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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2018	Jun. 29, 2019	Mar. 11, 2019
Entity Registrant Name	PetIQ, Inc.
Entity Central Index Key	0001668673
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float		$ 299.7
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Class A common stock
Entity Common Stock, Shares Outstanding			21,975,725
Class B common stock
Entity Common Stock, Shares Outstanding			6,207,792

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 66,360	$ 37,896
Accounts receivable, net	45,007	21,759
Inventories	92,142	44,056
Other current assets	4,212	5,164
Total current assets	207,721	108,875
Property, plant and equipment, net	27,335	15,000
Deferred tax assets	43,946	5,994
Other non-current assets	2,857	2,646
Intangible assets, net	88,546	3,266
Goodwill	125,029	5,064
Total assets	495,434	140,845
Current liabilities
Accounts payable	54,768	14,234
Accrued wages payable	5,295	1,811
Accrued interest payable	728	115
Other accrued expenses	1,154	1,880
Current portion of long-term debt and capital leases	2,251	151
Total current liabilities	64,196	18,191
Long-term debt	107,418	17,183
Capital leases, less current installments	2,319	389
Other non-current liabilities	524	238
Total non-current liabilities	110,261	17,810
Commitments and contingencies
Equity
Additional paid-in capital	262,219	70,873
Accumulated deficit	(4,450)	(3,493)
Accumulated other comprehensive loss	(1,316)	(687)
Total stockholders' equity	256,481	66,714
Non-controlling interest	64,496	38,130
Total equity	320,977	104,844
Total liabilities and equity	495,434	140,845
Class A common stock
Equity
Common stock value	22	13
Class B common stock
Equity
Common stock value	$ 7	$ 8

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2018	Oct. 01, 2018	Dec. 31, 2017
Common stock, shares outstanding	21,619,875		13,222,583
Class A common stock
Common stock, par value	$ 0.001		$ 0.001
Common stock authorized	125,000,000		125,000,000
Common Stock, Shares, Issued	21,619,875	5,750,000	13,222,583
Common stock, shares outstanding	21,619,875		13,222,583
Class B common stock
Common stock, par value	$ 0.001		$ 0.001
Common stock authorized	100,000,000		100,000,000
Common Stock, Shares, Issued	6,546,791		8,268,188
Common stock, shares outstanding	6,546,791		8,268,188

Consolidated Statements of Operations - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Total net sales

$ 528,614

$ 266,687

$ 200,162

Total cost of sales

445,326

215,493

167,615

Gross profit

83,288

51,194

32,547

Operating expenses

General and administrative expenses

72,260

37,905

31,845

Contingent note revaluations

3,280

Operating income

7,748

13,289

702

Interest expense, net

(8,022)

(1,563)

(3,058)

Foreign currency gain (loss), net

(140)

(24)

Loss on debt extinguishment

(1,681)

Other (expense) income, net

(345)

201

666

Total other expense, net

(8,322)

(1,502)

(4,097)

Pretax net (loss) income

(574)

11,787

(3,395)

Income tax benefit (expense)

661

(3,970)

Net income (loss)

7,817

(3,395)

Net income (loss) attributable to non-controlling interest

869

11,310

(3,395)

Net loss attributable to PetIQ, Inc.

$ (782)

$ (3,493)

Net income (loss) per share attributable to PetIQ, Inc. Class A common stock

Basic

^[1]

$ (0.05)

$ (0.26)

Diluted

^[1]

$ (0.05)

$ (0.26)

Weighted average shares of Class A common stock outstanding

Basic

^[1]

17,215,978

13,222,583

Diluted

^[1]

17,215,978

13,222,583

Product

Total net sales

$ 450,229

$ 266,687

200,162

Total cost of sales

383,501

$ 215,493

$ 167,615

Services

Total net sales

78,385

Total cost of sales

$ 61,825

[1]	Basic and Diluted earnings per share is applicable only for periods after the Company’s IPO. See Note 8 - Earnings (loss) per share.

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Comprehensive Income
Net income (loss)	$ 87	$ 7,817	$ (3,395)
Foreign currency translation adjustment	(613)	823	(1,898)
Comprehensive (loss) income	(526)	8,640	(5,293)
Comprehensive income attributable to non-controlling interest	697	11,943	$ (5,293)
Comprehensive income attributable to PetIQ	$ (1,223)	$ (3,303)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities
Net Income (loss)	$ 87	$ 7,817	$ (3,395)
Adjustments to reconcile net income to net cash (used in) provided by operating activities
Depreciation and amortization of intangible assets and loan fees	12,467	3,614	4,074
Foreign exchange (gain) loss on liabilities	16	228	(28)
(Gain) Loss on disposition of property, plant, and equipment	(90)	20	42
Stock based compensation expense	3,812	447
Deferred tax adjustment	(843)	3,690
Contingent note revaluations	3,280
Other non-cash activity	(334)		(645)
Changes in assets and liabilities
Accounts receivable	(14,209)	(4,313)	(2,216)
Inventories	(36,610)	(9,718)	(542)
Prepaid expenses and other assets	1,423	(721)	2,037
Accounts payable	15,701	4,152	104
Accrued wages payable	1,979	694	(128)
Other accrued expenses	908	(28)	(229)
Net cash (used in) provided by operating activities	(12,413)	5,882	(926)
Cash flows from investing activities
Proceeds from disposition of property, plant, and equipment	229		1
Purchase of property, plant, and equipment	(7,178)	(4,131)	(2,041)
Business acquisitions (net of cash acquired)	(93,052)
Net cash used in investing activities	(100,001)	(4,131)	(2,040)
Cash flows from financing activities
Proceeds from issuance of long-term debt	538,028	260,020	238,252
Principal payments on long-term debt	(466,912)	(270,458)	(243,852)
Proceeds from Public Offering of Class A Shares, net of underwriting discounts and offering costs	73,914	104,010
Repayment of preference notes		(55,960)
Change in restricted deposits		50	6,894
Tax distributions to Continuing LLC Owners	(1,485)
Purchase of LLC units from Continuing LLC Owners		(2,133)
Principal payments on capital lease obligations	(1,254)	(116)	(93)
Payment of deferred financing fees and debt discount	(2,750)	(42)	(509)
Exercise of options to purchase common stock	1,429
Net cash provided by financing activities	140,970	35,371	692
Net change in cash and cash equivalents	28,556	37,122	(2,274)
Effect of exchange rate changes on cash and cash equivalents	(92)	7	(209)
Cash and cash equivalents, beginning of period	37,896	767	3,250
Cash and cash equivalents, end of period	66,360	37,896	767
Supplemental cash flow information
Interest paid	7,220	1,353	2,911
Property, plant, and equipment acquired through accounts payable	25	(80)	125
Capital lease additions	656	35	$ 188
Issuance of preference notes for LLC Interests		55,960
Net change of deferred tax asset from step-up in basis	36,882	9,441
Income taxes paid	640	323
Accrued tax distribution	2,097	$ 597
Non cash consideration - Contingent notes	6,900
Non cash consideration - Guarantee note	10,000
Non cash consideration - Issuance of Class B common stock and LLC Interests	$ 103,004

Consolidated Statements of Members’/Stockholders’ Equity - USD ($) $ in Thousands	Class A common stock Common Stock [Member]	Class B common stock Common Stock [Member]	Member Equity [Member]	(Accumulated Deficit)	Accumulated Other Comprehensive (Loss) Income	Additional Paid-In Capital	Non-controlling Interest	Total
Beginning Balance at Dec. 31, 2015			$ 46,339		$ (42)		$ (22)	$ 46,275
Increase (Decrease) in Stockholders' Equity
Other comprehensive income					(1,898)			(1,898)
Net income (loss)			(3,398)				3	(3,395)
Ending Balance at Dec. 31, 2016			42,941		(1,940)		(19)	40,982
Increase (Decrease) in Stockholders' Equity
Net income prior to IPO			11,165				(4)	11,161
Other comprehensive income prior to IPO					515			515
Accrued tax distribution prior to recapitalization			(591)					(591)
Issuance of Class A common stock for merger	$ 6							6
Issuance of Class A common stock for merger (in shares)	6,035,083
Exchange of LLC Interests held by Continuing LLC Owners			$ 53,515		(668)	$ (28,459)	(24,388)
Issuance of Class B Shares		$ 8						8
Issuance of Class B Shares (in shares)		8,401,522
Issuance of Class A Shares for IPO net of under writing discounts and offering costs	$ 7					104,003		104,010
Number of shares issued	7,187,500
Issuance of preference notes to affiliates						(55,960)		(55,960)
Increase in deferred tax asset from step-up in tax basis						9,441		9,441
Purchase of noncontrolling interests					(120)	(15,345)	13,332	(2,133)
Common unit issued in exchange of shares value		$ 0
Common unit issued in exchange of shares (in shares)		(133,334)
Accrued tax distributions							(6)	(6)
Stock based compensation expense						275	172	447
Net income (loss)								7,817
Other comprehensive income post IPO					190		119	308
Net (loss) income post IPO				$ (3,493)			149	(3,344)
Ending Balance at Dec. 31, 2017	$ 13	$ 8		(3,493)	(687)	70,873	38,130	104,844
Ending Balance (in shares) at Dec. 31, 2017	13,222,583	8,268,188
Increase (Decrease) in Stockholders' Equity
Issuance of equity for business combination		$ 5			128	43,075	59,796	103,004
Issuance of equity for business combination (in shares)		4,600,000
Exchange of LLC Interests held by Continuing LLC Owners	$ 6	$ (6)			(290)	47,458	(47,168)
Exchange of LLC Interests held by Continuing LLC Owners (in shares)	6,321,397	(6,321,397)
Net increase in deferred tax asset from LLC Interest transactions						36,882		36,882
Issuance of Class A Shares for IPO net of under writing discounts and offering costs	$ 2					73,912		$ 73,914
Number of shares issued	2,000,000							2,000,000
Accrued tax distributions							(2,097)	$ (2,097)
Other comprehensive income					(441)		(172)	(613)
Equity shift as a result of the public offering					(26)	(13,914)	13,940
Stock based compensation expense						2,504	1,308	3,812
Exercise of Options to purchase Common Stock	$ 0					1,429		$ 1,429
Exercise of Options to purchase Common Stock (in shares)	75,895							75,895
Net income (loss)				(782)			869	$ 87
Ending Balance at Dec. 31, 2018	$ 22	$ 7		(4,450)	$ (1,316)	$ 262,219	64,496	320,977
Ending Balance (in shares) at Dec. 31, 2018	21,619,875	6,546,791
Increase (Decrease) in Stockholders' Equity
ASC 606 adoption, net of tax \| ASU 2014-09				$ (175)			$ (110)	$ (285)

Principal Business Activity and Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Principal Business Activity and Significant Accounting Policies

Principal Business Activity and Significant Accounting Policies

Note 1 – Principal Business Activity and Significant Accounting Policies

Principal Business Activity and Principals of Consolidation

PetIQ, Inc and Subsidiaries (the Company) is a rapidly growing pet health and wellness company providing convenient access and affordable choices to a broad portfolio of veterinarian-recommended pet health and wellness products across a network of leading national retail stores, including more than 40,000 retail pharmacy locations. PetIQ believes that pets are an important part of the family and deserve the best pet care we can give them. During the year ended December 31, 2018, PetIQ completed the acquisitions of VIP Petcare and HBH. Through VIP, PetIQ provides veterinary services to pet owners in over 39 states. With the HBH Acquisition, the Company enhanced manufacturing capability and capacity.

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 U.S. Generally Accepted Accounting Principles (“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 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; allowance for doubtful accounts; the valuation of property, plant, and equipment, intangible assets and goodwill, inventories and notes receivable; and reserves for legal contingencies.

Foreign Currencies

The Company operates subsidiaries in foreign countries who use the local currency as the functional currency. The Company translates its foreign subsidiaries’ assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in the cumulative translation account, a component of accumulated other comprehensive income. The Company records gains and losses from changes in exchange rates on transactions denominated in currencies other than each reporting location’s functional currency in net income (loss) for each period.

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, accounts receivable, accounts payable and accrued liabilities, are at cost, which approximates fair value due to their relatively short maturities. The guarantee note is carried at cost, which approximates fair value due to the recent issuance of the note. Our term loan and revolving credit facility bear interest at a variable interest rate plus an applicable margin and, therefore, carrying amounts approximate fair value.

The following table presents liabilities measured at fair value on a recurring basis:


$'s in 000's		December 31, 2018		December 31, 2017
Liabilities:
2019 Contingent note	$	2,680	$	—

In connection with the acquisition of Community Veterinary Clinics, LLC d/b/a VIP Petcare (“VIP” and such acquisition, the “VIP Acquisition”) a portion of the purchase price is structured in the form of Contingent Notes (the “Contingent Notes”) that are earned based on the combined Company EBITDA targets for the years ending December 31, 2018 and 2019 (“Measurement Dates”). See Note 2 – “Business Combinations” for more information regarding the VIP Acquisition. The Company is required to reassess the fair value of the Contingent Notes at each reporting period. As of December 31, 2018, $7.5 million was payable pursuant to the 2018 Contingent Note, subject to the same payment terms described below. As such, the portion of the liability as it relates to the 2018 Contingent Note became fixed as of December 31, 2018.

For the 2019 Contingent Note, a Monte Carlo simulation method was utilized in estimating the fair value (Level 3) of the Contingent Notes. The simulation model is a numerical algorithm that generates thousands of scenarios for the future EBITDA in order to assess the probability of achieving the EBITDA hurdles. The valuation model simulates the last twelve months EBITDA from the Valuation Date to the end of each Measurement Date in one 'jump'. The Contingent Notes were valued within a risk-neutral option pricing framework with the real growth rate adjusted for the market price of EBITDA risk. The Company used the WACC less risk-free rate as a proxy for the EBITDA risk premium.

Although the Company believes its estimates and assumptions are reasonable, different assumptions, including those regarding the operating results of the Company, or changes in the future may result in different estimated amounts.

The contingent consideration is included in Contingent Notes in the accompanying consolidated balance sheets. The Company will satisfy this obligation with a cash payment to the sellers due in July 2023 upon the achievement of the respective milestones discussed above. The Contingent Notes will bear interest at a fixed rate of 6.75%, beginning upon the achievement of the respective milestones discussed above.

The following table summarizes the Level 3 activity related to the contingent consideration:


	Year ended
$'s in 000's	December 31, 2018		December 31, 2017
Balance at beginning of the period	$	—	$	—
Fair value of contingent consideration at VIP Acquisition date		6,900		—
Change in fair value of contingent consideration		3,280		—
Transfer out of level 3		(7,500)
Balance at the end of the period	$	2,680	$	—

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with an original maturity of three months or less, excluding amounts restricted for various state licensing regulations. 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 a set number 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 doubtful accounts equal to estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice.

Accounts receivable consists of the following as of:


$'s in 000's	December 31, 2018		December 31, 2017
Trade receivables	$	43,531	$	22,189
Other receivables		1,764		297
		45,295		22,486
Less: Allowance for doubtful accounts		(216)		(343)
Non-current portion of receivables		(72)		(384)
Total accounts receivable, net	$	45,007	$	21,759

Inventories

Inventories are stated at the lower of cost or net realizable value, which approximate the first-in first-out (“FIFO”) basis. 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 were as follows as of December 31, 2018 and 2017:


$'s in 000's	December 31, 2018		December 31, 2017
Raw materials	$	6,106	$	4,004
Work in progress		94		—
Finished goods		85,942		40,052
Total inventories	$	92,142	$	44,056

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.

Depreciation and amortization is provided using the straight-line method, based on estimated useful lives of the assets, except for leasehold improvements and capital 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 or general and administrative expenses in the consolidated statements of comprehensive income, 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			3-15 years
Furniture and fixtures			5-10 years

Intangible Assets

Indefinite lived intangible assets consist primarily of trademarks. Trademarks represent costs paid to legally register phrases and graphic designs that identify and distinguish products sold by the Company. Trademarks are not amortized, rather potential impairment is considered on an annual basis in the fourth quarter, or more frequently upon the occurrence of an event, when circumstances indicate that the book value of trademarks are greater than their fair value. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the indefinite lived intangible asset is less than the carrying value as a basis to determine whether further impairment testing under ASC 350 is necessary. No impairment charge was recorded for the years ended December 31, 2018, 2017, and 2016.

Definite-lived intangible assets consist of a distribution agreement, production certifications, patents and processes, customer relationships, and brand names. The assets are amortized on either a straight-line basis or proportionately to the benefits derived from those relationships or agreements. Useful lives vary by asset type and are determined based on the period over which the intangible asset is expected to contribute directly or indirectly to the company’s future cash flows. Useful lives range from 2 to 20 years.

Goodwill

Goodwill is the excess of the consideration paid over the fair value of specifically identifiable assets, liabilities and contingent liabilities in a business combination and relates to the future economic benefits arising from assets, which are not capable of being individually identified and separately recognized.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortized but is reviewed for impairment annually in the Company’s fourth quarter or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

Under ASU 2017-04 (Topic 350), Intangibles - Goodwill and Other – Simplifying the Test for Goodwill Impairment, companies are no longer required to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment, thus eliminating Step Two of the analysis that was required under the prior guidance. Under ASU 2017-04, goodwill impairment testing is performed by comparing the fair value of the reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

The update to the standard does not eliminate the optional qualitative assessment of goodwill impairment that is often used to determine if the quantitative assessment is necessary. The qualitative assessment requires the evaluation of certain events and circumstances 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. Otherwise, the Company would perform a quantitative analysis.

The quantitative analysis requires companies to compare the fair value of the reporting units to which goodwill was assigned to their respective carrying values. If the fair value exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying value exceeds the fair value, the goodwill of the reporting unit is potentially impaired, and the carrying value of goodwill is then reduced to the implied value, or to zero if the fair value of the assets exceeds the fair value of the reporting unit, through an impairment charge.

The Company performed its qualitative assessment during the fourth fiscal quarter of 2018 and concluded that it was more likely than not that the fair values of its reporting units were greater than their carrying amounts. After reaching this conclusion, the quantitative impairment test was unnecessary and no further testing was performed. The qualitative factors that were considered included, but were not limited to, general economic conditions, outlook for the pet sector, market capitalization, consolidated company stock price, and recent and forecasted financial performance.

Goodwill impairment analysis and measurement is a process that requires significant judgment. If there are significant changes in market conditions or a future downturn in our business, or a future annual goodwill impairment test indicates an impairment of our goodwill, the Company may have to recognize impairment of its goodwill.

Deferred Acquisition Liability

The Company had a deferred acquisition liability related to an acquisition that occurred in 2013. The liability was denominated in Euros and required annual payments based on a percentage of gross profit from the sales of certain products. This liability was repaid during 2018. The balance recorded as of December 31, 2017 was $1.6 million , and was included in other accrued expenses.

In January 2018, the Company completed the VIP Acquisition, which included guarantee and contingent notes due to the sellers. See Note 2 for more information.

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 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.

Revenue for services is recognized over time as the service is delivered. 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 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, 2018.

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 (rate per case) 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 other current assets or accounts payable in the Condensed Consolidated Balance Sheet.

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, no terms beyond one year are 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 will be one year or less.

Shipping

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.

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. 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, 2018 are immaterial. The Company does not have significant deferred revenue or unbilled receivable balances because of transactions with customers.

The following tables represent the disaggregation of revenue by contract type for each of our reportable segments:


		Year ended December 31, 2018
$'s in 000's		U.S.		Foreign		Total
Product sales	$	444,364	$	5,865	$	450,229
Service revenue		78,385		—		78,385
Total net sales	$	522,749	$	5,865	$	528,614

		Year ended December 31, 2017
$'s in 000's		U.S.		Foreign		Total
Product sales	$	261,526	$	5,161	$	266,687
Service revenue		—		—		—
Total net sales	$	261,526	$	5,161	$	266,687

Shipping and Handling Costs

Shipping and handling costs are recorded as cost of sales, and are not typically billed to customers.

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 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 general and administrative expenses. Research and development costs amounted to $203 thousand, $514 thousand, and $310 thousand and advertising costs were $2.9 million, $2.2 million, and $1.2 million for the years ended December 31, 2018, 2017, and 2016, respectively.

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.

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 8 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, (iv) capital lease obligations and the mortgage note outstanding, offset by interest income earned on our demand deposits and other assets. Interest expense was $8.3 million, $1.6 million, and $3.1 million for the years ended December 31, 2018, 2017, and 2016, respectively, offset by $271 thousand, $75 thousand, and $20 thousand of interest income, respectively.

Earnings Per Share

Basic earnings per share is computed by dividing net income (loss) attributable to PetIQ, Inc. by the weighted average shares outstanding during the period. Diluted earnings per share is computed by dividing net income 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 earnings per share. See Note 7 for further discussion.

Reclassifications

Certain reclassifications have been made to the prior years’ consolidated financial statemetns to conform to current year presentation. These reclassifications had no impact on net income, shareholders’ equity, or cash flows as previously reported.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, and subsequently issued several related Accounting Standards Updates (“ASUs”) (“Topic 606”), which provide guidance for recognizing revenue from contracts with customers. The core principle of Topic 606 is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects consideration for which entitlement is expected in exchange for those goods or services. Topic 606 was effective commencing with our quarter ending March 31, 2018.

On January 1, 2018, the Company adopted Topic 606 using the modified retrospective approach. Under the modified retrospective approach, the Company is required to recognize the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of retained earnings as of January 1, 2018, the date of initial application. The cumulative effect of initially applying Topic 606 was immaterial to the Consolidated Financial Statements.

Results for the year ended December 31, 2018 is presented under Topic 606. Prior periods are not adjusted and will continue to be reported in accordance with ASC 605 Revenue Recognition (“ASC 605”). The following tables summarize the impacts of adopting Topic 606 on the Company’s Consolidated Financial Statements as of and for the year ended December 31, 2018.

Consolidated Statements of Income for the year ended December 31, 2018


						Balance Without
$'s in 000's		As Reported		Adjustments		Adoption of Topic 606
Revenues	$	528,614	$	636	$	529,250
Cost of sales		445,326		(455)		444,871
General and Administrative expenses		72,260		870		73,130
(Provision) benefit for income taxes		661		69		730
Net Income		87		290		377

Consolidated Balance Sheets


						Balance Without
$'s in 000's		As Reported		Adjustments		Adoption of Topic 606
Assets
Accounts receivable, net	$	45,007	$	891	$	45,898
Inventories		92,142		(774)		91,368
Other current assets		4,212		—		4,212

Liabilities and Stockholders' Equity
Accounts payable		54,768		(731)		54,037
Accumulated deficit		(4,450)		290		(4,160)

In February 2016, the FASB issued ASU 2016-02, Leases. This ASU is a comprehensive new leases standard that was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The original guidance required application on a modified retrospective basis with the earliest period presented. In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842, which includes an option to not restate comparative periods in transition and elect to use the effective date of ASC 842, Leases, as the date of initial application of transition. Based on the effective date, we adopted this ASU beginning on January 1, 2019 and have elected the transition option provided under ASU 2018-11. The Company expects this standard will have a material effect on our Consolidated Balance Sheets with the recognition of new right of use assets and lease liabilities for all operating leases, except those subjectshort-term lease recognition exemption of less than twelve months. Upon adoption, we estimate both assets and liabilities on our Consolidated Balance Sheets will increase by approximately $10 million. Changes in our lease population or changes in incremental borrowing rates may alter this estimate. We will expand our consolidated financial statement disclosures upon adoption of this standard.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU clarify and provide specific guidance on eight cash flow classification issues that are not currently addressed by current U.S. GAAP. This ASU was effective commencing with our quarter ending March 31, 2018. The adoption of this ASU did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350) (“ASU 2017-04”): Simplifying the Test for Goodwill Impairment. The amended guidance simplifies the accounting for goodwill impairment for all entities by eliminating the requirement to perform a hypothetical purchase price allocation. A goodwill impairment charge will now be recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. The ASU is effective for interim and annual periods for the Company on January 1, 2020. with early adoption permitted. The Company early adopted the the standard beginning with its annual goodwill impairment test in 2018.

In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The amendments add various SEC paragraphs pursuant to the issuance of SEC Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“Act”) (“SAB 118”). The SEC issued SAB 118 to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Act in the period of enactment. SAB 118 allows disclosure that timely determination of some or all of the income tax effects from the Act are incomplete by the due date of the financial statements and if possible to provide a reasonable estimate. The Company completed accounting for the Act during the year ended December 31, 2018. See Note 7 – Income Taxes, for the Company’s assessment of the income tax effects of the Act.

Business Combination

12 Months Ended

Dec. 31, 2018

Business Combination

Business Combination

Note 2 – Business Combinations

VIP

On January 17, 2018 PetIQ, Inc. completed the acquisition of VIP from VIP Holdings, LLC (“VIPH” or the “Sellers”). VIP is a provider of veterinary wellness and pet preventive services as well as a distributor of pet wellness products and medications. The total purchase price was approximately $198 million, net of cash acquired and the effective settlement of pre-existing payables between the Company and VIP at cost which approximates fair value, and was funded through a combination of cash on hand, borrowings under a new $75 million term loan, a $10 million note payable, two $10 million contingent notes payable upon the achievement of certain combined Company EBITDA targets in 2018 and 2019, and equity consideration consisting of 4.2 million LLC Interests and 4.2 million shares of Class B common stock of the Company.

The estimate of fair value and purchase price allocation were based on information available at the time of closing the VIP Acquisition. The Company finalized the purchase accounting for VIP as of December 31, 2018. The following table summarizes the preliminary purchase price allocation and adjustments since the preliminary purchase price allocation was disclosed as of March 31, 2018:


$'s in 000's		Preliminary Estimated Fair Value		Adjustments		As Retrospectively Adjusted
Current assets	$	15,755	$	(138)	$	15,617
Property, plant, and equipment		8,857		28		8,885
Other assets, net		295		—		295
Intangible assets - Customer relationships (20 year useful life)		80,200		(3,000)		77,200
Intangible assets - Brand names (10 year useful life)		9,600		—		9,600
Goodwill		112,109		534		112,643
Total assets		226,816		(2,576)		224,240

Current liabilities		22,886		22		22,908
Capital lease obligations		3,032		—		3,032
Total liabilities		25,918		22		25,940

Estimated purchase price	$	200,898	$	(2,598)	$	198,300

Cash paid, net of cash acquired	$	91,987	$	95	$	92,082
LLC Interests and shares of Class B common stock		90,031		—		90,031
Guarantee note		10,000		—		10,000
Contingent notes		9,500		(2,600)		6,900
Post-closing working capital adjustment		(620)		(93)		(713)

Estimated fair value of total consideration transferred	$	200,898	$	(2,598)	$	198,300

During the year ended December 31, 2018, we adjusted purchase price allocation as a result of receiving certain information which existed as of the date of acquisition. This information impacted our working capital adjustment as well as the projected operating results used in estimating the fair value of intangible assets and contingent notes.

The definite-lived intangibles primarily relate to customer relationships and brand names. The $86.8 million represents the fair value and will be amortized over the estimated useful lives of the assets through January 2038. Amortization expense for these definite-lived intangible assets for the year ended December 31, 2018 was $4.7 million.

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 $49.8 million of the $112.6 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 and Services segments and as shown in Note 4.

Pro Forma Combined Statements of Operations (Unaudited)

The following unaudited pro forma combined statements of operations presents the Company's operations as if the VIP Acquisition and related financing activities had occurred on January 1, 2017. The pro forma information includes the following adjustments (i) amortization of acquired definite-lived intangible assets; (ii) depreciation based on the fair value of acquired property and equipment; (iii) costs of goods sold based on the fair value of acquired inventory; (iv) interest expense incurred in connection with the term loan and guaranteed note borrowings used to finance the acquisition; (v) inclusion of equity-based compensation expense associated with equity awards granted to certain VIP employees in connection with the acquisition; (vi) elimination of acquisition expenses; and (vii) VIP’s operations for the periods from January 1, 2017 to December 31, 2017 and January 1, 2018 to January 16, 2018. Additionally the share count utilized and Net Income do not account for non-controlling interests. The pro forma combined statements of operations are not necessarily indicative of the results of operations as they would have been had the VIP Acquisition been effected on the assumed date and are not intended to be a projection of future results:


		Year ended December 31,
($'s in 000's, except per share data)		2018		2017
Net sales	$	531,711	$	407,466
Net income	$	1,937	$	5,648

Earnings per share:
Basic	$	0.07	$	0.22
Diluted	$	0.07	$	0.22

HBH Enterprises

On October 17, 2018, the Company completed the acquisition of HBH Enterprises, LLC (“HBH”) (the “HBH Acquisition”). Total consideration, net of cash acquired, was approximately $14.7 million consisting of cash of $1.7 million and equity consideration of approximately $13.0 million. The equity consideration consisted 400,000 LLC interests of Holdco and 400,000 shares of Class B common stock, $0.001 par value per share, of the Company.

The estimate of fair value and purchase price allocation were based on information available at the time of closing the HBH Acquisition and the Company continues to evaluate the underlying inputs and assumptions. The Company is in process of finalizing net working capital adjustments as well as valuation studies. Accordingly, these preliminary estimates are subject to 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 HBH Acquisition.The purchase price allocation has been preliminarily allocated as follows:



$'s in 000's		Preliminary Estimated Fair Value
Working Capital, net	$	1,676
Property, plant, and equipment		2,686
Intangible assets - Customer relationships		3,800
Goodwill		7,607
Total assets		15,769

Capital lease obligations		1,114
Total liabilities		1,114

Estimated purchase price	$	14,655

Cash paid, net of cash acquired	$	1,683
LLC Interests and shares of Class B common stock		12,972

Estimated fair value of total consideration transferred	$	14,655

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 $5.0 million of the $7.6 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 as shown in Note 4.

Property, Plant, and equipment

12 Months Ended

Dec. 31, 2018

Property, Plant, and Equipment

Property, Plant, and Equipment

Note 3 – Property, Plant, and Equipment

Property, plant, and equipment consists of the following at December 31:


$'s in 000's		2018		2017
Leasehold improvements	$	10,776	$	6,616
Equipment		14,477		10,665
Vehicles and accessories		3,989		—
Computer equipment and software		5,839		927
Buildings		2,479		771
Furniture and fixtures		1,547		407
Land		660		660
Construction in progress		682		2,344
		40,449		22,390
Less accumulated depreciation		(13,114)		(7,390)
Total property, plant, and equipment	$	27,335	$	15,000

Depreciation and amortization expense related to these assets total $6.7 million, $2.3 million, and $1.9 million for the years ended December 31, 2018, 2017, and 2016, respectively.

Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2018

Intangible Assets and Goodwill

Intangible Assets and Goodwill

Note 4 – Intangible Assets and Goodwill

Intangible assets consist of the following at December 31:


$'s in 000's	Useful Lives	2018		2017
Amortizable intangibles
Distribution agreement	2 years	$	3,021	$	3,021
Certification	7 years		350		350
Customer relationships	12-20 years		82,124		1,191
Patents and processes	10 years		1,900		1,998
Brand names	10-15 years		10,470		923
Total amortizable intangibles			97,865		7,483
Less accumulated amortization			(9,835)		(4,733)
Total net amortizable intangibles			88,030		2,750
Non-amortizable intangibles
Trademarks and other			516		516
Intangible assets, net of accumulated amortization		$	88,546	$	3,266

Certain intangible assets are denominated in currencies other than the U.S. Dollar; therefore, their gross and net carrying values are subject foreign currency movements. Amortization expense for the years ended December 31, 2018, 2017, and 2016 was $5.2 million, $1.1 million, and $1.1 million, respectively.

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


Years ending December 31, ($'s in 000's)
2019							9,124
2020							11,118
2021							10,346
2022							9,360
2023							7,981
Thereafter							40,101

The following is a summary of the changes in the carrying value of goodwill for the years ended December 31, 2018 and 2017.


		Reporting Unit
($'s in 000's)		Products		Services		Total
Goodwill as of January 1, 2017	$	4,619	$	—	$	4,619
Foreign currency translation		445		—		445
Goodwill as of December 31, 2017		5,064		—		5,064
Foreign currency translation		(285)		—		(285)
Acquisitions		72,986		47,264		120,250
Goodwill as of December 31, 2018	$	77,765	$	47,264	$	125,029

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Debt

12 Months Ended

Dec. 31, 2018

Debt

Debt

Note 5 – Debt

A&R Credit Agreement

In connection with the VIP Acquisition, the Company amended and restated its existing revolving credit agreement (the “A&R Credit Agreement”) on January 17, 2018, which was subsequently amended in August 2018. The A&R Credit Agreement provides for a secured revolving credit facility of $75 million in the aggregate, at either LIBOR or Base (prime) interest rates plus an applicable margin. The A&R Credit Agreement matures on January 17, 2023 and contains a lockbox mechanism.

All obligations under the A&R Credit Agreement are 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 Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the assets of each borrower and guarantor under the A&R Credit Agreement, subject to certain exceptions.

Also in connection with the closing of the VIP Acquisition, the Company entered into a term loan credit agreement (the “Term Loan”). The Term Loan provides for a secured term loan credit facility of $75 million in aggregate at either LIBOR or Base (prime) interest rates plus an applicable margin. The Term Loan Credit Agreement requires quarterly principal payments, with the full balance due on January 17, 2023.

As of December 31, 2018, the Company had $13.5 million outstanding under the A&R Credit Agreement and $74.6 million under the Term Loan Credit Agreement. The interest rate on the A&R Credit Agreement was 5.5% as a Base Rate loan, the interest rate on the Term Loan Credit Agreement was 7.6% as a LIBOR rate loan. Additionally the Company pays between 0.375% and 0.50% as an unused facility fee, depending on the amount borrowed.

The A&R Credit Agreement and Term Loan contain certain covenants and restrictions including a fixed charge coverage ratio and a first lien net leverage ratio and is secured by collateral consisting of a percentage of eligible accounts receivable, inventories, and machinery and equipment. As of December 31, 2018, the Company was in compliance with these covenants. The availability of certain baskets and the ability to enter into certain transactions (including our ability to pay dividends) may also be subject to compliance with consolidated EBITDA.

Prior Credit Agreement

The Company entered into a credit agreement (the “Credit Agreement”) on December 21, 2016. The Credit Agreement provided for secured financing of $50 million in aggregate at either LIBOR or Base (prime) interest rates plus an applicable margin, consisting of

(i) $45 million revolving credit facility (“Revolver”) maturing on December 21, 2019; and

(ii) $5 million term loan (“Term Loans”), requiring equal amortizing payments for 24 months.

As of December 31, 2017, the Company had $0 outstanding as Term Loans and $15.3 million outstanding under the Revolver. The interest rate on the revolving credit facility was 5.00%, as a Base Rate loan.

The Company refinanced its 2015 credit facility in March 2016 with an amended and restated credit agreement (the “Amended Credit Agreement”). The Amended Credit Agreement provided for secured financing of $48,000 in the aggregate, consisting of

(i) $3 million in aggregate principal amount of term loans maturing on December 31, 2016 (the “Term B Loans”);

(ii) $20 million in aggregate principal amount of term loans maturing on March 16, 2018 (the “Term A Loans”); and

(iii) a $25 million revolving credit facility maturing on March 16, 2018.

Other Debt

The Company entered into a mortgage with a local bank to finance $1.92 million of the purchase price of 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.

In connection with the VIP Acquisition, the Company entered into a guarantee note which requires the Company to pay $10.0 million on July 17, 2023. The note bears interest at a fixed 6.75% and requires quarterly interest payments. In addition, the Company is required to pay a $7.5 million earn-out based on achievement of 2018 and $10 million contingent on achievement of 2019 combined company Adjusted EBITDA targets. As of December 31, 2018 $7.5 million was payable pursuant to the 2018 Contingent Note. See “Note – 2 Business Combinations”. The $7.5 million note requires quarterly interest payments of 6.75% with the balance payable July 17, 2023.

The following represents the Company’s long-term debt as of December 31, 2018 and December 31, 2017:


$'s in 000's	December 31, 2018		December 31, 2017
Term loans	$	74,625	$	—
Revolving credit facility		13,452		15,325
Mortgage		1,859		1,902
Contingent notes		2,680		—
Earned Contingent Note		7,500		—
Guaranteed note		10,000		—
Net discount on debt and deferred financing fees		(1,902)		—
	$	108,214	$	17,227
Less current maturities of long-term debt		(796)		(44)
Total long-term debt	$	107,418	$	17,183

Future maturities of long-term debt, excluding the net discount on debt, deferred financing fees and the unearned contingent note, as of December 31, 2018 are as follows:


($'s in 000's)
2019	$	796
2020		798
2021		800
2022		802
2023		102,631
Thereafter		1,609

The Company incurred debt issuance costs of $0.3 million related to the A&R Credit Agreement and $2.4 million related to the Term Loan during the year ended December 31, 2018.

The Company incurred debt issuance costs of $218 thousand related to the Amended Credit Agreement during the first quarter of 2016. The debt transaction resulted in a loss on debt extinguishment of $993 thousand, which included the write off of unamortized debt issuance costs and debt discount, early termination fees, and legal costs.

The Company incurred debt issuance costs of $261 thousand related to the Credit Agreement during 2016. This second refinancing transaction resulted in a loss on extinguishment of $688 thousand, which included the write off of unamortized debt issuance costs and debt discount, early termination fees, and legal costs.

Leases

12 Months Ended

Dec. 31, 2018

Leases

Leases

Note 6 - Leases

The Company leases certain real estate, both office and production facilities, as well as equipment from third parties. Lease expiration dates are between 2018 and 2025. A portion of capital leases are denominated in foreign currencies. Many of these leases include renewal options and in some cases options to purchase.

Annual future commitments under non-cancelable leases as of December 31, 2018, consist of the following:


	Lease Obligations
$'s in 000's	Operating Leases		Capital Leases
2019	$	3,318	$	1,615
2020		2,685		1,296
2021		1,894		605
2022		1,765		433
2023		1,478		123
Thereafter		134		—
Total minimum future obligations	$	11,274	$	4,072
Less interest				(298)
Present value of net future minimum obligations				3,774
Less current capital lease obligations				(1,455)
Long-term capital lease obligations			$	2,319

The net book value of assets under capital lease was $4.5 million and $0.9 million as of December 31, 2018 and 2017, respectively. Total operating lease expense for the years ended December 31, 2018, 2017, and 2016 totaled $6.0 million, $1.7 million, and $1.7 million, respectively.

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Taxes

Income Taxes

Note 7 - Income Taxes

As a result of the IPO and related reorganization transactions completed in July 2017, the Company held an economic interest of approximately 62% in Holdco and consolidates the financial position and results of Holdco. The ownership of Holdco not held by the Company is considered non-controlling interest, which, through exchanges that have occurred since the IPO, totaled approximately 23% of the ownership of Holdco as of December 31, 2018. See Note 11 – Non-controlling interests for more information. Holdco is treated as a partnership for income tax reporting. HoldCo’s members, including the Company, are liable for federal, state, and local income taxes based on their share of HoldCo’s taxable income.

Prior to the IPO in 2017, the Company’s predecessor for financial reporting purposes was Opco, which is a limited liability company, and the majority of Opco’s businesses and assets are held and operated by limited liability companies, which are not subject to entity-level federal or state income taxation. Opco makes cash distributions to permit the member to pay these taxes as needed by the member’s tax situation. The Company made cash distributions of $1.5 million in the year ended December 31, 2018. Opco accrued an additional $2.1 million for anticipated tax distributions to Continuing LLC Owners during the year. This liability is included in accounts payable on the consolidated balance sheet.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code which impacted 2017 including, but not limited to, reducing the U.S. federal corporate tax rate from 35 to 21 percent and requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. U.S. GAAP requires the impact of tax legislation to be recorded in the period of enactment. Staff Accounting Bulletin (SAB) 118 established a one-year measurement period to complete the accounting for the ASC 740 income tax effects of the Tax Act.

As of December 31, 2017, we were able to make reasonable estimates of the impact of the Tax Act and recorded provisional amounts for the deemed repatriation tax, and the remeasurement of deferred taxes. We recorded a provisional net tax expense of $3.6 million in the period ended December 31, 2017 attributable to the Tax Act. This net expense consists of an expense of $3.4 million primarily due to the remeasurement of deferred tax assets and liabilities associated with the corporate rate reduction and $0.2 million for the Company’s allocated share of the one-time transition tax on unrepatriated earnings of foreign subsidiaries. As of December 31, 2018, we have completed our accounting for the Tax Act now that we have filed our U.S. tax return and recorded an immaterial adjustment related to the deferred remeasurement and the one-time transition tax.

The Tax Act contains a new law that requires a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations, also known as the tax on global intangible low taxed income (GILTI), beginning in 2018. The FASB has provided that companies subject to GILTI have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for temporary differences, including outside basis differences, expected to reverse as GILTI. As of December 31, 2018, we have adopted an accounting policy regarding the treatment of taxes due on future inclusion of non-U.S. income in U.S. taxable income under the Global Intangible Low-Taxed Income provisions as a current period expense when incurred. Therefore, no deferred tax related to these provisions has been recorded as of December 31, 2018.

The components of earnings before income taxes, determined by tax jurisdiction, are as follows:


		Years Ended December 31
$'s in 000's		2018		2017		2016
United States	$	(1,116)	$	11,479	$	(3,634)
Foreign		542		308		239
Total	$	(574)	$	11,787	$	(3,395)

The provision for income taxes for 2018, 2017, and 2016 consisted of the following:


		Years Ended December 31
$'s in 000's		2018		2017		2016
Current:
Federal	$	—	$	(10)	$	—
State		148		63		—
Foreign		—		—		—
	$	148	$	53	$	-
Deferred and other:
Federal		(751)		3,708		—
State		(135)		19		—
Foreign		77		190		—
		(809)		3,917		—
Total tax expense (benefit)	$	(661)	$	3,970	$	—

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


	Years Ended December 31
$'s in 000's	2018		2017		2016
Income tax expense (benefit) at federal statutory rate	21.0	%	35.0	%	35.0
State and local income taxes net of federal tax benefit	(5.7)		—		—
Non-controlling interest and nontaxable income	54.7		(33.2)		(37.4)
Deferred tax rate changes	37.2		—		—
Share-based compensation	18.3		—		—
Tax Cuts and Jobs Act of 2017	(7.3)		30.7		—
Nondeductible/nontaxable items	(3.0)		1.2		2.4
Income tax expense (benefit)	115.2	%	33.7	%	-

Our tax rate is affected by the lower pre-tax income in the current year, recurring items, such as the portion of income and expense allocated to the noncontrolling interest, and tax rates in foreign jurisdictions relative to the amounts of income we earn in those jurisdictions. 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. Our effective income tax rate prior to the IPO differed from statutory rates primarily due to our pass-through entity structure for U.S. income tax purposes.

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, 2018 and 2017 are as follows:


$'s in 000's		2018		2017
Investment in partnership	$	41,658	$	5,855
Fixed Assets		41		—
Net operating loss carryforwards and tax credits		2,538		536
Other		2		66
Subtotal		44,239		6,457
Less: valuation allowance	$	(206)	$	(237)
Total net deferred tax assets		44,033		6,220
Other		(355)		(417)
Net deferred tax asset	$	43,678	$	5,803

The Company has a valuation allowance for certain deferred tax assets of $0.2 million and $0.2 million as of December 31, 2018 and December 31, 2017, respectively. The valuation allowance pertains to certain international loss carryforwards, some of which have no expiration and others that would expire beginning in 2018.

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, 2018, tax years from 2015 to 2018 are subject to examination by the tax authorities.

Earnings (loss) per Share

12 Months Ended

Dec. 31, 2018

Earnings (loss) per Share

Earnings (loss) per Share

Note 8 – Earnings (loss) per Share

Basic and diluted earnings (loss) per share

Basic earnings (loss) per share of Class A common stock is computed by dividing net income (loss) 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.

As described in Note 9 — Stockholders’ Equity, on July 20, 2017, the PetIQ Holdings, LLC Agreement (“LLC Agreement”) was amended and restated to, among other things, (i) provide for a new single class of common membership interests, the LLC Interests of HoldCo, and (ii) exchange all of the then-existing membership interests of the Continuing LLC Owners for common units of HoldCo. This Recapitalization changed the relative membership rights of the Continuing LLC Owners such that retroactive application of the Recapitalization to periods prior to the IPO for the purposes of calculating earnings (loss) per share would not be appropriate.

Prior to the IPO, the PetIQ, LLC membership structure included several different types of LLC interests including ownership interests and profits interests. The Company analyzed the calculation of earnings per unit for periods prior to the IPO using the two-class method and determined that it resulted in values that would not be meaningful to the users of these consolidated financial statements. Therefore, earnings (loss) per share information has not been presented for periods prior to the IPO on July 20, 2017. The basic and diluted earnings (loss) per share represent only the the period July 20, 2017 to December 31, 2018.

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



(in 000's, except for per share amounts)	December 31, 2018		December 31, 2017
Numerator:
Net income	$	87	$	7,817
Less: net income attributable to non-controlling interests		(869)		(11,310)
Net loss attributable to PetIQ, Inc. — basic and diluted		(782)		(3,493)
Denominator:
Weighted-average shares of Class A common stock outstanding -- basic		17,216		13,223
Dilutive effects of stock options that are convertible into Class A common stock		—		—
Dilutive effect of RSUs		—		—
Weighted-average shares of Class A common stock outstanding -- diluted		17,216		13,223

Earnings per share of Class A common stock — basic	$	(0.05)	$	(0.26)
Earnings per share of Class A common stock — diluted	$	(0.05)	$	(0.26)

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 as well as stock options and restricted stock units have not been included in the diluted earnings (loss) per share calculation as they have been determined to be anti-dilutive under the if-converted method and treasury stock method, respectively.

Stock Based Compensation

12 Months Ended

Dec. 31, 2018

Stock Based Compensation

Stock Based Compensation

Note 9 – Stock Based Compensation

Stock based compensation expense is recorded within general and administrative expenses.

PetIQ, Inc. Omnibus Incentive Plan

The 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, restricted stock units (RSUs), and other stock-based awards. The Company initially reserved 1,914,047 registered shares of Class A common stock for issuance under the Plan. As of December 31, 2018 and 2017, 412,805 and 1,315,403 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.

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”) provides for the grant of stock options to employees hired in connection with the VIP Acquisition 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. As of December 31, 2018, no additional shares were available for issuance under the Inducement Plan. All awards issued under the Plan may only be settled in shares of Class A common stock.

Stock Options

The Company awards stock options to certain employees and directors under the 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 compensation expense over the vesting period. Expense recognized totaled $3.6 million and $0.4 million for the years ended December 31, 2018, and 2017, respectively. All stock based compensation expense is included in general and administrative expenses based on the role of recipients. The fair value of the stock option awards was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions for the period ended December 31:


	2018			2017
Expected term (years) (1)		6.25			6.25
Expected volatility (2)		35.00	%		35.00	%
Risk-free interest rate (3)		2.74	%		1.98	%
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 following table summarizes the activity of the Company’s unvested stock options for the period ended December 31, 2018: The weighted average grant date fair value of stock options granted during the period ended December 31, 2018 was $11.12 per option.


							Weighted
							Average
			Weighted				Remaining
			Average		Aggregate		Contractual
	Stock		Exercise		Intrinsic		Life
	Options		Price		Value		(years)
Outstanding at December 31, 2017		598,647	$	16.00		3,496		9.5
Granted		1,616,837		25.74
Exercised		(75,895)		18.83
Forfeited		(195,000)		21.37
Cancelled		—
Outstanding at December 31, 2018		1,944,589	$	23.45	$	5,527		9.1
Options exercisable at December 31, 2018		134,159

At December 31, 2018, total unrecognized compensation cost related to unvested stock options was $14.1million and is expected to be recognized over a weighted-average period of approximately 3.3 years.

Restricted Stock Units

The Company awards RSUs to certain employees and directors under the Plan, which are subject to time-based vesting conditions. 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 common stock on the date of grant. At December 31, 2018, total unrecognized compensation cost related to unvested RSUs was $1.5 million and is to expected to vest over a weighted average 3.5 years.

The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $0.2 million for the year ended December 31, 2018. All stock based compensation expense is included in 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, 2018:


			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Outstanding at December 31, 2017		—		—
Granted		50,758		33.16
Settled		—
Forfeited		—
Non-vested RSUs at December 31, 2018		50,758	$	33.16

There were no grants of RSUs for the year ended December 31, 2017.

Stockholder's Equity

12 Months Ended

Dec. 31, 2018

Stockholder's Equity

Stockholder's Equity

Note 10 - Stockholders’ Equity

Reorganization Transactions

In connection with the IPO on July 20, 2017, the Company completed the following reorganization transactions (collectively, the “Reorganization Transactions”):

The Company amended and restated its certificate of incorporation (see “Amendment and Restatement of Certificate of Incorporation” below);

PetIQ Holdings, LLC (“HoldCo”) amended and restated its limited liability company agreement (the “LLC Agreement”) (see “HoldCo Recapitalization” below);

The Company acquired, by the contribution by certain sponsors, three entities (“Sponsor Corps”) that were owned by former indirect members of HoldCo (the “Sponsors”), for which the Company issued 5,615,981 shares of Class A common stock and preference notes equal to $30.5 million as merger consideration (the “Merger”). The only significant asset held by the Sponsor Corps prior to the Merger was 7,523,839 LLC interests (the “LLC Interests”). Upon consummation of the Merger, the Company recognized the 7,523,839 LLC Interests at carrying value, as the contribution was considered to be a transaction between entities under common control;

The Company acquired 419,102 LLC Interests in exchange for an equal number of Class A common stock from certain employee owners;

The Company purchased from Continuing LLC Owners 1,589,642 LLC Interests in exchange for $25.4 million in preference notes;

The Company purchased from Continuing LLC Owners 133,334 LLC Interests in exchange for $2.1 million.

Following the completion of the Reorganization Transactions and initial public offering (“IPO”), PetIQ owned approximately 62% of HoldCo. The remaining 38% of HoldCo was held by the “Continuing LLC Owners,” whom the Company defines as all remaining direct and indirect owners of HoldCo except for PetIQ. As a result of the Reorganization Transactions, PetIQ became the sole managing member of HoldCo and has the sole voting power in, and controls the management of, HoldCo. Accordingly, the Company consolidated the financial results of HoldCo and reported a non-controlling interest in its consolidated financial statements. As the Reorganization Transactions are considered transactions between entities under common control, the financial statements for the previously separate entities have been combined for presentation purposes.

Immediately following the Reclassification, PetIQ became a holding company and our principal asset is the LLC Interests. As the sole managing member of HoldCo, PetIQ operates and controls all of the business and affairs of HoldCo and, through HoldCo and its subsidiaries, conducts business. In addition, PetIQ controls the management of, and has a controlling interest in, HoldCo and, therefore, PetIQ is the primary beneficiary of HoldCo. As a result, the Company consolidates the financial results of Holdco pursuant to the variable-interest entity (“VIE”) accounting model, and a portion of net income (loss) is allocated to the non-controlling interest to reflect the entitlement of Continuing LLC Owners to a portion of Holdco’s net income (loss).

Other than its purchase of LLC Interests with the net proceeds of the IPO, PetIQ has not provided any financial or other support to HoldCo. PetIQ is not required to provide financial or other support for HoldCo, though it will control HoldCo’s business and other activities through its managing member interest in HoldCo. Because PetIQ is not a guarantor or obligor with respect to any of the liabilities of HoldCo, absent any such arrangement, the creditors of HoldCo will not have any recourse to the general credit of PetIQ. Nevertheless, because PetIQ will have no material assets other than its interests in HoldCo, any change in HoldCo’s financial condition could result in PetIQ recognizing a loss.

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 120,000,000 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).

Initial Public Offering

On July 20, 2017, the Company completed an IPO of 7,187,500 shares of the Company’s Class A common stock at a public offering price of $16.00 per share, inclusive of the contemporaneous exercise of the underwriters option to purchase additional shares. The Company received $104.0 million in proceeds, net of underwriting discounts, commissions and offering costs, which were used repay $56.0 million in preference notes, to purchase 3,556,666 newly-issued LLC Interests from HoldCo at a price per unit equal to the initial public offering price per share of Class A common stock in the IPO less underwriting discounts and commissions, and to purchase 133,334 LLC Interests and corresponding Class B common shares from entities affiliated with the Company’s CEO and President.

Immediately following the completion of the IPO and the underwriters’ exercise of their option to purchase additional shares of Class A common stock, there were 13,222,583 shares of Class A common stock outstanding and 8,268,188 shares of Class B common stock outstanding.

PetIQ Holdings, LLC Recapitalization

On July 20, 2017, HoldCo amended and restated the LLC Agreement (the “Recapitalization”) to, among other things, (i) provide for a new single class of common membership interests in HoldCo, the LLC Interests, (ii) exchange all of the then-existing membership interests for LLC Interests of HoldCo and (iii) appoint the Company as the sole managing member of HoldCo.

The LLC Agreement also provides that the Continuing LLC Owners may from time to time at each of their options require HoldCo to exchange all or a portion of their LLC Interests in exchange for, at the Company’s election (determined solely by the Company’s board of directors, which includes directors who hold LLC Interests or are otherwise affiliated with holders of LLC interests), shares of the Company’s Class A common stock on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC interest exchanged, in each case in accordance with the terms of the LLC Agreement; provided that, at the Company’s election (determined solely by the Company’s board of directors, which includes directors who hold LLC interests or are otherwise affiliated with holders of LLC interests), the Company may effect a direct exchange of such Class A common stock or such cash, as applicable, for such LLC interests. The Continuing LLC Owners may exercise such redemption right for as long as their LLC interests remain outstanding. Simultaneously with the payment of cash or shares of Class A common stock, as applicable, in connection with a redemption or exchange of LLC interests pursuant to the terms of the LLC Agreement, a number of shares of the Company’s Class B common stock will be cancelled for no consideration on a one-for-one basis with the number of LLC interests so redeemed or exchanged.

The amendment also requires that HoldCo, at all times, maintain (i) a one-to-one ratio between the number of outstanding shares of Class A common stock and the number of LLC interests of HoldCo owned by PetIQ, Inc. and (ii) a one-to-one ratio between the number of shares of Class B common stock owned by Continuing LLC Owners and the number of LLC Interests of HoldCo owned by the Continuing LLC Owners.

2018 Public Offering

On October 1, 2018, the Company closed an underwritten public offering of 5,750,000 shares of Class A common stock. The Company sold 2,000,000 newly issued shares of Class A common stock and received net proceeds of approximately $73.9 million after deducting underwriting discounts and commissions and offering expenses. The remaining 3,750,000 shares of Class A common stock were sold by selling stockholders and the Company did not receive any proceeds with respect hereto. In conjunction with the 2018 Public Offering, a number of holders of Class B common stock exchanged LLC Interests and corresponding Class B common shares for Class A common stock. The impact on non-controlling interest is shown along with other exchanges during the year in Note 11 – Non-Controlling Interests.

Non-Controlling Interests

12 Months Ended

Dec. 31, 2018

Non-Controlling Interests

Non-Controlling Interests

Note 11 - Non-Controlling Interests

In connection with the Reorganization Transactions described in Note 10, PetIQ became the sole managing member of HoldCo and, as a result, consolidates the financial results of HoldCo.

The 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 Members on a regular basis, these distributions will reduce the non-controlling interest.

The Company used the net proceeds from its IPO to purchase 3,556,666 newly-issued LLC Interests of HoldCo and 133,334 LLC Interests from Continuing LLC Owners. Additionally, in connection with the Reorganization Transactions, the Company acquired 9,532,583 LLC Interests of HoldCo.

As of December 31, 2018, there were 28,166,666 LLC Interests outstanding, of which PetIQ owned 21,619,875, representing a 76.8% ownership interest in HoldCo.


	LLC Interests held					% of Total
		Continuing LLC				Continuing LLC
	Owners		PetIQ, Inc.		Total	Owners	PetIQ, Inc.
As of December 31, 2017		8,268,188		13,222,583	21,490,771	38.5%	61.5%
Issuance of LLC Interests for acquisition		4,200,000		—	4,200,000
Contribution of proceeds from stock option issuance		—		75,895	75,895
Issuance of LLC Interests for acquisition		400,000			400,000
Sale of stock and contribution to Holdco				2,000,000	2,000,000
Exchange transactions		(6,321,397)		6,321,397	—
As of December 31, 2018		6,546,791		21,619,875	28,166,666	23.2%	76.8%

Customer Concentration	12 Months Ended
Customer Concentration	Dec. 31, 2018
Customer Concentration
Customer Concentration	Note 12 - Customer Concentration The Company has significant exposure to customer concentration. During each of the years ended December 31, 2018, 2017, and 2016, one, three, and three customers, respectively, accounted for more than 10% of sales individually. In total for the years ended December 31, 2018, 2017, and 2016, the three customers accounted for 18%, 61%, and 70% of net sales, respectively. At December 31, 2018 and December 31, 2017, one and four customers, respectively, individually accounted for more than 10% of outstanding trade receivables, and in aggregate accounted for 43% and 48%, respectively, of outstanding trade receivables, net. The customers are customers of our Products segment.

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 31, 2018
Commitments and Contingencies
Commitments and Contingencies	Note 13 - Commitments and Contingencies Litigation Contingencies In April 2018, Med Vets, Inc. and Bay Medical Solutions Inc., filed suit in the United States District Court for the Northern District of California against PetIQ, Inc. and VIP Petcare Holdings, Inc. for alleged unlawful merger and other antitrust violations. The Plaintiffs’ sought unspecified monetary damages, and various injunctive relief, including an order to require PetIQ to divest its interests in VIP. We filed a Motion to Dismiss the Complaint for failure to state a claim upon which relief could be granted. On August 3, 2018 the Court granted our Motion to Dismiss the Complaint, but permitted the plaintiffs to attempt to plead a viable Complaint. The Plaintiffs’ filed an Amended Complaint on December 13, 2018 and we subsequently filed a Motion to Dismiss the Amended Complaint. That Motion has been fully briefed and is ready for decision. Although we believe the motion lacks merit, because of the inherent uncertainties of litigation, we can provide no assurance of a favorable outcome. 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 at December 31, 2018, as the Company does not consider any contingency to be probable or estimable. The Company expenses legal costs as incurred within 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, 2018

Segments

Segments

Note 14 - Segments

Prior to January 17, 2018, The Company had two operating segments, and thus two reportable segments, which were the procurement, packaging, and distribution of pet health and wellness products in the Domestic markets (U.S. and Canada) and in the International markets (primarily Europe). The determination of the operating segments was based on the level at which the Chief Operating Decision Maker reviews discrete financial information to assess performance and make resource allocation decisions, which was done based on these two geographic areas.

In connection with the VIP Acquisition, the Company reorganized operations to correspond with the new structure of the Company. The Company now operates the Product and Service segments. The Product segment consists of legacy PetIQ Domestic and International segments plus VIP’s product distribution business. Services represents all veterinary services, and related product sales, provided by the Company directly to consumers. The segments are based on the discrete financial information reviewed by the Chief Operating Decision Maker to make resource allocation decisions and to evaluate performance. Certain corporate costs are not included in this analysis, such as accounting, legal, human resources, information technology and headquarters expenses. Additionally certain expense types are allocated to the corporate portion of the Company, such as stock based compensation, amortization expense on intangible assets, interest expense, foreign currency exchange adjustments, and income taxes. All prior period disclosures have been restated to reflect these new reportable operating segments.

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


$'s in 000's
December 31, 2018	Products		Services		Corporate		Consolidated
Net Sales	$	450,229	$	78,385	$	—	$	528,614
Operating income (loss)		48,755		2,662		(43,669)		7,748
Interest expense		—		—		(8,022)		(8,022)
Foreign currency loss, net		—		—		45		45
Other income, net		—		—		(345)		(345)
Property, plant, and equipment	$	13,191	$	6,137	$	8,007	$	27,335
Depreciation expense		2,343		2,326		1,988		6,657
Amortization expense	$	—	$	—	$	5,210	$	5,210
Capital expenditures	$	1,339	$	3,440	$	2,399	$	7,178


$'s in 000's
December 31, 2017	Products		Services		Corporate		Consolidated
Net Sales	$	266,687	$	—	$	—	$	266,687
Operating income (loss)		28,671		—		(15,382)		13,289
Interest expense		—		—		(1,563)		(1,563)
Other income, net		—		—		201		201
Foreign currency loss, net		—		—		(140)		(140)
Property, plant, and equipment	$	11,843	$	—	$	3,157	$	15,000
Depreciation expense		2,165		—		183		2,348
Amortization expense	$	—	$	—	$	1,052	$	1,052
Capital expenditures	$	1,519	$	—	$	2,612	$	4,131


$'s in 000's
December 31, 2016	Products		Services		Corporate		Consolidated
Net Sales	$	200,162	$	—	$	—	$	200,162
Operating income (loss)		16,152		—		(15,450)		702
Interest expense		—		—		(3,058)		(3,058)
Other income (expense), net		—				666		666
Loss on debt extinguishment		—		—		(1,681)		(1,681)
Foreign currency gain, net		—		—		(24)		(24)
Property, plant, and equipment	$	12,682	$	—	$	362	$	13,044
Depreciation expense	$	1,818	$	—	$	97	$	1,915
Amortization expense	$	—	$	—	$	1,067	$	1,067
Capital expenditures	$	1,846	$	—	$	195	$	2,041

The net book value of property plant and equipment, net by location was as follows as of December 31,


	2018		2017
United States	$	26,268	$	13,882
Europe		1,067		1,118
Total	$	27,335	$	15,000

Related Parties	12 Months Ended
Related Parties	Dec. 31, 2018
Related Parties
Related Parties	Note 15 - Related Parties Opco had entered into management consulting services agreements with members of HoldCo. The services were related to financial transactions and other senior management matters related to business administration. Those agreements provided for the Company to pay base annual management fees plus expenses, typically paid quarterly. These expenses were recorded in general and administrative expenses in the consolidated statement of operations. The Company recorded $610 thousand and $864 thousand for the years ended December 31, 2017, and 2016, respectively. Upon consummation of the recapitalization and IPO transactions, these agreements were terminated. As discussed in Note 7– Income taxes, the Company has accrued tax distributions that are payable to Continuing LLC Owners to facilitate the Continuing LLC Owners periodic estimated tax obligations. At December 31, 2018, the Company had accrued $1.2 million for estimated tax distributions, which are included in accounts payable on the consolidated balance sheets. As discussed in Note 5– Debt, the Company has a note payable to the Sellers of VIP, who are significant shareholders of the Company, of $10 million and accrued interest of $169 thousand as of December 31, 2018. The Company leases office and warehouse space from a company under common control of the Sellers, commencing on January 17, 2018. The Company incurred rent expenses of $373 thousand for the year ended December 31, 2018. 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, paid to Moreton and subsequently transferred to insurance providers, was $1.5 million in 2018. Mr. Christensen was paid a commission of approximately $75 thousand by Moreton for the sale of such insurance policies to the Company.

Quarterly information

12 Months Ended

Dec. 31, 2018

Quarterly information (unaudited)

Quarterly information (unaudited)

Note 16 – Quarterly information (unaudited)


($'s in 000's, except per share amounts)		Quarter 1		Quarter 2		Quarter 3		Quarter 4
2018:
Product sales	$	97,851	$	148,713	$	108,524	$	95,141
Services revenue		17,215		22,429		22,858		15,883
Gross profit		15,883		26,318		24,182		16,905
Selling, general, and administrative expenses		18,968		16,943		17,621		18,728
Operating income		(3,226)		8,916		6,911		(4,853)
Net income (loss)		(3,957)		5,398		3,902		(5,256)
Basic net income (loss) per common share	$	(0.14)	$	0.16	$	0.13	$	(0.16)
Diluted net income per common share	$	(0.14)	$	0.16	$	0.13	$	(0.16)
Basic weighted average shares		14,574,883		15,980,111		16,943,630		21,282,724
Diluted weighted average shares		14,574,883		16,008,046		17,238,918		21,282,724
		March 31, 2017		June 30, 2017		September 30, 2017		December 31, 2017
2017:
Net sales	$	67,029	$	87,178	$	60,554	$	51,926
Gross profit		12,200		15,951		12,517		10,526
Selling, general, and administrative expenses		7,405		9,277		10,739		10,484
Operating income		4,795		6,674		1,778		42
Net income (loss)		4,279		6,070		859		(3,391)
Basic net income per common share(1)		—		—	$	(0.02)	$	(0.25)
Diluted net income per common share(1)		—		—	$	(0.02)	$	(0.25)
Basic weighted average shares(1)		—		—		13,222,583		13,222,583
Diluted weighted average shares(1)		—		—		13,222,583		13,222,583

(1) Number of shares out standing and earnings per share prior to our IPO on July 26, 2017 are not reported, see Note 8 in the accompanying consolidated financial statements.

Employee Benefit Plan	12 Months Ended
Employee Benefit Plan	Dec. 31, 2018
Employee Benefit Plans
Employee Benefit Plans	Note 17 – Employee Benefit Plans The Company sponsors 401(k) defined contribution plans at certain subsidiaries. The plans are generally for employees who are at least age 21 and have completed 1,000 hours of service. 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 $0.3 million for the year ended December 31, 2018. No benefit plans were in place for the years ended December 31, 2017 or 2016.

Principal Business Activity and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Principal Business Activity and Significant Accounting Policies

Use of Estimates

Foreign Currencies

Fair Value of Financial Instruments

Level 1—Quoted prices in active markets for identical 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 following table presents liabilities measured at fair value on a recurring basis:


$'s in 000's		December 31, 2018		December 31, 2017
Liabilities:
2019 Contingent note	$	2,680	$	—

The following table summarizes the Level 3 activity related to the contingent consideration:


	Year ended
$'s in 000's	December 31, 2018		December 31, 2017
Balance at beginning of the period	$	—	$	—
Fair value of contingent consideration at VIP Acquisition date		6,900		—
Change in fair value of contingent consideration		3,280		—
Transfer out of level 3		(7,500)
Balance at the end of the period	$	2,680	$	—

Cash and Cash Equivalents

Receivables and Credit Policy

Accounts receivable consists of the following as of:


$'s in 000's	December 31, 2018		December 31, 2017
Trade receivables	$	43,531	$	22,189
Other receivables		1,764		297
		45,295		22,486
Less: Allowance for doubtful accounts		(216)		(343)
Non-current portion of receivables		(72)		(384)
Total accounts receivable, net	$	45,007	$	21,759

Inventories


$'s in 000's	December 31, 2018		December 31, 2017
Raw materials	$	6,106	$	4,004
Work in progress		94		—
Finished goods		85,942		40,052
Total inventories	$	92,142	$	44,056

Property, Plant, and Equipment


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

Intangible Assets

Goodwill

Deferred Acquisition Liability

In January 2018, the Company completed the VIP Acquisition, which included guarantee and contingent notes due to the sellers. See Note 2 for more information.

Revenue Recognition

When Performance Obligations Are Satisfied

Revenue for services is recognized over time as the service is delivered. Payment is typically rendered at the time of service.

Variable Consideration

Significant Payment Terms

Shipping

Warranties & Returns

Contract balances

The following tables represent the disaggregation of revenue by contract type for each of our reportable segments:


		Year ended December 31, 2018
$'s in 000's		U.S.		Foreign		Total
Product sales	$	444,364	$	5,865	$	450,229
Service revenue		78,385		—		78,385
Total net sales	$	522,749	$	5,865	$	528,614

		Year ended December 31, 2017
$'s in 000's		U.S.		Foreign		Total
Product sales	$	261,526	$	5,161	$	266,687
Service revenue		—		—		—
Total net sales	$	261,526	$	5,161	$	266,687

Cost of Services

Shipping and Handling Costs

Shipping and handling costs are recorded as cost of sales, and are not typically billed to customers.

Research and Development and Advertising Costs

Litigation

Stock based compensation

Accounting for Income Taxes

Interest expense, net

Earnings Per Share

Reclassifications

Recently Issued Accounting Pronouncements

Consolidated Statements of Income for the year ended December 31, 2018


						Balance Without
$'s in 000's		As Reported		Adjustments		Adoption of Topic 606
Revenues	$	528,614	$	636	$	529,250
Cost of sales		445,326		(455)		444,871
General and Administrative expenses		72,260		870		73,130
(Provision) benefit for income taxes		661		69		730
Net Income		87		290		377

Consolidated Balance Sheets


						Balance Without
$'s in 000's		As Reported		Adjustments		Adoption of Topic 606
Assets
Accounts receivable, net	$	45,007	$	891	$	45,898
Inventories		92,142		(774)		91,368
Other current assets		4,212		—		4,212

Liabilities and Stockholders' Equity
Accounts payable		54,768		(731)		54,037
Accumulated deficit		(4,450)		290		(4,160)

Principal Business Activity and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Principal Business Activity and Significant Accounting Policies

Summary of liabilities measured at fair value on a recurring basis


$'s in 000's		December 31, 2018		December 31, 2017
Liabilities:
2019 Contingent note	$	2,680	$	—

Summary of Level 3 activity related to the contingent consideration


	Year ended
$'s in 000's	December 31, 2018		December 31, 2017
Balance at beginning of the period	$	—	$	—
Fair value of contingent consideration at VIP Acquisition date		6,900		—
Change in fair value of contingent consideration		3,280		—
Transfer out of level 3		(7,500)
Balance at the end of the period	$	2,680	$	—

Schedule of accounts receivable


$'s in 000's	December 31, 2018		December 31, 2017
Trade receivables	$	43,531	$	22,189
Other receivables		1,764		297
		45,295		22,486
Less: Allowance for doubtful accounts		(216)		(343)
Non-current portion of receivables		(72)		(384)
Total accounts receivable, net	$	45,007	$	21,759

Schedule of components of inventories


$'s in 000's	December 31, 2018		December 31, 2017
Raw materials	$	6,106	$	4,004
Work in progress		94		—
Finished goods		85,942		40,052
Total inventories	$	92,142	$	44,056

Schedule of estimated useful lives of property, plant, and equipment


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

Summary of disaggregation of revenue by contract type


		Year ended December 31, 2018
$'s in 000's		U.S.		Foreign		Total
Product sales	$	444,364	$	5,865	$	450,229
Service revenue		78,385		—		78,385
Total net sales	$	522,749	$	5,865	$	528,614

		Year ended December 31, 2017
$'s in 000's		U.S.		Foreign		Total
Product sales	$	261,526	$	5,161	$	266,687
Service revenue		—		—		—
Total net sales	$	261,526	$	5,161	$	266,687

Schedule of financial information that has been recast to reflect the adoption of Topic 606


						Balance Without
$'s in 000's		As Reported		Adjustments		Adoption of Topic 606
Revenues	$	528,614	$	636	$	529,250
Cost of sales		445,326		(455)		444,871
General and Administrative expenses		72,260		870		73,130
(Provision) benefit for income taxes		661		69		730
Net Income		87		290		377

Consolidated Balance Sheets


						Balance Without
$'s in 000's		As Reported		Adjustments		Adoption of Topic 606
Assets
Accounts receivable, net	$	45,007	$	891	$	45,898
Inventories		92,142		(774)		91,368
Other current assets		4,212		—		4,212

Liabilities and Stockholders' Equity
Accounts payable		54,768		(731)		54,037
Accumulated deficit		(4,450)		290		(4,160)

Business Combination (Tables)

12 Months Ended

Dec. 31, 2018

VIP

Summary of preliminary estimated fair value of the consideration


$'s in 000's		Preliminary Estimated Fair Value		Adjustments		As Retrospectively Adjusted
Current assets	$	15,755	$	(138)	$	15,617
Property, plant, and equipment		8,857		28		8,885
Other assets, net		295		—		295
Intangible assets - Customer relationships (20 year useful life)		80,200		(3,000)		77,200
Intangible assets - Brand names (10 year useful life)		9,600		—		9,600
Goodwill		112,109		534		112,643
Total assets		226,816		(2,576)		224,240

Current liabilities		22,886		22		22,908
Capital lease obligations		3,032		—		3,032
Total liabilities		25,918		22		25,940

Estimated purchase price	$	200,898	$	(2,598)	$	198,300

Cash paid, net of cash acquired	$	91,987	$	95	$	92,082
LLC Interests and shares of Class B common stock		90,031		—		90,031
Guarantee note		10,000		—		10,000
Contingent notes		9,500		(2,600)		6,900
Post-closing working capital adjustment		(620)		(93)		(713)

Estimated fair value of total consideration transferred	$	200,898	$	(2,598)	$	198,300

Summary of pro forma combined statements of operations


		Year ended December 31,
($'s in 000's, except per share data)		2018		2017
Net sales	$	531,711	$	407,466
Net income	$	1,937	$	5,648

Earnings per share:
Basic	$	0.07	$	0.22
Diluted	$	0.07	$	0.22

HBH

Summary of preliminary estimated fair value of the consideration



$'s in 000's		Preliminary Estimated Fair Value
Working Capital, net	$	1,676
Property, plant, and equipment		2,686
Intangible assets - Customer relationships		3,800
Goodwill		7,607
Total assets		15,769

Capital lease obligations		1,114
Total liabilities		1,114

Estimated purchase price	$	14,655

Cash paid, net of cash acquired	$	1,683
LLC Interests and shares of Class B common stock		12,972

Estimated fair value of total consideration transferred	$	14,655

Property, Plant, and equipment (Tables)

12 Months Ended

Dec. 31, 2018

Property, Plant, and Equipment

Property, Plant, and Equipment


$'s in 000's		2018		2017
Leasehold improvements	$	10,776	$	6,616
Equipment		14,477		10,665
Vehicles and accessories		3,989		—
Computer equipment and software		5,839		927
Buildings		2,479		771
Furniture and fixtures		1,547		407
Land		660		660
Construction in progress		682		2,344
		40,449		22,390
Less accumulated depreciation		(13,114)		(7,390)
Total property, plant, and equipment	$	27,335	$	15,000

Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2018

Intangible Assets and Goodwill

Schedule of intangible assets


$'s in 000's	Useful Lives	2018		2017
Amortizable intangibles
Distribution agreement	2 years	$	3,021	$	3,021
Certification	7 years		350		350
Customer relationships	12-20 years		82,124		1,191
Patents and processes	10 years		1,900		1,998
Brand names	10-15 years		10,470		923
Total amortizable intangibles			97,865		7,483
Less accumulated amortization			(9,835)		(4,733)
Total net amortizable intangibles			88,030		2,750
Non-amortizable intangibles
Trademarks and other			516		516
Intangible assets, net of accumulated amortization		$	88,546	$	3,266

Estimated future amortization expense


Years ending December 31, ($'s in 000's)
2019							9,124
2020							11,118
2021							10,346
2022							9,360
2023							7,981
Thereafter							40,101

Schedule of Goodwill


		Reporting Unit
($'s in 000's)		Products		Services		Total
Goodwill as of January 1, 2017	$	4,619	$	—	$	4,619
Foreign currency translation		445		—		445
Goodwill as of December 31, 2017		5,064		—		5,064
Foreign currency translation		(285)		—		(285)
Acquisitions		72,986		47,264		120,250
Goodwill as of December 31, 2018	$	77,765	$	47,264	$	125,029

Debt (Tables)

12 Months Ended

Dec. 31, 2018

Debt

Schedule of components of long term debt


$'s in 000's	December 31, 2018		December 31, 2017
Term loans	$	74,625	$	—
Revolving credit facility		13,452		15,325
Mortgage		1,859		1,902
Contingent notes		2,680		—
Earned Contingent Note		7,500		—
Guaranteed note		10,000		—
Net discount on debt and deferred financing fees		(1,902)		—
	$	108,214	$	17,227
Less current maturities of long-term debt		(796)		(44)
Total long-term debt	$	107,418	$	17,183

Future maturities of long-term debt, excluding the net discount on debt, deferred financing fees and contingent notes


($'s in 000's)
2019	$	796
2020		798
2021		800
2022		802
2023		102,631
Thereafter		1,609

- 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/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21475-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28541-108399

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21521-112644

+ Details

Leases (Tables)

12 Months Ended

Dec. 31, 2018

Leases

Summary of annual future commitments under non-cancelable leases


	Lease Obligations
$'s in 000's	Operating Leases		Capital Leases
2019	$	3,318	$	1,615
2020		2,685		1,296
2021		1,894		605
2022		1,765		433
2023		1,478		123
Thereafter		134		—
Total minimum future obligations	$	11,274	$	4,072
Less interest				(298)
Present value of net future minimum obligations				3,774
Less current capital lease obligations				(1,455)
Long-term capital lease obligations			$	2,319

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Taxes

Schedule of components of earnings before income taxes, by tax jurisdiction


		Years Ended December 31
$'s in 000's		2018		2017		2016
United States	$	(1,116)	$	11,479	$	(3,634)
Foreign		542		308		239
Total	$	(574)	$	11,787	$	(3,395)

Schedule of provision for income taxes


		Years Ended December 31
$'s in 000's		2018		2017		2016
Current:
Federal	$	—	$	(10)	$	—
State		148		63		—
Foreign		—		—		—
	$	148	$	53	$	-
Deferred and other:
Federal		(751)		3,708		—
State		(135)		19		—
Foreign		77		190		—
		(809)		3,917		—
Total tax expense (benefit)	$	(661)	$	3,970	$	—

Schedule of reconciliation between effective tax rate and statutory tax rate


	Years Ended December 31
$'s in 000's	2018		2017		2016
Income tax expense (benefit) at federal statutory rate	21.0	%	35.0	%	35.0
State and local income taxes net of federal tax benefit	(5.7)		—		—
Non-controlling interest and nontaxable income	54.7		(33.2)		(37.4)
Deferred tax rate changes	37.2		—		—
Share-based compensation	18.3		—		—
Tax Cuts and Jobs Act of 2017	(7.3)		30.7		—
Nondeductible/nontaxable items	(3.0)		1.2		2.4
Income tax expense (benefit)	115.2	%	33.7	%	-

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


$'s in 000's		2018		2017
Investment in partnership	$	41,658	$	5,855
Fixed Assets		41		—
Net operating loss carryforwards and tax credits		2,538		536
Other		2		66
Subtotal		44,239		6,457
Less: valuation allowance	$	(206)	$	(237)
Total net deferred tax assets		44,033		6,220
Other		(355)		(417)
Net deferred tax asset	$	43,678	$	5,803

Earnings (loss) per Share (Tables)

12 Months Ended

Dec. 31, 2018

Earnings (loss) per Share

Reconciliations of the numerators and denominators used to compute basic and diluted earnings (loss) per share of Class A common stock



(in 000's, except for per share amounts)	December 31, 2018		December 31, 2017
Numerator:
Net income	$	87	$	7,817
Less: net income attributable to non-controlling interests		(869)		(11,310)
Net loss attributable to PetIQ, Inc. — basic and diluted		(782)		(3,493)
Denominator:
Weighted-average shares of Class A common stock outstanding -- basic		17,216		13,223
Dilutive effects of stock options that are convertible into Class A common stock		—		—
Dilutive effect of RSUs		—		—
Weighted-average shares of Class A common stock outstanding -- diluted		17,216		13,223

Earnings per share of Class A common stock — basic	$	(0.05)	$	(0.26)
Earnings per share of Class A common stock — diluted	$	(0.05)	$	(0.26)

Stock Based Compensation (Tables)

12 Months Ended

Dec. 31, 2018

Stock Based Compensation

Fair value of the stock option awards was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions


	2018			2017
Expected term (years) (1)		6.25			6.25
Expected volatility (2)		35.00	%		35.00	%
Risk-free interest rate (3)		2.74	%		1.98	%
Dividend yield (4)		0.00	%		0.00	%

⁽¹⁾

⁽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


							Weighted
							Average
			Weighted				Remaining
			Average		Aggregate		Contractual
	Stock		Exercise		Intrinsic		Life
	Options		Price		Value		(years)
Outstanding at December 31, 2017		598,647	$	16.00		3,496		9.5
Granted		1,616,837		25.74
Exercised		(75,895)		18.83
Forfeited		(195,000)		21.37
Cancelled		—
Outstanding at December 31, 2018		1,944,589	$	23.45	$	5,527		9.1
Options exercisable at December 31, 2018		134,159

Summary of RSU activity


			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Outstanding at December 31, 2017		—		—
Granted		50,758		33.16
Settled		—
Forfeited		—
Non-vested RSUs at December 31, 2018		50,758	$	33.16

Non-Controlling Interests (Tables)

12 Months Ended

Dec. 31, 2018

Non-Controlling Interests

Summary of noncontrolling interest


	LLC Interests held					% of Total
		Continuing LLC				Continuing LLC
	Owners		PetIQ, Inc.		Total	Owners	PetIQ, Inc.
As of December 31, 2017		8,268,188		13,222,583	21,490,771	38.5%	61.5%
Issuance of LLC Interests for acquisition		4,200,000		—	4,200,000
Contribution of proceeds from stock option issuance		—		75,895	75,895
Issuance of LLC Interests for acquisition		400,000			400,000
Sale of stock and contribution to Holdco				2,000,000	2,000,000
Exchange transactions		(6,321,397)		6,321,397	—
As of December 31, 2018		6,546,791		21,619,875	28,166,666	23.2%	76.8%

Segments (Tables)

12 Months Ended

Dec. 31, 2018

Segments

Summary of financial information relating to the Company’s operating segments


$'s in 000's
December 31, 2018	Products		Services		Corporate		Consolidated
Net Sales	$	450,229	$	78,385	$	—	$	528,614
Operating income (loss)		48,755		2,662		(43,669)		7,748
Interest expense		—		—		(8,022)		(8,022)
Foreign currency loss, net		—		—		45		45
Other income, net		—		—		(345)		(345)
Property, plant, and equipment	$	13,191	$	6,137	$	8,007	$	27,335
Depreciation expense		2,343		2,326		1,988		6,657
Amortization expense	$	—	$	—	$	5,210	$	5,210
Capital expenditures	$	1,339	$	3,440	$	2,399	$	7,178


$'s in 000's
December 31, 2017	Products		Services		Corporate		Consolidated
Net Sales	$	266,687	$	—	$	—	$	266,687
Operating income (loss)		28,671		—		(15,382)		13,289
Interest expense		—		—		(1,563)		(1,563)
Other income, net		—		—		201		201
Foreign currency loss, net		—		—		(140)		(140)
Property, plant, and equipment	$	11,843	$	—	$	3,157	$	15,000
Depreciation expense		2,165		—		183		2,348
Amortization expense	$	—	$	—	$	1,052	$	1,052
Capital expenditures	$	1,519	$	—	$	2,612	$	4,131


$'s in 000's
December 31, 2016	Products		Services		Corporate		Consolidated
Net Sales	$	200,162	$	—	$	—	$	200,162
Operating income (loss)		16,152		—		(15,450)		702
Interest expense		—		—		(3,058)		(3,058)
Other income (expense), net		—				666		666
Loss on debt extinguishment		—		—		(1,681)		(1,681)
Foreign currency gain, net		—		—		(24)		(24)
Property, plant, and equipment	$	12,682	$	—	$	362	$	13,044
Depreciation expense	$	1,818	$	—	$	97	$	1,915
Amortization expense	$	—	$	—	$	1,067	$	1,067
Capital expenditures	$	1,846	$	—	$	195	$	2,041

Summary of net book value of property plant and equipment, net by location


	2018		2017
United States	$	26,268	$	13,882
Europe		1,067		1,118
Total	$	27,335	$	15,000

Quarterly information (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly information (unaudited)

Quarterly Financial Information


($'s in 000's, except per share amounts)		Quarter 1		Quarter 2		Quarter 3		Quarter 4
2018:
Product sales	$	97,851	$	148,713	$	108,524	$	95,141
Services revenue		17,215		22,429		22,858		15,883
Gross profit		15,883		26,318		24,182		16,905
Selling, general, and administrative expenses		18,968		16,943		17,621		18,728
Operating income		(3,226)		8,916		6,911		(4,853)
Net income (loss)		(3,957)		5,398		3,902		(5,256)
Basic net income (loss) per common share	$	(0.14)	$	0.16	$	0.13	$	(0.16)
Diluted net income per common share	$	(0.14)	$	0.16	$	0.13	$	(0.16)
Basic weighted average shares		14,574,883		15,980,111		16,943,630		21,282,724
Diluted weighted average shares		14,574,883		16,008,046		17,238,918		21,282,724
		March 31, 2017		June 30, 2017		September 30, 2017		December 31, 2017
2017:
Net sales	$	67,029	$	87,178	$	60,554	$	51,926
Gross profit		12,200		15,951		12,517		10,526
Selling, general, and administrative expenses		7,405		9,277		10,739		10,484
Operating income		4,795		6,674		1,778		42
Net income (loss)		4,279		6,070		859		(3,391)
Basic net income per common share(1)		—		—	$	(0.02)	$	(0.25)
Diluted net income per common share(1)		—		—	$	(0.02)	$	(0.25)
Basic weighted average shares(1)		—		—		13,222,583		13,222,583
Diluted weighted average shares(1)		—		—		13,222,583		13,222,583

(1) Number of shares out standing and earnings per share prior to our IPO on July 26, 2017 are not reported, see Note 8 in the accompanying consolidated financial statements.

Principal Business Activity and Significant Accounting Policies - (Details)	12 Months Ended
	Dec. 31, 2018 state location
Principal Business Activity and Significant Accounting Policies
Number of retail pharmacy locations \| location	40,000
Number of states in which the entity provides veterinary services to pet owners \| state	39

Principal Business Activity and Significant Accounting Policies - Fair value on a recurring basis (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Liabilities:
Fixed interest rate	4.35%
Contingent note revaluations	$ 3,280
Contingent notes
Liabilities:
Fixed interest rate	6.75%
Recurring \| Contingent notes
Liabilities:
Contingent notes	$ 2,680

Principal Business Activity and Significant Accounting Policies - Fair value on a contingent consideration (Details) - VIP - Level 3 $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Business Acquisition, Contingent Consideration [Line Items]
Fair value of contingent consideration at VIP Acquisition date	$ 6,900
Change in fair value of contingent consideration	3,280
Transfer out of level 3	7,500
Balance at the end of the period	$ 2,680

Principal Business Activity and Significant Accounting Policies - Receivables and Credit Policy (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Receivables and Credit Policy
Accounts receivable, gross	$ 45,295	$ 22,486
Less: Allowance for doubtful accounts	(216)	(343)
Non-current portion of receivables	(72)	(384)
Total accounts receivable, net	45,007	21,759
Trade receivables
Receivables and Credit Policy
Accounts receivable, gross	43,531	22,189
Other receivables
Receivables and Credit Policy
Accounts receivable, gross	$ 1,764	$ 297

Principal Business Activity and Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Inventories
Raw materials	$ 6,106	$ 4,004
Work in progress	94
Finished goods	85,942	40,052
Total inventories	$ 92,142	$ 44,056

Principal Business Activity and Significant Accounting Policies - PPNE (Details)	12 Months Ended
	Dec. 31, 2018
Computer equipment and software
Property, Plant, and Equipment
Estimated useful life	3 years
Vehicle and vehicle accessories \| Minimum
Property, Plant, and Equipment
Estimated useful life	3 years
Vehicle and vehicle accessories \| Maximum
Property, Plant, and Equipment
Estimated useful life	5 years
Buildings
Property, Plant, and Equipment
Estimated useful life	33 years
Equipment \| Minimum
Property, Plant, and Equipment
Estimated useful life	2 years
Equipment \| Maximum
Property, Plant, and Equipment
Estimated useful life	15 years
Leasehold improvements \| Minimum
Property, Plant, and Equipment
Estimated useful life	3 years
Leasehold improvements \| Maximum
Property, Plant, and Equipment
Estimated useful life	15 years
Furniture and fixtures \| Minimum
Property, Plant, and Equipment
Estimated useful life	5 years
Furniture and fixtures \| Maximum
Property, Plant, and Equipment
Estimated useful life	10 years

Principal Business Activity and Significant Accounting Policies - Intangible Assets (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Intangible asset impairment charge	$ 0	$ 0	$ 0
Minimum
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	2 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	20 years

Principal Business Activity and Significant Accounting Policies - Deferred Acquisition Liability (Details) $ in Millions	Dec. 31, 2017 USD ($)
Other accrued expenses
Deferred Acquisition Liability
Balance of deferred acquisition liability	$ 1.6

Principal Business Activity and Significant Accounting Policies - Disaggregation of revenue (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Disaggregation of revenue
Total net sales	$ 16,905	$ 24,182	$ 26,318	$ 15,883	$ 51,926	$ 60,554	$ 87,178	$ 67,029	$ 528,614	$ 266,687	$ 200,162
Product
Disaggregation of revenue
Total net sales	95,141	108,524	148,713	97,851					450,229	266,687	$ 200,162
Services
Disaggregation of revenue
Total net sales	$ 15,883	$ 22,858	$ 22,429	$ 17,215					78,385
Domestic
Disaggregation of revenue
Total net sales									522,749	261,526
Domestic \| Product
Disaggregation of revenue
Total net sales									444,364	261,526
Domestic \| Services
Disaggregation of revenue
Total net sales									78,385
Foreign
Disaggregation of revenue
Total net sales									5,865	5,161
Foreign \| Product
Disaggregation of revenue
Total net sales									$ 5,865	$ 5,161
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-09-30
Disaggregation of revenue
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 Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Research and Development and Advertising Costs
Research and development costs	$ 203	$ 514	$ 310
Advertising costs	$ 2,900	$ 2,200	$ 1,200

Principal Business Activity and Significant Accounting Policies - Interest expense, net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Interest expense, net
Interest expense	$ 8,300	$ 1,600	$ 3,100
Interest and other income	$ 271	$ 75	$ 20

Principal Business Activity and Significant Accounting Policies - Adopted Accounting Standard Updates (“ASU”) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Consolidated Statements of Income
Revenues	$ 16,905	$ 24,182	$ 26,318	$ 15,883	$ 51,926	$ 60,554	$ 87,178	$ 67,029	$ 528,614	$ 266,687	$ 200,162
Cost of sales									445,326	215,493	167,615
General and administrative expenses	18,728	$ 17,621	$ 16,943	$ 18,968	10,484	$ 10,739	$ 9,277	$ 7,405	72,260	37,905	31,845
Income tax benefit (expense)									661	(3,970)
Net Income (loss)									87	7,817	$ (3,395)
Assets
Accounts receivable, net	45,007				21,759				45,007	21,759
Inventories	92,142				44,056				92,142	44,056
Other current assets	4,212				5,164				4,212	5,164
Liabilities and equity
Accounts payable	54,768				14,234				54,768	14,234
Accumulated deficit	(4,450)				$ (3,493)				(4,450)	$ (3,493)
ASU 2014-09 \| Adjustments
Consolidated Statements of Income
Revenues									636
Cost of sales									(455)
General and administrative expenses									870
Income tax benefit (expense)									69
Net Income (loss)									290
Assets
Accounts receivable, net	891								891
Inventories	(774)								(774)
Liabilities and equity
Accounts payable	(731)								(731)
Accumulated deficit	290								290
ASU 2014-09 \| Balance Without Adoption of ASC 606
Consolidated Statements of Income
Revenues									529,250
Cost of sales									444,871
General and administrative expenses									73,130
Income tax benefit (expense)									730
Net Income (loss)									377
Assets
Accounts receivable, net	45,898								45,898
Inventories	91,368								91,368
Other current assets	4,212								4,212
Liabilities and equity
Accounts payable	54,037								54,037
Accumulated deficit	$ (4,160)								$ (4,160)

Principal Business Activity and Significant Accounting Policies - Recent accounting pronouncements (Details) - Adjustment - ASU 2016-02 $ in Millions	Dec. 31, 2018 USD ($)
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Right-of-use asset	$ 10
Right to use liabilities	$ 10

Business Combination - Narrative (Details) $ / shares in Units, $ in Thousands			12 Months Ended
	Oct. 17, 2018 $ / shares shares	Jan. 17, 2018 USD ($) item shares	Dec. 31, 2018 USD ($) $ / shares	Dec. 31, 2017 USD ($) $ / shares
Business Combination
Intangible assets, net of accumulated amortization			$ 88,030	$ 2,750
Goodwill not deductible for tax purposes			$ 49,800
Class B common stock
Business Combination
Common stock, par value \| $ / shares			$ 0.001	$ 0.001
VIP
Business Combination
Total purchase price, net of cash acquired		$ 198,300
VIP \| Class B common stock
Business Combination
Number of shares Issued \| shares		4,200,000
VIP \| Holdco
Business Combination
Number of shares Issued \| shares		4,200,000
HBH \| Class B common stock
Business Combination
Number of shares Issued \| shares	400,000
Common stock, par value \| $ / shares	$ 0.001
HBH \| Holdco
Business Combination
Number of shares Issued \| shares	400,000
Term loan \| VIP
Business Combination
Fund to acquire business acquisition		$ 75,000
Note payable \| VIP
Business Combination
Fund to acquire business acquisition		10,000
Contingent notes \| VIP
Business Combination
Fund to acquire business acquisition		$ 10,000
Number of contingent notes \| item		2
Customer relationships and brand names
Business Combination
Intangible assets, net of accumulated amortization			$ 86,800
Current amortization expense			$ 4,700

Business Combination - Total consideration (Details) - USD ($) $ in Thousands			12 Months Ended
	Oct. 17, 2018	Jan. 17, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Preliminary estimated fair value of the consideration
Goodwill			$ 125,029	$ 5,064	$ 4,619
Cash paid, net of cash acquired			$ 93,052
VIP
Preliminary estimated fair value of the consideration
Current assets		$ 15,617
Property, plant, and equipment		8,885
Other assets, net		295
Goodwill		112,643
Total assets		224,240
Current liabilities		22,908
Capital lease obligations		3,032
Total liabilities		25,940
Estimated purchase price		198,300
Cash paid, net of cash acquired		92,082
LLC Interests and shares of Class B common stock		90,031
Guarantee note		10,000
Contingent notes		6,900
Post-closing working capital adjustment		(713)
Estimated fair value of total consideration transferred		198,300
Customer relationships
Preliminary estimated fair value of the consideration
Finite-Lived Intangible Asset, Useful Life			20 years
Customer relationships \| VIP
Preliminary estimated fair value of the consideration
Intangible assets		77,200
Brand names
Preliminary estimated fair value of the consideration
Finite-Lived Intangible Asset, Useful Life			10 years
Brand names \| VIP
Preliminary estimated fair value of the consideration
Intangible assets		9,600
Maximum
Preliminary estimated fair value of the consideration
Finite-Lived Intangible Asset, Useful Life			20 years
Maximum \| Customer relationships
Preliminary estimated fair value of the consideration
Finite-Lived Intangible Asset, Useful Life			20 years
Maximum \| Brand names
Preliminary estimated fair value of the consideration
Finite-Lived Intangible Asset, Useful Life			15 years
Preliminary Estimated Fair Value \| VIP
Preliminary estimated fair value of the consideration
Current assets		15,755
Property, plant, and equipment		8,857
Other assets, net		295
Goodwill		112,109
Total assets		226,816
Current liabilities		22,886
Capital lease obligations		3,032
Total liabilities		25,918
Estimated purchase price		200,898
Cash paid, net of cash acquired		91,987
LLC Interests and shares of Class B common stock		90,031
Guarantee note		10,000
Contingent notes		9,500
Post-closing working capital adjustment		(620)
Estimated fair value of total consideration transferred		200,898
Preliminary Estimated Fair Value \| HBH
Preliminary estimated fair value of the consideration
Working Capital, net	$ 1,676
Property, plant, and equipment	2,686
Goodwill	7,607
Total assets	15,769
Capital lease obligations	1,114
Total liabilities	1,114
Estimated purchase price	14,655
Cash paid, net of cash acquired	1,683
LLC Interests and shares of Class B common stock	12,972
Estimated fair value of total consideration transferred	14,655
Preliminary Estimated Fair Value \| Customer relationships \| VIP
Preliminary estimated fair value of the consideration
Intangible assets		80,200
Preliminary Estimated Fair Value \| Customer relationships \| HBH
Preliminary estimated fair value of the consideration
Intangible assets	$ 3,800
Preliminary Estimated Fair Value \| Brand names \| VIP
Preliminary estimated fair value of the consideration
Intangible assets		9,600
Net Working Capital Adjustments \| VIP
Preliminary estimated fair value of the consideration
Current assets		(138)
Property, plant, and equipment		28
Goodwill		534
Total assets		(2,576)
Current liabilities		22
Total liabilities		22
Estimated purchase price		(2,598)
Cash paid, net of cash acquired		95
Contingent notes		(2,600)
Post-closing working capital adjustment		(93)
Estimated fair value of total consideration transferred		(2,598)
Net Working Capital Adjustments \| Customer relationships \| VIP
Preliminary estimated fair value of the consideration
Intangible assets		$ (3,000)

Business Combination - Pro Forma Combined Statements of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Pro forma combined statements of operations
Net sales	$ 531,711	$ 407,466
Net income	$ 1,937	$ 5,648
Earnings per share: Basic	$ 0.07	$ 0.22
Earnings per share: Diluted	$ 0.07	$ 0.22

Property, Plant, and equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Property, Plant, and Equipment
Property, plant and equipment, gross	$ 40,449	$ 22,390
Less accumulated depreciation	(13,114)	(7,390)
Property, Plant and Equipment, Net, Total	27,335	15,000	$ 13,044
Depreciation and amortization expense	6,657	2,348	$ 1,915
Leasehold improvements
Property, Plant, and Equipment
Property, plant and equipment, gross	10,776	6,616
Equipment
Property, Plant, and Equipment
Property, plant and equipment, gross	14,477	10,665
Vehicles and accessories
Property, Plant, and Equipment
Property, plant and equipment, gross	3,989
Computer equipment and software
Property, Plant, and Equipment
Property, plant and equipment, gross	5,839	927
Buildings
Property, Plant, and Equipment
Property, plant and equipment, gross	2,479	771
Furniture and fixtures
Property, Plant, and Equipment
Property, plant and equipment, gross	1,547	407
Land
Property, Plant, and Equipment
Property, plant and equipment, gross	660	660
Construction in Progress
Property, Plant, and Equipment
Property, plant and equipment, gross	$ 682	$ 2,344

Intangible Assets and Goodwill - Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Intangible Assets and Goodwill
Amortizable Intangibles, gross	$ 97,865	$ 7,483
Less accumulated amortization	(9,835)	(4,733)
Total net amortizable intangibles	88,030	2,750
Intangible assets, net of accumulated amortization	88,546	3,266
Amortization expense	5,210	1,052	$ 1,067
Trademarks and other
Intangible Assets and Goodwill
Non-amortizable intangibles	$ 516	516
Distribution agreement
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	2 years
Amortizable Intangibles, gross	$ 3,021	3,021
Certification
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	7 years
Amortizable Intangibles, gross	$ 350	350
Customer relationships
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	20 years
Amortizable Intangibles, gross	$ 82,124	1,191
Patents and processes
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	10 years
Amortizable Intangibles, gross	$ 1,900	1,998
Brand names
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	10 years
Amortizable Intangibles, gross	$ 10,470	$ 923
Minimum
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	2 years
Minimum \| Customer relationships
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	12 years
Minimum \| Brand names
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	10 years
Maximum
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	20 years
Maximum \| Customer relationships
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	20 years
Maximum \| Brand names
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	15 years

Intangible Assets and Goodwill - Estimated future amortization expense (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Intangible Assets and Goodwill
2019	$ 9,124
2020	11,118
2021	10,346
2022	9,360
2023	7,981
Thereafter	$ 40,101

Intangible Assets and Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Goodwill, Beginning Balance	$ 5,064	$ 4,619
Foreign currency translation	(285)	445
Acquisition	120,250
Goodwill, Ending Balance	125,029	5,064
Product
Goodwill, Beginning Balance	5,064	4,619
Foreign currency translation	(285)	445
Acquisition	72,986
Goodwill, Ending Balance	77,765	$ 5,064
Services
Acquisition	47,264
Goodwill, Ending Balance	$ 47,264

Debt (Details) - USD ($)	3 Months Ended	12 Months Ended
Debt (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Mar. 16, 2018	Dec. 21, 2016
Debt
Maximum borrowing capacity						$ 50,000,000
Purchase price of a commercial building		$ 1,920,000
Fixed interest rate		4.35%
Earn-outs payments based on achievement of company Adjusted EBITDA targets		$ 7,500,000
Earn-outs payments based on achievement of company Adjusted EBITDA targets for 2019		$ 10,000,000
Amortization schedule		25 years
Balloon payment		10 years
Net discount on debt and deferred financing fees		$ (1,902,000)
Long-term Debt, Total		108,214,000	$ 17,227,000
Less current maturities of long-term debt		(796,000)	(44,000)
Long-term debt		107,418,000	17,183,000
Future maturities of long-term debt
2019		796,000
2020		798,000
2021		800,000
2022		802,000
2023		102,631,000
Thereafter		1,609,000
Debt issuance costs		$ 2,750,000	42,000	$ 509,000
Loss on debt extinguishment				(1,681,000)
Minimum
Debt
Unused facility fee (as a percent)		0.375%
Maximum
Debt
Unused facility fee (as a percent)		0.50%
Revolving credit facility
Debt
Maximum borrowing capacity		$ 75,000,000	15,300,000			45,000,000
Aggregate principal amount					$ 25,000,000
Outstanding balance		$ 13,452,000	$ 15,325,000
Variable interest rate, basis points spread over variable reference rate (as a percent)		5.50%	5.00%
Future maturities of long-term debt
Debt issuance costs		$ 300,000
Term loans
Debt
Maximum borrowing capacity			$ 0			$ 5,000,000
Aggregate principal amount	$ 48,000
Outstanding balance		74,625,000
Future maturities of long-term debt
Debt issuance costs		2,400,000
Term B Loans
Debt
Aggregate principal amount				$ 3,000,000
Term A Loans
Debt
Aggregate principal amount					$ 20,000,000
Mortgage
Debt
Mortgage		1,859,000	1,902,000
Term Loan Credit Agreement
Debt
Maximum borrowing capacity		$ 75,000,000
Variable interest rate, basis points spread over variable reference rate (as a percent)		7.60%
Contingent notes
Debt
Contingent notes		$ 2,680,000
Earned Contingent Note
Debt
Long-term Debt, Total		$ 7,500,000
Guaranteed note
Debt
Fixed interest rate		6.75%
Long-term Debt, Total		$ 10,000,000
Amended Credit Agreement
Future maturities of long-term debt
Debt issuance costs	218,000
Loss on debt extinguishment	$ 993,000
Credit Agreement
Future maturities of long-term debt
Debt issuance costs			261,000
Loss on debt extinguishment			$ 688,000

Leases (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Operating Leases
2019	$ 3,318
2020	2,685
2021	1,894
2022	1,765
2023	1,478
Thereafter	134
Operating Leases, Total minimum future obligations	11,274
Capital Leases
2019	1,615
2020	1,296
2021	605
2022	433
2023	123
Capital Leases, Total minimum future obligations	4,072
Less Interest	(298)
Present value of net future minimum obligations	3,774
Less current capital lease obligations	(1,455)
Long-term capital lease obligations	$ 2,319

Leases - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
Leases - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Leases
Net book value of equipment under capital lease	$ 4,500	$ 900
Total operating lease expense	$ 6	$ 1,700	$ 1,700

Income Taxes (Details) - USD ($) $ in Millions	12 Months Ended
Income Taxes (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jul. 20, 2017
Anticipated Tax Distributions	$ 2.1
Income tax expense (benefit) at federal statutory rate	21.00%	35.00%	35.00%
Net expenses due to remeasurement of deferred tax assets		$ 3.4
Holdco
Interest held by non-controlling owners				38.00%
PetIQ
Cash distributions	$ 1.5

Income Taxes - comprehensive tax (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Taxes
Provisional net tax expenses	$ 0	$ 3,600
One-time transition tax on unrepatriated earnings of foreign subsidiaries		$ 200

Income Taxes - Components of earnings before income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Components of earnings before income taxes
United States	$ (1,116)	$ 11,479	$ (3,634)
Foreign	542	308	239
Pretax net (loss) income	$ (574)	$ 11,787	$ (3,395)

Income Taxes - Provision for income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Current:
Federal		$ (10)
State	$ 148	63
Total current	148	53
Deferred and other:
Federal	(751)	3,708
State	(135)	19
Foreign	77	190
Total deferred and other	(809)	3,917
Total tax expense (benefit)	$ (661)	$ 3,970

Income Taxes - Effective Income Tax Rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Reconciliation:
Income tax expense (benefit) at federal statutory rate	21.00%	35.00%	35.00%
State and local income taxes net of federal tax benefit	(5.70%)
Noncontrolling interest and nontaxable income	54.70%	(33.20%)	(37.40%)
Deferred tax rate changes	37.20%
Share-based compensation	18.3
Tax Cuts and Jobs Act of 2017	(7.30%)	30.70%
Nondeductible/nontaxable items	(3.00%)	1.20%	2.40%
Income tax expense (benefit)	115.20%	33.70%

Income Taxes - Deferred Tax Assets Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Tax effects of temporary differences:
Investment in partnership	$ 41,658	$ 5,855
Fixed Assets	41
Net operating loss carryforwards and tax credits	2,538	536
Other	(2)	(66)
Subtotal	44,239	6,457
Less: valuation allowance	(206)	(237)
Total net deferred tax assets	44,033	6,220
Other	(355)	(417)
Net deferred tax assets	$ 43,678	$ 5,803

Income Taxes - Valuation allowance (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Income Taxes
Unrecognized tax benefit would impact the effective tax rate	$ 0

Earnings (loss) per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2018

Sep. 30, 2018

Jun. 30, 2018

Mar. 31, 2018

Dec. 31, 2017

Sep. 30, 2017

Jun. 30, 2017

Mar. 31, 2017

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Numerator:

Net Income (loss)

$ 87

$ 7,817

$ (3,395)

Less: net income attributable to non-controlling interests

(869)

(11,310)

$ 3,395

Net loss attributable to PetIQ, Inc.

$ (5,256)

$ 3,902

$ 5,398

$ (3,957)

$ (3,391)

$ 859

$ 6,070

$ 4,279

$ (782)

$ (3,493)

Denominator:

Basic weighted average shares (in shares)

21,282,724

16,943,630

15,980,111

14,574,883

13,222,583

17,215,978

^[1]

13,222,583

^[1]

Weighted-average shares of Class A common stock outstanding - diluted (in shares)

21,282,724

17,238,918

16,008,046

14,574,883

13,222,583

17,215,978

^[1]

13,222,583

^[1]

Basic net income per common share

$ (0.16)

$ 0.13

$ 0.16

$ (0.14)

$ (0.25)

$ (0.02)

$ (0.05)

^[1]

$ (0.26)

^[1]

Diluted net income per common share

$ (0.16)

$ 0.13

$ 0.16

$ (0.14)

$ (0.25)

$ (0.02)

$ (0.05)

^[1]

$ (0.26)

^[1]

[1]	Basic and Diluted earnings per share is applicable only for periods after the Company’s IPO. See Note 8 - Earnings (loss) per share.

Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Stock Based Compensation
Stock Options Granted (in shares)	1,616,837
Vesting percentage on each anniversary of the grant date	25.00%
Maximum term for stock options	6 years 3 months	6 years 3 months
Stock based compensation expense	$ (3,812)	$ (447)
Grant date fair value of stock options granted	$ 11.12
Unrecognized compensation cost related to unvested stock options	$ 14,100
Unrecognized compensation cost related to unvested options, recognized weighted-average period	3 years 3 months 18 days
Omnibus Plan
Stock Based Compensation
Additional shares available for issuance	0
Class A common stock
Stock Based Compensation
Number of shares reserved	800,000
Class A common stock \| Omnibus Plan
Stock Based Compensation
Shares reserved for future issuance	1,914,047
Share available for issuance	412,805	1,315,403
Maximum
Stock Based Compensation
Maximum term for stock options	10 years

Stock Based Compensation - Weighted Average Assumptions (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Stock Based Compensation
Expected term (years)	6 years 3 months	6 years 3 months
Expected volatility	35.00%	35.00%
Risk-free interest rate	2.74%	1.98%
Dividend yield	0.00%	0.00%

Stock Based Compensation - Summary of Unvested Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Stock Based Compensation
Stock Options Outstanding - Beginning Balance	598,647
Stock Options Granted (in shares)	1,616,837
Stock option Exercised (in shares)	(75,895)
Stock Options Forfeited (in shares)	(195,000)
Stock Options Outstanding - Ending Balance	1,944,589	598,647
Options exercisable - Ending Balance	134,159
Weighted Average Exercise Price Outstanding - Beginning Balance	$ 16.00
Weighted Average Exercise Price - Granted	25.74
Weighted Average Exercise Price - Exercised	18.83
Weighted Average Exercise Price - Forfeited	21.37
Weighted Average Exercise Price Outstanding - Ending Balance	$ 23.45	$ 16.00
Aggregate Intrinsic Value	$ 5,527	$ 3,496
Weighted Average Remaining Contractual Life (years)	9 years 1 month 6 days	9 years 6 months

Stock Based Compensation - Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Unrecognized compensation cost related to unvested stock options	$ 14,100
Stock based compensation expense	(3,812)	$ (447)
RSU
Unrecognized compensation cost related to unvested stock options	$ 1,500
Vesting period	3 years 6 months
Stock based compensation expense	$ 200
Number of Shares
Granted (in shares)	50,758
Ending balance	50,758
Weighted Average Grant Date Fair Value
Granted (per share)	$ 33.16
Ending balance	$ 33.16

Stockholder's Equity - Reorganization and amendment (Details) $ / shares in Units, $ in Millions	Jul. 20, 2017 USD ($) Vote class $ / shares shares	Dec. 31, 2018 $ / shares shares	Oct. 01, 2018 shares	Dec. 31, 2017 $ / shares shares	Jul. 19, 2017 shares
Holdco
Class of Stock [Line Items]
Ownership interest in Holdco		76.80%		61.50%
Ownership interest by continuing LLC owners	38.00%
Pet, LLC and Subsidiaries (the "Company")
Class of Stock [Line Items]
Number of shares purchased		3,556,666
Sponsor Corps
Class of Stock [Line Items]
LLC interests held					7,523,839
Continuing LLC Owners
Class of Stock [Line Items]
Common unit issued in exchange of shares (in shares)	133,334
Cash paid \| $	$ 2.1
Continuing LLC Owners \| Holdco
Class of Stock [Line Items]
Ownership interest by continuing LLC owners		23.20%		38.50%
Continuing LLC Owners \| Pet, LLC and Subsidiaries (the "Company")
Class of Stock [Line Items]
Number of shares purchased		133,334
Class A common stock
Class of Stock [Line Items]
Common Stock, Shares, Issued		21,619,875	5,750,000	13,222,583
Common stock authorized		125,000,000		125,000,000
Common stock, par value \| $ / shares		$ 0.001		$ 0.001
Class A common stock \| IPO
Class of Stock [Line Items]
Common Stock, Shares, Issued	7,187,500
Class A common stock \| IPO \| Holdco
Class of Stock [Line Items]
Number of shares purchased	3,556,666
Class A common stock \| Sponsor Corps \| IPO
Class of Stock [Line Items]
Common Stock, Shares, Issued	5,615,981
Class B common stock
Class of Stock [Line Items]
Common Stock, Shares, Issued		6,546,791		8,268,188
Common stock authorized		100,000,000		100,000,000
Common stock, par value \| $ / shares		$ 0.001		$ 0.001
Amended Holdco LLC Agreement
Class of Stock [Line Items]
Blank check preferred stock, authorized	12,500,000
Number of classes of directors \| class	3
Staggered service term	3 years
Number of vote per share \| Vote	1
Amended Holdco LLC Agreement \| Holdco
Class of Stock [Line Items]
Ownership interest in Holdco	62.00%	76.80%
Amended Holdco LLC Agreement \| Holdco
Class of Stock [Line Items]
Number of shares purchased		9,532,583
Amended Holdco LLC Agreement \| Sponsor Corps
Class of Stock [Line Items]
Preference notes payable \| $	$ 30.5
Amended Holdco LLC Agreement \| Continuing LLC Owners
Class of Stock [Line Items]
Preference notes payable \| $	$ 25.4
Common unit issued in exchange of shares (in shares)	1,589,642
Amended Holdco LLC Agreement \| Class A common stock
Class of Stock [Line Items]
Common stock authorized	125,000,000
Common stock, par value \| $ / shares	$ 0.001
Conversion ratio	1
Amended Holdco LLC Agreement \| Class A common stock \| Certain Employee Owners
Class of Stock [Line Items]
Common unit issued in exchange of shares (in shares)	419,102
Amended Holdco LLC Agreement \| Class B common stock
Class of Stock [Line Items]
Common stock authorized	120,000,000
Common stock, par value \| $ / shares	$ 0.001
Conversion ratio	1
Cancellation ratio	1

Stockholder's Equity - Initial public offering (Details) $ / shares in Units, $ in Thousands			12 Months Ended
	Oct. 01, 2018 USD ($) shares	Jul. 20, 2017 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 USD ($) shares
Class of Stock [Line Items]
Proceeds from Public Offering of Class A Shares, net of underwriting discounts and offering costs \| $			$ 73,914	$ 104,010
Repayments of Notes Payable \| $				$ 55,960
Common stock, shares outstanding			21,619,875	13,222,583
Number of shares issued			2,000,000
Pet, LLC and Subsidiaries (the "Company")
Class of Stock [Line Items]
Number of shares purchased			3,556,666
Pet, LLC and Subsidiaries (the "Company") \| IPO
Class of Stock [Line Items]
Repayments of Notes Payable \| $		$ 56,000
Class A common stock
Class of Stock [Line Items]
Common Stock, Shares, Issued	5,750,000		21,619,875	13,222,583
Common stock, shares outstanding			21,619,875	13,222,583
Class A common stock \| IPO
Class of Stock [Line Items]
Common Stock, Shares, Issued		7,187,500
Share Price \| $ / shares		$ 16.00
Proceeds from Public Offering of Class A Shares, net of underwriting discounts and offering costs \| $		$ 104,000
Number of shares issued	2,000,000
Proceeds from issuance of shares after deducting underwriting discounts and commissions and offering expenses \| $	$ 73,900
Class A common stock \| Over allotment
Class of Stock [Line Items]
Number of shares issued	3,750,000
Class A common stock \| Holdco \| IPO
Class of Stock [Line Items]
Number of shares purchased		3,556,666
Class B common stock
Class of Stock [Line Items]
Common Stock, Shares, Issued			6,546,791	8,268,188
Common stock, shares outstanding			6,546,791	8,268,188
Certain Executives \| Class B common stock
Class of Stock [Line Items]
Number of shares purchased		133,334
Amended Holdco LLC Agreement
Class of Stock [Line Items]
Common stock, shares outstanding			28,166,666	21,490,771
Number of shares issued			2,000,000
Amended Holdco LLC Agreement \| Holdco
Class of Stock [Line Items]
Number of shares purchased			9,532,583
Amended Holdco LLC Agreement \| Class A common stock
Class of Stock [Line Items]
Stockholders' Equity Note, Stock Split, Conversion Ratio		1
Amended Holdco LLC Agreement \| Class B common stock
Class of Stock [Line Items]
Stockholders' Equity Note, Stock Split, Conversion Ratio		1

Non-Controlling Interests (Details) - shares	12 Months Ended
Non-Controlling Interests (Details) - shares	Dec. 31, 2018	Dec. 31, 2017	Jul. 20, 2017
Common Stock, Shares, Outstanding, Beginning Balance	13,222,583
Contribution of proceeds from stock option issuance	75,895
Sale of stock and contribution to Holdco	2,000,000
Exchange transactions	6,321,397
Common Stock, Shares, Outstanding, Ending Balance	21,619,875	13,222,583
Continuing LLC Owners
Common Stock, Shares, Outstanding, Beginning Balance	8,268,188
Issuance of LLC Interests for acquisition	4,200,000
Issuance of LLC Interests for acquisition	400,000
Exchange transactions	(6,321,397)
Common Stock, Shares, Outstanding, Ending Balance	6,546,791	8,268,188
Amended Holdco LLC Agreement
Common Stock, Shares, Outstanding, Beginning Balance	21,490,771
Issuance of LLC Interests for acquisition	4,200,000
Contribution of proceeds from stock option issuance	75,895
Issuance of LLC Interests for acquisition	400,000
Sale of stock and contribution to Holdco	2,000,000
Common Stock, Shares, Outstanding, Ending Balance	28,166,666	21,490,771
Pet, LLC and Subsidiaries (the "Company")
Number of shares purchased	3,556,666
Pet, LLC and Subsidiaries (the "Company") \| Continuing LLC Owners
Number of shares purchased	133,334
Holdco \| Amended Holdco LLC Agreement
Number of shares purchased	9,532,583
Holdco
Ownership interest by continuing LLC owners			38.00%
Ownership interest in Holdco	76.80%	61.50%
Holdco \| Continuing LLC Owners
Ownership interest by continuing LLC owners	23.20%	38.50%
Holdco \| Amended Holdco LLC Agreement
Ownership interest in Holdco	76.80%		62.00%

Customer Concentration (Details) - customer	12 Months Ended
Customer Concentration (Details) - customer	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Customer concentrations \| Sales
Customer Concentration
Number of customers accounted for more than 10% of sales individually	1	3	3
Concentration risk	18.00%	61.00%	70.00%
Credit concentrations \| Accounts receivable
Customer Concentration
Number of customers accounted for more than 10% of sales individually	1	4
Concentration risk	43.00%	48.00%

Segments (Details) $ in Thousands	3 Months Ended								12 Months Ended
Segments (Details) $ in Thousands	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2018 USD ($) segment	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Segments
Number of operating segments \| segment									2
Number of reportable segments \| segment									2
Financial information relating to the Company’s operating segments
Net Sales									$ 528,614	$ 266,687	$ 200,162
Operating income (loss)	$ (4,853)	$ 6,911	$ 8,916	$ (3,226)	$ 42	$ 1,778	$ 6,674	$ 4,795	7,748	13,289	702
Interest expense									(8,022)	(1,563)	(3,058)
Loss on debt extinguishment											(1,681)
Property, plant and equipment	27,335				15,000				27,335	15,000	13,044
Foreign currency gain (loss), net									45	(140)	(24)
Other (expense) income, net									(345)	201	666
Depreciation expense									6,657	2,348	1,915
Amortization expense									5,210	1,052	1,067
Capital expenditures									7,178	4,131	2,041
Domestic
Financial information relating to the Company’s operating segments
Property, plant and equipment	26,268				13,882				26,268	13,882
Europe
Financial information relating to the Company’s operating segments
Property, plant and equipment	1,067				1,118				1,067	1,118
Operating Segments \| Products
Financial information relating to the Company’s operating segments
Net Sales									450,229	266,687	200,162
Operating income (loss)									48,755	28,671	16,152
Property, plant and equipment	13,191				11,843				13,191	11,843	12,682
Depreciation expense									2,343	2,165	1,818
Capital expenditures									1,339	1,519	1,846
Operating Segments \| Services
Financial information relating to the Company’s operating segments
Net Sales									78,385
Operating income (loss)									2,662
Property, plant and equipment	6,137								6,137
Depreciation expense									2,326
Capital expenditures									3,440
Corporate, Non-Segment
Financial information relating to the Company’s operating segments
Operating income (loss)									(43,669)	(15,382)	(15,450)
Interest expense									(8,022)	(1,563)	(3,058)
Loss on debt extinguishment											(1,681)
Property, plant and equipment	$ 8,007				$ 3,157				8,007	3,157	362
Foreign currency gain (loss), net									45	(140)	(24)
Other (expense) income, net									(345)	201	666
Depreciation expense									1,988	183	97
Amortization expense									5,210	1,052	1,067
Capital expenditures									$ 2,399	$ 2,612	$ 195

Related Parties (Details) - USD ($) $ in Thousands	12 Months Ended
Related Parties (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Related Parties
Related party expenses		$ 610	$ 864
Accrued estimated tax distributions	$ 1,200
Notes payable to Seller's of VIP	10,000
Accrued interest	169
Rent expenses	373
Chris Christensen
Related Parties
Payment of premium expenses	1,500
Commission paid	$ 75

Quarterly information (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2018

Sep. 30, 2018

Jun. 30, 2018

Mar. 31, 2018

Dec. 31, 2017

Sep. 30, 2017

Jun. 30, 2017

Mar. 31, 2017

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Revenues

$ 16,905

$ 24,182

$ 26,318

$ 15,883

$ 51,926

$ 60,554

$ 87,178

$ 67,029

$ 528,614

$ 266,687

$ 200,162

Gross profit

10,526

12,517

15,951

12,200

83,288

51,194

32,547

Selling, general, and administrative expenses

18,728

17,621

16,943

18,968

10,484

10,739

9,277

7,405

72,260

37,905

31,845

Operating income

(4,853)

6,911

8,916

(3,226)

1,778

6,674

4,795

7,748

13,289

702

Net income (loss)

$ (5,256)

$ 3,902

$ 5,398

$ (3,957)

$ (3,391)

$ 859

$ 6,070

$ 4,279

$ (782)

$ (3,493)

Basic net income per common share

$ (0.16)

$ 0.13

$ 0.16

$ (0.14)

$ (0.25)

$ (0.02)

$ (0.05)

^[1]

$ (0.26)

^[1]

Diluted net income per common share

$ (0.16)

$ 0.13

$ 0.16

$ (0.14)

$ (0.25)

$ (0.02)

$ (0.05)

^[1]

$ (0.26)

^[1]

Basic weighted average shares (in shares)

21,282,724

16,943,630

15,980,111

14,574,883

13,222,583

17,215,978

^[1]

13,222,583

^[1]

Diluted weighted average shares (in shares)

21,282,724

17,238,918

16,008,046

14,574,883

13,222,583

17,215,978

^[1]

13,222,583

^[1]

Product

Revenues

$ 95,141

$ 108,524

$ 148,713

$ 97,851

$ 450,229

$ 266,687

$ 200,162

Services

Revenues

$ 15,883

$ 22,858

$ 22,429

$ 17,215

$ 78,385

[1]	Basic and Diluted earnings per share is applicable only for periods after the Company’s IPO. See Note 8 - Earnings (loss) per share.

Employee Benefit Plans (Details) $ in Millions	12 Months Ended
Employee Benefit Plans (Details) $ in Millions	Dec. 31, 2018 USD ($)
Employee Benefit Plans
Employee contribution	100.00%
Employer contribution	100.00%
Employer contribution, percent of match	4.00%
Employer matching contribution	$ 0.3