{
  "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": 56,
  "pageCount": 128,
  "prevPage": 55,
  "nextPage": 57,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "dense",
  "nDataPoints": 0,
  "notes": "Uses a red flag icon to signal a warning/contradiction. Directly quotes 10-K disclosures to undermine the company's narrative.",
  "elementsJson": [
    "headline_text",
    "callout_box",
    "data_table",
    "paragraph"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b99-1e32ee1ceb49/56",
  "deckHref": "/decks/019dd923-622c-750b-8b99-1e32ee1ceb49",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b99-1e32ee1ceb49.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-1e32ee1ceb49#slide-56",
  "components": [
    {
      "bbox": {
        "h": 0.09,
        "w": 0.96,
        "x": 0.02,
        "y": 0.17
      },
      "kind": "callout",
      "text": "As a distributor and white label reseller, Heska does not control its own product destiny. Moreover, Heska’s consumables subscription growth depends upon the placement of instruments and ancillary services, where we believe the Company is poorly positioned.",
      "attrs": null,
      "subkind": "primary",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "2cd11ada-e223-4459-a7cb-ec2933a3654b",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "callout",
      "text": "Moreover, we struggle to comprehend the market's willingness to ascribe a SaaS revenue multiple to a company that neither developed or owns the product it is selling.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd953-3f3c-7011-a9a8-a9e01bcd72f9",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.25,
        "w": 0.96,
        "x": 0.02,
        "y": 0.62
      },
      "kind": "paragraph",
      "text": "Heska’s consumables revenue depends upon its ability to place instruments, which requires product differentiation and effective sales reach. However, we believe that Heska is purely a distributor and has minimal scale and sales firepower relative to industry leader IDEXX Labs. Moreover, we struggle to comprehend the market’s willingness to ascribe a SaaS revenue multiple to a company that neither developed or owns the product it is selling. This type of risk, and the implications for a disrupted revenue stream, is exactly why SaaS companies achieve higher multiples.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "fb3ec399-d3c2-4d8b-978f-c2af65237c36",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "quote",
      "text": "All of our Point of Care laboratory and other non-imaging instruments and consumables are supplied by third parties, who typically own the product rights and supply the product to us under marketing and/or distribution agreements...A loss of, or disruption in, the supply of consumables we are selling to an installed base of instruments could substantially harm our business. — Heska 2020 10-K",
      "attrs": null,
      "subkind": null,
      "toolName": "Authority citation",
      "toolSlug": "authority-citation",
      "confidence": null,
      "componentId": "019dd953-3f3c-7011-a9a8-ac8e3a8354f5",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.03,
        "w": 0.15,
        "x": 0.02,
        "y": 0.95
      },
      "kind": "source-note",
      "text": "Source: Heska 2020 10-K",
      "attrs": null,
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "baa8a4f0-cf62-4add-a316-482fed048db7",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.22,
        "w": 0.96,
        "x": 0.02,
        "y": 0.35
      },
      "kind": "table",
      "text": "Not Developed Internally: All of our Point of Care laboratory and other non-imaging instruments and consumables are supplied by third parties... Dependent on Instrument Placements: Unless we are able to find an alternate supply...",
      "attrs": null,
      "subkind": "data",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "12b6db1e-732b-4a65-840a-844bcb1eba58",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.12,
        "w": 0.65,
        "x": 0.31,
        "y": 0.03
      },
      "kind": "title",
      "text": "Investors Want To Believe Heska’s Consumables Business Is SaaS-Like; We Believe It’s Not",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "3d4184db-1818-42ad-abf6-4103cd817b8a",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.04,
        "w": 0.96,
        "x": 0.02,
        "y": 0.28
      },
      "kind": "title",
      "text": "Heska’s Disclosure on Subscription Consumables",
      "attrs": null,
      "subkind": "subtitle",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "8cff6f65-e1c0-4d9b-8e54-de50f7dfb093",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "ceo-quote-contradiction",
      "slug": null,
      "matchId": "d5fd886c-0210-4891-8471-812df6208abb",
      "evidence": "Uses company's own 10-K disclosures to contradict the market's SaaS valuation thesis.",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 128,
      "from": 51,
      "beatId": "4e43434d-b2d5-4e85-8876-a8ed1db53557",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "The Victory",
      "beatSlug": "overcoming-monster-the-victory",
      "evidence": "The deck concludes with a strong sell opinion and a call to action for investors.",
      "position": 2,
      "confidence": 0.8,
      "parentBeatName": "Turn",
      "parentBeatSlug": "turn"
    }
  ],
  "loops": [
    {
      "to": 70,
      "from": 50,
      "name": "Cost Of Inaction",
      "slug": "27-cost-of-inaction",
      "bestFor": "Urgent budget requests, compliance, risk mitigation",
      "matchId": "5757e4f8-7cdf-47a2-9b16-5ff0d9fc9db3",
      "evidence": "The deck presents a thorough analysis of Heska Corp.'s financials and business model, highlighting several red flags.",
      "position": 1,
      "objective": "The cost of inaction for investors is significant, as Heska Corp.'s stock price may decline.",
      "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point",
      "confidence": 0.6,
      "description": "Quantify what happens if the audience does nothing"
    }
  ],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}