe there is an opportunity to realize revenue growth from our annuity revenue categories.
I will now address our operating performance. Our gross margin was 56% in the second quarter of 2009 and 2010. Our margin remained flat due to continued improvements from product reliability offset by reduced margin on our cosmeceutical business during the quarter.
We typically target 60% gross margin at quarterly revenue levels in the $14 million range. Below the $14 million revenue level we would expect the gross margin level to decline due to absorption of fixed costs. Alternatively, we expect the gross margin range to increase above 60% when quarterly rise above $14 million.
Sales and marketing expenses were $6.5 million or 53% of revenue for the second quarter of 2010 compared to $6.1 million or 52% of revenue for the second quarter of 2009. Few reasons for the expense growth include, an increase in expenses associated with establishing our cosmeceutical business in Japan and expenses associated with our new sales and marketing functions that occur in 2010, but not in 2009, to increase our focus on revenue growth.
The new departments include business development to focus on our acquisition and strategic alliance strategy and evaluating new opportunities, clinical development to focus on clinical studies on existing products to increase their indications for use and ability and improve our ability to market them, and a small sales group to focus on increasing our penetration and strong relationships with our installed base.
We expect to improve the leverage of these expenses and reduce their ratios to revenue as our revenue increases. Research and development expenses were relatively flat at $1.5 million in the second quarter 2010 and 2009. As Kevin mentioned earlier, we plan to increase our investments in R&D and expect to launch three new products in the 18 months. As a result, we expect R&D expenses to increase, however, as our revenue improves we expect that R&D expenditure should decrease from the 12% of revenue in the second quarter of 2010.
General and administrative expenses were $2.7 million or 22% of revenue for the second quarter of 2010 compared to $3.6 million or 31% of revenue for the second quarter of 2009. This $900,000 decrease in general and administrative expenses was primarily due to a $550,000 in lower bad debt expenses and $350,000 in other cost reductions as a result of our restructuring efforts and lower professional fees.
Note that traditionally our second quarter has a higher stock based compensation expense than other quarters due to annual equity grants to our employees and directors and officers. For modeling purposes, we expect our quarterly general and administrative expenses to be approximately $2.3 million in the second half of 2010. We expect to improve the leverage of our G&A expense once our revenue increases.
Interest and other income net was a $141,000 for the second quarter of 2010 compared to $511,000 in the second quarter of 2009. The lower income was due primarily to extremely low yields on our investment portfolio, which is managed with a focus on principle preservation and has some foreign exchange losses. In the second quarter of 2010 we reported tax expense of $82,000; this compares to an income tax benefit for the second quarter 2009 of $1.8 million.
Even though we had a loss before tax in the second quarter 2010 we were not able to tax defect our loss because we have evaluation allowance against our U.S. deferred tax assets. This evaluation allowance was established in the third quarter of 2009. For modeling purposes, we suggest using an effective income tax expense of approximately $75,000 per quarter until we have fully utilized our U.S. evaluation allowance.
Turning to the balance sheet, our financial position remains strong. As of June 30, 2010, we had $99.1 million in cash, marketable securities and long term investment with no debt. This represents approximately $7.30 per outstanding share. During the second quarter, our operations consumed $3.9 million of cash. Of this amount approximately $750,000 were used to pay down our (GCPA) lawsuit liability net of the insurance proceeds.
Net accounts receivable at the end of the second quarter 2010 were $3.8 million and the DSOs were 29 days. Our DSOs continue to remain strong. Inventories as of the end of the second quarter reflect compared to the first quarter as we continue to aggressively manage this asset.
Now that I've concluded my overview of Cutera's financial performance, I'll turn the call back to Kevin.
Kevin Connors
Thanks, Ron. For the next two quarters, we remain focused on the following key initiatives: One, improving sales productivity to improve sales training and focusing our sales and marketing efforts on physicians in core market; two, continuing our efforts on multiple R&D projects that include the following: the stage launch of our toenail fungus removal product, with the initial launch occurring before the end of the third quarter, a new best-in-class laser targeted to core market to be launched at the AAD in February 2011, and then a new product launch planned for the second half of 2011.
We are continuing to evaluate other complementary strategic alliances to further enhance our product offering and leverage our distribution channels while the near term prospect for the industry are difficult to predict, we believe that our core portfolio of products, planned new product launches for the 18 months, worldwide distribution network and a strong balance sheet with roughly $100 million in cash and investment with no debt offer continuing long term growth opportunities for our company.
Now, I'd like to open up the call to your question. Operator.
Question-and-Answer Session
Operator
(Operator Instructions) Our first question is from the line of Tom Gunderson with Piper Jaffray.
Tom Gunderson - Piper Jaffray
Let's just jump right into the new products. On the toenail fungus one, I understand that you have a more general 510(k) and looking to get a specific later. Is that right, Kevin?
Kevin Connors
That's right. For our U.S. market launch, that's the strategy. Obviously, most of our revenue now comes from outside of the United States. So getting the CE mark with that indication cleared, I think it's something we're very excited about.
Tom Gunderson - Piper Jaffray
And then for sales, whether they're in Europe or were in the United States. What kind of clinical data exist today for the doctor to use and there on marketing.
Kevin Connors
Well, the category has gotten a lot of attention. Lots of derms and podiatrists have adopted other technology in the market and that got our attention. And so there has been published data that supports they're seeing improvement with other devices on the market, not ours.
Tom Gunderson - Piper Jaffray
And then the product that's coming out AAD, that's a new and improved light-based product or is there a new indication in there as well.
Kevin Connors
There's a whole new platform. So we're watching a laser platform that has been designed with a tremendous amount of input from key opinion leaders, and we've really spent a lot of time researching it. And we think we've got some of the key characteristic that they're looking for in laser platform for treating a broad range of vascular lesion. So we'll be able to put more details around that as we prepare for the launch.
Tom Gunderson - Piper Jaffray
And then I keep reading in the papers that the economy is still not back, but if we look at market dynamics a little bit, it seems interesting to me that on a sequential basis, U.S. sales were up, service overall sales were up, upgrades were up. Are you sensing from your customers that they're doing a little better from a demand standpoint more patience coming in?
Kevin Connors
We once removed from it, as you know, Tom, but I think people are adapting to the new environment that we're in terms of the broader economic concerns. But we are hearing from the core physicians in particular that they're feeling more optimistic about the future.
Operator
The next question is from Dalton Chandler with Needham & Company.
Dalton Chandler - Needham & Company
I guess let's stick with the new products for a minute. On the Genesis Plus, do you have any thoughts on how that will be priced yet, and is there a disposable component?
Kevin Connors
Well, we have been working on the pricing strategy and we're pretty close to launching that. But it will be something in the $60,000 range. There are no disposables associated with that technology.
Dalton Chandler - Needham & Company
And to better understand correctly that the CE mark is pending, but you haven't yet filed a 510(k).
Kevin Connors
We have a general surgical clearance with that product today. And we have not filed an additional toenail fungus application at this time. The CE mark, we're expect that file to be completed any day now.
Dalton Chandler - Needham & Company
So are you going to wait to launch in the U.S. until you, or I guess maybe you are selling it for these indications.
Kevin Connors
We will be limited to promote it for the indications that have been granted the FDA. So we will not promote it for a toenail fungus application until we get that clearance.
Dalton Chandler - Needham & Company
And when you reenter the new product list you didn't say anything about the TruSculpt, is there any update on that?
Kevin Connors
There is no update on it, but it is still an engineering program, but one of the action items after the disappoint was the lack of that launch is that we wanted to really build our R&D pipeline as to near-term applications that we could get to the market with a reasonable level of risk. And so I think that's what we've done with the R&D resources. We've really focused among three products that we're looking to launch between now and the end of next year.
Dalton Chandler - Needham & Company
And I think you also launched the VASER during the quarter, how did that go?
Kevin Connors
It's still early; we're learning more about it. I think in Canada for example, it is limited to physicians that have an operating room. So that was something we didn't know about. But until we got into market, but we'll update in the coming quarters as we continue to roll out VASER.
Dalton Chandler - Needham & Company
And I just wanted to clarify one thing, Ron in your guidance you said $2.3 million G&A in the second half, did you mean $2.3 million per quarter?
Ron Santilli
Yes, I think I said per quarter for the second half. Sorry I wasn't perfectly clear.
Dalton Chandler - Needham & Company
On the sales and marketing, I know you've got some special initiatives to sort of reach direct to the sales force. But could you give us a sense of what you spent on that versus the traditional sales and marketing activity. Because, I mean it was 53% of revenue for the quarter?
Ron Santilli
Yes, but it's not significantly different from the previous quarter. We've been investing in the other initiative with business development, additional clinical development. And then of course, we added the (channel) sales group. In addition to that, we've added few extra people in Japan to help us with our cosmeceutical business.
Operator
The next question is from Anthony Vendetti with Maxim Group.
Anthony Vendetti - Maxim Group
I think Kevin, you said core was 40% this quarter, is that right?
Kevin Connors
That's correct.
Anthony Vendetti - Maxim Group
And what was the U.S. and international break-out as a percent of revenues?
Ron Santilli
61% international?
Anthony Vendetti - Maxim Group
61% international.
Ron Santilli
Yes, that's correct.
Anthony Vendetti - Maxim Group
Ron, I missed what you said about the Titan refills, what happened this quarter? And you said by the first quarter of 2011 they should pick back up to the $1.4 million run rate?
Ron Santilli
Yes, we said that clearly the number is down. It was $970,000 I believe, somewhere in that range for the quarter, which is significantly down from our $1.3 million, $1.4 million run rate, and that's due to the launch or recall that we've done when we replaced the hand pieces.
So we expect next quarter to be a similar type revenue level, and then it will be ramping up from there in Q4, and by the time you get the Q1 '11, we should be back to where we were.
Anthony Vendetti - Maxim Group
And Ron, have you continued to break up the stock based comp by line items?
Ron Santilli
Sure.
Anthony Vendetti - Maxim Group
So cost of sales is about $228,000, sales and marketing about $357,000; R&D, $166,000 and just over $1 million in G&A? Right now is there any thing that you're seeing right now in the customer base that indicates that their looking to start purchasing, certainly I'm hearing through our survey that procedures among the derms and plastics are starting to pick up, are you seeing that translate into orders or is the credit markets are still limiting those actual sales?
Kevin Connors
Yes, Anthony, I read your report and I'm hopeful that your finding come to fruition, because it indicated that a significant number of derms and plastics are planning to buy equipment in the next 18 months. And so we're hopeful that that's a true statement.
We've always pointed out that the credit certainly is much more dwindled down than it has been. But the overall is show of confidence is probably the biggest factor that we see. And we see the world different and different parts of our distribution. I mean we did indicate that we had a record quarter in Japan, and we've had strong performance out of Australia and Canada. We had a bit of a bump on the road due to the tax change up there. But the business feels healthy in certain parts of our geographic distribution.
Anthony Vendetti - Maxim Group
Okay. So just a follow up on the credit market. So are you saying right now, Kevin, that you're not seeing any material improvement there at this point?
Kevin Connors
Maybe on the margin but we're finding other mixing companies starting to get involved with this space again so that's a good sign. But I can't say that as a significantly improved feel to it.
Ron Santilli
And we are continuing to see customers continue to get business loans to buy the equipment, particularly the people we're targeting within the core market as well as physicians in established practices. They typically have access to money, maybe it's not to release but to loan it sometime.
Anthony Vendetti - Maxim Group
Okay. And so you're seeing some pockets of strength. You set record quarter in Japan and Australia up. What do you think the opportunity is with some of these joint ventures that you have here? Anyone in particular you think more helpful to the sale of Cutera type products whether it be Obagi, Sound Surgicals, VASER Lipo or Radiesse? What kind of synergies do you see at this point?
Kevin Connors
Well, there are a couple of them that are particularly excited for us. I think in the case of filler product or the cosmeceuticals product manufactured by Obagi, it gives us access to that existing install base and we introduce our capital equipment to the Obagi users as well as Radiesse users. We like the fact that it is a different model than a capital equipment model.
Issues like financing and major capital outlays are not an obstacle to us. So we think the fact that we did have a record quarter in Japan is due in part to those relationships being successful for us.
It's too early to say VASER as the earlier question regarding how's that going, we will have more to comment on that in the coming quarters.
Anthony Vendetti - Maxim Group
Okay. And lastly on the products at the end of 2011, what you're saying so far on that is that it's not TruSculpt, that's another product. These three products are independent of TruSculpt?
Kevin Connors
That's correct.
Operator
The next question is from Phil Nalbone from Wedbush.
Phil Nalbone - Wedbush
We are pleased to see growth return in the U.S., but international sales growth looked a little light in the June quarter compared to what we've been accustomed to. Can you talk a little bit about what went on in the overseas markets? And can you give us a guesstimate as to what the Canadian tax matter might have cost in terms of Q2 revenue?
Kevin Connors
Sure. Ron, let me look at the Canadian, and you can follow up there. It's been a fairly predictable business out of Canada. In Europe, with some of the developments in Europe over the past quarter, that became kind of an uncertain environment for us. And so we think things have settled down there and we're hopeful for improved performance out of Europe. But our international business can be somewhat lumpy, and I think you have to take the longer term trends to get a better sense of what that true trajectory is.
Ron, do you want to talk about Canada?
Ron Santilli
Yes. With regard to the Canadian situation, Phil, there is some harmonization regarding their tax situation of the GSP and PSP, which makes it advantageous to actually purchase in this quarter versus last quarter. So we found a lot of our customers at that period of time in Q2 willing to purchase but just waiting to push the purchase into Q3.
We've already started to see some of that now, but our Q2 number for Canada was off and it was approximately half of what it had been running. So I hope that helps provide some color on it.
Phil Nalbone - Wedbush
Ron, can you give us some sense for what your expectations are for operating cash flows during the remainder of the year. Do you think you're going to use more cash, or is the opportunity there to add to the cash balance through the end of the year?
Ron Santilli
Our target is to remain cash neutral I think in the second half year. Everything of course is dependent upon the top-line, and if we can get the top-line where we want to, we would be accretive. But its going to be very dependent, and our goal at this point is to be breakeven in the second half.
Phil Nalbone - Wedbush
Finally, Kevin, if we could go back to the first new product in the pipeline. Can you talk a little bit about the prospective label in the U.S.? Are you going for improvement in the cosmetic appearance of toenail fungus? Are you aiming toward more of an underlying disease treatment label, a fungicidal or fungistatic kind of label?
Kevin Connors
Yes. There are lots of discussions within the agency right now regarding what is required for manufacturers to get the clearance. There are a number of companies that we understand have submissions under review right now. And we're looking for clarification from the FDA in terms of what standards they're looking for, and what indications for use that they're willing to grant and we'll design our clinical study to achieve that.
Phil Nalbone - Wedbush
It's my understanding that most toenail fungus is treated by podiatrists as opposed to derms or any other group of physician. What does that suggest about your ability to implement a strong sales and marketing program right off the back? Can youf existing sales people target podiatrists effectively, or you're going to need more resources to make this product really work?
Kevin Connors
We think we can target podiatrists effectively. And we do find from the dermatologists that we've spoken to that they do perform those procedures themselves. So we think there is a high level of interest.
Phil Nalbone - Wedbush
And then just to be crystal clear here on the three new products; TruSculpt is not that third new product.
Kevin Connors
That's correct.
Phil Nalbone - Wedbush
Okay. And is there any likelihood that we could see that product within that 18-month window?
Kevin Connors
We're hopeful Phil. What we're trying to do is communicate what we have in the near term, and we still can't make a commitment in terms of the TruSculpt launch at this time.
Operator
The next question is from Chris Sassouni with Eagle Asset Management.
Chris Sassouni - Eagle Asset Management
I just wanted to understand at this point what is the total number of reps that you have in the U.S.?
Ron Santilli
At this point we still have a target of 30 territories. Some open at the moment, but 30 territories in U.S. and Canada. I'm sorry, so it's U.S. and Canada.
Kevin Connors
Okay, a similar number of headcount outside of North America, Chris.
Chris Sassouni - Eagle Asset Management
And then I just wanted to be clear, when you say that headcount, that's your reps or are those distributors?
Ron Santilli
Those are our direct reps.
Chris Sassouni - Eagle Asset Management
Okay, fine. And then, so I'm just trying to envision, so they are calling on the core market, they've been focusing primarily on the terms in plastics. There had been this primary care market that they had been targeting in the past, and now the podiatrist market will come on board. So does that mean that you will have to add additional reps, or does that mean that they will just have to call on more people in a given territory?
Kevin Connors
Well, we're really looking to get improved productivity from our North American sales team, that's the first thing we're looking to achieve, Chris. And I think you probably recall that we also had a relationship in the United States with PSS; that's 700-strong reps out there, and I think they could be a factor with all this ultimately.
Chris Sassouni - Eagle Asset Management
So that relationship is still ongoing and still productive?
Kevin Connors
Yes, every effective. I think in particular, they're good outside the core group which for podiatrists could be a very good to sponsor them.
Chris Sassouni - Eagle Asset Management
And then the other thing I missed was what was the total revenues from Obagi and with the cosmeceuticals and fillers and all that?
Ron Santilli
The fillers and cosmeceuticals total revenue was in the $800,000 range. The Obagi piece of that was I think about $570,000, somewhere in that range.
Operator
Our next question is from Larry Haimovitch with Haimovitch Medical Technology Consultants.
Larry Haimovitch - Haimovitch Medical Technology Consultants
Just what's your sense about your market share in this market? Obviously, the market has been very, very tight. We've seen some other companies report already, and their results have been pretty soft and mediocre. Are you gaining share in this market or are you losing share or holding share?
Ron Santilli
Globally, we're 8%, Larry. We think we've lost share here in the United States, and that certainly has our attention. We need to turn that around. And we think these new product launches can be a factor in that. But we have a whole organization under scrutiny right now to improve that performance. And then, OUS, we had been gaining share, but we're kind of staying with the market right now.
Larry Haimovitch - Haimovitch Medical Technology Consultants
Second question, and it's an obvious question I guess when one looks at the balance sheet. You've had plenty of cash for a long time. You haven't spent that. I know when we visited several months ago, you mentioned you were looking at different opportunities. Can you describe your corporate strategic plans as far as the cash part of the business is concerned, Kevin?
Kevin Connors
Sure, Larry. And I think when we chatted, we did indicate that a couple of years back, we did buy back $25 million worth of shares. And so there has been a willingness from the Board to evaluate that. And I certainly share those sentiments from investors, with my Board just so that they're aware of what I'm hearing.
Ron alluded to it, but the new development is something we're taking very seriously, and we have a dedicated resource to look at various opportunities out there. And we're actively doing that. If we find something that we really like, we think we're well positioned to incorporate that technology into Cutera. But it's a bit hard to find the right opportunity that allows us to check all the important boxes that we think there is opportunity we'd have to represent for us.
Larry Haimovitch - Haimovitch Medical Technology Consultants
And what about the buyback? Is the buyback now done, Kevin, or is the buyback still in place?
Kevin Connors
We completed the $25 million buyback. So we don't have an active buyback program at this time.
Larry Haimovitch - Haimovitch Medical Technology Consultants
So the Board would have to reauthorize a new program, I would assume. I would presume that the stock at 10% or less above cash, that could be an interesting point for you to reinitiate a buyback.
Kevin Connors
It's an active discussion in every Board meeting.
Operator
We've reached the end of our time, and I'd like to turn the call back to Kevin Connors for closing remarks.
Kevin Connors
Thank you for participating in our call today. We look forward to seeing you at various investor events during the quarter and to updating on our third quarter conference call in November. Good afternoon and thanks for your continued interest in Cutera.
Operator
This concludes today's teleconference. You may disconnect your lines. Thank you for your participation.
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