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Heska organization (HSKA) Q1 2019 profits name Transcript

Logo of jester cap with thought bubble.graphic supply: The Motley idiot.

Heska employer (NASDAQ:HSKA)Q1 2019 salary CallMay. 7, 2019, eleven:00 a.m. ET

Contents:
  • prepared Remarks
  • Questions and answers
  • call contributors
  • organized Remarks:

    Operator

    respectable day and welcome to the Heska agency First Quarter 2019 profits call. modern day conference is being recorded.

    at present, i need to show the conference over to Mr. Jon Aagaard. Please go forward, sir.

    Jon Aaggard -- Director of Investor members of the family

    thank you and decent morning, everyone. Welcome to Heska business enterprise's income demand the primary Quarter of 2019. i'm Jon Aagaard, Director of Investor family members for Heska. prior to discussing Heska's first quarter 2019 results, i would like to remind you that during the direction of this call they may additionally be sure forward-looking statements concerning future routine or future fiscal efficiency of the enterprise. They need to warning you that one of these ahead-looking statements are according to their present beliefs and expectations and contain widely used and unknown hazards and uncertainties, which may cause exact effects and efficiency to be materially distinct from that expressed or implied by these forward-searching statements.

    components that could cause or might make contributions to such adjustments are particular in writing in places, together with this morning's revenue unencumber and Heska organisation's annual and quarterly filings with the SEC. Any ahead-looking statements speak simplest as of the time they're made and Heska doesn't intend and chiefly disclaims any duty or intention to replace any ahead-looking statements to reflect routine that take place after the time such remark became made. they have with us this morning. Kevin Wilson; Heska's Chief executive Officer and President; Catherine Grassman, Heska's Chief monetary Officer; and Jason Napolitano, Heska's Chief operating Officer and Strategist. Mr. Wilson and Ms. Grassman will give details surrounding the effects said and should open the call to questions.

    at this time then, it is my pleasure to show the call over to Kevin Wilson, Heska's CEO and President. Kevin?

    Kevin S. Wilson -- Chief executive Officer and President

    hi there, thanks, Jon. decent morning, each person. nowadays we're pleased to file an excellent first quarter. It continues to be in keeping with their full-12 months outlook. These effects are described in more element during this morning's free up and i encourage you to study it. earlier than they get started this morning on the details, i would want to take a minute to congratulate Catherine Grassman on her new promoting to Chief financial Officer of Heska this week. Catherine has been a brilliant chief and a senior member of my group for the past couple of years, most lately as their Chief Accounting Officer, and that i'm super completely happy to have her officially now during this elevated function. So, congratulations Catherine. yes, decent job.

    Now for brand new consequences. Their year has started off strongly. state-of-the-art results met or a bit of passed their estimates in nearly all key areas. main the way was 13.8% growth in Lab Consumables and their maximum number of Heska factor of Care Lab reset subscriptions because the middle of 2016. active subscriptions, subscriber retention charges, months beneath subscription, and minimum contract subscription cost; all have been based on my goals for the quarter and for the 12 months. Commercially, purchasers replied smartly to their new six month Free time period crusade for consumables and shipping with qualifying new and renewing subscribers receiving six months free after which carrying on with to benefit from Heska's superior efficiency and price for an additional six years. Early placement consequences are solid and utilization traits better than ordinary minimums in the early months of this application.

    We count on that these tendencies will comply with via and increased utilization over the life of these agreements can be had which are above their extra traditional minimum CSV stages. All in all the teams carried out splendidly for shoppers in a really competitive aspect of care lab area and that i'm pleased with their work. moving to their corporate account setting up efforts. whereas there's nonetheless a great deal work to do, they are progressing positively with all of their money owed and are generally in accordance with their goals for 2019. They noticed installations from every of their magnificent corporate partners in the first quarter; including Ethos, Pathway, and PetVet Care centers; and we're positive for the stability of the year that they will proceed their progress. i'm pleased with the robust work of all of their corporate set up teams and their continuing success in this very competitive section of the market.

    relocating on to their product launches scheduled for the starting of 2019, i'm comfortable to report that we're on the right track. As expected, they expanded the utility of their latest family unit of analyzers via launching new assessments all over the primary quarter and on into the 2nd quarter. Progesterone checking out for the aspect i is launched and the reception has been fabulous amongst clinicians that focal point on breeding healthcare. also within the quarter, they launched the new eWrap configured Plus Panel, which is their second most used panel that runs on their factor DC and high volume DC5x chemistry structures. Early response is fairly nice for this eWrap configuration because it is more convenient and quicker to use in bigger volumes with efficiency at a pretty good rate. and eventually, for their aspect POC Blood gasoline platform. their BUN test has now been introduced to the only finished test card to meet an important and long-standing request from their optimum extent specialists and clinicians.

    With each and every of these new offerings, we're proud to proceed to make investments to make Heska know-how greater useful more commonly to greater clinicians and (inaudible) and we're inspired that the response to each of those new menu expansions has been in shape and enthusiastic. They agree with that these new test menu expansions will boost utilization and pride amongst their thousands of existing users and should additionally serve to appeal to new consumers to Heska from the competition. On the overseas front, Heska Australia is up and operating in point of Care Lab Diagnostics. The group is proficient and in area, operational systems are coming online, and we're excited to have on schedule a handful of localized Heska reset subscriptions now signed up. here's an important milestone and we're happy with their younger Australian team's fulfillment.

    relocating to Europe, Heska's February acquisition of Optomed in France is closed. the integration is progressing well and preparations for launching Optomed endoscopy items in North america and Heska aspect of Care Lab Diagnostics into France and broader European markets are continuing. near-term contributions from these initiatives are predicted to be small in 2019 and growing to be in 2020. On the brand new product front and with reference to their announced new product launches, point i+ and point RC persevered to be targeted for early limited liberate in June and whole market unlock late in the third quarter of 2019. point i+ is a crucial unlock for Heska domestically and internationally whereas element RC is targeted and tied to their European growth efforts. We're excited and anxious to look each of those new structures attain their commercial launch part and momentum is effective and building toward this aim.

    a bit extra out on the calendar for subsequent year is their vital factor UF urine and fecal analyzer platform. Their analysis and building investments are showing outcomes and growth continues positively with a few milestones now met, critical records now conventional, and key selections made. With this growth and updated repute, they continue to goal an early restrained unencumber in the 2d quarter of 2020. here is a big and critical challenge for Heska and they aim to get it appropriate as they invent a primary mover solution to a big and important problem for veterinarians and their sufferers throughout the globe. Now whereas dangers round genuine timing and charges are inherent in initiatives equivalent to these; in line with the latest repute and progress of these initiatives, they stay positive for meeting their timetables and they proceed to strongly trust out there possibility and feasibility of each and every of those items. As I wrap up my organized feedback, I just want to again factor out how excited we're to be well into the 2019 and 2020 cycle. it be been a lot of work getting right here and now it's getting fun as they push challenging to hit their stride for Act 2.

    2019 continues to be the busiest and most productive duration in Heska's heritage. they are concurrently broadening their proprietary solutions, growing their subscriber base in a really competitive market, increasing their geographical footprint, and scaling their groups to create a multiplier effect in 2020 and past. while there's all the time risk and uncertainty in reaching for these desires, 2019 is off to a superb beginning and they remain upbeat about their options. Underpinning these efforts is a turning out to be pet healthcare market with favorable demographic, cost, growth, and funding traits. Into this suit environment, their problem is a similar and it is still clear. number one, win with Heska reset factor of care lab subscriptions in opposition t a really robust set of competitors. quantity two, bring on transformative items just like the new element i+, factor RC chemistry, and aspect UF urine and fecal structures whilst they expand the geography into which they promote.

    number three, extra wholly transition to these core proprietary highly differentiated diagnostics that are developed, manufactured, and sold directly with the aid of Heska to circulate Heska it to the desirable of the price introduction and innovation chain. And number 4, allocate capital for product building, in-house manufacturing of their core diagnostics, group enlargement, acquisitions, joint ventures, and licensing opportunities. they have lots of work to do and we're challenging at work doing it, however the competitors is equally tough at work against us. And while the competitors is large, buttoned up, and fabulous; i suspect that their house is not zero sum and that there could be many winners now not only one. but make no mistake, if they do the challenging things smartly, for my part it's primarily quite simply a query of time. Heska's in it to win and we're dedicated to doing the challenging issues to relaxed that win as a result of it is what creates price, can provide returns, positively adjustments lives, upsets getting older champions, and makes the combat fun.

    Now with that, i could flip the name over to Catherine to move over the details of the quarter and following Catherine's feedback, they will open up the call to answer your questions. Catherine?

    Catherine Grassman -- vice chairman, Chief Accounting Officer

    Thanks, Kevin, and first rate morning, everyone. the primary quarter of 2019 became in response to their up to now communicated full-yr outlook. in comparison to the first quarter of 2018, consolidated internet profits turned into $29.5 million, a 9.9% decrease. revenue in Core associate Animal or CCA section was $24.7 million for the primary quarter of 2019, a 7.eight% reduce over $26.eight million within the first quarter of 2018. income from factor of Care Laboratory items grew 17% in the first quarter of 2019 compared to the primary quarter of 2018 driven by way of powerful sales of -- sales increase of consumables of 13.8%, which is according to their full-yr outlook consumable increase cost of 12% to 17%, and favorable placements under revenue type leases. Offsetting these increases had been anticipated reduce revenue from earnings of prescribed drugs and vaccines of fifty three.6% especially Tri-coronary heart, a heartworm preventative manufactured for Merck, and reduce point of care imaging product income of 9.4%.

    As anticipated, income from their other Vaccines and pharmaceuticals or OVP segment declined 19.4% to $4.eight million in the first quarter of 2019 as compared to the first quarter of 2018 as a result of decrease construction and transport -- shipments regarding contract manufacturing settlement.

    Consolidated gross margin within the first quarter of 2019 changed into 42.5% as in comparison to forty.6% in the first quarter of 2018. within the first quarter of 2019, gross margin in their CCA phase grew 140 basis points to forty eight.9% as in comparison to the primary quarter of 2018 due to favorable pricing of aspect of Care Lab and imaging product. OVP section margin remained flat at 9.4% for both intervals presented as a result of favorable product mix on reduce quantity. operating income reduced 104% to a loss of approximately $seventy five,000 as in comparison to the primary quarter of 2018. The reduce in working revenue is as a result of accelerated compensation cost in promoting and advertising because of increased revenue drive and as expected, expanded research and construction expenses regarding new product innovation.

    Depreciation and amortization changed into $1.3 million for the primary quarter of 2019 compared to $1.2 million for the first quarter of 2018. inventory-based compensation was $1.2 million for the primary quarter of 2019 compared to $1.1 million within the first quarter of 2018. The business's positive revenue tax fee for the first quarter of 2019 was a tax price advantage of about 1700% in comparison to a tax expense improvement of 14.9% for the first quarter of 2018. each durations include tax improvement of about $1 million from inventory-primarily based compensation activity. internet earnings attributable to Heska agency for the first quarter of 2019 turned into $0.eight million or income of $0.10 per diluted share, a sixty two.2% lower over $2.2 million or $0.28 per diluted share within the first quarter of 2018. As of March thirty first, 2019 Heska enterprise had $9.1 million in money compared to $13.four million as of December 31st, 2018. cash stream from operations become $0.7 million for the primary quarter of 2019 as compared to $four.2 million for the first quarter of 2018.

    involving knowledge questions concerning their 2018 Investor Day outlook for 2020 and 2022, we're within the technique of updating these fashions. As followers of Heska already be aware of, Heska is fast moving and has a few variables that affect long-time period projection. on the grounds that may fifteenth of 2018, items have moved, introduced, and been eliminated while new researching has befell. for example seeing that may also 15th of 2018, they made the strategic resolution to forgo their 2019 stand-by myself urine analyzer and their 2020 stand-on my own sequel analyzer with a purpose to speed up by way of two years their single system urine and sequel analyzer into 2020. They additionally now have greater visibility than they did in may additionally of 2018 into things just like the fee have an impact on and roll-out geographies of international markets as well because the expected efficiency of a few of their non-core items offered via third-events corresponding to heartworm preventive.

    As such, we're reviewing and refining their mannequin to mirror these and different adjustments. while I consider buyers and analysts who comply with Heska have generally adjusted their expectations and model to mirror this figuring out, in my new position as CFO i am fully evaluating their tactics surrounding forward-searching -- ahead-searching tips and i intend to give a extra complete update by way of the conclusion of this 12 months related to the lengthy-term outlook they provided lower back on can also 15th of 2018 in addition to their strategy going forward. before I flip the call over for questions. i would like to take the chance to thank Kevin, the Board of directors of Heska enterprise, my colleagues, my teammates, and my family unit for his or her continued help and that i'm honored to serve as Heska's Chief financial Officer. I appear forward with extraordinary enthusiasm to serving the business and all of its stakeholders in this position.

    With that, we'd like to open up the demand your questions.

    Questions and solutions:

    Operator

    thank you. (Operator guidance) they can now take their first query from Mark Massaro from Canaccord Genuity. Please go ahead, your line is open.

    Mark Massaro -- Canaccord Genuity restricted -- Analyst

    whats up guys. Thanks for the questions. And Catherine, congrats on the promoting to CFO.

    Catherine Grassman -- vice chairman, Chief Accounting Officer

    Thanks, Mark.

    Mark Massaro -- Canaccord Genuity restrained -- Analyst

    My first query, it be encouraging to see the replace involving your colossal neighborhood debts so i used to be hoping you might perhaps give a bit bit greater colour around how the installations are going and definitely wanted to verify that you've initiated shipments to PetVet Care centers?

    we've. So, installations came about to PetVet Care right through the duration. each of the installations were swap outs of a aggressive placement and that i think we're working through the logistics with that. So, it become an encouraging quarter.

    it really is wonderful. I wager, Kevin, a question for you. i know that you have made some development with your European operations, you known as out Australia, you may have completed a pleasant job completing the acquisition of the enterprise in France. are you able to just speak a little bit more widely concerning the abilities of working with a bigger partner in a greater in all probability significant enlargement to Europe and beyond?

    Kevin S. Wilson -- Chief executive Officer and President

    yes, when it comes to a distributor associate, what we're finding is -- well, I think other folks have found that there isn't any one European market. or not it's no longer the United European states. And so what we're discovering is there are mighty champions in Germany, who might be somewhat different than the effective champions in France and not to make gentle of it, but I feel they fought about 800 wars through the years. So, there are only potent cultural changes and economic transformations. So, the thought that there is a pan-European single partner and single entry isn't -- is never as interesting to us as partnering with powerful companions in areas like Germany, Scandinavia, Spain, France, which is why they entered France via an acquisition. So, it really is what their pondering is currently. and i do suppose they spoke of on may fifteenth of 2018 as they viewed some of these strategic discussions that they might start moving ahead on their own and doing greater centered country and place category of partnerships and i suppose it's what we're doing and they like how it's turning out. So they feel it should be would becould very well be a little bit slower, but they love it.

    Mark Massaro -- Canaccord Genuity confined -- Analyst

    tremendous. after which I respect the comments about the lengthy-time period aims. I wager maybe for Catherine, without doubt there are lots of moving items as you outlined which have modified because final might also. a type of alterations, might be this is just me, I believe would be an expanded center of attention on taking in more of the R&D and some of the manufacturing in-condo. So, is it fair to consider that moreover probably the timing of new product releases, a different factor to the update would consist of most likely spending and clearly flowing down to say operating margin?

    Catherine Grassman -- vp, Chief Accounting Officer

    yes, that is a good point absolutely. It should be greater finished as they spoke of incorporating manufacturing capabilities as you outlined. sure, greater finished all encompassing.

    Mark Massaro -- Canaccord Genuity limited -- Analyst

    ok. and may I ask on where your sales force stands? And that will be my final question. Thanks.

    Kevin S. Wilson -- Chief executive Officer and President

    I do not think the number -- the web number has moved a lot within the quarter. So I are looking to say or not it's correct around a hundred and ten, but I do not believe it moved a good deal within the quarter. there have been a couple of additions and a few losses, simply sort of herbal sales force churn.

    Mark Massaro -- Canaccord Genuity confined -- Analyst

    extraordinary. it really is it for me. Thanks, guys.

    Kevin S. Wilson -- Chief govt Officer and President

    Thanks, Mark.

    Operator

    thanks. they will now take their next question from Ben Haynor from Alliance global partners. Please go forward.

    Benjamin Haynor -- Alliance world partners -- Anayst

    good morning, guys. And congrats, Catherine, on the promotion..

    Catherine Grassman -- vice president, Chief Accounting Officer

    Thanks, Ben.

    Benjamin Haynor -- Alliance global companions -- Anayst

    So, simply thinking in regards to the Free term crusade that you just guys have undertaken, can you discuss -- a little about what you see there once the six-month time is up? I suggest i might think about it be possibly just a little of a way of teaching purchasers that there might also now not be as plenty pushback from sufferers if they are able to push diagnostics. Is that a part of the method and they use at an improved cost and then that better fee continues once the six-month term is up or how do you see that flowing through?

    Kevin S. Wilson -- Chief executive Officer and President

    sure. I imply I believe you've got acquired it. They get extra encouraged to simply make the most of checking out when it be clinically essential. It just turns into a part of their daily pursuits in all probability a little bit greater than it had been in the past. They nonetheless compete with outdoor reference labs and that i think every so often they lose sight of that, however anything for you to do to pull trying out from sending it out and waiting compared to doing it at the factor of care; once in a while this is now not actually a clinical decision, it be a addiction and it be the ancient adage it takes eight weeks to exchange a addiction. if you can trade that addiction amongst all of the workforce; this is technicians, it truly is all of the veterinarians speaking with the pet owner; then I feel the long-time period tendencies are respectable. The program is also decent with reference to surroundings genuine utilization over the -- over the period of the paid time period that means as an alternative of deciding on an arbitrarily low minimal subscription per 30 days, they now have precise information on what the clinic in reality generates beneath usual utilization patterns and then that definitely flows via contractually for the time period of the contract and that they're quite comfortable with it and we're quite at ease with it since it's according to the annualized information from the six-month free length.

    So, there have been a number of advantages. after which candidly, or not it's just -- it's an aggressive application. So I -- straight up I suppose it helps us convert aggressive accounts and it additionally helps us renew shoppers who're expiring this year and subsequent yr since it's a bit bit of found cash for them. in the event that they're chuffed with Heska and they wish to renew, we're tickled to give them six months free which is kind of a -- type of a pleasant bonus that they didn't see coming as part of their P&L and perhaps they can make other investments of their health facility in the event that they continue with whatever that they have been satisfied with for the ultimate 5 years and we're tickled to do it because they relaxed a happy present customer for an further six years. So, or not it's been -- it be been effective.

    Benjamin Haynor -- Alliance global partners -- Anayst

    top notch. that's very advantageous. after which just an additional for me and then i could start back in queue. On the contracts that you have signed thus far, the apartment reset contracts in Australia, do they also have that Free term as neatly and are those guys getting the aspect RC or are they getting the element DC? What form of instrument equipment are they slated to get usually?

    Catherine Grassman -- vice president, Chief Accounting Officer

    The -- their Australian consumers are using their element DC as part of their suite of analyzers. after which to answer your first query, no, at the moment they are approaching the market in a similar way as they did right here earlier just a few years ago. And -- however are coming near it more in five-year terms versus the six-yr terms there simply to introduce Heska to the market.

    Kevin S. Wilson -- Chief executive Officer and President

    Which is what they began right here. So, we're simply following the roadmap that they adopted here and or not it's encouraging that canines with Australian accents are blissful to get their chemistry in addition to these with American accents, it's decent.

    Benjamin Haynor -- Alliance international partners -- Anayst

    it truly is awesome. okay, thanks a lot guys.

    Operator

    thank you. Their next query comes from Andrew Cooper from Raymond James. Please go ahead, your line is open.

    Andrew Cooper -- Raymond James -- Analyst

    hi there guys. Thanks for the questions. simply a pair from me. I wager first, the 13.8% on the factor of Care Lab Consumables relative to the e book. I bet as they feel concerning the quarter having in reality good placement quantity and considering concerning the pacing of the 12 months, is there any rationale that that is not accelerating given sort of the incremental placements that you make -- made and that you can proceed to make throughout the year so they can also come to be nearer to the bigger end of that range as adverse to the lessen or any pondering around that could be positive?

    Catherine Grassman -- vice chairman, Chief Accounting Officer

    I think that here's a very reflective quantity inside that range and i say that as a result of whereas placements are effective, providing six months free time period does dampen that increase expense over the preliminary duration -- over the total period of the contract. So, i would not propose to the greater end of the latitude at this point.

    Andrew Cooper -- Raymond James -- Analyst

    k. it really is useful. after which is there any sort of incremental colour you might give us on the place we're in the US process just form of qualitatively of what stage of the procedure or anything else like that?

    Kevin S. Wilson -- Chief government Officer and President

    For which system. i am sorry?

    Andrew Cooper -- Raymond James -- Analyst

    Of construction for the UF?

    Kevin S. Wilson -- Chief executive Officer and President

    Oh, the urine and fecal, sure. they have now put out milestones and that i feel I especially be aware a slide early in the year at JPMorgan's conference and we're on schedule with that. So, we're moving towards the place they are able to flip alpha units in the second half of this 12 months and we're relocating towards kind of an early unencumber -- pre-market unencumber within the 2nd quarter of subsequent 12 months. So, I think we're on schedule. there is lots of relocating elements, however each time they circulation ahead, i'm in reality extra encouraged as opposed to less. So, I consider we're anywhere they spoke of they have now been publicly and i suppose they reiterated that this morning.

    Andrew Cooper -- Raymond James -- Analyst

    okay. after which closing one from me simply on variety of the -- it's been touched on a bit bit, but bringing in-house more of the manufacturing. Has that gotten truly under manner at the facility and what's the elevate seem like there and the way are they thinking about that in the course of the direction of the year ?

    Kevin S. Wilson -- Chief government Officer and President

    So I believe in the beginning they have a crew in Des Moines this is evaluating firstly developing construction line for factor i+ examine playing cards. part of the benefit there is some of these assessments playing cards in the future are destined to be USDA regulated tests in any adventure so they need to be manufactured in a USDA facility such as their Des Moines plant. So, we're early tiers. They have not deployed capital. We're getting their budgets collectively for what CapEx appears like to get a construction line setup for factor i+ playing cards and that could be their first challenge.

    Jason A. Napolitano -- Chief operating Officer, Chief Strategist

    sure. here's Jason. I feel we're prone to follow the model they adopted during the past, which is to do the initial manufacturing in Colorado in this case with the aid of their associate and once they have obtained probably the most kinks labored out of the gadget, then transfer it on a bigger scale to Des Moines. So, probably the initial product that you'll see should be produced by means of their associate right here in Colorado. And over time then they will transfer confidently as we're getting the better volumes to Des Moines and pickup those efficiencies.

    Andrew Cooper -- Raymond James -- Analyst

    okay. So greater -- greater seemingly the greater have an impact on coming in 2020 and beyond as adversarial to anything type of within the lower back half of the '19?

    Jason A. Napolitano -- Chief operating Officer, Chief Strategist

    I believe it is reasonable.

    Kevin S. Wilson -- Chief govt Officer and President

    sure, it's how I see it as smartly.

    Andrew Cooper -- Raymond James -- Analyst

    ok. it really is it for me. appreciate it.

    Kevin S. Wilson -- Chief government Officer and President

    Thanks, Andrew.

    Operator

    thank you. Their next question comes from Bruce Jackson from The Benchmark. Please go ahead, your line is open.

    Bruce Jackson -- The Benchmark business -- Analyst

    Thanks for taking my query. with reference to the element i+, is it going to have a full menu at launch or are you going to roll-out the tests in incremental after which in case you may tell us what the roll-out agenda is for these exams? that might be constructive.

    Kevin S. Wilson -- Chief government Officer and President

    yes. So firstly it'll have their T4 and their Cortisol verify, which characterize roughly 90% of the trying out on the existing element i platform. So, these are essentially the most crucial exams to roll out. presently following that, we're focused on TSH and a handful of alternative tests. they now have posted a restrained menu. What's exciting in regards to the element i+ is the menu is -- it's very, very expansive in terms of its means. So they have -- they now have published a confined piece of that menu including issues like heartworm, lyme, ehrlichia, anaplasma regulated exams, and then unregulated checks like TSH and Cortisol and progesterone, and things like that are unregulated tests.

    however they intended that menu -- a part of the motive to make that funding, that menu expansion will ensue for years -- years and years and it be really just a remember of assay construction and capital expenditure. So, it be time and capital. Most assays will run someplace between 500,000 and 1 million to strengthen an assay and will run any place from six months to fifteen months. And so they take a seat and examine market needs and necessities and capital allocation and maybe you do one or two a yr, perhaps you do six or 12 12 months just depending on what you suppose the market possibility is and what the capital allocation needs are.

    Bruce Jackson -- The Benchmark enterprise -- Analyst

    ok, exquisite. and then with reference to the Optomed product line in Europe when it comes to bringing some of those over to the us, when do you feel you could have a few of these able to launch and what are the primary ones that you're going to convey over?

    Kevin S. Wilson -- Chief government Officer and President

    i may speak about the method first. So, we've had imaging executives go to France and sit with the product groups and get proficient on the products. They've picked certain scopes that they feel in response to the information and the customer utilization in Optomed's French customer base, which are most advantageous perfect for launch here within the US. i am no longer prepared to show precisely which of these products. And there are samples now here in the united states which are being evaluated by product managers and everything is in the method of being we'll say Americanized. You have to get a hold of pricing brochures, requirements, those styles of issues. So, it truly is where we're within the procedure. robotically, or not it's extra of a product administration challenge than anything else.

    Bruce Jackson -- The Benchmark business -- Analyst

    very well. that's very beneficial. thanks.

    Operator

    thanks. (Operator guidelines) they will now take their subsequent question from David Westenberg from Guggenheim Securities. Please go forward, your line is open.

    David Westernberg -- Guggenheim Securities -- Analyst

    hi. Thanks for taking my query and congratulations to Catherine. So on the fecal, urine analyzer in terms of competition, are you seeing any probably patents being filed or trademarks which are suggesting that possibly rivals are engaged on the identical exact kind of project?

    Kevin S. Wilson -- Chief govt Officer and President

    No, I imply they have not seen trademarks and when it comes to patent, i'm blind to any patents. when you are, send them on over. I think we're forward on this task because they have been concentrated on this formula to solve the difficulty considering that the beginning. So, they have not focused on a reference -- significant reference lab primarily based variety of antigen primarily based examine. They concentrated on an imaging answer considering the fact that the starting. but once again, it be aggressive and that i certainly not recognize -- I on no account be aware of what a few of their large competitors are doing, but i am unaware of anybody racing us to the conclude line nonetheless it wouldn't basically count to us. They feel their launch is soon., They think it be probably a first-mover competencies, but if not or not it's a very very early mover skills into an unserved market. So, they think decent about the place we're.

    David Westernberg -- Guggenheim Securities -- Analyst

    excellent thank you. after which super to look the R&D tick up, you comprehend I all the time like that. but is most of that associated with the urine fecal analyzer? and type of what i'm asking is where should they expect to type of normalize run expense any longer? i am saying that additionally with you are going to be including menu to the immunoanalyzer as well so.

    Kevin S. Wilson -- Chief govt Officer and President

    yes. I think urine and fecal is probably -- probably driving it. I suppose the factor i+ is additionally driving it. So rolling out these assays and finalizing the new analyzer construction, I consider those are doubtless the two larger components of R&D. once analyzers get finalized, I consider you do have a leveling off. in terms of ongoing R&D fee, they are able to replace that really with their 2020, 2022 replace. and you've got more visibility in that once the analyzer platforms are baked, then it actually is how aggressive do you are looking to get to circulation assessments forward or do you are looking to circulation them lower back, which you could manage the calendar a bit bit greater. but the race to the beginning line with analyzers is what it's, you need it to go as fast as viable but nonetheless have as near ultimate of a product firstly line as that you can get.

    David Westernberg -- Guggenheim Securities -- Analyst

    thanks. And only one last query. lots of pharma organizations are looking to do more novel items, no matter if it's, biologics, immunotherapies, et cetera, et cetera. you've got capabilities of building fairly novel therapeutics or kind of products at your Iowa facility. So do you foreshadow perhaps some advantage relationships in the future or things that you can do out of that facility?

    Kevin S. Wilson -- Chief govt Officer and President

    now they have performed contract manufacturing for really smartly-funded wise individuals out of that facility for forty years and i feel that has the potential to continue. they have a team there it is very respectable at it. however candidly, we're relatively laser focused on their announced tasks. we've business construction attempting to find those kinds of issues, but their leading center of attention is their diagnostics products. Did they lose you?

    David Westernberg -- Guggenheim Securities -- Analyst

    o.k., i am carried out. thanks.

    Kevin S. Wilson -- Chief govt Officer and President

    Thanks David. respectable to consult with you.

    Operator

    thanks. There aren't any extra questions in the cell queue at this time. i want handy the call lower back over to you, Mr. Wilson, for any additional or closing remarks.

    Kevin S. Wilson -- Chief executive Officer and President

    well, thanks all and sundry for logging into their call and in your consideration to Heska. I believe they began the yr off strongly. We're tremendous inspired and or not it's in reality enjoyable to enter this 2019-2020 phase where we're geared toward launching some definitely enormous new items and geographies. So, I seem ahead to speakme to you in about 90 days to replace you on their growth for the primary half. And until then, thanks for following us and we'll talk to you quickly. Thanks. Bye.

    Operator

    this may conclude trendy convention name. thank you all in your participation. You may additionally now disconnect.

    period: 38 minutes

    call individuals:

    Jon Aaggard -- Director of Investor family members

    Kevin S. Wilson -- Chief executive Officer and President

    Catherine Grassman -- vice president, Chief Accounting Officer

    Jason A. Napolitano -- Chief working Officer, Chief Strategist

    Mark Massaro -- Canaccord Genuity restrained -- Analyst

    Benjamin Haynor -- Alliance international companions -- Anayst

    Andrew Cooper -- Raymond James -- Analyst

    Bruce Jackson -- The Benchmark enterprise -- Analyst

    David Westernberg -- Guggenheim Securities -- Analyst

    extra HSKA evaluation

    All earnings name transcripts

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