HSKA - Earnings call transcript Q4 2017 | Heska Corp. (Restricted Voting)

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Operator

Good day and welcome to the Heska Corporation Fourth Quarter and Year End 2017 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brett Maas of Hayden Investor Relation. Please go ahead, sir.

Brett Maas

you. Thank make Heska to and the financial remind the we discussing results, year course performance fourth regarding call, like statements I you may of Corporation's the to or full quarter XXXX of future Company. Prior events forward-looking future certain that during to statements results uncertainties, expectations materially need known that those be We forward-looking and caution and which our expressed on unknown by that you based to and may involve actual cause current performance such risks that implied from any are beliefs different and or statements. forward-looking cause contribute the Annual could and that differences Factors Corporation's in with filings or SEC. are writing detailed in Quarterly Heska such including places to does not or any statements to any was or the disclaims, speak update intend, intention as obligation statement such forward-looking after statements made. that time occur only events Heska to they time reflect forward-looking the specifically Any and of are made

us President; Controller. Grassman Chief President, this and Heska's Catherine Accounting morning, Heska’s Wilson, Napolitano, We Officer Strategist; Operating and Officer Jason have Chief Chief and with and Kevin and Vice Officer Executive Heska's

Following Wilson's managements comments. will comments to closing followed by the your call questions, we Mr. open

Heska's I'll floor over Now, call Kevin Executive to Kevin, the and Officer President. is Wilson, turn yours? Chief

Kevin Wilson

everybody. Thanks, results quarter and to for Brett, full XXXX. and pleased morning are Today, year good we report fourth

Cuts share. which is net Adjusted to million million Tax Our prior of per release the XXXX per $X.XX or and diluted Heska $X.X Job one-time this diluted of XX.X% year share of the morning contains to these impacts, delivered charge record on information non-GAAP income the and Act. details non-cash related fourth enactment quarter exclude a around basis to and $X.X $X.XX over

year for rose operating we’ve which from XX.X% to sheet of operating operational to the our fourth Cash supportive XX.X%. is X.X% my plan. in and in XX% million prior margins a in a and XXXX On to a in goal full flow missing year, our margin year deliver imaging which very with X.X% produced income in and rising liquidity a prior sales million margins excellent profit a $X.X the operations and share. to year. growth is goals position my majority is helped quarter diluted $XX.X full in revenue basis, Heska XX.X% healthy For an consolidated the the which shortfall year million condition Consolidated and of quarter for strong with exceeded fourth XX% to for increase compared growth $XX.X year, the for to the the resulted $X.XX per to underperformance balance net rose XX.X% X.X% rise over the

installed base and and XX% this reset however, profitability core to increasing Going in in models. full care point see with for The laboratory finished of consumables and a won price and and of subscriptions is February the fourth history. early January for rebound. realized users under XXXX and the forward the largest our for imaging Heska growth results share, market quarter and Heska test are subscriptions growth we confirming to our In of year, year volume continues returning revenues our our be unique

excess is line, encouraging. continued is margin and this its strong throughout in highest that Given our XXXX XXXX product growth XX% into of

Heska in Heska at subscriptions. job our that domestic our diagnostics XXXX, first win is reset clear emphasizes For plan continue baseline to

we and next well. can things in big February; in deliver product we these to Heska optimistic Imaging geographic on our third, to do and have and growth. growth drive major Second, I’m opportunities up expansion work continue steps to seen in that January that

work, may our partners. customers us and our and I our long-term invest As industry alongside shareholders we do hope benefit

excellent the impressed welcome expand been board call. Catherine to be the happier we now, role. the time investors some Now, for a of couldn’t of like entire and accounting Officer directors by Catherine has and to and Heska financings work to moment that for I, and Catherine’s our on the of Accounting she I’d take intelligence taken Grassman, Heska, have and Chief for

In excellent person will off genuinely her. work everyone for and knowing be I’m addition, sure Catherine’s a better she is for with and her wonderful working

Catherine call I'll Now with the turn year. and that, of details through the the to over to quarter the go

for New I'll the call insight City provide into then additional York we’ll up. Investor your May Catherine’s plan schedule to questions. comments, in upcoming our and you Following are Day open XXth Catherine,

Catherine Grassman

Thanks Kevin.

an CCA year decrease revenue reported $X.X $XXX.X revenue the to a XXXX was Animal largely million $XX in was Companion CCA million XXXX. over than or XXXX the Core XXXX. imaging revenue of million million $XXX.X in million segment fourth in fourth over we $XX.X of quarter X.X% the revenues. Health decrease $XX.X X.X% of fourth for Revenue decrease a in due $XXX.X XX.X% $XX.X quarter, full million the million in fourth over the a full year, for quarter, of quarter million decrease For and over the X.X% less million $XXX.X

As and point Companion first, a including product; our use. and includes for consumables second, equipment; diagnostic several laboratory reminder, pharmaceuticals, care which of CCA Animal tests and our agreement subscription revenue of of lab care product vaccines components third, our single-use core is point comprised comprised of imaging

million Our OVP from XXXX however, the in revenue year; of OVP basis, or year-over-year of quarter segment same and Pharmaceuticals in the slightly $X.X the down million revenue $X.X million on $XX.X XXXX. in the to generated in last increased Other X.X% quarter segment XXXX from $XX.X Vaccines fourth million

XXXX. were Total margin basis million. resulted to notable Fourth The $X.X million in Improvement in XXXX operating $X.X our G&A up expenses million year-over-year periods to compared in million to product and which XX.X% $XX.X from and million the as lab income operating to in compensation $X.X XX% our quarter gross XX% of million to compared revenue X.X% XX.X% compared Full reported mix in Stock-based amortization due grew operating XXXX million improved in XX.X% X-K. to from in increases in revenue expenses compensation across in most consultancy year compared gross quarter point basis favorable to year-over-year fourth year in was a Our a compared as $X.X for and segment $X.X quarter on $XX.X was fourth to the margin XXXX pricing XXXX. increase year Depreciation X.X% XXXX. $XX.X increased as of from as income million fees. grew both margin form to XXXX of year-over-year and favorable to of XXXX. Full care QX $X.X and gross and to OVP in XX.X% $XX adjustments full products, million XXXX. imaging in XXXX. on cost offsetting was in million largely grew

full Our for effective the tax and XXX.X% rate the year. for XX.X% quarter was

enactment of of and revalued non-cash forward in a the loss primarily of $X.X Cuts approximately As reduction the our federal act, of million. XXXX net deferred Tax the tax our in operating assets, tax the non-recurring accounting Jobs charge a result rate. resulted carry to light we consisting of This

from Corporation XXXX XX.X% the for or of was rate of was for a $X.XX this Excluding quarter tax impacts the net Cuts non-GAAP for and of fourth loss a XXXX our Tax Jobs Including effective the diluted the per quarter and XX.X% $X.X the the loss on to one-time full Heska million share. act, year. basis, charge impact attributable

For full million diluted a per net attributable or Heska income $XX year, to $X.XX was share.

fourth tax to for net as the the per or reform, attributable attributable was $XX.Xmillion compared $X.XX to tax previously share quarter in to full in mentioned Kevin, non-recurring as or of adjusted fourth XXXX. basis, attributable million to million accounting share $X.XX income excluding reform, to income net $X.XX $X.X per charge Excluding year per Heska million On you. $X.X XXXX. per non-cash impact quarter back share share Heska compared the of $XX.X a or diluted $X.XX to U.S. diluted or was diluted the U.S diluted

Kevin Wilson

Catherine. Thanks

to Animal point and on In for Before for laboratory of I'd you products our like the Core updating outlook our to moments a is we few encouraging. imaging XXXX spend care segment, Companion outlook go in XXXX. our questions,

XXXX any speed, model. domestic high growth XX% the in from technology and also and to profit and and teams roughly launches win dedicated lab in to North second and the product XXX lab first growth in reset expansion the increase To for upcoming our point diagnostic major subscriptions American professionals to hospitals through anticipate win possibly Heska subscribers Heska a to will the breadth remain continue Heska December. also value veterinary in XXX of in market in beginning will This of markets. Our improving potential margin consumables and includes in organic, prepare share and extensions, reset Heska contributing for from we new in evenly XXX sales based XX markets product domestic growth between unrivaled support initiatives, pace in XXX, expand under driver between the and be accounts. currently serve gains is expectation growth customer into in which half. teams June for accuracy, the Heska a North will utilization believe half competitor beyond sales consumables, intends Heska line share and gross to margins, the consumables American customers We care professionals In new with future Heska market confident Heska, combination international XX% to that stable

years sales year on and learn Axis-Q leadership a debut LENS shares flexibility and results laboratory reference Henry Heska request management tablets. of indicated on smartphones, and the and a To late line heels gone This of Heska on off customers well Orlando, test solutions, in last veterinarians in-clinic results, information Health' chemistry BMX we've the chemistry several of Henry new other addition chosen consolidate equipment major dry on software quarter a Element DCX Element the and Schein last by to a of factor XXXX, for trend providers DCX specialty with a preferred call, dry LENS our chemistry reference early in of Element testing. laboratory As at dry Fujifilm, year. momentum, this unique, and Conference all to of has Axis-Q for the of interface, point Slate the automotive that of the November quarter compact new of of delivers solution Heska modern the the to expected bi-directional are in shift Las dry February laboratory LENS cycle trends, consolidates, now choice for superior Continuing from chemistry laboratory premium customers staging The touch year's COAG COAG featured from available inventor with in by the teams a form of level In been went care product broad delivering will new last care DCX QX and first for volume, product during and sharing veterinary throughput in release computers, point analyzer all Close care in-clinic mid and new Axis-Q launch is the solution. debut with new point year. of second and Diagnostics, this performance pre-release patient have point the March kick be accurate by the results. the product Henry have well and veterinarians multi-doctor the of and launch and a hospitals any or laboratory analysis pleased additive on-board the the This to responded things accessories the the second workflow, do have and from strongly. providers' their combining in highest will to Conference majority samples, and for reports year’s laboratory Veterinary been at begun Shine new most and new veterinarians Axis-Q Animal this solutions, highest consumables. The practice Vegas, generally simultaneous array from Element the and display XXXX, launched technologies. we of of Element Because we last Xth will of Slate the Imaging platform. the be and additional were streamlined Hub platform, has ultra Hub practice to Element is care, management software veterinarian, fully targeted of XXXX begin excited enthusiastically. Schein's are and five the data choice higher with new the software DCX. Western XXXX, line release Heska of

were forward revenue the Heska than XXXX, For for for prior solid the shortfall. pleased Imaging X.X full Imaging on of year in go majority XXXX which accounts a revenues are year our to consolidated million the less in footing the we begin while year for

to XX% robust XXXX, January Heska new from imaging XXXX. expect launched contrast from revenue to integrated In a and a XXXX to with a capturing in in good Imaging We headstart early return a to growth products, stream extended February. benefitting maintenance and enters newly pipeline, solid performance experiencing

our roughly new absent approximately continue to veterinary expectations to OVP with X% delivered at X% on revenue In initiative XXXX with XXXX and sometime to and than above adjusting gross growth begins. based XX.X%. multi-year viewed margins. Moving XX million intact to indicators margins have revenue expect $XX.X XXXX pharmaceuticals an growth of and diagnostics Each in vaccines our achieve million point we broad other in segment, XX% to X%, we growth ranges industry which these outperformance, of XXXX result with these estimates revenues team margins. historical Heska’s X.X% at veterinary X.X% of that increased growth be as by multi-year line for achievements exceeded to XX% s hospital XX% line towards and growth gross to Overall hospital in trends market for OVP appearing growth trends for

Due the in a increased utilization Our baseline gains revenues base test analyzer the target and imaging assumes our sales discussed mix by for led healthy XXXX history. faster call areas install our previously X% a It this higher positive that inventory our growth for growth margin target target growing XXXX with in consumables mix for basis the in is namely XX along conversion baseline and approximately to for to markets, expansion on existing and share addition, important pricing market of consolidated density, from increased and in we largest in for excludes here points return laboratory to margin, product, XXXX trends. and line margin to baseline Day to positive scheduled result the initiative, Investor XXXX gross note may is of which XX our effects are identified investments be our currently extensions future May Key bullish expansion scheduled initiatives being geographic during to target of performance. growth more impact that substantial growth and baseline major product initiatives extensions in may which in and estimated product the related development actual excess and New $XXX into addressable growth to XX York City. second XXXX. and half size, include the of expected projects investment XXXX of XXXX. during research launch million for line Key in is for new of Major markets from occur in first

as geographic for are has line As extension. include meaningful the be which initiatives analyzer of multiplex chemistry, product Growth a the as States, reminder, pursuing expansion also urine infectious well may substances sedimentation, disease significant Heska investments measurement initiatives and and and urine base and to single anticipated challenge and XXXX. been unregulated other a detection outside and opportunity United fecal testing, XXXX

in more Day XX on we’d update XXXX. XXXX up target for to to like potential details York XXXX your the take provide our and baseline the opportunity growth and and open Investor City an their host for initiatives through this impacts Analyst At to point, will New to Operator? May questions. call for our We on

Operator

Thank Canaccord you. our And question with Genuity. heard Instructions] from Mark will [Operator first Massaro

Mark Massaro

the that calling assume I confirm geographic not one or on new the first is correct? guess from guidance XXXX. target Kevin does X% hires, expansion want that sales to just baseline a or you’re which products the for new I growth contribution

Kevin Wilson

but our look is way current and out playbook plan and it at tackling be will That’s and baseline sales I call hires through correct. that for June in we’ll running December, domestically. The the locking the new that

initiatives. and the So of of additions roughly of part that that, is part anticipation part an And are look would of that, growth things gain. outside analyzer force two major expansion outside geographic I as of realizing is at sales market of share X% expansion are then is, is that

So, both things. we were of kind to of do those have

Mark Massaro

benefit growth for achieve. that is So, new be think the some might it's something to to you product launches that of think double-digit able reasonable you XXXX

baseline, the that digit the launches. your that's year, where if on something is growth could know I get in numbers a not of just fall you course, achieve, new probably double may you investors for Of the at sense your of but to perform product end

Kevin Wilson

want The Mark egg are margins egg, to is the the We're the market don't doing scramble baseline well. good, I are Yes, gross unscramble I and executing good. business the in saying, profitability look is macro Consumables is They're good, X.X% to purposely by trend have is have U.S. of going that's normalize years years. it's and you'll headwinds a to you'll but good. down -- doing up to fine, in There’re X%, up got year-over-year. some OVP be when long-term well. still

growth then or I The to do, come do top of and what I'm So what then you is do X% the that say takes if trying we affect like you if answer, is up access a much that on that, an on to a calendar kind the baseline. folks of make a question product of easy folks, put we it geographical expansion, does the for into think is, and time that, puts successfully then And new to yes, year. launch you X%. how becomes mix with

right and or growth and about stressed not comes entirely getting get unfortunately, I focused it X% the is X% calendar it XXXX look what on two months and more, three driven, delay at or not am in if so that and plan like that or get I'm Fortunately costs year we whether it right, on year to more of not right. us

I'm precise them get than be get little these that, the events year. trying but you is X%, to squirming up more not XXXX if we have a step say baseline on later, I'm we higher they bit, earlier, less impact could to calendar be little if So on a

Mark Massaro

Okay, that perfect sense. makes

obviously XXXX. to growth On a X% I'm for that a maybe guidance, you OVP grower XXXX a hover X% the between would typically The if had doing segment, year minus X.X% the is a My with right understanding X% OVP is XX%. good for math and grower.

So provide double a expecting why some can of digit? you're context just for decline OVP you

Kevin Wilson

we've that, years, I for used Now, before at term here. we think the not even even look I years

couple inflation that precise. lot often X% that all I So didn't I moved away interpreted there’s from been maybe was the that in decade last But has inflationary know I'm of inflationary about not years, because been it aware think but grower. term a is I been of growth. growers

And simply going so trend you're what so line it meet their purchasing been If you needs don't and know, the managers, quarter, lumpy. to a is generally I for for produce the we it's on think it's taking that's know so because to really you side, contract reliable and manufacturing lumpy and inventory going business and really it's ours. based each what deliver you're contract the to at year, get get manufacturing schedule, not on their largely,

at to trends long-term based of facility. got would then as could that it a buy year out who again no, with normalize and be X.X% it look lot all people it's again, products I outperforms the up we’re year, X% the And So, seeing. if grower of on of that think and just the I so a is the down that’s next

Bear which and other their stuff end they’re they USDA a inventory through quality our they’re really good doing and as the like folks of shipments is market doing but their doing Merck pull think control businesses. job, timing for I job user at don’t much as and the Elanco, a they’re job, So good producing facility

Mark Massaro

out. DCXx And to on soon Element last be congratulations the roll one that, from me on

in the sample, the throughput see platforms an well maybe You it platform So is patient to indicated as has high that this the you you existing can industry that speak competitive the competition? where of press a analyzer. speak you other, in your this fitting the as plenty to relative five Can market? to in some just release of has just value

Kevin Wilson

I gold space. am categorically standard absolutely in the is

competitors users we everybody, all If like is do which call testing high for of the volume high for you one, the will coveted And so volume largest look it's largest which it lots we’re covered pre-surgical of at most testing. three high volume things users. main users, users the

of they’re faster and that’s you is meeting do and And those done their both each they users individually that end specialty they room market, lined It’s the with busy that faster that big faster pre-surgical get accuracy very, get a the they can that, specialty trying having speed patients and panels so a things of sit do think very hospital top get anesthesia. run happy as credibility they specialty than hospital, surgery attract hospitals deal ready shown up hospitals in and to a next get might a it morning of their I owned the are if morning go be set the before will might the in very, and you their gives have multi-doctor kind quite and specialty they next when your veterinary for through. those very you And group that patient hospitals and discharge corporately can halo then customers to large. can more and owned surgeries

accurate it. puts at precise, Its and the heat. of Heska a the big we its technology, top than it there to from users large definitely are think inventor love dry going think dry of anything we chemistry the deal, So think I out faster it’s technology volume it's chemistry

I about a excited it, we’re So it’s big deal. think

Operator

And next Raymond Benchmark. from hear we’ll from Myers

Raymond Myers

more about sounds that gradually placement? up revenue it and you customers Let I get you me ask there the you for time to chemistries exciting that recognition revenue that first at Or is make more throughput? placement that. want of any will just on out. getting primarily run therefore Is for really the pick that that Element DCXx,

Kevin Wilson

to for do it's the of we options multiple there are number a that. when components So, doing subscription and subscription are both, there

equipment you’ll on that So and piece more if placement. expensive equipment, you of that higher a cost have place

you an that. contract, of month total equipment on depending a long-term place the the of revenue get Now portion that you’ll booked value

Some minimum of usage that do least $XXXX very we hospitals large and usage will other month the the at on users accounting revenue $XXXX we them placing knowing you a drive to no specialty place no is or very, are equipment. hand, were a might the usage month usage. minimum these fall that, what's would minimum get where it really If actually for upfront operating going a under to the

of in All X% market a of of whole veterinarian doesn’t which the to put are lot, portion placement. recognition. is or of all gain, and far diagnostic recognize the our mind to if say agreed of X%, let less we through concerned the let our and six equipment their revenue my a how dogs largest get the amount cats and for through matter through themselves to infrastructure on our users When growing cats that years about and I share put most infrastructure focus I have upfront dogs number

veterinarian portion, month. that’s the and subscriptions the benefit can and this a to X, what as we really X, whole cautioned and they not sometimes the equipment through cats our The on the dogs grow for was but XX happened years focus that upfront moving So sale put with point capture on model I focus goal. just infrastructure of X, let to focus

David Westenberg

about because expense be that? see what of opportunities was expected to -- of what the these deploy the What extra force? second increasing growth guidance additional of do It you this that as would stemming believe growth on how you sales from in year. talk I And half second some substantially initiatives. type expense to be well. you’ll in force the your sales move guidance the your sounds Can half excluding of this Let’s exciting you

flows that how understand help So through?

Kevin Wilson

kick going lot down Investor can Analyst Yes, road are parts that to and there a the the question. it I’m bit and is of moving little in to because Day a

we’re need layer the think XX gain, smiling first is, have of veterinarian I by of growing. new the the of trained rep, the from all that haven't expense, And market faces product launches. still because all yet. the And share on you productivity second front converted that then X of competitor use more can seeing we any the you of on a layer have the and expansion happy what flowing new sales because in we density of enthusiastic we’re more to Heska veterinarians So

need call So tell to I hear X our more or with on the of enthusiastic that might go area think And on We’ll probably smiling happy should. a talk model slide XX launches a more they that be saying our difficult who I that value for new faces think layer need have financial have the new to to about segment, more do out product we else go third XX to Day then product people new two. us the a still PowerPoint veterinarians thing be little we we impact major pretty XX and don’t why proposition. area product in Heska Investor a that specific should something is, we that of what to to the how but that, on out if

David Westenberg

these that, over that investments about us or to helpful I that the tremendously on two. the we XXXX? be any How making thanks. forward look you We guidance you’re understand impact year around should profitability? profitability will for think next Can give

John McMahon

Yes, and it I hit force a sales just moving answer I and will P&L, the the invest think little probably in all you if those the same runs something listed, it specific, P&L. through more be parts

areas I job investors look I that up two the matching at growth growth us. go do worry this long-term through If swings. why high If communicating drive and P&L. investments and for healthy, job other say our run that things. consumable impacts of some launch, anticipating over the it's do that a encourage that profitability do trajectory prior basis job, of business highest to about to in a spend, and of think particular multiyear better day forward to just I and with might them our think, those we margin growing and can And That’s and are a that deploy research development XX gross on those a you and a are swing been to investment could it's on to a nicely going margins consumables margin that a period. things less

And so, we May intend little have to more bit I our out things kind fill you'll to a get XXth bit of Day. out on on a those think ahead your little again And Investor model. of

Raymond Myers

last And Great, thanks that rate for Kevin. assuming? Kathryn. the XXXX What is question tax you're is

Catherine Grassman

than Candidly around and statutory rates XX%. state the the lower hovering

Operator

C.L. move King. to next with Westenberg David on And to

David Westenberg

thanks but Hey, the the at XX%, looking comp. and unscrambling, easy for you two you you rate and going know, at the you're trying avoid taking now you're stock question. ran know, I an scrambling to I'm off year know growth

growth that's base case. calling you're that So X% rate as the out

Now, be to a in kind fact we easy here? that are given would XXXX the of comp that upside there

Kevin Wilson

Yes, know want don't there. go that I to I

try initiative careful to a and with going it out X% to successful calling I and were think leave to in we or we're be we I want think growth XXXX. in be investors there. I'll to we analysts whether presume to reasonably stay precise assume and

could I we think better. are, it if be, be it could

better attention set play part there's we're I and the make think variability if delayed X%. but at I and and that's game, X% we we’ll but there much know it we'll the to we reason in as try liked it of to expectation could there, be want the and

what that's we've done. So

David Westenberg

was when to Got you're apologize. it. trying I avoid. I know that

take third-party here. in what product in P&L some on on a to about more this house be, the the So bit the rationale you're both going from would impact impact? rely might third of you new You with be what Can would Can on on a the revenue going either take rely little this? you go talk anyway, and talk about it or some whether to to party the of house. or I'm

Kevin Wilson

I what done mean, Heska in tell I actuality, in can I and you our I've most think is this the done whether it's of past competitors. how or

based we our needs, time. side, right so technologies a technology, do things can And and available that things bit partners But don’t of Shenzhen, we it. not and most with on working adapting do interesting I in space more an these just these on sedimentation we announce fit as little things some that that not them as I party manufacturing more the chemistry with I'd do there. who spending point veterinarize to directly. we've think manufacture we exceptions. it We inconsistent. example a that’s are tailor think products third For them maybe couple of plant rely going to or human of and getting we’re some are to little to we opposed and urine on and purchase think China and We a to customized of been the think hardware kind analyzer we’re do bit

I think well. manufacturing Apple uses as contract

fabrication things So, question. won’t of that. that on like that the be Does millions we I think dollars of was the and XXs question? answer spending

David Westenberg

trying I’m you’re giving will in and going it. a as you to like actually keeping P&L in end what as veternizing a talking about get about your the new little new products, I’m You’re mind know as just might R&D whether I you’re the something this handle don’t like I’m these lot come you’re to of analyzer look impact P&L? guessing launching these do R&D be know very just and Analyst more, terms at your and on would in a bit in new on looking P&L me. that’s of the to the instance products you on get coming want vague, OEM these with that’s on maybe if to what sediment fine is understand then for to are to I’m just impact purposely Day trying more going manufacture the I that third year a going to a in and you have party be products

Kevin Wilson

your opportunity, evaluate as P&L, a the helpful investment terms symmetry of here got can to to think okay in is here base investors. reason, you’ve the it symmetry be the Again initiative the XXXX may opposed just is that margin, in base there is of the concept. growth up and is, embedded I where kind our project having run here base the for is is you that the we target think exactly out through side I is called there may the having there off as or size here a say, size and not here would market, think offer the then we got is an I to step case to event. investors but it able of then XXXX nice that And target to

to So, we scrambling again to to egg where tend scrambling to opposed want growth the initiative to of the egg. the focus on we’re May XXth on avoid some standalone trying as as back evaluation

David Westenberg

about have throughput winning on really new touched instrument. prior in consolidated now calls high more you you a practices, And

to this that out large for be called web You a going is practices.

upside consolidated upside practices some to win product maybe that haven’t about have customers past? this this think maybe get to new have to new kind you also the region? in the Just maybe some consolidated able give a that the with of in us of would and way opportunity maybe same traditional maybe Now, some been

Kevin Wilson

that pridefully, not largest was, start in in from able way revenue would had acquired. Centers answer than and diagnostics the I diagnostic much just very so represent Heska the know is the question your so that and looked why diagnostics smart they yes, two why is think acquired in country large to type them those move may terms Care of say The I Centers. it’s would but very past. great. So, is, the to been so when our of contract facilities two they're to and at Heska hospitals and large they have rest PetVet we equipment they're dollars specialty top business There with we to and by much up already folks our than I of diagnostic Care of size. competitors, And being again said, the the got portfolio X% with the get very, the millions portfolio, picked phone Care great, volume and better in the Centers XX% prior hospitals we PetVet in converted better performance of PetVet these hospitals acquire of and of was our rest And we

the throughput think just corporately of we’re hospital can’t owned position corporately of win standalone it’s DCX ability leadership very to the accuracy use, it’s some chemistry whether whether to or that things owned that and Element or large I a day we think that contract it’s standalone a enhances trying your you’d for. list looking ease dry on it’s speed have put stayed I punch you’re and us is

evaluation I think think deal. in leader have to that we be so big it's I the

Operator

we with next to move And Kara B. on FBR. Riley Anderson

Kara Anderson

that third you have So is from in delays on more in that second investment? is, performance released And Can equine in question provide quarter the the was full believed be and under to XX% for new what believe for color caused key February? the to the sales imaging up products in delayed were reason with acceleration you’re January QX? the in quarter. the imaging you does seeing in And that it really to further require your what year for

Kevin Wilson

So in does not and require what January in an we’re I'll reverse acceleration seeing take from order, it February.

is year a thinking what start for we’re that year. confirms just So nice there full think to I the the

in launch have back lot the Year, and to fourth of and product the days. back launch, Slate then awful Christmas, and selling you off the the accessories the those I in Thanksgiving and Hub on you led of November XXth don’t alone terms in you when you then New really an In back quarter shipping when think days

the a product a for prior margin based good was don’t it and we the the generated the look profitability, fourth a job. a fourth they think at and standpoint, a just really The did off team really I good quarter quarter contribution line job. for quarter. and so good did was profitable folks profitability of XXXX, I year’s very And fourth lot from or but They unit also think on

say June December, integrating product the to were the I and We quarter to and imaging well. Xst on think So think think integrated. is that from launch is business fourth had through largely for I all gross margins integrated focus I of which the went is good, very

layer footing tailwind we’re reasons and I with There are number They XX% think never additive why service had of is will that accessory there those start of are on solid of on Slate got there. revenue little optimistic We back to Hub. pretty which new grower. a kind and bit the it the backed just a accessories doing revenues. that the

Kara Anderson

then and about from for it. And Did last the was missed if I you and heartworm that me I’m XQ? sorry slated second test talk reformulated one

Kevin Wilson

I half, squishy the it’s a not think didn’t so and I’m going don’t for a I We think to it’s slated get first but actually that, little on XQ.

is it half. optimistic So the first

that hard to context on is think XXXX very season point $X it’s not franchise be forward. I those a really to coming but really will will into like heartworm into I out now put going want additive I that’s and to and just full we’d push swing so was out to market. our don’t it We shrunk nice million maybe plans growth That under a heartworm million. poor $XX franchise that

a headwind. a going that $X just But maybe the it's years, for million been and of if look couple line that million. year it's it's at backwards gives under So last straight a $X you already

it's would there's not million nothing, under lot $X million, of to so lose because a that. we difficult it So did than be pretty more already even if in $X downside

new gross means better forward comes much And on market, think do which that pricing. end better reformulation so, when much a I user at basis, go to margin,

I a differentiation the multiplexing think to which between think to test, heartworm do tests popular I a tests segment. four still as is opposed very

again, franchise that be first we slightly that still in USDA that get might in growth. the to continues to think optimistic still still regulatory, the samples $X probably I I'm That's, we're to acquiring half. under that back million in get delay. goes But we're that.

Operator

Jim him Company. Sidoti our and we'll & And question next from Sidoti hear

Jim Sidoti

little too your Investor a a are you hesitant Day, high detail of but on ahead understand giving level I much to bit just So, basis.

it will that XXXX they margin sales investments there's or think decline not in increased what should Is marketing. increase and that I will saying we the XXXX, in did right? these assume way you're in of operating because is some

Kevin Wilson

fair. I think that's

precise, on I accurate. very been think it are be even living haven't fair. but investor might on be it's, on precise that's that. we precise more And spreadsheets But very day, it they not in will then

still a here. factor there's human So

I you July swing. move are costing can a and size you September, you or out of we just expense then factor day out and pointed things still a have that where fact and day that of for still June XX negative day in on or August, can they that things trends, have those to XX a people XX can have bit a recruit positive and a function a to the human really and past, factors. things you aren't that swing that or control XX are and a size roll have XX human all period of can't better the still in factors basis, you XX those And You a terms you little in on or of delays we're get do higher human to

operating Y year And basis extrapolate it's, just benefits out forward. so, Strategy more not three in important far points to trying a margin. folks than points not X the that caution roll of in to are terms term I or or of nail basis whether long

Jim Sidoti

net year margins over And the three I improve. will assume operating plan,

Kevin Wilson

we X% our Yes, margin. maybe guarantee operating started under when but I XX%, in think so. recall we early disclaimer, of were future is I, past performance XXXX, I work no no performance

that I quarter at anything XX%, to would folks long miraculous this in make doesn't basis, a, but up that picked to a just I most points we've make about XXX that XXX year trend. basis stop that I've think doesn't don't a term on been there's caution I so years we've would finished cause here. a think

the margins bigger competitors taken I had and we've for that a watermark quarter last than up so XX%, then case. the XX% of do operating high So still watermark publicly towards I that's to couple I've drifting high watermark and and are think see I a where drift X% years see be year's fourth high towards to quarter, it that higher the have said we year every our we fourth in in a long-term of our from we change that and

Jim Sidoti

maintained And Okay. question GAAP XX%? tax to then the confirm say just will the be Did you Catherine rate said. I from want around last

Kevin Wilson

Yes.

Operator

We’ll Aegis Haynor Ben to on Capital. with move

Ben Haynor

people. is XXX XX from people of couple does ones on how growing that out that, adding flash think first sales then and dozen Just all how territories land that? a loss we the how it quick and utilization me -- about Or that do does sales is to should territories all check is a from utilization domestically dozen about you it both new or think off at a that in new sales people a was now dozen how

Kevin Wilson

role territories been called I those manager this each we’re is it. folks, and the we’ve regional of think We we where Yes, we that territories some so for have sometime offering about expanding imaging a wouldn’t dual quieter and the have blood been has have actually is up. divided folks, they of because diagnostic have just laboratory in expanding. piloting we care then step a little have entire And out carry point diagnostics a there

to are switch more just faces maybe new been happy patients ask some products going us. of that veterinarians think anticipation to I telling why about require smiley

it's in too just clinics So territory. I increasing and that not playing its we’re human we’re just more, being density the a sort the revolutionizing literally we of the all open sales for just force, think where the cover much geography territories would

I So higher points is folks performers finding pinching high of for us than for without to have easier expansion density is think already. it

Ben Haynor

there what of at expect out you really pretty -- then you’ve accounts. there And that XXX, number. that you few taken helps accounts are called the after that some XXX doesn’t into new in had you the similar in running years XXX helpful. sounds DCX to XXX you or you kind past the which maybe to new that that’s Do you factor win assume Okay, customer do out wins, of couple corporate in to that been corporate

Kevin Wilson

to will No think help working are do that But I there number, in corporate convince. we’ve that accounts we do wins specific corporate competitive. that the DCX it's assume and the with us been

worth Its contacts, know here to people analyzers competitive, the X%, a percentage DCXX. that they not might have know. as many try just a with so just put know maybe X confirming opposed to is. number think to to we a but and be I hospitals X.X get may decide you some they how on other don’t guys calendar were I the You

to that’s So a it, really only I just the my put number try in on script. change

Operator

And Raymond Cooper next to on we with James. move Andrew

Andrew Cooper

the It taking to imaging answered, when what would looking initially higher and expansion. that thanks thoughts already was do give more a been for so what's have there I’ll helpful is of color of of to and I But initiatives. out then different the lot kind of is think please? just been growth pushed of anything guys it relative on think further kind approach keep Hey broadening it was be the and project approach to you’re graphic outside you initial level like on now her to will kind see and some feels we but brief question. back international kind you us expected

Kevin Wilson

important improve competitors we we’d in just the been couple of would us, like in and for problem last year look and this welcome. and more of year tiny doing hugely transcript initiative You’re we’re a like terms good have call growth somewhere this liege, now. go think is That’s read the the competitive beachhead much XX in than to for the preparation I infrastructure structure a a But terms question. terms largest logistics half we’ve the the that in and work is results. and is solved International I for establish in that with the of if to continuation I I at for back of year

appetite. a focused maybe So bigger longer bit we’ve bit of more a little term little I with think been on an

We we an some intent into of have that time Recently, We spend of quantifies for letter of on lot that a had entered progressed. issue. that this particular a expansion. progress

will And it in we out, be think do pushed like so, but XXXX. some it success here does look there

at to a to close do think in end but out getting now in not bigger XXth, point want we this where to year we’re February launch We’re call we able it being way.

Operator

additional call conclude remarks. to over And to that I'd today’s management for this At session. any question-and-answer will back time, closing like or turn the

Kevin Wilson

investors analysts and and in. called thanks operator to the all who you Thank

you has this that broad, major us we’ve thoughts. couple of positioned on very been The for in has pipeline healthy with a events, XXXX but creating done of leave quiet never opportunities well Just years my I the major work next uncharacteristically was step value XXXX alright. our think several large, of and

XXXX primarily Our we and improving have first that rewarded to think I act from that. base period achieved us from business XXXX our

that from but strength my win opportunity long-term that in I placing goals and well the our holds new XXXX to first think accomplish value and our second our of have, XXXX geographically. size optimism Heska XXXX we the we difficulty me informed who have these and I’m act this encouraged the confidence partners I’m industry next in in my investors we joined XXXX, can from to of and super creating things. that reward and act the expanding that our than competitors more the of to period in on act I’m to product fully going aware and the we’re focus broadening and

forward on our to May look our on and on progress everybody bye. XXth Thanks. and optimism details So you and I see plans updating during with more this Bye Day our we’ll Investor soon.

Operator

participation. will today's conclude for We your you that thank And call.

Heska Corp. (HSKA) 28 Feb 182017 Q4 Earnings call transcript