Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 05, 2016 | |
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, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 | |
Entity Common Stock, Shares Outstanding | 6,875,256 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 6,669 | $ 6,890 |
Accounts receivable, net of allowance for doubtful accounts of $189 and $199, respectively | 14,596 | 16,136 |
Due from – related parties | 1,979 | 308 |
Inventories, net | 18,076 | 16,101 |
Other current assets | 1,367 | 1,827 |
Total current assets | 42,687 | 41,262 |
Property and equipment, net | 17,652 | 17,020 |
Note receivable – related party | 0 | 1,516 |
Goodwill and other intangibles | 29,248 | 20,966 |
Deferred tax asset | 24,664 | 25,883 |
Other long-term assets | 5,374 | 3,072 |
Total assets | 119,625 | 109,719 |
Current liabilities: | ||
Accounts payable | 6,011 | 7,624 |
Accrued liabilities | 5,227 | 5,416 |
Current portion of deferred revenue | 3,926 | 5,461 |
Line of credit | 0 | 143 |
Other short-term borrowings, including current portion of long-term note payable | 412 | 159 |
Total current liabilities | 15,576 | 18,803 |
Long-term note payable, net of current portion | 229 | 69 |
Deferred tax liability | 905 | 0 |
Deferred revenue, net of current portion, and other | 11,391 | 11,572 |
Total liabilities | 28,101 | 30,444 |
Commitments and contingencies | ||
Non-controlling interest | 15,866 | 15,747 |
Stockholders' equity: | ||
Preferred stock, $.01 par value, 2,500,000 shares authorized, none issued or outstanding | 0 | 0 |
Traditional common stock, $.01 par value, 9,000,000 shares authorized, none issued or outstanding | 0 | 0 |
Public common stock, $.01 par value, 9,000,000 shares authorized, 6,625,287 and 6,873,389 shares issued and outstanding, respectively | 69 | 66 |
Additional paid-in capital | 235,255 | 227,267 |
Accumulated other comprehensive income | 139 | 187 |
Accumulated deficit | (159,805) | (163,992) |
Total stockholders' equity | 75,658 | 63,528 |
Total liabilities and stockholders' equity | $ 119,625 | $ 109,719 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Allowance for doubtful accounts | $ 199 | $ 189 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 9,000,000 | 7,500,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Public Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 9,000,000 | 7,500,000 |
Common stock, shares issued | 6,873,389 | 6,625,287 |
Common stock, shares outstanding | 6,873,389 | 6,625,287 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenue: | ||||
Core companion animal health | $ 24,464 | $ 20,757 | $ 47,898 | $ 40,329 |
Other vaccines, pharmaceuticals and products | 5,501 | 3,153 | 9,213 | 6,475 |
Total revenue, net | 29,965 | 23,910 | 57,111 | 46,804 |
Cost of revenue | 17,283 | 13,613 | 32,987 | 26,423 |
Gross profit | 12,682 | 10,297 | 24,124 | 20,381 |
Operating expenses: | ||||
Selling and marketing | 5,386 | 5,239 | 11,005 | 10,699 |
Research and development | 523 | 392 | 1,098 | 811 |
General and administrative | 3,217 | 2,837 | 6,495 | 6,021 |
Total operating expenses | 9,126 | 8,468 | 18,598 | 17,531 |
Operating income | 3,556 | 1,829 | 5,526 | 2,850 |
Interest and other expense (income), net | 34 | 37 | (99) | 174 |
Income before income taxes | 3,522 | 1,792 | 5,625 | 2,676 |
Income tax expense: | ||||
Current income tax expense | 87 | 82 | 161 | 126 |
Deferred income tax expense | 693 | 532 | 1,275 | 789 |
Total income tax expense | 780 | 614 | 1,436 | 915 |
Net income | 2,742 | 1,178 | 4,189 | 1,761 |
Net income (loss) attributable to non-controlling interest | 220 | (19) | 482 | (34) |
Net income attributable to Heska Corporation | $ 2,522 | $ 1,197 | $ 3,707 | $ 1,795 |
Earnings Per Share [Abstract] | ||||
Basic earnings per share attributable to Heska Corporation, in dollars per share | $ 0.38 | $ 0.19 | $ 0.56 | $ 0.29 |
Diluted earnings per share attributable to Heska Corporation, in dollars per share | $ 0.35 | $ 0.17 | $ 0.51 | $ 0.26 |
Weighted average outstanding shares used to compute basic earnings per share attributable to Heska Corporation | 6,695 | 6,283 | 6,641 | 6,232 |
Weighted average outstanding shares used to compute diluted earnings per share attributable to Heska Corporation | 7,249 | 7,075 | 7,206 | 6,980 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Net income | $ 2,742 | $ 1,178 | $ 4,189 | $ 1,761 |
Other comprehensive income (expense): | ||||
Sale of equity investment | 0 | 0 | (90) | 0 |
Unrealized gain on available for sale investments | 0 | 6 | 0 | 6 |
Foreign currency translation | (47) | 87 | 42 | 163 |
Comprehensive income | 2,695 | 1,271 | 4,141 | 1,930 |
Comprehensive income (loss) attributable to non-controlling interest | 220 | (19) | 482 | (34) |
Comprehensive income attributable to Heska Corporation | $ 2,475 | $ 1,290 | $ 3,659 | $ 1,964 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 4,189 | $ 1,761 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 2,211 | 2,074 |
Deferred tax expense | 1,275 | 789 |
Stock based compensation | 1,112 | 879 |
Unrealized (gain) loss on foreign currency translation | (2) | 44 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,764 | 552 |
Inventories | (3,691) | (6,670) |
Other current assets | 363 | (70) |
Accounts payable | (1,725) | 1,696 |
Accrued liabilities and other | (367) | 458 |
Other non-current assets | (2,889) | (562) |
Deferred revenue and other | (1,962) | (1,233) |
Net cash provided by (used in) operating activities | 278 | (282) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of equity investment | 115 | 0 |
Purchases of property and equipment | (1,368) | (936) |
Proceeds from disposition of property and equipment | 405 | 0 |
Net cash used in investing activities | (848) | (936) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of common stock, net of distributions | 649 | 680 |
Proceeds from (repayments of) line of credit borrowings, net | (142) | 1,325 |
Repayments of other debt | (180) | (69) |
Net cash provided by financing activities | 327 | 1,936 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 22 | 74 |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (221) | 792 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 6,890 | 5,855 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ 6,669 | $ 6,647 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Heska Corporation and its wholly-owned and majority-owned subsidiaries ("Heska", the "Company", "we" or "our") sell advanced veterinary diagnostic and specialty products. Heska's state-of-the-art offerings include blood testing instruments and supplies, digital imaging products, software and services, and single-use products and data services, allergy testing and immunotherapy, and single-use offerings such as in-clinic diagnostic tests and heartworm preventive products. The Company's core focus is on the canine and feline markets. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the financial position of the Company at June 30, 2016, the results of our operations for the three and six months ended June 30, 2016 and 2015 and cash flows for the six months ended June 30, 2016 and 2015. The unaudited Condensed Consolidated Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and other financial information filed with the SEC. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are required when establishing the allowance for doubtful accounts and the provision for excess or obsolete inventory, in determining the period over which our obligations are fulfilled under agreements to license product rights and/or technology rights, evaluating long-lived and intangible assets for impairment, determining the allocation of purchase price under purchase accounting, estimating the expense associated with the granting of stock options, determining the value of our non-controlling interest and in determining the need for, and the amount of, a valuation allowance on deferred tax assets. Critical Accounting Policies Our accounting policies are described in our audited Consolidated Financial Statements and Notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2015. Recent Accounting Pronouncements In March 2016, the FASB issued guidance codified in Accounting Standards Codification (“ASC”) Topic 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The standard simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes, statutory tax withholding requirements and classification on the statement of cash flows. The new standard is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. We early adopted the standard during the second quarter of 2016 and are therefore required to report the impacts as though the standard had been adopted on January 1, 2016. Accordingly, we recognized additional income tax benefits as an increase to earnings of $0.5 million ($0.07 per diluted share) in the three and six months ended June 30, 2016. The new accounting standard did not impact any periods prior to January 1, 2016, as we applied the changes to the standard on a prospective basis. In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes ASC 840, Leases, and creates a new topic, ASC 842, Leases. This update requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. This update is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with earlier application permitted. This update will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We are currently evaluating the effect of this update on our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Upon the effective date, the ASU replaces almost all existing revenue recognition guidance, including industry specific guidance, in generally accepted accounting principles. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this update deferred the effective date for implementation of ASU 2014-09 by one year and are now effective for annual reporting periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016 including interim reporting periods within that period. We are currently assessing the impact that the adoption of this standard will have on our consolidated financial statements and related disclosures upon implementation. |
ACQUISITION AND RELATED PARTY I
ACQUISITION AND RELATED PARTY ITEMS | 6 Months Ended |
Jun. 30, 2016 | |
Business Combinations and Related Party Disclosures [Abstract] | |
ACQUISITION AND RELATED PARTY ITEMS | ACQUISITIONS AND RELATED PARTY ITEMS On May 31, 2016, the Company closed a transaction (the "Merger") to acquire Cuattro Veterinary, LLC ("Cuattro International") from Kevin S. Wilson, and all of the members of Cuattro International (the "Members"). Pursuant to the Merger, the Company issued 175,000 shares of the Company’s common stock, $.01 par value per share (the "Common Stock"), to the Members on the Closing Date, at an aggregate value equal to approximately $6.3 million based on the adjusted closing price per share of the Common Stock as reported on the Nasdaq Stock Market on the Merger closing date. These shares were issued to the Members in a private placement in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and the safe harbor provided by Rule 506 of Regulation D promulgated thereunder. Effective on the Merger closing date, each of the Members executed lock-up agreements with the Company that restrict their ability to sell any of the shares of Common Stock received in the Merger until 180 days after the Merger closing date. In addition, the Company assumed approximately $1.5 million in debt as part of the transaction. Mr. Wilson is a founder of Cuattro International, Cuattro, LLC, Cuattro Software, LLC and Cuattro Medical, LLC. Mr. Wilson, Mrs. Wilson and trusts for the benefit of Mr. and Mrs. Wilson’s children and family own a 100% interest in Cuattro, LLC and a majority interest in Cuattro Medical, LLC. Cuattro, LLC owns a 100% interest in Cuattro Software, LLC and, prior to the Merger, owned a majority interest in Cuattro International. The Company recorded assets acquired and assets assumed at their estimated fair values. Intangible assets were valued based on a report from an independent third party. The following summarizes the aggregate consideration paid by the Company and the allocation of the purchase price (in thousands): Common stock issued - 175,000 shares $ 6,347 Debt assumed 1,535 Total fair value of consideration transferred $ 7,882 Accounts receivable $ 222 Inventories 39 Due from Cuattro, LLC 963 Property and equipment 80 Other tangible assets 164 Deferred tax asset 56 Intangible assets 2,521 Goodwill 5,783 Accounts payable (112 ) Deferred tax liability (905 ) Other assumed liabilities (929 ) Total fair value of consideration transferred $ 7,882 Intangible assets acquired, amortization method and estimated useful lives as of May 31, 2016 was as follows (dollars in thousands): Useful Life Amortization Method Fair Value Customer relationships 6.67 Straight-line $2,521 Cuattro International is a provider to international markets of digital radiography technologies for veterinarians. As a leading provider of advanced veterinary diagnostic and specialty products, we made the acquisition in an effort to combine Cuattro International's international reach with our domestic success in the imaging and blood testing markets in the United States. International markets represent a significant portion of worldwide veterinary revenues for which we intend to compete. As of the closing date of the Merger, Cuattro International was renamed Heska Imaging International, LLC, and the Company's interest in both Heska Imaging International, LLC ("International Imaging") and Heska Imaging US, LLC ("US Imaging") was transferred to the Company's wholly-owned subsidiary, Heska Imaging Global, LLC ("Global Imaging"). On February 24, 2013, the Company acquired a 54.6% interest in Cuattro Veterinary USA, LLC which was subsequently renamed Heska Imaging US, LLC. The remaining minority position (45.4%) in US Imaging is subject to purchase by Heska under performance-based puts and calls following calendar year 2016 and 2017. Should Heska undergo a change in control, as defined, prior to the end of 2017, US Imaging minority unit holders will be entitled to sell their US Imaging units to Heska. US 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 US Imaging, respectively. Kevin S. Wilson is the Chief Executive Officer and President of the Company 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. Cuattro, LLC has charged US Imaging $3.6 million from January 1, 2016 to May 31, 2016 and has charged Global Imaging $0.9 million since June 1, 2016, 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 has charged US Imaging $2.4 million during the six months ended June 30, 2016, primarily related to sales expenses; and Heska Corporation has charged Cuattro, LLC $130 thousand during the six months ended June 30, 2016, primarily related to facility usage and other services. At June 30, 2016, US Imaging had a $1.5 million note receivable, including accrued interest, from International Imaging, which is due on June 15, 2019 and which eliminated in consolidation of the Company's financial statements. This note was previously listed as "Note receivable – related party" on the Company's consolidated balance sheets and, as discussed above, the note receivable was assumed as part of the Company's acquisition of Cuattro International. At June 30, 2016, Heska Corporation had net accounts receivable from Cuattro, LLC of $25 thousand which is included in "Due from – related parties" on the Company's consolidated balance sheets; International Imaging had a net receivable due from Cuattro, LLC of $546 thousand , which is included in "Due from – related parties" on the Company's consolidated balance sheets; Global Imaging had net prepaid receivables from Cuattro, LLC of $1.4 million which is included in "Due from – related parties" on the Company's consolidated balance sheets; Heska Corporation had accounts receivable from US Imaging of $5.0 million , including accrued interest, which eliminated in consolidation of the Company's financial statements; all monies owed accrue interest at the same interest 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 US Imaging of the unit holders who hold the 45.4% of US Imaging that Heska Corporation does not own (the "Put Value") is being accreted to its estimated redemption value in accordance with US Imaging's 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 value 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 the Operating Agreement to the unit holders who hold the 45.4% of US Imaging that Heska Corporation does not own (the "Imaging Minority") each reporting period is recorded to stockholders' equity in accordance with U.S. GAAP. The following is a reconciliation of the non-controlling interest balance (in thousands): Beginning December 31, 2015 $ 15,747 Accretion of Put Value 119 Balance June 30, 2016 $ 15,866 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Our total income tax expense and the effective tax rate for our income before income taxes are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Income before income taxes $ 1,792 $ 3,522 $ 2,676 $ 5,625 Total income tax expense 614 780 915 1,436 Effective tax rate 34.3 % 22.1 % 34.2 % 25.5 % We are subject to income taxes in the U.S. federal jurisdiction, and various foreign, state and local jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The rates in the three and six months ended June 30, 2016 benefited from additional tax benefits related to employee share-based payment awards which are now recorded as income tax benefit or expense in earnings effective with the adoption of an accounting standard update during the quarter ended June 30, 2016. We early adopted the accounting standard update during the second quarter of 2016 and are therefore required to report the impacts as though the accounting standard update had been adopted on January 1, 2016. Accordingly, we recognized additional income tax benefits of $0.5 million during the three and six months ended June 30, 2016. Cash paid for income taxes for each of the three months ended June 30, 2015 and 2016 was $15 thousand and $57 thousand , respectively. Cash paid for income taxes for the six months ended June 30, 2015 and 2016 was $20 thousand and $62 thousand , respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share ("EPS") is computed by dividing net income attributable to Heska Corporation by the weighted-average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the numerator is increased to exclude charges that would not have been incurred, and the denominator is increased to include the number of additional common shares that would have been outstanding (using the if-converted and treasury stock methods), if securities containing potentially dilutive common shares (stock options and restricted stock units but excluding options to purchase fractional shares resulting from the Company's December 2010 1-for- 10 reverse stock split) had been converted to common shares, and if such assumed conversion is dilutive. The following is a reconciliation of the weighted-average shares outstanding used in the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2015 and 2016 (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Net income attributable to Heska Corporation $ 1,197 $ 2,522 $ 1,795 $ 3,707 Basic weighted-average common shares outstanding 6,283 6,695 6,232 6,641 Assumed exercise of dilutive stock options and restricted stock units 792 554 748 565 Diluted weighted-average common shares outstanding 7,075 7,249 6,980 7,206 Basic earnings per share attributable to Heska Corporation $ 0.19 $ 0.38 $ 0.29 $ 0.56 Diluted earnings per share attributable to Heska Corporation $ 0.17 $ 0.35 $ 0.26 $ 0.51 The following stock options and restricted units were excluded from the computation of diluted earnings per share because they would have been anti-dilutive (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Stock options 27 138 28 138 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOOWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES The following summarizes the changes in goodwill during the six months ended June 30, 2016 (in thousands): June 30, 2016 Carrying amount, beginning of period $ 20,910 Additions and adjustments 5,798 Carrying amount, end of period $ 26,708 Other intangibles consisted of the following as of December 31, 2015 and June 30, 2016 (in thousands): December 31, June 30, 2015 2016 Gross carrying amount $ 788 $ 3,309 Accumulated amortization (732 ) (769 ) Net carrying amount $ 56 $ 2,540 Amortization expense relating to other intangibles is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Amortization expense $ 65 $ 34 $ 130 $ 37 Estimated amortization expense related to intangibles for each of the five years from 2016 (remaining) through 2020 and thereafter is as follows (in thousands): Year Ending December 31, 2016 (remaining) $ 194 2017 388 2018 388 2019 388 2020 356 Thereafter 826 $ 2,540 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Detail of property and equipment is as follows (in thousands): December 31, June 30, 2015 2016 Land $ 377 $ 377 Building 2,868 2,868 Machinery and equipment 35,284 37,348 Leasehold and building improvements 6,673 6,733 Construction in progress 1,496 1,851 46,698 49,177 Less accumulated depreciation and amortization (29,678 ) (31,525 ) Total property and equipment, net $ 17,020 $ 17,652 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 and depreciated, typically over a five to seven year period depending on the circumstance under which the instrument is placed with the customer. Total costs transferred from inventory were approximately $2.5 million and $1.7 million for the six month periods ended June 30, 2015 and 2016, 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 its 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, all related to the Company's 54.6% -owned subsidiary, US Imaging, provided $59 thousand of cash which was reported in the "deferred revenue and other" line item of the Company's consolidated statements of cash flows for the six months ended June 30, 2015 . There were no such sales during the six months ended June 30, 2016 . 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 in accordance with its depreciation policies. The Company had $2.2 million and $1.5 million of net property and equipment related to these transactions as of December 31, 2015 and June 30, 2016 , respectively, all related to the Company's 54.6% -owned subsidiary, US Imaging. Depreciation and amortization expense for property and equipment was $1.1 million in each of the three months ended June 30, 2015 and 2016 . Depreciation and amortization expense for property and equipment was $2.1 million and $2.2 million for the six months ended June 30, 2015 and 2016 , respectively. The Company capitalizes third-party software costs, where appropriate, and reports such costs, net of accumulated amortization, on the "property and equipment, net" line of its consolidated balance sheets. We had $0.4 million and $0.3 million of such capitalized costs, net of accumulated amortization, on the "property and equipment, net" line of our consolidated balance sheets as of December 31, 2015 and June 30, 2016 , 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. We had $44 thousand of capitalized software costs reported on the "purchases of property and equipment" line item of our consolidated statements of cash flows for the six months ended June 30, 2015 . There were no capitalized software costs incurred in the six months ended June 30, 2016 . |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories are stated at the lower of cost or net realizable value using the first-in, first-out method. Inventory we manufacture includes the cost of material, labor and overhead. If the cost of inventories exceeds estimated net realizable value, provisions are made to reduce the carrying value to estimated net realizable value. Inventories, net consist of the following (in thousands): December 31, June 30, 2015 2016 Raw materials $ 8,531 $ 10,097 Work in process 2,839 4,089 Finished goods 6,122 5,194 Allowance for excess or obsolete inventory (1,391 ) (1,304 ) Total inventory $ 16,101 $ 18,076 |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 6 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
ACCRUED LIABILITIES | ACCRUED LIABILITIES Accrued liabilities consisted of the following as of December 31, 2015 and June 30, 2016 (in thousands): December 31, June 30, Accrued payroll and employee benefits $ 860 $ 1,168 Accrued property taxes 721 506 Accrued purchases 300 — Other 3,535 3,553 Total accrued liabilities $ 5,416 $ 5,227 Other accrued liabilities consists of items that are individually less than 5% of total current liabilities. |
CAPITAL STOCK
CAPITAL STOCK | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
CAPITAL STOCK | 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, 2015 and 2016 . Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Risk-free interest rate 1.17% 1.17% 1.16% 1.19% Expected lives 3.4 years 4.5 years 3.4 years 4.5 years Expected volatility 43% 41% 43% 41% Expected dividend yield 0% 0% 0% 0% A summary of our stock option plans, excluding options to purchase fractional shares resulting from our December 2010 1-for- 10 reverse stock split, is as follows: Year Ended December 31, Six Months Ended June 30, 2015 2016 Weighted Average Exercise Price Weighted Average Exercise Price Outstanding at beginning of period 1,074,251 $ 10.110 940,610 $ 14.163 Granted at Market 146,446 $ 36.904 19,355 $ 39.074 Canceled (28,440 ) $ 10.080 (463 ) $ 14.881 Exercised (251,647 ) $ 10.559 (70,507 ) $ 11.793 Outstanding at end of period 940,610 $ 14.163 888,995 $ 14.893 Exercisable at end of period 621,559 $ 10.269 633,469 $ 11.489 The total estimated fair value of stock options granted during the six months ended June 30, 2015 and 2016 were computed to be approximately $258 thousand and $267 thousand , respectively. The amounts are amortized ratably over the vesting periods of the options. The weighted average estimated fair value of options granted during the six months ended June 30, 2015 and 2016 was computed to be approximately $8.88 and $13.83 , respectively. The total intrinsic value of options exercised during the six months ended June 30, 2015 and 2016 was $1.9 million and $1.6 million , respectively. The cash proceeds from options exercised during the six months ended June 30, 2015 and 2016 was $715 thousand and $660 thousand , respectively. The following table summarizes information about stock options outstanding and exercisable at June 30, 2016, excluding outstanding options to purchase an aggregate of 4.2 fractional shares resulting from our December 2010 1-for- 10 reverse stock split with a weighted average remaining contractual life of 0.5 years, a weighted average exercise price of $18.69 and exercise prices ranging from $17.17 - $22.50 . We intend to issue whole shares only from option exercises. Options Outstanding Options Exercisable Exercise Prices Number of Weighted Weighted Number of Weighted $ 4.40 - $ 6.90 216,365 4.38 $ 5.598 214,484 $ 5.592 $ 6.91 - $ 8.26 186,964 7.37 $ 7.385 119,329 $ 7.385 $ 8.27 - $17.17 171,853 5.58 $ 10.342 152,355 $ 10.446 $17.18 - $28.39 152,558 5.79 $ 18.465 91,647 $ 18.475 $28.40 - $39.76 161,255 9.43 $ 37.543 55,654 $ 34.361 $ 4.40 - $39.76 888,995 6.40 $ 14.893 633,469 $ 11.489 As of June 30, 2016, there was approximately $2.0 million in total unrecognized compensation cost related to outstanding stock options. That cost is expected to be recognized over a weighted average period of 1.60 years, with approximately $485 thousand to be recognized in the six months ending December 31, 2016 and all cost to be recognized as of March 2020, assuming all options vest according to the vesting schedules in place at June 30, 2016. As of June 30, 2016, the aggregate intrinsic value of outstanding options was approximately $20.1 million and the aggregate intrinsic value of exercisable options was approximately $16.3 million . Employee Stock Purchase Plan (the "ESPP") For the six months ended June 30, 2015 and 2016 , we issued 6,043 and 4,497 shares under the ESPP, respectively. For the three and six months ended June 30, 2015 and 2016 , we estimated the fair values of stock purchase rights granted under the ESPP using the Black-Scholes pricing model. The weighted average assumptions used for the periods presented were as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Risk-free interest rate 0.24% 0.55% 0.24% 0.53% Expected lives 1.2 years 1.2 years 1.2 years 1.2 years Expected volatility 36% 43% 35% 42% Expected dividend yield 0% 0% 0% 0% For the six months ended June 30, 2015 and 2016 , the weighted-average fair value of the purchase rights granted was $5.67 and $6.87 per share, respectively. For the three months ended June 30, 2015 and 2016 , the weighted-average fair value of the purchase rights granted was $5.75 and $7.64 per share, respectively. Restricted Stock Issuance 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 "2015 MIP Grants"). The Company issued 52,956 shares under the Performance Grants and 24,649 shares under 2015 MIP Grants. The Performance Grants have met the underlying performance condition based on the Company's 2015 financial performance and are to cliff vest on March 17, 2018, subject to other vesting provisions in the underlying restricted stock grant agreement. The 2015 MIP Grants were subject to the Company’s achievement of certain financial goals and other vesting provisions in the underlying restricted stock grant agreement. On March 2, 2016, the Company vested 14,364 shares related to the 2015 MIP Grant based on the respective performance criteria, including 4,788 shares withheld for tax, and canceled the remaining 10,285 shares. On March 2, 2016, the Company issued 15,000 unvested shares to certain Executive Officers related to performance-based restricted stock grants as part of the Company’s 2016 Management Incentive Plan (the "2016 MIP Grants"). The 2016 MIP Grants are to vest on the date MIP Payouts are to be made under the 2016 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. On March 26, 2016, 27,500 shares originally issued to Mr. Wilson on March 26, 2014 pursuant to an employment agreement between Mr. Wilson and the Company effective as of March 26, 2014 (the "Wilson Employment Agreement") vested pursuant to the Wilson Employment Agreement. 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 affect 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 under the Certificate of Incorporation, and the Company's Board of Directors has procedures under the 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. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | ACCUMULATED OTHER COMPREHENSIVE INCOME Accumulated other comprehensive income consisted of the following (in thousands): Minimum pension liability Foreign currency translation Sale of Equity Investment Total accumulated other comprehensive income Balances at December 31, 2015 $ (576 ) $ 673 $ 90 $ 187 Current period other comprehensive income (loss) — 42 (90 ) (48 ) Balances at June 30, 2016 $ (576 ) $ 715 $ — $ 139 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company holds certain rights to market and manufacture all products developed or created under certain research, development and licensing agreements with various entities. In connection with such agreements, the Company has agreed to pay the entities royalties on net product sales. In each of the three months ended June 30, 2015 and 2016 , royalties of $0.1 million became payable under these agreements. In each of the six months ended June 30, 2015 and 2016, royalties of $0.2 million became payable under these agreements. The Company has contracts with suppliers for unconditional annual minimum inventory purchases and milestone obligations to third parties the Company believes are likely to be triggered currently totaling approximately $0.2 million for each of the fiscal years 2016 and 2017 . From time to time, the Company may be involved in litigation relating to claims arising out of its operations. On March 12, 2015, a complaint was filed against us by Shaun Fauley in the United States District Court Northern District of Illinois alleging our transmittal of unauthorized faxes in violation of the federal Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention Act of 2005, as a class action seeking stated damages of the greater of actual monetary loss or five hundred dollars per violation. We intend to defend ourselves vigorously in this matter. As of June 30, 2016, the Company was not a party to any other legal proceedings that were expected, individually or in the aggregate, to have a material adverse effect on our business, financial condition or operating results. The Company's current terms and conditions of sale include a limited warranty that its products and services will conform to published specifications at the time of shipment and a more extensive warranty related to certain of its products. The Company also sells a renewal warranty for certain of its products. The typical remedy for breach of warranty is to correct or replace any defective product, and if not possible or practical, the Company will accept the return of the defective product and refund the amount paid. Historically, the Company has incurred minimal warranty costs. The Company's warranty reserve at June 30, 2016 was $0.4 million . |
INTEREST AND OTHER EXPENSE (INC
INTEREST AND OTHER EXPENSE (INCOME) | 6 Months Ended |
Jun. 30, 2016 | |
Other Income and Expenses [Abstract] | |
INTEREST AND OTHER EXPENSE (INCOME) | INTEREST AND OTHER EXPENSE (INCOME) Interest and other expense (income) consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Interest income $ (41 ) $ (30 ) $ (99 ) $ (63 ) Interest expense 50 38 103 76 Other, net 28 26 170 (112 ) Total $ 37 $ 34 $ 174 $ (99 ) Cash paid for interest for the three months ended June 30, 2015 and 2016 was $21 thousand and $19 thousand , respectively. Cash paid for interest for the six months ended June 30, 2015 and 2016 was $40 thousand and $37 thousand , respectively. |
CREDIT FACILITY
CREDIT FACILITY | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITY | CREDIT FACILITY At June 30, 2016 , we had a $15.0 million asset-based revolving line of credit with Wells Fargo which has a maturity date of December 31, 2017 as part of our credit and security agreement with Wells Fargo. At June 30, 2016 , we had no borrowings outstanding on this line of credit. Our ability to borrow under this line of credit varies based upon available cash, eligible accounts receivable and eligible inventory. Any interest on borrowings due is to be charged at a stated rate of three month LIBOR plus 2.25% and payable monthly. There is an annual minimum interest charge of $75 thousand under the agreement. We are required to comply with various financial and non-financial covenants, and we have made various representations and warranties under our agreement with Wells Fargo. A key financial covenant is based on a fixed charge coverage ratio, as defined in our agreement with Wells Fargo. We were in compliance with all financial covenants as of June 30, 2016 and our available borrowing capacity based upon eligible accounts receivable and eligible inventory under our revolving line of credit was approximately $12.0 million . |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING The Company consists 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, pharmaceuticals and vaccines, primarily for canine and feline use. 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): Three Months Ended June 30, 2015 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 20,757 $ 3,153 $ 23,910 Operating Income 1,536 293 1,829 Income before income taxes 1,511 281 1,792 Capital expenditures 142 189 331 Depreciation and amortization 894 174 1,068 Three Months Ended June 30, 2016 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 24,464 $ 5,501 $ 29,965 Operating Income 2,746 810 3,556 Income before income taxes 2,724 798 3,522 Capital expenditures 82 381 463 Depreciation and amortization 915 200 1,115 Six Months Ended June 30, 2015 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 40,329 $ 6,475 $ 46,804 Operating Income 2,071 779 2,850 Income before income taxes 1,921 755 2,676 Capital expenditures 449 487 936 Depreciation and amortization 1,724 350 2,074 Six Months Ended June 30, 2016 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 47,898 $ 9,213 $ 57,111 Operating Income 4,504 1,022 5,526 Income before income taxes 4,532 1,093 5,625 Capital expenditures 479 889 1,368 Depreciation and amortization 1,812 399 2,211 Revenue is attributed to individual countries based on customer location. Total revenue by principal geographic area was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 United States $ 22,926 $ 28,908 $ 44,339 $ 54,729 Europe 515 567 1,046 1,120 Other International 469 490 1,419 1,262 Total $ 23,910 $ 29,965 $ 46,804 $ 57,111 Asset information by reportable segment as of December 31, 2015 is as follows (in thousands): Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Total assets $ 92,567 $ 17,152 $ 109,719 Net assets 48,175 15,353 63,528 Asset information by reportable segment as of June 30, 2016 is as follows (in thousands): Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Total assets $ 95,829 $ 23,796 $ 119,625 Net assets 59,303 16,355 75,658 Total assets by principal geographic areas were as follows (in thousands): December 31, June 30, 2015 2016 United States $ 106,780 $ 116,552 Europe 2,939 3,073 Total $ 109,719 $ 119,625 |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Heska Corporation and its wholly-owned and majority-owned subsidiaries ("Heska", the "Company", "we" or "our") sell advanced veterinary diagnostic and specialty products. Heska's state-of-the-art offerings include blood testing instruments and supplies, digital imaging products, software and services, and single-use products and data services, allergy testing and immunotherapy, and single-use offerings such as in-clinic diagnostic tests and heartworm preventive products. The Company's core focus is on the canine and feline markets. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the financial position of the Company at June 30, 2016, the results of our operations for the three and six months ended June 30, 2016 and 2015 and cash flows for the six months ended June 30, 2016 and 2015. The unaudited Condensed Consolidated Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and other financial information filed with the SEC. |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are required when establishing the allowance for doubtful accounts and the provision for excess or obsolete inventory, in determining the period over which our obligations are fulfilled under agreements to license product rights and/or technology rights, evaluating long-lived and intangible assets for impairment, determining the allocation of purchase price under purchase accounting, estimating the expense associated with the granting of stock options, determining the value of our non-controlling interest and in determining the need for, and the amount of, a valuation allowance on deferred tax assets. |
Recent Accounting Pronouncements | In March 2016, the FASB issued guidance codified in Accounting Standards Codification (“ASC”) Topic 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The standard simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes, statutory tax withholding requirements and classification on the statement of cash flows. The new standard is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. We early adopted the standard during the second quarter of 2016 and are therefore required to report the impacts as though the standard had been adopted on January 1, 2016. Accordingly, we recognized additional income tax benefits as an increase to earnings of $0.5 million ($0.07 per diluted share) in the three and six months ended June 30, 2016. The new accounting standard did not impact any periods prior to January 1, 2016, as we applied the changes to the standard on a prospective basis. In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes ASC 840, Leases, and creates a new topic, ASC 842, Leases. This update requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. This update is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with earlier application permitted. This update will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We are currently evaluating the effect of this update on our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Upon the effective date, the ASU replaces almost all existing revenue recognition guidance, including industry specific guidance, in generally accepted accounting principles. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this update deferred the effective date for implementation of ASU 2014-09 by one year and are now effective for annual reporting periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016 including interim reporting periods within that period. We are currently assessing the impact that the adoption of this standard will have on our consolidated financial statements and related disclosures upon implementation. |
ACQUISITION AND RELATED PARTY22
ACQUISITION AND RELATED PARTY ITEMS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Business Combinations and Related Party Disclosures [Abstract] | |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following summarizes the aggregate consideration paid by the Company and the allocation of the purchase price (in thousands): Common stock issued - 175,000 shares $ 6,347 Debt assumed 1,535 Total fair value of consideration transferred $ 7,882 Accounts receivable $ 222 Inventories 39 Due from Cuattro, LLC 963 Property and equipment 80 Other tangible assets 164 Deferred tax asset 56 Intangible assets 2,521 Goodwill 5,783 Accounts payable (112 ) Deferred tax liability (905 ) Other assumed liabilities (929 ) Total fair value of consideration transferred $ 7,882 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | Intangible assets acquired, amortization method and estimated useful lives as of May 31, 2016 was as follows (dollars in thousands): Useful Life Amortization Method Fair Value Customer relationships 6.67 Straight-line $2,521 |
Reconciliation of non-controlling interest balance | The following is a reconciliation of the non-controlling interest balance (in thousands): Beginning December 31, 2015 $ 15,747 Accretion of Put Value 119 Balance June 30, 2016 $ 15,866 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense | Our total income tax expense and the effective tax rate for our income before income taxes are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Income before income taxes $ 1,792 $ 3,522 $ 2,676 $ 5,625 Total income tax expense 614 780 915 1,436 Effective tax rate 34.3 % 22.1 % 34.2 % 25.5 % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Reconciliation of basic and diluted earnings per share | The following is a reconciliation of the weighted-average shares outstanding used in the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2015 and 2016 (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Net income attributable to Heska Corporation $ 1,197 $ 2,522 $ 1,795 $ 3,707 Basic weighted-average common shares outstanding 6,283 6,695 6,232 6,641 Assumed exercise of dilutive stock options and restricted stock units 792 554 748 565 Diluted weighted-average common shares outstanding 7,075 7,249 6,980 7,206 Basic earnings per share attributable to Heska Corporation $ 0.19 $ 0.38 $ 0.29 $ 0.56 Diluted earnings per share attributable to Heska Corporation $ 0.17 $ 0.35 $ 0.26 $ 0.51 |
Schedule of antidilutive securities excluded from computation of earnings per share | The following stock options and restricted units were excluded from the computation of diluted earnings per share because they would have been anti-dilutive (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Stock options 27 138 28 138 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in goodwill | The following summarizes the changes in goodwill during the six months ended June 30, 2016 (in thousands): June 30, 2016 Carrying amount, beginning of period $ 20,910 Additions and adjustments 5,798 Carrying amount, end of period $ 26,708 |
Schedule of other intangible assets | Other intangibles consisted of the following as of December 31, 2015 and June 30, 2016 (in thousands): December 31, June 30, 2015 2016 Gross carrying amount $ 788 $ 3,309 Accumulated amortization (732 ) (769 ) Net carrying amount $ 56 $ 2,540 |
Schedule of amortization expense on intangible assets | Amortization expense relating to other intangibles is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Amortization expense $ 65 $ 34 $ 130 $ 37 |
Schedule of estimated future amortization expense | Estimated amortization expense related to intangibles for each of the five years from 2016 (remaining) through 2020 and thereafter is as follows (in thousands): Year Ending December 31, 2016 (remaining) $ 194 2017 388 2018 388 2019 388 2020 356 Thereafter 826 $ 2,540 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Detail of property and equipment is as follows (in thousands): December 31, June 30, 2015 2016 Land $ 377 $ 377 Building 2,868 2,868 Machinery and equipment 35,284 37,348 Leasehold and building improvements 6,673 6,733 Construction in progress 1,496 1,851 46,698 49,177 Less accumulated depreciation and amortization (29,678 ) (31,525 ) Total property and equipment, net $ 17,020 $ 17,652 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventories, net consist of the following (in thousands): December 31, June 30, 2015 2016 Raw materials $ 8,531 $ 10,097 Work in process 2,839 4,089 Finished goods 6,122 5,194 Allowance for excess or obsolete inventory (1,391 ) (1,304 ) Total inventory $ 16,101 $ 18,076 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities consisted of the following as of December 31, 2015 and June 30, 2016 (in thousands): December 31, June 30, Accrued payroll and employee benefits $ 860 $ 1,168 Accrued property taxes 721 506 Accrued purchases 300 — Other 3,535 3,553 Total accrued liabilities $ 5,416 $ 5,227 |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of weighted average valuation assumptions | 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, 2015 and 2016 . Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Risk-free interest rate 1.17% 1.17% 1.16% 1.19% Expected lives 3.4 years 4.5 years 3.4 years 4.5 years Expected volatility 43% 41% 43% 41% Expected dividend yield 0% 0% 0% 0% |
Schedule of stock options plans | A summary of our stock option plans, excluding options to purchase fractional shares resulting from our December 2010 1-for- 10 reverse stock split, is as follows: Year Ended December 31, Six Months Ended June 30, 2015 2016 Weighted Average Exercise Price Weighted Average Exercise Price Outstanding at beginning of period 1,074,251 $ 10.110 940,610 $ 14.163 Granted at Market 146,446 $ 36.904 19,355 $ 39.074 Canceled (28,440 ) $ 10.080 (463 ) $ 14.881 Exercised (251,647 ) $ 10.559 (70,507 ) $ 11.793 Outstanding at end of period 940,610 $ 14.163 888,995 $ 14.893 Exercisable at end of period 621,559 $ 10.269 633,469 $ 11.489 |
Schedule of shares authorized under stock options plans by exercise price | The following table summarizes information about stock options outstanding and exercisable at June 30, 2016, excluding outstanding options to purchase an aggregate of 4.2 fractional shares resulting from our December 2010 1-for- 10 reverse stock split with a weighted average remaining contractual life of 0.5 years, a weighted average exercise price of $18.69 and exercise prices ranging from $17.17 - $22.50 . We intend to issue whole shares only from option exercises. Options Outstanding Options Exercisable Exercise Prices Number of Weighted Weighted Number of Weighted $ 4.40 - $ 6.90 216,365 4.38 $ 5.598 214,484 $ 5.592 $ 6.91 - $ 8.26 186,964 7.37 $ 7.385 119,329 $ 7.385 $ 8.27 - $17.17 171,853 5.58 $ 10.342 152,355 $ 10.446 $17.18 - $28.39 152,558 5.79 $ 18.465 91,647 $ 18.475 $28.40 - $39.76 161,255 9.43 $ 37.543 55,654 $ 34.361 $ 4.40 - $39.76 888,995 6.40 $ 14.893 633,469 $ 11.489 |
Schedule of pricing models | The weighted average assumptions used for the periods presented were as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Risk-free interest rate 0.24% 0.55% 0.24% 0.53% Expected lives 1.2 years 1.2 years 1.2 years 1.2 years Expected volatility 36% 43% 35% 42% Expected dividend yield 0% 0% 0% 0% |
ACCUMULATED OTHER COMPREHENSI30
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | Accumulated other comprehensive income consisted of the following (in thousands): Minimum pension liability Foreign currency translation Sale of Equity Investment Total accumulated other comprehensive income Balances at December 31, 2015 $ (576 ) $ 673 $ 90 $ 187 Current period other comprehensive income (loss) — 42 (90 ) (48 ) Balances at June 30, 2016 $ (576 ) $ 715 $ — $ 139 |
INTEREST AND OTHER EXPENSE (I31
INTEREST AND OTHER EXPENSE (INCOME) (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Other Income and Expenses [Abstract] | |
Schedule of interest expense (income) and other income, net | Interest and other expense (income) consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 Interest income $ (41 ) $ (30 ) $ (99 ) $ (63 ) Interest expense 50 38 103 76 Other, net 28 26 170 (112 ) Total $ 37 $ 34 $ 174 $ (99 ) |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Reconciliation of other significant reconciling items from segments to consolidated | Summarized financial information concerning the Company's reportable segments is shown in the following table (in thousands): Three Months Ended June 30, 2015 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 20,757 $ 3,153 $ 23,910 Operating Income 1,536 293 1,829 Income before income taxes 1,511 281 1,792 Capital expenditures 142 189 331 Depreciation and amortization 894 174 1,068 Three Months Ended June 30, 2016 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 24,464 $ 5,501 $ 29,965 Operating Income 2,746 810 3,556 Income before income taxes 2,724 798 3,522 Capital expenditures 82 381 463 Depreciation and amortization 915 200 1,115 Six Months Ended June 30, 2015 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 40,329 $ 6,475 $ 46,804 Operating Income 2,071 779 2,850 Income before income taxes 1,921 755 2,676 Capital expenditures 449 487 936 Depreciation and amortization 1,724 350 2,074 Six Months Ended June 30, 2016 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 47,898 $ 9,213 $ 57,111 Operating Income 4,504 1,022 5,526 Income before income taxes 4,532 1,093 5,625 Capital expenditures 479 889 1,368 Depreciation and amortization 1,812 399 2,211 |
Schedule of revenue from external customers and long-lived assets, by geographical areas | Revenue is attributed to individual countries based on customer location. Total revenue by principal geographic area was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2016 2015 2016 United States $ 22,926 $ 28,908 $ 44,339 $ 54,729 Europe 515 567 1,046 1,120 Other International 469 490 1,419 1,262 Total $ 23,910 $ 29,965 $ 46,804 $ 57,111 Asset information by reportable segment as of December 31, 2015 is as follows (in thousands): Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Total assets $ 92,567 $ 17,152 $ 109,719 Net assets 48,175 15,353 63,528 Asset information by reportable segment as of June 30, 2016 is as follows (in thousands): Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Total assets $ 95,829 $ 23,796 $ 119,625 Net assets 59,303 16,355 75,658 Total assets by principal geographic areas were as follows (in thousands): December 31, June 30, 2015 2016 United States $ 106,780 $ 116,552 Europe 2,939 3,073 Total $ 109,719 $ 119,625 |
ACQUISITION AND RELATED PARTY33
ACQUISITION AND RELATED PARTY ITEMS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | May 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Feb. 24, 2013 |
Business Acquisition [Line Items] | |||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||
Goodwill | $ 26,708 | $ 20,910 | |||
Cuattro Veterinary USA, LLC | |||||
Business Acquisition [Line Items] | |||||
Shares issued as consideration | 175 | ||||
Shares issued as consideration, value | $ 6,300 | ||||
Liabilities assumed in debt as part of the transaction | 1,535 | ||||
Common stock issued - 175,000 shares | 6,347 | ||||
Total fair value of consideration transferred | 7,882 | ||||
Accounts receivable | 222 | ||||
Inventories | 39 | ||||
Due from Cuattro, LLC | 963 | ||||
Property and equipment | 80 | ||||
Other tangible assets | 164 | ||||
Deferred tax asset | 56 | ||||
Intangible assets | 2,521 | ||||
Goodwill | 5,783 | ||||
Accounts payable | (112) | ||||
Deferred tax liability | (905) | ||||
Other assumed liabilities | (929) | ||||
Total fair value of consideration transferred | $ 7,882 | ||||
Percentage of voting interest acquired | 54.60% | ||||
Minority interest subject to purchase (as a percent) | 45.40% | ||||
Cuattro Veterinary USA, LLC | Customer Relationships | |||||
Business Acquisition [Line Items] | |||||
Acquired intangible assets, useful life | 6 years 7 months 31 days | ||||
Acquired intangible assets, fair value | $ 2,521 |
ACQUISITION AND RELATED PARTY34
ACQUISITION AND RELATED PARTY ITEMS - RELATED PARTY ITEMS (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2016 | May 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | ||||
Note receivable – related party | $ 0 | $ 1,516 | ||
Due from – related parties | 1,979 | $ 308 | ||
Cuattro, LLC | ||||
Related Party Transaction [Line Items] | ||||
Due from – related parties | 25 | |||
Heska Imaging | ||||
Related Party Transaction [Line Items] | ||||
Due from – related parties | 5,000 | |||
Affiliated Entity | Cuattro, LLC | ||||
Related Party Transaction [Line Items] | ||||
Related party - amount of transaction | $ 2,400 | |||
Cuattro, LLC | Chief Executive Officer | Kevin S. Willson, Shawna M. Wilson And Trusts For Their Children And Family | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage by trusts | 100.00% | |||
Cuattro, LLC | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Related party - amount of transaction | $ 130 | |||
Cuattro Software, LLC | Chief Executive Officer | Kevin S. Willson, Shawna M. Wilson And Trusts For Their Children And Family | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage by trusts | 100.00% | |||
Heska Imaging | ||||
Related Party Transaction [Line Items] | ||||
Following acquisition, former unit holders, ownership percentage | 45.40% | |||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
December 31, 2015 | $ 15,747 | |||
Accretion of Put Value | 119 | |||
June 30, 2016 | 15,866 | |||
Heska Imaging | Clint Roth | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 8.39% | |||
Heska Imaging | Cuattro, LLC | ||||
Related Party Transaction [Line Items] | ||||
Due to – related party | 1,400 | |||
Heska Imaging | Cuattro Veterinary, LLC | ||||
Related Party Transaction [Line Items] | ||||
Note receivable – related party | $ 1,500 | |||
Heska Imaging | Chief Executive Officer | Kevin S. Wilson | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 0.05% | |||
Heska Imaging | Immediate Family Member of Management or Principal Owner | Shawna M. Wilson | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 29.75% | |||
Heska Imaging | Executive Officer | Steven M. Asakowicz | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 4.09% | |||
Heska Imaging | Executive Officer | Rodney A. Lippincott | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 3.07% | |||
Heska Imaging | Affiliated Entity | Cuattro, LLC | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 0.05% | |||
Related party - amount of transaction | 3,600 | |||
Global Imaging | Affiliated Entity | Cuattro, LLC | ||||
Related Party Transaction [Line Items] | ||||
Related party - amount of transaction | 900 | |||
International Imaging | Cuattro, LLC | ||||
Related Party Transaction [Line Items] | ||||
Due from – related parties | $ 546 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||||
Income before income taxes | $ 3,522 | $ 1,792 | $ 5,625 | $ 2,676 | |
Total income tax expense | $ 780 | $ 614 | $ 1,436 | $ 915 | |
Effective tax rate | 22.10% | 34.30% | 25.50% | 34.20% | |
Cash paid for income taxes | $ 57 | $ 5 | $ 15 | $ 62 | $ 20 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2010 | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($)$ / sharesshares | |
Earnings Per Share [Abstract] | |||||
Reverse stock split conversion ratio | 0.10 | ||||
Net income attributable to Heska Corporation | $ | $ 2,522 | $ 1,197 | $ 3,707 | $ 1,795 | |
Weighted average outstanding shares used to compute basic earnings per share attributable to Heska Corporation | 6,695 | 6,283 | 6,641 | 6,232 | |
Assumed exercise of dilutive stock options and restricted stock units | 554 | 792 | 565 | 748 | |
Diluted weighted-average common shares outstanding | 7,249 | 7,075 | 7,206 | 6,980 | |
Basic earnings per share attributable to Heska Corporation, in dollars per share | $ / shares | $ 0.38 | $ 0.19 | $ 0.56 | $ 0.29 | |
Diluted earnings per share attributable to Heska Corporation, in dollars per share | $ / shares | $ 0.35 | $ 0.17 | $ 0.51 | $ 0.26 | |
Stock Options And Restricted Units | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Stock options and restricted units excluded from computation of earnings per share | 138 | 27 | 138 | 28 |
GOODWILL AND OTHER INTANGIBLE37
GOODWILL AND OTHER INTANGIBLES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Goodwill [Roll Forward] | |||||
Carrying amount, beginning of period | $ 20,910 | ||||
Additions and adjustments | 5,798 | ||||
Carrying amount, end of period | $ 26,708 | 26,708 | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Gross carrying amount | 3,309 | 3,309 | $ 788 | ||
Accumulated amortization | (769) | (769) | (732) | ||
Net carrying amount | 2,540 | 2,540 | 56 | ||
Amortization expense | 34 | $ 65 | 37 | $ 130 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||||
2016 (remaining) | 194 | 194 | |||
2,017 | 388 | 388 | |||
2,018 | 388 | 388 | |||
2,019 | 388 | 388 | |||
2,020 | 356 | 356 | |||
Thereafter | 826 | 826 | |||
Net carrying amount | $ 2,540 | $ 2,540 | $ 56 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | Feb. 24, 2013 | |
Property, Plant and Equipment [Line Items] | |||||||
Property and equipment, gross | $ 49,177,000 | $ 49,177,000 | $ 46,698,000 | ||||
Less accumulated depreciation and amortization | (31,525,000) | (31,525,000) | (29,678,000) | ||||
Total property and equipment, net | 17,652,000 | 17,652,000 | 17,020,000 | ||||
Total costs transferred from inventory | 1,700,000 | $ 2,500,000 | |||||
Deferred revenue and other | (1,962,000) | (1,233,000) | |||||
Depreciation and amortization | 1,100,000 | $ 1,100,000 | 2,200,000 | 2,100,000 | |||
Capital expenditures | 463,000 | $ 331,000 | 1,368,000 | 936,000 | |||
Cuattro Veterinary USA, LLC | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Percentage of voting interest acquired | 54.60% | ||||||
Heska Imaging | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Total property and equipment, net | 1,500,000 | 1,500,000 | 2,200,000 | ||||
Deferred revenue and other | 59,000 | ||||||
Land | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Property and equipment, gross | 377,000 | 377,000 | 377,000 | ||||
Building | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Property and equipment, gross | 2,868,000 | 2,868,000 | 2,868,000 | ||||
Machinery and equipment | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Property and equipment, gross | 37,348,000 | 37,348,000 | 35,284,000 | ||||
Leasehold and building improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Property and equipment, gross | 6,733,000 | 6,733,000 | 6,673,000 | ||||
Construction in progress | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Property and equipment, gross | 1,851,000 | $ 1,851,000 | 1,496,000 | ||||
Machinery and equipment | Minimum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Property plant and equipment, useful life | 5 years | ||||||
Machinery and equipment | Maximum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Property plant and equipment, useful life | 7 years | ||||||
Software and Software Development Costs | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Total property and equipment, net | $ 300,000 | $ 300,000 | $ 400,000 | ||||
Capital expenditures | $ 0 | $ 44,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 10,097 | $ 8,531 |
Work in process | 4,089 | 2,839 |
Finished goods | 5,194 | 6,122 |
Allowance for excess or obsolete inventory | (1,304) | (1,391) |
Inventory, net | $ 18,076 | $ 16,101 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accrued payroll and employee benefits | $ 1,168 | $ 860 |
Accrued property taxes | 506 | 721 |
Accrued purchases | 0 | 300 |
Other | 3,553 | 3,535 |
Total accrued liabilities | $ 5,227 | $ 5,416 |
CAPITAL STOCK - NARRATIVE (Deta
CAPITAL STOCK - NARRATIVE (Details) $ / shares in Units, $ in Thousands | Mar. 26, 2016shares | Mar. 02, 2016shares | Mar. 17, 2015shares | Dec. 31, 2010 | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015$ / shares | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($)$ / sharesshares | Dec. 31, 2015shares | Dec. 31, 2014shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Reverse stock split conversion ratio | 0.10 | |||||||||
Fair value of stock options granted during period | $ | $ 267 | $ 258 | ||||||||
Weighted average grant date fair value | $ / shares | $ 13.83 | $ 8.88 | ||||||||
Intrinsic value of options exercised | $ | $ 1,600 | $ 1,900 | ||||||||
Proceeds from stock options exercised | $ | 660 | $ 715 | ||||||||
Unrecognized compensation expense to be recognized during the remainder of fiscal year | $ | $ 485 | $ 485 | ||||||||
Weighted average purchase price of shares purchased | $ / shares | $ 7.64 | $ 5.75 | $ 6.87 | $ 5.67 | ||||||
Stockholder ownership percentage, threshold for restrictions | 5.00% | |||||||||
Kevin S. Wilson | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares vested during period | 27,500 | |||||||||
Excluded Stock Options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Options outstanding | 4.2 | 4.2 | ||||||||
Options outstanding, weighted average remaining contractual term | 6 months | |||||||||
Options outstanding, weighted average exercise price | $ / shares | $ 18.69 | $ 18.69 | ||||||||
Exercise price, lower range limit | $ / shares | 17.17 | |||||||||
Exercise price, upper range limit | $ / shares | $ 22.50 | |||||||||
Employee Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares issued during period | 4,497 | 6,043 | ||||||||
Employee Stock Option | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Intrinsic value of options exercised | $ | $ 16,300 | |||||||||
Options outstanding | 888,995 | 888,995 | 940,610 | 1,074,251 | ||||||
Total unrecognized compensation expense related to outstanding stock options | $ | $ 2,000 | $ 2,000 | ||||||||
Period for recognition of unrecognized compensation expense | 1 year 7 months 6 days | |||||||||
Intrinsic value of options outstanding | $ | $ 20,100 | $ 20,100 | ||||||||
Performance Shares | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares issued during period | 52,956 | |||||||||
Performance Shares | Management Incentive Plan (MIP) Grants 2015 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares issued during period | 24,649 | |||||||||
Shares vested during period | 14,364 | |||||||||
Shares withheld for income tax expense | 4,788 | |||||||||
Performance shares canceled | 10,285 | |||||||||
Performance Shares | Management Incentive Plan (MIP) Grants 2016 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares issued during period | 15,000 |
CAPITAL STOCK - OPTION ACTIVITY
CAPITAL STOCK - OPTION ACTIVITY (Details) - $ / shares | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Employee Stock Option | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Risk-free interest rate (as a percent) | 1.17% | 1.17% | 1.19% | 1.16% | |
Expected lives (in years) | 4 years 5 months 18 days | 3 years 4 months 24 days | 4 years 5 months 18 days | 3 years 4 months 24 days | |
Expected volatility (as a percent) | 41.00% | 43.00% | 41.00% | 43.00% | |
Expected dividend rate (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||||
Outstanding at beginning of period | 940,610 | 1,074,251 | 1,074,251 | ||
Granted at Market | 19,355 | 146,446 | |||
Canceled | (463) | (28,440) | |||
Exercised | (70,507) | (251,647) | |||
Outstanding at end of period | 888,995 | 888,995 | 940,610 | ||
Exercisable at end of period | 633,469 | 633,469 | 621,559 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||||
Outstanding at beginning of period (in dollars per share) | $ 14.163 | $ 10.110 | $ 10.110 | ||
Granted at Market (in dollars per share) | 39.074 | 36.904 | |||
Cancelled (in dollars per share) | 14.881 | 10.080 | |||
Exercised (in dollars per share) | 11.793 | 10.559 | |||
Outstanding at ending of period (in dollars per share) | $ 14.893 | 14.893 | 14.163 | ||
Exercisable at end of period (in dollars per share) | $ 11.489 | $ 11.489 | $ 10.269 | ||
Employee Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Risk-free interest rate (as a percent) | 0.55% | 0.24% | 0.53% | 0.24% | |
Expected lives (in years) | 1 year 2 months 18 days | 1 year 2 months 18 days | 1 year 2 months 18 days | 1 year 2 months 18 days | |
Expected volatility (as a percent) | 43.00% | 36.00% | 42.00% | 35.00% | |
Expected dividend rate (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
CAPITAL STOCK - SUMMARY OF INFO
CAPITAL STOCK - SUMMARY OF INFORMATION BY EXERCISE PRICE RANGE (Details) - $ / shares | 3 Months Ended | 6 Months Ended |
Mar. 31, 2016 | Jun. 30, 2016 | |
$ 4.40 - $ 6.90 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number of Options Outstanding at June 30, 2016 | 216,365 | |
Weighted Average Remaining Contractual Life in Years | 4 years 4 months 18 days | |
Weighted Average Exercise Price | $ 5.598 | |
Number of Options Exercisable at June 30, 2016 | 214,484 | |
Weighted Average Exercise Price | $ 5.592 | |
Exercise price, lower range limit | $ 4.40 | |
Exercise price, upper range limit | 6.90 | |
$ 6.91 - $ 8.26 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number of Options Outstanding at June 30, 2016 | 186,964 | |
Weighted Average Remaining Contractual Life in Years | 7 years 4 months 15 days | |
Weighted Average Exercise Price | $ 7.385 | |
Number of Options Exercisable at June 30, 2016 | 119,329 | |
Weighted Average Exercise Price | $ 7.385 | |
Exercise price, lower range limit | 6.91 | |
Exercise price, upper range limit | 8.26 | |
$ 8.27 - $ 17.17 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number of Options Outstanding at June 30, 2016 | 171,853 | |
Weighted Average Remaining Contractual Life in Years | 5 years 5 months 59 days | |
Weighted Average Exercise Price | $ 10.342 | |
Number of Options Exercisable at June 30, 2016 | 152,355 | |
Weighted Average Exercise Price | $ 10.446 | |
Exercise price, lower range limit | 8.27 | |
Exercise price, upper range limit | 17.17 | |
$ 17.18 - $ 28.39 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number of Options Outstanding at June 30, 2016 | 152,558 | |
Weighted Average Remaining Contractual Life in Years | 5 years 8 months 46 days | |
Weighted Average Exercise Price | $ 18.465 | |
Number of Options Exercisable at June 30, 2016 | 91,647 | |
Weighted Average Exercise Price | $ 18.475 | |
Exercise price, lower range limit | 17.18 | |
Exercise price, upper range limit | 28.39 | |
$ 28.40 - $ 39.76 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number of Options Outstanding at June 30, 2016 | 161,255 | |
Weighted Average Remaining Contractual Life in Years | 9 years 4 months 35 days | |
Weighted Average Exercise Price | $ 37.543 | |
Number of Options Exercisable at June 30, 2016 | 55,654 | |
Weighted Average Exercise Price | $ 34.361 | |
Exercise price, lower range limit | 28.40 | |
Exercise price, upper range limit | 39.76 | |
$ 4.40 - $ 39.76 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number of Options Outstanding at June 30, 2016 | 888,995 | |
Weighted Average Remaining Contractual Life in Years | 6 years 4 months 25 days | |
Weighted Average Exercise Price | $ 14.893 | |
Number of Options Exercisable at June 30, 2016 | 633,469 | |
Weighted Average Exercise Price | $ 11.489 | |
Exercise price, lower range limit | 4.40 | |
Exercise price, upper range limit | $ 39.76 |
ACCUMULATED OTHER COMPREHENSI44
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Total accumulated other comprehensive income | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | $ 187 |
Current period other comprehensive income (loss) | (48) |
Ending balance | 139 |
Minimum pension liability | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | (576) |
Current period other comprehensive income (loss) | 0 |
Ending balance | (576) |
Foreign currency translation | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | 673 |
Current period other comprehensive income (loss) | 42 |
Ending balance | 715 |
Sale of Equity Investment | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | 90 |
Current period other comprehensive income (loss) | (90) |
Ending balance | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Increase in royalties payable | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 |
Recorded Unconditional Purchase Obligation [Line Items] | ||||
Warranty reserve | 0.4 | 0.4 | ||
Inventories | ||||
Recorded Unconditional Purchase Obligation [Line Items] | ||||
Minimum inventory purchases in fiscal 2016 | 0.2 | 0.2 | ||
Minimum inventory purchases in fiscal 2017 | $ 0.2 | $ 0.2 |
INTEREST AND OTHER EXPENSE (I46
INTEREST AND OTHER EXPENSE (INCOME) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Other Income and Expenses [Abstract] | ||||
Interest income | $ (30) | $ (41) | $ (63) | $ (99) |
Interest expense | 38 | 50 | 76 | 103 |
Other, net | 26 | 28 | (112) | 170 |
Interest and other expense (income), net | (34) | (37) | 99 | (174) |
Interest Paid | $ 19 | $ 21 | $ 37 | $ 40 |
CREDIT FACILITY (Details)
CREDIT FACILITY (Details) - Line of Credit - Revolving Credit Facility | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Debt Instrument [Line Items] | |
Maximum borrowing capacity | $ 15,000,000 |
Long-term line of credit | 0 |
Minimum annual interest charge | 75,000 |
Remaining borrowing capacity | $ 12,000,000 |
London Interbank Offered Rate (LIBOR) | |
Debt Instrument [Line Items] | |
Basis spread on variable rate | 2.25% |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Total revenue | $ 29,965 | $ 23,910 | $ 57,111 | $ 46,804 | |
Operating Income | 3,556 | 1,829 | 5,526 | 2,850 | |
Income before income taxes | 3,522 | 1,792 | 5,625 | 2,676 | |
Capital expenditures | 463 | 331 | 1,368 | 936 | |
Depreciation and amortization | 1,115 | 1,068 | 2,211 | 2,074 | |
Assets | 119,625 | 119,625 | $ 109,719 | ||
Net Assets | 75,658 | 75,658 | 63,528 | ||
United States | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Total revenue | 28,908 | 22,926 | 54,729 | 44,339 | |
Assets | 116,552 | 116,552 | 106,780 | ||
Europe | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Total revenue | 567 | 515 | 1,120 | 1,046 | |
Assets | 3,073 | 3,073 | 2,939 | ||
Other International | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Total revenue | 490 | 469 | 1,262 | 1,419 | |
Operating Segments | Core Companion Animal Health | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Total revenue | 24,464 | 20,757 | 47,898 | 40,329 | |
Operating Income | 2,746 | 1,536 | 4,504 | 2,071 | |
Income before income taxes | 2,724 | 1,511 | 4,532 | 1,921 | |
Capital expenditures | 82 | 142 | 479 | 449 | |
Depreciation and amortization | 915 | 894 | 1,812 | 1,724 | |
Assets | 95,829 | 95,829 | 92,567 | ||
Net Assets | 59,303 | 59,303 | 48,175 | ||
Operating Segments | Other Vaccines, Pharmaceuticals and Products | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Total revenue | 5,501 | 3,153 | 9,213 | 6,475 | |
Operating Income | 810 | 293 | 1,022 | 779 | |
Income before income taxes | 798 | 281 | 1,093 | 755 | |
Capital expenditures | 381 | 189 | 889 | 487 | |
Depreciation and amortization | 200 | $ 174 | 399 | $ 350 | |
Assets | 23,796 | 23,796 | 17,152 | ||
Net Assets | $ 16,355 | $ 16,355 | $ 15,353 |
SEGMENT REPORTING - NARRATIVE (
SEGMENT REPORTING - NARRATIVE (Details) | 6 Months Ended |
Jun. 30, 2016segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |