Heska Corporation Reports Record Revenues in Second

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 second quarter ended June 30, 1999. Total revenues increased 40%, to $12.9 million for the quarter ended June 30, 1999, compared to $9.2 million for the second quarter of 1998. This represents the highest quarterly revenue in the Company's history. The growth in revenues during the 1999 quarter was primarily due to sales of products introduced by the company during 1998 and 1999. The Company's net loss for the second quarter of 1999 improved to $6.9 million, or a basic net loss of $0.26 per share, compared to a net loss of $9.95 million, or a basic net loss of $0.40 per share, for the second quarter of 1998. The net loss in the second quarter of 1999 was approximately $3.0 million less than the net loss in the second quarter of 1998. This improvement was primarily due to higher revenues, increased gross profit margins and lower operating expenses. For the six-month period ending June 30, 1999, total revenues increased 40% to $23.9 million compared to $17.1 million for the first 6 months of 1998. The growth in revenues during 1999 was primarily due to sales of products introduced by the company during 1998 and 1999. The net loss for the six-month period ending June 30, 1999 was $14.8 million, or a basic net loss of $0.56 per share, compared to a net loss of $19.8 million, or a basic net loss of $0.86 per share, for the first six months of 1998. The net loss in the first six months of 1999 was approximately $5.0 million less than the net loss in the first six months of 1998. This improvement was primarily due to higher revenues, increased gross profit margins and lower operating expenses. Robert Grieve, Heska's Chief Executive Officer, said, "Our second quarter results represent another very solid quarter for the Company. We are making significant progress in all of the areas we had targeted as financial priorities for 1999. Our revenues continued to increase, enabling us to post the highest quarterly revenues in the Company's history. This increase in revenues 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 on product sales continued to improve, reflecting our increased emphasis in this area. Finally, our total operating expenses, exclusive of cost of goods sold, declined from the prior year. 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 delivering shareholder value through 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 equipment 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 March 31, 1999 under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Factors that May Affect Results." Consolidated Statements of Operations In Thousands, Except per Share Amounts (unaudited) Three Months Ended Six Month Ended June 30, June 30, 1999 1998 1999 1998 Revenues: Products, net $12,553 $9,100 $23,563 $16,490 Research and development 325 119 366 639 12,878 9,219 23,929 17,129 Costs and operating expenses: Cost of goods sold 8,286 6,751 15,995 11,562 Research and development 4,291 6,502 8,535 12,680 Selling and marketing 3,402 2,868 6,812 5,958 General and administrative 2,713 2,826 5,449 5,826 Amortization of intangible assets and deferred compensation 827 672 1,684 1,437 19,519 19,619 38,475 37,463 Loss from operations (6,641) (10,400) (14,546)(20,334) Other income (expense): Interest income 390 897 992 1,472 Interest expense (475) (468) (1,009) (938) Other, net (205) 16 (251) 28 Net loss $(6,931) $(9,955) $(14,814) $(19,772) Basic net loss per share $ (0.26) $ (0.40) $ (0.56) (0.86) Shares used to compute basic net loss per share 26,714 24,920 26,660 23,086 Balance Sheet Data In Thousands (unaudited) June 30, 1999 1998 Cash $29,785 $54,760 Working capital 36,451 60,196 Total assets 82,219 99,070 Long-term obligations 10,322 10,368 Shareholders' equity 52,231 73,532 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, 212-696-4455 ext. 221, or Matthew Knight, Media Relations, 212-696-4455 ext. 271, both of Noonan/Russo Communications, Inc., for Heska Corporation 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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