Exhibit 99.1
FOR IMMEDIATE RELEASE
At Heska Corporation:
Jason Napolitano, Executive Vice President & CFO
(970) 493-7272, Ext. 4105
Heska Announces Q2 Results
2nd Quarter Net Loss Decreased 45% Over Prior Year
LOVELAND, CO, August 15, 2005 - Heska Corporation (NASDAQ:HSKA) today reported financial results for its second quarter ended June 30, 2005.
Heska Corporation (“Heska” or the “Company”) highlights since its second quarter began in April were:
| — | Amended bank agreement to include new equipment notes and extend maturity date to June 30, 2009 |
| — | Completed headquarters relocation to a new facility at Centerra in Loveland, Colorado |
| — | 200th U.S. patent issued |
“We continue to pursue operating efficiencies, and were able to reduce our operating expenses this quarter by approximately $1.2 million as compared to the second quarter of 2004,” said Robert Grieve, Heska’s Chairman and CEO. “Despite our lower operating expenses, second quarter 2005 Core Companion Animal Health product revenue exceeded its level in the second quarter of 2004.”
Segment Product Revenue
Total product revenue for the second quarter of 2005 was $16.2 million, down 7% from $17.4 million in the second quarter of 2004. Heska Corporation’s business is comprised of two reportable segments - Core Companion Animal Health and Other Vaccines, Pharmaceuticals and Products. 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 second quarter of 2005, this segment generated product revenue of $13.3 million, which was up slightly as compared to product revenue in the second quarter of 2004.
Other Vaccines, Pharmaceuticals and Products This segment includes revenue from private label vaccine and pharmaceutical production, primarily for cattle but also for other species including small mammals, horses and fish. In the second quarter of 2005, this segment generated product revenue of $2.8 million, down 31% as compared to $4.1 million in the second quarter of 2004.
Investor Conference Call
Management will conduct a conference call on Monday, August 15, 2005 at 9:00 a.m. MDT (11:00 a.m. EDT) to discuss the second quarter 2005 financial results. To participate, dial (800)218-0204 (domestic) or (303)262-2138 (international); the conference call access number is 11035775. 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 August 29, 2005. 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 until August 29, 2005.
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 provide 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 raise additional capital or borrow additional cash to fund future operations as needed; uncertainties regarding the impact of revenue fluctuations or shortfalls versus our expectations on our cash flow and liquidity as many of our expenses are fixed; uncertainties regarding our ability to achieve profitability; uncertainties regarding our ability to comply with financial covenants required under our revolving line of credit agreement; inability to market, sell and distribute products successfully; uncertainties regarding the scope, enforceability and validity of patents and proprietary rights, which are subject to interpretation by administrative agencies and courts; uncertainties regarding our ability to successfully develop or commercialize products in research and development and/or supported by our patents; competition; risks regarding our reliance on third parties who we have granted substantial marketing rights to certain of our existing products; risks regarding our reliance on third-party suppliers, which is substantial; 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, 2004 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2005.
Financial Table Follows (Certain prior year numbers have been reclassified to be consistent with the current year presentation.):
Consolidated Statements of Operations
In Thousands, Except per Share Amounts
(unaudited)
| Three Months Ended
June 30, | Six Months Ended
June 30, |
|---|
| | |
|
|---|
| 2004 | 2005 | 2004 | 2005 |
|---|
| |
|
|
| Revenue, net: | | | | | | | | | | | | | | |
| Product revenue, net: | | | | | | | | | | | | | | |
| Core companion animal health | | | $ | 13,308 | | $ | 13,324 | | $ | 27,422 | | $ | 26,180 | |
Other vaccines, pharmaceuticals and
products | | | | 4,123 | | | 2,847 | | | 6,428 | | | 6,827 | |
|
| |
| |
| |
| |
| Total product revenue, net | | | | 17,431 | | | 16,171 | | | 33,850 | | | 33,007 | |
| Research, development and other | | | | 365 | | | 394 | | | 687 | | | 712 | |
|
| |
| |
| |
| |
| Total revenue | | | | 17,796 | | | 16,565 | | | 34,537 | | | 33,719 | |
|
| |
| |
| |
| |
Cost of Revenue: | | | | | | | | | | | | | | |
| Cost of products sold | | | | 11,515 | | | 10,752 | | | 21,976 | | | 21,809 | |
| Cost of research, development and other | | | | 94 | | | 288 | | | 229 | | | 467 | |
|
| |
| |
| |
| |
| Total cost of revenue | | | | 11,609 | | | 11,040 | | | 22,205 | | | 22,276 | |
|
| |
| |
| |
| |
Gross Profit | | | | 6,187 | | | 5,525 | | | 12,332 | | | 11,443 | |
|
| |
| |
| |
| |
| Operating expenses: | | | | | | | | | | | | | | |
| Selling and marketing | | | | 3,792 | | | 3,428 | | | 8,240 | | | 7,227 | |
| Research and development | | | | 1,571 | | | 950 | | | 3,284 | | | 2,177 | |
| General and administrative | | | | 2,029 | | | 1,854 | | | 4,070 | | | 3,849 | |
|
| |
| |
| |
| |
| Total operating expenses | | | | 7,392 | | | 6,232 | | | 15,594 | | | 13,253 | |
|
| |
| |
| |
| |
| Loss from operations | | | | (1,205 | ) | | (707 | ) | | (3,262 | ) | | (1,810 | ) |
| Interest and other expense, net | | | | 183 | | | 60 | | | 120 | | | 265 | |
|
| |
| |
| |
| |
| Net loss | | | $ | (1,388 | ) | $ | (767 | ) | $ | (3,382 | ) | $ | (2,075 | ) |
|
| |
| |
| |
| |
| Basic and diluted net loss per share | | | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.07 | ) | $ | (0.04 | ) |
|
| |
| |
| |
| |
Shares used to compute basic and diluted net
loss per share | | | | 48,996 | | | 49,521 | | | 48,950 | | | 49,448 | |
|
| |
| |
| |
| |
Balance Sheet Data
In Thousands
(unaudited)
| December 31, | June 30, |
|---|
| 2004 | 2005 |
|---|
| |
|
|
|---|
| Cash and cash equivalents | | | $ | 4,982 | | $ | 4,637 | |
| Total current assets | | | | 28,442 | | | 24,787 | |
| Total assets | | | | 38,724 | | | 35,247 | |
| Line of credit | | | | 10,375 | | | 9,872 | |
| Current portion of long-term debt and capital leases | | | | 302 | | | 1,586 | |
| Total current liabilities | | | | 23,269 | | | 24,070 | |
| Long-term debt and capital leases | | | | 1,466 | | | 23 | |
| Stockholders’ equity | | | | 2,579 | | | 538 | |
### |
