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  "docId": "019dd923-622c-750b-8b98-a3d302cd2d9a",
  "docSlug": "2692179b6d0b",
  "documentTitle": "PetIQ, Inc. (PETQ)",
  "authorId": "54_Spruce_Point_Capital",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-04-30 00:00:00",
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  "pageNumber": 74,
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  "notes": "Uses a red arrow to visually connect the rebate figure in the text to the operating income figure in the table.",
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      "kind": "callout",
      "text": "The value of VIP's vendor rebates in FY17 was ~$6M greater than the combined company's total operating income!",
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      "text": "operating income: $15.6M",
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      "kind": "paragraph",
      "text": "We know that VIP received $21.7M in vendor rebates from veterinary pharmaceutical manufacturers in FY17, and passed along some (significant) portion of them to PetIQ. We also know that the combined company's pro forma FY17 operating income was $15.6M. This is $6M less than the total value of VIP's FY17 rebates!",
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      "kind": "paragraph",
      "text": "Given that the rebate structure recently changed, and that Merial has begun to bypass the grey market, we wonder how sustainable these rebates are, and consequently what multiple investors should pay for these earnings.",
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      "kind": "quote",
      "text": "The Company also receives rebates from vendors based on the volume of purchases of inventory, which is included as a reduction of cost of sales when the related inventory is sold and totaled $21,705,176, $8,710,422, and $5,136,899 for the years ended December 31, 2017, 2016, and 2015, respectively.",
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      "kind": "table",
      "text": "Combined PetIQ + VIP, Pro Forma (FY17) Sales, Products, Services, Cost of Sales, Gross Profit, G&A, Operating Income",
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      "kind": "title",
      "text": "Rebates: A Giant Piece Of The Model",
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