0001628280-23-005700 | 10-K | XBRL Viewer

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Cover Page - USD ($) $ in Millions	12 Months Ended
Cover Page - USD ($) $ in Millions	Dec. 31, 2022	Feb. 28, 2023	Jun. 30, 2022
Document Information [Line Items]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-38163
Entity Registrant Name	PetIQ, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	35-2554312
Entity Address, Address Line One	230 E. Riverside Dr.
Entity Address, City or Town	Eagle
Entity Address, State or Province	ID
Entity Address, Postal Zip Code	83616
City Area Code	208
Local Phone Number	939-8900
Title of 12(b) Security	Class A Common Stock, $0.001 par value
Trading Symbol	PETQ
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Public Float			$ 456.8
Documents Incorporated by Reference	DOCUMENTS INCORPORATED BY REFERENCE We intend to file with the Securities and Exchange Commission, not later than 120 days after the close of our fiscal year ended December 31, 2022, a definitive proxy statement or an amendment to this report filed under cover of Form 10-K/A containing the information required to be disclosed under Part III of Form 10-K.
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Central Index Key	0001668673
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		28,986,307
Class B Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		244,540

Audit Information	12 Months Ended
Audit Information	Dec. 31, 2022
Auditor Information [Abstract]
Auditor Name	KPMG LLP
Auditor Location	Boise, ID
Auditor Firm ID	185

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 101,265	$ 79,406
Accounts receivable, net	118,004	113,947
Inventories	142,605	96,440
Other current assets	8,238	8,896
Total current assets	370,112	298,689
Property, plant and equipment, net	73,395	76,613
Operating lease right of use assets	18,231	20,489
Other non-current assets	1,373	2,024
Intangible assets, net	172,479	190,662
Goodwill	183,306	231,110
Total assets	818,896	819,587
Current liabilities
Accounts payable	112,995	55,057
Accrued wages payable	11,512	12,704
Accrued interest payable	1,912	3,811
Other accrued expenses	7,725	11,680
Current portion of operating leases	6,595	6,500
Current portion of long-term debt and finance leases	8,751	8,350
Total current liabilities	149,490	98,102
Operating leases, less current installments	12,405	14,843
Long-term debt, less current installments	443,276	448,470
Finance leases, less current installments	907	2,493
Other non-current liabilities	1,025	459
Total non-current liabilities	457,613	466,265
Equity
Additional paid-in capital	378,709	368,006
Accumulated deficit	(162,733)	(114,525)
Accumulated other comprehensive loss	(2,224)	(684)
Total stockholders' equity	209,924	252,826
Non-controlling interest	1,869	2,394
Total equity	211,793	255,220
Total liabilities and equity	818,896	819,587
Class A Common Stock
Equity
Common stock value	29	29
Class A treasury stock, at cost, 373 and 0 shares, respectively	(3,857)	0
Class B Common Stock
Equity
Common stock value	$ 0	$ 0

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
Common stock, shares outstanding (in shares)	29,000,000
Class A Common Stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock authorized (in shares)	125,000,000	125,000,000
Common stock, shares, issued (in shares)	29,348,000	29,139,000
Treasury stock, common, shares outstanding (in shares)	373,000	0
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock authorized (in shares)	8,401,521	8,402,000
Common stock, shares, issued (in shares)	252,000	272,000
Common stock, shares outstanding (in shares)	252,000	272,000

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Total net sales	$ 921,513	$ 932,528	$ 780,051
Total cost of sales	711,850	746,135	644,863
Gross profit	209,663	186,393	135,188
Operating expenses
Selling, general and administrative expenses	182,561	170,521	138,375
Goodwill impairment	47,264	0	0
Operating (loss) income	(20,162)	15,872	(3,187)
Interest expense, net	27,374	24,696	22,807
Loss on debt extinguishment	0	5,453	0
Other (expense), net	(130)	(1,763)	(680)
Total other expense, net	27,244	28,386	22,127
Pretax net loss	(47,406)	(12,514)	(25,314)
Income tax expense	(1,214)	(3,869)	(60,413)
Net loss	(48,620)	(16,383)	(85,727)
Net loss attributable to non-controlling interest	(412)	(416)	(3,072)
Net loss attributable to PetIQ, Inc.	$ (48,208)	$ (15,967)	$ (82,655)
Net loss per share attributable to PetIQ, Inc. Class A common stock
Basic (in dollars per share)	$ (1.65)	$ (0.57)	$ (3.36)
Diluted (in dollars per share)	$ (1.65)	$ (0.57)	$ (3.36)
Weighted average shares of Class A common stock outstanding
Basic (in shares)	29,159	28,242	24,629
Diluted (in shares)	29,159	28,242	24,629
Product
Total net sales	$ 800,305	$ 825,395	$ 725,705
Total cost of sales	606,548	646,402	584,401
Operating expenses
Goodwill impairment	0
Service
Total net sales	121,208	107,133	54,346
Total cost of sales	105,302	$ 99,733	$ 60,462
Operating expenses
Goodwill impairment	$ 47,264

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Statement of Comprehensive Income [Abstract]
Net loss income	$ (48,620)	$ (16,383)	$ (85,727)
Foreign currency translation adjustment	(1,553)	(65)	363
Comprehensive loss	(50,173)	(16,448)	(85,364)
Comprehensive loss attributable to non-controlling interest	(425)	(417)	(3,049)
Comprehensive loss attributable to PetIQ	$ (49,748)	$ (16,031)	$ (82,315)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income (loss) and other comprehensive income (loss), attributable to noncontrolling interests. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities
Net loss	$ (48,620)	$ (16,383)	$ (85,727)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation, amortization of intangible assets and loan fees	35,468	39,300	27,483
Goodwill impairment	47,264	0	0
Loss on debt extinguishment	0	5,453	0
Loss (gain) on disposition of property, plant, and equipment	438	(1,183)	(238)
Stock based compensation expense	11,363	9,428	9,170
Deferred tax adjustment	599	3,487	59,708
Termination of supply agreement	0	0	7,801
Other non-cash activity	(385)	233	164
Changes in assets and liabilities
Accounts receivable	(4,137)	(11,197)	(31,652)
Inventories	(46,297)	1,283	(17,846)
Other assets	1,093	(1,380)	556
Accounts payable	58,546	(12,131)	17,435
Accrued wages payable	(1,225)	2,194	1,424
Other accrued expenses	(6,083)	4,663	7,121
Net cash provided by (used in) operating activities	48,024	23,767	(4,601)
Cash flows from investing activities
Proceeds from disposition of property, plant, and equipment	0	5,132	442
Purchase of property, plant, and equipment	(11,973)	(31,270)	(22,392)
Purchase of Capstar and related intangibles	0	0	(96,072)
Net cash used in investing activities	(11,973)	(26,138)	(118,022)
Cash flows from financing activities
Proceeds from issuance of convertible notes	0	0	143,750
Payment for Capped Call options	0	0	(14,821)
Proceeds from issuance of long-term debt	59,000	642,568	837,675
Principal payments on long-term debt	(66,600)	(597,071)	(838,073)
Payment of financing fees on Convertible Notes	0	0	(5,884)
Tax distributions to LLC Owners	0	(70)	(47)
Principal payments on finance lease obligations	(1,493)	(1,926)	(1,965)
Payment of deferred financing fees and debt discount	0	(7,656)	(550)
Tax withholding payments on Restricted Stock Units	(875)	(937)	(595)
Stock repurchase	(3,857)	0	0
Exercise of options to purchase class A common stock	115	13,426	9,274
Net cash (used in) provided by financing activities	(13,710)	48,334	128,764
Net change in cash and cash equivalents	22,341	45,963	6,141
Effect of exchange rate changes on cash and cash equivalents	(482)	(13)	43
Cash and cash equivalents, beginning of period	79,406	33,456	27,272
Cash and cash equivalents, end of period	101,265	79,406	33,456
Supplemental cash flow information
Interest paid	26,404	19,189	19,402
Net change in property, plant, and equipment acquired through accounts payable	509	735	279
Finance lease additions	59	1,191	2,019
Net change of deferred tax asset from step-up in basis	0	3,348	0
Income taxes paid, net of refunds	359	418	130
Accrued tax distribution	0	7	(434)
Issuance of note for termination, settlement, and asset acquisition agreement	0	0	17,487
Purchase of intangible assets from note issuance	$ 0	$ 0	$ (9,686)

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Accumulated Deficit	Accumulated Other Comprehensive Loss	Additional Paid-in Capital	Non-controlling Interest	Class A Common Stock	Class A Common Stock Common Stock	Class A Common Stock Class A Treasury Stock	Class B Common Stock	Class B Common Stock Common Stock
Beginning balance at Dec. 31, 2019	$ 328,310	$ (15,903)	$ (1,131)	$ 300,120	$ 45,196		$ 23	$ 0		$ 5
Beginning balance (in shares) at Dec. 31, 2019							23,554,000			4,752,000
Beginning balance (in shares) at Dec. 31, 2019								0
Increase (Decrease) in Stockholders' Equity
Exchange of LLC Interests held by LLC Owners (in shares)							1,712,000			(1,712,000)
Exchange of LLC Interests held by LLC Owners	0		105	15,725	(15,830)		$ 2			$ (2)
Payment for capped call share options	(14,821)			(12,803)	(2,018)
Accrued tax distributions	434				434
Other comprehensive income	363		340		23
Stock based compensation expense	9,170			7,921	1,249
Exercise of options to purchase common stock (in shares)							395,000
Exercise of options to purchase common stock	9,274			9,274
Issuance of stock for vesting of RSU's, net of tax withholdings (in shares)							50,000
Issuance of stock vesting of RSU's, net of tax withholdings	(595)			(595)
Net loss	(85,727)	(82,655)			(3,072)
Ending balance at Dec. 31, 2020	246,410	(98,558)	(686)	319,642	25,983		$ 26	$ 0		$ 3
Ending balance (in shares) at Dec. 31, 2020							25,711,000			3,040,000
Ending balance (in shares) at Dec. 31, 2020								0
Increase (Decrease) in Stockholders' Equity
Exchange of LLC Interests held by LLC Owners (in shares)							2,768,000			(2,768,000)
Exchange of LLC Interests held by LLC Owners	0		66	23,531	(23,597)		$ 3			$ (3)
Net increase in deferred tax asset from LLC Interest transactions	3,348			3,235	113
Accrued tax distributions	(7)				(7)
Other comprehensive income	(65)		(64)		(1)
Stock based compensation expense	$ 9,428			9,109	319
Exercise of options to purchase common stock (in shares)	583,000						583,000
Exercise of options to purchase common stock	$ 13,426			13,426
Issuance of stock for vesting of RSU's, net of tax withholdings (in shares)							77,000
Issuance of stock vesting of RSU's, net of tax withholdings	(937)			(937)
Net loss	(16,383)	(15,967)			(416)
Ending balance at Dec. 31, 2021	255,220	(114,525)	(684)	368,006	2,394		$ 29	$ 0		$ 0
Ending balance (in shares) at Dec. 31, 2021							29,139,000		272,000	272,000
Ending balance (in shares) at Dec. 31, 2021						0		0
Increase (Decrease) in Stockholders' Equity
Exchange of LLC Interests held by LLC Owners (in shares)							20,000			(20,000)
Exchange of LLC Interests held by LLC Owners	0		0	199	(199)		$ 0			$ 0
Other comprehensive income	$ (1,553)		(1,540)		(13)
Treasury stock purchase (in shares)	373,408							373,000
Treasury stock purchase	$ (3,857)							$ (3,857)
Stock based compensation expense	$ 11,363			11,264	99
Exercise of options to purchase common stock (in shares)	2,000						2,000
Exercise of options to purchase common stock	$ 115			115
Issuance of stock for vesting of RSU's, net of tax withholdings (in shares)							187,000
Issuance of stock vesting of RSU's, net of tax withholdings	(875)			(875)
Net loss	(48,620)	(48,208)			(412)
Ending balance at Dec. 31, 2022	$ 211,793	$ (162,733)	$ (2,224)	$ 378,709	$ 1,869		$ 29	$ (3,857)		$ 0
Ending balance (in shares) at Dec. 31, 2022	29,000,000						29,348,000		252,000	252,000
Ending balance (in shares) at Dec. 31, 2022						373,000		373,000

Principal Business Activity and Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Principal Business Activity and Significant Accounting Policies

Principal Business Activity and Principals of Consolidation

PetIQ is a leading pet medication and wellness company delivering a smarter way for pet parents to help their pets live their best lives through convenient access to affordable veterinary products and services. We engage with customers through more than 60,000 points of distribution across retail and e-commerce channels with our branded and distributed medications as well as health and wellness items, which are further supported by our world-class medications manufacturing facility in Omaha, Nebraska and health and wellness manufacturing facility in Springville, Utah. Our national veterinarian service platform operates in over 2,600 retail partner locations in 41 states providing cost effective and convenient veterinary wellness services. PetIQ believes that pets are an important part of the family and deserve the best products and care we can provide.

PetIQ has two reporting segments: (i) Products; and (ii) Services. The Products segment consists of the manufacturing and distribution business. The Services segment consists of veterinary services, and related product sales, provided by the Company directly to consumers.

PetIQ is the managing member of PetIQ Holdings, LLC (“HoldCo”), a Delaware limited liability company, which is the sole member of PetIQ, LLC (“Opco”) and, through HoldCo, operate and control all the business and affairs of Opco.

The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property, plant, and equipment and intangible assets; the valuation of property, plant, and equipment, intangible assets and goodwill, the valuation of assets and liabilities in connection with acquisitions, the valuation of deferred tax assets, the valuation of inventories, and reserves for legal contingencies.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, are at cost, which approximates fair value due to their relatively short maturities.

A portion of the purchase price for the acquisition of Community Veterinary Clinics, LLC d/b/a VIP Petcare (“VIP” and such acquisition, the “VIP Acquisition”) was structured in the form of Contingent Notes.

The Contingent Notes began bearing interest at a fixed rate of 6.75%, with the balance payable July 17, 2023. The Company fully repaid the Contingent Notes in April 2021 as part of the refinance activity described in Note 5 – Debt.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the date of acquisition. All credit card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash equivalents. The Company maintains its cash accounts in various deposit accounts, the balances of which at times exceeded federal deposit insurance limits during the periods presented.

Receivables and Credit Policy

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 45 days from the invoice date. Accounts receivable are stated at the amount billed to the customer, net of discounts and estimated deductions. The Company does not have a policy for charging interest on overdue customer account balances. The Company provides an allowance for credit losses equal to expected losses. The Company’s estimate is based on historical collection experience, a review of the current status of trade accounts receivable and known current economic conditions. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice.

Other receivables consists of various receivables due from vendors, banking institutions, employees, and government agencies.

Accounts receivable, net consists of the following as of:


$'s in 000's	December 31, 2022		December 31, 2021
Trade receivables	$	104,612	$	108,049
Other receivables	13,790		6,405
	118,402		114,454
Less: Allowance for doubtful accounts	(398)		(507)
Total accounts receivable, net	$	118,004	$	113,947

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined on the FIFO method and includes estimated rebate amounts. The Company maintains reserves for estimated obsolete or unmarketable inventory based on the difference between the cost of inventory and its estimated net realizable value. In estimating the reserves, management considers factors such as excess or slow-moving inventories, product expiration dating, and market conditions. Changes in these conditions may result in additional reserves. Major components of inventories consist of the following as of:


$'s in 000's	December 31, 2022		December 31, 2021
Raw materials	$	17,464	$	16,564
Work in progress	2,234		1,650
Finished goods	122,907		78,226
Total inventories	$	142,605	$	96,440

Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Expenditures for improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment charge was recorded for the years ended December 31, 2022, 2021 and 2020.

Depreciation and amortization is provided using the straight-line method, based on estimated useful lives of the assets, except for leasehold improvements and finance leased assets which are depreciated over the shorter of the expected useful life or the lease term. Depreciation and amortization expense is recorded in cost of sales and selling, general and administrative expenses in the consolidated statements of operations, depending on the use of the asset. The estimated useful lives of property, plant, and equipment are as follows:


Computer equipment and software			3 years
Vehicle and vehicle accessories			3-5 years
Buildings			33 years
Equipment			2-15 years
Leasehold improvements			2-15 years
Furniture and fixtures			5-10 years

Goodwill and Intangible Assets

Goodwill is the excess of the consideration paid over the fair value of specifically identifiable assets, liabilities and contingent liabilities in a business combination. Intangible assets acquired are recorded at estimated fair value. Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are tested for impairment annually during the fourth quarter, and at any time when events suggest an impairment more likely than not occurred.

To assess goodwill for impairment, the Company, depending on relevant facts and circumstances, performs either a qualitative assessment or a quantitative analysis utilizing a discounted cash flow valuation model. In performing the qualitative assessment, the Company evaluates relevant factors such as macroeconomic conditions, industry and market considerations, cost factors and overall financial performance, as well as company and reporting unit specific items. If, after assessing these qualitative factors, the Company determines that it is more likely than not that the carrying value of the reporting unit is less than its fair value, then no further testing is required. In performing a quantitative analysis, the Company determines the fair value of a reporting unit using management’s assumptions about future cash flows based on long-range strategic plans. This approach incorporates many assumptions including discount rates and future growth rates. In the event the carrying amount of a reporting unit exceeded its fair value, an impairment loss would be recognized. During the three months ended September 30, 2022, the Company's market capitalization declined significantly, driven by rising interest rates and macroeconomic conditions. Additionally, the Company has slowed its expansion for the Services reporting segment. Based on these events, the Company concluded that an indicator of impairment existed for the Services segment related to its Goodwill during the three months ended September 30, 2022. See Note 4 - Intangible Assets and Goodwill for further information.

As a result of the Company's impairment test, the Company determined that the fair value of the Services reporting unit was less than it's carrying value, resulting in a non-cash goodwill impairment charge of $47.3 million during the twelve months ended December 31, 2022. No impairment charge was recorded for the years ended December 31, 2021 and 2020.

Indefinite-lived intangible assets are tested for impairment utilizing either a qualitative assessment or a quantitative analysis. For a qualitative assessment, the Company identifies and considers relevant key factors, events, and circumstances to determine whether it is necessary to perform a quantitative impairment test. The key factors considered include macroeconomic, industry, and market conditions, as well as the asset's actual and forecasted results. For the quantitative impairment tests, the Company compares the carrying amounts to the current fair market values. Intangible assets with definite lives are amortized over their estimated useful lives to reflect the pattern over which the economic benefits of the intangible assets are consumed. Definite-lived intangible assets are also evaluated for impairment when impairment indicators are present. Due to aforementioned goodwill impairment, during the three months ended September 30, 2022, the Company determined that a triggering event had occurred for certain amortizable intangible assets and conducted Step 1 of impairment testing utilizing undiscounted cash flows. No additional impairment was recorded as a result of this test or was recorded for the years ended December 31, 2022, 2021, and 2020.

Convertible Debt

On May 19, 2020, the Company issued $143.8 million aggregate principal amount of Convertible Notes due 2026 (the “Notes”). See Note 5 – “Debt.” Simultaneously, with the issuance of the Notes, we bought capped call options from certain financial institutions to minimize the impact of potential dilution of our Class A common stock upon conversion of the

Notes. The premium for the capped call options was recorded as additional paid-in capital in our consolidated balance sheets as the options are settleable in our Class A common stock.

Revenue Recognition

When Performance Obligations Are Satisfied

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s performance obligations are product sales and the delivery of veterinary services.

Revenue is generally recognized for product sales on a point in time basis when product control is transferred to the customer. In general, control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms, as the customer can direct the use and obtain substantially all of the remaining benefits from the asset at this point in time.

The Company determined that certain products manufactured to a customer’s specifications do not have an alternative future use at a reasonable profit margin due to costs associated with reworking, transporting and repackaging these products. These products are produced subject to purchase orders that include an enforceable right to payment. Therefore the Company determined that revenue on these products would be recognized over time, as the products are produced. This represents a minor subset of the products the Company manufactures.

Revenue for services is recognized over time as the service is delivered, typically over a single day. Payment is typically rendered at the time of service. Customer contracts generally do not include more than one performance obligation. When a contract does contain more than one performance obligation, we allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The standalone selling price for each distinct good is generally determined by directly observable data. The Company began offering subscription based veterinary service plans to customers of the Services segment in 2021, however total activity during the years ended December 31, 2022 and 2021 was immaterial.

The performance obligations in our contracts are satisfied within one year. As such, we have not disclosed the transaction price allocated to remaining performance obligations as of December 31, 2022 and 2021.

Variable Consideration

In addition to fixed contract consideration, most contracts include some form of variable consideration. The most common forms of variable consideration include discounts, rebates, and sales returns and allowances. Variable consideration is treated as a reduction in revenue when product revenue is recognized. Depending on the specific type of variable consideration, we use either the expected value or most likely amount method to determine the variable consideration. We believe there will not be significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. The Company reviews and updates its estimates and related accruals of variable consideration each period based on the terms of the agreements, historical experience, and any recent changes in the market. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration.

Trade marketing expense, consisting primarily of customer pricing allowances and merchandising funds are offered through various programs to customers and are designed to promote our products. They include the cost of in-store product displays, feature pricing in retailers' advertisements and other temporary price reductions. These programs are offered to our customers both in fixed and variable amounts. The ultimate cost of these programs depends on retailer performance and is subject to management estimates.

Certain retailers require the payment of product introductory fees in order to obtain space for the Company's products on the retailer's store shelves. This cost is typically a lump sum and is determined using the expected value based on the contract between the two parties.

Both trade marketing expense and product introductory fees are recognized as reductions of revenue at the time the transfer of control of the associated products occurs. Accruals for expected payouts, or amounts paid in advance, under these programs are included as accounts payable or other current assets in the consolidated balance sheets.

Significant Payment Terms

Our customer contracts identify the product, quantity, price, payment and final delivery terms. Payment terms usually include early pay discounts. We grant payment terms consistent with industry standards. Although some payment terms may be more extended, terms beyond one year are not typically granted at contract inception. As a result, we do not adjust the promised amount of consideration for the effects of a significant financing component because the period between our transfer of a promised good or service to a customer and the customer’s payment for that good or service is typically one year or less.

Shipping and other costs

All shipping and handling costs associated with outbound freight are accounted for as fulfillment costs and are included in the cost of sales. This includes shipping and handling costs after control over a product has transferred to a customer.

Sales tax collected from customers and remitted to governmental authorities is not included in revenue and is reflected as a liability on the Company’s consolidated balance sheets.

Warranties & Returns

PetIQ provides all customers with a standard or assurance type warranty. Either stated or implied, the Company provides assurance the related products will comply with all agreed-upon specifications and other warranties provided under the law. No significant services beyond an assurance warranty are provided to customers.

The Company does not grant a general right of return. However, customers may return defective or non-conforming products. Additionally customers from time to time will negotiate certain return provisions to facilitate seasonal retail inventory changes or to reset placement within stores. Customer remedies may include either a cash refund or an exchange of the product. As a result, the right of return and related refund liability is estimated and recorded as a reduction in revenue. This return estimate is reviewed and updated each period and is based on historical sales and return experience.

Contract balances

Contract asset and liability balances as of December 31, 2022 and 2021 are immaterial. The Company does not have significant deferred revenue or unbilled receivable balances.

Cost of Services

Cost of Services are comprised of all service and product costs related to the delivery of veterinary services, including but not limited to, salaries and contract costs of veterinarians, technicians and other clinic based personnel, transportation and delivery costs, rent, occupancy costs, supply costs, depreciation and amortization of clinic assets, certain marketing and promotional expenses and costs of goods sold.

Research and Development and Advertising Costs

Research and development and advertising costs are expensed as incurred and are included in selling, general and administrative expenses. Research and development costs amounted to $2.1 million, $8.0 million, and $2.3 million and advertising costs were $20.1 million, $16.2 million, and $10.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Collaboration Agreements

Through the Perrigo Animal Health Acquisition, we entered into a product development and asset purchase agreement with a third party for certain product formulations in development by the third party. During the year ended December 31, 2021, the Company opted out of the arrangement for two of the product formulations, which reduced the amount potentially payable under the agreement. The Company may make payments of up to $3.3 million over the course of the next several

years contingent on achievement of certain development and regulatory approval milestones on the remaining product formulation in development. Product development costs are expensed as incurred or as milestone payments become probable. There can be no assurance that this product will be approved by the FDA on the anticipated schedule or at all. Consideration paid after FDA approval will be capitalized and amortized to cost of goods sold over the economic life of each product. The expenses paid prior to FDA approval will be included in selling, general and administrative expenses on the consolidated statements of operations. The Company accrued $2.0 million in research and development expense within accounts payable in the consolidated balance sheets related to the agreement as a milestone was determined to be probable during the year ended December 31, 2021. The amount was paid during the year ended December 31, 2022. There were no expenses incurred under the agreement for the periods ended December 31, 2022 and 2020.

Litigation

The Company is subject to various legal proceedings, claims, litigation, investigations and contingencies arising out of the ordinary course of business. If the likelihood of an adverse legal outcome is determined to be probable and the amount of loss is estimable, then a liability is accrued in accordance with accounting guidance for Contingencies. If the assessment indicates a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. The Company consults with both internal and external legal counsel related to litigation. See Note 13 for more information.

Stock based compensation

The Company expenses employee share-based awards under ASC Topic 718, Compensation—Stock Compensation, which requires compensation cost for the grant-date fair value of share-based awards to be recognized over the requisite service period. Stock options granted to executives and other employees are valued using the Black-Scholes option pricing model. See Note 9 for more information.

Accounting for Income Taxes

The Company uses the asset and liability approach for financial accounting and reporting of income taxes. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred taxes are measured using rates expected to apply to taxable income in years in which those temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company uses a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken in a tax return. The first step is a determination of whether the tax position should be recognized in the consolidated financial statements. The second step determines the measurement of the tax position. The Company records potential interest and penalties on uncertain tax positions as a component of income tax expense.

Interest expense, net

Interest expense, net, is comprised primarily of interest expense related to (i) our debt agreements, (ii) unused line fees, (iii) amortization of deferred loan fees and discounts, (iv) finance lease obligations and the mortgage note outstanding, offset by interest income earned on our demand deposits and other assets. Interest expense was $28.2 million, $24.7 million, and $22.8 million for the years ended December 31, 2022, 2021, and 2020, respectively, offset by $0.8 million, $0.0 million, and $0.0 million of interest income, respectively.

Non-controlling interest

The non-controlling interests on the consolidated statements of operations represents the portion of earnings or loss attributable to the economic interest in the Company’s subsidiary, HoldCo, held by the non-controlling holders of Class B common stock and limited liability company interests in HoldCo. Non-controlling interests on the consolidated balance sheet represents the portion of net assets of the Company attributable to the non-controlling holders of Class B common stock and Limited Liability Company interests in HoldCo.

Loss Per Share

Basic loss per share is computed by dividing net loss attributable to PetIQ, Inc. by the weighted average shares outstanding during the period. Diluted loss per share is computed by dividing net loss attributable to PetIQ, Inc., adjusted as necessary for the impact of potentially dilutive securities, by the weighted-average shares outstanding during the period and the impact of securities that would have a dilutive effect on loss per share. See Note 8 for further discussion.

Recently Issued Accounting Pronouncements / Adopted Accounting Standard Updates

From time to time, the Financial Accounting Standards Board or other standards setting bodies issue new accounting pronouncements. Updates to the Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”)

In 2022, we adopted ASU 2021-10, Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance, which requires certain footnote disclosure of assistance received from government entities. Certain states and localities we operate in offer various business incentives related to investment or job creation which we may qualify for. The Company determined there was no material impact on the Company's Financial Statements or existing footnote disclosures for the current period.

Asset Acquisitions

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Asset Acquisitions

Capstar ® (nitenpyram) Acquisition

On July 31, 2020 the Company completed the acquisition of Capstar® and CapAction® and related assets (the “Capstar Acquisition”) from Elanco US Inc. for $95 million, plus the cost of certain outstanding finished goods inventory in saleable condition, using cash on hand as a result of the issuance of the 4.00% Convertible Senior Notes due 2026 (the “Notes”) in May 2020, See Note 5 – “Debt”

The Capstar Acquisition was accounted for as an asset acquisition and certain transaction related costs of approximately $1.0 million were included in the cost of the acquired assets. The fair value assigned to trade names was based on the income approach using a relief from royalty methodology that assumes that the fair value of a trade name can be measured by estimating the cost of licensing and paying a royalty fee for the trade name that the owner of the trade name avoids. The estimated fair value of customer relationship was determined using an income approach, specifically a discounted cash flow analysis. The rate utilized to discount net cash flows to their present values was approximately 15% and was determined after consideration of the overall enterprise rate of return and the relative risk and importance of the assets to the generation of future cash flows. The fair value assigned to patents and processes was determined based on the income approach. The purchased assets are identified below:


$'s in 000's	Fair Value
Amortizable intangibles
Customer relationships	$	70,901
Patents and processes	9,895
Total amortizable intangibles	80,796
Non-amortizable intangibles
Trademarks and other	15,276
Total purchased intangible assets	$	96,072

The weighted average amortization period of the amortizable intangible assets is approximately 11.8 years.

Supplier Termination, Settlement and Asset Purchase Agreement:

During July 2020, the Company entered into a Termination, Settlement and Asset Purchase Agreement (the “Agreement”) with a supplier who alleged PetIQ had breached its supply agreement due to the acquisition of Perrigo Animal Health. The Agreement called for PetIQ to pay $20.6 million, $2.6 million at signing and $1.0 million per quarter thereafter. The Agreement terminated the supply agreement that was previously in place, settled all outstanding claims and operations, and allowed PetIQ to purchase certain intellectual property related assets. The Company has estimated the fair value of the payment obligation as $17.5 million, and determined the fair value of the acquired assets to be $9.7 million. The assets acquired are included within the patents and processes intangible assets category and will be amortized over 10 years. The assets were valued using the relief from royalty method. The remainder of the obligation is considered to be a payment to settle the alleged breach of the supply agreement, the termination expense is included in selling, general and administrative expenses on the consolidated statement of operations for the year ended December 31, 2020. The obligation is considered debt and is included in debt on the consolidated balance sheet. See Note 5 – “Debt” for additional information.

Property, Plant, and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Property, Plant, and Equipment

Property, plant, and equipment consists of the following at:


$'s in 000's	December 31, 2022		December 31, 2021
Leasehold improvements	$	27,694	$	26,341
Equipment	27,187		26,414
Buildings	26,176		23,302
Computer equipment and software	17,501		15,418
Land	8,934		8,934
Vehicles and accessories	6,771		7,339
Furniture and fixtures	3,499		3,877
Construction in progress	4,797		5,077
	122,559		116,702
Less accumulated depreciation	(49,164)		(40,089)
Total property, plant, and equipment	$	73,395	$	76,613

Depreciation and amortization expense related to these assets total $14.5 million, $14.4 million, and $12.1 million for the years ended December 31, 2022, 2021, and 2020, respectively. Depreciation for the year ended December 31, 2022, 2021, and 2020 includes approximately $0.0 million, $2.0 million, and $0.0 million of accelerated depreciation related to assets with shortened useful lives, respectively.

Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Intangible assets consist of the following at:


$'s in 000's	Useful Lives	December 31, 2022		December 31, 2021
Amortizable intangibles
Certification	7 years	$	350	$	350
Customer relationships	12-20 years	160,040		160,167
Patents and processes	5-10 years	14,634		14,843
Brand names	5-15 years	24,633		24,731
Total amortizable intangibles		199,657		200,091
Less accumulated amortization		(62,085)		(44,438)
Total net amortizable intangibles		137,572		155,653
Non-amortizable intangibles
Trademarks and other		33,239		33,341
In-process research and development		1,668		1,668
Intangible assets, net of accumulated amortization		$	172,479	$	190,662

Certain intangible assets are denominated in currencies other than the U.S. Dollar; therefore, their gross and net carrying values are subject to foreign currency movements. Amortization expense for the years ended December 31, 2022, 2021, and 2020 was $18.1 million, $22.3 million, and $12.8 million, respectively.

The in-process research and development (“IPRD”), intangible assets represent the value assigned to acquired R&D projects that principally represent rights to develop and sell products that the Company has acquired which has not yet been completed or approved. The IPRD acquired as part of the Perrigo Animal Health Acquisition is accounted for as an indefinite-lived asset until the product is available for sale and regulatory approval is obtained, or abandonment of the associated research and development efforts. If the research and development efforts are successfully completed, the IPRD would be amortized over its then estimated useful life. The fair value of the IPRD was estimated using the multi-period excess earnings income method. The projected cash flows estimates for the future products were based on certain key assumptions including estimates of future revenues and expenses, taking into account the stage of development at the acquisition date and the resources needed to complete development. In the event that the efforts are not successful, the Company will write off the relevant IPRD in the period in which it is no longer considered feasible. During the year ended December 31, 2021, the Company opted out of two of the acquired projects, effectively abandoning the associated research and development efforts. Accordingly, the Company wrote off the associated IPRD assets of $3.8 million, with the expense recorded as amortization expense included in selling, general, and administrative expenses on the consolidated statement of operations.

Estimated future amortization expense for each of the following years is as follows:


Years ending December 31, ($'s in 000's)
2023			16,893
2024			14,537
2025			13,881
2026			13,297
2027			12,810
Thereafter			66,155

The following is a summary of the changes in the carrying value of goodwill for the years ended December 31, 2022 and 2021.


	Reporting Unit				Total
($'s in 000's)	Products		Services
Goodwill as of January 1, 2021	$	183,894	$	47,264	$	231,158
Foreign currency translation	(48)		—		(48)
Goodwill as of December 31, 2021	183,846		47,264		231,110
Foreign currency translation	(540)		—		(540)
Impairment	—		$	(47,264)	(47,264)
Goodwill as of December 31, 2022	$	183,306	$	—	$	183,306

Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

On April 13, 2021, the Company entered into the ABL Facility and the Term Loan B (each as defined below), which replaced both the Amended Revolving Credit Agreement (as defined below) and A&R Term Loan Agreement as well as fully repaid $27.5 million of the Notes Payable – VIP Acquisition (as defined below).

As part of the termination of the Amended Revolving Credit Agreement and the A&R Term Loan Credit agreement, and the repayment in full of the Notes Payable – VIP Acquisition, the Company wrote off $5.5 million in deferred financing fees to loss on debt extinguishment and incurred an additional $0.9 million in costs related to the transaction which are included in selling, general and administrative expenses for the year ended December 31, 2021.

Senior Secured Asset-Based Revolving Credit Facility – ABL

On April 13, 2021, Opco entered into an asset-based revolving credit agreement with KeyBank National Association, as administrative agent and collateral agent, and the lenders’ party thereto, that provides revolving credit commitments of $125.0 million, subject to a borrowing base limitation (the “ABL Facility”). The borrowing base for the ABL Facility at any time equals the sum of: (i) 90% of eligible investment-grade accounts; plus (ii) 85% of eligible other accounts; plus, (iii) 85% of the net orderly liquidation value of the cost of certain eligible on-hand and in-transit inventory; plus, (iv) at the option of Opco, 100% of qualified cash; minus (v) reserves. The ABL Facility bears interest at a variable rate plus a margin, with the variable rate being based on a base rate or London Interbank Offered Rate, ("LIBOR") at the option of the Company. The rate at December 31, 2022 was 4.39%. The Company also pays a commitment fee on unused borrowings at a rate of 0.35%. On February 3, 2023, Opco entered into the First Amendment Agreement to the ABL Facility to replace the interest rate benchmark from LIBOR to the Secured Overnight Financing Rate (“SOFR”). For more information on the First Amendment, please see Note 17 – “Subsequent Events.”

The ABL Facility is secured by substantially all the assets of HoldCo and its wholly-owned domestic subsidiaries including a first-priority security interest in personal property consisting of accounts receivable, inventory, cash, and deposit accounts (such collateral subject to such first-priority security interest, “ABL Priority Collateral”), and a second-priority security interest in all other personal and real property of HoldCo and its wholly-owned domestic subsidiaries (such collateral subject to such second-priority security interest, “Term Priority Collateral”), in each case, subject to customary exceptions. The ABL contains customary representations and warranties, affirmative and negative covenants and events of default, including negative covenants that restrict the ability of HoldCo and its restricted subsidiaries to incur additional indebtedness, pay dividends, make investments, loans, and acquisitions, among other restrictions.

Senior Secured Term Loan Facility – Term Loan B

On April 13, 2021, Opco entered into a term credit agreement with Jefferies Finance LLC, as administrative agent and collateral agent, and the lenders’ party thereto, that provides senior secured term loans of $300 million (the “Term Loan B”). The Term Loan B bears interest at a variable rate (with the variable rate being based on a base rate or LIBOR at the option of the Company) plus a margin of 3.25% in the case of base rate loans, or 4.25% in the case of LIBOR loans. LIBOR rates are subject to a 0.50% floor. The interest rate at December 31, 2022 was 8.57%. The Term Loan B requires quarterly amortization payments of 0.25% of the original principal amount, with the balance due on the seventh anniversary of the closing date.

The Term Loan B is secured by substantially all the assets of HoldCo and its wholly-owned domestic subsidiaries, including a first-priority security interest in Term Priority Collateral and a second-priority security interest in ABL Priority Collateral, in each case, subject to customary exceptions. The Term Loan B contains customary representations and warranties, affirmative and negative covenants and events of default, including negative covenants that restrict the ability of HoldCo and its restricted subsidiaries to incur additional indebtedness, pay dividends, make investments, loans, and acquisitions, among other restrictions.

The fair value of the the Term Loan B was $268.9 million as of December 31, 2022. The estimated fair value of the Notes is based on market rates at the closing trading price as of December 31, 2022 and is classified as Level 2 in the fair value hierarchy.

Convertible Notes

On May 19, 2020, the Company issued $143.8 million in aggregate principal amount of 4.00% Convertible Senior Notes due 2026 (the “Notes”) pursuant to the indenture (the “Indenture”), dated as of May 19, 2020. The total net proceeds from the Notes offering, after deducting debt issuance costs paid or payable by us, was $137.9 million. The Notes accrue interest at a rate of 4.00% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020. The Notes will mature on June 1, 2026, unless earlier repurchased, redeemed or converted. Before January 15, 2026, holders will have the right to convert their Notes only upon the occurrence of certain events. From and after January 15, 2026, holders may convert their Notes at any time at their election until the close of business on the scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of its Class A common stock, or a combination of cash and shares of its Class A common stock, at its election. The initial conversion rate is 33.7268 shares of Class A common stock per $1,000 principal amount of Notes. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The Notes are redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after June 1, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s Class A common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any Notes will constitute a Make-Whole Fundamental Change with respect to such Notes, which will result in an increase to the conversion rate if such Notes are converted after they are called for redemption.

If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s Class A common stock.

The Notes are the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries. The Notes contain customary events of default.

The fair value of the Notes was $120.5 million as of December 31, 2022. The estimated fair value of the Notes is based on market rates at the closing trading price of the Convertible Notes as of December 31, 2022 and is classified as Level 2 in the fair value hierarchy.

Capped Call Transactions

On May 14, 2020 and May 19, 2020, the Company entered into capped call transactions (the “Capped Call Transactions”) with two counterparties. The Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to the Notes, the underlying shares of Class A common stock and are intended to reduce, subject to a limit, the potential dilution with respect to the Class A common stock upon conversion of the Notes. The cap price of the Capped Call Transactions is $41.51 per share of Class A common stock, and is subject to certain adjustments under the terms of the Capped Call Transactions.

The Company paid approximately $14.8 million for the Capped Call Transactions, which was recorded as additional paid-in capital, using a portion of the gross proceeds from the sale of the Notes. The capped call is expected to be tax deductible as the Company elected to integrate the capped call into the Notes for tax purposes.

Amended & Restated Credit Agreement

OpCo entered into an Amended Revolving Credit Agreement on July 8, 2019 (the “Amended Revolving Credit Agreement”). The Amended Revolving Credit Agreement provided for a secured revolving credit facility of $125 million that matured on July 8, 2024. The borrowers under the Amended Revolving Credit Facility incurred fees between 0.375% and 0.50% as unused facility fees, dependent on the aggregate amount borrowed.

All obligations under the Amended Revolving Credit Agreement were unconditionally guaranteed by HoldCo and, subject to certain exceptions, each of its material current and future domestic wholly-owned subsidiaries. All obligations under the Amended Revolving Credit Agreement, and the guarantees of those obligations, were secured by substantially all of the assets of each borrower and guarantor under the Amended Revolving Credit Agreement, subject to certain exceptions.

The Amended Revolving Credit Agreement was fully repaid and terminated in April 2021.

Amended & Restated Term Loan Credit Agreement

OpCo entered into an Amended and Restated Term Loan Credit Agreement on July 8, 2019 (the “A&R Term Loan Credit Agreement”). The $220.0 million A&R Term Loan Credit Agreement had an interest rate equal to the Eurodollar rate plus 5.00%. The A&R Term Loan Credit Agreement called for 1% of the original loan balance to be paid annually via equal quarterly payments, with the balance of the loan due on the sixth anniversary of the agreement.

All obligations under the A&R Term Loan Credit Agreement were unconditionally guaranteed by HoldCo and each of its domestic wholly-owned subsidiaries and, subject to certain exceptions, each of its material current and future domestic wholly-owned subsidiaries. All obligations under the A&R Term Loan Credit Agreement, and the guarantees of those obligations, were secured by substantially all of the assets of OpCo and each guarantor under the A&R Term Loan Credit Agreement, subject to certain exceptions.

The A&R Term Loan Credit Agreement was fully repaid and terminated in April 2021.

General Other Debt

The Company entered into a mortgage with Huntington Bank to finance a commercial building in Eagle, Idaho, in December 2021. The mortgage bears interest at a fixed rate of 2.0% plus LIBOR and utilizes a 10 year amortization schedule with a balloon payment of the balance due at that time. The rate at December 31, 2022 was 6.39%.

The Company entered into a mortgage with a local bank to finance a commercial building in Eagle, Idaho, in July 2017. The mortgage bears interest at a fixed rate of 4.35% and utilizes a 25 year amortization schedule with a 10 year balloon payment of the balance due at that time. The Company entered into an agreement to sell the commercial building in Eagle, Idaho, which closed in the third quarter of 2021. The Company used the proceeds from the sale to repay the mortgage on August 2, 2021.

In July 2020, the Company entered into the Agreement. See Note 2 – “Asset Acquisitions”. The Agreement called for PetIQ to pay $20.6 million, $2.6 million at signing and $1.0 million per quarter thereafter with no interest. The Company discounted the payment stream using a market interest rate of 8.3%, resulting in an obligation of $17.5 million at the time it was entered into.

In connection with the acquisition of Community Veterinary Clinics, LLC d/b/a, VIP Petcare (the “VIP Acquisition”), the Company entered into a guarantee note of $10.0 million and contingent Notes that were subsequently earned. As of December 31, 2021 $7.5 million was payable pursuant to the 2018 Contingent Note and $10.0 million was payable pursuant to the 2019 Contingent Note. The guarantee note and the Contingent Notes (collectively, “Notes Payable – VIP Acquisition”) of $27.5 million required quarterly interest payments of 6.75% with the balance payable July 17, 2023. These Notes Payable – VIP Acquisition were fully repaid in April 2021.

The following represents the Company’s long-term debt as of:



$'s in 000's	December 31, 2022		December 31, 2021
Convertible Notes	$	143,750	$	143,750
Term loans	295,500		298,500
Revolving credit facility	—		—
Other Debt	19,690		23,518
Net discount on debt and deferred financing fees	(8,531)		(10,418)
	$	450,409	$	455,350
Less current maturities of long-term debt	(7,133)		(6,880)
Total long-term debt	$	443,276	$	448,470

Future maturities of long-term debt, excluding net discount on debt and deferred financing fees, as of December 31, 2022, are as follows:


($'s in 000's)
2023			7,064
2024			7,426
2025			4,600
2026			147,350
2027			3,600
Thereafter			288,900

The Company incurred $6.4 million in debt issuance costs related to the Term Loan B, $1.0 million related to the ABL, and $0.2 million related to the new mortgage during the year ended December 31, 2021.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
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-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
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-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

The Company leases certain real estate for commercial, production, and retail purposes, as well as equipment from third parties. Lease expiration dates are between 2023 and 2028.

For both operating and finance leases, the Company recognizes a right-of-use asset, which represents the right to use the underlying asset for the lease term, and a lease liability, which represents the present value of our obligation to make payments arising over the lease term.

We elected the short-term lease exemption for all leases that qualify. This means leases having an initial term of twelve months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the term of the lease.

The Company’s leases may include options to extend or terminate the lease. Renewal options generally range from one to ten years and the options to extend are included in the lease term when it is reasonably certain that we will exercise that option. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in the ROU assets and liabilities. Variable payments for real estate leases primarily relate to common area maintenance, insurance, taxes and utilities. Variable payments for equipment and vehicles primarily relate to usage, repairs, and

maintenance. As the implicit rate is not readily determinable for most of the Company’s leases, the Company applies a portfolio approach using an estimated incremental borrowing rate, giving consideration to company specific information and publicly available interest rates for instruments with similar characteristics, to determine the initial present value of lease payments over the lease terms.

The components of lease expense consists of the following:


	Year Ended
$'s in 000's	December 31, 2022		December 31, 2021		December 31, 2020
Finance lease cost
Amortization of right-of-use assets	$	1,185	$	2,215	$	1,681
Interest on lease liabilities	243		338		315
Operating lease cost	6,603		5,556		5,831
Variable lease cost(1)	1,318		1,283		1,130
Short-term lease cost	17		13		34
Sublease income	(269)		(238)		(528)
Total lease cost	$	9,097	$	9,167	$	8,463

(1)Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate.

Other information related to leases was as follows as of:


	December 31, 2022	December 31, 2021
Weighted-average remaining lease term (years)
Operating leases	3.19	3.86
Finance leases	1.82	2.59
Weighted-average discount rate
Operating leases	4.4%	4.9%
Finance leases	4.5%	4.6%

Annual future commitments under non-cancelable leases as of December 31, 2022, consist of the following:


	Lease Obligations
$'s in 000's	Operating Leases		Finance Leases
2023	$	7,271	$	1,265
2024	5,759		1,045
2025	4,749		238
2026	2,338		95
2027	213		—

Total minimum future obligations	$	20,330	$	2,642
Less interest	(1,330)		(117)
Present value of net future minimum obligations	19,000		2,525
Less current lease obligations	(6,595)		(1,618)
Long-term lease obligations	$	12,405	$	907

Supplemental cash flow information:


	Year Ended
$'s in 000's	December 31, 2022		December 31, 2021		December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	243	$	338	$	315
Operating cash flows from operating leases	6,730		3,928		5,668
Financing cash flows from finance leases	1,493		1,926		1,965
Non-cash right-of-use assets obtained in exchange for lease obligations
Operating leases	4,087		5,212		5,105
Finance leases	59		1,191		2,019

Leases

The Company leases certain real estate for commercial, production, and retail purposes, as well as equipment from third parties. Lease expiration dates are between 2023 and 2028.

The components of lease expense consists of the following:


	Year Ended
$'s in 000's	December 31, 2022		December 31, 2021		December 31, 2020
Finance lease cost
Amortization of right-of-use assets	$	1,185	$	2,215	$	1,681
Interest on lease liabilities	243		338		315
Operating lease cost	6,603		5,556		5,831
Variable lease cost(1)	1,318		1,283		1,130
Short-term lease cost	17		13		34
Sublease income	(269)		(238)		(528)
Total lease cost	$	9,097	$	9,167	$	8,463

(1)Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate.

Other information related to leases was as follows as of:


	December 31, 2022	December 31, 2021
Weighted-average remaining lease term (years)
Operating leases	3.19	3.86
Finance leases	1.82	2.59
Weighted-average discount rate
Operating leases	4.4%	4.9%
Finance leases	4.5%	4.6%

Annual future commitments under non-cancelable leases as of December 31, 2022, consist of the following:


	Lease Obligations
$'s in 000's	Operating Leases		Finance Leases
2023	$	7,271	$	1,265
2024	5,759		1,045
2025	4,749		238
2026	2,338		95
2027	213		—

Total minimum future obligations	$	20,330	$	2,642
Less interest	(1,330)		(117)
Present value of net future minimum obligations	19,000		2,525
Less current lease obligations	(6,595)		(1,618)
Long-term lease obligations	$	12,405	$	907

Supplemental cash flow information:


	Year Ended
$'s in 000's	December 31, 2022		December 31, 2021		December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	243	$	338	$	315
Operating cash flows from operating leases	6,730		3,928		5,668
Financing cash flows from finance leases	1,493		1,926		1,965
Non-cash right-of-use assets obtained in exchange for lease obligations
Operating leases	4,087		5,212		5,105
Finance leases	59		1,191		2,019

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

The Company is the sole managing member of HoldCo. HoldCo is treated as a partnership for U.S. federal income tax purposes with the remaining partners of HoldCo (the “LLC Owners”) owning a non-controlling interest. The LLC Owners have an exchange right which grants them the right to exchange a HoldCo partnership interest and a PetIQ Class B Common Stock share for a PetIQ Class A Common Stock share. Upon such an exchange, the Company is treated as purchasing an additional interest in HoldCo from the continuing LLC Owners in a taxable exchange which generates deferred tax assets as a result of an increase in tax basis for the Company. As of December 31, 2022, the Company had $75.6 million of deferred tax assets associated with these exchanges, which currently have a full valuation allowance against the deferred tax asset. The non-controlling interests totaled approximately 0.9% of the ownership of HoldCo as of December 31, 2022. See Note 11 – Non-controlling interests for more information.

HoldCo’s members, including the Company, are liable for federal, state, and local income taxes based on their share of HoldCo’s taxable income.

The components of pretax net loss, determined by tax jurisdiction, are as follows:


	Year Ended December 31

$'s in 000's	2022		2021		2020
United States	$	(47,767)	$	(12,816)	$	(25,747)
Foreign	361		302		433
Total	$	(47,406)	$	(12,514)	$	(25,314)

The provision for income taxes for 2022, 2021, and 2020 consisted of the following:


	Year Ended December 31

$'s in 000's	2022		2021		2020
Current:
Federal	$	—	$	—	$	—
State	498		323		327
Foreign	117		26		137
	$	615	$	349	$	464
Deferred and other:
Federal	574		2,661		47,048
State	154		717		12,922
Foreign	(129)		142		(21)
	599		3,520		59,949
Total income tax expense	$	1,214	$	3,869	$	60,413

Reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows:


	Year Ended December 31

	2022		2021		2020
Income tax expense at federal statutory rate	21.0	%	21.0	%	21.0	%
State and local income taxes net of federal tax benefit	3.6		(0.2)		0.6
Non-controlling interest and nontaxable income	(0.2)		(0.1)		(2.4)
Deferred tax rate changes	—		1.0		(0.6)
Share-based compensation	(1.6)		6.8		0.6
Goodwill impairment	(9.2)		—		—
Return-to-provision	(6.8)		(15.7)		(2.3)
Valuation allowance	(9.4)		(42.9)		(255.2)
Other	—		(0.8)		(0.4)
Effective income tax rate	(2.6)	%	(30.9)	%	(238.7)	%

Our tax rate is affected primarily by the changes in valuation allowance, goodwill impairment charge, return to provision adjustments, and state and local taxes during the year ended December 31, 2022. It is also affected by discrete items that may occur in any given year such as stock based compensation, but are not consistent from year to year.

As a result of the IPO and reorganization transactions, the Company has recorded deferred tax assets and liabilities based on the differences between the book value of assets and liabilities for financial reporting purposes and those amounts applicable for income tax purposes. Deferred tax assets have been recorded for the basis differences resulting from the purchase of LLC Interests from existing members and newly issued LLC Interests acquired directly from HoldCo. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2022 and 2021 are as follows:


$'s in 000's	2022		2021
Deferred tax assets
Investment in partnership	$	69,656	$	77,306
Fixed assets	62		43
Net operating loss carryforwards and tax credits	33,271		25,888
Disallowed business interest carryforward	8,389		3,169
Other accruals and reversals	5		5
Subtotal	111,383		106,411
Less: valuation allowance	(111,218)		(106,258)
Net deferred tax assets	165		153

Deferred tax liabilities
Fixed Assets	$	(112)	$	(151)
Intangible assets	(1,069)		(454)
Other	(9)		(7)
Net deferred tax liabilities	$	(1,190)	$	(612)

At December 31, 2022, the Company has federal net operating loss (“NOL”) carryforwards of $121.3 million, of which $1.9 million, generated in 2017 and prior, will expire in 2037. The remaining NOLs do not expire. The NOL generated since 2018 of $119.4 million will have an indefinite carryforward period but can generally only be used to offset 80% of taxable income in any particular year. The Company has a federal business interest expense carryover totaling $39.9 million as of December 31, 2022, which has an indefinite carryforward period but is limited in any particular year based on certain provisions. As of December 31, 2022, the Company has charitable contribution carryforwards of $0.7 million, which if unused will expire between 2023 and 2028. The Company has state NOL carryforwards of $82.1 million as of December 31, 2022 which expire between 2023 and 2040 and others that have an indefinite carryforward period. At December 31, 2022 the Company has state business tax credits related to tax incentive arrangements of $1.9 million which if unused will expire between 2036 and 2037. At December 31, 2022 the Company had foreign NOL carryforwards of $0.6 million which do not expire.

The Company has assessed the realizability of the net deferred tax assets as of December 31, 2022 and has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income to realize its deferred tax assets. The Company believes it is more likely than not that the benefit from the recorded deferred tax assets in the United States and Ireland will not be realized. The Company has recorded a valuation allowance for these deferred tax assets of $111.2 million and $106.3 million as of December 31, 2022 and 2021, respectively. Additionally, the Company has recorded a net deferred tax liability related to its indefinite lived intangible assets in the United States. In future periods, if we conclude we have future taxable income sufficient to recognize the deferred tax assets, we may reduce or eliminate the valuation allowance.

The Company operates in certain jurisdictions where we have tax incentive arrangements. These incentives are conditional upon certain business operations and employment thresholds. The effect of these tax incentive arrangements are recognized in the Company's tax provision as the appropriate conditions are met and credits are earned.

The Company has not recognized any uncertain tax positions, penalties or interest as we have concluded that no such positions exist. Accordingly, no unrecognized tax benefit would impact the effective tax rate. If interest and penalties were accrued, we would recognize interest and penalties as income tax expense. We are subject to taxation in the United States and various states and foreign jurisdictions. As of December 31, 2022, tax years from 2017 to present are subject to examination by the tax authorities.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

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+ Details

Loss per Share

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Loss per Share

Basic and Diluted Loss per share

Basic loss per share of Class A common stock is computed by dividing net loss available to PetIQ, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted loss per share of Class A common stock is computed by dividing net loss available to PetIQ, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted loss per share of Class A common stock:


	Year Ended December 31,
(in 000's, except for per share amounts)	2022		2021		2020
Numerator:
Net loss	(48,620)		(16,383)		(85,727)
Less: net loss attributable to non-controlling interests	(412)		(416)		(3,072)
Net loss attributable to PetIQ, Inc. — basic and diluted	(48,208)		(15,967)		(82,655)
Denominator:
Weighted-average shares of Class A common stock outstanding — basic	29,159		28,242		24,629
Dilutive effects of stock options that are convertible into Class A common stock	—		—		—
Dilutive effect of RSUs	—		—		—
Dilutive effect for conversion of Notes	—		—		—
Weighted-average shares of Class A common stock outstanding — diluted	29,159		28,242		24,629

Loss per share of Class A common stock — basic	$	(1.65)	$	(0.57)	$	(3.36)
Loss per share of Class A common stock — diluted	$	(1.65)	$	(0.57)	$	(3.36)

Shares of the Company’s Class B common stock do not share in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented.

Shares of the Company’s Class B common stock have not been included in the diluted loss per share calculation as they have been determined to be anti-dilutive under the if-converted method.

Additionally, all stock options and restricted stock units and convertible Notes have not been included in the diluted earnings per share calculation for the years ended December 31, 2022, 2021 and 2020, as they have been determined to be anti-dilutive under the treasury stock method and if-converted method, as applicable.

Stock Based Compensation

12 Months Ended

Dec. 31, 2022

Share-based Payment Arrangement [Abstract]

Stock Based Compensation

PetIQ, Inc. Omnibus Incentive Plan

The Amended and Restated PetIQ, Inc. Omnibus Incentive Plan, as amended (the “Plan”), provides for the grant of various equity-based incentive awards to directors of the Company, employees, and consultants. The types of equity-based awards that may be granted under the Plan include: stock options, stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs), and other stock-based awards. On June 22, 2022, the Company's stockholders approved an amendment and restatement of the Plan to, among other things, increase the total number of shares of the Company's Class A common stock reserved and available for issuance thereunder by 1,890,000 shares resulting in a total of 5,804,000 shares of Class A common stock issuable under the Plan. As of December 31, 2022 and 2021, 2,143,955 and 771,000 shares were available for issuance under the Plan, respectively. All awards issued under the Plan may only be settled in shares of Class A common stock. Shares issued pursuant to awards under the incentive plans are from our authorized but unissued shares.

PetIQ, Inc. 2018 Inducement and Retention Stock Plan for CVC Employees

The PetIQ, Inc. 2018 Inducement and Retention Stock Plan for CVC Employees (the “Inducement Plan”) provided for the grant of stock options to employees hired in connection with an acquisition in 2018 as employment inducement awards pursuant to NASDAQ Listing Rule 5635(c)(4). The Inducement Plan reserved 800,000 shares of Class A Common Stock of the Company, of which 760,000 were granted. No further grants may be made under the Inducement Plan. All awards issued under the Inducement Plan may only be settled in shares of Class A common stock.

Stock Options

The Company awards stock options to certain employees under the Plan and previously issued stock options under the Inducement Plan, which are subject to time-based vesting conditions, typically 25% on each anniversary of the grant date until fully vested. Upon a termination of service relationship by the Company, all unvested options will be forfeited and the shares of common stock underlying such awards will become available for issuance under the Plan. The maximum contractual term for stock options is 10 years.

The fair value of these equity awards is amortized to equity based compensation expense over the vesting period. Expense recognized totaled $3.2 million, $5.2 million, and $6.5 million for the years ended December 31, 2022, 2021, and 2020, respectively. All stock based compensation expense is included in selling, general and administrative expenses based on the role of recipients. The fair value of the stock option awards was determined on the grant dates using the Black-Scholes valuation model based on the following weighted-average assumptions for the periods ended:


	December 31, 2022		December 31, 2021
Expected term (years) (1)	6.25		6.17
Expected volatility (2)	37.21	%	33.45	%
Risk-free interest rate (3)	1.44	%	0.89	%
Dividend yield (4)	0.00	%	0.00	%

(1)The Company utilized the simplified method to determine the expected term of the stock options since we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

(2)The expected volatility assumption was calculated based on a peer group analysis of stock price volatility with a look back period consistent with the expected option term.

(3)The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds to the expected term of the stock options.

(4)The Company has not paid and does not anticipate paying a cash dividend on our common stock.

The weighted average grant date fair value of stock options granted during the period ended December 31, 2022 and 2021 was $9.14 and $12.39, respectively, per option. The following table summarizes the activity of the Company’s unvested stock options for the period ended December 31, 2022:


	Stock Options (in 000's)	Weighted Average Exercise Price		Aggregate Intrinsic Value (in 000's)		Weighted Average Remaining Contractual Life (years)
Outstanding at January 1, 2021	2,086	$	23.93	$	30,302	7.2
Granted	354	35.66
Exercised	(583)	23.05		$	8,499
Forfeited	(64)	24.84
Cancelled	(25)	$	25.70
Outstanding at December 31, 2021	1,768	$	26.51	$	2,897	7.3
Granted	83	14.16
Exercised	(2)	19.49		$	10
Forfeited	(110)	29.24
Cancelled	(86)	31.12
Outstanding at December 31, 2022	1,652	$	25.48	$	53	6.2
Options exercisable at December 31, 2022	1,149

The aggregate intrinsic values disclosed in the above table were calculated as the excess, if any, between the Company’s closing share price per share on the respective period end date and the strike price of the underlying awards.

At December 31, 2022, total unrecognized compensation cost related to unvested stock options was $3.0 million and is expected to be recognized over a weighted-average period of approximately 2.0 years.

Restricted Stock Units

The Company awards RSUs to certain employees under the Plan, which are subject to time-based vesting conditions. Upon a termination of service relationship by the Company, all unvested RSUs will generally be forfeited and the shares of common stock underlying such awards will become available for issuance under the Plan. The fair value of RSUs are measured based on the closing fair market value of the Company’s common stock on the date of grant. At December 31, 2022, total unrecognized compensation cost related to unvested RSUs was $14.2 million and is expected to vest over a weighted average of 2.8 years.

The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $8.1 million, $4.3 million, and $2.6 million for the years ended December 31, 2022, 2021, and 2020, respectively. All stock based compensation expense is included in selling, general and administrative expenses based on the role of recipients.

The following table summarizes the activity of the Company’s RSUs for the period ended December 31, 2022:


	Number of Shares (in 000's)	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2021	317	$	22.91
Granted	268	37.91
Settled	(103)	24.81
Forfeited	(23)	26.02
Outstanding at December 31, 2021	459	$	31.08
Granted	802	20.30
Settled	(231)	27.81
Forfeited	(177)	25.53
Nonvested RSUs at December 31, 2022	853	$	23.06

The total income tax benefit recognized in the income statement for share-based compensation arrangements was zero for the years ended December 31, 2022, 2021, and 2020.

Stockholders' Equity	12 Months Ended
Stockholders' Equity	Dec. 31, 2022
Stockholders' Equity Note [Abstract]
Stockholders' Equity	Stockholders’ Equity Certificate of Incorporation The Company’s amended and restated certificate of incorporation, among other things, provides for the (i) authorization of 125,000,000 shares of Class A common stock with a par value of $0.001 per share; (ii) authorization of 8,401,521 shares of Class B common stock with a par value of $0.001 per share; (iii) authorization of 12,500,000 shares of blank check preferred stock; and (iv) establishment of a classified board of directors, divided into three classes, each of whose members will serve for staggered three-year terms. Each share of the Company’s Class A common stock and Class B common stock entitles its holders to one vote per share on all matters presented to the Company’s stockholders generally. Holders of the Company’s Class B common stock are not entitled to receive dividends and will not be entitled to receive any distributions upon the liquidation, dissolution or winding up of the Company. Shares of Class B common stock may only be issued to the extent necessary to maintain the one-to-one ratio between the number of LLC interests of HoldCo held by continuing LLC Owners. Shares of Class B common stock are transferable only together with an equal number of LLC Interests. Shares of Class B common stock will be canceled on a one-for-one basis upon the redemption or exchange any of the outstanding LLC Interests held by the continuing LLC Owners. The Company must, at all times, maintain a one-to-one ratio between the number of outstanding shares of Class A common stock and the number of LLC Interests owned by PetIQ (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities). Stock repurchase program On September 6, 2022, the Company's Board of Directors authorized a stock repurchase program for up to $30 million of the Company’s outstanding shares of Class A common stock. Repurchases of Class A common stock may be made at management’s discretion from time to time in one or more transactions on the open market or in privately negotiated purchase and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations promulgated under Securities Exchange Act. During the twelve months ended December 31, 2022 the Company repurchased 373,408 shares at a weighted average price of $10.33 per share.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Non-Controlling Interests

12 Months Ended

Dec. 31, 2022

Noncontrolling Interest [Abstract]

Non-Controlling Interests

Non-Controlling InterestsThe Company reports a non-controlling interest representing the LLC interests of HoldCo held by continuing LLC Owners. Changes in PetIQ’s ownership interest in HoldCo while PetIQ retains its controlling interest in HoldCo will be accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC interests of HoldCo by the continuing

LLC Owners will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in capital when HoldCo has positive or negative net assets, respectively. The Company is also required to make tax distributions based on the LLC Agreement to continuing LLC Owners on a regular basis, these distributions will reduce the non-controlling interest.

As of December 31, 2022, there were 29.2 million LLC Interests outstanding, of which PetIQ owned 29.0 million, representing a 99.1% ownership interest in HoldCo. Exchange and other equity activity during the years ended December 31, 2022 and 2021 resulted in weighted average ownership of HoldCo by PetIQ of 99.1% and 96.6%, respectively.


	LLC Interests held			% of Total
$'s in 000's	LLC Owners	PetIQ, Inc.	Total	LLC Owners		PetIQ, Inc.
As of January 1, 2021	3,040	25,711	28,751	10.6	%	89.4	%
Stock based compensation transactions	—	660	660
Exchange transactions	(2,768)	2,768	—
As of December 31, 2021	272	29,139	29,411	0.9	%	99.1	%
Stock based compensation transactions	—	188	188
Exchange transactions	(20)	20	—
Unit redemption	—	(373)	(373)
As of December 31, 2022	252	28,974	29,226	0.9	%	99.1	%

Customer Concentration	12 Months Ended
Customer Concentration	Dec. 31, 2022
Risks and Uncertainties [Abstract]
Customer Concentration	Customer Concentration The Company has significant exposure to customer concentration. During each of the years ended December 31, 2022, 2021, and 2020, two, one, and two customers, respectively, accounted for more than 10% of sales individually and in aggregate, which accounted for 35%, 26%, and 42% of net sales, respectively. At December 31, 2022, one Products segment customer individually accounted for more than 10% of outstanding trade receivables, and accounting for 46% of outstanding trade receivables, net. At December 31, 2021 one Products segment customers individually accounting for more than 10% of outstanding trade receivables, and accounted for 47% of outstanding trade receivables, net. All of our customer concentration exists in our Products segment.

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Litigation Contingencies During the years ended December 31, 2022, 2021, and 2020, the Company recorded expense of $3.5 million, $3.5 million, and $7.8 million respectively, for contract termination costs and other litigation related matters. The expense is included within selling, general and administrative expenses for the years ended December 31, 2022, 2021, and 2020. During the year ended December 31, 2021, the Company entered into mediation with a third party who had filed a class action lawsuit against the Company. As a result of that mediation, the Company accrued the expected settlement of $1.4 million. Final settlement of the mediation and payment of the accrued amount occurred in 2022. Additionally, during the year ended December 31, 2022, the Company settled a lawsuit brought by a former supplier to the Company related to the redemption of ownership interests. The Company had accrued an obligation of $2.0 million as of December 31, 2021. The Company recorded an additional $3.5 million of expense in the consolidated statement of operations for the year ended December 31, 2022 and paid $5.5 million in full satisfaction of the lawsuit. The Company records a liability when a particular contingency is probable and estimable and provides disclosure for contingencies that are at least reasonably possible of resulting in a loss including an estimate which we currently cannot make. The Company has not accrued for any contingency other than those noted above, at December 31, 2022 as the Company does not consider any other contingency to be probable or estimable. The Company expenses legal costs as incurred within selling, general, and administrative expenses on the consolidated statements of operations. Commitments We have commitments for leases and long-term debt that are discussed further in Note 5, Debt, and Note 6, Leases. In addition, we have purchase obligations for goods and services, capital expenditures, and raw materials entered into in the normal course of business.

Segments

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segments

The Company has two operating segments: Products and Services. The Products segment consists of the Company’s manufacturing and distribution business. The Services segment consists of the Company’s veterinary services and related product sales. The segments are based on the discrete financial information reviewed by the Chief Operating Decision Maker (“CODM”) to make resource allocation decisions and to evaluate performance. We measure and evaluate our reportable segments based on their respective Segment Adjusted EBITDA performance. Beginning in the fourth quarter of 2022, we allocate to our segments capital expenditures and certain costs and expenses, such as accounting, legal, human resources, information technology and corporate headquarters expenses, on a pro rata basis based on net sales to better align with the discrete financial information reviewed by our CODM. Such expenses previously were not allocated to segments. The Company has recast prior periods to give effect to this change. This change in presentation had no impact on the Consolidated Statements of Operations.

Financial information relating to the Company’s operating segments for the years ended:


$'s in 000's	Products		Services
December 31, 2022
Net Sales	$	800,305	$	121,208
Segment Adjusted EBITDA	90,333		3,781
Depreciation expense	7,443		7,077
Capital expenditures	8,432		3,541


$'s in 000's	Products		Services
December 31, 2021
Net Sales	$	825,395	$	107,133
Segment Adjusted EBITDA	88,982		3,910
Depreciation expense	7,397		6,969
Capital expenditures	18,568		12,702


$'s in 000's	Products		Services
December 31, 2020
Net Sales	$	725,705	$	54,346
Segment Adjusted EBITDA	68,084		(292)
Depreciation expense	8,063		4,019
Capital expenditures	14,906		7,486

The following table reconciles Segment EBITDA to Net Loss for the periods presented.


	Year Ended December 31
$'s in 000's	2022		2021		2020
Segment Adjusted EBITDA:
Product(1)	$	90,333	$	88,982	68,084
Services(1)	3,781		3,910		(292)
Total	94,114		92,892		67,792
Adjustments:
Depreciation	(14,520)		(14,366)		(12,082)
Amortization	(18,079)		(22,336)		(12,815)
Interest	(27,374)		(24,696)		(22,807)
Loss on debt extinguishment and related costs(2)	—		(6,438)		—
Acquisition costs(3)	(1,464)		(92)		(2,620)
Stock based compensation expense	(11,363)		(9,428)		(9,170)
Non same-store adjustment(4)	(16,423)		(23,159)		(16,354)
Integration costs(5)	(1,171)		142		(9,776)
Litigation expenses	(3,862)		(4,105)		(1,006)
COVID-19 related costs(6)	—		—		(6,476)
CFO Transition	—		(928)		—
Goodwill impairment(7)	(47,264)		—		—
Pretax net loss	$	(47,406)	$	(12,514)	$	(25,314)
Income tax expense	(1,214)		(3,869)		(60,413)
Net loss	$	(48,620)	$	(16,383)	$	(85,727)

(1)Beginning in the fourth quarter of 2022, the Company is allocating corporate expenses to each segment pro rata based on net sales for each segment. The presentation of Product Adjusted EBITDA and Segment Adjusted EBITDA for the years ended December 31, 2021 and 2020 have been recast for comparability. For the years ended December 31, 2022, 2021 and 2020, total corporate expenses were $75.5 million (of which $65.6 million was allocated to Products and $9.9 million was allocated to Services), $68.2 million (of which $60.4 million was allocated to Products and $7.8 million was allocated to Services) and $52.8 million (of which $49.1 million was allocated to Products and $3.7 million was allocated to Services), respectively.

(2) Loss on debt extinguishment and related costs are related to our entering into two new credit facilities, including the write off of deferred financing costs and related costs.

(3) Acquisition costs include legal, accounting, banking, consulting, diligence, and other costs related to completed and contemplated acquisitions.

(4) Non same-store revenue and costs relate to our Services segment and are from wellness centers with less than six full quarters of operating results. This includes clinic launch expenses.

(5) Integration costs represent costs related to integrating the acquired businesses including personnel costs such as severance and signing bonuses, consulting costs, contract termination, and IT conversion costs. The costs are primarily within the Products segment.

(6) Costs related to maintaining service segment infrastructure, staffing, and overhead related to clinics and wellness centers closed due to COVID-19 related health and safety initiatives. Product segment costs related to incremental wages paid to essential workers and sanitation costs due to COVID.

(7) Non-cash goodwill impairment due to a significant decline in the Company’s market capitalization, driven primarily by rising interest rates and macroeconomic conditions. Additionally, the Company made the strategic decision to slow expansion plans for the Services business.

Supplemental geographic disclosures are below.


	Year ended December 31, 2022
$'s in 000's	U.S.		Foreign		Total
Product sales	$	793,427	$	6,878	$	800,305
Service revenue	121,208		—		121,208
Total net sales	$	914,635	$	6,878	$	921,513


	Year ended December 31, 2021
$'s in 000's	U.S.		Foreign		Total
Product sales	$	818,593	$	6,802	$	825,395
Service revenue	107,133		—		107,133
Total net sales	$	925,726	$	6,802	$	932,528


	Year ended December 31, 2020
$'s in 000's	U.S.		Foreign		Total
Product sales	$	719,282	$	6,423	$	725,705
Service revenue	54,346		—		54,346
Total net sales	$	773,628	$	6,423	$	780,051

The net book value of property plant and equipment, by geographic location was as follows as of:


	December 31, 2022		December 31, 2021
United States	$	69,376	$	75,315
Europe	4,019		1,298
Total	$	73,395	$	76,613

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Section 50
-Paragraph 21
-Subparagraph (a)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 32
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Related Parties	12 Months Ended
Related Parties	Dec. 31, 2022
Related Party Transactions [Abstract]
Related Parties	Related Parties Chris Christensen, the brother of CEO, McCord Christensen, acts as the Company’s agent at Moreton Insurance (“Moreton”), which acts as a broker for a number of the Company’s insurance policies. The Company’s annual premium expense, which is paid at a variety of times throughout the year, and is generally paid directly to the relevant insurance company, amounted to $6.6 million and $6.9 million in 2022 and 2021 respectively. Amounts paid to Moreton and subsequently transferred to insurance providers, was $2.8 million in 2020. Mr. Chris Christensen earns various forms of compensation based on the specifics of each policy. In August 2021, the Company sold its prior corporate office in Eagle, Idaho for $4.8 million. The Company utilized Colliers International (“Colliers”) as a broker with Mike Christensen, the brother of CEO, McCord Christensen, as agent. The Company paid approximately $0.1 million in commissions to Colliers as a result of the sale. In December 2021, the Company purchased a parcel of land for $2.5 million. Total commission paid to Colliers was approximately $0.1 million as a result of this purchase. In April 2020, the Company purchased a parcel of land for $2.5 million. Total commission paid to Colliers was approximately $0.1 million as a result of this purchase. Katie Turner, the spouse of CEO, McCord Christensen, is the owner of Acadia Investor Relations LLC, (“Acadia”) which acts as the Company’s investor relations consultant. Acadia has been paid $0.2 million for the year ending December 31, 2022 and 2021, respectively.

Employee Benefit Plans	12 Months Ended
Employee Benefit Plans	Dec. 31, 2022
Retirement Benefits [Abstract]
Employee Benefit Plans	Employee Benefit PlansThe Company sponsors 401(k) defined contribution plans at certain subsidiaries. Participants may elect to defer up to 100% of compensation. The Company makes matching contributions of 100% of the employee deferrals up to 4% of compensation. The Company may also make discretionary profit sharing contributions each year, which are allocated to each eligible participant based on compensation. The Company made matching contributions of $1.7 million, $1.1 million, and $0.9 million, respectively, for the years ended December 31, 2022, 2021 and 2020.

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2022
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events The Company completed the acquisition of all of the membership units of Rocco & Roxie LLC("R&R") on January 13, 2023. The acquisition expands the Company's brand and product portfolio to include stain and odor products. The Company paid $26.5 million for the membership interests of R&R using cash on hand, resulting in R&R becoming a wholly owned subsidiary of PetIQ. The purchase is subject to normal working capital adjustments. As of the date of this filing, the initial accounting for the business combination, including the allocation of the purchase price to the identifiable assets acquired and the liabilities assumed, is incomplete. We expect to disclose a preliminary allocation of the purchase price in our Form 10-Q for the three months ended March 31, 2023. On February 3, 2023, HoldCo and Opco, entered into the First Amendment Agreement to the ABL Facility to replace the interest rate benchmark from LIBOR to SOFR

Principal Business Activity and Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property, plant, and equipment and intangible assets; the valuation of property, plant, and equipment, intangible assets and goodwill, the valuation of assets and liabilities in connection with acquisitions, the valuation of deferred tax assets, the valuation of inventories, and reserves for legal contingencies.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, are at cost, which approximates fair value due to their relatively short maturities. A portion of the purchase price for the acquisition of Community Veterinary Clinics, LLC d/b/a VIP Petcare (“VIP” and such acquisition, the “VIP Acquisition”) was structured in the form of Contingent Notes. The Contingent Notes began bearing interest at a fixed rate of 6.75%, with the balance payable July 17, 2023. The Company fully repaid the Contingent Notes in April 2021 as part of the refinance activity described in Note 5 – Debt.
Cash and Cash Equivalents	Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the date of acquisition. All credit card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash equivalents. The Company maintains its cash accounts in various deposit accounts, the balances of which at times exceeded federal deposit insurance limits during the periods presented.
Receivables and Credit Policy	Receivables and Credit Policy Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 45 days from the invoice date. Accounts receivable are stated at the amount billed to the customer, net of discounts and estimated deductions. The Company does not have a policy for charging interest on overdue customer account balances. The Company provides an allowance for credit losses equal to expected losses. The Company’s estimate is based on historical collection experience, a review of the current status of trade accounts receivable and known current economic conditions. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice. Other receivables consists of various receivables due from vendors, banking institutions, employees, and government agencies.
Inventories	InventoriesInventories are stated at the lower of cost or net realizable value. Cost is determined on the FIFO method and includes estimated rebate amounts. The Company maintains reserves for estimated obsolete or unmarketable inventory based on the difference between the cost of inventory and its estimated net realizable value. In estimating the reserves, management considers factors such as excess or slow-moving inventories, product expiration dating, and market conditions. Changes in these conditions may result in additional reserves.
Property, Plant, and Equipment	Property, Plant, and Equipment Property, plant, and equipment are recorded at cost. Expenditures for improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment charge was recorded for the years ended December 31, 2022, 2021 and 2020. Depreciation and amortization is provided using the straight-line method, based on estimated useful lives of the assets, except for leasehold improvements and finance leased assets which are depreciated over the shorter of the expected useful life or the lease term. Depreciation and amortization expense is recorded in cost of sales and selling, general and administrative expenses in the consolidated statements of operations, depending on the use of the asset.
Goodwill and Intangible Assets	Goodwill and Intangible Assets Goodwill is the excess of the consideration paid over the fair value of specifically identifiable assets, liabilities and contingent liabilities in a business combination. Intangible assets acquired are recorded at estimated fair value. Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are tested for impairment annually during the fourth quarter, and at any time when events suggest an impairment more likely than not occurred. To assess goodwill for impairment, the Company, depending on relevant facts and circumstances, performs either a qualitative assessment or a quantitative analysis utilizing a discounted cash flow valuation model. In performing the qualitative assessment, the Company evaluates relevant factors such as macroeconomic conditions, industry and market considerations, cost factors and overall financial performance, as well as company and reporting unit specific items. If, after assessing these qualitative factors, the Company determines that it is more likely than not that the carrying value of the reporting unit is less than its fair value, then no further testing is required. In performing a quantitative analysis, the Company determines the fair value of a reporting unit using management’s assumptions about future cash flows based on long-range strategic plans. This approach incorporates many assumptions including discount rates and future growth rates. In the event the carrying amount of a reporting unit exceeded its fair value, an impairment loss would be recognized. During the three months ended September 30, 2022, the Company's market capitalization declined significantly, driven by rising interest rates and macroeconomic conditions. Additionally, the Company has slowed its expansion for the Services reporting segment. Based on these events, the Company concluded that an indicator of impairment existed for the Services segment related to its Goodwill during the three months ended September 30, 2022. See Note 4 - Intangible Assets and Goodwill for further information. As a result of the Company's impairment test, the Company determined that the fair value of the Services reporting unit was less than it's carrying value, resulting in a non-cash goodwill impairment charge of $47.3 million during the twelve months ended December 31, 2022. No impairment charge was recorded for the years ended December 31, 2021 and 2020. Indefinite-lived intangible assets are tested for impairment utilizing either a qualitative assessment or a quantitative analysis. For a qualitative assessment, the Company identifies and considers relevant key factors, events, and circumstances to determine whether it is necessary to perform a quantitative impairment test. The key factors considered include macroeconomic, industry, and market conditions, as well as the asset's actual and forecasted results. For the quantitative impairment tests, the Company compares the carrying amounts to the current fair market values. Intangible assets with definite lives are amortized over their estimated useful lives to reflect the pattern over which the economic benefits of the intangible assets are consumed. Definite-lived intangible assets are also evaluated for impairment when impairment indicators are present. Due to aforementioned goodwill impairment, during the three months ended September 30, 2022, the Company determined that a triggering event had occurred for certain amortizable intangible assets and conducted Step 1 of impairment testing utilizing undiscounted cash flows. No additional impairment was recorded as a result of this test or was recorded for the years ended December 31, 2022, 2021, and 2020.
Convertible Debt	Convertible Debt On May 19, 2020, the Company issued $143.8 million aggregate principal amount of Convertible Notes due 2026 (the “Notes”). See Note 5 – “Debt.” Simultaneously, with the issuance of the Notes, we bought capped call options from certain financial institutions to minimize the impact of potential dilution of our Class A common stock upon conversion of the Notes. The premium for the capped call options was recorded as additional paid-in capital in our consolidated balance sheets as the options are settleable in our Class A common stock.
Revenue Recognition	Revenue Recognition When Performance Obligations Are Satisfied A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s performance obligations are product sales and the delivery of veterinary services. Revenue is generally recognized for product sales on a point in time basis when product control is transferred to the customer. In general, control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms, as the customer can direct the use and obtain substantially all of the remaining benefits from the asset at this point in time. The Company determined that certain products manufactured to a customer’s specifications do not have an alternative future use at a reasonable profit margin due to costs associated with reworking, transporting and repackaging these products. These products are produced subject to purchase orders that include an enforceable right to payment. Therefore the Company determined that revenue on these products would be recognized over time, as the products are produced. This represents a minor subset of the products the Company manufactures. Revenue for services is recognized over time as the service is delivered, typically over a single day. Payment is typically rendered at the time of service. Customer contracts generally do not include more than one performance obligation. When a contract does contain more than one performance obligation, we allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The standalone selling price for each distinct good is generally determined by directly observable data. The Company began offering subscription based veterinary service plans to customers of the Services segment in 2021, however total activity during the years ended December 31, 2022 and 2021 was immaterial. The performance obligations in our contracts are satisfied within one year. As such, we have not disclosed the transaction price allocated to remaining performance obligations as of December 31, 2022 and 2021. Variable Consideration In addition to fixed contract consideration, most contracts include some form of variable consideration. The most common forms of variable consideration include discounts, rebates, and sales returns and allowances. Variable consideration is treated as a reduction in revenue when product revenue is recognized. Depending on the specific type of variable consideration, we use either the expected value or most likely amount method to determine the variable consideration. We believe there will not be significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. The Company reviews and updates its estimates and related accruals of variable consideration each period based on the terms of the agreements, historical experience, and any recent changes in the market. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration. Trade marketing expense, consisting primarily of customer pricing allowances and merchandising funds are offered through various programs to customers and are designed to promote our products. They include the cost of in-store product displays, feature pricing in retailers' advertisements and other temporary price reductions. These programs are offered to our customers both in fixed and variable amounts. The ultimate cost of these programs depends on retailer performance and is subject to management estimates. Certain retailers require the payment of product introductory fees in order to obtain space for the Company's products on the retailer's store shelves. This cost is typically a lump sum and is determined using the expected value based on the contract between the two parties. Both trade marketing expense and product introductory fees are recognized as reductions of revenue at the time the transfer of control of the associated products occurs. Accruals for expected payouts, or amounts paid in advance, under these programs are included as accounts payable or other current assets in the consolidated balance sheets. Significant Payment Terms Our customer contracts identify the product, quantity, price, payment and final delivery terms. Payment terms usually include early pay discounts. We grant payment terms consistent with industry standards. Although some payment terms may be more extended, terms beyond one year are not typically granted at contract inception. As a result, we do not adjust the promised amount of consideration for the effects of a significant financing component because the period between our transfer of a promised good or service to a customer and the customer’s payment for that good or service is typically one year or less. Shipping and other costs All shipping and handling costs associated with outbound freight are accounted for as fulfillment costs and are included in the cost of sales. This includes shipping and handling costs after control over a product has transferred to a customer. Sales tax collected from customers and remitted to governmental authorities is not included in revenue and is reflected as a liability on the Company’s consolidated balance sheets. Warranties & Returns PetIQ provides all customers with a standard or assurance type warranty. Either stated or implied, the Company provides assurance the related products will comply with all agreed-upon specifications and other warranties provided under the law. No significant services beyond an assurance warranty are provided to customers. The Company does not grant a general right of return. However, customers may return defective or non-conforming products. Additionally customers from time to time will negotiate certain return provisions to facilitate seasonal retail inventory changes or to reset placement within stores. Customer remedies may include either a cash refund or an exchange of the product. As a result, the right of return and related refund liability is estimated and recorded as a reduction in revenue. This return estimate is reviewed and updated each period and is based on historical sales and return experience. Contract balances Contract asset and liability balances as of December 31, 2022 and 2021 are immaterial. The Company does not have significant deferred revenue or unbilled receivable balances.
Cost of Services	Cost of Services Cost of Services are comprised of all service and product costs related to the delivery of veterinary services, including but not limited to, salaries and contract costs of veterinarians, technicians and other clinic based personnel, transportation and delivery costs, rent, occupancy costs, supply costs, depreciation and amortization of clinic assets, certain marketing and promotional expenses and costs of goods sold.
Research and Development and Advertising Costs	Research and Development and Advertising CostsResearch and development and advertising costs are expensed as incurred and are included in selling, general and administrative expenses.
Collaboration Agreements	Collaboration Agreements Through the Perrigo Animal Health Acquisition, we entered into a product development and asset purchase agreement with a third party for certain product formulations in development by the third party. During the year ended December 31, 2021, the Company opted out of the arrangement for two of the product formulations, which reduced the amount potentially payable under the agreement. The Company may make payments of up to $3.3 million over the course of the next several years contingent on achievement of certain development and regulatory approval milestones on the remaining product formulation in development. Product development costs are expensed as incurred or as milestone payments become probable. There can be no assurance that this product will be approved by the FDA on the anticipated schedule or at all. Consideration paid after FDA approval will be capitalized and amortized to cost of goods sold over the economic life of each product. The expenses paid prior to FDA approval will be included in selling, general and administrative expenses on the consolidated statements of operations.
Litigation	Litigation The Company is subject to various legal proceedings, claims, litigation, investigations and contingencies arising out of the ordinary course of business. If the likelihood of an adverse legal outcome is determined to be probable and the amount of loss is estimable, then a liability is accrued in accordance with accounting guidance for Contingencies. If the assessment indicates a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. The Company consults with both internal and external legal counsel related to litigation. See Note 13 for more information.
Stock based compensation	Stock based compensation The Company expenses employee share-based awards under ASC Topic 718, Compensation—Stock Compensation, which requires compensation cost for the grant-date fair value of share-based awards to be recognized over the requisite service period. Stock options granted to executives and other employees are valued using the Black-Scholes option pricing model. See Note 9 for more information.
Accounting for Income Taxes	Accounting for Income Taxes The Company uses the asset and liability approach for financial accounting and reporting of income taxes. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred taxes are measured using rates expected to apply to taxable income in years in which those temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company uses a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken in a tax return. The first step is a determination of whether the tax position should be recognized in the consolidated financial statements. The second step determines the measurement of the tax position. The Company records potential interest and penalties on uncertain tax positions as a component of income tax expense.
Interest expense, net	Interest expense, netInterest expense, net, is comprised primarily of interest expense related to (i) our debt agreements, (ii) unused line fees, (iii) amortization of deferred loan fees and discounts, (iv) finance lease obligations and the mortgage note outstanding, offset by interest income earned on our demand deposits and other assets.
Non-controlling interest	Non-controlling interest The non-controlling interests on the consolidated statements of operations represents the portion of earnings or loss attributable to the economic interest in the Company’s subsidiary, HoldCo, held by the non-controlling holders of Class B common stock and limited liability company interests in HoldCo. Non-controlling interests on the consolidated balance sheet represents the portion of net assets of the Company attributable to the non-controlling holders of Class B common stock and Limited Liability Company interests in HoldCo.
Loss Per Share	Loss Per Share Basic loss per share is computed by dividing net loss attributable to PetIQ, Inc. by the weighted average shares outstanding during the period. Diluted loss per share is computed by dividing net loss attributable to PetIQ, Inc., adjusted as necessary for the impact of potentially dilutive securities, by the weighted-average shares outstanding during the period and the impact of securities that would have a dilutive effect on loss per share. See Note 8 for further discussion.
Recently Issued Accounting Pronouncements / Adopted Accounting Standard Updates	Recently Issued Accounting Pronouncements / Adopted Accounting Standard Updates From time to time, the Financial Accounting Standards Board or other standards setting bodies issue new accounting pronouncements. Updates to the Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”) In 2022, we adopted ASU 2021-10, Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance, which requires certain footnote disclosure of assistance received from government entities. Certain states and localities we operate in offer various business incentives related to investment or job creation which we may qualify for. The Company determined there was no material impact on the Company's Financial Statements or existing footnote disclosures for the current period.

Principal Business Activity and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Schedule of Accounts Receivable

Accounts receivable, net consists of the following as of:


$'s in 000's	December 31, 2022		December 31, 2021
Trade receivables	$	104,612	$	108,049
Other receivables	13,790		6,405
	118,402		114,454
Less: Allowance for doubtful accounts	(398)		(507)
Total accounts receivable, net	$	118,004	$	113,947

Schedule of Components of Inventories

Major components of inventories consist of the following as of:


$'s in 000's	December 31, 2022		December 31, 2021
Raw materials	$	17,464	$	16,564
Work in progress	2,234		1,650
Finished goods	122,907		78,226
Total inventories	$	142,605	$	96,440

Schedule of Estimated Useful Lives of Property, Plant, and Equipment

The estimated useful lives of property, plant, and equipment are as follows:


Computer equipment and software			3 years
Vehicle and vehicle accessories			3-5 years
Buildings			33 years
Equipment			2-15 years
Leasehold improvements			2-15 years
Furniture and fixtures			5-10 years

Asset Acquisitions (Tables)

12 Months Ended

Dec. 31, 2022

Capstar Acquisition

Schedule of fair value of purchased assets

The fair value assigned to patents and processes was determined based on the income approach. The purchased assets are identified below:


$'s in 000's	Fair Value
Amortizable intangibles
Customer relationships	$	70,901
Patents and processes	9,895
Total amortizable intangibles	80,796
Non-amortizable intangibles
Trademarks and other	15,276
Total purchased intangible assets	$	96,072

Property, Plant, and Equipment (Tables)

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Summary of Property, Plant, and Equipment

Property, plant, and equipment consists of the following at:


$'s in 000's	December 31, 2022		December 31, 2021
Leasehold improvements	$	27,694	$	26,341
Equipment	27,187		26,414
Buildings	26,176		23,302
Computer equipment and software	17,501		15,418
Land	8,934		8,934
Vehicles and accessories	6,771		7,339
Furniture and fixtures	3,499		3,877
Construction in progress	4,797		5,077
	122,559		116,702
Less accumulated depreciation	(49,164)		(40,089)
Total property, plant, and equipment	$	73,395	$	76,613

Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets consist of the following at:


$'s in 000's	Useful Lives	December 31, 2022		December 31, 2021
Amortizable intangibles
Certification	7 years	$	350	$	350
Customer relationships	12-20 years	160,040		160,167
Patents and processes	5-10 years	14,634		14,843
Brand names	5-15 years	24,633		24,731
Total amortizable intangibles		199,657		200,091
Less accumulated amortization		(62,085)		(44,438)
Total net amortizable intangibles		137,572		155,653
Non-amortizable intangibles
Trademarks and other		33,239		33,341
In-process research and development		1,668		1,668
Intangible assets, net of accumulated amortization		$	172,479	$	190,662

Estimated Future Amortization Expense

Estimated future amortization expense for each of the following years is as follows:


Years ending December 31, ($'s in 000's)
2023			16,893
2024			14,537
2025			13,881
2026			13,297
2027			12,810
Thereafter			66,155

Schedule of Goodwill

The following is a summary of the changes in the carrying value of goodwill for the years ended December 31, 2022 and 2021.


	Reporting Unit				Total
($'s in 000's)	Products		Services
Goodwill as of January 1, 2021	$	183,894	$	47,264	$	231,158
Foreign currency translation	(48)		—		(48)
Goodwill as of December 31, 2021	183,846		47,264		231,110
Foreign currency translation	(540)		—		(540)
Impairment	—		$	(47,264)	(47,264)
Goodwill as of December 31, 2022	$	183,306	$	—	$	183,306

Debt (Tables)

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Schedule of Components of Long Term Debt

The following represents the Company’s long-term debt as of:



$'s in 000's	December 31, 2022		December 31, 2021
Convertible Notes	$	143,750	$	143,750
Term loans	295,500		298,500
Revolving credit facility	—		—
Other Debt	19,690		23,518
Net discount on debt and deferred financing fees	(8,531)		(10,418)
	$	450,409	$	455,350
Less current maturities of long-term debt	(7,133)		(6,880)
Total long-term debt	$	443,276	$	448,470

Schedule of Future Maturities of Long-Term Debt

Future maturities of long-term debt, excluding net discount on debt and deferred financing fees, as of December 31, 2022, are as follows:


($'s in 000's)
2023			7,064
2024			7,426
2025			4,600
2026			147,350
2027			3,600
Thereafter			288,900

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

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+ Details

Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Schedule of Components of Lease Expense

The components of lease expense consists of the following:


	Year Ended
$'s in 000's	December 31, 2022		December 31, 2021		December 31, 2020
Finance lease cost
Amortization of right-of-use assets	$	1,185	$	2,215	$	1,681
Interest on lease liabilities	243		338		315
Operating lease cost	6,603		5,556		5,831
Variable lease cost(1)	1,318		1,283		1,130
Short-term lease cost	17		13		34
Sublease income	(269)		(238)		(528)
Total lease cost	$	9,097	$	9,167	$	8,463

(1)Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate.

Schedule of Other Information Related to Leases

Other information related to leases was as follows as of:


	December 31, 2022	December 31, 2021
Weighted-average remaining lease term (years)
Operating leases	3.19	3.86
Finance leases	1.82	2.59
Weighted-average discount rate
Operating leases	4.4%	4.9%
Finance leases	4.5%	4.6%

Summary of Annual Future Commitments Under Non-Cancelable Operating Leases

Annual future commitments under non-cancelable leases as of December 31, 2022, consist of the following:


	Lease Obligations
$'s in 000's	Operating Leases		Finance Leases
2023	$	7,271	$	1,265
2024	5,759		1,045
2025	4,749		238
2026	2,338		95
2027	213		—

Total minimum future obligations	$	20,330	$	2,642
Less interest	(1,330)		(117)
Present value of net future minimum obligations	19,000		2,525
Less current lease obligations	(6,595)		(1,618)
Long-term lease obligations	$	12,405	$	907

Summary of Annual Future Commitments Under Non-Cancelable Finance Leases

Annual future commitments under non-cancelable leases as of December 31, 2022, consist of the following:


	Lease Obligations
$'s in 000's	Operating Leases		Finance Leases
2023	$	7,271	$	1,265
2024	5,759		1,045
2025	4,749		238
2026	2,338		95
2027	213		—

Total minimum future obligations	$	20,330	$	2,642
Less interest	(1,330)		(117)
Present value of net future minimum obligations	19,000		2,525
Less current lease obligations	(6,595)		(1,618)
Long-term lease obligations	$	12,405	$	907

Supplemental Cash Flow Information

Supplemental cash flow information:


	Year Ended
$'s in 000's	December 31, 2022		December 31, 2021		December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	243	$	338	$	315
Operating cash flows from operating leases	6,730		3,928		5,668
Financing cash flows from finance leases	1,493		1,926		1,965
Non-cash right-of-use assets obtained in exchange for lease obligations
Operating leases	4,087		5,212		5,105
Finance leases	59		1,191		2,019

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Components of Earnings Before Net Loss Taxes, By Tax Jurisdiction

The components of pretax net loss, determined by tax jurisdiction, are as follows:


	Year Ended December 31

$'s in 000's	2022		2021		2020
United States	$	(47,767)	$	(12,816)	$	(25,747)
Foreign	361		302		433
Total	$	(47,406)	$	(12,514)	$	(25,314)

Schedule of Provision for Income Taxes

The provision for income taxes for 2022, 2021, and 2020 consisted of the following:


	Year Ended December 31

$'s in 000's	2022		2021		2020
Current:
Federal	$	—	$	—	$	—
State	498		323		327
Foreign	117		26		137
	$	615	$	349	$	464
Deferred and other:
Federal	574		2,661		47,048
State	154		717		12,922
Foreign	(129)		142		(21)
	599		3,520		59,949
Total income tax expense	$	1,214	$	3,869	$	60,413

Schedule of Reconciliation Between Effective Tax Rate and Statutory Tax Rate

Reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows:


	Year Ended December 31

	2022		2021		2020
Income tax expense at federal statutory rate	21.0	%	21.0	%	21.0	%
State and local income taxes net of federal tax benefit	3.6		(0.2)		0.6
Non-controlling interest and nontaxable income	(0.2)		(0.1)		(2.4)
Deferred tax rate changes	—		1.0		(0.6)
Share-based compensation	(1.6)		6.8		0.6
Goodwill impairment	(9.2)		—		—
Return-to-provision	(6.8)		(15.7)		(2.3)
Valuation allowance	(9.4)		(42.9)		(255.2)
Other	—		(0.8)		(0.4)
Effective income tax rate	(2.6)	%	(30.9)	%	(238.7)	%

Schedule of tax effects of temporary differences of deferred tax assets and liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2022 and 2021 are as follows:


$'s in 000's	2022		2021
Deferred tax assets
Investment in partnership	$	69,656	$	77,306
Fixed assets	62		43
Net operating loss carryforwards and tax credits	33,271		25,888
Disallowed business interest carryforward	8,389		3,169
Other accruals and reversals	5		5
Subtotal	111,383		106,411
Less: valuation allowance	(111,218)		(106,258)
Net deferred tax assets	165		153

Deferred tax liabilities
Fixed Assets	$	(112)	$	(151)
Intangible assets	(1,069)		(454)
Other	(9)		(7)
Net deferred tax liabilities	$	(1,190)	$	(612)

Loss per Share (Tables)

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Reconciliation of Basic and Diluted Loss per Share

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted loss per share of Class A common stock:


	Year Ended December 31,
(in 000's, except for per share amounts)	2022		2021		2020
Numerator:
Net loss	(48,620)		(16,383)		(85,727)
Less: net loss attributable to non-controlling interests	(412)		(416)		(3,072)
Net loss attributable to PetIQ, Inc. — basic and diluted	(48,208)		(15,967)		(82,655)
Denominator:
Weighted-average shares of Class A common stock outstanding — basic	29,159		28,242		24,629
Dilutive effects of stock options that are convertible into Class A common stock	—		—		—
Dilutive effect of RSUs	—		—		—
Dilutive effect for conversion of Notes	—		—		—
Weighted-average shares of Class A common stock outstanding — diluted	29,159		28,242		24,629

Loss per share of Class A common stock — basic	$	(1.65)	$	(0.57)	$	(3.36)
Loss per share of Class A common stock — diluted	$	(1.65)	$	(0.57)	$	(3.36)

Stock Based Compensation (Tables)

12 Months Ended

Dec. 31, 2022

Share-based Payment Arrangement [Abstract]

Schedule of Weighted-Average Assumptions

The fair value of the stock option awards was determined on the grant dates using the Black-Scholes valuation model based on the following weighted-average assumptions for the periods ended:


	December 31, 2022		December 31, 2021
Expected term (years) (1)	6.25		6.17
Expected volatility (2)	37.21	%	33.45	%
Risk-free interest rate (3)	1.44	%	0.89	%
Dividend yield (4)	0.00	%	0.00	%

(2)The expected volatility assumption was calculated based on a peer group analysis of stock price volatility with a look back period consistent with the expected option term.

(3)The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds to the expected term of the stock options.

(4)The Company has not paid and does not anticipate paying a cash dividend on our common stock.

Summary of Unvested Stock Options

The following table summarizes the activity of the Company’s unvested stock options for the period ended December 31, 2022:


	Stock Options (in 000's)	Weighted Average Exercise Price		Aggregate Intrinsic Value (in 000's)		Weighted Average Remaining Contractual Life (years)
Outstanding at January 1, 2021	2,086	$	23.93	$	30,302	7.2
Granted	354	35.66
Exercised	(583)	23.05		$	8,499
Forfeited	(64)	24.84
Cancelled	(25)	$	25.70
Outstanding at December 31, 2021	1,768	$	26.51	$	2,897	7.3
Granted	83	14.16
Exercised	(2)	19.49		$	10
Forfeited	(110)	29.24
Cancelled	(86)	31.12
Outstanding at December 31, 2022	1,652	$	25.48	$	53	6.2
Options exercisable at December 31, 2022	1,149

Summary of RSU activity

The following table summarizes the activity of the Company’s RSUs for the period ended December 31, 2022:


	Number of Shares (in 000's)	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2021	317	$	22.91
Granted	268	37.91
Settled	(103)	24.81
Forfeited	(23)	26.02
Outstanding at December 31, 2021	459	$	31.08
Granted	802	20.30
Settled	(231)	27.81
Forfeited	(177)	25.53
Nonvested RSUs at December 31, 2022	853	$	23.06

Non-Controlling Interests (Tables)

12 Months Ended

Dec. 31, 2022

Noncontrolling Interest [Abstract]

Summary of Noncontrolling Interest


	LLC Interests held			% of Total
$'s in 000's	LLC Owners	PetIQ, Inc.	Total	LLC Owners		PetIQ, Inc.
As of January 1, 2021	3,040	25,711	28,751	10.6	%	89.4	%
Stock based compensation transactions	—	660	660
Exchange transactions	(2,768)	2,768	—
As of December 31, 2021	272	29,139	29,411	0.9	%	99.1	%
Stock based compensation transactions	—	188	188
Exchange transactions	(20)	20	—
Unit redemption	—	(373)	(373)
As of December 31, 2022	252	28,974	29,226	0.9	%	99.1	%

Segments (Tables)

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Summary of Financial Information Relating to the Company's Operating Segments

Financial information relating to the Company’s operating segments for the years ended:


$'s in 000's	Products		Services
December 31, 2022
Net Sales	$	800,305	$	121,208
Segment Adjusted EBITDA	90,333		3,781
Depreciation expense	7,443		7,077
Capital expenditures	8,432		3,541


$'s in 000's	Products		Services
December 31, 2021
Net Sales	$	825,395	$	107,133
Segment Adjusted EBITDA	88,982		3,910
Depreciation expense	7,397		6,969
Capital expenditures	18,568		12,702


$'s in 000's	Products		Services
December 31, 2020
Net Sales	$	725,705	$	54,346
Segment Adjusted EBITDA	68,084		(292)
Depreciation expense	8,063		4,019
Capital expenditures	14,906		7,486

Summary of Segment Adjusted EBITDA to Net Loss Reconciliation

The following table reconciles Segment EBITDA to Net Loss for the periods presented.


	Year Ended December 31
$'s in 000's	2022		2021		2020
Segment Adjusted EBITDA:
Product(1)	$	90,333	$	88,982	68,084
Services(1)	3,781		3,910		(292)
Total	94,114		92,892		67,792
Adjustments:
Depreciation	(14,520)		(14,366)		(12,082)
Amortization	(18,079)		(22,336)		(12,815)
Interest	(27,374)		(24,696)		(22,807)
Loss on debt extinguishment and related costs(2)	—		(6,438)		—
Acquisition costs(3)	(1,464)		(92)		(2,620)
Stock based compensation expense	(11,363)		(9,428)		(9,170)
Non same-store adjustment(4)	(16,423)		(23,159)		(16,354)
Integration costs(5)	(1,171)		142		(9,776)
Litigation expenses	(3,862)		(4,105)		(1,006)
COVID-19 related costs(6)	—		—		(6,476)
CFO Transition	—		(928)		—
Goodwill impairment(7)	(47,264)		—		—
Pretax net loss	$	(47,406)	$	(12,514)	$	(25,314)
Income tax expense	(1,214)		(3,869)		(60,413)
Net loss	$	(48,620)	$	(16,383)	$	(85,727)

(2) Loss on debt extinguishment and related costs are related to our entering into two new credit facilities, including the write off of deferred financing costs and related costs.

(3) Acquisition costs include legal, accounting, banking, consulting, diligence, and other costs related to completed and contemplated acquisitions.

(4) Non same-store revenue and costs relate to our Services segment and are from wellness centers with less than six full quarters of operating results. This includes clinic launch expenses.

Long-lived Assets by Geographic Areas

Supplemental geographic disclosures are below.


	Year ended December 31, 2022
$'s in 000's	U.S.		Foreign		Total
Product sales	$	793,427	$	6,878	$	800,305
Service revenue	121,208		—		121,208
Total net sales	$	914,635	$	6,878	$	921,513


	Year ended December 31, 2021
$'s in 000's	U.S.		Foreign		Total
Product sales	$	818,593	$	6,802	$	825,395
Service revenue	107,133		—		107,133
Total net sales	$	925,726	$	6,802	$	932,528


	Year ended December 31, 2020
$'s in 000's	U.S.		Foreign		Total
Product sales	$	719,282	$	6,423	$	725,705
Service revenue	54,346		—		54,346
Total net sales	$	773,628	$	6,423	$	780,051

The net book value of property plant and equipment, by geographic location was as follows as of:


	December 31, 2022		December 31, 2021
United States	$	69,376	$	75,315
Europe	4,019		1,298
Total	$	73,395	$	76,613

Principal Business Activity and Significant Accounting Policies - Narrative (Details) distributionCenter in Thousands	12 Months Ended
	Dec. 31, 2022 distributionCenter location state segment
Accounting Policies [Abstract]
Number of points of distribution \| distributionCenter	60
Number of retail pharmacy locations \| location	2,600
Number of states in which the entity provides veterinary services to pet owners \| state	41
Number of reportable segments \| segment	2

Principal Business Activity and Significant Accounting Policies - Fair value on a recurring basis (Details)	Dec. 31, 2022	Dec. 31, 2021	Jul. 31, 2017
Fair Value of Financial Instruments
Fixed interest rate		2.00%	4.35%
Contingent notes
Fair Value of Financial Instruments
Fixed interest rate	6.75%

Principal Business Activity and Significant Accounting Policies - Receivables and Credit Policy (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Receivables and Credit Policy
Accounts receivable, gross	$ 118,402	$ 114,454
Less: Allowance for doubtful accounts	(398)	(507)
Total accounts receivable, net	118,004	113,947
Trade receivables
Receivables and Credit Policy
Accounts receivable, gross	104,612	108,049
Other receivables
Receivables and Credit Policy
Accounts receivable, gross	$ 13,790	$ 6,405

Principal Business Activity and Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Raw materials	$ 17,464	$ 16,564
Work in progress	2,234	1,650
Finished goods	122,907	78,226
Total inventories	$ 142,605	$ 96,440

Principal Business Activity and Significant Accounting Policies - Property, Plant, and Equipment (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Property, Plant, and Equipment
Impairment of property, plant and equipment	$ 0	$ 0	$ 0
Computer equipment and software
Property, Plant, and Equipment
Estimated useful life	3 years
Buildings
Property, Plant, and Equipment
Estimated useful life	33 years
Minimum \| Vehicle and vehicle accessories
Property, Plant, and Equipment
Estimated useful life	3 years
Minimum \| Equipment
Property, Plant, and Equipment
Estimated useful life	2 years
Minimum \| Leasehold improvements
Property, Plant, and Equipment
Estimated useful life	2 years
Minimum \| Furniture and fixtures
Property, Plant, and Equipment
Estimated useful life	5 years
Maximum \| Vehicle and vehicle accessories
Property, Plant, and Equipment
Estimated useful life	5 years
Maximum \| Equipment
Property, Plant, and Equipment
Estimated useful life	15 years
Maximum \| Leasehold improvements
Property, Plant, and Equipment
Estimated useful life	15 years
Maximum \| Furniture and fixtures
Property, Plant, and Equipment
Estimated useful life	10 years

Principal Business Activity and Significant Accounting Policies - Goodwill and Intangible Assets (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Goodwill impairment	$ 47,264,000	$ 0	$ 0
Impairment of indefinite-lived intangible assets	$ 0	$ 0	$ 0

Principal Business Activity and Significant Accounting Policies - Convertible Debt (Details) $ in Millions	May 19, 2020 USD ($)
Convertible Notes Payable
Debt
Aggregate principal amount	$ 143.8

Principal Business Activity and Significant Accounting Policies - Disaggregation of Revenue (Details)	Dec. 31, 2022
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Disaggregation of revenue
Remaining performance obligation, expected timing of satisfaction, period	1 year

Principal Business Activity and Significant Accounting Policies - Research and Development and Advertising Costs (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Research and development costs	$ 2.1	$ 8.0	$ 2.3
Advertising costs	$ 20.1	$ 16.2	$ 10.1

Principal Business Activity and Significant Accounting Policies - Collaboration Agreements (Details)	12 Months Ended
	Dec. 31, 2022 USD ($) product	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Accounting Policies [Abstract]
Number of product opted out \| product	2
Collaboration agreements, contingent payments to be made	$ 3,300,000
Collaboration agreement, probable milestone payments accrued	$ 0	$ 2,000,000	$ 0

Principal Business Activity and Significant Accounting Policies - Interest expense, net (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Interest expense	$ 28.2	$ 24.7	$ 22.8
Interest income	$ 0.8	$ 0.0	$ 0.0

Asset Acquisitions - Narrative (Details) $ in Thousands		12 Months Ended
Asset Acquisitions - Narrative (Details) $ in Thousands	Jul. 31, 2020 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	May 31, 2020	May 19, 2020	Jul. 31, 2017
Business Acquisition [Line Items]
Acquisition Price		$ 11,973	$ 31,270	$ 22,392
Fixed interest rate			2.00%				4.35%
Capitalized asset acquisition cost		$ 1,000
Fair value measurement input		15
Weighted average amortization period		11 years 9 months 18 days
Convertible Notes Payable
Business Acquisition [Line Items]
Fixed interest rate					4.00%	4.00%
Capstar Acquisition
Business Acquisition [Line Items]
Acquisition Price	$ 95,000

Asset Acquisitions - Schedule of Fair Value of Purchased Assets (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Business Acquisition [Line Items]
Amortizable intangibles	$ 80,796
Total purchased intangible assets	96,072
Trademarks and other
Business Acquisition [Line Items]
Non-amortizable intangibles	15,276
Customer relationships
Business Acquisition [Line Items]
Amortizable intangibles	70,901
Patents and processes
Business Acquisition [Line Items]
Amortizable intangibles	$ 9,895

Asset Acquisitions - Supplier Termination, Settlement and Asset Purchase Agreement (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Jul. 31, 2020	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Business Acquisition [Line Items]
Amount required to pay pursuant to settlement agreement	$ 20,600
Payment on signing	2,600
Payment per quarter	1,000
Estimated fair value of the payment obligation	17,500
Fair value of assets acquired	$ 9,700	$ 0	$ 0	$ 9,686
Patents and processes
Business Acquisition [Line Items]
Amortizable Intangibles, useful lives		10 years

Property, Plant, and Equipment - Summary of Property, Plant, and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property, Plant, and Equipment
Property, plant and equipment, gross	$ 122,559	$ 116,702
Less accumulated depreciation	(49,164)	(40,089)
Total property, plant, and equipment	73,395	76,613
Leasehold improvements
Property, Plant, and Equipment
Property, plant and equipment, gross	27,694	26,341
Equipment
Property, Plant, and Equipment
Property, plant and equipment, gross	27,187	26,414
Buildings
Property, Plant, and Equipment
Property, plant and equipment, gross	26,176	23,302
Computer equipment and software
Property, Plant, and Equipment
Property, plant and equipment, gross	17,501	15,418
Land
Property, Plant, and Equipment
Property, plant and equipment, gross	8,934	8,934
Vehicles and accessories
Property, Plant, and Equipment
Property, plant and equipment, gross	6,771	7,339
Furniture and fixtures
Property, Plant, and Equipment
Property, plant and equipment, gross	3,499	3,877
Construction in progress
Property, Plant, and Equipment
Property, plant and equipment, gross	$ 4,797	$ 5,077

Property, Plant, and Equipment - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 14,520	$ 14,366	$ 12,082
Accelerated depreciation	$ 0	$ 2,000	$ 0

Intangible Assets and Goodwill - Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Amortizable intangibles
Total amortizable intangibles	$ 199,657	$ 200,091
Less accumulated amortization	(62,085)	(44,438)
Total net amortizable intangibles	137,572	155,653
Non-amortizable intangibles
Intangible assets, net of accumulated amortization	172,479	190,662
Trademarks and other
Non-amortizable intangibles
Non-amortizable intangibles	33,239	33,341
In-process research and development
Non-amortizable intangibles
Non-amortizable intangibles	$ 1,668	1,668
Certification
Amortizable intangibles
Amortizable Intangibles, useful lives	7 years
Total amortizable intangibles	$ 350	350
Customer relationships
Amortizable intangibles
Total amortizable intangibles	$ 160,040	160,167
Patents and processes
Amortizable intangibles
Amortizable Intangibles, useful lives	10 years
Total amortizable intangibles	$ 14,634	14,843
Brand names
Amortizable intangibles
Total amortizable intangibles	$ 24,633	$ 24,731
Minimum \| Customer relationships
Amortizable intangibles
Amortizable Intangibles, useful lives	12 years
Minimum \| Patents and processes
Amortizable intangibles
Amortizable Intangibles, useful lives	5 years
Minimum \| Brand names
Amortizable intangibles
Amortizable Intangibles, useful lives	5 years
Maximum \| Customer relationships
Amortizable intangibles
Amortizable Intangibles, useful lives	20 years
Maximum \| Patents and processes
Amortizable intangibles
Amortizable Intangibles, useful lives	10 years
Maximum \| Brand names
Amortizable intangibles
Amortizable Intangibles, useful lives	15 years

Intangible Assets and Goodwill - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($) project	Dec. 31, 2020 USD ($)
Intangible Assets and Goodwill
Amortization of intangible assets	$ 18,100	$ 22,300	$ 12,800
Number of acquired R&D projects opted out \| project		2
General and administrative expenses	$ 182,561	$ 170,521	$ 138,375
In-process research and development
Intangible Assets and Goodwill
General and administrative expenses		$ 3,800

Intangible Assets and Goodwill - Estimated future amortization expense (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2023	$ 16,893
2024	14,537
2025	13,881
2026	13,297
2027	12,810
Thereafter	$ 66,155

Intangible Assets and Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Summary of Changes in Carrying Value of Goodwill
Beginning balance	$ 231,110	$ 231,158
Foreign currency translation	(540)	(48)
Impairment	(47,264)	0	$ 0
Ending balance	183,306	231,110	231,158
Products
Summary of Changes in Carrying Value of Goodwill
Beginning balance	183,846	183,894
Foreign currency translation	(540)	(48)
Impairment	0
Ending balance	183,306	183,846	183,894
Services
Summary of Changes in Carrying Value of Goodwill
Beginning balance	47,264	47,264
Foreign currency translation	0	0
Impairment	(47,264)
Ending balance	$ 0	$ 47,264	$ 47,264

Debt - Narrative (Details) - USD ($) $ in Millions		12 Months Ended
Debt - Narrative (Details) - USD ($) $ in Millions	Apr. 13, 2021	Dec. 31, 2022
Notes Payable VIP Acquisition
Debt
Repayment of debt	$ 27.5
Write off deferred financing fees	5.5
Transaction cost on termination of debt instrument	0.9
Senior Secured Asset-Based Revolving Credit Facility - ABL
Debt
Maximum borrowing capacity	$ 125.0
Eligible investment - grade accounts	90.00%
Percentage of eligible investment other accounts	85.00%
Percentage of net orderly liquidation value of cost of certain eligible on hand and in transit inventory	85.00%
Percentage of qualified cash	100.00%
Line of credit facility, interest rate at period end		4.39%
Unused facility fee (as a percent)		0.35%
Senior Secured Term Loan Facility - Term Loan B
Debt
Maximum borrowing capacity	$ 300.0
Line of credit facility, interest rate at period end		8.57%
Floor rate	0.50%
Debt instrument, frequency of periodic payment	quarterly
Percentage of periodic payment, principal	0.25%
Lines of credit, fair value		$ 268.9
Senior Secured Term Loan Facility - Term Loan B \| Base Rate
Debt
Variable interest rate, basis points spread over variable reference rate (as a percent)	3.25%
Senior Secured Term Loan Facility - Term Loan B \| London Interbank Offered Rate (LIBOR)
Debt
Variable interest rate, basis points spread over variable reference rate (as a percent)	4.25%

Debt - Convertible Notes (Details) $ in Thousands	May 19, 2020 USD ($) day	Dec. 31, 2022 USD ($)	Dec. 31, 2021	May 31, 2020	Jul. 31, 2017
Debt
Interest rate			2.00%		4.35%
Convertible Notes Payable
Debt
Aggregate principal amount	$ 143,800
Interest rate	4.00%			4.00%
Class A Common Stock \| Convertible Notes Payable
Debt
Aggregate principal amount	$ 143,800
Interest rate	4.00%
Net proceeds from the debt	$ 137,900
Conversion ratio	33.7268
Denomination for conversion of debt	$ 1,000
Threshold trading days \| day	20
Threshold consecutive trading days \| day	30
Fair value of our convertible notes		$ 120,500
Class A Common Stock \| Convertible Notes Payable \| Minimum
Debt
Premium percentage on conversion price	130.00%

Debt - Capped Call Transactions (Details) $ / shares in Units, $ in Thousands			12 Months Ended
	May 19, 2020 USD ($) distributionCenter	May 19, 2020 distributionCenter $ / shares	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Debt
Number of option counterparties \| distributionCenter	2	2
Payment for capped call options			$ 0	$ 0	$ 14,821
Class A Common Stock
Debt
Derivative cap price per share \| $ / shares		$ 41.51
Class A Common Stock \| Capped Call Transactions
Debt
Payment for capped call options	$ 14,800

Debt - Amended & Restated Credit and Term Loan Agreements (Details) $ in Millions	Jul. 08, 2019 USD ($)
Revolving credit facility
Debt
Maximum borrowing capacity	$ 125.0
Revolving credit facility \| Minimum
Debt
Unused facility fee (as a percent)	0.375%
Revolving credit facility \| Maximum
Debt
Unused facility fee (as a percent)	0.50%
Amended & Restated Term Loan Credit Agreement
Debt
Maximum borrowing capacity	$ 220.0
Amended & Restated Term Loan Credit Agreement \| Eurodollar
Debt
Variable interest rate, basis points spread over variable reference rate (as a percent)	5.00%

Debt - General Other Debt (Details) - USD ($) $ in Thousands	1 Months Ended		12 Months Ended
	Jul. 31, 2020	Jul. 31, 2017	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Jan. 17, 2018
Debt
Fixed interest rate		4.35%		2.00%
Amortization schedule		25 years
Market interest rate	8.30%		6.39%
Balloon payment		10 years
Amount required to pay pursuant to settlement agreement	$ 20,600
Payment on signing	2,600
Payment per quarter	1,000
Estimated fair value of the payment obligation	$ 17,500
Guarantee note			$ 450,409	$ 455,350
Earn-outs payments based on achievement of company Adjusted EBITDA targets				7,500
Earn-outs payments based on achievement of company Adjusted EBITDA targets for 2019				10,000
Debt issuance costs			$ 0	7,656	$ 550
Guaranteed note
Debt
Guarantee note						$ 10,000
Contingent Note
Debt
Fixed interest rate			6.75%
Contingent notes			$ 27,500
Senior Secured Term Loan Facility - Term Loan B
Debt
Debt issuance costs				6,400
Senior Secured Asset-Based Revolving Credit Facility - ABL
Debt
Debt issuance costs				1,000
New Mortgage
Debt
Debt issuance costs				$ 200

Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Debt
Other Debt	$ 19,690	$ 23,518
Net discount on debt and deferred financing fees	(8,531)	(10,418)
Guarantee note	450,409	455,350
Less current maturities of long-term debt	(7,133)	(6,880)
Total long-term debt	443,276	448,470
Term loans
Debt
Outstanding balance	295,500	298,500
Revolving credit facility
Debt
Outstanding balance	0	0
Convertible Notes
Debt
Outstanding balance	$ 143,750	$ 143,750

Debt - Future Maturities (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Debt Disclosure [Abstract]
2023	$ 7,064
2024	7,426
2025	4,600
2026	147,350
2027	3,600
Thereafter	$ 288,900

Leases - Narrative (Details)	Dec. 31, 2022
Minimum
Lessee, Lease, Description [Line Items]
Renewal options term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Renewal options term	10 years

Leases - Components of Lease Expense and Other Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Finance lease cost
Amortization of right-of-use assets	$ 1,185	$ 2,215	$ 1,681
Interest on lease liabilities	243	338	315
Operating lease cost	6,603	5,556	5,831
Variable lease cost	1,318	1,283	1,130
Short-term lease cost	17	13	34
Sublease income	(269)	(238)	(528)
Total lease cost	$ 9,097	$ 9,167	$ 8,463
Weighted-average remaining lease term (years)
Operating leases	3 years 2 months 8 days	3 years 10 months 9 days
Finance leases	1 year 9 months 25 days	2 years 7 months 2 days
Weighted-average discount rate
Operating leases	4.40%	4.90%
Finance leases	4.50%	4.60%

Leases - Annual Future Commitments Under Non-Cancelable Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Operating Leases
2023	$ 7,271
2024	5,759
2025	4,749
2026	2,338
2027	213
Total minimum future obligations	20,330
Less interest	(1,330)
Present value of net future minimum obligations	19,000
Less current lease obligations	(6,595)	$ (6,500)
Long-term lease obligations	$ 12,405	14,843
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Current portion of long-term debt and finance leases
Finance Leases
2023	$ 1,265
2024	1,045
2025	238
2026	95
2027	0
Total minimum future obligations	2,642
Less interest	(117)
Present value of net future minimum obligations	2,525
Less current lease obligations	(1,618)
Long-term lease obligations	$ 907	$ 2,493

Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$ 243	$ 338	$ 315
Operating cash flows from operating leases	6,730	3,928	5,668
Financing cash flows from finance leases	1,493	1,926	1,965
Non-cash right-of-use assets obtained in exchange for lease obligations
Operating leases	4,087	5,212	5,105
Finance leases	$ 59	$ 1,191	$ 2,019

Income Taxes - Narrative (Details) $ in Millions	Dec. 31, 2022 USD ($)
Noncontrolling Interest [Line Items]
Deferred tax assets	$ 75.6
State and Local Jurisdiction
Noncontrolling Interest [Line Items]
State business tax credits related to tax incentive	$ 1.9
LLC Owners
Noncontrolling Interest [Line Items]
Interest held by parent	0.90%

Income Taxes - Components of Earnings Before Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
United States	$ (47,767)	$ (12,816)	$ (25,747)
Foreign	361	302	433
Pretax net loss	$ (47,406)	$ (12,514)	$ (25,314)

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8906-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 940
-SubTopic 20
-Section 25
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=123384075&loc=d3e41242-110953

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(10))
-URI http://asc.fasb.org/extlink&oid=123367319&loc=SL114868664-224227

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(8))
-URI http://asc.fasb.org/extlink&oid=120400993&loc=SL114874131-224263

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 235
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-05(b)(2))
-URI http://asc.fasb.org/extlink&oid=120399901&loc=d3e537907-122884

Reference 9: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(15))
-URI http://asc.fasb.org/extlink&oid=120399700&loc=SL114874048-224260

+ Details

Income Taxes - Provision for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Current:
Federal	$ 0	$ 0	$ 0
State	498	323	327
Foreign	117	26	137
Total current	615	349	464
Deferred and other:
Federal	574	2,661	47,048
State	154	717	12,922
Foreign	(129)	142	(21)
Total deferred and other	599	3,520	59,949
Total income tax expense	$ 1,214	$ 3,869	$ 60,413

Income Taxes - Effective Income Tax Rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Reconciliation:
Income tax expense at federal statutory rate	21.00%	21.00%	21.00%
State and local income taxes net of federal tax benefit	3.60%	(0.20%)	0.60%
Non-controlling interest and nontaxable income	(0.20%)	(0.10%)	(2.40%)
Deferred tax rate changes	0.00%	1.00%	(0.60%)
Share-based compensation	(1.60%)	6.80%	0.60%
Goodwill impairment	(9.20%)	0.00%	0.00%
Return-to-provision	(6.80%)	(15.70%)	(2.30%)
Valuation allowance	(9.40%)	(42.90%)	(255.20%)
Other	0.00%	(0.80%)	(0.40%)
Effective income tax rate	(2.60%)	(30.90%)	(238.70%)

Income Taxes - Deferred Tax Assets Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets
Investment in partnership	$ 69,656	$ 77,306
Fixed assets	62	43
Net operating loss carryforwards and tax credits	33,271	25,888
Disallowed business interest carryforward	8,389	3,169
Other accruals and reversals	5	5
Subtotal	111,383	106,411
Less: valuation allowance	(111,218)	(106,258)
Net deferred tax assets	165	153
Deferred tax liabilities
Fixed Assets	(112)	(151)
Intangible assets	(1,069)	(454)
Other	(9)	(7)
Net deferred tax liabilities	$ (1,190)	$ (612)

Income Taxes - Valuation Allowance and NOL (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Federal net operating loss carryforwards	$ 121,300,000
Deferred tax assets, operating loss carryforwards, subject to expiration	1,900,000
Deferred tax assets, operating loss carryforwards, not subject to expiration	$ 119,400,000
Percentage of taxable income offset against net operating carryforward	80.00%
Federal interest expense carryover	$ 39,900,000
Charitable contribution carryforwards	700,000
State net operating loss carryforwards	82,100,000
Foreign net operating loss carryforwards indefinite carryforward period	600,000
Deferred tax assets	111,218,000	$ 106,258,000
Unrecognized tax benefit would impact the effective tax rate	$ 0

Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Numerator:
Net loss	$ (48,620)	$ (16,383)	$ (85,727)
Less: net loss attributable to non-controlling interests	(412)	(416)	(3,072)
Net loss attributable to PetIQ, Inc.	$ (48,208)	$ (15,967)	$ (82,655)
Denominator:
Weighted-average shares of Class A common stock outstanding -- basic (in shares)	29,159	28,242	24,629
Dilutive effect for conversion of Notes (in shares)	0	0	0
Weighted-average shares of Class A common stock outstanding - diluted (in shares)	29,159	28,242	24,629
Loss per share of Class A common stock - basic (in dollars per share)	$ (1.65)	$ (0.57)	$ (3.36)
Loss per share of Class A common stock - diluted (in dollars per share)	$ (1.65)	$ (0.57)	$ (3.36)
Stock Options
Denominator:
Dilutive effect of stock options and RSUs (in shares)	0	0	0
Restricted Stock Units
Denominator:
Dilutive effect of stock options and RSUs (in shares)	0	0	0

Stock Based Compensation - Narrative (Details) - USD ($)	12 Months Ended			60 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2022	Dec. 31, 2018
Stock Based Compensation
Granted (in shares)	83,000	354,000
Vesting percentage on each anniversary of the grant date	25.00%
Maximum term for stock options	6 years 3 months	6 years 2 months 1 day
Stock based compensation expense	$ 11,363,000	$ 9,428,000	$ 9,170,000
Weighted average grant date fair value of stock options granted (in dollars per share)	$ 9.14	$ 12.39
Unrecognized compensation cost related to unvested stock options	$ 3,000,000			$ 3,000,000
Unrecognized compensation cost related to unvested options, recognized weighted-average period (years)	2 years
Income tax benefit for share-based compensation arrangements	$ 1,214,000	$ 3,869,000	60,413,000
Class A Common Stock \| Omnibus Plan
Stock Based Compensation
Common stock, increase in capital shares reserved for issuance	1,890,000			1,890,000
Shares reserved for future issuance (in shares)	5,804,000			5,804,000
Share available for issuance (in shares)	2,143,955	771,000		2,143,955
Class A Common Stock \| Induction and Retention Stock Plan
Stock Based Compensation
Number of shares reserved (in shares)					800,000
Granted (in shares)				760,000
Maximum
Stock Based Compensation
Maximum term for stock options	10 years
Stock Options
Stock Based Compensation
Stock based compensation expense	$ 3,200,000	$ 5,200,000	6,500,000
Restricted Stock Units
Stock Based Compensation
Stock based compensation expense	8,100,000	4,300,000	2,600,000
Unrecognized compensation cost related to unvested stock options	$ 14,200,000			$ 14,200,000
Vesting period (years)	2 years 9 months 18 days
Income tax benefit for share-based compensation arrangements	$ 0	$ 0	$ 0

Stock Based Compensation - Weighted Average Assumptions (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-based Payment Arrangement [Abstract]
Expected term (years)	6 years 3 months	6 years 2 months 1 day
Expected volatility	37.21%	33.45%
Risk-free interest rate	1.44%	0.89%
Dividend yield	0.00%	0.00%

Stock Based Compensation - Summary of Unvested Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Stock Options
Beginning balance (in shares)	1,768	2,086
Granted (in shares)	83	354
Exercised (in shares)	(2)	(583)
Forfeited (in shares)	(110)	(64)
Cancelled (in shares)	(86)	(25)
Ending balance (in shares)	1,652	1,768	2,086
Options exercisable (in shares)	1,149
Weighted Average Exercise Price
Beginning balance (in dollars per share)	$ 26.51	$ 23.93
Granted (in dollars per share)	14.16	35.66
Exercised (in dollars per share)	19.49	23.05
Forfeited (in dollars per share)	29.24	24.84
Cancelled (in dollars per share)	31.12	25.70
Ending balance (in dollars per share)	$ 25.48	$ 26.51	$ 23.93
Aggregate Intrinsic Value	$ 53	$ 2,897	$ 30,302
Aggregate Intrinsic Value - Exercised	$ 10	$ 8,499
Weighted Average Remaining Contractual Life (years)	6 years 2 months 12 days	7 years 3 months 18 days	7 years 2 months 12 days

Stock Based Compensation - Restricted Stock (Details) - Restricted Stock Units - $ / shares shares in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Number of Shares
Beginning balance (in shares)	459	317
Granted (in shares)	802	268
Settled (in shares)	(231)	(103)
Forfeited (in shares)	(177)	(23)
Ending balance (in shares)	853	459
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share)	$ 31.08	$ 22.91
Granted (in dollars per share)	20.30	37.91
Settled (in dollars per share)	27.81	24.81
Forfeited (in dollars per share)	25.53	26.02
Ending balance (in dollars per share)	$ 23.06	$ 31.08

Stockholders' Equity (Details) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2022 vote $ / shares shares	Sep. 06, 2022 USD ($)	Dec. 31, 2021 $ / shares shares
Class of Stock [Line Items]
Blank check preferred stock, authorized (in shares)	12,500,000
Staggered term (in years)	3 years
Number of votes per share (vote) \| vote	1
Stock repurchase program authorized amount \| $		$ 30
Treasury stock purchase (in shares)	373,408
Shares repurchased, weighted average price per share (in dollars per share) \| $ / shares	$ 10.33
Class A Common Stock
Class of Stock [Line Items]
Common stock authorized (in shares)	125,000,000		125,000,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.001		$ 0.001
Share ratio (in shares)	1
Class B Common Stock
Class of Stock [Line Items]
Common stock authorized (in shares)	8,401,521		8,402,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.001		$ 0.001
Share ratio (in shares)	1

Non-Controlling Interests (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Schedule of LLC Interests Held [Roll Forward]
Ending balance (in shares)	29,000
LLC Owners
Schedule of LLC Interests Held [Roll Forward]
Beginning balance (in shares)	272	3,040
Stock based compensation transactions (in shares)	0	0
Exchange transactions (in shares)		(2,768)
Unit redemption (in shares)	0
Ending balance (in shares)	252	272
Amended Holdco LLC Agreement
Schedule of LLC Interests Held [Roll Forward]
Beginning balance (in shares)	29,411	28,751
Stock based compensation transactions (in shares)	188	660
Exchange transactions (in shares)		0
Unit redemption (in shares)	(373)
Ending balance (in shares)	29,226	29,411
Holdco
Schedule of LLC Interests Held [Roll Forward]
Weighted average ownership percentage in Holdco	99.10%	96.60%
LLC Owners
Schedule of LLC Interests Held [Roll Forward]
Ownership interest by continuing LLC owners	0.90%	0.90%	10.60%
Ownership interest in Holdco	0.90%
PetIQ, Inc.
Schedule of LLC Interests Held [Roll Forward]
Beginning balance (in shares)	29,139	25,711
Stock based compensation transactions (in shares)	188	660
Exchange transactions (in shares)		2,768
Unit redemption (in shares)	(373)
Ending balance (in shares)	28,974	29,139
Ownership interest in Holdco	99.10%	99.10%	89.40%

Customer Concentration (Details) - Customer Concentration Risk - customer	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Revenue Benchmark \| One Customer
Customer Concentration
Concentration risk		26.00%
Revenue Benchmark \| Two Customers
Customer Concentration
Concentration risk	35.00%		42.00%
Accounts Receivable
Customer Concentration
Number of customers accounted for more than 10% of sales individually	1	1
Accounts Receivable \| One Customer
Customer Concentration
Concentration risk	46.00%	47.00%

Commitments and Contingencies (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Med Vets, Inc. and Bay Medical Solutions Inc
Litigation Contingencies
Loss contingency, expense recorded during period	$ 3.5	$ 3.5	$ 7.8
Mediation With Third Party
Litigation Contingencies
Liability recorded		1.4
Lawsuit By Former Supplier For Redemption Of Ownership Interest
Litigation Contingencies
Loss contingency, expense recorded during period	3.5
Liability recorded		$ 2.0
Loss contingency payments	$ 5.5

Segments - Narrative (Details) $ in Millions	12 Months Ended
Segments - Narrative (Details) $ in Millions	Dec. 31, 2022 USD ($) segment	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Number of operating segments \| segment	2
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Corporate expenses	$ 75.5	$ 68.2	$ 52.8
Operating Segments \| Products
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Corporate expenses	65.6	60.4	49.1
Operating Segments \| Services
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Corporate expenses	$ 9.9	$ 7.8	$ 3.7

Segments - Schedule of Operating Segments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Segments
Net Sales	$ 921,513	$ 932,528	$ 780,051
Segment Adjusted EBITDA	94,114	92,892	67,792
Products
Segments
Net Sales	800,305	825,395	725,705
Services
Segments
Net Sales	121,208	107,133	54,346
Operating Segments \| Products
Segments
Net Sales	800,305	825,395	725,705
Segment Adjusted EBITDA	90,333	88,982	68,084
Depreciation expense	7,443	7,397	8,063
Capital expenditures	8,432	18,568	14,906
Operating Segments \| Services
Segments
Net Sales	121,208	107,133	54,346
Segment Adjusted EBITDA	3,781	3,910	(292)
Depreciation expense	7,077	6,969	4,019
Capital expenditures	$ 3,541	$ 12,702	$ 7,486

- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Segments - Reconciliation of Segment EBITDA to Net Loss (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment Adjusted EBITDA	$ 94,114	$ 92,892	$ 67,792
Depreciation	(14,520)	(14,366)	(12,082)
Amortization	(18,079)	(22,336)	(12,815)
Interest	(27,374)	(24,696)	(22,807)
Loss on debt extinguishment and related costs	0	(6,438)	0
Acquisition costs	(1,464)	(92)	(2,620)
Stock based compensation expense	(11,363)	(9,428)	(9,170)
Non same-store adjustment	(16,423)	(23,159)	(16,354)
Integration costs	(1,171)	142	(9,776)
Litigation expenses	(3,862)	(4,105)	(1,006)
COVID-19 related costs	0	0	(6,476)
CFO Transition	0	(928)	0
Goodwill impairment	(47,264)	0	0
Pretax net loss	(47,406)	(12,514)	(25,314)
Income tax expense	(1,214)	(3,869)	(60,413)
Net loss	(48,620)	(16,383)	(85,727)
Products \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment Adjusted EBITDA	90,333	88,982	68,084
Services \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment Adjusted EBITDA	$ 3,781	$ 3,910	$ (292)

Segments - Supplemental Geographic Disclosures (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Segments
Net Sales	$ 921,513	$ 932,528	$ 780,051
Products
Segments
Net Sales	800,305	825,395	725,705
Services
Segments
Net Sales	121,208	107,133	54,346
U.S.
Segments
Net Sales	914,635	925,726	773,628
U.S. \| Products
Segments
Net Sales	793,427	818,593	719,282
U.S. \| Services
Segments
Net Sales	121,208	107,133	54,346
Foreign
Segments
Net Sales	6,878	6,802	6,423
Foreign \| Products
Segments
Net Sales	6,878	6,802	6,423
Foreign \| Services
Segments
Net Sales	$ 0	$ 0	$ 0

- Definition

+ References

+ Details

Segments - Net Book Value of Property, Plant and Equipment by Geographic Location (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Segments
Property, plant and equipment, net	$ 73,395	$ 76,613
U.S.
Segments
Property, plant and equipment, net	69,376	75,315
Europe
Segments
Property, plant and equipment, net	$ 4,019	$ 1,298

Related Parties (Details) - USD ($) $ in Millions	1 Months Ended			12 Months Ended
Related Parties (Details) - USD ($) $ in Millions	Dec. 31, 2021	Aug. 31, 2021	Apr. 30, 2020	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Insurance Policy Premium Expense \| Relevant Insurance Company
Related Parties
Premium expense				$ 6.6	$ 6.9
Insurance Policy Premium Expense \| Moreton Insurance
Related Parties
Premium expense						$ 2.8
Real Estate Commissions Expense \| Colliers International
Related Parties
Payments to acquire land	$ 2.5
Payment of broker's commission	$ 0.1
Real Estate Commissions Expense \| Colliers International \| Corporate Office in Eagle Idaho
Related Parties
Amount received for sale of corporate office		$ 4.8
Commission paid		$ 0.1
Mike Christensen \| Real Estate Commissions Expense \| Colliers International
Related Parties
Payments to acquire land			$ 2.5
Payment of broker's commission			$ 0.1
Acadia Investor Relations L LC
Related Parties
Payments to investor relations consultant				$ 0.2	$ 0.2

Employee Benefit Plans (Details) - USD ($) $ in Millions	12 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Retirement Benefits [Abstract]
Employee contribution	100.00%
Employer contribution	100.00%
Employer contribution, percent of match	4.00%
Employer matching contribution	$ 1.7	$ 1.1	$ 0.9

Subsequent Events (Details) $ in Millions	Jan. 13, 2023 USD ($)
Subsequent Event
Subsequent Event [Line Items]
Business combination, consideration transferred	$ 26.5