{ "docId": "019dd923-622c-750b-8b99-1e32ee1ceb49", "docSlug": "cce862680d4f", "documentTitle": "Heska Corporation (HSKA)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2021-10-25 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 34, "pageCount": 128, "prevPage": 33, "nextPage": 35, "slideType": "preempt_rebuttal", "function": "preempt_rebuttal", "density": "dense", "nDataPoints": 0, "notes": "Includes a red flag icon as a visual metaphor for risk.", "elementsJson": [ "headline_text", "callout_box", "comparison_table" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-1e32ee1ceb49/34", "deckHref": "/decks/019dd923-622c-750b-8b99-1e32ee1ceb49", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-1e32ee1ceb49.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-1e32ee1ceb49#slide-34", "components": [ { "bbox": null, "kind": "callout", "text": "We believe the risk of a major OEM going direct is real.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-3f3c-7011-a9a6-66106c89ada8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.09, "x": 0.01, "y": 0.17 }, "kind": "image", "text": "Red flag icon", "attrs": null, "subkind": "illustration", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1baa78fd-3e33-40f7-88eb-63dc0dd92c0b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.88, "x": 0.11, "y": 0.17 }, "kind": "paragraph", "text": "We believe the risk of a major OEM going direct is real. Not only did this occur to scil in Europe prior to its acquisition by Heska, but we believe there is a meaningful risk that FUJIFILM, one of Heska's two largest suppliers, may eventually go direct in the U.S. market. FUJIFILM has made clear that its Healthcare segment is highly strategic and expected to be a key future growth driver, particularly relative to other segments such as Business Innovation (copiers and printers for corporate offices) and Imaging (cameras and projectors). Furthermore, in a relatively rare move for a Japanese company, Fuji has made two billion dollar acquisitions in the U.S. to bolster its healthcare business specifically in this market, Hitachi Medical Systems and Sonosite. As part of our research, we spoke with several Fuji healthcare products distributors in the U.S., and at least one acknowledged the possibility of FUJIFILM switching to direct sales to bypass Heska. We believe Heska investors fail to acknowledge this risk, which we believe would have a material adverse impact on Heska should it occur.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "82bacb66-26cc-4c4c-bf0e-15496a6dda6c", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“Fuji has acquired Hitachi Medical Systems and Sonosite in the U.S., each for a billion dollars or more. They are very serious about the U.S. market. They have the diagnostic expertise, and they find the veterinary market very interesting. It wouldn't surprise me if they decided to go direct in the U.S. That kind of thing happens in this industry.” — FUJIFILM Medical Products Distributor", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-3f3c-7011-a9a6-6b082cb2ac43", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.1, "x": 0.04, "y": 0.76 }, "kind": "source-note", "text": "Source: Interview", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b7a0c8a4-b900-40bc-bcc8-cd3b5d35aa2c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.98, "x": 0.02, "y": 0.49 }, "kind": "table", "text": "Could FUJIFILM Bypass Heska and Go Direct? Spruce Point: \"Do you believe FUJIFILM would consider transitioning to direct sales for veterinary products in the US?\" FUJIFILM Medical Products Distributor: \"Fuji has acquired Hitachi Medical Systems and Sonosite in the U.S., each for a billion dollars or more. They are very serious about the U.S. market. They have the diagnostic expertise, and they find the veterinary market very interesting. It wouldn't surprise me if they decided to go direct in the U.S. That kind of thing happens in this industry.\"", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8e9993b6-fc0c-479f-a9c9-a7dd617856fe", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.65, "x": 0.31, "y": 0.04 }, "kind": "title", "text": "We Believe There Is A Real Risk That FUJIFILM, A Major Supplier, Could Move To Direct Sales In The U.S.", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "de066ad4-7237-4295-81ec-6884257c0219", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "antagonist-introduction", "slug": null, "matchId": "6fadf452-b361-49f6-8651-6b9b35a1e7cf", "evidence": "Frames Fujifilm as a threat/villain to the company's business model.", "confidence": 0.8 } ], "arcBeats": [ { "to": 50, "from": 11, "beatId": "412174ed-5484-439a-aff3-7a3e556cebff", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "The Struggle", "beatSlug": "overcoming-monster-the-struggle", "evidence": "The deck presents an analysis of Heska Corp.'s financial performance, competitive position, and business model.", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }