May 2013 NASDAQ: HSKA Heska Corporation. All Rights Reserved.

Transcription

1 May 2013 NASDAQ: HSKA 2013 Heska Corporation. All Rights Reserved.

2 NASDAQ: HSKA Forward-Looking Statements This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These statements are based on current expectations and assumptions that are subject to risks, uncertainties and changes in business conditions. If the underlying assumptions are inaccurate, our actual results may differ materially from our current expectations and our plans may differ based on changes in business conditions. Among the factors subject to such risks and uncertainties are the following: uncertainties regarding the accuracy of past, current or future financial guidance, stock valuation and price performance; loss of products from third-party suppliers; uncertainties regarding our ability to maintain existing customers; uncertainties regarding our ability and those of third parties to market, sell and distribute our products; delays in or failure to achieve market launch and market acceptance of new products; unanticipated changes in pet owner or veterinarian behavior; competition; and the loss of key personnel. For a further discussion of these factors and others, please refer to Heska's filings with the Securities and Exchange Commission including the section entitled Risk Factors on our Form 10-Q for the quarter ended March 31, Forwardlooking statements speak only to the time the statement was made. Heska does not intend to update any forward-looking statements.

3 Investor Highlights Positive Market Dynamics Favorable trends in pet ownership and care Superior and Growing Product Portfolio Particular strength in advanced diagnostics and allergy Cuattro Veterinary USA Acquisition Adds talent, products, and accelerates growth Fundamentals and Valuation $72.8 Million in Revenue, $2.2 Million in Operating Income for Full Year 2012

4 Heska Veterinary Solutions Advanced Diagnostics & Specialty Products Other Vaccines, Pharmaceuticals & Products Digital Imaging & Software Lab Analyzers Heartworm Dx Allergy Testing & Therapy Thyroid Rx Heartworm Rx Rapid Diagnostek TM Pipeline Contract Manufacturing Private Label Manufacturing Product and Process Development

5 Market Dynamics Pet Owner is the Ultimate Consumer U.S. Baby Boomers - Peak income - Peak pet ownership Pet population growth - More households own dog or cat - More dogs/cats per household Aging pet population U.S. Companion Animal Industry Over 73M households - Over 78M dogs - Over 86M cats Over $50B in annual sales - Food and vet costs ~65% of spending - $3.5B+ spent in our target market - We target 53,000 veterinarians in 24,000 clinics, approximately

6 Veterinary Practice Is Changing Fewer Opportunities New Opportunities New Technologies and Product Categories Fewer vaccines Generics Channel threats Veterinarians expected to offer wellness, health information Advanced diagnostics and specialty products are key Heska provides diagnostic and specialty products to help veterinarians embrace change and develop their practices

7 Growing Opportunities Advanced diagnostics and specialty products are key Cuattro acquisition allows Heska to compete more effectively Diversified products, strong brands, seasoned sales force Product development, expanded global allergy efforts

8 Single-Use Products Diagnostics, Tests and Allergy Solutions Solo Step Canine and Feline Heartworm Tests ALLERCEPT Allergy Assessment & Treatment E.R.D.-HealthScreen Urine Tests

9 Blood Analyzers & Consumables In-house Blood Testing with High Performance Element DC Chemistry Analyzer DRI-CHEM 7000 Chemistry Analyzer HemaTrue Hematology Analyzer VitalPath Blood Gas & Electrolyte Analyzer

10 Digital Imaging Broader Solutions for In-Clinic Imaging Needs CloudDR Digital Radiography Esaote MyLab Alpha Ultrasound Cloud Based Software Support

11 Bundling Capability Providing Increasingly Robust Solutions for Veterinary Market HESKA Lab Systems combine with Digital Imaging Products offering complete solution Synergistic sales strategies and tactics

12 Other Products Pharmaceuticals, Supplements and Pumps Tri-Heart Plus (Merck) ThyroMed Chewable Tablets HESKA F.A. Granules Vet/IV 2.2 Infusion Pumps

13 Heska Capabilities Innovate and Customize Heska improves, modifies and customizes platforms for the veterinary industry Core Competencies Service and Support Heska contributes significant value, including 24/7 customer service and support

14 New Distribution Partnership MWI Veterinary Supply As of 1/2/13 MWI inventories, markets and promotes full distribution line of Heska veterinary products throughout the US Improves customer choices for advanced diagnostic solutions

15 Heska Vs. Principal Competitors Digital Radiography Ultrasound Allergy Testing & Therapy Heartworm Rx Vet Infusion Pumps Thyroid Rx Rapid Diagnostek TM Pipeline OVP segment Core In-clinic Analyzers / Heartworm Diagnostics Other Single Use Diagnostics Reference Lab w/ Nat l Logistics Human Chemistry Analyzer segment Other Single Use Diagnostics Digital Radiography Reference Lab w/ Nat l Logistics Allergy Testing & Therapy Practice Management Software Water testing segment LPD & Other segments Continue to ensure core products are state-of-the-art and invest and grow outside this highly competitive sphere

16 Financial Results (in millions) Revenue $70.1 $72.8 Operating Income $3.2 $65.5 $2.2 $

17 Income Statement (in thousands) Three Months Ended 3/31/12 Three Months Ended 3/31/13 Year Ended 12/31/11 Year Ended 12/31/12 Core companion animal health revenue $16,580 $15,649 $57,481 $61,502 Other vaccines, pharmaceuticals and products $2,595 $3,330 $12,584 $11,303 Total revenue, net $19,175 $18,979 $70,065 $72,805 Cost of revenue $10,252 $11,177 $40,878 $41,704 Gross Profit $8,923 $7,802 $29,187 $31,101 Total Operating Expenses $7,841 $8,484 $25,938 $28,943 Operating income (loss) $1,082 $(682) $3,249 $2,158 Income before income taxes $940 $(671) $3,366 $2,023 Current tax expense (benefit) $48 $6 $165 $214 Deferred tax expense (benefit) $308 $(325) $1,056 $606 Net income attributable to Heska Corporation $584 $(386) $2,145 $1,203 Diluted net income per share $0.11 $(0.07) $0.40 $0.22

18 Balance Sheet (in millions) $9 $6 $3 $0 $7.5 $7.6 $6.3 $6.0 $5.3 $5.6 $5.4 $5.3 $5.6 $5.7 $5.5 $5.6 $5.7 $5.7 $5.8 $5.5 Q209Q309Q409Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412Q113 Term/Other Debt Line of Credit Cash $5.0 million in borrowing capacity as of March 31, 2013

19 Potential Tax Benefit Position NOLs can be used to offset future income taxes At year-end 2012, Heska had federal NOLs of: $113.5M total None expire until 2018 Future cash flow value deferred tax expense Properly structured transactions will enhance the use of these NOLs

20 Heska is Poised to Grow Revenue Growth Sales force efficiency New organic and acquired products Potential with MWI Veterinary Supply distribution Significant sales engine and relationships, bundling opportunities with Cuattro Vet acquisition Profit Growth Operating expense leverage NOL value beyond GAAP EPS Acquisition Opportunities

21 Experienced Leadership Robert Grieve, Chairman & Chief Executive Officer Co-founder; CEO since 1999 Kevin Wilson, President & Chief Operating Officer A founder of Cuattro Veterinary USA and Sound Technologies Michael McGinley, President, Biologicals & Pharmaceuticals Previous experience includes Bayer Animal Health and Fort Dodge Laboratories Jason Napolitano, Chief Financial Officer Previous experience includes Credit Suisse First Boston

22 Investor Summary Positive Market Dynamics Positive market dynamics Over $50B spent annually on companion animals Go ahead and replace it with your 73M households own text. This have is companion example animals text. Go ahead and replace it with your Heska targets own text ~24,000 veterinary clinics Superior & Growing Product Portfolio Relationships with FUJIFILM Corporation and Roche Diagnostics GmbH LLC Future new product launches Acquisition potential Fundamentals and Valuation 2012 revenue of $72.8M vs. $70.1M in gross profit was $31.1M (42.7% GM) vs. $29.2M (41.7% GM) in operating income was $2.2M vs. $3.2M in 2011 Cuattro Veterinary USA Acquisition Provider of increasingly robust and strongly branded solutions for veterinary market Allows growth of existing business with a superior digital imaging product line Complementary to current advanced diagnostic product suite Allows for bundling to compete very effectively