UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
 
May 7, 2020
Date of Report (Date of earliest event reported)
 
HESKA CORPORATION
(Exact name of Registrant as specified in its charter)
 
Delaware
000-22427
77-0192527
(State or other jurisdiction of
incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
3760 Rocky Mountain Avenue
Loveland, Colorado
(Address of principal executive offices)
80538
(Zip Code)
 
 
Registrant's telephone number, including area code
(970) 493-7272
 
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, $0.01 par value
HSKA
The Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 






Item 2.02    Results of Operations and Financial Condition.
The information in this current report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
On May 7, 2020, Heska Corporation announced its financial results for the quarter ended March 31, 2020 and certain other information. A copy of the press release announcing these financial results and certain other information is attached hereto as Exhibit 99.1.
Item 9.01    Financial Statements and Exhibits.
(d)    Exhibits.
The following exhibit is furnished with this current report on Form 8-K:
Exhibit No.    Exhibit Description
99.1 Press Release dated May 7, 2020.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
HESKA CORPORATION
a Delaware corporation
 
 
 
 
By:
/s/ Catherine Grassman
Dated: May 7, 2020
 
Catherine Grassman
Executive Vice President, Chief Financial Officer
 
 
 








EXHIBIT INDEX



Exhibit Number
 
Description
 
Press Release dated May 7, 2020



Exhibit
Exhibit 99.1
Heska Corporation
 
 
Jon Aagaard
 
 
Director, Investor Relations
 
 
970.619.3033
 
 
investorrelations@heska.com
 
 
        

Heska Corporation Reports First Quarter 2020 Results
Revenue $30.7 Million, Diagnostic Consumable Sales up 15.7%
Strong Balance Sheet, Fundamentals, Global Position Drive Strategy

LOVELAND, CO, May 7, 2020 -- Heska Corporation (NASDAQ: HSKA; “Heska” or “Company”), a leading provider of advanced veterinary diagnostic and specialty products, today reported financial results for its first quarter ended March 31, 2020. The Company reports two segments: Core Companion Animal (“CCA”) and Other Vaccines & Pharmaceuticals (“OVP”). The Company forecast provided during the February 25, 2020 release is referred to as "2020 Outlook".

First Quarter 2020 and Year Over Year ("YOY") Metrics
$ in millions except Earnings Per Share ("EPS")
 
Q1 ($)
Q1 (%) YOY
Consolidated Revenue
$30.7
3.9%
     CCA Revenue
$27.3
10.5%
         Lab Consumables
$14.2
15.7%
         Instruments: Lab & Other
$2.2
(22.3)%
         Instruments: Infusion Pumps
$0.6
(20.3)%
         Imaging
$4.9
(10.3)%
         PVD(1) 
$5.4
60.1%
     OVP Revenue
$3.3
(30.2)%
 
 
 
 
Q1 (%)
Q1 YOY bps(2)
Consolidated Gross Margin
43.9%
+135
Adjusted EBITDA margin(3)
3.0%
(460)
 
 
 
 
Q1 ($)
Q1 (%) YOY
Net Loss Attributable to Heska
$(5.3)
(749.6)%
EPS, Basic
$(0.70)
(735.2)%
EPS, Diluted
$(0.70)
(798.7)%
Non-GAAP EPS, Diluted(3)
$(0.14)
(260.1)%
(1) "PVD" is Pharmaceuticals, Vaccines and Diagnostic, and includes Tri-Heart® heartworm. (2) "bps" is basis points. (3) See “Use of Non-GAAP Financial Measures” and the related reconciliations provided below.
Note: Numbers may not foot due to rounding.





Kevin Wilson, Heska’s Chief Executive Officer and President, commented, “It is with mixed emotions that I report that the first quarter of 2020 was a strong start to the year for Heska. By grace alone, our extended Heska family in North America, Europe, Australia, and Malaysia is safe, employed and healthy. We are filled with thanks for our unmerited good fortune and we grieve for those who have been directly and tragically affected by COVID-19. Our business concerns pale in comparison to their health and value. It is with sincere humility that we give thanks for own good fortune and health and we carry on with our professional and personal duties each day.
In the first quarter, Heska grew revenue, expanded margins, achieved major strategic milestones, reaffirmed the benefits of a secure subscriptions model, improved our balance sheet, added to our cash position, and advanced our research and development projects. In the face of a global COVID-19 crisis, our accomplishment in nearly all key areas met or exceeded our goals in the quarter.
1.
Heska strongly performed in our most important Point of Care ("POC") Lab Consumables business, which was up 15.7% over the prior year period.
2.
Heska completed the on-time acquisition of scil animal care company GmbH ("scil") for $110 million dollars, when most global M&A transactions were paused or terminated.
3.
Heska adjusted exceptionally well to the COVID-19 crisis by protecting employees and their families, pets and their families, veterinary teams and their families, and Heska's commercial capacity, brand and culture. Our business continuity plans are working well."
Mr. Wilson continued, "Risks properly identified and pressure thoughtfully managed can produce opportunities for prepared growth companies like Heska during times of crisis. We believe Heska is well prepared and positioned. Our end markets remain fundamentally healthy and our supply chain is intact. Our balance sheet is in great shape and our cash on-hand projections, even in severely down-market scenarios, confirm our long-term ability to simultaneously perform financially and pursue growth strategies. With these foundations in place, Heska accomplished a great deal in the first period of 2020 and we continue to expect positive progress throughout the balance of the year."
Impact of COVID-19 Pandemic on Our People.
In the latter half of the quarter, we experienced modest impact from government restrictions on the movement of people, goods, and services. Fortunately, those we serve, veterinarians and herd animal health experts, are deemed essential services in areas of government mandated restrictions. To service them safely and efficiently, Heska teams quickly adjusted to a targeted, remote workforce posture and put the care and health of people and our brand first. Heska has not laid off or furloughed employees nor reduced the salaries they and their families depend upon, because the data and business fundamentals have



not supported the need for such measures. We have been fortunate. Our investment in people has been both the right thing to do and also good for business. Our associates and customers have responded to our support by showing great care for each other and Heska through strong loyalty and increased performance in key business and relational areas; these benefits have continued into the second quarter.
Impact of COVID-19 Pandemic on Our Business.
Because of social distancing measures, on-site installations of POC Lab and Imaging equipment will experience intermittent delays. While not significant to the overall results of the first quarter, on-site installations of equipment were impacted in March. We anticipate the impact to on-site installations and capital equipment expenditures to continue for at least the remainder of 2020.
While we have experienced some intermittent delays in receiving supply, Heska's supply chain has not been significantly impacted and we do not expect material changes to current supply availability trends over the remaining months of 2020.
Our major research and development projects are continuing to progress substantially as planned, but we have experienced sporadic delays receiving validation samples and device components as well as inefficiencies in remote collaboration and field-testing. We anticipate these delays to result in slippage of 90 to 120 days in our new products’ commercial roll-out schedules.  While these delays are unfortunate, we are taking the additional time to improve product features and benefits.
We do not know how long COVID-19 related challenges will continue. The ultimate impact on our business will depend on many factors substantially beyond our control and difficult to predict. In the near-term and with asynchronous variation across geographies, we anticipate some veterinary hospitals will temporarily: (1) realize lower average diagnostics use as a result of deferred and elective patient visits, and (2) delay capital equipment investments as a result of heightened conservatism and the effects of social distancing on in-clinic demonstrations and installations. Despite these headwinds, we believe we are well positioned; (1) our customers and products are essential, (2) our main POC Lab business continues to show healthy consumables use and margin, (3) our subscriptions model metrics continue to show solid performance, (4) our vaccines and pharmaceuticals business continues to track our 2020 Outlook, (5) our balance sheet is strong, and (6) our employees, logistics, supply chain, and operations continue to operate well in the current environment and they are prepared for both a staged return and an instant-on return to full capacity.



International Expansion
scil animal care company, Germany. Heska worked diligently throughout the first quarter to finalize the acquisition of scil. This represents a transformative milestone in the Company’s long-term strategic plan. scil is a proven European based leader in veterinary point of care laboratory and imaging diagnostics, with a significant, longstanding base of loyal customers, a top three market position in Germany, France, Italy, Spain and Canada, and a growing presence in the United Kingdom, Scandinavia, Eastern Europe, Latin America and Malaysia. Heska's combination with scil creates a unified and difficult-to-replicate global veterinary diagnostics company with critical market share leadership in key countries to service millions of pets through tens of thousands of veterinarians and active point of care analyzers around the world.
Summary
“I believe that properly prepared companies, in structurally sound industries, that invest in their people and capabilities during difficult times like these will be in a position for above market performance when uncertainty recedes. Heska intends to be one of these companies. Our capabilities and end markets are intact. While no business will be left untouched by COVID-19, we are well positioned. We will continue to secure past wins, pressure test and adjust to risks, invest for long-term gain, and build the strengths of our team and end markets. Our balance sheet is strong, our end markets are fundamentally healthy, our addressable geographies and customers have recently doubled, our innovation pipeline is packed and progressing for major launches in 2020 and 2021, and we are positioned well to grow. Pet healthcare broadly and Heska specifically are wonderful places in which to invest for the future, especially in uncertain times, and I am excited to prudently continue to do so," concluded Mr. Wilson.
Financial Results
Revenue
2020 first quarter revenue was $30.7 million, a 3.9% increase from $29.5 million in the first quarter of 2019. CCA segment revenue increased 10.5% to $27.3 million, from $24.7 million in the first quarter of 2019. The $2.6 million increase was driven by a 15.7% increase in POC Lab Consumables and a $1.9 million increase in PVD related to the contract manufactured heartworm preventive, Tri-Heart®, which had reduced channel demand in 2019. These increases were partially offset by a 22.3% decrease in capital lease placements and outright sales of POC Lab Instruments and a 10.3% decrease in POC Imaging sales.
OVP segment revenue decreased 30.2% to $3.3 million in the first quarter of 2020, compared to $4.8 million in the first quarter of 2019. The decrease was driven primarily by reduced customer requirements compared to the first quarter of 2019.



Gross Profit
Gross profit increased 7.2% to $13.4 million in the first quarter of 2020, compared to $12.5 million in the first quarter of 2019. Gross margin increased to 43.9% in the first quarter of 2020, compared to 42.5% in the first quarter of 2019. The increase in both gross profit and gross margin percentage was driven primarily by favorable product mix related to increased revenue from consumable sales.
Operating Expenses    
Total operating expenses in the first quarter of 2020 were $18.1 million (58.9% of sales), compared to $12.6 million (42.8% of sales) in the prior year. The increase is driven primarily by $3.9 million of one-time acquisition and restructuring costs related to the acquisition of scil. The remaining variance is related to increased investments in research and development of $0.8 million relating to our new product initiatives. Finally, the increase in sales and marketing is as a result of international expansion, both organic and inorganic.
Net Loss Attributable to Heska and EPS
Net loss attributable to Heska was $5.3 million for the three months ended March 31, 2020, compared to net income attributable to Heska of $0.8 million in the prior year period. Net loss per diluted share for the first quarter 2020 was $0.70 compared to net income per diluted share for the first quarter of 2019 of $0.10. Net income is lower in the three months ended March 31, 2020 as compared to the three months ended March 31, 2019 due to increases operating expenses as discussed above, as well as cash interest and amortization charges relating to the Convertible Notes issued in the third quarter of 2019.
Adjusted EBITDA and Non-GAAP EPS
Adjusted EBITDA for the first quarter 2020 was $0.9 million (3.0% adjusted EBITDA margin) compared to $2.2 million (7.6% adjusted EBITDA margin) in the first quarter 2019. Non-GAAP EPS was a loss of $0.14 per diluted share for the first quarter 2020 compared to earnings of $0.09 per diluted share in the first quarter 2019. The decline in both metrics is due to purposeful investment in research and development and international expansion of sales and marketing. Refer to 'Reconciliation of GAAP to Non-GAAP' included with this release.
Balance Sheet
For the three months ended March 31, 2020, we had $191.2 million of cash and cash equivalents and working capital of $223.8 million. Net cash used in operating activities was $4.8 million in the three months ended March 31, 2020 compared to net cash provided by operating activities of $0.7 million for the three months ended March 31, 2019. Net cash used in investing activities was $14.6 million in the first quarter 2020 compared to $0.5 million in the first quarter of 2019 driven by $14.4 million payment of consideration for the December 2019 acquisition of CVM Diagnostico Veterinario, S.L. and CVM



Ecografía, S.L. (referred to collectively as "CVM"). Net cash provided by financing activities was $121.6 million in the first quarter 2020 compared to net cash used in financing activities of $4.6 million for the first quarter 2019. The change was driven by an $122.0 million increase in proceeds from the issuance of preferred stock in anticipation of the acquisition of scil. Approximately $111.0 million was used subsequent to the first quarter for consideration in the acquisition of scil.
2020 Combined Outlook
As previously discussed, Heska currently anticipates that its operations, for at least the remainder of 2020, will be adversely impacted by the current economic environment and COVID-19 social distancing strategies, especially as it relates to on-site installation and sale of capital equipment. Considering the impact and the potential impact resulting from COVID-19 on Heska's organic growth as well as on the recently acquired scil European (primarily) business, we have revised the Company's consolidated 2020 Outlook.
The table below introduces fiscal year 2020 guidance ranges ("2020 Combined Outlook") for revenue and adjusted EBITDA margin for Heska Corporation compared to previous Heska Corporation stand-alone guidance presented in the February 25, 2020 Earnings Release. Among the factors and metrics considered in Heska's 2020 Combined Outlook, Heska stand-alone net customer acquisition forecast decreased approximately 50-60% due to updated COVID-19 related scenario assumptions.
 
Actual 2019
2020 Outlook
2020 Combined Outlook
Consolidated Revenue
$122.7
$135-$145
$175-185
CCA Segment Revenue
$106.6
$120-$130
$160-$170
     POC Laboratory
$64.1
$70-$80
12-17% POC Consumable growth
$105-$115
12-17% POC Consumable growth(2)
     Global Imaging Revenue
$25.7
$25-$30
$25-$35
OVP Segment Revenue
$16.1
$15-$16
$15-$16
Adjusted EBITDA Margin(1)
8.5%
6%-8%
4%-6%
Dollars in millions. All 2020 Outlook and 2020 Combined Outlook are forward looking statements.
(1) Excludes estimates for taxes, interest, depreciation and amortization, acquisition and other one-time costs, and stock-based compensation.
(2) Excludes impact of scil acquisition.
Heska is unable to provide a reconciliation of the non-GAAP guidance measure to the corresponding GAAP measure on a forward-looking basis without unreasonable effort due to the high variability and low visibility of most of the excluded items. Material changes to any one of these items could have a significant impact on future GAAP results. Heska believes the non-GAAP presentation is more in-line with future ongoing operating performance.



2020 Investor and Analyst Day and Multi-Year Outlook
The Company plans to host an Analyst and Investor Day on November 12, 2020 (formerly September 2020) in New York City, pending evaluation of the then-current COVID-19 situation, to discuss the Company’s growth strategy, consolidated performance including its recent major acquisitions, Element UF demonstration, and multi-year outlook. Details surrounding the event will be forthcoming.
Investor Conference Call
Management will conduct a conference call on May 7, 2020 at 9 a.m. MT (11 a.m. ET) to discuss the first quarter 2020 financial results. To participate, dial 1-866-548-4713 (domestic) or 1-323-794-20933 (international) and reference conference call access number 3918137. The conference call will also be broadcast live over the Internet at www.heska.com. To listen, simply log on to the web at this address at least ten minutes prior to the start of the call to register and download and install any necessary audio software. Telephone replays of the conference call will be available for playback until May 21, 2020. The telephone replay may be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The replay access number is 3918137.  The webcast will also be archived on www.heska.com for 90 days.
About Heska
Heska Corporation (NASDAQ: HSKA) manufactures, develops and sells advanced veterinary diagnostic and specialty healthcare products through its two business segments: Core Companion Animal Health ("CCA") and Other Vaccines and Pharmaceuticals ("OVP"). CCA segment includes Point of Care Laboratory testing instruments and consumables, primarily under a unique multi-year subscription model, digital imaging products, software and services, data services, allergy testing and immunotherapy, and single use offerings such as in-clinic diagnostic tests and heartworm preventive products. OVP segment includes private label vaccine and pharmaceutical production under third party agreements and channels, primarily for herd animal health.





Forward-Looking Statements
This document contains forward-looking information related to the Company. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “believes,” “plans,” “anticipates,” “expects,” “intends,” “strategy,” “future,” “opportunity,” “may,” “will,” “should,” “could,” “potential,” or similar expressions. All of the statements in this document, other than historical facts, are forward-looking statements and are based on a number of assumptions that could ultimately prove inaccurate and cause actual results to materially deviate from forward-looking statements. Forward-looking statements in this document include, among other things, statements with respect to Heska's future financial and operating results, future sales, sales split percentages, sales geography percentages, market share, and strategic goals, the expected timing of the scil acquisition and its anticipated benefits; anticipated investments and growth; and the number of customers that the Company will be able to acquire and retain. Such statements are based on current expectations and are subject to a number of risks and uncertainties, including, but not limited to, risks and uncertainties related to the closing of the scil acquisition; the ability to achieve the anticipated benefits of the scil acquisition; supplier availability, competing suppliers, any product’s ability to perform and be recognized as anticipated, in particular when such product is under development; Heska’s ability to sell and market its products in an economically sustainable fashion, including related to varying customs, cultures, languages and sales cycles and uncertainties with foreign political and economic climates; the Company’s ability to integrate the acquired scil business within its existing operations; and new product development and release schedules.

Other factors that could cause actual results to differ materially from those matters expressed in or implied by such forward-looking statements include, among others, risks and uncertainties related to: the impact of the COVID-19 pandemic on consumer demand, our global supply chain and our financial and operational results; the success of third parties in marketing our products; outside business interests of our Chief Executive Officer, our reliance on third party suppliers and collaborative partners; our dependence on key personnel; our dependence upon a number of significant customers; competitive conditions in our industry; our ability to market and sell our products successfully; expansion of our international operations; the impact of regulation on our business; the success of our acquisitions and other strategic development opportunities; our ability to develop, commercialize and gain market acceptance of our products; cybersecurity incidents and related disruptions and our ability to protect our stakeholders’ privacy; product returns or liabilities; volatility of our stock price; our ability to service our convertible notes and comply with their terms. Such factors are set forth under “Risk Factors” in the Company’s most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q.
Use of Non-GAAP Financial Measures
In addition to financial measures presented on the basis of accounting principles generally accepted in the U.S. (“U.S. GAAP”), we also present first quarter 2020 net income attributable to Heska, earnings per diluted share, adjusted EBITDA, adjusted EBITDA margin, and the effective tax rate, excluding acquisition and other one-time charges, which are non-GAAP measures. We also present first quarter 2019 net income attributable to Heska, earnings per diluted share, adjusted EBITDA, adjusted EBITDA margin, and the effective tax rate, which are non-GAAP measures. These measures should be viewed as a supplement to (not substitute for) our results of operations presented under U.S. GAAP. The non-GAAP financial measures presented may not be comparable to similarly titled measures of other companies because they may not calculate their measures in the same manner. A reconciliation of non-GAAP financial measures and most directly comparable GAAP financial measures is included in this release. Our management has included these measures to assist in comparing performance from period to period on a consistent basis.



HESKA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
 
 
Three Months Ended
March 31,
 
 
2020
 
2019
Revenue:
 
 

 
 

Core companion animal
 
$
27,306

 
$
24,716

Other vaccines and pharmaceuticals
 
3,348

 
4,795

Total revenue, net
 
30,654

 
29,511

 
 
 
 
 
Cost of revenue
 
17,206

 
16,968

 
 
 
 
 
Gross profit
 
13,448

 
12,543

 
 
 
 
 
Operating expenses:
 
 

 
 

Selling and marketing
 
7,380

 
7,033

Research and development
 
2,128

 
1,366

General and administrative
 
8,558

 
4,219

Total operating expenses
 
18,066

 
12,618

Operating loss
 
(4,618
)
 
(75
)
Interest and other expense (income), net
 
2,199

 
(16
)
Loss before income taxes and equity in losses of unconsolidated affiliates
 
(6,817
)
 
(59
)
Income tax (benefit) expense:
 
 

 
 

Current income tax expense
 
25

 
45

Deferred income tax benefit
 
(1,533
)
 
(1,055
)
Total income tax benefit
 
(1,508
)
 
(1,010
)
 
 
 
 
 
Net (loss) income before equity in losses of unconsolidated affiliates
 
(5,309
)
 
951

         Equity in losses of unconsolidated affiliates
 
(130
)
 
(181
)
Net (loss) income after equity in losses of unconsolidated affiliates
 
(5,439
)
 
770

         Net loss attributable to redeemable non-controlling interest
 
(151
)
 
(44
)
Net (loss) income attributable to Heska Corporation
 
$
(5,288
)
 
$
814

 
 
 
 
 
Basic (loss) earnings per share attributable to Heska Corporation
 
$
(0.70
)
 
$
0.11

Diluted (loss) earnings per share attributable to Heska Corporation
 
$
(0.70
)
 
$
0.10

 
 
 
 
 
Weighted average outstanding shares used to compute basic (loss) earnings per share attributable to Heska Corporation
 
7,568

 
7,459

Weighted average outstanding shares used to compute diluted (loss) earnings per share attributable to Heska Corporation
 
7,568

 
7,965




HESKA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
March 31,
 
December 31,
 
 
2020
 
2019
 
 
(UNAUDITED)
 
 
ASSETS
 
 
 
 
 
Current Assets:
 
 

 
 

Cash and cash equivalents
 
$
191,245

 
$
89,030

Accounts receivable, net of allowance for doubtful accounts of $232 and $186, respectively
 
14,838

 
15,161

Inventories, net
 
29,056

 
26,601

Net investment in leases, current, net of allowance for doubtful accounts of $85 and $105, respectively
 
4,020

 
3,856

Prepaid expenses
 
2,711

 
2,219

Other current assets
 
3,790

 
3,000

Total current assets
 
245,660

 
139,867

 
 
 
 
 
Property and equipment, net
 
15,076

 
15,469

Operating lease right-of-use assets
 
5,404

 
5,726

Goodwill
 
36,095

 
36,204

Other intangible assets, net
 
11,061

 
11,472

Deferred tax asset, net
 
8,027

 
6,429

Net investment in leases, non-current
 
14,373

 
14,307

Investments in unconsolidated affiliates
 
7,295

 
7,424

Other non-current assets
 
7,990

 
7,526

Total assets
 
$
350,981

 
$
244,424

 
 
 
 
 
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
 
 
 
 
 
Current liabilities:
 
 

 
 

Accounts payable
 
$
7,137

 
$
6,600

Accrued liabilities
 
10,091

 
6,345

Accrued purchase consideration payable
 

 
14,579

Current operating lease liabilities
 
1,755

 
1,745

Current portion of deferred revenue, and other
 
2,923

 
2,930

Total current liabilities
 
21,906

 
32,199

 
 
 
 
 
Convertible notes, long-term, net
 
$
46,872

 
$
45,348

Deferred revenue, net of current portion
 
5,521

 
5,966

Other long-term borrowings
 
1,110

 
1,121

Non-current operating lease liabilities
 
4,092

 
4,413

Deferred tax liability
 
678

 
691

Other liabilities
 
141

 
152

Total liabilities
 
80,320

 
89,890

 
 
 
 
 
Redeemable non-controlling interest and mezzanine equity
 
23

 
170

 
 
 
 
 
Total stockholders' equity
 
270,638

 
154,364

Total liabilities, mezzanine equity and stockholders' equity
 
$
350,981

 
$
244,424




HESKA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA
($ in thousands)
(unaudited)
 
Three Months Ended
March 31,
 
2020
 
2019
Net (loss) income attributable to Heska Corporation
$
(5,288
)
 
$
814

Income tax expense (benefit)
(1,508
)
 
(1,010
)
Interest expense (income)
2,113

 
(15
)
Depreciation and amortization
1,374

 
1,265

EBITDA
$
(3,309
)
 
$
1,054

Acquisition-related and other one-time costs(1)
3,874

 

Stock-based compensation
353

 
1,186

Adjusted EBITDA
$
918

 
$
2,240

Adjusted EBITDA margin(2)
3.0
%
 
7.6
%

(1) To exclude the effect of one-time charges of $3.9 million in the first quarter 2020 incurred primarily as part of the acquisition of scil animal care company GmbH.

(2)Adjusted EBITDA margin is calculated as the ratio of adjusted EBITDA to revenue.

































HESKA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (LOSS) PER DILUTED SHARE
($ in thousands)
(unaudited)

 
Three Months Ended
March 31,
 
2020
 
2019
GAAP net (loss) income attributable to Heska per diluted share
$
(0.70
)
 
$
0.10

Acquisition-related and other one-time costs(1)
0.51

 

Amortization of acquired intangibles(2)
0.02

 

Amortization of debt discount and issuance costs
0.20

 

Stock-based compensation
0.05

 
0.15

Gain (loss) on equity investee transactions
0.02

 
0.02

Estimated income tax effect of above non-GAAP adjustments(3)
(0.20
)
 
(0.04
)
Discrete tax benefits associated with stock-based compensation activity
(0.04
)
 
(0.14
)
Non-GAAP net (loss) income per diluted share
$
(0.14
)
 
$
0.09

 
 
 
 
Shares used in diluted per share calculations
7,568

 
7,965


(1) To exclude the effect of one-time charges of $3.9 million in the first quarter 2020 incurred primarily as part of the acquisition of scil animal care company GmbH.

(2) To exclude the effect of amortization of intangibles of $0.1 million in the first quarter 2020 incurred as part of the acquisitions of Optomed and CVM.

(3) Represents income tax expense utilizing an estimated effective tax rate that adjusts for non-GAAP measures including: acquisition-related and other one-time costs, restructuring costs, amortization of debt discount and issuance costs, and stock-based compensation. Adjusted effective tax rates are 25% for the first quarter 2020 and 24% for the first quarter 2019.