LOVELAND, Colo., July 27, 2011 /PRNewswire/ -- Heska Corporation
(NASDAQ: HSKA; "Heska" or the "Company"), a provider of advanced
veterinary diagnostic and other specialty veterinary products,
today reported financial results for its second quarter, ended
June 30, 2011.
(Logo:
http://photos.prnewswire.com/prnh/20000622/HESKALOGO)
Second Quarter Highlights Include:
- 15.5% revenue growth to $17.4
million vs. $15.1 million in
last year's period
- Revenue growth in both operating segments
- 27.7% increase in year-over-year quarterly gross profit and a
42.8% Gross Margin, a 411-basis point improvement compared to the
second quarter last year and a 27-basis point sequential
improvement compared to the prior quarter
- Selling, General and Administrative expenses, or SG&A,
increased 3.8% compared to the second quarter last year, but
decreased as a percent of revenue to 33.7% from 37.5% in the second
quarter last year
- $887,000 in operating income
compared to a ($207,000) operating
loss in the second quarter last year
- Strong cash from operations resulting in $0 debt at the end of the period
- The addition of Ms. Sharon
Riley, a proven hospital administrator and most recently the
CEO of UT Southwestern University
Hospitals in Dallas, to Heska's
Board of Directors
- Completed the quarter with $5.7
million in cash, no debt and $18.7
million in working capital
"This was another quarter of solid execution, as we laid the
groundwork for accelerated growth and increased profitability in
future quarters," commented Robert
Grieve, Heska's Chairman and CEO. "Joe Aperfine, our new Executive Vice President,
Sales and Marketing, has been expanding our technical sales
expertise, filling vacant sales territories with exceptionally
talented people and creating a more effective commercial
organization. The ramp in new hiring has been steady and we
expect to have all vacancies filled by the end of the current third
quarter. I firmly believe the right hiring and Mr. Aperfine's
other initiatives will provide us with a more productive sales
force to optimize growth in the future, particularly as we continue
to innovate and introduce new products."
Financial Results
Second quarter revenue was $17.4
million, an increase of 15.5% compared to $15.1 million in the second quarter last year.
Core companion animal health revenue grew 2.1% to $14.0 million from $13.7
million in the year-ago quarter. Other vaccines,
pharmaceuticals and products revenue grew 148.8% to $3.4 million from $1.4
million, although the second quarter of 2010 was negatively
impacted by a now resolved regulatory issue. Gross profit was
$7.5 million, or a 42.8% gross profit
margin, compared with gross profit of $5.8
million, or 38.7% gross profit margin, in the second quarter
last year. SG&A expense was $5.9
million, or 33.7% of sales, compared to SG&A expense of
$5.7 million, or 37.5% of sales in
the second quarter last year. Total operating expenses were
$6.6 million, or 37.7% of sales,
compared with total operating expenses of $6.1 million, or 40.1% of sales, in last year's
second quarter. The Company reported operating income of
$887,000, compared to a loss from
operations of ($207,000) in last
year's second quarter. Pre-tax income was $745,000 compared to a pre-tax loss of
($329,000) last year. Net income,
inclusive of a $235,000 deferred
income tax expense, was $457,000 or
$0.09 per basic and diluted share,
compared with a net loss of ($165,000) or ($0.03) per basic and diluted share in last
year's period. In the second quarter last year, the Company
recorded a ($178,000) deferred income
tax benefit.
"This was another strong quarter with revenue growth, margin
expansion and an improved level of quarterly profitability compared
to last year as we grew revenue at nearly twice the rate of
expenses, resulting in a significant swing to positive operating
income," Dr. Grieve continued. "Looking to the future, we launched
our handheld lactate analyzer and are on pace to launch one more
unique product by the end of this year. In addition, we expect to
introduce up to four new products next year, including at least two
new products from our recently announced alliance with Rapid
Diagnostek. This commitment to innovation, research and development
and the development of proprietary intellectual property is
consistent with our focus on accelerated growth and profitability.
We are demonstrating the ability to scale our top line faster than
our operating expenses, and this is expected to result in increased
earnings power as we grow."
Year-to-date, revenues were $37.0
million, an increase of 12.7% compared to revenue of
$32.8 million last year. Core
companion animal health revenue grew 3.2% to $30.5 million from $29.5
million last year and other vaccines, pharmaceuticals and
products revenue grew 97.9% to $6.5
million from $3.3 million last
year. Gross profit was $15.8 million,
or 42.7% gross profit margin, compared with gross profit of
$12.1 million, or 36.7% gross profit
margin last year. SG&A expense was $12.3
million, or 33.3% of sales, compared to SG&A expense of
$11.9 million, or 36.3% of sales in
the first six months last year. Total operating expenses were
$13.3 million, or 36.1% of sales,
compared with total operating expenses of $12.7 million, or 38.9% of sales last year. The
Company reported operating income of $2.4
million compared to a loss from operations of ($695,000) last year. Pre-tax income was
$2.3 million compared to a pre-tax
loss of ($990,000) last year. Net
income, inclusive of a $730,000
deferred income tax expense, was $1.4
million or $0.26 per basic and
diluted share, compared with a net loss of ($495,000) or ($0.09) per basic and diluted share last year.
The first six months of last year's results included a ($495,000) deferred income tax benefit.
Balance Sheet and Liquidity
As of June 30, 2011, Heska had
$5.7 million in cash and working
capital of $18.7 million. During the
quarter, the Company generated strong cash from operations to
eliminate all borrowings under its line of credit, ending the
quarter with no debt. Stockholders' equity increased 4.2% to
$47.7 million compared to
$45.8 million as of December 31, 2010.
Investor Conference Call
Management will conduct a conference call on Wednesday, July 27, 2011 at 9 a.m. MDT (11 a.m.
EDT) to discuss the second quarter 2011 financial results.
To participate, dial (877) 941-1465 (domestic) or (480)
629-9866 (international); the conference call access number is
4458377. 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 and webcast replays of the
conference call will be available for playback until August 10, 2011. The telephone replay may
be accessed by dialing (800) 406-7325 (domestic) or (303) 590-3030
(international). The webcast replay may be accessed from
Heska's home page at www.heska.com until August 10, 2011.
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 www.heska.com.
Forward-Looking Statements
This announcement contains forward-looking statements
regarding Heska's future financial and operating results. For
example, Dr. Grieve's stated expectations for new product launches
and increased earnings power are forward-looking. 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. In addition, factors that could
affect the business and financial results of Heska generally
include the following: risks related to Heska's reliance on third
parties to develop certain of Heska's future products; risks
related to Heska's ability to increase the productivity of its
sales force; risks related to the implementation of current product
development plans, including anticipated launch dates; risks
regarding Heska's reliance on third-party suppliers such as minimum
purchase requirements, which could have a significant adverse
impact on Heska's financial position; uncertainties related to
Heska's ability to hire and retain effective individuals to fill
currently vacant positions; uncertainties related to Heska's
ability to successfully commercialize new products; uncertainties
regarding Heska's reliance on third parties to whom Heska has
granted substantial marketing rights to certain of Heska's existing
products and whom may be large Heska customers, including
Schering-Plough Animal Health Corporation which has exclusive
rights to Heska's heartworm preventive in the United States; uncertainties regarding
Heska's ability to successfully market and sell its products in an
economically sustainable manner; competition; risks related to
Heska's ability to generate levels of profitability to utilize
significantly its deferred tax assets; 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 Quarterly Report
on Form 10-Q for the quarter ended March 31, 2011.
Financial Table Follows:
Consolidated
Statements of Operations
In
Thousands, Except per Share Amounts
(unaudited)
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
Revenue, net:
|
|
|
|
Core companion animal
health
|
$
|
13,731
|
|
$
|
14,023
|
|
$
|
29,523
|
|
$
|
30,464
|
|
|
Other vaccines,
pharmaceuticals and products
|
|
1,376
|
|
|
3,424
|
|
|
3,278
|
|
|
6,488
|
|
|
Total revenue,
net
|
|
15,107
|
|
|
17,447
|
|
|
32,801
|
|
|
36,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
9,260
|
|
|
9,978
|
|
|
20,749
|
|
|
21,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
5,847
|
|
|
7,469
|
|
|
12,052
|
|
|
15,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
marketing
|
|
3,656
|
|
|
3,570
|
|
|
7,692
|
|
|
7,530
|
|
|
Research and
development
|
|
388
|
|
|
703
|
|
|
845
|
|
|
1,034
|
|
|
General and
administrative
|
|
2,010
|
|
|
2,309
|
|
|
4,210
|
|
|
4,776
|
|
|
Total operating
expenses
|
|
6,054
|
|
|
6,582
|
|
|
12,747
|
|
|
13,340
|
|
|
Operating income
(loss)
|
|
(207)
|
|
|
887
|
|
|
(695)
|
|
|
2,427
|
|
|
Interest and other expense,
net
|
|
122
|
|
|
142
|
|
|
295
|
|
|
165
|
|
|
Income (loss) before income
taxes
|
|
(329)
|
|
|
745
|
|
|
(990)
|
|
|
2,262
|
|
|
Income tax expense
(benefit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax
expense
|
|
14
|
|
|
53
|
|
|
64
|
|
|
159
|
|
|
Deferred tax expense
(benefit)
|
|
(178)
|
|
|
235
|
|
|
(559)
|
|
|
730
|
|
|
Total income tax expense
(benefit)
|
|
(164)
|
|
|
288
|
|
|
(495)
|
|
|
889
|
|
|
Net income (loss)
|
$
|
(165)
|
|
$
|
457
|
|
$
|
(495)
|
|
$
|
1,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per
share
|
$
|
(0.03)
|
|
$
|
0.09
|
|
$
|
(0.09)
|
|
$
|
0.26
|
|
|
Diluted net income (loss) per
share
|
$
|
(0.03)
|
|
$
|
0.09
|
|
$
|
(0.09)
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used for basic net income
(loss) per share
|
|
5,217
|
|
|
5,234
|
|
|
5,216
|
|
|
5,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used for diluted net
income (loss) per share
|
|
5,217
|
|
|
5,353
|
|
|
5,216
|
|
|
5,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet Data
In Thousands
(unaudited)
|
|
|
|
December
31,
2010
|
|
June
30,
2011
|
|
Cash and cash
equivalents
|
|
$
5,492
|
|
|
$
5,707
|
|
Total current assets
|
|
27,279
|
|
|
28,418
|
|
Property and equipment,
net
|
|
5,486
|
|
|
4,998
|
|
Total assets
|
|
63,048
|
|
|
61,823
|
|
Line of credit
|
|
3,079
|
|
|
--
|
|
Total current
liabilities
|
|
12,660
|
|
|
9,708
|
|
Stockholders' equity
|
|
45,798
|
|
|
47,736
|
|
|
|
|
|
|
|
|
|
SOURCE Heska Corporation