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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2019	Mar. 11, 2020	Jun. 28, 2019
Document Information [Line Items]
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Entity Registrant Name	PetIQ, Inc.
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Central Index Key	0001668673
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Public Float			$ 629.7
Class A common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		23,889,861
Class B common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		4,462,643

Consolidated Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 27,272,000	$ 66,360,000
Accounts receivable, net	71,377,000	45,007,000
Inventories	79,703,000	92,142,000
Other current assets	7,071,000	4,212,000
Total current assets	185,423,000	207,721,000
Property, plant and equipment, net	52,525,000	27,335,000
Operating lease right of use assets	20,785,000
Deferred tax assets	59,780,000	43,946,000
Other non-current assets	3,214,000	2,857,000
Intangible assets, net	119,956,000	88,546,000
Goodwill	231,045,000	125,029,000
Total assets	672,728,000	495,434,000
Current liabilities
Accounts payable	51,538,000	54,768,000
Accrued wages payable	9,082,000	5,295,000
Accrued interest payable	83,000	728,000
Other accrued expenses	3,871,000	1,154,000
Current portion of operating leases	4,619,000.00
Current portion of long-term debt and finance leases	3,821,000	2,251,000
Total current liabilities	73,014,000	64,196,000
Operating leases, less current installments	16,580,000.00
Long-term debt, less current installments	251,376,000	107,418,000
Finance leases, less current installments	3,331,000	2,319,000
Other non-current liabilities	117,000	524,000
Total non-current liabilities	271,404,000	110,261,000
Commitments and contingencies
Equity
Additional paid-in capital	300,120,000	262,219,000
Accumulated deficit	(15,903,000)	(4,450,000)
Accumulated other comprehensive loss	(1,131,000)	(1,316,000)
Total stockholders' equity	283,114,000	256,481,000
Non-controlling interest	45,196,000	64,496,000
Total equity	328,310,000	320,977,000
Total liabilities and equity	672,728,000	495,434,000
Class A common stock
Equity
Common stock value	23,000	22,000
Class B common stock
Equity
Common stock value	$ 5,000	$ 7,000

Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Dec. 31, 2019	Dec. 31, 2018	Oct. 01, 2018
Common stock, shares outstanding	23,554	21,620
Class A common stock
Common stock, par value	$ 0.001	$ 0.001
Common stock authorized	125,000	125,000
Common Stock, Shares, Issued	23,554	21,620	5,750
Common stock, shares outstanding	23,554	21,620
Class B common stock
Common stock, par value	$ 0.001	$ 0.001
Common stock authorized	100,000	100,000
Common Stock, Shares, Issued	4,752	6,547
Common stock, shares outstanding	4,752	6,547

Consolidated Statements of (Loss) Income - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Total net sales	$ 709,431	$ 528,614	$ 266,687
Total cost of sales	602,048	445,326	215,493
Gross profit	107,383	83,288	51,194
Operating expenses
General and administrative expenses	103,200	72,260	37,905
Contingent note revaluations loss	7,320	3,280
Operating (loss) income	(3,137)	7,748	13,289
Interest expense, net	(14,495)	(8,022)	(1,563)
Foreign currency gain (loss), net	(151)	45	(140)
Other (expense) income, net	172	(345)	201
Total other expense, net	(14,474)	(8,322)	(1,502)
Pretax net (loss) income	(17,611)	(574)	11,787
Income tax benefit (expense)	3,309	661	(3,970)
Net (loss) income	(14,302)	87	7,817
Net (loss) income attributable to non-controlling interest	(2,849)	869	11,310
Net (loss) income attributable to PetIQ, Inc.	$ (11,453)	$ (782)	$ (3,493)
Net (loss) income per share attributable to PetIQ, Inc. Class A common stock
Basic	$ (0.51)	$ (0.05)	$ (0.26)
Diluted	$ (0.51)	$ (0.05)	$ (0.26)
Weighted average shares of Class A common stock outstanding
Basic	22,652	17,216	13,223
Diluted	22,652	17,216	13,223
Product
Total net sales	$ 617,118	$ 450,229	$ 266,687
Total cost of sales	530,031	383,501	$ 215,493
Services
Total net sales	92,313	78,385
Total cost of sales	$ 72,017	$ 61,825

Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Comprehensive Income
Net (loss) income	$ (14,302)	$ 87	$ 7,817
Foreign currency translation adjustment	366	(613)	823
Comprehensive (loss) income	(13,936)	(526)	8,640
Comprehensive (loss) income attributable to non-controlling interest	(2,777)	697	11,943
Comprehensive loss attributable to PetIQ	$ (11,159)	$ (1,223)	$ (3,303)

- Definition

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

+ References

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+ Details

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities
Net (loss) income	$ (14,302)	$ 87	$ 7,817
Adjustments to reconcile net (loss) income to net cash used in operating activities
Depreciation and amortization of intangible assets and loan fees	16,509	12,467	3,614
Foreign exchange loss on liabilities		16	228
(Gain) Loss on disposition of property, plant, and equipment	(189)	(90)	20
Stock based compensation expense	7,355	3,812	447
Deferred tax adjustment	(3,458)	(843)	3,690
Contingent note revaluations	7,320	3,280
Other non-cash activity	405	(334)
Changes in assets and liabilities
Accounts receivable	(14,123)	(14,209)	(4,313)
Inventories	30,448	(36,610)	(9,718)
Other assets	(1,619)	1,423	(721)
Accounts payable	(7,595)	15,701	4,152
Accrued wages payable	2,800	1,979	694
Other accrued expenses	(2,718)	908	(28)
Net cash (used in) provided by operating activities	20,833	(12,413)	5,882
Cash flows from investing activities
Proceeds from disposition of property, plant, and equipment	340	229
Purchase of property, plant, and equipment	(10,276)	(7,178)	(4,131)
Business acquisitions (net of cash acquired)	(185,090)	(93,052)
Net cash used in investing activities	(195,026)	(100,001)	(4,131)
Cash flows from financing activities
Proceeds from issuance of long-term debt	818,387	538,028	260,020
Principal payments on long-term debt	(676,509)	(466,912)	(270,458)
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
Tax Distributions to LLC Owners	(1,686)	(1,485)
Purchase of LLC units from Continuing LLC Owners			(2,133)
Principal payments on finance lease obligations	(1,547)	(1,254)	(116)
Payment of deferred financing fees and debt discount	(5,790)	(2,750)	(42)
Tax withholding payments on Restricted Stock Units	(114)
Exercise of options and RSU withholdings to purchase common stock	2,318	1,429
Net cash provided by financing activities	135,059	140,970	35,371
Net change in cash and cash equivalents	(39,134)	28,556	37,122
Effect of exchange rate changes on cash and cash equivalents	46	(92)	7
Cash and cash equivalents, beginning of period	66,360	37,896	767
Cash and cash equivalents, end of period	27,272	66,360	37,896
Supplemental cash flow information
Interest paid	13,632	7,220	1,353
Net change in property, plant, and equipment acquired through accounts payable	(1,814)	25	(80)
Finance lease additions	(3,006)	656	35
Issuance of preference notes for LLC Interests			55,960
Net change of deferred tax asset from step-up in basis	12,381	36,882	9,441
Income taxes paid	249	640	323
Accrued tax distribution	$ 786	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 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, 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
Issuance of equity for business combination	$ 6							6
Issuance of equity for business combination (in shares)	6,035,000
Accrued tax distribution prior to recapitalization			(591)					(591)
Exchange of LLC Interests held by LLC Owners			$ (53,515)		668	$ 28,459	24,388
Issuance of Class B Shares		$ 8						8
Issuance of Class B Shares (in shares)		8,402,000
Issuance of Class A Shares for IPO net of under writing discounts and offering costs	$ 7					104,003		104,010
Number of shares issued	7,188,000
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		$ (133)			(120)	(15,345)	13,332	(2,133)
Accrued tax distributions							(6)	(6)
Stock based compensation expense						275	172	447
Net (loss) income								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	13,223,000	8,268,000
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 LLC Owners	$ 6	$ (6)			(290)	47,458	(47,168)
Exchange of LLC Interests held by LLC Owners (in shares)	6,321,000	(6,321,000)
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
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						1,429		$ 1,429
Exercise of Options to purchase Common Stock (in shares)	76,000							76,000.00
Net (loss) income				(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	21,620,000	6,547,000
Increase (Decrease) in Stockholders' Equity
ASC 606 adoption, net of tax				(175)			(110)	(285)
Exchange of LLC Interests held by LLC Owners	$ 1	$ (1)			(109)	17,299	(17,190)
Exchange of LLC Interests held by LLC Owners (in shares)	1,794,000	(1,794,000)
Net increase in deferred tax asset from LLC Interest transactions						12,381		12,381
Accrued tax distributions							(786)	(786)
Other comprehensive income					294		72	366
Stock based compensation expense						5,902	1,453	7,355
Exercise of Options to purchase Common Stock						2,318		$ 2,318
Exercise of Options to purchase Common Stock (in shares)	119,000							119,000.00
Issuance of stock for vesting of RSU's (in shares)	21,000
Net (loss) income				(11,453)			(2,849)	$ (14,302)
Ending Balance at Dec. 31, 2019	$ 23	$ 5		$ (15,903)	$ (1,131)	$ 300,120	$ 45,196	$ 328,310
Ending Balance (in shares) at Dec. 31, 2019	23,554,000	4,752,000

Principal Business Activity and Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Principal Business Activity and Significant Accounting Policies

Principal Business Activity and Significant Accounting Policies

Notes to the consolidated financial statements

Note 1 – Principal Business Activity and Significant Accounting Policies

Principal Business Activity and Principals of Consolidation

PetIQ is a leading pet medication and wellness company delivering a smarter way for pet parents to help their pets live their best lives through convenient access to affordable veterinary products and services. The company engages with customers through points of distribution across retail and e-commerce channels with its branded distributed medications, which is further supported by its own world-class medications manufacturing facility in Omaha, Nebraska. The Company’s national service platform, VIP Petcare, operates retail partner locations providing cost effective and convenient veterinary wellness services.

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

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

Use of Estimates

The preparation of consolidated financial statements in conformity with 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 and intangible assets; the valuation of property, plant, and equipment, intangible assets and goodwill, the valuation of assets and liabilities in connection with acquisitions, the valuation of deferred tax assets, the valuation of inventories, and reserves for legal contingencies.

Fair Value of Financial Instruments

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

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

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

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

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

The carrying amounts of the Company’s financial instruments, including cash, 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.

A portion of the purchase price for the acquisition of Community Veterinary Clinics, LLC d/b/a VIP Petcare (“VIP” and such acquisition, the “VIP Acquisition”) was structured in the form of Contingent Notes (the “Contingent Notes”) that vest 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 liabilities related to the 2018 and 2019 Contingent Notes became fixed as of December 31, 2018 and 2019, respectively, and are carried at cost, which approximates fair value as the stated interest rate is consistent with current market rates.

The Contingent Notes are included in long-term debt in the accompanying consolidated balance sheets. The Contingent Notes began bearing interest at a fixed rate of 6.75%, with the balance payable July 17, 2023.

The following table summarizes the Level 3 activity related to the Contingent Notes:


	Year ended
$'s in 000's	December 31, 2019		December 31, 2018
Balance at beginning of the period	$	2,680	$	—
Fair value of contingent consideration at VIP Acquisition date		—		6,900
Change in fair value of contingent consideration		7,320		3,280
Transfer out of level 3		(10,000)		(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 at the date of acquisition. All credit card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash equivalents. The Company maintains its cash accounts in various deposit accounts, the balances of which at times exceeded federal deposit insurance limits during the periods presented.

Receivables and Credit Policy

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 45 days from the invoice date. Accounts receivable are stated at the amount billed to the customer, net of discounts and estimated deductions. The Company does not have a policy for charging interest on overdue customer account balances. The Company provides an allowance for 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.

Other receivables consists of various receivables due from vendors, banking partners, and notes receivable from suppliers. Non-current portions of these other receivables are included in other non-current assets on the consolidated balance sheets.

Accounts receivable consists of the following as of:


$'s in 000's	December 31, 2019		December 31, 2018
Trade receivables	$	67,551	$	43,531
Other receivables		4,257		1,764
		71,808		45,295
Less: Allowance for doubtful accounts		(431)		(216)
Non-current portion of receivables		—		(72)
Total accounts receivable, net	$	71,377	$	45,007

Inventories

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


$'s in 000's	December 31, 2019		December 31, 2018
Raw materials	$	10,675	$	6,106
Work in progress		1,717		94
Finished goods		67,311		85,942
Total inventories	$	79,703	$	92,142

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 finance leased assets which are depreciated over the shorter of the expected useful life or the lease term. Depreciation and amortization expense is recorded in cost of sales and general and administrative expenses in the consolidated statements of operations, depending on the use of the asset. The estimated useful lives of property, plant, and equipment are as follows:


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

Intangible Assets

Indefinite lived intangible assets consist primarily of trademarks and in-process research and development (“IPRD”). Trademarks represent the value assigned to acquired, legally registered phrases and graphic designs that identify and distinguish products sold by the Company. The trademarks acquired as part of the Perrigo Animal Health Acquisition are accounted for as indefinite-lived assets. IPRD represents the value assigned to acquired research and development projects that principally represent rights to develop and sell a product that the Company has acquired which have not yet been completed or approved. The IPRD acquired as part of the Perrigo Animal Health Acquisition is accounted for as an indefinite-lived asset until the product is available for sale and regulatory approval is obtained, or abandonment of the associated research and development efforts. If the research and development efforts are successfully completed, the IPRD would be amortized over its then estimated useful life. The fair value of the IPRD was estimated using the multi-period excess earnings income method. The projected cash flows estimates for the future products were based on certain key assumptions including estimates of future revenues and expenses, taking into account the stage of development at the acquisition date and the resources needed to complete development. Trademarks and IPRD 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 and IPRD 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, 2019, 2018, and 2017.

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 2019 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.

Revenue Recognition

When Performance Obligations Are Satisfied

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

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

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

Revenue for services is recognized over time as the service is delivered, typically over a single day. Payment is typically rendered at the time of service. Customer contracts generally do not include more than one performance obligation. When a contract does contain more than one performance obligation, we allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The standalone selling price for each distinct good is generally determined by directly observable data.

The 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, 2019.

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 accounts payable or other current assets in the Consolidated Balance Sheets.

Significant Payment Terms

Our customer contracts identify the product, quantity, price, payment and final delivery terms. Payment terms usually include early pay discounts. We grant payment terms consistent with industry standards. Although some payment terms may be more extended, 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, 2019 and 2018 are immaterial. The Company does not have significant deferred revenue or unbilled receivable balances.

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


	Year ended December 31, 2019
$'s in 000's	U.S.		Foreign		Total
Products sales	$	610,986	$	6,132	$	617,118
Services revenue		92,313		—		92,313
Total net sales	$	703,299	$	6,132	$	709,431

	Year ended December 31, 2018
$'s in 000's	U.S.		Foreign		Total
Products sales	$	444,364	$	5,865	$	450,229
Services 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
Products sales	$	261,526	$	5,161	$	266,687
Services revenue		—		—		—
Total net sales	$	261,526	$	5,161	$	266,687

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 $1.3 million, $0.2 million, and $0.5 million and advertising costs were $4.5 million, $2.9 million, and $2.2 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Collaboration Agreements

Through the Perrigo Animal Health Acquisition, we entered into a product development and asset purchase agreement with a third party for certain product formulations in development by the third party. The Company may make up to $20.5 million of payments over the course of the next several years contingent on achievement of certain development and regulatory approval milestones. Product development costs are expensed as incurred or as milestone payments become probable. There can be no assurance that these products will be approved by the U.S. Food and Drug Administration (“FDA”) on the anticipated schedule or at all. Consideration paid after FDA approval will be capitalized and amortized to cost of goods sold over the economic life of each product. The expenses paid prior to FDA approval will be included in General and Administrative expenses on the Consolidated Statements of (Loss) Income. There were no expenses incurred under the agreement for the period ended December 31, 2019.

Litigation

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

Stock based compensation

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

Accounting for Income Taxes

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

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

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

Interest expense, net

Interest expense, net, is comprised primarily of interest expense related to (i) our debt agreements, (ii) unused line fees, (iii) amortization of deferred loan fees, (iv) finance lease obligations and the mortgage note outstanding, offset by interest income earned on our demand deposits and other assets. Interest expense was $14.9 million, $8.3 million, and $1.6 million for the years ended December 31, 2019, 2018, and 2017, respectively, offset by $0.4 million, $0.3 million, and $0.1 million of interest income, respectively.

Non-controlling interest

The non-controlling interests on the condensed consolidated statements of (loss) income represents the portion of earnings or loss attributable to the economic interest in the Company’s subsidiary, Holdco, held by the non-controlling holders of Class B common stock and limited liability company interests in Holdco. Non-controlling interests on the condensed consolidated balance sheet represents the portion of net assets of the Company attributable to the non-controlling holders of Class B common stock and Limited Liability Company interests in Holdco. As of December 31, 2019 and December 31, 2018 the non-controlling interest was approximately 16.8% and 23.2%, respectively.

Earnings Per Share

Basic earnings per share is computed by dividing net (loss) income attributable to PetIQ, Inc. by the weighted average shares outstanding during the period. Diluted earnings per share is computed by dividing net (loss) 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 8 for further discussion.

Reclassifications

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

Recently Issued Accounting Pronouncements / Adopted Accounting Standard Updates

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

In May 2014, the FASB issued ASC Topic 606, Revenue from Contracts with Customers, and subsequently issued several related ASUs (collectively, “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 years ended December 31, 2018 and 2019 are presented under Topic 606. Prior periods are not adjusted and will continue to be reported under ASC 605 Revenue Recognition.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The purpose of ASU 2016-02 is 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. In addition, ASU 2016-02 modifies the definition of a lease to clarify that an arrangement contains a lease when such arrangement conveys the right to control the use of an identified asset. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within the year of adoption. Originally under ASU 2016-02, an organization was required upon adoption to recognize and measure leases beginning in the earliest period presented using a modified retrospective approach and restate the financial statements for all periods presented. In July 2018, the FASB issued ASU 2018-11, which amends ASU 2016-02 to provide organizations with an additional (and optional) transition method whereby it may elect to recognize and measure leases by applying the cumulative impact of adopting ASU 2016-02 to the opening retained earnings balance in the period of adoption, thereby removing the requirement that the financial statements of prior periods by restated. The Company adopted the provisions of this guidance effective January 1, 2019, using the modified retrospective optional transition method. Therefore, the standard was applied beginning January 1, 2019 and prior periods were not restated. The adoption of the standard did not result in a cumulative-effect adjustment to the opening balance of accumulated deficit. The Company elected the package of practical expedients and implemented internal controls and system functionality to enable the preparation of financial information upon adoption. In addition, the Company has elected to apply the practical expedient to not separate the lease and non-lease components for all of the Company’s leases.

The adoption of the new standard resulted in the recognition of a right of use asset and short-term and long-term liabilities recorded on the Company’s consolidated balance sheet related to operating leases. Accounting for finance leases remained substantially unchanged. In addition, the adoption of the standard did not have a material impact on the Company’s results of operations or cash flows.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 adds a current expected credit loss (“CECL”) impairment model to U.S. GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within the year of adoption. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. PetIQ will adopt the new guidance in fiscal year 2020. PetIQ does not expect the application of the CECL impairment model to have a significant impact on PetIQ’s allowance for uncollectible amounts for accounts receivable.

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.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 amends ASC 820 to add, remove, and modify fair value measurement disclosure requirements. The ASU’s changes to disclosures aim to improve the effectiveness of ASC 820’s disclosure requirements under the aforementioned FASB disclosure framework project. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods within the year of adoption. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted for any eliminated or modified disclosures prescribed by the ASU. This ASU is effective for the Company beginning in interim periods starting in fiscal year 2020. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

Business Combinations

12 Months Ended

Dec. 31, 2019

Business Combinations

Business Combinations

Note 2 – Business Combinations

Perrigo Animal Health Acquisition

On July 8, 2019, PetIQ, Inc., through its subsidiary PetIQ, LLC, completed the acquisition of all the outstanding stock of Sergeant’s Pet Care Products, Inc. (“Sergeant’s”), d/b/a Perrigo Animal Health, including any assets related to Perrigo Company plc’s animal health business (the “Perrigo Animal Health Acquisition”). Sergeant’s is now an indirect wholly-owned subsidiary of the Company.

The fair value of the consideration is summarized as follows:




$'s in 000's	Fair Value
Inventories	$	17,998
Property, plant and equipment		19,568
Other current assets		13,048
Other assets		9,680
Indefinite-lived intangible assets		23,040
Definite-lived intangible assets - 13 year weighted average life		14,480
Goodwill		105,838
Total assets		203,652

Liabilities assumed		19,259

Purchase price	$	184,393

Cash paid, net of cash acquired	$	(185,090)
Post-closing working capital adjustment		697

Fair value of total consideration transferred	$	(184,393)

The definite-lived intangibles primarily relate to trademarks, customer relationships, and developed technology and know-how. The $14.6 million represents the fair value and will be amortized over the estimated useful lives of the assets through June 2039. Amortization expense for these definite-lived intangible assets at December 31, 2019 was $1.1 million.

The indefinite-lived intangibles primarily relate to trademarks and in-process research and development. We evaluate goodwill and indefinite-lived intangible assets for impairment on an annual basis and more frequently if an event occurs or circumstances change that would indicate impairment may exist.

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 $105.8 million of goodwill is expected to be deductible for tax purposes. Goodwill was allocated to the Products segment.

Transaction costs of $6.1 million were incurred in the year ended December 31, 2019, and are included in General and Administrative expenses on the Consolidated Statements of (Loss) Income.

Pro Forma Combined Statements of Operations (Unaudited)

The following unaudited pro forma combined statements of operations presents the Company’s operations as if the Perrigo Animal Health Acquisition and related financing activities had occurred on January 1, 2018. The pro forma information includes the following adjustments for nonrecurring charges (i) removal of costs of goods sold based on the step-up in fair value of acquired inventory of $4.8 million; and (ii) elimination of acquisition expenses of $6.1 million. Additionally the share count utilized and Net (Loss) Income do not account for non-controlling interest. The pro forma combined statements of operations are not necessarily indicative of the results of operations as they would have been had the Perrigo Animal Health 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)	2019		2018
Net sales	$	751,348	$	618,678
Net (loss) income	$	(6,888)	$	(184,744)

(Loss) Earnings per share:
Basic	$	(0.30)	$	(10.73)
Diluted	$	(0.30)	$	(10.73)

For the twelve months ended December 31, 2019, the acquired business had Product sales of $28.9 million and pre-tax net income of $1.2 million included in the Consolidated Statements of (Loss) Income.

HBH Enterprises

On October 17, 2018, the Company completed the acquisition of HBH Enterprises, LLC (“HBH”) (the “HBH Acquisition”).

The fair value of the consideration is summarized as follows:



$'s in 000's	Fair Value
Working Capital, net	$	1,676
Property, plant, and equipment		2,686
Intangible assets - Customer relationships (15 year useful life)		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.

VIP Acquisition

On January 17, 2018, PetIQ, Inc. completed the VIP Acquisition.

The fair value of the consideration is summarized as follows:


$'s in 000's	Fair value
Current assets	$	15,617
Property, plant, and equipment		8,885
Other assets, net		295
Intangible assets - Customer relationships (20 year useful life)		77,200
Intangible assets - Brand names (10 year useful life)		9,600
Goodwill		112,643
Total assets		224,240

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

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)

Fair value of total consideration transferred	$	198,300

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, 2019 and 2018 was $4.3 million and $4.7 million, respectively.

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.

Property, Plant, and Equipment

12 Months Ended

Dec. 31, 2019

Property, Plant, and Equipment

Property, Plant, and Equipment

Note 3 – Property, Plant, and Equipment

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


$'s in 000's	December 31, 2019		December 31, 2018
Leasehold improvements	$	15,517	$	10,776
Equipment		23,138		14,477
Vehicles and accessories		6,007		3,989
Computer equipment and software		8,070		5,839
Buildings		10,050		2,479
Furniture and fixtures		1,836		1,547
Land		4,557		660
Construction in progress		3,392		682
		72,567		40,449
Less accumulated depreciation		(20,042)		(13,114)
Total property, plant, and equipment	$	52,525	$	27,335

Depreciation and amortization expense related to these assets total $9.1 million, $6.7 million, and $2.3 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2019

Intangible Assets and Goodwill

Intangible Assets and Goodwill

Note 4 – Intangible Assets and Goodwill

Intangible assets consist of the following at:


$'s in 000's	Useful Lives	December 31, 2019		December 31, 2018
Amortizable intangibles
Distribution agreement	2 years	$	—	$	3,021
Certification	7 years		350		350
Customer relationships	12-20 years		89,232		82,124
Patents and processes	5-10 years		4,928		1,900
Brand names	5-15 years		15,019		10,470
Total amortizable intangibles			109,529		97,865
Less accumulated amortization			(13,058)		(9,835)
Total net amortizable intangibles			96,471		88,030
Non-amortizable intangibles
Trademarks and other			18,016		516
In-process research and development			5,469		—
Intangible assets, net of accumulated amortization		$	119,956	$	88,546

Certain intangible assets are denominated in currencies other than the U.S. Dollar; therefore, their gross and net carrying values are subject to foreign currency movements. Amortization expense for the years ended December 31, 2019, 2018, and 2017 was $6.0 million, $5.2 million, and $1.1 million, respectively.

The IPRD, intangible assets represent the value assigned to acquired R&D projects that principally represent rights to develop and sell a product that the Company has acquired which have not yet been completed or approved. The IPRD acquired as part of the Perrigo Animal Health Acquisition is accounted for as an indefinite-lived asset until the product is available for sale and regulatory approval is obtained, or abandonment of the associated research and development efforts. If the research and development efforts are successfully completed, the IPRD would be amortized over its then estimated useful life. The fair value of the IPRD was estimated using the multi-period excess earnings income method. The projected cash flows estimates for the future products were based on certain key assumptions including estimates of future revenues and expenses, taking into account the stage of development at the acquisition date and the resources needed to complete development.

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


Years ending December 31, ($'s in 000's)
2020	$	9,012
2021		8,996
2022		9,173
2023		8,809
2024		6,797
Thereafter		53,684

The following is a summary of the changes in the carrying value of goodwill for the years ended December 31, 2019 and 2018.


	Reporting Unit
($'s in 000's)	Products		Services		Total
Goodwill as of January 1, 2018	$	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
Foreign currency translation		178		—		178
Acquisitions		105,838		—		105,838
Goodwill as of December 31, 2019	$	183,781	$	47,264	$	231,045

Debt

12 Months Ended

Dec. 31, 2019

Debt

Debt

Note 5 – Debt

A&R Credit Agreement

In connection with the Perrigo Animal Health Acquisition described in Note 2 – Business Combinations in the notes to the consolidated financial statements, the Company amended the existing revolving credit agreement of PetIQ, LLC and each of its domestic wholly-owned subsidiaries (the “Amended Revolving Credit Agreement”) on July 8, 2019. The Amended Revolving Credit Agreement provides for a secured revolving credit facility of $110 million, with an accordion feature allowing an additional increase up to a total facility of $125 million and extends the maturity date of the revolving facility to July 8, 2024. In addition, the Amended Revolving Credit Agreement reduces the interest rate on Eurodollar rate loans and modifies certain financial covenants, including eliminating the maximum first lien net coverage ratio. The borrowers under the Amended Revolving Credit Facility incur fees between 0.375% and 0.50% as unused facility fees, dependent on the aggregate amount borrowed.

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

The Amended Revolving Credit Agreement contains a number of covenants that, among other things, restrict the ability of the borrowers and guarantors thereunder to (subject to certain exceptions): (i) make investments, loans or advances; (ii) incur additional indebtedness; (iii) create liens on assets; (iv) engage in mergers or consolidations and/or sell assets; (v) pay dividends and distributions or repurchase our equity interests; (vi) repay subordinated indebtedness; (vii) make certain acquisitions; and (viii) other restrictions typical for a credit agreement of this type. As of December 31, 2019, the borrowers and guarantors thereunder were in compliance with these covenants.

The Amended Revolving Credit Agreement also contains certain customary affirmative covenants and events of default (including change of control). In addition, the Amended Revolving Credit Agreement contains a minimum fixed charge coverage ratio covenant which is tested if availability under the Amended Revolving Credit Agreement falls below a certain level. As of December 31, 2019, the borrowers and guarantors thereunder were in compliance with these covenants.

As of December 31, 2019, $10.0 million was outstanding under the Amended Revolving Credit Agreement. The weighted average interest rate on the Amended Revolving Credit Agreement was 3.5% at December 31, 2019.

A&R Term Loan Credit Agreement

Also in connection with the closing of the Perrigo Animal Health Acquisition, the Company amended and restated the existing term loan credit agreement of PetIQ, LLC (the “A&R Term Loan Credit Agreement”) on July 8, 2019. The A&R Term Loan Credit Agreement was increased from $74.1 million to $220.0 million at an interest rate equal to the Eurodollar rate plus 4.50%, the proceeds of which were used to refinance the existing term loan facility and consummate the acquisition.

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

The A&R Term Loan Credit Agreement contains a number of covenants that, among other things, restrict the ability of the borrower and guarantors thereunder to (subject to certain exceptions): (i) make investments, loans or advances; (ii) incur additional indebtedness; (iii) create liens on assets; (iv) engage in mergers or consolidations and/or sell assets; (v) pay dividends and distributions or repurchase our equity interests; (vi) repay subordinated indebtedness; (vii) make certain acquisitions; and (viii) other restrictions typical for a credit agreement of this type. As of December 31, 2019, the borrower and guarantors thereunder were in compliance with these covenants.

The A&R Term Loan Credit Agreement also contains certain customary affirmative covenants and events of default (including change of control). In addition, the A&R Term Loan Credit Agreement includes a maintenance covenant that requires compliance with a maximum first lien net leverage ratio. 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 secured leverage ratios. As of December 31, 2019, the borrower and guarantors thereunder were in compliance with these covenants.

As of December 31, 2019, $220.0 million was outstanding under the A&R Term Loan Credit Agreement.

General Other Debt

The Company entered into a mortgage with a local bank to finance $1.9 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 of $10.0 million. As of December 31, 2019, $7.5 million was payable pursuant to the 2018 Contingent Note and $10.0 million was payable pursuant to the 2019 Contingent Note. The guarantee note and the Contingent Notes, collectively, “Notes Payable – VIP Acquisition” of $27.5 million require quarterly interest payments of 6.75% with the balance payable July 17, 2023. The following represents the Company’s long-term debt as of:


$'s in 000's	December 31, 2019		December 31, 2018
Term loans	$	220,000	$	74,625
Revolving credit facility		10,000		13,452
Mortgage		1,812		1,859
2019 Contingent note		—		2,680
Notes Payable - VIP Acquisition		27,500		17,500
Net discount on debt and deferred financing fees		(5,688)		(1,902)
	$	253,624	$	108,214
Less current maturities of long-term debt		(2,248)		(796)
Total long-term debt	$	251,376	$	107,418

Future maturities of long-term debt, excluding net discount on debt and deferred financing fees, as of December 31, 2019, are as follows:


($'s in 000's)
2020	$	2,248
2021		2,250
2022		2,253
2023		29,755
2024		2,257
Thereafter		220,549

The Company incurred debt issuance costs of $0.7 million during the year ended December 31, 2019 related to the A&R Credit Agreement and $5.1 million related to the A&R Term Loan Credit Agreement.

Leases

12 Months Ended

Dec. 31, 2019

Leases

Leases

Note 6 - Leases

The Company leases certain real estate for commercial, production, and retail purposes, as well as equipment from third parties. Lease expiration dates are between 2020 and 2026. A portion of leases are denominated in foreign currencies.

On January 1, 2019, the Company adopted ASU No. 2016-02, “Leases (Topic 842),” which requires most leases to be recognized on the balance sheet. The Company adopted the standard using the modified retrospective method and used the effective date as our date of initial adoption. Prior year financial statements were not restated under the new standard and, therefore, those amounts are not presented below. For both operating and finance leases, the Company recognizes a right-of-use asset, which represents the right to use the underlying asset for the lease term, and a lease liability, which represents the present value of our obligation to make payments arising over the lease term.

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

The Company’s leases may include options to extend or terminate the lease. Renewal options generally range from one to ten years and the options to extend are included in the lease term when it is reasonably certain that we will exercise that option. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in the ROU assets and liabilities. Variable payments for real estate leases primarily relate to common area maintenance, insurance, taxes and utilities. Variable payments for equipment, vehicles, and leases within supply agreements primarily relate to usage, repairs, and maintenance. As the implicit rate is not readily determinable for most of the Company’s leases, the Company applies a portfolio approach using an estimated incremental borrowing rate, giving consideration to company specific information and publicly available interest rates for instruments with similar characteristics, to determine the initial present value of lease payments over the lease terms.

The effect of the changes made to our consolidated balance sheet as of January 1, 2019 for the adoption of the new lease standard was as follows:


	Balance at		Adjustments due		Balance at
$'s in 000's	December 31, 2018		to ASC 842		January 1, 2019
ASSETS
Property and equipment, net (1)	$	27,335	$	—	$	27,335
Operating lease right-of-use assets		—		10,424		10,424
Other non-current assets		2,857		(116)		2,741

LIABILITIES
Current portion of operating leases	$	—	$	2,921	$	2,921
Operating Leases, less current installments		—		7,644		7,644
Current portion of long-term debt and finance leases(2)		2,251		—		2,251
Finance leases, less current installments		2,319		—		2,319
Other non-current liabilities		524		(257)		267

⁽¹⁾

Finance lease right-of-use assets of $4.5 million are included in property and equipment, net, on the consolidated balance sheets.

⁽²⁾

Current portion of long-term debt and finance leases includes $1.5 million of current portion of finance leases.

In accordance with the new lease standard requirements, the disclosure of the impact of adoption on our consolidated balance sheet was as follows:


		December 31, 2019
			Balance excluding
			the adoption of		Effect of
$'s in 000's	As Reported		ASC 842		change
ASSETS
Property and equipment, net (1)	$	52,525	$	52,525	$	—
Operating lease right-of-use assets		20,785		—		(20,785)
Other non-current assets		3,214		3,276		62

LIABILITIES
Current portion of operating leases	$	4,619	$	—	$	(4,619)
Operating leases, less current installments		16,580		—		(16,580)
Current portion of long-term debt and finance leases(2)		3,821		3,821		—
Finance leases, less current installments		3,331		3,331		—
Other non-current liabilities		117		485		368

⁽¹⁾

Finance lease right-of-use assets of $5.8 million are included in property and equipment, net, on the condensed consolidated balance sheets.

⁽²⁾

Current portion of long-term debt and finance leases includes $1.5 million of current portion of finance leases.



	Year Ended
$'s in 000's	December 31, 2019
Finance lease cost
Amortization of right-of-use assets	$	1,441
Interest on lease liabilities		308
Operating lease cost		4,833
Variable lease cost(1)		629
Short-term lease cost		41
Sublease income		(452)
Total lease cost	$	6,800

⁽¹⁾

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

Other information related to leases was as follows as of:


			December 31, 2019
Weighted-average remaining lease term (years)
Operating leases			5.15
Finance leases			2.73
Weighted-average discount rate
Operating leases			5.3%
Finance leases			5.7%

Annual future commitments under non-cancelable leases as of December 31, 2019, consist of the following:


	Lease Obligations
$'s in 000's	Operating Leases		Finance Leases
2020	$	5,706	$	1,771
2021		4,920		1,329
2022		4,682		1,150
2023		3,910		1,072
2024		2,394		16
Thereafter		2,928		3
Total minimum future obligations	$	24,540	$	5,341
Less interest		(3,341)		(437)
Present value of net future minimum obligations		21,199		4,904
Less current lease obligations		(4,619)		(1,573)
Long-term lease obligations	$	16,580	$	3,331

Supplemental cash flow information:



	Year Ended
$'s in 000's	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	308
Operating cash flows from operating leases		4,568
Financing cash flows from finance leases		1,547
(Noncash) right-of-use assets obtained in exchange for lease obligations
Operating leases		5,368
Finance leases		(3,006)

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

Annual future commitments under non-cancelable leases as of December 31, 2018 under ASC 840 were:


	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 imputed interest				(298)
Total lease obligations				3,774
Less current obligations				(1,455)
Long-term lease obligations			$	2,319

Income Taxes

12 Months Ended

Dec. 31, 2019

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 17% of the ownership of Holdco as of December 31, 2019. 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.

Holdco makes cash distributions to members to pay taxes attributable to their allocable share of income earned. In the years ended December 31, 2019 and 2018, the Company made cash distributions of $1.7 million and $1.5 million, respectively. Additionally, Holdco accrues for distributions required to be made related to estimated income taxes. During the years ended December 31, 2019 and 2018, the Company accrued $0.8 million and $2.1 million, respectively. This liability is included in accounts payable on the consolidated balance sheet.

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


	Years Ended December 31
$'s in 000's	2019		2018		2017
United States	$	(17,953)	$	(1,116)	$	11,479
Foreign		342		542		308
Total	$	(17,611)	$	(574)	$	11,787

The provision for income taxes for 2019, 2018, and 2017 consisted of the following:


	Years Ended December 31
$'s in 000's	2019		2018		2017
Current:
Federal	$	—	$	—	$	(10)
State		317		148		63
Foreign		17		—		—
	$	334	$	148	$	53
Deferred and other:
Federal		(2,146)		(751)		3,708
State		(1,336)		(135)		19
Foreign		(161)		77		190
		(3,643)		(809)		3,917
Total income tax expense (benefit)	$	(3,309)	$	(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		2019		2018		2017
Income tax expense (benefit) at federal statutory rate		21.0	%	21.0	%	35.0	%
State and local income taxes net of federal tax benefit		1.3		(5.7)		—
Non-controlling interest and nontaxable income		(4.0)		54.7		(33.2)
Deferred tax rate changes		(0.4)		37.2		—
Share-based compensation		0.1		18.3		—
Tax Cuts and Jobs Act of 2017		—		(7.3)		30.7
Other		0.8		(3.0)		1.2
Effective income tax rate		18.8	%	115.2	%	33.7	%

Our tax rate is affected by the lower pre-tax loss 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, 2019 and 2018 are as follows:


$'s in 000's	2019		2018
Deferred tax assets
Investment in partnership	$	53,303	$	41,658
Fixed assets		29		41
Net operating loss carryforwards and tax credits		6,775		2,538
Other accruals and reversals		5		2
Subtotal		60,112		44,239
Less: valuation allowance		(143)		(206)
Net deferred tax assets		59,969		44,033

Deferred tax liabilities
Intangible assets	$	(293)	$	(350)
Other		(5)		(5)
Net deferred tax liabilities	$	(298)	$	(355)

At December 31, 2019, the Company has federal net operating loss (“NOL”) carryforwards of $4.9 million, of which $0.4 million, generated in 2017 and prior, will expire in 2037. The NOL generated in 2018 and 2019 of $4.5 million will have an indefinite carryforward period but can generally only be used to offset 80% of taxable income in any particular year. The Company has a federal business interest expense carryover totaling $0.6 million as of December 31, 2019, which has an indefinite carryforward period but is limited in any particular year based on certain provisions. As of December 31, 2019, the Company has charitable contribution carryforwards of $0.2 million, which if unused will expire between 2020 and 2024. The Company has state NOL carryforwards of $0.9 million as of December 31, 2019 which expire between 2022 and 2037 and others that have an indefinite carryforward period. At December 31, 2019 the Company had foreign NOL carryforwards of $0.2 million which do not expire. The above carryforward amounts are shown after-tax.

The Company has assessed the realizability of the net deferred tax assets as of December 31, 2019 and in that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of certain carryforwards. The Company believes that there will be sufficient taxable income in the future that the Company’s deferred tax assets will be realized except for the following. The Company has a valuation allowance for certain deferred tax assets of $0.1 million and $0.2 million as of December 31, 2019 and 2018, respectively. The valuation allowance pertains to certain charitable contribution carryforwards as of December 31, 2019, and international loss carryforwards as of December 31, 2018, some of which have no expiration and others that would expire beginning in 2020.

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, 2019, tax years from 2016 to present are subject to examination by the tax authorities.

Earnings (Loss) per Share

12 Months Ended

Dec. 31, 2019

Earnings (Loss) per Share

Earnings (Loss) per Share

Note 8 – Earnings (Loss) per Share

Basic and Diluted (Loss) Earnings per share

Basic (loss) earnings per share of Class A common stock is computed by dividing net (loss) income available to PetIQ, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net (loss) 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 period July 20, 2017 to December 31, 2019.

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:


	Year ended December 31,
(in 000's, except for per share amounts)		2019	2018		2017
Numerator:
Net (loss) income	$	(14,302)	$	87	$	7,817
Less: net (loss) income attributable to non-controlling interests		(2,849)		869		11,310
Net (loss) income attributable to PetIQ, Inc. — basic and diluted		(11,453)		(782)		(3,493)
Denominator:
Weighted-average shares of Class A common stock outstanding -- basic		22,652		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		22,652		17,216		13,223

(Loss) earnings per share of Class A common stock — basic	$	(0.51)	$	(0.05)	$	(0.26)
(Loss) earnings per share of Class A common stock — diluted	$	(0.51)	$	(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 all stock options and restricted stock units have not been included in the diluted (loss) earnings 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, 2019

Stock Based Compensation

Stock Based Compensation

Note 9 – Stock Based Compensation

PetIQ, Inc. Omnibus Incentive Plan

The PetIQ, Inc. Omnibus Incentive Plan, as amended (the “Plan”), provides for the grant of various equity-based incentive awards to directors of the Company, employees, and consultants. The types of equity-based awards that may be granted under the Plan include: stock options, stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs), and other stock-based awards. The Company has 3,914 thousand authorized shares under the Plan. As of December 31, 2019 and 2018, 2,017 thousand and 413 thousand shares were available for issuance under the Plan, respectively. All awards issued under the Plan may only be settled in shares of Class A common stock. Shares issued pursuant to awards under the incentive plans are from our authorized but unissued shares.

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

The PetIQ, Inc. 2018 Inducement and Retention Stock Plan for CVC Employees (the “Inducement Plan”) 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 thousand shares of Class A Common Stock of the Company. As of December 31, 2019, no 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 and previously issued stock options under the Inducement Plan, which are subject to time-based vesting conditions, typically 25% on each anniversary of the grant date until fully vested. Upon a termination of service relationship by the Company, all unvested options will be forfeited and the shares of common stock underlying such awards will become available for issuance under the Plan. The maximum contractual term for stock options is 10 years.

The fair value of these equity awards is amortized to equity based compensation expense over the vesting period. Expense recognized totaled $6.2 million and $3.6 million for the years ended December 31, 2019, and 2018, 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 dates using the Black-Scholes valuation model based on the following weighted-average assumptions for the periods ended:


	December 31, 2019			December 31, 2018
Expected term (years) (1)		6.25			6.25
Expected volatility (2)		35.00	%		35.00	%
Risk-free interest rate (3)		2.37	%		2.74	%
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, 2019: The weighted average grant date fair value of stock options granted during the period ended December 31, 2019 and 2018 was $10.63 and $11.12, respectively, per option.


							Weighted
							Average
			Weighted		Aggregate		Remaining
	Stock		Average		Intrinsic		Contractual
	Options		Exercise		Value		Life
	(in 000's)		Price		(in 000's)		(years)
Outstanding at December 31, 2016		—	$	—
Granted		804		16.00
Exercised		—
Forfeited		(205)		16.00
Cancelled/Expired		—
Outstanding at December 31, 2017		599	$	16.00	$	3,496		9.5
Granted		1,617		25.74
Exercised		(76)		18.83
Forfeited		(195)		21.37
Cancelled/Expired		—
Outstanding at December 31, 2018		1,945	$	23.45	$	5,527		9.1
Granted		423		27.54
Exercised		(119)		19.51
Forfeited		(168)		21.92
Cancelled/Expired		(9)		25.70
Outstanding at December 31, 2019		2,072	$	24.63	$	6,266		8.0
Options exercisable at December 31, 2019		572

At December 31, 2019, total unrecognized compensation cost related to unvested stock options was $12.3 million and is expected to be recognized over a weighted-average period of approximately 2.6 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, 2019, total unrecognized compensation cost related to unvested RSUs was $3.2 million and is expected to vest over a weighted average of 3.1 years.

The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $1.1 million and $0.2 million for the years ended December 31, 2019 and 2018, respectively. 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, 2019:


			Weighted
	Number of		Average
	Shares		Grant Date
	(in 000's)		Fair Value
Outstanding at December 31, 2017		—	—
Granted		51		33.16
Settled		—
Forfeited		—
Outstanding at December 31, 2018		51	$	33.16
Granted		123		27.61
Settled		(25)		30.43
Forfeited		(15)		30.58
Nonvested RSUs at December 31, 2019		133	$	28.85

Stockholder's Equity	12 Months Ended
Stockholder's Equity	Dec. 31, 2019
Stockholder's Equity
Stockholder's Equity	Note 10 - Stockholders’ Equity 2018 Public Offering On October 1, 2018, the Company closed an underwritten public offering of 5,750 thousand shares of Class A common stock. The Company sold 2,000 thousand 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 thousand 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, 2019

Non-Controlling Interests

Non-Controlling Interests

Note 11 - Non-Controlling Interests

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.

As of December 31, 2019, there were 28,306 thousand LLC Interests outstanding, of which PetIQ owned 23,554 thousand, representing a 83.2% ownership interest in HoldCo.


	LLC Interests held					% of Total
		LLC				LLC
$'s in 000's	Owners		PetIQ, Inc.		Total	Owners	PetIQ, Inc.
As of December 31, 2018		6,547		21,620	28,167	23.2%	76.8%
Stock based compensation adjustments		—		140	140
Exchange transactions		(1,794)		1,794	—
As of December 31, 2019		4,752		23,554	28,306	16.8%	83.2%

Customer Concentration	12 Months Ended
Customer Concentration	Dec. 31, 2019
Customer Concentration
Customer Concentration	Note 12 - Customer Concentration The Company has significant exposure to customer concentration. During each of the years ended December 31, 2019, 2018, and 2017, two, one, and three customers, respectively, accounted for more than 10% of sales individually and in aggregate accounted for 35%, 18%, and 61% of net sales, respectively. At December 31, 2019 and December 31, 2018, two and one customers, respectively, individually accounted for more than 10% of outstanding trade receivables, and in aggregate accounted for 61% and 43%, respectively, of outstanding trade receivables, net. All of our customer concentration exists in our Products segment.

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 31, 2019
Commitments and Contingencies
Commitments and Contingencies	Note 13 - Commitments and Contingencies Litigation Contingencies During the year ended December 31, 2019, the Company recorded a liability of $1 million for contract termination costs, related to a settlement for alleged breach of contract. The expense is included within General and Administrative expenses for the year ended December 31, 2019. On April 4, 2018, Med Vets, Inc. and Bay Medical Solutions Inc. (collectively “Plaintiffs”) filed suit in the United States District Court for the Northern District of California against PetIQ 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. In June 2018, the Company 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 the Company’s 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 second Motion to Dismiss the Amended Complaint. On April 22, 2019, the Court granted the Company’s Motion to Dismiss without further leave to amend, concluding that Plaintiffs were not able to identify any factual allegations to support their alleged claims. Plaintiffs filed a notice of appeal with the 9th Circuit Court of Appeals on May 21, 2019 and briefing on appeal was completed in December 2019. Oral arguments are expected to occur in mid to late 2020. A final decision from the 9th Circuit Court of Appeals is estimated in late 2020. The Company records a liability when a particular contingency is probable and estimable and provides disclosure for contingencies that are at least reasonably possible of resulting in a loss including an estimate which we currently cannot make. The Company has not accrued for any contingency, other than those previously noted, at December 31, 2019 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, 2019

Segments

Segments

Note 14 - Segments

Effective January 17, 2018, the Company has two operating segments: Products and Services. The Products segment consists of the Company’s manufacturing and distribution business. The Services segment consists of the Company’s veterinary services, and related product sales, provided by the Company directly to consumers.

The segments are based on the discrete financial information reviewed by the Chief Operating Decision Maker (“CODM”) to make resource allocation decisions and to evaluate performance. We measure and evaluate our reportable segments based on net sales and segment Adjusted EBITDA. We exclude from our segments certain corporate costs and expenses, such as accounting, legal, human resources, information technology and corporate headquarters expenses as our corporate functions do not meet the definition of a segment as defined in the accounting guidance related to segment reporting.

Effective during the year ended December 31, 2019, the Company changed its segment measure of profitability for its reportable segments from segment operating income (loss) to Adjusted EBITDA to better align the way the CODM views reportable segment operations in light of changes in the Company’s operations, including the increase of manufacturing operations as a result of the Perrigo Animal Health Acquisition in the Products segment and the growth of the Company’s wellness centers, host partners, and regions within the Services segment. For comparability purposes, previous periods have been recast to reflect the measure of segment profitability.

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


$'s in 000's					Unallocated
December 31, 2019	Products		Services		Corporate		Consolidated
Net Sales	$	617,118	$	92,313	$	—	$	709,431
Adjusted EBITDA		73,537		20,045		(32,907)		60,675
Property, plant, and equipment		23,114		13,520		15,891		52,525
Depreciation expense		3,552		3,170		2,417		9,139
Capital expenditures		1,297		6,409		2,570		10,276


$'s in 000's					Unallocated
December 31, 2018	Products		Services		Corporate		Consolidated
Net Sales	$	450,229	$	78,385	$	—	$	528,614
Adjusted EBITDA		52,185		15,246		(25,892)		41,539
Property, plant, and equipment		13,191		6,137		8,007		27,335
Depreciation expense		2,343		2,326		1,988		6,657
Capital expenditures		1,339		3,440		2,399		7,178


$'s in 000's					Unallocated
December 31, 2017	Products		Services		Corporate		Consolidated
Net Sales	$	266,687	$	—	$	—	$	266,687
Adjusted EBITDA		30,836		—		(8,529)		22,307
Property, plant, and equipment		11,843		—		3,157		15,000
Depreciation expense		2,165		—		183		2,348
Capital expenditures		1,519		—		2,612		4,131

The following table reconciles Segment Adjusted EBITDA to Net (Loss) Income for the periods presented.


	For the years ended
$'s in 000's	December 31, 2019		December 31, 2018		December 31, 2017
Adjusted EBITDA:
Product	$	73,537	$	52,185	$	30,836
Services		20,045		15,246		—
Unallocated Corporate		(32,907)		(25,892)		(8,529)
Total Consolidated		60,675		41,539		22,307
Adjustments:
Depreciation		(9,139)		(6,657)		(2,348)
Amortization		(5,994)		(5,210)		(1,052)
Interest		(14,495)		(8,022)		(1,563)
Acquisition costs(1)		(6,147)		(3,787)		(1,965)
Stock based compensation expense		(7,355)		(3,812)		(447)
Purchase accounting adjustment to inventory(2)		(4,805)		(2,149)		—
Non same-store revenue(3)		8,088		3,967		—
Non same-store costs(3)		(19,553)		(10,345)		—
Fair value adjustment of contingent note		(7,320)		(3,280)		—
Integration costs and costs of discontinued clinics(4)		(3,788)		(998)		—
Clinic launch expenses(5)		(767)		(1,380)		—
Non-recurring royalty settlement(6)		—		(440)		—
SKU Rationalization(7)		(6,482)		—		(610)
Costs associated with becoming a public company		—		—		(2,710)
Supplier receivable write-off		—		—		175
Litigation expenses		(529)		—		—
Pretax net (loss) income	$	(17,611)	$	(574)	$	11,787
Income tax benefit (expense)		3,309		661		(3,970)
Net (loss) income	$	(14,302)	$	87	$	7,817

⁽¹⁾

Acquisition costs are costs directly related to various completed and pending acquisitions and include diligence, accounting, banking, and other out of pocket costs.

⁽²⁾

Purchase accounting adjustment to inventory represents the portion of costs of sales related to the fair value of inventory adjusted as part of the purchase price allocation. During 2019 the amounts relate to the Perrigo Animal Health Acquisition and are part of the Products segment. During 2018 the costs relate to the VIP Acquisition which are part of the Services Segment and the HBH Acquisition, which is part of the Products Segment.

⁽³⁾

Non same-store revenue and costs relate to Services segment regional offices, mobile community clinics provided with host partners and wellness centers that have been operating for less than six full trailing quarters.

⁽⁴⁾

Integration costs and costs of discontinued clinics represent costs related to integrating the acquired businesses, such as personnel costs like severance and signing bonuses, consulting work, contract termination, and IT conversion costs. These costs are primarily in the Products segment and the corporate segment for personnel costs, legal and consulting expenses, and IT costs. In addition, related to the Service Segment, there were costs associated with vet services clinics that were discontinued subsequent to the acquisition of VIP.

⁽⁵⁾

Clinic launch expenses relate to our Services segment and represent the nonrecurring costs to open new veterinary wellness centers, primarily employee costs, training, marketing, and rent prior to opening for business.

⁽⁶⁾

Non-recurring royalty settlement represents a settlement paid to a supplier related to a royalty agreement in place since 2013.

⁽⁷⁾

SKU Rationalization relates to the disposal of, or reserve to, estimated net realizable value for inventory that will either no longer be sold, or will be de-emphasized, as the Company aligns brands between Legacy PetIQ brands and brands acquired as part of the Perrigo Animal Health Acquisition. All costs are included in the Products segment gross margin.

Supplemental geographic disclosures are below.


	Year ended December 31, 2019
$'s in 000's	U.S.		Foreign		Total
Products sales	$	610,986	$	6,132	$	617,118
Services revenue		92,313		—		92,313
Total net sales	$	703,299	$	6,132	$	709,431

	Year ended December 31, 2018
$'s in 000's	U.S.		Foreign		Total
Products sales	$	444,364	$	5,865	$	450,229
Services 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
Products sales	$	261,526	$	5,161	$	266,687
Services revenue		—		—		—
Total net sales	$	261,526	$	5,161	$	266,687

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


	December 31, 2019		December 31, 2018
United States	$	51,397	$	26,268
Europe		1,128		1,067
Total	$	52,525	$	27,335

Related Parties	12 Months Ended
Related Parties	Dec. 31, 2019
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 for the year ended December 31, 2017. 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, 2019 and 2018, the Company had accrued $0.4 million and $1.2 million, respectively, for estimated tax distributions, which are included in accounts payable on the consolidated balance sheets. As discussed in Note 5– Debt, the Company has notes payable to the Sellers of VIP, who are significant shareholders of the Company, of $27.5 million. The Company had no accrued interest on these notes as of December 31, 2019, but accrued interest of $0.2 million as of December 31, 2018. The Company has leased office and warehouse space from a company under control of Will Santana, an Executive Vice President of the Company and a director, since the consummation of the VIP Acquisition on January 17, 2018. The Company incurred rent expenses of $0.4 million and $0.4 million for the years ended December 31, 2019 and 2018, respectively. 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 $2.3 million and $1.5 million in 2019 and 2018, respectively. Mr. Christensen was paid a commission of approximately $0.1 million and $0.1 million in 2019 and 2018, respectively, by Moreton for the sale of such insurance policies to the Company.

Quarterly information (unaudited)

12 Months Ended

Dec. 31, 2019

Quarterly information (unaudited)

Quarterly information (unaudited)

Note 16 – Quarterly information (unaudited)


(In 000's, except per share amounts)		Quarter 1		Quarter 2		Quarter 3		Quarter 4
2019:
Product sales	$	126,084	$	194,606	$	161,534	$	134,894
Services revenue		22,352		26,028		24,491		19,442
Gross profit		24,730		34,900		27,291		20,462
General and administrative expenses		20,538		24,450		29,345		28,867
Operating income (loss)		4,872		8,990		(4,364)		(12,635)
Net income (loss)		2,326		5,918		(8,796)		(13,752)
Basic net income (loss) per common share	$	0.07	$	0.17	$	(0.26)	$	(0.47)
Diluted net income (loss) per common share	$	0.07	$	0.17	$	(0.26)	$	(0.47)
Basic weighted average shares		21,800		22,365		22,974		23,436
Diluted weighted average shares		21,978		22,597		22,974		23,436

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
General and administrative expenses		18,968		16,943		17,621		18,728
Operating income		(3,226)		8,916		6,911		(4,853)
Net (loss) income		(3,957)		5,398		3,902		(5,256)
Basic net (loss) income per common share	$	(0.14)	$	0.16	$	0.13	$	(0.16)
Diluted net (loss) income per common share	$	(0.14)	$	0.16	$	0.13	$	(0.16)
Basic weighted average shares		14,575		15,980		16,944		21,283
Diluted weighted average shares		14,575		16,008		17,239		21,283

Employee Benefit Plans	12 Months Ended
Employee Benefit Plans	Dec. 31, 2019
Employee Benefit Plans
Employee Benefit Plans	Note 17 – Employee Benefit Plans The Company sponsors 401(k) defined contribution plans at certain subsidiaries. Participants may elect to defer up to 100% of compensation. The Company makes matching contributions of 100% of the employee deferrals up to 3% 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 $0.6 million and $0.3 million, respectively, for the years ended December 31, 2019 and 2018. No benefit plans were in place for the years ended December 31, 2017.

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2019
Subsequent Events
Subsequent Events	Note 18 – Subsequent Events On January 13, 2020, we announced that, through Opco, we executed an Asset Purchase Agreement (the “Purchase Agreement”) to acquire the U.S. rights to Capstar® and CapAction® and related assets (the “Acquisition”) from Elanco US Inc. (“Elanco”) for $95 million, plus the cost of certain outstanding finished goods inventory in saleable condition. Capstar and CapAction are oral tablets for the treatment of flea infestations on dogs, puppies, cats and kittens. Capstar is comprised of five SKUs and CapAction is sold under three SKUs. The closing of the transaction is contingent upon customary closing conditions, including, among others, the approval of the acquisition under a consent order issued by the U.S. Federal Trade Commission. The parties have agreed that the Acquisition will not close earlier than July 1, 2020. Following closing, Elanco will manufacture and supply Capstar and CapAction and provide certain technology transfer services to Opco over a 24-month period pursuant to a manufacturing and supply agreement.

Principal Business Activity and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Principal Business Activity and Significant Accounting Policies

Use of Estimates

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 summarizes the Level 3 activity related to the Contingent Notes:


	Year ended
$'s in 000's	December 31, 2019		December 31, 2018
Balance at beginning of the period	$	2,680	$	—
Fair value of contingent consideration at VIP Acquisition date		—		6,900
Change in fair value of contingent consideration		7,320		3,280
Transfer out of level 3		(10,000)		(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, 2019		December 31, 2018
Trade receivables	$	67,551	$	43,531
Other receivables		4,257		1,764
		71,808		45,295
Less: Allowance for doubtful accounts		(431)		(216)
Non-current portion of receivables		—		(72)
Total accounts receivable, net	$	71,377	$	45,007

Inventories


$'s in 000's	December 31, 2019		December 31, 2018
Raw materials	$	10,675	$	6,106
Work in progress		1,717		94
Finished goods		67,311		85,942
Total inventories	$	79,703	$	92,142

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

Revenue Recognition

When Performance Obligations Are Satisfied

Variable Consideration

Significant Payment Terms

Shipping

Warranties & Returns

Contract balances

Contract asset and liability balances as of December 31, 2019 and 2018 are immaterial. The Company does not have significant deferred revenue or unbilled receivable balances.

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


	Year ended December 31, 2019
$'s in 000's	U.S.		Foreign		Total
Products sales	$	610,986	$	6,132	$	617,118
Services revenue		92,313		—		92,313
Total net sales	$	703,299	$	6,132	$	709,431

	Year ended December 31, 2018
$'s in 000's	U.S.		Foreign		Total
Products sales	$	444,364	$	5,865	$	450,229
Services 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
Products sales	$	261,526	$	5,161	$	266,687
Services revenue		—		—		—
Total net sales	$	261,526	$	5,161	$	266,687

Cost of Services

Research and Development and Advertising Costs

Collaboration Agreements

Litigation

Stock based compensation

Accounting for Income Taxes

Interest expense, net

Non-controlling interest

Earnings Per Share

Reclassifications

Recently Issued Accounting Pronouncements / Adopted Accounting Standard Updates

Results for the years ended December 31, 2018 and 2019 are presented under Topic 606. Prior periods are not adjusted and will continue to be reported under ASC 605 Revenue Recognition.

Principal Business Activity and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Principal Business Activity and Significant Accounting Policies

Summary of Level 3 activity related to the contingent consideration


	Year ended
$'s in 000's	December 31, 2019		December 31, 2018
Balance at beginning of the period	$	2,680	$	—
Fair value of contingent consideration at VIP Acquisition date		—		6,900
Change in fair value of contingent consideration		7,320		3,280
Transfer out of level 3		(10,000)		(7,500)
Balance at the end of the period	$	—	$	2,680

Schedule of accounts receivable


$'s in 000's	December 31, 2019		December 31, 2018
Trade receivables	$	67,551	$	43,531
Other receivables		4,257		1,764
		71,808		45,295
Less: Allowance for doubtful accounts		(431)		(216)
Non-current portion of receivables		—		(72)
Total accounts receivable, net	$	71,377	$	45,007

Schedule of components of inventories


$'s in 000's	December 31, 2019		December 31, 2018
Raw materials	$	10,675	$	6,106
Work in progress		1,717		94
Finished goods		67,311		85,942
Total inventories	$	79,703	$	92,142

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, 2019
$'s in 000's	U.S.		Foreign		Total
Products sales	$	610,986	$	6,132	$	617,118
Services revenue		92,313		—		92,313
Total net sales	$	703,299	$	6,132	$	709,431

	Year ended December 31, 2018
$'s in 000's	U.S.		Foreign		Total
Products sales	$	444,364	$	5,865	$	450,229
Services 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
Products sales	$	261,526	$	5,161	$	266,687
Services revenue		—		—		—
Total net sales	$	261,526	$	5,161	$	266,687

Business Combinations (Tables)

12 Months Ended

Dec. 31, 2019

Summary of pro forma combined statements of operations


	Year ended December 31,
($'s in 000's, except per share data)	2019		2018
Net sales	$	751,348	$	618,678
Net (loss) income	$	(6,888)	$	(184,744)

(Loss) Earnings per share:
Basic	$	(0.30)	$	(10.73)
Diluted	$	(0.30)	$	(10.73)

VIP

Summary of preliminary estimated fair value of the consideration


$'s in 000's	Fair value
Current assets	$	15,617
Property, plant, and equipment		8,885
Other assets, net		295
Intangible assets - Customer relationships (20 year useful life)		77,200
Intangible assets - Brand names (10 year useful life)		9,600
Goodwill		112,643
Total assets		224,240

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

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)

Fair value of total consideration transferred	$	198,300

HBH

Summary of preliminary estimated fair value of the consideration



$'s in 000's	Fair Value
Working Capital, net	$	1,676
Property, plant, and equipment		2,686
Intangible assets - Customer relationships (15 year useful life)		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

Perrigo Animal Health Acquisition

Summary of preliminary estimated fair value of the consideration




$'s in 000's	Fair Value
Inventories	$	17,998
Property, plant and equipment		19,568
Other current assets		13,048
Other assets		9,680
Indefinite-lived intangible assets		23,040
Definite-lived intangible assets - 13 year weighted average life		14,480
Goodwill		105,838
Total assets		203,652

Liabilities assumed		19,259

Purchase price	$	184,393

Cash paid, net of cash acquired	$	(185,090)
Post-closing working capital adjustment		697

Fair value of total consideration transferred	$	(184,393)

Property, Plant, and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Property, Plant, and Equipment

Property, Plant, and Equipment


$'s in 000's	December 31, 2019		December 31, 2018
Leasehold improvements	$	15,517	$	10,776
Equipment		23,138		14,477
Vehicles and accessories		6,007		3,989
Computer equipment and software		8,070		5,839
Buildings		10,050		2,479
Furniture and fixtures		1,836		1,547
Land		4,557		660
Construction in progress		3,392		682
		72,567		40,449
Less accumulated depreciation		(20,042)		(13,114)
Total property, plant, and equipment	$	52,525	$	27,335

Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2019

Intangible Assets and Goodwill

Schedule of intangible assets


$'s in 000's	Useful Lives	December 31, 2019		December 31, 2018
Amortizable intangibles
Distribution agreement	2 years	$	—	$	3,021
Certification	7 years		350		350
Customer relationships	12-20 years		89,232		82,124
Patents and processes	5-10 years		4,928		1,900
Brand names	5-15 years		15,019		10,470
Total amortizable intangibles			109,529		97,865
Less accumulated amortization			(13,058)		(9,835)
Total net amortizable intangibles			96,471		88,030
Non-amortizable intangibles
Trademarks and other			18,016		516
In-process research and development			5,469		—
Intangible assets, net of accumulated amortization		$	119,956	$	88,546

Estimated future amortization expense


Years ending December 31, ($'s in 000's)
2020	$	9,012
2021		8,996
2022		9,173
2023		8,809
2024		6,797
Thereafter		53,684

Schedule of Goodwill


	Reporting Unit
($'s in 000's)	Products		Services		Total
Goodwill as of January 1, 2018	$	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
Foreign currency translation		178		—		178
Acquisitions		105,838		—		105,838
Goodwill as of December 31, 2019	$	183,781	$	47,264	$	231,045

Debt (Tables)

12 Months Ended

Dec. 31, 2019

Debt

Schedule of components of long term debt


$'s in 000's	December 31, 2019		December 31, 2018
Term loans	$	220,000	$	74,625
Revolving credit facility		10,000		13,452
Mortgage		1,812		1,859
2019 Contingent note		—		2,680
Notes Payable - VIP Acquisition		27,500		17,500
Net discount on debt and deferred financing fees		(5,688)		(1,902)
	$	253,624	$	108,214
Less current maturities of long-term debt		(2,248)		(796)
Total long-term debt	$	251,376	$	107,418

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


($'s in 000's)
2020	$	2,248
2021		2,250
2022		2,253
2023		29,755
2024		2,257
Thereafter		220,549

- 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://fasb.org/us-gaap/role/ref/legacyRef
-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://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-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://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-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 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Leases (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of components of lease expense



	Year Ended
$'s in 000's	December 31, 2019
Finance lease cost
Amortization of right-of-use assets	$	1,441
Interest on lease liabilities		308
Operating lease cost		4,833
Variable lease cost(1)		629
Short-term lease cost		41
Sublease income		(452)
Total lease cost	$	6,800

⁽¹⁾

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

Schedule of other information related to leases


			December 31, 2019
Weighted-average remaining lease term (years)
Operating leases			5.15
Finance leases			2.73
Weighted-average discount rate
Operating leases			5.3%
Finance leases			5.7%

Summary of annual future commitments under non-cancelable leases


	Lease Obligations
$'s in 000's	Operating Leases		Finance Leases
2020	$	5,706	$	1,771
2021		4,920		1,329
2022		4,682		1,150
2023		3,910		1,072
2024		2,394		16
Thereafter		2,928		3
Total minimum future obligations	$	24,540	$	5,341
Less interest		(3,341)		(437)
Present value of net future minimum obligations		21,199		4,904
Less current lease obligations		(4,619)		(1,573)
Long-term lease obligations	$	16,580	$	3,331

Supplemental cash flow information



	Year Ended
$'s in 000's	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	308
Operating cash flows from operating leases		4,568
Financing cash flows from finance leases		1,547
(Noncash) right-of-use assets obtained in exchange for lease obligations
Operating leases		5,368
Finance leases		(3,006)

Summary of operating and capital 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 imputed interest				(298)
Total lease obligations				3,774
Less current obligations				(1,455)
Long-term lease obligations			$	2,319

ASU 2016-02

Schedule of effect of the changes to consolidated balance sheet for the adoption of the new lease standard

The effect of the changes made to our consolidated balance sheet as of January 1, 2019 for the adoption of the new lease standard was as follows:


	Balance at		Adjustments due		Balance at
$'s in 000's	December 31, 2018		to ASC 842		January 1, 2019
ASSETS
Property and equipment, net (1)	$	27,335	$	—	$	27,335
Operating lease right-of-use assets		—		10,424		10,424
Other non-current assets		2,857		(116)		2,741

LIABILITIES
Current portion of operating leases	$	—	$	2,921	$	2,921
Operating Leases, less current installments		—		7,644		7,644
Current portion of long-term debt and finance leases(2)		2,251		—		2,251
Finance leases, less current installments		2,319		—		2,319
Other non-current liabilities		524		(257)		267

⁽¹⁾

Finance lease right-of-use assets of $4.5 million are included in property and equipment, net, on the consolidated balance sheets.

⁽²⁾

Current portion of long-term debt and finance leases includes $1.5 million of current portion of finance leases.

In accordance with the new lease standard requirements, the disclosure of the impact of adoption on our consolidated balance sheet was as follows:


		December 31, 2019
			Balance excluding
			the adoption of		Effect of
$'s in 000's	As Reported		ASC 842		change
ASSETS
Property and equipment, net (1)	$	52,525	$	52,525	$	—
Operating lease right-of-use assets		20,785		—		(20,785)
Other non-current assets		3,214		3,276		62

LIABILITIES
Current portion of operating leases	$	4,619	$	—	$	(4,619)
Operating leases, less current installments		16,580		—		(16,580)
Current portion of long-term debt and finance leases(2)		3,821		3,821		—
Finance leases, less current installments		3,331		3,331		—
Other non-current liabilities		117		485		368

⁽¹⁾

Finance lease right-of-use assets of $5.8 million are included in property and equipment, net, on the condensed consolidated balance sheets.

⁽²⁾

Current portion of long-term debt and finance leases includes $1.5 million of current portion of finance leases.

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

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


	Years Ended December 31
$'s in 000's	2019		2018		2017
United States	$	(17,953)	$	(1,116)	$	11,479
Foreign		342		542		308
Total	$	(17,611)	$	(574)	$	11,787

Schedule of provision for income taxes


	Years Ended December 31
$'s in 000's	2019		2018		2017
Current:
Federal	$	—	$	—	$	(10)
State		317		148		63
Foreign		17		—		—
	$	334	$	148	$	53
Deferred and other:
Federal		(2,146)		(751)		3,708
State		(1,336)		(135)		19
Foreign		(161)		77		190
		(3,643)		(809)		3,917
Total income tax expense (benefit)	$	(3,309)	$	(661)	$	3,970

Schedule of reconciliation between effective tax rate and statutory tax rate


	Years Ended December 31
$'s in 000's		2019		2018		2017
Income tax expense (benefit) at federal statutory rate		21.0	%	21.0	%	35.0	%
State and local income taxes net of federal tax benefit		1.3		(5.7)		—
Non-controlling interest and nontaxable income		(4.0)		54.7		(33.2)
Deferred tax rate changes		(0.4)		37.2		—
Share-based compensation		0.1		18.3		—
Tax Cuts and Jobs Act of 2017		—		(7.3)		30.7
Other		0.8		(3.0)		1.2
Effective income tax rate		18.8	%	115.2	%	33.7	%

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


$'s in 000's	2019		2018
Deferred tax assets
Investment in partnership	$	53,303	$	41,658
Fixed assets		29		41
Net operating loss carryforwards and tax credits		6,775		2,538
Other accruals and reversals		5		2
Subtotal		60,112		44,239
Less: valuation allowance		(143)		(206)
Net deferred tax assets		59,969		44,033

Deferred tax liabilities
Intangible assets	$	(293)	$	(350)
Other		(5)		(5)
Net deferred tax liabilities	$	(298)	$	(355)

Earnings (Loss) per Share (Tables)

12 Months Ended

Dec. 31, 2019

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


	Year ended December 31,
(in 000's, except for per share amounts)		2019	2018		2017
Numerator:
Net (loss) income	$	(14,302)	$	87	$	7,817
Less: net (loss) income attributable to non-controlling interests		(2,849)		869		11,310
Net (loss) income attributable to PetIQ, Inc. — basic and diluted		(11,453)		(782)		(3,493)
Denominator:
Weighted-average shares of Class A common stock outstanding -- basic		22,652		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		22,652		17,216		13,223

(Loss) earnings per share of Class A common stock — basic	$	(0.51)	$	(0.05)	$	(0.26)
(Loss) earnings per share of Class A common stock — diluted	$	(0.51)	$	(0.05)	$	(0.26)

Stock Based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

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


	December 31, 2019			December 31, 2018
Expected term (years) (1)		6.25			6.25
Expected volatility (2)		35.00	%		35.00	%
Risk-free interest rate (3)		2.37	%		2.74	%
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		Aggregate		Remaining
	Stock		Average		Intrinsic		Contractual
	Options		Exercise		Value		Life
	(in 000's)		Price		(in 000's)		(years)
Outstanding at December 31, 2016		—	$	—
Granted		804		16.00
Exercised		—
Forfeited		(205)		16.00
Cancelled/Expired		—
Outstanding at December 31, 2017		599	$	16.00	$	3,496		9.5
Granted		1,617		25.74
Exercised		(76)		18.83
Forfeited		(195)		21.37
Cancelled/Expired		—
Outstanding at December 31, 2018		1,945	$	23.45	$	5,527		9.1
Granted		423		27.54
Exercised		(119)		19.51
Forfeited		(168)		21.92
Cancelled/Expired		(9)		25.70
Outstanding at December 31, 2019		2,072	$	24.63	$	6,266		8.0
Options exercisable at December 31, 2019		572

Summary of RSU activity


			Weighted
	Number of		Average
	Shares		Grant Date
	(in 000's)		Fair Value
Outstanding at December 31, 2017		—	—
Granted		51		33.16
Settled		—
Forfeited		—
Outstanding at December 31, 2018		51	$	33.16
Granted		123		27.61
Settled		(25)		30.43
Forfeited		(15)		30.58
Nonvested RSUs at December 31, 2019		133	$	28.85

Non-Controlling Interests (Tables)

12 Months Ended

Dec. 31, 2019

Non-Controlling Interests

Summary of noncontrolling interest


	LLC Interests held					% of Total
		LLC				LLC
$'s in 000's	Owners		PetIQ, Inc.		Total	Owners	PetIQ, Inc.
As of December 31, 2018		6,547		21,620	28,167	23.2%	76.8%
Stock based compensation adjustments		—		140	140
Exchange transactions		(1,794)		1,794	—
As of December 31, 2019		4,752		23,554	28,306	16.8%	83.2%

Segments (Tables)

12 Months Ended

Dec. 31, 2019

Segments

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


$'s in 000's					Unallocated
December 31, 2019	Products		Services		Corporate		Consolidated
Net Sales	$	617,118	$	92,313	$	—	$	709,431
Adjusted EBITDA		73,537		20,045		(32,907)		60,675
Property, plant, and equipment		23,114		13,520		15,891		52,525
Depreciation expense		3,552		3,170		2,417		9,139
Capital expenditures		1,297		6,409		2,570		10,276


$'s in 000's					Unallocated
December 31, 2018	Products		Services		Corporate		Consolidated
Net Sales	$	450,229	$	78,385	$	—	$	528,614
Adjusted EBITDA		52,185		15,246		(25,892)		41,539
Property, plant, and equipment		13,191		6,137		8,007		27,335
Depreciation expense		2,343		2,326		1,988		6,657
Capital expenditures		1,339		3,440		2,399		7,178


$'s in 000's					Unallocated
December 31, 2017	Products		Services		Corporate		Consolidated
Net Sales	$	266,687	$	—	$	—	$	266,687
Adjusted EBITDA		30,836		—		(8,529)		22,307
Property, plant, and equipment		11,843		—		3,157		15,000
Depreciation expense		2,165		—		183		2,348
Capital expenditures		1,519		—		2,612		4,131

Summary of reconciles segment adjusted ebitda to pretax net income


	For the years ended
$'s in 000's	December 31, 2019		December 31, 2018		December 31, 2017
Adjusted EBITDA:
Product	$	73,537	$	52,185	$	30,836
Services		20,045		15,246		—
Unallocated Corporate		(32,907)		(25,892)		(8,529)
Total Consolidated		60,675		41,539		22,307
Adjustments:
Depreciation		(9,139)		(6,657)		(2,348)
Amortization		(5,994)		(5,210)		(1,052)
Interest		(14,495)		(8,022)		(1,563)
Acquisition costs(1)		(6,147)		(3,787)		(1,965)
Stock based compensation expense		(7,355)		(3,812)		(447)
Purchase accounting adjustment to inventory(2)		(4,805)		(2,149)		—
Non same-store revenue(3)		8,088		3,967		—
Non same-store costs(3)		(19,553)		(10,345)		—
Fair value adjustment of contingent note		(7,320)		(3,280)		—
Integration costs and costs of discontinued clinics(4)		(3,788)		(998)		—
Clinic launch expenses(5)		(767)		(1,380)		—
Non-recurring royalty settlement(6)		—		(440)		—
SKU Rationalization(7)		(6,482)		—		(610)
Costs associated with becoming a public company		—		—		(2,710)
Supplier receivable write-off		—		—		175
Litigation expenses		(529)		—		—
Pretax net (loss) income	$	(17,611)	$	(574)	$	11,787
Income tax benefit (expense)		3,309		661		(3,970)
Net (loss) income	$	(14,302)	$	87	$	7,817

⁽¹⁾

Acquisition costs are costs directly related to various completed and pending acquisitions and include diligence, accounting, banking, and other out of pocket costs.

⁽²⁾

⁽³⁾

⁽⁴⁾

⁽⁵⁾

⁽⁶⁾

Non-recurring royalty settlement represents a settlement paid to a supplier related to a royalty agreement in place since 2013.

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


	Year ended December 31, 2019
$'s in 000's	U.S.		Foreign		Total
Products sales	$	610,986	$	6,132	$	617,118
Services revenue		92,313		—		92,313
Total net sales	$	703,299	$	6,132	$	709,431

	Year ended December 31, 2018
$'s in 000's	U.S.		Foreign		Total
Products sales	$	444,364	$	5,865	$	450,229
Services 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
Products sales	$	261,526	$	5,161	$	266,687
Services revenue		—		—		—
Total net sales	$	261,526	$	5,161	$	266,687

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


	December 31, 2019		December 31, 2018
United States	$	51,397	$	26,268
Europe		1,128		1,067
Total	$	52,525	$	27,335

Quarterly information (unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly information (unaudited)

Quarterly Financial Information


(In 000's, except per share amounts)		Quarter 1		Quarter 2		Quarter 3		Quarter 4
2019:
Product sales	$	126,084	$	194,606	$	161,534	$	134,894
Services revenue		22,352		26,028		24,491		19,442
Gross profit		24,730		34,900		27,291		20,462
General and administrative expenses		20,538		24,450		29,345		28,867
Operating income (loss)		4,872		8,990		(4,364)		(12,635)
Net income (loss)		2,326		5,918		(8,796)		(13,752)
Basic net income (loss) per common share	$	0.07	$	0.17	$	(0.26)	$	(0.47)
Diluted net income (loss) per common share	$	0.07	$	0.17	$	(0.26)	$	(0.47)
Basic weighted average shares		21,800		22,365		22,974		23,436
Diluted weighted average shares		21,978		22,597		22,974		23,436

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
General and administrative expenses		18,968		16,943		17,621		18,728
Operating income		(3,226)		8,916		6,911		(4,853)
Net (loss) income		(3,957)		5,398		3,902		(5,256)
Basic net (loss) income per common share	$	(0.14)	$	0.16	$	0.13	$	(0.16)
Diluted net (loss) income per common share	$	(0.14)	$	0.16	$	0.13	$	(0.16)
Basic weighted average shares		14,575		15,980		16,944		21,283
Diluted weighted average shares		14,575		16,008		17,239		21,283

Principal Business Activity and Significant Accounting Policies - Fair value on a recurring basis (Details)	Dec. 31, 2019
Fair Value of Financial Instruments
Fixed interest rate	4.35%
Contingent notes
Fair Value of Financial Instruments
Fixed interest rate	6.75%

Principal Business Activity and Significant Accounting Policies - Fair value on a contingent consideration (Details) - VIP - Level 3 - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Business Acquisition, Contingent Consideration [Line Items]
Balance at beginning of the period	$ 2,680
Fair value of contingent consideration at VIP Acquisition date		$ 6,900
Change in fair value of contingent consideration	7,320	3,280
Transfer out of level 3	$ (10,000)	(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, 2019	Dec. 31, 2018
Receivables and Credit Policy
Accounts receivable, gross	$ 71,808	$ 45,295
Less: Allowance for doubtful accounts	(431)	(216)
Non-current portion of receivables		(72)
Total accounts receivable, net	71,377	45,007
Trade receivables
Receivables and Credit Policy
Accounts receivable, gross	67,551	43,531
Other receivables
Receivables and Credit Policy
Accounts receivable, gross	$ 4,257	$ 1,764

Principal Business Activity and Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Inventories
Raw materials	$ 10,675	$ 6,106
Work in progress	1,717	94
Finished goods	67,311	85,942
Total inventories	$ 79,703	$ 92,142

Principal Business Activity and Significant Accounting Policies - PPNE (Details)	12 Months Ended
	Dec. 31, 2019
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, 2019	Dec. 31, 2018	Dec. 31, 2017
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 - Disaggregation of revenue (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disaggregation of revenue
Total net sales									$ 709,431	$ 528,614	$ 266,687
Product
Disaggregation of revenue
Total net sales	$ 134,894	$ 161,534	$ 194,606	$ 126,084	$ 95,141	$ 108,524	$ 148,713	$ 97,851	617,118	450,229	266,687
Services
Disaggregation of revenue
Total net sales	$ 19,442	$ 24,491	$ 26,028	$ 22,352	$ 15,883	$ 22,858	$ 22,429	$ 17,215	92,313	78,385
Domestic
Disaggregation of revenue
Total net sales									703,299	522,749	261,526
Domestic \| Product
Disaggregation of revenue
Total net sales									610,986	444,364	261,526
Domestic \| Services
Disaggregation of revenue
Total net sales									92,313	78,385
Foreign
Disaggregation of revenue
Total net sales									6,132	5,865	5,161
Foreign \| Product
Disaggregation of revenue
Total net sales									$ 6,132	$ 5,865	$ 5,161
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Disaggregation of revenue
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year								1 year

Principal Business Activity and Significant Accounting Policies - Research and Development and Advertising Costs (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Research and Development and Advertising Costs
Research and development costs	$ 1.3	$ 0.2	$ 0.5
Advertising costs	$ 4.5	$ 2.9	$ 2.2

Principal Business Activity and Significant Accounting Policies - Collaboration Agreements (Details) $ in Millions	Dec. 31, 2019 USD ($)
Principal Business Activity and Significant Accounting Policies
Collaboration agreements, contingent payments to be made	$ 20.5

Principal Business Activity and Significant Accounting Policies - Interest expense, net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Interest expense, net
Interest expense	$ 14,495	$ 8,022	$ 1,563
Interest and other income	$ 400	$ 300	$ 100

Principal Business Activity and Significant Accounting Policies - Non-controlling interest (Details)	Dec. 31, 2019	Dec. 31, 2018
Continuing LLC Owners
Noncontrolling Interest [Line Items]
Interest held by non-controlling owners	16.80%	23.20%

Business Combinations - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands			12 Months Ended
	Jul. 08, 2019	Jan. 17, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Combination
Intangible assets, net of accumulated amortization			$ 96,471	$ 88,030
Current amortization expense				4,700
Goodwill not deductible for tax purposes			49,800
Acquisition costs			$ 6,147	$ 3,787	$ 1,965
Class B common stock
Business Combination
Common stock, par value			$ 0.001	$ 0.001
VIP
Business Combination
Business Combination, Consideration Transferred		$ 198,300
HBH
Business Combination
Business Combination, Consideration Transferred			$ 14,655
Goodwill not deductible for tax purposes			5,000
Perrigo Animal Health Acquisition
Business Combination
Business Combination, Consideration Transferred	$ 184,393
Intangible assets, net of accumulated amortization			14,600
Current amortization expense			1,100
Acquisition costs			6,100
Customer relationships and brand names
Business Combination
Intangible assets, net of accumulated amortization			86,800
Current amortization expense			$ 4,300

Business Combinations - Total consideration (Details) - USD ($) $ in Thousands			12 Months Ended
	Jul. 08, 2019	Jan. 17, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Preliminary estimated fair value of the consideration
Goodwill			$ 231,045	$ 125,029	$ 5,064
Cash paid, net of cash acquired			185,090	$ 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
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
Perrigo Animal Health Acquisition
Preliminary estimated fair value of the consideration
Inventories	$ 17,998
Property, plant, and equipment	19,568
Other current assets	13,048
Other assets	9,680
Indefinite-lived intangible assets	23,040
Definite-lived intangible assets	14,480
Goodwill	105,838
Total assets	203,652
Total liabilities	19,259
Estimated purchase price	184,393
Cash paid, net of cash acquired	(185,090)
Post-closing working capital adjustment	697
Estimated fair value of total consideration transferred	$ 184,393
Finite-Lived Intangible Asset, Useful Life			13 years
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
Definite-lived intangible assets		77,200
Customer relationships \| HBH
Preliminary estimated fair value of the consideration
Definite-lived intangible assets			$ 3,800
Finite-Lived Intangible Asset, Useful Life			15 years
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
Definite-lived 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
Minimum
Preliminary estimated fair value of the consideration
Finite-Lived Intangible Asset, Useful Life			2 years
Minimum \| Customer relationships
Preliminary estimated fair value of the consideration
Finite-Lived Intangible Asset, Useful Life			12 years
Minimum \| Brand names
Preliminary estimated fair value of the consideration
Finite-Lived Intangible Asset, Useful Life			5 years

Business Combinations - Pro Forma (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Acquisition, Pro Forma Information [Abstract]
Net sales	$ 751,348	$ 618,678
Net (loss) income	$ (6,888)	$ (184,744)
(Loss) Earnings per share: Basic	$ (0.30)	$ (10.73)
(Loss) Earnings per share: Diluted	$ (0.30)	$ (10.73)
Revenues	$ 709,431	$ 528,614	$ 266,687
Perrigo Animal Health Acquisition
Business Acquisition, Pro Forma Information [Abstract]
Pre-tax net income	1,200
Perrigo Animal Health Acquisition \| Acquisition-related Costs [Member]
Business Acquisition, Pro Forma Information [Abstract]
Revenues	4,800
Perrigo Animal Health Acquisition \| Fair Value Adjustment to Inventory [Member]
Business Acquisition, Pro Forma Information [Abstract]
Revenues	6,100
Product \| Perrigo Animal Health Acquisition
Business Acquisition, Pro Forma Information [Abstract]
Net sales	$ 28,900

Property, Plant, and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jan. 01, 2019
Property, Plant, and Equipment
Property, plant and equipment, gross	$ 72,567	$ 40,449
Less accumulated depreciation	(20,042)	(13,114)
Property, Plant and Equipment, Net, Total	52,525	27,335	$ 15,000	$ 27,335
Depreciation and amortization expense	9,139	6,657	$ 2,348
Leasehold improvements
Property, Plant, and Equipment
Property, plant and equipment, gross	15,517	10,776
Equipment
Property, Plant, and Equipment
Property, plant and equipment, gross	23,138	14,477
Vehicles and accessories
Property, Plant, and Equipment
Property, plant and equipment, gross	6,007	3,989
Computer equipment and software
Property, Plant, and Equipment
Property, plant and equipment, gross	8,070	5,839
Buildings
Property, Plant, and Equipment
Property, plant and equipment, gross	10,050	2,479
Furniture and fixtures
Property, Plant, and Equipment
Property, plant and equipment, gross	1,836	1,547
Land
Property, Plant, and Equipment
Property, plant and equipment, gross	4,557	660
Construction in Progress
Property, Plant, and Equipment
Property, plant and equipment, gross	$ 3,392	$ 682

Intangible Assets and Goodwill - Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Intangible Assets and Goodwill
Amortizable Intangibles, gross	$ 109,529	$ 97,865
Less accumulated amortization	(13,058)	(9,835)
Total net amortizable intangibles	96,471	88,030
Intangible assets, net of accumulated amortization	119,956	88,546
Amortization expense	6,000	5,200	$ 1,100
Trademarks and other
Intangible Assets and Goodwill
Non-amortizable intangibles	18,016	516
IPRD
Intangible Assets and Goodwill
Non-amortizable intangibles	$ 5,469
Distribution agreement
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	2 years
Amortizable Intangibles, gross		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	$ 89,232	82,124
Patents and processes
Intangible Assets and Goodwill
Amortizable Intangibles, gross	$ 4,928	1,900
Brand names
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	10 years
Amortizable Intangibles, gross	$ 15,019	$ 10,470
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 \| Patents and processes
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	5 years
Minimum \| Brand names
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	5 years
Maximum
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	20 years
Maximum \| Customer relationships
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	20 years
Maximum \| Patents and processes
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	10 years
Maximum \| Brand names
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	15 years

Intangible Assets and Goodwill - Estimated future amortization expense (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Intangible Assets and Goodwill
2020	$ 9,012
2021	8,996
2022	9,173
2023	8,809
2024	6,797
Thereafter	$ 53,684

Intangible Assets and Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Goodwill, Beginning Balance	$ 125,029	$ 5,064
Foreign currency translation	178	(285)
Acquisition	105,838	120,250
Goodwill, Ending Balance	231,045	125,029
Product
Goodwill, Beginning Balance	77,765	5,064
Foreign currency translation	178	(285)
Acquisition	105,838	72,986
Goodwill, Ending Balance	183,781	77,765
Services
Goodwill, Beginning Balance	47,264
Acquisition		47,264
Goodwill, Ending Balance	$ 47,264	$ 47,264

Debt (Details) - USD ($) $ in Thousands		12 Months Ended
Debt (Details) - USD ($) $ in Thousands	Jul. 08, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jul. 07, 2019
Debt
Purchase price of a commercial building		$ 1,900
Fixed interest rate		4.35%
Earn-outs payments based on achievement of company Adjusted EBITDA targets		$ 7,500
Earn-outs payments based on achievement of company Adjusted EBITDA targets for 2019		$ 10,000
Amortization schedule		25 years
Balloon payment		10 years
Net discount on debt and deferred financing fees		$ (5,688)	$ (1,902)
Long-term Debt, Total		253,624	108,214
Less current maturities of long-term debt		(2,248)	(796)
Long-term debt, less current installments		251,376	107,418
Future maturities of long-term debt
2020		2,248
2021		2,250
2022		2,253
2023		29,755
2024		2,257
Thereafter		220,549
Debt issuance costs		5,790	2,750	$ 42
Revolving credit facility
Debt
Maximum borrowing capacity	$ 125,000				$ 110,000
Outstanding balance		$ 10,000	13,452
Weighted average interest rate		3.50%
Future maturities of long-term debt
Debt issuance costs		$ 700
Revolving credit facility \| Minimum
Debt
Unused facility fee (as a percent)	0.375%
Revolving credit facility \| Maximum
Debt
Unused facility fee (as a percent)	0.50%
Term loans
Debt
Outstanding balance		220,000	74,625
Future maturities of long-term debt
Debt issuance costs		5,100
Mortgage
Debt
Mortgage		1,812	1,859
A&R Term Loan Credit Agreement
Debt
Maximum borrowing capacity	$ 220,000				$ 74,100
Outstanding balance		220,000
Variable interest rate, basis points spread over variable reference rate (as a percent)	4.50%
Contingent notes
Debt
Contingent notes			2,680
Earned Contingent Note
Debt
Long-term Debt, Total		27,500	$ 17,500
Long-term debt, less current installments		$ 27,500
Guaranteed note
Debt
Fixed interest rate		6.75%
Long-term Debt, Total		$ 10,000

Leases - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
Leases - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2019
Lessee, Lease, Description [Line Items]
Net book value of assets under finance lease	$ 4.5
Total operating lease expense	$ 6.0	$ 1.7
Maximum
Lessee, Lease, Description [Line Items]
Renewal options term			10 years
Minimum
Lessee, Lease, Description [Line Items]
Renewal options term			1 year

Leases - Adoption of new lease standard (Details) - USD ($)	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018	Dec. 31, 2017
ASSETS
Property, plant and equipment, net	$ 52,525,000	$ 27,335,000	$ 27,335,000	$ 15,000,000
Operating lease right of use assets	20,785,000	10,424,000
Finance lease right-of-use assets	5,800,000	4,500,000
Other non-current assets	3,214,000	2,741,000	2,857,000
LIABILITIES
Current portion of operating leases	4,619,000.00	2,921,000
Operating leases, less current installments	16,580,000.00	7,644,000
Current portion of long-term debt and finance lease	3,821,000	2,251,000	2,251,000
Finance leases, less current installments	3,331,000	2,319,000	2,319,000
Other non-current liabilities	117,000	267,000	524,000
Current portion of finance lease	1,573,000	1,500,000	$ 1,455,000
ASU 2016-02 \| Previously reported
ASSETS
Property, plant and equipment, net	52,525,000
Other non-current assets	3,276,000
LIABILITIES
Current portion of long-term debt and finance lease	3,821,000
Finance leases, less current installments	3,331,000
Other non-current liabilities	485,000
ASU 2016-02 \| Adjustment
ASSETS
Operating lease right of use assets	(20,785,000)	10,424,000
Other non-current assets	62,000	(116,000)
LIABILITIES
Current portion of operating leases	(4,619,000)	2,921,000
Operating leases, less current installments	(16,580,000)	7,644,000
Other non-current liabilities	$ 368,000	$ (257,000)

Leases - Components of lease expense and other information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2019
Lease cost
Amortization of right-of-use assets	$ 1,441
Interest on lease liabilities	308
Operating lease cost	4,833
Variable lease cost	629
Short-term lease cost	41
Sublease income	(452)
Total lease cost	$ 6,800
Weighted-average remaining lease term (years), Operating leases		5 years 1 month 24 days
Weighted-average remaining lease term (years), Finance leases		2 years 8 months 23 days
Weighted-average discount rate, Operating leases		5.30%
Weighted-average discount rate, Finance leases		5.70%

Leases - Annual future commitments under non-cancelable leases (Details) - USD ($)	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Lease Obligations, Operating Leases
2020	$ 5,706,000.00
2021	4,920,000.00
2022	4,682,000.00
2023	3,910,000.00
2024	2,394,000.00
Thereafter	2,928,000.00
Total minimum future obligations	24,540,000.00
Less interest	(3,341,000.00)
Present value of net future minimum obligations	21,199,000.00
Less current lease obligations	(4,619,000.00)	$ (2,921,000)
Long-term lease obligations	16,580,000.00	7,644,000
Lease Obligations, Finance Leases
2020	1,771,000
2021	1,329,000
2022	1,150,000
2023	1,072,000
2024	16,000
Thereafter	3,000
Total minimum future obligations	5,341,000
Less interest	(437,000)
Present value of net future minimum obligations	4,904,000
Less current lease obligations	(1,573,000)	(1,500,000)	$ (1,455,000)
Long-term lease obligations	$ 3,331,000	$ 2,319,000	$ 2,319,000

Leases - Supplemental Cash Flow (Details) $ in Thousands	12 Months Ended
Leases - Supplemental Cash Flow (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Leases
Operating cash flows from finance leases	$ 308
Operating cash flows from operating leases	4,568
Financing cash flows from finance leases	1,547
Operating leases	5,368
Finance leases	$ (3,006)

Leases - Annual future commitments under non-cancelable leases - ASC 840 (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Operating Leases
2020			$ 3,318
2021			2,685
2022			1,894
2023			1,765
2024			1,478
Thereafter			134
Operating Leases, Total minimum future obligations			11,274
Capital Leases
2020			1,615
2021			1,296
2022			605
2023			433
2024			123
Capital Leases, Total minimum future obligations			4,072
Less imputed interest			(298)
Total lease obligations			3,774
Less current lease obligations	$ (1,573)	$ (1,500)	(1,455)
Long-term lease obligations	$ 3,331	$ 2,319	$ 2,319

Income Taxes (Details) - USD ($) $ in Millions	12 Months Ended
Income Taxes (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income tax expense (benefit)	18.80%	115.20%	33.70%
Income tax expense (benefit) at federal statutory rate	21.00%	21.00%	35.00%
Accrued estimated income tax		$ 2.1
Holdco
Cash distributions	$ 1.7	1.5
Accrued estimated income tax		$ 0.8

Income Taxes - Components of earnings before income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Components of earnings before income taxes
United States	$ (17,953)	$ (1,116)	$ 11,479
Foreign	342	542	308
Pretax net (loss) income	$ (17,611)	$ (574)	$ 11,787

Income Taxes - Provision for income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current:
Federal			$ (10)
State	$ 317	$ 148	63
Foreign	17
Total current	334	148	53
Deferred and other:
Federal	(2,146)	(751)	3,708
State	(1,336)	(135)	19
Foreign	(161)	77	190
Total deferred and other	(3,643)	(809)	3,917
Total tax expense (benefit)	$ (3,309)	$ (661)	$ 3,970

Income Taxes - Effective Income Tax Rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation:
Income tax expense (benefit) at federal statutory rate	21.00%	21.00%	35.00%
State and local income taxes net of federal tax benefit	1.30%	(5.70%)
Noncontrolling interest and nontaxable income	(4.00%)	54.70%	(33.20%)
Deferred tax rate changes	(0.40%)	37.20%
Share-based compensation	0.10%	18.30%
Tax Cuts and Jobs Act of 2017		(7.30%)	30.70%
Nondeductible/nontaxable items	0.80%	(3.00%)	1.20%
Income tax expense (benefit)	18.80%	115.20%	33.70%

Income Taxes - Deferred Tax Assets Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Tax effects of temporary differences:
Investment in partnership	$ 53,303	$ 41,658
Fixed Assets	29	41
Net operating loss carryforwards and tax credits	6,775	2,538
Other accruals and reversals	5	2
Subtotal	60,112	44,239
Less: valuation allowance	(143)	(206)
Total net deferred tax assets	59,969	44,033
Intangible assets	(293)	(350)
Other	(5)	(5)
Total deferred tax liabilities	$ (298)	$ (355)

Income Taxes - Valuation allowance and NOL (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Income Taxes
Unrecognized tax benefit would impact the effective tax rate	$ 0
Federal net operating loss carryforwards	4,900
Federal net operating loss carryforwards will expire in 2037	400
Federal net operating loss carryforwards indefinite carryforward period	$ 4,500
Percentage of taxable income offset against net operating carryforward	80.00%
State net operating loss carryforwards	$ 900
Foreign net operating loss carryforwards indefinite carryforward period	200
Federal interest expense carryover	600
Charitable contribution carryforwards	$ 200

Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Numerator:
Net (loss) income	$ (13,752)	$ (8,796)	$ 5,918	$ 2,326	$ (5,256)	$ 3,902	$ 5,398	$ (3,957)	$ (14,302)	$ 87	$ 7,817
Net (loss) income attributable to non-controlling interest									(2,849)	869	11,310
Net (loss) income attributable to PetIQ, Inc.									$ (11,453)	$ (782)	$ (3,493)
Denominator:
Basic weighted average shares (in shares)	23,436	22,974	22,365	21,800	21,283	16,944	15,980	14,575	22,652	17,216	13,223
Weighted-average shares of Class A common stock outstanding - diluted (in shares)	23,436	22,974	22,597	21,978	21,283	17,239	16,008	14,575	22,652	17,216	13,223
Basic net income (loss) per common share	$ (0.47)	$ (0.26)	$ 0.17	$ 0.07	$ (0.16)	$ 0.13	$ 0.16	$ (0.14)	$ (0.51)	$ (0.05)	$ (0.26)
Diluted net (loss) income per common share	$ (0.47)	$ (0.26)	$ 0.17	$ 0.07	$ (0.16)	$ 0.13	$ 0.16	$ (0.14)	$ (0.51)	$ (0.05)	$ (0.26)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(19))
-URI http://asc.fasb.org/extlink&oid=116637232&loc=SL114874131-224263

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=117326831&loc=d3e1337-109256

Reference 3: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 55
-Paragraph 52
-URI http://asc.fasb.org/extlink&oid=117327953&loc=d3e4984-109258

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(21))
-URI http://asc.fasb.org/extlink&oid=116634182&loc=SL114868664-224227

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

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+ Details

- Definition

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

+ References + Details

- Definition

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

+ References

+ Details

Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Stock Based Compensation
Stock Options Granted (in shares)	423,000.00	1,617,000.00	804,000.00
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	$ 6.2	$ 3.6
Grant date fair value of stock options granted	$ 10.63	$ 11.12
Unrecognized compensation cost related to unvested stock options	$ 12.3
Unrecognized compensation cost related to unvested options, recognized weighted-average period	2 years 7 months 6 days
Omnibus Plan
Stock Based Compensation
Share 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	3,914,000
Share available for issuance	2,017,000	413,000
Maximum
Stock Based Compensation
Maximum term for stock options	10 years

Stock Based Compensation - Weighted Average Assumptions (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Stock Based Compensation
Expected term (years)	6 years 3 months	6 years 3 months
Expected volatility	35.00%	35.00%
Risk-free interest rate	2.37%	2.74%
Dividend yield	0.00%	0.00%

Stock Based Compensation - Summary of Unvested Stock Options (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Stock Based Compensation
Stock Options Outstanding - Beginning Balance	1,945,000.00	599,000.00
Stock Options Granted (in shares)	423,000.00	1,617,000.00	804,000.00
Stock option Exercised (in shares)	(119,000.00)	(76,000.00)
Stock Options Forfeited (in shares)	(168,000.00)	(195,000.00)	(205,000.00)
Stock Options Cancelled (in shares)	(9,000.00)
Stock Options Outstanding - Ending Balance	2,072,000.00	1,945,000.00	599,000.00
Options exercisable - Ending Balance	572,000.00
Weighted Average Exercise Price Outstanding - Beginning Balance	$ 23.45	$ 16.00
Weighted Average Exercise Price - Granted	27.54	25.74	16.00
Weighted Average Exercise Price - Exercised	19.51	18.83
Weighted Average Exercise Price - Forfeited	21.92	21.37	16.00
Weighted Average Exercise Price - Expired	25.70
Weighted Average Exercise Price Outstanding - Ending Balance	$ 24.63	$ 23.45	$ 16.00
Aggregate Intrinsic Value	$ 6,266,000.00	$ 5,527,000.00	$ 3,496,000.00
Weighted Average Remaining Contractual Life (years)	8 years	9 years 1 month 6 days	9 years 6 months

Stock Based Compensation - Restricted Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Unrecognized compensation cost related to unvested stock options	$ 12.3
Stock based compensation expense	6.2	$ 3.6
RSU
Unrecognized compensation cost related to unvested stock options	$ 3.2
Vesting period	3 years 1 month 6 days
Stock based compensation expense	$ 1.1	$ 0.2
Number of Shares
Beginning Balance	51
Granted (in shares)	123	51
Settled (in shares)	(25)
Forfeited (in shares)	(15)
Ending balance	133	51
Weighted Average Grant Date Fair Value
Beginning Balance	$ 33.16
Granted (per share)	27.61	33.16
Settled (per share)	30.43
Forfeited (per share)	30.58
Ending balance	$ 28.85	$ 33.16

Stockholder's Equity - Reorganization and amendment (Details) - $ / shares shares in Thousands	Dec. 31, 2019	Dec. 31, 2018	Oct. 01, 2018
PetIQ
Class of Stock [Line Items]
Ownership interest in Holdco	83.20%	76.80%
Class A common stock
Class of Stock [Line Items]
Common Stock, Shares, Issued	23,554	21,620	5,750
Common stock authorized	125,000	125,000
Common stock, par value	$ 0.001	$ 0.001
Class B common stock
Class of Stock [Line Items]
Common Stock, Shares, Issued	4,752	6,547
Common stock authorized	100,000	100,000
Common stock, par value	$ 0.001	$ 0.001

Stockholder's Equity - Initial public offering (Details) - USD ($) $ in Thousands		12 Months Ended
	Oct. 01, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2019
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		21,620,000		23,554,000
Class A common stock
Class of Stock [Line Items]
Common Stock, Shares, Issued	5,750,000	21,620,000		23,554,000
Common stock, shares outstanding		21,620,000		23,554,000
Class A common stock \| IPO
Class of Stock [Line Items]
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
Class B common stock
Class of Stock [Line Items]
Common Stock, Shares, Issued		6,547,000		4,752,000
Common stock, shares outstanding		6,547,000		4,752,000
Amended Holdco LLC Agreement
Class of Stock [Line Items]
Common stock, shares outstanding		28,167,000		28,306,000

Non-Controlling Interests (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Common Stock, Shares, Outstanding, Beginning Balance	21,620
Stock based compensation adjustments	140
Exchange transactions	1,794
Common Stock, Shares, Outstanding, Ending Balance	23,554	21,620
Continuing LLC Owners
Common Stock, Shares, Outstanding, Beginning Balance	6,547
Exchange transactions	(1,794)
Common Stock, Shares, Outstanding, Ending Balance	4,752	6,547
Amended Holdco LLC Agreement
Common Stock, Shares, Outstanding, Beginning Balance	28,167
Stock based compensation adjustments	140
Common Stock, Shares, Outstanding, Ending Balance	28,306	28,167
Continuing LLC Owners
Ownership interest by continuing LLC owners	16.80%	23.20%
PetIQ
Ownership interest in Holdco	83.20%	76.80%

Customer Concentration (Details) - customer	12 Months Ended
Customer Concentration (Details) - customer	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Customer concentrations \| Sales
Customer Concentration
Number of customers accounted for more than 10% of sales individually	2	1	3
Concentration risk	35.00%	18.00%	61.00%
Credit concentrations \| Accounts receivable
Customer Concentration
Number of customers accounted for more than 10% of sales individually	2	1
Concentration risk	61.00%	43.00%

Commitments and Contingencies (Details) $ in Millions	Dec. 31, 2019 USD ($)
Med Vets, Inc. and Bay Medical Solutions Inc
Litigation Contingencies
Liability recorded	$ 1.0

Segments (Details) $ in Thousands	12 Months Ended
Segments (Details) $ in Thousands	Dec. 31, 2019 USD ($) segment	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jan. 01, 2019 USD ($)
Segments
Number of operating segments \| segment	2
Financial information relating to the Company’s operating segments
Net Sales	$ 709,431	$ 528,614	$ 266,687
Adjusted EBITDA	60,675	41,539	22,307
Property, plant and equipment, net	52,525	27,335	15,000	$ 27,335
Depreciation expense	9,139	6,657	2,348
Capital Expenditures	10,276	7,178	4,131
Domestic
Financial information relating to the Company’s operating segments
Net Sales	703,299	522,749	261,526
Property, plant and equipment, net	51,397	26,268
Foreign
Financial information relating to the Company’s operating segments
Net Sales	6,132	5,865	5,161
Europe
Financial information relating to the Company’s operating segments
Property, plant and equipment, net	1,128	1,067
Products
Financial information relating to the Company’s operating segments
Net Sales	617,118	450,229	266,687
Products \| Domestic
Financial information relating to the Company’s operating segments
Net Sales	610,986	444,364	261,526
Products \| Foreign
Financial information relating to the Company’s operating segments
Net Sales	6,132	5,865	5,161
Services
Financial information relating to the Company’s operating segments
Net Sales	92,313	78,385
Services \| Domestic
Financial information relating to the Company’s operating segments
Net Sales	92,313	78,385
Operating Segments \| Products
Financial information relating to the Company’s operating segments
Net Sales	617,118	450,229	266,687
Adjusted EBITDA	73,537	52,185	30,836
Property, plant and equipment, net	23,114	13,191	11,843
Depreciation expense	3,552	2,343	2,165
Capital Expenditures	1,297	1,339	1,519
Operating Segments \| Services
Financial information relating to the Company’s operating segments
Net Sales	92,313	78,385
Adjusted EBITDA	20,045	15,246
Property, plant and equipment, net	13,520	6,137
Depreciation expense	3,170	2,326
Capital Expenditures	6,409	3,440
Corporate, Non-Segment \| Unallocated Corporate
Financial information relating to the Company’s operating segments
Adjusted EBITDA	(32,907)	(25,892)	(8,529)
Property, plant and equipment, net	15,891	8,007	3,157
Depreciation expense	2,417	1,988	183
Capital Expenditures	$ 2,570	$ 2,399	$ 2,612

Segments - Reconciles Segments (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Adjusted EBITDA									$ 60,675	$ 41,539	$ 22,307
Depreciation									(9,139)	(6,657)	(2,348)
Amortization									(5,994)	(5,210)	(1,052)
Interest									(14,495)	(8,022)	(1,563)
Acquisition costs									(6,147)	(3,787)	(1,965)
Stock based compensation expense									(7,355)	(3,812)	(447)
Purchase accounting adjustment to inventory									(4,805)	(2,149)
Non same-store revenue									8,088	3,967
Non same-store costs									(19,553)	(10,345)
Fair value adjustment of contingent note									(7,320)	(3,280)
Integration costs and costs of discontinued clinics									(3,788)	(998)
Clinic launch expenses									(767)	(1,380)
Non-recurring royalty settlement										(440)
SKU Rationalization									(6,482)		(610)
Costs associated with becoming a public company											(2,710)
Supplier receivable write-off											175
Litigation expenses									(529)
Pretax net (loss) income									(17,611)	(574)	11,787
Income tax benefit (expense)									3,309	661	(3,970)
Net (loss) income	$ (13,752)	$ (8,796)	$ 5,918	$ 2,326	$ (5,256)	$ 3,902	$ 5,398	$ (3,957)	(14,302)	87	7,817
Products \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Adjusted EBITDA									73,537	52,185	30,836
Services \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Adjusted EBITDA									20,045	15,246
Unallocated Corporate \| Corporate, Non-Segment
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Adjusted EBITDA									$ (32,907)	$ (25,892)	$ (8,529)

Related Parties (Details) - USD ($) $ in Thousands	12 Months Ended
Related Parties (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Related Parties
Related party expenses			$ 610
Accrued estimated tax distributions	$ 400	$ 1,200
Notes payable to Seller's of VIP	27,500
Accrued interest		200
Rent expense	400	400
Chris Christensen
Related Parties
Payment of premium expenses	2,300	1,500
Commission paid	$ 100	$ 100

Quarterly information (unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues									$ 709,431	$ 528,614	$ 266,687
Gross profit	$ 20,462	$ 27,291	$ 34,900	$ 24,730	$ 16,905	$ 24,182	$ 26,318	$ 15,883	107,383	83,288	51,194
Selling, general, and administrative expenses	28,867	29,345	24,450	20,538	18,728	17,621	16,943	18,968	103,200	72,260	37,905
Operating income (loss)	(12,635)	(4,364)	8,990	4,872	(4,853)	6,911	8,916	(3,226)	(3,137)	7,748	13,289
Net (loss) income	$ (13,752)	$ (8,796)	$ 5,918	$ 2,326	$ (5,256)	$ 3,902	$ 5,398	$ (3,957)	$ (14,302)	$ 87	$ 7,817
Basic net income (loss) per common share	$ (0.47)	$ (0.26)	$ 0.17	$ 0.07	$ (0.16)	$ 0.13	$ 0.16	$ (0.14)	$ (0.51)	$ (0.05)	$ (0.26)
Diluted net (loss) income per common share	$ (0.47)	$ (0.26)	$ 0.17	$ 0.07	$ (0.16)	$ 0.13	$ 0.16	$ (0.14)	$ (0.51)	$ (0.05)	$ (0.26)
Basic weighted average shares (in shares)	23,436	22,974	22,365	21,800	21,283	16,944	15,980	14,575	22,652	17,216	13,223
Diluted weighted average shares (in shares)	23,436	22,974	22,597	21,978	21,283	17,239	16,008	14,575	22,652	17,216	13,223
Product
Revenues	$ 134,894	$ 161,534	$ 194,606	$ 126,084	$ 95,141	$ 108,524	$ 148,713	$ 97,851	$ 617,118	$ 450,229	$ 266,687
Services
Revenues	$ 19,442	$ 24,491	$ 26,028	$ 22,352	$ 15,883	$ 22,858	$ 22,429	$ 17,215	$ 92,313	$ 78,385

Employee Benefit Plans (Details) - USD ($) $ in Millions	12 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Employee Benefit Plans
Employee contribution	100.00%
Employer contribution	100.00%
Employer contribution, percent of match	3.00%
Employer matching contribution	$ 0.6	$ 0.3