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  "documentTitle": "PetIQ, Inc. (PETQ)",
  "authorId": "54_Spruce_Point_Capital",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-04-30 00:00:00",
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  "pageNumber": 11,
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  "notes": "The slide contrasts Street estimates with Spruce Point's own adjustments, specifically focusing on the impact of Non-GAAP add-backs on EBITDA and leverage ratios.",
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      "text": "PetIQ is more levered than it would otherwise seem, which will amplify its inevitable share price decline once investors recognize that the business won't hit its targets and will continue to burn cash.",
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      "text": "EV / Adj EBITDA: 42.6x",
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      "text": "PetIQ trades at handsome valuation on the popular belief that its margins – already substantially higher than industry averages – are sustainable and have room to expand, and that its targeted revenue growth of ~15% (already walked back from 20%) is within reach. We find both of these outcomes highly unlikely. Further, PETQ's valuation is inflated by liberal Non-GAAP adjustments which draw no pushback from sell-side analysts. We find that many of management's Non-GAPP add-backs represent important and unavoidable costs associated with its growth strategy which, as such, should not be adjusted out of earnings. Consequently, PetIQ is more levered than it would otherwise seem, which will amplify its inevitable share price decline once investors recognize that the business won't hit its targets and will continue to burn cash.",
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      "text": "Source: Company financials, Bloomberg consensus, Spruce Point adjustments and estimates",
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      "text": "Cap structure and valuation metrics table comparing Street and Spruce Point estimates.",
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