~~-5-~~

VetZ is the name of our PIMS business. VetZ’s signature software offering is the “easyVET” product which is sold via license to veterinary practices and combines practice management, image management, communication and other functionality. VetZ also provides recurring support service (including updates, upgrades, and helpdesk) after sale. In addition, VetZ provides “easyIMAGE”, a PACS software package as part of easyVET as well as on a stand-alone basis, digital radiography systems (sourced from Heska), “vetsXL” which is connectivity software between veterinary practices and laboratory, insurance management and other providers to veterinary clinics, and “petsXL” which facilitates communication between veterinary clinics and pet owners. These software packages are offered primarily in Europe.

~~Point of Care Rapid Assay Diagnostic Tests~~

We sell rapid point-of-care tests to detect antigens and antibodies associated with infectious and parasitic diseases of animals. The trūRapid™ line of lateral flow tests are fast, accurate, and convenient for veterinarians. There are over 20 different tests available to detect antigens and antibodies for a variety of infectious and parasitic diseases. Both individual and multiplex rapids are available to give clinics the ultimate flexibility in testing options. trūRapids™ can be used on a variety of samples, including feces, whole blood, serum, or plasma and are stored at room temperature providing convenience for any practice. With strong sensitivity and specificity, trūRapid™ tests afford clinics the confidence to make the correct clinical decisions to diagnose and treat pets.

Heartworm Preventive Products

We have an agreement with Merck Animal Health ~~a unit of Merck & Co., Inc.,~~ granting Merck Animal Health the ~~exclusive~~non-exclusive distribution and marketing rights for our canine heartworm prevention product, Tri-Heart® Plus Chewable Tablets, ultimately sold to or through veterinarians in the U.S. Tri-Heart Plus Chewable Tablets (ivermectin/pyrantel) are indicated for use as a monthly preventive treatment of canine heartworm infection and for treatment and control of ascarid and hookworm infections. We manufacture Tri-Heart Plus Chewable Tablets at our Des Moines, Iowa production facility.

Allergy Products and Services

~~Allergy is~~

Allergies are common in companion animals. Clinical symptoms of ~~allergy~~allergies are variable, but ~~are~~ often ~~manifested~~manifest as persistent and serious skin disease in dogs and cats. ~~Clinical management~~Management of allergic disease is clinically problematic, as there are a large number of allergens that may give rise to these conditions. Although skin testing is often regarded as the most accurate diagnostic procedure, such tests can be painful, subjective and inconvenient. The effectiveness of the immunotherapy that is prescribed to treat symptoms of allergic disease is inherently limited by inaccuracies in the diagnostic process.

~~We believe that our~~ ALLERCEPT® Definitive Allergen Panels ~~provide the most accurate determination of which we~~ are ~~aware of~~used to determine the specific allergens to which an animal, such as a dog, cat or horse, is reacting. The panels use a highly specific recombinant version of the natural IgE receptor to test the serum of potentially allergic animals for IgE directed against a panel of known allergens. A typical test panel consists primarily of various pollen, grass, mold, insect and mite allergens. The test results often serve as the basis for prescription ALLERCEPT® Therapy Shots and ALLERCEPT® Therapy Drops. ~~We operate~~Our veterinary laboratories in Loveland, Colorado and Fribourg, Switzerland ~~which~~ both offer blood testing using our ALLERCEPT® Definitive Allergen Panels.

~~We sell kits to conduct blood testing using our ALLERCEPT~~® Definitive Allergen Panels to third party veterinary diagnostic laboratories outside of the U.S. We also sell products to screen for the presence of allergen-specific IgE to these customers. Animals testing positive for allergen-specific IgE using these screening tests are candidates for further evaluation using our ALLERCEPT® ~~Definitive Allergen Panels.~~

~~Veterinarians who use our ALLERCEPT~~® ~~Definitive Allergen Panels often purchase our ALLERCEPT~~® ~~Therapy Shots or ALLERCEPT~~® Therapy Drops. These prescription immunotherapy treatment sets are formulated specifically for each allergic animal and contain only the allergens to which the animal has significant levels of IgE antibodies. The prescription formulations are administered in a series of subcutaneous injections (Shots) or by daily sublingual (under the tongue) administration (Drops), with doses increasing over several months, to ameliorate the allergic condition of the animal. Immunotherapy is generally continued for an extended time. We offer canine, feline and equine subcutaneous and sublingual

~~-6-~~-5-

~~immunotherapy treatment products. We believe our ALLERCEPT~~® ~~Therapy Drops offer a convenient alternative to subcutaneous injection, thereby increasing the likelihood of pet owner compliance.~~

Other Vaccines and Pharmaceuticals ("OVP")

We developed a line of bovine vaccines that are licensed by the U.S. Department of Agriculture ("USDA"). In January 2015, we signed a long-term Master Supply Agreement related to these vaccines with Elanco.

We manufacture biological and pharmaceutical products for a number of other animal health ~~companies.~~companies in our facility in Des Moines, Iowa. We manufacture products for ~~animals other than cattle including horses, pigs, chickens, cats~~livestock and ~~dogs.~~companion animals. Our offerings range from providing ~~complete turnkey~~a portfolio of services which include research, licensing, production, labeling and packaging of products to providing any one of these services as needed by our customers, as well as validation support and distribution services.

We developed a line of bovine vaccines that are regulated by the U.S. Department of Agriculture ("USDA"). In January 2015, we signed a long-term Master Supply Agreement related to these vaccines with Elanco Animal Health, Inc. ("Elanco"), which terminates on June 17, 2023.

Marketing, Sales and Customer Support

~~We currently~~The acceptance of our products and solutions by veterinarians is critical to our success. In both of our segments, we sell and market our core products and solutions to veterinarians through ~~an outside~~our internal marketing organization, our field sales organization, a telephone sales force and independent third-party ~~distributors, as well as~~distributors. In our North America segment, our OVP products are marketed and sold by third parties under third-party labels. We market and sell outside our key countries through ~~trade shows, print advertising~~third-party veterinary diagnostic laboratories and ~~through other distribution relationships, such as Merck Animal Health in the case of our heartworm preventive.~~independent third-party distributors. As of December 31, ~~2021,~~2022, our customer facing sales, installed base support and utilization organization consisted of ~~144~~156 and ~~125~~187 individuals in ~~various parts of~~ our North America and International segments, respectively.

Veterinarians may obtain our products directly from us or indirectly through others. All of our products ultimately are sold primarily to or through veterinarians. The acceptance of our products by veterinarians is critical to our success. Internationally, we market our products to veterinarians primarily through our recent acquisitions of scil, Optomed and CVM, and through organic efforts in Australia we have begun to market directly. We also market internationally outside our key countries through third-party veterinary diagnostic laboratories and independent third party distributors.

We have a staff dedicated to customer and product support including veterinarians, technical support specialists and service technicians. Individuals from our product development group may also be used as a resource in responding to certain product inquiries.

~~All OVP products are marketed and sold by third parties under third-party labels.~~

~~We grant third parties rights to our intellectual property as well as our products, with our compensation often taking the form of royalties and/or milestone payments.~~

Manufacturing

The majority of our revenue is derived from ~~proprietary~~sales of products manufactured by third parties. Third parties manufacture our veterinary instruments, including affiliated consumables and supplies. Our acquisition of LightDeck represented an investment in our manufacturing capabilities. Following our acquisition of LightDeck, we own the manufacturing rights to the Element i+ analyzer and related consumables.

Our facility in Des Moines, Iowa is a USDA, Food and Drug Administration ("FDA") and Drug Enforcement Agency ("DEA") licensed biological and pharmaceutical manufacturing facility. This facility currently has the capacity to manufacture more than 50 million doses of vaccine each year. We expect that we will, for the foreseeable future, manufacture most, or all of our pharmaceutical and biological products at this ~~facility, as well as most, or all, of our recombinant proteins and other proprietary reagents for our diagnostic tests.~~facility. We currently manufacture our canine heartworm prevention product, our allergy treatment products and ~~all~~ our OVP products at this facility.

~~-7-~~

The OVP products for our North America segment are purchased in both finished and bulk format, and we perform all phases of manufacturing, including growth of the active bacterial and viral agents, sterile filling, lyophilization and packaging at this facility. We manufacture our various allergy products at our Des Moines facility, our Loveland facility and our Fribourg facility. We believe the raw materials for most of the products we manufacture are readily available from more than one source.

Product Development

We are committed to providing innovative products to address the health needs of companion animals. We may obtain such products from external sources, ~~external~~third-party collaboration arrangements or internal research and development.

We are committed to identifying external product opportunities and creating business and technical collaborations that lead to high value veterinary ~~products.~~products and solutions. We believe that our active

-6-

participation in scientific networks and our reputation for investing in research ~~enhances~~enhance our ability to develop and acquire ~~external product opportunities. We have collaborated,~~new products and ~~intend to continue to do so, with a number~~solutions. Our acquisition of ~~companies and universities.~~

~~Internal~~LightDeck expanded our internal research and development ~~is managed on a case-by-case basis. We employ individuals with expertise in various applicable areas and will form multidisciplinary product-associated teams as appropriate.~~capabilities.

Intellectual Property

We ~~believe that~~rely upon various forms of intellectual property, including trade secrets, patents, trademarks, copyrights, ~~and other proprietary rights represent opportunities to grow our business and maintain or enhance our competitive position. We also rely upon trade secrets,~~ know-how, continuing technological innovations, and ~~licensing opportunities~~licenses and other proprietary rights to develop and maintain our competitive position. Our various agreements with third party manufacturers for POC products provide obligations to protect our intellectual property, as well as intellectual property associated with our products. The proprietary technologies of our OVP products are primarily protected through trade secret protection of, for example, our manufacturing processes in this area.

We actively seek patent protection both in the U.S. and abroad. Our issued patent portfolios primarily relate to allergy ~~diagnostic~~ and ~~detection tests, and vaccine delivery~~diagnostic technologies. As of December 31, ~~2021,~~2022, we owned, co-owned or had rights to 2one issued U.S. ~~patents~~patent expiring ~~at various dates from May 2022 to~~in April 2024 and had 1one pending U.S. patent application. Our corresponding foreign patent portfolio as of December 31, ~~2021~~2022 included 2one issued ~~patents~~patent in ~~various foreign countries~~Canada expiring ~~at various dates from March 2022 to~~in August ~~2024 and no pending applications.~~2024.

We also have obtained exclusive and non-exclusive licenses for numerous other patents held by academic institutions and for-profit companies. Our material licenses include our exclusive license to develop and commercialize the Nu.Q® POC cancer screening and monitoring solution for dogs and cats.

Seasonality

~~While we~~

We do not experience significant seasonal fluctuations in our sales throughout the ~~year, we generally experience higher sales in the fourth quarter due to industry trade shows and other similar activities.~~

~~-8-~~

year.

Government Regulation

Although the majority of our revenue is from the sale of unregulated items, many of our products or products that we may develop are, or may be, subject to extensive regulation by governmental authorities in the U.S., including the USDA, FDA and the ~~FDA~~EPA and by similar agencies in other countries. These regulations govern, among other things, the development, testing, manufacturing, labeling, storage, pre-market approval, advertising, promotion, sale and distribution of our products. Satisfaction of these requirements can take several years to achieve, and the time needed to satisfy them may vary substantially, based on the type, complexity, and novelty of the product. Any product that we develop must receive all relevant regulatory approval or clearances, if required, before it may be marketed in a particular country. The following summarizes the major U.S. government agencies that regulate animal health products:

•USDA. Vaccines and certain single use, ~~point-of-care~~POC diagnostics are considered veterinary biologics and are therefore regulated by the Center for Veterinary Biologics, or CVB, of the USDA. In contrast to vaccines, single use, point-of-care diagnostics can typically be licensed by the USDA in about two years, at considerably less cost. However, vaccines or diagnostics that use innovative materials, such as those resulting from recombinant DNA technology, usually require additional time to license. The USDA licensing process involves the submission of several data packages. These packages include information on how the product will be manufactured, information on the efficacy and safety of the product in laboratory and target animal studies and information on performance of the product in field conditions.

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•FDA. Pharmaceutical products, which typically include synthetic compounds, are approved and monitored by the Center for Veterinary Medicine of the FDA. Under the Federal Food, Drug and Cosmetic Act, the same statutory standard for FDA approval applies to both human and animal drugs: demonstrated safety, efficacy and compliance with FDA manufacturing standards. However, unlike human drugs, neither preclinical studies nor a sequential phase system of studies are required. Rather, for animal drugs, studies for safety and efficacy may be conducted immediately in the species for which the drug is intended. Thus, there is no required phased evaluation of drug performance, and the Center for Veterinary Medicine will review data at appropriate times in the drug development process. The time and cost for developing companion animal drugs may be significantly less than for drugs for livestock animals, which generally have enhanced standards designed to ensure safety in the food chain.

•EPA. Products that are applied topically to animals or to premises to control external parasites are regulated by the Environmental Protection Agency, or EPA.

After we have received regulatory licensing or approval for our products, numerous regulatory requirements typically apply. Among the conditions for certain regulatory approvals is the requirement that our manufacturing facilities or those of our third-party manufacturers may need to conform to current Good Manufacturing Practices or other manufacturing regulations, which include requirements relating to quality control and quality assurance as well as maintenance of records and documentation. The USDA, FDA, EPA and foreign regulatory authorities strictly enforce manufacturing regulatory requirements through periodic inspections and/or reports.

A number of our animal health products are not regulated. For example, certain products such as our ALLERCEPT® panels are not regulated by either the USDA or FDA. Similarly, none of our veterinary instruments requires regulatory approval to be marketed and sold in the U.S.

~~-9-~~

We have pursued Conformité Européene (CE)Marking for certain POC laboratory instruments and imaging equipment and regulatory approval outside the U.S. based on market demographics of foreign countries. For marketing outside the U.S., we are subject to foreign regulatory requirements governing regulatory licensing and approval for many of our products. Licensing and approval by comparable regulatory authorities of foreign countries must be obtained before we can market products in those countries. Product licensing approval processes and requirements vary from country to country and the time required for such approvals may differ substantially from that required in the U.S. We cannot be certain that approval of any of our products in one country will result in approvals in any other country.

To date, we or our distributors have sought regulatory approval for certain of our products from the Canadian Center for Veterinary Biologics, or CCVB (Canada); the Japanese Ministry of Agriculture, Forestry and Fisheries, or MAFF (Japan); the Australian Department of Agriculture, Fisheries and Forestry, or ADAFF (Australia); the Republic of South Africa Department of Agriculture, or RSADA (South Africa); the Agriculture, Fisheries and Conservation Department, or ADCD (Hong Kong); the Macau Animal Health Division of Animal Control and Inspection, or IACM (Macau); the Spanish Ministry for Agriculture, Fisheries and Food; and from the relevant regulatory authorities in certain other countries requiring such approval.

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The heartworm and allergy products previously discussed which have received regulatory approval in the U.S. and/or elsewhere are summarized below:

Products

Country

Regulated

Agency

Status

ALLERCEPT Allergy Treatment Sets

U.S.
Canada

Yes
Yes

USDA
CCVB

Licensed
Licensed

SOLO STEP CH

U.S.
EU
Canada

Yes
No-in most countries
Yes

USDA

CCVB

Licensed

Licensed

SOLO STEP FH

U.S.
Canada

Yes
Yes

USDA
CCVB

Licensed
Licensed

TRI-HEART Plus Heartworm Preventive

U.S.
Hong Kong
Macau

Yes
Yes
Yes

FDA
AFCD
IACM

Licensed
Licensed
Licensed

Heartworm Antigen Test Kit

U.S.

Yes

USDA

Licensed

~~Customer Concentration~~

~~The information concerning our significant customers included in our Risk Factors section of this Annual Report under the caption “The loss of significant customers who, for example, are historically large purchasers or who are considered leaders in their field could damage our business and financial results” is incorporated herein by reference thereto.~~

Competition

Our market is intensely competitive. Our competitors include ~~independent~~ animal health companies and major pharmaceutical companies that have animal health ~~divisions.~~divisions as well as human health companies. We also compete with independent, third-party distributors and suppliers, including distributors and suppliers who sell products under their own private labels. In the ~~Point of Care~~POC diagnostic testing market, our major competitors include IDEXX Laboratories, Inc. ("IDEXX") and Zoetis Inc. ("Zoetis"). ~~Idexx~~Each of IDEXX and Zoetis has a larger veterinary product and service offering than we do and a large sales infrastructure network and a well-established brand name. The primary business of IDEXX, like ours, is veterinary diagnostics while the primary business of Zoetis ~~also has a large sales infrastructure network.~~

~~-10-~~is veterinary pharmaceuticals.

In our North America segment, the OVP products we manufacture for sale by third parties compete with similar products offered by a number of other companies, some of which have substantially greater financial, technical, research and other resources than us and may have more established marketing, sales, distribution and service organizations than we do. Companies with a significant presence in the animal health market ~~such as~~include C.H. Boehringer Sohn AG & Co. KG (Boehringer Ingelheim), CEVA Santé Animale, Elanco, Merck Animal Health, Sanofi, Vétoquinol S.A., and Virbac S.A. ~~and Zoetis may be marketing or developing products that compete with our products or would compete with them if successfully developed.~~ These and other competitors and potential competitors may have substantially greater financial, technical, research and other resources and larger, more established marketing, sales, distribution and service organizations than we do. Our competitors may offer broader product lines and have greater name recognition than we do.

Environmental Regulation

In connection with our product development activities and manufacturing of our biological, pharmaceutical, diagnostic and detection products, we are subject to federal, state and local laws, rules, regulations and policies governing the use, generation, manufacture, storage, handling and disposal of certain materials, biological specimens and wastes. Although we believe that we have complied with these laws, regulations and policies in all material respects and have not been required to take any significant action to correct any noncompliance, we may be required to incur significant costs to comply with environmental and health and safety regulations in the future. Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by state and federal regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. In the event of such an accident, we could be held liable for any damages that result and any such liability could exceed our resources.

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Human Capital Resources

As of December 31, ~~2021,~~2022, we employed approximately ~~655~~808 persons, ~~396 of which resided~~428 in North America and ~~259~~380 internationally. We employ temporary workers on a need only basis to maintain business flexibility and a dynamic workforce. We are committed to employee diversity and inclusion and the support of traditionally underrepresented groups in management. Our workforce is approximately 53% women and 47% men with ~~40%~~44% of our U.S. management team (defined as Director, Vice President, Senior Vice President and Executive Vice President) represented by women. ~~In 2021, we experienced an employee turnover rate of approximately 15% globally.~~

We believe that the current and future ~~success of our company’s~~ ability to execute on ~~its~~our strategic initiatives is highly dependent upon our ability to recruit, retain and reward our employees. We engage in targeted recruitment strategies to fill highly skilled positions. Our employees enjoy competitive compensation plans including market rate targeted salaries, robust benefits including retirement plans and employee stock purchase plan opportunities, and the opportunity for participation in short- and long-term incentive programs. Our compensation philosophy is designed to provide an appealing, market-based and rewarding compensation program that encourages high personal and company performance, strong cultural and ethical behavior, and incentives aligned with ~~shareholder~~stockholder interests. Our aim is to attract, engage and retain highly qualified, motivated, and creative people who will fulfill our mission to be the “voice of the pet,” while delivering on Heska goals in a healthy, honest, and sustainable manner.

We are committed to providing a workplace that protects the health and well-being of our employees. All employees are required to abide by our Code of Conduct and Ethics, company health and safety parameters and contribute to a positive and friendly company culture. Due to the COVID-19 pandemic and in consideration of our employees’ safety, in March 2020, we implemented work from home policies for ~~all~~ employees with the ability to work remotely, along with targeted on-site attendance for employees whose job requires their physical presence. At our Des Moines, Iowa manufacturing facility, we instituted staggered start

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times, designated building entry/exit protocols and closed common areas to maximize “social distancing” guidelines. AsWe anticipate easing restrictions implemented during the height of ~~December 31, 2021, we continue to enforce these safety precautions~~the pandemic and ~~abide by Center for Disease Control (“CDC”) guidelines, while tentatively planning~~continuing limited return to work procedures ~~in the second half of 2022.~~throughout 2023. Internationally, we continue to abide by local and country specific governmental requirements and follow local authority recommendations.

~~Our Chief Administrative Officer is responsible for developing and executing the Company’s human capital strategy and updates the Board on human capital matters.~~

Where You Can Find Additional Information

Our principal executive offices are located at 3760 Rocky Mountain Avenue, Loveland, Colorado 80538. Our telephone number is 970-493-7272 and our Internet address is www.heska.com. References to our website in this Annual Report on Form 10-K are inactive textual references only and the content of our website should not be deemed incorporated by reference for any purpose.

Because we believe it provides useful information in a cost-effective manner to interested investors, we make available free of charge, via a link on our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practical after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the "SEC").

In addition, you may also review and download a copy of this Annual Report on Form 10-K, including any exhibits and any schedules filed therewith, and our other periodic and current reports, proxy and information statements, and other information that we file with the SEC, without charge, by visiting the SEC's website (http://www.sec.gov).

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Information About Our Executive Officers

Our executive officers and their ages as of February 28, ~~2022~~2023 are as follows:


Name	Age	Position
Kevin S. Wilson	4950	Chief Executive Officer and President
Catherine Grassman	4647	Executive Vice President, Chief Financial Officer
Nancy Wisnewski, Ph.D.	5960	Executive Vice President, Chief Operating Officer
Steven M. Eyl	5657	Executive Vice President, Chief Commercial Officer, and President, scil animal care company
Christopher Sveen	3940	Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary, Heska and President, Diamond Animal Health
Eleanor Baker	3738	Executive Vice President, Managing Director and Chief Operating Officer scil animal care company
Anthony Providenti	56	Executive Vice President, Corporate Development

Kevin S. Wilson was appointed President and Chief Executive Officer effective March 31, 2014. He previously served as our President and Chief Operating Officer from February 2013. Mr. Wilson became a member of our Board of Directors in May 2014. Mr. Wilson is a founder, member and officer of Cuattro, LLC, an imaging and software company. Since 2008, he has been involved in developing technologies for radiographic imaging with Cuattro, LLC and as a founder of Cuattro Software, LLC, Cuattro Medical, LLC and Cuattro Veterinary, LLC. Mr. Wilson served on the board of various private, non-profit and educational organizations from 2005 to 2011. He was a founder of Sound Technologies, Inc., a diagnostic imaging

~~-12-~~

company, in 1996. After Sound Technologies, Inc. was sold to VCA Antech, Inc. in 2004, Mr. Wilson served as Chief Strategy Officer for VCA Antech, Inc. until 2006. Mr. Wilson attended Saddleback College.

Catherine Grassman, CPA, was appointed Executive Vice President, Chief Financial Officer on May 6, 2019. She previously served as Vice President and Chief Accounting Officer from December 2017 to May 2019 and as Corporate Controller from January 2017 to December 2017. Prior to joining Heska, Ms. Grassman was Corporate Controller of KeyPoint Government Solutions, a mid-sized private-equity backed, background investigation services company. She also spent more than 15 years with PricewaterhouseCoopers, LLP as a senior manager in the audit practice. She is licensed in Colorado as a Certified Public Accountant and possesses a Master of Accountancy and a Bachelor of Business Administration from Stetson University.

Nancy Wisnewski, Ph.D. was appointed Executive Vice President, Chief Operating Officer in August 2019. She previously served as Executive Vice President, Diagnostic Operations and Product Development from September 2016 to August 2019, as Executive Vice President, Product Development and Customer Service from April 2011 to September 2016 and as Vice President, Product Development and Technical Customer Service from December 2006 to April 2011. From January 2006 to November 2006, Dr. Wisnewski was Vice President, Research and Development. Dr. Wisnewski held various positions in Heska's Research and Development organization between 1993 and 2005. She holds a Ph.D. in Parasitology/Biochemistry from the University of Notre Dame and a BS in Biology from Lafayette College. Dr. Wisnewski will step down from her current position effective March 31, 2023 and will remain with the Company in the position of Chief Science Advisor to the CEO, but will no longer serve as an executive officer as of such time.

Steven M. Eyl was appointed Executive Vice President, Global Sales and Marketing in September 2016. He previously served as our Executive Vice President, Commercial Operations from May 2013 to September 2016. Mr. Eyl was a principal of Eyl Business Services, a consulting firm, from January 2012 to May 2013. He was President of Sound Technologies, Inc. ("Sound") from 2000 to 2011, including after Sound's acquisition by VCA Antech, Inc. in 2004. Mr. Eyl has an extensive background in medical technology sales. He is a graduate of Indiana University.

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Christopher Sveen, Esq. was appointed Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary of Heska Corporation and President, Diamond Animal Health in April 2020, previously serving as Vice President, General Counsel from December 2018 to April 2020. Before joining Heska, Mr. Sveen served as a Private Banker at J.P. Morgan Private Bank in Chicago from August 2015 to May 2018 and prior to that as a civil litigation and trial attorney at a boutique litigation firm. Mr. Sveen received his Juris Doctor from Chicago-Kent College of Law in 2009 and his Master of Business Administration (MBA) from the Kelley School of Business at Indiana University in 2015. He is licensed to practice law in Illinois and Colorado.

Eleanor Baker ~~Esq.~~ was appointed Executive Vice President, Managing Director of scil in April 2020, previously serving as Vice President, General Counsel since November 2017. Previously, Ms. Baker worked at KPMG, LLP as a technology and innovation solutions consultant from 2015 to November 2017. Ms. Baker received her Juris Doctor from Wake Forest School of Law, a Master of Laws from University of Houston and her undergraduate degree from Texas A&M University. She is licensed to practice law in Texas and Colorado.

Anthony Providenti was appointed Executive Vice President, Corporate Development in September 2021. Mr. Providenti brings over 25 years of transactional experience and over 15 years of veterinary industry experience to this role. Prior to Heska, Mr. Providenti held key roles at prominent animal health companies, having served most recently as Executive Vice President, Corporate Development at Covetrus, Inc. He joined Covetrus in February 2019 as part of its formation after serving as Vice President, Corporate Business Development Group, Animal Health and Medical at Henry Schein, Inc. (NASDAQ: HSIC). Before joining Henry Schein, Mr. Providenti acted as a corporate attorney at Gibson, Dunn & Crutcher LLP. Mr. Providenti holds a Juris Doctor from Fordham University School of Law, where he served as an editor and a member of the Fordham Law Review and a BS in Accounting from Lehigh University.

Item 1A.Risk Factors

Risk Factors Summary

Pursuant to Item 105(b) of Regulation S-K, the following represents a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together

~~-13-~~

with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock.

Risks related to our business and industry

•~~Uncertainty regarding the extent~~Our business is subject to ~~which~~risk based on global economic conditions, including inflationary pressures and lingering economic effects of the COVID-19 ~~pandemic will adversely impact our business, results of operations and financial condition.~~pandemic.

•If third parties with substantial marketing rights for certain of our historical products, existing products, or future products under development are not successful in marketing those products, then our sales and financial position may suffer.

•We rely substantially on third party suppliers and rights under contracts with third parties. The loss of products, or rights under contracts, or delays in product availability from one or more third party suppliers could substantially harm our business.

•We depend on key personnel for our future success. If we lose our key personnel or are unable to attract and retain additional personnel, we may be unable to achieve our goals.

•~~The loss of significant customers who, for example, are historically large purchasers or who are considered leaders in their field could damage our business and financial results.~~

•We operate in a highly competitive industry, which could render our products obsolete or substantially limit the volume of products that we sell. This would limit our ability to compete and maintain sustained profitability.

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•We often depend on third parties for products we intend to introduce in the future. If our current relationships and collaborations are not successful, we may not be able to introduce the products we intend to introduce in the future.

•We may be unable to market and sell our products successfully.

•We face risks associated with our international operations and our international expansion may not generate the results we anticipate.

•We may face costly legal disputes, including disputes related to our intellectual property or technology or that of our suppliers or collaborators.

•Interpretation of existing legislation, regulations and rules, including financial accounting standards, or implementation of future legislation, regulations and rules could cause our costs to increase or could harm us in other ways.

•We are currently evaluating, and we intend to pursue, acquisitions, investments, licenses, joint ventures, and other strategic development opportunities, which may not have desired results and could be detrimental to our financial position.

•Obtaining and maintaining regulatory approvals in order to market our products may be costly and could delay the marketing and sales of our products. Failure to meet ~~all~~ regulatory requirements could cause significant losses from affected inventory and the loss of market share.

•Our future revenues depend on successful product development, direct manufacturing, contract manufacturing, commercialization and/or market acceptance, any of which can be slower than we expect or may not occur.

•Many of our expenses are fixed and if factors beyond our control cause our revenue to fluctuate, this fluctuation could cause greater than expected losses, cash flow and liquidity shortfalls.

•Cyberattack related breaches of our information technology systems could have an adverse effect on our business.

•We may be unable to protect our stakeholders’ privacy or we may fail to comply with privacy laws.

•We may not be able to achieve sustained profitability or increase profitability on a quarterly or annual basis.

•We may face product returns and product liability litigation in excess of, or not covered by, our insurance coverage or indemnities and/or warranties from our suppliers. If we become subject to

~~-14-~~

product liability claims resulting from defects in our products, we may fail to achieve market acceptance of our products and our sales could substantially decline.

•We may be held liable for the release of hazardous materials, which could result in extensive remediation costs or otherwise harm our business.

Risks related to our common stock

•Our stock price has historically experienced high volatility, and could do so in the future, including experiencing a material price decline resulting from a large sale in a short period of time. This volatility could affect the value of our common stock.

•Our NOL Protective Amendment could adversely impact the value and trading liquidity of our common stock.

•If securities analysts do not publish research or reports about our business, or if they downgrade our stock, the price of our stock could decline.

•We have not declared or paid any dividends on our common stock since 2012 and we do not anticipate paying any cash dividends in the foreseeable future.

•We have fewer than ~~300~~200 holders of record, which could allow us to terminate voluntarily the registration of our common stock with the SEC and after which we would no longer be eligible to maintain the listing of our common stock on The Nasdaq Capital Market. We may also be unable to otherwise maintain our listing on The Nasdaq Capital Market.

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•Provisions in our Certificate of Incorporation and bylaws and under Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

~~Risks related to the outstanding Notes~~

•~~Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.~~

•We may not have the ability to raise the funds necessary to settle conversions of our convertible notes (the "Notes") in cash or to repurchase the Notes upon a fundamental change, and our future debt may contain, limitations on our ability to pay cash upon conversion or repurchase of the Notes.

•~~The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.~~

~~Risk Factors~~

Our future operating results may vary substantially from period to period due to a number of factors, many of which are beyond our control. The following discussion highlights the material factors and the possible impact of these factors on future results of operations. If any of the following factors actually occur, our business, financial condition or results of operations could be harmed. In that case, the price of our Public Common Stock could decline and investors in our Public Common Stock could experience losses on their investment.

~~-15-~~

~~Risks related to our business and industry~~

~~The extent to which the COVID-19 pandemic will adversely affect our business, results of operations and financial condition is uncertain.~~

The global spread of the coronavirus and its variants (the “COVID-19 pandemic”) has created significant uncertainty and economic disruption in the markets in which we operate, both near-term and potentially long-term. The extent to which the COVID-19 pandemic will affect our business, results of operation and financial condition is difficult to predict and depends on numerous rapidly evolving factors, such as the severity and transmission rate of the virus, the emergence and spread of variants, infection rates in areas where we operate, the extent and effectiveness of containment actions, including the continued availability and effectiveness of vaccines in the markets where we operate, the impact of actions taken by governmental authorities and other third parties in response to the pandemic, and the impact of these and other factors on our employees, customers, and suppliers. Although difficult to determine the full scope of the effects of the COVID-19 pandemic on our business, we have experienced and continue to experience supply chain disruptions, which may result in manufacturing delays and increased component costs. We also expect that we may incur increased compensation expenses and higher-than-normal employee turnover as we attempt to attract and retain skilled employees during a macro working environment where qualified labor is in short supply, job-mobility is high in part because of remote working arrangements, and the benefits of company culture and personal relationships are more difficult to realize outside of the traditional office setting. We are also monitoring the effects of the COVID-19 pandemic on the operation of veterinary clinics, consumer discretionary spending on their pets’ health and wellbeing, research and development trends regarding animal health ~~vis a vis~~ human health, and the ability of our sales staff to travel and our manufacturing staff to operate in their normal capacities. However, the effect of the COVID-19 pandemic on the foregoing issues and numerous other potential issues is difficult to predict, both in the short-term and in the long-term, and any one of them could cause a material adverse effect on our business, results of operation and financial condition. The COVID-19 pandemic could also have the effect of heightening other risk factors described in this report.

If third parties with substantial marketing rights for certain historical products, existing products or future products under development are not successful in marketing those products, then our sales and financial position may suffer.

We are party to agreements with Merck Animal Health (“MAH”) for our canine heartworm preventive product, TRI-HEART Plus Chewable Tablets, and Elanco for certain bovine vaccines, which have been sold primarily under the Titanium and MasterGuard brands. Either of these marketing partners may not devote sufficient resources to marketing our products and our sales and financial position could suffer significantly as a result. For example, in 2019, MAH failed to market, sell and support our heartworm preventive product, which resulted in depressed PVD product annual revenue in our North America segment. Furthermore, there may be nothing to prevent these partners from pursuing alternative technologies, products or supply arrangements, including as part of mergers, acquisitions or divestitures. Third party marketing assistance may not be available in the future on reasonable terms, if at all. If the third parties with marketing rights for our products were to merge or go out of business, the sale and promotion of our products could be diminished.

We rely substantially on third party suppliers and rights under contracts with third parties. The loss of products, or rights under contracts, or delays in product availability from one or more third party suppliers could substantially harm our business.

To be successful, we must contract for the supply of, or manufacture ourselves, current and future products of appropriate quantity, quality and cost. Such products must be available on a timely basis and be in compliance with any regulatory requirements. Similarly, we must provide ourselves, or contract for the supply of, certain services. Such services must be provided in a timely and appropriate manner. Failure to do any of the above could substantially harm our business.

~~-16-~~

We rely on third party suppliers to manufacture those products we do not manufacture ourselves and to provide services we do not provide ourselves. Proprietary products provided by these suppliers represent a majority of our revenue. We currently rely on these suppliers for our Point of Care laboratory instruments and consumable supplies for these instruments, for our imaging products and related software and services, for key components of our point-of-care diagnostic tests as well as for the manufacture of other products.

The loss of access to products from one or more suppliers could have a significant, negative impact on our business. Major suppliers that sell us proprietary products are FUJIFILM Corporation and Shenzen Mindray Bio-Medical Electronics Co., Ltd. We often purchase products from our suppliers under agreements that are of limited duration or potentially can be terminated on short notice subsequent to unfavorable legal action. In the case of our Point of Care laboratory instruments and our digital radiography solutions, post-termination, we are typically entitled to non-exclusive access to consumable supplies, or ongoing non-exclusive access to products and services to meet the needs of an existing customer base, respectively, for a defined period upon expiration of exclusive rights, which could subject us to competitive pressures in the period of non-exclusive access. There can be no assurance that our suppliers will meet their obligations under any agreements we may have in place with them or that we will be able to compel them to do so. Risks of relying on suppliers include:

•~~Inability to meet minimum obligations~~. Current agreements, or agreements we may negotiate in the future, may commit us to certain minimum purchase or other spending obligations. It is possible we will not be able to create the market demand to meet such obligations, which could create a drain on our financial resources and liquidity. Some agreements may require minimum purchases and/or sales to maintain product rights and we may be significantly harmed if we are unable to meet such requirements and lose product rights.

•~~Loss of exclusivity~~. In the case of our Point of Care laboratory instruments, if we are entitled to non-exclusive access to consumable supplies for a defined period upon expiration of exclusive rights, we may face increased competition from a third party with similar non-exclusive access or our former supplier, which could cause us to lose customers and/or significantly decrease our margins and could significantly affect our financial results. In addition, current agreements, or agreements we may negotiate in the future, with suppliers may require us to meet minimum annual sales levels to maintain our position as the exclusive distributor of these products. We may not meet these minimum sales levels and maintain exclusivity over the distribution and sale of these products. If we are not the exclusive distributor of these products, competition may increase significantly, reducing our revenues and/or decreasing our margins.

•~~Changes in economics~~. An underlying change in the economics with a supplier, such as a large price increase or new requirement of large minimum purchase amounts, could have a significant, adverse effect on our business, particularly if we are unable to identify and implement an alternative source of supply in a timely manner.

•~~Supply chain constraints in raw materials to suppliers~~. Our suppliers rely on sourcing raw materials, instrument components and other items necessary to produce the supply of products we offer our customers. Supply chain constraints faced by our suppliers may delay a supplier’s ability to produce our products, which could create an interruption in our ability to fulfill orders.

•~~The loss of product rights upon expiration or termination of an existing agreement~~. Unless we are able to find an alternate supply of a similar product, we would not be able to continue to offer our customers the same breadth of products and our sales and operating results would likely suffer. In the case of an instrument supplier, we could also potentially suffer the loss of sales of consumable supplies, which would be significant in cases where we have built a significant installed base, further harming our sales prospects

~~-17-~~

and opportunities. Even if we were able to find an alternate supply for a product to which we lost rights, we would likely face increased competition from the product whose rights we lost being marketed by a third party or the former supplier and it may take us additional time and expense to gain the necessary approvals and launch an alternative product.

•~~High switching costs~~. In our Point of Care laboratory instrument products, we could face significant competition and lose all or some of the consumable revenues from the installed base of those instruments if we were to switch to a competitive instrument. If we need to change to other commercial manufacturing contractors for certain of our regulated products, additional regulatory licenses or approvals generally must be obtained for these contractors prior to our use. This would require new testing and compliance inspections prior to sale, thus resulting in potential delays. Any new manufacturer would have to be educated in, or develop, substantially equivalent processes necessary for the production of our products. We likely would have to train our sales force, distribution network employees and customer support organization on the new product and spend significant funds marketing the new product to our customer base.

•~~The involuntary or voluntary discontinuation of a product line~~. Unless we are able to find an alternate supply of a similar product in this or similar circumstances with any product, we would not be able to continue to offer our customers the same breadth of products and our sales would likely suffer. Even if we are able to identify an alternate supply, it may take us additional time and expense to gain the necessary approvals and launch an alternative product, especially if the product is discontinued unexpectedly.

•~~Inconsistent or inadequate quality control. We may not be able to control or adequately monitor the quality of products we receive from our suppliers. Poor quality items could damage our reputation with our customers.~~

•~~Limited capacity or ability to scale capacity~~. If market demand for our products increases suddenly, our current suppliers might not be able to fulfill our commercial needs, which would require us to seek new manufacturing arrangements and may result in substantial delays in meeting market demand. If we consistently generate more demand for a product than a given supplier is capable of handling, it could lead to large backorders and potentially lost sales to competitive products that are readily available. This could require us to seek or fund new sources of supply, which may be difficult to find or may require terms that are less advantageous if available at all.

•~~Regulatory risk~~. Our manufacturing facility and those of some of our third party suppliers are subject to ongoing periodic unannounced inspection by regulatory authorities, including the FDA, USDA and other federal, state and foreign agencies for compliance with strictly enforced Good Manufacturing Practices, regulations and similar foreign standards. We do not have control over our suppliers’ compliance with these regulations and standards. Regulatory violations could potentially lead to interruptions in supply that could cause us to lose sales to readily available competitive products. If one of our suppliers is unable to provide a raw material or finished product due to regulatory issues, it could have a material adverse financial impact on our business and could expose us to legal action if we are unable to perform on contracts to our customers involving related products.

•~~Developmental delays~~. We may experience delays in the scale-up quantities needed for product development that could delay regulatory submissions and commercialization of our products in development, causing us to miss key opportunities.

•~~Limited geographic rights. We typically do not have global geographic rights to products supplied by third parties. If we were to determine a market opportunity in a geography where we did not have distribution~~

~~-18-~~

~~rights and were unable to obtain such rights from the supplier, it might hamper our ability to succeed in such geography and our sales and profits would be lower than they otherwise would have been.~~

•~~Limited intellectual property rights~~. We typically do not have intellectual property rights, or may have to share intellectual property rights, to the products supplied by third parties and any improvements to the manufacturing processes or new manufacturing processes for these products.

•~~Changes to United States tariff and import/export regulations~~. Changes to United States trade policies, treaties and tariffs could have a material adverse effect on global trade. These changes could result in increased costs of goods imported into the United States for the Company and our third party suppliers. Our third party suppliers may limit their trade with companies in the United States, including us.

•~~Global human and animal health risk~~. Several of our suppliers have operations in areas that may be susceptible to public health emergencies that could restrict global trade generally, and our access to consumables and product, specifically.The risk of infectious disease in humans and animals may limit trade and product access with third party suppliers with companies inside and outside the United States, including us. In particular, the use of animal bi-product may affect our consumable supply as a result of global animal health risks.

Potential problems with suppliers such as those discussed above could substantially decrease sales, lead to higher costs and/or damage our reputation with our customers due to factors such as poor quality goods or delays in order fulfillment, resulting in our being unable to sell our products effectively and substantially harming our business.

~~We depend on key personnel for our future success. If we lose our key personnel or are unable to attract and retain additional personnel, we may be unable to achieve our goals.~~

Our future success is substantially dependent on the efforts of our senior management and other key personnel, including our Chief Executive Officer (“CEO”) and President, Kevin Wilson. The loss of the services of members of our senior management or other key personnel may significantly delay or prevent the achievement of our business objectives. Although we have employment agreements with many of these individuals, all are at-will employees, which means that either the employee or Heska may terminate employment at any time without prior notice. If we lose the services of, or fail to recruit, key personnel, the growth of our business could be substantially impaired. We do not maintain key person life insurance for any of our senior management or key personnel.

~~The loss of significant customers who, for example, are historically large purchasers or who are considered leaders in their field could damage our business and financial results.~~

Revenue from Covetrus, Inc., formerly known as Henry Schein Animal Health ("Covetrus"), represented approximately 8%, 6% and 14% of our consolidated revenue for the years ended December 31, 2021, 2020 and 2019, respectively. No other customer accounted for more than 10% of our consolidated revenue for the years ended December 31, 2021, 2020 or 2019. No customer accounted for more than 10% of our consolidated accounts receivable at December 31, 2021 or 2020. The loss of, or material reduction in business from, any of our significant customers could adversely affect our business and financial results.

~~-19-~~

We operate in a highly competitive industry, which could render our products obsolete or substantially limit the volume of products that we sell. This would limit our ability to compete and maintain sustained profitability.

The market in which we compete is intensely competitive. Our competitors include independent animal health companies and major pharmaceutical companies that have animal health divisions. We also compete with independent, third party distributors, including distributors that sell products under their own private labels. In the point-of-care diagnostic testing market, our major competitors include IDEXX Laboratories, Inc. and Zoetis Inc.. The OVP products manufactured by our North America segment for sale by third parties compete with similar products offered by a number of other companies, some of which have substantially greater financial, technical, research and other resources than us and may have more established marketing, sales, distribution and service organizations than those of our OVP product customers. Competitors may have facilities with similar capabilities to our Des Moines, Iowa facility, which they may operate and sell at a lower unit price to customers than we sell our OVP products for, which could cause us to lose customers. Companies with a significant presence in the companion animal health market, such as CEVA Sante´ Animale, Elanco, Merck, Sanofi, Vétoquinol S.A. and Virbac S.A. may be marketing or developing products that compete with our products or would compete with them if developed. These and other competitors and potential competitors may have substantially greater financial, technical, research and other resources and larger, more established marketing, sales and service organizations than we do. For example, if Zoetis devotes its significant commercial and financial resources to growing its market share in the veterinary allergy market, our allergy-related sales could suffer significantly. Our competitors may offer broader product lines and have greater name recognition than we do. Our competitors may also develop or market technologies or products that are more effective or commercially attractive than our current or future products or that would render our technologies and products obsolete. Further, additional competition could come from new entrants to the animal health care market. Moreover, we may not have the financial resources, technical expertise or marketing, sales or support capabilities to compete successfully.

~~If we fail to compete successfully, our ability to achieve sustained profitability will be limited and sustained profitability, or profitability at all, may not be possible.~~

We benefit from relationships or collaboration with third parties, including but not limited to, companies, buying groups, veterinary hospital groups and reference laboratory entities that operate in our markets. Beneficial third party, semi-competitive, directly competitive and cooperative relationships that affect how we go to market, develop products, generate leads and other commercial efforts of Heska may be negatively affected as a result of consolidation, acquisition, merger, exclusive arrangement or other agreements or activities between and amongst those third parties and others.

~~-20-~~

We may depend on third parties for products we intend to introduce in the future. If our current relationships and collaborations are not successful, we may not be able to introduce the products we intend to introduce in the future.

We are occasionally dependent on third parties and collaborative partners to perform research and development activities to successfully develop new products. We routinely discuss Heska marketing in the veterinary market instruments being developed by third parties for use in the human health care market. In the future, one or more of these third parties or collaborative partners may not complete research and development activities in a timely fashion, or at all. Even if these third parties are successful in their research and development activities, we may not be able to come to an economic agreement with them. If these third parties or collaborative partners fail to complete research and development activities or fail to complete them in a timely fashion, or if we are unable to negotiate economic agreements with such third parties or collaborative partners, our ability to introduce new products may be impacted negatively and our revenues may decline.

~~We may be unable to market and sell our products successfully.~~

We may not develop and maintain marketing and/or sales capabilities successfully, and we may not be able to make arrangements with third parties to perform these activities on satisfactory terms, or at all. If our marketing and sales strategy is unsuccessful, our ability to sell our products will be negatively impacted and our revenues will decrease. This could result in the loss of distribution rights for products or failure to gain access to new products and could cause damage to our reputation and adversely affect our business and future prospects. The market for companion animal healthcare products is highly fragmented. Because our proprietary products are generally available only to veterinarians or by prescription and our medical instruments require technical training to operate, we ultimately sell all our products primarily to or through veterinarians. The acceptance of our products by veterinarians is critical to our success. Changes in our ability to obtain or maintain such acceptance or changes in veterinary medical practice could significantly decrease our anticipated sales. As the vast majority of cash flow to veterinarians ultimately is funded by pet owners without private insurance or government support, our business may be more susceptible to severe economic downturns than other health care businesses that rely less on individual consumers.

For our Point of Care laboratory blood diagnostics products, we primarily rely on contracts with our veterinary customers for their use of our owned equipment and our consumable supplies over a multiple year period. If veterinarians under these contracts experience a significant downturn in their business, they may not fulfill their use and financial obligations under these contracts. If veterinarians breach our contracts, and we are unable to collect on default payment provisions or otherwise enforce the terms of our contracts, our business will be adversely affected. If we have to litigate against customer(s) to enforce our contracts, our expenses may increase, our sales may decrease to those customers, and our reputation may suffer. If significant numbers of our customers under contracts for use of our equipment and consumable supplies do not renew their contracts, our business will be adversely affected.

We have entered into agreements with independent third party distributors who we anticipate will market and sell our products to a greater degree than in the recent past. Independent third party distributors may be effective in increasing sales of our products to veterinarians, although we would expect a corresponding lower gross margin as such distributors typically buy products from us at a discount to end user prices. It is possible new or existing independent third party distributors could cannibalize our direct sales efforts and lower our total gross margin. For us to be effective when working with an independent third party distributor, the distributor must agree to market and/or sell our products and we must provide proper economic incentives to the distributor as well as contend effectively for the time, energy and focus of the employees of such distributor given other products the distributor may be carrying, potentially including those of our

~~-21-~~

~~competitors. If we fail to be effective with new or existing independent third party distributors, our financial performance may suffer.~~

~~We face risks associated with our international operations and our international expansion may not generate the results we anticipate.~~

A core component of our future growth strategy is international expansion. As we continue to expand our international footprint, we will be increasingly susceptible to the risks associated with international operations including, but not limited to, the following:

•~~uncertain political and economic climates and fluctuations in exchange rates that may increase the volatility of foreign-based revenue and expense;~~

•~~burdens of complying with and unexpected changes in foreign laws, accounting and legal standards, regulatory requirements, taxes, tariffs and other barriers or trade restrictions;~~

•~~lack of experience in connection with the customs, cultures, languages and sales cycle;~~

•~~reduced or altered protection for intellectual property rights; and~~

•~~data privacy laws in foreign countries, which require that data storage and processing be subject to laws different than the United States.~~

~~As a result of these and other factors, international expansion may be more difficult and not generate the results we anticipate, which could negatively impact our business.~~

~~We may face costly legal disputes, including disputes related to our intellectual property or technology or that of our suppliers or collaborators.~~

We have faced, and may face in the future, legal disputes related to our business. Even if meritless, these disputes may require significant expenditures on our part and could entail a significant distraction to members of our management team or other key employees. Insurance coverage may not cover any costs required to litigate a legal dispute or an unfavorable ruling or settlement. A legal dispute leading to an unfavorable ruling or settlement, whether or not insurance coverage may be available for any portion thereof, could have material adverse consequences on our business. Moreover, we may have to use legal means and incur affiliated costs to secure the benefits to which we are entitled under third party agreements, such as to collect payment for goods shipped to third parties, which would reduce our income as compared to what it otherwise would have been.

We may become subject to patent infringement claims and litigation in the United States or other countries or interference proceedings conducted in the United States Patent and Trademark Office, or USPTO, to determine the priority of inventions. The defense and prosecution of intellectual property suits, USPTO interference proceedings and related legal and administrative proceedings are likely to be costly, time-consuming and distracting. As is typical in our industry, from time to time we and our collaborators and suppliers have received, and may in the future receive, notices from third parties claiming infringement and invitations to take licenses under third-party patents. Any legal action against us or our collaborators or suppliers may require us or our collaborators or suppliers to obtain one or more licenses in order to market or manufacture affected products or services. We or our collaborators or suppliers may not, however, be able to obtain licenses for technology patented by others on commercially reasonable terms, or at all, or to develop alternative approaches to access or replace such technology if we or they are unable to obtain such licenses or if current and future licenses prove inadequate, any of which could substantially harm our business.

We may also need to pursue litigation to enforce any contractual rights or patents issued to us or our collaborative partners, to protect trade secrets or know-how owned by us or our collaborative partners, or to

~~-22-~~

determine the enforceability, scope and validity of our contractual rights or the proprietary rights of others. Any litigation or interference proceedings will likely result in substantial expense to us and significant diversion of the efforts of our technical and management personnel. Any adverse determination in litigation or interference proceedings could subject us to significant liabilities to third parties. Further, as a result of litigation or other proceedings, we may be required to seek licenses from third parties which may not be available on commercially reasonable terms, or at all.

Interpretation of existing legislation, regulations and rules, including financial accounting standards, or implementation of future legislation, regulations and rules could cause our costs to increase or could harm us in other ways.

As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses due to our compliance with regulations and disclosure obligations applicable to us, including compliance with the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, as well as rules implemented by the SEC and the Nasdaq Stock Market.We prepare our financial statements in conformance with GAAP. These accounting principles are established by and are subject to interpretation by the SEC, the FASB and others which interpret and create accounting policies. These rules and regulations will continue to cause us to incur significant legal and financial compliance costs and will make some activities more time-consuming and costly. A change in those policies or how those policies are interpreted can have a significant effect on our reported results and may affect our reporting of transactions completed before a change is made effective. Such changes may require us to incur additional compliance costs, adversely affect our reported financial results and the way we conduct our business or have a negative impact on us if we fail to track such changes.

If our regulators and/or auditors adopt or interpret more stringent standards than we anticipate, we could experience unanticipated changes in our reported financial statements, including but not limited to restatements, which could adversely affect our business due to litigation and investor confidence in our financial statements. In addition, changes in the underlying circumstances to which we apply given accounting standards and principles may affect our results of operations and have a negative impact on us. For example, we review goodwill recognized on our consolidated balance sheets at least annually and if we were to conclude there was an impairment of goodwill, we would reduce the corresponding goodwill to its estimated fair value and recognize a corresponding expense in our statement of operations. This impairment and corresponding expense could be as large as the total amount of goodwill recognized on our consolidated balance sheets, which was $118.8 million at December 31, 2021 and $88.3 million at December 31, 2020. There can be no assurance that future goodwill impairments will not occur if projected financial results are not met, or otherwise.

We are currently evaluating, and we intend to pursue, acquisitions, investments, licenses, joint ventures, and other strategic development opportunities, which may not have desired results and could be detrimental to our financial position.

We continue to evaluate, and we intend to pursue, acquisitions and other strategic development opportunities, including minority investments where strategic, such as our acquisition of scil in 2020, our acquisitions of Lacuna, BiEsseA, and Biotech in 2021, and our acquisition of VetZ in 2022. The ultimate business and financial performance of these opportunities may not create, and may end up adversely affecting materially, the value we hope to enhance by pursuing them. Any acquisition may significantly underperform relative to our financial expectations and may serve to diminish rather than enhance shareholder value. We may also diminish our cash resources or dilute stockholders in order to finance any such acquisition or other strategic transaction.

~~-23-~~

businesses. The integration of acquisitions is likely to require significant attention from our management, and the diversion of management’s attention and resources could have a material adverse effect on our ability to manage our business. Furthermore, we may not realize the degree or timing of benefits we anticipated when we first entered into the acquisition transaction. If actual integration costs are higher than amounts originally anticipated, if we are unable to integrate the assets and personnel acquired in an acquisition as anticipated, or if we are unable to fully benefit from anticipated synergies, our business, financial condition, results of operations and cash flows could be materially adversely affected. Furthermore, it is possible we will use management time and resources to pursue opportunities we ultimately are unable or decide not to consummate, in which case, we may not be able to utilize such management time and resources on what may have proved to be more productive matters in other areas of our business.

We make investments into licenses, third parties, and contracts with legal, development and commercial rights and obligations. These investments may not produce positive results, economic or strategic value, or any benefits and may decline in value or have no value.

Obtaining and maintaining regulatory approvals in order to market our products may be costly and could delay the marketing and sales of our products. Failure to meet all regulatory requirements could cause significant losses from affected inventory and the loss of market share.

Many of the products we develop, market or manufacture may subject us to extensive regulation by one or more of the USDA, the FDA, the EPA and foreign and other regulatory authorities. These regulations govern, among other things, the development, testing, manufacturing, labeling, storage, pre-market approval, advertising, promotion and sale of some of our products. Satisfaction of these requirements can take several years and time needed to satisfy them may vary substantially, based on the type, complexity and novelty of the product. The decision by a regulatory authority to regulate a currently non-regulated product or product area could significantly impact our revenue and have a corresponding adverse impact on our financial performance and position while we attempt to comply with the new regulation, if such compliance is possible at all.

The effect of government regulation may be to delay or to prevent marketing of our products for a considerable period of time and to impose costly procedures upon our activities. We may not be able to estimate the time to obtain required regulatory approvals accurately and such approvals may require significantly more time than we anticipate. We have experienced in the past, and may experience in the future, difficulties that could delay or prevent us from obtaining the regulatory approval or license necessary to introduce or market our products. Such delays in approval may cause us to forego a significant portion of a new product’s sales in its first year due to seasonality and advanced booking periods associated with certain products. Regulatory approval of our products may also impose limitations on the indicated or intended uses for which our products may be marketed.

~~-24-~~

Difficulties in making established products to all regulatory specifications may lead to significant losses related to affected inventory as well as market share. Among the conditions for certain regulatory approvals is the requirement that our facilities and/or the facilities of our third party manufacturers conform to current Good Manufacturing Practices and other analogous or additional requirements. If any regulatory authority determines that our manufacturing facilities or those of our third party manufacturers do not conform to appropriate manufacturing requirements, we or the manufacturers of our products may be subject to sanctions, including, but not limited to, warning letters, manufacturing suspensions, product recalls or seizures, injunctions, refusal to permit products to be imported into or exported out of the United States, refusals of regulatory authorities to grant approval or to allow us to enter into government supply contracts, withdrawals of previously approved marketing applications, civil fines and criminal prosecutions. Furthermore, third parties may perceive procedures required to obtain regulatory approval objectionable and may attempt to disrupt or otherwise damage our business as a result. In addition, certain of our agreements may require us to pay penalties if we are unable to supply products, including for failure to maintain regulatory approvals.

~~Any of these events, alone or in combination with others, could significantly damage our business or results of operations.~~

Our future revenues depend on successful product development, direct manufacturing, contract manufacturing, commercialization and/or market acceptance, any of which can be slower than we expect or may not occur.

The product development and regulatory approval and maintenance process for many of our current and potential products is extensive and may take substantially longer than we anticipate. Research projects may fail. New products that we may be developing for the veterinary marketplace may not perform consistently within our expectations. Because we have limited resources to devote to product development and commercialization, any delay in the development of one product or reallocation of resources to product development efforts that prove unsuccessful may delay or jeopardize the development of other product candidates. If we fail to successfully develop new products and bring them to market in a timely manner, our ability to generate additional revenue will decrease.

Even if we are successful in the development of a product or obtain rights to a product from a third party supplier, we may experience delays or shortfalls in commercialization and/or market acceptance of the product. For example, veterinarians may be slow to adopt a product, a product may not achieve the anticipated technical performance in field use or there may be delays in producing large volumes of a product. The former is particularly likely where there is no comparable product available or historical precedent for such a product. The ultimate adoption of a new product by veterinarians, the rate of such adoption and the extent veterinarians choose to integrate such a product into their practice are all important factors in the economic success of any new products and are factors that we do not control to a large extent. If our products do not achieve a significant level of market acceptance, demand for our products will not develop as expected and our revenues will be lower than we anticipate.

Even if we are successful in the development of a product or obtain rights to a product from a third party supplier, we may not be able to, ourselves or through a third party, manufacture such product or continue to manufacture such product on an ongoing basis necessary to realize economic value or service customers, or manufacture such product economically or to the standard necessary to realize economic value or service customers.

~~-25-~~

~~Many of our expenses are fixed and if factors beyond our control cause our revenue to fluctuate, this fluctuation could cause greater than expected losses, cash flow and liquidity shortfalls.~~

~~We believe that our future operating results will fluctuate on a quarterly basis due to a variety of factors which are generally beyond our control, including:~~

•~~supply of products and components, including minimum purchase agreements, from third party suppliers or termination, cancellation or expiration of such relationships;~~

•~~competition and pricing pressures from competitive products;~~

•~~the introduction of new products or services by our competitors or by us;~~

•~~large customers failing to purchase at historical levels;~~

•~~fundamental shifts in market demand;~~

•~~manufacturing delays;~~

•~~shipment problems;~~

•~~information technology problems, which may prevent us from conducting our business effectively, or at all, and may also raise our costs;~~

•~~regulatory and other delays in product development;~~

•~~product recalls or other issues which may raise our costs;~~

•~~changes in our reputation and/or market acceptance of our current or new products; and~~

•~~changes in the mix of products sold.~~

We have high operating expenses, including those related to personnel. Many of these expenses are fixed in the short term and may increase over time. If any of the factors listed above cause our revenues to decline, our operating results could be substantially harmed.

~~Cyberattack related breaches of our information technology systems could have an adverse effect on our business.~~

Cyberattacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect and defend against, notwithstanding our ongoing evaluation of and improvements to the preventive measures we take on to reduce the risks associated with these threats based on our own experience and those observed in the broader market. Cyberattacks, ranging from the use of malware, computer viruses, dedicated denial of services attacks, credential harvesting, social engineering and other means for obtaining unauthorized access to our Company's confidential information or assets or disrupting our Company’s ability to operate normally, could have a material adverse effect on our business. Cyberattacks may cause equipment failures, loss of information or assets, including sensitive personal information of third-party vendors, customers or employees, or valuable technical and marketing information, as well as disruptions to our or our vendor or customers’ operations. These attacks may be committed by company employees or external actors operating in any geography, including jurisdictions where law enforcement measures to address such attacks are unavailable or ineffective. Cyberattacks may occur alone or in conjunction with physical attacks, especially where disruption of service is an objective of the attacker. The preventive actions we take on an ongoing basis to reduce the risks and mitigate the potential damages associated with cyberattacks, including protection of our systems, networks and assets and the retention of cybersecurity insurance policies, may be insufficient to repel or mitigate entirely the effects of a cyberattack.

~~-26-~~

results in the unauthorized release of Personally Identifiable Information (“PII”), our reputation and brand could be materially damaged; use of our products and services could decrease, we could suffer from reputational harm impacting sales revenue, and we could be faced with unforeseen regulatory investigation, remediation and litigation costs. Our cybersecurity insurance policies may not cover the full extent, or any, of the potential financial harm that could be caused by a breach of our systems, including in respect of theft or possible damages claims that may be brought against us by our business partners and customers in respect of any such breach.

The frequently changing attack techniques, along with the increased volume and sophistication of the attacks, create additional potential for us to be adversely impacted by this activity. This impact could result in reputational, competitive, operational or other business harm as well as management distraction, financial losses and costs, and regulatory action.

~~We may be unable to protect our stakeholders’ privacy or we may fail to comply with privacy laws.~~

The protection of customer, employee, supplier and company data is critical and the regulatory environment surrounding information security, storage, use, processing, disclosure and privacy is demanding, with the frequent imposition of new and changing requirements. In addition, our customers, employees and suppliers expect that we will protect their personal information. Any actual or perceived significant breakdown, intrusion, interruption, cyberattack or corruption of customer, employee or supplier data or our failure to comply with federal, state, local and foreign privacy laws, including the European Union’s General Data Protection Regulation (“GDPR”) and the Health Insurance Portability and Accountability Act, could result in lost sales, remediation costs, and legal liability including severe penalties, regulatory action and reputational harm. GDPR became effective in 2018, for example, and requires companies to meet new and enhanced requirements regarding the handling of personal data, including its use, protection and the rights of data subjects to request correction or deletion of their personal data. Failure to meet GDPR requirements could result in penalties of up to 4% of worldwide revenue. Despite our efforts and investments in technology to secure our computer network, security could be compromised, confidential information could be misappropriated or system disruptions could occur. Failure to comply with the security requirements or rectify a security issue may result in fines and the imposition of restrictions on our ability to accept payment by credit or debit cards. In addition, the payment card industry (“PCI”) is controlled by a limited number of vendors that have the ability to impose changes in PCI’s fee structure and operational requirements on us without negotiation. Such changes in fees and operational requirements may result in our failure to comply with PCI security standards, as well as significant unanticipated expenses. Such failures could materially adversely affect our operating results and financial condition. Furthermore, we maintain cybersecurity insurance coverage at levels that we believe are appropriate for our business. The costs related to significant security breaches or disruptions, however, could be material and exceed the limits of the cybersecurity insurance we maintain against such risks. If the amounts of our insurance coverage are inadequate to satisfy any damages and losses in the event of a cybersecurity incident, we may have to expend significant resources to mitigate the impact of such an incident, and to develop and implement protections to prevent future incidents of this nature from occurring. Such financial exposure could have a material adverse effect on our business.

~~We may not be able to achieve sustained profitability or increase profitability on a quarterly or annual basis.~~

Prior to 2005, we incurred net losses on an annual basis since our inception in 1988 and, as of December 31, 2021, we had an accumulated deficit of $148.6 million. Relatively small differences in our performance metrics may cause us to generate an operating or net loss in future periods. Our ability to be profitable in future periods will depend, in part, on our ability to increase sales, including maintaining and growing our installed base of instruments and related consumables, to maintain or increase gross margins and to limit the

~~-27-~~

increase in our operating expenses to a reasonable level as well as avoid or effectively manage any unanticipated issues. We may not be able to generate, sustain or increase profitability on a quarterly or annual basis. If we cannot achieve or sustain profitability for an extended period, we may not be able to fund our expected cash needs, including the repayment of debt as it comes due, or continue our operations.

We may face product returns and product liability litigation in excess of, or not covered by, our insurance coverage or indemnities and/or warranties from our suppliers. If we become subject to product liability claims resulting from defects in our products, we may fail to achieve market acceptance of our products and our sales could substantially decline.

The testing, manufacturing and marketing of our current products as well as those currently under development entail an inherent risk of product liability claims and associated adverse publicity. Following the introduction of a product, adverse side effects may be discovered. Adverse publicity regarding such effects could affect sales of our other products for an indeterminate time period. To date, we have not experienced any material product liability claims, but any claim arising in the future could substantially harm our business. Potential product liability claims may exceed the amount of our insurance coverage or may be excluded from coverage under the terms of the policy. We may not be able to continue to obtain adequate insurance at a reasonable cost, if at all. In the event that we are held liable for a claim against which we are not indemnified or for damages exceeding the $10 million limit of our insurance coverage or which results in significant adverse publicity against us, we may lose revenue, be required to make substantial payments which could exceed our financial capacity and/or lose or fail to achieve market acceptance.

~~We may be held liable for the release of hazardous materials, which could result in extensive remediation costs or otherwise harm our business.~~

Certain of our products and development programs produced at our Des Moines, Iowa facility involve the controlled use of hazardous and biohazardous materials, including chemicals and infectious disease agents. We cannot eliminate the risk of accidental contamination or injury from these materials. In the event of such an accident, we could be held liable for any fines, penalties, remediation costs or other damages that result. Our liability for the release of hazardous materials could exceed our resources, which could lead to a shutdown of our operations, significant remediation costs and potential legal liability. In addition, we may incur substantial costs to comply with environmental regulations if we choose to expand our manufacturing capacity.

~~Risks related to our common stock~~

Our stock price has historically experienced high volatility, and could do so in the future, including experiencing a material price decline resulting from a large sale in a short period of time. This volatility could affect the value of our common stock.

Should a relatively large stockholder decide to sell a large number of shares in a short period of time, it could lead to an excess supply of our shares available for sale and correspondingly result in a significant decline in our stock price.

The securities markets have experienced significant price and volume fluctuations and the market prices of securities of many small cap companies have in the past been, and can in the future be expected to be, especially volatile. During the year ended December 31, 2021, the closing stock price of our common stock has ranged from a low of $143.93 to a high of $274.20, and the closing sale price of our common stock on February 24, 2022 was $137.17 per share. Fluctuations in the trading price or liquidity of our common stock

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~~may adversely affect our ability to raise capital through future equity financings. Factors that may have a significant impact on the market price and marketability of our common stock include:~~

•~~stock sales by large stockholders or by insiders;~~

•~~changes in the outlook for our business;~~

•~~our quarterly operating results, including as compared to expected revenue or earnings and in comparison to historical results;~~

•~~termination, cancellation or expiration of our third-party supplier relationships;~~

•~~announcements of technological innovations or new products by our competitors or by us;~~

•~~litigation;~~

•~~regulatory developments, including delays in product introductions;~~

•~~developments or disputes concerning patents or proprietary rights;~~

•~~availability of our revolving line of credit and compliance with debt covenants;~~

•~~releases of reports by securities analysts;~~

•~~economic and other external factors;~~

•~~issuances of equity or equity-linked securities by us; and~~

•~~general market conditions~~

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. If a securities class action suit is filed against us, it is likely we would incur substantial legal fees and our management’s attention and resources would be diverted from operating our business in order to respond to the litigation.

~~Our NOL Protective Amendment could adversely impact the value and trading liquidity of our common stock.~~

On May 4, 2010, our stockholders approved an amendment (the “NOL Protective Amendment”) to our Certificate of Incorporation. The NOL Protective Amendment places restrictions on the transfer of our common stock that could adversely affect our ability to use our domestic Federal Net Operating Loss carryforward (“NOL”). In particular, the NOL Protective Amendment prevents the transfer of shares without the approval of our board of directors if, as a consequence, an individual, entity or groups of individuals or entities would become a 5-percent holder under Section 382 of the Internal Revenue Code of 1986, as amended, and the related Treasury regulations, and also prevents any existing 5-percent holder from increasing his or her ownership position in the Company without the approval of our board of directors. Any transfer of shares in violation of the NOL Protective Amendment (a “Transfer Violation”) shall be void ab initio under the our Certificate of Incorporation and our board of directors has procedures under our Certificate of Incorporation to remedy a Transfer Violation including requiring the shares causing such Transfer Violation to be sold and any profit resulting from such sale to be transferred to a charitable entity chosen by the Company’s board of directors in specified circumstances. The NOL Protective Amendment could have an adverse impact on the value and trading liquidity of our stock if certain buyers who would otherwise have bid on or purchased our stock, including buyers who may not be comfortable owning stock with transfer restrictions, do not bid on or purchase our stock as a result of the NOL Protective Amendment. In addition, because some corporate takeovers occur through the acquirer’s purchase, in the public market or otherwise, of sufficient shares to give it control of a company, any provision that restricts the transfer of shares can have the effect of preventing a takeover. The NOL Protective Amendment could discourage or otherwise prevent accumulations of substantial blocks of shares in which our stockholders might receive a substantial premium above market value and might tend to insulate management and the board of directors against the possibility of removal to a greater degree than had the NOL Protective Amendment not passed.

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In February 2018, our board of directors granted a waiver to a non-affiliated stockholder to allow the purchase, subject to certain limitations, of up to 730,000 shares of our common stock without causing a Transfer Violation. This waiver can be withdrawn by our board of directors at any time, in which case the non-affiliated stockholder is to only sell our stock until the non-affiliated stockholder ceases to be a Five Percent Shareholder (as defined in our Certificate of Incorporation). On August 7, 2019, our board of directors determined to waive the application of any NOL transfer restrictions contained in our Certificate of Incorporation with respect to the issuance and transfer of our Notes, any issuance of shares of the Company’s common stock upon conversion of any of the Notes, and any subsequent and further transfer of any such common stock, to the extent such restrictions would otherwise have been applicable thereto. In January 2020, our board of directors waived the application of any NOL transfer restrictions contained in our Certificate of Incorporation with respect to the issuance and sale of the shares of preferred stock and underlying common stock issued in connection with the financing of the scil acquisition. In February 2021, our board of directors waived the application of any NOL transfer restrictions contained in our Certificate of Incorporation with respect to the issuance and transfer of the shares of common stock in our March 2021 public offering, and any subsequent and further transfer of any such shares, to the extent such restrictions would otherwise have been applicable thereto.These waivers, and any similar waivers that our board of directors may grant in the future, may make it more likely that we have a “change of ownership” as defined under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended, which could place a significant restriction on our ability to utilize our domestic Federal NOL in the future and materially adversely affect our results of operations. State net operating loss carryforwards may be similarly or more stringently limited. Any limitations on our ability to use our pre-change of ownership net operating losses to offset taxable income could potentially result in increased future tax liability to us.

~~If securities analysts do not publish research or reports about our business, or if they downgrade our stock, the price of our stock could decline.~~

The trading market for our common stock will likely be influenced by research and reports that securities or industry analysts publish about us or our business. In the event securities or industry analysts cover our company and one or more of these analysts downgrades our stock, lowers their price target, or publishes unfavorable or inaccurate research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

~~We have not declared or paid any dividends on our common stock since 2012 and we do not anticipate paying any cash dividends in the foreseeable future.~~

We have not declared or paid any dividends on our common stock since October 2012. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the future. As a result, investors in our common stock may only receive a return on their investment in our common stock if the market price of our common stock increases.

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We have fewer than 300 holders of record, which could allow us to terminate voluntarily the registration of our common stock with the SEC and after which we would no longer be eligible to maintain the listing of our common stock on The Nasdaq Capital Market. We may also be unable to otherwise maintain our listing on The Nasdaq Capital Market.

We have fewer than 300 holders of record as of our latest information, a fact which could make us eligible to terminate voluntarily the registration of our common stock with the SEC and therefore suspend our reporting obligations with the SEC under the Exchange Act and become a non-reporting company. If we were to cease reporting with the SEC, we would no longer be eligible to maintain the listing of our common stock on The Nasdaq Capital Market, which we would expect to materially adversely affect the liquidity and market price for our common stock. The Nasdaq Capital Market has several additional quantitative and qualitative requirements companies must comply with to maintain this listing. While we believe we are currently in compliance with all Nasdaq requirements, there can be no assurance we will continue to meet Nasdaq listing requirements, that Nasdaq will interpret these requirements in the same manner we do if we believe we meet the requirements, or that Nasdaq will not change such requirements or add new requirements to include requirements we do not meet in the future.

If we were delisted from The Nasdaq Capital Market, our common stock may be considered a penny stock under the regulations of the SEC and would therefore be subject to rules that impose additional sales practice requirements on broker-dealers who sell our securities. The additional burdens imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our common stock, which could severely limit market liquidity of the common stock and any stockholder’s ability to sell our securities in the secondary market. This lack of liquidity would also likely make it more difficult for us to raise capital in the future.

Provisions in our Certificate of Incorporation and bylaws and under Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Our Certificate of Incorporation and bylaws contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change of control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions:

•~~place restrictions on the transfer of our common stock that could adversely affect our ability to use our domestic NOL, which can have an effect of preventing a takeover;~~

•~~provide that our board of directors may, without stockholder approval, issue shares of preferred stock with special voting or economic rights;~~

•~~prohibit stockholders from calling a special meeting of our stockholders;~~

•~~provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and~~

•~~establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.~~

Additionally, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder and which may discourage, delay, or prevent a change of control of our company.

Any provision of our Certificate of Incorporation, bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also negatively affect the price that some investors are willing to pay for our common stock.

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Risks related to the outstanding Notes

•Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

•We may not have the ability to raise the funds necessary to settle conversions of our convertible notes (the "Notes") in cash or to repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.

•The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.

Risk Factors

Risks related to our business and industry

Our business is subject to risk based on global economic conditions, including inflationary pressures and lingering economic effects of the COVID-19 pandemic.

Macroeconomic, global inflationary pressures and pandemic-related disruptions could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our veterinarians, their customers and the companion animals they serve could be affected by continuing local and global inflationary pressures, lingering economic effects of the COVID-19 pandemic, further or unexpected economic recessionary fears, increased political instability and threats of war and could suffer from increased borrowing costs that limit discretionary consumer spending, which could lead to decreased pet visits, demand for our products and delayed companion animal diagnostic testing and treatment.

The extent to which the COVID-19 pandemic will cause lingering economic effects on our business, results of operation and financial condition is difficult to predict and depends on numerous rapidly evolving factors, such as the severity and transmission rate of the virus, the emergence and spread of variants, infection rates in areas where we operate, the extent and effectiveness of containment actions, including the continued availability and effectiveness of vaccines in the markets where we operate, the impact of actions taken by governmental authorities and other third parties in response to the pandemic, and the impact of these and other factors on our employees, customers, and suppliers. We are also monitoring the effects of the COVID-19 pandemic on the operation of veterinary clinics, consumer discretionary spending on their pets’ health and wellbeing, research and development trends regarding animal health vis a vis human health, and the ability of our sales staff to travel and our manufacturing staff to operate in their normal capacities. However, the effect of the COVID-19 pandemic on the foregoing issues and numerous other potential issues is difficult to predict, both in the short-term and in the long-term, and any one of them could cause a material adverse effect on our business, results of operation and financial condition. Global economic conditions and the COVID-19 pandemic could also have the effect of heightening other risk factors described in this report.

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We are party to agreements with Merck Animal Health for our canine heartworm preventive product, TRI-HEART Plus Chewable Tablets, and Elanco for certain bovine vaccines, which have been sold primarily under the Titanium and MasterGuard brands. Either of these marketing partners may not devote sufficient resources to marketing our products and our sales and financial position could suffer significantly as a result. For example, in 2019, Merck Animal Health failed to market, sell and support our heartworm preventive product, which resulted in depressed PVD product annual revenue in our North America segment. Furthermore, there may be nothing to prevent these partners from pursuing alternative technologies, products or supply arrangements, including as part of mergers, acquisitions or divestitures. Third party marketing assistance may not be available in the future on reasonable terms, if at all. If the third parties with marketing rights for our products were to merge or go out of business, the sale and promotion of our products could be diminished.

We rely on third party suppliers to manufacture those products we do not manufacture ourselves and to provide services we do not provide ourselves. Proprietary products provided by these suppliers represent a majority of our revenue. We currently rely on these suppliers for our POC laboratory instruments and consumable supplies for these instruments, for our imaging products and related software and services, for key components of our POC diagnostic tests as well as for the manufacture of other products.

The loss of access to products from one or more suppliers could have a significant, negative impact on our business. Major suppliers that sell us proprietary products are FUJIFILM Corporation and Shenzen Mindray Bio-Medical Electronics Co., Ltd. We often purchase products from our suppliers under agreements that are of limited duration or potentially can be terminated on short notice subsequent to unfavorable legal action. In the case of our POC laboratory instruments and our digital radiography solutions, post-termination, we are typically entitled to non-exclusive access to consumable supplies, or ongoing non-exclusive access to products and services to meet the needs of an existing customer base, respectively, for a defined period upon expiration of exclusive rights, which could subject us to competitive pressures in the period of non-exclusive access. There can be no assurance that our suppliers will meet their obligations under any agreements we may have in place with them or that we will be able to compel them to do so. Risks of relying on suppliers include:

•Inability to meet minimum obligations. Current agreements, or agreements we may negotiate in the future, may commit us to certain minimum purchase or other spending obligations. It is possible we will not be able to create the market demand to meet such obligations, which could create a drain on our financial resources and liquidity. Some agreements may require minimum purchases and/or sales to maintain product rights and we may be significantly harmed if we are unable to meet such requirements and lose product rights.

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•Loss of exclusivity. In the case of our POC laboratory instruments, if we are entitled to non-exclusive access to consumable supplies for a defined period upon expiration of exclusive rights, we may face increased competition from a third party with similar non-exclusive access or our former supplier, which could cause us to lose customers and/or significantly decrease our margins and could significantly affect our financial results. In addition, current agreements, or agreements we may negotiate in the future, with suppliers may require us to meet minimum annual sales levels to maintain our position as the exclusive distributor of these products. We may not meet these minimum sales levels and maintain exclusivity over the distribution and sale of these products. If we are not the exclusive distributor of these products, competition may increase significantly, reducing our revenues and/or decreasing our margins.

•Changes in economics. An underlying change in the economics with a supplier, such as a large price increase or new requirement of large minimum purchase amounts, could have a significant, adverse effect on our business, particularly if we are unable to identify and implement an alternative source of supply in a timely manner.

•Supply chain constraints in raw materials to suppliers. Our suppliers rely on sourcing raw materials, instrument components and other items necessary to produce the supply of products we offer our customers. Supply chain constraints faced by our suppliers may delay a supplier’s ability to produce our products, which could create an interruption in our ability to fulfill orders.

•The loss of product rights upon expiration or termination of an existing agreement. Unless we are able to find an alternate supply of a similar product, we would not be able to continue to offer our customers the same breadth of products and our sales and operating results would likely suffer. In the case of an instrument supplier, we could also potentially suffer the loss of sales of consumable supplies, which would be significant in cases where we have built a significant installed base, further harming our sales prospects and opportunities. Even if we were able to find an alternate supply for a product to which we lost rights, we would likely face increased competition from the product whose rights we lost being marketed by a third party or the former supplier and it may take us additional time and expense to gain the necessary approvals and launch an alternative product.

•High switching costs. In our POC laboratory instrument products, we could face significant competition and lose all or some of the consumable revenues from the installed base of those instruments if we were to switch to a competitive instrument. If we need to change to other commercial manufacturing contractors for certain of our regulated products, additional regulatory licenses or approvals generally must be obtained for these contractors prior to our use. This would require new testing and compliance inspections prior to sale, thus resulting in potential delays. Any new manufacturer would have to be educated in, or develop, substantially equivalent processes necessary for the production of our products. We likely would have to train our sales force, distribution network employees and customer support organization on the new product and spend significant funds marketing the new product to our customer base.

•The involuntary or voluntary discontinuation of a product line. Unless we are able to find an alternate supply of a similar product in this or similar circumstances with any product, we would not be able to continue to offer our customers the same breadth of products and our sales would likely suffer. Even if we are able to identify an alternate supply, it may take us additional time and expense to gain the necessary approvals and launch an alternative product, especially if the product is discontinued unexpectedly.

•Inconsistent or inadequate quality control. We may not be able to control or adequately monitor the quality of products we receive from our suppliers. Poor quality items could damage our reputation with our customers.

•Limited capacity or ability to scale capacity. If market demand for our products increases suddenly, our current suppliers might not be able to fulfill our commercial needs, which would require us to seek new manufacturing arrangements and may result in substantial delays in meeting market demand. If we consistently generate more demand for a product than a given supplier is capable of

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handling, it could lead to large backorders and potentially lost sales to competitive products that are readily available. This could require us to seek or fund new sources of supply, which may be difficult to find or may require terms that are less advantageous if available at all.

•Regulatory risk. Our manufacturing facility and those of some of our third-party suppliers are subject to ongoing periodic unannounced inspection by regulatory authorities, including the FDA, USDA and other federal, state and foreign agencies for compliance with regulations and similar foreign standards. We do not have control over our suppliers’ compliance with these regulations and standards. Regulatory violations could potentially lead to interruptions in supply that could cause us to lose sales to readily available competitive products. If one of our suppliers is unable to provide a raw material or finished product due to regulatory issues, it could have a material adverse financial impact on our business and could expose us to legal action if we are unable to perform on contracts to our customers involving related products.

•Developmental delays. We may experience delays in the scale-up quantities needed for product development that could delay regulatory submissions and commercialization of our products in development, causing us to miss key opportunities.

•Limited geographic rights. We typically do not have global geographic rights to products supplied by third parties. If we were to determine a market opportunity in a geography where we did not have distribution rights and were unable to obtain such rights from the supplier, it might hamper our ability to succeed in such geography and our sales and profits would be lower than they otherwise would have been.

•Limited intellectual property rights. We typically do not have intellectual property rights, or may have to share intellectual property rights, to the products supplied by third parties and any improvements to the manufacturing processes or new manufacturing processes for these products.

•Changes to United States tariff and import/export regulations. Changes to United States trade policies, treaties and tariffs could have a material adverse effect on global trade. These changes could result in increased costs of goods imported into the United States for the Company and our third-party suppliers. Our third-party suppliers may limit their trade with companies in the United States, including us.

•Global human and animal health risk. Several of our suppliers have operations in areas that may be susceptible to public health emergencies that could restrict global trade generally, and our access to consumables and product, specifically. The risk of infectious disease in humans and animals may limit trade and product access with third party suppliers with companies inside and outside the United States, including us. In particular, the use of animal bi-product may affect our consumable supply as a result of global animal health risks.

We depend on key personnel for our future success. If we lose our key personnel or are unable to attract and retain additional personnel, we may be unable to achieve our goals.

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growth of our business could be substantially impaired. We do not maintain key person life insurance for any of our senior management or key personnel.

We also expect that we may incur increased compensation expenses and higher-than-normal employee turnover as we attempt to attract and retain skilled employees during a macro working environment where qualified labor is in short supply, job-mobility is high in part because of remote working arrangements, and the benefits of company culture and personal relationships are more difficult to realize outside of the traditional office setting.

The market in which we compete is intensely competitive. Our competitors include independent animal health companies and major pharmaceutical companies that have animal health divisions. We also compete with independent, third party distributors, including distributors that sell products under their own private labels. In the POC diagnostic testing market, our major competitors include IDEXX and Zoetis. The OVP products manufactured by our North America segment for sale by third parties compete with similar products offered by a number of other companies, some of which have substantially greater financial, technical, research and other resources than us and may have more established marketing, sales, distribution and service organizations than those of our OVP product customers. Competitors may have facilities with similar capabilities to our Des Moines, Iowa facility, which they may operate and sell at a lower unit price to customers than we sell our OVP products for, which could cause us to lose customers. Companies with a significant presence in the companion animal health market, such as CEVA Sante´ Animale, Elanco, Merck Animal Health, Sanofi, Vétoquinol S.A. and Virbac S.A. may be marketing or developing products that compete with our products or would compete with them if developed. These and other competitors and potential competitors may have substantially greater financial, technical, research and other resources and larger, more established marketing, sales and service organizations than we do. Our competitors may offer broader product lines and have greater name recognition than we do. Our competitors may also develop or market technologies or products that are more effective or commercially attractive than our current or future products or that would render our technologies and products obsolete. Further, additional competition could come from new entrants to the animal health care market. Moreover, we may not have the financial resources, technical expertise or marketing, sales or support capabilities to compete successfully.

If we fail to compete successfully, our ability to achieve sustained profitability will be limited and sustained profitability, or profitability at all, may not be possible.

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development activities in a timely fashion, or at all. Even if these third parties are successful in their research and development activities, we may not be able to come to an economic agreement with them. If these third parties or collaborative partners fail to complete research and development activities or fail to complete them in a timely fashion, or if we are unable to negotiate economic agreements with such third parties or collaborative partners, our ability to introduce new products may be impacted negatively and our revenues may decline.

We may be unable to market and sell our products successfully.

We may not develop and maintain marketing and/or sales capabilities successfully, and we may not be able to make arrangements with third parties to perform these activities on satisfactory terms, or at all. If our marketing and sales strategy is unsuccessful, our ability to sell our products will be negatively impacted and our revenues will decrease. This could result in the loss of distribution rights for products or failure to gain access to new products and could cause damage to our reputation and adversely affect our business and future prospects. The market for companion animal healthcare products is highly fragmented. Because our proprietary products are generally available only to veterinarians or by prescription and our medical instruments require technical training to operate, we ultimately sell our products primarily to or through veterinarians. The acceptance of our products by veterinarians is critical to our success. Changes in our ability to obtain or maintain such acceptance or changes in veterinary medical practice could significantly decrease our anticipated sales. As the vast majority of cash flow to veterinarians ultimately is funded by pet owners without private insurance or government support, our business may be more susceptible to severe economic downturns than other health care businesses that rely less on individual consumers.

For our POC laboratory blood diagnostics products, we primarily rely on contracts with our veterinary customers for their use of our owned equipment and our consumable supplies over a multiple year period. If veterinarians under these contracts experience a significant downturn in their business, they may not fulfill their use and financial obligations under these contracts. If veterinarians breach our contracts, and we are unable to collect on default payment provisions or otherwise enforce the terms of our contracts, our business will be adversely affected. If we have to litigate against customers to enforce our contracts, our expenses may increase, our sales may decrease to those customers, and our reputation may suffer. If significant numbers of our customers under contracts for use of our equipment and consumable supplies do not renew their contracts, our business will be adversely affected.

We have entered into agreements with independent third party distributors who we anticipate will market and sell our products to a greater degree than in the recent past. Independent third party distributors may be effective in increasing sales of our products to veterinarians, although we would expect a corresponding lower gross margin as such distributors typically buy products from us at a discount to end user prices. It is possible new or existing independent third-party distributors could cannibalize our direct sales efforts and lower our total gross margin. For us to be effective when working with an independent third party distributor, the distributor must agree to market and/or sell our products and we must provide proper economic incentives to the distributor as well as contend effectively for the time, energy and focus of the employees of such distributor given other products the distributor may be carrying, potentially including those of our competitors. If we fail to be effective with new or existing independent third-party distributors, our financial performance may suffer.

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We face risks associated with our international operations and our international expansion may not generate the results we anticipate.

•Increased competition from global market competitors;

•uncertain political and economic climates, including as a result of the conflict between Russia and the Ukraine;

•fluctuations in exchange rates, such as the strengthening of the U.S. Dollar, that may increase the volatility of foreign-based revenue and expense;

•burdens of complying with and unexpected changes in foreign laws, accounting and legal standards, regulatory requirements, taxes, tariffs and other barriers or trade restrictions;

•lack of experience in connection with the customs, cultures, languages and sales cycle;

•reduced or altered protection for intellectual property rights; and

•data privacy and cybersecurity laws in foreign countries, which may subject our data collection, storage and processing to different and more expansive requirements than the United States.

As a result of these and other factors, international expansion may be more difficult and not generate the results we anticipate, which could negatively impact our business.

We may face costly legal disputes, including disputes related to our intellectual property or technology or that of our suppliers or collaborators.

-20-

As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses due to our compliance with regulations and disclosure obligations applicable to us, including compliance with the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, as well as rules implemented by the SEC and the Nasdaq Stock Market. We prepare our financial statements in conformance with GAAP. These accounting principles are established by and are subject to interpretation by the SEC, the FASB and others which interpret and create accounting policies. These rules and regulations will continue to cause us to incur significant legal and financial compliance costs and will make some activities more time-consuming and costly. A change in those policies or how those policies are interpreted can have a significant effect on our reported results and may affect our reporting of transactions completed before a change is made effective. Such changes may require us to incur additional compliance costs, adversely affect our reported financial results and the way we conduct our business or have a negative impact on us if we fail to track such changes.

If our regulators and/or auditors adopt or interpret more stringent standards than we anticipate, we could experience unanticipated changes in our reported financial statements, including but not limited to restatements, which could adversely affect our business due to litigation and investor confidence in our financial statements. In addition, changes in the underlying circumstances to which we apply given accounting standards and principles may affect our results of operations and have a negative impact on us. For example, we review goodwill recognized on our consolidated balance sheets at least annually and if we were to conclude there was an impairment of goodwill, we would reduce the corresponding goodwill to its estimated fair value and recognize a corresponding expense in our statement of operations. This impairment and corresponding expense could be as large as the total amount of goodwill recognized on our consolidated balance sheets, which was $135.9 million at December 31, 2022 and $118.8 million at December 31, 2021. There can be no assurance that future goodwill impairments will not occur if projected financial results are not met, or otherwise.

We regularly evaluate, and we intend to pursue, acquisitions, investments, licenses, joint ventures, and other strategic development opportunities, which may not have desired results and could be detrimental to our financial position.

We continue to evaluate, and we intend to pursue, acquisitions and other strategic development opportunities, including minority investments where strategic, such as our acquisition of scil in 2020, our acquisitions of Lacuna, BiEsseA, and Biotech in 2021, our acquisition of VetZ in 2022, and our acquisition of LightDeck in 2023. The ultimate business and financial performance of these opportunities may not create, and may end up adversely affecting materially, the value we hope to enhance by pursuing them. Any acquisition may significantly underperform relative to our financial expectations and may serve to diminish rather than enhance stockholder value. We may also diminish our cash resources or dilute stockholders in order to finance any such acquisition or other strategic transaction.

The success of any acquisition will depend on, among other things, our ability to integrate assets and personnel acquired in these transactions and to apply our internal controls process to these acquired businesses. The integration of acquisitions is likely to require significant attention from our management, and

-21-

the diversion of management’s attention and resources could have a material adverse effect on our ability to manage our business. Furthermore, we may not realize the degree or timing of benefits we anticipated when we first entered into the acquisition transaction. If actual integration costs are higher than amounts originally anticipated, if we are unable to integrate the assets and personnel acquired in an acquisition as anticipated, or if we are unable to fully benefit from anticipated synergies, our business, financial condition, results of operations and cash flows could be materially adversely affected. Furthermore, it is possible we will use management time and resources to pursue opportunities we ultimately are unable or decide not to consummate, in which case, we may not be able to utilize such management time and resources on what may have proved to be more productive matters in other areas of our business.

-22-

disrupt or otherwise damage our business as a result. In addition, certain of our agreements may require us to pay penalties if we are unable to supply products, including for failure to maintain regulatory approvals.

Any of these events, alone or in combination with others, could significantly damage our business or results of operations.

Many of our expenses are fixed and if factors beyond our control cause our revenue to fluctuate, this fluctuation could cause greater than expected losses, cash flow and liquidity shortfalls.

We believe that our future operating results will fluctuate on a quarterly basis due to a variety of factors which are generally beyond our control, including:

•supply of products and components, including minimum purchase agreements, from third party suppliers or termination, cancellation or expiration of such relationships;

•competition and pricing pressures from competitive products;

•the introduction of new products or services by our competitors or by us;

•large customers failing to purchase at historical levels;

•fundamental shifts in market demand;

•manufacturing delays;

•shipment problems;

-23-

•information technology problems, which may prevent us from conducting our business effectively, or at all, and may also raise our costs;

•regulatory and other delays in product development;

•product recalls or other issues which may raise our costs;

•changes in our reputation and/or market acceptance of our current or new products; and

•changes in the mix of products sold.

Cyberattack related breaches of our information technology systems could have an adverse effect on our business.

We devote significant resources to network security, data encryption and other security measures to protect our systems and data, but these security measures cannot provide absolute security. To the extent we were to experience a breach of our systems and were unable to protect sensitive data in the wake of the breach, such a breach could materially damage business partner and customer relationships and reduce or otherwise negatively impact access to online services. Moreover, if a computer security breach affects our systems or results in the unauthorized release of Personally Identifiable Information (“PII”), our reputation and brand could be materially damaged; use of our products and services could decrease, we could suffer from reputational harm impacting sales revenue, and we could be faced with unforeseen regulatory investigation, remediation and litigation costs. Our cybersecurity insurance policies may not cover the full extent, or any, of the potential financial harm that could be caused by a breach of our systems, including in respect of theft or possible damages claims that may be brought against us by our business partners and customers in respect of any such breach.

-24-

We may be unable to protect our stakeholders’ privacy or we may fail to comply with privacy laws.

The protection of customer, employee, supplier and company data is critical and the regulatory environment surrounding information security, storage, use, processing, and disclosure of personal information is demanding. There is frequent imposition of new and changing requirements and enforcement risks, particularly as more U.S. states enact comprehensive privacy laws, including Colorado, which recently passed the Colorado Privacy Act, effective July 2023. In addition, our customers, employees and suppliers expect that we will protect their personal information. Any actual or perceived cyberattack, unauthorized access or acquisition of customer, employee or supplier data, or our failure to comply with federal, state, local and foreign privacy laws, such as the European Union’s General Data Protection Regulation (“GDPR”) and the Health Insurance Portability and Accountability Act, could result in lost sales, extensive remediation costs, and legal liability including severe penalties, regulatory action and reputational harm. The GDPR became effective in 2018, for example, and requires companies to meet enhanced requirements regarding the processing of personal data, and provides data subjects with various rights, including the right to request correction or deletion of their personal data. Failure to meet GDPR requirements could result in penalties of up to 4% of worldwide revenue. Despite implementation of reasonable technical, administrative, and physical safeguards, and our efforts and investments in technology to secure our ecosystem, no computer network or system can ever be 100% secure. Given the sophisticated and evolving threat landscape, system disruptions or data incidents can occur and result in the compromise or misappropriation of personal or confidential information. In addition, in the event of a data incident, failure to comply with applicable security requirements or timely rectify a security issue may result in fines and notice obligations to regulators, consumers, or third parties, and the imposition of restrictions on our ability to accept payment by credit or debit cards. In addition, the payment card industry (“PCI”) is controlled by a limited number of vendors that have the ability to impose changes in PCI’s fee structure and operational requirements on our payment processing vendors without negotiation. Such changes in fees and operational requirements may result in the failure to comply with PCI security standards, as well as significant unanticipated expenses. Such failures could materially adversely affect our operating results and financial condition. Furthermore, we maintain cybersecurity insurance coverage at levels that we believe are appropriate for our business. However, the costs related to significant security breaches or disruptions could be material and exceed the limits of the cybersecurity insurance we maintain against such risks, and given the increase in cyberattacks, cybersecurity insurance providers are increasingly raising premiums while narrowing the scope of coverage. If the amounts of our insurance coverage are inadequate to satisfy any damages and losses in the event of a cybersecurity incident, we may have to expend significant resources to mitigate the impact of such an incident, and to develop and implement protections to prevent future incidents from occurring. Such financial exposure could have a material adverse effect on our business.

We may not be able to achieve sustained profitability or increase profitability on a quarterly or annual basis.

As of December 31, 2022, we had an accumulated deficit of $168.5 million. Relatively small differences in our performance metrics may cause us to generate an operating or net loss in future periods. Our ability to be profitable in future periods will depend, in part, on our ability to increase sales, including maintaining and growing our installed base of instruments and related consumables, to maintain or increase gross margins and to limit the increase in our operating expenses to a reasonable level as well as avoid or effectively manage any unanticipated issues. We may not be able to generate, sustain or increase profitability on a quarterly or annual basis. If we cannot achieve or sustain profitability for an extended period, we may not be able to fund our expected cash needs, including the repayment of debt as it comes due, or continue our operations.

-25-

We may be held liable for the release of hazardous materials, which could result in extensive remediation costs or otherwise harm our business.

Risks related to our common stock

The securities markets have experienced significant price and volume fluctuations and the market prices of securities of many small cap companies have in the past been, and can in the future be expected to be, especially volatile. During the year ended December 31, 2022, the closing price of our common stock has ranged from a low of $60.21 to a high of $171.74, and the closing price of our common stock on February 16, 2023 was $83.41 per share. Fluctuations in the trading price or liquidity of our common stock may adversely affect our ability to raise capital through future equity financings. Factors that may have a significant impact on the market price and marketability of our common stock include:

•stock sales by large stockholders or by insiders;

•changes in the outlook for our business;

-26-

•our quarterly operating results, including as compared to expected revenue or earnings and in comparison to historical results;

•termination, cancellation or expiration of our third-party supplier relationships;

•announcements of technological innovations or new products by our competitors or by us;

•litigation;

•regulatory developments, including delays in product introductions;

•developments or disputes concerning patents or proprietary rights;

•availability of our revolving line of credit and compliance with debt covenants;

•releases of reports by securities analysts;

•economic and other external factors;

•issuances of equity or equity-linked securities by us; and

•general market conditions

Our NOL Protective Amendment could adversely impact the value and trading liquidity of our common stock.

-27-

common stock upon conversion of any of the Notes, and any subsequent and further transfer of any such common stock, to the extent such restrictions would otherwise have been applicable thereto. In January 2020, our board of directors waived the application of any NOL transfer restrictions contained in our Certificate of Incorporation with respect to the issuance and sale of the shares of preferred stock and underlying common stock issued in connection with the financing of the scil acquisition. In February 2021, our board of directors waived the application of any NOL transfer restrictions contained in our Certificate of Incorporation with respect to the issuance and transfer of the shares of common stock in our March 2021 public offering, and any subsequent and further transfer of any such shares, to the extent such restrictions would otherwise have been applicable thereto. In July 2022, our board of directors granted a waiver to a non-affiliated stockholder with respect to the acquisition of shares by such stockholder in reliance on receipt of certain representations and covenants from such stockholder, to the extent such restrictions would have otherwise been applicable thereto. This waiver can be withdrawn with 90 days of notice to the stockholder. These waivers, and any similar waivers that our board of directors may grant in the future, may make it more likely that we have a “change of ownership” as defined under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended, which could place a significant restriction on our ability to utilize our domestic Federal NOL in the future and materially adversely affect our results of operations. State net operating loss carryforwards may be similarly or more stringently limited. Any limitations on our ability to use our pre-change of ownership net operating losses to offset taxable income could potentially result in increased future tax liability to us.

If securities analysts do not publish research or reports about our business, or if they downgrade our stock, the price of our stock could decline.

We have not declared or paid any dividends on our common stock since 2012 and we do not anticipate paying any cash dividends in the foreseeable future.

We have fewer than 200 holders of record, which could allow us to terminate voluntarily the registration of our common stock with the SEC and after which we would no longer be eligible to maintain the listing of our common stock on The Nasdaq Capital Market. We may also be unable to otherwise maintain our listing on The Nasdaq Capital Market.

We have fewer than 200 holders of record as of our latest information, a fact which could make us eligible to terminate voluntarily the registration of our common stock with the SEC and therefore suspend our reporting obligations with the SEC under the Exchange Act and become a non-reporting company. If we were to cease reporting with the SEC, we would no longer be eligible to maintain the listing of our common stock on The Nasdaq Capital Market, which we would expect to materially adversely affect the liquidity and market price for our common stock. The Nasdaq Capital Market has several additional quantitative and qualitative requirements companies must comply with to maintain this listing. While we believe we are currently in compliance with Nasdaq requirements, there can be no assurance we will continue to meet Nasdaq listing requirements, that Nasdaq will interpret these requirements in the same manner we do if we believe we meet

-28-

the requirements, or that Nasdaq will not change such requirements or add new requirements to include requirements we do not meet in the future.

•place restrictions on the transfer of our common stock that could adversely affect our ability to use our domestic NOL, which can have an effect of preventing a takeover;

•provide that our board of directors may, without stockholder approval, issue shares of preferred stock with special voting or economic rights;

•prohibit stockholders from calling a special meeting of our stockholders;

•provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and

•establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

Risks related to the outstanding Notes

Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the amounts payable under the Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

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We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, and our future debt may contain, limitations on our ability to pay cash upon conversion or repurchase of the Notes.

Holders of the Notes will have the right to require us to repurchase their notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or Notes being converted. In addition, our ability to repurchase the Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory authority or by agreements governing our existing and future indebtedness. Our failure to repurchase Notes at a time when the repurchase is required by the indenture or to pay any cash payable on future conversions of the Notes as required by the indenture would constitute a default under the indenture. If a fundamental change occurs, or if the Notes are accelerated due to an event of default under the indenture, such events may lead to a default under agreements governing our future indebtedness. Any future indebtedness of ours may contain restrictions on our ability to pay cash upon conversion or repurchase of the Notes. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof.

The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the Notes is triggered, holders of Notes will be entitled to convert the Notes at any time during specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share) or by electing an exchange process for the Notes and a designated financial institution delivers the applicable conversion consideration, we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders of Notes do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal

~~-32-~~

of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Item 1B.Unresolved Staff Comments

None.

Item 2.Properties

Our principal administrative and research and development activities are located in Loveland, Colorado. We lease approximately 60,000 square feet at a facility in Loveland, Colorado under an agreement that expires in 2023. On February 8, 2023, we signed a 10-year lease for a new facility in Loveland of approximately 60,000 square feet to replace the current building, which will commence in November 2023. Our principal production facility located in Des Moines, Iowa, consists of approximately 160,000 square feet of buildings on 34 acres of land, which we own. We also lease a building in Maryland that is used for research, development and manufacturing. Following the acquisition of LightDeck on January 3, 2023, we lease approximately 65,000 square feet at a manufacturing facility in Longmont, Colorado, and approximately 31,000 square feet at a facility in Boulder, Colorado.

-30-

Our principal international administrative and research and development activities are located in Germany, France, Spain, Canada, Italy and Malaysia. In Germany, we own an office space ~~that is approximately 45,000 square feet,~~ and a warehouse that isare approximately 45,000 and 15,000 square feet, respectively, and lease a showroom that totals approximately 3,000 square feet. In ~~France,~~addition, in Germany, we lease approximately 25,000 square feet at a facility for VetZ's administrative and research and development activities. In Spain and Malaysia, we lease office spaces and warehouses. In Canada, we lease an office ~~space and in~~space. In Italy, we own an office space, a warehouse, and showroom and lease an office and a ~~showroom.~~reference lab facility. In France, we own an office space and lease an office space and warehouse.

Item 3.Legal Proceedings

From time to time, the Company may be involved in litigation relating to claims arising out of its operations. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred, and the amount can be reasonably estimated.

As of December 31, ~~2021,~~2022, we were not a party to any legal proceedings that are expected, individually or in the aggregate, to have a material adverse effect on our business, financial condition or operating results.

Item 4. Mine Safety Disclosures

Not applicable.

~~-33-~~-31-

PART II

Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our Public Common Stock is quoted on the Nasdaq Capital Market under the symbol "HSKA".

As of February ~~24, 2022,~~16, 2023, there were approximately ~~265~~177 holders of record of our Public Common ~~Stock, and approximately 4,400 beneficial stockholders.~~Stock. We do not anticipate any dividend payments in the foreseeable future.

~~Unregistered Issuances of Equity Securities~~

On January 3, 2022, we acquired 100% of the equity of VetZ GmbH (“VetZ”), a European leader in veterinary practice information management software solutions (“PIMS”). Pursuant to the VetZ acquisition agreement, the seller may earn an additional $15.5 million in Heska common stock (91,039 shares) as earn-out payments.The shares will be issued in tranches contingent upon achieving certain future financial and non-financial milestones. The actual number of shares of common stock to be issued as earn-out payments, if any, could vary materially depending on whether and to what extent the future milestones are achieved. As such, we may ultimately issue no or less than the total number of shares of our common stock set forth above.~~Any such shares will be issued in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction not involving any public offering.~~

Issuer Purchases of Equity Securities

The following table sets forth information about the Company's purchases of our outstanding Public Common Stock during the quarter ended December 31, ~~2021:~~2022:
Period Total Number of Shares Purchased (1) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs
October 2021 — $ — — $ —
November 2021 715 $ 176.25 — $ —
December 2021 — $ — — $ —
715 $ 176.25 — $ —
(1) Shares of Public Common Stock we purchased between October 1, 2021 and December 31, 2021 were solely for the cancellation of shares of stock withheld for related tax obligations.


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs
October 2022	—	$	—	—	$	—
November 2022	717	$	64.41	—	$	—
December 2022	—	$	—	—	$	—
	717	$	64.41	—	$	—

(1) Shares of Public Common Stock we purchased between October 1, 2022 and December 31, 2022 were solely for the cancellation of shares of stock withheld for related tax obligations.

~~-34-~~-32-

STOCK PRICE PERFORMANCE GRAPH

The following graph provides a comparison over the five-year period ended December 31, ~~2021~~2022 of the cumulative total shareholder return from a $100 investment in the Company's common stock with the NASDAQ Medical Supplies Index and the NASDAQ Composite Total Return:


		Dec-16		Dec-17		Dec-18		Dec-19		Dec-20		Dec-21			Dec-17		Dec-18		Dec-19		Dec-20		Dec-21		Dec-22
Heska Corporation	Heska Corporation	$	100	$	112	$	120	$	134	$	203	$	255	Heska Corporation	$	100	$	107	$	120	$	182	$	228	$	77
NASDAQ Medical Supplies Index	NASDAQ Medical Supplies Index	$	100	$	131	$	141	$	186	$	236	$	283	NASDAQ Medical Supplies Index	$	100	$	107	$	142	$	180	$	216	$	141

NASDAQ Composite Total Return Index	NASDAQ Composite Total Return Index	$	100	$	130	$	126	$	172	$	250	$	305	NASDAQ Composite Total Return Index	$	100	$	97	$	133	$	192	$	235	$	159


Large Accelerated filer ☒			Accelerated filer ☐
Non-accelerated filer ☐			Smaller Reporting Company ☐
			Emerging Growth Company ☐


			Page
PART I			1
	Item 1.	Business	2
	Item 1A.	Risk Factors	1312
	Item 1B.	Unresolved Staff Comments	3330
	Item 2.	Properties	3330
	Item 3.	Legal Proceedings	3331
	Item 4.	Mine Safety Disclosures	3331
PART II			3432
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities	3432
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3634
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	5150
	Item 8.	Financial Statements and Supplementary Data	5251
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~116~~112
	Item 9A.	Controls and Procedures	~~116~~112
	Item 9B.	Other Information	~~117~~113
	Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	~~117~~113
PART III			~~118~~114
	Item 10.	Directors, Executive Officers and Corporate Governance	~~118~~114
	Item 11.	Executive Compensation	~~118~~114
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~118~~114
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~119~~115
	Item 14.	Principal Accountant Fees and Services	~~119~~115
PART IV			~~120~~116
	Item 15.	Exhibits and Financial Statement Schedules	~~120~~116
	Item 16.	Form 10-K Summary	~~124~~120
	Signatures		~~125~~121


		Year Ended December 31,							Year Ended December 31,
		2021			2020				2022			2021
Revenue, net	Revenue, net	$	253,739		$	197,323		Revenue, net	$	257,307		$	253,739
Gross profit	Gross profit	105,794			81,290			Gross profit	111,167			105,794
Operating expenses	Operating expenses	106,787			89,482			Operating expenses	131,465			106,787
Operating loss	Operating loss	(993)			(8,192)			Operating loss	(20,298)			(993)
Interest and other expense, net	Interest and other expense, net	2,448			5,601			Interest and other expense, net	1,536			2,448
Loss before income taxes and equity in losses of unconsolidated affiliates	Loss before income taxes and equity in losses of unconsolidated affiliates	(3,441)			(13,793)			Loss before income taxes and equity in losses of unconsolidated affiliates	(21,834)			(3,441)
Income tax (benefit) expense		(3,573)			239
Net income (loss) before equity in losses of unconsolidated affiliates		132			(14,032)
Income tax benefit								Income tax benefit	(3,410)			(3,573)
Net (loss) income before equity in losses of unconsolidated affiliates								Net (loss) income before equity in losses of unconsolidated affiliates	(18,424)			132
Equity in losses of unconsolidated affiliates	Equity in losses of unconsolidated affiliates	(1,280)			(720)			Equity in losses of unconsolidated affiliates	(1,465)			(1,280)
Net loss, after equity in losses of unconsolidated affiliates		(1,148)			(14,752)
Net loss attributable to non-controlling interest		—			(353)
Net loss attributable to Heska Corporation	Net loss attributable to Heska Corporation	$	(1,148)		$	(14,399)		Net loss attributable to Heska Corporation	$	(19,889)		$	(1,148)

Diluted loss per share attributable to Heska Corporation(1)	Diluted loss per share attributable to Heska Corporation(1)	$	(0.11)		$	(1.66)		Diluted loss per share attributable to Heska Corporation(1)	$	(1.92)		$	(0.11)
Non-GAAP net income per diluted share (1)(2)	Non-GAAP net income per diluted share (1)(2)	$	1.61		$	0.74		Non-GAAP net income per diluted share (1)(2)	$	1.58		$	1.61

Adjusted EBITDA (2)	Adjusted EBITDA (2)	$	29,739		$	22,319		Adjusted EBITDA (2)	$	27,203		$	29,739
Net margin (2)	Net margin (2)	0.1		%	(7.1)		%	Net margin (2)	(7.2)		%	0.1		%
Adjusted EBITDA margin (2)	Adjusted EBITDA margin (2)	11.7		%	11.3		%	Adjusted EBITDA margin (2)	10.6		%	11.7		%


		Year Ended December 31,							Year Ended December 31,
		2021			2020				2022			2021
Net income (loss) (1)		$	132		$	(14,032)
Income tax (benefit) expense		(3,573)			239
Net (loss) income (1)								Net (loss) income (1)	$	(18,424)		$	132
Income tax (benefit)								Income tax (benefit)	(3,410)			(3,573)
Interest expense, net	Interest expense, net	2,404			5,767			Interest expense, net	613			2,404
Depreciation and amortization	Depreciation and amortization	13,555			11,385			Depreciation and amortization	13,966			13,555
EBITDA	EBITDA	$	12,518		$	3,359		EBITDA	$	(7,255)		$	12,518

Acquisition-related and other one-time costs (2)		$	238		$	9,837
Acquisition-related and other non-recurring/extraordinary costs (2)								Acquisition-related and other non-recurring/extraordinary costs (2)	$	19,919		$	238
Stock-based compensation	Stock-based compensation	18,263			9,490			Stock-based compensation	16,004			18,263
Equity in losses of unconsolidated affiliates	Equity in losses of unconsolidated affiliates	(1,280)			(720)			Equity in losses of unconsolidated affiliates	(1,465)			(1,280)
Net loss attributable to non-controlling interest		—			353
Adjusted EBITDA	Adjusted EBITDA	$	29,739		$	22,319		Adjusted EBITDA	$	27,203		$	29,739
Net margin (3)	Net margin (3)	0.1		%	(7.1)		%	Net margin (3)	(7.2)		%	0.1		%
Adjusted EBITDA margin (3)	Adjusted EBITDA margin (3)	11.7		%	11.3		%	Adjusted EBITDA margin (3)	10.6		%	11.7		%


	Year Ended December 31,
	2021		2020
GAAP net income attributable to Heska per diluted share	$	(0.11)	$	(1.66)
Acquisition-related costs and other one-timed costs(1)	0.02		1.04
Amortization of acquired intangibles(2)	0.60		0.55
Purchase accounting adjustments related to inventory and fixed asset step-up(3)	0.03		0.08
Amortization of debt discount and issuance costs	0.01		0.33
Stock-based compensation	1.75		1.00
Loss on equity investee transactions	0.12		0.08
Estimated income tax effect of non-GAAP adjustments(4)	(0.81)		(0.68)
Non-GAAP net income per diluted share	$	1.61	$	0.74

Shares used in diluted per share calculations	10,407		9,451


UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Year Ended December 31,						Change					Year Ended December 31,						Change
		2021			2020			Dollar Change		% Change			2022			2021			Dollar Change		% Change
Point of Care laboratory:		$	86,841		$	72,910		$	13,931	19.1	%
POC Laboratory:												POC Laboratory:	$	95,480		$	86,841		$	8,639	9.9	%
Instruments & Other	Instruments & Other	14,837			13,663			1,174		8.6	%	Instruments & Other	17,178			14,837			2,341		15.8	%
Consumables	Consumables	72,004			59,247			12,757		21.5	%	Consumables	78,302			72,004			6,298		8.7	%
Point of Care imaging		29,512			20,651			8,861		42.9	%
POC Imaging & Informatics												POC Imaging & Informatics	27,335			29,512			(2,177)		(7.4)	%
PVD	PVD	24,939			19,810			5,129		25.9	%	PVD	22,020			24,939			(2,919)		(11.7)	%
OVP	OVP	17,606			17,695			(89)		(0.5)	%	OVP	16,927			17,606			(679)		(3.9)	%
Total North America revenue	Total North America revenue	$	158,898		$	131,066		$	27,832	21.2	%	Total North America revenue	$	161,762		$	158,898		$	2,864	1.8	%
North America Gross Profit	North America Gross Profit	$	74,426		$	60,903		$	13,523	22.2	%	North America Gross Profit	$	75,528		$	74,426		$	1,102	1.5	%
North America Gross Margin	North America Gross Margin	46.8		%	46.5		%					North America Gross Margin	46.7		%	46.8		%
North America Operating Income (Loss)		$	650		$	(4,977)		$	5,627	113.1	%
North America Operating Income (Loss) Margin		0.4		%	(3.8)		%
North America Operating (Loss) Income												North America Operating (Loss) Income	$	(15,797)		$	650		$	(16,447)	NM
North America Operating (Loss) Income Margin												North America Operating (Loss) Income Margin	(9.8)		%	0.4		%


		December 31,				Change					December 31,				Change
		2021		2020		Dollar Change		% Change			2022		2021		Dollar Change		% Change
Net cash provided by (used in) operating activities		$	6,247	$	(656)	$	6,903	1,052.3	%
Net cash (used in) provided by operating activities										Net cash (used in) provided by operating activities	$	(21,813)	$	6,247	$	(28,060)	NM
Net cash used in investing activities	Net cash used in investing activities	(35,001)		(126,597)		91,596		72.4	%	Net cash used in investing activities	(35,770)		(35,001)		(769)		(2.2)	%
Net cash provided by financing activities		166,404		123,764		42,640		34.5	%
Net cash (used in) provided by financing activities										Net cash (used in) provided by financing activities	(7,051)		166,404		(173,455)		NM
Foreign exchange effect on cash and cash equivalents	Foreign exchange effect on cash and cash equivalents	(410)		793		(1,203)		(151.7)	%	Foreign exchange effect on cash and cash equivalents	(2,322)		(410)		(1,912)		(466.3)	%
Increase (decrease) in cash and cash equivalents		137,240		(2,696)		139,936		5,190.5	%
(Decrease) increase in cash and cash equivalents										(Decrease) increase in cash and cash equivalents	(66,956)		137,240		(204,196)		NM
Cash and cash equivalents, beginning of the period	Cash and cash equivalents, beginning of the period	86,334		89,030		(2,696)		(3.0)	%	Cash and cash equivalents, beginning of the period	223,574		86,334		137,240		159.0	%
Cash and cash equivalents, end of the period	Cash and cash equivalents, end of the period	$	223,574	$	86,334	$	137,240	159.0	%	Cash and cash equivalents, end of the period	$	156,618	$	223,574	$	(66,956)	(29.9)	%


		Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		After 5 Years			Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		After 5 Years
Purchase obligations	Purchase obligations	$	41,126	$	19,751	$	11,976	$	9,399	$	—	Purchase obligations	$	55,291	$	27,361	$	24,065	$	3,865	$	—
Operating lease obligations	Operating lease obligations	6,127		2,297		2,964		692		174		Operating lease obligations	7,886		3,257		2,110		1,114		1,405
Finance lease obligations	Finance lease obligations	565		213		233		113		6		Finance lease obligations	460		168		236		56		—
Convertible senior notes (1)	Convertible senior notes (1)	86,250		—		—		86,250		—		Convertible senior notes (1)	86,250		—		—		86,250		—
Future interest obligations (2)	Future interest obligations (2)	17,010		3,234		7,394		6,382		—		Future interest obligations (2)	11,994		3,234		6,469		2,291		—
Total	Total	$	151,078	$	25,495	$	22,567	$	102,836	$	180	Total	$	161,881	$	34,020	$	32,880	$	93,576	$	1,405


			Page
Reports of Independent Registered Public Accounting ~~Firms~~Firm (PCAOB ID Nu ~~mbe~~rNumber 248 a ~~nd PCAOB ID Numbe~~r ~~166~~, ~~respectively~~)			5352
Consolidated Balance Sheets			5856
Consolidated Statements of Loss			5957
Consolidated Statements of Comprehensive Loss			6058
Consolidated Statements of Stockholders' Equity			6159
Consolidated Statements of Cash Flows			6260
Notes to Consolidated Financial Statements			6462
Note 1, Operations and Summary of Significant Accounting Policies			6462
Note 2, Revenue			7573
Note 3, Acquisition and Related Party Items			7876
Note 4, Investments in Unconsolidated Affiliates			8886
Note 5, Income Taxes			8987
Note 6, Leases			9391
Note 7, Earnings Per Share			9794
Note 8, Goodwill and Other Intangibles			9895
Note 9, Property and Equipment, Net			9996
Note 10, Inventories			~~100~~97
Note 11, Accrued Liabilities			~~100~~97
Note 12, Capital Stock			~~100~~97
Note 13, Accumulated Other Comprehensive Income			~~106~~103
Note 14, Commitments and Contingencies			~~106~~103
Note 15, Interest and Other Expense (Income), Net			~~107~~104
Note 16, Convertible Notes			~~107~~104
Note 17, Note Receivables			~~111~~108
Note 18, Segment Reporting			~~112~~109

Note 19, Subsequent Events			~~116~~112


		Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders' Equity			Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
		Shares	Amount		Shares	Amount											Shares	Amount		Shares	Amount
Balances, December 31, 2018		—	$	—	7,676	$	77	$	257,034	$	277	$	(134,979)	$	122,409
Net loss attributable to Heska Corporation		—	—		—	—		—		—		(1,465)		(1,465)
Issuance of common stock, net of shares withheld for employee taxes		—	—		206	2		(1,620)		—		—		(1,618)
Stock-based compensation		—	—		—	—		4,968		—		—		4,968
Convertible notes, equity		—	—		—	—		29,834		—		—		29,834
Other comprehensive income		—	—		—	—		—		236		—		236
Balances, December 31, 2019	Balances, December 31, 2019	—	$	—	7,882	$	79	$	290,216	$	513	$	(136,444)	$	154,364	Balances, December 31, 2019	—	$	—	7,882	$	79	$	290,216	$	513	$	(136,444)	$	154,364
Adoption of accounting standards	Adoption of accounting standards	—	—		—	—		—		—		(18)		(18)		Adoption of accounting standards	—	—		—	—		—		—		(18)		(18)
Balances, January 1, 2020	Balances, January 1, 2020	—	—		7,882	79		290,216		513		(136,462)		154,346		Balances, January 1, 2020	—	—		7,882	79		290,216		513		(136,462)		154,346
Net loss attributable to Heska Corporation	Net loss attributable to Heska Corporation	—	—		—	—		—		—		(14,399)		(14,399)		Net loss attributable to Heska Corporation	—	—		—	—		—		—		(14,399)		(14,399)
Issuance of common stock, net of shares withheld for employee taxes	Issuance of common stock, net of shares withheld for employee taxes	—	—		85	1		2,795		—		—		2,796		Issuance of common stock, net of shares withheld for employee taxes	—	—		85	1		2,795		—		—		2,796
Issuance of preferred stock	Issuance of preferred stock	122	1		—	—		121,785		—		—		121,786		Issuance of preferred stock	122	1		—	—		121,785		—		—		121,786
Conversion to common stock	Conversion to common stock	(122)	(1)		1,509	15		(14)		—		—		—		Conversion to common stock	(122)	(1)		1,509	15		(14)		—		—		—
Stock-based compensation	Stock-based compensation	—	—		—	—		9,490		—		—		9,490		Stock-based compensation	—	—		—	—		9,490		—		—		9,490
Purchase of minority interest	Purchase of minority interest	—	—		—	—		(622)		—		—		(622)		Purchase of minority interest	—	—		—	—		(622)		—		—		(622)
Other comprehensive income	Other comprehensive income	—	—		—	—		—		13,656		—		13,656		Other comprehensive income	—	—		—	—		—		13,656		—		13,656
Balances, December 31, 2020	Balances, December 31, 2020	—	$	—	9,476	$	95	$	423,650	$	14,169	$	(150,861)	$	287,053	Balances, December 31, 2020	—	$	—	9,476	$	95	$	423,650	$	14,169	$	(150,861)	$	287,053
Adoption of accounting standards	Adoption of accounting standards	—	—		—	—		(29,834)		—		3,365		(26,469)		Adoption of accounting standards	—	—		—	—		(29,834)		—		3,365		(26,469)
Balances, January 1, 2021	Balances, January 1, 2021	—	—		9,476	95		393,816		14,169		(147,496)		260,584		Balances, January 1, 2021	—	—		9,476	95		393,816		14,169		(147,496)		260,584
Net loss attributable to Heska Corporation	Net loss attributable to Heska Corporation	—	—		—	—		—		—		(1,148)		(1,148)		Net loss attributable to Heska Corporation	—	—		—	—		—		—		(1,148)		(1,148)
Issuance of common stock, net of shares withheld for employee taxes	Issuance of common stock, net of shares withheld for employee taxes	—	—		295	3		3,098		—		—		3,101		Issuance of common stock, net of shares withheld for employee taxes	—	—		295	3		3,098		—		—		3,101
Equity offering, net of issuance costs	Equity offering, net of issuance costs	—	—		941	9		164,177		—		—		164,186		Equity offering, net of issuance costs	—	—		941	9		164,177		—		—		164,186
Stock-based compensation	Stock-based compensation	—	—		—	—		18,263		—		—		18,263		Stock-based compensation	—	—		—	—		18,263		—		—		18,263
Other comprehensive loss	Other comprehensive loss	—	—		—	—		—		(9,132)		—		(9,132)		Other comprehensive loss	—	—		—	—		—		(9,132)		—		(9,132)
Balances, December 31, 2021	Balances, December 31, 2021	—	$	—	10,712	$	107	$	579,354	$	5,037	$	(148,644)	$	435,854	Balances, December 31, 2021	—	$	—	10,712	$	107	$	579,354	$	5,037	$	(148,644)	$	435,854
Net loss attributable to Heska Corporation																Net loss attributable to Heska Corporation	—	—		—	—		—		—		(19,889)		(19,889)
Issuance of common stock, net of shares withheld for employee taxes																Issuance of common stock, net of shares withheld for employee taxes	—	—		118	1		(2,079)		—		—		(2,078)
Equity contingent consideration																Equity contingent consideration	—	—		—	—		3,860		—		—		3,860
Stock-based compensation																Stock-based compensation	—	—		—	—		16,004		—		—		16,004
Other comprehensive loss																Other comprehensive loss	—	—		—	—		—		(11,543)		—		(11,543)
Balances, December 31, 2022																Balances, December 31, 2022	—	$	—	10,830	$	108	$	597,139	$	(6,506)	$	(168,533)	$	422,208


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:	SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:							SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non-cash transfers of equipment between inventory and property and equipment, net	Non-cash transfers of equipment between inventory and property and equipment, net	$	4,600	$	4,437	$	827	Non-cash transfers of equipment between inventory and property and equipment, net	$	2,563	$	4,600	$	4,437
Non-cash conversion of preferred stock to common stock	Non-cash conversion of preferred stock to common stock	$	—	$	122,000	$	—	Non-cash conversion of preferred stock to common stock	$	—	$	—	$	122,000
Contingent consideration for acquisitions	Contingent consideration for acquisitions	$	4,034	$	—	$	—	Contingent consideration for acquisitions	$	3,860	$	4,034	$	—
Notes payable issued in acquisition	Notes payable issued in acquisition	$	15,900	$	—	$	—	Notes payable issued in acquisition	$	—	$	15,900	$	—

Consideration payable for CVM Acquisition (See Note 3)		$	—	$	—	$	14,420
Indemnity holdback for acquisition	Indemnity holdback for acquisition	$	346	$	—	$	—	Indemnity holdback for acquisition	$	1,420	$	346	$	—


	Years Ended December 31,
	2022		2021		2020
Balances at beginning of period	$	874	$	769	$	186
Additions from acquisitions	—		3		90
Additions - charged to expense	485		353		614
Deductions - write offs, net of recoveries	(214)		(248)		(121)
Foreign exchange effects	(16)		(3)		—
Balances at end of period	$	1,129	$	874	$	769


		As of December 31,			As of December 31,
		2021	2020		2022	2021
European Union Euros	European Union Euros	5,497	8,520	European Union Euros	12,497	5,497
Swiss Francs	Swiss Francs	224	138	Swiss Francs	1,342	224
Canadian Dollars	Canadian Dollars	4,191	2,993	Canadian Dollars	1,854	4,191
GB Pounds				GB Pounds	104	—
Australian Dollars	Australian Dollars	676	159	Australian Dollars	564	676
Malaysian Ringgit	Malaysian Ringgit	1,412	364	Malaysian Ringgit	1,369	1,412


Year Ending December 31,	Year Ending December 31,	Revenue		Year Ending December 31,	Revenue
2022		$	40,216
2023	2023	36,867		2023	$	51,556
2024	2024	31,914		2024	47,923
2025	2025	26,215		2025	41,660
2026	2026	20,886		2026	36,428
2027				2027	22,720
Thereafter	Thereafter	11,325		Thereafter	18,941
		$	167,423		$	219,228


		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
2022										2022
Financial Assets										Financial Assets
Money market fund										Money market fund	$	95,000	$	95,000	$	—	$	—
Convertible note receivable embedded derivative										Convertible note receivable embedded derivative	177		—		—		177

Financial Liabilities										Financial Liabilities
BiEsseA Contingent Consideration										BiEsseA Contingent Consideration	438		—		—		438
Balances, December 31, 2022										Balances, December 31, 2022	$	95,615	$	95,000	$	—	$	615

2021										2021	Total		Level 1		Level 2		Level 3
	2021	Total		Level 1		Level 2		Level 3
Financial Assets	Financial Assets									Financial Assets
Convertible note receivable embedded derivative	Convertible note receivable embedded derivative	$	888	$	—	$	—	$	888	Convertible note receivable embedded derivative	$	888	$	—	$	—	$	888
Promissory note receivable derivative		337		—		—		337
Promissory note receivable embedded derivative										Promissory note receivable embedded derivative	337		—		—		337
Financial Liabilities	Financial Liabilities									Financial Liabilities
BiEsseA Contingent Consideration										BiEsseA Contingent Consideration	2,334		—		—		2,334

BiEsseA Contingent Consideration		2,334		—		—		2,334
Notes payable		15,900		—		—		15,900
Balances, December 31, 2021	Balances, December 31, 2021	$	19,459	$	—	$	—	$	19,459	Balances, December 31, 2021	$	3,559	$	—	$	—	$	3,559

2020		Total		Level 1		Level 2		Level 3

Financial Assets
Convertible note receivable embedded derivative		$	995	$	—	$	—	$	995

Balances, December 31, 2020		$	995	$	—	$	—	$	995


	Derivative Assets				Contingent Consideration Liabilities				Notes Payable
	Convertible note receivable		Promissory note receivable		Lacuna		BiEsseA		Biotech
Balances, December 31, 2020	$	995	$	—	$	—	$	—	$	—
Acquisition value	—		307		1,700		2,334		15,900
Cash payments	—		—		—		—		—
Changes in fair value	(107)		30		(1,700)		—		—
Balances, December 31, 2021	$	888	$	337	$	—	$	2,334	$	15,900


Asset Classification			Estimated Useful Life
Building			10 to 43 years
Machinery and equipment			2 to 10 years
Office furniture and equipment			3 to 713 years
Computer hardware and software			3 to 75 years
Leasehold and building improvements			5 to 1530 years


	January 3, 2022
Purchase price in cash	$	31,627
Fair value of equity contingent consideration	3,860
Total purchase consideration	$	35,487

Cash and cash equivalents	$	1,251
Inventory	359
Accounts receivable	824
Prepaid expenses and other assets	318
Property and equipment, net	602
Operating lease right-of-use assets	2,962
Intangible assets	18,504
Total assets acquired	24,820
Accounts payable	520
Accrued liabilities	1,260
Operating lease liabilities, current	247
Deferred revenue, current, and other	1,014
Operating lease liabilities, non-current	2,714
Deferred tax liabilities	5,246
Other liabilities	318
Net assets acquired	13,501
Goodwill	21,986
Total fair value of consideration transferred	$	35,487


	September 1, 2021
Purchase price in cash	$	16,250
Notes payable	15,900
Total purchase consideration	$	32,150

Accounts receivables	$	18
Other current assets	1
Inventories	~~173~~190
Property and equipment, net	148
Operating lease right-of-use assets	1,033
Other intangible assets, net	6,000
Other non-current assets	15
Total assets acquired	~~7,388~~7,405
Accounts payable	11
Accrued liabilities	33
Operating lease liabilities, current	188
Operating lease liabilities, non-current	845
Net assets acquired	~~6,311~~6,328
Goodwill	~~25,839~~25,822
Total fair value of consideration transferred	$	32,150


	July 1, 2021
Purchase price in cash	$	4,835
Fair value of contingent consideration	2,334
Total purchase consideration	$	7,169

Cash and cash equivalents	$	322
Accounts receivables	152
Other receivables	497
Prepaid expenses	8
Other current assets	275
Property and equipment, net	89
Operating lease right-of-use assets	44
Other intangible assets, net	3,329
Total assets acquired	4,716
Accounts payable	208
Accrued liabilities	334
Operating lease liabilities, current	37
Deferred revenue, current, and other	85
Operating lease liabilities, non-current	20
Deferred tax liability, net	925
Other liabilities	500
Net assets acquired	2,607
Goodwill	4,562
Total fair value of consideration transferred	$	7,169


	February 1, 2021
Purchase price in cash	$	4,255
Fair value of contingent consideration	1,700
Total purchase consideration	$	5,955

Cash and cash equivalents	$	3
Accounts receivable	170
Property and equipment, net	530
Other intangible assets, net	1,185
Total assets acquired	1,888
Deferred tax liability	133
Net assets acquired	1,755
Goodwill	4,200
Total fair value of consideration transferred	$	5,955


	April 1, 2020
Total purchase consideration	$	110,290

Cash and cash equivalents	$	5,889
Accounts receivable	10,707
Inventories	11,278
Net investment in leases, current	311
Prepaid expenses	1,692
Other current assets	1,338
Property and equipment, net	19,320
Operating lease right-of-use assets	877
Other intangible assets, net	44,517
Net investment in leases, non-current	1,027
Investments in unconsolidated affiliates	55
Other non-current assets	291
Total assets acquired	97,302
Accounts payable	8,221
Accrued liabilities	7,067
Operating lease liabilities, current	356
Deferred revenue, current, and other	3,220
Deferred revenue, non-current	94
Operating lease liabilities, non-current	529
Deferred tax liability	13,249
Other liabilities	276
Net assets acquired	64,290
Goodwill	46,000
Total fair value of consideration transferred	$	110,290


	Year Ended December 31,
	2020		2019
Revenue, net	$	215,874	$	201,700
Net loss before equity in losses of unconsolidated affiliates	$	(14,848)	$	(2,159)
Net loss attributable to Heska Corporation	$	(15,215)	$	(2,487)


	Year Ended
	December 31, 2020
Revenue, net	$	215,874
Net loss before equity in losses of unconsolidated affiliates	$	(14,848)
Net loss attributable to Heska Corporation	$	(15,215)


~~Purchase Price~~	~~December 5, 2019~~
~~Consideration paid to former owners~~	$	~~14,420~~

~~Cash and cash equivalents~~	$	~~1,226~~
~~Accounts receivable~~	~~583~~
~~Inventories~~	~~1,621~~
~~Other current assets~~	~~1,186~~
~~Property and equipment~~	~~345~~
~~Other intangible assets~~	~~2,608~~
~~Other non-current assets~~	~~460~~
~~Total assets acquired~~	~~8,029~~
~~Accounts payable~~	94
~~Accrued liabilities~~	~~471~~
~~Current portion of deferred revenue, and other~~	54
~~Deferred tax liability~~	~~683~~
~~Other long-term borrowings~~	~~1,109~~
~~Other liabilities~~	~~157~~
~~Net assets acquired~~	~~5,461~~
~~Goodwill~~	~~8,959~~
~~Total fair value of consideration transferred~~	$	~~14,420~~


	~~Year Ended~~
	~~December 31, 2019~~
~~Revenue, net~~	$	~~130,434~~
~~Net (loss) income before equity in losses of unconsolidated affiliates~~	$	~~(460)~~
~~Net (loss) income attributable to Heska Corporation~~	$	~~(788)~~


		December 31, 2021		December 31, 2020			December 31, 2022		December 31, 2021
Equity method investment	Equity method investment	$	2,406	$	3,686	Equity method investment	$	941	$	2,406
Non-marketable equity security investment	Non-marketable equity security investment	3,018		3,018		Non-marketable equity security investment	3,018		3,018
Investment in Unconsolidated Affiliates	Investment in Unconsolidated Affiliates	$	5,424	$	6,704	Investment in Unconsolidated Affiliates	$	3,959	$	5,424


Leases	Balance Sheet Location	December 31, 2021		December 31, 2020
Assets
Operating	Operating lease right-of-use assets	$	5,198	$	5,457
Finance	Property and equipment, net	1,650		1,907
Total Leased Assets		$	6,848	$	7,364

Liabilities
Operating	Operating lease liabilities, current	$	2,227	$	2,087
	Operating lease liabilities, non-current	3,509		3,858
Finance	Deferred revenue, current, and other	200		295
	Other liabilities	331		261
Total Lease Liabilities		$	6,267	$	6,501


Year Ending December 31,	Operating Leases		Finance Leases
2023	$	3,255	$	168
2024	1,212		134
2025	898		102
2026	653		50
2027	461		5
Thereafter	1,405		—
Total lease payments	7,884		459
Less: imputed interest	412		25
Total lease liabilities	$	7,472	$	434


Year Ending December 31,	Year Ending December 31,	Sales-Type Leases		Year Ending December 31,	Sales-Type Leases
2022		$	6,175
2023	2023	5,938		2023	$	7,674
2024	2024	5,168		2024	7,451
2025	2025	4,076		2025	6,636
2026	2026	3,060		2026	5,888
2027				2027	4,335
Thereafter	Thereafter	1,921		Thereafter	2,948
Total undiscounted future maturities		26,338
Less: interest		35

Total lease receivables	Total lease receivables	$	26,303	Total lease receivables	$	34,932


		North America		International		Total			North America		International		Total
Carrying amount, December 31, 2019		$	25,724	$	10,480	$	36,204
Carrying amount, December 31, 2020								Carrying amount, December 31, 2020	$	35,414	$	52,862	$	88,276
Goodwill attributable to acquisitions								Goodwill attributable to acquisitions	30,039		4,562		34,601

Foreign currency adjustments								Foreign currency adjustments	82		(4,133)		(4,051)
Carrying amount, December 31, 2021								Carrying amount, December 31, 2021	$	65,535	$	53,291	$	118,826
Goodwill attributable to acquisitions	Goodwill attributable to acquisitions	8,742		37,258		46,000		Goodwill attributable to acquisitions	—		21,986		21,986
Measurement period adjustment to prior year acquisition	Measurement period adjustment to prior year acquisition	—		110		110		Measurement period adjustment to prior year acquisition	(17)		—		(17)
Foreign currency adjustments	Foreign currency adjustments	948		5,014		5,962		Foreign currency adjustments	(606)		(4,271)		(4,877)
Carrying amount, December 31, 2020		$	35,414	$	52,862	$	88,276
Goodwill attributable to acquisitions (subject to change)		30,039		4,562		34,601
Measurement period adjustment to prior year acquisition		—		—		—
Foreign currency adjustments		82		(4,133)		(4,051)
Carrying amount, December 31, 2021		$	65,535	$	53,291	$	118,826
Carrying amount, December 31, 2022								Carrying amount, December 31, 2022	$	64,912	$	71,006	$	135,918


		Options Outstanding				Options Exercisable					Options Outstanding				Options Exercisable
Exercise Prices	Exercise Prices	Number of Options Outstanding at December 31, 2021	Weighted Average Remaining Contractual Life in Years	Weighted Average Exercise Price		Number of Options Exercisable at December 31, 2021	Weighted Average Remaining Contractual Life in Years	Weighted Average Exercise Price		Exercise Prices	Number of Options Outstanding	Weighted Average Remaining Contractual Life in Years	Weighted Average Exercise Price		Number of Options Exercisable	Weighted Average Remaining Contractual Life in Years	Weighted Average Exercise Price
$7.36 - $21.09	$7.36 - $21.09	84,828	1.88	$	9.87	84,828	1.88	$	9.87	$7.36 - $21.09	36,148	1.41	$	12.49	36,148	1.41	$	12.49
$21.10 - $69.76	$21.10 - $69.76	98,288	6.82	$	53.06	63,288	6.01	$	48.71	$21.10 - $69.76	89,717	6.11	$	54.97	89,717	6.11	$	54.97
$69.77 - $71.83	$69.77 - $71.83	90,000	6.32	$	69.81	90,000	6.32	$	69.81	$69.77 - $71.83	80,851	5.33	$	69.81	80,851	5.33	$	69.81
$71.84 - $95.65	$71.84 - $95.65	96,131	6.91	$	80.90	70,362	6.58	$	79.10	$71.84 - $95.65	86,131	5.80	$	79.59	86,131	5.80	$	79.59
$95.66 - $188.62	$95.66 - $188.62	50,955	8.01	$	133.53	18,453	6.28	$	99.62	$95.66 - $188.62	47,191	7.05	$	131.51	29,815	6.46	$	116.40
$7.36 - $188.62	$7.36 - $188.62	420,202	5.88	$	64.06	326,931	5.16	$	53.85	$7.36 - $188.62	340,038	5.48	$	70.84	322,662	5.34	$	66.18


	Year Ended December 31,
	2021
	Options	Weighted Average Exercise Price
Outstanding at beginning of period	220,000	$	60.94
Granted at market	34,800	$	198.40



Outstanding at end of period	254,800	$	79.71
Exercisable at end of period	25,000	$	60.94


		Restricted Stock Awards			Restricted Stock Units				Restricted Stock Awards			Restricted Stock Units
		Restricted Stock	Weighted-Average Grant Date Fair Value Per Award		Restricted Stock	Weighted-Average Grant Date Fair Value Per Award			Restricted Stock	Weighted-Average Grant Date Fair Value Per Award		Restricted Stock	Weighted-Average Grant Date Fair Value Per Award
Non-vested as of December 31, 2020		291,520	$	78.44	—	$	—
Non-vested as of December 31, 2021								Non-vested as of December 31, 2021	493,513	$	141.98	6,000	$	172.11
Granted	Granted	243,369	$	207.24	6,000	$	172.11	Granted	78,236	$	115.91	26,173	$	100.97
Vested	Vested	(30,082)	$	68.33	—	$	—	Vested	(114,991)	$	90.57	—	$	—
Forfeited	Forfeited	(11,294)	$	104.49	—	$	—	Forfeited	(14,239)	$	91.17	(243)	$	127.09
Non-vested as of December 31, 2021		493,513	$	141.98	6,000	$	172.11
Non-vested as of December 31, 2022								Non-vested as of December 31, 2022	442,519	$	152.36	31,930	$	114.14