Veterinary diagnostics maker Heska ($HSKA) stood at the bottom of a steep slope earlier this year, with analysts urging the company to boost its visibility as it revamped its business model to get more revenue from recurring sources. The company has worked hard to turn things around and at least for now, it seems like its efforts are paying off. Heska revealed Q3 revenues that beat the Street's expectations, partly fueled by a strong performance of its blood analyzer systems.
The Loveland, CO-based company brought in $28.03 million in sales during the third quarter, surpassing analysts' estimates of $24.28 million. Heska also beat on earnings with a Q3 EPS of $0.20, exceeding the Street's $0.12 estimate.
Operating profit in Q3 shot up to $2.1 million year over year from $381,000. Investors seem pleased with the numbers, with shares in Heska jumping almost 10% to $35.85 in early morning trading after the company announced earnings.
More blood analyzer placements helped drive the company to a win during the quarter. Heska increased its analyzer placements 66% year over year and drew 80% of its customers for key analyzers switched from a competitor or were new users, CEO Kevin Wilson said in a statement. The company recently launched new Element HT5 Hematology and element POC blood gas platforms that continue to gain share, Wilson said during Heska's Q3 earnings call. "Heska is executing well, our new products pipeline is rich, our current sales pipeline is at record levels and our teams are winning," Wilson said in a statement.
With recent progress in tow, Heska is setting its sights on international growth. The company announced along with earnings that it would snatch up veterinary imaging firm Cuattro Veterinary for $6 million to expand its international footprint and get its hands on Cuattro's digital radiography and imaging technology. Cuattro has established sales channels in Canada, Mexico, Europe, the Middle East and Latin America, allowing Heska to "leverage our domestic success in the imaging and blood diagnostics space on a worldwide stage," Wilson said in a statement.
The company has focused on winning over a higher number of large veterinary clinics to drive sales, and expanded offerings could go a long way in helping Heska secure customers. Cuattro brought in about $6 million in revenue for the 12 months ending Sept. 30 and Heska expects the acquisition to be "neutral to slightly accretive to earnings per share in 2016," the company said in a statement. The companies plan to close the deal by the end of this year.
"International markets represent a significant portion of worldwide veterinary revenues for which Heska intends to compete," Wilson said. "Today, Heska begins to aggressively pursue those markets with advanced blood diagnostics and imaging bundles, a proven go-to-market model, and an expert and expanding team."
- read the company's earnings statement
- here's the statement about Heska's Cuattro acquisition
- get the Seeking Alpha earnings call transcript