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 andservices, today reported its financial results for the secondquarter ended June 30, 1999. Total revenues increased 40%, to $12.9 million for the quarterended June 30, 1999, compared to $9.2 million for the secondquarter of 1998. This represents the highest quarterly revenue inthe Company's history. The growth in revenues during the 1999quarter was primarily due to sales of products introduced by thecompany during 1998 and 1999. The Company's net loss for the second quarter of 1999 improvedto $6.9 million, or a basic net loss of $0.26 per share, comparedto a net loss of $9.95 million, or a basic net loss of $0.40 pershare, for the second quarter of 1998. The net loss in the secondquarter of 1999 was approximately $3.0 million less than the netloss in the second quarter of 1998. This improvement wasprimarily due to higher revenues, increased gross profit marginsand lower operating expenses. For the six-month period ending June 30, 1999, total revenuesincreased 40% to $23.9 million compared to $17.1 million for thefirst 6 months of 1998. The growth in revenues during 1999 wasprimarily due to sales of products introduced by the companyduring 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, comparedto a net loss of $19.8 million, or a basic net loss of $0.86 pershare, for the first six months of 1998. The net loss in thefirst six months of 1999 was approximately $5.0 million less thanthe net loss in the first six months of 1998. This improvementwas primarily due to higher revenues, increased gross profitmargins and lower operating expenses. Robert Grieve, Heska's Chief Executive Officer, said, "Oursecond quarter results represent another very solid quarter forthe Company. We are making significant progress in all of theareas we had targeted as financial priorities for 1999. Ourrevenues continued to increase, enabling us to post the highestquarterly revenues in the Company's history. This increase inrevenues occurred despite the fact that we continued torationalize our product line, eliminating certain products thatdid not meet current gross margin requirements. We continue to bepleased with the market acceptance of our HESKA(TM) Solo-Step(TM)CH canine heartworm diagnostic test, particularly in light of thevery 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, ourtotal operating expenses, exclusive of cost of goods sold,declined from the prior year. We were able to achieve asignificant reduction in operating expenses while continuing todrive the growth of our business. We believe these results are aclear demonstration of our focus on delivering shareholder valuethrough improved operating results, while also developing theproduct pipeline for long-term growth." Heska discovers, develops, manufactures and markets companionanimal health products, primarily for dogs, cats and horses.Heska has a large and sophisticated scientific effort devoted toapplying biotechnology to the large and growing companion animalhealth market. Heska also offers diagnostic and patientmonitoring equipment and supplies, as well as laboratorydiagnostic products in the United States and Europe toveterinarians, and operates USDA-and FDA-licensed facilities,which manufacture vaccine, pharmaceutical, and allergyimmunotherapy products. For additional information on Heska andits products, visit the company's web site at www.heska.com. With the exception of historical matters, this press releasecontains express or implied forward-looking information aboutHeska's products, markets, and results of operations, includingimplied statements concerning the market acceptance of theproducts described above, the anticipated growth rate of thebusiness and the ability to reduce operating losses goingforward. Such forward-looking statements involve known andunknown risks, uncertainties and other factors which may causeactual results, performance or achievements of Heska to bematerially different from any future results, performance orachievements expressed or implied by such forward-lookingstatements. Heska's achievement of these results may be affectedby many factors, including among others, the following: delays inor failure to achieve market acceptance of products; delays in orfailure to achieve future product development; uncertaintiesregarding the outcome of research and development efforts or theability to successfully develop or commercialize products inresearch and development, uncertainties regarding the ability toreceive required regulatory approvals in a timely manner, if atall, uncertainties regarding the scope, enforceability andvalidity of patents and proprietary rights, which are subject tocomplex legal standards that vary from country to country and aresubject to interpretation by administrative agencies and courts;quality of management; competition; changes in business strategyor development plans; inability to obtain renewal or continuationof contracts, or obtain exclusivity, to market, sell ordistribute products described herein; inability to manufacture,market, sell or distribute products at currently projected costsand the risks set forth in Heska's filings and future filingswith the Securities and Exchange Commission, including those setforth in Heska's Annual Report on Form 10-K for the year endedDecember 31, 1998 under the caption "Business-Factors that MayAffect Results," and in its Quarterly Report on Form 10-Q for thequarter ended March 31, 1999 under the caption "Management'sDiscussion and Analysis of Financial Condition and Results ofOperations -- Factors that May Affect Results."

Consolidated Statements of Operations

In Thousands, Except per Share Amounts

(unaudited)

Three Months Ended

Six MonthEnded

June 30,

June 30,

1999

1998

19991998 Revenues:

Products, net

$12,553

$9,100

$23,563$16,490

Research and

development

325

119

366639

12,878

9,219

23,92917,129 Costs and operating expenses:

Cost of goods sold

8,286

6,751

15,99511,562

Research and

development

4,291

6,502

8,53512,680

Selling and marketing 3,402

2,868

6,8125,958

General and

administrative

2,713

2,826

5,4495,826

Amortization of

intangible assets and

deferred compensation 827

672

1,6841,437

19,519

19,619

38,47537,463 Loss from operations

(6,641)

(10,400)(14,546)(20,334) Other income (expense):

Interest income

390

897

9921,472

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

26,66023,086

Balance Sheet Data

In Thousands

(unaudited)

June 30,

19991998 Cash

$29,785$54,760 Working capital

36,45160,196 Total assets

82,21999,070 Long-term obligations

10,32210,368 Shareholders' equity

52,23173,532 ots Original Text Service: Heska Corporation Internet:http://www.newsaktuell.de Contact: Ron Hendrick, Executive VicePresident & 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 CorporationWeb site: http://www.heska.com

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