Heska Corporation Reports Record Revenues in Third Quarter Results / Company Delivers Increased Product Sales, Improved Margins and Reduced Operating Expenses

FORT COLLINS, Colo. (PROTEXT) - Heska Corporation (Nasdaq: HSKA), a leader in companion animal health care products and services, today reported its financial results for the third quarter ended September 30, 1999. Total revenue increased 33 percent to $13.1 million for the quarter ended September 30, 1999, as compared to $9.9 million for the third quarter of 1998. This represents the highest quarterly revenue in the Company's history. The growth in revenue during the 1999 third quarter was primarily due to sales of products introduced by the Company during 1998 and 1999. The Company's net loss for the third quarter of 1999 improved to $8.3 million, or $0.31 per share, compared to a net loss of $10.9 million, or $0.42 per share, for the third quarter of 1998. The 1999 results included a restructuring charge of $1.2 million, or $0.05 per share, related to the previously announced consolidation of the Company's diagnostic and monitoring instrumentation operations. The improvement in the Company's financial performance was primarily due to record revenues, significantly improved gross profit margins and lower operating expenses. For the nine-month period ending September 30, 1999, total revenue increased 37 percent to $37.0 million compared to $27.0 million for the same period in 1998. The revenue growth during 1999 was primarily due to sales of products introduced by the Company during 1998 and 1999. The net loss for the nine-month period ending September 30, 1999, was $23.1 million, or $0.87 per share, compared to a net loss of $30.6 million, or $1.27 per share, for the first nine months of 1998. The Company's results for the nine-month period in 1999 included the $1.2 million, or $0.05 per share, restructuring charge previously discussed. The 1999 year-to-date improvement was primarily due to higher revenues, increased gross profit margins and lower operating expenses. Robert Grieve, Heska's Chief Executive Officer, said, "We are very pleased with our 1999 third quarter results as we continued to increase revenue, control our operating expenses and significantly reduce Heska's overall net loss. Through the first three quarters of the year, we have made substantial progress toward achieving our financial goals for 1999. Quarterly revenue was again a record for any period in the Company's history. The increase in revenue occurred despite the fact that we continued to rationalize our product line, eliminating certain products that did not meet current gross margin requirements. We continue to be pleased with the market acceptance of our HESKA(TM) Solo Step(TM) CH canine heartworm diagnostic test, particularly in light of the very competitive market conditions which exist for this product. "Our gross profit margins continued to improve over the prior year, reflecting our increased emphasis in this area. The combination of record revenue and improved gross profit margins for the third quarter of 1999 resulted in a 139 percent increase in gross profit dollars over the third quarter of the prior year. On a year-to-date basis, gross profit dollars increased 66 percent over the comparable 1998 period. "Finally, our total operating expenses for the first nine months of 1999, exclusive of cost of goods sold and the restructuring charge, declined more than $5.8 million from the comparable period a year ago. We were able to achieve a significant reduction in operating expenses while continuing to drive the growth of our business. We believe these results are a clear demonstration of our focus on improved operating results, while also developing the product pipeline for long-term growth." Heska discovers, develops, manufactures and markets companion animal health products, primarily for dogs, cats and horses. Heska has a large and sophisticated scientific effort devoted to applying biotechnology to the large and growing companion animal health market. Heska also offers diagnostic and patient monitoring instrumentation and supplies, as well as laboratory diagnostic products in the United States and Europe to veterinarians, and operates USDA- and FDA-licensed facilities, which manufacture vaccine, pharmaceutical, and allergy immunotherapy products. For additional information on Heska and its products, visit the company's web site at www.heska.com. With the exception of historical matters, this press release contains express or implied forward-looking information about Heska's products, markets, and results of operations, including implied statements concerning the market acceptance of the products described above, the anticipated growth rate of the business and the ability to reduce operating losses going forward. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of Heska to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Heska's achievement of these results may be affected by many factors, including among others, the following: delays in or failure to achieve market acceptance of products; delays in or failure to achieve future product development; uncertainties regarding the outcome of research and development efforts or the ability to successfully develop or commercialize products in research and development, uncertainties regarding the ability to receive required regulatory approvals in a timely manner, if at all, uncertainties regarding the scope, enforceability and validity of patents and proprietary rights, which are subject to complex legal standards that vary from country to country and are subject to interpretation by administrative agencies and courts; quality of management; competition; changes in business strategy or development plans; inability to obtain renewal or continuation of contracts, or obtain exclusivity, to market, sell or distribute products described herein; inability to manufacture, market, sell or distribute products at currently projected costs and the risks set forth in Heska's filings and future filings with the Securities and Exchange Commission, including those set forth in Heska's Annual Report on Form 10-K for the year ended December 31, 1998 under the caption "Business-Factors that May Affect Results," and in its Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors that May Affect Results." In Thousands, Except per Share Amounts (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 1999 1998 1999 1998 Revenues: Products, net $12,915 $9,823 $36,478 $26,313 Research and development 152 38 518 677 13,067 9,861 36,996 26,990 Costs and operating expenses: Cost of goods sold 8,702 8,034 24,697 19,596 Gross profit 4,365 1,827 12,299 7,394 Research and development 3,942 6,311 12,477 18,991 Selling and marketing 3,736 3,159 10,548 9,117 General and administrative 2,804 3,065 8,253 8,891 Amortization of intangible assets and deferred compensation 276 650 1,960 2,087 Restructuring charge 1,210 -- 1,210 -- Total operating expenses 11,968 13,185 34,448 39,086 Loss from operations (7,603) (11,358) (22,149) (31,692) Other income (expense): Interest income 327 879 1,319 2,351 Interest expense (409) (521) (1,418) (1,459) Other, net (638) 147 (889) 175 Net loss $(8,323)$(10,853) $(23,137) $(30,625) Basic net loss per share $(0.31) $(0.42) $(0.87) $(1.27) Shares used to compute basic net loss per share 26,845 26,023 26,717 24,077 Balance Sheet Data In Thousands (unaudited) September 30, 1999 1998 Cash and cash equivalents $20,459 $61,169 Working capital 26,752 66,578 Total assets 73,175 109,102 Long-term obligations 7,993 11,894 Shareholders' equity 44,552 81,173 ots Original Text Service: Heska Corporation Internet: http://www.newsaktuell.de Contact: Ron Hendrick, Executive Vice President & Chief Financial Officer of Heska Corporation, 970- 493-7272; or Judy Brenna, Investor Relations, Ext. 221, or Matthew Knight, Media Relations, Ext. 271, both of Noonan/Russo Communications, Inc., 212-696-4455 Web site: http://www.heska.com Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. 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