Young Companies on a Roll
by David Landis
If popular TV shows like Extreme Makeover are any indication, Americans like to believe that ugly ducklings can indeed turn into swans. Last year, U.S. plastic surgeons treated nearly nine million patients, up 32% from 2002. About one million of those patients were treated nonsurgically with lasers for hair removal, skin rejuvenation and other therapies.
Cutera offers a new wrinkle to physicians and other practitioners who use cosmetic lasers, or want to: upgradeable laser systems. Buyers of its products, which are designed mainly for hair removal, can update their technology or add new treatment options without purchasing entirely new systems, which cost $70,000 and up. Since its start in 1999, Cutera has sold more than 1,200 laser systems and 240 upgrades in the U.S. and abroad.
Competition among sellers of aesthetic laser equipment is intense, with five public companies and dozens of private firms fighting for a share of a market still in its infancy. Analyst Mark Taylor of investment bank Roth Capital Partners estimates that laser-equipped doctors serve less than 4% of the potential market. For the full year, Cutera expects revenues of about $50 million, up 29% from 2003.
Dermatologists and plastic surgeons have been the traditional customers for cosmetic laser devices. But now more than half of sales are to general practitioners, gynecologists and other primary-care physicians looking for new business as reimbursements from health insurers fall. Insurance doesn’t cover aesthetic procedures, but aging baby-boomers – the target market – “tend to have disposable income and want to improve their looks and slow down the aging process,” says Ron Santilli, Cutera’s chief financial officer.