Segment Product Revenue

Total product revenue for the fourth quarter of 2008 was $15.1 million, down 23% from $19.7 million in the fourth quarter of 2007. For the year ended December 31, 2008, total product revenue was $80.3 million, down 1% from $80.8 million in 2007. Heska Corporation's business is comprised of two reportable segments - Core Companion Animal Health and Other Vaccines, Pharmaceuticals and Products. Product revenue from these segments is as follows:

Core Companion Animal Health This segment includes revenue from the Company's diagnostic instruments and supplies as well as single use, point-of-care tests, vaccines and pharmaceuticals, primarily for canine and feline use. In the fourth quarter of 2008, this segment generated product revenue of $13.4 million, down 22% as compared to $17.1 million in the fourth quarter of 2007. For the year ended December 31, 2008, this segment generated product revenue of $67.0 million, up 2% from $65.9 million in 2007.

Other Vaccines, Pharmaceuticals and Products This segment includes revenue from private label vaccine and pharmaceutical production, primarily for cattle but also for other animals such as small mammals. In the fourth quarter of 2008, this segment generated product revenue of $1.7 million, down 34% as compared to $2.6 million in the fourth quarter of 2007. In 2008, this segment generated product revenue of $13.3 million down 11% from $14.9 million in 2007. Results for the year ended December 31, 2007 include approximately $1.6 million in revenue recognized in the first quarter upon receipt of a payment for product previously shipped and "take-or-pay" minimums for 2005 and 2006 which previously had not been paid as part of a now settled dispute with United Vaccines, Inc. ("United"), a former customer.

Research, Development and Ot
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