12 May Heska Corporation – The Cat’s Meow!
Heska Corporation (NASDAQ: HSKA) is a premier veterinary diagnostic and specialty products manufacturer with presence in major markets such as the United States, Canada, Mexico, Australia, France, Germany, Italy, Malaysia, Spain, and Switzerland. The Company aims to bring leading-edge healthcare solutions to pets, through innovation and strategic partnerships with global leaders in pet diagnostics and treatment solutions.
The Company offers lab diagnostic and digital imaging solutions under the element and cuattro brand names respectively. Heska’s product suite provides comprehensive blood diagnostic solutions encompassing chemistry, hematology, blood gas and electrolytes and immunodiagnostics among others. In addition, its digital imaging solutions include high-definition digital radiography and ultrasound that work in tandem with cloud-based data archival solutions.
Heska Corporation (NASDAQ: HSKA)
Market Cap: $ 2.00B; Current Share Price: 190.97 USD
Data by YCharts
Industry
The Immunodiagnostics market is growing by leaps and bounds owing to a marked preference for these tests by veterinarians and its potential in veterinary diagnostics. Governments around the world are increasing spending on creating awareness about animal diseases and promoting animal healthcare products due to the burgeoning demand for animal-derived food products.
The COVID-19 pandemic has spurred organizations into actions with countries forming the Zoonotic Disease Integrated Action (ZODIAC) initiative in June 2020, to prevent the spread of diseases caused by viruses, bacteria, fungi and parasites originating from animals. The initiative seeks to set up a global network of laboratories to detect and prevent diseases such as Zika, COVID-19 and Ebola among others. In addition, the CDC and USDA are working in conjunction with other departments and countries to test and maintain surveillance over pets to study the impact of exposure to a COVID-19 infected person, by using animal specific reagents for laboratory testing.
The global animal diagnostics market is poised to reach USD 3.0 billion by 2025, growing at a CAGR of 9.8% from USD 1.8 billion in 2020 according to a report by market and markets. The increasing pet population, growth in veterinary practitioners, rising demand for quality healthcare solutions and scientific advancements are driving the growth in the market.
The rising prevalence of Zoonotic diseases, increase in disposable incomes, provision of pet insurance and rising animal health expenditure are other factors that are contributing to the growth in the industry. However, rising pet costs may hamper the growth in the market.
Company
Heska provides comprehensive integrated animal health cycle services and solutions that include Testing, Treatment, Diet and Veterinary services. From Point of care, reference lab and rapid singles to imaging and tele-radiology and e microscopy, the Company is focused on becoming a leading provider of high-quality veterinary diagnostics.
Image Source: Company
Heska intends to double its sales by FY 2023 and become a leader in major geographies. As part of its three-point strategy, the company aims to double its customers, products, revenue streams as well as geographies by 2023. The Company aims to be the closest to the veterinarians in key markets such as the U.S, Germany, Spain, France and Italy, where it currently is one of the top 3 players and has been able to deploy a direct sales team and logistics required to maintain a leadership position.
The Company has been able to achieve a balanced global presence with its sales figures reflecting the shift. In 2018, 91 percent of the Company’s sales were from the USA, with whole Europe (5%), Canada (2%) and rest of the world (2%) contributing the rest, the sales were better distributed geographically in 2020 with U.S contributing to 60 percent of the sales and Pan Europe bringing in 37 percent.
Heska’s sales mix has also undergone a transformation with point of care lab testing contributing to 60 percent of the revenue in 2020 as compared to 45 percent in 2018, while imaging rose to 20 percent in 2020 as compared to 18 percent in 2018.
Image Source: Company
The Company is also investing heavily in research and development initiatives, which enable it to expand its offerings in analyzer platforms, upgrade currently installed products and open up in-licensing opportunities. Heska currently has an installed base of over 6000 imaging solutions and there are new products in the offering that have the potential to open up new markets due to their differential price points. The Company has also introduced a new range of branded ultrasound that adds great value to the existing product family.
The Company has also launched a professional services helpline HeskaView+, through its acquisition of Lacuna Diagnostics, a premier digital telemedicine cytology platform. Heska has a goal of reaching a revenue of $25MM over the next few years through this platform.
First Quarter 2021 Financial Results
The Company reported record quarterly revenue growth including a 23.9% increase in North America POC Lab Consumables sales, which beat estimates by more than 10 percent. The Company’s sales also saw an increase of 34.8 percent along with a growth in the gross margin by 176 bps. The growth was driven by expanding utilization, good market share, expanding menu, and strong end-user demand as per the Company. In addition, imaging grew by 91.3% through restructuring of its sales force.
Furthermore, Heska beat revenue expectations by 12% with revenues of US$61m and a profit of US$0.19 per share.
Key Takeaways
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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References
https://ir.heska.com/assets/uploads/2021/01/Heska-Investor-Presentation_JPM-2021_Compressed.pdf
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