0001628280-23-028317 | 10-Q | XBRL Viewer

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Business Combination - Rocco & Roxie (Details) - USD ($) $ in Thousands		6 Months Ended
	Jan. 13, 2023	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Goodwill		$ 204,204	$ 183,306	$ 231,110
Rocco & Roxie
Business Acquisition [Line Items]
Consideration paid	$ 27,600
Payments to acquire business	26,500
Preliminary working capital	1,100
Current assets	3,020
Other assets	1,208
Amortizable intangibles	7,420
Intangibles, Adjustment	(500)
Goodwill	20,766
Goodwill, Adjustments	500
Total assets	32,414
Current liabilities	1,000
Other tax liabilities	3,780
Total liabilities	4,780
Purchase price, net of cash acquired	27,634
Weighted average amortization period		9 years 10 months 24 days
Amount of goodwill not tax deductible	19,500
Transaction costs	500
Rocco & Roxie \| As reported
Business Acquisition [Line Items]
Current assets	3,020
Other assets	1,208
Amortizable intangibles	7,920
Goodwill	20,266
Total assets	32,414
Current liabilities	1,000
Other tax liabilities	3,780
Total liabilities	4,780
Purchase price, net of cash acquired	27,634
Trade name \| Rocco & Roxie
Business Acquisition [Line Items]
Amortizable intangibles	7,100
Intangibles, Adjustment	(500)
Trade name \| Rocco & Roxie \| As reported
Business Acquisition [Line Items]
Amortizable intangibles	7,600
Customer relationships \| Rocco & Roxie
Business Acquisition [Line Items]
Amortizable intangibles	320
Customer relationships \| Rocco & Roxie \| As reported
Business Acquisition [Line Items]
Amortizable intangibles	$ 320

Stock Based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock Based Compensation

Note 7 — Stock Based Compensation

PetIQ, Inc. Omnibus Incentive Plan

The Amended and Restated PetIQ, Inc. Omnibus Incentive Plan, (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, RSUs, and other stock-based awards, up to a total of 5,804,000 shares of Class A common stock issuable under the Plan. As of June 30, 2023 and 2022, 1,227,691 and 1,914,000 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 are typically 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, which totaled $0.4 million and $0.9 million for the three and six months ended June 30, 2023, respectively, and $0.9 million and $2.2 million for the three and six months ended June 30, 2022, 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 period ended June 30, 2022. No options were issued for the period ended June 30, 2023:


	June 30, 2022
Expected term (years) (1)	6.25
Expected volatility (2)	37.21	%
Risk-free interest rate (3)	1.44	%
Dividend yield (4)	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.

As of June 30, 2023, total unrecognized compensation cost related to unvested stock options was $2.6 million and is expected to be recognized over a weighted-average period of 1.5 years.


	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, 2022	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


Forfeited	(76)	16.21
Cancelled	(46)	31.54
Outstanding at June 30, 2023	1,530	$	25.73	$	—	5.4
Options exercisable at June 30, 2023	1,302

Restricted Stock Units

The Company awards RSUs to certain employees and directors under the Plan, which are subject to time-based vesting conditions. Typically, upon a termination of service relationship by the Company, all unvested RSUs will 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 Class A common stock on the date of grant. At June 30, 2023, total unrecognized compensation cost related to unvested RSUs was $24.9 million and is expected to vest over a weighted average period of 3.2 years.

The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $2.3 million and $4.3 million for the three and six months ended June 30, 2023, and $2.0 million and $4.4 million for the three and six months ended June 30, 2022, 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 June 30, 2023.


	Number of Shares (in 000's)	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2022	459	$	31.08
Granted	802	20.30
Settled	(231)	27.81
Forfeited	(177)	25.53
Outstanding at December 31, 2022	853	$	23.06
Granted	1,081	10.96
Settled	(230)	22.69
Forfeited	(100)	18.97
Nonvested RSUs at June 30, 2023	1,604	$	14.94

Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands	Total	Accumulated Deficit	Accumulated Other Comprehensive Loss	Class A Treasury Stock	Additional Paid-in Capital	Non-controlling Interest	Class A common stock Common Stock	Class B common stock	Class B common stock Common Stock
Beginning balance at Dec. 31, 2021	$ 255,220	$ (114,525)	$ (684)		$ 368,006	$ 2,394	$ 29		$ 0
Beginning common stock, shares outstanding (in shares) at Dec. 31, 2021							29,139		272
Increase (Decrease) in Stockholders' Equity
Exchange of LLC Interests held by LLC Owners (in shares)							20		(20)
Exchange of LLC Interests held by LLC Owners	0				192	(192)
Other comprehensive income	(1,533)		(1,519)			(14)
Stock based compensation expense	6,666				6,609	57
Exercise of options to purchase common stock (in shares)							2
Exercise of Options to purchase common stock	115				115
Issuance of stock vesting of RSU's, net of withholdings (in shares)							143
Issuance of stock vesting of RSU's, net of tax withholdings	(865)				(865)
Net income	7,838	7,763				75
Ending balance at Jun. 30, 2022	267,441	(106,762)	(2,203)		374,057	2,320	$ 29		$ 0
Ending common stock, shares outstanding (in shares) at Jun. 30, 2022							29,304		252
Beginning balance at Dec. 31, 2021	$ 255,220	(114,525)	(684)		368,006	2,394	$ 29		$ 0
Beginning common stock, shares outstanding (in shares) at Dec. 31, 2021							29,139		272
Increase (Decrease) in Stockholders' Equity
Exercise of options to purchase common stock (in shares)	2
Ending balance at Dec. 31, 2022	$ 211,793	(162,733)	(2,224)	$ (3,857)	378,709	1,869	$ 29		$ 0
Ending common stock, shares outstanding (in shares) at Dec. 31, 2022							29,348	252	252
Ending treasury stock, shares outstanding (in shares) at Dec. 31, 2022	373			373
Beginning balance at Mar. 31, 2022	$ 261,159	(111,394)	(1,136)		371,398	2,262	$ 29		$ 0
Beginning common stock, shares outstanding (in shares) at Mar. 31, 2022							29,272		252
Increase (Decrease) in Stockholders' Equity
Other comprehensive income	(1,077)		(1,067)			(10)
Stock based compensation expense	2,843				2,821	22
Exercise of options to purchase common stock (in shares)							0
Exercise of Options to purchase common stock	15				15
Issuance of stock vesting of RSU's, net of withholdings (in shares)							33
Issuance of stock vesting of RSU's, net of tax withholdings	(177)				(177)
Net income	4,678	4,632				46
Ending balance at Jun. 30, 2022	267,441	(106,762)	(2,203)		374,057	2,320	$ 29		$ 0
Ending common stock, shares outstanding (in shares) at Jun. 30, 2022							29,304		252
Beginning balance at Dec. 31, 2022	211,793	(162,733)	(2,224)	$ (3,857)	378,709	1,869	$ 29		$ 0
Beginning common stock, shares outstanding (in shares) at Dec. 31, 2022							29,348	252	252
Increase (Decrease) in Stockholders' Equity
Exchange of LLC Interests held by LLC Owners (in shares)							8		(8)
Exchange of LLC Interests held by LLC Owners	0				115	(115)
Other comprehensive income	236		234			2
Stock based compensation expense	5,208				5,165	44
Issuance of stock vesting of RSU's, net of withholdings (in shares)							195
Issuance of stock vesting of RSU's, net of tax withholdings	(969)				(969)
Net income	19,334	19,167				167
Ending balance at Jun. 30, 2023	$ 235,603	(143,566)	(1,990)	$ (3,857)	383,020	1,967	$ 29		$ 0
Ending common stock, shares outstanding (in shares) at Jun. 30, 2023							29,551	244	244
Ending treasury stock, shares outstanding (in shares) at Jun. 30, 2023	373			373
Beginning balance at Mar. 31, 2023	$ 223,149	(153,034)	(2,275)	$ (3,857)	380,429	1,857	$ 29		$ 0
Beginning common stock, shares outstanding (in shares) at Mar. 31, 2023							29,499		244
Beginning treasury stock, shares outstanding (in shares) at Mar. 31, 2023				373
Increase (Decrease) in Stockholders' Equity
Other comprehensive income	287		285			2
Stock based compensation expense	2,743				2,720	23
Issuance of stock vesting of RSU's, net of withholdings (in shares)							52
Issuance of stock vesting of RSU's, net of tax withholdings	(129)				(129)
Net income	9,553	9,468				85
Ending balance at Jun. 30, 2023	$ 235,603	$ (143,566)	$ (1,990)	$ (3,857)	$ 383,020	$ 1,967	$ 29		$ 0
Ending common stock, shares outstanding (in shares) at Jun. 30, 2023							29,551	244	244
Ending treasury stock, shares outstanding (in shares) at Jun. 30, 2023	373			373

Related Parties (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Related Parties (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Related Parties
Amounts due to related party	$ 4,787		$ 4,787		$ 1,025
Insurance Policy Premium Expense \| Relevant Insurance Company
Related Parties
Amounts paid to related parties			6,600	$ 6,900
Investor Relations Consultant \| Acadia Investor Relations L LC
Related Parties
Amounts paid to related parties	60	$ 100		$ 100
Master Services Agreement \| Immediate Family Member of Management or Principal Owner
Related Parties
Amounts paid to related parties	$ 0		$ 0
Term of agreement	39 months		39 months
Amounts due to related party	$ 400		$ 400

Earnings Per Share - Narrative (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-Based Payment Arrangement
Dilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive shares excluded from computation of diluted earnings per share (in shares)	2,134	2,376	2,199	2,334
Convertible Debt Securities
Dilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive shares excluded from computation of diluted earnings per share (in shares)	4,848	4,848	4,848	4,848

Debt - Narrative (Details) - USD ($)	Apr. 13, 2021	Jun. 30, 2023
Senior Secured Asset-Based Revolving Credit Facility
Debt
Maximum borrowing capacity	$ 125,000,000
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		6.31%
Unused facility fee (as a percent)	0.35%
Outstanding balance		$ 0
Senior Secured Term Loan Facility
Debt
Maximum borrowing capacity	$ 300,000,000
Line of credit facility, interest rate at period end		9.46%
Floor rate	0.50%
Percentage of periodic payment, principal	0.25%
Senior Secured Term Loan Facility \| LIBOR \| Minimum
Debt
Variable interest rate, basis points spread over variable reference rate (as a percent)	3.25%
Senior Secured Term Loan Facility \| LIBOR \| Maximum
Debt
Variable interest rate, basis points spread over variable reference rate (as a percent)	4.25%

Intangible Assets and Goodwill - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Intangible Assets and Goodwill
Amortization expense	$ 6,500	$ 4,500	$ 10,700	$ 9,000
Write-off of selling, general and administrative expenses	$ 55,159	$ 50,595	98,486	$ 98,831
In-process research and development
Intangible Assets and Goodwill
Write-off of selling, general and administrative expenses			$ 1,700

Customer Concentration	6 Months Ended
Customer Concentration	Jun. 30, 2023
Risks and Uncertainties [Abstract]
Customer Concentration	Note 9 — Customer Concentration The Company has significant exposure to customer concentration. During the three and six months ended June 30, 2023, three and two customers individually accounted for more than 10% of sales, comprising 54% and 42% of net sales in aggregate, respectively for such periods. During the three and six months ended June 30, 2022 three customers individually accounted for more than 10% of sales, comprising 48% and 43% of net sales, respectively for such periods. At June 30, 2023, one Products segment customer individually accounted for more than 10% of outstanding trade receivables, and accounted for 44% of outstanding trade receivables, net. At December 31, 2022, one Products segment customer individually accounted for more than 10% of outstanding trade receivables, and accounted for 46% of outstanding trade receivables, net.

Principal Business Activity and Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with U.S. 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 condensed 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 deferred tax assets, the valuation of inventories, and reserves for legal contingencies.

Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Note 4 — Intangible Assets and Goodwill

Goodwill and non-amortizable intangible assets

Intangible assets consist of the following at:


$'s in 000's	Useful Lives	June 30, 2023		December 31, 2022
Amortizable intangibles
Certification	7 years	$	350	$	350
Customer relationships	10-20 years	160,391		160,040
Patents and processes	5-10 years	14,685		14,634
Brand names	5-15 years	31,757		24,633
Total amortizable intangibles		207,183		199,657
Less accumulated amortization		(71,240)		(62,085)
Total net amortizable intangibles		135,943		137,572
Non-amortizable intangibles
Trademarks and other		33,239		33,239
In-process research and development		—		1,668
Intangible assets, net of accumulated amortization		$	169,182	$	172,479

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 three months ended June 30, 2023 and 2022 was $6.5 million and $4.5 million, respectively. Amortization expense for the six months ended June 30, 2023, and 2022 was $10.7 million and $9.0 million, respectively. During the three months ended June 30, 2023, the Company opted out of the final acquired project included in in-process research and development, effectively abandoning the associated research and development effort. Accordingly, the Company wrote off the associated intangible asset of $1.7 million in the Products segment, the expense for which is included as amortization expense in selling, general and administrative expenses on the condensed 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)
Remainder of 2023	$	8,927
2024	15,665
2025	14,991
2026	14,338
2027	13,671
Thereafter	68,351

The following is a summary of the changes in the carrying value of goodwill for the period from January 1, 2022 to June 30, 2023:


	Reporting Unit
($'s in 000's)	Products		Services		Total
Goodwill as of January 1, 2022	$	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
R&R Acquisition	20,766		—		20,766
Foreign currency translation	132		—		132
Goodwill as of June 30, 2023	$	204,204	$	—	$	204,204

Commitments and Contingencies (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022
Lawsuit By Former Supplier For Redemption Of Ownership Interest
Litigation Contingencies
Loss contingency accrual, provision	$ 1.0	$ 3.5

Stock Based Compensation - Restricted Stock (Details) - RSU - $ / shares shares in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Number of Shares
Beginning balance (in shares)	853	459
Granted (in shares)	1,081	802
Settled (in shares)	(230)	(231)
Forfeited (in shares)	(100)	(177)
Ending balance (in shares)	1,604	853
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share)	$ 23.06	$ 31.08
Granted (in dollars per share)	10.96	20.30
Settled (in dollars per share)	22.69	27.81
Forfeited (in dollars per share)	18.97	25.53
Ending balance (in dollars per share)	$ 14.94	$ 23.06

Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

Note 3 — Debt

Senior Secured Asset-Based Revolving Credit Facility

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"). The borrowing base for the ABL at any time equals the sum of: (i) 90% of eligible investment-grade accounts receivable; plus (ii) 85% of eligible other accounts receivable; 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 bears interest at a variable rate plus a margin, with the variable rate being based on a base rate or LIBOR at the option of the Company. On February 3, 2023, HoldCo and Opco, entered into the First Amendment Agreement to the ABL to replace the interest rate benchmark from LIBOR to Secured Overnight Financing Rate ("SOFR"). The interest rate at June 30, 2023 was 6.31% The Company also pays a commitment fee on unused borrowings at a rate of 0.35%.

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 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. As of June 30, 2023, no amounts were outstanding under the ABL.

Senior Secured Term Loan Facility - Term Loan B

On April 13, 2021, OpCo entered into a term credit and guaranty agreement with Jefferies Finance LLC, as administrative agent and collateral agent, and the lenders’ party thereto, that provides senior secured term loans of $300.0 million (which may be increased in certain circumstances) (the "Term Loan B"). The Term Loan B bears interest at a variable rate of either prime, federal funds effective rate or LIBOR, plus an applicable margin of between 3.25% and 4.25% depending on the underlying base rate. LIBOR rates are subject to a 0.50% floor. The interest rate at June 30, 2023 was 9.46%. The Term Loan B requires quarterly payments of 0.25% of the original principal amount, with the balance due on April 13, 2028. On May 25, 2023, the Term Loan B was amended to replace the interest rate benchmark from the Adjusted Eurodollar Rate to SOFR.

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.

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


$'s in 000's	June 30, 2023		December 31, 2022
Convertible Notes	$	143,750	$	143,750
Term Loan B	294,000		295,500
Revolving credit facility	—		—
Other debt	17,676		19,690
Net discount on debt and deferred financing fees	(7,577)		(8,531)
	$	447,849	$	450,409
Less current maturities of long-term debt	(7,267)		(7,133)
Total long-term debt	$	440,582	$	443,276

Future maturities of long-term debt, excluding the discount on debt and deferred financing fees, as of June 30, 2023, are as follows:


($'s in 000's)
Remainder of 2023	$	3,550
2024	7,426
2025	4,600
2026	147,350
2027	3,600
Thereafter	288,900

- 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://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Segments - Reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment Adjusted EBITDA	$ 34,790	$ 27,582	$ 67,836	$ 59,177
Depreciation	(4,164)	(3,515)	(7,685)	(7,197)
Amortization	(6,477)	(4,477)	(10,739)	(9,000)
Interest	(8,824)	(6,299)	(17,556)	(12,420)
Acquisition costs	(297)	(156)	(835)	(156)
Stock based compensation expense	(2,743)	(2,843)	(5,208)	(6,666)
Non same store adjustment	(1,922)	(3,466)	(4,245)	(10,631)
Integration costs	(618)	(404)	(1,594)	(743)
Litigation expenses	0	(1,141)	0	(3,802)
Pretax net income	9,745	5,281	19,974	8,562
Income tax expense	(192)	(603)	(640)	(724)
Net income	9,553	4,678	19,334	7,838
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Corporate expense		20,500		39,900
Products \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment Adjusted EBITDA	33,279	25,531	65,474	55,965
Corporate expense		17,800		35,300
Services \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment Adjusted EBITDA	$ 1,511	2,051	$ 2,362	3,212
Corporate expense		$ 2,700		$ 4,600

Segments (Tables)

6 Months Ended

Jun. 30, 2023

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 three months ended:


$'s in 000's	Products		Services
June 30, 2023
Net sales	$	278,167	$	36,380
Segment Adjusted EBITDA	33,279		1,511
Depreciation expense	1,861		2,303
Capital expenditures	1,275		944


$'s in 000's	Products		Services
June 30, 2022
Net sales	$	219,014	$	33,000
Segment Adjusted EBITDA	25,531		2,051
Depreciation expense	1,768		1,747
Capital expenditures	1,526		822

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


$'s in 000's	Products		Services
June 30, 2023
Net sales	$	537,160	$	67,858
Segment Adjusted EBITDA	65,474		2,362
Depreciation expense	3,677		4,008
Capital expenditures	2,839		1,289


$'s in 000's	Products		Services
June 30, 2022
Net sales	$	466,764	$	60,945
Segment Adjusted EBITDA	55,965		3,212
Depreciation expense	3,696		3,501
Capital expenditures	5,445		2,581

Summary of Segment Adjusted EBITDA to Net Loss Reconciliation

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


	For the three months ended				For the six months ended
$'s in 000's	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Segment Adjusted EBITDA:
Products(1)	$	33,279	$	25,531	$	65,474	$	55,965
Services(1)	1,511		2,051		2,362		3,212
Total	34,790		27,582		67,836		59,177
Adjustments:
Depreciation	(4,164)		(3,515)		(7,685)		(7,197)
Amortization	(6,477)		(4,477)		(10,739)		(9,000)
Interest	(8,824)		(6,299)		(17,556)		(12,420)

Acquisition costs(2)	(297)		(156)		(835)		(156)

Stock based compensation expense	(2,743)		(2,843)		(5,208)		(6,666)
Non same-store adjustment(3)	(1,922)		(3,466)		(4,245)		(10,631)
Integration costs(4)	(618)		(404)		(1,594)		(743)
Litigation expenses	—		(1,141)		—		(3,802)


Pretax net income	$	9,745	$	5,281	$	19,974	$	8,562
Income tax expense	(192)		(603)		(640)		(724)
Net income	$	9,553	$	4,678	$	19,334	$	7,838

(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 Products Segment Adjusted EBITDA and Services Segment Adjusted EBITDA for the three and six months ended June 30, 2022 has been recast for comparability. For the three and six months ended June 30, 2022, total corporate expenses were $20.5 million, of which $17.8 million was allocated to Products and $2.7 million was allocated to Services, and $39.9 million, of which $35.3 million was allocated to Products and $4.6 million was allocated to Services, respectively.

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

(3) Non same-store adjustment includes revenue and costs, and associated gross profit, related to our Services segment wellness centers and host partners with less than six full quarters of operating results, and also include pre-opening expenses.

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

Long-Lived Assets by Geographic Areas

Supplemental geographic disclosures are below.


	Three Months Ended June 30, 2023
$'s in 000's	U.S.		Foreign		Total
Product sales	$	276,074	$	2,093	$	278,167
Service revenue	36,380		—		36,380
Total net sales	$	312,454	$	2,093	$	314,547


	Three Months Ended June 30, 2022
$'s in 000's	U.S.		Foreign		Total
Product sales	$	217,285	$	1,729	$	219,014
Service revenue	33,000		—		33,000
Total net sales	$	250,285	$	1,729	$	252,014


	Six Months Ended June 30, 2023
$'s in 000's	U.S.		Foreign		Total
Product sales	$	534,051	$	3,109	$	537,160
Service revenue	67,858		—		67,858
Total net sales	$	601,909	$	3,109	$	605,018


	Six Months Ended June 30, 2022
$'s in 000's	U.S.		Foreign		Total
Product sales	$	462,867	$	3,897	$	466,764
Service revenue	60,945		—		60,945
Total net sales	$	523,812	$	3,897	$	527,709

Property, plant, and equipment by geographic location is below.


	June 30, 2023		December 31, 2022
United States	$	65,782	$	69,376
Europe	3,994		4,019
Total	$	69,776	$	73,395

Principal Business Activity and Significant Accounting Policies	6 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
Principal Business Activity and Significant Accounting Policies	Note 1 — Principal Business Activity and Significant Accounting Policies Principal Business Activity and Principles of Consolidation PetIQ, Inc. ("PetIQ", the "Company", "we", "our", or "us") 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 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 that we can give them. PetIQ has two reporting segments: (i) Products; and (ii) Services. The Products segment consists of our manufacturing and distribution business. The Services segment consists of veterinary and wellness 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, operates and controls all of the business and affairs of OpCo. The condensed consolidated financial statements as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 are unaudited. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2022 and related notes thereto included in the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023 (the "Annual Report"). Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. 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 condensed 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 deferred tax assets, the valuation of inventories, and reserves for legal contingencies. Significant Accounting Policies The Company's significant accounting policies are discussed in Note 1 – Principal Business Activity and Significant Accounting Policies in the Annual Report. There have been no significant changes to these policies that have had a material impact on the Company's unaudited condensed financial statements and related notes during the three and six months ended June 30, 2023.

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities
Net income	$ 19,334	$ 7,838
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization of intangible assets and loan fees	19,769	17,660
Stock based compensation expense	5,208	6,666
Other non-cash activity	(135)	48
Changes in assets and liabilities, net of business acquisition
Accounts receivable	(74,468)	(54,969)
Inventories	2,901	(63,771)
Other assets	(481)	(409)
Accounts payable	40,320	26,481
Accrued wages payable	252	(2,359)
Other accrued expenses	1,703	(2,569)
Net cash provided by (used in) operating activities	14,403	(65,384)
Cash flows from investing activities
Business acquisition (net of cash acquired)	(27,634)	0
Purchase of property, plant, and equipment	(4,128)	(8,026)
Net cash used in investing activities	(31,762)	(8,026)
Cash flows from financing activities
Proceeds from issuance of long-term debt	35,000	44,000
Principal payments on long-term debt	(38,800)	(42,800)
Principal payments on finance lease obligations	(801)	(744)
Tax withholding payments on Restricted Stock Units	(969)	(865)
Exercise of options to purchase Class A common stock	0	115
Net cash used in financing activities	(5,570)	(294)
Net change in cash and cash equivalents	(22,929)	(73,704)
Effect of exchange rate changes on cash and cash equivalents	101	(306)
Cash and cash equivalents, beginning of period	101,265	79,406
Cash and cash equivalents, end of period	78,437	5,396
Supplemental cash flow information
Interest paid	16,657	13,380
Net change in property, plant, and equipment acquired through accounts payable	52	595
Finance lease additions	0	59
Income taxes paid, net of refunds	$ 326	$ 244

Segments - Operating Segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Segments
Net sales	$ 314,547	$ 252,014	$ 605,018	$ 527,709
Segment Adjusted EBITDA	34,790	27,582	67,836	59,177
Products
Segments
Net sales	278,167	219,014	537,160	466,764
Services
Segments
Net sales	36,380	33,000	67,858	60,945
Operating Segments \| Products
Segments
Net sales	278,167	219,014	537,160	466,764
Segment Adjusted EBITDA	33,279	25,531	65,474	55,965
Depreciation expense	1,861	1,768	3,677	3,696
Capital expenditures	1,275	1,526	2,839	5,445
Operating Segments \| Services
Segments
Net sales	36,380	33,000	67,858	60,945
Segment Adjusted EBITDA	1,511	2,051	2,362	3,212
Depreciation expense	2,303	1,747	4,008	3,501
Capital expenditures	$ 944	$ 822	$ 1,289	$ 2,581

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479941/924-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-4

+ Details

Segments

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segments

Note 11 — 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 Condensed Consolidated Statements of Operations.

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


$'s in 000's	Products		Services
June 30, 2023
Net sales	$	278,167	$	36,380
Segment Adjusted EBITDA	33,279		1,511
Depreciation expense	1,861		2,303
Capital expenditures	1,275		944


$'s in 000's	Products		Services
June 30, 2022
Net sales	$	219,014	$	33,000
Segment Adjusted EBITDA	25,531		2,051
Depreciation expense	1,768		1,747
Capital expenditures	1,526		822

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


$'s in 000's	Products		Services
June 30, 2023
Net sales	$	537,160	$	67,858
Segment Adjusted EBITDA	65,474		2,362
Depreciation expense	3,677		4,008
Capital expenditures	2,839		1,289


$'s in 000's	Products		Services
June 30, 2022
Net sales	$	466,764	$	60,945
Segment Adjusted EBITDA	55,965		3,212
Depreciation expense	3,696		3,501
Capital expenditures	5,445		2,581

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


	For the three months ended				For the six months ended
$'s in 000's	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Segment Adjusted EBITDA:
Products(1)	$	33,279	$	25,531	$	65,474	$	55,965
Services(1)	1,511		2,051		2,362		3,212
Total	34,790		27,582		67,836		59,177
Adjustments:
Depreciation	(4,164)		(3,515)		(7,685)		(7,197)
Amortization	(6,477)		(4,477)		(10,739)		(9,000)
Interest	(8,824)		(6,299)		(17,556)		(12,420)

Acquisition costs(2)	(297)		(156)		(835)		(156)

Stock based compensation expense	(2,743)		(2,843)		(5,208)		(6,666)
Non same-store adjustment(3)	(1,922)		(3,466)		(4,245)		(10,631)
Integration costs(4)	(618)		(404)		(1,594)		(743)
Litigation expenses	—		(1,141)		—		(3,802)


Pretax net income	$	9,745	$	5,281	$	19,974	$	8,562
Income tax expense	(192)		(603)		(640)		(724)
Net income	$	9,553	$	4,678	$	19,334	$	7,838

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

Supplemental geographic disclosures are below.


	Three Months Ended June 30, 2023
$'s in 000's	U.S.		Foreign		Total
Product sales	$	276,074	$	2,093	$	278,167
Service revenue	36,380		—		36,380
Total net sales	$	312,454	$	2,093	$	314,547


	Three Months Ended June 30, 2022
$'s in 000's	U.S.		Foreign		Total
Product sales	$	217,285	$	1,729	$	219,014
Service revenue	33,000		—		33,000
Total net sales	$	250,285	$	1,729	$	252,014


	Six Months Ended June 30, 2023
$'s in 000's	U.S.		Foreign		Total
Product sales	$	534,051	$	3,109	$	537,160
Service revenue	67,858		—		67,858
Total net sales	$	601,909	$	3,109	$	605,018


	Six Months Ended June 30, 2022
$'s in 000's	U.S.		Foreign		Total
Product sales	$	462,867	$	3,897	$	466,764
Service revenue	60,945		—		60,945
Total net sales	$	523,812	$	3,897	$	527,709

Property, plant, and equipment by geographic location is below.


	June 30, 2023		December 31, 2022
United States	$	65,782	$	69,376
Europe	3,994		4,019
Total	$	69,776	$	73,395

- 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
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-15

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 31
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-31

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

+ Details

Segments - Property, Plant and Equipment by Geographic Location (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Segment Reporting, Asset Reconciling Item [Line Items]
Property, plant and equipment, net	$ 69,776	$ 73,395
United States
Segment Reporting, Asset Reconciling Item [Line Items]
Property, plant and equipment, net	65,782	69,376
Europe
Segment Reporting, Asset Reconciling Item [Line Items]
Property, plant and equipment, net	$ 3,994	$ 4,019

Income Tax (Details)	3 Months Ended		6 Months Ended
Income Tax (Details)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Effective tax rate	2.00%	11.40%	3.20%	8.50%

Business Combination (Tables)

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary allocations of the consideration paid of $27.6 million, which included the $26.5 million purchase price plus $1.1 million of working capital, to the assets acquired and liabilities assumed, based on our current estimates of the fair value at the date of the R&R Acquisition:


$'s in 000's	Preliminary Estimated Fair Value		Adjustments		As Retrospectively Adjusted
Current assets	$	3,020	$	—	$	3,020
Other assets	1,208		—		1,208
Amortizable intangibles
Trade name	7,600		(500)		7,100
Customer relationships	320		—		320
Total amortizable intangibles	$	7,920	$	(500)	$	7,420
Goodwill	20,266		500		20,766
Total assets	$	32,414	$	—	$	32,414

Current liabilities	1,000		—		1,000
Other tax liabilities	3,780		—		3,780
Total liabilities	4,780		—		4,780

Purchase price, net of cash acquired	$	27,634	$	—	$	27,634

Income Tax	6 Months Ended
Income Tax	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income Tax	Note 5 — Income Tax Our effective tax rate from continuing operations was 2.0% and 3.2% for the three and six months ended June 30, 2023, respectively, and 11.4% and 8.5% for the three and six months ended June 30, 2022, respectively, including discrete items. Income tax expense for the three and six months ended June 30, 2023 and 2022 was different than the U.S federal statutory income tax rate of 21% primarily due to the effects of the change in valuation allowance, state taxes, and the foreign rate differential. The Company has assessed the realizability of the net deferred tax assets as of June 30, 2023 and in that analysis 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 recorded deferred tax assets will not be realized. 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.

- 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
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-Section 50
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+ Details

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Total net sales	$ 314,547	$ 252,014	$ 605,018	$ 527,709
Total cost of sales	240,668	190,040	468,879	408,100
Gross profit	73,879	61,974	136,139	119,609
Operating expenses
Selling, general and administrative expenses	55,159	50,595	98,486	98,831
Operating income	18,720	11,379	37,653	20,778
Interest expense, net	8,824	6,299	17,556	12,420
Other expense (income), net	151	(201)	123	(204)
Total other expense, net	8,975	6,098	17,679	12,216
Pretax net income	9,745	5,281	19,974	8,562
Income tax expense	(192)	(603)	(640)	(724)
Net income	9,553	4,678	19,334	7,838
Net income attributable to non-controlling interest	85	46	167	75
Net income attributable to PetIQ, Inc.	$ 9,468	$ 4,632	$ 19,167	$ 7,763
Net income per share attributable to PetIQ, Inc. Class A common stock
Basic (in dollars per share)	$ 0.32	$ 0.16	$ 0.66	$ 0.27
Diluted (in dollars per share)	$ 0.32	$ 0.16	$ 0.66	$ 0.26
Weighted Average shares of Class A common stock outstanding
Basic (in shares)	29,136	29,283	29,083	29,223
Diluted (in shares)	29,373	29,329	29,218	29,304
Products
Total net sales	$ 278,167	$ 219,014	$ 537,160	$ 466,764
Total cost of sales	210,428	163,568	411,330	354,419
Services
Total net sales	36,380	33,000	67,858	60,945
Total cost of sales	$ 30,240	$ 26,472	$ 57,549	$ 53,681

Earnings per Share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator:
Net income	$ 9,553	$ 4,678	$ 19,334	$ 7,838
Less: net income attributable to non-controlling interests	85	46	167	75
Net income attributable to PetIQ, Inc.	$ 9,468	$ 4,632	$ 19,167	$ 7,763
Denominator:
Weighted-average shares of Class A common stock outstanding -- basic (in shares)	29,136	29,283	29,083	29,223
Dilutive effect of conversion of Notes (in shares)	0	0	0	0
Weighted-average shares of Class A common stock outstanding - diluted (in shares)	29,373	29,329	29,218	29,304
Earnings Per Share
Income per share of Class A common stock - basic (in dollars per share)	$ 0.32	$ 0.16	$ 0.66	$ 0.27
Income per share of Class A common stock - diluted (in dollars per share)	$ 0.32	$ 0.16	$ 0.66	$ 0.26
Stock options
Denominator:
Dilutive impact of share-based payment awards (in shares)	237	46	135	81

Debt (Tables)

6 Months Ended

Jun. 30, 2023

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	June 30, 2023		December 31, 2022
Convertible Notes	$	143,750	$	143,750
Term Loan B	294,000		295,500
Revolving credit facility	—		—
Other debt	17,676		19,690
Net discount on debt and deferred financing fees	(7,577)		(8,531)
	$	447,849	$	450,409
Less current maturities of long-term debt	(7,267)		(7,133)
Total long-term debt	$	440,582	$	443,276

Future Maturities of Long-Term Debt, Excluding The Net Discount on Debt, Deferred Financing Fees and Contingent Notes

Future maturities of long-term debt, excluding the discount on debt and deferred financing fees, as of June 30, 2023, are as follows:


($'s in 000's)
Remainder of 2023	$	3,550
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

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 470
-SubTopic 20
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-Section 55
-Paragraph 69B
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+ Details

Non-Controlling Interests (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
LLC Owners
Noncontrolling Interest [Line Items]
Beginning common stock, shares outstanding (in shares)			252	272	272
Stock based compensation transactions (in shares)					0
Exchange transactions (in shares)			(8)		(20)
Unit redemption (in shares)					0
Ending common stock, shares outstanding (in shares)	244		244		252
Amended Holdco LLC Agreement
Noncontrolling Interest [Line Items]
Beginning common stock, shares outstanding (in shares)			29,226	29,411	29,411
Stock based compensation transactions (in shares)			195		188
Exchange transactions (in shares)			0		0
Unit redemption (in shares)					(373)
Ending common stock, shares outstanding (in shares)	29,421		29,421		29,226
Holdco
Noncontrolling Interest [Line Items]
Weighted average ownership percentage in Holdco	99.20%	99.10%	99.20%	99.10%
LLC Owners
Noncontrolling Interest [Line Items]
Ownership interest by continuing LLC owners	0.80%		0.80%		0.90%	0.90%
PetIQ, Inc.
Noncontrolling Interest [Line Items]
Beginning common stock, shares outstanding (in shares)			28,974	29,139	29,139
Stock based compensation transactions (in shares)			195		188
Exchange transactions (in shares)			8		20
Unit redemption (in shares)					(373)
Ending common stock, shares outstanding (in shares)	29,177		29,177		28,974
Ownership interest in Holdco	99.20%		99.20%		99.10%	99.10%

Intangible Assets and Goodwill - Estimated Future Amortization Expense (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2023	$ 8,927
2024	15,665
2025	14,991
2026	14,338
2027	13,671
Thereafter	$ 68,351

Intangible Assets and Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 183,306	$ 231,110
Foreign currency translation	132	(540)
Goodwill impairment		(47,264)
R&R Acquisition	20,766
Goodwill, ending balance	204,204	183,306
Products
Goodwill [Roll Forward]
Goodwill, beginning balance	183,306	183,846
Foreign currency translation	132	(540)
Goodwill impairment		0
R&R Acquisition	20,766
Goodwill, ending balance	204,204	183,306
Services
Goodwill [Roll Forward]
Goodwill, beginning balance	0	47,264
Foreign currency translation	0	0
Goodwill impairment		(47,264)
R&R Acquisition	0
Goodwill, ending balance	$ 0	$ 0

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Principal Business Activity and Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2023 distributionCenter location state segment
Accounting Policies [Abstract]
Number of points of distribution \| distributionCenter	60,000
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

Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

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 period ended June 30, 2022. No options were issued for the period ended June 30, 2023:


	June 30, 2022
Expected term (years) (1)	6.25
Expected volatility (2)	37.21	%
Risk-free interest rate (3)	1.44	%
Dividend yield (4)	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 The Activity of The Company's Unvested Stock Options


	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, 2022	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


Forfeited	(76)	16.21
Cancelled	(46)	31.54
Outstanding at June 30, 2023	1,530	$	25.73	$	—	5.4
Options exercisable at June 30, 2023	1,302

Summary of RSU Activity

The following table summarizes the activity of the Company’s RSUs for the period ended June 30, 2023.


	Number of Shares (in 000's)	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2022	459	$	31.08
Granted	802	20.30
Settled	(231)	27.81
Forfeited	(177)	25.53
Outstanding at December 31, 2022	853	$	23.06
Granted	1,081	10.96
Settled	(230)	22.69
Forfeited	(100)	18.97
Nonvested RSUs at June 30, 2023	1,604	$	14.94

Debt - Long Term Debt Schedule (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt
Other debt	$ 17,676	$ 19,690
Net discount on debt and deferred financing fees	(7,577)	(8,531)
Long-term debt	447,849	450,409
Less current maturities of long-term debt	(7,267)	(7,133)
Long-term debt, less current installments	440,582	443,276
Term Loan B
Debt
Outstanding balance	294,000	295,500
Revolving credit facility
Debt
Outstanding balance	0	0
Convertible Notes
Debt
Outstanding balance	$ 143,750	$ 143,750

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 78,437	$ 101,265
Accounts receivable, net	193,570	118,004
Inventories	141,647	142,605
Other current assets	8,788	8,238
Total current assets	422,442	370,112
Property, plant and equipment, net	69,776	73,395
Operating lease right of use assets	15,440	18,231
Other non-current assets	2,426	1,373
Intangible assets, net	169,182	172,479
Goodwill	204,204	183,306
Total assets	883,470	818,896
Current liabilities
Accounts payable	154,141	112,995
Accrued wages payable	11,826	11,512
Accrued interest payable	1,465	1,912
Other accrued expenses	9,909	7,725
Current portion of operating leases	6,211	6,595
Current portion of long-term debt and finance leases	8,152	8,751
Total current liabilities	191,704	149,490
Operating leases, less current installments	9,957	12,405
Long-term debt, less current installments	440,582	443,276
Finance leases, less current installments	837	907
Other non-current liabilities	4,787	1,025
Total non-current liabilities	456,163	457,613
Equity
Additional paid-in capital	383,020	378,709
Class A treasury stock, at cost, 373 shares	(3,857)	(3,857)
Accumulated deficit	(143,566)	(162,733)
Accumulated other comprehensive loss	(1,990)	(2,224)
Total stockholders' equity	233,636	209,924
Non-controlling interest	1,967	1,869
Total equity	235,603	211,793
Total liabilities and equity	883,470	818,896
Class A common stock
Equity
Common stock value	29	29
Class B common stock
Equity
Common stock value	$ 0	$ 0

Earnings per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings per Share

Note 6 — Earnings per Share

Basic and Diluted Earnings per Share

Basic earnings per share of Class A common stock is computed by dividing net income available to PetIQ, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income 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 earnings per share of Class A common stock:


	Three months ended June 30,				Six months ended June 30,
(in 000's, except for per share amounts)	2023		2022		2023		2022
Numerator:
Net income	$	9,553	$	4,678	$	19,334	$	7,838
Less: net income attributable to non-controlling interests	85		46		167		75
Net income attributable to PetIQ, Inc. — basic and diluted	9,468		4,632		19,167		7,763


Denominator(1):
Weighted-average shares of Class A common stock outstanding — basic	29,136		29,283		29,083		29,223
Dilutive impact of share-based compensation awards (2)	237		46		135		81
Dilutive effect of conversion of Notes (3)	—		—		—		—
Weighted-average shares of Class A common stock outstanding — diluted	29,373		29,329		29,218		29,304

Income per share of Class A common stock — basic	$	0.32	$	0.16	$	0.66	$	0.27
Income per share of Class A common stock — diluted	$	0.32	$	0.16	$	0.66	$	0.26

(1) - Shares of the Company’s Class B common stock do not share in the earnings 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.

(2) - For the three and six months ended June 30, 2023, 2,134 thousand and 2,199 thousand of outstanding share-based compensation awards were excluded from the computation of diluted earnings per share, as the effect of including those shares would be anti-dilutive. For the three and six months ended June 30, 2022, 2,376 thousand and 2,334 thousand of outstanding share-based compensation awards were excluded from the computation of diluted earnings per share, as the effect of including those shares would be anti-dilutive.

(3) - For the three and six months ended June 30, 2023 and 2022, 4,848 thousand shares of common stock associated with the assumed conversion of the Notes have been excluded from the computation of diluted earnings per share, as the effect of including those shares would be anti-dilutive.

Segments - Additional Information (Details)	6 Months Ended
Segments - Additional Information (Details)	Jun. 30, 2023 segment
Segment Reporting [Abstract]
Number of operating segments	2

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss) Attributable to Parent	$ 9,468	$ 4,632	$ 19,167	$ 7,763

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
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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 15: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Stock Based Compensation - Summary of Unvested Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Stock Options (in 000's)
Outstanding - beginning balance (in shares)	1,652	1,768
Granted (in shares)		83
Exercised (in shares)		(2)
Forfeited (in shares)	(76)	(110)
Cancelled (in shares)	(46)	(86)
Outstanding - ending balance (in shares)	1,530	1,652	1,768
Options exercisable (in shares)	1,302
Weighted Average Exercise Price
Beginning balance (in dollars per share)	$ 25.48	$ 26.51
Granted (in dollars per share)		14.16
Exercised (in dollars per share)		19.49
Forfeited (in dollars per share)	16.21	29.24
Cancelled (in dollars per share)	31.54	31.12
Ending balance (in dollars per share)	$ 25.73	$ 25.48	$ 26.51
Aggregate Intrinsic Value
Aggregate intrinsic value of shares outstanding, period start	$ 53	$ 2,897
Aggregate intrinsic value - exercised		10
Aggregate intrinsic value of shares outstanding, period end	$ 0	$ 53	$ 2,897
Weighted average remaining contractual life (years)	5 years 4 months 24 days	6 years 2 months 12 days	7 years 3 months 18 days

Non-Controlling Interests (Tables)

6 Months Ended

Jun. 30, 2023

Noncontrolling Interest [Abstract]

Summary of Noncontrolling Interest

The following table presents the outstanding membership interests in HoldCo ("LLC Interests") and changes in LLC Interests for the periods presented.


	LLC Interests held			% of Total
$'s in 000's	LLC Owners	PetIQ, Inc.	Total	LLC Owners		PetIQ, Inc.
As of January 1, 2022	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	%
Stock based compensation transactions	—	195	195
Exchange transactions	(8)	8	—
As of June 30, 2023	244	29,177	29,421	0.8	%	99.2	%

Note that certain figures shown in the table above may not recalculate due to rounding.

Stock Based Compensation - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Stock Based Compensation
Granted (in shares)					83,000
Vesting percentage on each anniversary of the grant date			25.00%
Maximum term for stock options				6 years 3 months
Stock based compensation expense	$ 2,743	$ 2,843	$ 5,208	$ 6,666
Unrecognized compensation cost related to unvested stock options	2,600		$ 2,600
Unrecognized compensation cost related to unvested options, recognized weighted-average period			1 year 6 months
Stock based compensation expense	$ 2,743	$ 2,843	$ 5,208	$ 6,666
Class A common stock
Stock Based Compensation
Number of shares reserved (in shares)	800,000		800,000
Granted (in shares)			760,000,000
Class A common stock \| Omnibus Plan
Stock Based Compensation
Shares reserved for future issuance (in shares)	5,804,000		5,804,000
Share available for issuance (in shares)	1,227,691	1,914,000	1,227,691	1,914,000
Maximum
Stock Based Compensation
Maximum term for stock options			10 years
Stock options
Stock Based Compensation
Stock based compensation expense	$ 400	$ 900	$ 900	$ 2,200
Stock based compensation expense	400	900	900	2,200
RSU
Stock Based Compensation
Stock based compensation expense	2,300	2,000	4,300	4,400
Unrecognized compensation cost related to unvested stock options	24,900		$ 24,900
Vesting period			3 years 2 months 12 days
Stock based compensation expense	$ 2,300	$ 2,000	$ 4,300	$ 4,400

Non-Controlling Interests

6 Months Ended

Jun. 30, 2023

Noncontrolling Interest [Abstract]

Non-Controlling Interests

Note 8 — Non-Controlling Interests

The following table presents the outstanding membership interests in HoldCo ("LLC Interests") and changes in LLC Interests for the periods presented.


	LLC Interests held			% of Total
$'s in 000's	LLC Owners	PetIQ, Inc.	Total	LLC Owners		PetIQ, Inc.
As of January 1, 2022	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	%
Stock based compensation transactions	—	195	195
Exchange transactions	(8)	8	—
As of June 30, 2023	244	29,177	29,421	0.8	%	99.2	%

Note that certain figures shown in the table above may not recalculate due to rounding.

For the three and six months ended June 30, 2023, the Company owned a weighted average of 99.2%, of HoldCo, and for the three and six months ended June 30, 2022 the Company owned a weighted average of 99.1%, respectively.

Stock Based Compensation - Weighted Average Assumptions (Details)	6 Months Ended
	Jun. 30, 2022
Share-Based Payment Arrangement [Abstract]
Expected term (years)	6 years 3 months
Expected volatility	37.21%
Risk-free interest rate	1.44%
Dividend yield	0.00%

Intangible Assets and Goodwill - Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Intangible Assets and Goodwill
Amortizable Intangibles, gross	$ 207,183	$ 199,657
Less accumulated amortization	(71,240)	(62,085)
Total net amortizable intangibles	135,943	137,572
Intangible assets, net of accumulated amortization	169,182	172,479
Trademarks and other
Intangible Assets and Goodwill
Non-amortizable intangibles	33,239	33,239
In-process research and development
Intangible Assets and Goodwill
Non-amortizable intangibles	$ 0	1,668
Certification
Intangible Assets and Goodwill
Amortizable intangibles, useful lives	7 years
Amortizable Intangibles, gross	$ 350	350
Customer relationships
Intangible Assets and Goodwill
Amortizable Intangibles, gross	160,391	160,040
Patents and processes
Intangible Assets and Goodwill
Amortizable Intangibles, gross	14,685	14,634
Brand names
Intangible Assets and Goodwill
Amortizable Intangibles, gross	$ 31,757	$ 24,633
Minimum \| Customer relationships
Intangible Assets and Goodwill
Amortizable intangibles, useful lives	10 years
Minimum \| Patents and processes
Intangible Assets and Goodwill
Amortizable intangibles, useful lives	5 years
Minimum \| Brand names
Intangible Assets and Goodwill
Amortizable intangibles, useful lives	5 years
Maximum \| Customer relationships
Intangible Assets and Goodwill
Amortizable intangibles, useful lives	20 years
Maximum \| Patents and processes
Intangible Assets and Goodwill
Amortizable intangibles, useful lives	10 years
Maximum \| Brand names
Intangible Assets and Goodwill
Amortizable intangibles, useful lives	15 years

Business Combination

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Business Combination

Note 2 — Business Combination

Rocco & Roxie

The Company completed the acquisition of all of the membership units of Rocco & Roxie Supply Co, LLC ("R&R") on January 13, 2023, (the "R&R Acquisition"), which resulted in R&R becoming a wholly owned subsidiary of the Company. The R&R Acquisition expands the Company's brand and product portfolio to include stain and odor products and enables the Company to extend its offerings into premium dog supplements and jerky treats. The Company paid $26.5 million for the membership interests of R&R using cash on hand. The purchase is subject to normal working capital adjustments.


$'s in 000's	Preliminary Estimated Fair Value		Adjustments		As Retrospectively Adjusted
Current assets	$	3,020	$	—	$	3,020
Other assets	1,208		—		1,208
Amortizable intangibles
Trade name	7,600		(500)		7,100
Customer relationships	320		—		320
Total amortizable intangibles	$	7,920	$	(500)	$	7,420
Goodwill	20,266		500		20,766
Total assets	$	32,414	$	—	$	32,414

Current liabilities	1,000		—		1,000
Other tax liabilities	3,780		—		3,780
Total liabilities	4,780		—		4,780

Purchase price, net of cash acquired	$	27,634	$	—	$	27,634

Intangible assets will be amortized over the estimated useful lives of the assets through January 2033. The weighted average amortization period of the amortizable intangible assets is approximately 9.9 years. The identifiable intangible assets are measured at fair value as Level III in accordance with the fair value hierarchy.

Goodwill represents the future economic benefits that do not qualify for separate recognition and primarily includes the assembled workforce and other non-contractual relationships, as well as expected future synergies. Approximately $19.5 million of the $20.8 million of Goodwill will not be tax deductible, and the remaining balance is expected to be deductible for tax purposes. Goodwill was allocated to the Products segment. Transaction costs of $0.5 million were incurred and are recorded in Selling, General, and Administrative costs on the condensed consolidated statement of operations.

The estimate of fair value and purchase price allocation were based on information available at the time of closing the R&R Acquisition. These preliminary estimates are subject to retrospective adjustments during the measurement period, not to exceed one year, based upon new information obtained about facts and circumstances that existed as of the date of closing the R&R Acquisition. The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of identifiable intangible assets, residual goodwill and deferred taxes.

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Debt - Future Maturities (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Future maturities of long-term debt
Remainder of 2023	$ 3,550
2024	7,426
2025	4,600
2026	147,350
2027	3,600
Thereafter	$ 288,900

Related Parties	6 Months Ended
Related Parties	Jun. 30, 2023
Related Party Transactions [Abstract]
Related Parties	Note 12 — Related Parties Chris Christensen, the brother of CEO, McCord Christensen, acts as the Company’s agent at Moreton Insurance, which acts as a broker for a number of the Company’s insurance policies. The Company’s premium expense, which is generally paid directly to the relevant insurance company, amounted to $6.6 million and $6.9 million for policies that cover the six months ended June 30, 2023 and 2022, respectively. Mr. Chris Christensen earns various forms of compensation based on the specifics of each policy. 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 was paid $0.06 million and $0.1 million for the three and six months ended June 30, 2023 and 2022, respectively. Mike Glasman, the brother of CFO, Zvi Glasman, acted as a broker in connection with the Company's entry into a Master Services Agreement with Syndeo, LLC d/b/a Broadvoice ("Broadvoice") in February 2023 for the provision of certain information technology related services. The amount to be paid to Broadvoice over the 39-month agreement is estimated at $0.4 million. No payments were made in the three and six months ended June 30, 2023.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Section 50
-Paragraph 2
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+ Details

Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Reconciliation of Basic and Diluted Earnings per Share

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


	Three months ended June 30,				Six months ended June 30,
(in 000's, except for per share amounts)	2023		2022		2023		2022
Numerator:
Net income	$	9,553	$	4,678	$	19,334	$	7,838
Less: net income attributable to non-controlling interests	85		46		167		75
Net income attributable to PetIQ, Inc. — basic and diluted	9,468		4,632		19,167		7,763


Denominator(1):
Weighted-average shares of Class A common stock outstanding — basic	29,136		29,283		29,083		29,223
Dilutive impact of share-based compensation awards (2)	237		46		135		81
Dilutive effect of conversion of Notes (3)	—		—		—		—
Weighted-average shares of Class A common stock outstanding — diluted	29,373		29,329		29,218		29,304

Income per share of Class A common stock — basic	$	0.32	$	0.16	$	0.66	$	0.27
Income per share of Class A common stock — diluted	$	0.32	$	0.16	$	0.66	$	0.26

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Comprehensive Income (Loss)
Net income	$ 9,553	$ 4,678	$ 19,334	$ 7,838
Foreign currency translation adjustment	287	(1,077)	236	(1,533)
Comprehensive income	9,840	3,601	19,570	6,305
Comprehensive income attributable to non-controlling interest	87	36	169	61
Comprehensive income attributable to PetIQ, Inc.	$ 9,753	$ 3,565	$ 19,401	$ 6,244

- 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

Intangible Assets and Goodwill (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets consist of the following at:


$'s in 000's	Useful Lives	June 30, 2023		December 31, 2022
Amortizable intangibles
Certification	7 years	$	350	$	350
Customer relationships	10-20 years	160,391		160,040
Patents and processes	5-10 years	14,685		14,634
Brand names	5-15 years	31,757		24,633
Total amortizable intangibles		207,183		199,657
Less accumulated amortization		(71,240)		(62,085)
Total net amortizable intangibles		135,943		137,572
Non-amortizable intangibles
Trademarks and other		33,239		33,239
In-process research and development		—		1,668
Intangible assets, net of accumulated amortization		$	169,182	$	172,479

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)
Remainder of 2023	$	8,927
2024	15,665
2025	14,991
2026	14,338
2027	13,671
Thereafter	68,351

Schedule of Goodwill

The following is a summary of the changes in the carrying value of goodwill for the period from January 1, 2022 to June 30, 2023:


	Reporting Unit
($'s in 000's)	Products		Services		Total
Goodwill as of January 1, 2022	$	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
R&R Acquisition	20,766		—		20,766
Foreign currency translation	132		—		132
Goodwill as of June 30, 2023	$	204,204	$	—	$	204,204

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

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+ Details

Cover Page - shares	6 Months Ended
Cover Page - shares	Jun. 30, 2023	Aug. 09, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
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 Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001668673
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Class A common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		29,182,311
Class B common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		239,540

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2023	Dec. 31, 2022
Treasury stock, shares outstanding (in shares)	373	373
Class A common stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock authorized (in shares)	125,000	125,000
Common stock, shares, issued (in shares)	29,551	29,348
Class B common stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock authorized (in shares)	8,402	8,402
Common stock, shares, issued (in shares)	244	252
Common stock, shares outstanding (in shares)	244	252

Debt - Convertible Notes (Details) - Convertible Notes $ in Millions	May 19, 2020 USD ($)
Debt
Fixed interest rate	4.00%
Class A common stock
Debt
Aggregate principal amount	$ 143.8
Fixed interest rate	4.00%
Conversion ratio	0.0337268

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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+ Details

Customer Concentration (Details)	3 Months Ended		6 Months Ended		12 Months Ended
Customer Concentration (Details)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Customer concentrations \| Revenue from Contract with Customer, Product and Service Benchmark \| Three Customers
Customer Concentration
Concentration risk	54.00%	48.00%		43.00%
Customer concentrations \| Revenue from Contract with Customer, Product and Service Benchmark \| Two Customers
Customer Concentration
Concentration risk			42.00%
Credit concentrations \| Accounts receivable \| One Customer
Customer Concentration
Concentration risk			44.00%		46.00%

Segments - Supplemental Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Segments
Total net sales	$ 314,547	$ 252,014	$ 605,018	$ 527,709
Products
Segments
Total net sales	278,167	219,014	537,160	466,764
Services
Segments
Total net sales	36,380	33,000	67,858	60,945
U.S.
Segments
Total net sales	312,454	250,285	601,909	523,812
U.S. \| Products
Segments
Total net sales	276,074	217,285	534,051	462,867
U.S. \| Services
Segments
Total net sales	36,380	33,000	67,858	60,945
Foreign
Segments
Total net sales	2,093	1,729	3,109	3,897
Foreign \| Products
Segments
Total net sales	2,093	1,729	3,109	3,897
Foreign \| Services
Segments
Total net sales	$ 0	$ 0	$ 0	$ 0

- Definition

+ References

+ Details

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 10 — Commitments and Contingencies Litigation Contingencies 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 as of June 30, 2023 and December 31, 2022 as the Company does not consider any contingency to be probable or estimable. The Company recorded $1.0 million and $3.5 million of expense in the three and six months ended June 30, 2022, respectively, related to a lawsuit brought by a former supplier to the Company related to the redemption of ownership interest, which is included within selling, general and administrative expenses on the condensed consolidated statements of operations. The matter was settled and paid during 2022. Commitments We have commitments for long-term debt that are discussed further in Note - 3, Debt, and leases. In addition, we have purchase obligations for goods and services, capital expenditures, and raw materials entered into in the normal course of business.