Revenue and Gross Profit Increase LOVELAND, Colo., Nov. 10
/PRNewswire-FirstCall/ -- Heska Corporation (NASDAQ:HSKA) today
reported financial results for its third quarter ended September
30, 2008. (Logo:
http://www.newscom.com/cgi-bin/prnh/20000622/HESKALOGO) Heska
Corporation ("Heska" or the "Company") generated Core Companion
Animal Health product revenue of $18.9 million, an increase of 21%
from the prior year period. "Revenue from Heska's blood chemistry
instrument, the DRI-CHEM(R) Veterinary Chemistry Analyzer, and
associated consumables, were a key factor in the strong revenue
growth we posted this quarter," said Robert Grieve, Heska's
Chairman and CEO. "Investors should note the accounting change in
the way Heska is reporting income tax expense in 2008 as compared
to 2007. This is the primary reason for the large increase in
income tax expense. We have included pro forma information for
additional clarity. Heska will continue to furnish pro forma
information until the Company begins to report 2009 results with
comparable income tax accounting treatment to 2008." Total Revenue
Total revenue for the third quarter of 2008 was $21.7 million, an
increase of 11% compared to the third quarter of 2007. Total
revenue consists of product revenue and research, development and
other revenue, both of which are discussed below. Segment Product
Revenue Total product revenue for the third quarter of 2008 was
$21.4 million, up 12% from $19.0 million in the third quarter of
2007. Heska Corporation's business is comprised of two reportable
segments -- Core Companion Animal Health and Other Vaccines,
Pharmaceuticals and Products. Product revenue from these segments
is as follows: Core Companion Animal Health This segment includes
revenue from the Company's diagnostic instruments and supplies as
well as single use, point-of-care tests, vaccines and
pharmaceuticals, primarily for canine and feline use. In the third
quarter of 2008, this segment generated product revenue of $18.9
million, up 21% as compared to $15.6 million in the third quarter
of 2007. Other Vaccines, Pharmaceuticals and Products This segment
includes revenue from private label vaccine and pharmaceutical
production, primarily for cattle but also for other animals
including small mammals and fish. In the third quarter of 2008,
this segment generated product revenue of $2.4 million, down 29% as
compared to $3.4 million in the third quarter of 2007. Results for
the nine months ended September 30, 2007 include approximately $1.6
million in revenue recognized in the first quarter upon receipt of
a payment for product previously shipped and "take-or-pay" minimums
for 2005 and 2006 which previously had not been paid as part of a
now settled dispute with United Vaccines, Inc. ("United"), a former
customer. Research, Development and Other Revenue Research,
development and other revenue was $316 thousand in the third
quarter of 2008, a decrease of approximately $175 thousand when
compared to $491 thousand in the prior year period. Investor
Conference Call Management will conduct a conference call on
Monday, November 10, 2008 at 9:00 a.m. MST (11:00 a.m. EST) to
discuss the third quarter 2008 financial results. To participate,
dial (800) 240-2134 (domestic) or (303) 262-2125 (international);
the conference call access number is 11121827. 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 until November 24, 2008. The telephone replay may be
accessed by dialing (800) 405-2236 (domestic) or (303) 590-3000
(international). The webcast replay may be accessed from Heska's
home page at http://www.heska.com/ until November 24, 2008. About
Heska Heska Corporation (NASDAQ:HSKA) sells advanced veterinary
diagnostic and other specialty veterinary products. Heska's
state-of-the-art offerings to its customers include diagnostic
instruments and supplies as well as single use, point-of-care
tests, pharmaceuticals and vaccines. 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 http://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 to predict future
outcomes. Revenue generated in the past related to customers,
technology or products may not recur in future periods. For
example, in the nine months ended September 30, 2007, Heska
recognized approximately $1.6 million in revenue upon receipt of a
payment from United for product previously shipped and "take or
pay" minimums for 2005 and 2006. As United has ceased operations,
Heska does not expect to generate any future revenue from United.
In addition, factors that could affect the business and financial
results of Heska generally include the following: risks related to
the ultimate commercial success of the Heska's recently launched
chemistry instrument; risks related to Heska's ability to maintain
financial covenants under its credit facility agreement, which is
essential to fund the Company's ongoing operations; uncertainties
related to Heska's ability to project future financial results;
risks regarding Heska's reliance on third-party suppliers, which is
substantial and could have significant negative consequences if
Heska were to lose exclusive rights or access to a product due to a
failure to meet minimum sales requirements or for other reasons;
risks regarding Heska's ability to successfully market, sell and
distribute its products; risks related to the loss of large or
significant customers; competition, including uncertainties
regarding the impact of new products competitors have recently
launched or may launch in the future; uncertainties regarding
Heska's reliance on third parties to whom Heska has granted
substantial marketing rights to certain of Heska's existing
products; uncertainties regarding potential changes in accounting
standards, which could affect the manner in which Heska's financial
statements are reported; uncertainties surrounding Heska's ability
to maintain its listing on the Nasdaq Capital Market; 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, 2007 and
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.
Financial Table Follows: Consolidated Statements of Operations In
Thousands, Except per Share Amounts (unaudited) Three Months Nine
Months Ended Ended September 30, September 30, 2007 2008 2007 2008
Revenue, net: Product revenue, net: Core companion animal health
$15,601 $18,944 $48,828 $53,623 Other vaccines, pharmaceuticals and
products 3,399 2,426 12,262 11,581 Total product revenue, net
19,000 21,370 61,090 65,204 Research, development and other 491 316
1,203 1,015 Total revenue 19,491 21,686 62,293 66,219 Cost of
revenue: Cost of products sold 11,825 13,402 35,790 41,395 Cost of
research, development and other 58 88 234 321 Total cost of revenue
11,883 13,490 36,024 41,716 Gross profit 7,608 8,196 26,269 24,503
Operating expenses: Selling and marketing 3,795 4,458 12,172 14,024
Research and development 663 506 2,109 1,462 General and
administrative 2,017 2,134 7,042 6,756 (Gain) on sale of assets --
-- (47) -- Total operating expenses 6,475 7,098 21,276 22,242
Income from operations 1,133 1,098 4,993 2,261 Interest and other
expense, net 94 153 433 500 Income before income taxes 1,039 945
4,560 1,761 Income tax expense: Current 23 54 112 173 Net operating
loss usage and other deferred 4 314 9 571 Total income tax expense
27 368 121 744 Net income $1,012 $577 $4,439 $1,017 Basic net
income per share $0.02 $0.01 $0.09 $0.02 Diluted net income per
share $0.02 $0.01 $0.08 $0.02 Shares used for basic net income per
share 51,269 51,797 51,008 51,625 Shares used for diluted net
income per share 56,173 52,580 55,458 53,774 Balance Sheet Data In
Thousands (unaudited) December 31, September 30, 2007 2008 Cash and
cash equivalents $5,524 $5,434 Total current assets 35,127 32,716
Total assets 75,591 72,180 Line of credit 12,614 9,020 Current
portion of long-term debt and capital leases 776 1,344 Total
current liabilities 25,195 22,279 Long-term debt and capital leases
1,151 -- Stockholders' equity 42,883 44,592 Pro Forma Financial
Information Statement of Utility The following estimated pro forma
financial information is presented assuming Heska had reduced its
valuation allowance related to its domestic net operating loss on
December 31, 2006 rather than December 31, 2007. In this
circumstance, the Company would have recognized Net Operating Loss
Usage as Income Tax Expense, as outlined below. The Company
believes the pro forma information may be valuable to investors as
an additional tool to benchmark future periods versus historical
results on a consistently reported basis. The Company does not
suggest that investors should consider such pro forma financial
information in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. Pro Forma
Reconciliation to GAAP Consolidated Statements of Operations In
Thousands, Except per Share Amounts (unaudited) Three Months Ended
Nine Months Ended September 30, 2007 September 30, 2007 As As
Reported Pro Reported Pro (GAAP) Adjustments Forma (GAAP)
Adjustments Forma Revenue, net: Product revenue, net: Core
companion animal health $15,601 $-- $15,601 $48,828 $-- $48,828
Other vaccines, pharmaceuticals and products 3,399 -- 3,399 12,262
-- 12,262 Total product revenue, net 19,000 -- 19,000 61,090 --
61,090 Research, development and other 491 -- 491 1,203 -- 1,203
Total revenue 19,491 -- 19,491 62,293 -- 62,293 Cost of revenue:
Cost of products sold 11,825 -- 11,825 35,790 -- 35,790 Cost of
research, development and other 58 -- 58 234 -- 234 Total cost of
revenue 11,883 -- 11,883 36,024 -- 36,024 Gross profit 7,608 --
7,608 26,269 -- 26,269 Operating expenses: Selling and marketing
3,795 -- 3,795 12,172 -- 12,172 Research and development 663 -- 663
2,109 -- 2,109 General and administrative 2,017 -- 2,017 7,042 --
7,042 (Gain) on sale of assets -- -- -- (47) -- (47) Total
Operating expenses 6,475 -- 6,475 21,276 -- 21,276 Income from
operations 1,133 -- 1,133 4,993 -- 4,993 Interest and other
expense, net 94 -- 94 433 -- 433 Income before income taxes 1,039
-- 1,039 4,560 -- 4,560 Income tax expense: Current 23 -- 23 112 --
112 Net operating loss usage and other deferred 4 331 335 9 1,607
1,616 Total income tax expense 27 331 358 121 1,607 1,728 Net
income $1,012 $(331) $681 $4,439 $(1,607) $2,832 Basic net income
per share $0.02 $(0.01) $0.01 $0.09 $(0.03) $0.06 Diluted net
income per share $0.02 $(0.01) $0.01 $0.08 $(0.03) $0.05 Shares
used for basic net income per share 51,269 51,269 51,269 51,008
51,008 51,008 Shares used for diluted net income per share 56,173
56,173 56,173 55,458 55,458 55,458
http://www.newscom.com/cgi-bin/prnh/20000622/HESKALOGO
http://photoarchive.ap.org/ DATASOURCE: Heska Corporation CONTACT:
Jason Napolitano, Executive Vice President & CFO of Heska
Corporation, +1-970-493-7272, ext. 4105 Web Site:
http://www.heska.com/
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