Heska Announces Q309 Results

Over $1 Million in Operating Income for 3rd Consecutive Quarter

• Press Release
• Source: Heska Corporation
• On 9:00 am EDT, Tuesday October 27, 2009

LOVELAND, Colo., Oct. 27 /PRNewswire-FirstCall/ -- Heska Corporation (Nasdaq: HSKA; "Heska" or the "Company") today reported financial results for its third quarter ended September 30, 2009.

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"The third quarter of 2009 was the most profitable quarter this year and the financial performance exceeded our latest guidance. The strong cash flow from our operations has allowed us to reduce our borrowings significantly," said Robert Grieve, Heska's Chairman and CEO. "We are excited by our future prospects, including the market opportunity presented by the DRI-CHEM 7000® Veterinary Chemistry Analyzer - a new, high-end chemistry instrument that is a line-extension to our current offering."

Investor Conference Call

Management will conduct a conference call on Tuesday, October 27, 2009 at 9:00 a.m. MDT (11:00 a.m. EDT) to discuss the third quarter 2009 financial results. To participate, dial (877) 941-8609 (domestic) or (480) 629-9818 (international); the conference call access number is 4171626. The conference call will also be broadcast live over the Internet at http://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, download and install any necessary audio software. Telephone replays of the conference call will be available for playback until November 10, 2009. The telephone replay may be accessed by dialing (800) 406-7325 (domestic) or (303) 590-3030 (international). The webcast replay may be accessed from Heska's home page at www.heska.com until November 10, 2009.

About Heska

Heska Corporation (Nasdaq: HSKA - News) sells advanced veterinary diagnostic and other specialty veterinary products. Heska's state-of-the-art offerings to its customers include diagnostic instruments and supplies as well as single use, point-of-care tests, pharmaceuticals and vaccines. The company's core focus is on the canine and feline markets where it strives to provide high value products and unparalleled customer support to veterinarians. For further information on Heska and its products, visit the company's website at www.heska.com.

Forward-Looking Statements

This announcement contains forward-looking statements regarding Heska's future financial and operating results. These statements are based on current expectations and are subject to a number of risks and uncertainties. Investors should note that there is an inherent risk in using past results, including trends, to predict future outcomes. In addition, factors that could affect the business and financial results of Heska generally include the following: uncertainties related to the anticipated loss, after November 1, 2009, of access to products from Abbott Point of Care Inc., which represent approximately 18% of Heska's revenue for the year ended September 30, 2009, as well as uncertainties related to the loss of exclusive access to these products on May 1, 2009; uncertainties regarding Heska's reliance on third parties to whom Heska has granted substantial marketing rights to certain of Heska's existing products and whom may be large Heska customers; uncertainties regarding Heska's ability to generate profits and positive cash flow in future periods; uncertainties surrounding the success of future products, including Heska's ability to adhere to stated deadlines and successfully commercialize such products; risks regarding Heska's ability to successfully market, sell and distribute its products in an economically sustainable manner; uncertainties related to Heska's ability to maintain its listing on the Nasdaq Capital Market; competition, including uncertainties regarding the impact of new products competitors have recently launched or may launch in the future; risks regarding Heska's reliance on third-party suppliers, which is substantial and could have significant negative consequences if Heska were to lose exclusive rights or access to a product due to a supplier decision or for other reasons; risks related to Heska's reliance on third parties to properly and timely complete certain research and development activities; uncertainties regarding Heska's ability to continue to meet its covenant obligations under its borrowing agreement; uncertainties related to Heska's ability to raise additional capital, if necessary or advisable; the level of Heska's fixed expense, which is significant, and the corresponding cash flow and liquidity-related risks resulting from unanticipated revenue and gross margin shortfalls; uncertainties regarding overall economic conditions, the affect of these conditions on Heska's business, which may change as compared to historical results, and Heska's accuracy in predicting these and related matters; and the risks set forth in Heska's filings and future filings with the Securities and Exchange Commission, including those set forth in Heska's Annual Report on Form 10-K for the year ended December 31, 2008 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2009.

                             Financial Table Follows:

                      Consolidated Statements of Operations
                     In Thousands, Except per Share Amounts
                                    (unaudited)

                               Three Months Ended     Nine Months Ended
                                  September 30,         September 30,
                               -------------------    -----------------
                               2008         2009      2008        2009
                               ----         ----      ----        ----
    Revenue, net:
        Core companion
         animal health       $19,240      $16,892   $54,473     $51,908
        Other vaccines,
         pharmaceuticals
         and products          2,446        2,658    11,746       6,412
                               -----        -----    ------       -----
          Total revenue, net  21,686       19,550    66,219      58,320
                              ------       ------    ------      ------

    Cost of revenue           13,490       12,130    41,716      36,496
                              ------       ------    ------      ------

    Gross profit               8,196        7,420    24,503      21,824
                               -----        -----    ------      ------

    Operating
     expenses:
        Selling and
         marketing             4,458        3,695    14,024      11,075
        Research and
         development             506          457     1,462       1,308
        General and
         administrative        2,134        2,109     6,756       6,255
                               -----        -----     -----       -----
             Total operating
              expenses         7,098        6,261    22,242      18,638
                               -----        -----    ------      ------
    Operating income           1,098        1,159     2,261       3,186
    Interest and other
     (income) expense,
     net                         153          (13)      500         193
                                 ---          ---       ---         ---
    Income before
     income taxes                945        1,172     1,761       2,993
    Income tax expense           368          429       744       1,211
                                 ---          ---       ---       -----
    Net income                  $577         $743    $1,017      $1,782
                                ====         ====    ======      ======

    Basic net income
     per share                 $0.01        $0.01     $0.02       $0.03
                               =====        =====     =====       =====
    Diluted net income
     per share                 $0.01        $0.01     $0.02       $0.03
                               =====        =====     =====       =====

    Shares used for
     basic net income
     per share                51,797       52,123    51,625      52,049
                              ======       ======    ======      ======

    Shares used for
     diluted net
     income per share         52,580       52,192    53,774      52,060
                              ======       ======    ======      ======

                                Balance Sheet Data
                             In Thousands (unaudited)

                                             December 31,  September 30,
                                                 2008          2009
                                                 ----          ----
    Cash and cash equivalents                   $4,705        $5,603
    Total current assets                        31,290        29,530
    Total assets                                70,438        65,992
    Line of credit                              11,042         5,984
    Current portion of long-term debt              770           573
    Total current liabilities                   22,228        16,360
    Long-term debt, net of current
     portion                                       381             -
    Stockholders' equity                        42,523        44,637

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