Heska Corp. (HSKA) 2 Nov 172017 Q3 Earnings call transcript

Good day and welcome to the Heska Corporation Third Quarter 2017 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brett Maas. Please go ahead, sir.

Hello and welcome to Heska Corporation's earnings call for the third quarter of 2017. Hayden Investor of firm. Maas Brett IR, Relations Heska's I'm call, XXXX Corporation's would during Prior financial certain performance this or Heska Company. future quarter statements the may results, regarding forward-looking of of that to discussing future you third I events make remind like course the we to actual beliefs to that and involve that known materially unknown risks We you forward-looking that implied are expectations any need expressed to performance based statements. by and statements which results may different from those cause uncertainties, such be caution on and our current or and forward-looking Factors to Corporation's in Annual detailed cause SEC. that Heska filings writing Quarterly could the with or such differences and including contribute in places are Heska or made. Any disclaims, occur or speak forward-looking of events to to such intention the statement statements was as not and any does specifically only obligation made any the time that time reflect forward-looking update after statements intend, are they

Kevin have Officer morning, We Heska's Chief and Jason Officer and Financial Chief us President; McMahon, Napolitano, Operating Executive and and with Heska's Officer; Strategist. Chief this Wilson, Heska's John

will comments open call questions, followed to we by comments. Mr. managements Following your Wilson's closing the

Now, Kevin Chief Officer yours? Wilson, President. over call Executive is I'll Kevin, Heska's floor the and turn to

strong shots of Strong points best This all market and cash key we nice from back of Thanks, I and becoming smaller positives I of and margin good XXXX. goal. XX.X%. execution execution and otherwise by of that of and which business my in in to gains were go core year. heartworm blood has that in outstripped and our the expectation XXXX to on growing quarters gross early quarters report above basis the was initiatives. it diagnostics that Consolidated playbook, from our morning, the After was first Brett, call delivered business offset have everyone. shows good largest see in report XXX is lines both Today investors providing to our three May the of core quarter for subscriptions. unseen third on below continued stage period strong of powered including by which goal delayed benefits and XX% personal to expansion our eight share growth imaging operations and a then missed XXXX

points in quarter The they I'm seized feels highly much present I made third prospects of as in themselves. long-term what see entry and Heska same early and the confident Like Heska the and I'll me. see to into XXXX of thoughtful growth investors attractive upon XXXX

our good required For focus our intensity the space Heska part competitive to the growing in path teams clear continue win. and work our with on our

through outlook turn balance go Now to the the update details you of and for call I'll quarter John year. the on the over the the of to McMahon

provide comments into analyzer John's COAG we'll in plans area insight answer launch with the and and corporate I'll win John? open major to Following and Centers. Then because questions. PetVetCare accounts element our operations new additional this the big your Heska's call week's

Thanks morning, good and Kevin, everyone.

products. and diagnostics single-use XX% core Revenue key the we million rising the after pharmaceuticals, XXXX or core to $XX.X to the instruments quarter up vaccines million decline and in as our million CCA in digital $XX.X a diagnostic of blood consumables, year-ago. as we at up from $XX.X to last was over Companion million and of sales XX% compared to quarter third referred million to recorded was of year. third of grow which PVD slightly For segment compared is X% in for quarters a Animal revenue On quarter the $XX.X $XX.X revenue blood basis tests, year-to-date. XXXX. million of Revenue comprised as continues third revenue CCA and diagnostic the imaging strongly a $XX.X year-to-date quarter X% three Health

We grow unique with gain initial multi-year our under new and competitive nearly occurring market reset and subscriptions over six-year term. a our space share reset installed very XXX% in net XX% placements of of under continue a placements placements to subscriptions. six-year With

are placement a secure gain encouraged new a market and address We represents that long-term new each in share. into

was low We our by blood declines anticipate XXXX. PVD imaging throughout strong substantially half PVD see continue blood continuing XX% of upcoming deemphasize We've diagnostics into been experiencing products higher sales. and CCA see strength with over we to growth the declines lower of sales trends QX in to and in and in in offsetting XXXX in quarter and in the because as competitive decision relaunch supported diagnostics growth our and first win Partially those cost our competitiveness. reformulation these into segment heartworm the turning performance We made heartworm margin. and we XXXX and the

we While to the to XX% we in In of XXXX, now year, prior global factors. revenue had expect XXXX. imaging four in of half of these expected them declined reformulation to the due half year the the first QX this hit compared second benefits

up XXXX we very strong were First, against comparables.

to wholly-owned Heska, which Second, resources we in which both opportunities business focus systems cost have XXXX. of savings delayed limited we to to business and into imaging see integrate on expect the the

return upside with upfront recognition the new imaging additions Kevin of broad-based and and short of to we capital is growth Impending $X that customers We the cycle revenues XXXX for the imaging enter new sales. run entered strong we ended fourth fourth, in fourth leaving more that for cost a strong because later pipeline year contracts year. rental The the had of upswing imaging the releases close we four million detail period. hoped expect XXXX release on particularly these to of this aided prior the some a will as quarter than ready quarter believe revenue factors in on purchases strong us call. of and this quarter fourth third recognition all quarter to this off to delay we unclosed the fourth have year products in compared some in-process new upcoming the product shift by close equipment an with And the placements. in and quarters XXXX Thirdly, impact to to softness the in to to very a

Vaccines Turning and or XX% Pharmaceuticals to segment our yielded year After half OVP. Other a front the to start that loaded growth.

substantially We OVP to in expected QX revenue moderate.

third As QX. $X order anticipated move to the of about shift OVP $X.X $X in note was revenue customers of Of from XXXX. million revenue QX drop this reduction million to as million from schedules quarter

year achieve for finish to full-year. We the the single-digit growth to expect well and OVP expected the mid

to of the quarter third to mentioned XX% grew higher in improved result in compared XXXX. revenue XX% the the quarter margin from period. The diagnostics product we which improved a margin QX beneficial XX.X% a in margin gross blood for portion overall of as mix in as larger of Our was sales

XX% its between three will illustrate, our base. CCA some this CCA business that segment. to our for a growth continued in The It much to trends XXXX in CCA margins growth we our favoring year lower it that note and improvement by $X.X will XX% operating much and if is segment potentially off overall higher diagnostics OVP $X.X and blood was basis faster XXXX mix in anticipate we trend larger lower OVP segment a To it XX% year-over-year in lines, bit the driven next result of consolidated and the revenues, couple of expense As this million from in product our grew was year-over-year be trend seen of continues time in to has of anticipate continues Total is on margin now growth higher. product the XXXX margin over million consolidated mix as continues. margin long-term instructive a years outpace expenses take X% areas. gross

The product work first to development projects. was on business related and new

recognition of standard by and for in to headcount. expenses and into our will This count our expanded third second member we've that operational effect anticipated implementation in our the enhance The sales for XXXX, growth team surrounding in X% XXXX. go efforts was expansion new capabilities is year the

X% results XXXX, compared of XXXX. operating third the decline in a quarter up in income X% We XXXX, and of $X.X was to million the X% $X.X yield was just and team investments XXXX in XX% only For capabilities context, basis. million Quarterly our XXXX. in XXXX, headcount our on will year-over-year believe in a

XX% performance of and QX compared of $X.X million to in $XX.X and for income million to for to nine $XX customer months compared last and the year-to-date initiatives was stock million $X.X And million million of initiation income. stock-based and to year. and total However, to metrics incentive first quarter stakeholder has non-executive closely relative ties in and like in plan indices, $X.X important due year. last amortization their QX was This a year, growth risen Depreciation in meaningful to key this long-term leaders. year last align the new this outperformance to million operating facing managers and of operational compensation plan $X.X revenue new QX success that's price, stock long-term

rate tax was for effective XX.X%. Our the quarter

which tax rates been tax of of allowance in by received $X.X to deferred again the were million approximately current use impacted benefits our a As in realizing discrete $X.X have assets, QX, previous quarters, tax valuation offset of our tax related the benefits stock-based after million, tax We discrete partially by future compensation. benefit.

quarter months year-to-date Heska of items XX% as $X.XX closely for income share generated $X.X was each in outlook to to last in nine period. up to diluted Corp million, quarter internal the Corporation Heska expectations, us million, leading first million, per income our or On year. the for that $X.XX share, share, was was basis, tax attributable in year. We the net ahead $XX to to our of the $X.X diluted or to third share per per This will to or a $X.XX per continue subsequent the monitor point midway $X.XX $X.X attributable or these close million, XXXX. slightly increase compared tighten as compared diluted diluted is of Net to

blood back estimate core growth earlier raising million, $XXX per to XX% test $XXX see $XXX up this flow million and the our warm our and XX% million to million XXXX key relaunch, delay in XXX we diluted and QX the full-year, For lateral original over between have I'll diagnostics and $X until earnings is to recently share revenues year we Kevin. reformulation half softness into imaging and and year. XXXX share, late heart to of the the to that, which between to call expected due of strong by than lower sales rising XXX of $XXX earlier see turn per first we driven which estimate this to from from margins, healthy in XXX in With

Thanks, John.

is on worked in a placements kick have re-initialize The integrated save previously it XXX% ultrasound, Nov lifetime digital older dental imaging for dragged profitability on on stores at time new and substantial battery into aided to powered new portable and expandable has unique recognition multimodality Association expenses solid medical radiography, money footing new and Equine consolidate it we noted, that needs taken is imaging a companion third a POC Hub fully quarter a XXXX Antonio were results begins will to time, patient's some wireless, radiography XX. each off, devices, by development. endoscopy peripherals is supports $XX,XXX, Slate exciting has product device At because blood by complete power savings imaging growth is cycle veterinarians systems, results in San of that XXXX incurred and of Hub Slate imaging full in in have multimodality in unifying databases element animal release cycle management additional better American is now and performs rental addressing space our consoles, and to imaging and release of been exacerbated line the Slate and things multiple, Hub This same for record. by device. customer single we impacted softness as years. which and Hub some by one and into purpose Slate Conference imaging similar impossible. return To been cost John revenue time to increased wireless identifying product to most demands largely into mobile for product for has Heska power profitability Pricing hug equine implications. core Practitioners is extensions diagnostics the single as has radiography platform, a to at digital digital which

available when of one of radiography for mobile operated, on adding seek all add quarter to order modalities Slate customers XXXX. and As to is their to of makes general practitioners. accessorize Hub ruggedized Slate of November unit imaging with has Hub battery Hub DR a it veterinarians power purchased Dental new for handheld selling console, up is will These models. for November multiple on more both powered and world's is choosing partner release their Dental average purchase to with XX%. Slate Hub. be products $XX,XXX XX, equine will exclusive on capabilities, the available on by when high only solution. base first purchase digital human wireless ultrasound Slate and will November DR meet exclusive prerelease is digital on stored is the eliminates Dental new radiography radiography ultrasound, Hub handheld extension for Slate viewed general $XX,XXX unique One and wireless of needs products that is be easy means Slate growth Slate markets the ultrasound and and for resolution ultrasound Imaging control separately. larger worldwide can dental Hub. sell similar Slate only which chargers, of factors Slate Slate size but wireless Heska's new and price Also Slate or for digital equine equine Slate exclusive centers, of such with when purchased cables, separately. times the compelling begin each to This with cases accessory for first several a for Hub which line the DR the raising in when our sales and handheld for and for Slate dentistry, new importantly shipping Handheld $X,XXX for XX and XX Slate $XX,XXX by Heska first standalone increase offering order the while rare intraoral add-on will up unit to Preorders

service five-year point online installing stream coverage. your original imaging of uptake offers to customers for they on contracts. customers animal extension service revenue beginning we in Another solutions now multi-year first of When care, are conclude extensions their to point is time customers and agreement a these extensions began sale contribution the year initiatives of are small point imaging as from $XXXX. The eligible price XXXX coming to combined imaging contribution purchased these warranty from range new their tailwind eligible coverage these of early purchase XXXX steady product and and each positive a XXXs to in The performance now more in and fourth annual multi-year XXXs a imaging financial beyond. releases become for and much in points of effect XXXX. $XXXX strong our quarter to improved on a which new

existing examples. Slate current of dental, imaging element this upgrades from software. each new of several growth and Hub, team which our quietly contract relaunch, key improve we're our focused new day and of work launch the Now four and for new us some on and of telemedicine to step Jason We're the It also formulation I'd analyzer catalysts see period our in how revenue with COAG creation solo and XX% to you area and continue on focus Operating our launches molecular, for pure to grow we business and time new my business. share data, I'd fecal, Today allergy, to which working to spend rolling segments analyzer to and each growth I Strategist efficiency service industry XX% businesses product new our disease, the diagnostics like like and Chief key Heska. my margins adding new very, and infectious in our share of which a very quarter areas to Officer, XX% XX% coagulation, that imaging, other development, is XXXX. in Slate over major projects are expect partnership traceable key business pursuing and development on busy product growth blood roughly business development DR development consumer products week's drivers to urine, roughly has area. and in XX% Napolitano sales, is been includes hard in a period a business, between we

share target for share We our team first traditional The market pick team. standalone XXX a our up is and approximately hospital efforts. driver minimum with hospitals of market strength sales X% area

this to exceeded have XXXX over teams Our XXXX.

Corporate America's Additionally, we owned PetVetCare Corporate for their hospital exclusive primary growing top and long-term pick fastest target a provider. X% up an week's hospitals. one of has Group largest additional market has North selected XXX share this that Centers announcement Groups, With five because

sales hospitals large roughly Centers current usage specialty healthcare acquire excited hospitals several that organizations XXX with over over pending anticipate or and to annual referral like and roughly XX PetVetCare they which users. to fast and pleased Including seek current million new locations is XX for XXX very We as regular next annually and well-funded do diagnostics current are secured have grow over will so. and Centers hospitals We their often growing and grow XXXX. Heska PetVetCare the years.

We several X% Heska With market groups additional Centers. share groups or in in We an switch and currently between PetVetCare and to attracting see $XX substantial and XXXX million more are on $XXX opportunities to between healthcare $XX million veterinary additional annually. now like from XX sales groups corporate focused groups. XX million

X% price. veterinary visits We our themselves, well-positioned these estimated utilization increase Heska's in businesses be in increased is to which to in XXXX. in growth think hospitals base to Heska of our use the and own growth underlying utilization. From testing the is installed base promotional participation targeted, driver second The increase within by installed hospitals help is and the between programs from utilization diagnostics X% from

reset price. The our third model subscriptions own driver is growth in

in some couple which years. cases were in increased price value testing taken fairly has starting of high fourth not in We the and increase increase several positioning. The value the panels the superior our of has new the effectively price some taken starting between our subscriptions tests, performance, price In major maintaining growth Heska's while savings test late we competition protest QX is a segments. for year, reset fair, gap to fair have competition. our driver able In subscription past this per analyzer increases

veterinarians choose partner. cycles. COAG, and upgrade contains corporate on own COAG next new upgrades over Heska in and generation the element the new companies launch development, more Heska For testing to upgrade first Element a second Heska's the their occurring analyzer cadence XXXX did technologies brand with blood as which POC the internal friendship this line see of of second introduces by regular launches and typing. expand to are growth a week's embark continued customer these the in these extend to XXXX for we and is major The the cutting pipeline a stream off more the global and launches our half I cycles. again of new causing a and both like three years. new we our release With virtuous of of like COAG of did much edge launches kicked targeted coagulation current of stimulated groups another of and which From individual of customer Health steady with acquisition new XXXX, of Element and Element element pleased Animal to XXXX half businesses next one Element success COAG and

The go-to-market disrupt driven of relationships them ventures and past new ones. new driven and independent geographic strategies. current driver expansion evaluating structured the of markets compared other carefully initiatives We some potential international fifth spent is Geographic opportunities. will year will joint Some acquisitions. Heska to and we've our geographic these create

launch, sustainable, longer at creating and do easy, farther Expand anticipated. out at best from for investors of simple. With in every afield directive We're efficient, team appreciate not play. diligently. and the clear future and up our has under we in having be establishes carefully the in right and do XX conversations maintaining we have your until we to XX-year that. follow-up Operator? I us that months call to continue comments may ground a probing a we the that a flexibility ball way will partners today. it's patience than while product simple. much profitable, runway for to we to value It's our this questions open I'd not so My healthy, with arrive Our these with while run work geography profitability will strategy some after times conversation the is that, like still of taken but

Nicholas go Instructions] our take we'll Raymond with from question And [Operator ahead. Please James. first Jansen

for the thus Hey, far. Kevin color all John. and Thanks

me that kind size it's imaging, us on revenue disappointment just dynamic been pushed products? of market so but out and this the with year think you're of maybe some next, were on imaging a First, XXXX kind of on addressing growth you that certainly help little how the as defining the just on these potential to the expecting appreciates scope bit understand thoughts new this a the year, of your heartworm of the recovery into we about of you're

$X below That's imaging have the To a it half. will call XX% that at business mid quarter, million core great you in. come down in OVP, the and Blood XX% grew it disappointment out as was that core but roughly business in a business. and quarter. business grower it high Yes. the if the I'd single-digit hope simplify was of where Not ancillary fantastic. expected of a came the peripheral, the up diagnostics is look first things, any to to is We a the we third in question.

one too about quarter. a I think the shouldn't that push disappointing but did surprise, million $X in third the come fourth quarter be and to So as

for just direct We million launch Roughly imaging. that generally which the the into heartworm a million XXXX balance a numbers. we then of the as about shrunk go lost the the reformulated $X And we to million heartworm year, $X deal. business. big top $X So business year on there's another million to of XXXX, is in was Heska expected about

large the cost expense marketing just profitable. Over just and wasn't because the part in product of last that structure years, the several

giving it it. counted everything We been little deemphasized this so and one us year just bit that we an So what last the in extra It's that been revenue called half because substantially launch, been reformulation to put that some was marketing on million because nicely. It's first really a tending years. which growing that two behind into want couple the flow just in of drag muscle But to behind on of or and has of development. something to get it else revenue out, instead the you second so do cuts that cost won't turns track. that's product USDA I those reformulated our process. hoped, in It's lateral revenues next until on a start of growing had has year, the of manufacture regulatory again. That the growth half

you when mentioned shots So on I kind and of those combine goal. business, ancillary

and draw You great in on use get point used a you're have three to team sports the shooters great point three shots the if great a league. best metaphors, and that point and you offences three drills you shots

You longer want like going to that. them to had was third they if stadium little them sometimes bounce see to sometimes bounce the go rim rim, the hit the take hoped, around and those in, and watching bit than sometimes unfortunately you the the rim around it's whole a they quarter shots

grow whole under that thing subscriptions have the you new on business operation, the growth follow-up there you a your is just own maybe, And the rate can this the as dampen helpful. double-digits think or the going trajectory comments, how there? about products, do you perhaps to we that's imaging towards movement the the now Okay,

was into higher around exact like million rollout type and imaging rental business. three revenue imaging continue professional professional of $X recognition things, we rolled really of Well, sale, upfront diagnosis much opposed as and consumable, meaningful. as images, mentioned $XX subscription, maybe the at software services don't meaningful business and but fingertips at be suspect long-term telemedicine I types that's that turn on so services, a we'll have revenue so out which look some growth I services don't until path, a placements things. based two of auto data, in that those which I the we million-ish it differential quarters things and an here on my we to of of based would the in data telemedicine on booked

So don't piece it the of there's next I the year-over-year will growth three that. year, think quarters the I so put of the think year-over-year first year grow in in going into will and part on because rental

actually Philips, in business. Heska big very, really And business. The part And the add second is that's for the human something very on didn't numbers to but and ago and been about contract literally roll time have traditional five initial important when right their and when business side imaging has a you service piece worth first three year on the of to top beyond on I Siemens, it's to we service whether GE, four put imaging the is XXXX look didn't those access that ability growth business since to really at XX service of businesses three we placements the for - days service the the points probably services percentage imaging it, really have that to imaging, started in business to agreement. portfolio,

business. business So $XX when a in you probably to you combine the X% and on XXX X% that will services head million XXXX combine recognition rental start forego the

mid had based before on new single-digit you product some to at already high launches. core just growth growth You of these look

initiatives on but what been and XX% been about revenues to and profitability development as will it's talk probably on nice we I All some product significant early to positive some XX% a drag has a next better year drag specifics as this profitability. money to what's say spent which is turn on into turn and of will think year XXXX, importantly of some into a these

less good off for a and So I a than of is XXXX. impressive think slated really XXXX imaging admittedly

in today the That's very remind my the would over just many about us water should yesterday. the I great see “corporate” share that how be was and helpful. gain customers question last on we that of news cadence guess thinking And just tell you how opportunity be the Maybe time. strategy have to it corporate

cool accounts We excellent some were and on the a did we similar really think really year Heska. PetVetCare of a their point basis have and because a specialty accounts. big We one earned out Centers for time key country's The corporate an of emergency great she's of a and in able fantastic created relationships and this corporate business has is initiative staffed over Heska's a on accounts. with of manager terms in with to we've I I That's opportunity one-by-one for would fact largest couple at some a thing a long validation quality. largest that competitors and in displace period job

some speed But of I folks display really Heska at just is folks the to million mentioned with that these we've PetVetCare quality after main Centers in groups those large biggest other market, think normal That's $XXX year those and operations at every some our looking to the maybe other that. do both think corporate users to demanding of converted I old-fashioned everyday XX% basically looking just reset our looking it Heska say users major to a conversations at then competitors of the over and by two roughly corporate to most group switched accounts and facilities able that do And things. really of we in look Heska's probably look and pursuing these importantly huge were kind virtually extremely well our would able and $XX offering. million have just are these way were XXX with And that range. at happy where started. for I and done more

a opportunity. it's full as X% to share Centers. enter of half you owned And XXX point practices up of out picked great that I which a corporately XXXX you is So know we we've PetVetCare market with roughly again think would we

I for our ability so And our very X% get XXXX. feel in confident target corporate to

a that is PetVetCare The seven-year other out would agreement. thing is I Centers point

share. acquire grow expansion that with those to they really picking and to XX much of As That's up they continue practices to acquire convert Centers PetVetCare more practices. and equivalent representative sales year. hospitals costs acquire they avenue efficiently Heska. able the Say market that a another you're Is as to

So practices compound annual to initial six next of acquisition XX the it's an over with XXX not years XX to efforts. just it's XXX due XXX, practices growth XXX, their

in market to and we're for look to the these in pickups we us The our see be our tends you market, of competitor, these have accounts. there. that so we largest analyzers the competitor what appears well smaller we see at an I important for makeup it's to of share XX% positioned think significant large So when track with initiative corporate were XX% placed what to accounts

So I that helps. hope

queue. Absolutely Kevin. I in Thanks. hope back

Thank you.

comes next B. Our question from Kara with FBR. ahead. go Riley Anderson Please

question-and-answer. you I the Hi, guess for PetVetCare? the some provide a value color to good Heska with agreement previous of I morning. Can the have follow-up on dollar

are hospitals type $XXX,XXX so within $XXXX the I some of a different, and look some which ways couple is they're which year normal to XX hospital each are of group specialty give month When dollar a users. can't I because value be of a emergency you going you their at know and it plus specifics roughly so

care I So out point us lab some think customer broad. it's a the do then they healthier for there related of customers is ownership. are with that of very larger really of reference care point and

a you they that So lab. when they care more you a pick lab than to point up tended do own account doesn't reference corporate reference

buy So we population it's business. may growth run also in I those because above the They they it's think and user of their types do our think healthy. of slightly just the general practices practices.

our So It's usage. I think it's not base. dampening that install definitely user additive to

that. Imaging, acquired can think about annual when piece Heska that's run it against? $X in was million how respect tracking some rate international around the the provide With context to you quarter? it on that I you how you Thank and performed

the In was off. quarter third it substantially

product their of things they we the It's in in so middle didn't see you is want timing. and at had ability that Slate They the aware Hub orders and of some they - did this orders, of to also the shows were Some third our trade these and big in rating shows occurred quarter fourth were for before of the they release Europe. rating as other put And And look they orders rightfully well. and partners some off lot October. September year occur development trade we international in quarter. kick have main a little season with pricing, of off, large a were in not held

dragon So the in international quarter the me. to around third was not quarter. disappointing, totally unexpected turning but see I do fourth a

jump queue. the Thanks. back in I'll

Okay. Thanks.

Canaccord Massaro take we'll ahead. Mark with And Please Genuity. next question go our from

questions. the guys. for Thanks taking Hey

on made. out comments was maybe of some you transparency out provided, quarter, just could believe $X.X appreciate consensus. heartworm Just thinking and then course about you roughly but you below of came in that the roughly the called I Kevin, hoping million launch. push of just X clarify guys you all X the you the I million was roughly you imaging million the OVP, talked I

the maybe shortfall could the occurred to of I'm trying you you maybe push out buckets the the in the guess If impact I where just quarter? really understand rehash think heartworm. just of the

comes so product that heartworm to X market move have two think I I million we a quickly. to the or fairly when mean ability

the that of label, that side have just start like and just which private that it. on, sitting orders, that you boxes for a I on shipping stocking question. in is of can regulatory is we have and partnerships put distribution until currently initiatives Some things is some think we them other preparing But

XX% kind at our outperformance XX%. is to single-digit account it we for in high a that half call first out and mid - I And the think was of of consensus enough business. didn't running this grower domain year probably high

probably was ahead think I as a consensus million well. So

X guys if own it. million a of you it, own million I'll So of

helpful. That's

core blood given, the partially You imaging your willing more degree around new XX% for potentially double-digit on topline by be obviously converting to rental indicated communicate you business. program. growth offset of likely XX% maybe - Would to have your of but to more products, converting confidence growth benefit XXXX the you

how topline? you So feeling double-digit about and XXXX are just generally

of the going I'm not out return to that. do, think year And blood and and anything six, makes year-over-year. teams and improve it. work we're think as your in but of confident It peripheral sense. it's somewhere all lot in in how business, businesses a I It's long-term XX% disappointed imaging It's call in seven work lot so a growth This our logical. think that all heartworm have in I'm all of in engine, core to year really that of the just to like a it's I internally doable. to called Is miss happens, it. range diagnostics We really, confident I'm the kind and that clear we also that's growth, growth. and with very which I XX% to growth just

shot along and So did the how a of absolutely they go is, the but of a on short not It's in in we we to, it shots work. it's more goal the on XX-day you is for up throwing runs and there, bit in work a going to it's period little them expectation out you on got stretch world double-digit in business. quarter. traditionally and wanted keep to And and see get just report sometimes growth then third to we've my XXXX rolling the clock before

about rental could your to above if when helpful, maybe And on half converted or think that additional converting that any or thanks. imaging that? you say that business, are reset book provide the below or you're program, can That's you we you color

of pilot to just and try explain. we the questions, so try the nature thoughtfully. things do try I'll to to Yes, it We

its the year, idea equipment the our is we imaging I going business but didn't to of sales are converting percentage we of our we going really sales candors what the force grow sell a rentals additive. with rental. entered to we The like didn't we you're found amount is certain if all to be I idea behind really capital and found grow, - of of In same really converted. So what that training, and some

pursue So the something and thought was it project to scale I the in maintain enough XXXX, would to unconvinced who it personally somebody that that sales and capital additive, shows and which which something. in which capital want say, it that interesting. the your the into the future want thought I evidence weren't a that turned otherwise. opposed position traction say unusual I convinced does to was be to equipment market of chose idea is a is I is customers publicly to we call into a maybe tried get that rentals rental, that it customers for I'm fourth I you and continue in quarter my that drag it didn't the market equipment as would. would And good all would

ancillary is start think think it valuable a the radiographs And lot sense over then $XX,XXX I customers turns XXX% we're professional rental can pursue a XXX I sale. $X,XXX my and hour make turn who $XX is an doing for radiologist one-time upfront ready than services of until with when mind you to it. we'll services an rental So don't going read behind forward, awful a business. month, or more In a X,XXX place

ideas, point like in return And professional we're build long-term of for sense, makes make for professional of long-term some early agreements return was I equipment these services for so analyzers we future placement out in model some in blood sense? that on a that. as much supplies at where is there placements Is services but

can It just does, on and I last XX.X% beat margins, gross ask my one appreciate that was one I and estimate. if solid

Do greater towards come the in blood might be of where the You're shift the core maybe we seeing to as viewed of is which as at mix think end year? you you your that a end margin. to XX% you higher look lower think XXXX business, can

a scary you're a isn't if XX% model building out number. XXXX For

want I guess would I probably more realistic think - XX%. it's but more. be conservative, than to Mark, I and it's

lower in off So cash in than both of because that flow, growing I don't seen the accelerating our and growing but see it's much trend that's you that margins think growing Imaging faster much base. it's OVP I we've think diagnostics a faster, much faster much larger are our of even which temporary

So it's that which increase, continues a - improves to margins just cemetery gross

the Got color. it, thanks for

welcome. You're

next Sidoti Please question go Jim Company. ahead. And we our & Sidoti will from with take

hear you Can good me? morning. Hi,

you? are How Jim. can We

Couple you. questions. Thank Good. Good.

basis First, lot know for what you're not on I a you can you in of tell XXXX a and rate paying QX tax what of assuming it me be reported think you're that.

it's John. Jim, Hi,

we have of I of get mean low quarter So that a every something we that marking are visibility benefits go don't going out the in what into we're to the lot XX's ordinary. to

always we're low So XX's. the something marking in

the XX-ish if line XX-ish, where in to you're So need up. we range that's

right. Any in the Hurricanes quarter? from All impact Okay. the

take one. I'll that

things call bit Reference and the of Lab have I where a visible. I size. for things I want that think like little more closed major little call to carriers pick simply are It's were that But me just country of who how to businesses it and of a that don't up. company know amounts to feels weak there the out pockets it step quarter. for certain companies drive certainly our

I when the don't great. out So call weather is it

calling out, But keep on yeah pass an going. I don't it probably will just was exact. was So there know but meaningful

quite quarter you would this then to months that's up. three continues ago. and analyzers follow-up quarter you coming you large question of and a purchase, thought it last but down be gone you year, up the same a move asked Okay said Inventory I first questions in bit had it's a because

Jim ready in we higher have as traditionally the QX. QX level imaging where in inventory for get a shows and we the So shows

QX. into down that year So you and trending go move can end see the - into as start a into lot we of

right. Okay. Thank you. All

you Although well launching received Slate you inventory new Hubs and have so when an analyzer products start to you as come products down. you're number those up build know as those element COAG's making who a launch then

Okay.

in QX should we again eighteen? expect QX and then So in number that down of

QX the I go up. and direction it seeing really in Yes, we're as certainly topped start you would other

Right.

you. Thank Okay.

our ahead. will King. with go Westenberg David C.L. take from We question Instructions] Please [Operator next

and the you guys, call good for Hey, and thank taking the very color. all much

in blood corporate diagnostics ask of I a the the can have you in growth going like growth asked get tougher first but XX% rate in XX% you then mean to growth rate So blood year. I rate QX about the and XXXX so diagnostics I a seen last bit in a QX accounts, I'm guys XX% had little one

you sustainable are market that know that definitely are that those about understand as I but sort share base you that and of guys just you now you not larger we that on numbers, to you're growth and Now confidence XX% customers. of Can that? reset much talk XX% diagnostic so realize thinking blood mind boggling growth XX% just the business in in kind about of rate

of Long-term rolled the growth I'm that spend good highly I a rate key that confident think space. portion I did comments prepared and of five I drivers out

at of But not So one. you X% combination least I just it's know pick think up.

I years. install increases price think price base continues that to get is that it over includes called out price your for had within taken We we again major we to have That price of in for installed you that base. protection continue analyze the starting grow the increases subscription. and they two tests some those

we've XX-month why like it I do of generally up comments lot a but it. four three, times the saw the care those members several them. like large I've releases. nice left told to every and already analyzer then a prepared and are sales upgrade again will higher spent Fecal years growth, in got the that pick extend and contracts that you which we things the I so comprehensives renew be margin actual of time And new growth I those got told improves will being part we are and of there in in XXXX renewals. user. A analyzer We've there on baseline you and gases corporate point importantly that So been price for did starting that's have end for have blood place like on when one we we see and

accounts? for competitive made they PetVetCare I'm perfect their drivers were then what you. talk show that of deal the Thank that them bid assuming signed? about that particular you and competition procedure you And like sort that guys, really you can process because PetVetCare corporate you Can process, kick of just the think a that some it the the I'm you and assuming was about talk kind made it you

Yes.

local I sales our handful when stuff about we accounts precision, they the better better, specialists competitors again to became and results greater biggest better for process are level great We staffed in at of converted say explained our think the other kicked he the made already we way. are was is - normal sent think old the with the value, Heska years convert connectivity the obviously largest to rep a corporate that very and economics few performance, a more our and very competitive higher a and users people ago I just demanding really from very should great process process, who this the why do our And but offering. the on it's decision there; bigger and better what off logical because I most and accurate, took two it to fashioned XXX. think like faster, the

was of corporate said a these really it accounts don't didn't bid a that And way. process. go that they checklist, more out really all that find sent It a go send So wasn't and parameters bid of where I way. us your spreadsheet, most the

with practices and I think and chose and good credibility at Heska. and across replicate replicated excited guys the successful working practices their all they business. run have the then super it's a go already wholesale we're how have they better because group. all and champions also the That's guys PetVetCare then look across process. what's they happened. it a They're they centers as within And you smart that They they to try

that so of longer the corporate diagnostics they for a to sort hesitant pain accounts much you a sign I of deals been more Apologies see more then they're know But for as modus or point. what's have diagnostics thought say this changing aggregators saving to call bundling you operandi, Great. movement lot the these and in what consolidators but here, color. question maybe equipment and all days, more Thank predict because sort to a of good maybe about going vendor? one looking be these to at that diagnostic pick And is the you your and can money laboratory idea. consolidators

we the thing. I are the to think benefits guy think smaller same guy. Because what personally and is move happens the I the smaller aggregation

select accurate, individual chemistry owner, to will five and part owner, P&L, go pitches we'll his fund, staff offer All we own an a what hematology. the and which individual and practice make kids' Heska it's that he likeability these profitability own through gets and software their and with way he stuff communication to aggregators, other owner what pulls acquired as more owner people management that why of is owner Heska. his When owner faster, some it's two the benefits We will great might by aggregators technology, and dry one his our that then own the his have. college better, solution it's of individual laser to opposed clinics the of aggregator, an into highlights has benefits business

our started diagnostics get they of cases profitability, and guys to table this the a other folks we owners really conversion running profitability get experience still these lot they And they so raises years on to have because and the that so pitch three of their made why sold our with bought they it's decisions says they the us and make a looking she around it with That's lot with a sales sales corporate guy. pain practice or diagnostics good experience right we guys Heska stuff, lower in and those have meaningful. and And good idea the that getting a individual they do love corporate group best with practice two points, a in we as the in of need place. have of for their why no or spent to before you're XX%, some history. it's side they large They I upwards they the XX% group is practice practices, hey, which first could really he hand on the they're successful get acquired for

I think as the favors to opposed trend So that other us direction.

and very day. great your a of rest Thank have much you guys

Thank you.

ahead. go one from we'll Benchmark. And Please with Raymond more take question Myers

heartworm Kevin, on regulatory you heard you. flow you Have clearance. was lateral that thought say the pending already? I call I submitted the Thank

we've and of dossier the dossier. have actually lot disease The of work. heartworm a and way the We these majority the tests works submitted infectious

You as buckets. I'll I'm have in And understand to not but different it. explain technical, again, effectiveness overly show I it

hardest middle infection you might diagnosing just to worm. if really worm. the bucket the you of bucket population might infection, one patients which general another smallest those have XX and to week, then XX is So XXX a then and infected have worms, you're heartworm in of find have significant last with are XXXX The you to worms bucket got might one

and dossiers come to of picked and larger validate things. dogs test infection. to concerns that waiting they're pull complete the the about the population believe to samples zero that are we that have you this the submitted enough for can with formulation early accuracy from - then we've in that and one actual actual has test you we've animals So up. show is buckets worms through to literally And We and with find, your testing precision worm I because the the those can of find your for easier actually amount but

who make doc generally them, universities acquire sources you from work we other us, worm that find some go folks If one we out that doing of submit one that their but through door, The you final are they're every for can samples the infection. comes piece can't CA. and and and can't finding those

is a run, current delay we on do submitted terms really half very fully actually believe launch see first control. the we'll of of your officially. XXXX product the based we frustrating in of sum But that the So and since that the to the it's out because and total that ability it's

Okay, great. good a answer. very That's complete

it upgrade start in imaging we imaging already products cycle think some the should launching November, fourth shortly sales? the you're the is quarter first cycle, here here about the half event? upgrade XXXX in Can or impacting Regarding this when

the already the did than the We quarter fourth - maybe I a had hoped. quarter. starting pipeline It's stronger with honestly fourth start

good been quarter. there So I think a has the to start

you quarter. very downside sales the once in percentage December. wish, tax holidays The it those and the line, a start could you many to have XX clock of meaningfully get you sometimes in the year, so things of hurry. customer and holidays runs and a vacations the in doing launching out it just and certain is door days starships that lot benefits think and kinds is helps in will you immediate I is your out get and in November of left shipping hit upside all exciting these sometimes backing January first The for you you a and so something out

in I So but an I both. three upswing. the think profitability it's like of don't the see was other do blowout the it in direction and bit imaging, a I first of see on I fourth quarter quarters going year, quarter. be I think to see fourth a a don't And little the do it's for revenue. we as enter drag moving

the and the revenue product? Okay, on timing magnitude quantify opportunity good. Thanks the that taking and for COAG business, help can of you to us

analyzer nice with We POC. same end the XXXX doing thing did a the it's second starter good COAG. with like eliminate mean conversation and just we're the with had element and XXXX of blood we when and great at gas launched the I Yes, XXXX a half same Element and opportunity upswing in a the thing we

segment if It's So every the as look you It's not XXXX, analyzer think segment. I those and XXXX like segment, and think a of peripheral as the where. device followed important other two products the now started chemistry it the a that definitely launches us those at XXXX, I it's bit receiving hematology cycles be up out, portals - - the something and on just teams now It's all rolled to knocking new think and segment it's marketing blood out last I they'll significant. and talk segment, about. being the and gas to gives but teams, so week it's training immunotherapy doors Immunodiagnostic and

good. it's So

Very we quite that How going QX, for good low in expense any and forward? think the can G&A was unusual about G&A factor? expense

and had see I QX, had spending we and So our I we in to quarters of expenses couple credit of standards the us growth last over think in think accounting right also QX opened. compensation plus you've related now some related where line some you to we seen that

bit maybe there, number an of think QX you'll uptick I So directionally a good normal quarter but little us. is target that from a for more see a of that's probably

Okay, very good. Thank you.

no turn our I'd speakers further time. conference are questions at like additional or there to this And back the any to for closing remarks.

analysts Thanks, operator to a say We're XX% also strong to for as table thanks share setting and the work we're which hard the to for on our at like will finish XX and be diluted year. all XXXX. on growth, XX% we're strong earnings on full-year well. working a per XXX the to which I'd XXX shareholders growth, and deliver we hard and Clearly, the call is between think

optimism in data, upgrades, busy software developing Everyone and buyer time sequel, telemedicine market busy line to hospital development the quietly running and to is want and additions margins year new we've and and I molecular, specifically. For in working series new been year interest on hard your We've areas hard and joining I infectious XXXX a our all all international capabilities launched coagulation, and and our the in for and blood next by Heska see growth building corporate which been on really us work at the for Heska activity never and in position again for prospects. thoughtfully some encouraged expansion. Heska in in the we as terms XXXX, diagnostics, look veterinary the by XXXX a the just forward disease, at backed imaging, the I our excited which space, in and and growth, my very PVD to since of all element return XX% in basis for the ground business day. by Thanks early maybe been lines broad growth been for new to imaging a generally range COAG. of growth to entirely a of it's product products, upgrades options improving have value great veterinary and wins, and of and like throughout continue of balls updating of and by progress supported you account our diagnostics we key broad-based heartworm XX% allergy and emphasize, healthy enhanced out just

concludes Thank for conference. participation. you This your today's

now may disconnect. You