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  "documentTitle": "Heska Corporation (HSKA)",
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  "authorName": "Spruce Point Capital Management",
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  "presentationDate": "2021-10-25 00:00:00",
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  "notes": "The slide uses a combination of financial data and excerpts from SEC filings to undermine the strategic rationale of the acquisition.",
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      "kind": "callout",
      "text": "scil was actually a distributor for Abaxis, the animal health diagnostic equipment company acquired by Zoetis in 2018 and now a major Heska competitor.",
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      "text": "Our research and analysis indicates scil has a poor track record of growth, operates at very low gross margins, and suffered the loss of a major customer shortly before the deal closed. Although these issues are seemingly priced in (at 1.4x revenues after a $15 million post-announce price cut), we question the strategic logic and financial impacts.",
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      "text": "scil revenue declined at a -1% CAGR from 2014 to 2019 during its ownership by Henry Schein and Covetrus. Moreover, the business only grew 1% in 2020 despite the supposed trend toward Covid-driven pet ownership.",
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      "kind": "paragraph",
      "text": "Excerpt from scil Transaction Definitive Agreement: Key Supplier(s) means GE Healthcare, Fujifilm, [***], Horiba ABX, Samsung, [***], Siemens Healthcare, [***], Anvajo, [***] and Abaxis (in each case, including their Affiliates and subsidiaries).",
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      "kind": "paragraph",
      "text": "scil animal care GmbH is a German-domiciled equipment distributor with operations in France, Spain, Italy, and Canada that was acquired from Covetrus (CVET), the animal health spin-off from Henry Schein as part of a Reverse Morris Trust transaction with Vets First Choice in 2019. scil was previously acquired by Henry Schein in March 2015.",
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      "kind": "paragraph",
      "text": "Excerpt from Henry Schein 2015 10-K: On March 31, 2015, we completed the acquisition of scil animal care company GmbH (\"scil\"), a specialty distributor of animal health laboratory and imaging diagnostic products and services to veterinarians primarily in North America and Europe. scil had annual sales in 2014 of approximately $83 million. As a result of this acquisition, we recorded $3.5 million of initial goodwill.",
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      "text": "On March 31, 2015, we completed the acquisition of scil animal care company GmbH (\"scil\"), a specialty distributor of animal health laboeatory and imaging diagnostic products and services to veterinarians primarily in North America and Europe. scil had annual sales in 2014 of approximately $83 million.",
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      "text": "scil Historical and Implied Revenue Analysis",
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      "kind": "title",
      "text": "scil animal care, The Largest Transaction, Raises Numerous Red Flags",
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