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  "documentTitle": "PetIQ, Inc. (PETQ)",
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  "presentationDate": "2019-04-30 00:00:00",
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  "notes": "The slide uses red boxes to highlight negative gross profit, operating profit, and operating cash flow figures.",
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      "kind": "callout",
      "text": "Spruce Point estimates that the new wellness center buildout could burn over $200M of cash over the next five years, and more thereafter.",
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      "text": "New Center Operating Cash Flow Estimate: -$200M",
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      "text": "We model annual wellness center revenue more realistically at $300K per center at maturity – about 50% of management's estimate of $640K, but, generously, at 150% of the revenue target implied by Merial's estimated visits per store (just under $200K), and in line with Banfield's vet-adjusted revenue estimates, even though we view the independent vet clinic described by Merial as the better comp for PetIQ wellness centers. Also generously assuming that ~82.5% of store COGS are variable costs, we estimate that PetIQ's new wellness centers will not achieve break-even operating profit until FY23, and that associated cash flow will remain strongly negative throughout the build-out period.",
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      "text": "Note: Wellness center openings and unit economics modeled on a quarterly basis. Per-center sales adjusted for anticipated ramp-up period. Centers reach maturity at 13 months.",
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      "text": "Wellness Center Rollout: Spruce Point Estimates",
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      "kind": "title",
      "text": "Wellness Center Rollout A Long-Term Drag Under More Reasonable Assumptions",
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