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October 14, 2005

Via EDGAR and FedEx

Securities and Exchange
Commission

Division of Corporate
Finance

450 Fifth Street, N.W. -
Mailstop 6010

Washington, D.C. 20549

Attention:              Jim
B. Rosenberg, Senior Assistant Chief Accountant

Joseph
Roesler, Staff Accountant

Mary
Mast, Senior Accountant

Re:          Heska Corporation

Form 10-K for Fiscal Year ended December 31, 2004

Form 10-Q for Fiscal Quarter Ended June 30, 2005

File No. 000-22427

Ladies and Gentlemen:

Heska Corporation (“Heska” or the “Company”)
hereby responds to the comments of the Staff of the Securities and Exchange
Commission (the “Staff”) set forth in the letter dated August 29,
2005 in connection with the above-referenced reports on Form 10-K and Form 10-Q
(the “Reports”).

For ease of reference by the Staff in reviewing Heska’s
responses to each of the comments, each comment is referred to separately by
the number set forth in the letter from the Staff dated August 29, 2005
and is also repeated prior to the applicable response.

Form 10-K
for the year ended December 31, 2004

Management’s
Discussion and Analysis of Financial Condition and Results of Operations

Critical
Accounting Policies and Estimates

Revenue
Recognition, page 16

COMMENT 1:
We believe that your disclosure related to estimates that reduce
gross revenue such as product returns and other allowances could be
improved.  Please provide us the
following information in disclosure-type format to help us evaluate the
adequacy of your disclosure:

a)     Provide the
nature and amount of each accrual at the balance sheet date and the effect that
could result from using other reasonably likely assumptions than what you used
to arrive

at
each accrual such as a range of reasonably likely amounts or other type of
sensitivity analysis.

b)    Provide the
factors that you consider in estimating each accrual such as historical return
of products, levels of inventory in the distribution channel, estimated
remaining shelf life, price changes from competitors and introductions of
generics and/or new products.

c)     To the extent
that information you consider in b) is quantifiable, provide both quantitative
and qualitative information and discuss to what extent information is from
external sources (e.g. end-customer prescription demand, third-party market research
data comparing wholesaler inventory levels to end-customer demand).  For example, in discussing your estimate of
product that may be returned, consider disclosing and discussing, preferably by
product and in tabular format, the total amount of product (in sales dollars)
that could potentially be returned as of the balance sheet date and
disaggregated by expiration period.

d)    If applicable,
discuss any shipments made as a result of incentive and/or in excess of your
customer’s ordinary course of business inventory level.  Discuss your revenue recognition policy for
such shipments.

e)     Provide a roll
forward of the accrual for each estimate for each period presented showing the
following:

•      Beginning
balance

•      Current
provision related to sales made in current period

•      Current
provision related to sales made in prior periods.

•      Actual
returns or credits in current period related to sales made in current period

•      Actual
returns or credits in current period related to sales made in prior periods,
and

•      Ending
balance.

f)     In your
discussion of results of operations for the period to period revenue
comparisons, provide the amount of and reason for fluctuations for each type of
reduction of gross revenue, such as product returns and other allowances,
including the effect that changes in your estimates of these items had on your
revenues and operations.

RESPONSE:

a.             At both December 31,
2004 and 2003, we maintained an accrual for sales returns and allowances of
approximately $120,000.  During 2004 and
2003, returns of $367,000 and $46,000, respectively, represented approximately
0.7% and 0.1%, respectively, of our Core Companion Animal Health product
revenue.  Through June 30, 2005, our
returns experience is consistent with our expectations at that date, and has
not indicated that our reserve at that date should have been a significantly
different amount.

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We do
not permit general returns of products sold.
Certain of our products have expiration dates.  Our policy is to exchange certain outdated,
expired products for the same product.
At the time of sale, the price to the customer is fixed; the buyer is
obligated to pay us, and the obligation is not contingent on the resale of the
product; the buyer’s obligation to pay us is not changed in the event of theft,
physical destruction or damage to the product; and we do not have significant
obligations to bring about the resale of the product. Such exchanges primarily
occur with our heartworm diagnostic tests and our early renal damage detection
tests.  The purpose of the accrual at
each year end is to reduce revenue for the estimated cost of replacing the
expired product expected to be returned in the future, based on our historical
experience adjusted for any known factors that reasonably could be expected to
change historical patterns, such as regulatory actions which allow us to extend
the shelf lives of our products.  We sell
these products to a large number of individual veterinarians, and have done so
for several years.  The amount of expired
product returned to us is dependent upon the ability of these numerous
veterinarians to use the products in their practice before the expiration date.  To date, the number of returns has not been
significant relative to revenue and has not differed materially from our
expectations.  As such, we believe that
historical information, which results in a relatively narrow band of expected
returns, is the most appropriate basis upon which to estimate our returns. We
do not believe that other reasonably likely assumptions would result in
materially different estimates.

In addition, from time to time, we run promotions
whereby our customers are able to earn rebates.
These programs are straightforward, and at each year end, had ended,
such that the amount of the rebate was known and was not subject to revision
and therefore, no accrual was necessary at the balance sheet date.

Additionally, during fiscal 2004 and through mid-2005,
we ran a promotion with our customers whereby they were able to earn free
future product based upon purchase volumes.
Our reserve for the obligation to provide such free product was
approximately $264,000 at December 31, 2004 and was recorded as a
reduction in revenue and an accrued liability at the time that the customer
made the qualifying purchases.

As such, our disclosure speaks to the estimates that
may be involved during the period reported, as opposed to the amounts reported
at each balance sheet date.

b.             We believe the primary factors to be considered
when estimating these accruals include current and prior period sales volumes,
shelf life/expiration dates of product sold into the marketplace and market
activity including competing products and programs.  Over the past several years, our sales
volumes have not resulted in significant fluctuations in the reserve for sales
returns as the impact of increases in

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volumes
have been offset by an increase in the length of time before our products expire.

c.             We do
not believe there is information available from external sources which would
improve our estimates. Our products are sold only to veterinarians primarily
for use in their clinics including diagnostic instruments and single use
diagnostic tests.  We do not sell
products which are made available via prescription to the pet owner by the
veterinarian which have a right of return.
Our products are used in thousands of veterinary clinics and as such, we
are unable to precisely determine what Heska products remain unused at any
given point in time; however, we believe that we have substantial historical
returns experience to estimate the amount that reasonably could be returned to
us at the expiration date.  We
respectfully submit that our current disclosures, given the dollar amounts
involved relative to our total revenue, adequately discusses our revenue
recognition practices, and the critical estimates and judgments we make when
recording revenue.

d.             We do
not believe that shipments of our products are made in excess of our customers’
ordinary course of business inventory level.
Specifically, we have not engaged in sales practices or promotions that
we believe “stuff the channel” with our products.  We do provide incentives at certain points of
the year.  These promotions have been
ongoing for several years, and at the approximate same times each year, and
returns experience for the applicable products are factored into our
determination of the estimate for returns and allowances.  Our incentive programs do not create unusual
or increased uncertainty around the collectibility of the sales price, the
ownership of the product by the customer and the transfer of the risk of
ownership thereto, or other factors that would require us to modify our normal revenue
recognition policies.

e.             The
Company respectfully submits to the Staff that given the amounts of the
reserves and the activity within them, as discussed in a) above, the additional
information provided by a rollforward would not enhance the reader’s
understanding of the Company’s results of operations to a meaningful degree.

f.              As
noted above, the amount of returns, and the reserve therefore, represents less
than 1% of Core Companion Animal Health product revenue for 2003 and 2004.  As such, fluctuations in the accrual for
returns and allowances have not had a significant impact on our revenue or
results of operations.  Similarly, the
amount of reserves for promotional programs has not had a significant impact on
our revenue or results of operations.

Liquidity, Capital
Resources and Financial Condition

Contractual
Obligations, page 24

COMMENT 2:  We refer to the last paragraph on page 30
of your 2004 Form 10-K where you disclose that several of your commercial
arrangements call for you to pay milestones and

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royalties.  Please clarify for us whether these payments
meet the criteria as a purchase obligation and are included in your contractual
obligations table pursuant to Item 303(a)(5) of Regulation S-K. If they
are not included, tell us your basis for a) excluding them from the table and
b) not providing disclosure to the table informing investors that it excludes
these types of payments and the reasons therefore.  Please refer to Financial Reporting Release
72, section IV.

RESPONSE:

The Company currently has approximately $220,000 of
minimum annual royalties obligations under its licensing agreements.  Of this amount, approximately $170,000 has
been paid through the normal course of business based on sales which
significantly exceed the annual minimums.
The remaining approximately $50,000 of minimum annual royalties have
been paid through a combination of proceeds from product revenue and payment of
the minimum in excess of royalties generated by the sale of product.  Our interpretation of Item 303 (a)(5) and
the definition provided in paragraph (D) to date was that disclosure
should include only purchases of goods and services.  We have viewed royalty payments as neither
purchases of goods nor services and therefore outside the scope of 303 (a)(5).  As the majority of our minimum annual royalty
obligations were being met in the normal course of our business and, given
magnitude of the numbers above, we did not feel this information was material and
merited specific supplemental disclosure in a discussion of our liquidity,
capital resources and financial condition.

We have decided to interpret 303 (a)(5) more
broadly going forward and will include minimum annual royalties in future
presentations of our table of contractual obligations under unconditional
purchase obligations.

Consolidated
Financial Statements

Consolidated
Financial Statements of Cash Flows, page 43

COMMENT 3:  We note from your statement of cash flows
that you have included proceeds from licensing of technology and product rights
and capitalized patent costs as investing activities.  Please tell us your basis for including these
items as investing activities.  Please
cite the authoritative guidance used, including paragraph reference, so we may
better understand your response.  In
addition, please clarify for us in disclosure-type format where the revenue
from licensing of technology and product rights is included in your Statements
of Operations.  Tell us your basis for
the presentation.

RESPONSE:

We have historically entered into two distinctly
different types of transactions involving our technology rights and product
rights and our basis of presentation in our statement of cash flows of the
proceeds from such transactions is dependent upon the type of transaction.  For

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those
licensing arrangements where Heska grants the purchaser full ownership rights
of the technology and/or the products (but retains the obligation to ensure
that patents are maintained), the cash received is recognized in investing
activities for cash flow purposes as we have transferred all rights to the
asset to the purchaser, in a manner similar to a sale.  We believe that this is consistent with the
guidance of paragraph 16 of SFAS 95.

The
second type of transaction involves the licensing of rights to use technology
or market specific products but which does not result in the transfer of
ownership or impair our ability to use the remaining rights to the technology
for our own purposes.  Because we view
such transactions as a component of our core business operations, we recognize
the proceeds received from such transactions as cash flow from operations., and
note that SFAS 95, paragraph 21 notes that “operating activities generally
involve . . . providing services.”

We
capitalize certain costs, primarily payments to third-party law firms for
patent prosecution, related to the patented technology underlying a variety of
long-term licensing arrangements.  We own
a portfolio of patents not currently utilized in our product development or
manufacture.  Several entities have paid
upfront licensing fees to utilize the technology supported by these patents in
their own product development efforts.
Because we believe that we have an obligation to defend the underlying
patents, we defer the revenue associated with these long-term agreements and
the direct and incremental costs of prosecuting the patents that support the
agreements.  The capitalized expenditures
are included in cash used for investing activities since, like a capital
expenditure to improve a building or add a piece of equipment, the cost is a
necessary investment into a productive asset to maintain [protect] our future
revenue process.  We note that SFAS 95,
paragraph 17(c) states that investing activities include “Payments at the
time of purchase or soon before or after purchase to acquire property, plant,
and equipment and other productive assets
[emphasis added].”

The
revenue from the licensing of technology and product rights is included in the
caption “Research, development and other” which is shown after “Total product
revenue, net” in the Statement of Operations.
Included in that caption is revenue from research and development
projects for third parties, amortization of deferred up front fees from
long-term licensing arrangements, royalties and any licensing fees received
which do not require deferral.  We
believe it is in the normal course of our business operations to utilize our
research strengths to provide services to third parties, develop and license
our own technologies, to maintain the validity of patents underlying technology
and produ