On November 5, 2020 Heska Corporation (NASDAQ: HSKA; "Heska" or "Company"), a leading provider of advanced veterinary diagnostic and specialty products, reported financial results in two segments (North America and International) for its third quarter ended September 30, 2020 (Press release, Heska, NOV 5, 2020, View Source [SID1234570236]). Point of Care is "POC" and scil animal care company GmbH is "scil" in this release.
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Third Quarter 2020 Highlights
Record quarterly revenue growth led by strong POC Lab Consumables and recent scil acquisition. North America POC Lab Consumables sales up 15.2% in period and up 9.7% year to date.
As anticipated, consolidated gross margin was impacted by acquired lower scil margin. Year-over-year, North America quarterly sales rose 16.4% at 48.3% gross margin (+430 bps compared to prior year) and International sales and gross margin met the Company’s targets.
Net loss and diluted EPS impacted by income tax, stock-based compensation, one-time transaction costs, interest associated with convertible debt, and other expenses relating primarily to the acquisition of scil. Non-GAAP diluted EPS impacted by income tax expense and cash interest charge in the current period.
Research, development, and commercial launch of key strategic initiatives advanced in-line with previously stated timelines.
Heska management to present strategic plan, new product demonstration and launch roadmap, multi-year financial targets, and other key considerations at the Company’s virtual Investor Day on November 18 at 9:00 a.m. MT.
Kevin Wilson, Heska’s Chief Executive Officer and President, commented, "Heska’s third quarter followed through on a solid 2020 first half. Our teams delivered record revenue and near-universal outperformance across key metrics that lead us to believe that we will perform at the top of the ranges for most, if not all, of the full-year targets we shared in our second quarter earnings release. In the third quarter, Heska’s North America POC Lab Consumables sales accelerated nicely, our International segment performed wonderfully, and our margins, cost discipline, cash management, and other key areas were all excellent. Heska and the animal health industry continue to reaffirm a decades-long resiliency. Pet visits and veterinary trends have generally outpaced most forecasted estimates. Heska end-user demand remains strong, our current subscribers continue to increase utilization of key tests, and our teams, logistics, and supply chain continue to meet demand well, even from a partial work-from-home posture."
"In addition to Heska’s strong financial results," continued Mr. Wilson, "we met and advanced key non-financial objectives. Research and development initiatives progressed in-line with previously stated timelines, and commercial launch plans further solidified across several projects. Integration with our recent international acquisitions progressed in-line with our expectations and we are confident in our ability to meaningfully grow and improve the profitability of these businesses over time. We remain convinced we will succeed in the core tenets of our five year strategic plan (2018-2023) to: (1) double the geographies and customers we serve, (2) double the products and revenue lines we offer, and (3) continue to grow our core business. We are grateful for our industry, customers, employees, and investors, and we are humbly thankful for our good fortune as we continue to accomplish our plans, which we will share with you in more detail at our Investor Day on November 18th. We hope to ‘see’ you there (virtually)," concluded Mr. Wilson.
Third Quarter Financial Results
Operating Expenses
Total operating expenses in the third quarter of 2020 were $23.2 million, compared to $13.5 million in the third quarter of the prior year. The increase is driven primarily by the impact related to the consolidation of our acquisitions’ operations of approximately $6.5 million, an increase in stock-based compensation of $2.9 million, and one-time acquisition costs of $0.8 million.
Liquidity
We continue to demonstrate a strong liquidity position with cash of $84.5 million.
2020 Investor Day
The Company plans to host a virtual Investor Day on November 18, 2020 at 9:00 a.m. MT (11:00 a.m. ET) to present the Company’s strategic growth plan, new product demonstration and launch roadmap, multi-year financial targets, and other key considerations. To register for the event, please visit View Source
Investor Conference Call
Management will conduct a conference call on November 5, 2020 at 9:00 a.m. MT (11:00 a.m. ET) to discuss the third quarter 2020 financial results. To participate, dial 1-866-548-4713 (US) or 1-323-794-2093 (international) and reference conference call access number 9707717. 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 November 19, 2020. The telephone replay may be accessed by dialing 1-844-512-2921 (US) or 1-412-317-6671 (international). The replay access number is 9707717. The webcast will also be archived on www.heska.com for 90 days.