I just wanted to remind readers that there are some assumptions in there that make the model as unrefined as a stalk of raw sugar cane is to a bottle of rum. I just wanted to first illustrate how an annuity with perpetually increasing payments is valued, discounting at an equity market rate of return. I'm not saying this particular model presents a refined way to look at a company, as I explained that the model reflects no operating leverage in the business when there is indeed hefty operating leverage in the business model. I go, asking them what they've spent on their pets in the past and what sort of price increases they'd countenance in the future. I have to consider, however, that people's reactions to questions of that sort are not reliable data.
People regularly answer polls in one way and then act in a contrary manner.
Plus, I can't assume this as a condition of competition that holds up. Non-affiliated veterinarians would probably not raise their prices at this rate, and the competitive gulf would widen. Not that customers would leave VCA at the drop of a hat, but if given a reason to do so, it would be much more likely to seek out other providers. Bottom line, people act in strange ways when it comes to healthcare. Expectations of the level of service in relation to the price paid are, I believe, irrational.