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Heska cuts ties to Cuattro LLC in $8.2 million deal

Software ownership will move to Heska Imaging in a cash-and-stock transaction.

Heska cuts ties to Cuattro LLC in $8.2 million deal
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Veterinary diagnostics company Heska Corp. will pay $2.75 million in cash to wrap up a business relationship with Cuattro LLC, a maker of digital imaging systems used in human medicine.

The deal, expected to close by year’s end, includes 54,763 shares of Heska common stock, raising the total value to $8.2 million.

The agreement calls for a subsidiary, Heska Imaging, to purchase from Cuattro the software that powers Heska imaging equipment. The transaction also terminates license and supply agreements.

Heska acquired majority control of Cuattro Veterinary, now Heska Imaging, in 2013 and purchased the remainder from Cuattro LLC more than two years later. Heska CEO and President Kevin Wilson and his family own Cuattro LLC.

“We have received investor feedback advising it would be best for us to eliminate the related party obligations, expenses, balances and reporting associated with Cuattro since 2013,” said Scott Humphrey, a Heska board member. “The transactions address these concerns and are in the best interest of our stockholders. We believe the transactions will eliminate distractions and allow us to more strongly focus on our collective success in 2019 and beyond.”

The Cuattro veterinary brand name is not going away.

“We have been migrating to the Cuattro brand and model name for our small animal solutions, placing Heska in front of it to bring the brand family fully under Heska and to make it consistent with the blood diagnostics lines,” a spokesman said. “Practically speaking, this will look like Heska Cuattro digital radiography, with Cuattro being the brand/model name.”

The multimillion-dollar transaction is good for Heska’s bottom line.

“The software asset is now owned versus licensing at approximately $3,500 to $4,500 per digital radiography [unit] sold,” the spokesman said.

“The working software is now ours for future development and full integration across product lines. The transaction lowers costs across the board, improves margins, shortcuts R&D and turns what was an expense into an owned asset. We are also eliminating the risk of losing the product and [intellectual property] in four to five years, when the agreement was set to end.”

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