Heska Corp. (HSKA) 10-Q 7 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 06, 2015
Document And Entity Information
Entity Registrant Name	Heska Corp
Entity Central Index Key	1,038,133
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		6,532,977
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,015

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 6,647	$ 5,855
Accounts receivable, net of allowance for doubtful accounts of $216 and $256, respectively	11,368	11,919
Due from - related parties	848	892
Inventories, net	16,836	12,658
Deferred tax asset, current	1,468	1,489
Other current assets	1,640	1,587
Total current assets	38,807	34,400
Property and equipment, net	14,886	13,410
Note receivable - related party	1,492	1,466
Goodwill and other intangible assets	21,132	21,205
Deferred tax asset, net of current portion	24,954	25,721
Other long-term assets	1,635	642
Total assets	102,906	96,844
Current liabilities:
Accounts payable	6,147	4,897
Due to - related party	698	252
Accrued liabilities	5,520	5,130
Current portion of deferred revenue	4,506	4,584
Line of credit	1,373	48
Other short-term borrowings, including current portion of long-term note payable	159	141
Total current liabilities	18,403	15,052
Long-term note payable, net of current portion	140	227
Deferred revenue, net of current portion, and other	12,062	12,754
Total liabilities	30,605	28,033
Non-Controlling Interest	15,705	15,679
Stockholders' equity:
Public common stock, $.01 par value, 7,500,000 shares authorized; 6,342,205 and 6,527,237 shares issued and outstanding, respectively	65	63
Additional paid-in capital	223,829	222,297
Accumulated other comprehensive income	452	283
Accumulated deficit	(167,750)	(169,511)
Total stockholders' equity	56,596	53,132
Total liabilities and stockholders' equity	$ 102,906	$ 96,844

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Accounts receivable, net of allowance for doubtful accounts	$ 256	$ 216
Preferred stock at par value	$ 0.01	$ 0.01
Preferred stock shares authorized	2,500	2,500
Common stock at par value	$ 0.01	$ 0.01
Common stock shares authorized	7,500	7,500
Public common stock at par value	$ 0.01	$ 0.01
Public common stock shares authorized	7,500	7,500
Public common stock shares issued	65,000	63,000
Public common stock shares outstanding	65,000	63,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue, net:
Core companion animal health	$ 20,757	$ 17,486	$ 40,329	$ 34,852
Other vaccines, pharmaceuticals and products	3,153	5,430	6,475	8,857
Total revenue, net	23,910	22,916	46,804	43,709
Cost of revenue	13,613	13,839	26,423	26,353
Gross profit	10,297	9,077	20,381	17,356
Operating expenses:
Selling and marketing	5,239	4,752	10,699	9,697
Research and development	392	374	811	762
General and administrative	2,837	3,034	6,021	6,081
Total operating expenses	8,468	8,160	17,531	16,540
Operating income	1,829	917	2,850	816
Interest and other expense, net	37	(7)	174	9
Income before income taxes	1,792	924	2,676	807
Income tax expense (benefit)
Current tax expense	82	32	126	53
Deferred tax expense (benefit)	532	114	789	249
Total income tax expense (benefit)	614	146	915	302
Net income	1,178	778	1,761	505
Net income (loss) attributable to non-controlling interest	(19)	(291)	(34)	(756)
Net income attributable to Heska Corporation	$ 1,197	$ 1,069	$ 1,795	$ 1,261
Basic net income per share attributable to Heska Corporation	$ 0.19	$ 0.18	$ 0.29	$ 0.21
Diluted net income per share attributable to Heska Corporation	$ 0.17	$ 0.17	$ 0.26	$ 0.20
Weighted average outstanding shares used to compute basic net income (loss) per share attributable to Heska Corp.	6,283	5,936	6,232	5,898
Weighted average outstanding shares used to compute diluted net income (loss) per share attributable to Heska Corp	7,075	6,384	6,980	6,183

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Net Income	$ 1,178	$ 778	$ 1,761	$ 505
Other comprehensive income (expense):
Minimum pension liability		8		(6)
Foreign currency translation	87	43	163	70
Unrealized gain on available for sale investments	6	(2)	6	(2)
Comprehensive income	1,271	827	1,930	567
Comprehensive income (loss) attributable to Non-controlling interest	(19)	(291)	(34)	(756)
Comprehensive income attributable to Heska Corporation	$ 1,290	$ 1,118	$ 1,964	$ 1,323

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income	$ 1,761	$ 505
Depreciation and amortization	2,074	1,617
Deferred tax expense (benefit)	789	249
Stock-based compensation	879	586
Unrealized (gain)/loss on foreign currency translation	44	(5)
Changes in operating assets and liabilities:
Accounts receivable	552	(585)
Inventories	(6,670)	(3,282)
Other current assets	(70)	394
Accounts payable	1,696	1,523
Accrued liabilities and other	458	33
Other non-current assets	(562)	(207)
Deferred revenue and other liabilities	(1,233)	2,335
Net cash provided by (used in) operating activities	(282)	3,163
CASH FLOWS FROM PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Investment in subsidiary		0
Purchase of property and equipment	(936)	(1,538)
Proceeds from disposition of property and equipment		6
Net cash provided by (used in) investing activities	(936)	(1,532)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from issuance of common stock	680	902
Repayments of line of credit borrowings, net	1,325	(2,224)
Repayments of other debt	(69)	(111)
Net cash provided by (used in) financing activities	1,936	(1,433)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	74	50
INCREASE IN CASH AND CASH EQUIVALENTS	792	248
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	5,855	6,016
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 6,647	$ 6,264

ORGANIZATION AND BUSINESS

ORGANIZATION AND BUSINESS	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
ORGANIZATION AND BUSINESS	1. ORGANIZATION AND BUSINESS Heska Corporation ("Heska" or the "Company") develops, manufactures, markets, sells and supports veterinary products. Heska's core focus is on the canine and feline companion animal health markets.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jun. 30, 2015
Summary Of Significant Accounting Policies
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements are the responsibility of the Company's management and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the instructions to Form 10-Q and rules and regulations of the Securities and Exchange Commission (the "SEC"). The condensed consolidated balance sheet as of June 30, 2015, the condensed consolidated statements of operations for the three months and six months ended June 30, 2014 and 2015, the condensed consolidated statements of comprehensive income for the three months and six months ended June 30, 2014 and 2015 and the condensed consolidated statements of cash flows for the six months ended June 30, 2014 and 2015 are unaudited, but include, in the opinion of management, all adjustments (consisting of normal recurring adjustments) which the Company considers necessary for a fair presentation of its financial position, operating results and cash flows for the periods presented. All material intercompany transactions and balances have been eliminated in consolidation. Although the Company believes that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the SEC. Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying financial statements and related disclosures have been prepared with the presumption that users of the interim financial information have read or have access to the audited financial statements for the preceding fiscal year. Accordingly, these financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2014, included in the Company's Annual Report on Form 10-K filed with the SEC on March 25, 2015. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expense during the reported period. Actual results could differ from those estimates. Significant estimates are required when establishing the allowance for doubtful accounts and the provision for excess/obsolete inventory, in determining the period over which the Company's obligations are fulfilled under agreements to license product rights and/or technology rights, in determining the need for, and the amount of, a valuation allowance on certain deferred tax assets and in determining the need for, and the amount of, an accrued liability for future payments related to minimum purchase obligations the Company may make in order to maintain certain product rights. Inventories Inventories are stated at the lower of cost or market using the first-in, first-out method. Inventory manufactured by the Company includes the cost of material, labor and overhead. If the cost of inventories exceeds estimated fair value, provisions are made to reduce the carrying value to estimated fair value. Inventories, net consist of the following (in thousands): December 31, 2014 June 30, 2015 Raw materials $ 6,298 $ 8,405 Work in process 2,966 4,152 Finished goods 4,949 5,744 Allowance for excess or obsolete inventory (1,555 ) (1,465 ) $ 12,658 $ 16,836 Property and Equipment The Company has utilized marketing programs whereby its instruments in inventory may be placed in a customer's location on a rental basis. The cost of these instruments is transferred to machinery and equipment or other long-term assets and depreciated or amortized, typically over a five to seven year period depending on the circumstance under which the instrument is placed with the customer. For the six months ended June 30, 2014 and the six months ended June 30, 2015, total costs transferred from inventory, including related to instrument rentals, were approximately $2.3 million and $2.5 million, respectively. The Company has sold certain customer rental contracts and underlying assets to a third party under the agreement that once the customer has met the customer obligations under the contract, ownership of the assets underlying the contract would be returned to the Company. The Company enters a debit to cash and a corresponding credit to deferred revenue at the time of these sales. These sales provided $874 thousand and $59 thousand of cash which was reported in the "deferred revenue and other" line item of the Company's consolidated statements of cash flows as of June 30, 2014 and June 30, 2015, respectively, all related to the Company's 54.6%-owned subsidiary, Heska Imaging US, LLC. As the Company anticipates it will regain ownership of the assets underlying these sales, it reports these assets as part of property and equipment and depreciates these assets per its depreciation policies. The Company had $3.0 million of net property and equipment and $2.7 million of net property and equipment related to these transactions as of December 31, 2014 and June 30, 2015, respectively, all related to the Company's 54.6%-owned subsidiary, Heska Imaging US, LLC. Capitalized Software The Company capitalizes third-party software costs, where appropriate, and reports such capitalized costs, net of accumulated amortization, on the "property and equipment" line of its consolidated balance sheets. The Company had $587 thousand and $515 thousand of such capitalized costs, net of accumulated amortization, on the "property and equipment" line of its consolidated balance sheets as of December 31, 2014 and June 30, 2015, respectively. Capitalized software costs in a given year are reported on the "purchases of property and equipment" line item of the Company's consolidated statements of cash flows. The Company had $31 thousand and $44 thousand of capitalized software costs reported on the "purchases of property and equipment" line item of its consolidated statements of cash flows for the six months ended June 30, 2014 and June 30, 2015, respectively. Cash Interest Cash paid for interest for the six months ended June 30, 2014 and June 30, 2015 was $44 thousand and $40 thousand, respectively. Basic and Diluted Net Income (Loss) Per Share Basic net income (loss) per common share is computed using the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding used to calculate basic net income per common share for the three and six months ended June 30, 2015 excluded unvested shares of restricted common stock, which totaled 209,177 shares at June 30, 2015. Diluted net income (loss) per share is computed using the sum of the weighted average number of shares of common stock outstanding, and, if not anti-dilutive, the effect of outstanding common stock equivalents (such as stock options and warrants) determined using the treasury stock method. For the three and six months ended June 30, 2014 and June 30, 2015, the Company reported net income attributable to Heska Corporation and therefore, unvested shares of restricted common stock and other dilutive common stock equivalent securities, as computed using the treasury method (but excluding options to purchase fractional shares resulting from the Company's December 2010 1-for-10 reverse stock split), were added to basic weighted average shares outstanding for the period to derive the weighted average shares for diluted earnings per share calculation. Common stock equivalent securities, other than options to purchase fractional shares, that were anti-dilutive for the three and six months ended June 30, 2014, and therefore excluded, were outstanding options to purchase 288,763 and 430,109 shares of common stock, respectively. Common stock equivalent securities, other than options to purchase fractional shares, that were anti-dilutive for the three and six months ended June 30, 2015, and therefore excluded, were outstanding options to purchase 26,500 and 27,700 shares of common stock, respectively. These securities are anti-dilutive primarily due to exercise prices greater than the average trading price of the Company's common stock during the three and six months ended June 30, 2014 and June 30, 2015.

NON-CONTROLLING INTEREST AND RE

NON-CONTROLLING INTEREST AND RELATED PARTY ITEMS	6 Months Ended
	Jun. 30, 2015
Business Combinations [Abstract]
Non-Controlling Interest and Realted Party Items	3. NON-CONTROLLING INTEREST AND RELATED PARTY ITEMS On February 24, 2013, the Company acquired a 54.6% interest in Cuattro Veterinary USA, LLC, an entity which was subsequently renamed Heska Imaging US, LLC ("Heska Imaging"). The remaining minority position (45.4%) in Heska Imaging is subject to purchase by Heska under performance-based puts and calls following calendar year 2015, 2016 and 2017. Should Heska undergo a change in control, as defined, prior to the end of 2017, Heska Imaging minority unit holders will be entitled to sell their Heska Imaging units to Heska at the highest call value they could have otherwise obtained if Heska Imaging meets certain minimum performance criteria. Heska Imaging markets, sells and supports digital radiography and ultrasound products along with embedded software and support, data hosting and other services. Shawna M. Wilson, Clint Roth, DVM, Steven M. Asakowicz, Rodney A. Lippincott, Kevin S. Wilson and Cuattro, LLC own approximately 29.75%, 8.39%, 4.09%, 3.07%, 0.05% and 0.05% of Heska Imaging, respectively. Kevin S. Wilson is the Chief Executive Officer and President of the Company, a member of the Company's Board of Directors and the spouse of Shawna M. Wilson. Steven M. Asakowicz serves as Executive Vice President, Companion Animal Health Sales for the Company. Rodney A. Lippincott serves as Executive Vice President, Companion Animal Health Sales for the Company. Mr. Wilson, Mrs. Wilson and trusts for their children and family own a 100% interest in Cuattro, LLC. Cuattro, LLC owns a 100% interest in Cuattro Software, LLC and a majority interest in Cuattro Veterinary, LLC. Mr. Wilson, Mrs. Wilson and trusts for their children and family own a majority interest in Cuattro Medical, LLC. Since January 1, 2015, Cuattro, LLC charged Heska Imaging $3.9 million, primarily related to digital imaging products, for which there is an underlying supply contract with minimum purchase obligations, software and services as well as other operating expenses; Heska Corporation charged Heska Imaging $2.2 million, primarily related to sales expenses; Heska Corporation charged Cuattro, LLC $79 thousand, primarily related to facility usage and other services. At June 30, 2015, Heska Imaging has a $1.5 million note receivable, including accrued interest, from Cuattro Veterinary, LLC, which is due on March 15, 2016 and which is listed as "Note receivable – related party" on the Company's consolidated balance sheets; Heska Imaging had accounts receivable from Cuattro Software, LLC of $832 thousand, which is included in "Due from – related parties" on the Company's consolidated balance sheets; Heska Corporation had net accounts receivable from Cuattro, LLC of $16 thousand which is included in "Due from – related parties" on the Company's consolidated balance sheets; Heska Imaging had net accounts payable to Cuattro, LLC of $698 thousand which is included in "Due to – related party" on the Company's consolidated balance sheets; Heska Corporation had accounts receivable from Heska Imaging of $5.7 million, including accrued interest, which eliminated in consolidation of the Company's financial statements; all monies owed accrue interest at the same rate Heska Corporation pays under its credit and security agreement with Wells Fargo Bank, National Association ("Wells Fargo") once past due with the exception of the note receivable, which accrues at this rate to its maturity date. The aggregate position in Heska Imaging of the unit holders who hold the 45.4% of Heska Imaging that Heska Corporation does not own (the "Put Value") is being accreted to its estimated redemption value in accordance with Heska Imaging's Amended and Restated Operating Agreement (the "Operating Agreement"). Since the Operating Agreement contains certain put rights that are out of the control of the Company, authoritative guidance requires the non-controlling interest, which includes the estimated values of such put rights, to be displayed outside of the equity section of the consolidated balance sheets. The adjustment to increase or decrease the Put Value to its expected redemption value and to estimate any distributions required under Heska Imaging's Operating Agreement to the unit holders who hold the 45.4% of Heska Imaging that Heska Corporation does not own (the "Imaging Minority") each reporting period is recorded to stockholders' equity in accordance with United States Generally Accepted Accounting Principles. The following is a reconciliation of the non-controlling interest balance (in thousands): Beginning at December 31, 2014 $ 15,679 Accretion of Put Value 26 Balance at June 30, 2015 $ 15,705

CAPITAL STOCK

CAPITAL STOCK	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
CAPITAL STOCK	4. CAPITAL STOCK Stock Option Plans The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model, with the following weighted average assumptions for options granted in the three and six months ended June 30, 2014 and 2015. Three Months Ended June 30 Six Months Ended June 30 2014 2015 2014 2015 Risk-free interest rate 1.10% 1.17% 1.07% 1.16% Expected lives 3.3 years 3.4 years 3.3 years 3.4 years Expected volatility 45% 43% 45% 43% Expected dividend yield 0% 0% 0% 0% A summary of the Company's stock option plans, excluding options to purchase fractional shares resulting from the Company's December 2010 1-for-10 reverse stock split is as follows: Year Ended December 31, 2014 Six Months Ended June 30, 2015 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at beginning of period 1,321,232 $ 10.386 1,074,251 $ 10.111 Granted at market 134,800 $ 16.398 29,046 $ 27.650 Cancelled (218,926 ) $ 17.786 (27,585 ) $ 10.067 Exercised (162,855 ) $ 7.234 (128,721 ) $ 8.816 Outstanding at end of period 1,074,251 $ 10.110 946,991 $ 10.826 Exercisable at end of period 729,175 $ 9.800 680,767 $ 10.688 The estimated fair value of stock options granted during the six months ended June 30, 2014 and 2015 was computed to be approximately $114 thousand and $258 thousand, respectively. The amount is amortized ratably over the vesting period of the options. The per share weighted average estimated fair value of options granted during the six months ended June 30, 2014 and 2015 was computed to be approximately $3.66 and $8.88, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2014 and 2015 was approximately $440 thousand and $1.94 million, respectively. The cash proceeds from options exercised during the six months ended June 30, 2014 and 2015 were approximately $789 thousand and $715 thousand, respectively. The following table summarizes information about stock options outstanding and exercisable at June 30, 2015, excluding outstanding options to purchase an aggregate of 8.6 fractional shares resulting from the Company's December 2010 1-for-10 reverse stock split with a weighted average remaining contractual life of 1.1 years, a weighted average exercise price of $15.27 and exercise prices ranging from $9.50 to $22.50. The Company intends to issue whole shares only from option exercises. Options Outstanding Options Exercisable Exercise Prices Number of Options Outstanding at June 30, 2015 Weighted Average Remaining Contractual Life in Years Weighted Average Exercise Price Number of Options Exercisable at June 30, 2015 Weighted Average Exercise Price $ 4.40 - $ 6.90 226,753 5.40 $ 5.597 213,505 $ 5.529 $ 6.91 - $ 8.34 209,299 8.32 $ 7.476 93,264 $ 7.585 $ 8.35 - $12.40 176,019 7.18 $ 9.445 127,538 $ 9.735 $12.41 -$17.17 147,561 1.10 $ 13.752 143,487 $ 13.718 $17.18 - $28.55 187,359 7.08 $ 19.890 102,973 $ 21.151 $ 4.40 - $28.55 946,991 6.04 $ 10.826 680,767 $ 10.688 As of June 30, 2015, there was approximately $1.1 million of total unrecognized compensation cost related to outstanding stock options. That cost is expected to be recognized over a weighted average period of 1.8 years, with approximately $324 thousand to be recognized in the six months ending December 31, 2015 and all the cost to be recognized as of May 2019, assuming all options vest according to the vesting schedules in place at June 30, 2015. As of June 30, 2015, the aggregate intrinsic value of outstanding options was approximately $17.9 million and the aggregate intrinsic value of exercisable options was approximately $12.9 million. Employee Stock Purchase Plan (the "ESPP") On May 5, 2015, the Company’s shareholders approved the amendment and restatement of the ESPP, including a 75,000 share increase to 450,000 total shares authorized under the ESPP as well as the following changes as compared to the ESPP prior to the amendment and restatement. Beginning April 1, 2015, employees may elect to withhold a positive fixed amount from each compensation payment in addition to the previous approach of withholding a whole percentage of such compensation payment, with all withholding for a given employee subject to a maximum monthly amount of $2,500 following the amendment and restatement as opposed to a $25,000 maximum annual amount prior to the amendment and restatement. For offering periods beginning on or after April 1, 2015, the purchase price of stock on March 31, June 30, September 30 and December 31 is to be the lesser of (1) 85% of the fair market value at the time of purchase and (2) the greater of (i) 85% of the fair market value at the beginning of the applicable offering period, (ii) the fair market value at the beginning of the applicable offering period less 1 cent and (iii) 65% of the fair market value at the time of purchase. In addition, participating employees may elect to purchase shares under the ESPP at the beginning of an applicable offering period for a purchase price of stock equal to the greater of (1) 85% of the fair market value at the beginning of the applicable offering period and (2) the fair market value at the beginning of the applicable offering period less 1 cent or at 5 pm on a day other than March 31, June 30, September 30 and December 31 during the applicable offering period for a purchase price of stock equal to the greater of (1) 85% of the fair market value at the time of purchase and (2) the fair market value at the time of purchase less 1 cent. In the six months ended June 30, 2014, the Company issued 16,069 shares under the ESPP. In the six months ended June 30, 2015, the Company issued 6,043 shares under the ESPP. For the three and six months ending June 30 of the following years, the Company estimated the fair values of stock purchase rights granted under the ESPP using the Black-Scholes pricing model and the following weighted average assumptions: Three Months Ended June 30 Six Months Ended June 30 2014 2015 2014 2015 Risk-free interest rate 0.23% 0.24% 0.23% 0.24% Expected lives 1.3 years 1.2 years 1.3 years 1.2 years Expected volatility 35% 36% 34% 35% Expected dividend yield 0% 0% 0% 0% For the six months ended June 30, 2014, the weighted-average fair value of the purchase rights granted was $2.26 per share, respectively. For the six months ended June 30, 2015, the weighted-average fair value of the purchase rights granted $5.67 per share, respectively. Restricted Stock Vesting and Issuance In the six months ended June 30, 2015, Mr. Wilson vested 39,000 shares, which were shares originally issued on May 6, 2014 following a vote of approval by the Company's stockholders pursuant to an employment agreement between Mr. Wilson and the Company effective as of March 26, 2014 (the "Wilson Employment Agreement"), upon the Company's achievement of certain stock price targets as defined and further described in the Wilson Employment Agreement. On March 17, 2015, the Company issued unvested shares to certain Executive Officers related to performance-based restricted stock grants (the "Performance Grants") and performance-based restricted stock grants related to the Company's 2015 Management Incentive Plan (the "MIP Grants"). The Performance Grants are to cliff vest three years following issuance, subject to the Company's achieving $7 million in Operating Cash Flow, as defined in the underlying restricted stock grant agreement, in at least one of 2015, 2016 or 2017, and other vesting provisions in the underlying restricted stock grant agreement. The MIP Grants are to vest on the date MIP Payouts are to be made under the 2015 Management Incentive Plan and are subject to the Company's achievement of certain financial goals and other vesting provisions in the underlying restricted stock grant agreement. The Company issued 52,956 shares under Performance Grants and 24,649 shares under MIP Grants on March 17, 2015. Restrictions on the transfer of Company stock The Company's Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation"), places restrictions (the "Transfer Restrictions") on the transfer of the Company's stock that could adversely effect the Company's ability to utilize its domestic Federal Net Operating Loss Position. In particular, the Transfer Restrictions prevent the transfer of shares without the approval of the Company's Board of Directors if, as a consequence of such transfer, 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 the Company's Board of Directors. Any transfer of shares in violation of the Transfer Restrictions (a "Transfer Violation") shall be void ab initio

SEGMENT REPORTING

SEGMENT REPORTING	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
SEGMENT REPORTING	5. SEGMENT REPORTING The Company is comprised of two reportable segments, Core Companion Animal Health ("CCA") and Other Vaccines, Pharmaceuticals and Products ("OVP"). The Core Companion Animal Health segment includes diagnostic instruments and supplies, as well as single use diagnostic and other tests and pharmaceuticals. The CCA segment also includes digital radiography and ultrasound products along with embedded software and support, data hosting and other services from Heska Imaging. These products are sold directly by the Company as well as through independent third-party distributors and through other distribution relationships. CCA segment products manufactured at the Des Moines, Iowa production facility included in the OVP segment's assets are transferred at cost and are not recorded as revenue for the OVP segment. The Other Vaccines, Pharmaceuticals and Products segment includes private label vaccine and pharmaceutical production, primarily for cattle, but also for other animals including small mammals. All OVP products are sold by third parties under third-party labels. Summarized financial information concerning the Company's reportable segments is shown in the following table (in thousands): Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Six Months Ended June 30, 2014: Total revenue $ 34,852 $ 8,857 $ 43,709 Operating income (loss) (265 ) 1,081 816 Interest expense 74 28 102 Total assets 81,903 15,214 97,117 Net assets 39,968 11,715 51,683 Capital expenditures 1,334 204 1,538 Depreciation and amortization 1,231 386 1,617 Six Months Ended June 30, 2015: Total revenue $ 40,329 $ 6,475 $ 46,804 Operating income 2,071 779 2,850 Interest expense 80 23 103 Total assets 88,254 14,652 102,906 Net assets 43,989 12,607 56,596 Capital expenditures 449 487 936 Depreciation and amortization 1,724 350 2,074 Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Three Months Ended June 30, 2014: Total revenue $ 17,486 $ 5,430 $ 22,916 Operating income 43 874 917 Interest expense 37 15 52 Total assets 81,903 15,214 97,117 Net assets 39,968 11,715 51,683 Capital expenditures 123 98 221 Depreciation and amortization 688 200 888 Three Months Ended June 30, 2015: Total revenue $ 20,757 $ 3,153 $ 23,910 Operating income 1,536 293 1,829 Interest expense 40 11 51 Total assets 88,254 14,652 102,906 Net assets 43,989 12,607 56,596 Capital expenditures 142 189 331 Depreciation and amortization 894 174 1,068

SUMMARY OF SIGNIFICANT ACCOUN12

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2015
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements are the responsibility of the Company's management and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the instructions to Form 10-Q and rules and regulations of the Securities and Exchange Commission (the "SEC"). The condensed consolidated balance sheet as of June 30, 2015, the condensed consolidated statements of operations for the three months and six months ended June 30, 2014 and 2015, the condensed consolidated statements of comprehensive income for the three months and six months ended June 30, 2014 and 2015 and the condensed consolidated statements of cash flows for the six months ended June 30, 2014 and 2015 are unaudited, but include, in the opinion of management, all adjustments (consisting of normal recurring adjustments) which the Company considers necessary for a fair presentation of its financial position, operating results and cash flows for the periods presented. All material intercompany transactions and balances have been eliminated in consolidation. Although the Company believes that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the SEC. Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying financial statements and related disclosures have been prepared with the presumption that users of the interim financial information have read or have access to the audited financial statements for the preceding fiscal year. Accordingly, these financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2014, included in the Company's Annual Report on Form 10-K filed with the SEC on March 25, 2015.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expense during the reported period. Actual results could differ from those estimates. Significant estimates are required when establishing the allowance for doubtful accounts and the provision for excess/obsolete inventory, in determining the period over which the Company's obligations are fulfilled under agreements to license product rights and/or technology rights, in determining the need for, and the amount of, a valuation allowance on certain deferred tax assets and in determining the need for, and the amount of, an accrued liability for future payments related to minimum purchase obligations the Company may make in order to maintain certain product rights.
Inventories	Inventories Inventories are stated at the lower of cost or market using the first-in, first-out method. Inventory manufactured by the Company includes the cost of material, labor and overhead. If the cost of inventories exceeds estimated fair value, provisions are made to reduce the carrying value to estimated fair value. Inventories, net consist of the following (in thousands): December 31, 2014 June 30, 2015 Raw materials $ 6,298 $ 8,405 Work in process 2,966 4,152 Finished goods 4,949 5,744 Allowance for excess or obsolete inventory (1,555 ) (1,465 ) $ 12,658 $ 16,836
Property and Equipment	Property and Equipment The Company has utilized marketing programs whereby its instruments in inventory may be placed in a customer's location on a rental basis. The cost of these instruments is transferred to machinery and equipment or other long-term assets and depreciated or amortized, typically over a five to seven year period depending on the circumstance under which the instrument is placed with the customer. For the six months ended June 30, 2014 and the six months ended June 30, 2015, total costs transferred from inventory, including related to instrument rentals, were approximately $2.3 million and $2.5 million, respectively. The Company has sold certain customer rental contracts and underlying assets to a third party under the agreement that once the customer has met the customer obligations under the contract, ownership of the assets underlying the contract would be returned to the Company. The Company enters a debit to cash and a corresponding credit to deferred revenue at the time of these sales. These sales provided $874 thousand and $59 thousand of cash which was reported in the "deferred revenue and other" line item of the Company's consolidated statements of cash flows as of June 30, 2014 and June 30, 2015, respectively, all related to the Company's 54.6%-owned subsidiary, Heska Imaging US, LLC. As the Company anticipates it will regain ownership of the assets underlying these sales, it reports these assets as part of property and equipment and depreciates these assets per its depreciation policies. The Company had $3.0 million of net property and equipment and $2.7 million of net property and equipment related to these transactions as of December 31, 2014 and June 30, 2015, respectively, all related to the Company's 54.6%-owned subsidiary, Heska Imaging US, LLC.
Capitalized Software	Capitalized Software The Company capitalizes third-party software costs, where appropriate, and reports such capitalized costs, net of accumulated amortization, on the "property and equipment" line of its consolidated balance sheets. The Company had $587 thousand and $515 thousand of such capitalized costs, net of accumulated amortization, on the "property and equipment" line of its consolidated balance sheets as of December 31, 2014 and June 30, 2015, respectively. Capitalized software costs in a given year are reported on the "purchases of property and equipment" line item of the Company's consolidated statements of cash flows. The Company had $31 thousand and $44 thousand of capitalized software costs reported on the "purchases of property and equipment" line item of its consolidated statements of cash flows for the six months ended June 30, 2014 and June 30, 2015, respectively.
Cash Interest	Cash Interest Cash paid for interest for the six months ended June 30, 2014 and June 30, 2015 was $44 thousand and $40 thousand, respectively.
Basic and Diluted Net Income Per Share	Basic and Diluted Net Income (Loss) Per Share Basic net income (loss) per common share is computed using the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding used to calculate basic net income per common share for the three and six months ended June 30, 2015 excluded unvested shares of restricted common stock, which totaled 209,177 shares at June 30, 2015. Diluted net income (loss) per share is computed using the sum of the weighted average number of shares of common stock outstanding, and, if not anti-dilutive, the effect of outstanding common stock equivalents (such as stock options and warrants) determined using the treasury stock method. For the three and six months ended June 30, 2014 and June 30, 2015, the Company reported net income attributable to Heska Corporation and therefore, unvested shares of restricted common stock and other dilutive common stock equivalent securities, as computed using the treasury method (but excluding options to purchase fractional shares resulting from the Company's December 2010 1-for-10 reverse stock split), were added to basic weighted average shares outstanding for the period to derive the weighted average shares for diluted earnings per share calculation. Common stock equivalent securities, other than options to purchase fractional shares, that were anti-dilutive for the three and six months ended June 30, 2014, and therefore excluded were outstanding options to purchase 288,763 and 430,109 shares of common stock, respectively. Common stock equivalent securities, other than options to purchase fractional shares, that were anti-dilutive for the three and six months ended June 30, 2015, and therefore excluded, were outstanding options to purchase 26,500 and 27,700 shares of common stock, respectively. These securities are anti-dilutive primarily due to exercise prices greater than the average trading price of the Company's common stock during the three and six months ended June 30, 2014 and June 30, 2015.

CAPITAL STOCK POLICIES (Policie

CAPITAL STOCK POLICIES (Policies)	6 Months Ended
	Jun. 30, 2015
Capital Stock Policies Policies
Stock Option Plans	Stock Option Plans The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model, with the following weighted average assumptions for options granted in the three and six months ended June 30, 2014 and 2015. Three Months Ended June 30 Six Months Ended June 30 2014 2015 2014 2015 Risk-free interest rate 1.10% 1.17% 1.07% 1.16% Expected lives 3.3 years 3.4 years 3.3 years 3.4 years Expected volatility 45% 43% 45% 43% Expected dividend yield 0% 0% 0% 0% A summary of the Company's stock option plans, excluding options to purchase fractional shares resulting from the Company's December 2010 1-for-10 reverse stock split is as follows: Year Ended December 31, 2014 Six Months Ended June 30, 2015 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at beginning of period 1,321,232 $ 10.386 1,074,251 $ 10.111 Granted at market 134,800 $ 16.398 29,046 $ 27.650 Cancelled (218,926 ) $ 17.786 (27,585 ) $ 10.067 Exercised (162,855 ) $ 7.234 (128,721 ) $ 8.816 Outstanding at end of period 1,074,251 $ 10.110 946,991 $ 10.826 Exercisable at end of period 729,175 $ 9.800 680,767 $ 10.688 The estimated fair value of stock options granted during the six months ended June 30, 2014 and 2015 was computed to be approximately $114 thousand and $258 thousand, respectively. The amount is amortized ratably over the vesting period of the options. The per share weighted average estimated fair value of options granted during the six months ended June 30, 2014 and 2015 was computed to be approximately $3.66 and $8.88, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2014 and 2015 was approximately $440 thousand and $1.94 million, respectively. The cash proceeds from options exercised during the six months ended June 30, 2014 and 2015 were approximately $789 thousand and $715 thousand, respectively. The following table summarizes information about stock options outstanding and exercisable at June 30, 2015, excluding outstanding options to purchase an aggregate of 8.6 fractional shares resulting from the Company's December 2010 1-for-10 reverse stock split with a weighted average remaining contractual life of 1.1 years, a weighted average exercise price of $15.27 and exercise prices ranging from $9.50 to $22.50. The Company intends to issue whole shares only from option exercises. Options Outstanding Options Exercisable Exercise Prices Number of Options Outstanding at June 30, 2015 Weighted Average Remaining Contractual Life in Years Weighted Average Exercise Price Number of Options Exercisable at June 30, 2015 Weighted Average Exercise Price $ 4.40 - $ 6.90 226,753 5.40 $ 5.597 213,505 $ 5.529 $ 6.91 - $ 8.34 209,299 8.32 $ 7.476 93,264 $ 7.585 $ 8.35 - $12.40 176,019 7.18 $ 9.445 127,538 $ 9.735 $12.41 -$17.17 147,561 1.10 $ 13.752 143,487 $ 13.718 $17.18 - $28.55 187,359 7.08 $ 19.890 102,973 $ 21.151 $ 4.40 - $28.55 946,991 6.04 $ 10.826 680,767 $ 10.688 As of June 30, 2015, there was approximately $1.1 million of total unrecognized compensation cost related to outstanding stock options. That cost is expected to be recognized over a weighted average period of 1.8 years, with approximately $324 thousand to be recognized in the six months ending December 31, 2015 and all the cost to be recognized as of May 2019, assuming all options vest according to the vesting schedules in place at June 30, 2015. As of June 30, 2015, the aggregate intrinsic value of outstanding options was approximately $17.9 million and the aggregate intrinsic value of exercisable options was approximately $12.9 million.
Employee Stock Purchase Plan (the "ESPP")	Employee Stock Purchase Plan (the "ESPP") On May 5, 2015, the Company’s shareholders approved the amendment and restatement of the ESPP, including a 75,000 share increase to 450,000 total shares authorized under the ESPP as well as the following changes as compared to the ESPP prior to the amendment and restatement. Beginning April 1, 2015, employees may elect to withhold a positive fixed amount from each compensation payment in addition to the previous approach of withholding a whole percentage of such compensation payment, with all withholding for a given employee subject to a maximum monthly amount of $2,500 following the amendment and restatement as opposed to a $25,000 maximum annual amount prior to the amendment and restatement. For offering periods beginning on or after April 1, 2015, the purchase price of stock on March 31, June 30, September 30 and December 31 is to be the lesser of (1) 85% of the fair market value at the time of purchase and (2) the greater of (i) 85% of the fair market value at the beginning of the applicable offering period, (ii) the fair market value at the beginning of the applicable offering period less 1 cent and (iii) 65% of the fair market value at the time of purchase. In addition, participating employees may elect to purchase shares under the ESPP at the beginning of an applicable offering period for a purchase price of stock equal to the greater of (1) 85% of the fair market value at the beginning of the applicable offering period and (2) the fair market value at the beginning of the applicable offering period less 1 cent or at 5 pm on a day other than March 31, June 30, September 30 and December 31 during the applicable offering period for a purchase price of stock equal to the greater of (1) 85% of the fair market value at the time of purchase and (2) the fair market value at the time of purchase less 1 cent. In the six months ended June 30, 2014, the Company issued 16,069 shares under the ESPP. In the six months ended June 30, 2015, the Company issued 6,043 shares under the ESPP. For the three and six months ending June 30 of the following years, the Company estimated the fair values of stock purchase rights granted under the ESPP using the Black-Scholes pricing model and the following weighted average assumptions: Three Months Ended June 30 Six Months Ended June 30 2014 2015 2014 2015 Risk-free interest rate 0.23% 0.24% 0.23% 0.24% Expected lives 1.3 years 1.2 years 1.3 years 1.2 years Expected volatility 35% 36% 34% 35% Expected dividend yield 0% 0% 0% 0% For the six months ended June 30, 2014, the weighted-average fair value of the purchase rights granted was $2.26 per share, respectively. For the six months ended June 30, 2015, the weighted-average fair value of the purchase rights granted $5.67 per share, respectively.
Restricted Stock Vesting and Issuance	Restricted Stock Vesting and Issuance In the six months ended June 30, 2015, Mr. Wilson vested 39,000 shares, which were shares originally issued on May 6, 2014 following a vote of approval by the Company's stockholders pursuant to an employment agreement between Mr. Wilson and the Company effective as of March 26, 2014 (the "Wilson Employment Agreement"), upon the Company's achievement of certain stock price targets as defined and further described in the Wilson Employment Agreement. On March 17, 2015, the Company issued unvested shares to certain Executive Officers related to performance-based restricted stock grants (the "Performance Grants") and performance-based restricted stock grants related to the Company's 2015 Management Incentive Plan (the "MIP Grants"). The Performance Grants are to cliff vest three years following issuance, subject to the Company's achieving $7 million in Operating Cash Flow, as defined in the underlying restricted stock grant agreement, in at least one of 2015, 2016 or 2017, and other vesting provisions in the underlying restricted stock grant agreement. The MIP Grants are to vest on the date MIP Payouts are to be made under the 2015 Management Incentive Plan and are subject to the Company's achievement of certain financial goals and other vesting provisions in the underlying restricted stock grant agreement. The Company issued 52,956 shares under Performance Grants and 24,649 shares under MIP Grants on March 17, 2015.
Restrictions on the Transfer of Company stock	Restrictions on the transfer of Company stock The Company's Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation"), places restrictions (the "Transfer Restrictions") on the transfer of the Company's stock that could adversely effect the Company's ability to utilize its domestic Federal Net Operating Loss Position. In particular, the Transfer Restrictions prevent the transfer of shares without the approval of the Company's Board of Directors if, as a consequence of such transfer, 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 the Company's Board of Directors. Any transfer of shares in violation of the Transfer Restrictions (a "Transfer Violation") shall be void ab initio

SUMMARY OF SIGNIFICANT ACCOUN14

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
	Jun. 30, 2015
Accounting Policies [Abstract]
Inventories	Inventories, net consist of the following (in thousands): December 31, 2014 June 30, 2015 Raw materials $ 6,298 $ 8,405 Work in process 2,966 4,152 Finished goods 4,949 5,744 Allowance for excess or obsolete inventory (1,555 ) (1,465 ) $ 12,658 $ 16,836

NON-CONTROLLING INTERESY AND RE

NON-CONTROLLING INTERESY AND RELATED PARTY ITEMS (Tables)	6 Months Ended
	Jun. 30, 2015
Business Combinations [Abstract]
Non-controlling interest reconciliation	The following is a reconciliation of the non-controlling interest balance (in thousands): Beginning at December 31, 2014 $ 15,679 Accretion of Put Value 26 Balance at June 30, 2015 $ 15,705

CAPITAL STOCK (Tables)

CAPITAL STOCK (Tables)	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Fair Value of each Option Grant	Three Months Ended June 30, 2015 Six Months Ended June 30, 2014 2015 2014 2015 Risk-free interest rate 1.10% 1.17% 1.07% 1.16% Expected lives 3.3 years 3.4 years 3.3 years 3.4 years Expected volatility 45% 43% 45% 43% Expected dividend yield 0% 0% 0% 0%
Summary of Company Stock Option Plans	Year Ended December 31, 2014 Six Months Ended June 30, 2015 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at beginning of period 1,321,232 $ 10.386 1,074,251 $ 10.111 Granted at market 134,800 $ 16.398 29,046 $ 27.650 Cancelled (218,926 ) $ 17.786 (27,585 ) $ 10.067 Exercised (162,855 ) $ 7.234 (128,721 ) $ 8.816 Outstanding at end of period 1,074,251 $ 10.110 946,991 $ 10.826 Exercisable at end of period 729,175 $ 9.800 680,767 $ 10.688
Stock Options Outstanding and Exercisable	Options Outstanding Options Exercisable Exercise Prices Number of Options Outstanding at June 30, 2015 Weighted Average Remaining Contractual Life in Years Weighted Average Exercise Price Number of Options Exercisable at June 30, 2015 Weighted Average Exercise Price $ 4.40 - $ 6.90 226,753 5.40 $ 5.597 213,505 $ 5.529 $ 6.91 - $ 8.34 209,299 8.32 $ 7.476 93,264 $ 7.585 $ 8.35 - $12.40 176,019 7.18 $ 9.445 127,538 $ 9.735 $12.41 -$17.17 147,561 1.10 $ 13.752 143,487 $ 13.718 $17.18 - $28.55 187,359 7.08 $ 19.890 102,973 $ 21.151 $ 4.40 - $28.55 946,991 6.04 $ 10.826 680,767 $ 10.688
Employee Stock Purchase Plan	Three Months Ended June 30 Six Months Ended June 30 2014 2015 2014 2015 Risk-free interest rate 0.23% 0.24% 0.23% 0.24% Expected lives 1.3 years 1.2 years 1.3 years 1.2 years Expected volatility 35% 36% 34% 35% Expected dividend yield 0% 0% 0% 0%

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Segment Reporting	Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Six Months Ended June 30, 2014: Total revenue $ 34,852 $ 8,857 $ 43,709 Operating income (loss) (265 ) 1,081 816 Interest expense 74 28 102 Total assets 81,903 15,214 97,117 Net assets 39,968 11,715 51,683 Capital expenditures 1,334 204 1,538 Depreciation and amortization 1,231 386 1,617 Six Months Ended June 30, 2015: Total revenue $ 40,329 $ 6,475 $ 46,804 Operating income 2,071 779 2,850 Interest expense 80 23 103 Total assets 88,254 14,652 102,906 Net assets 43,989 12,607 56,596 Capital expenditures 449 487 936 Depreciation and amortization 1,724 350 2,074 Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Three Months Ended June 30, 2014: Total revenue $ 17,486 $ 5,430 $ 22,916 Operating income 43 874 917 Interest expense 37 15 52 Total assets 81,903 15,214 97,117 Net assets 39,968 11,715 51,683 Capital expenditures 123 98 221 Depreciation and amortization 688 200 888 Three Months Ended June 30, 2015: Total revenue $ 20,757 $ 3,153 $ 23,910 Operating income 1,536 293 1,829 Interest expense 40 11 51 Total assets 88,254 14,652 102,906 Net assets 43,989 12,607 56,596 Capital expenditures 142 189 331 Depreciation and amortization 894 174 1,068

INVENTORIES (Details)

INVENTORIES (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Inventories Details
Raw materials	$ 8,405	$ 6,298
Work in process	4,152	2,966
Finished goods	5,744	4,949
Allowance for excess or obsolete inventory	(1,465)	(1,555)
Total Inventories	$ 16,836	$ 12,658

SUMMARY OF SIGNIFICANT ACCOUN19

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Accounting Policies [Abstract]
Non-cash transfer of inventory to PP&E and other assets			$ 2,500	$ 2,300
Deferred revenue to third parties			59	874
Net PP&E value of third party transactions	$ 2,700		2,700		$ 3,000
Capitalized Software Costs	$ 515		515		$ 587
Capitalized Software in PP&E on Cash Flow Statement			44	31
Cash Interest			$ 40	44
Weighted average number of common shares used to calculate basic net income	209,177		209,177
Common Stock Equivalent Securities	$ 26,500	$ 288,763	$ 27,700	$ 430,109

ACQUISITION (Details)

ACQUISITION (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014	Feb. 24, 2013
Heska Imaging charges from Cuattro, LLC	$ 3,900
Heska Imaging carges from Heska Corp.	2,200
Cuattro, LLC charges from Heska Corp.	79
Heska Imaging Note Receivable from Cuattro Vet, LLC	1,500
Heska Imaging accounts receivable from Cuattro Software, LLC	832
Heska Corp. accounts receivable from Heska Imaging	5,700
Heska Corp. accounts receivable from Cuattro, LLC	16
Heska Imaging accounts payable to Cuattro, LLC	698
Non-Controlling Interest	15,705	$ 15,679
Accretion of non-controlling interest	$ 26
Cuattro Veterinary USA, LLC
Interest acquired in combination			54.60%
Remaining minority position of Cuattro Vet subject to purchase			45.40%
Shawna M. Wilson ownership in Heska Imaging			29.75%
Clint Roth, DVM ownership in Heska Imaging			8.39%
Steven M. Asakowicz ownership in Heska Imaging			4.09%
Rodney A. Lippincott ownership in Heska Imaging			3.07%
Kevin S. Wilson ownership in Heska Imaging			0.05%
Cuattro, LLC ownership in Heska Imaging			0.05%

FAIR VALUE OF EACH OPTION GRANT

FAIR VALUE OF EACH OPTION GRANT (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Fair Value Of Each Option Grant Details
Risk-free interest rate	1.17%	1.10%	1.16%	1.07%
Expected lives, in years	3.4	3.3	3.4	3.3
Expected volatility	43.00%	45.00%	43.00%	45.00%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%

SUMMARY OF COMPANY STOCK OPTION

SUMMARY OF COMPANY STOCK OPTION PLANS (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Summary Of Company Stock Option Plans Details
Outstanding at beginning of period	1,074,251	1,321,232
Outstanding at begining of period, Weighted Average Exercise Price	$ 10.111	$ 10.386
Granted at market, options	29,046	134,800
Granted at market, Weighted Average Exercise Price	$ 27.650	$ 16.398
Cancelled, Options	(27,585)	(218,926)
Cancelled, Weighted Average Excercise Price	10.067	17.786
Exercised, Options	$ (128,721)	$ (162,855)
Exercised, Weighted Average Exercise Price	$ 8.816	$ 7.234
Outstanding at end of period	946,991	1,074,251
Outstanding at end of period, Weighted Average Exercise Price	$ 10.826	$ 10.110
Exercisable at end of period, Options	680,767	729,175
Exercisable at end of period, Weighted Average Exercise Price	$ 10.688	$ 9.800

STOCK OPTIONS OUTSTANDING (Deta

STOCK OPTIONS OUTSTANDING (Details) - $ / shares	Jun. 30, 2015	Dec. 31, 2014	Dec. 31, 2013
Stock options Outstanding	946,991	1,074,251	1,321,232
Weighted Average Exercise Price on Outstanding Options	$ 10.688	$ 9.800
Stock Options Exercisable		10.111	$ 10.386
Weighted Average Exercise Price on Exercisable Options	$ 10.826	$ 10.110
$ 4.40 - $ 6.90
Stock options Outstanding	226,753
Average Remaining Contractual Life in Years	$ 5.40
Weighted Average Exercise Price on Outstanding Options	5.597
Stock Options Exercisable	213,505
Weighted Average Exercise Price on Exercisable Options	$ 5.529
$ 6.91 - $ 8.34
Stock options Outstanding	209,299
Average Remaining Contractual Life in Years	$ 8.32
Weighted Average Exercise Price on Outstanding Options	7.476
Stock Options Exercisable	93,264
Weighted Average Exercise Price on Exercisable Options	$ 7.585
$ 8.35 - $ 12.40
Stock options Outstanding	176,019
Average Remaining Contractual Life in Years	$ 7.18
Weighted Average Exercise Price on Outstanding Options	9.445
Stock Options Exercisable	127,538
Weighted Average Exercise Price on Exercisable Options	$ 9.735
$ 12.41 - $ 17.17
Stock options Outstanding	147,561
Average Remaining Contractual Life in Years	$ 1.10
Weighted Average Exercise Price on Outstanding Options	13.752
Stock Options Exercisable	143,487
Weighted Average Exercise Price on Exercisable Options	$ 13.718
$ 17.18 - $ 28.55
Stock options Outstanding	187,359
Average Remaining Contractual Life in Years	$ 7.08
Weighted Average Exercise Price on Outstanding Options	19.890
Stock Options Exercisable	102,973
Weighted Average Exercise Price on Exercisable Options	$ 21.151
$ 4.40 - $28.55
Stock options Outstanding	946,991
Average Remaining Contractual Life in Years	$ 6.04
Weighted Average Exercise Price on Outstanding Options	10.826
Stock Options Exercisable	680,767
Weighted Average Exercise Price on Exercisable Options	$ 10.688

FAIR VALUE OF STOCK UNDER ESPP

FAIR VALUE OF STOCK UNDER ESPP (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Fair Value Of Stock Under Espp Details
Risk-free interest rate	0.24%	0.23%	0.24%	0.23%
Expected lives, in years	1.2	1.3	1.2	1.3
Expected volatility	36.00%	35.00%	35.00%	34.00%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%

CAPITAL STOCK (Details)

CAPITAL STOCK (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Dec. 31, 2015	Jun. 30, 2015	Jun. 30, 2014	May. 05, 2015	Mar. 17, 2015
Notes to Financial Statements
Fair Value Of Stock Options Granted		$ 258	$ 114
Weighted Average Fair Value of Options		$ 8.88	$ 3.66
Intrinsic Value of Options Exercised		$ 1,940	$ 440
Cash Proceeds from Options Exercised		$ 715	$ 789
Fractional Shares of Outstanding Options		$ 8.6
Weighted Average Reamining Contractual Life		1.1
Weighted Average Exercise Price		15.27
Exercise Price Range Low		9.50
Exercise Price Range High		$ 22.50
Unrecognized Compensation Costs of Options		$ 1,130
Weighted Average Period of Unrecognized Cost		1.8
Option Compensation Costs to be Recognized this Year	$ 324
Aggregate Intrinsic Value of Outstanding Options		$ 17,900
Aggregate Intrinsic Value of Exercisable Options		$ 12,900
ESPP share increase				75,000
Total Shares Authorized				450,000
ESPP shares issued		6,043	16,069
Weighted Average Fair Value of Purchase Rights Granted		$ 5.67	$ 2.26
Shares vested by Mr. Wilson		39,000
Performance Grant shares issued					52,956
MIP Grant shares issued					24,649

SEGMENT REPORTING (Details)

SEGMENT REPORTING (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Total revenue	$ 23,910	$ 22,916	$ 46,804	$ 43,709
Operating income (loss)	1,829	917	2,850	816
Interest expense	51	52	103	102
Total assets	102,906	97,117	102,906	97,117
Net assets	56,596	51,683	56,596	51,683
Capital expenditures	331	221	936	1,538
Depreciation and amortization	1,068	888	2,074	1,617
CCA
Total revenue	20,757	17,486	40,329	34,852
Operating income (loss)	1,536	43	2,071	(265)
Interest expense	40	37	80	74
Total assets	88,254	81,903	88,254	81,903
Net assets	43,989	39,968	43,989	39,968
Capital expenditures	142	123	449	1,334
Depreciation and amortization	894	688	1,724	1,231
OVP
Total revenue	3,153	5,430	6,475	8,857
Operating income (loss)	293	874	779	1,081
Interest expense	11	15	23	28
Total assets	14,652	15,214	14,652	15,214
Net assets	12,607	11,715	12,607	11,715
Capital expenditures	189	98	487	204
Depreciation and amortization	$ 174	$ 200	$ 350	$ 386