Revenue $29.7 million
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LOVELAND, Colo., Aug. 7, 2018 /PRNewswire/ -- Heska Corporation (NASDAQ: HSKA - News; "Heska" or the "Company"), a provider of advanced veterinary diagnostic and specialty products, today reported financial results for its second quarter ended June 30, 2018. The Company reports results in two segments: Core Companion Animal ("CCA") and Other Vaccines & Pharmaceuticals ("OVP"). The Company forecast provided during the May 15, 2018 Analyst Day in New York is referred to in this release as "Outlook"(1). Second Quarter 2018 Highlights with Second Quarter Prior Year and Outlook Comparisons:
Kevin Wilson, Heska's Chief Executive Officer and President, commented, "I am pleased with this quarter's results, which are in line with our quarter and full year Outlook. The second quarter exceeded our Outlook for gross margin by 100 bps and operating margin by 170 bps, while coming in lower by 1% for revenues. We continue to focus on growing our highest quality revenue streams and are having success in key areas such as Point of Care Laboratory Consumables, which rose 16% to overcome short term and expected declines in Point of Care Imaging, which we indicated would be volatile as it normalizes to deliver 10% to 12% growth for the full year. Gross margin in our key Point of Care Laboratory business line rose a healthy 240 bps, leading our CCA segment gross margins up 190 bps to 49.5%. Emphasis on these higher quality revenues improved company-wide operating profitability while offsetting an expected 3,800 basis point decrease to -3.7% in the OVP segment gross margins primarily from anticipated OVP product mix and plant utilization factors." "For the full year, we continue to anticipate (i) OVP segment achieving our Outlook for approximately 22% gross margins, with higher margin shipments skewed to the fourth quarter, (ii) consolidated gross margin expansion from healthy sales growth and margins in key CCA segment business lines, and (iii) 15-20% in Point of Care Laboratory Consumables and 10-12% in Imaging sales growth," added Mr. Wilson. "In mid-May, Heska was selected to partner with Pathway Vet Alliance, which provides state of the art pet healthcare in the United States in over 150 full-service hospitals staffed by over 3,000 dedicated employees. When combined with Heska's Pet Vet Care Centers agreement win as the new year began, we have largely secured the corporately owned group hospital commitments to meet Heska's market share goals from this class of customer for 2018. Entering the second half of the year, we are focused on installing and delighting these large, multi-year customers, even as we continue to track additional opportunities with other groups." Mr. Wilson continued, "The new Element DC5x dry chemistry analyzer began shipping in quantity to large volume domestic hospitals late in the period; the DC5x launch has gone well and these higher volume customers are responding favorably. Product development projects and geographic expansion initiatives announced in our Outlook continue on pace with my expectations. In addition to these previously announced projects, after many years of effort, Heska is excited to announce today our plans to release in the coming few months what we believe is the world's most advanced rotor style chemistry solution for global animal health and veterinary markets. In anticipation of these launches, our North American field commercial team expansion from 85 to 105 customer focused professionals is on schedule and we continue work on our limited 2018 international launches and broad 2019 international launches." "The global animal and pet healthcare industry continues to see favorable, broad-based trends that are increasingly driving meaningful investment and strategic consolidation activity," concluded Mr. Wilson. "As a leading provider and innovator in the space, Heska's customer base, product portfolio, product pipeline, expertise, and growth opportunities are company-specific strengths that point towards an important and rapidly scalable role for Heska in the race to serve animals and pets of all types and nationalities. As we enter the second half of 2018 and prepare for a very exciting 2019, we are focused on enhancing this important role and we remain convinced that the value creation opportunities ahead of Heska far outstrip our past successes." Financial Results Revenues Cost of Revenues Income Cash Flow Income Taxes Balance Sheet Updated Consolidated Outlook for 2018(1) (1) In addition to other statements, all Outlook and Updated Consolidated Outlook statements are forward-looking; See "Forward-Looking Statements". Investor Conference Call About Heska Forward-Looking Statements Financial Table Follows: HESKA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
Revenue:
Core companion animal health $26,644 $26,090 $53,463 $49,875
Other vaccines, pharmaceuticals and
products 3,018 7,315 8,964 13,089
----- ----- ----- ------
Total revenue, net 29,662 33,405 62,427 62,964
Cost of revenue 16,597 18,476 36,055 34,826
------ ------ ------ ------
Gross profit 13,065 14,929 26,372 28,138
------ ------ ------ ------
Operating expenses:
Selling and marketing 5,944 5,993 12,084 12,093
Research and development 559 445 1,229 975
General and administrative 4,358 3,931 8,984 7,722
----- ----- ----- -----
Total operating expenses 10,861 10,369 22,297 20,790
------ ------ ------ ------
Operating income 2,204 4,560 4,075 7,348
Interest and other expense (income),
net 92 (118) 88 (180)
--- ---- --- ----
Income before income taxes 2,112 4,678 3,987 7,528
Income tax expense (benefit):
Current income tax expense 12 10 29 17
Deferred income tax expense
(benefit) 203 1,529 (94) 69
--- ----- --- ---
Total income tax expense (benefit) 215 1,539 (65) 86
--- ----- --- ---
Net income 1,897 3,139 4,052 7,442
----- ----- ----- -----
Net loss attributable to non-
controlling interest - (194) - (498)
--- ---- --- ----
Net income attributable to Heska
Corporation $1,897 $3,333 $4,052 $7,940
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Basic earnings per share
attributable to Heska Corporation $0.26 $0.47 $0.57 $1.14
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Diluted earnings per share
attributable to Heska Corporation $0.24 $0.44 $0.52 $1.05
===== ===== ===== =====
Weighted average outstanding shares
used to compute basic earnings per
share attributable to Heska
Corporation 7,226 7,069 7,146 6,967
===== ===== ===== =====
Weighted average outstanding shares
used to compute diluted earnings
per share attributable to Heska
Corporation 7,850 7,632 7,781 7,570
===== ===== ===== =====
HESKA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2018 2017*
---- ----
UNAUDITED
ASSETS
Current Assets:
Cash and cash equivalents $13,675 $9,659
Accounts receivable, net of allowance for doubtful accounts of $219 and $215,
respectively 12,999 15,710
Due from - related parties - 1
Inventories, net 28,873 32,596
Lease receivable, current, net of allowance for doubtful accounts of $36 and $0,
respectively 2,593 2,069
Contract acquisition costs, current 865 30
Other current assets 3,073 3,066
----- -----
Total current assets 62,078 63,131
Property and equipment, net 16,587 17,331
Goodwill 26,673 26,687
Other intangible assets, net 1,764 1,958
Deferred tax asset, net 11,970 11,877
Lease receivable, non-current 11,141 9,615
Contract acquisition costs, non-current 1,623 3
Other non-current assets 6,191 5,185
Total assets $138,027 $135,787
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,038 $9,489
Due to - related parties 367 1,828
Accrued liabilities 3,143 4,417
Current portion of deferred revenue 3,008 3,992
Line of credit and other short-term borrowings 6,019 6,000
Total current liabilities 19,575 25,726
Long-term liabilities 8,530 9,621
----- -----
Total liabilities 28,105 35,347
Stockholders' equity 109,922 100,440
Total liabilities and stockholders' equity $138,027 $135,787
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* December 31, 2017 amounts are
derived from the December 31,
2017 audited Consolidated
Financial Statements,
reclassified to conform to
current year presentation.
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Company Codes: NASDAQ-SMALL:HSKA |
