Heska Reports 10% Revenue Growth, $0.09 Per Share for the First Quarter of 2015

Core Companion Animal Health Revenue Increases approximately 13% from Prior-Year Period; Heska Ships New Element HT5™ Instrument, Expanding Instrument Portfolio

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Heska Corporation

May 07, 2015, 09:00 ET

LOVELAND, Colo., May 7, 2015 /PRNewswire/ -- Heska Corporation (NASDAQ: HSKA - News; "Heska" or the "Company"), a provider of advanced veterinary diagnostic and other specialty veterinary products, today reported financial results for its first quarter ended March 31, 2015.

First Quarter 2015 Highlights:

Consolidated revenue for the first quarter of 2015 was up 10% to $22.9 million from $20.8 million in the first quarter of 2014.
Gross profit for the first quarter of 2015 was up 22% to $10.1 million from $8.3 million in the first quarter of 2014.
Gross margin was 44% compared to gross margin of 40% in the first quarter of 2014.
Net income attributable to Heska Corporation of $598 thousand, or 9 cents per diluted share, was up 211% compared to $192 thousand or 3 cents per diluted share in the first quarter of 2014.
Heska completed the quarter with $5.7 million in cash, $1.8 million in short-term debt and $19.2 million in working capital.

Kevin Wilson, Heska's Chief Executive Officer and President, commented that, "Heska continued its strong momentum in the quarter by expanding margins, selling more, and spending less per revenue dollar doing it. Heska had success in key broad initiatives and in the details during the quarter. The feedback from customers of our newly launched Element HT5 five-part hematology analyzer was excellent. Our close relationship with Henry Schein Animal Health is going very well and gaining momentum. During the period, we grew our net customer base in all key segments, including the highly competitive blood analyzer space, where roughly eight in ten new analyzer customers upgraded to Heska from a competitor. We are executing well, our pipeline is at record levels, and we are working hard on new initiatives."

Financial Results
First quarter 2015 revenue was $22.9 million, up 10% as compared to the first quarter of 2014. In the first quarter of 2015, Core Companion Animal Health revenue increased approximately 13% to $19.6 million from $17.4 million in the prior year period. Other Vaccines, Pharmaceuticals and Products revenue decreased approximately 3% to $3.3 million from $3.4 million in the first quarter last year. Gross profit was $10.1 million, or a 44.0% gross margin, in the first quarter of 2015 compared with gross profit of $8.3 million, or 39.8% gross margin, in the first quarter of 2014. Total operating expenses were $9.1 million, or 39.6% of sales, in the first quarter of 2015 compared with total operating expenses of $8.4 million, or 40.3% of sales, in the prior year period. The Company reported operating income of $1.0 million in the first quarter of 2015, compared to operating loss of $101 thousand in the first quarter of 2014. Income before income taxes was $884 thousand in the first quarter of 2015, compared to a loss before taxes of $117 thousand in the prior year period. In the first quarter of 2015, net income attributable to Heska Corporation was $598 thousand, or $0.09 per diluted share, compared to net income attributable to Heska Corporation of $192 thousand, or $0.03 per diluted share, in the first quarter of 2014.

Balance Sheet
As of March 31, 2015, Heska had $5.7 million in cash and working capital of $19.2 million. Stockholders' equity increased to $54.3 million compared to $53.1 million as of December 31, 2014.

Investor Conference Call
Management will conduct a conference call on Thursday May 7, 2015 at 9 a.m. MDT (11 a.m. EDT) to discuss the first quarter 2015 financial results. To participate, dial (888) 455-2260 (domestic) or (719) 325-2484 (international); the conference call access number is 7316333. The conference call will also be broadcast live over the Internet at http://www.heska.com. To listen, simply log on to the web at this address at least ten minutes prior to the start of the call to register, download and install any necessary audio software. Telephone replays of the conference call will be available for playback on Heska's home page at www.heska.com until May 21, 2015. The telephone replay may be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The replay access number is 7316333.

About Heska
Heska Corporation (NASDAQ: HSKA - News) sells advanced veterinary diagnostic and other specialty veterinary products. Heska's state-of-the-art offerings to its customers include blood testing instruments and supplies, digital imaging products, software and services, and single use products and services such as in-clinic heartworm diagnostic tests, heartworm preventive products, allergy immunotherapy products and allergy testing. The Company's core focus is on the canine and feline markets where it strives to provide high value products and unparalleled customer support to veterinarians. For further information on Heska and its products, visit the company's website at www.heska.com.

Forward-Looking Statements
This announcement contains forward-looking statements regarding Heska's future financial and operating results. These statements are based on current expectations and are subject to a number of risks and uncertainties. Investors should note that there is an inherent risk in using past results, including trends, to predict future outcomes, including using customer trends to predict future success with new customers. In addition, factors that could affect the business and financial results of Heska generally include the following: uncertainties related to the ultimate commercial success of any product, including a product where the initial customer experience is positive; uncertainties related to Heska's ability to compete successfully as compared to Heska's competitors for the time, energy and focus of a given distributor's employees; uncertainties related to current commercial plans and strategies; risks related to Heska's reliance on third-party suppliers, which is substantial; competition; uncertainties related to Heska's reliance on key personnel; uncertainties related to Heska's ability to maintain customer relationships; risks related to relying on past sales success of a distributor as an indicator of future success; uncertainties related to the market's perception of the quality of Heska products, including products Heska may introduce in the future; and the risks set forth in Heska's filings and future filings with the Securities and Exchange Commission, including those set forth in Heska's Annual Report on Form 10-K for the year ended December 31, 2014.

Financial Table Follows:

Consolidated Statements of Operations In Thousands, Except per Share Amounts (unaudited)

	Three Months Ended March 31,
	2014		2015
Revenue:
Core companion animal health	$	17,366		$	19,572
Other vaccines, pharmaceuticals and products		3,427			3,322
Total revenue, net		20,793			22,894

Cost of revenue		12,514			12,810

Gross profit		8,279			10,084

Operating expenses:
Selling and marketing		4,945			5,460
Research and development		388			419
General and administrative		3,047			3,184
Total operating expenses		8,380			9,063
Operating income (loss)		(101)			1,021
Interest and other expense, net		16			137
Income (loss) before income taxes		(117)			884
Income tax expense:
Current tax expense		21			44
Deferred tax expense		135			257
Total income tax expense		156			301
Net income (loss)	$	(273)		$	583
Net income (loss) attributable to non-controlling interest		(465)			(15)
Net income attributable to Heska Corporation		192			598

Basic net income per share attributable to Heska Corporation	$	0.03		$	0.10
Diluted net income per share attributable to Heska Corporation	$	0.03		$	0.09

Weighted average outstanding shares used to compute basic net income per share attributable to Heska Corporation		5,870			6,181
Weighted average outstanding shares used to compute diluted net income per share attributable to Heska Corporation		5,985			6,869

Balance Sheet Data In Thousands (unaudited)

	December 31, 2014		March 31, 2015
Cash and cash equivalents	$	5,855	$	5,728
Total current assets		34,400		37,124
Note receivable – related party		1,466		1,481
Total assets		96,844		100,352
Line of credit		48		1,681
Other short-term borrowings, including current portion of long-term note payable		141		159
Total current liabilities		15,052		17,884
Long-term note payable, net of current portion		227		175
Non-controlling interest		15,679		15,825
Stockholders' equity		53,132		54,277