LOVELAND, Colo., Nov. 14, 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 third quarter ended
September 30, 2011.
Third Quarter Highlights Include:
- Core companion animal health revenues increased approximately
1%, while other vaccines, pharmaceuticals and products revenue
decreased 4% compared to the third quarter last year. In the
third quarter of 2010, the USDA validated an improved process for a
line of cattle vaccines, allowing Heska to ship a significant
quantity of product in a category which had previously been on hold
due to regulatory concerns.
- 4% increase in year-over-year quarterly gross profit and a
38.8% gross margin, a 1.4 percentage point improvement
compared to the third quarter last year.
- $408 thousand in operating income
compared to $365 thousand in
operating income in the third quarter last year.
- Heska completed the quarter with $7.5
million in cash, no debt and $19.2
million in working capital.
"Heska achieved another quarter of profitability and continued
to set the stage for accelerated growth," commented Robert Grieve, Heska's Chairman and CEO.
"We are on pace to announce a new product by the end of this
year, with at least four additional products to be launched in
2012. This commitment to innovation, research and development and
the development of proprietary intellectual property is consistent
with our focus on accelerated growth and profitability. To
support this effort, we are focused on expanding, specializing and
increasing the technical expertise of our sales and marketing team
in anticipation of these product launches. We have added new
personnel to fill vacant sales territories, but we continue to have
unfilled vacancies, impacting our revenues in the short term."
Financial Results
Third quarter revenue was $17.6
million, essentially unchanged from the $17.6 million for the third quarter last year and
a sequential increase of approximately 1% from the $17.4 million reported in the second quarter.
Core Companion Animal Health revenue grew approximately 1% to
$14.3 million from $14.1 million in the year-ago quarter and Other
Vaccines, Pharmaceuticals and Products revenue decreased
approximately 4% to $3.3 million from
$3.5 million. In the third
quarter last year, the USDA validated an improved process for a
line of cattle vaccines, allowing Heska to ship a significant
quantity of product in a category which had previously been on hold
due to regulatory concerns. Gross profit was $6.8 million, or a 38.8% gross margin, compared
with gross profit of $6.6 million, or
37.4% gross profit margin, in the third quarter last year.
Total operating expenses were $6.4
million, or 36.5% of sales, compared with total operating
expenses of $6.2 million, or 35.3% of
sales, in last year's third quarter. The Company reported
operating income of $408 thousand,
compared to operating income of $365
thousand in last year's third quarter. Income before
income taxes was $472 thousand
compared to $483 thousand last year.
Net income, inclusive of a $154
thousand deferred tax expense, was $288 thousand or $0.05 per diluted share, compared to net income
of $241 thousand or $0.05 per diluted share in the third quarter of
2010. In the third quarter last year, the Company recorded a
$279 thousand deferred tax
expense.
Year-to-date, revenues were $54.6
million, an increase of 8% compared to revenue of
$50.4 million last year.
Core Companion Animal Health revenue grew 2% to $44.7 million from $43.7
million last year and Other Vaccines, Pharmaceuticals and
Products revenue grew 45% to $9.8
million from $6.8 million last
year. Gross profit was $22.6
million, or 41.4% gross margin, compared with gross profit
of $18.6 million, or 37.0% gross
profit margin last year. Total operating expenses were
$19.8 million, or 36.2% of sales,
compared with total operating expenses of $19.0 million, or 37.6% of sales last year.
The Company reported operating income of $2.8 million compared to a loss from
operations of $330 thousand last
year. Income before income taxes was $2.7 million compared to a loss before income
taxes of $507 thousand last year.
Net income, inclusive of an $884
thousand deferred tax expense, was $1.7 million or $0.31 per diluted share, compared with a net loss
of $254 thousand or $(0.05) per diluted share last year. The first
nine months of last year's results included a $280 thousand deferred tax benefit.
"Our focus on expense management, and the elimination of all
debt and the associated payments, continues to enable us to
significantly increase our year-to-date profitability compared to
the first nine months of last year," Dr. Grieve continued.
"Year-to-date, we have swung from an operating loss to $2.8 million in operating income. It is
important to note that we have achieved this significant
improvement in profitability even while committing resources to
develop and launch new products which will ultimately bolster our
competitive position and help us to grow."
Balance Sheet
As of September 30, 2011, Heska had
$7.5 million in cash and working
capital of $19.2 million.
Stockholders' equity increased 5% to $47.9
million compared to $45.8
million as of December 31, 2010.
Investor Conference Call
Management will conduct a conference call on Monday, November 14, 2011 at 9 a.m. MST (11 a.m.
EST) to discuss the third quarter 2011 financial results.
To participate, dial (877) 941-8609 (domestic) or (480)
629-9818 (international); the conference call access number is
4478832. 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 November 28, 2011. The
telephone replay may be accessed by dialing (800) 406-7325
(domestic) or (303) 590-3030 (international).
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. 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: uncertainties related to Heska's ability to maintain a
given level of profitability, or profitability at all;
uncertainties regarding Heska's reliance on third parties to whom
Heska has granted substantial marketing rights to certain of
Heska's existing products and who may be large Heska customers,
including Schering-Plough Animal Health Corporation which has
exclusive rights to our heartworm preventive in the United States; uncertainties regarding
Heska's ability to successfully market and sell its products in an
economically sustainable manner; risks related to Heska's reliance
on third parties to develop certain of Heska's future products;
uncertainties regarding Heska's ability to successfully
commercialize new products; risks related to the impact on Heska's
share price resulting from heavy selling volume on any given day;
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; competition; 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
June 30, 2011.
Financial Table Follows:
Consolidated
Statements of Operations
In
Thousands, Except per Share Amounts
(unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
Revenue, net:
|
|
|
|
Core companion animal
health
|
$
|
14,144
|
|
$
|
14,263
|
|
$
|
43,667
|
|
$
|
44,727
|
|
|
Other vaccines,
pharmaceuticals and products
|
|
3,491
|
|
|
3,345
|
|
|
6,769
|
|
|
9,833
|
|
|
Total revenue,
net
|
|
17,635
|
|
|
17,608
|
|
|
50,436
|
|
|
54,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
11,042
|
|
|
10,781
|
|
|
31,791
|
|
|
31,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
6,593
|
|
|
6,827
|
|
|
18,645
|
|
|
22,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
marketing
|
|
3,912
|
|
|
3,753
|
|
|
11,604
|
|
|
11,283
|
|
|
Research and
development
|
|
455
|
|
|
311
|
|
|
1,300
|
|
|
1,345
|
|
|
General and
administrative
|
|
1,861
|
|
|
2,355
|
|
|
6,071
|
|
|
7,131
|
|
|
Total operating
expenses
|
|
6,228
|
|
|
6,419
|
|
|
18,975
|
|
|
19,759
|
|
|
Operating income
(loss)
|
|
365
|
|
|
408
|
|
|
(330)
|
|
|
2,835
|
|
|
Interest and other (income)
expense, net
|
|
(118)
|
|
|
(64)
|
|
|
177
|
|
|
101
|
|
|
Income (loss) before income
taxes
|
|
483
|
|
|
472
|
|
|
(507)
|
|
|
2,734
|
|
|
Income tax expense
(benefit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax expense
(benefit)
|
|
(37)
|
|
|
30
|
|
|
27
|
|
|
189
|
|
|
Deferred tax expense
(benefit)
|
|
279
|
|
|
154
|
|
|
(280)
|
|
|
884
|
|
|
Total income tax expense
(benefit)
|
|
242
|
|
|
184
|
|
|
(253)
|
|
|
1,073
|
|
|
Net income (loss)
|
$
|
241
|
|
$
|
288
|
|
$
|
(254)
|
|
$
|
1,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per
share
|
$
|
0.05
|
|
$
|
0.06
|
|
$
|
(0.05)
|
|
$
|
0.32
|
|
|
Diluted net income (loss) per
share
|
$
|
0.05
|
|
$
|
0.05
|
|
$
|
(0.05)
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used for basic net income
(loss) per share
|
|
5,224
|
|
|
5,239
|
|
|
5,219
|
|
|
5,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used for diluted net
income (loss) per share
|
|
5,238
|
|
|
5,411
|
|
|
5,219
|
|
|
5,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet Data
In Thousands
(unaudited)
|
|
|
|
December
31,
2010
|
|
September
30,
2011
|
|
Cash and cash
equivalents
|
|
$
|
5,492
|
|
$
|
7,523
|
|
|
Total current assets
|
|
|
27,279
|
|
|
30,088
|
|
|
Property and equipment,
net
|
|
|
5,486
|
|
|
4,732
|
|
|
Total assets
|
|
|
63,048
|
|
|
63,022
|
|
|
Line of credit
|
|
|
3,079
|
|
|
--
|
|
|
Total current
liabilities
|
|
|
12,660
|
|
|
10,889
|
|
|
Stockholders' equity
|
|
|
45,798
|
|
|
47,933
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Heska Corporation