Investor Presentation 2019. Important Disclosure and Safe Harbor Notice. This document and presentation (verbal or written) contains or incorporates by reference forward-looking statements regarding Heska Corporation (“Heska”) and its affiliates, including projections, estimates, forecasts, plans and objectives. Although management believes that expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. In addition, these statements are subject to certain risks, uncertainties and other assumptions that are difficult to predict and may be beyond our control. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, the Heska’s actual results may vary materially from what management anticipated, estimated, projected or expected. The key risk factors that may have a direct bearing on the Heska’s results of operations and financial condition are described in detail in Heska’s periodic reports most recently filed with the Securities and Exchange Commission (“SEC”). Investors are encouraged to consider closely the disclosures and risk factors contained in Heska’s annual and quarterly reports filed from time to time with the SEC. Heska undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable securities laws. Information contained in this document and subsequent and associated verbal presentation speaks only as of the date hereof, is unaudited, and is subject to change. Forward-looking statements can be identified by the use of words such as “expects,” “may,” “anticipates,” “intends,” “would,” “will,” “plans,” “believes,” “estimates,” “should,” and similar words and expressions and as noted “*” in footnotes and other comments. These statements are based on management’s current expectations and beliefs as well as numerous assumptions and estimates concerning future events and are subject to a number of risks and uncertainties. Recipients are cautioned that there is an inherent risk in using past results, including trends, to predict future outcomes, including financial results and perceived customer behavior; do not put undue reliance on forward-looking statements because actual results may vary materially from those expressed or implied. Factors that could affect the business and financial results of Heska generally include, but are not limited to, the following risks related to: reliance on third party manufacturers and developers for its products; the commercialization and development of new products; uncertainties related to attempts to expand into international markets; Heska's ability to measure and predict trends and effectiveness of commercial relationships; future impact of recent business development activity; Heska’s ability to access capital on acceptable terms; Heska's reliance on outside suppliers, which is substantial; competition, which is robust, varied, and well resourced; and the risks set forth in Heska's filings and future filings with the SEC, including those set forth in Heska's Annual Report on Form 10-K/A for the year ended December 31, 2017 and 10-Q ending September 30, 2018. 1
Seriously Fun. Seriously Good Business. 1. Global Animal Healthcare Trends 2. Heska Position and Strategy 2
Integrated Global Animal Health Cycle Positive regulatory, payor, & demographic trends Accelerating industry investment & consolidation 3
Investment Baseline Veterinary Healthcare Veterinary Healthcare is a great (5% - 6% growth) place to be… Humanization of Pets with Global expansion of the trend Family Member Pets need Juvenile, Wellness & Aging care Historically recession resistant 4
Strong Industry Performance through the Cycle Revenue growth evolution over time: IDEXX, Abaxis and VCA IDEXX Abaxis VCA 35% 31% 27% 25% 25% 25% 24% 25% 20% 18% 18% 18% 17% 15% 16% 17% 16% 15% 16% 14% 13% 14% 15% 13% 10% 13% 11% 11% 10% 8% 11% 8% 11% 10% 7% 7% 8% 9% 8% 8% 6% 6% 6% 5% 5% 6% 5% 4% 3% 3% 3% 1% (10%) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 EBITDA margin evolution over time: IDEXX, Abaxis and VCA 24% 27% 26% 24% 21% 22% 22% 22% 22% 23% 19% 23% 21% 22% 23% 21% 20% 23% 24% 22% 23% 23% 19% 22% 23% 22% 21% 21% 21% 21% 21% 21% 18% 20% 20% 20% 20% 21% 20% 19% 20% 19% 19% 19% 18% 19% 18% 17% 17% 14% 10% 9% 5% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Company filings; IDEXX FYE 12/31; ABAXIS FYE 3/31; VCA FYE 12/31; EBITDA calculated as operating income plus D&A; VCA acquired by Mars Inc in September 2017.
Share price performance over time Source: FactSet as of 1/3/2019 1 Animal Health Index includes Zoetis, Phibro Animal Health, Idexx Laboratories, Abaxis, Neogen, Dechra Pharmaceauticals, Virbac, Vetoquinol and VCA. (Abaxis was acquired by Zoetis in July 2018) (VCA was acquired by Mars in September 2017) 2 Pharna Index includes Pfizer, Johnson & Johnson, Merck, Bristol-Myers Squibb, AbbVie and Eli Lilly. 3 Diagnostics/ Point of Care Index includes Alere, Abbott Laboratories, Thermo Fisher, Quidel and Cepheid. (Alere was acquired by Abbott Laboratories in October 2017) 6
Historical multiples evolution (NTM P/E) Averages Since 2002 10-years 5-years 3-years 1-year 40.0x Animal Health Index 22.0x 22.3x 23.9x 24.4x 25.5x 1 Pharma Index 14.7x 13.5x 16.0x 15.9x 15.1x 2 Diagnostics / Point of Care Index 20.8x 17.5x 18.3x 18.9x 21.1x 3 35.0x 30.0x 25.0x 23.0x 20.7x 20.0x 15.0x 14.1x 10.0x 5.0x 0.0x Jan-02 Feb-04 Apr-06 May-08 Jul-10 Aug-12 Oct-14 Nov-16 Jan-19 Source: FactSet as of 1/3/2019 1 Animal Health Index includes Zoetis, Phibro Animal Health, Idexx Laboratories, Abaxis, Neogen, Dechra Pharmaceauticals, Virbac, Vetoquinol and VCA. (Abaxis was acquired by Zoetis in July 2018) (VCA was acquired by Mars in September 2017) 2 Pharna Index includes Pfizer, Johnson & Johnson, Merck, Bristol-Myers Squibb, AbbVie and Eli Lilly. 3 Diagnostics/ Point of Care Index includes Alere, Abbott Laboratories, Thermo Fisher, Quidel and Cepheid. (Alere was acquired by Abbott Laboratories in October 2017) 7
Share price in key pullback periods Share price performance 10/1/2007 – 3/31/2009 Share price performance 9/1/2015 – 12/31/2016 1 1 2 2 3 3 Animal Health Index performance by company Company Returns Company Returns IDEXX Laboratories (35.6%) Virbac (15.3%) Abaxis (24.3%) Vetoquinol (52.6%) Neogen (10.2%) VCA Inc. (46.2%) Dechra Pharmaceuticals 23.8% Source: FactSet as of 1/3/2019 1 Animal Health Index includes Zoetis, Phibro Animal Health, Idexx Laboratories, Abaxis, Neogen, Dechra Pharmaceauticals, Virbac, Vetoquinol and VCA; Left chart excludes Zoetis and Phibro which went public on 8/13/2012 and 3/10/2014, respectively. 2 Pharna Index includes Pfizer, Johnson & Johnson, Merck, Bristol-Myers Squibb, AbbVie and Eli Lilly. 3 Diagnostics/ Point of Care Index includes Alere, Abbott Laboratories, Thermo Fisher, Quidel and Cepheid. (Alere acquired by Abbott Laboratories in October 2017) 8
Investment Baseline Veterinary Diagnostics Diagnostics is the best (7% - 8% growth) place to be…. Diagnostics is a veterinarian major revenue-profit center (+/- 20%) Diagnostics utilization occurs in (+/- 15%) Hospital Pet Visits Hospital Pet Visits are rising (+/- 5%) Diagnostics favored by Veterinarians (Veterinary Licensure Required) New Point of Care Technologies pull Tests to Point of Care Diagnostics Subscriptions Price Lift 4% per Year Diagnostics is the first Spend (security in tight budgets) 9
Integrated Global Animal Health Cycle Multiple Approaches Integration Consolidation 10
(1) Point of Care (2) Reference Lab (3) Single Use (4) Imaging (1) Hospital (2) (1) Pharmaceutical (2) Home Vaccine (3) Telemedicine (4) (3) Therapy (4) Device Mobile (1) Supermarket (2) Premium (3) Prescription (4) Therapy 11
Point of Care & Single Reference Laboratory Use 12
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Puppy Town DrPet Vet Anan Ainuo Chong Fuxin Ringpai National Veterinary 15
(1) Point of Care (2) Reference Lab (3) Single Use (4) Imaging (1) Hospital (2) (1) Pharmaceutical (2) Home Vaccine (3) Telemedicine (4) (3) Therapy (4) Device Mobile (1) Supermarket (2) Premium (3) Prescription (4) Therapy 16
Paws in Key Segments Loveland, Colorado Team: 215 FTE Des Moines Iowa Team: 125 FTE (CCA) Core Companion Animal ( +/- 90% REV / 45%GM)* OVP Vaccines, Pharmaceuticals ( +/- 10% REV / 20%GM)* Companion Animal Diagnostics Production Animal Health Contract Manufacturing Companion Animal Therapeutics Vaccines (Food Animal Health) Biologics and Pharmaceuticals Private Label and Partnerships FTE number and type subject to change. *Historical range approximations; may vary substantially; not forward looking guidance. 17
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