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  "docSlug": "2692179b6d0b",
  "documentTitle": "PetIQ, Inc. (PETQ)",
  "authorId": "54_Spruce_Point_Capital",
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  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-04-30 00:00:00",
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  "pageNumber": 31,
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  "notes": "Uses tax return screenshots as evidence of lower historical profitability.",
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      "kind": "callout",
      "text": "How did PETQ get so profitable?",
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      "text": "2009 Tax Return",
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      "text": "2010 Tax Return",
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      "kind": "metric",
      "text": "Operating Margin: 8.1%",
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      "kind": "paragraph",
      "text": "As discussed, PetIQ demonstrates unusually high margins for a drug distributor of any kind – veterinary or human. We wonder how it has been able to maintain such profitability levels. Interestingly, from W.T.F. tax returns disclosed during one of the suits brought against the company by a former veterinarian business partner, we observe that, prior to 2011, the company posted margins much more in line with those of other drug distributors. We recognize that PetIQ is now a much larger business, and that it may enjoy some level of operating leverage. However, we find it interesting that company profitability was less atypical of drug distributors until, under new CEO Christensen, it began to build non-arms-length relationships with third-party veterinary drug vendors - which, according to Farrens' allegations, were used to flatter True Science's financials.",
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      "text": "Operating Margin Comparison Table",
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      "kind": "title",
      "text": "W.T.F. / True Science / PetIQ Margins Were In Line With Industry Before Vendor Relationships Formed",
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      "evidence": "Uses historical tax documents to contrast with current high margins to imply financial manipulation.",
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