{
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  "docSlug": "cce862680d4f",
  "documentTitle": "Heska Corporation (HSKA)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
  "documentKindSlug": "activist-deck",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2021-10-25 00:00:00",
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  "pageNumber": 18,
  "pageCount": 128,
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  "slideType": "expose_contradiction",
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  "density": "dense",
  "nDataPoints": 32,
  "notes": "Uses a 'scil' acquisition as a benchmark to derive implied North American operating expenses.",
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      "kind": "callout",
      "text": "Based on scil's 2018 and 2019 financials, the Company spent an average of 30% of revenue on operating expenses with little variability. If we apply that same 30% to Heska's LTM international revenue, which we know is predominantly scil, then we can calculate implied North American operating expenses.",
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      "kind": "callout",
      "text": "Some analysts have been encouraged by what has been perceived as modest operating leverage at Heska over the past year. However, we show that implied North America operating expense as a percent of revenue has actually increased when stock based compensation is included.",
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      "kind": "callout",
      "text": "Our North American operating expense estimate including SBC represents 45.4% of revenue, and thus an increase of over 180 basis points over pre-scil expense levels in 2019.",
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      "kind": "metric",
      "text": "operating expense as a percent of revenue: 45.4%",
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      "text": "Source: Heska SEC filings and scil financials",
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      "kind": "table",
      "text": "Heska Operating Expense Analysis table showing Revenue, S&M, R&D, G&A, SBC, Acquisition costs, and totals for 2019, LTM, International, and Implied North America.",
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      "kind": "title",
      "text": "We Find That Heska's Recent Operating Leverage Is Not What It Appears",
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      "evidence": "Exposing hidden costs (SBC) to contradict market perception of operating leverage.",
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      "evidence": "The deck presents several contradictions and inconsistencies in Heska Corp.'s financial reporting and business model.",
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