Heska Corporation Reports First Quarter 2021 Results

LOVELAND, Colo., May 6, 2021 /PRNewswire/ -- Heska Corporation (NASDAQ: HSKA; "Heska" or "Company"), a leading provider of advanced veterinary diagnostic and specialty products, reported financial results in two segments (North America and International) for its first quarter ended March 31, 2021. Point of Care is "POC" and scil animal care company GmbH is "scil" in this release.

First Quarter 2021 Highlights

• Record quarterly revenue growth led by strong utilization, price, and mix in POC Lab Consumables, Imaging and International markets.
• North America POC Lab Consumables sales up 23.9%, ahead of 2021 Outlook (> 10%).
• North America sales up 34.8%. North America gross margin rose 176 bps compared to prior year, to 47.0% in the first quarter. As anticipated, consolidated gross margin was impacted by acquired lower scil margin in the International segment, which Heska continues to view as an opportunity. International sales and gross margin continued to progress in line with our goals.
• Key projects advanced within target for 2021 commercial launches, including Element AIM^™, Element RCX, Element RC3X, Element i+^®, Element COAG+^™, Heskaview Specialty Services^™ in digital cytology, Heskaview Cloud^™, Heskaview Connect^™, and others.

"I'm pleased to report a great start to the year," commented Kevin Wilson, Heska's Chief Executive Officer and President. "Heska teams again outpaced goals across nearly all key metrics and demonstrated strong operational efficiency. While I won't attempt to comment on this quarter's entire (extensive) highlight reel, I will briefly touch on a handful of areas. In our North America segment, POC Lab Consumables sales grew 23.9% from expanding utilization, good market share, expanding menu, and strong end-user demand. Imaging grew 91.3%, benefiting from the work we did last year to reorganize and expand our sales force into a unified, customer-location structure. Our International segment delivered a very solid start to the year in nearly all geographies, with great momentum in POC Lab Consumables and adoption of our subscriptions model in select European markets. Research and development and commercial launches continued on target for our many announced projects. Heska install teams are prepared to place initial Element AIM^™ units, on schedule, in the second quarter, and early wins in top hospitals for our new Heskaview Specialty Services^™ digital cytology reaffirmed our enthusiasm for entry into professional services in the first quarter."

Mr. Wilson continued, "Also in the first quarter, we successfully raised substantial growth capital to go faster in launching new analyzer platforms, new test menus, new diagnostics services, and new international initiatives. While we are mindful of our competition and of the universal tendency for things to be difficult while going faster, the strong beginning to 2021 and the favorable setup for the rest of the year is highly encouraging. Our underlying markets are well positioned for the current macro-economic environment. Our many new initiatives are now launching in rapid fire succession. Our international move to subscriptions is progressing nicely. We have a rock-solid, growth-oriented balance sheet, our people and unique capabilities are second to none, and we continue to build great enterprise value and optionality within markets ripe for smart offense and collaboration. We have what customers need and want now, and we are building what customers will need and want for decades. These things are valuable. The first quarter highlight reel was indeed great … and lots of fun, and I'd like to thank and congratulate everyone who contributed," concluded Mr. Wilson.

Profitability
Total operating expenses in the first quarter of 2021 were $24.5 million compared to $18.1 million in the first quarter of 2020. The increase is driven primarily by the impact related to the consolidation of our acquisitions' operations and higher stock-based compensation expense, partially offset by timing of research and development costs and lower one-time acquisition and other related costs incurred last year as part of the acquisition of scil.

Net income, diluted EPS, and non-GAAP diluted EPS were favorably impacted by increased revenue, higher gross profit, and better leveraged operating costs. Net income and diluted EPS were also favorably impacted by lower non-cash interest expense as a result of a change in accounting treatment related to the Company's Convertible Notes.

Liquidity
We continue to demonstrate a strong liquidity position with cash of $238.5 million, improved by common stock proceeds of approximately $165 million in the first quarter of 2021.

Earnings Conference Call
Heska management will conduct a conference call on May 6, 2021 at 9:00 a.m. MT (11:00 a.m. ET) to discuss the first quarter 2021 financial results. The conference call may be accessed by dialing 1-866-548-4713 within the United States and 1-323-794-2093 outside of the United States. The conference call access number is 9609613. The call will also be broadcast at https://ir.heska.com/events/. To participate, simply log on to the event prior to the call to register and download any necessary audio software. A telephone replay of the conference call will be available until May 20, 2021. The telephone replay may be accessed by dialing 1-844-512-2921 within the United States or 1-412-317-6671 outside of the United States. The replay access number is 9609613. The webcast will also be archived on www.heska.com for 90 days.

About Heska
Heska Corporation (NASDAQ: HSKA) manufactures, develops and sells advanced veterinary diagnostic and specialty healthcare products through its two business segments: North America and International. Both segments include Point of Care Lab testing instruments and consumables, digital imaging products, software and services, data services, allergy testing and immunotherapy, and single-use offerings such as in-clinic diagnostic tests and heartworm preventive products. The North America segment also includes private label vaccine and pharmaceutical production under third-party agreements and channels, primarily for herd animal health. For more information, please visit www.heska.com.

Forward-Looking Statements
This document contains forward-looking information related to the Company. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as "believes," "plans," "anticipates," "expects," "intends," "strategy," "future," "opportunity," "may," "will," "should," "could," "potential," or similar expressions. All of the statements in this document, other than historical facts, are forward-looking statements and are based on a number of assumptions that could ultimately prove inaccurate and cause actual results to materially deviate from forward-looking statements. Forward-looking statements in this document include, among other things, statements with respect to Heska's future financial and operating results, future sales, sales split percentages, sales geography percentages, market share, and strategic goals; the anticipated benefits of the scil acquisition; supplier availability; competing suppliers; any product's ability to performed and be recognized as anticipated, in particular when such product is under development; Heska's ability to sell and market its products in an economically sustainable fashion, including related to varying customs, cultures, languages and sales cycles and uncertainties with foreign political and economic climates; the Company's ability to integrate the acquired scil business within its existing operations; and new product development and release schedules.

Other factors that could cause actual results to differ materially from those matters expressed in or implied by such forward-looking statements include, among others, risks and uncertainties related to: the impact of the COVID-19 pandemic on consumer demand, our global supply chain and our financial and operational results; the success of third parties in marketing our products; outside business interests of our Chief Executive Officer; our reliance on third party suppliers and collaborative partners; our dependence on key personnel; our dependence upon a number of significant customers; competitive conditions in our industry; our dependence on third parties to successfully develop new products; our ability to market and sell our products successfully; expansion of our international operations; the impact of regulation on our business; the success of our acquisitions and other strategic development opportunities; our ability to develop, commercialize and gain market acceptance of our products; cybersecurity incidents and related disruptions and our ability to protect our stakeholders' privacy; product returns or liabilities; volatility of our stock price; and our ability to service our convertible notes and comply with their terms. Such factors are set forth under "Risk Factors" in the Company's most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q.

Use of Non-GAAP Financial Measures
In addition to financial measures presented on the basis of accounting principles generally accepted in the U.S. ("U.S. GAAP"), we also present first quarter 2021 and first quarter 2020 EBITDA (net income before income taxes, interest, depreciation and amortization), and Adjusted EBITDA, Adjusted EBITDA Margin and Non-GAAP earnings per share, which are non-GAAP measures. These measures should be viewed as a supplement to (not substitute for) our results of operations presented under U.S. GAAP. The non-GAAP financial measures presented may not be comparable to similarly titled measures of other companies because they may not calculate their measures in the same manner. A reconciliation of non-GAAP financial measures and most directly comparable GAAP financial measures is included in this release. Our management has included these measures to assist in comparing performance from period to period on a consistent basis.

SOURCE Heska Corporation