Heska Corp. (HSKA) 10-Q 4 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 03, 2017
Document And Entity Information
Entity Registrant Name	Heska Corp
Entity Central Index Key	1,038,133
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,017
Entity Common Stock, Shares Outstanding		7,226,070

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 3,727	$ 10,794
Accounts receivable, net of allowance for doubtful accounts of $267 and $237, respectively	14,459	20,857
Due from – related parties	21	100
Inventories, net	26,068	20,395
Other current assets	3,713	3,127
Total current assets	47,988	55,273
Property and equipment, net	16,159	16,581
Goodwill	26,706	26,647
Other intangible assets, net	2,152	2,346
Deferred tax asset, net	21,052	21,122
Other non-current assets	12,352	8,875
Total assets	126,409	130,844
Current liabilities:
Accounts payable	7,410	7,154
Accrued liabilities	4,668	6,469
Current portion of deferred revenue	3,424	3,439
Obligation to purchase minority interest	0	14,602
Line of credit and other short-term borrowings	4,033	750
Total current liabilities	19,535	32,414
Deferred revenue, net of current portion, and other	10,299	11,455
Total liabilities	29,834	43,869
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 2,500,000 shares authorized, none issued or outstanding	0	0
Traditional common stock, $.01 par value, 10,000,000 shares authorized, none issued or outstanding	0	0
Public common stock, $.01 par value, 10,000,000 shares authorized, 7,195,623 and 7,026,051 shares issued and outstanding, respectively	72	70
Additional paid-in capital	240,621	238,635
Accumulated other comprehensive income	267	97
Accumulated deficit	(144,385)	(151,827)
Total stockholders' equity	96,575	86,975
Total liabilities and stockholders' equity	$ 126,409	$ 130,844

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Allowance for doubtful accounts	$ 267	$ 237
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
Traditional Common Stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	10,000,000	10,000,000
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	10,000,000	10,000,000
Common stock, shares issued	7,195,623	7,026,051
Common stock, shares outstanding	7,195,623	7,026,051

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenue:
Core companion animal health	$ 27,021	$ 24,464	$ 51,629	$ 47,898
Other vaccines, pharmaceuticals and products	7,315	5,501	13,089	9,213
Total revenue, net	34,336	29,965	64,718	57,111
Cost of revenue	19,407	17,283	36,580	32,987
Gross profit	14,929	12,682	28,138	24,124
Operating expenses:
Selling and marketing	5,993	5,386	12,093	11,005
Research and development	445	523	975	1,098
General and administrative	3,931	3,217	7,722	6,495
Total operating expenses	10,369	9,126	20,790	18,598
Operating income	4,560	3,556	7,348	5,526
Interest and other expense (income), net	(118)	34	(180)	(99)
Income before income taxes	4,678	3,522	7,528	5,625
Income tax expense:
Current income tax expense	10	87	17	161
Deferred income tax expense	1,529	693	69	1,275
Total income tax expense	1,539	780	86	1,436
Net income	3,139	2,742	7,442	4,189
Net income (loss) attributable to non-controlling interest	(194)	220	(498)	482
Net income attributable to Heska Corporation	$ 3,333	$ 2,522	$ 7,940	$ 3,707
Earnings Per Share [Abstract]
Basic earnings per share attributable to Heska Corporation, in dollars per share	$ 0.47	$ 0.38	$ 1.14	$ 0.56
Diluted earnings per share attributable to Heska Corporation, in dollars per share	$ 0.44	$ 0.35	$ 1.05	$ 0.51
Weighted average outstanding shares used to compute basic earnings per share attributable to Heska Corporation	7,069	6,695	6,967	6,641
Weighted average outstanding shares used to compute diluted earnings per share attributable to Heska Corporation	7,632	7,249	7,570	7,206

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Net income	$ 3,139	$ 2,742	$ 7,442	$ 4,189
Other comprehensive income:
Sale of equity investment	0	0	0	(90)
Foreign currency translation	114	(47)	170	42
Comprehensive income	3,253	2,695	7,612	4,141
Comprehensive income (loss) attributable to non-controlling interest	(194)	220	(498)	482
Comprehensive income attributable to Heska Corporation	$ 3,447	$ 2,475	$ 8,110	$ 3,659

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 7,442	$ 4,189
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization	2,192	2,211
Deferred tax expense	69	1,275
Stock based compensation	1,386	1,112
Unrealized benefit on foreign currency translation	20	(2)
Changes in operating assets and liabilities:
Accounts receivable	6,398	1,764
Inventories	(5,391)	(3,691)
Other current assets	(567)	363
Accounts payable	255	(1,725)
Accrued liabilities and other	(1,801)	(367)
Other non-current assets	(3,661)	(2,889)
Deferred revenue and other	(917)	(1,962)
Net cash provided by operating activities	5,425	278
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equity investment	0	115
Purchase of minority interest	(13,757)	0
Purchases of property and equipment	(1,865)	(1,368)
Proceeds from disposition of property and equipment	0	405
Net cash used in investing activities	(15,622)	(848)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of distributions	1,571	649
Re-purchase of equity instruments	(860)	0
Distributions to non-controlling interest members	(954)	0
Proceeds from line of credit borrowings	26,051	15,886
Repayments of line of credit borrowings	(22,690)	(16,028)
Repayments of other debt	(79)	(180)
Net cash provided by financing activities	3,039	327
EFFECT OF EXCHANGE RATE CHANGES ON CASH	91	22
DECREASE IN CASH AND CASH EQUIVALENTS	(7,067)	(221)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	10,794	6,890
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 3,727	$ 6,669

BASIS OF PRESENTATION

BASIS OF PRESENTATION	6 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
BASIS OF PRESENTATION	BASIS OF PRESENTATION Heska Corporation and its wholly-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. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the financial position of the Company at June 30, 2017 , and the results of our operations for the three and six months ended June 30, 2017 and 2016 and cash flows for the six months ended June 30, 2017 and 2016 . The unaudited Condensed Consolidated Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and other financial information filed with the SEC. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are required when establishing the allowance for doubtful accounts and the provision for excess or obsolete inventory, in determining the period over which our obligations are fulfilled under agreements to license product rights and/or technology rights, evaluating long-lived and intangible assets for impairment, determining the allocation of purchase price under purchase accounting, estimating the expense associated with the granting of stock options, and in determining the need for, and the amount of, a valuation allowance on deferred tax assets. Critical Accounting Policies Our accounting policies are described in our audited Consolidated Financial Statements and Notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2016. Recent Accounting Pronouncements In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” ASU 2017-09 was issued to provide clarity and reduce both 1) diversity in practice and 2) cost and complexity when applying the guidance in Topic 718 to a change in the terms or conditions of a share-based payment award. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under Topic 718. The amendments in ASU 2017-09 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The amendments in ASU 2017-09 should be applied prospectively to an award modified on or after the adoption date. Heska adopted the new guidance in its second quarter of fiscal year 2017 and will apply the guidance to any future changes to the terms or conditions of its share-based payment awards. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment,” to simplify financial reporting by eliminating the need to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. Under ASU 2017-04, an entity should perform its goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, up to the amount of goodwill allocated to that reporting unit. The new guidance effectively eliminates “Step 2” from the previous goodwill impairment test. ASU 2017-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. Heska plans to adopt the new guidance in its fourth quarter of fiscal year 2017 when it performs its annual goodwill impairment test as of December 15, 2017. Heska does not expect the adoption of ASU 2017-04 to have a significant impact on the results of its goodwill impairment testing. 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 May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” and has subsequently issued several supplemental and/or clarifying ASUs (collectively “ASC 606”). ASC 606 prescribes a single common revenue standard that replaces most existing U.S. GAAP revenue recognition guidance. ASC 606 outlines a five-step model, under which Heska will recognize revenue as performance obligations within a customer contract are satisfied. ASC 606 is intended to provide more consistent interpretation and application of the principles outlined in the standard across filers in multiple industries and within the same industries compared to current practices, which should improve comparability. Adoption of ASC 606 is required for annual reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Upon adoption, Heska must elect to adopt either retrospectively to each prior reporting period presented (full retrospective method) or using the cumulative effect transition method with the cumulative effect of initial adoption recognized at the date of initial application (modified retrospective method). Based on evaluation of the accounting impact of ASC 606 on our revenue streams, Heska has elected to adopt the modified retrospective method. Heska assessed the impact that the future adoption of ASC 606 is expected to have on its Consolidated Financial Statements by analyzing its current portfolio of customer contracts and various revenue streams, including a review of historical accounting policies and practices to identify potential differences in applying the guidance of ASC 606. Heska is also performing a comprehensive review of its current processes and systems to determine and implement changes required to support the adoption of ASC 606 on January 1, 2018. Based on Heska’s review of its customer contracts, Heska has determined that the timing of revenue recognition on the majority of its customer contracts will continue to be recognized as they are currently, generally upon shipment of products, consistent with Heska’s current revenue recognition model. While Heska believes that the timing of revenue recognition is consistent with current practice, we are still evaluating the allocation of the standalone selling price of goods and services and this could have an impact on the amount of revenue recognized at a point in time versus over time. As such, Heska believes the adoption of ASC 606 will have an impact on both the timing of revenue recognition and various line items within the Consolidated Balance Sheet. Heska generally expenses costs to obtain contracts (i.e. sales commissions) as a period expense for all contracts, despite the length of the arrangement. ASC 606, states that "an asset recognized in accordance with the incremental costs of obtaining a contract shall be amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates." Because a significant number of Heska’s customers are under noncancelable contracts for periods extending beyond one year with the delivery of goods and services occurring throughout the duration, Heska anticipates recording an asset related to the prepayment of such contract acquisition costs. In addition, ASC 606 will require more comprehensive disclosures about revenue streams and contracts with customers, including significant judgments required. Heska is currently evaluating potential changes to its processes for preparing required disclosures and to information systems that support the financial reporting process. In addition, Heska is evaluating implications to the Company’s system of internal controls, relative to revenue recognition and the related revenue disclosures.

ACQUISITION AND RELATED PARTY I

ACQUISITION AND RELATED PARTY ITEMS	6 Months Ended
	Jun. 30, 2017
Business Combinations and Related Party Disclosures [Abstract]
ACQUISITION AND RELATED PARTY ITEMS	ACQUISITIONS AND RELATED PARTY ITEMS Cuattro Veterinary, LLC On May 31, 2016, the Company closed a transaction (the "Merger") to acquire Cuattro Veterinary, LLC ("Cuattro International") from Kevin S. Wilson, and all of the members of Cuattro International (the "Members"). Pursuant to the Merger, the Company issued 175,000 shares of the Company’s common stock, $.01 par value per share (the "Common Stock"), to the Members on the Closing Date, at an aggregate value equal to approximately $6.3 million based on the adjusted closing price per share of the Common Stock as reported on the Nasdaq Stock Market on the Merger closing date. These shares were issued to the Members in a private placement in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and the safe harbor provided by Rule 506 of Regulation D promulgated thereunder. 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 liabilities 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"). Cuattro Veterinary USA, LLC On February 24, 2013, the Company acquired a 54.6% interest in Cuattro Veterinary USA, LLC, which was subsequently renamed Heska Imaging US, LLC. The remaining minority position (45.4%) in US Imaging was subject to purchase by Heska under performance-based puts and calls following the audit of our financial statements for 2016 and 2017. The required performance criteria were met in 2016, we considered notice given on March 3, 2017 that the put option was being exercised and on May 31, 2017, we delivered $13.8 million in cash to obtain the remaining minority position in US Imaging. Prior to the purchase of the minority position (the "Imaging Minority"), Shawna M. Wilson, Clint Roth, DVM, Steven M. Asakowicz, Rodney A. Lippincott, Kevin S. Wilson and Cuattro, LLC owned 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. On April 3, 2017, and in accordance with the terms of its Operating Agreement, US Imaging distributed $2.1 million based on past operating performance, including $1.0 million to its minority interest members. On June 1, 2017, the Company consolidated its assets and liabilities in the US Imaging and International Imaging companies into Global Imaging, which was re-named Heska Imaging, LLC ("Heska Imaging"). Related Party Activities Cuattro, LLC charged Heska Imaging $8.6 million during the six months ended June 30, 2017 , primarily related to digital imaging products, for which there is an underlying supply contract with minimum purchase obligations, software and services as well as other operating expenses; Heska Corporation charged Heska Imaging $2.9 million during the five months ended May 31, 2017, prior to the purchase of the Imaging Minority on June 1, 2017, primarily related to sales expenses; and Heska Corporation charged Cuattro, LLC $67 thousand during the six months ended June 30, 2017 , primarily related to facility usage and other services. As of June 30, 2017, Heska Corporation had receivables from Cuattro, LLC of $21 thousand , which is included in "Due from – related parties" on the Company's consolidated balance sheet.

INCOME TAXES

INCOME TAXES	6 Months Ended
	Jun. 30, 2017
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES Our total income tax expense and the effective tax rate for our income before income taxes were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Income before income taxes $ 4,678 $ 3,522 $ 7,528 $ 5,625 Total income tax expense 1,539 780 86 1,436 Effective tax rate 32.9 % 22.1 % 1.1 % 25.5 % We are subject to income taxes in the U.S. federal jurisdiction, and various foreign, state and local jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. During interim periods, the Company generally utilizes the estimated annual effective tax rate method which involves the use of forecasted information. Under this method, the provision is calculated by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The Company’s effective tax rate increased to 32.9% for the three months ended June 30, 2017 , compared to 22.1% for the three months ended June 30, 2016 , which included the early adoption of ASU 2016-09. As discussed further below, the increase in rate was primarily attributable to recording a partial valuation allowance against our deferred tax assets (“DTAs”) as of June 30, 2017 to partially offset the tax impact of various stock compensation-related tax benefits. As of June 30, 2017 , the Company assessed whether the reduction of taxable income due to large benefits created by stock option exercises and vesting of restricted stock and the excess tax benefits resulting from the application of ASU 2016-09 would cause a larger portion of our DTAs to likely expire unrealized. The Company assessed its ability to realize the DTAs by evaluating all available positive and negative evidence, including (1) cumulative results of operations in recent years, (2) sources of recent pre-tax losses, (3) estimates of future taxable income, and (4) the length of Net Operating Loss ("NOL") carryforward periods. Additionally, the Company considered the length of NOL carryforward periods and an objectively verifiable estimate of future income based on operating results from the Company’s recent history, as well as an estimate of future income that incorporates the Company's forecasted operating results for fiscal 2017. Due to the significant amount of additional stock based compensation excess tax deduction generated, the Company determined that the negative evidence outweighed the positive evidence and that it is not more-likely-than-not that sufficient taxable income will be generated to realize all of the DTAs as of June 30, 2017. As such, an additional $1.8 million was recorded to the current partial valuation allowance against the Company’s DTAs as of June 30, 2017. The Company will continue to closely monitor the need for an additional valuation allowance against its DTAs in each subsequent reporting period which can be impacted by actual operating results compared to the Company's forecast. There were $144 thousand cash payments for income taxes for the three months ended June 30, 2017 and there were $57 thousand cash paid for income taxes for the three month period ended June 30, 2016 . There were $144 thousand cash payments for income taxes for the six months ended June 30, 2017 and there were $62 thousand cash paid for income taxes for the six month period ended June 30, 2016 .

EARNINGS PER SHARE

EARNINGS PER SHARE	6 Months Ended
	Jun. 30, 2017
Earnings Per Share [Abstract]
EARNINGS PER SHARE	EARNINGS PER SHARE Basic earnings per share ("EPS") is computed by dividing net income attributable to Heska by the weighted-average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the numerator is increased to exclude charges that would not have been incurred, and the denominator is increased to include the number of additional common shares that would have been outstanding (using the if-converted and treasury stock methods), if securities containing potentially dilutive common shares (stock options and restricted stock units but excluding options to purchase fractional shares resulting from the Company's December 2010 1-for- 10 reverse stock split) had been converted to common shares, and if such assumed conversion is dilutive. The following is a reconciliation of the weighted-average shares outstanding used in the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016 (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net income attributable to Heska $ 3,333 $ 2,522 $ 7,940 $ 3,707 Basic weighted-average common shares outstanding 7,069 6,695 6,967 6,641 Assumed exercise of dilutive stock options and restricted stock units 563 554 603 565 Diluted weighted-average common shares outstanding 7,632 7,249 7,570 7,206 Basic earnings per share attributable to Heska $ 0.47 $ 0.38 $ 1.14 $ 0.56 Diluted earnings per share attributable to Heska $ 0.44 $ 0.35 $ 1.05 $ 0.51 The following stock options and restricted units were excluded from the computation of diluted earnings per share because they would have been anti-dilutive (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Stock options 25 138 132 138

GOODWILL AND OTHER INTANGIBLES

GOODWILL AND OTHER INTANGIBLES	6 Months Ended
	Jun. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
GOOWILL AND OTHER INTANGIBLES	GOODWILL AND OTHER INTANGIBLES The following summarizes the change in goodwill during the six months ended June 30, 2017 (in thousands): Carrying amount, December 31, 2016 $ 26,647 Foreign currency adjustments 59 Carrying amount, June 30, 2017 $ 26,706 Other intangibles consists of the following as of June 30, 2017 and December 31, 2016 (in thousands): June 30, December 31, 2017 2016 Gross carrying amount $ 3,309 $ 3,309 Accumulated amortization (1,157 ) (963 ) Net carrying amount $ 2,152 $ 2,346 Amortization expense relating to other intangibles was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Amortization expense $ 97 $ 34 $ 194 $ 37 Estimated amortization expense related to intangibles for each of the five years from 2017 (remaining) through 2021 and thereafter is as follows (in thousands): Year Ending December 31, 2017 (remaining) 194 2018 388 2019 388 2020 388 2021 384 Thereafter 410 $ 2,152

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	6 Months Ended
	Jun. 30, 2017
Property, Plant and Equipment [Abstract]
PROPERTY AND EQUIPMENT	PROPERTY AND EQUIPMENT Property and equipment, net consists of the following (in thousands): June 30, December 31, 2017 2016 Land $ 377 $ 377 Building 2,868 2,868 Machinery and equipment 37,488 36,588 Leasehold and building improvements 8,126 7,662 Construction in progress 1,869 1,655 50,728 49,150 Less accumulated depreciation (34,569 ) (32,569 ) Total property and equipment, net $ 16,159 $ 16,581 The Company has utilized marketing programs whereby its instruments in inventory may be placed in a customer's location on a rental basis. The cost of these instruments is transferred to machinery and equipment and depreciated, typically over a five to seven year period depending on the circumstance under which the instrument is placed with the customer. Total costs transferred from inventory were approximately $0.3 million and $1.8 million for the six months ended June 30, 2017 and the annual period ended December 31, 2016, respectively. The Company has sold certain customer rental contracts and underlying assets to third parties under agreements that once the customer has met its obligations under the contract, ownership of the assets underlying the contract would be returned to the Company. The Company enters a debit to cash and a corresponding credit to deferred revenue at the time of these sales. Since the Company anticipates it will regain ownership of the assets underlying these sales, it reports these assets as part of property and equipment and depreciates these assets in accordance with its depreciation policies. The Company had $0.3 million of net property and equipment related to these transactions as of both June 30, 2017 and December 31, 2016, all related to Heska Imaging. Depreciation expense for property and equipment was $1.0 million and $1.1 million for the three months ended June 30, 2017 and 2016, respectively. Depreciation expense was $2.0 million and $2.2 million for the six months ended June 30, 2017 and 2016, respectively.

INVENTORIES

INVENTORIES	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
INVENTORIES	INVENTORIES Inventories are stated at the lower of cost or net realizable value using the first-in, first-out method. Inventory we manufacture includes the cost of material, labor and overhead. If the cost of inventories exceeds estimated net realizable value, provisions are made to reduce the carrying value to estimated net realizable value. Inventories, net consist of the following (in thousands): June 30, December 31, 2017 2016 Raw materials $ 12,551 $ 10,807 Work in process 4,413 3,820 Finished goods 10,508 7,087 Allowance for excess or obsolete inventory (1,404 ) (1,319 ) Total inventory, net $ 26,068 $ 20,395

ACCRUED LIABILITIES

ACCRUED LIABILITIES	6 Months Ended
	Jun. 30, 2017
Payables and Accruals [Abstract]
ACCRUED LIABILITIES	ACCRUED LIABILITIES Accrued liabilities consists of the following (in thousands): June 30, December 31, Accrued payroll and employee benefits $ 1,457 $ 2,166 Accrued property taxes 522 748 Accrued purchases — 664 Other 2,689 2,891 Total accrued liabilities $ 4,668 $ 6,469 Other accrued liabilities consist of items that are individually less than 5% of total current liabilities.

CAPITAL STOCK

CAPITAL STOCK	6 Months Ended
	Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
CAPITAL STOCK	CAPITAL STOCK Stock Option Plans The fair value of each option grant was estimated on the date of grant using the Black-Scholes option- pricing model with the following weighted average assumptions for options granted in the six months ended June 30, 2017 and 2016 . Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Risk-free interest rate 1.75% 1.17% 1.75% 1.19% Expected lives 4.9 years 4.5 years 4.9 years 4.5 years Expected volatility 41% 41% 41% 41% Expected dividend yield 0% 0% 0% 0% A summary of our stock option plans, excluding options to purchase fractional shares resulting from our December 2010 1-for- 10 reverse stock split, is as follows: Six Months Ended June 30, Year Ended December 31, 2017 2016 Weighted Average Exercise Price Weighted Average Exercise Price Outstanding at beginning of period 829,617 $ 23.203 940,610 $ 14.163 Granted at Market 24,950 $ 98.794 129,855 $ 67.706 Canceled (3,343 ) $ 46.181 (463 ) $ 14.881 Exercised (144,407 ) $ 10.657 (240,385 ) $ 11.886 Outstanding at end of period 706,817 $ 28.326 829,617 $ 23.203 Exercisable at end of period 456,476 $ 15.304 532,703 $ 12.140 The total estimated fair value of stock options granted during the six months ended June 30, 2017 and 2016 was computed to be approximately $932 thousand and $267 thousand , respectively. The amounts are amortized ratably over the vesting periods of the options. The weighted average estimated fair value of options granted during the six months ended June 30, 2017 and 2016 was computed to be approximately $37.37 and $13.83 , respectively. The total intrinsic value of options exercised during the six months ended June 30, 2017 and 2016 was $12.4 million and $1.6 million , respectively. The cash proceeds from options exercised during the six months ended June 30, 2017 and 2016 was $1.3 million and $660 thousand , respectively. The following table summarizes information about stock options outstanding and exercisable at June 30, 2017 : Options Outstanding Options Exercisable Exercise Prices Number of Weighted Average Remaining Contractual Life in Years Weighted Average Exercise Price Number of Weighted Average Exercise Price $ 4.40 - $ 6.90 97,973 3.20 $ 5.406 97,605 $ 5.403 $ 6.91 - $ 7.36 140,266 6.39 $ 7.360 120,875 $ 7.360 $ 7.37 - $18.13 166,553 6.55 $ 13.317 130,005 $ 12.030 $18.14 - $39.76 169,201 7.57 $ 35.054 94,911 $ 32.025 $39.77 - $108.25 132,824 9.58 $ 77.623 13,080 $ 73.803 $ 4.40 - $108.25 706,817 6.87 $ 28.326 456,476 $ 15.304 As of June 30, 2017 , there was approximately $4.5 million in total unrecognized compensation cost related to outstanding stock options. That cost is expected to be recognized over a weighted average period of 1.81 years, with all cost to be recognized by the end of May 2021, assuming all options vest according to the vesting schedules in place at June 30, 2017 . As of June 30, 2017 , the aggregate intrinsic value of outstanding options was approximately $52.1 million and the aggregate intrinsic value of exercisable options was approximately $39.6 million . Employee Stock Purchase Plan (the "ESPP") For the three months ended June 30, 2017 and 2016 , we issued 2,339 and 4,497 shares under the ESPP, respectively. For the six months ended June 30, 2017 and 2016 , we issued 5,543 and 10,382 shares under the ESPP, respectively. For the three and six months ended June 30, 2017 and 2016 , we estimated the fair values of stock purchase rights granted under the ESPP using the Black-Scholes pricing model. The weighted average assumptions used for the periods presented were as follows: Three Months Ended Six Months Ended June 30, 2017 2016 2017 2016 Risk-free interest rate 0.70% 0.55% 0.67% 0.53% Expected lives 1.2 years 1.2 years 1.2 years 1.2 years Expected volatility 45% 43% 45% 42% Expected dividend yield 0% 0% 0% 0% For the three months ended June 30, 2017 and 2016, the weighted-average fair value of the purchase rights granted was $18.67 and $7.64 per share, respectively. For the six months ended June 30, 2017 and 2016 , the weighted-average fair value of the purchase rights granted was $15.63 and $6.87 per share, respectively. Restricted Stock Issuance 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 subject to time-based vesting and other provisions outlined in the Wilson Employment Agreement. As of March 26, 2017, all tranches have vested. On March 17, 2015, the Company issued unvested shares to certain Executive Officers related to performance-based restricted stock grants (the "Performance Grants"). The Company issued 52,956 shares under the Performance 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. 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"). Of these, 14,629 vested, 371 were forfeited, and 4,133 were withheld for tax. The 2016 MIP Grants vested during the three months ended March 31, 2017. On May 1, 2017, the Company issued 2,720 shares of our Common Stock to the Company's non-employee directors. These grants are to vest (the "Vesting Time") in full on the latter of (i) the one year anniversary of the date of grant and (ii) the Company’s Annual Meeting of Stockholders for the year following the year of grant for the award (the "Vesting Meeting"), subject to (i) the non-employee director's continued service to the Company through the Vesting Time, unless the non-employee director’s current term expires at the Vesting Meeting in which case vesting is subject to the non-employee director’s service to the Vesting Meeting and (ii) the non-employee director not engaging in “competition”, as defined in a restricted stock grant agreement executed by the non-employee director, to the Vesting Time. On May 31, 2017, the Company issued 23,700 unvested performance-based restricted stock shares to certain key employees. The vesting of these shares is subject to the achievement of certain Company performance and market conditions that must be met on or before May 30, 2024 . On June 15, 2017, the Company issued 6,594 unvested restricted shares to certain Executive Officers related to performance-based restricted stock grants as part of the Company’s 2017 Management Incentive Plan (the "2017 MIP Grants"). The 2017 MIP Grants have a one year vesting period from date of grant, 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	6 Months Ended
	Jun. 30, 2017
Equity [Abstract]
ACCUMULATED OTHER COMPREHENSIVE INCOME	ACCUMULATED OTHER COMPREHENSIVE INCOME Accumulated other comprehensive income consists of the following (in thousands): Minimum pension liability Foreign currency translation Total accumulated other comprehensive income Balances at December 31, 2016 $ (501 ) $ 598 $ 97 Current period other comprehensive income — 170 170 Balances at June 30, 2017 $ (501 ) $ 768 $ 267

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES The Company holds certain rights to market and manufacture all products developed or created under certain research, development and licensing agreements with various entities. In connection with such agreements, the Company has agreed to pay the entities royalties on net product sales. In each of the the three months ended June 30, 2017 and 2016, royalties of $0.1 million became payable under these agreements. In each of the six months ended June 30, 2017 and 2016, royalties of $0.2 million became payable under these agreements. The Company has contracts with suppliers for unconditional annual minimum inventory purchases and milestone obligations to third parties the Company believes are likely to be triggered currently totaling approximately $0.3 million for the remainder of 2017 and $0.3 million in 2018 . 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. The Company intends to defend itself vigorously in this matter. As of June 30, 2017, 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 its 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 at both June 30, 2017 and December 31, 2016 .

INTEREST AND OTHER INCOME, NET

INTEREST AND OTHER INCOME, NET	6 Months Ended
	Jun. 30, 2017
Other Income and Expenses [Abstract]
INTEREST AND OTHER INCOME, NET	INTEREST AND OTHER INCOME, NET Interest and other income, net consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Interest income $ (43 ) $ (30 ) $ (81 ) $ (63 ) Interest expense 51 38 75 76 Other expense (income), net (126 ) 26 (174 ) (112 ) Total interest and other expense (income), net $ (118 ) $ 34 $ (180 ) $ (99 ) Cash paid for interest for the three months ended June 30, 2017 and 2016 was $32 thousand and $19 thousand , respectively. Cash paid for interest for the six months ended June 30, 2017 and 2016 was $58 thousand and $37 thousand , respectively.

CREDIT FACILITY

CREDIT FACILITY	6 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
CREDIT FACILITY	CREDIT FACILITY At June 30, 2017 , we had a $15.0 million asset-based revolving line of credit with Wells Fargo which had a maturity date of December 31, 2017 as part of our credit and security agreement with Wells Fargo. At June 30, 2017 and December 31, 2016 , we had $4.0 million and $0.7 million borrowings outstanding on this line of credit, respectively. We were in compliance with all financial covenants as of June 30, 2017 and our available borrowing capacity under this revolving line of credit was approximately $11.1 million . On July 27, 2017, we repaid all outstanding balances and closed the Credit Facility with Wells Fargo described above and entered into a Credit Agreement (the "Credit Agreement") with JP Morgan Chase Bank, N.A. ("Chase"), which provides for a new revolving credit facility of up to $30.0 million (the "Credit Facility"). The Credit Facility provides us with the ability to borrow up to $30.0 million , although the amount of the Credit Facility may be increased by an additional $20.0 million up to a total of $50.0 million subject to receipt of additional lender commitments and other conditions. Any interest on borrowings due is to be charged at either the (i) rate of interest per annum publicly announced from time to time by Chase as its prime rate in effect at its principal offices in New York City, subject to a floor, minus 1.65% , or (ii) the interest rate per annum equal to (a) LIBOR for the interest period in effect multiplied by (b) Chase's Statutory Reserve Rate (as defined in the Credit Agreement), plus 1.10% and payable monthly. There is an annual minimum interest charge of $60 thousand under the Credit Agreement. Borrowings under the Credit Facility are subject to certain financial and non-financial covenants and are available for various corporate purposes, including general working capital, capital investments, and certain permitted acquisitions. The Credit Agreement also permits us to issue letters of credit. The maturity date of the Credit Facility is July 27, 2020. The foregoing discussion of the new Credit Facility is a summary only and is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which has been filed as an exhibit to the Company's Current Report on Form 8-K filed with the SEC on August 2, 2017.

SEGMENT REPORTING

SEGMENT REPORTING	6 Months Ended
	Jun. 30, 2017
Segment Reporting [Abstract]
SEGMENT REPORTING	SEGMENT REPORTING The Company consists of two reportable segments, Core Companion Animal Health ("CCA") and Other Vaccines, Pharmaceuticals and Products ("OVP"). The 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 US Imaging and International 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 animals including small mammals. All OVP products are sold by third parties under third-party labels. Summarized financial information concerning the Company's reportable segments is shown in the following table (in thousands): Three Months Ended June 30, 2017 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 27,021 $ 7,315 $ 34,336 Operating income 2,581 1,979 4,560 Income before income taxes 2,683 1,995 4,678 Capital purchases 211 779 990 Depreciation and amortization 857 243 1,100 Three Months Ended June 30, 2016 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 24,464 $ 5,501 $ 29,965 Operating income 2,746 810 3,556 Income before income taxes 2,724 798 3,522 Capital purchases 82 381 463 Depreciation and amortization 915 200 1,115 Six months ended June 30, 2017 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 51,628 $ 13,090 $ 64,718 Operating income 3,695 3,653 7,348 Income before income taxes 3,897 3,631 7,528 Capital purchases 655 1,210 1,865 Depreciation and amortization 1,702 490 2,192 Six months ended June 30, 2016 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 47,898 $ 9,213 $ 57,111 Operating income 4,504 1,022 5,526 Income before income taxes 4,532 1,093 5,625 Capital purchases 479 889 1,368 Depreciation and amortization 1,812 399 2,211 Revenue is attributed to individual countries based on customer location. Total revenue by principal geographic area was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 United States $ 31,902 $ 28,371 $ 59,623 $ 53,955 Europe 516 605 1,902 1,432 Canada 990 340 1,038 771 Other International 928 649 2,155 953 Total $ 34,336 $ 29,965 $ 64,718 $ 57,111 Asset information by reportable segment as of June 30, 2017 is as follows (in thousands): Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Total assets $ 105,655 $ 20,754 $ 126,409 Net assets 74,041 22,534 96,575 Asset information by reportable segment as of December 31, 2016 is as follows (in thousands): Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Total assets $ 110,995 $ 19,849 $ 130,844 Net assets 68,072 18,903 86,975 Total assets by principal geographic areas were as follows (in thousands): June 30, December 31, 2017 2016 United States $ 123,908 $ 127,827 Europe 2,501 3,017 Total $ 126,409 $ 130,844

BASIS OF PRESENTATION (Policies

BASIS OF PRESENTATION (Policies)	6 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
Basis of Presentation	Heska Corporation and its wholly-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. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the financial position of the Company at June 30, 2017 , and the results of our operations for the three and six months ended June 30, 2017 and 2016 and cash flows for the six months ended June 30, 2017 and 2016 . The unaudited Condensed Consolidated Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and other financial information filed with the SEC.
Use of Estimates	The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are required when establishing the allowance for doubtful accounts and the provision for excess or obsolete inventory, in determining the period over which our obligations are fulfilled under agreements to license product rights and/or technology rights, evaluating long-lived and intangible assets for impairment, determining the allocation of purchase price under purchase accounting, estimating the expense associated with the granting of stock options, and in determining the need for, and the amount of, a valuation allowance on deferred tax assets.
Recent Accounting Pronouncements	In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” ASU 2017-09 was issued to provide clarity and reduce both 1) diversity in practice and 2) cost and complexity when applying the guidance in Topic 718 to a change in the terms or conditions of a share-based payment award. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under Topic 718. The amendments in ASU 2017-09 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The amendments in ASU 2017-09 should be applied prospectively to an award modified on or after the adoption date. Heska adopted the new guidance in its second quarter of fiscal year 2017 and will apply the guidance to any future changes to the terms or conditions of its share-based payment awards. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment,” to simplify financial reporting by eliminating the need to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. Under ASU 2017-04, an entity should perform its goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, up to the amount of goodwill allocated to that reporting unit. The new guidance effectively eliminates “Step 2” from the previous goodwill impairment test. ASU 2017-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. Heska plans to adopt the new guidance in its fourth quarter of fiscal year 2017 when it performs its annual goodwill impairment test as of December 15, 2017. Heska does not expect the adoption of ASU 2017-04 to have a significant impact on the results of its goodwill impairment testing. 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 May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” and has subsequently issued several supplemental and/or clarifying ASUs (collectively “ASC 606”). ASC 606 prescribes a single common revenue standard that replaces most existing U.S. GAAP revenue recognition guidance. ASC 606 outlines a five-step model, under which Heska will recognize revenue as performance obligations within a customer contract are satisfied. ASC 606 is intended to provide more consistent interpretation and application of the principles outlined in the standard across filers in multiple industries and within the same industries compared to current practices, which should improve comparability. Adoption of ASC 606 is required for annual reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Upon adoption, Heska must elect to adopt either retrospectively to each prior reporting period presented (full retrospective method) or using the cumulative effect transition method with the cumulative effect of initial adoption recognized at the date of initial application (modified retrospective method). Based on evaluation of the accounting impact of ASC 606 on our revenue streams, Heska has elected to adopt the modified retrospective method. Heska assessed the impact that the future adoption of ASC 606 is expected to have on its Consolidated Financial Statements by analyzing its current portfolio of customer contracts and various revenue streams, including a review of historical accounting policies and practices to identify potential differences in applying the guidance of ASC 606. Heska is also performing a comprehensive review of its current processes and systems to determine and implement changes required to support the adoption of ASC 606 on January 1, 2018. Based on Heska’s review of its customer contracts, Heska has determined that the timing of revenue recognition on the majority of its customer contracts will continue to be recognized as they are currently, generally upon shipment of products, consistent with Heska’s current revenue recognition model. While Heska believes that the timing of revenue recognition is consistent with current practice, we are still evaluating the allocation of the standalone selling price of goods and services and this could have an impact on the amount of revenue recognized at a point in time versus over time. As such, Heska believes the adoption of ASC 606 will have an impact on both the timing of revenue recognition and various line items within the Consolidated Balance Sheet. Heska generally expenses costs to obtain contracts (i.e. sales commissions) as a period expense for all contracts, despite the length of the arrangement. ASC 606, states that "an asset recognized in accordance with the incremental costs of obtaining a contract shall be amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates." Because a significant number of Heska’s customers are under noncancelable contracts for periods extending beyond one year with the delivery of goods and services occurring throughout the duration, Heska anticipates recording an asset related to the prepayment of such contract acquisition costs. In addition, ASC 606 will require more comprehensive disclosures about revenue streams and contracts with customers, including significant judgments required. Heska is currently evaluating potential changes to its processes for preparing required disclosures and to information systems that support the financial reporting process. In addition, Heska is evaluating implications to the Company’s system of internal controls, relative to revenue recognition and the related revenue disclosures.

ACQUISITION AND RELATED PARTY22

ACQUISITION AND RELATED PARTY ITEMS (Tables)	6 Months Ended
	Jun. 30, 2017
Business Combinations and Related Party Disclosures [Abstract]
Schedule of purchase price allocation	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

INCOME TAXES (Tables)

INCOME TAXES (Tables)	6 Months Ended
	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Schedule of components of income tax expense	Our total income tax expense and the effective tax rate for our income before income taxes were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Income before income taxes $ 4,678 $ 3,522 $ 7,528 $ 5,625 Total income tax expense 1,539 780 86 1,436 Effective tax rate 32.9 % 22.1 % 1.1 % 25.5 %

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	6 Months Ended
	Jun. 30, 2017
Earnings Per Share [Abstract]
Reconciliation of basic and diluted earnings per share	The following is a reconciliation of the weighted-average shares outstanding used in the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016 (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net income attributable to Heska $ 3,333 $ 2,522 $ 7,940 $ 3,707 Basic weighted-average common shares outstanding 7,069 6,695 6,967 6,641 Assumed exercise of dilutive stock options and restricted stock units 563 554 603 565 Diluted weighted-average common shares outstanding 7,632 7,249 7,570 7,206 Basic earnings per share attributable to Heska $ 0.47 $ 0.38 $ 1.14 $ 0.56 Diluted earnings per share attributable to Heska $ 0.44 $ 0.35 $ 1.05 $ 0.51
Schedule of antidilutive securities excluded from computation of earnings per share	The following stock options and restricted units were excluded from the computation of diluted earnings per share because they would have been anti-dilutive (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Stock options 25 138 132 138

GOODWILL AND OTHER INTANGIBLES

GOODWILL AND OTHER INTANGIBLES (Tables)	6 Months Ended
	Jun. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of changes in goodwill	The following summarizes the change in goodwill during the six months ended June 30, 2017 (in thousands): Carrying amount, December 31, 2016 $ 26,647 Foreign currency adjustments 59 Carrying amount, June 30, 2017 $ 26,706
Schedule of other intangible assets	Other intangibles consists of the following as of June 30, 2017 and December 31, 2016 (in thousands): June 30, December 31, 2017 2016 Gross carrying amount $ 3,309 $ 3,309 Accumulated amortization (1,157 ) (963 ) Net carrying amount $ 2,152 $ 2,346
Schedule of amortization expense on intangible assets	Amortization expense relating to other intangibles was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Amortization expense $ 97 $ 34 $ 194 $ 37
Schedule of estimated future amortization expense	Estimated amortization expense related to intangibles for each of the five years from 2017 (remaining) through 2021 and thereafter is as follows (in thousands): Year Ending December 31, 2017 (remaining) 194 2018 388 2019 388 2020 388 2021 384 Thereafter 410 $ 2,152

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	6 Months Ended
	Jun. 30, 2017
Property, Plant and Equipment [Abstract]
Schedule of property and equipment	roperty and equipment, net consists of the following (in thousands): June 30, December 31, 2017 2016 Land $ 377 $ 377 Building 2,868 2,868 Machinery and equipment 37,488 36,588 Leasehold and building improvements 8,126 7,662 Construction in progress 1,869 1,655 50,728 49,150 Less accumulated depreciation (34,569 ) (32,569 ) Total property and equipment, net $ 16,159 $ 16,581

INVENTORIES (Tables)

INVENTORIES (Tables)	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
Schedule of inventory	Inventories, net consist of the following (in thousands): June 30, December 31, 2017 2016 Raw materials $ 12,551 $ 10,807 Work in process 4,413 3,820 Finished goods 10,508 7,087 Allowance for excess or obsolete inventory (1,404 ) (1,319 ) Total inventory, net $ 26,068 $ 20,395

ACCRUED LIABILITIES (Tables)

ACCRUED LIABILITIES (Tables)	6 Months Ended
	Jun. 30, 2017
Payables and Accruals [Abstract]
Schedule of accrued liabilities	Accrued liabilities consists of the following (in thousands): June 30, December 31, Accrued payroll and employee benefits $ 1,457 $ 2,166 Accrued property taxes 522 748 Accrued purchases — 664 Other 2,689 2,891 Total accrued liabilities $ 4,668 $ 6,469

CAPITAL STOCK (Tables)

CAPITAL STOCK (Tables)	6 Months Ended
	Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of weighted average valuation assumptions	The fair value of each option grant was estimated on the date of grant using the Black-Scholes option- pricing model with the following weighted average assumptions for options granted in the six months ended June 30, 2017 and 2016 . Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Risk-free interest rate 1.75% 1.17% 1.75% 1.19% Expected lives 4.9 years 4.5 years 4.9 years 4.5 years Expected volatility 41% 41% 41% 41% Expected dividend yield 0% 0% 0% 0%
Schedule of stock options plans	A summary of our stock option plans, excluding options to purchase fractional shares resulting from our December 2010 1-for- 10 reverse stock split, is as follows: Six Months Ended June 30, Year Ended December 31, 2017 2016 Weighted Average Exercise Price Weighted Average Exercise Price Outstanding at beginning of period 829,617 $ 23.203 940,610 $ 14.163 Granted at Market 24,950 $ 98.794 129,855 $ 67.706 Canceled (3,343 ) $ 46.181 (463 ) $ 14.881 Exercised (144,407 ) $ 10.657 (240,385 ) $ 11.886 Outstanding at end of period 706,817 $ 28.326 829,617 $ 23.203 Exercisable at end of period 456,476 $ 15.304 532,703 $ 12.140
Schedule of shares authorized under stock options plans by exercise price	The following table summarizes information about stock options outstanding and exercisable at June 30, 2017 : Options Outstanding Options Exercisable Exercise Prices Number of Weighted Average Remaining Contractual Life in Years Weighted Average Exercise Price Number of Weighted Average Exercise Price $ 4.40 - $ 6.90 97,973 3.20 $ 5.406 97,605 $ 5.403 $ 6.91 - $ 7.36 140,266 6.39 $ 7.360 120,875 $ 7.360 $ 7.37 - $18.13 166,553 6.55 $ 13.317 130,005 $ 12.030 $18.14 - $39.76 169,201 7.57 $ 35.054 94,911 $ 32.025 $39.77 - $108.25 132,824 9.58 $ 77.623 13,080 $ 73.803 $ 4.40 - $108.25 706,817 6.87 $ 28.326 456,476 $ 15.304
Schedule of pricing models	The weighted average assumptions used for the periods presented were as follows: Three Months Ended Six Months Ended June 30, 2017 2016 2017 2016 Risk-free interest rate 0.70% 0.55% 0.67% 0.53% Expected lives 1.2 years 1.2 years 1.2 years 1.2 years Expected volatility 45% 43% 45% 42% Expected dividend yield 0% 0% 0% 0%

ACCUMULATED OTHER COMPREHENSI30

ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)	6 Months Ended
	Jun. 30, 2017
Equity [Abstract]
Schedule of accumulated other comprehensive income (loss)	Accumulated other comprehensive income consists of the following (in thousands): Minimum pension liability Foreign currency translation Total accumulated other comprehensive income Balances at December 31, 2016 $ (501 ) $ 598 $ 97 Current period other comprehensive income — 170 170 Balances at June 30, 2017 $ (501 ) $ 768 $ 267

INTEREST AND OTHER INCOME, NET

INTEREST AND OTHER INCOME, NET (Tables)	6 Months Ended
	Jun. 30, 2017
Other Income and Expenses [Abstract]
Schedule of interest expense (income) and other income, net	Interest and other income, net consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Interest income $ (43 ) $ (30 ) $ (81 ) $ (63 ) Interest expense 51 38 75 76 Other expense (income), net (126 ) 26 (174 ) (112 ) Total interest and other expense (income), net $ (118 ) $ 34 $ (180 ) $ (99 )

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)	6 Months Ended
	Jun. 30, 2017
Segment Reporting [Abstract]
Reconciliation of other significant reconciling items from segments to consolidated	Summarized financial information concerning the Company's reportable segments is shown in the following table (in thousands): Three Months Ended June 30, 2017 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 27,021 $ 7,315 $ 34,336 Operating income 2,581 1,979 4,560 Income before income taxes 2,683 1,995 4,678 Capital purchases 211 779 990 Depreciation and amortization 857 243 1,100 Three Months Ended June 30, 2016 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 24,464 $ 5,501 $ 29,965 Operating income 2,746 810 3,556 Income before income taxes 2,724 798 3,522 Capital purchases 82 381 463 Depreciation and amortization 915 200 1,115 Six months ended June 30, 2017 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 51,628 $ 13,090 $ 64,718 Operating income 3,695 3,653 7,348 Income before income taxes 3,897 3,631 7,528 Capital purchases 655 1,210 1,865 Depreciation and amortization 1,702 490 2,192 Six months ended June 30, 2016 Core Other Vaccines, Pharmaceuticals and Products Total revenue $ 47,898 $ 9,213 $ 57,111 Operating income 4,504 1,022 5,526 Income before income taxes 4,532 1,093 5,625 Capital purchases 479 889 1,368 Depreciation and amortization 1,812 399 2,211
Schedule of revenue from external customers and long-lived assets, by geographical areas	Revenue is attributed to individual countries based on customer location. Total revenue by principal geographic area was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 United States $ 31,902 $ 28,371 $ 59,623 $ 53,955 Europe 516 605 1,902 1,432 Canada 990 340 1,038 771 Other International 928 649 2,155 953 Total $ 34,336 $ 29,965 $ 64,718 $ 57,111 Asset information by reportable segment as of June 30, 2017 is as follows (in thousands): Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Total assets $ 105,655 $ 20,754 $ 126,409 Net assets 74,041 22,534 96,575 Asset information by reportable segment as of December 31, 2016 is as follows (in thousands): Core Companion Animal Health Other Vaccines, Pharmaceuticals and Products Total Total assets $ 110,995 $ 19,849 $ 130,844 Net assets 68,072 18,903 86,975 Total assets by principal geographic areas were as follows (in thousands): June 30, December 31, 2017 2016 United States $ 123,908 $ 127,827 Europe 2,501 3,017 Total $ 126,409 $ 130,844

ACQUISITION AND RELATED PARTY33

ACQUISITION AND RELATED PARTY ITEMS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	May 31, 2016	Jun. 30, 2017	Dec. 31, 2016	Feb. 24, 2013
Business Acquisition [Line Items]
Common stock, par value (in dollars per share)		$ 0.01
Goodwill		$ 26,706	$ 26,647
Cuattro, LLC | Kevin S. Willson, Shawna M. Wilson And Trusts For Their Children And Family | Chief Executive Officer
Business Acquisition [Line Items]
General Partner Interest (as a percent)		100.00%
Cuattro Software, LLC | Kevin S. Willson, Shawna M. Wilson And Trusts For Their Children And Family | Chief Executive Officer
Business Acquisition [Line Items]
General Partner Interest (as a percent)		100.00%
Cuattro Veterinary USA, LLC
Business Acquisition [Line Items]
Shares issued as consideration	175
Liabilities assumed in debt as part of the transaction	$ 1,535
Common stock issued - 175,000 shares	6,347
Total fair value of consideration transferred	7,882
Accounts receivable	222
Inventories	39
Due from Cuattro, LLC	963
Property and equipment	80
Other tangible assets	164
Deferred tax asset	56
Intangible assets	2,521
Goodwill	5,783
Accounts payable	(112)
Deferred tax liability	(905)
Other assumed liabilities	(929)
Total fair value of consideration transferred	$ 7,882
Percentage of voting interest acquired				54.60%
Minority interest subject to purchase (as a percent)				45.40%
Cuattro Veterinary USA, LLC | Customer Relationships
Business Acquisition [Line Items]
Acquired intangible assets, useful life	6 years 7 months 31 days
Acquired intangible assets, fair value	$ 2,521
Heska Imaging
Business Acquisition [Line Items]
Shares issued as consideration, value	$ 6,300
Put option, maximum valuation		$ 13,800

ACQUISITION AND RELATED PARTY34

ACQUISITION AND RELATED PARTY ITEMS - RELATED PARTY ITEMS (Details) - USD ($) $ in Thousands	3 Months Ended	5 Months Ended	6 Months Ended
	Jun. 30, 2017	May 31, 2017	Jun. 30, 2017
Related Party Transaction [Line Items]
Distributions to non-controlling interest members			$ 1,000
Affiliated Entity | Cuattro, LLC
Related Party Transaction [Line Items]
Related party - amount of transaction		$ 2,900
Heska Imaging
Related Party Transaction [Line Items]
Distributions to non-controlling interest members			$ 2,100
Heska Imaging | Clint Roth
Related Party Transaction [Line Items]
Ownership percentage	8.39%		8.39%
Heska Imaging | Immediate Family Member of Management or Principal Owner | Shawna M. Wilson
Related Party Transaction [Line Items]
Ownership percentage	29.75%		29.75%
Heska Imaging | Executive Officer | Steven M. Asakowicz
Related Party Transaction [Line Items]
Ownership percentage	4.09%		4.09%
Heska Imaging | Executive Officer | Rodney A. Lippincott
Related Party Transaction [Line Items]
Ownership percentage	3.07%		3.07%
Heska Imaging | Chief Executive Officer | Kevin S. Wilson
Related Party Transaction [Line Items]
Ownership percentage	0.05%		0.05%
Heska Imaging | Affiliated Entity | Cuattro, LLC
Related Party Transaction [Line Items]
Ownership percentage	0.05%		0.05%
Related party - amount of transaction	$ 8,600
Cuattro, LLC | Affiliated Entity
Related Party Transaction [Line Items]
Related party - amount of transaction			$ 67
Heska Corporation | Cuattro, LLC
Related Party Transaction [Line Items]
Due to – related party	$ 21		$ 21

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Tax Disclosure [Abstract]
Income before income taxes	$ 4,678	$ 3,522	$ 7,528	$ 5,625
Total income tax expense	$ 1,539	$ 780	$ 86	$ 1,436
Effective tax rate	32.90%	22.10%	1.10%	25.50%
Cash paid for income taxes	$ 144	$ 57	$ 144	$ 62

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) $ / shares in Units, shares in Thousands, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Dec. 31, 2010	Jun. 30, 2017USD ($)$ / sharesshares	Jun. 30, 2016USD ($)$ / sharesshares	Jun. 30, 2017USD ($)$ / sharesshares	Jun. 30, 2016USD ($)$ / sharesshares
Earnings Per Share [Abstract]
Reverse stock split conversion ratio	0.10
Net income attributable to Heska Corporation | $		$ 3,333	$ 2,522	$ 7,940	$ 3,707
Weighted average outstanding shares used to compute basic earnings per share attributable to Heska Corporation		7,069	6,695	6,967	6,641
Assumed exercise of dilutive stock options and restricted stock units		563	554	603	565
Diluted weighted-average common shares outstanding		7,632	7,249	7,570	7,206
Basic earnings per share attributable to Heska Corporation, in dollars per share | $ / shares		$ 0.47	$ 0.38	$ 1.14	$ 0.56
Diluted earnings per share attributable to Heska Corporation, in dollars per share | $ / shares		$ 0.44	$ 0.35	$ 1.05	$ 0.51
Stock Options And Restricted Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options and restricted units excluded from computation of earnings per share		25	138	132	138

GOODWILL AND OTHER INTANGIBLE37

GOODWILL AND OTHER INTANGIBLES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Goodwill [Roll Forward]
Carrying amount, December 31, 2016			$ 26,647
Foreign currency adjustments			59
Carrying amount, June 30, 2017	$ 26,706		26,706
Finite-Lived Intangible Assets, Net [Abstract]
Gross carrying amount	3,309		3,309		$ 3,309
Accumulated amortization	(1,157)		(1,157)		(963)
Net carrying amount	2,152		2,152		2,346
Amortization expense	97	$ 34	194	$ 37
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2017 (remaining)	194		194
2,018	388		388
2,019	388		388
2,020	388		388
2,021	384		384
Thereafter	410		410
Net carrying amount	$ 2,152		$ 2,152		$ 2,346

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 50,728		$ 50,728		$ 49,150
Less accumulated depreciation	(34,569)		(34,569)		(32,569)
Total property and equipment, net	16,159		16,159		16,581
Total costs transferred from inventory			300		1,800
Depreciation and amortization	1,000	$ 1,100	2,000	$ 2,200
Heska Imaging
Property, Plant and Equipment [Line Items]
Total property and equipment, net	300		300		300
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	377		377		377
Building
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,868		2,868		2,868
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	37,488		37,488		36,588
Leasehold and building improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	8,126		8,126		7,662
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,869		$ 1,869		$ 1,655
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

INVENTORIES (Details)

INVENTORIES (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 12,551	$ 10,807
Work in process	4,413	3,820
Finished goods	10,508	7,087
Allowance for excess or obsolete inventory	(1,404)	(1,319)
Inventory, net	$ 26,068	$ 20,395

ACCRUED LIABILITIES (Details)

ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Accrued payroll and employee benefits	$ 1,457	$ 2,166
Accrued property taxes	522	748
Accrued purchases	0	664
Other	2,689	2,891
Total accrued liabilities	$ 4,668	$ 6,469

CAPITAL STOCK - NARRATIVE (Deta

CAPITAL STOCK - NARRATIVE (Details) $ / shares in Units, $ in Thousands	Jun. 15, 2017shares	May 01, 2017shares	May 31, 2016shares	Mar. 02, 2016shares	Mar. 17, 2015shares	Mar. 26, 2014trancheshares	Dec. 31, 2010	Jun. 30, 2017USD ($)$ / sharesshares	Jun. 30, 2016$ / sharesshares	Jun. 30, 2017USD ($)$ / sharesshares	Jun. 30, 2016USD ($)$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reverse stock split conversion ratio							0.10
Fair value of stock options granted during period | $										$ 932	$ 267
Weighted average grant date fair value | $ / shares										$ 37.37	$ 13.83
Intrinsic value of options exercised | $										$ 12,400	$ 1,600
Proceeds from stock options exercised | $										$ 1,300	$ 660
Weighted average purchase price of shares purchased | $ / shares								$ 18.67	$ 7.64	$ 15.63	$ 6.87
Stockholder ownership percentage, threshold for restrictions								5.00%
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Intrinsic value of options exercised | $										$ 39,600
Total unrecognized compensation expense related to outstanding stock options | $								$ 4,500		$ 4,500
Period for recognition of unrecognized compensation expense										1 year 9 months 21 days
Intrinsic value of options outstanding | $								$ 52,100		$ 52,100
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued during period								2,339	4,497	5,543	10,382
Restricted Stock | Non-employee director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued during period		2,720,000
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 in share-based payment award | tranche						4
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued during period			23,700,000		52,956
Performance Shares | Management Incentive Plan (MIP) Grants 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued during period				15,000
Shares vested during period				14,629
Performance shares canceled				371
Shares withheld for income tax expense				4,133
Performance Shares | Management Incentive Plan (MIP) Grants 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued during period	6,594,000

CAPITAL STOCK - OPTION ACTIVITY

CAPITAL STOCK - OPTION ACTIVITY (Details) - $ / shares	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate (as a percent)	1.75%	1.17%	1.75%	1.19%
Expected lives (in years)	4 years 10 months 18 days	4 years 5 months 18 days	4 years 10 months 18 days	4 years 5 months 18 days
Expected volatility (as a percent)	41.00%	41.00%	41.00%	41.00%
Expected dividend rate (as a percent)	0.00%	0.00%	0.00%	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning of period			829,617	940,610	940,610
Granted at Market			24,950		129,855
Canceled			(3,343)		(463)
Exercised			(144,407)		(240,385)
Outstanding at end of period	706,817		706,817		829,617
Exercisable at end of period	456,476		456,476		532,703
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)			$ 23.203	$ 14.163	$ 14.163
Granted at Market (in dollars per share)			98.794		67.706
Cancelled (in dollars per share)			46.181		14.881
Exercised (in dollars per share)			10.657		11.886
Outstanding at ending of period (in dollars per share)	$ 28.326		28.326		23.203
Exercisable at end of period (in dollars per share)	$ 15.304		$ 15.304		$ 12.140
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate (as a percent)	0.70%	0.55%	0.67%	0.53%
Expected lives (in years)	1 year 2 months 18 days	1 year 2 months 18 days	1 year 2 months 18 days	1 year 2 months 18 days
Expected volatility (as a percent)	45.00%	43.00%	45.00%	42.00%
Expected dividend rate (as a percent)	0.00%	0.00%	0.00%	0.00%

CAPITAL STOCK - EXERCISE PRICE

CAPITAL STOCK - EXERCISE PRICE (Details)	6 Months Ended
	Jun. 30, 2017$ / sharesshares
$ 4.40 - $ 6.90
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of Options Outstanding at June 30, 2017 | shares	97,973
Weighted Average Remaining Contractual Life in Years	3 years 2 months 13 days
Weighted Average Exercise Price	$ 5.406
Number of Options Exercisable at June 30, 2017 | shares	97,605
Weighted Average Exercise Price	$ 5.403
Exercise price range, lower (in dollars per share)	4.40
Exercise price range, upper (in dollars per share)	$ 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 June 30, 2017 | shares	140,266
Weighted Average Remaining Contractual Life in Years	6 years 4 months 21 days
Weighted Average Exercise Price	$ 7.360
Number of Options Exercisable at June 30, 2017 | shares	120,875
Weighted Average Exercise Price	$ 7.360
Exercise price range, lower (in dollars per share)	6.91
Exercise price range, upper (in dollars per share)	$ 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 June 30, 2017 | shares	166,553
Weighted Average Remaining Contractual Life in Years	6 years 6 months 18 days
Weighted Average Exercise Price	$ 13.317
Number of Options Exercisable at June 30, 2017 | shares	130,005
Weighted Average Exercise Price	$ 12.030
Exercise price range, lower (in dollars per share)	7.37
Exercise price range, upper (in dollars per share)	$ 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 June 30, 2017 | shares	169,201
Weighted Average Remaining Contractual Life in Years	7 years 6 months 27 days
Weighted Average Exercise Price	$ 35.054
Number of Options Exercisable at June 30, 2017 | shares	94,911
Weighted Average Exercise Price	$ 32.025
Exercise price range, lower (in dollars per share)	18.14
Exercise price range, upper (in dollars per share)	$ 39.76
$39.77 - $108.25
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of Options Outstanding at June 30, 2017 | shares	132,824
Weighted Average Remaining Contractual Life in Years	9 years 6 months 31 days
Weighted Average Exercise Price	$ 77.623
Number of Options Exercisable at June 30, 2017 | shares	13,080
Weighted Average Exercise Price	$ 73.803
Exercise price range, lower (in dollars per share)	39.77
Exercise price range, upper (in dollars per share)	$ 108.25
$ 4.40 - $108.25
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of Options Outstanding at June 30, 2017 | shares	706,817
Weighted Average Remaining Contractual Life in Years	6 years 10 months 14 days
Weighted Average Exercise Price	$ 28.326
Number of Options Exercisable at June 30, 2017 | shares	456,476
Weighted Average Exercise Price	$ 15.304
Exercise price range, lower (in dollars per share)	4.40
Exercise price range, upper (in dollars per share)	$ 108.25

ACCUMULATED OTHER COMPREHENSI44

ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017USD ($)
Total accumulated other comprehensive income
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	$ 97
Current period other comprehensive income	170
Ending balance	267
Minimum pension liability
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(501)
Current period other comprehensive income	0
Ending balance	(501)
Foreign currency translation
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	598
Current period other comprehensive income	170
Ending balance	$ 768

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Increase in royalties payable	$ 0.1	$ 0.1	$ 0.2	$ 0.2
Recorded Unconditional Purchase Obligation [Line Items]
Warranty reserve	0.4		0.4		$ 0.4
Inventories
Recorded Unconditional Purchase Obligation [Line Items]
Minimum inventory purchases in fiscal 2016	0.3		0.3
Minimum inventory purchases in fiscal 2017	$ 0.3		$ 0.3

INTEREST AND OTHER INCOME, NE46

INTEREST AND OTHER INCOME, NET (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Other Income and Expenses [Abstract]
Interest income	$ (43)	$ (30)	$ (81)	$ (63)
Interest expense	51	38	75	76
Other, net	(126)	26	(174)	(112)
Interest and other expense (income), net	(118)	34	(180)	(99)
Interest Paid	$ 32	$ 19	$ 58	$ 37

CREDIT FACILITY (Details)

CREDIT FACILITY (Details) - Line of Credit - Revolving Credit Facility - USD ($)	Jul. 27, 2017	Jun. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 15,000,000
Long-term line of credit		4,000,000	$ 700,000
Remaining borrowing capacity		$ 11,100,000
London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate		1.65%
Subsequent Event
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 30,000,000
Additional maximum borrowing capacity increase	20,000,000
Contingent maximum borrowing capacity	50,000,000
Minimum annual interest charge	$ 60,000
Subsequent Event | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate	1.10%

SEGMENT REPORTING (Details)

SEGMENT REPORTING (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total revenue	$ 34,336	$ 29,965	$ 64,718	$ 57,111
Operating income	4,560	3,556	7,348	5,526
Income before income taxes	4,678	3,522	7,528	5,625
Capital expenditures	990	463	1,865	1,368
Depreciation and amortization	1,100	1,115	2,192	2,211
Assets	126,409		126,409		$ 130,844
Net Assets	96,575		96,575		86,975
United States
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total revenue	31,902	28,371	59,623	53,955
Assets	123,908		123,908		127,827
Europe
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total revenue	516	605	1,902	1,432
Assets	2,501		2,501		3,017
Canada
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total revenue	990	340	1,038	771
Other International
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total revenue	928	649	2,155	953
Operating Segments | Core Companion Animal Health
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total revenue	27,021	24,464	51,628	47,898
Operating income	2,581	2,746	3,695	4,504
Income before income taxes	2,683	2,724	3,897	4,532
Capital expenditures	211	82	655	479
Depreciation and amortization	857	915	1,702	1,812
Assets	105,655		105,655		110,995
Net Assets	74,041		74,041		68,072
Operating Segments | Other Vaccines, Pharmaceuticals and Products
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total revenue	7,315	5,501	13,090	9,213
Operating income	1,979	810	3,653	1,022
Income before income taxes	1,995	798	3,631	1,093
Capital expenditures	779	381	1,210	889
Depreciation and amortization	243	$ 200	490	$ 399
Assets	20,754		20,754		19,849
Net Assets	$ 22,534		$ 22,534		$ 18,903

SEGMENT REPORTING - NARRATIVE (

SEGMENT REPORTING - NARRATIVE (Details)	3 Months Ended
	Jun. 30, 2017segment
Segment Reporting [Abstract]
Number of reportable segments	2