Heska (HSKA) Tops Q1 EPS by 11c, Revenues Miss; Offers FY20 Revenue Guidance Above Consensus

Heska (NASDAQ: HSKA) reported Q1 EPS of ($0.14), $0.11 better than the analyst estimate of ($0.25). Revenue for the quarter came in at $30.7 million versus the consensus estimate of $32.66 million.

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."

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.

GUIDANCE:

Heska sees FY2020 revenue of $175-185 million, versus the consensus of $150.44 million.

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.

For earnings history and earnings-related data on Heska (HSKA) click here.

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