LOVELAND, Colo., May 12 Heska Corporation(Nasdaq: HSKA) today reported financial results for its first quarter endedMarch 31, 2008.
Heska Corporation ("Heska" or the "Company") generated its highest firstquarter Core Companion Animal Health segment ("CCA") product revenue ever inthe three months ended March 31, 2008, with product revenue totaling$17.4 million. The Company also generated approximately $4.3 million inproduct revenue in its Other Vaccines, Pharmaceuticals and Products segment("OVP") and $282 thousand in Research, development and other revenue.
"We continue to be pleased with the competitiveness of our productoffering. In the first quarter of 2008, we experienced strong chemistryinstrument revenue growth due to the launch of an upgraded product -- theHeska(R) Dri-Chem 4000 Veterinary Clinical Chemistry Analyzer by FUJIFILM --last November," said Robert Grieve, Heska's Chairman and CEO. "As we havepreviously predicted, the first quarter of 2007 presented a difficultcomparison for us as we recognized over $2 million in high gross marginrevenue we did not expect to repeat in the first quarter of 2008. While weare disappointed to report a net loss of $226 thousand after seven consecutivequarters of profitability, we expect to return to profitability in the secondquarter of 2008."
Total revenue for the first quarter of 2008 was $21.9 million, a decreaseof 3.5% compared to the first quarter of 2007. Total revenue consists ofproduct revenue and research, development and other revenue, both of which arediscussed below.
Segment Product Revenue
Total product revenue for the first quarter of 2008 was $21.6 million,down 3% from $22.3 million in the first quarter of 2007. Heska Corporation'sbusiness is comprised of two reportable segments -- Core Companion AnimalHealth and Other Vaccines, Pharmaceuticals and Products. Product revenue fromthese segments is as follows:
Core Companion Animal Health This segment includes revenue from theCompany's diagnostic instruments and supplies as well as single use,point-of-care tests, vaccines and pharmaceuticals, primarily for canine andfeline use. In the first quarter of 2008, this segment generated productrevenue of $17.4 million, up 2% as compared to $17.0 million in the firstquarter of 2007.
Other Vaccines, Pharmaceuticals and Products This segment includesrevenue from private label vaccine and pharmaceutical production, primarilyfor cattle but also for other animals including small mammals and fish. Inthe first quarter of 2008, this segment generated product revenue of$4.3 million, down 20% as compared to $5.3 million in the first quarter of2007. Results for the first quarter ended March 31, 2007 includeapproximately $1.6 million in revenue recognized in the first quarter uponreceipt of a payment for product previously shipped and "take-or-pay" minimumsfor 2005 and 2006 which previously had not been paid as part of a now settleddispute with United Vaccines, Inc. ("United"), a former customer.
Research, Development and Other Revenue
Research, development and other revenue was $282 thousand in the firstquarter of 2008, a decrease of approximately $119 thousand when compared to$401 thousand in the prior year period. In December 2006, the Companycompleted the sale of a worldwide patent portfolio covering a number of majorallergens and the genes that encode them to Allergopharma Joachim Ganzer AG(the "Allergopharma Portfolio"). In the first quarter of 2007, the Companyrecognized approximately $100 thousand in revenue under a service contractwhich was completed in 2007 related to the Allergopharma Portfolio.
Investor Conference Call
Management will conduct a conference call on Monday, May 12, 2008 at 9:00a.m. MDT (11:00 a.m. ED