>It's even simpler -- the manufacturers need to match distributor claims for rebates against their sales to the distributor. No "proof of purchase," no rebate. If the manufacturers are this stupid, it may be time to short them! <
Yes, I agree. You would think they would pay very close attention to somethng like that.
It's even simpler -- the manufacturers need to match distributor claims for rebates against their sales to the distributor. No "proof of purchase," no rebate. If the manufacturers are this stupid, it may be time to short them!
and you have better figures?
Even an extra 5% margin will mean a 50 cent/shr cut in profits.
THC started off small, one hospital, one doc, one illegal push in extra surgeries, and bamm, the whole thing blewup to a full blown medicare extra charges.
There is something fishy in this stock, it tanks in a strong tape, gotta tell you something is up; and we all know what is really going on here.
>The process is actually pretty simple to track. You do not submit rebates on purchases made by the secondary dist. <
I can understand that. However, you would have to keep really close tabs on every single piece of your inventory or keep each batch from different sources separate to know which qualified for rebate and which didn't.
That's why I am saying this can be viewed mostly as an internal controls and accounting issue unless each piece of inventory is clearly identified.
The real trouble for ABC is no one has an idea how much of the current earnings is due to these illegal churns.
ABC said it has only 2% of its biz related to this churn, but c'mmon, 2% of a 45 billion biz is about ONE BILLION dollars.
If the illegal churn gives ABC an extra 10% margin in profits, that's 100 Million extra bucks.
With about 110 Million shrs outstanding, the illegal profits could be as serious as 1 dollar/shr.
Take that one dollar extra profits out, ABC's p/e no longer looks good rleative to the rest of the group.
Initiallym I want to take a dip in this name, but after the debacle in THC, I no longer consider any DOJ< FBI investigations as no biggie, especially will low margin biz like ABC.