Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 04, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 000-22427 | |
Entity Registrant Name | HESKA CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 77-0192527 | |
Entity Address, Address Line One | 3760 Rocky Mountain Avenue | |
Entity Address, City or Town | Loveland | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80538 | |
City Area Code | 970 | |
Local Phone Number | 493-7272 | |
Title of 12(b) Security | Common stock, $0.01 par value | |
Trading Symbol | HSKA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 10,825,586 | |
Entity Central Index Key | 0001038133 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 161,074,000 | $ 223,574,000 |
Accounts receivable, net of allowance for losses of $1,130 and $874, respectively | 26,415,000 | 27,995,000 |
Inventories | 57,477,000 | 49,361,000 |
Net investment in leases, current, net of allowance for losses of $149 and $137, respectively | 6,898,000 | 6,175,000 |
Prepaid expenses | 5,269,000 | 5,244,000 |
Other current assets | 5,681,000 | 7,206,000 |
Total current assets | 262,814,000 | 319,555,000 |
Property and equipment, net | 31,059,000 | 33,413,000 |
Operating lease right-of-use assets | 6,810,000 | 5,198,000 |
Goodwill | 129,960,000 | 118,826,000 |
Other intangible assets, net | 60,435,000 | 56,705,000 |
Deferred tax asset, net | 23,763,000 | 19,429,000 |
Net investment in leases, non-current | 23,782,000 | 20,128,000 |
Investments in unconsolidated affiliates | 4,330,000 | 5,424,000 |
Related party convertible note receivable, net | 3,015,000 | 6,800,000 |
Promissory note receivable from investee, net | 13,196,000 | 8,448,000 |
Other non-current assets | 10,903,000 | 10,146,000 |
Total assets | 570,067,000 | 604,072,000 |
Current liabilities: | ||
Accounts payable | 14,749,000 | 15,374,000 |
Accrued liabilities | 14,292,000 | 19,424,000 |
Operating lease liabilities, current | 2,681,000 | 2,227,000 |
Deferred revenue, current, and other | 4,869,000 | 6,901,000 |
Total current liabilities | 36,591,000 | 43,926,000 |
Convertible note, non-current, net | 84,357,000 | 84,034,000 |
Notes payable | 13,515,000 | 15,900,000 |
Deferred revenue, non-current | 3,603,000 | 3,854,000 |
Operating lease liabilities, non-current | 4,713,000 | 3,509,000 |
Deferred tax liability | 15,436,000 | 12,667,000 |
Other liabilities | 3,953,000 | 4,328,000 |
Total liabilities | 162,168,000 | 168,218,000 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value, 2,500,000 shares authorized, none issued or outstanding | 0 | 0 |
Common stock, $0.01 par value, 20,000,000 shares authorized, respectively, none issued or outstanding | 0 | 0 |
Public common stock, $0.01 par value, 20,000,000 shares authorized, 10,824,291 and 10,712,347 shares issued and outstanding, respectively | 108,000 | 107,000 |
Additional paid-in capital | 593,140,000 | 579,354,000 |
Accumulated other comprehensive (loss) income | (21,037,000) | 5,037,000 |
Accumulated deficit | (164,312,000) | (148,644,000) |
Total stockholders' equity | 407,899,000 | 435,854,000 |
Total liabilities and stockholders' equity | $ 570,067,000 | $ 604,072,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Allowance for credit loss | $ 1,130 | $ 874 |
Leases, allowance for doubtful accounts | $ 149 | $ 137 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 2,500,000 | 2,500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 0 | 0 |
Common stock, shares outstanding (in shares) | 0 | 0 |
Public Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 10,824,291 | 10,712,347 |
Common stock, shares outstanding (in shares) | 10,824,291 | 10,712,347 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues [Abstract] | ||||
Revenue, net | $ 61,492 | $ 60,240 | $ 190,969 | $ 185,671 |
Cost of revenue | 34,616 | 34,996 | 107,621 | 107,685 |
Gross profit | 26,876 | 25,244 | 83,348 | 77,986 |
Operating expenses: | ||||
Selling and marketing | 11,280 | 10,785 | 35,042 | 34,141 |
Research and development | 2,382 | 1,955 | 17,164 | 5,089 |
General and administrative | 13,885 | 14,937 | 48,811 | 40,867 |
Total operating expenses | 27,547 | 27,677 | 101,017 | 80,097 |
Operating loss | (671) | (2,433) | (17,669) | (2,111) |
Interest and other expense (income), net | 241 | (30) | 1,080 | 1,075 |
Net loss before taxes and equity in losses of unconsolidated affiliates | (912) | (2,403) | (18,749) | (3,186) |
Income tax (benefit) expense: | ||||
Current income tax expense (benefit) | 235 | (63) | 450 | 614 |
Deferred income tax benefit | (1,069) | (750) | (4,625) | (4,043) |
Total income tax benefit | (834) | (813) | (4,175) | (3,429) |
Net (loss) income before equity in losses of unconsolidated affiliates | (78) | (1,590) | (14,574) | 243 |
Equity in losses of unconsolidated affiliates | (358) | (308) | (1,094) | (837) |
Net loss attributable to Heska Corporation | $ (436) | $ (1,898) | $ (15,668) | $ (594) |
Earnings Per Share [Abstract] | ||||
Basic (loss) earnings per share attributable to Heska Corporation (in dollars per share) | $ (0.04) | $ (0.19) | $ (1.52) | $ (0.06) |
Diluted (loss) earnings per share attributable to Heska Corporation (in dollars per share) | $ (0.04) | $ (0.19) | $ (1.52) | $ (0.06) |
Weighted average outstanding shares used to compute basic (loss) earnings per share attributable to Heska Corporation (in shares) | 10,368 | 10,195 | 10,330 | 9,949 |
Weighted average outstanding shares used to compute diluted (loss) earnings per share attributable to Heska Corporation (in shares) | 10,368 | 10,195 | 10,330 | 9,949 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Net loss attributable to Heska Corporation | $ (436) | $ (1,898) | $ (15,668) | $ (594) |
Other comprehensive loss: | ||||
Translation adjustments and losses from intra-entity transactions | (11,645) | (3,431) | (26,074) | (6,962) |
Comprehensive loss attributable to Heska Corporation | $ (12,081) | $ (5,329) | $ (41,742) | $ (7,556) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Adoption of accounting standards | Cumulative Effect, Period of Adoption, Adjusted Balance | Preferred Stock | Preferred Stock Cumulative Effect, Period of Adoption, Adjusted Balance | Common Stock | Common Stock Cumulative Effect, Period of Adoption, Adjusted Balance | Additional Paid-in Capital | Additional Paid-in Capital Adoption of accounting standards | Additional Paid-in Capital Cumulative Effect, Period of Adoption, Adjusted Balance | Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Cumulative Effect, Period of Adoption, Adjusted Balance | Accumulated Deficit | Accumulated Deficit Adoption of accounting standards | Accumulated Deficit Cumulative Effect, Period of Adoption, Adjusted Balance |
Beginning balance (in shares) at Dec. 31, 2020 | 0 | 0 | 9,476 | 9,476 | |||||||||||
Beginning balance at Dec. 31, 2020 | $ 287,053 | $ (26,469) | $ 260,584 | $ 0 | $ 0 | $ 95 | $ 95 | $ 423,650 | $ (29,834) | $ 393,816 | $ 14,169 | $ 14,169 | $ (150,861) | $ 3,365 | $ (147,496) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net loss attributable to Heska Corporation | (594) | (594) | |||||||||||||
Issuance of common stock, net of shares withheld for employee taxes (in shares) | 284 | ||||||||||||||
Issuance of common stock, net of shares withheld for employee taxes | 2,767 | $ 3 | 2,764 | ||||||||||||
Equity offering, net of issuance costs (in shares) | 941 | ||||||||||||||
Equity offering, net of issuance costs | 164,186 | $ 9 | 164,177 | ||||||||||||
Stock-based compensation | 14,861 | 14,861 | |||||||||||||
Other comprehensive income (loss) | (6,962) | (6,962) | |||||||||||||
Ending balance (in shares) at Sep. 30, 2021 | 0 | 10,701 | |||||||||||||
Ending balance at Sep. 30, 2021 | 434,842 | $ 0 | $ 107 | 575,618 | 7,207 | (148,090) | |||||||||
Beginning balance (in shares) at Jun. 30, 2021 | 0 | 10,646 | |||||||||||||
Beginning balance at Jun. 30, 2021 | 433,766 | $ 0 | $ 106 | 569,214 | 10,638 | (146,192) | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net loss attributable to Heska Corporation | (1,898) | ||||||||||||||
Issuance of common stock, net of shares withheld for employee taxes (in shares) | 55 | ||||||||||||||
Issuance of common stock, net of shares withheld for employee taxes | 1,001 | $ 1 | 1,000 | ||||||||||||
Stock-based compensation | 5,404 | 5,404 | |||||||||||||
Other comprehensive income (loss) | (3,431) | (3,431) | |||||||||||||
Ending balance (in shares) at Sep. 30, 2021 | 0 | 10,701 | |||||||||||||
Ending balance at Sep. 30, 2021 | 434,842 | $ 0 | $ 107 | 575,618 | 7,207 | (148,090) | |||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 0 | 10,712 | |||||||||||||
Beginning balance at Dec. 31, 2021 | 435,854 | $ 0 | $ 107 | 579,354 | 5,037 | (148,644) | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net loss attributable to Heska Corporation | (15,668) | (15,668) | |||||||||||||
Issuance of common stock, net of shares withheld for employee taxes (in shares) | 112 | ||||||||||||||
Issuance of common stock, net of shares withheld for employee taxes | (2,384) | $ 1 | (2,385) | ||||||||||||
Stock-based compensation | 12,311 | 12,311 | |||||||||||||
Equity contingent consideration | 3,860 | 3,860 | |||||||||||||
Other comprehensive income (loss) | (26,074) | (26,074) | |||||||||||||
Ending balance (in shares) at Sep. 30, 2022 | 0 | 10,824 | |||||||||||||
Ending balance at Sep. 30, 2022 | 407,899 | $ 0 | $ 108 | 593,140 | (21,037) | (164,312) | |||||||||
Beginning balance (in shares) at Jun. 30, 2022 | 0 | 10,800 | |||||||||||||
Beginning balance at Jun. 30, 2022 | 417,287 | $ 0 | $ 108 | 590,447 | (9,392) | (163,876) | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net loss attributable to Heska Corporation | (436) | (436) | |||||||||||||
Issuance of common stock, net of shares withheld for employee taxes (in shares) | 24 | ||||||||||||||
Issuance of common stock, net of shares withheld for employee taxes | 372 | 372 | |||||||||||||
Stock-based compensation | 2,321 | 2,321 | |||||||||||||
Other comprehensive income (loss) | (11,645) | (11,645) | |||||||||||||
Ending balance (in shares) at Sep. 30, 2022 | 0 | 10,824 | |||||||||||||
Ending balance at Sep. 30, 2022 | $ 407,899 | $ 0 | $ 108 | $ 593,140 | $ (21,037) | $ (164,312) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net (loss) income before equity in losses of unconsolidated affiliates | $ (15,668) | $ (594) |
Adjustments to reconcile net loss to cash (used in) provided by operating activities: | ||
Depreciation and amortization | 10,327 | 10,084 |
Non-cash impact of operating leases | 2,012 | 1,582 |
Deferred tax benefit | (4,625) | (4,043) |
Stock-based compensation | 12,311 | 14,861 |
Change in fair value of contingent consideration | (315) | (744) |
Provision for credit losses on convertible note receivable | 3,499 | 0 |
Equity in losses of unconsolidated affiliates | 1,094 | 837 |
Accretion of discounts and issuance costs | 29 | 48 |
Other losses (gains), net | 1,233 | 1,057 |
Changes in operating assets and liabilities (net of the effect of acquisitions): | ||
Accounts receivable | 801 | 5,504 |
Inventories | (12,710) | (9,286) |
Lease receivables | (5,152) | (3,528) |
Other assets | (710) | (3,357) |
Accounts payable | 268 | (2,913) |
Other liabilities | (11,045) | (4,236) |
Net cash (used in) provided by operating activities | (18,651) | 5,272 |
Cash flows from investing activities: | ||
Promissory note receivable issuance | (4,700) | (9,000) |
Purchases of property and equipment | (1,600) | (993) |
Proceeds from disposition of property and equipment | 0 | 42 |
Net cash used in investing activities | (35,256) | (34,596) |
Cash flows from financing activities: | ||
Payment of stock issuance costs | 0 | (314) |
Proceeds from issuance of common stock | 2,840 | 168,770 |
Payments for taxes related to shares withheld for employee taxes | (5,224) | (1,503) |
Repayments of other debt | (158) | (821) |
Payments on Notes Payable | (2,385) | 0 |
Net cash (used in) provided by financing activities | (4,927) | 166,132 |
Foreign exchange effect on cash and cash equivalents | (3,666) | (242) |
Net (decrease) increase in cash and cash equivalents | (62,500) | 136,566 |
Cash and cash equivalents, beginning of period | 223,574 | 86,334 |
Cash and cash equivalents, end of period | 161,074 | 222,900 |
Supplemental disclosure of cash flow information: | ||
Non-cash transfers of equipment between inventory and property and equipment, net | 2,070 | 3,678 |
Contingent consideration for acquisitions | 3,860 | 3,290 |
Notes payable | 0 | 15,900 |
Indemnity holdback and net working capital adjustment for acquisitions | 1,420 | 346 |
Lacuna Diagnostics, Inc. | ||
Cash flows from investing activities: | ||
Acquisition | 0 | (3,882) |
VetZ GmbH | ||
Cash flows from investing activities: | ||
Acquisition | (28,956) | 0 |
Biotech | ||
Cash flows from investing activities: | ||
Acquisition | 0 | (16,250) |
Cash flows from financing activities: | ||
Payments on Notes Payable | (2,600) | |
BiEsseA s.r.1. | ||
Cash flows from investing activities: | ||
Acquisition | $ 0 | $ (4,513) |
OPERATIONS AND SUMMARY OF SIGNI
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Heska Corporation and its wholly-owned subsidiaries ("Heska", the "Company", "we" or "our") sell advanced veterinary diagnostic and specialty products. Our offerings include Point of Care ("POC") laboratory instruments and consumables, single-use offerings such as in-clinic diagnostics tests; Point of Care digital imaging diagnostic instruments and veterinary practice information management software solutions (“PIMS”); digital cytology services; vaccines; local and cloud-based data services; allergy testing and immunotherapy; and heartworm preventive products. Our core focus is on supporting veterinarians in the canine and feline healthcare space. Basis of Presentation and Consolidation The accompanying interim Condensed Consolidated Financial Statements are unaudited. The interim unaudited Condensed Consolidated Financial Statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include normal, recurring adjustments, necessary to present fairly the financial position of the Company as of September 30, 2022, and the results of our operations and statements of stockholders' equity for the three and nine months ended September 30, 2022 and 2021, and cash flows for the nine months ended September 30, 2022 and 2021. 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 ("GAAP") have been condensed or omitted pursuant to such rules and regulations. Our unaudited Condensed Consolidated Financial Statements include our accounts and the accounts of our wholly-owned subsidiaries since their respective dates of acquisitions. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year or any future period, particularly in light of the COVID-19 pandemic and its effects on the domestic and global economies as described below. 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 year ended December 31, 2021 and other financial information filed with the SEC. Beginning in the first quarter of 2020, to limit the spread of COVID-19, governments took various actions including the issuance of stay-at-home policies and social distancing procedures and guidelines, causing some businesses to adjust, reduce or suspend business and operating activities. Veterinary care is widely recognized as an "essential" service for pet owners, and veterinarians continued to deliver essential medical care for sick and injured pets. We are unable to predict with certainty the effects of the COVID-19 pandemic on our customers, suppliers and vendors, as well as the actions of governments, and when and to what extent normal economic and operating conditions will return to pre-pandemic levels; these effects may differ from those assumed in our projected estimates. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business, mainly in our ability to place new capital equipment, primarily under long-term contracts, as a result of any economic impact that may occur in the future. Use of Estimates The preparation of financial statements in conformity with 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 credit losses and the net realizable value of inventory; determining future costs associated with warranties provided; 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 and investments for estimated useful lives and impairment; estimating the useful lives and standalone selling prices of instruments under leasing arrangements; determining the allocation of purchase price under purchase accounting; estimating the expense associated with the granting of stock; determining the need for, and the amount of a valuation allowance on deferred tax assets; determining the fair value of our embedded derivatives; and determining the value of the non-controlling interest in a business combination. Our actual results may differ from these estimates and there may be changes to those estimates in future periods. Fair Value of Financial Instruments In accordance with ASC 820, Fair Value Measurements (“ASC 820”), the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Quoted prices in active markets for similar assets and liabilities, quoted prices for identically similar assets or liabilities in markets that are not active and models for which all significant inputs are observable either directly or indirectly. Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs for inactive markets. The Company's financial instruments consist of cash and cash equivalents, short-term trade receivables and payables, long-term note receivables with embedded derivative assets, contingent consideration liabilities, notes payable for acquisitions and its 3.75% Convertible Senior Notes due 2026 (the "Notes"). The carrying values of cash and cash equivalents and short-term trade receivables and payables approximate fair value because of the short-term nature of the instruments. The fair values of our financial instruments at September 30, 2022 and December 31, 2021 were (in thousands): Total Level 1 Level 2 Level 3 2022 Financial Assets Money market fund $ 120,000 $ 120,000 $ — $ — Convertible note receivable embedded derivative 355 — — 355 Promissory note receivable derivative 337 — — 337 Financial Liabilities BiEsseA contingent consideration 1,639 — — 1,639 Balances, September 30, 2022 $ 122,331 $ 120,000 $ — $ 2,331 2021 Total Level 1 Level 2 Level 3 Financial Assets Convertible note receivable embedded derivative $ 888 $ — $ — $ 888 Promissory note receivable embedded derivative 337 — — 337 Financial Liabilities BiEsseA contingent consideration 2,334 — — 2,334 Balances, December 31, 2021 $ 3,559 $ — $ — $ 3,559 The Company's financial assets based upon Level 3 inputs include embedded derivatives relating to its notes receivable. The Company determined the redemption features of its convertible note receivable represent an embedded derivative. The estimated fair value of the embedded derivative asset is evaluated through Level 3 inputs using a probability-weighted scenario analysis. The Company determined the warrant associated with its promissory note receivable represents a derivative. The estimated fair value of the derivative asset is evaluated through Level 3 inputs, using an enterprise valuation model. For additional information regarding the Company's notes receivable and derivatives, refer to Note 17, Notes Receivable. The estimated fair value of the Company's 3.75% Convertible Senior Notes due in 2026 (the "Notes"), is disclosed at each reporting period and is evaluated through Level 2 inputs with consideration of quoted market prices in less active markets. For additional information regarding the Company's accounting treatment for the issuance of the Notes, refer to Note 16, Convertible Notes. The Company's financial liabilities based upon Level 3 inputs include contingent consideration arrangements and notes payable relating to its acquisitions of Lacuna Diagnostics, Inc. ("Lacuna"), BiEsse A-Laboratorio die Analisi Veterinarie S.r.l. (“BSA”), and Biotech Laboratories U.S.A. LLC ("Biotech"). The Company is obligated to pay contingent consideration payments of $2.0 million in connection with the Lacuna acquisition based on the achievement of certain performance metrics within a twelve month period ("Initial Earn Out Period"), reducing to $1.0 million if such metrics were met in a twelve month period subsequent to the Initial Earn Out Period. The fair value of the Lacuna contingent consideration was $0 as of both December 31, 2021 and September 30, 2022. The Company is obligated to pay contingent consideration payments of $2.6 million in connection with the BSA acquisition based on the achievement of certain revenue metrics within three annual periods after 2021. The Company is obligated to pay contingent notes of up to $17.5 million in connection with the Biotech acquisition based on the achievement of certain product development milestones or at a predetermined date in the future, of which $14.9 million was outstanding as of September 30, 2022. Refer to Note 3, Acquisitions and Related Party Items for further discussion. The fair value of our contingent consideration and notes payable arrangements are determined based on a probability-weighted outcome analysis. The fair value of the contingent consideration and notes payable liabilities associated with future payments were based on several factors, the most significant of which are the financial and product development performance of the acquired businesses. For the contingent consideration liabilities, the Company will update its assumptions each reporting period based on new developments and record such amounts at fair value based on the revised assumptions until the agreements expire. Changes in fair value are recorded in the Condensed Consolidated Statements of Loss within General and administrative expenses. The note payable associated with the Biotech acquisition is not adjusted to fair value each period. The following table presents the changes of our Level 3 assets and liabilities as of September 30, 2022 (in thousands): Derivative Assets Contingent Consideration Liability Convertible note receivable Promissory note receivable BSA Balances, December 31, 2021 $ 888 $ 337 $ 2,334 Acquisition value — — — Cash payments — — — Changes in fair value (533) — (315) Foreign currency impact — — (380) Balances, September 30, 2022 $ 355 $ 337 $ 1,639 Significant 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, 2021, and other than the recently adopted accounting pronouncements and revenue recognition updates described below, have not changed materially since such filing. Revenue Recognition With the acquisition of VetZ GmbH (“VetZ”) on January 3, 2022, the Company entered the market for veterinary practice information management software solutions (“PIMS”). Revenue for the sale of software licenses is recognized at a point in time upon delivery of the software. The software has significant stand-alone functionality, and provides the customer with the right to use the intellectual property as it exists at the point in time at which the license is granted. Revenue for support services, cloud-based services, and installation and training is recognized over time as the services are performed. Refer to Note 3 for further details regarding the VetZ acquisition. The Company may enter into contracts that represent a bill-and hold-arrangement, under which the Company bills a customer for product but retains physical possession of the product until some future point in time. For bill-and-hold arrangements, the Company recognizes revenue when control of the product transfers to the customer in accordance with the additional criteria in ASC 606-10-55-83. Adoption of New Accounting Pronouncements Effective January 1, 2022, we adopted ASU 2021-05, Leases (Topic 842), Lessors- Certain Leases with Variable Lease Payments. This guidance amends the lease classification accounting for lessors for certain leases with variable lease payments that do not depend on a reference index or a rate and would have resulted in the recognition of a loss at lease commencement if classified as a sale-type or direct financing lease. Under the new guidance, these leases will be classified as an operating lease. We evaluated the impact of the standard on our consolidated financial statements and the adoption of this ASU did not have a material impact on our consolidated financial statements and disclosures. Effective January 1, 2022, we early adopted ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . This guidance requires an acquiring entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, the acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. We evaluated the impact of the standard on our consolidated financial statements and the adoption of this ASU did not have a material impact on our consolidated financial statements and disclosures. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE We separate our goods and services among two reportable segments, North America and International. The two segments consist of revenue originating from: • North America: including the United States, Canada and Mexico • International: all geographies outside North America, currently consisting primarily of Australia, France, Germany, Italy, Malaysia, Spain and Switzerland Refer to Note 18 for further detail regarding the Company's reportable segments. The following table summarizes our segment revenue (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 North America revenue: POC lab instruments & other $ 3,630 $ 3,547 $ 11,821 $ 10,017 POC lab consumables 19,711 17,694 58,685 53,942 POC imaging & informatics 7,688 7,433 19,641 21,222 PVD 5,343 4,297 16,758 17,370 OVP 3,957 4,838 11,702 13,063 Total North America revenue $ 40,329 $ 37,809 $ 118,607 $ 115,614 International revenue: POC lab instruments & other $ 3,698 $ 3,800 $ 11,269 $ 10,801 POC lab consumables 9,381 11,223 31,621 35,383 POC imaging & informatics 7,243 5,849 26,787 19,783 PVD 841 1,559 2,685 4,090 Total International revenue $ 21,163 $ 22,431 $ 72,362 $ 70,057 Total revenue $ 61,492 $ 60,240 $ 190,969 $ 185,671 Remaining Performance Obligations Remaining performance obligations represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. Remaining performance obligations include noncancellable purchase orders, the non-lease portion of minimum purchase commitments under long-term supply arrangements, extended warranty, service and other long-term contracts. Remaining performance obligations do not include revenue from contracts with customers with an original term of one year or less, revenue from long-term supply arrangements with no minimum purchase requirements, revenue expected from purchases made in excess of the minimum purchase requirements, or revenue from instruments leased to customers. While the remaining performance obligations disclosure is similar in concept to backlog, the definition of remaining performance obligations excludes leases and contracts that provide the customer with the right to cancel or terminate for convenience with no substantial penalty, even if historical experience indicates the likelihood of cancellation or termination is remote. Additionally, the Company has elected to exclude contracts with customers with an original term of one year or less from remaining performance obligations. As of September 30, 2022, the aggregate amount of the transaction price allocated to remaining minimum performance obligations was approximately $200.6 million. As of September 30, 2022, the Company expects to recognize revenue as follows (in thousands): Year Ending December 31, Revenue 2022 (remaining) $ 12,620 2023 48,180 2024 43,058 2025 36,803 2026 31,678 Thereafter 28,296 $ 200,635 Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled contract assets, deferred revenue, and customer deposits and billings in excess of revenue recognized. In addition, the Company defers certain costs incurred to obtain contracts. Contract Assets Certain unbilled amounts related to long-term contracts for which we provide a free term to the customer are recorded in "Other current assets" and "Other non-current assets" on the accompanying Condensed Consolidated Balance Sheets. The collection of these balances occurs over the term of the underlying contract. The balances as of September 30, 2022 were $1.6 million and $5.3 million for current and non-current assets, respectively, shown net of related unearned interest. The balances as of December 31, 2021 were $1.5 million and $5.1 million for current and non-current assets, respectively, shown net of related unearned interest. The increase in contract assets for the nine-month period ended September 30, 2022 is primarily related to additional contract assets recorded for contracts with a free term, partially offset by payments received. Contract Liabilities The Company receives cash payments from customers for licensing fees or other arrangements that extend for a specified term. These contract liabilities are classified as either current or long-term in the Condensed Consolidated Balance Sheets based on the timing of when the Company expects to recognize revenue. As of September 30, 2022 and December 31, 2021, contract liabilities were $7.7 million and $9.6 million, respectively, and are included within "Deferred revenue, current, and other" and "Deferred revenue, non-current" in the accompanying Condensed Consolidated Balance Sheets. The decrease in the contract liability balance during the nine-month period ended September 30, 2022 is attributable to approximately $7.9 million of revenue recognized during the period and an exchange rate impact of $0.4 million, partially offset by approximately $5.5 million of additional deferred sales in 2022, and the acquisition of VetZ contract liabilities of approximately $0.9 million. Contract liabilities are reported on the accompanying Condensed Consolidated Balance Sheets on a contract-by-contract basis. |
ACQUISITION AND RELATED PARTY I
ACQUISITION AND RELATED PARTY ITEMS | 9 Months Ended |
Sep. 30, 2022 | |
Business Combinations and Related Party Disclosure [Abstract] | |
ACQUISITION AND RELATED PARTY ITEMS | ACQUISITIONS AND RELATED PARTY ITEMS VetZ Acquisition On January 3, 2022, the Company acquired 100% of the equity of VetZ GmbH (“VetZ”), a European leader in veterinary practice information management software solutions (“PIMS”), for an aggregate purchase price of approximately $35.5 million. The purchase price consisted of approximately $31.6 million in cash as well as contingent consideration as described below. The cash purchase price includes a general indemnity holdback of approximately $1.4 million to be released within 18 months of closing. The cash purchase price was also reduced by a negative net working capital adjustment of approximately $0.6 million. As additional consideration for the acquisition, the Company agreed to a contingent earn-out of 91,039 shares of Heska stock, with a total value of $15.5 million, which will be issued in tranches based on future financial and non-financial milestones. The fair value of the contingent consideration as of the acquisition date was approximately $3.9 million, determined using a Monte-Carlo simulation model. The Company evaluated whether the contingent earn-out should be treated as a liability or equity in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”). The contingent earn-out did not meet the ASC 480 definition of a liability as it is not mandatorily redeemable, is not an obligation to repurchase the Company’s shares, and it can only be settled with a fixed number of shares. Additionally, the Company noted the contingent earn-out met the scope exception in ASC 815-10 as the earn-out is indexed to the Company’s own shares, and also met the criteria in ASC 815-40 to be classified in equity as the Company has sufficient authorized and unissued shares, the earn-out has an explicit share limit, there are no required cash payments. As such the contingent earn-out is classified in equity, and is not subsequently remeasured each reporting period. Subsequent settlement of the obligation will be accounted for within equity. The purchase price exceeded the fair value of the identifiable net assets, resulting in goodwill of $22.1 million, all of which is attributable to our International segment. The goodwill resulting from this acquisition consists of new product offerings from entering the PIMS market. All of the goodwill is tax deductible for purposes of calculating Controlled Foreign Corporation tested income, which may result in a decrease to the Company's future U.S. federal tax liability. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations . As such, the total purchase consideration was allocated to the assets acquired and liabilities assumed based on their fair values as of January 3, 2022. The total purchase consideration is subject to customary working capital adjustments. The information below represents the preliminary purchase price allocation as of the acquisition date (in thousands): January 3, 2022 Purchase price in cash $ 31,627 Fair value of equity contingent consideration 3,860 Total purchase consideration $ 35,487 Cash and cash equivalents $ 1,251 Inventory 359 Accounts receivable 824 Prepaid expenses and other assets 318 Property and equipment, net 602 Operating lease right-of-use assets 2,962 Intangible assets 18,504 Total assets acquired 24,820 Accounts payable 520 Accrued liabilities 1,260 Operating lease liabilities, current 247 Deferred revenue, current, and other 1,014 Operating lease liabilities, non-current 2,714 Deferred tax liabilities 5,408 Other liabilities 318 Net assets acquired 13,339 Goodwill 22,148 Total fair value of consideration transferred $ 35,487 The Company's preliminary estimates of fair values of the net assets acquired are based on the information that was available at the date of the acquisition. Purchase accounting for the transaction is still open as we finalize annual tax accounting at the subsidiary level. Accordingly, these preliminary estimates are subject to change during the measurement period, which is up to one year from the date of the acquisition. A decrease in the fair value of assets acquired or an increase in the fair value of liabilities assumed in the acquisition from those valuations would result in a corresponding increase in the amount of goodwill from the acquisition. Intangible assets acquired, amortization method and estimated useful life as of January 3, 2022, were as follows (dollars in thousands): Weighted- Average Useful Life Amortization Fair Value Customer relationships 12 years Straight-line $ 12,941 Trade name 8 years Straight-line 1,816 Developed technology 4.3 years Straight-line 3,747 Total intangible assets acquired $ 18,504 VetZ generated net revenue of $9.0 million and a net loss of $1.5 million for the period from January 3, 2022 to September 30, 2022. The Company incurred acquisition related costs of approximately $0 million and $0.7 million for the three and nine months ended September 30, 2022, respectively, which are included within general and administrative expenses on our Condensed Consolidated Statements of Loss. Unaudited Pro Forma Financial Information The following table presents unaudited supplemental pro forma financial information as if the acquisition had occurred on January 1, 2021 (in thousands): Three Months Ended Nine Months Ended Revenue, net $ 63,085 $ 194,148 Net (loss) income before equity in losses of unconsolidated affiliates $ (1,230) $ 1,257 Net (loss) income attributable to Heska Corporation $ (1,538) $ 420 Biotech Acquisition On September 1, 2021, Heska acquired 65% of the equity of Biotech Laboratories U.S.A. LLC ("Biotech"), a developer of rapid assay diagnostic testing, in exchange for approximately $16.3 million in cash. As part of the purchase, Heska entered into put and call options in order to purchase the remaining 35% ownership in future years. The counterparty, Chinta Lamichhane, DVM, Ph.D, maintains an interest in Biotech and is an employee of the Company, thus commencing a related party relationship. Aside from the acquisition described herein, there were no financial or non-financial transactions between the Company and the counterparty. In conjunction with the acquisition, the Company entered into various put and call options which are classified on the Condensed Consolidated Balance Sheets as Notes Payable. The written put options can be exercised after June 30, 2024, at a valuation identical to the initial purchase price. The written call options can be exercised at any time prior to June 30, 2026, at an amount equal to two times the initial valuation or after June 30, 2026, at a valuation identical to the initial purchase price. Additionally, if certain product development milestones are met, the shares may be exercised in various tranches at two times the initial valuation. The Company evaluated the put and call options embedded in the shares representing the non-controlling interest under the guidance in ASC 480, Distinguishing Liabilities from Equity, and determined the instrument met the criteria to be recorded as a liability because the fixed price of the put and call options are identical starting after June 30, 2026. As a result, the Company recorded the transaction as a financing arrangement of the purchase of the non-controlling interest, and will record 100% of the income and loss of Biotech in our Condensed Consolidated Statements of Loss. The options were not redeemable as of the acquisition date. As of the period ending September 30, 2022, one of the product development milestones was achieved. The Company made a payment of $2.6 million, $2.4 million was a reduction to Notes Payable and $0.2 million was related to interest expense. The Company acquired an additional 5.25% interest for a majority interest ownership of 70.25%. The counterparty owns the remaining minority interest of 29.75%. The estimated fair value of the Notes Payable at the acquisition date of $15.9 million is inclusive of the probability weighted outcomes of the options described herein and was determined using Level 3 inputs. As of the period ending September 30, 2022, the remaining value of the Notes Payable is $13.5 million. The total purchase consideration exceeded the fair value of the identifiable net assets acquired, resulting in goodwill of $25.8 million, all of which is attributable to our North America segment. In connection with the acquisition and pursuant to the elections under Section 754 of the Internal Revenue Code, the Company expects to obtain an increase with respect to the tax basis in the assets of Biotech. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations . As such, the total purchase consideration was allocated to the assets acquired and liabilities assumed based on their fair values as of September 1, 2021. The total purchase consideration is subject to customary working capital adjustments, which were finalized as of September 1, 2022. The information below represents the purchase price allocation as of the acquisition date (in thousands): September 1, 2021 Purchase price $ 16,250 Notes payable 15,900 Total purchase consideration $ 32,150 Accounts receivables 18 Other current assets 1 Inventories 190 Property and equipment, net 148 Operating lease right-of-use assets 1,033 Other intangible assets, net 6,000 Other non-current assets 15 Total assets acquired 7,405 Accounts payable 11 Accrued liabilities 33 Operating lease liabilities, current 188 Operating lease liabilities, non-current 845 Net assets acquired 6,328 Goodwill 25,822 Total fair value of consideration transferred $ 32,150 Intangible assets acquired, amortization method and estimated useful life as of September 1, 2021, were as follows (dollars in thousands): Useful Life Amortization Fair Value Development technology 6 years Straight-line $ 6,000 Total intangible assets acquired $ 6,000 Pro forma financial information related to the acquisition of Biotech has not been provided as it is not material to our consolidated results of operations. BiEsseA Acquisition On July 1, 2021, the Company completed the acquisition of BiEsse A-Laboratorio die Analisi Veterinarie S.r.l. (“BSA”). The Company acquired 100% of the issued and outstanding shares of BSA for an aggregate purchase price of $7.2 million. On January 1, 2022, BSA was merged into scil animal care company Srl, a wholly owned subsidiary of scil animal care company GmbH ("scil"). As additional consideration for the shares, the Company agreed to a contingent earn-out of $2.5 million based on the achievement of certain performance metrics within three annual periods after 2021, each of which can pay up to one third of the total earn-out. The fair value of the contingent consideration was $2.3 million as of the acquisition date and as of December 31, 2021, and subsequently decreased to $1.6 million as of September 30, 2022. The total purchase consideration exceeded the fair value of the identifiable net assets acquired, resulting in $4.6 million of goodwill, all of which is attributable to our International segment. All of the goodwill is tax deductible for purposes of calculating Controlled Foreign Corporation tested income, which may result in a decrease to the Company's future U.S. federal income tax liability. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. As such, the total purchase consideration was allocated to the assets acquired and liabilities assumed based on their fair values as of July 1, 2021. The total purchase consideration is subject to customary working capital adjustments, which were finalized as of December 31, 2021. Per the tax indemnification included in the purchase agreement of BSA, the seller has indemnified the Company for $0.5 million related to uncertain tax positions taken in prior years. The outcome of this arrangement will either be settled or expire due to lapse of statute of limitations by 2025. As of September 30, 2022, approximately $0.4 million of the indemnification agreement remains outstanding. The information below represents the purchase price allocation as of the acquisition date (in thousands): July 1, 2021 Purchase price $ 4,835 Fair value of contingent consideration 2,334 Total purchase consideration $ 7,169 Cash and cash equivalents 322 Accounts receivables 152 Other receivables 497 Prepaid expenses 8 Other current assets 275 Property and equipment, net 89 Operating lease right-of-use assets 44 Other intangible assets, net 3,329 Total assets acquired 4,716 Accounts payable 208 Accrued liabilities 334 Operating lease liabilities, current 37 Deferred revenue, current, and other 85 Operating lease liabilities, non-current 20 Deferred tax liability 925 Other liabilities 500 Net assets acquired 2,607 Goodwill 4,562 Total fair value of consideration transferred $ 7,169 Intangible assets acquired, amortization method and estimated useful life as of July 1, 2021, were as follows (dollars in thousands): Useful Life Amortization Method Fair Value Customer relationships 14 years Straight-line $ 3,329 Total intangible assets acquired $ 3,329 Pro forma financial information related to the acquisition of BSA has not been provided as it is not material to our consolidated results of operations. Lacuna Acquisition On February 1, 2021, the Company completed the acquisition of Lacuna Diagnostics, Inc. ("Lacuna"), a veterinary digital cytology company, to broaden the Company's point of care diagnostic offerings. The Company acquired 100% of the issued and outstanding shares of Lacuna for a purchase price of $4.3 million. The Company then dissolved Lacuna on February 1, 2021. In accordance with the purchase agreement, the Company is required to hold a $0.4 million general indemnity holdback that is intended to provide a non-exclusive source of funds for the payment of any losses identified and shall be released within 18 months of closing. $0.3 million of the $0.4 million indemnification holdback was released during the quarter ended September 30, 2022. As of September 30, 2022, $0.0 million of the indemnification holdback remains outstanding. As additional consideration for the shares, the Company agreed to a contingent earn-out of $2.0 million based on the achievement of certain performance metrics within a twelve month period ("Initial Earn Out Period"), reducing to $1.0 million if such metrics were met in a twelve month period subsequent to the Initial Earn Out Period. The fair value of the contingent consideration as of the acquisition date was $1.7 million, and subsequently decreased to $0 as of September 30, 2022 and December 31, 2021. The total purchase consideration exceeded the fair value of the identifiable net assets acquired, resulting in $4.2 million of goodwill, primarily related to expanded opportunities with our offerings. All of the goodwill is allocated to the North America segment and is not tax deductible for income tax purposes. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. As such, the total purchase consideration was allocated to the assets acquired and liabilities assumed based on their fair values as of February 1, 2021. The total purchase consideration is subject to customary working capital adjustments, which were finalized as of February 1, 2022. The information below represents the purchase price allocation as of the acquisition date (in thousands): February 1, 2021 Purchase price $ 4,255 Fair value of contingent consideration 1,700 Total purchase consideration $ 5,955 Cash and cash equivalents $ 3 Accounts receivable 170 Property and equipment, net 530 Other intangible assets, net 1,185 Total assets acquired 1,888 Deferred tax liability 133 Net assets acquired 1,755 Goodwill 4,200 Total fair value of consideration transferred $ 5,955 Intangible assets acquired, amortization method and estimated useful life as of February 1, 2021, were as follows (dollars in thousands): Useful Life Amortization Fair Value Developed technology 3 years Straight-line $ 1,000 Customer relationships 6 months Straight-line 150 Trade name 11 months Straight-line 35 Total intangible assets acquired $ 1,185 Pro forma financial information related to the acquisition of Lacuna has not been provided as it is not material to our consolidated results of operations. Other Related Party Activities In connection with the VetZ acquisition, the Company entered into a related party building lease agreement with the former owners, who are now employees of the Company. The Company recorded operating lease expense of $47 thousand and $199 thousand related to this lease for the three and nine months ended September 30, 2022, respectively. The right-of-use asset and lease liability related to the building lease were approximately $2.2 million and $2.2 million as of September 30, 2022, respectively. Prior to the closing of the VetZ acquisition, the former owners who are now employees of the Company purchased vehicles and bicycles from VetZ. As of January 3, 2022, a receivable of approximately $165 thousand was included in the preliminary purchase price allocation related to these transactions. These receivables were settled in full on January 7, 2022. |
INVESTMENTS IN UNCONSOLIDATED A
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 9 Months Ended |
Sep. 30, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | INVESTMENTS IN UNCONSOLIDATED AFFILIATES The carrying values of investments in unconsolidated affiliates, categorized by type of investment, is as follows (in thousands): September 30, 2022 December 31, 2021 Equity method investment $ 1,312 $ 2,406 Non-marketable equity security investment 3,018 3,018 Investments in unconsolidated affiliates $ 4,330 $ 5,424 Equity Method Investment On September 24, 2018, we invested approximately $5.1 million, including costs, to acquire an equity interest in a business as part of our product development strategy. As of September 30, 2022, the Company's ownership interest in the business was 26.0% . In connection with the investment, the Company entered into a Manufacturing Supply Agreement that grants the Company global exclusivity to specified products to be delivered under the agreement for a 15-year period that begins upon the Company's receipt and acceptance of an initial order under the agreement. The Company accounts for this investment using the equity method of accounting. Under the equity method, the carrying value of the investment is adjusted for the Company's proportionate share of the investee's reported earnings or losses with the corresponding share of earnings or losses reported as Equity in losses of unconsolidated affiliates, listed below Net (loss) income before equity in losses of unconsolidated affiliates within the Condensed Consolidated Statements of Loss. The Company has a note receivable from the equity method investee. Refer to Note 17, Notes Receivable, for additional details. Non-Marketable Equity Security Investment On August 8, 2018, the Company invested approximately $3.0 million, including costs, in exchange for preferred stock. The Company’s investment is a non-marketable equity security, recorded using the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. As part of the agreement, the Company entered into a Supply and License Agreement, which provides that the investee produce and commercialize products that will enhance the Company's diagnostic portfolio. As part of this agreement, the Company made an upfront payment of $1.0 million related to a worldwide exclusive license agreement over a 20-year period, recorded in both short and long-term other assets. In addition, the agreement provides for an additional contingent payment of $10.0 million, relating to the successful achievement of sales milestones. This potential future milestone payment has not yet been accrued as it is not deemed by the Company to be probable at this time. Both parties in this arrangement are active participants and are exposed to significant risks and rewards dependent on the commercial success of the activities of the collaboration. The parties are actively working on developing and testing the product as well as funding the research and development. Heska classifies the amounts paid for research and development work within the North America segment research and development operating expenses. Expense is recognized when incurred and in accordance with the development plan. On September 9, 2022, the Company entered into an agreement among the Company, MBio Merger Sub ("Merger Sub"), a wholly owned subsidiary of the Company, MBio Diagnostics, Inc., d/b/a LightDeck Diagnostics ("LightDeck"), and Shareholder Representative Services LLC, whereby the Company, Merger Sub and LightDeck enter into a business combination transaction pursuant to which Merger Sub will merge with and into LightDeck, Merger Sub will cease to exist and LightDeck will become a wholly owned subsidiary of the Company for approximately $38.7 million, in a mix of cash and debt forgiveness, subject to working capital and other adjustments. The merger is expected to close in the first half of 2023, subject to customary closing conditions. If the merger has not been consummated by July 15, 2023, each of the Company and LightDeck may terminate the Agreement. The Company evaluated the investment in LightDeck as well as a First Promissory Note and Second Promissory Note, discussed in Note 17, to determine whether they meet the requirement for consolidation within the Variable Interest Entity ("VIE") and Voting Interest Entity ("VOE") models. In accordance with both the VIE and VOE models, it was concluded that while the Company does have a variable interest in the Investee, the Company does not assert control over the investee and therefore should not consolidate their financial results prior to closing a merger transaction. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company's total income tax benefit for our (loss) income before income taxes were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Loss before income taxes and equity in losses of unconsolidated affiliates $ (912) $ (2,403) $ (18,749) $ (3,186) Total income tax benefit $ (834) $ (813) $ (4,175) $ (3,429) There were cash payments for income taxes, net of refunds, of $1.0 million and $2.4 million for the three and nine months ended September 30, 2022, respectively, and there were cash payments of $0.4 million and $1.6 million, respectively, for income taxes for the three and nine months ended September 30, 2021. The Company had a tax benefit of $0.8 million and $4.2 million for the three and nine months ended September 30, 2022, respectively, compared to the tax benefit of $0.8 million and $3.4 million for the three and nine months ended September 30, 2021, respectively. The increase in tax benefit in the nine month period is due to an increased loss for financial reporting purposes. The Company recognized $0.2 million in excess tax expense related to employee share-based compensation for the three months ended September 30, 2022, compared to $0.7 million excess tax benefit recognized for the three months ended September 30, 2021. The Company recognized $0.3 million in excess tax benefits related to employee share-based compensation for the nine months ended September 30, 2022, compared to $1.7 million for the nine months ended September 30, 2021. As of December 31, 2021, the Company had a deferred tax asset of approximately $5.7 million from net operating losses and tax credits. The Company has a valuation allowance recorded on statutory deferred tax assets in Germany and a partial valuation allowance recorded on state net operating losses in the US. In the third quarter, the Company forecasts an increase of approximately $0.9 million of the valuation allowance through the annual effective tax rate used to estimate income tax expense. The increase is due to forecasted future financial losses in Germany. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
LEASES, LESSEE | LEASES Lessee Accounting The Company leases buildings, office equipment, and vehicle s. The following table summarizes the Company's operating and finance lease balances (in thousands): Leases Balance Sheet Location September 30, 2022 December 31, 2021 Assets Operating Operating lease right-of-use assets $ 6,810 $ 5,198 Finance Property and equipment, net 1,368 1,650 Total Lease Assets $ 8,178 $ 6,848 Liabilities Operating Operating lease liabilities, current $ 2,681 $ 2,227 Operating lease liabilities, non-current 4,713 3,509 Finance Deferred revenue, current, and other 127 200 Other liabilities 290 331 Total Lease Liabilities $ 7,811 $ 6,267 Lessor Accounting The following table summarizes the profit recognized on the commencement date for sales-type leases and lease income for equipment-only operating leases (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Sales-type lease revenue $ 3,785 $ 3,086 $ 10,838 $ 8,212 Sales-type lease cost of revenue 3,145 2,417 8,972 6,378 Profit recognized at commencement for sales-type leases $ 640 $ 669 $ 1,866 $ 1,834 Operating lease income $ 400 $ 514 $ 1,286 $ 1,655 |
LEASES, LESSOR | LEASES Lessee Accounting The Company leases buildings, office equipment, and vehicle s. The following table summarizes the Company's operating and finance lease balances (in thousands): Leases Balance Sheet Location September 30, 2022 December 31, 2021 Assets Operating Operating lease right-of-use assets $ 6,810 $ 5,198 Finance Property and equipment, net 1,368 1,650 Total Lease Assets $ 8,178 $ 6,848 Liabilities Operating Operating lease liabilities, current $ 2,681 $ 2,227 Operating lease liabilities, non-current 4,713 3,509 Finance Deferred revenue, current, and other 127 200 Other liabilities 290 331 Total Lease Liabilities $ 7,811 $ 6,267 Lessor Accounting The following table summarizes the profit recognized on the commencement date for sales-type leases and lease income for equipment-only operating leases (in thousands): |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 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 ("EPS") for the three and nine months ended September 30, 2022 and 2021 (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net loss attributable to Heska Corporation $ (436) $ (1,898) $ (15,668) $ (594) Basic weighted-average common shares outstanding 10,368 10,195 10,330 9,949 Dilutive effect of stock options and restricted stock — — — — Diluted weighted-average common shares outstanding 10,368 10,195 10,330 9,949 Basic loss per share attributable to Heska Corporation $ (0.04) $ (0.19) $ (1.52) $ (0.06) Diluted loss per share attributable to Heska Corporation $ (0.04) $ (0.19) $ (1.52) $ (0.06) The following potentially outstanding common shares from convertible senior notes, stock options and restricted stock awards were excluded from the computation of diluted EPS because the effect would have been antidilutive (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Convertible Senior Notes 996 996 996 996 Stock options and restricted stock 229 404 272 381 1,225 1,400 1,268 1,377 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES The following summarizes the change in goodwill during the nine months ended September 30, 2022 (in thousands): North America International Total Carrying amount, December 31, 2021 $ 65,535 $ 53,291 $ 118,826 Goodwill attributable to acquisitions (subject to change) — 22,148 22,148 Measurement period adjustment to prior year acquisition (17) — (17) Foreign currency adjustments (737) (10,260) (10,997) Carrying amount, September 30, 2022 $ 64,781 $ 65,179 $ 129,960 Other intangibles consisted of the following (in thousands): September 30, 2022 December 31, 2021 Gross Carrying Amount Accum. Amortiz. Net Carrying Amount Gross Carrying Amount Accum. Amortiz. Net Carrying Amount Intangible assets subject to amortization: Customer relationships and other $ 52,857 $ (13,775) $ 39,082 $ 47,629 $ (11,145) $ 36,484 Developed technology 18,807 (5,572) 13,235 15,633 (3,218) 12,415 Trade names 1,672 (251) 1,421 223 (166) 57 Intangible assets not subject to amortization: Trade names 6,697 — 6,697 7,749 — 7,749 Total intangible assets $ 80,033 $ (19,598) $ 60,435 $ 71,234 $ (14,529) $ 56,705 Amortization expense was $1.4 million and $1.6 million for the three months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021 the amortization expense was $5.4 million and $4.6 million, respectively. During the three months ended September 30, 2022, the Company impaired customer relationship and trade name intangible assets as a result of entity rationalization due to acquisition activity. Impairment expense of $0.2 million was recorded to Sales and marketing within operating expenses. The remaining weighted-average amortization period for intangible assets is approximately 7.8 years. Estimated amortization expense related to intangibles for each of the five years from 2022 (remaining) through 2026 and thereafter is as follows (in thousands): Year Ending December 31, 2022 (remaining) $ 2,133 2023 7,987 2024 7,405 2025 7,365 2026 7,005 Thereafter 21,843 Total amortization related to finite-lived intangible assets $ 53,738 Intangible assets not subject to amortization 6,697 Net intangible assets $ 60,435 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT, NET Property and equipment, net, consisted of the following (in thousands): September 30, 2022 December 31, 2021 Land $ 2,029 $ 2,959 Building 10,787 11,288 Machinery and equipment 38,218 39,851 Office furniture and equipment 2,145 1,732 Computer hardware and software 5,332 5,285 Leasehold and building improvements 10,878 10,796 Construction in progress 653 286 Property and equipment, gross 70,042 72,197 Less accumulated depreciation (38,983) (38,784) Total property and equipment, net $ 31,059 $ 33,413 The Company has subscription agreements whereby its instruments in inventory may be placed at a customer's location on a rental basis. For instruments classified as operating leases, the cost of these instruments is transferred to machinery and equipment and depreciated, typically over a 5 to 7 year period depending on the circumstance under which the instrument is placed with the customer. Our cost of instruments under operating leases as of September 30, 2022 and December 31, 2021, was $16.0 million and $15.1 million, respectively, before accumulated depreciation of $6.3 million and $5.8 million, respectively. Depreciation expense was $1.4 million and $1.7 million for the three months ended September 30, 2022 and 2021, respectively, and $3.3 million and $5.2 million for the nine months ended September 30, 2022 and 2021, respectively. |
INVENTORIES, NET
INVENTORIES, NET | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | INVENTORIES Inventories consisted of the following (in thousands): September 30, 2022 December 31, 2021 Raw materials $ 19,392 $ 16,094 Work in process 3,474 3,656 Finished goods 34,611 29,611 Total inventories $ 57,477 $ 49,361 |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
ACCRUED LIABILITIES | ACCRUED LIABILITIES Accrued liabilities consisted of the following (in thousands): September 30, 2022 December 31, 2021 Accrued payroll and employee benefits $ 6,623 $ 9,392 Inventory in transit 2,206 1,605 Accrued taxes 1,672 3,574 Interest accrual on Notes 111 1,464 Other 3,680 3,389 Total accrued liabilities $ 14,292 $ 19,424 Other accrued liabilities consist of items that are individually less than 5% of total current liabilities. |
CAPITAL STOCK
CAPITAL STOCK | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
CAPITAL STOCK | CAPITAL STOCK During the nine months ended September 30, 2022, the Company granted the following restricted stock awards and restricted stock units: Nine Months Ended September 30, 2022 Awards/Units Weighted-Average Grant Date Fair Value Restricted stock awards 76,941 $ 116.65 Restricted stock units 25,853 $ 101.34 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) consisted of the following (in thousands): Pension Adjustments Foreign Currency Translation 1 Foreign Currency Gain on Intra-Entity Transactions 2 Total Accumulated Other Comprehensive Income (Loss) Balances at December 31, 2021 $ (279) $ 1,974 $ 3,342 $ 5,037 Current period other comprehensive loss — (14,007) (12,067) (26,074) Balances at September 30, 2022 $ (279) $ (12,033) $ (8,725) $ (21,037) 1 Foreign currency gains and losses related to translation of foreign subsidiary financial statements. 2 The Company has intercompany loans of a long-term investment nature that are denominated in a foreign currency. These transactions are considered to be of a long-term nature if settlement is not planned or anticipated in the foreseeable future. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Warranties 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 products. The Company also sells a renewal warranty for certain of its products. The typical remedy for breach of warranty is to repair 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 re serve was $0.4 million and $0.5 million as of September 30, 2022 and December 31, 2021, respectively, included in Accrued liabilities on the Condensed Consolidated Balance Sheets. Litigation From time to time, the Company may be involved in litigation relating to claims arising out of its operations. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred, and the amount can be reasonably estimated. On February 18, 2020, a former managing director of scil filed a claim disputing the effective date of the termination of his management service agreement and the validity of the Company´s waiver of his two-year post-contractual non-compete obligation. The Company defended itself from the claim but ultimately reached a settlement agreement and paid $0.8 million to the defendant on April 28, 2022. The Company is indemnified by the scil acquisition agreement for this claim. As of September 30, 2022, 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. Global Supply and Licensing Agreement On March 28, 2022, the Company entered into a global supply and licensing agreement with VolitionRx Limited (“Volition”) to adapt and commercialize the Nu.Q ® Vet Cancer Screening Test at the point of care for canines and felines on Heska’s technology. On March 30, 2022, the Company made an upfront milestone payment of $10 million to Volition in exchange for exclusive rights to develop the Nu.Q ® Vet Cancer Screening Test for the point of care and non-exclusive rights for central reference lab testing. The $10 million payment was expensed to Research and development on the Condensed Consolidated Statements of Loss for the nine months ended September 30, 2022. The Company is obligated to pay an additional $13 million on or before December 31, 2024, if certain milestones are met, or to obtain an extended timeline to meet those milestones. If those milestones are not met by the agreed upon extension, the agreement may be terminated. However, if the $13 million milestones are met, the agreement will have a total term of 22 years for exclusivity in point of care testing. If the first milestones are met and the agreement does not terminate, there will be another $5 million payment due upon the achievement of an additional milestone within the remaining term of the agreement. These potential future milestone payments have not yet been accrued, as the Company has not deemed them probable at this time. Off-Balance Sheet Commitments We have no off-balance sheet arrangements. Refer to Note 4 for discussion of our variable interest entity. Purchase Obligations |
INTEREST AND OTHER (INCOME) EXP
INTEREST AND OTHER (INCOME) EXPENSE, NET | 9 Months Ended |
Sep. 30, 2022 | |
Other Income and Expenses [Abstract] | |
INTEREST AND OTHER (INCOME) EXPENSE, NET | INTEREST AND OTHER EXPENSE, NET Interest and other expense, net, consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Interest income $ (857) $ (479) $ (1,917) $ (1,335) Interest expense 1,172 918 3,028 2,760 Other (income) expense, net (74) (469) (31) (350) Total interest and other expense (income), net $ 241 $ (30) $ 1,080 $ 1,075 Cash paid for interest for the three months ended September 30, 2022 and 2021 was $1.6 million and $1.6 million, respectively. Cash paid for interest for the nine months ended September 30, 2022 and 2021 was $3.8 million and $3.3 million, respectively. |
CONVERTIBLE NOTES AND CREDIT FA
CONVERTIBLE NOTES AND CREDIT FACILITY | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES AND CREDIT FACILITY | CONVERTIBLE NOTES Convertible Notes On September 17, 2019, the Company issued $86.25 million aggregate principal amount of 3.750% Convertible Senior Notes due 2026 , which included the exercise in full of an $11.25 million purchase option, to certain financial institutions as the initial purchasers of the Notes (the "Initial Purchasers"). The Company pays interest on the Notes semiannually in arrears at a rate of 3.750% per annum on March 15 and September 15 of each year. The Notes are senior unsecured obligations of the Company. The Notes were issued pursuant to an Indenture, dated September 17, 2019, between the Company and U.S. Bank National Association, as trustee. The net proceeds from the sale of the Notes were approximately $83.7 million after deducting the Initial Purchasers' discounts and the offering expenses payable by the Company. Refer to Note 16, Convertible Notes, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of the Company's 2021 Form 10-K for further information on the Notes. No portion of the Notes was converted during the nine months ended September 30, 2022 and the liability was classified as long-term debt on the Company's Condensed Consolidated Balance Sheet as of September 30, 2022. Effective January 1, 2021, the Company early adopted ASU 2020-06, which simplifies the accounting for certain convertible instruments. Under the new standard, qualifying convertible debt is accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. As a result of ASU 2020-06, the Company's cash interest expense is not impacted, however, the Company's non-cash interest accretion is limited to the amortization of debt issuance costs under ASC 835-30. The new effective interest rate of the Notes post-adoption is 4.35%. The Company also reversed the conversion feature amount recorded in APIC and reversed the difference in non-cash interest expense via retained earnings. The following table summarizes the net carrying amount of the Notes (in thousands): September 30, 2022 December 31, 2021 Principal amount of the Notes $ 86,250 $ 86,250 Unamortized debt discount (1,893) (2,216) Net carrying amount $ 84,357 $ 84,034 Interest expense related to the Notes is comprised of the amortization of debt discount and debt issuance costs and the contractual coupon interest as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Interest expense related to contractual coupon interest $ 809 $ 809 $ 2,426 $ 2,426 Interest expense related to amortization of the debt discount 109 104 323 310 $ 918 $ 913 $ 2,749 $ 2,736 As of September 30, 2022, the remaining period over which the unamortized discount will be amortized is 4 years. |
NOTE RECEIVABLES
NOTE RECEIVABLES | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
NOTE RECEIVABLES | NOTES RECEIVABLE Convertible Promissory Note On December 9, 2020, the Company's equity method investee (the “Equity Method Investee”), issued a Convertible Promissory Note to the Company (the “Convertible Promissory Note”) with a principal amount of $6.65 million and a stated interest rate of 3.0% per annum that is payable monthly. The Convertible Promissory Note has a maturity date of December 9, 2023, or otherwise upon qualified redemption event or in the event of a default. Refer to Note 4 for additional information on our equity method investment. The conversion of the Convertible Promissory Note is contingent upon certain events. Due to the convertible debt features included in the Convertible Promissory Note, it is not an equity security and is therefore not considered an additional investment in our Equity Method Investee. The Company accounted for the transaction as a note receivable, included in Related party convertible note receivable, net on the Consolidated Balance Sheets. The note receivable will be measured at amortized cost and evaluated for credit losses each reporting period. The Company determined that the redemption features described above met the definition of an embedded derivative that requires bifurcation from the note receivable host. The Company measured the redemption features at fair value, with the residual proceeds paid allocated to the note receivable host, creating a discount to the note receivable. The discount will be amortized over the contractual term of the Convertible Promissory Note using the effective interest method. The effective interest rate of the Convertible Promissory Note is 8.69%, and the amortization of the discount will be included as interest income within Interest and other (income) expense, net on the Condensed Consolidated Statements of Loss. The fair value of the derivative will be remeasured each reporting period, with the mark-to-market adjustment to be included in Interest and other (income) expense, net on the Condensed Consolidated Statements of Loss. The following table summarizes the net carrying amount of the note receivable, including the unamortized discount and allowance for expected credit losses, as well as the fair value of the embedded derivative asset (in thousands): September 30, 2022 December 31, 2021 Principal amount $ 6,650 $ 6,650 Unamortized discount (425) (672) Allowance for expected credit losses (3,565) (67) Net carrying amount 2,660 5,911 Embedded derivative asset 355 889 Related party convertible note receivable, net $ 3,015 $ 6,800 The allowance for expected credit losses increased $3.5 million from December 31, 2021. The change reflects increased risk of collectability given the investee's current financial position and ability to achieve certain events required for conversion of the note, which are largely driven by more recent challenges and uncertainties in the macro-economic environment. These factors increased the probability of default. Promissory Notes On February 1, 2021, one of the Company's equity investees (the "Investee"), which the Company accounts for as a non-marketable equity security, issued a Promissory Note to the Company (the “First Promissory Note”) with a principal amount of $9.0 million and a stated interest rate of 10.0% per annum that is payable monthly. The First Promissory Note has a maturity date of December 1, 2024 and provides for interest only payments through December 1, 2023. Beginning on January 1, 2024, the First Promissory Note requires repayment of the principal and interest over twelve consecutive monthly payments. As additional consideration, the Company was also issued a warrant to acquire securities of the Investee that expires December 31, 2034. On September 19, 2022, a second Promissory Note (the "Second Promissory Note") was issued to the Company with a principal amount of $4.7 million and a stated interest rate of 10.0% per annum that is payable on December 31, 2023. The Second Promissory Note has a maturity date of the earlier of December 31, 2023 and a merger transaction with the Investee. Refer to Note 4 for additional information on our equity investments and the agreement for a merger transaction. The Company evaluated the accounting treatment of the warrant to acquire securities and determined it is a freestanding instrument that meets the definition of a derivative under ASC 815 and requires bifurcation from the note receivable host. The Company measured the warrant at fair value, with the residual proceeds paid allocated to the note receivable host, creating a discount to the note receivable. The discount will be amortized over the contractual term of the Promissory Note using the effective interest method. The effective interest rate of the Promissory Note is 10.99%, and the amortization of the discount will be included as interest income within Interest and other (income) expense, net on the Condensed Consolidated Statements of Loss . The fair value of the derivative will be remeasured each reporting period, with the mark-to-market adjustment to be included in other Interest and other expense, net on the Condensed Consolidated Statements of Loss . The following table summarizes the carrying value of the notes receivable, including the unamortized discount and allowance for expected credit losses (in thousands): September 30, 2022 December 31, 2021 Principal amount $ 13,700 $ 9,000 Unamortized discount (206) (254) Allowance for expected credit losses (298) (298) Promissory notes receivable from investee, net $ 13,196 $ 8,448 |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING The Company’s two segments are North America and International. The North America segment is comprised of the Company's operations in the United States, Canada and Mexico and the International segment is comprised of geographies outside of North America, which are the Company's operations primarily in Australia, France, Germany, Italy, Malaysia, Spain and Switzerland. Certain expenses incurred at the Company’s headquarters located in the North America segment are allocated to each segment in a manner consistent with where the benefits from the expenses are derived. However, there are certain corporate expenses included in the North America segment that the Company does not allocate. Such expenses include research and development, and certain selling, marketing, general, and administrative costs that support the global organization. Sales and transfers between operating segments are accounted for at market-based transaction prices and are eliminated in consolidation. The Company's sales are determined by the country of origin where the sale occurred. Our Chief Operating Decision Maker ("CODM") evaluates segment performance and allocates resources based on Revenue, Cost of Revenue, Gross Profit, Gross Margin and Operating Income. The CODM does not evaluate operating segments using asset information; however, we have included total asset information by segment below as there was a material change in total assets by segment as of September 30, 2022, due to the acquisition of VetZ on January 3, 2022. Summarized financial information concerning the Company's reportable segments is shown in the following tables (in thousands): Three Months Ended September 30, 2022 North America International Total Total revenue $ 40,329 $ 21,163 $ 61,492 Cost of revenue 21,584 13,032 34,616 Gross profit $ 18,745 $ 8,131 $ 26,876 Gross margin 46 % 38 % 44 % Operating income (loss) $ 885 $ (1,556) $ (671) Three Months Ended September 30, 2021 North America International Total Total revenue $ 37,809 $ 22,431 $ 60,240 Cost of revenue 20,034 14,962 34,996 Gross profit $ 17,775 $ 7,469 $ 25,244 Gross margin 47 % 33 % 42 % Operating loss $ (1,645) $ (788) $ (2,433) Nine Months Ended September 30, 2022 North America International Total revenue, net $ 118,607 $ 72,362 $ 190,969 Cost of revenue 63,158 44,463 107,621 Gross profit $ 55,449 $ 27,899 $ 83,348 Gross margin 47 % 39 % 44 % Operating loss $ (15,927) $ (1,742) $ (17,669) Nine Months Ended September 30, 2021 North America International Total revenue, net $ 115,614 $ 70,057 $ 185,671 Cost of revenue 60,908 46,777 107,685 Gross profit $ 54,706 $ 23,280 $ 77,986 Gross margin 47 % 33 % 42 % Operating loss $ (484) $ (1,627) $ (2,111) Asset information by reportable segment as of September 30, 2022 is as follows (in thousands): As of September 30, 2022 North America International Total Total assets $ 370,619 $ 199,448 $ 570,067 Asset information by reportable segment as of December 31, 2021 is as follows (in thousands): As of December 31, 2021 North America International Total Total assets $ 441,234 $ 162,838 $ 604,072 |
OPERATIONS AND SUMMARY OF SIG_2
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | The accompanying interim Condensed Consolidated Financial Statements are unaudited. The interim unaudited Condensed Consolidated Financial Statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include normal, recurring adjustments, necessary to present fairly the financial position of the Company as of September 30, 2022, and the results of our operations and statements of stockholders' equity for the three and nine months ended September 30, 2022 and 2021, and cash flows for the nine months ended September 30, 2022 and 2021. 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 ("GAAP") have been condensed or omitted pursuant to such rules and regulations. Our unaudited Condensed Consolidated Financial Statements include our accounts and the accounts of our wholly-owned subsidiaries since their respective dates of acquisitions. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year or any future period, particularly in light of the COVID-19 pandemic and its effects on the domestic and global economies as described below. 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 year ended December 31, 2021 and other financial information filed with the SEC. Beginning in the first quarter of 2020, to limit the spread of COVID-19, governments took various actions including the issuance of stay-at-home policies and social distancing procedures and guidelines, causing some businesses to adjust, reduce or suspend business and operating activities. Veterinary care is widely recognized as an "essential" service for pet owners, and veterinarians continued to deliver essential medical care for sick and injured pets. We are unable to predict with certainty the effects of the COVID-19 pandemic on our customers, suppliers and vendors, as well as the actions of governments, and when and to what extent normal economic and operating conditions will return to pre-pandemic levels; these effects may differ from those assumed in our projected estimates. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business, mainly in our ability to place new capital equipment, primarily under long-term contracts, as a result of any economic impact that may occur in the future. |
Use of Estimates | The preparation of financial statements in conformity with 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 credit losses and the net realizable value of inventory; determining future costs associated with warranties provided; 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 and investments for estimated useful lives and impairment; estimating the useful lives and standalone selling prices of instruments under leasing arrangements; determining the allocation of purchase price under purchase accounting; estimating the expense associated with the granting of stock; determining the need for, and the amount of a valuation allowance on deferred tax assets; determining the fair value of our embedded derivatives; and determining the value of the non-controlling interest in a business combination. Our actual results may differ from these estimates and there may be changes to those estimates in future periods. |
Fair Value of Financial Instruments | The Company's financial assets based upon Level 3 inputs include embedded derivatives relating to its notes receivable. The Company determined the redemption features of its convertible note receivable represent an embedded derivative. The estimated fair value of the embedded derivative asset is evaluated through Level 3 inputs using a probability-weighted scenario analysis. The Company determined the warrant associated with its promissory note receivable represents a derivative. The estimated fair value of the derivative asset is evaluated through Level 3 inputs, using an enterprise valuation model. For additional information regarding the Company's notes receivable and derivatives, refer to Note 17, Notes Receivable. The estimated fair value of the Company's 3.75% Convertible Senior Notes due in 2026 (the "Notes"), is disclosed at each reporting period and is evaluated through Level 2 inputs with consideration of quoted market prices in less active markets. For additional information regarding the Company's accounting treatment for the issuance of the Notes, refer to Note 16, Convertible Notes. The Company's financial liabilities based upon Level 3 inputs include contingent consideration arrangements and notes payable relating to its acquisitions of Lacuna Diagnostics, Inc. ("Lacuna"), BiEsse A-Laboratorio die Analisi Veterinarie S.r.l. (“BSA”), and Biotech Laboratories U.S.A. LLC ("Biotech"). The Company is obligated to pay contingent consideration payments of $2.0 million in connection with the Lacuna acquisition based on the achievement of certain performance metrics within a twelve month period ("Initial Earn Out Period"), reducing to $1.0 million if such metrics were met in a twelve month period subsequent to the Initial Earn Out Period. The fair value of the Lacuna contingent consideration was $0 as of both December 31, 2021 and September 30, 2022. The Company is obligated to pay contingent consideration payments of $2.6 million in connection with the BSA acquisition based on the achievement of certain revenue metrics within three annual periods after 2021. The Company is obligated to pay contingent notes of up to $17.5 million in connection with the Biotech acquisition based on the achievement of certain product development milestones or at a predetermined date in the future, of which $14.9 million was outstanding as of September 30, 2022. Refer to Note 3, Acquisitions and Related Party Items for further discussion. The fair value of our contingent consideration and notes payable arrangements are determined based on a probability-weighted outcome analysis. The fair value of the contingent consideration and notes payable liabilities associated with future payments were based on several factors, the most significant of which are the financial and product development performance of the acquired businesses. For the contingent consideration liabilities, the Company will update its assumptions each reporting period based on new developments and record such amounts at fair value based on the revised assumptions until the agreements expire. Changes in fair value are recorded in the Condensed Consolidated Statements of Loss within General and administrative expenses. The note payable associated with the Biotech acquisition is not adjusted to fair value each period. |
Revenue Recognition | Revenue Recognition With the acquisition of VetZ GmbH (“VetZ”) on January 3, 2022, the Company entered the market for veterinary practice information management software solutions (“PIMS”). Revenue for the sale of software licenses is recognized at a point in time upon delivery of the software. The software has significant stand-alone functionality, and provides the customer with the right to use the intellectual property as it exists at the point in time at which the license is granted. Revenue for support services, cloud-based services, and installation and training is recognized over time as the services are performed. Refer to Note 3 for further details regarding the VetZ acquisition. The Company may enter into contracts that represent a bill-and hold-arrangement, under which the Company bills a customer for product but retains physical possession of the product until some future point in time. For bill-and-hold arrangements, the Company recognizes revenue when control of the product transfers to the customer in accordance with the additional criteria in ASC 606-10-55-83. |
Adoption of New Accounting Pronouncements | Adoption of New Accounting Pronouncements Effective January 1, 2022, we adopted ASU 2021-05, Leases (Topic 842), Lessors- Certain Leases with Variable Lease Payments. This guidance amends the lease classification accounting for lessors for certain leases with variable lease payments that do not depend on a reference index or a rate and would have resulted in the recognition of a loss at lease commencement if classified as a sale-type or direct financing lease. Under the new guidance, these leases will be classified as an operating lease. We evaluated the impact of the standard on our consolidated financial statements and the adoption of this ASU did not have a material impact on our consolidated financial statements and disclosures. Effective January 1, 2022, we early adopted ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . This guidance requires an acquiring entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, the acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. We evaluated the impact of the standard on our consolidated financial statements and the adoption of this ASU did not have a material impact on our consolidated financial statements and disclosures. |
OPERATIONS AND SUMMARY OF SIG_3
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The fair values of our financial instruments at September 30, 2022 and December 31, 2021 were (in thousands): Total Level 1 Level 2 Level 3 2022 Financial Assets Money market fund $ 120,000 $ 120,000 $ — $ — Convertible note receivable embedded derivative 355 — — 355 Promissory note receivable derivative 337 — — 337 Financial Liabilities BiEsseA contingent consideration 1,639 — — 1,639 Balances, September 30, 2022 $ 122,331 $ 120,000 $ — $ 2,331 2021 Total Level 1 Level 2 Level 3 Financial Assets Convertible note receivable embedded derivative $ 888 $ — $ — $ 888 Promissory note receivable embedded derivative 337 — — 337 Financial Liabilities BiEsseA contingent consideration 2,334 — — 2,334 Balances, December 31, 2021 $ 3,559 $ — $ — $ 3,559 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents the changes of our Level 3 assets and liabilities as of September 30, 2022 (in thousands): Derivative Assets Contingent Consideration Liability Convertible note receivable Promissory note receivable BSA Balances, December 31, 2021 $ 888 $ 337 $ 2,334 Acquisition value — — — Cash payments — — — Changes in fair value (533) — (315) Foreign currency impact — — (380) Balances, September 30, 2022 $ 355 $ 337 $ 1,639 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents the changes of our Level 3 assets and liabilities as of September 30, 2022 (in thousands): Derivative Assets Contingent Consideration Liability Convertible note receivable Promissory note receivable BSA Balances, December 31, 2021 $ 888 $ 337 $ 2,334 Acquisition value — — — Cash payments — — — Changes in fair value (533) — (315) Foreign currency impact — — (380) Balances, September 30, 2022 $ 355 $ 337 $ 1,639 |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table summarizes our segment revenue (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 North America revenue: POC lab instruments & other $ 3,630 $ 3,547 $ 11,821 $ 10,017 POC lab consumables 19,711 17,694 58,685 53,942 POC imaging & informatics 7,688 7,433 19,641 21,222 PVD 5,343 4,297 16,758 17,370 OVP 3,957 4,838 11,702 13,063 Total North America revenue $ 40,329 $ 37,809 $ 118,607 $ 115,614 International revenue: POC lab instruments & other $ 3,698 $ 3,800 $ 11,269 $ 10,801 POC lab consumables 9,381 11,223 31,621 35,383 POC imaging & informatics 7,243 5,849 26,787 19,783 PVD 841 1,559 2,685 4,090 Total International revenue $ 21,163 $ 22,431 $ 72,362 $ 70,057 Total revenue $ 61,492 $ 60,240 $ 190,969 $ 185,671 |
Schedule of Timing of Revenue Expected to be Recognized | As of September 30, 2022, the Company expects to recognize revenue as follows (in thousands): Year Ending December 31, Revenue 2022 (remaining) $ 12,620 2023 48,180 2024 43,058 2025 36,803 2026 31,678 Thereafter 28,296 $ 200,635 |
ACQUISITION AND RELATED PARTY_2
ACQUISITION AND RELATED PARTY ITEMS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combinations and Related Party Disclosure [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The information below represents the preliminary purchase price allocation as of the acquisition date (in thousands): January 3, 2022 Purchase price in cash $ 31,627 Fair value of equity contingent consideration 3,860 Total purchase consideration $ 35,487 Cash and cash equivalents $ 1,251 Inventory 359 Accounts receivable 824 Prepaid expenses and other assets 318 Property and equipment, net 602 Operating lease right-of-use assets 2,962 Intangible assets 18,504 Total assets acquired 24,820 Accounts payable 520 Accrued liabilities 1,260 Operating lease liabilities, current 247 Deferred revenue, current, and other 1,014 Operating lease liabilities, non-current 2,714 Deferred tax liabilities 5,408 Other liabilities 318 Net assets acquired 13,339 Goodwill 22,148 Total fair value of consideration transferred $ 35,487 The information below represents the purchase price allocation as of the acquisition date (in thousands): September 1, 2021 Purchase price $ 16,250 Notes payable 15,900 Total purchase consideration $ 32,150 Accounts receivables 18 Other current assets 1 Inventories 190 Property and equipment, net 148 Operating lease right-of-use assets 1,033 Other intangible assets, net 6,000 Other non-current assets 15 Total assets acquired 7,405 Accounts payable 11 Accrued liabilities 33 Operating lease liabilities, current 188 Operating lease liabilities, non-current 845 Net assets acquired 6,328 Goodwill 25,822 Total fair value of consideration transferred $ 32,150 The information below represents the purchase price allocation as of the acquisition date (in thousands): July 1, 2021 Purchase price $ 4,835 Fair value of contingent consideration 2,334 Total purchase consideration $ 7,169 Cash and cash equivalents 322 Accounts receivables 152 Other receivables 497 Prepaid expenses 8 Other current assets 275 Property and equipment, net 89 Operating lease right-of-use assets 44 Other intangible assets, net 3,329 Total assets acquired 4,716 Accounts payable 208 Accrued liabilities 334 Operating lease liabilities, current 37 Deferred revenue, current, and other 85 Operating lease liabilities, non-current 20 Deferred tax liability 925 Other liabilities 500 Net assets acquired 2,607 Goodwill 4,562 Total fair value of consideration transferred $ 7,169 The information below represents the purchase price allocation as of the acquisition date (in thousands): February 1, 2021 Purchase price $ 4,255 Fair value of contingent consideration 1,700 Total purchase consideration $ 5,955 Cash and cash equivalents $ 3 Accounts receivable 170 Property and equipment, net 530 Other intangible assets, net 1,185 Total assets acquired 1,888 Deferred tax liability 133 Net assets acquired 1,755 Goodwill 4,200 Total fair value of consideration transferred $ 5,955 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | Intangible assets acquired, amortization method and estimated useful life as of January 3, 2022, were as follows (dollars in thousands): Weighted- Average Useful Life Amortization Fair Value Customer relationships 12 years Straight-line $ 12,941 Trade name 8 years Straight-line 1,816 Developed technology 4.3 years Straight-line 3,747 Total intangible assets acquired $ 18,504 Intangible assets acquired, amortization method and estimated useful life as of September 1, 2021, were as follows (dollars in thousands): Useful Life Amortization Fair Value Development technology 6 years Straight-line $ 6,000 Total intangible assets acquired $ 6,000 Intangible assets acquired, amortization method and estimated useful life as of July 1, 2021, were as follows (dollars in thousands): Useful Life Amortization Method Fair Value Customer relationships 14 years Straight-line $ 3,329 Total intangible assets acquired $ 3,329 Intangible assets acquired, amortization method and estimated useful life as of February 1, 2021, were as follows (dollars in thousands): Useful Life Amortization Fair Value Developed technology 3 years Straight-line $ 1,000 Customer relationships 6 months Straight-line 150 Trade name 11 months Straight-line 35 Total intangible assets acquired $ 1,185 |
Business Acquisition, Pro Forma Information | The following table presents unaudited supplemental pro forma financial information as if the acquisition had occurred on January 1, 2021 (in thousands): Three Months Ended Nine Months Ended Revenue, net $ 63,085 $ 194,148 Net (loss) income before equity in losses of unconsolidated affiliates $ (1,230) $ 1,257 Net (loss) income attributable to Heska Corporation $ (1,538) $ 420 |
INVESTMENTS IN UNCONSOLIDATED_2
INVESTMENTS IN UNCONSOLIDATED AFFILIATES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Carrying values of investments in unconsolidated entities | The carrying values of investments in unconsolidated affiliates, categorized by type of investment, is as follows (in thousands): September 30, 2022 December 31, 2021 Equity method investment $ 1,312 $ 2,406 Non-marketable equity security investment 3,018 3,018 Investments in unconsolidated affiliates $ 4,330 $ 5,424 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense | The Company's total income tax benefit for our (loss) income before income taxes were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Loss before income taxes and equity in losses of unconsolidated affiliates $ (912) $ (2,403) $ (18,749) $ (3,186) Total income tax benefit $ (834) $ (813) $ (4,175) $ (3,429) |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Assets and Liabilities, Lessee | The following table summarizes the Company's operating and finance lease balances (in thousands): Leases Balance Sheet Location September 30, 2022 December 31, 2021 Assets Operating Operating lease right-of-use assets $ 6,810 $ 5,198 Finance Property and equipment, net 1,368 1,650 Total Lease Assets $ 8,178 $ 6,848 Liabilities Operating Operating lease liabilities, current $ 2,681 $ 2,227 Operating lease liabilities, non-current 4,713 3,509 Finance Deferred revenue, current, and other 127 200 Other liabilities 290 331 Total Lease Liabilities $ 7,811 $ 6,267 |
Sales-type Lease, Lease Income | The following table summarizes the profit recognized on the commencement date for sales-type leases and lease income for equipment-only operating leases (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Sales-type lease revenue $ 3,785 $ 3,086 $ 10,838 $ 8,212 Sales-type lease cost of revenue 3,145 2,417 8,972 6,378 Profit recognized at commencement for sales-type leases $ 640 $ 669 $ 1,866 $ 1,834 Operating lease income $ 400 $ 514 $ 1,286 $ 1,655 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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 ("EPS") for the three and nine months ended September 30, 2022 and 2021 (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net loss attributable to Heska Corporation $ (436) $ (1,898) $ (15,668) $ (594) Basic weighted-average common shares outstanding 10,368 10,195 10,330 9,949 Dilutive effect of stock options and restricted stock — — — — Diluted weighted-average common shares outstanding 10,368 10,195 10,330 9,949 Basic loss per share attributable to Heska Corporation $ (0.04) $ (0.19) $ (1.52) $ (0.06) Diluted loss per share attributable to Heska Corporation $ (0.04) $ (0.19) $ (1.52) $ (0.06) |
Schedule of antidilutive securities excluded from computation of earnings per share | The following potentially outstanding common shares from convertible senior notes, stock options and restricted stock awards were excluded from the computation of diluted EPS because the effect would have been antidilutive (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Convertible Senior Notes 996 996 996 996 Stock options and restricted stock 229 404 272 381 1,225 1,400 1,268 1,377 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in goodwill | The following summarizes the change in goodwill during the nine months ended September 30, 2022 (in thousands): North America International Total Carrying amount, December 31, 2021 $ 65,535 $ 53,291 $ 118,826 Goodwill attributable to acquisitions (subject to change) — 22,148 22,148 Measurement period adjustment to prior year acquisition (17) — (17) Foreign currency adjustments (737) (10,260) (10,997) Carrying amount, September 30, 2022 $ 64,781 $ 65,179 $ 129,960 |
Schedule of other intangible assets | Other intangibles consisted of the following (in thousands): September 30, 2022 December 31, 2021 Gross Carrying Amount Accum. Amortiz. Net Carrying Amount Gross Carrying Amount Accum. Amortiz. Net Carrying Amount Intangible assets subject to amortization: Customer relationships and other $ 52,857 $ (13,775) $ 39,082 $ 47,629 $ (11,145) $ 36,484 Developed technology 18,807 (5,572) 13,235 15,633 (3,218) 12,415 Trade names 1,672 (251) 1,421 223 (166) 57 Intangible assets not subject to amortization: Trade names 6,697 — 6,697 7,749 — 7,749 Total intangible assets $ 80,033 $ (19,598) $ 60,435 $ 71,234 $ (14,529) $ 56,705 |
Schedule of estimated future amortization expense | Estimated amortization expense related to intangibles for each of the five years from 2022 (remaining) through 2026 and thereafter is as follows (in thousands): Year Ending December 31, 2022 (remaining) $ 2,133 2023 7,987 2024 7,405 2025 7,365 2026 7,005 Thereafter 21,843 Total amortization related to finite-lived intangible assets $ 53,738 Intangible assets not subject to amortization 6,697 Net intangible assets $ 60,435 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment, net, consisted of the following (in thousands): September 30, 2022 December 31, 2021 Land $ 2,029 $ 2,959 Building 10,787 11,288 Machinery and equipment 38,218 39,851 Office furniture and equipment 2,145 1,732 Computer hardware and software 5,332 5,285 Leasehold and building improvements 10,878 10,796 Construction in progress 653 286 Property and equipment, gross 70,042 72,197 Less accumulated depreciation (38,983) (38,784) Total property and equipment, net $ 31,059 $ 33,413 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventories consisted of the following (in thousands): September 30, 2022 December 31, 2021 Raw materials $ 19,392 $ 16,094 Work in process 3,474 3,656 Finished goods 34,611 29,611 Total inventories $ 57,477 $ 49,361 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities consisted of the following (in thousands): September 30, 2022 December 31, 2021 Accrued payroll and employee benefits $ 6,623 $ 9,392 Inventory in transit 2,206 1,605 Accrued taxes 1,672 3,574 Interest accrual on Notes 111 1,464 Other 3,680 3,389 Total accrued liabilities $ 14,292 $ 19,424 |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock options plans | During the nine months ended September 30, 2022, the Company granted the following restricted stock awards and restricted stock units: Nine Months Ended September 30, 2022 Awards/Units Weighted-Average Grant Date Fair Value Restricted stock awards 76,941 $ 116.65 Restricted stock units 25,853 $ 101.34 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss) consisted of the following (in thousands): Pension Adjustments Foreign Currency Translation 1 Foreign Currency Gain on Intra-Entity Transactions 2 Total Accumulated Other Comprehensive Income (Loss) Balances at December 31, 2021 $ (279) $ 1,974 $ 3,342 $ 5,037 Current period other comprehensive loss — (14,007) (12,067) (26,074) Balances at September 30, 2022 $ (279) $ (12,033) $ (8,725) $ (21,037) 1 Foreign currency gains and losses related to translation of foreign subsidiary financial statements. 2 The Company has intercompany loans of a long-term investment nature that are denominated in a foreign currency. These transactions are considered to be of a long-term nature if settlement is not planned or anticipated in the foreseeable future. |
INTEREST AND OTHER (INCOME) E_2
INTEREST AND OTHER (INCOME) EXPENSE, NET (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Other Income and Expenses [Abstract] | |
Schedule of interest expense (income) and other income, net | Interest and other expense, net, consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Interest income $ (857) $ (479) $ (1,917) $ (1,335) Interest expense 1,172 918 3,028 2,760 Other (income) expense, net (74) (469) (31) (350) Total interest and other expense (income), net $ 241 $ (30) $ 1,080 $ 1,075 |
CONVERTIBLE NOTES AND CREDIT _2
CONVERTIBLE NOTES AND CREDIT FACILITY (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Convertible Debt | September 30, 2022 December 31, 2021 Principal amount of the Notes $ 86,250 $ 86,250 Unamortized debt discount (1,893) (2,216) Net carrying amount $ 84,357 $ 84,034 |
Interest Income and Interest Expense Disclosure | Interest expense related to the Notes is comprised of the amortization of debt discount and debt issuance costs and the contractual coupon interest as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Interest expense related to contractual coupon interest $ 809 $ 809 $ 2,426 $ 2,426 Interest expense related to amortization of the debt discount 109 104 323 310 $ 918 $ 913 $ 2,749 $ 2,736 |
NOTE RECEIVABLES (Tables)
NOTE RECEIVABLES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Related Party Transactions | The following table summarizes the net carrying amount of the note receivable, including the unamortized discount and allowance for expected credit losses, as well as the fair value of the embedded derivative asset (in thousands): September 30, 2022 December 31, 2021 Principal amount $ 6,650 $ 6,650 Unamortized discount (425) (672) Allowance for expected credit losses (3,565) (67) Net carrying amount 2,660 5,911 Embedded derivative asset 355 889 Related party convertible note receivable, net $ 3,015 $ 6,800 September 30, 2022 December 31, 2021 Principal amount $ 13,700 $ 9,000 Unamortized discount (206) (254) Allowance for expected credit losses (298) (298) Promissory notes receivable from investee, net $ 13,196 $ 8,448 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Reconciliation of Revenue from Segments to Consolidated | Three Months Ended September 30, 2022 North America International Total Total revenue $ 40,329 $ 21,163 $ 61,492 Cost of revenue 21,584 13,032 34,616 Gross profit $ 18,745 $ 8,131 $ 26,876 Gross margin 46 % 38 % 44 % Operating income (loss) $ 885 $ (1,556) $ (671) Three Months Ended September 30, 2021 North America International Total Total revenue $ 37,809 $ 22,431 $ 60,240 Cost of revenue 20,034 14,962 34,996 Gross profit $ 17,775 $ 7,469 $ 25,244 Gross margin 47 % 33 % 42 % Operating loss $ (1,645) $ (788) $ (2,433) Nine Months Ended September 30, 2022 North America International Total revenue, net $ 118,607 $ 72,362 $ 190,969 Cost of revenue 63,158 44,463 107,621 Gross profit $ 55,449 $ 27,899 $ 83,348 Gross margin 47 % 39 % 44 % Operating loss $ (15,927) $ (1,742) $ (17,669) Nine Months Ended September 30, 2021 North America International Total revenue, net $ 115,614 $ 70,057 $ 185,671 Cost of revenue 60,908 46,777 107,685 Gross profit $ 54,706 $ 23,280 $ 77,986 Gross margin 47 % 33 % 42 % Operating loss $ (484) $ (1,627) $ (2,111) |
Schedule of revenue from external customers and long-lived assets, by geographical areas | Asset information by reportable segment as of September 30, 2022 is as follows (in thousands): As of September 30, 2022 North America International Total Total assets $ 370,619 $ 199,448 $ 570,067 Asset information by reportable segment as of December 31, 2021 is as follows (in thousands): As of December 31, 2021 North America International Total Total assets $ 441,234 $ 162,838 $ 604,072 |
OPERATIONS AND SUMMARY OF SIG_4
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2022 | Dec. 31, 2021 | Jul. 01, 2021 | Feb. 01, 2021 | |
Lacuna Diagnostics, Inc. | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Business Combination, Contingent Consideration Arrangements, Payments | $ 2,000,000 | |||
Business Combination, Contingent Consideration Arrangements, Payments If Metrics Met In Period | 1,000,000 | |||
Contingent Consideration | 0 | $ 0 | ||
Business combination, contingent consideration, liability | $ 2,000,000 | |||
BiEsseA s.r.1. | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Business Combination, Contingent Consideration Arrangements, Payments | 2,600,000 | |||
Business combination, contingent consideration, liability | $ 2,500,000 | |||
Biotech | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Business Combination, Contingent Consideration Arrangements, Payments | 17,500,000 | |||
Business combination, contingent consideration, liability | $ 14,900,000 | |||
Convertible Senior Notes Due 2026 | Senior Notes | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Debt instrument, interest rate, stated percentage | 3.75% |
OPERATIONS AND SUMMARY OF SIG_5
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Balances | $ 122,331 | $ 3,559 |
BiEsseA s.r.1. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | 1,639 | 2,334 |
Money market fund | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market fund | 120,000 | |
Convertible Note Receivable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative asset | 355 | 888 |
Promissory Note Receivable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative asset | 337 | 337 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Balances | 120,000 | 0 |
Level 1 | BiEsseA s.r.1. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | 0 | 0 |
Level 1 | Money market fund | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market fund | 120,000 | |
Level 1 | Convertible Note Receivable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative asset | 0 | 0 |
Level 1 | Promissory Note Receivable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative asset | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Balances | 0 | 0 |
Level 2 | BiEsseA s.r.1. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | 0 | 0 |
Level 2 | Money market fund | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market fund | 0 | |
Level 2 | Convertible Note Receivable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative asset | 0 | 0 |
Level 2 | Promissory Note Receivable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative asset | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Balances | 2,331 | 3,559 |
Level 3 | BiEsseA s.r.1. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | 1,639 | 2,334 |
Level 3 | Money market fund | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market fund | 0 | |
Level 3 | Convertible Note Receivable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative asset | 355 | 888 |
Level 3 | Promissory Note Receivable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative asset | $ 337 | $ 337 |
OPERATIONS AND SUMMARY OF SIG_6
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Roll Forward (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Contingent Consideration | BiEsseA s.r.1. | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 2,334 |
Acquisition value | 0 |
Cash payments | 0 |
Changes in fair value | (315) |
Foreign currency impact | (380) |
Ending balance | 1,639 |
Derivative Financial Instruments, Assets | Convertible Note Receivable | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 888 |
Acquisition value | 0 |
Cash payments | 0 |
Changes in fair value | (533) |
Foreign currency impact | 0 |
Ending balance | 355 |
Derivative Financial Instruments, Assets | Promissory Note Receivable | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 337 |
Acquisition value | 0 |
Cash payments | 0 |
Changes in fair value | 0 |
Foreign currency impact | 0 |
Ending balance | $ 337 |
REVENUE - Disaggregation (Detai
REVENUE - Disaggregation (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Number of reportable segments | segment | 2 | ||||
Revenue, net | $ 61,492 | $ 60,240 | $ 190,969 | $ 185,671 | |
Contract receivables, current | 1,600 | 1,600 | $ 1,500 | ||
Contract receivables, noncurrent | 5,300 | 5,300 | 5,100 | ||
Current portion of deferred revenue, and other | 7,700 | 7,700 | $ 9,600 | ||
Contract liabilities, revenue recognized | 7,900 | ||||
Contract liabilities, increase due to additional deferred sales | 5,500 | ||||
Exchange rate impact | 400 | ||||
VetZ GmbH | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Contact with customer, due to business acquisition | 900 | ||||
North America | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | 40,329 | 37,809 | 118,607 | 115,614 | |
International | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | 21,163 | 22,431 | 72,362 | 70,057 | |
POC lab instruments & other | North America | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | 3,630 | 3,547 | 11,821 | 10,017 | |
POC lab instruments & other | International | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | 3,698 | 3,800 | 11,269 | 10,801 | |
POC lab consumables | North America | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | 19,711 | 17,694 | 58,685 | 53,942 | |
POC lab consumables | International | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | 9,381 | 11,223 | 31,621 | 35,383 | |
POC imaging & informatics | North America | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | 7,688 | 7,433 | 19,641 | 21,222 | |
POC imaging & informatics | International | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | 7,243 | 5,849 | 26,787 | 19,783 | |
PVD | North America | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | 5,343 | 4,297 | 16,758 | 17,370 | |
PVD | International | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | 841 | 1,559 | 2,685 | 4,090 | |
OVP | North America | Operating Segments | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Revenue, net | $ 3,957 | $ 4,838 | $ 11,702 | $ 13,063 |
REVENUE - Performance Obligatio
REVENUE - Performance Obligations (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 200,635 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 12,620 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 48,180 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 43,058 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 36,803 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 31,678 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 28,296 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of satisfaction |
ACQUISITION AND RELATED PARTY_3
ACQUISITION AND RELATED PARTY ITEMS - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||||||
Jan. 03, 2022 | Sep. 01, 2021 | Jul. 01, 2021 | Feb. 01, 2021 | Sep. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Feb. 21, 2021 | |
Business Acquisition [Line Items] | |||||||||||
Payment of Notes Payable | $ 2,385,000 | $ 0 | |||||||||
Goodwill | $ 129,960,000 | 129,960,000 | $ 118,826,000 | ||||||||
Operating lease right-of-use assets | $ 6,810,000 | $ 6,810,000 | $ 5,198,000 | ||||||||
Biotech | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Ownership percentage | 70.25% | 70.25% | |||||||||
Additional ownership interest acquired | 5.25% | 5.25% | |||||||||
Biotech | Chinta Lamichhane, DVM, Ph.D | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Ownership percentage | 29.75% | 29.75% | |||||||||
VetZ GmbH | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Percentage of voting interest acquired | 100% | ||||||||||
Cash consideration transferred | $ 31,627,000 | ||||||||||
Business Combination, Contingent Consideration, Liability, Term | 18 months | ||||||||||
Business Combination, Contingent Consideration, Earn-Out | $ 15,500,000 | ||||||||||
Business Combination, Contingent Consideration, Liability, Fair Value | 3,900,000 | ||||||||||
Working capital adjustment | $ 600,000 | ||||||||||
Additional consideration (in shares) | 91,039 | ||||||||||
Business combination, contingent consideration, liability | $ 1,400,000 | ||||||||||
Goodwill | 22,148,000 | ||||||||||
Purchase price | 35,487,000 | ||||||||||
Operating lease right-of-use assets | $ 2,200,000 | $ 2,200,000 | |||||||||
Operating Lease, Liability | 2,200,000 | 2,200,000 | |||||||||
Revenue of acquiree since acquisition date | $ 9,000,000 | ||||||||||
Acquisition related costs | 0 | 700,000 | |||||||||
Operating Lease, Expense | 47,000 | 199,000 | |||||||||
Net income of acquiree since acquisition date | $ 1,500,000 | ||||||||||
Acquisition receivables | $ 165,000 | ||||||||||
Biotech | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Percentage of voting interest acquired | 65% | ||||||||||
Cash consideration transferred | $ 16,250,000 | ||||||||||
Remaining percentage of interest to be acquired | 35% | ||||||||||
Payment of Notes Payable | 2,600,000 | ||||||||||
Reduction to notes payable | 2,400,000 | ||||||||||
Interest expense related to Notes Payable | 200,000 | ||||||||||
Notes Payable, Fair Value Disclosure | $ 15,900,000 | 13,500,000 | 13,500,000 | ||||||||
Business combination, contingent consideration, liability | 14,900,000 | 14,900,000 | |||||||||
Goodwill | 25,822,000 | ||||||||||
Purchase price | $ 32,150,000 | ||||||||||
BiEsseA s.r.1. | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Cash consideration transferred | $ 4,835,000 | ||||||||||
Business combination, contingent consideration, liability | 2,500,000 | ||||||||||
Goodwill | 4,562,000 | ||||||||||
Purchase price | 7,169,000 | ||||||||||
Unrecognized tax benefits, decrease resulting from acquisition | 500,000 | ||||||||||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | $ 4,600,000 | ||||||||||
Business Combination, Indemnification Assets, Amount Outstanding | 400,000 | 400,000 | |||||||||
Lacuna Diagnostics, Inc. | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Percentage of voting interest acquired | 100% | ||||||||||
Cash consideration transferred | $ 4,255,000 | ||||||||||
Business Combination, Contingent Consideration, Liability, Fair Value | 1,700,000 | $ 0 | 0 | ||||||||
Business combination, indemnification liabilities, holdback | $ 400,000 | 0 | 0 | ||||||||
Business combination, indemnification liabilities, holdback release period | 18 months | ||||||||||
Business combination, contingent consideration, liability | $ 2,000,000 | ||||||||||
Business acquisition, initial earn out period | 12 months | ||||||||||
Business combination, contingent consideration arrangements, liability performance reduction | $ 1,000,000 | ||||||||||
Fair value of contingent consideration | 1,700,000 | ||||||||||
Goodwill | 4,200,000 | ||||||||||
Purchase price | 5,955,000 | ||||||||||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | 0 | ||||||||||
Business Combination, Indemnification Liabilities, Holdback Released | $ 300,000 | $ 300,000 | |||||||||
Lacuna Diagnostics, Inc. | North America | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Goodwill | $ 4,200,000 |
ACQUISITION AND RELATED PARTY_4
ACQUISITION AND RELATED PARTY ITEMS - Preliminary Purchase Price Acquisition (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||||
Jan. 03, 2022 | Sep. 01, 2021 | Jul. 01, 2021 | Feb. 01, 2021 | Sep. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |||||||
Goodwill | $ 129,960 | $ 118,826 | |||||
VetZ GmbH | |||||||
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination [Abstract] | |||||||
Cash consideration transferred | $ 31,627 | ||||||
Equity interest issued and issuable | 3,860 | ||||||
Business combination, consideration transferred | 35,487 | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |||||||
Cash and cash equivalents | 1,251 | ||||||
Inventory | 359 | ||||||
Accounts receivable | 824 | ||||||
Prepaid expenses and other assets | 318 | ||||||
Property and equipment, net | 602 | ||||||
Operating lease right-of-use assets | 2,962 | ||||||
Intangible assets | 18,504 | ||||||
Total assets acquired | 24,820 | ||||||
Accounts payable | 520 | ||||||
Accrued liabilities | 1,260 | ||||||
Operating lease liabilities, current | 247 | ||||||
Deferred revenue, current, and other | 1,014 | ||||||
Operating lease liabilities, non-current | 2,714 | ||||||
Deferred tax liabilities | 5,408 | ||||||
Other liabilities | 318 | ||||||
Net assets acquired | 13,339 | ||||||
Goodwill | 22,148 | ||||||
Total fair value of consideration transferred | $ 35,487 | ||||||
Biotech | |||||||
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination [Abstract] | |||||||
Cash consideration transferred | $ 16,250 | ||||||
Equity interest issued and issuable | 15,900 | ||||||
Business combination, consideration transferred | 32,150 | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |||||||
Inventory | 190 | ||||||
Accounts receivable | 18 | ||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other | 1 | ||||||
Property and equipment, net | 148 | ||||||
Operating lease right-of-use assets | 1,033 | ||||||
Intangible assets | 6,000 | ||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets | 15 | ||||||
Total assets acquired | 7,405 | ||||||
Accounts payable | 11 | ||||||
Accrued liabilities | 33 | ||||||
Operating lease liabilities, current | 188 | ||||||
Operating lease liabilities, non-current | 845 | ||||||
Net assets acquired | 6,328 | ||||||
Goodwill | 25,822 | ||||||
Total fair value of consideration transferred | $ 32,150 | ||||||
Lacuna Diagnostics, Inc. | |||||||
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination [Abstract] | |||||||
Cash consideration transferred | $ 4,255 | ||||||
Business combination, consideration transferred | 5,955 | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |||||||
Cash and cash equivalents | 3 | ||||||
Accounts receivable | 170 | ||||||
Property and equipment, net | 530 | ||||||
Intangible assets | 1,185 | ||||||
Total assets acquired | 1,888 | ||||||
Deferred tax liabilities | 133 | ||||||
Net assets acquired | 1,755 | ||||||
Goodwill | 4,200 | ||||||
Total fair value of consideration transferred | $ 5,955 | ||||||
BiEsseA s.r.1. | |||||||
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination [Abstract] | |||||||
Cash consideration transferred | $ 4,835 | ||||||
Equity interest issued and issuable | 2,334 | $ 1,600 | $ 2,300 | ||||
Business combination, consideration transferred | 7,169 | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |||||||
Cash and cash equivalents | 322 | ||||||
Accounts receivable | 152 | ||||||
Other receivables | 497 | ||||||
Prepaid expenses | 8 | ||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other | 275 | ||||||
Property and equipment, net | 89 | ||||||
Operating lease right-of-use assets | 44 | ||||||
Intangible assets | 3,329 | ||||||
Total assets acquired | 4,716 | ||||||
Accounts payable | 208 | ||||||
Accrued liabilities | 334 | ||||||
Operating lease liabilities, current | 37 | ||||||
Deferred revenue, current, and other | 85 | ||||||
Operating lease liabilities, non-current | 20 | ||||||
Deferred tax liabilities | 925 | ||||||
Other liabilities | 500 | ||||||
Net assets acquired | 2,607 | ||||||
Goodwill | 4,562 | ||||||
Total fair value of consideration transferred | $ 7,169 |
ACQUISITION AND RELATED PARTY_5
ACQUISITION AND RELATED PARTY ITEMS - Intangible Assets Acquired, Amortization Method (Details) - USD ($) $ in Thousands | Jan. 03, 2022 | Sep. 01, 2021 | Jul. 01, 2021 | Feb. 01, 2021 | Sep. 30, 2022 | Dec. 31, 2021 |
Business Acquisition [Line Items] | ||||||
Gross Carrying Amount | $ 80,033 | $ 71,234 | ||||
VetZ GmbH | ||||||
Business Acquisition [Line Items] | ||||||
Fair Value | $ 18,504 | |||||
Lacuna Diagnostics, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Gross Carrying Amount | $ 1,185 | |||||
Biotech | ||||||
Business Acquisition [Line Items] | ||||||
Fair Value | $ 6,000 | |||||
BiEsseA s.r.1. | ||||||
Business Acquisition [Line Items] | ||||||
Fair Value | $ 3,329 | |||||
Developed technology | VetZ GmbH | ||||||
Business Acquisition [Line Items] | ||||||
Weighted- Average Useful Life | 4 years 3 months 18 days | |||||
Fair Value | $ 3,747 | |||||
Developed technology | Lacuna Diagnostics, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Weighted- Average Useful Life | 3 years | |||||
Fair Value | $ 1,000 | |||||
Developed technology | Biotech | ||||||
Business Acquisition [Line Items] | ||||||
Weighted- Average Useful Life | 6 years | |||||
Fair Value | $ 6,000 | |||||
Customer relationships | VetZ GmbH | ||||||
Business Acquisition [Line Items] | ||||||
Weighted- Average Useful Life | 12 years | |||||
Fair Value | $ 12,941 | |||||
Customer relationships | Lacuna Diagnostics, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Weighted- Average Useful Life | 6 months | |||||
Fair Value | $ 150 | |||||
Customer relationships | BiEsseA s.r.1. | ||||||
Business Acquisition [Line Items] | ||||||
Weighted- Average Useful Life | 14 years | |||||
Fair Value | $ 3,329 | |||||
Trade name | VetZ GmbH | ||||||
Business Acquisition [Line Items] | ||||||
Weighted- Average Useful Life | 8 years | |||||
Fair Value | $ 1,816 | |||||
Trade name | Lacuna Diagnostics, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Weighted- Average Useful Life | 11 months | |||||
Fair Value | $ 35 |
ACQUISITION AND RELATED PARTY_6
ACQUISITION AND RELATED PARTY ITEMS - Unaudited Pro Forma Financial Information (Details) - VetZ GmbH - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Business Acquisition [Line Items] | ||
Business Acquisition, Pro Forma Revenue | $ 63,085 | $ 194,148 |
Business Acquisition, Pro Forma Income (Loss) from Continuing Operations, Net of Tax | (1,230) | 1,257 |
Business Acquisition, Pro Forma Net Income (Loss) | $ (1,538) | $ 420 |
INVESTMENTS IN UNCONSOLIDATED_3
INVESTMENTS IN UNCONSOLIDATED AFFILIATES (Details) - USD ($) $ in Thousands | Sep. 09, 2022 | Sep. 24, 2018 | Aug. 08, 2018 | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investment | $ 1,312 | $ 2,406 | |||
Non-marketable equity security investment | 3,018 | 3,018 | |||
Investments | $ 4,330 | $ 5,424 | |||
Payments to acquire wholly owned subsidiary | $ 38,700 | ||||
General Fluidics Corporation | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Supply commitment term | 15 years | ||||
General Fluidics Corporation | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Payments to acquire equity method investments | $ 5,100 | ||||
Ownership percentage | 26% | ||||
MBio Diagnostics, Inc. | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Payments to acquire non-marketable securities | $ 3,000 | ||||
Intangible asset acquired | $ 1,000 | ||||
Intangible assets acquired, useful life | 20 years | ||||
Contingent consideration on milestones | $ 10,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Contingency [Line Items] | ||||||
Income before income taxes | $ (912) | $ (2,403) | $ (18,749) | $ (3,186) | ||
Total income tax benefit | 834 | 813 | 4,175 | 3,429 | ||
Cash paid for income taxes | 1,000 | 400 | 2,400 | 1,600 | ||
Excess tax benefits related to employee share-based compensation | $ 200 | $ 700 | $ 300 | $ 1,700 | ||
Deferred Tax Assets, Operating Loss Carryforwards | $ 5,700 | |||||
Deferred tax assets, valuation allowance | $ 900 | |||||
Forecast | ||||||
Income Tax Contingency [Line Items] | ||||||
Deferred tax assets, valuation allowance | $ 3,700 |
LEASES - Operating and Financin
LEASES - Operating and Financing Lease Balances (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 6,810 | $ 5,198 |
Property and equipment, net | 1,368 | 1,650 |
Total Lease Assets | 8,178 | 6,848 |
Operating lease liabilities, current | 2,681 | 2,227 |
Operating lease liabilities, non-current | 4,713 | 3,509 |
Deferred revenue, current, and other | 127 | 200 |
Other liabilities | 290 | 331 |
Total Lease Liabilities | $ 7,811 | $ 6,267 |
LEASES - Sales-type Leases and
LEASES - Sales-type Leases and Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Sales-type lease revenue | $ 3,785 | $ 3,086 | $ 10,838 | $ 8,212 |
Sales-type lease cost of revenue | 3,145 | 2,417 | 8,972 | 6,378 |
Profit recognized at commencement for sales-type leases | 640 | 669 | 1,866 | 1,834 |
Operating lease income | $ 400 | $ 514 | $ 1,286 | $ 1,655 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |||||
Net loss attributable to Heska Corporation | $ (436) | $ (1,898) | $ (1,898) | $ (15,668) | $ (594) |
Basic weighted-average common shares outstanding (in shares) | 10,368 | 10,195 | 10,330 | 9,949 | |
Dilutive effect of stock options and restricted stock | 0 | 0 | 0 | 0 | |
Diluted weighted-average common shares outstanding | 10,368 | 10,195 | 10,330 | 9,949 | |
Basic (loss) earnings per share attributable to Heska Corporation (in dollars per share) | $ (0.04) | $ (0.19) | $ (1.52) | $ (0.06) | |
Diluted (loss) earnings per share attributable to Heska Corporation (in dollars per share) | $ (0.04) | $ (0.19) | $ (1.52) | $ (0.06) | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Stock options and restricted units excluded from computation of earnings per share | 1,225 | 1,400 | 1,268 | 1,377 | |
Senior Convertible Note | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Stock options and restricted units excluded from computation of earnings per share | 996 | 996 | 996 | 996 | |
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 | 229 | 404 | 272 | 381 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Goodwill [Roll Forward] | |||||
Carrying amount, December 31, 2021 | $ 118,826 | ||||
Goodwill attributable to acquisitions (subject to change) | 22,148 | ||||
Measurement period adjustment to prior year acquisition | $ (17) | ||||
Foreign currency adjustments | (10,997) | ||||
Carrying amount, September 30, 2022 | $ 129,960 | 129,960 | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Accumulated amortization | (19,598) | (19,598) | $ (14,529) | ||
Net carrying amount | 53,738 | 53,738 | |||
Indefinite-lived Intangible Assets [Line Items] | |||||
Intangible assets not subject to amortization | 6,697 | 6,697 | |||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||
Gross Carrying Amount | 80,033 | 80,033 | 71,234 | ||
Accumulated amortization | (19,598) | (19,598) | (14,529) | ||
Net intangible assets | 60,435 | 60,435 | 56,705 | ||
Amortization of Intangible Assets | 1,400 | $ 1,600 | $ 5,400 | 4,600 | |
Impairment expense | 200 | ||||
Remaining weighted average amortization period for intangible assets | 7 years 9 months 18 days | ||||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||||
2022 (remaining) | 2,133 | $ 2,133 | |||
2023 | 7,987 | 7,987 | |||
2024 | 7,405 | 7,405 | |||
2025 | 7,365 | 7,365 | |||
2026 | 7,005 | 7,005 | |||
Thereafter | 21,843 | 21,843 | |||
Net carrying amount | 53,738 | 53,738 | |||
Intangible assets not subject to amortization | 6,697 | 6,697 | |||
Net intangible assets | 60,435 | 60,435 | 56,705 | ||
Trade name | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Intangible assets not subject to amortization | 6,697 | 6,697 | 7,749 | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||||
Intangible assets not subject to amortization | 6,697 | 6,697 | 7,749 | ||
Customer relationships and other | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Gross carrying amount | 52,857 | 52,857 | 47,629 | ||
Accumulated amortization | (13,775) | (13,775) | (11,145) | ||
Net carrying amount | 39,082 | 39,082 | 36,484 | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||
Accumulated amortization | (13,775) | (13,775) | (11,145) | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||||
Net carrying amount | 39,082 | 39,082 | 36,484 | ||
Developed technology | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Gross carrying amount | 18,807 | 18,807 | 15,633 | ||
Accumulated amortization | (5,572) | (5,572) | (3,218) | ||
Net carrying amount | 13,235 | 13,235 | 12,415 | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||
Accumulated amortization | (5,572) | (5,572) | (3,218) | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||||
Net carrying amount | 13,235 | 13,235 | 12,415 | ||
Trade name | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Gross carrying amount | 1,672 | 1,672 | 223 | ||
Accumulated amortization | (251) | (251) | (166) | ||
Net carrying amount | 1,421 | 1,421 | 57 | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||
Accumulated amortization | (251) | (251) | (166) | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||||
Net carrying amount | 1,421 | 1,421 | $ 57 | ||
Operating Segments | North America | |||||
Goodwill [Roll Forward] | |||||
Carrying amount, December 31, 2021 | 65,535 | ||||
Goodwill attributable to acquisitions (subject to change) | 0 | ||||
Measurement period adjustment to prior year acquisition | (17) | ||||
Foreign currency adjustments | (737) | ||||
Carrying amount, September 30, 2022 | 64,781 | 64,781 | |||
Operating Segments | International | |||||
Goodwill [Roll Forward] | |||||
Carrying amount, December 31, 2021 | 53,291 | ||||
Goodwill attributable to acquisitions (subject to change) | 22,148 | ||||
Measurement period adjustment to prior year acquisition | $ 0 | ||||
Foreign currency adjustments | (10,260) | ||||
Carrying amount, September 30, 2022 | $ 65,179 | $ 65,179 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 70,042 | $ 70,042 | $ 72,197 | ||
Less accumulated depreciation | (38,983) | (38,983) | (38,784) | ||
Total property and equipment, net | 31,059 | 31,059 | 33,413 | ||
Depreciation and amortization | 1,400 | $ 1,700 | 3,300 | $ 5,200 | |
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 2,029 | 2,029 | 2,959 | ||
Building | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 10,787 | 10,787 | 11,288 | ||
Machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 38,218 | 38,218 | 39,851 | ||
Office furniture and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 2,145 | 2,145 | 1,732 | ||
Computer hardware and software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 5,332 | 5,332 | 5,285 | ||
Leasehold and building improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 10,878 | 10,878 | 10,796 | ||
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 653 | $ 653 | 286 | ||
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 | ||||
Leased equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 16,000 | $ 16,000 | 15,100 | ||
Less accumulated depreciation | $ (6,300) | $ (6,300) | $ (5,800) |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 19,392 | $ 16,094 |
Work in process | 3,474 | 3,656 |
Finished goods | 34,611 | 29,611 |
Total inventory, net | $ 57,477 | $ 49,361 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued payroll and employee benefits | $ 6,623 | $ 9,392 |
Inventory in transit | 2,206 | 1,605 |
Accrued taxes | 1,672 | 3,574 |
Interest accrual on Notes | 111 | 1,464 |
Other | 3,680 | 3,389 |
Total accrued liabilities | $ 14,292 | $ 19,424 |
Percentage of total current liabilities | 5% |
CAPITAL STOCK - STOCK OPTIONS A
CAPITAL STOCK - STOCK OPTIONS AND RESTRICTED STOCK (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Restricted Stock | |
Awards/Units Granted | |
Restricted stock awards (in shares) | shares | 76,941 |
Weighted-Average Grant Date Fair Value (per award/unit) | |
Restricted stock awards (in dollars per share) | $ / shares | $ 116.65 |
Restricted Stock Units (RSUs) | |
Awards/Units Granted | |
Restricted stock awards (in shares) | shares | 25,853 |
Weighted-Average Grant Date Fair Value (per award/unit) | |
Restricted stock awards (in dollars per share) | $ / shares | $ 101.34 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | $ 435,854 |
Ending balance | 407,899 |
Total Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | 5,037 |
Current period other comprehensive loss | (26,074) |
Ending balance | (21,037) |
Pension Adjustments | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | (279) |
Current period other comprehensive loss | 0 |
Ending balance | (279) |
Foreign Currency Translation1 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | 1,974 |
Current period other comprehensive loss | (14,007) |
Ending balance | (12,033) |
Foreign Currency Gain on Intra-Entity Transactions2 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |
Beginning balance | 3,342 |
Current period other comprehensive loss | (12,067) |
Ending balance | $ (8,725) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | 9 Months Ended | |||
Feb. 18, 2020 | Sep. 30, 2022 | Mar. 28, 2022 | Dec. 31, 2021 | |
Loss Contingencies [Line Items] | ||||
Litigation settlement, amount | $ 0.8 | |||
Warranty reserve | 0.4 | $ 0.5 | ||
Unconditional annual minimum inventory purchases | $ 105 | |||
Loss Contingency, Post-Contractual, Non-Compete Obligation Period | 2 years | |||
VolitionRx Limited | Supply And License | ||||
Loss Contingencies [Line Items] | ||||
Contract with customer, liability | $ 10 | |||
Milestone payment | $ 13 | |||
Agreement term | 22 years | |||
Additional milestone payment | $ 5 |
INTEREST AND OTHER (INCOME) E_3
INTEREST AND OTHER (INCOME) EXPENSE, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Other Income and Expenses [Abstract] | ||||
Interest income | $ (857) | $ (479) | $ (1,917) | $ (1,335) |
Interest expense | 1,172 | 918 | 3,028 | 2,760 |
Other, net | (74) | (469) | (31) | (350) |
Total interest and other expense (income), net | 241 | (30) | 1,080 | 1,075 |
Cash paid for interest | $ 1,600 | $ 1,600 | $ 3,800 | $ 3,300 |
CONVERTIBLE NOTES AND CREDIT _3
CONVERTIBLE NOTES AND CREDIT FACILITY - Convertible Notes Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 17, 2019 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jan. 01, 2021 | |
Debt Instrument [Line Items] | |||||||
Debt instrument, convertible, remaining discount amortization period | 4 years | ||||||
Share price | $ 72.92 | $ 72.92 | |||||
Senior Convertible Note | |||||||
Debt Instrument [Line Items] | |||||||
Proceeds from convertible debt | $ 83,700,000 | ||||||
Convertible Debt | Senior Convertible Note | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount | $ 86,250,000 | $ 86,250,000 | $ 86,250,000 | $ 86,250,000 | |||
Debt instrument, interest rate, stated percentage | 3.75% | ||||||
Interest expense, debt | 918,000 | $ 913,000 | 2,749,000 | $ 2,736,000 | |||
Convertible Debt | Senior Convertible Note | Accounting Standards Update 2020-06 | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate, effective percentage | 4.35% | ||||||
Level 2 | Senior Convertible Note | |||||||
Debt Instrument [Line Items] | |||||||
Convertible debt, fair value | $ 98,200,000 | $ 98,200,000 | $ 194,300,000 | ||||
Initial Purchasers | Convertible Debt | Senior Convertible Note | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount | $ 11,250,000 |
CONVERTIBLE NOTES AND CREDIT _4
CONVERTIBLE NOTES AND CREDIT FACILITY - Carrying Amount of Debt (Details) - Convertible Debt - Senior Convertible Note - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 17, 2019 |
Debt Instrument [Line Items] | |||
Aggregate principal amount | $ 86,250,000 | $ 86,250,000 | $ 86,250,000 |
Unamortized debt discount | (1,893,000) | (2,216,000) | |
Net carrying amount | $ 84,357,000 | $ 84,034,000 |
CONVERTIBLE NOTES AND CREDIT _5
CONVERTIBLE NOTES AND CREDIT FACILITY - Interest Expense (Details) - Convertible Debt - Senior Convertible Note - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Debt Instrument [Line Items] | ||||
Interest expense related to contractual coupon interest | $ 809 | $ 809 | $ 2,426 | $ 2,426 |
Interest expense related to amortization of the debt discount | 109 | 104 | 323 | 310 |
Interest expense, debt | $ 918 | $ 913 | $ 2,749 | $ 2,736 |
NOTE RECEIVABLES - Additional I
NOTE RECEIVABLES - Additional Information (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||||
Sep. 19, 2022 | Feb. 01, 2021 | Dec. 09, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||||||
Principal amount | $ 4,700,000 | $ 9,000,000 | ||||
Increase in allowance for expected credit losses | $ 3,500,000 | |||||
Equity Method Investee | Convertible Note Receivable | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 6,650,000 | |||||
Related party transaction, rate | 3% | |||||
Related party transaction, effective interest rate | 8.69% | |||||
Embedded derivative asset | 355,000 | 889,000 | ||||
Accounts and financing receivable, allowance for credit loss | 3,565,000 | 67,000 | ||||
Equity Method Investee | Notes Receivable | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 4,700,000 | $ 9,000,000 | ||||
Related party transaction, rate | 10% | 10% | ||||
Related party transaction, effective interest rate | 10.99% | |||||
Accounts and financing receivable, allowance for credit loss | $ 298,000 | $ 298,000 |
NOTE RECEIVABLES - Schedule (De
NOTE RECEIVABLES - Schedule (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Net carrying amount | $ 3,015 | $ 6,800 |
Equity Method Investee | Convertible Note Receivable | ||
Debt Instrument [Line Items] | ||
Principal amount | 6,650 | 6,650 |
Unamortized discount | (425) | (672) |
Allowance for expected credit losses | (3,565) | (67) |
Net carrying amount | 2,660 | 5,911 |
Embedded derivative asset | 355 | 889 |
Related party convertible note receivable, net | 3,015 | 6,800 |
Equity Method Investee | Notes Receivable | ||
Debt Instrument [Line Items] | ||
Principal amount | 13,700 | 9,000 |
Unamortized discount | (206) | (254) |
Allowance for expected credit losses | (298) | (298) |
Net carrying amount | $ 13,196 | $ 8,448 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Number of reportable segments | segment | 2 | ||||
Total revenue | $ 61,492 | $ 60,240 | $ 190,969 | $ 185,671 | |
Cost of revenue | 34,616 | 34,996 | 107,621 | 107,685 | |
Gross profit | $ 26,876 | $ 25,244 | $ 83,348 | $ 77,986 | |
Gross margin | 44% | 42% | 44% | 42% | |
Operating income (loss) | $ (671) | $ (2,433) | $ (17,669) | $ (2,111) | |
Total assets | 570,067 | 570,067 | $ 604,072 | ||
North America | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Total revenue | 40,329 | 37,809 | 118,607 | 115,614 | |
Cost of revenue | 21,584 | 20,034 | 63,158 | 60,908 | |
Gross profit | $ 18,745 | $ 17,775 | $ 55,449 | $ 54,706 | |
Gross margin | 46% | 47% | 47% | 47% | |
Operating income (loss) | $ 885 | $ (1,645) | $ (15,927) | $ (484) | |
Total assets | 370,619 | 370,619 | 441,234 | ||
International | |||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||
Total revenue | 21,163 | 22,431 | 72,362 | 70,057 | |
Cost of revenue | 13,032 | 14,962 | 44,463 | 46,777 | |
Gross profit | $ 8,131 | $ 7,469 | $ 27,899 | $ 23,280 | |
Gross margin | 38% | 33% | 39% | 33% | |
Operating income (loss) | $ (1,556) | $ (788) | $ (1,742) | $ (1,627) | |
Total assets | $ 199,448 | $ 199,448 | $ 162,838 |
Uncategorized Items - hska-2022
Label | Element | Value |
Retained Earnings [Member] | ||
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | $ (1,898,000) |