Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 02, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | Heska Corp | ||
Entity Central Index Key | 1,038,133 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 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 | FY | ||
Document Fiscal Year Focus | 2,016 | ||
Entity Public Float | $ 228,685,202 | ||
Entity Common Stock, Shares Outstanding | 7,502,880 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Current assets: | ||
Cash and cash equivalents | $ 10,794 | $ 6,890 |
Accounts receivable, net of allowance for doubtful accounts of $237 and $189, respectively | 20,857 | 15,935 |
Due from – related parties | 100 | 308 |
Inventories, net | 20,395 | 16,101 |
Other current assets | 3,127 | 2,028 |
Total current assets | 55,273 | 41,262 |
Property and equipment, net | 16,581 | 17,020 |
Note receivable – related party | 0 | 1,516 |
Goodwill | 26,647 | 20,910 |
Finite-Lived Intangible Assets, Net | 2,346 | 56 |
Deferred tax asset, net | 21,122 | 25,883 |
Other long-term assets | 8,875 | 3,072 |
Total assets | 130,844 | 109,719 |
Current liabilities: | ||
Accounts payable | 7,154 | 7,624 |
Accrued liabilities | 6,469 | 5,416 |
Current portion of deferred revenue | 3,439 | 5,461 |
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | 14,602 | 0 |
Line of credit | 672 | 143 |
Other short-term borrowings, including current portion of long-term note payable | 78 | 159 |
Total current liabilities | 32,414 | 18,803 |
Long-term note payable, net of current portion | 0 | 69 |
Deferred revenue, net of current portion, and other | 11,455 | 11,572 |
Total liabilities | 43,869 | 30,444 |
Commitments and contingencies | ||
Non-Controlling Interest | 0 | 15,747 |
Stockholders' equity: | ||
Preferred stock, $.01 par value, 2,500,000 shares authorized, none issued or outstanding | 0 | 0 |
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, 7,026,051 and 6,625,287 shares issued and outstanding, respectively | 70 | 66 |
Additional paid-in capital | 238,635 | 227,267 |
Accumulated other comprehensive income | 97 | 187 |
Accumulated deficit | (151,827) | (163,992) |
Total stockholders' equity | 86,975 | 63,528 |
Total liability and stockholders' equity | $ 130,844 | $ 109,719 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Allowance for doubtful accounts | $ 237 | $ 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, par value (in dollars per share) | $ 0.01 | |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 9,000,000 | 9,000,000 |
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 | 9,000,000 |
Common stock, shares issued | 7,026,051 | 6,625,287 |
Common stock, shares outstanding | 7,026,051 | 6,625,287 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue: | |||
Core companion animal health | $ 107,398 | $ 84,249 | $ 72,354 |
Other vaccines, pharmaceuticals and products | 22,685 | 20,348 | 17,483 |
Total revenue, net | 130,083 | 104,597 | 89,837 |
Cost of revenue | 76,191 | 60,384 | 54,122 |
Gross profit | 53,892 | 44,213 | 35,715 |
Operating expenses: | |||
Selling and marketing | 22,092 | 21,339 | 19,159 |
Research and development | 2,147 | 1,658 | 1,414 |
General and administrative | 13,120 | 12,659 | 12,231 |
Total operating expenses | 37,359 | 35,656 | 32,804 |
Operating income | 16,533 | 8,557 | 2,911 |
Interest and other expense (income), net | 29 | 130 | (39) |
Income before income taxes | 16,504 | 8,427 | 2,950 |
Income tax expense: | |||
Current income tax expense | 407 | 1,581 | 47 |
Deferred income tax expense | 3,932 | 1,327 | 1,304 |
Total income tax expense | 4,339 | 2,908 | 1,351 |
Net income | 12,165 | 5,519 | 1,599 |
Net income (loss) attributable to non-controlling interest | 1,657 | 280 | (1,004) |
Net income attributable to Heska Corporation | $ 10,508 | $ 5,239 | $ 2,603 |
Earnings Per Share [Abstract] | |||
Basic earnings (loss) per share attributable to Heska Corporation, in dollars per share | $ 1.55 | $ 0.80 | $ 0.44 |
Diluted earnings (loss) per share attributable to Heska Corporation, in dollars per share | $ 1.43 | $ 0.74 | $ 0.41 |
Weighted average outstanding shares used to compute basic earnings per share attributable to Heska Corporation | 6,783 | 6,509 | 5,951 |
Weighted average outstanding shares used to compute diluted earnings per share attributable to Heska Corporation | 7,361 | 7,074 | 6,409 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||
Net income | $ 12,165 | $ 5,519 | $ 1,599 |
Other comprehensive income (expense): | |||
Minimum pension liability | 75 | (129) | 0 |
Sale of equity investment | (90) | 44 | 3 |
Foreign currency translation | (75) | (11) | (300) |
Comprehensive income | 12,075 | 5,423 | 1,302 |
Comprehensive income (loss) attributable to non-controlling interest | 1,657 | 280 | (1,004) |
Comprehensive income attributable to Heska Corporation | $ 10,418 | $ 5,143 | $ 2,306 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit |
Beginning balance at Dec. 31, 2013 | $ 47,116 | $ 58 | $ 217,588 | $ 580 | $ (171,110) |
Beginning balance (in shares) at Dec. 31, 2013 | 5,846 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 1,599 | 1,599 | |||
Stock issued for acquisitions | 3,405 | $ 0 | 3,405 | ||
Stock issued for acquisitions (in shares) | 0 | ||||
Issuance of common stock related to options, ESPP and other | 1,448 | $ 5 | 1,443 | ||
Issuance of common stock related to options, ESPP and other (in shares) | 496 | ||||
Recognition of stock based compensation | 1,653 | 1,653 | |||
Excess tax benefit from stock-based compensation | 228 | 228 | |||
Stock issued for Heska Imaging Mark to Market | (2,020) | (2,020) | |||
Unrealized gain on available for sale investments | 3 | 3 | |||
Foreign currency translation adjustments | (300) | (300) | |||
Ending balance at Dec. 31, 2014 | 53,132 | $ 63 | 222,297 | 283 | (169,511) |
Ending balance (in shares) at Dec. 31, 2014 | 6,342 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 5,519 | 5,519 | |||
Issuance of common stock related to options, ESPP and other | 1,258 | $ 3 | 1,255 | ||
Issuance of common stock related to options, ESPP and other (in shares) | 283 | ||||
Recognition of stock based compensation | 2,269 | 2,269 | |||
Excess tax benefit from stock-based compensation | 1,514 | 1,514 | |||
Unrealized gain on available for sale investments | 44 | 44 | |||
Foreign currency translation adjustments | (11) | (11) | |||
Ending balance at Dec. 31, 2015 | 63,528 | $ 66 | 227,267 | 187 | (163,992) |
Ending balance (in shares) at Dec. 31, 2015 | 6,625 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 12,165 | 12,165 | |||
Stock issued for acquisitions | 6,349 | $ 2 | 6,347 | ||
Stock issued for acquisitions (in shares) | 175 | ||||
Issuance of common stock related to options, ESPP and other | 1,618 | $ 2 | 1,616 | ||
Issuance of common stock related to options, ESPP and other (in shares) | 226 | ||||
Recognition of stock based compensation | 2,260 | 2,260 | |||
Accretion of non-controlling interest | 1,145 | 1,145 | |||
Minimum pension liability adjustments | 75 | 75 | |||
Unrealized gain on available for sale investments | (90) | (90) | |||
Foreign currency translation adjustments | (75) | (75) | |||
Ending balance at Dec. 31, 2016 | $ 86,975 | $ 70 | $ 238,635 | $ 97 | $ (151,827) |
Ending balance (in shares) at Dec. 31, 2016 | 7,026 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Statement of Cash Flows [Abstract] | |||
Stock issued for acquisitions | $ 6,349 | $ 0 | $ 0 |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | 12,165 | 5,519 | 1,599 |
Adjustments to reconcile net income to cash provided by operating activities: | |||
Depreciation and amortization | 4,645 | 4,187 | 3,712 |
Deferred tax expense | 3,932 | 1,327 | 1,304 |
Stock based compensation | 2,260 | 2,269 | 1,653 |
Unrealized (gain) loss on foreign currency translation | (3) | 36 | (81) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (4,700) | (4,216) | (510) |
Inventories | (4,731) | (7,240) | (5,592) |
Other current assets | 88 | (238) | (73) |
Accounts payable | (688) | 3,059 | 900 |
Accrued liabilities and other | 1,005 | 43 | 814 |
Other non-current assets | (5,818) | (2,430) | (263) |
Deferred revenue and other | (2,300) | (191) | 2,091 |
Net cash provided by operating activities | 5,855 | 2,125 | 5,554 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Proceeds from sale of equity investment | 115 | 0 | 0 |
Purchases of property and equipment | (3,417) | (3,773) | (2,337) |
Proceeds from disposition of property and equipment | 0 | 0 | 6 |
Net cash used in investing activities | (3,302) | (3,773) | (2,331) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from issuance of common stock, net of distributions | 1,620 | 1,258 | 1,430 |
Proceeds from (repayments of) line of credit borrowings, net | 530 | 95 | (4,751) |
Repayments of other debt | (747) | (141) | (178) |
Excess tax benefit from stock-based compensation | 0 | 1,514 | 228 |
Net cash provided by (used in) financing activities | 1,403 | 2,726 | (3,271) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (52) | (43) | (113) |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 3,904 | 1,035 | (161) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 6,890 | 5,855 | 6,016 |
CASH AND CASH EQUIVALENTS, END OF YEAR | $ 10,794 | $ 6,890 | $ 5,855 |
OPERATIONS AND SUMMARY OF SIGNI
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Heska Corporation and its wholly-owned and majority-owned subsidiaries ("Heska", the "Company", "we" or "our") sell advanced veterinary diagnostic and specialty products. Our offerings include blood testing instruments and supplies, digital imaging products, software and services, vaccines, local and cloud-based data services, allergy testing and immunotherapy, and single-use offerings such as in-clinic diagnostic tests and heartworm preventive products. Our core focus is on supporting veterinarians in the canine and feline healthcare space. Basis of Presentation Our consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries and majority-owned subsidiaries since their respective dates of acquisitions. All intercompany accounts and transactions have been eliminated in consolidation. Where our ownership of a subsidiary is less than 100%, the non-controlling interest is reported on our consolidated balance sheets. The non-controlling interest in our consolidated net income is reported as "Net income (loss) attributable to non-controlling interest" on our consolidated statements of income. Our consolidated financial statements are stated in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). 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. Concentration of Credit Risk Financial instruments that potentially subject us to a concentration of credit risk consist of cash and cash equivalents and accounts receivable. We maintain the majority of our cash and cash equivalents with financial institutions that management believes are creditworthy in the form of demand deposits. We have no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign currency hedging arrangements. Our accounts receivable balances are due largely from distribution partners, domestic veterinary clinics and individual veterinarians and other animal health companies. Henry Schein represented 16% of our consolidated accounts receivable at December 31, 2016. Merck entities represented approximately 11% and 13% of our consolidated accounts receivable at December 31, 2016 and 2015, respectively. Eli Lilly entities, including Elanco, represented approximately 15% and 20% of our consolidated accounts receivable at December 31, 2016 and 2015, respectively. No other customer accounted for more than 10% of our consolidated accounts receivable at December 31, 2016 or 2015. We have established an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at net realizable value. From time to time, our customers are unable to meet their payment obligations. We continuously monitor our customers' credit worthiness and use our judgment in establishing a provision for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. While such credit losses have historically been within our expectations and the provisions established, there is no assurance that we will continue to experience the same credit loss rates that we have in the past. A significant change in the liquidity or financial position of our customers could have a material adverse impact on the collectability of accounts receivable and our future operating results. Changes in allowance for doubtful accounts are summarized as follows (in thousands): Years Ended December 31, 2016 2015 2014 Balances at beginning of period $ 189 $ 216 $ 209 Additions - charged to expense 163 83 143 Deductions - write offs, net of recoveries (115 ) (110) (136) Balances at end of period $ 237 $ 189 $ 216 Cash and Cash Equivalents Cash and cash equivalents are stated at cost, which approximates market value, and include short-term, highly liquid investments with original maturities of less than three months. We valued our Euro and Japanese Yen cash accounts at the spot market foreign exchange rate as of each balance sheet date, with changes due to foreign exchange fluctuations recorded in current earnings. We held 2,778,614 and 1,779,910 Euros at December 31, 2016 and 2015 , respectively. We held 1,252,221 and 1,252,221 Yen at December 31, 2016 and 2015 , respectively. We held 172,743 and 127,507 Swiss Francs at December 31, 2016 and 2015 , respectively. We held 26,477 and 26,477 Canadian Dollars at December 31, 2016 and 2015 , respectively. The majority of our cash and cash equivalents are held at U.S.-based or Swiss-based financial institutions in accounts not insured by governmental entities. Fair Value of Financial Instruments Our financial instruments consist of cash and cash equivalents, short-term trade receivables and payables and the Company's revolving line of credit. The carrying values of cash and cash equivalents and short-term trade receivables and payables approximate fair value because of the short-term nature of the instruments. The fair value of our line of credit balance is estimated based on current rates available for similar debt with similar maturities and collateral, and at December 31, 2016 and 2015 , approximates the carrying value due primarily to the floating rate of interest on such debt instruments. 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, 2016 2015 Raw materials $ 10,807 $ 8,531 Work in process 3,820 2,839 Finished goods 7,087 6,122 Allowance for excess or obsolete inventory (1,319 ) (1,391 ) $ 20,395 $ 16,101 Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. When an item is sold or retired, the cost and related accumulated depreciation is relieved, and the resulting gain or loss, if any, is recognized in the consolidated statements of income. We provide for depreciation primarily using the straight-line method by charges to income in amounts that allocate the cost of property and equipment over their estimated useful lives as follows: Asset Classification Estimated Useful Life Building 10 to 20 years Machinery and equipment 3 to 15 years Leasehold and building improvements 7 to 15 years We capitalize certain costs incurred in connection with developing or obtaining software designated for internal use based on three distinct stages of development. Qualifying costs incurred during the application development stage, which consist primarily of internal payroll and direct fringe benefits and external direct project costs, including labor and travel, are capitalized and amortized on a straight-line basis over the estimated useful life of the asset. Costs incurred during the preliminary project and post and post-implementation and operation phases are expensed as incurred. These costs are general and administrative in nature and related primarily to the determination of performance requirements, data conversion and training. Goodwill, Intangible and Other Long-Lived Assets We assess goodwill for impairment annually, at the reporting unit level, in the fourth quarter and whenever events or circumstances indicate impairment may exist. In evaluating goodwill for impairment, we have the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, we determine that is more likely than not that the fair value of a reporting is less than its carrying amount, we would then perform step one of the two-step impairment test; otherwise, no further impairment test would be required. In contrast, we can opt to bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the two-step impairment test. Doing so does not preclude us from performing the qualitative assessment in any subsequent period. In the fourth quarter of 2016 , we performed a qualitative assessment of the goodwill residing within the assets of our CCA segment and determined that no indications of impairment existed. Intangible assets are valued based on estimates of future cash flows and amortized over their estimated useful lives. We continually evaluate whether events and circumstances have occurred that indicate the remaining estimated useful life of intangible assets as well as other long-lived assets may warrant revision, or that the remaining balance of these assets may not be recoverable. When deemed necessary, we complete this evaluation by comparing the carrying amount of the assets with the estimated undiscounted future cash flows associated with them. If such evaluations indicate that the future undiscounted cash flows of amortizable long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their estimated fair values. The estimation of useful lives and expected cash flows requires us to make significant judgments regarding future periods that are subject to some factors outside of our control. Changes in these estimates can result in significant revisions to our carrying value of these assets and may result in material charges to our results of operations. Revenue Recognition We generate our revenue through the sale of products, as well as through licensing of technology product rights, royalties and sponsored research and development. Our policy is to recognize revenue when the applicable revenue recognition criteria have been met, which generally include the following: • Persuasive evidence of an arrangement exists; • Delivery has occurred or services rendered; • Price is fixed or determinable; and • Collectability is reasonably assured. Revenue from the sale of products is recognized after both the goods are shipped to the customer and acceptance has been received, if required, with an appropriate provision for estimated returns and allowances. We do not permit general returns of products sold. Certain of our products have expiration dates. Our policy is to exchange certain outdated, expired product with the same product. We record an accrual for the estimated cost of replacing the expired product expected to be returned in the future, based on our historical experience, adjusted for any known factors that reasonably could be expected to change historical patterns, such as regulatory actions which allow us to extend the shelf lives of our products. Revenue from both direct sales to veterinarians and sales to independent third-party distributors are generally recognized when goods are shipped. Our products are shipped complete and ready to use by the customer. The terms of the customer arrangements generally pass title and risk of ownership to the customer at the time of shipment. Certain customer arrangements provide for acceptance provisions. Revenue for these arrangements is not recognized until the acceptance has been received or the acceptance period has lapsed. We reduce our revenue by the estimated cost of any rebates, allowances or similar programs, which are used as promotional programs. Recording revenue from the sale of products involves the use of estimates and management judgment. We must make a determination at the time of sale whether the customer has the ability to make payments in accordance with arrangements. While we do utilize past payment history, and, to the extent available for new customers, public credit information in making our assessment, the determination of whether collectability is reasonably assured is ultimately a judgment decision that must be made by management. We must also make estimates regarding our future obligation relating to returns, rebates, allowances and similar other programs. License revenue under arrangements to sell or license product rights or technology rights is recognized as obligations under the agreement are satisfied, which generally occurs over a period of time. Generally, licensing revenue is deferred and recognized over the estimated life of the related agreements, products, patents or technology. Nonrefundable licensing fees, marketing rights and milestone payments received under contractual arrangements are deferred and recognized over the remaining contractual term using the straight-line method. Recording revenue from license arrangements involves the use of estimates. The primary estimate made by management is determining the useful life of the related agreement, product, patent or technology. We evaluate all of our licensing arrangements by estimating the useful life of either the product or the technology, the length of the agreement or the legal patent life and defer the revenue for recognition over the appropriate period. We may enter into arrangements that include multiple elements. Such arrangements may include agreements allowing for the usage of an instrument and a given level of consumables for one monthly payment. In these situations, we must determine whether the various elements meet the criteria to be accounted for as separate elements. If the elements cannot be separated, revenue is recognized once revenue recognition criteria for the entire arrangement have been met or over the period that the Company's obligations to the customer are fulfilled, as appropriate. If the elements are determined to be separable, the revenue is allocated to the separate elements based on relative fair value and recognized separately for each element when the applicable revenue recognition criteria have been met. In accounting for these multiple element arrangements, we must make determinations about whether elements can be accounted for separately and make estimates regarding their relative fair values. In addition to our direct sales force, we utilize distributors to sell our products. Distributors purchase goods from us, take title to those goods and resell them to their customers in the distributors' territory. Upfront payments we receive under arrangements for product, patent or technology rights in which we retain an interest in the underlying product, patent or technology are initially deferred, and revenue is subsequently recognized over the estimated life of the agreement, product, patent or technology. Similarly, upfront payments we receive under agreements where we are obligated to maintain a product or technology sold to a third party and/or transfer know-how or technology to a third party are initially deferred and revenue is subsequently recognized over the estimated life of the agreement. Milestone payments related to an improvement in a product in which we retain an interest in the product are initially deferred and recognized over the estimated life of the agreement or product. We received upfront and milestone payments totaling $3.0 million in 2014 . We did not receive any such payments in 2016 or 2015 . Revenue from royalties is recognized once we are informed of sales on which we are entitled to royalties. Stock-Based Compensation Accounting for stock-based compensation requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. We estimate the fair value of all stock options and awards on the date of grant using the Black-Scholes pricing model, which is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the estimated term of the awards, the estimated term of the awards, which is dependent in part on employee option exercise behaviors, risk free interest rates and expected dividends. Our expected volatility assumption is based on the historical closing prices of our stock over a period equivalent to the expected life of the options. Advertising Costs Advertising costs are expensed as incurred and are included in sales and marketing expenses. Advertising expenses were $0.2 million for the year ended December 31, 2016 and $ 0.1 million for each of the years ended December 31, 2015 and 2014 . Income Taxes The Company records a current provision for income taxes based on estimated amounts payable or refundable on tax returns filed or to be filed each year. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates, in each tax jurisdiction, expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The overall change in deferred tax assets and liabilities for the period measures the deferred tax expense or benefit for the period. Deferred tax assets are reduced by a valuation allowance based on a judgmental assessment of available evidence if the Company is unable to conclude that it is more likely than not that some or all of the deferred tax assets will be realized. Foreign Currency Translation The functional currency of our Swiss subsidiary is the Swiss Franc. Assets and liabilities of our Swiss subsidiary are translated using the exchange rate in effect at the balance sheet date. Revenue and expense accounts and cash flows are translated using an average of exchange rates in effect during the period. Cumulative translation gains and losses are shown in the consolidated balance sheets as a separate component of stockholders' equity. Exchange gains and losses arising from transactions denominated in foreign currencies (i.e., transaction gains and losses) are recognized as a component of other income (expense) in current operations, as are exchange gains and losses on intercompany transactions expected to be settled in the near term. Taxes Collected from Customers In the course of doing business we collect various taxes from customers including, but not limited to, sales taxes. It is our policy to record revenue net of taxes collected from customers in our consolidated statements of income. Shipping and Handling Costs Amounts billed to customers for shipping and handling are recorded in sales. Shipping and handling costs incurred by us for the delivery of products to customers are included in cost of sales. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued guidance codified in Accounting Standards ASU, ("ASU") Topic 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting". The update 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 update is effective for annual and interim 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 $0.8 million ( $0.11 per diluted share) in the twelve months ended December 31, 2016 .The update 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 (Topic 842)", 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 early adoption 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 July 2015, the FASB issued ASU 2015-11 "Inventory - Simplifying the Measurement of Inventory (Topic 330)". This update required an entity to measure inventory within the scope of the update at the lower of cost and net realizable value, and defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted, and is to be applied on a prospective basis. We early adopted this standard with no impact to 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 U.S. GAAP. 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 and interim reporting periods beginning after December 15, 2017. The new standard permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). We currently anticipate adopting the standard using the modified retrospective method. We are still in the process of completing our analysis on the impact this guidance will have on our consolidated financial statements and related disclosures. |
ACQUISITION AND RELATED PARTY I
ACQUISITION AND RELATED PARTY ITEMS | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations and Related Party Disclosures [Abstract] | |
ACQUISITION AND RELATED PARTY ITEMS | ACQUISITION 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, $0.01 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 restricted 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 (the "Acquisition"), which was subsequently renamed Heska Imaging US, LLC ("US Imaging). The remaining minority position (45.4)% in US Imaging is subject to purchase by Heska under performance-based puts and calls following the audit of either our 2016 and 2017 financial statements. Required performance criteria have been met in 2016 and we have been given notice that the put option is being exercised. We have 90 days from the receipt of notice to deliver payment (any applicable payment in aggregate to be defined as the "Put Payment") for the Imaging Minority’s position, and we consider notice to have been received immediately prior to the filing of this Form 10-K with the SEC. We plan to deliver the Put Payment and obtain the Imaging Minority’s position in US Imaging on May 31, 2017. Based on US Imaging’s 2016 financial performance, the Put Payment is to be for a value of $13.8 million if we deliver all cash or up to $14.6 million if we deliver a combination of cash and the maximum contractually allowable value of stock. While we have the right to deliver up to 55% of the consideration in our Public Common Stock under certain circumstances, such stock is to be valued based on 90% of market value (the "Delivery Stock Value") and is limited to approximately 650 thousand shares in any case. If the Delivery Stock Value per share is less than the market value per share of our Public Common Stock at the time of the Acquisition, we do not have the right to deliver any Public Common Stock as consideration. While we have reported the Put Payment at $14.6 million for financial reporting purposes, which contemplates our delivery of 55% of the Put Payment consideration in Public Common Stock, no final decision by our Board of Directors as to the relative use of cash and stock has been made and we may not be able to deliver any stock based on the Delivery Stock Value at the time of closing, as discussed above. The estimated Put Payment value of $14.6 million , which had been listed as "Non-controlling interest" on our consolidated balance sheets and accreted to its estimated redemption value in accordance with US Imaging's Operating Agreement, is now listed as "Obligation to purchase minority interest" on the Company's consolidated balance sheets as of December 31, 2016. The following is a reconciliation of the non-controlling interest balance (in thousands): Balance December 31, 2015 $ 15,747 Accretion of Put Value (1,145 ) Balance reclassification to current liabilities $ (14,602 ) Balance December 31, 2016 $ — 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 charged US Imaging $3.6 million from January 1, 2016 to May 31, 2016 and has charged Global Imaging $10.9 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 charged US Imaging $5.3 million in 2016 , primarily related to sales expenses; Heska Corporation has charged Cuattro, LLC $0.2 million , primarily related to facility usage and other services. At December 31, 2016 , US Imaging had a $1.6 million note receivable, including accrued interest, from International Imaging, which is due on June 15, 2019 and which eliminates 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, was assumed as part of the Company's acquisition of International Imaging. At December 31, 2016 , Heska Corporation had accounts receivable from US Imaging of $5.6 million , including accrued interest, which eliminates in consolidation of the Company's financial statements; US Imaging had a net receivable due from Cuattro, LLC of $0.1 million , which is included in "Due from – related parties" on the Company's consolidated balance sheets; Global Imaging had net prepaid receivables from US Imaging of $1.2 million which eliminates 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 once past due with the exception of the note receivable, which accrues at this rate to its maturity date. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES As of December 31, 2016 , the Company had a domestic federal net operating loss carryforward ("NOL"), of approximately $96.0 million , a domestic alternative minimum tax credit of approximately $0.5 million and a domestic research and development tax credit carryforward of approximately $0.4 million for federal tax purposes. The Company's NOL is expected to expire as follows if unused: $90.0 million in 2018 through 2022 , $5.5 million in 2024 and 2025 and $0.5 million in 2027 and later. The NOL and tax credit carryforwards are subject to alternative minimum tax limitations and to examination by the tax authorities. In addition, the Company had a "change of ownership" as defined under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended (an "Ownership Change"). The Company does not believe this Ownership Change will place a significant restriction on its ability to utilize its NOL in the future. The Company has established a valuation allowance against those NOL's and credits for which it is estimated to be more likely than not that they will expire unutilized. 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 rate in the year ended December 31, 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 ASU 2016-09. We early adopted the ASU 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 as an increase to earnings of $0.8 million in the year ended December 31, 2016 . Cash paid for income taxes for the twelve months ended December 31, 2016 , 2015 , and 2014 was $357 thousand , $55 thousand and $272 thousand , respectively. The components of income before income taxes were as follows (in thousands): Year Ended December 31, 2016 2015 2014 Domestic $ 16,375 $ 8,325 $ 2,837 Foreign 129 102 113 $ 16,504 $ 8,427 $ 2,950 Temporary differences that give rise to the components of net deferred tax assets are as follows (in thousands): December 31, 2016 2015 Inventory $ 1,172 $ 954 Accrued compensation 114 267 Stock Options 811 344 Research and development 438 440 Alternative minimum tax credit 543 367 Deferred revenue 2,934 3,638 Property and equipment 2,750 1,967 Net operating loss carryforwards – domestic 34,706 37,845 Capital Lease (2,833 ) (384 ) Other 34 (8 ) 40,669 45,430 Valuation allowance (19,547 ) (19,547 ) Total net deferred tax assets $ 21,122 $ 25,883 The components of the income tax expense are as follows (in thousands): Year Ended December 31, 2016 2015 2014 Current income tax expense: Federal $ 197 $ 1,492 $ 11 State 179 65 7 Foreign 31 24 29 Total current expense $ 407 $ 1,581 $ 47 Deferred income tax expense: Federal $ 3,545 $ 1,043 $ 1,181 State 387 284 123 Foreign — — — Total deferred expense 3,932 1,327 1,304 Total income tax expense $ 4,339 $ 2,908 $ 1,351 The Company's income tax expense (benefit) relating to income (loss) for the periods presented differs from the amounts that would result from applying the federal statutory rate to that income (loss) as follows: Year Ended December 31, 2016 2015 2014 Statutory federal tax rate 34 % 34 % 34 % State income taxes, net of federal benefit 2 % 3 % 5 % Non-controlling interest in Heska Imaging US, LLC (3 )% (1 )% 12 % Other permanent differences (7 )% (1 )% (3 )% Change in tax rate — % (1 )% 2 % Change in valuation allowance — % (14 )% 78 % Other — % 15 % (82 )% Effective income tax rate 26 % 35 % 46 % ASC 740 provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a "more-likely-than-not" recognition threshold before a benefit is recognized in the financial statements. As of December 31, 2016 , the Company has not recorded a liability for uncertain tax positions. The Company would recognize interest and penalties related to uncertain tax positions in income tax expense. No interest and penalties related to uncertain tax positions were accrued at December 31, 2016 . |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 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 years ended December 31, 2016 , 2015 , and 2014 (in thousands, except per share data): Years ended December 31, 2016 2015 2014 Net income attributable to Heska Corporation $ 10,508 $ 5,239 $ 2,603 Basic weighted-average common shares outstanding 6,783 6,509 5,951 Assumed exercise of dilutive stock options and restricted stock units 578 565 458 Diluted weighted-average common shares outstanding 7,361 7,074 6,409 Basic earnings per share $ 1.55 $ 0.80 $ 0.44 Diluted earnings per share $ 1.43 $ 0.74 $ 0.41 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): Years ended December 31, 2016 2015 2014 Stock options 234 144 367 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOOWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES The following summarizes the changes in goodwill during the years ended December 31, 2016 and 2015 (in thousands): Year Ended December 31, 2016 2015 Carrying amount, December 31, 2015 $ 20,910 $ 20,903 Additions and adjustments 5,737 7 Carrying amount, December 31, 2016 $ 26,647 $ 20,910 Other intangibles assets, net consisted of the following as of December 31, 2016 and 2015 (in thousands): Year Ended December 31, 2016 2015 Gross carrying amount $ 2,622 $ 788 Accumulated amortization (276 ) (732 ) Net carrying amount $ 2,346 $ 56 Amortization expense relating to other intangibles is as follows (in thousands): Years Ended December 31, 2016 2015 2014 Amortization expense $ 230 $ 246 $ 260 Estimated amortization expense related to intangibles for each of the five years from 2017 through 2021 and thereafter is as follows (in thousands): Year Ending December 31, 2017 $ 388 2018 388 2019 388 2020 388 2021 384 Thereafter 410 $ 2,346 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Detail of property and equipment is as follows (in thousands): December 31, 2016 2015 Land $ 377 $ 377 Building 2,868 2,868 Machinery and equipment 36,588 35,284 Leasehold and building improvements 7,662 6,673 Construction in progress 1,655 1,496 49,150 46,698 Less accumulated depreciation (32,569 ) (29,678 ) Total property and equipment, net $ 16,581 $ 17,020 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, 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 $1.8 million , $4.1 million and $4.6 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. The Company has sold certain customer rental contracts and underlying assets to third parties under agreements 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. Since the Company anticipates it will regain ownership of the assets underlying these sales, the Company reports these assets as part of property and equipment and depreciates these assets in accordance with its depreciation policies. The Company had $0.3 million and $2.2 million of net property and equipment related to these transactions as of December 31, 2016 and December 31, 2015 , respectively, all related to the Company's 54.6% -owned subsidiary, US Imaging. Depreciation expense for property and equipment was $4.4 million , $4.0 million and $3.4 million for the years ended December 31, 2016 , 2015 and 2014 , 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 of such capitalized costs, net of accumulated amortization, on the "property and equipment, net" line of each of our consolidated balance sheets as of December 31, 2016 and 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. We had $251 thousand , $51 thousand and $31 thousand of capitalized software costs reported on the "purchases of property and equipment" line item of our consolidated statements of cash flows for the years ended December 31, 2016 , 2015 and 2014 , respectively. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
ACCRUED LIABILITIES | ACCRUED LIABILITIES Accrued liabilities consisted of the following as of December 31, 2016 and 2015 (in thousands): 2016 2015 Accrued payroll and employee benefits $ 2,166 $ 1,626 Accrued property taxes 748 594 Other 3,555 3,196 Total accrued liabilities $ 6,469 $ 5,416 Other accrued liabilities consists of items that are individually less than 5% of total current liabilities. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | CAPITAL STOCK Stock Option Plans We have two stock option plans which authorize granting of stock options and stock purchase rights to our employees, officers, directors and consultants to purchase shares of common stock. In 1997, the board of directors adopted the 1997 Stock Incentive Plan (the "1997 Plan") and terminated two prior option plans. All shares that remained available for grant under the terminated plans were incorporated into the 1997 Plan, including shares subsequently canceled under prior plans. In May 2012 , the stockholders approved an amendment to the 1997 Plan allowing for an increase of 250,000 shares and an annual increase through 2016 based on the number of non-employee directors serving as of our Annual Meeting of Stockholders, subject to a maximum of 45,000 shares per year. In May 2016, the stockholders approved a further amendment to the 1997 Plan to authorize additional 500,000 shares to be available for issuance thereunder. In May 2003 , the stockholders approved a new plan, the 2003 Equity Incentive Plan, which allows for the granting of options for up to 239,050 shares of the Company's common stock. The number of shares reserved for issuance under both plans as of December 31, 2016 was 407,339 . The stock options granted by the board of directors may be either incentive stock options ("ISOs") or non-qualified stock options ("NQs"). The exercise price for options under all of the plans may be no less than 100% of the fair value of the underlying common stock for ISOs or 85% of fair value for NQs. Options granted will expire no later than the tenth anniversary subsequent to the date of grant or three months following termination of employment, except in cases of death or disability, in which case the options will remain exercisable for up to twelve months. Under the terms of the 1997 Plan, in the event we are sold or merged, outstanding options will either be assumed by the surviving corporation or vest immediately. There are four key inputs to the Black-Scholes model which we use to estimate the fair value for options which it issues: expected term, expected volatility, risk-free interest rate and expected dividends, all of which require us to make estimates. Our estimates for these inputs may not be indicative of actual future performance and changes to any of these inputs can have a material impact on the resulting estimated fair value calculated for the option. Our expected term input was estimated based on our historical experience for time from option grant to option exercise for all employees in 2016 , 2015 and 2014 . We treated all employees in one grouping in all three years. Our expected volatility input was estimated based on our historical stock price volatility in 2016 , 2015 and 2014 . Our risk-free interest rate input was determined based on the U.S. Treasury yield curve at the time of option issuance in 2016 , 2015 and 2014 . Our expected dividends inputs were zero in all periods as we did not anticipate paying dividends in the foreseeable future. Weighted average assumptions used in 2016 , 2015 and 2014 for each of these four key inputs are listed in the following table: 2016 2015 2014 Risk-free interest rate 1.76% 1.41% 1.21% Expected lives 4.5 years 3.4 years 3.4 years Expected volatility 41% 41% 43% Expected dividend yield 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, 2016 2015 2014 Weighted Average Exercise Price Weighted Average Exercise Price Weighted Average Exercise Price Outstanding at beginning of period 940,610 $ 14.163 1,074,251 $ 10.110 1,321,232 $ 10.386 Granted at Market 129,855 $ 67.706 146,446 $ 36.904 134,800 $ 16.398 Canceled (463 ) $ 14.881 (28,440 ) $ 10.080 (218,926 ) $ 17.786 Exercised (240,385 ) $ 11.886 (251,647 ) $ 10.559 (162,855 ) $ 7.234 Outstanding at end of period 829,617 $ 23.203 940,610 $ 14.163 1,074,251 $ 10.110 Exercisable at end of period 532,703 $ 12.140 621,559 $ 10.269 729,175 $ 9.800 The total estimated fair value of stock options granted were computed to be approximately $3.2 million , $1.6 million and $0.7 million during the years ended December 31, 2016 , 2015 and 2014 , respectively. The amounts are amortized ratably over the vesting periods of the options. The weighted average estimated fair value of options granted was computed to be approximately $24.59 , $11.35 and $5.28 during the years ended December 31, 2016 , 2015 and 2014 , respectively. The total intrinsic value of options exercised was $9.9 million , $4.7 million and $0.7 million during the years ended December 31, 2016 , 2015 and 2014 , respectively. The cash proceeds from options exercised was $1.9 million , $1.8 million and $1.2 million during the years ended December 31, 2016 , 2015 and 2014 , respectively. The following table summarizes information about stock options outstanding and exercisable at December 31, 2016 , excluding outstanding options to purchase an aggregate of 0.5 fractional shares resulting from our December 2010 1-for- 10 reverse stock split with a weighted average remaining contractual life of 0.34 years at an exercise price of $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 - $ 6.90 164,794 3.94 $ 5.679 163,663 $ 5.676 $ 6.91 - $ 7.36 157,323 6.89 $ 7.360 114,670 $ 7.360 $ 7.37 - $18.13 214,697 6.68 $ 12.800 162,451 $ 11.317 $18.14 - $39.76 182,303 7.93 $ 34.954 91,878 $ 31.057 $39.77 - $72.85 110,500 9.99 $ 72.721 41 $ 56.587 $ 4.40 - $72.85 829,617 6.89 $ 23.203 532,703 $ 12.140 As of December 31, 2016 , there was approximately $4.5 million of total unrecognized compensation cost related to outstanding stock options. That cost is expected to be recognized over a weighted-average period of 1.9 years with all cost to be recognized by the end of December 2018, assuming all options vest according to the vesting schedules in place at December 31, 2016 . As of December 31, 2016 , the aggregate intrinsic value of outstanding options was approximately $40.3 million and the aggregate intrinsic value of exercisable options was approximately $31.7 million . Employee Stock Purchase Plan (the "ESPP") Under the 1997 Employee Stock Purchase Plan, we are authorized to issue up to 450,000 shares of common stock to our employees, of which 408,668 had been issued as of December 31, 2016 . On May 5, 2015, our 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 changes discussed below as compared to the ESPP prior to the amendment and restatement. Employees who are expected to work at least 20 hours per week and 5 months per year are eligible to participate and can choose to have up to 10% of their compensation withheld to purchase our stock under the ESPP when they choose to withhold a whole percentage of their compensation. Beginning on July 1, 2013, our ESPP had a 27 -month offering period and three -month accumulation periods ending on each March 31, June 30, September 30 and December 31. The purchase price of stock on March 31, June 30, September 30 and December 31 was the lesser of (1) 85% of the fair market value at the time of purchase and (2) the greater of (i) 95% of the fair market value at the beginning of the applicable offering period or (ii) 65% of the fair market value at the time of purchase. In addition, participating employees may purchase shares under the ESPP at the beginning of an applicable offering period for a purchase price of stock equal to 95% of the fair market value at such time 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 95% of the fair market value at purchase. 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. We issued 17,057 , 16,673 and 29,847 shares under the ESPP for the years ended December 31, 2016 , 2015 and 2014 , respectively. For the years ended December 31, 2016 , 2015 and 2014 , we estimated the fair values of stock purchase rights granted under the ESPP using the Black-Scholes pricing model and the following weighted average assumptions: 2016 2015 2014 Risk-free interest rate 0.54% 0.27% 0.23% Expected lives 1.2 years 1.2 years 1.3 years Expected volatility 42% 36% 34% Expected dividend yield 0% 0% 0% The weighted-average fair value of the purchase rights granted was $8.23 , $6.25 and $2.61 per share for the years ended December 31, 2016 , 2015 and 2014 , respectively. Restricted Stock Issuance On March 26, 2014, we issued 63,572 shares to Robert B. Grieve, Ph.D., who was our Executive Chair, pursuant to an employment agreement between Dr. Grieve and the Company effective as of March 26, 2014 (the "Grieve Employment Agreement"). The shares were issued in five tranches and are subject to time-based vesting and other provisions outlined in the Grieve Employment Agreement. All shares were to vest in full as of April 30, 2017. Effective on October 1, 2015, the Grieve Employment Agreement was terminated and, in connection therewith, the Company entered into a Separation and Release Agreement dated as of October 1, 2015 (the "Release Agreement") with Dr. Grieve. Pursuant to the Release Agreement, the Company agreed to treat the termination of the Grieve Employment Agreement as a termination without cause, entitling Dr. Grieve to the immediate vesting of 55,715 shares, 14,373 of which were withheld for tax purposes. As a result of the termination of the Grieve Employment Agreement, and as acknowledged in the Release Agreement, effective October 1, 2015, Dr. Grieve began serving as a consultant to the Company pursuant to the Consulting Agreement (Founder Emeritus) dated as of March 26, 2014 (the "Consulting Agreement"). The remaining 7,857 shares issued to Dr. Grieve on March 26, 2014 vested on April 30, 2016, of which 2,525 shares were withheld for tax purposes. On March 26, 2014, we issued 110,000 shares to Mr. Wilson pursuant to an employment agreement between Mr. Wilson and the Company effective as of March 26, 2014 (the "Wilson Employment Agreement"). The shares were issued in four equal tranches and are subject to time-based vesting and other provisions outlined in the Wilson Employment Agreement. The first tranche vested on September 26, 2014, and each of the three remaining tranches is to vest on the succeeding March 26 until all shares are vested in full as of March 26, 2017. On May 6, 2014, we issued an additional 130,000 shares to Mr. Wilson following a vote of approval on the issuance by our stockholders. The shares were issued in ten equal tranches, five of which were subject to vesting based on the achievement of certain stock price targets as defined and further described in the Wilson Employment Agreement and five of which were subject to vesting based on certain "Adjusted EBITDA" targets as defined and further described in the Wilson Employment Agreement. All shares subject to vesting based on "Adjusted EBITDA" vested based on our 2014 performance. Of the five tranches based on the achievement of certain stock price targets, one vested in 2014 and the remaining four vested in 2015. 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 Grants 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 scheduled 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. 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 | 12 Months Ended |
Dec. 31, 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) 75 (75 ) (90 ) (90 ) Balances at December 31, 2016 $ (501 ) $ 598 $ — $ 97 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 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. Royalties of $0.4 million became payable under these agreements in each of the years ended December 31, 2016 , 2015 and 2014 . 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 $0.6 million in 2017 and $0.3 million in 2018. The Company has entered into operating leases for its office and research facilities and certain equipment with future minimum payments as of December 31, 2016 as follows (in thousands): Year Ending December 31, 2017 $ 2,090 2018 1,970 2019 1,810 2020 1,696 2021 1,677 Thereafter 3,202 $ 12,445 The Company had rent expense of $2.0 million in each of the years ended December 31, 2016 and 2015 and $1.9 million in the year ended December 31, 2014 . 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. At December 31, 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 was $0.4 million as of December 31, 2016 and 2015. |
INTEREST AND OTHER EXPENSE (INC
INTEREST AND OTHER EXPENSE (INCOME) | 12 Months Ended |
Dec. 31, 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): Year Ended December 31, 2016 2015 2014 Interest income $ (124 ) $ (172 ) $ (190 ) Interest expense 160 200 206 Other expense (income), net (7 ) 102 (55 ) $ 29 $ 130 $ (39 ) Cash paid for interest was $78 thousand , $90 thousand and $92 thousand for the years ended December 31, 2016 , 2015 and 2014 , respectively. |
CREDIT FACILITY AND LONG-TERM D
CREDIT FACILITY AND LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITY AND LONG-TERM DEBT | CREDIT FACILITY AND LONG-TERM DEBT At December 31, 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 December 31, 2016 , we had $0.7 million of 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 December 31, 2016 and our available borrowing capacity based upon eligible accounts receivable and eligible inventory under our revolving line of credit was approximately $12.9 million . Long-term debt consists of the following (in thousands): December 31, 2016 2015 Term loan with a financial entity due in monthly installments beginning July 2012 with the balance to be paid in full in June 2017 and a stated interest rate of 6.0%. $ 78 $ 228 Less current maturities 78 159 Long-term debt, net of current portion $ — $ 69 |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING The Company is comprised of two reportable segments, Core Companion Animal Health ("CCA") and Other Vaccines, Pharmaceuticals and Products ("OVP"). The CCA 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 OVP segment includes private label vaccine and pharmaceutical production, primarily for cattle, but also for other species including equine, porcine, avian, feline and canine. 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): Year Ended December 31, 2016 Core Other Vaccines, Total Total revenue $ 107,398 $ 22,685 $ 130,083 Operating Income 13,015 3,518 16,533 Income before income taxes 12,938 3,566 16,504 Total assets 110,995 19,849 130,844 Net assets 68,072 18,903 86,975 Capital expenditures 1,135 2,282 3,417 Depreciation and amortization 3,800 845 4,645 Year Ended December 31, 2015 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 84,249 $ 20,348 $ 104,597 Operating Income 4,911 3,646 8,557 Income before income taxes 4,836 3,591 8,427 Total assets 92,567 17,152 109,719 Net assets 48,175 15,353 63,528 Capital expenditures 1,177 2,596 3,773 Depreciation and amortization 3,478 709 4,187 Year Ended December 31, 2014 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 72,354 $ 17,483 $ 89,837 Operating Income 1,198 1,713 2,911 Income before income taxes 1,290 1,660 2,950 Total assets 85,361 11,483 96,844 Net assets 41,286 11,846 53,132 Capital expenditures 1,864 473 2,337 Depreciation and amortization 2,954 758 3,712 Revenue is attributed to individual countries based on customer location. Total revenue by principal geographic area was as follows (in thousands): For the Years Ended December 31, 2016 2015 2014 United States $ 120,082 $ 97,164 $ 83,584 Canada 2,378 1,833 1,123 Europe 4,781 2,086 2,264 Other International 2,842 3,514 2,866 Total $ 130,083 $ 104,597 $ 89,837 Total assets by principal geographic areas were as follows (in thousands): For the Years Ended December 31, 2016 2015 2014 United States $ 127,827 $ 106,780 $ 93,977 Europe 3,017 2,939 2,867 Total $ 130,844 $ 109,719 $ 96,844 |
SUPPLEMENTAL QUARTERLY FINANCIA
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (unaudited) | SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Unaudited) The following tables present quarterly unaudited results for each of the two years in the periods ended December 31, 2016 and 2015 (amounts in thousands, except per share data). Q1 Q2 Q3 Q4 Total 2016 Total revenue $ 27,146 $ 29,965 $ 33,430 $ 39,542 $ 130,083 Gross profit 11,442 12,682 13,718 16,050 53,892 Operating income 1,970 3,556 4,492 6,515 16,533 Net income 1,447 2,742 3,343 4,633 12,165 Net income attributable to Heska Corporation 1,186 2,522 3,347 3,453 10,508 Basic earnings per share attributable to Heska Corporation 0.18 0.38 0.49 0.50 1.55 Diluted earnings per share attributable to Heska Corporation 0.17 0.35 0.45 0.46 1.43 2015 Total revenue $ 22,894 $ 23,910 $ 28,034 $ 29,759 $ 104,597 Gross profit 10,084 10,297 11,597 12,235 44,213 Operating income 1,021 1,829 2,142 3,565 8,557 Net income 583 1,178 1,383 2,375 5,519 Net income attributable to Heska Corporation 598 1,197 1,415 2,029 5,239 Basic earnings per share attributable to Heska Corporation 0.10 0.19 0.22 0.29 0.80 Diluted earnings per share attributable to Heska Corporation 0.09 0.17 0.20 0.28 0.74 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS As discussed in more detail above in Item 1A., Risk Factors, under the caption “ We have significant related party transactions, including the planned purchase of the minority interest in Heska Imaging US, LLC via a put option which has been exercised ”, the Imaging Minority has given us notice of exercise of the put option to sell to us all of the Imaging Minority's position in US Imaging granted to them under the Operating Agreement that was executed in connection with the Acquisition because the targeted US Imaging performance criteria has been met within the requisite period of time. Based on US Imaging’s 2016 financial performance, the Put Payment is to be for a value of $13.8 million if we deliver all cash or up to $14.6 million if we deliver a combination of cash and stock. We plan to deliver the Put Payment and obtain the Imaging Minority’s position in US Imaging on or about May 31, 2017. The additional information concerning the Put Payment and put option exercise discussed under the foregoing Risk Factors caption and elsewhere in this annual report on Form 10-K is incorporated herein by reference thereto. |
OPERATIONS AND SUMMARY OF SIG23
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Our consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries and majority-owned subsidiaries since their respective dates of acquisitions. All intercompany accounts and transactions have been eliminated in consolidation. Where our ownership of a subsidiary is less than 100%, the non-controlling interest is reported on our consolidated balance sheets. The non-controlling interest in our consolidated net income is reported as "Net income (loss) attributable to non-controlling interest" on our consolidated statements of income. Our consolidated financial statements are stated in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). |
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. |
Concentration of Credit Risk | Financial instruments that potentially subject us to a concentration of credit risk consist of cash and cash equivalents and accounts receivable. We maintain the majority of our cash and cash equivalents with financial institutions that management believes are creditworthy in the form of demand deposits. We have no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign currency hedging arrangements. Our accounts receivable balances are due largely from distribution partners, domestic veterinary clinics and individual veterinarians and other animal health companies. Henry Schein represented 16% of our consolidated accounts receivable at December 31, 2016. Merck entities represented approximately 11% and 13% of our consolidated accounts receivable at December 31, 2016 and 2015, respectively. Eli Lilly entities, including Elanco, represented approximately 15% and 20% of our consolidated accounts receivable at December 31, 2016 and 2015, respectively. No other customer accounted for more than 10% of our consolidated accounts receivable at December 31, 2016 or 2015. We have established an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivable are recorded at net realizable value. From time to time, our customers are unable to meet their payment obligations. We continuously monitor our customers' credit worthiness and use our judgment in establishing a provision for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. While such credit losses have historically been within our expectations and the provisions established, there is no assurance that we will continue to experience the same credit loss rates that we have in the past. A significant change in the liquidity or financial position of our customers could have a material adverse impact on the collectability of accounts receivable and our future operating results. |
Cash and Cash Equivalents | Cash and cash equivalents are stated at cost, which approximates market value, and include short-term, highly liquid investments with original maturities of less than three months. |
Fair Value of Financial Instruments | Our financial instruments consist of cash and cash equivalents, short-term trade receivables and payables and the Company's revolving line of credit. The carrying values of cash and cash equivalents and short-term trade receivables and payables approximate fair value because of the short-term nature of the instruments. The fair value of our line of credit balance is estimated based on current rates available for similar debt with similar maturities and collateral, and at December 31, 2016 and 2015 , approximates the carrying value due primarily to the floating rate of interest on such debt instruments. |
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. |
Property and Equipment | We capitalize certain costs incurred in connection with developing or obtaining software designated for internal use based on three distinct stages of development. Qualifying costs incurred during the application development stage, which consist primarily of internal payroll and direct fringe benefits and external direct project costs, including labor and travel, are capitalized and amortized on a straight-line basis over the estimated useful life of the asset. Costs incurred during the preliminary project and post and post-implementation and operation phases are expensed as incurred. These costs are general and administrative in nature and related primarily to the determination of performance requirements, data conversion and training. Property and equipment is stated at cost, net of accumulated depreciation. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. When an item is sold or retired, the cost and related accumulated depreciation is relieved, and the resulting gain or loss, if any, is recognized in the consolidated statements of income. |
Goodwill, Intangible and Other Long-Lived Assets | We assess goodwill for impairment annually, at the reporting unit level, in the fourth quarter and whenever events or circumstances indicate impairment may exist. In evaluating goodwill for impairment, we have the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, we determine that is more likely than not that the fair value of a reporting is less than its carrying amount, we would then perform step one of the two-step impairment test; otherwise, no further impairment test would be required. In contrast, we can opt to bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the two-step impairment test. Doing so does not preclude us from performing the qualitative assessment in any subsequent period. In the fourth quarter of 2016 , we performed a qualitative assessment of the goodwill residing within the assets of our CCA segment and determined that no indications of impairment existed. Intangible assets are valued based on estimates of future cash flows and amortized over their estimated useful lives. We continually evaluate whether events and circumstances have occurred that indicate the remaining estimated useful life of intangible assets as well as other long-lived assets may warrant revision, or that the remaining balance of these assets may not be recoverable. When deemed necessary, we complete this evaluation by comparing the carrying amount of the assets with the estimated undiscounted future cash flows associated with them. If such evaluations indicate that the future undiscounted cash flows of amortizable long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their estimated fair values. The estimation of useful lives and expected cash flows requires us to make significant judgments regarding future periods that are subject to some factors outside of our control. Changes in these estimates can result in significant revisions to our carrying value of these assets and may result in material charges to our results of operations. |
Revenue Recognition | We generate our revenue through the sale of products, as well as through licensing of technology product rights, royalties and sponsored research and development. Our policy is to recognize revenue when the applicable revenue recognition criteria have been met, which generally include the following: • Persuasive evidence of an arrangement exists; • Delivery has occurred or services rendered; • Price is fixed or determinable; and • Collectability is reasonably assured. Revenue from the sale of products is recognized after both the goods are shipped to the customer and acceptance has been received, if required, with an appropriate provision for estimated returns and allowances. We do not permit general returns of products sold. Certain of our products have expiration dates. Our policy is to exchange certain outdated, expired product with the same product. We record an accrual for the estimated cost of replacing the expired product expected to be returned in the future, based on our historical experience, adjusted for any known factors that reasonably could be expected to change historical patterns, such as regulatory actions which allow us to extend the shelf lives of our products. Revenue from both direct sales to veterinarians and sales to independent third-party distributors are generally recognized when goods are shipped. Our products are shipped complete and ready to use by the customer. The terms of the customer arrangements generally pass title and risk of ownership to the customer at the time of shipment. Certain customer arrangements provide for acceptance provisions. Revenue for these arrangements is not recognized until the acceptance has been received or the acceptance period has lapsed. We reduce our revenue by the estimated cost of any rebates, allowances or similar programs, which are used as promotional programs. Recording revenue from the sale of products involves the use of estimates and management judgment. We must make a determination at the time of sale whether the customer has the ability to make payments in accordance with arrangements. While we do utilize past payment history, and, to the extent available for new customers, public credit information in making our assessment, the determination of whether collectability is reasonably assured is ultimately a judgment decision that must be made by management. We must also make estimates regarding our future obligation relating to returns, rebates, allowances and similar other programs. License revenue under arrangements to sell or license product rights or technology rights is recognized as obligations under the agreement are satisfied, which generally occurs over a period of time. Generally, licensing revenue is deferred and recognized over the estimated life of the related agreements, products, patents or technology. Nonrefundable licensing fees, marketing rights and milestone payments received under contractual arrangements are deferred and recognized over the remaining contractual term using the straight-line method. Recording revenue from license arrangements involves the use of estimates. The primary estimate made by management is determining the useful life of the related agreement, product, patent or technology. We evaluate all of our licensing arrangements by estimating the useful life of either the product or the technology, the length of the agreement or the legal patent life and defer the revenue for recognition over the appropriate period. We may enter into arrangements that include multiple elements. Such arrangements may include agreements allowing for the usage of an instrument and a given level of consumables for one monthly payment. In these situations, we must determine whether the various elements meet the criteria to be accounted for as separate elements. If the elements cannot be separated, revenue is recognized once revenue recognition criteria for the entire arrangement have been met or over the period that the Company's obligations to the customer are fulfilled, as appropriate. If the elements are determined to be separable, the revenue is allocated to the separate elements based on relative fair value and recognized separately for each element when the applicable revenue recognition criteria have been met. In accounting for these multiple element arrangements, we must make determinations about whether elements can be accounted for separately and make estimates regarding their relative fair values. In addition to our direct sales force, we utilize distributors to sell our products. Distributors purchase goods from us, take title to those goods and resell them to their customers in the distributors' territory. Upfront payments we receive under arrangements for product, patent or technology rights in which we retain an interest in the underlying product, patent or technology are initially deferred, and revenue is subsequently recognized over the estimated life of the agreement, product, patent or technology. Similarly, upfront payments we receive under agreements where we are obligated to maintain a product or technology sold to a third party and/or transfer know-how or technology to a third party are initially deferred and revenue is subsequently recognized over the estimated life of the agreement. Milestone payments related to an improvement in a product in which we retain an interest in the product are initially deferred and recognized over the estimated life of the agreement or product. We received upfront and milestone payments totaling $3.0 million in 2014 . We did not receive any such payments in 2016 or 2015 . Revenue from royalties is recognized once we are informed of sales on which we are entitled to royalties. |
Stock-Based Compensation | Accounting for stock-based compensation requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. We estimate the fair value of all stock options and awards on the date of grant using the Black-Scholes pricing model, which is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the estimated term of the awards, the estimated term of the awards, which is dependent in part on employee option exercise behaviors, risk free interest rates and expected dividends. Our expected volatility assumption is based on the historical closing prices of our stock over a period equivalent to the expected life of the options. |
Advertising Costs | Advertising costs are expensed as incurred and are included in sales and marketing expenses. |
Income Taxes | The Company records a current provision for income taxes based on estimated amounts payable or refundable on tax returns filed or to be filed each year. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates, in each tax jurisdiction, expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The overall change in deferred tax assets and liabilities for the period measures the deferred tax expense or benefit for the period. Deferred tax assets are reduced by a valuation allowance based on a judgmental assessment of available evidence if the Company is unable to conclude that it is more likely than not that some or all of the deferred tax assets will be realized. In the course of doing business we collect various taxes from customers including, but not limited to, sales taxes. It is our policy to record revenue net of taxes collected from customers in our consolidated statements of income. |
Foreign Currency Translation | The functional currency of our Swiss subsidiary is the Swiss Franc. Assets and liabilities of our Swiss subsidiary are translated using the exchange rate in effect at the balance sheet date. Revenue and expense accounts and cash flows are translated using an average of exchange rates in effect during the period. Cumulative translation gains and losses are shown in the consolidated balance sheets as a separate component of stockholders' equity. Exchange gains and losses arising from transactions denominated in foreign currencies (i.e., transaction gains and losses) are recognized as a component of other income (expense) in current operations, as are exchange gains and losses on intercompany transactions expected to be settled in the near term. |
Shipping and Handling Costs | Amounts billed to customers for shipping and handling are recorded in sales. Shipping and handling costs incurred by us for the delivery of products to customers are included in cost of sales. |
Recent Accounting Pronouncements | In March 2016, the Financial Accounting Standards Board ("FASB") issued guidance codified in Accounting Standards ASU, ("ASU") Topic 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting". The update 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 update is effective for annual and interim 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 $0.8 million ( $0.11 per diluted share) in the twelve months ended December 31, 2016 .The update 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 (Topic 842)", 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 early adoption 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 July 2015, the FASB issued ASU 2015-11 "Inventory - Simplifying the Measurement of Inventory (Topic 330)". This update required an entity to measure inventory within the scope of the update at the lower of cost and net realizable value, and defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted, and is to be applied on a prospective basis. We early adopted this standard with no impact to 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 U.S. GAAP. 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 and interim reporting periods beginning after December 15, 2017. The new standard permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). We currently anticipate adopting the standard using the modified retrospective method. We are still in the process of completing our analysis on the impact this guidance will have on our consolidated financial statements and related disclosures. |
OPERATIONS AND SUMMARY OF SIG24
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Changes in allowance for doubtful accounts | Changes in allowance for doubtful accounts are summarized as follows (in thousands): Years Ended December 31, 2016 2015 2014 Balances at beginning of period $ 189 $ 216 $ 209 Additions - charged to expense 163 83 143 Deductions - write offs, net of recoveries (115 ) (110) (136) Balances at end of period $ 237 $ 189 $ 216 |
Schedule of inventory | Inventories, net consist of the following (in thousands): December 31, 2016 2015 Raw materials $ 10,807 $ 8,531 Work in process 3,820 2,839 Finished goods 7,087 6,122 Allowance for excess or obsolete inventory (1,319 ) (1,391 ) $ 20,395 $ 16,101 |
Schedule of property and equipment | We provide for depreciation primarily using the straight-line method by charges to income in amounts that allocate the cost of property and equipment over their estimated useful lives as follows: Asset Classification Estimated Useful Life Building 10 to 20 years Machinery and equipment 3 to 15 years Leasehold and building improvements 7 to 15 years Detail of property and equipment is as follows (in thousands): December 31, 2016 2015 Land $ 377 $ 377 Building 2,868 2,868 Machinery and equipment 36,588 35,284 Leasehold and building improvements 7,662 6,673 Construction in progress 1,655 1,496 49,150 46,698 Less accumulated depreciation (32,569 ) (29,678 ) Total property and equipment, net $ 16,581 $ 17,020 |
ACQUISITION AND RELATED PARTY25
ACQUISITION AND RELATED PARTY ITEMS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations and Related Party Disclosures [Abstract] | |
Schedule of aggregate consideration and allocation of purchase price | 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 intangible assets acquired | 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): Balance December 31, 2015 $ 15,747 Accretion of Put Value (1,145 ) Balance reclassification to current liabilities $ (14,602 ) Balance December 31, 2016 $ — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense | The components of the income tax expense are as follows (in thousands): Year Ended December 31, 2016 2015 2014 Current income tax expense: Federal $ 197 $ 1,492 $ 11 State 179 65 7 Foreign 31 24 29 Total current expense $ 407 $ 1,581 $ 47 Deferred income tax expense: Federal $ 3,545 $ 1,043 $ 1,181 State 387 284 123 Foreign — — — Total deferred expense 3,932 1,327 1,304 Total income tax expense $ 4,339 $ 2,908 $ 1,351 The components of income before income taxes were as follows (in thousands): Year Ended December 31, 2016 2015 2014 Domestic $ 16,375 $ 8,325 $ 2,837 Foreign 129 102 113 $ 16,504 $ 8,427 $ 2,950 |
Temporary differences to the components of deferred tax assets | Temporary differences that give rise to the components of net deferred tax assets are as follows (in thousands): December 31, 2016 2015 Inventory $ 1,172 $ 954 Accrued compensation 114 267 Stock Options 811 344 Research and development 438 440 Alternative minimum tax credit 543 367 Deferred revenue 2,934 3,638 Property and equipment 2,750 1,967 Net operating loss carryforwards – domestic 34,706 37,845 Capital Lease (2,833 ) (384 ) Other 34 (8 ) 40,669 45,430 Valuation allowance (19,547 ) (19,547 ) Total net deferred tax assets $ 21,122 $ 25,883 |
Effective income tax rate | The Company's income tax expense (benefit) relating to income (loss) for the periods presented differs from the amounts that would result from applying the federal statutory rate to that income (loss) as follows: Year Ended December 31, 2016 2015 2014 Statutory federal tax rate 34 % 34 % 34 % State income taxes, net of federal benefit 2 % 3 % 5 % Non-controlling interest in Heska Imaging US, LLC (3 )% (1 )% 12 % Other permanent differences (7 )% (1 )% (3 )% Change in tax rate — % (1 )% 2 % Change in valuation allowance — % (14 )% 78 % Other — % 15 % (82 )% Effective income tax rate 26 % 35 % 46 % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 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 years ended December 31, 2016 , 2015 , and 2014 (in thousands, except per share data): Years ended December 31, 2016 2015 2014 Net income attributable to Heska Corporation $ 10,508 $ 5,239 $ 2,603 Basic weighted-average common shares outstanding 6,783 6,509 5,951 Assumed exercise of dilutive stock options and restricted stock units 578 565 458 Diluted weighted-average common shares outstanding 7,361 7,074 6,409 Basic earnings per share $ 1.55 $ 0.80 $ 0.44 Diluted earnings per share $ 1.43 $ 0.74 $ 0.41 |
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): Years ended December 31, 2016 2015 2014 Stock options 234 144 367 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in goodwill | The following summarizes the changes in goodwill during the years ended December 31, 2016 and 2015 (in thousands): Year Ended December 31, 2016 2015 Carrying amount, December 31, 2015 $ 20,910 $ 20,903 Additions and adjustments 5,737 7 Carrying amount, December 31, 2016 $ 26,647 $ 20,910 |
Schedule of other intangible assets | Other intangibles assets, net consisted of the following as of December 31, 2016 and 2015 (in thousands): Year Ended December 31, 2016 2015 Gross carrying amount $ 2,622 $ 788 Accumulated amortization (276 ) (732 ) Net carrying amount $ 2,346 $ 56 |
Schedule of amortization expense on intangible assets | Amortization expense relating to other intangibles is as follows (in thousands): Years Ended December 31, 2016 2015 2014 Amortization expense $ 230 $ 246 $ 260 |
Schedule of estimated future amortization expense | Estimated amortization expense related to intangibles for each of the five years from 2017 through 2021 and thereafter is as follows (in thousands): Year Ending December 31, 2017 $ 388 2018 388 2019 388 2020 388 2021 384 Thereafter 410 $ 2,346 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | We provide for depreciation primarily using the straight-line method by charges to income in amounts that allocate the cost of property and equipment over their estimated useful lives as follows: Asset Classification Estimated Useful Life Building 10 to 20 years Machinery and equipment 3 to 15 years Leasehold and building improvements 7 to 15 years Detail of property and equipment is as follows (in thousands): December 31, 2016 2015 Land $ 377 $ 377 Building 2,868 2,868 Machinery and equipment 36,588 35,284 Leasehold and building improvements 7,662 6,673 Construction in progress 1,655 1,496 49,150 46,698 Less accumulated depreciation (32,569 ) (29,678 ) Total property and equipment, net $ 16,581 $ 17,020 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities consisted of the following as of December 31, 2016 and 2015 (in thousands): 2016 2015 Accrued payroll and employee benefits $ 2,166 $ 1,626 Accrued property taxes 748 594 Other 3,555 3,196 Total accrued liabilities $ 6,469 $ 5,416 |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of weighted average valuation assumptions | Weighted average assumptions used in 2016 , 2015 and 2014 for each of these four key inputs are listed in the following table: 2016 2015 2014 Risk-free interest rate 1.76% 1.41% 1.21% Expected lives 4.5 years 3.4 years 3.4 years Expected volatility 41% 41% 43% Expected dividend yield 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, 2016 2015 2014 Weighted Average Exercise Price Weighted Average Exercise Price Weighted Average Exercise Price Outstanding at beginning of period 940,610 $ 14.163 1,074,251 $ 10.110 1,321,232 $ 10.386 Granted at Market 129,855 $ 67.706 146,446 $ 36.904 134,800 $ 16.398 Canceled (463 ) $ 14.881 (28,440 ) $ 10.080 (218,926 ) $ 17.786 Exercised (240,385 ) $ 11.886 (251,647 ) $ 10.559 (162,855 ) $ 7.234 Outstanding at end of period 829,617 $ 23.203 940,610 $ 14.163 1,074,251 $ 10.110 Exercisable at end of period 532,703 $ 12.140 621,559 $ 10.269 729,175 $ 9.800 |
Schedule of shares authorized under stock options plans by exercise price range | The following table summarizes information about stock options outstanding and exercisable at December 31, 2016 , excluding outstanding options to purchase an aggregate of 0.5 fractional shares resulting from our December 2010 1-for- 10 reverse stock split with a weighted average remaining contractual life of 0.34 years at an exercise price of $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 - $ 6.90 164,794 3.94 $ 5.679 163,663 $ 5.676 $ 6.91 - $ 7.36 157,323 6.89 $ 7.360 114,670 $ 7.360 $ 7.37 - $18.13 214,697 6.68 $ 12.800 162,451 $ 11.317 $18.14 - $39.76 182,303 7.93 $ 34.954 91,878 $ 31.057 $39.77 - $72.85 110,500 9.99 $ 72.721 41 $ 56.587 $ 4.40 - $72.85 829,617 6.89 $ 23.203 532,703 $ 12.140 |
Schedule of pricing models | 2014 , we estimated the fair values of stock purchase rights granted under the ESPP using the Black-Scholes pricing model and the following weighted average assumptions: 2016 2015 2014 Risk-free interest rate 0.54% 0.27% 0.23% Expected lives 1.2 years 1.2 years 1.3 years Expected volatility 42% 36% 34% Expected dividend yield 0% 0% 0% |
ACCUMULATED OTHER COMPREHENSI32
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 12 Months Ended |
Dec. 31, 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) 75 (75 ) (90 ) (90 ) Balances at December 31, 2016 $ (501 ) $ 598 $ — $ 97 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating leases of lessee disclosure | The Company has entered into operating leases for its office and research facilities and certain equipment with future minimum payments as of December 31, 2016 as follows (in thousands): Year Ending December 31, 2017 $ 2,090 2018 1,970 2019 1,810 2020 1,696 2021 1,677 Thereafter 3,202 $ 12,445 |
INTEREST AND OTHER EXPENSE (I34
INTEREST AND OTHER EXPENSE (INCOME) (Tables) | 12 Months Ended |
Dec. 31, 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): Year Ended December 31, 2016 2015 2014 Interest income $ (124 ) $ (172 ) $ (190 ) Interest expense 160 200 206 Other expense (income), net (7 ) 102 (55 ) $ 29 $ 130 $ (39 ) |
CREDIT FACILITY AND LONG-TERM35
CREDIT FACILITY AND LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | Long-term debt consists of the following (in thousands): December 31, 2016 2015 Term loan with a financial entity due in monthly installments beginning July 2012 with the balance to be paid in full in June 2017 and a stated interest rate of 6.0%. $ 78 $ 228 Less current maturities 78 159 Long-term debt, net of current portion $ — $ 69 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 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): Year Ended December 31, 2016 Core Other Vaccines, Total Total revenue $ 107,398 $ 22,685 $ 130,083 Operating Income 13,015 3,518 16,533 Income before income taxes 12,938 3,566 16,504 Total assets 110,995 19,849 130,844 Net assets 68,072 18,903 86,975 Capital expenditures 1,135 2,282 3,417 Depreciation and amortization 3,800 845 4,645 Year Ended December 31, 2015 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 84,249 $ 20,348 $ 104,597 Operating Income 4,911 3,646 8,557 Income before income taxes 4,836 3,591 8,427 Total assets 92,567 17,152 109,719 Net assets 48,175 15,353 63,528 Capital expenditures 1,177 2,596 3,773 Depreciation and amortization 3,478 709 4,187 Year Ended December 31, 2014 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 72,354 $ 17,483 $ 89,837 Operating Income 1,198 1,713 2,911 Income before income taxes 1,290 1,660 2,950 Total assets 85,361 11,483 96,844 Net assets 41,286 11,846 53,132 Capital expenditures 1,864 473 2,337 Depreciation and amortization 2,954 758 3,712 |
Schedule of revenue from external customers and long-lived assets, by geographical areas | Total revenue by principal geographic area was as follows (in thousands): For the Years Ended December 31, 2016 2015 2014 United States $ 120,082 $ 97,164 $ 83,584 Canada 2,378 1,833 1,123 Europe 4,781 2,086 2,264 Other International 2,842 3,514 2,866 Total $ 130,083 $ 104,597 $ 89,837 Total assets by principal geographic areas were as follows (in thousands): For the Years Ended December 31, 2016 2015 2014 United States $ 127,827 $ 106,780 $ 93,977 Europe 3,017 2,939 2,867 Total $ 130,844 $ 109,719 $ 96,844 |
SUPPLEMENTAL QUARTERLY FINANC37
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of quarterly financial information | The following tables present quarterly unaudited results for each of the two years in the periods ended December 31, 2016 and 2015 (amounts in thousands, except per share data). Q1 Q2 Q3 Q4 Total 2016 Total revenue $ 27,146 $ 29,965 $ 33,430 $ 39,542 $ 130,083 Gross profit 11,442 12,682 13,718 16,050 53,892 Operating income 1,970 3,556 4,492 6,515 16,533 Net income 1,447 2,742 3,343 4,633 12,165 Net income attributable to Heska Corporation 1,186 2,522 3,347 3,453 10,508 Basic earnings per share attributable to Heska Corporation 0.18 0.38 0.49 0.50 1.55 Diluted earnings per share attributable to Heska Corporation 0.17 0.35 0.45 0.46 1.43 2015 Total revenue $ 22,894 $ 23,910 $ 28,034 $ 29,759 $ 104,597 Gross profit 10,084 10,297 11,597 12,235 44,213 Operating income 1,021 1,829 2,142 3,565 8,557 Net income 583 1,178 1,383 2,375 5,519 Net income attributable to Heska Corporation 598 1,197 1,415 2,029 5,239 Basic earnings per share attributable to Heska Corporation 0.10 0.19 0.22 0.29 0.80 Diluted earnings per share attributable to Heska Corporation 0.09 0.17 0.20 0.28 0.74 |
OPERATIONS AND SUMMARY OF SIG38
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended | |||||||||||||
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016CAD | Dec. 31, 2016JPY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2016CHF (SFr) | Dec. 31, 2015CAD | Dec. 31, 2015JPY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2015EUR (€) | Dec. 31, 2015CHF (SFr) | Dec. 31, 2013USD ($) | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||||||||||||
Balances at beginning of period | $ 189,000 | $ 216,000 | $ 209,000 | |||||||||||
Additions - charged to expense | 163,000 | 83,000 | 143,000 | |||||||||||
Deductions - write offs, net of recoveries | (115,000) | (110,000) | (136,000) | |||||||||||
Balances at end of period | 237,000 | 189,000 | 216,000 | |||||||||||
Cash and cash equivalents | 5,855,000 | CAD 26,477 | ¥ 1,252,221 | $ 10,794,000 | € 2,778,614 | SFr 172,743 | CAD 26,477 | ¥ 1,252,221 | $ 6,890,000 | € 1,779,910 | SFr 127,507 | $ 6,016,000 | ||
Inventory, Gross [Abstract] | ||||||||||||||
Raw materials | 10,807,000 | 8,531,000 | ||||||||||||
Work in process | 3,820,000 | 2,839,000 | ||||||||||||
Finished goods | 7,087,000 | 6,122,000 | ||||||||||||
Allowance for excess or obsolete inventory | (1,319,000) | (1,391,000) | ||||||||||||
Inventories, net | $ 20,395,000 | $ 16,101,000 | ||||||||||||
Upfront license fees | 0 | 0 | 3,000,000 | |||||||||||
Advertising expense | $ 200,000 | $ 100,000 | $ 100,000 | |||||||||||
Building | Minimum | ||||||||||||||
Inventory, Gross [Abstract] | ||||||||||||||
Property plant and equipment, useful life | 10 years | |||||||||||||
Building | Maximum | ||||||||||||||
Inventory, Gross [Abstract] | ||||||||||||||
Property plant and equipment, useful life | 20 years | |||||||||||||
Machinery and equipment | Minimum | ||||||||||||||
Inventory, Gross [Abstract] | ||||||||||||||
Property plant and equipment, useful life | 3 years | |||||||||||||
Machinery and equipment | Maximum | ||||||||||||||
Inventory, Gross [Abstract] | ||||||||||||||
Property plant and equipment, useful life | 15 years | |||||||||||||
Leasehold and building improvements | Minimum | ||||||||||||||
Inventory, Gross [Abstract] | ||||||||||||||
Property plant and equipment, useful life | 7 years | |||||||||||||
Leasehold and building improvements | Maximum | ||||||||||||||
Inventory, Gross [Abstract] | ||||||||||||||
Property plant and equipment, useful life | 15 years | |||||||||||||
Customer Concentration Risk | Accounts Receivable | Henry Schein | ||||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||||
Concentration risk, percentage | 16.00% | |||||||||||||
Customer Concentration Risk | Accounts Receivable | Merck | ||||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||||
Concentration risk, percentage | 11.00% | 13.00% | ||||||||||||
Customer Concentration Risk | Accounts Receivable | Eli Lilly | ||||||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||||||
Concentration risk, percentage | 15.00% | 20.00% |
ACQUISITION AND RELATED PARTY39
ACQUISITION AND RELATED PARTY ITEMS - ACQUISITION INFORMATION (Details) - USD ($) $ / shares in Units, $ in Thousands | May 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Feb. 24, 2013 |
Business Acquisition [Line Items] | |||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |||||
Goodwill | $ 26,647 | $ 20,910 | $ 20,903 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Interest subject to purchase as a percent | 45.40% | ||||
Heska Imaging | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Balance December 31, 2015 | 15,747 | ||||
Accretion of Put Value | (1,145) | ||||
reclassification to current liabilities | (14,602) | ||||
December 31, 2016 | $ 0 | ||||
Chief Executive Officer | Kevin S. Willson, Shawna M. Wilson And Trusts For Their Children And Family | Cuattro, LLC | |||||
Business Acquisition [Line Items] | |||||
Ownership percentage by trusts | 100.00% | ||||
Chief Executive Officer | Kevin S. Willson, Shawna M. Wilson And Trusts For Their Children And Family | Cuattro Software, LLC | |||||
Business Acquisition [Line Items] | |||||
Ownership percentage by trusts | 100.00% | ||||
Heska Imaging | |||||
Business Acquisition [Line Items] | |||||
Shares issued as consideration | 175,000 | ||||
Shares issued as consideration, value | $ 6,300 | ||||
Share sale restriction period following merger date | 180 days | ||||
Debt assumed in acquisition | $ 1,535 | ||||
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination [Abstract] | |||||
Stock | 6,347 | ||||
Debt assumed | 1,535 | ||||
Total fair value of consideration transferred | 7,882 | ||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |||||
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 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Percentage of voting interest acquired | 54.60% | ||||
Put option, actual cash valuation | $ 13,800 | ||||
Put option, maximum valuation from operating income calculation | $ 14,600 | ||||
Put option, percent of consideration deliverable as stock | 55.00% | ||||
Put option, shares to be transferred, percent of market value | 90.00% | ||||
Put option, maximum consideration deliverable as stock (in shares) | 650,000 | ||||
Put option, accrued amount | $ 14,600 | ||||
Heska Imaging | Customer Relationships | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Useful Life | 6 years 7 months 31 days | ||||
Fair Value | $ 2,521 |
ACQUISITION AND RELATED PARTY40
ACQUISITION AND RELATED PARTY ITEMS - RELATED PARTY ITEMS (Details) - USD ($) $ in Thousands | 5 Months Ended | 12 Months Ended | |
May 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Note receivable – related party | $ 0 | $ 1,516 | |
Due from – related parties | 100 | $ 308 | |
Affiliated Entity | Cuattro, LLC | |||
Related Party Transaction [Line Items] | |||
Related party - amount of transaction | 200 | ||
Affiliated Entity | Heska Imaging | |||
Related Party Transaction [Line Items] | |||
Related party - amount of transaction | 5,300 | ||
Due from – related parties | $ 5,600 | ||
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 | Clint Roth | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 8.39% | ||
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 | Chief Executive Officer | Kevin S. Wilson | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 0.05% | ||
Heska Imaging | Affiliated Entity | Cuattro, LLC | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 0.05% | ||
Heska Imaging | Affiliated Entity | International Imaging | |||
Related Party Transaction [Line Items] | |||
Note receivable – related party | $ 1,600 | ||
Cuattro, LLC | Affiliated Entity | Global Imaging | |||
Related Party Transaction [Line Items] | |||
Related party - amount of transaction | 10,900 | ||
Cuattro, LLC | Affiliated Entity | Heska Imaging | |||
Related Party Transaction [Line Items] | |||
Related party - amount of transaction | $ 3,600 | ||
Global Imaging | Affiliated Entity | Heska Imaging | |||
Related Party Transaction [Line Items] | |||
Due from – related parties | 1,200 | ||
International Imaging | Affiliated Entity | Cuattro, LLC | |||
Related Party Transaction [Line Items] | |||
Due from – related parties | $ 100 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Loss Carryforwards [Line Items] | |||
Net income | $ 12,165 | $ 5,519 | $ 1,599 |
Cash paid for income taxes | 357 | $ 55 | $ 272 |
Accounting Standards Update 2016-09 | |||
Operating Loss Carryforwards [Line Items] | |||
Net income | 800 | ||
Tax Years 2018 Through 2022 | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 90,000 | ||
Tax Years 2024 Through 2025 | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 5,500 | ||
Tax Year 2027 | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 500 | ||
Domestic Tax Authority | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 96,000 | ||
Alternative Minimum Tax Credit Carryforward | Domestic Tax Authority | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 500 | ||
Research Tax Credit Carryforward | Domestic Tax Authority | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | $ 400 |
INCOME TAXES - COMPONENTS OF IN
INCOME TAXES - COMPONENTS OF INCOME (LOSS) BEFORE TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ 16,375 | $ 8,325 | $ 2,837 |
Foreign | 129 | 102 | 113 |
Income (loss) before income taxes | $ 16,504 | $ 8,427 | $ 2,950 |
INCOME TAXES - TEMPORARY DIFFER
INCOME TAXES - TEMPORARY DIFFERENCES TO THE COMPONENTS OF DEFERRED TAX ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Inventory | $ 1,172 | $ 954 |
Accrued compensation | 114 | 267 |
Stock and Stock Options | 811 | 344 |
Research and development tax credit | 438 | 440 |
Alternative minimum tax credit | 543 | 367 |
Deferred revenue | 2,934 | 3,638 |
Property and equipment | 2,750 | 1,967 |
Net operating loss carryforwards – domestic | 34,706 | 37,845 |
Capital Lease | (2,833) | (384) |
Other | 34 | (8) |
Deferred tax assets, gross | 40,669 | 45,430 |
Valuation allowance | (19,547) | (19,547) |
Total net deferred tax assets | $ 21,122 | $ 25,883 |
INCOME TAXES - COMPONENTS OF 44
INCOME TAXES - COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current income tax expense: | |||
Federal | $ 197 | $ 1,492 | $ 11 |
State | 179 | 65 | 7 |
Foreign | 31 | 24 | 29 |
Total current expense | 407 | 1,581 | 47 |
Deferred income tax expense: | |||
Federal | 3,545 | 1,043 | 1,181 |
State | 387 | 284 | 123 |
Foreign | 0 | 0 | 0 |
Total deferred expense | 3,932 | 1,327 | 1,304 |
Total income tax expense | $ 4,339 | $ 2,908 | $ 1,351 |
INCOME TAXES - EFFECTIVE INCOME
INCOME TAXES - EFFECTIVE INCOME TAX RECONCILIATION (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal tax rate | 34.00% | 34.00% | 34.00% |
State income taxes, net of federal benefit | 2.00% | 3.00% | 5.00% |
Non-controlling interest in Heska Imaging US, LLC | (3.00%) | (1.00%) | 12.00% |
Other permanent differences | (7.00%) | (1.00%) | (3.00%) |
Change in tax rate | 0.00% | (1.00%) | 2.00% |
Change in valuation allowance | 0.00% | (14.00%) | 78.00% |
Other | 0.00% | 15.00% | (82.00%) |
Effective income tax rate | 26.00% | 35.00% | 46.00% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2010 | Dec. 31, 2016USD ($)$ / shares | Sep. 30, 2016USD ($)$ / shares | Jun. 30, 2016USD ($)$ / shares | Mar. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($)$ / shares | Sep. 30, 2015USD ($)$ / shares | Jun. 30, 2015USD ($)$ / shares | Mar. 31, 2015USD ($)$ / shares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | |
Earnings Per Share [Abstract] | ||||||||||||
Reverse stock split conversion ratio | 0.10 | 10 | ||||||||||
Net income attributable to Heska Corporation | $ | $ 3,453 | $ 3,347 | $ 2,522 | $ 1,186 | $ 2,029 | $ 1,415 | $ 1,197 | $ 598 | $ 10,508 | $ 5,239 | $ 2,603 | |
Weighted average outstanding shares used to compute basic earnings per share attributable to Heska Corporation | 6,783 | 6,509 | 5,951 | |||||||||
Assumed exercise of dilutive stock options and restricted stock units | 578 | 565 | 458 | |||||||||
Weighted average outstanding shares used to compute diluted earnings (loss) per share attributable to Heska Corporation | 7,361 | 7,074 | 6,409 | |||||||||
Basic earnings (loss) per share attributable to Heska Corporation, in dollars per share | $ / shares | $ 0.50 | $ 0.49 | $ 0.38 | $ 0.18 | $ 0.29 | $ 0.22 | $ 0.19 | $ 0.10 | $ 1.55 | $ 0.80 | $ 0.44 | |
Diluted earnings (loss) per share attributable to Heska Corporation, in dollars per share | $ / shares | $ 1.43 | $ 0.74 | $ 0.41 | |||||||||
Stock options | ||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||
Stock options and restricted units excluded from computation of earnings per share | 234 | 144 | 367 |
GOODWILL AND OTHER INTANGIBLE47
GOODWILL AND OTHER INTANGIBLES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill [Roll Forward] | |||
Carrying amount, December 31, 2015 | $ 20,910 | $ 20,903 | |
Additions and adjustments | 5,737 | 7 | |
Carrying amount, December 31, 2016 | 26,647 | 20,910 | $ 20,903 |
Finite-Lived Intangible Assets, Net [Abstract] | |||
Gross carrying amount | 2,622 | 788 | |
Accumulated amortization | (276) | (732) | |
Net carrying amount | 2,346 | 56 | |
Amortization expense | 230 | 246 | $ 260 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
2,017 | 388 | ||
2,018 | 388 | ||
2,019 | 388 | ||
2,020 | 388 | ||
2,021 | 384 | ||
Thereafter | 410 | ||
Net carrying amount | $ 2,346 | $ 56 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 49,150 | $ 46,698 | |
Less accumulated depreciation | (32,569) | (29,678) | |
Total property and equipment, net | 16,581 | 17,020 | |
Total costs transferred from inventory | 1,800 | 4,100 | $ 4,600 |
Depreciation and amortization | 4,400 | 4,000 | 3,400 |
Capital expenditures | $ 3,417 | 3,773 | 2,337 |
Heska Imaging | |||
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 | $ 300 | 2,200 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 377 | 377 | |
Building | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 2,868 | 2,868 | |
Building | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, useful life | 10 years | ||
Building | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, useful life | 20 years | ||
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 36,588 | 35,284 | |
Machinery and equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, useful life | 3 years | ||
Machinery and equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, useful life | 15 years | ||
Leasehold and building improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 7,662 | 6,673 | |
Leasehold and building improvements | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, useful life | 7 years | ||
Leasehold and building improvements | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, useful life | 15 years | ||
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 1,655 | 1,496 | |
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 | $ 400 | ||
Capital expenditures | $ 251 | $ 51 | $ 31 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accrued payroll and employee benefits | $ 2,166 | $ 1,626 |
Accrued property taxes | 748 | 594 |
Other | 3,555 | 3,196 |
Accrued liabilities | $ 6,469 | $ 5,416 |
CAPITAL STOCK - NARRATIVE (Deta
CAPITAL STOCK - NARRATIVE (Details) | Mar. 02, 2016shares | Oct. 01, 2015shares | Jul. 01, 2015 | May 05, 2015hourshares | Apr. 01, 2015USD ($) | Mar. 17, 2015shares | May 06, 2014trancheshares | Mar. 26, 2014trancheshares | May 31, 2016shares | May 31, 2012shares | Dec. 31, 2010 | Dec. 31, 2016USD ($)plans$ / sharesshares | Dec. 31, 2015USD ($)tranche$ / sharesshares | Dec. 31, 2014USD ($)tranche$ / sharesshares | Dec. 31, 2015shares | Mar. 31, 2015USD ($) | Sep. 26, 2014tranche | Dec. 31, 2013shares | May 31, 2003shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Expected dividend rate (as a percent) | 0.00% | 0.00% | 0.00% | ||||||||||||||||
Reverse stock split conversion ratio | 0.10 | 10 | |||||||||||||||||
Fair value of stock options granted during period | $ | $ 3,200,000 | $ 1,600,000 | $ 700,000 | ||||||||||||||||
Weighted average grant date fair value | $ / shares | $ 24.59 | $ 11.35 | $ 5.28 | ||||||||||||||||
Intrinsic value of options exercised | $ | $ 9,900,000 | $ 4,700,000 | $ 700,000 | ||||||||||||||||
Proceeds from stock options exercised | $ | $ 1,900,000 | $ 1,800,000 | $ 1,200,000 | ||||||||||||||||
Weighted average purchase price of shares purchased | $ / shares | $ 8.23 | $ 6.25 | $ 2.61 | ||||||||||||||||
Stockholder ownership percentage, threshold for restrictions | 500.00% | ||||||||||||||||||
Stock options | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of stock option plans | plans | 2 | ||||||||||||||||||
Intrinsic value of options exercised | $ | $ 31,700,000 | ||||||||||||||||||
Options outstanding | 829,617 | 940,610 | 1,074,251 | 940,610 | 1,321,232 | ||||||||||||||
Total unrecognized compensation expense related to outstanding stock options | $ | $ 4,500,000 | ||||||||||||||||||
Period for recognition of unrecognized compensation expense | 1 year 10 months 17 days | ||||||||||||||||||
Intrinsic value of options outstanding | $ | $ 40,300,000 | ||||||||||||||||||
Incentive Stock Options | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Percent of fair value for options granted | 100.00% | ||||||||||||||||||
Non-qualified Stock Options | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Percent of fair value for options granted | 85.00% | ||||||||||||||||||
Excluded Stock Options | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Options outstanding | 0.5 | ||||||||||||||||||
Options outstanding, weighted average remaining contractual term | 4 months 1 day | ||||||||||||||||||
Options outstanding, weighted average exercise price | $ / shares | $ 22.50 | ||||||||||||||||||
Employee Stock | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Expected dividend rate (as a percent) | 0.00% | 0.00% | 0.00% | ||||||||||||||||
Shares issued during period | 17,057 | 16,673 | 29,847 | ||||||||||||||||
Share Purchase Plan 1997 | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Increase in number of share to be repurchased | 500,000 | 250,000 | |||||||||||||||||
Number of shares authorized to be repurchased annually | 45,000 | ||||||||||||||||||
Number of shares authorized | 450,000 | 450,000 | |||||||||||||||||
Common stock, shares issued | 408,668 | ||||||||||||||||||
Remaining number of shares authorized to be repurchased | 407,339 | ||||||||||||||||||
Increase in authorized repurchase amount | 75,000 | ||||||||||||||||||
Weekly hours requirement for plan eligibility | hour | 20 | ||||||||||||||||||
Annual month requirement for plan eligibility | 5 months | ||||||||||||||||||
Maximum percent of annual base earnings withholding for purchases of stock | 10.00% | ||||||||||||||||||
Offering period | 27 months | ||||||||||||||||||
Accumulation period | 3 months | ||||||||||||||||||
Discount from market price, purchase date | 95.00% | 85.00% | |||||||||||||||||
Share Purchase Plan 1997 | Maximum | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Discount from market price, purchase date | 85.00% | 85.00% | |||||||||||||||||
Monthly withholding for compensation payment | $ | $ 2,500 | $ 25,000 | |||||||||||||||||
Share Purchase Plan 1997 | Maximum | Employee Stock Purchase Plan, Purchase Price, Greater Of | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Discount from market price, purchase date | 65.00% | 65.00% | |||||||||||||||||
Discount from market price, offering date | 95.00% | 85.00% | |||||||||||||||||
Share Purchase Plan 2003 | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of shares authorized | 239,050 | ||||||||||||||||||
Remaining number of shares authorized to be repurchased | 0 | ||||||||||||||||||
Restricted Stock | Robert B. Grieve | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Shares issued during period | 63,572 | ||||||||||||||||||
Number of tranches | tranche | 5 | ||||||||||||||||||
Shares immediately vested | 55,715 | ||||||||||||||||||
Shares withheld for tax purposes | 14,373 | 2,525 | |||||||||||||||||
Nonvested restricted shares outstanding | 7,857 | ||||||||||||||||||
Restricted Stock | Kevin S. Wilson | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Shares issued during period | 110,000 | ||||||||||||||||||
Number of tranches | tranche | 4 | 3 | |||||||||||||||||
Performance Shares | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Shares issued during period | 52,956 | ||||||||||||||||||
Performance Shares | Kevin S. Wilson | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Shares issued during period | 130,000 | ||||||||||||||||||
Number of tranches | tranche | 10 | ||||||||||||||||||
Performance Shares | Management Incentive Plan Grants 2015 | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Shares issued during period | 24,649 | ||||||||||||||||||
Shares withheld for tax purposes | 4,788 | ||||||||||||||||||
Equity instruments canceled (in shares) | 10,285 | ||||||||||||||||||
Equity instruments vested (in shares) | 14,364 | ||||||||||||||||||
Performance Shares | Management Incentive Plan Grants 2016 | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Shares issued during period | 15,000 | ||||||||||||||||||
Performance Shares, Stock Price Targets | Kevin S. Wilson | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of tranches | tranche | 5 | ||||||||||||||||||
Performance Shares, Adjusted EBITDA | Kevin S. Wilson | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of tranches | tranche | 5 | ||||||||||||||||||
Number of tranches vested | tranche | 4 | 1 |
CAPITAL STOCK - OPTION ACTIVITY
CAPITAL STOCK - OPTION ACTIVITY (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate (as a percent) | 1.76% | 1.41% | 1.21% |
Expected lives (in years) | 4 years 5 months 24 days | 3 years 4 months 24 days | 3 years 4 months 21 days |
Expected volatility (as a percent) | 41.00% | 41.00% | 43.00% |
Expected dividend rate (as a percent) | 0.00% | 0.00% | 0.00% |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding at beginning of period | 940,610 | 1,074,251 | 1,321,232 |
Granted at Market | 129,855 | 146,446 | 134,800 |
Canceled | (463) | (28,440) | (218,926) |
Exercised | (240,385) | (251,647) | (162,855) |
Outstanding at end of period | 829,617 | 940,610 | 1,074,251 |
Exercisable at end of period | 532,703 | 621,559 | 729,175 |
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 | $ 10.386 |
Granted at Market (in dollars per share) | 67.706 | 36.904 | 16.398 |
Cancelled (in dollars per share) | 14.881 | 10.080 | 17.786 |
Exercised (in dollars per share) | 11.886 | 10.559 | 7.234 |
Outstanding at ending of period (in dollars per share) | 23.203 | 14.163 | 10.110 |
Exercisable at end of period (in dollars per share) | $ 12.140 | $ 10.269 | $ 9.800 |
Employee Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate (as a percent) | 0.54% | 0.27% | 0.23% |
Expected lives (in years) | 1 year 2 months 18 days | 1 year 2 months 18 days | 1 year 3 months 18 days |
Expected volatility (as a percent) | 42.00% | 36.00% | 34.00% |
Expected dividend rate (as a percent) | 0.00% | 0.00% | 0.00% |
CAPITAL STOCK- SUMMARY OF INFOR
CAPITAL STOCK- SUMMARY OF INFORMATION BY EXERCISE PRICE RANGE (Details) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
$ 4.40 - $ 6.90 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Options Outstanding at December 31, 2016 | shares | 164,794 |
Weighted Average Remaining Contractual Life in Years | 3 years 11 months 8 days |
Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 5.679 |
Number of Options Exercisable at December 31, 2016 | shares | 163,663 |
Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 5.676 |
Exercise price, lower range limit | 4.40 |
Exercise price, upper range limit | $ 6.90 |
$ 6.91 - $ 7.36 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Options Outstanding at December 31, 2016 | shares | 157,323 |
Weighted Average Remaining Contractual Life in Years | 6 years 10 months 20 days |
Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 7.360 |
Number of Options Exercisable at December 31, 2016 | shares | 114,670 |
Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 7.360 |
Exercise price, lower range limit | 6.91 |
Exercise price, upper range limit | $ 7.36 |
$ 7.37 - $18.13 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Options Outstanding at December 31, 2016 | shares | 214,697 |
Weighted Average Remaining Contractual Life in Years | 6 years 8 months 6 days |
Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 12.800 |
Number of Options Exercisable at December 31, 2016 | shares | 162,451 |
Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 11.317 |
Exercise price, lower range limit | 7.37 |
Exercise price, upper range limit | $ 18.13 |
$18.14 - $39.76 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Options Outstanding at December 31, 2016 | shares | 182,303 |
Weighted Average Remaining Contractual Life in Years | 7 years 11 months 6 days |
Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 34.954 |
Number of Options Exercisable at December 31, 2016 | shares | 91,878 |
Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 31.057 |
Exercise price, lower range limit | 18.14 |
Exercise price, upper range limit | $ 39.76 |
$39.77 - $72.85 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Options Outstanding at December 31, 2016 | shares | 110,500 |
Weighted Average Remaining Contractual Life in Years | 9 years 11 months 26 days |
Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 72.721 |
Number of Options Exercisable at December 31, 2016 | shares | 41 |
Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 56.587 |
Exercise price, lower range limit | 39.77 |
Exercise price, upper range limit | $ 72.85 |
$ 4.40 - $72.85 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Options Outstanding at December 31, 2016 | shares | 829,617 |
Weighted Average Remaining Contractual Life in Years | 6 years 10 months 20 days |
Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 23.203 |
Number of Options Exercisable at December 31, 2016 | shares | 532,703 |
Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 12.140 |
Exercise price, lower range limit | 4.40 |
Exercise price, upper range limit | $ 72.85 |
ACCUMULATED OTHER COMPREHENSI53
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | $ 63,528 |
Ending balance | 86,975 |
Total accumulated other comprehensive income | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | 187 |
Current period other comprehensive income (loss) | (90) |
Ending balance | 97 |
Minimum pension liability | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | (576) |
Current period other comprehensive income (loss) | 75 |
Ending balance | (501) |
Foreign currency translation | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | 673 |
Current period other comprehensive income (loss) | (75) |
Ending balance | 598 |
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 CONTINGENCIES54
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | Mar. 12, 2015$ / violation | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | ||||||
Increase in royalties payable | $ 400 | $ 400 | $ 400 | |||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||||
2,017 | 2,090 | |||||
2,018 | 1,970 | |||||
2,019 | 1,810 | |||||
2,020 | 1,696 | |||||
2,021 | 1,677 | |||||
Thereafter | 3,202 | |||||
Total operating lease, future minimum payments | 12,445 | |||||
Rent expense | 2,000 | 2,000 | $ 1,900 | |||
Loss Contingencies [Line Items] | ||||||
Warranty reserve | $ 400 | $ 400 | ||||
Inventories | Scenario, Forecast | ||||||
Recorded Unconditional Purchase Obligation [Line Items] | ||||||
Annual minimum inventory purchases | $ 300 | $ 600 | ||||
Minimum | Illinois Junk Fax Litigation | ||||||
Loss Contingencies [Line Items] | ||||||
Estimate of possible loss, charge per violation | $ / violation | 500 |
INTEREST AND OTHER EXPENSE (I55
INTEREST AND OTHER EXPENSE (INCOME) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Other Income and Expenses [Abstract] | |||
Interest income | $ (124) | $ (172) | $ (190) |
Interest expense | 160 | 200 | 206 |
Other, net | (7) | 102 | (55) |
Interest and other income | 29 | 130 | (39) |
Interest Paid | $ 78 | $ 90 | $ 92 |
CREDIT FACILITY AND LONG-TERM56
CREDIT FACILITY AND LONG-TERM DEBT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Line of credit | $ 672,000 | $ 143,000 |
Long-term note payable, net of current portion | 0 | $ 69,000 |
Line of Credit | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | 15,000,000 | |
Minimum annual interest charge | 75,000 | |
Remaining borrowing capacity | $ 12,900,000 | |
Line of Credit | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.25% | |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 6.00% | 6.00% |
Term loan with a financial entity due in monthly installments beginning July 2012 with the balance to be paid in full in June 2017 and a stated interest rate of 6.0%. | $ 78,000 | $ 228,000 |
Less current maturities | 78,000 | 159,000 |
Long-term note payable, net of current portion | $ 0 | $ 69,000 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Segment Reporting [Abstract] | |||||||||||
Number of reportable segments | segment | 2 | ||||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||||
Total revenue | $ 130,083 | $ 104,597 | $ 89,837 | ||||||||
Operating income | $ 6,515 | $ 4,492 | $ 3,556 | $ 1,970 | $ 3,565 | $ 2,142 | $ 1,829 | $ 1,021 | 16,533 | 8,557 | 2,911 |
Income before income taxes | 16,504 | 8,427 | 2,950 | ||||||||
Total assets | 130,844 | 109,719 | 130,844 | 109,719 | 96,844 | ||||||
Net assets | 86,975 | 63,528 | 86,975 | 63,528 | 53,132 | ||||||
Capital expenditures | 3,417 | 3,773 | 2,337 | ||||||||
Depreciation and amortization | 4,645 | 4,187 | 3,712 | ||||||||
United States | |||||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||||
Total revenue | 120,082 | 97,164 | 83,584 | ||||||||
Total assets | 127,827 | 106,780 | 127,827 | 106,780 | 93,977 | ||||||
Canada | |||||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||||
Total revenue | 2,378 | 1,833 | 1,123 | ||||||||
Europe | |||||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||||
Total revenue | 4,781 | 2,086 | 2,264 | ||||||||
Total assets | 3,017 | 2,939 | 3,017 | 2,939 | 2,867 | ||||||
Other International | |||||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||||
Total revenue | 2,842 | 3,514 | 2,866 | ||||||||
Core Companion Animal Health | |||||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||||
Total revenue | 107,398 | 84,249 | 72,354 | ||||||||
Operating income | 13,015 | 4,911 | 1,198 | ||||||||
Income before income taxes | 12,938 | 4,836 | 1,290 | ||||||||
Total assets | 110,995 | 92,567 | 110,995 | 92,567 | 85,361 | ||||||
Net assets | 68,072 | 48,175 | 68,072 | 48,175 | 41,286 | ||||||
Capital expenditures | 1,135 | 1,177 | 1,864 | ||||||||
Depreciation and amortization | 3,800 | 3,478 | 2,954 | ||||||||
Other Vaccines, Pharmaceuticals and Products | |||||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||||
Total revenue | 22,685 | 20,348 | 17,483 | ||||||||
Operating income | 3,518 | 3,646 | 1,713 | ||||||||
Income before income taxes | 3,566 | 3,591 | 1,660 | ||||||||
Total assets | 19,849 | 17,152 | 19,849 | 17,152 | 11,483 | ||||||
Net assets | $ 18,903 | $ 15,353 | 18,903 | 15,353 | 11,846 | ||||||
Capital expenditures | 2,282 | 2,596 | 473 | ||||||||
Depreciation and amortization | $ 845 | $ 709 | $ 758 |
SUPPLEMENTAL QUARTERLY FINANC58
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenue | $ 39,542 | $ 33,430 | $ 29,965 | $ 27,146 | $ 29,759 | $ 28,034 | $ 23,910 | $ 22,894 | $ 130,083 | $ 104,597 | $ 89,837 |
Gross profit | 16,050 | 13,718 | 12,682 | 11,442 | 12,235 | 11,597 | 10,297 | 10,084 | 53,892 | 44,213 | 35,715 |
Operating income | 6,515 | 4,492 | 3,556 | 1,970 | 3,565 | 2,142 | 1,829 | 1,021 | 16,533 | 8,557 | 2,911 |
Net income | 4,633 | 3,343 | 2,742 | 1,447 | 2,375 | 1,383 | 1,178 | 583 | 12,165 | 5,519 | |
Net income attributable to Heska Corporation | $ 3,453 | $ 3,347 | $ 2,522 | $ 1,186 | $ 2,029 | $ 1,415 | $ 1,197 | $ 598 | $ 10,508 | $ 5,239 | $ 2,603 |
Basic earnings (loss) per share attributable to Heska Corporation, in dollars per share | $ 0.50 | $ 0.49 | $ 0.38 | $ 0.18 | $ 0.29 | $ 0.22 | $ 0.19 | $ 0.10 | $ 1.55 | $ 0.80 | $ 0.44 |
Diluted earnings per share attributable to Heska Corporation | $ 0.46 | $ 0.45 | $ 0.35 | $ 0.17 | $ 0.28 | $ 0.20 | $ 0.17 | $ 0.09 | $ 1.43 | $ 0.74 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Heska Imaging $ in Millions | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | |
Put option, actual cash valuation | $ 13.8 |
Put option, maximum valuation from operating income calculation | $ 14.6 |