Exhibit 99.1
FOR IMMEDIATE RELEASE
At Heska Corporation:
Jason Napolitano, Executive Vice President & CFO
(970) 493-7272, Ext. 4105
Heska Announces Q3 Results
Improved Bottom Line Performance
FORT COLLINS, CO, November 15, 2004— Heska Corporation (Nasdaq: HSKA) today reported financial results for its third quarter ended September 30, 2004.
Financial highlights for the third quarter of 2004 were:
| — | Highest third quarter revenue ever |
| — | A 12% decrease in year-over-year operating expenses |
| — | Lowest third quarter net loss as a public company |
“We continued to generate revenue growth in our Core Companion Animal Health segment this quarter, which allowed us to grow our revenue as compared to last year’s third quarter even while we experienced the anticipated revenue decline in our Other Vaccines, Pharmaceuticals and Products segment,” said Robert Grieve, Heska’s Chairman and CEO. “While we had hoped for even higher revenue results, it is noteworthy that our net loss was substantially lower year-over-year.”
Segment Revenue
Total product revenue for the third quarter of 2004 was $15.5 million, up slightly from $15.4 million in the third quarter of 2003. Heska Corporation’s business is comprised of two reportable segments - 1) Core Companion Animal Health and 2) Other Vaccines, Pharmaceuticals and Products, the latter of which was previously reported as Diamond Animal Health. Product revenue from these segments is as follows:
Core Companion Animal Health: This segment includes revenue from the company’s diagnostic and monitoring instruments and supplies as well as single use, point-of-care tests, vaccines and pharmaceuticals, primarily for canine and feline use. In the third quarter of 2004, this segment generated product revenue of $12.5 million, up 7% from $11.7 million in the third quarter of 2003.
Other Vaccines, Pharmaceuticals and Products: This segment includes revenue from private label vaccine and pharmaceutical production, primarily for cattle but also for other animals including small mammals, horses and fish. In the third quarter of 2004, this segment generated product revenue of $3.0 million, a 20% decrease as compared to $3.7 million in the third quarter of 2003.
Investor Conference Call
Management will conduct a conference call on Monday, November 15, at 9:00 a.m. MST (11:00 a.m. EST) to discuss the third quarter 2004 financial results. To participate, dial (800)218-8862 (domestic) or (303)262-2130 (international); the conference call access number is 11013836. The conference call will also be broadcast live over the Internet athttp://www.heska.com. To listen, simply log on to the web at this address at least ten minutes prior to the start of the call to register, download and install any necessary audio software. Telephone replays of the conference call will be available for playback until November 29, 2004. The telephone replay may be accessed by dialing (800)405-2236 (domestic) or (303)590-3000 (international). The webcast replay may be accessed from Heska’s home page atwww.heska.com.
About Heska
Heska Corporation (Nasdaq: HSKA) sells advanced veterinary diagnostic and other specialty veterinary products. Heska’s state-of-the-art offerings to its customers include diagnostic and monitoring instruments and supplies as well as single use, point-of-care tests, vaccines and pharmaceuticals. The company’s core focus is on the canine and feline markets where it strives to develop high value products for unmet needs in veterinary medicine. For further information on Heska and its products, visit the company’s website atwww.heska.com.
Forward-Looking Statements
This announcement contains forward-looking statements regarding Heska’s future financial and operating results. These statements are based on current expectations and are subject to a number of risks and uncertainties. In addition, factors that could affect the business and financial results of Heska generally include the following: uncertainties regarding our ability to achieve our financial plan for 2004 and 2005 required to continue to fund our operations; inability to obtain sufficient capital to fund our operations, if required; uncertainties regarding our ability to comply with financial covenants required under our revolving line of credit agreement; uncertainties regarding the purchase levels and our ability to negotiate satisfactory agreements with large customers; inability to market, sell and distribute products successfully; uncertainties regarding the impact of revenue fluctuations on our cash flow and liquidity as many of our expenses are fixed; uncertainties regarding the scope, enforceability and validity of patents and proprietary rights, including those of our suppliers, which are subject to complex legal standards that vary from country to country and are subject to interpretation by administrative agencies and courts; competition; risks regarding our reliance on third-party suppliers, which is substantial; uncertainties regarding the performance of third parties who we have granted substantial marketing rights to certain of our existing products; delays in or failure to achieve market acceptance of products; uncertainties regarding the outcome of research and development efforts or the ability to successfully develop or commercialize products in research and development; changes in accounting standards and interpretations; quality of management; and the risks set forth in Heska's filings and future filings with the Securities and Exchange Commission, including those set forth in Heska’s Annual Report on Form 10-K for the year ended December 31, 2003 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.
Financial Table Follows:
Consolidated Statements of Operations
In Thousands, Except per Share Amounts
(unaudited)
| Three Months Ended
September 30, | Nine Months Ended
September 30, |
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| 2003 | 2004 | 2003 | 2004 |
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| Revenue: | | | | | | | | | | | | | | |
| Core companion animal health | | | $ | 11,679 | | $ | 12,479 | | $ | 32,681 | | $ | 39,870 | |
| Other vaccines, pharmaceuticals and products | | | | 3,733 | | | 2,984 | | | 10,102 | | | 9,378 | |
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Total product revenue, net of sales returns
and allowances | | | | 15,412 | | | 15,463 | | | 42,783 | | | 49,248 | |
| Research, development and other | | | | 299 | | | 476 | | | 955 | | | 1,228 | |
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| Total revenue | | | | 15,711 | | | 15,939 | | | 43,738 | | | 50,476 | |
Cost of products sold | | | | 9,159 | | | 9,827 | | | 25,565 | | | 31,803 | |
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| | | | | 6,552 | | | 6,112 | | | 18,173 | | | 18,673 | |
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| Operating expenses: | | | | | | | | | | | | | | |
| Selling and marketing | | | | 4,218 | | | 3,598 | | | 11,831 | | | 11,838 | |
| Research and development | | | | 1,738 | | | 1,419 | | | 5,289 | | | 4,932 | |
| General and administrative | | | | 1,716 | | | 1,805 | | | 5,315 | | | 5,875 | |
| Restructuring and other operating expenses | | | | -- | | | -- | | | 515 | | | -- | |
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| Total operating expenses | | | | 7,672 | | | 6,822 | | | 22,950 | | | 22,645 | |
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| Income (loss) from operations | | | | (1,120 | ) | | (710 | ) | | (4,777 | ) | | (3,972 | ) |
| Other, net | | | | (82 | ) | | (166 | ) | | (101 | ) | | (286 | ) |
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| Net income (loss) | | | $ | (1,202 | ) | $ | (876 | ) | $ | (4,878 | ) | $ | (4,258 | ) |
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| Basic and diluted net income (loss) per share | | | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.10 | ) | $ | (0.09 | ) |
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Shares used to compute basic and diluted net
loss per share | | | | 48,346 | | | 49,042 | | | 48,021 | | | 48,981 | |
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Balance Sheet Data
In Thousands
(unaudited)
| December 31, | September 30, |
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| 2003 | 2004 |
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| Cash and cash equivalents | | | $ | 4,877 | | $ | 5,275 | |
| Total current assets | | | | 28,717 | | | 28,042 | |
| Total assets | | | | 38,896 | | | 38,409 | |
| Line of credit | | | | 7,528 | | | 9,384 | |
| Current portion of long-term debt | | | | 783 | | | 857 | |
| Total current liabilities | | | | 18,516 | | | 24,512 | |
| Long-term debt | | | | 1,746 | | | 1,038 | |
| Stockholders’ equity | | | | 6,656 | | | 2,688 | |
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