0001558370-21-002058 | 10-K | XBRL Viewer

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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2020	Feb. 26, 2021	Jun. 30, 2020
Document Information [Line Items]
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2020
Entity File Number	001-38163
Entity Registrant Name	PetIQ, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	35-2554312
Entity Address, Address Line One	923 S. Bridgeway Place
Entity Address, City or Town	Eagle
Entity Address, State or Province	ID
Entity Address, Postal Zip Code	83616
City Area Code	208
Local Phone Number	939-8900
Title of 12(b) Security	Class A Common Stock, $0.001 par value
Trading Symbol	PETQ
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Central Index Key	0001668673
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Public Float			$ 725.8
Class A common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		26,048,033
Class B common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		2,893,761

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 33,456	$ 27,272
Accounts receivable, net	102,755	71,377
Inventories	97,773	79,703
Other current assets	8,312	7,071
Total current assets	242,296	185,423
Property, plant and equipment, net	63,146	52,525
Operating lease right of use assets	20,122	20,785
Deferred tax assets		59,780
Other non-current assets	1,870	3,214
Intangible assets, net	213,000	119,956
Goodwill	231,158	231,045
Total assets	771,592	672,728
Current liabilities
Accounts payable	68,131	51,538
Accrued wages payable	10,540	9,082
Accrued interest payable	903	83
Other accrued expenses	8,815	3,871
Current portion of operating leases	4,915	4,619
Current portion of long-term debt and finance leases	7,763	3,821
Total current liabilities	101,067	73,014
Operating leases, less current installments	15,789	16,580
Long-term debt, less current installments	355,979	251,376
Finance leases, less current installments	3,338	3,331
Other non-current liabilities	1,397	117
Total non-current liabilities	376,503	271,404
Commitments and contingencies (Note 13)
Equity
Additional paid-in capital	356,442	300,120
Accumulated deficit	(93,377)	(15,903)
Accumulated other comprehensive loss	(686)	(1,131)
Total stockholders' equity	262,408	283,114
Non-controlling interest	31,614	45,196
Total equity	294,022	328,310
Total liabilities and equity	771,592	672,728
Class A common stock
Equity
Common stock value	26	23
Class B common stock
Equity
Common stock value	$ 3	$ 5

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Oct. 01, 2018
Common stock authorized	100,000,000
Common stock, shares outstanding	25,711,000	23,554,000	21,620,000
Class A common stock
Common stock, par value	$ 0.001	$ 0.001
Common stock authorized	125,000,000	125,000,000
Common Stock, Shares, Issued	25,711,000	23,554,000		5,750,000
Common stock, shares outstanding	25,711,000	23,554,000
Class B common stock
Common stock, par value	$ 0.001	$ 0.001
Common stock authorized	100,000,000	100,000,000
Common Stock, Shares, Issued	3,040,000	4,752,000
Common stock, shares outstanding	3,040,000	4,752,000

Condensed Consolidated Statements of (Loss) Income - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Total net sales	$ 780,051	$ 709,431	$ 528,614
Total cost of sales	644,863	602,048	445,326
Gross profit	135,188	107,383	83,288
Operating expenses
General and administrative expenses	138,375	103,200	72,260
Contingent note revaluations loss		7,320	3,280
Operating (loss) income	(3,187)	(3,137)	7,748
Interest expense, net	(26,299)	(14,495)	(8,022)
Foreign currency gain (loss), net	109	(151)	45
Other income (expense), net	571	172	(345)
Total other expense, net	(25,619)	(14,474)	(8,322)
Pretax net (loss) income	(28,806)	(17,611)	(574)
Income tax benefit (expense)	(52,216)	3,309	661
Net (loss) income	(81,022)	(14,302)	87
Net (loss) income attributable to non-controlling interest	(3,548)	(2,849)	869
Net loss attributable to PetIQ, Inc	$ (77,474)	$ (11,453)	$ (782)
Net loss per share attributable to PetIQ, Inc. Class A common stock
Basic	$ (3.15)	$ (0.51)	$ (0.05)
Diluted	$ (3.15)	$ (0.51)	$ (0.05)
Weighted Average shares of Class A common stock outstanding
Basic	24,629	22,652	17,216
Diluted	24,629	22,652	17,216
Product
Total net sales	$ 725,705	$ 617,118	$ 450,229
Total cost of sales	584,401	530,031	383,501
Services
Total net sales	54,346	92,313	78,385
Total cost of sales	$ 60,462	$ 72,017	$ 61,825

Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Comprehensive Income
Net (loss) income	$ (81,022)	$ (14,302)	$ 87
Foreign currency translation adjustment	363	366	(613)
Comprehensive (loss) income	(80,659)	(13,936)	(526)
Comprehensive (loss) income attributable to non-controlling interest	(3,525)	(2,777)	697
Comprehensive loss attributable to PetIQ	$ (77,134)	$ (11,159)	$ (1,223)

- Definition

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

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+ Details

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities
Net (loss) income	$ (81,022)	$ (14,302)	$ 87
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization of intangible assets and loan fees	30,975	16,509	12,467
Termination of supply agreement	7,801		16
Gain on disposition of property, plant, and equipment	(238)	(189)	(90)
Stock based compensation expense	9,170	7,355	3,812
Deferred tax adjustment	51,511	(3,458)	(843)
Contingent note revaluation		7,320	3,280
Other non-cash activity	164	405	(334)
Changes in assets and liabilities
Accounts receivable	(31,652)	(14,123)	(14,209)
Inventories	(17,846)	30,448	(36,610)
Other assets	556	(1,619)	1,423
Accounts payable	17,435	(7,595)	15,701
Accrued wages payable	1,424	2,800	1,979
Other accrued expenses	7,121	(2,718)	908
Net cash (used in) provided by operating activities	(4,601)	20,833	(12,413)
Cash flows from investing activities
Proceeds from disposition of property, plant, and equipment	442	340	229
Purchase of property, plant, and equipment	(22,392)	(10,276)	(7,178)
Purchase of Capstar and related intangibles	(96,072)
Business acquisitions (net of cash acquired)		(185,090)	(93,052)
Net cash used in investing activities	(118,022)	(195,026)	(100,001)
Cash flows from financing activities
Proceeds from issuance of convertible notes - liability	90,465
Proceeds from issuance of convertible notes - equity	53,285
Payment for Capped Call options	(14,821)
Proceeds from issuance of long-term debt	837,675	818,387	538,028
Principal payments on long-term debt	(838,073)	(676,509)	(466,912)
Payment of financing fees on Convertible Notes	(5,884)
Proceeds from Public Offering of Class A Shares, net of underwriting discounts and offering costs			73,914
Tax distributions to LLC Owners	(47)	(1,686)	(1,485)
Principal payments on finance lease obligations	(1,965)	(1,547)	(1,254)
Payment of deferred financing fees and debt discount	(550)	(5,790)	(2,750)
Tax withholding payments on Restricted Stock Units	(595)	(114)
Exercise of options to purchase class A common stock	9,274	2,318	1,429
Net cash provided by financing activities	128,764	135,059	140,970
Net change in cash and cash equivalents	6,141	(39,134)	28,556
Effect of exchange rate changes on cash and cash equivalents	43	46	(92)
Cash and cash equivalents, beginning of period	27,272	66,360	37,896
Cash and cash equivalents, end of period	33,456	27,272	66,360
Supplemental cash flow information
Interest paid	19,402	13,632	7,220
Net change in property, plant, and equipment acquired through accounts payable	279	(1,814)	25
Finance lease additions	2,019	(3,006)	656
Deferred tax liability created by convertible debt issuance	(8,197)
Net change of deferred tax asset from step-up in basis		12,381	36,882
Income taxes paid, net of refunds	130	249	640
Accrued tax distribution	(434)	$ 786	2,097
Issuance of note for termination, settlement, and asset acquisition agreement	17,487
Purchase of intangible assets from note issuance	$ (9,686)
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

Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands	Class A common stock Common Stock	Class B common stock Common Stock	Accumulated Deficit	Accumulated Other Comprehensive Loss	Additional Paid-In Capital	Non-controlling Interest	Total
Beginning Balance at Dec. 31, 2017	$ 13	$ 8	$ (3,493)	$ (687)	$ 70,873	$ 38,130	$ 104,844
Beginning Balance (in shares) at Dec. 31, 2017	13,223	8,268
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
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	(6,321)
Net increase in deferred tax asset from LLC Interest transactions					36,882		36,882
Issuance of Class A Shares	$ 2				73,912		73,914
Issuance of Class A Shares (in shares)	2,000
Accrued tax distributions						(2,097)	(2,097)
Other comprehensive income (loss)				(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						76
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	6,547
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	(1,794)
Net increase in deferred tax asset from LLC Interest transactions					12,381		12,381
Accrued tax distributions						(786)	(786)
Other comprehensive income (loss)				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						119
Issuance of stock for vesting of RSU's, net of tax with holdings (in shares)	21
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	4,752
Increase (Decrease) in Stockholders' Equity
Exchange of LLC Interests held by LLC Owners	$ 2	$ (2)		105	15,461	(15,566)
Exchange of LLC Interests held by LLC Owners (in shares)	1,712	(1,712)
Accrued tax distributions						434	434
Other comprehensive income (loss)				340		23	363
Stock based compensation expense					7,921	1,249	9,170
Equity component of convertible notes, net of tax					37,064	5,843	42,907
Payment for capped call share options					(12,803)	(2,018)	(14,821)
Exercise of Options to purchase Common Stock					9,274		$ 9,274
Exercise of Options to purchase Common Stock (in shares)	395						395
Issuance of stock for vesting of RSU's, net of tax with holdings					(595)		$ (595)
Issuance of stock for vesting of RSU's, net of tax with holdings (in shares)	50
Net (loss) income			(77,474)			(3,548)	(81,022)
Ending Balance at Dec. 31, 2020	$ 26	$ 3	$ (93,377)	$ (686)	$ 356,442	$ 31,614	$ 294,022
Ending Balance (in shares) at Dec. 31, 2020	25,711	3,040

Principal Business Activity and Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Principal Business Activity and Significant Accounting Policies

Principal Business Activity and Significant Accounting Policies

Note 1 – Principal Business Activity and Significant Accounting Policies

Principal Business Activity and Principals of Consolidation

PetIQ 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 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.

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

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

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

Use of Estimates

The preparation of consolidated financial statements in conformity with 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 and cash equivalents, 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 for the twelve months ended December 31, 2019:


$'s in 000's
Balance at beginning of the period	$	2,680
Change in fair value of contingent consideration		7,320
Transfer out of level 3		(10,000)
Balance at the end of the period	$	—

Cash and Cash Equivalents

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

Receivables and Credit Policy

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 45 days from the invoice date. Accounts receivable are stated at the amount billed to the customer, net of discounts and estimated deductions. The Company does not have a policy for charging interest on overdue customer account balances. The Company provides an allowance for credit losses equal to expected losses. The Company’s estimate is based on historical collection experience, a review of the current status of trade accounts receivable and known current economic conditions including the current and expected impact of COVID-19. 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, 2020		December 31, 2019
Trade receivables	$	96,381	$	67,551
Other receivables		7,094		4,257
		103,475		71,808
Less: Allowance for doubtful accounts		(720)		(431)
Total accounts receivable, net	$	102,755	$	71,377

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, 2020		December 31, 2019
Raw materials	$	15,761	$	10,675
Work in progress		2,273		1,717
Finished goods		79,739		67,311
Total inventories	$	97,773	$	79,703

Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Expenditures for improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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			2-15 years
Furniture and fixtures			5-10 years

Goodwill and Intangible Assets

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

To assess goodwill for impairment, the Company, depending on relevant facts and circumstances, performs either a qualitative assessment or a quantitative analysis utilizing a discounted cash flow valuation model. In performing the qualitative assessment, the Company evaluates relevant factors such as macroeconomic conditions, industry and market considerations, cost factors and overall financial performance, as well as company and reporting unit specific items. If, after assessing these qualitative factors, the Company determines that it is more likely than not that the carrying value of the reporting unit is less than its fair value, then no further testing is required. In performing a quantitative analysis, the Company determines the fair value of a reporting unit using management’s assumptions about future cash flows based on long-range strategic plans. This approach incorporates many assumptions including discount rates and future growth rates. In the event the carrying amount of a reporting unit exceeded its fair value, an impairment loss would be recognized.

Indefinite-lived intangible assets are tested for impairment utilizing either a qualitative assessment or a quantitative analysis. For a qualitative assessment, the Company identifies and considers relevant key factors, events, and circumstances to determine whether it is necessary to perform a quantitative impairment test. The key factors considered include macroeconomic, industry, and market conditions, as well as the asset's actual and forecasted results. For the quantitative impairment tests, the Company compares the carrying amounts to the current fair market values. Intangible assets with definite lives are amortized over their estimated useful lives to reflect the pattern over which the economic benefits of the intangible assets are consumed. Definite-lived intangible assets are also evaluated for impairment when impairment indicators are present.

No impairment charge was recorded for the years ended December 31, 2020, 2019, and 2018.

Convertible Debt

On May 19, 2020, we issued $143.8 million aggregate principal amount of Convertible Notes due 2026 (the “Notes”). See Note 5 – “Debt”. We separately account for the liability and equity components of convertible debt instruments that can be settled in cash by allocating the proceeds from issuance between the liability component and the embedded conversion option in accordance with accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. The value of the equity component is calculated by first measuring the fair value of the liability component, using the interest rate of a similar liability that does not have a conversion feature, as of the issuance date. The difference between the proceeds from the convertible debt issuance and the amount measured as the liability component is recorded as the equity component with a corresponding discount recorded on the debt. We recognize amortization of the resulting discount using the effective interest method as interest expense in our consolidated statements of operations. The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

We have allocated issuance costs to the liability and equity components. Issuance costs attributable to the liability component are being amortized to expense over the respective term of the Notes, and issuance costs attributable to the equity component were netted with the respective equity component in additional paid-in capital.

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, 2020.

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, 2020 and 2019 are immaterial. The Company does not have significant deferred revenue or unbilled receivable balances.

Cost of Services

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

Research and Development and Advertising Costs

Research and development and advertising costs are expensed as incurred and are included in general and administrative expenses. Research and development costs amounted to $2.3 million, $1.3 million, and $0.2 million and advertising costs were $10.1 million, $4.5 million, and $2.9 million for the years ended December 31, 2020, 2019, and 2018, 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 Operations. There were no expenses incurred under the agreement for the periods ended December 31, 2020 and 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 and discounts, (iv) finance lease obligations and the mortgage note outstanding, offset by interest income earned on our demand deposits and other assets. Interest expense was $26.3 million, $14.9 million, and $8.3 million for the years ended December 31, 2020, 2019, and 2018, respectively, offset by $0.0 million, $0.4 million, and $0.3 million of interest income, respectively.

Non-controlling interest

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

Earnings Per Share

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

Recently Issued Accounting Pronouncements / Adopted Accounting Standard Updates

From time to time, the Financial Accounting Standards Board (“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”).

Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, "Financial Instruments - Credit Losses." This ASU requires an organization to measure all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable information. Organizations will now use forward-looking information to better estimate their credit losses. The Company adopted this ASU using a modified retrospective approach. Under this method of adoption, the Company determined that there was no cumulative-effect adjustment to beginning Retained earnings on the consolidated balance sheet. Adoption of this standard did not impact the Company’s net loss and had no impact on the consolidated statement of cash flows.

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 August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to be applied for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the standard requires using either a modified retrospective or a full retrospective approach. Effective January 1, 2021, we intend to adopt ASU 2020-06 using the full retrospective approach. We expect the adoption of the new standard to result in a decrease to stockholders equity of $51.4 million and a corresponding increase to convertible senior notes. Interest expense, net for the year ending December 31, 2020 will decrease approximately $4.0 million. Interest expense, net, recognized in future periods will be reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. Additionally we expect that the change will result in significantly more dilutive shares outstanding.

Although there are several other new accounting pronouncements issued by the FASB, the Company does not believe any of these accounting pronouncements had or will have a material impact on its consolidated financial statements.

Business Combination

12 Months Ended

Dec. 31, 2020

Business Combination

Business Combination

Note 2 – Business Combination and Asset Acquisition

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.

The indefinite-lived intangibles primarily relate to trademarks and in-process research and development.

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 Operations.

Capstar ® (nitenpyram) Acquisition

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

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

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


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

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

Supplier Termination, Settlement and Asset Purchase Agreement:

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

Property, Plant, and Equipment

12 Months Ended

Dec. 31, 2020

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, 2020		December 31, 2019
Leasehold improvements	$	19,709	$	15,517
Equipment		25,664		23,138
Vehicles and accessories		7,110		6,007
Computer equipment and software		10,858		8,070
Buildings		10,168		10,050
Furniture and fixtures		2,347		1,836
Land		7,067		4,557
Construction in progress		11,331		3,392
		94,254		72,567
Less accumulated depreciation		(31,108)		(20,042)
Total property, plant, and equipment	$	63,146	$	52,525

Depreciation and amortization expense related to these assets total $12.1 million, $9.1 million, and $6.7 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2020

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, 2020		December 31, 2019
Amortizable intangibles
Certification	7 years	$	350	$	350
Customer relationships	12-20 years		160,178		89,232
Patents and processes	5-10 years		14,905		4,928
Brand names	5-15 years		24,740		15,019
Total amortizable intangibles			200,173		109,529
Less accumulated amortization			(25,984)		(13,058)
Total net amortizable intangibles			174,189		96,471
Non-amortizable intangibles
Trademarks and other			33,341		18,016
In-process research and development			5,470		5,469
Intangible assets, net of accumulated amortization		$	213,000	$	119,956

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, 2020, 2019, and 2018 was $12.8 million, $6.0 million, and $5.2 million, respectively.

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

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


Years ending December 31, ($'s in 000's)
2021	$	18,504
2022		18,310
2023		17,481
2024		15,078
2025		14,369
Thereafter		90,447

The following is a summary of the changes in the carrying value of goodwill for the years ended December 31, 2020 and 2019.


	Reporting Unit
($'s in 000's)	Products		Services		Total
Goodwill as of January 1, 2019		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
Foreign currency translation		113		—		113
Goodwill as of December 31, 2020	$	183,894	$	47,264	$	231,158

Debt

12 Months Ended

Dec. 31, 2020

Debt

Debt

Note 5 – Debt

Convertible Notes

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

The Notes are redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after June 1, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s Class A common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. In addition, calling any Notes will constitute a Make-Whole Fundamental Change with respect to such Notes, which will result in an increase to the conversion rate if such Notes are converted after they are called for redemption.

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

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

In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated using a discount rate of 13%, which was determined by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The amount of the equity component representing the conversion option was $53.3 million and was determined by deducting the fair value of the liability component from the par value of the Notes. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense at an annual effective interest rate over the contractual terms of the Notes. The Company has early adopted ASU 2020-06 as of January 1, 2021, which will impact the accounting for the Notes.

The fair value of the Notes was $218.1 million as of December 31, 2020. The estimated fair value of the Notes is based on market rates and the closing trading price of the Convertible Notes as of December 31, 2020 and is classified as Level 2

in the fair value hierarchy. As of December 31, 2020 the if-converted value of the Notes did not exceed the principal amount.

The net carrying amount of the liability component of the Notes was as follows:


($'s in 000's)	December 31, 2020
Par value of the Notes	$	143,750
Unamortized debt discount		(49,526)
Unamortized debt issuance costs		(3,441)
Net carrying amount	$	90,783

The net carrying amount of the equity component of the Notes was as follows:


($'s in 000's)	December 31, 2020
Proceeds allocated to the conversion option	$	53,285
Deferred tax affect		(8,197)
Issuance costs		(2,181)
Net carrying amount	$	42,907

The following table sets forth the interest expense recognized related to the Notes:


	For the Year Ended
	December 31, 2020
($'s in 000's)
Contractual interest expense	$	3,546
Amortization of debt discount		3,759
Amortization of debt issuance costs		261
Total	$	7,566
Effective interest rate of the liability component		13.0%

Capped Call Transactions

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

The Company paid approximately $14.8 million for the Capped Call Transactions, which was recorded as additional paid-in capital, using a portion of the gross proceeds from the sale of the Notes. The capped call is expected to be tax deductible as the Company elected to integrate the capped call into the Notes for tax purposes. The tax effect on the equity component of the Convertible Notes of $8.2 million was recorded through additional paid-in capital. The Company has recorded a full valuation allowance against its deferred tax assets as of December 31, 2020, as a result, the $8.2 million deferred tax liability associated with the Capped Call Transactions will be offset by a reduction to the valuation allowance adjustment through continuing operations.

A&R Credit Agreement

The Company amended the existing revolving credit agreement of Opco 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 $125 million that matures on July 8, 2024. 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. On May 14, 2020, the Company amended the Amended Revolving Credit Agreement to allow for the Notes described above. Additionally the amendment instituted a Eurodollar floor of 1% to the agreement.

All obligations under the Amended Revolving Credit Agreement are unconditionally guaranteed by HoldCo and, subject to certain exceptions, each of its material current and future domestic wholly-owned subsidiaries. All obligations under the Amended Revolving Credit Agreement, and the guarantees of those obligations, 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, 2020, the borrowers and guarantors thereunder were in compliance with these covenants. Although the Company currently expects continued compliance with debt covenants, the impact COVID-19 may negatively affect the Company’s ability to comply 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, 2020, the borrower and guarantors thereunder were in compliance with these covenants.

As of December 31, 2020, $15.0 million was outstanding under the Amended Revolving Credit Agreement. The weighted average interest rate on the Amended Revolving Credit Agreement was 2.3% at December 31, 2020.

A&R Term Loan Credit Agreement

The Company amended and restated the existing term loan credit agreement of Opco (the “A&R Term Loan Credit Agreement”) on July 8, 2019. The $220.0 million A&R Term Loan Credit Agreement has an interest rate equal to the Eurodollar rate plus 5.00%. The A&R Term Loan Credit Agreement calls for 1% of the original loan balance to be paid annually via equal quarterly payments, with the balance of the loan due on the sixth anniversary of the agreement.

All obligations under the A&R Term Loan Credit Agreement 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. 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.

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, 2020, the borrower and guarantors thereunder were in compliance with these covenants.

As of December 31, 2020, $217.3 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 July 2020, the Company entered into the Agreement. See Note 2 – “Business Combinations and Asset Acquisitions”. The Agreement called for PetIQ to pay $20.6 million, $2.6 million at signing and $1.0 million per quarter thereafter with no interest. The Company discounted the payment stream using a market interest rate of 8.3%, resulting in an obligation of $17.5 million.

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, 2020		December 31, 2019
Convertible Notes	$	143,750	$	—
Term loans		217,250		220,000
Revolving credit facility		15,000		10,000
Notes Payable - VIP Acquisition		27,500		27,500
Other Debt		16,257		1,812
Net discount on debt and deferred financing fees		(57,559)		(5,688)
	$	362,198	$	253,624
Less current maturities of long-term debt		(6,219)		(2,248)
Total long-term debt	$	355,979	$	251,376

Future maturities of long-term debt, excluding net discount on debt and deferred financing fees, as of December 31, 2020, are as follows:


($'s in 000's)
2021	$	6,219
2022		5,476
2023		33,255
2024		6,057
2025		2,259
Thereafter		366,491

The Company incurred debt issuance costs of $0.6 million related to the A&R Credit Agreement during the year ended December 31, 2020. 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.

The Company incurred debt issuance costs of $5.9 million in May 2020 in connection with the Notes. In accordance with FASB ASC 470, Debt, these costs were allocated to debt and equity components in proportion to the allocation of proceeds. $2.2 million of issuance costs were recorded as additional paid-in capital and such amounts are not subject to amortization. The remaining issuance costs of $3.7 million are recorded as debt issuance costs in the net carrying value of the Notes. The debt issuance costs are amortized on an effective interest basis over the term of the Notes and is included in interest expense, net on the condensed consolidated statements of operations. Future amortization of our debt discount and debt issuance costs for the term of the Convertible Notes is as follows:


($'s in 000's)	Debt Discounts		Debt Issuance Costs
2021	$	6,761	$	470
2022		7,684		534
2023		8,733		607
2024		9,925		690
2025		11,280		784
Thereafter		5,143		356

Leases

12 Months Ended

Dec. 31, 2020

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 2021 and 2026. A portion of leases are denominated in foreign currencies.

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

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

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

The components of lease expense consists of the follow:


	For the Year Ended
$'s in 000's	December 31, 2020		December 31, 2019
Finance lease cost
Amortization of right-of-use assets	$	1,681	$	1,441
Interest on lease liabilities		315		308
Operating lease cost		5,831		4,833
Variable lease cost⁽¹⁾		1,130		629
Short-term lease cost		34		41
Sublease income		(528)		(452)
Total lease cost	$	8,463	$	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, 2020	December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	4.41	5.15
Finance leases	2.38	2.73
Weighted-average discount rate
Operating leases	5.3%	5.3%
Finance leases	5.7%	5.7%

Annual future commitments under non-cancelable leases as of December 31, 2020, consist of the following:


	Lease Obligations
$'s in 000's	Operating Leases		Finance Leases
2021	$	5,861	$	1,757
2022		5,591		1,584
2023		4,789		1,580
2024		3,280		330
2025		2,357		20
Thereafter		1,365		—
Total minimum future obligations	$	23,243	$	5,271
Less interest		(2,539)		(367)
Present value of net future minimum obligations		20,704		4,904
Less current lease obligations		(4,915)		(1,566)
Long-term lease obligations	$	15,789	$	3,338

Supplemental cash flow information:



	Year Ended		Year Ended
$'s in 000's	December 31, 2020		December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	315	$	308
Operating cash flows from operating leases		5,668		4,568
Financing cash flows from finance leases		1,965		1,547
(Noncash) right-of-use assets obtained in exchange for lease obligations
Operating leases		5,105		5,368
Finance leases		2,019		(3,006)

Total operating lease expense for the year ended December 31, 2018, totaled $6.0 million.

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes

Income Taxes

Note 7 - Income Taxes

The Company is the sole managing member of Holdco. Holdco is treated as a partnership for U.S. federal income tax purposes with the remaining partners of Holdco (the “LLC Owners”) owning a non-controlling interest. The LLC Owners have an exchange right which grants them the right to exchange a Holdco partnership interest and a PetIQ Class B Common Stock share for a PetIQ Class A Common Stock share. Upon such an exchange, the Company is treated as purchasing an additional interest in Holdco from the LLC Owners in a taxable exchange which generates deferred tax assets as a result of an increase in tax basis for the Company. As of December 31, 2020, the Company had $67.6M of deferred tax assets associated with these exchanges, which currently have a full valuation allowance against the deferred tax asset. The non-controlling interests totaled approximately 11% of the ownership of Holdco as of December 31, 2020. See Note 11 – Non-controlling interests for more information.

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

Holdco makes cash distributions to members to pay taxes attributable to their allocable share of income earned. In the years ended December 31, 2020 and 2019, the Company made cash distributions of $0.05 million and $1.7 million, respectively. Additionally, Holdco accrues for distributions required to be made related to estimated income taxes. During the years ended December 31, 2020 and 2019, the Company relieved previously accrued distributions of $(0.4) million and accrued distributions of $0.8 million, respectively. This liability is included in accounts payable on the consolidated balance sheet.

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


	Years Ended December 31
$'s in 000's	2020		2019		2018
United States	$	(29,239)	$	(17,953)	$	(1,116)
Foreign		433		342		542
Total	$	(28,806)	$	(17,611)	$	(574)

The provision for income taxes for 2020, 2019, and 2018 consisted of the following:


	Years Ended December 31
$'s in 000's	2020		2019		2018
Current:
Federal	$	—	$	—	$	—
State		327		317		148
Foreign		137		17		—
	$	464	$	334	$	148
Deferred and other:
Federal		40,598		(2,146)		(751)
State		11,175		(1,336)		(135)
Foreign		(21)		(161)		77
		51,752		(3,643)		(809)
Total income tax expense (benefit)	$	52,216	$	(3,309)	$	(661)

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


	Years Ended December 31
		2020		2019		2018
Income tax expense (benefit) at federal statutory rate		21.0	%	21.0	%	21.0	%
State and local income taxes net of federal tax benefit		2.4		1.3		(5.7)
Non-controlling interest and nontaxable income		(2.9)		(4.0)		54.7
Deferred tax rate changes		(1.3)		(0.4)		37.2
Share-based compensation		0.6		0.1		18.3
Tax Cuts and Jobs Act of 2017		-		-		(13.1)
Return-to-Provision		(2.0)		0.8		13.4
Valuation Allowance		(198.4)		0.4		0.7
Other		(0.7)		(0.4)		(11.3)
Effective income tax rate		(181.3)	%	18.8	%	115.2	%

Our tax rate is affected primarily by the recognition of a valuation allowance during the year ended December 31, 2020 and the portion of income and expense allocated to the noncontrolling interest. It is also affected by discrete items that may occur in any given year such as stock based compensation, but are not consistent from year to year.

As a result of the IPO and reorganization transactions, the Company has recorded deferred tax assets and liabilities based on the differences between the book value of assets and liabilities for financial reporting purposes and those amounts applicable for income tax purposes. Deferred tax assets have been recorded for the basis differences resulting from the purchase of LLC Interests from existing members and newly issued LLC Interests acquired directly from Holdco. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2020 and 2019 are as follows:


$'s in 000's	2020		2019
Deferred tax assets
Investment in partnership	$	53,294	$	53,303
Fixed assets		32		29
Net operating loss carryforwards and tax credits		18,001		6,775
Other accruals and reversals		9		5
Subtotal		71,336		60,112
Less: valuation allowance		(71,161)		(143)
Net deferred tax assets		175		59,969

Deferred tax liabilities
Intangible assets	$	(447)	$	(293)
Other		(6)		(5)
Net deferred tax liabilities	$	(453)	$	(298)

At December 31, 2020, the Company has federal net operating loss (“NOL”) carryforwards of $66.0 million, of which $1.9 million, generated in 2017 and prior, will expire in 2037, the remaining NOLs do not expire. The NOL generated in 2018 and after of $64.1 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 $6.1 million as of December 31, 2020, which has an indefinite carryforward period but is limited in any particular year based on certain provisions. As of December 31, 2020, the Company has charitable contribution carryforwards of $1.0 million, which if unused will expire between 2021 and 2025. The Company has state NOL carryforwards of $384.7 million (tax effected $2.8 million) as of December 31, 2020 which expire between 2022 and 2038 and others that have an indefinite carryforward period. At December 31, 2020 the Company had foreign NOL carryforwards of $0.8 million which do not expire.

The Company has assessed the realizability of the net deferred tax assets as of December 31, 2020 and in that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income to realize its deferred tax assets. The Company believes it is more likely than not that the benefit from the recorded deferred tax assets will not be realized. The Company has recorded a valuation allowance for deferred tax assets of $71.2 million and $0.1 million as of December 31, 2020 and 2019, respectively. In future periods, if we conclude we have future taxable income sufficient to recognize the deferred tax assets, we may reduce or eliminate the valuation allowance.

The Company 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, 2020, tax years from 2017 to present are subject to examination by the tax authorities.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which includes temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property, and the creation of certain refundable employee retention credits. The Company will benefit from the Employee Retention Credits and the payroll tax deferral.

Loss per Share

12 Months Ended

Dec. 31, 2020

Loss per Share

Loss per Share

Note 8 – Loss per Share

Basic and Diluted Loss per share

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

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


	Year ended December 31,
(in 000's, except for per share amounts)		2020	2019		2018
Numerator:
Net (loss) income	$	(81,022)	$	(14,302)	$	87
Less: net (loss) income attributable to non-controlling interests		(3,548)		(2,849)		869
Net loss attributable to PetIQ, Inc. — basic and diluted		(77,474)		(11,453)		(782)
Denominator:
Weighted-average shares of Class A common stock outstanding -- basic		24,629		22,652		17,216
Dilutive effects of stock options that are convertible into Class A common stock		—		—		—
Dilutive effect of RSUs		—		—		—
Dilutive effect for conversion of Notes		—		—		—
Weighted-average shares of Class A common stock outstanding -- diluted		24,629		22,652		17,216

Loss per share of Class A common stock — basic	$	(3.15)	$	(0.51)	$	(0.05)
Loss per share of Class A common stock — diluted	$	(3.15)	$	(0.51)	$	(0.05)

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 per share calculation as they have been determined to be anti-dilutive under the if-converted method and treasury stock method, respectively.

Additionally, all stock options and restricted stock units and convertible Notes have not been included in the diluted earnings per share calculation for the years ended December 31, 2020, 2019 and 2018, as they have been determined to be anti-dilutive under the treasury stock method.

Stock Based Compensation

12 Months Ended

Dec. 31, 2020

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, 2020 and 2019, 1,293 thousand and 2,017 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, 2020, 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 $6.5 million and $6.2 million for the years ended December 31, 2020, and 2019, 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, 2020			December 31, 2019
Expected term (years) ⁽¹⁾		6.25			6.25
Expected volatility ⁽²⁾		33.91	%		35.00	%
Risk-free interest rate ⁽³⁾		0.37	%		2.37	%
Dividend yield ⁽⁴⁾		0.00	%		0.00	%

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

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

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

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

The weighted average grant date fair value of stock options granted during the period ended December 31, 2020 and 2019 was $11.88 and $10.63, respectively, per option. The following table summarizes the activity of the Company’s unvested stock options for the period ended December 31, 2020:


							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, 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
Granted		505		20.22
Exercised		(395)		23.48	$	4,468
Forfeited		(96)		21.42
Outstanding at December 31, 2020		2,086	$	23.93	$	30,302		7.2
Options exercisable at December 31, 2020		831			$	11,778		5.9

At December 31, 2020, total unrecognized compensation cost related to unvested stock options was $8.4 million and is expected to be recognized over a weighted-average period of approximately 2.2 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 generally be forfeited and the shares of common stock underlying such awards will become available for issuance under the Plan. The fair value of RSUs are measured based on the closing fair market value of the Company’s common stock on the date of grant. At December 31, 2020, total unrecognized compensation cost related to unvested RSUs was $5.8 million and is expected to vest over a weighted average of 2.8 years.

The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $2.6 million and $1.1 million for the years ended December 31, 2020 and 2019, 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, 2020:


			Weighted
	Number of		Average
	Shares		Grant Date
	(in 000's)		Fair Value
Outstanding at December 31, 2018		51	$	33.16
Granted		123		27.61
Settled		(25)		30.43
Forfeited		(15)		30.58
Outstanding at December 31, 2019		133	$	28.85
Granted		271		20.73
Settled		(70)		25.65
Forfeited		(17)		23.34
Nonvested RSUs at December 31, 2020		317	$	22.91

The total equity based compensation expense for these plans over the vesting period totaled $9.2 million, $7.4 million, and $3.8 million for the years ended December 31, 2020, 2019, and 2018, respectively. The total income tax benefit recognized in the income statement for share-based compensation arrangements was $0.0 million, $1.4 million and $0.5 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Stockholder's Equity

12 Months Ended

Dec. 31, 2020

Stockholder's Equity

Stockholder's Equity

Note 10 - Stockholders’ Equity

Certificate of Incorporation

The Company’s amended and restated certificate of incorporation, among other things, provides for the (i) authorization of 125,000,000 shares of Class A common stock with a par value of $0.001 per share; (ii) authorization of 100,000,000 shares of Class B common stock with a par value of $0.001 per share; (iii) authorization of 12,500,000 shares of blank check preferred stock; and (iv) establishment of a classified board of directors, divided into three classes, each of whose members will serve for staggered three-year terms.

Each share of the Company’s Class A common stock and Class B common stock entitles its holders to one vote per share on all matters presented to the Company’s stockholders generally.

Holders of the Company’s Class B common stock are not entitled to receive dividends and will not be entitled to receive any distributions upon the liquidation, dissolution or winding up of the Company. Shares of Class B common stock may only be issued to the extent necessary to maintain the one-to-one ratio between the number of LLC interests of HoldCo held by Continuing LLC Owners. Shares of Class B common stock are transferable only together with an equal number of LLC Interests. Shares of Class B common stock will be canceled on a one-for-one basis upon the redemption or exchange any of the outstanding LLC Interests held by the Continuing LLC Owners.

The Company must, at all times, maintain a one-to-one ratio between the number of outstanding shares of Class A common stock and the number of LLC Interests owned by PetIQ (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities).

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, 2020

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, 2020, there were 28,751 thousand LLC Interests outstanding, of which PetIQ owned 25,711 thousand, representing an 89.4% ownership interest in HoldCo. Exchange and other equity activity during the years ended December 31, 2020 and 2019 resulted in weighted average ownership of HoldCo by PetIQ of 86.4% and 80.2%, respectively.


	LLC Interests held					% of Total
		LLC				LLC
$'s in 000's	Owners		PetIQ, Inc.		Total	Owners	PetIQ, Inc.
As of January 1, 2019		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%
Stock based compensation adjustments		—		445	445
Exchange transactions		(1,712)		1,712	—
As of December 31, 2020		3,040		25,711	28,751	10.6%	89.4%

Customer Concentration

12 Months Ended

Dec. 31, 2020

Customer Concentration

Customer Concentration

Note 12 - Customer Concentration

The Company has significant exposure to customer concentration. During each of the years ended December 31, 2020, 2019, and 2018, two, two, and one customers, respectively, accounted for more than 10% of sales individually and in aggregate accounted for 42%, 35%, and 18% of net sales, respectively.

At December 31, 2020, one Products segment customer individually accounted for more than 10% of outstanding trade receivables, and accounted for 52% of outstanding trade receivables, net. At December 31, 2019 two Products segment customers individually accounted for more than 10% of outstanding trade receivables, and accounted for 61% of outstanding trade receivables, net. All of our customer concentration exists in our Products segment.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2020

Commitments and Contingencies

Commitments and Contingencies

Note 13 - Commitments and Contingencies

Litigation Contingencies

During the years ended December 31, 2020 and 2019, the Company recorded liabilities of $7.8 million and $1.0 million, respectively, for contract termination costs, related to settlements for alleged breach of contract. The expense is included within General and Administrative expenses for the years ended December 31, 2020 and 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. On June 29, 2020, the 9^th Circuit Court of Appeals issued an opinion affirming the dismissal of Med Vets’ merger challenge. On July 13, 2020, the Plaintiffs filed for an en banc hearing in the 9^th Circuit Court of Appeals which was unanimously denied on August 7, 2020. The Plaintiffs time period to petition the Supreme Court for certiorari has passed, therefore the matter is considered resolved. As no impact to the Company is considered probable or estimable, no litigation reserve has been accrued.

The Company records a liability when a particular contingency is probable and estimable and provides disclosure for contingencies that are at least reasonably possible of resulting in a loss including an estimate which we currently cannot make. The Company has not accrued for any contingency, at December 31, 2020 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, 2020

Segments

Segments

Note 14 - Segments

The Company has two operating segments: Products and Services. The Products segment consists of the Company’s manufacturing and distribution business. The Services segment consists of the Company’s veterinary services, and related product sales, 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.

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


$'s in 000's					Unallocated
December 31, 2020	Products		Services		Corporate		Consolidated
Net Sales	$	725,705	$	54,346	$	—	$	780,051
Adjusted EBITDA		117,216		3,387		(52,811)		67,792
Depreciation expense		4,810		3,775		3,497		12,082
Capital expenditures		13,394		7,373		1,625		22,392


$'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
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
Depreciation expense		2,343		2,326		1,988		6,657
Capital expenditures		1,339		3,440		2,399		7,178

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, 2020		December 31, 2019		December 31, 2018
Adjusted EBITDA:
Product	$	117,216	$	73,537	$	52,185
Services		3,387		20,045		15,246
Unallocated Corporate		(52,811)		(32,907)		(25,892)
Total Consolidated		67,792		60,675		41,539
Adjustments:
Depreciation		(12,082)		(9,139)		(6,657)
Amortization		(12,815)		(5,994)		(5,210)
Interest		(26,299)		(14,495)		(8,022)
Acquisition costs⁽¹⁾		(2,620)		(6,147)		(3,787)
Stock based compensation expense		(9,170)		(7,355)		(3,812)
Purchase accounting adjustment to inventory⁽²⁾		—		(4,805)		(2,149)
Non same-store revenue⁽³⁾		8,987		8,088		3,967
Non same-store costs⁽³⁾		(22,256)		(19,553)		(10,345)
Fair value adjustment of contingent note		—		(7,320)		(3,280)
Integration costs and costs of discontinued clinics⁽⁴⁾		(9,776)		(3,788)		(998)
Clinic launch expenses⁽⁵⁾		(3,085)		(767)		(1,380)
Non-recurring royalty settlement⁽⁶⁾		—		—		(440)
SKU Rationalization⁽⁷⁾		—		(6,482)		—
Litigation expenses		(1,006)		(529)		—
COVID-19 related costs⁽⁸⁾		(6,476)		—		—
Pretax net loss	$	(28,806)	$	(17,611)	$	(574)
Income tax benefit (expense)		(52,216)		3,309		661
Net (loss) income	$	(81,022)	$	(14,302)	$	87

(1)	Acquisition costs include legal, accounting, banking, consulting, diligence, and other out-of-pocket costs related to completed and contemplated acquisitions.

(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 our Services segment and are from wellness centers, host partners, and regions with less than six full trailing quarters of operating results.

(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.

(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.

(8)

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

Supplemental geographic disclosures are below.


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


		Year ended December 31, 2019
$'s in 000's		U.S.		Foreign		Total
Product sales	$	610,986	$	6,132	$	617,118
Service 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
Product sales	$	444,364	$	5,865	$	450,229
Service revenue		78,385		—		78,385
Total net sales	$	522,749	$	5,865	$	528,614

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


	December 31, 2020		December 31, 2019
United States	$	61,807	$	51,397
Europe		1,339		1,128
Total	$	63,146	$	52,525

Related Parties

12 Months Ended

Dec. 31, 2020

Related Parties

Related Parties

Note 15 - Related Parties

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, 2020 and 2019, the Company had paid $0.03 million in advance on required tax distributions and accrued $0.4 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 $0.5 million and $0.3 million of accrued interest on these notes as of December 31, 2020, and 2019, respectively. The Company paid $1.7 million and $1.3 million of interest for the years ended December 31, 2020 and 2019, respectively, and paid no interest for the year ended December 31, 2018. Will Santana, a former owner of VIP and board member of PetIQ until July 1, 2020, was one of the main beneficiaries of the VIP Notes. Mr. Santana has sold a sizable portion of his ownership in PetIQ and resigned from the board during 2020, as such he will no longer be considered a related party.

The Company leases office and warehouse space from a company under common control of the sellers of VIP, commencing on January 17, 2018. The Company incurred rent expenses of $0.4 million in each of the years ending December 31, 2020, 2019, and 2018, respectively. The lease ended January 5, 2021.

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 $2.8 million, $2.3 million and $1.5 million in 2020, 2019 and 2018, respectively. Mr. Christensen was paid a commission of approximately $0.1 million in each of the years ending December 31, 2020, 2019, and 2018, respectively, by Moreton for the sale of such insurance policies to the Company.

In April 2020, the Company purchased a parcel of land for $2.5 million. The broker for the Company was Colliers International, and the agent was Mike Christensen, the brother of CEO McCord Christensen. Total commission paid to Colliers was approximately $75 thousand.

Employee Benefit Plans

12 Months Ended

Dec. 31, 2020

Employee Benefit Plans

Employee Benefit Plans

Note 16 – 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 $0.9 million, $0.6 million, and $0.3 million, respectively, for the years ended December 31, 2020, 2019 and 2018.

Principal Business Activity and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Principal Business Activity and Significant Accounting Policies

Use of Estimates

Use of Estimates

Fair Value of Financial Instruments

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 for the twelve months ended December 31, 2019:


$'s in 000's
Balance at beginning of the period	$	2,680
Change in fair value of contingent consideration		7,320
Transfer out of level 3		(10,000)
Balance at the end of the period	$	—

Cash and Cash Equivalents

Cash and Cash Equivalents

Receivables and Credit Policy

Receivables and Credit Policy

Accounts receivable consists of the following as of:


$'s in 000's	December 31, 2020		December 31, 2019
Trade receivables	$	96,381	$	67,551
Other receivables		7,094		4,257
		103,475		71,808
Less: Allowance for doubtful accounts		(720)		(431)
Total accounts receivable, net	$	102,755	$	71,377

Inventories

Inventories


$'s in 000's	December 31, 2020		December 31, 2019
Raw materials	$	15,761	$	10,675
Work in progress		2,273		1,717
Finished goods		79,739		67,311
Total inventories	$	97,773	$	79,703

Property, Plant, and Equipment

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			2-15 years
Furniture and fixtures			5-10 years

Goodwill and Intangible Assets

Goodwill and Intangible Assets

No impairment charge was recorded for the years ended December 31, 2020, 2019, and 2018.

Convertible debt

Convertible Debt

Revenue Recognition

Revenue Recognition

When Performance Obligations Are Satisfied

Variable Consideration

Significant Payment Terms

Shipping

Warranties & Returns

Contract balances

Cost of Services

Cost of Services

Research and Development and Advertising Costs

Research and Development and Advertising Costs

Collaboration Agreements

Collaboration Agreements

Stock based compensation

Stock based compensation

Accounting for Income taxes

Accounting for Income Taxes

Interest expense, net

Interest expense, net

Non-controlling interest

Non-controlling interest

Litigation

Litigation

Earnings Per Share

Earnings Per Share

Recently Issued Accounting Pronouncements / Adopted Accounting Standard Updates

Principal Business Activity and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2020

Principal Business Activity and Significant Accounting Policies

Summary of Level 3 activity related to the contingent consideration


$'s in 000's
Balance at beginning of the period	$	2,680
Change in fair value of contingent consideration		7,320
Transfer out of level 3		(10,000)
Balance at the end of the period	$	—

Schedule of accounts receivable


$'s in 000's	December 31, 2020		December 31, 2019
Trade receivables	$	96,381	$	67,551
Other receivables		7,094		4,257
		103,475		71,808
Less: Allowance for doubtful accounts		(720)		(431)
Total accounts receivable, net	$	102,755	$	71,377

Schedule of components of inventories


$'s in 000's	December 31, 2020		December 31, 2019
Raw materials	$	15,761	$	10,675
Work in progress		2,273		1,717
Finished goods		79,739		67,311
Total inventories	$	97,773	$	79,703

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			2-15 years
Furniture and fixtures			5-10 years

Business Combination (Tables)

12 Months Ended

Dec. 31, 2020

Capstar Acquisition

Schedule of fair value of purchased assets


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

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, 2020

Property, Plant, and Equipment

Property, Plant, and Equipment


$'s in 000's	December 31, 2020		December 31, 2019
Leasehold improvements	$	19,709	$	15,517
Equipment		25,664		23,138
Vehicles and accessories		7,110		6,007
Computer equipment and software		10,858		8,070
Buildings		10,168		10,050
Furniture and fixtures		2,347		1,836
Land		7,067		4,557
Construction in progress		11,331		3,392
		94,254		72,567
Less accumulated depreciation		(31,108)		(20,042)
Total property, plant, and equipment	$	63,146	$	52,525

Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2020

Intangible Assets and Goodwill

Schedule of intangible assets


$'s in 000's	Useful Lives	December 31, 2020		December 31, 2019
Amortizable intangibles
Certification	7 years	$	350	$	350
Customer relationships	12-20 years		160,178		89,232
Patents and processes	5-10 years		14,905		4,928
Brand names	5-15 years		24,740		15,019
Total amortizable intangibles			200,173		109,529
Less accumulated amortization			(25,984)		(13,058)
Total net amortizable intangibles			174,189		96,471
Non-amortizable intangibles
Trademarks and other			33,341		18,016
In-process research and development			5,470		5,469
Intangible assets, net of accumulated amortization		$	213,000	$	119,956

Estimated future amortization expense


Years ending December 31, ($'s in 000's)
2021	$	18,504
2022		18,310
2023		17,481
2024		15,078
2025		14,369
Thereafter		90,447

Schedule of Goodwill


	Reporting Unit
($'s in 000's)	Products		Services		Total
Goodwill as of January 1, 2019		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
Foreign currency translation		113		—		113
Goodwill as of December 31, 2020	$	183,894	$	47,264	$	231,158

Debt (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of components of long term debt


$'s in 000's	December 31, 2020		December 31, 2019
Convertible Notes	$	143,750	$	—
Term loans		217,250		220,000
Revolving credit facility		15,000		10,000
Notes Payable - VIP Acquisition		27,500		27,500
Other Debt		16,257		1,812
Net discount on debt and deferred financing fees		(57,559)		(5,688)
	$	362,198	$	253,624
Less current maturities of long-term debt		(6,219)		(2,248)
Total long-term debt	$	355,979	$	251,376

Summary of debt interest expense


	For the Year Ended
	December 31, 2020
($'s in 000's)
Contractual interest expense	$	3,546
Amortization of debt discount		3,759
Amortization of debt issuance costs		261
Total	$	7,566
Effective interest rate of the liability component		13.0%

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


($'s in 000's)
2021	$	6,219
2022		5,476
2023		33,255
2024		6,057
2025		2,259
Thereafter		366,491

Convertible Notes [Member]

Convertible notes summary


($'s in 000's)	December 31, 2020
Par value of the Notes	$	143,750
Unamortized debt discount		(49,526)
Unamortized debt issuance costs		(3,441)
Net carrying amount	$	90,783

Schedule of net carrying amount of the equity component of notes


($'s in 000's)	December 31, 2020
Proceeds allocated to the conversion option	$	53,285
Deferred tax affect		(8,197)
Issuance costs		(2,181)
Net carrying amount	$	42,907

Schedule of amortization expense debt discount and debt issuance costs


($'s in 000's)	Debt Discounts		Debt Issuance Costs
2021	$	6,761	$	470
2022		7,684		534
2023		8,733		607
2024		9,925		690
2025		11,280		784
Thereafter		5,143		356

- Definition

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

+ References

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-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
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-Paragraph 1
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Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
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-Topic 505
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Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
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Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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-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
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-Section 55
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-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
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-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Leases (Tables)

12 Months Ended

Dec. 31, 2020

Leases

Schedule of components of lease expense


	For the Year Ended
$'s in 000's	December 31, 2020		December 31, 2019
Finance lease cost
Amortization of right-of-use assets	$	1,681	$	1,441
Interest on lease liabilities		315		308
Operating lease cost		5,831		4,833
Variable lease cost⁽¹⁾		1,130		629
Short-term lease cost		34		41
Sublease income		(528)		(452)
Total lease cost	$	8,463	$	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, 2020	December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	4.41	5.15
Finance leases	2.38	2.73
Weighted-average discount rate
Operating leases	5.3%	5.3%
Finance leases	5.7%	5.7%

Summary of annual future commitments under non-cancelable leases


	Lease Obligations
$'s in 000's	Operating Leases		Finance Leases
2021	$	5,861	$	1,757
2022		5,591		1,584
2023		4,789		1,580
2024		3,280		330
2025		2,357		20
Thereafter		1,365		—
Total minimum future obligations	$	23,243	$	5,271
Less interest		(2,539)		(367)
Present value of net future minimum obligations		20,704		4,904
Less current lease obligations		(4,915)		(1,566)
Long-term lease obligations	$	15,789	$	3,338

Supplemental cash flow information



	Year Ended		Year Ended
$'s in 000's	December 31, 2020		December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	315	$	308
Operating cash flows from operating leases		5,668		4,568
Financing cash flows from finance leases		1,965		1,547
(Noncash) right-of-use assets obtained in exchange for lease obligations
Operating leases		5,105		5,368
Finance leases		2,019		(3,006)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Taxes

Schedule of components of earnings before net loss taxes, by tax jurisdiction


	Years Ended December 31
$'s in 000's	2020		2019		2018
United States	$	(29,239)	$	(17,953)	$	(1,116)
Foreign		433		342		542
Total	$	(28,806)	$	(17,611)	$	(574)

Schedule of provision for income taxes


	Years Ended December 31
$'s in 000's	2020		2019		2018
Current:
Federal	$	—	$	—	$	—
State		327		317		148
Foreign		137		17		—
	$	464	$	334	$	148
Deferred and other:
Federal		40,598		(2,146)		(751)
State		11,175		(1,336)		(135)
Foreign		(21)		(161)		77
		51,752		(3,643)		(809)
Total income tax expense (benefit)	$	52,216	$	(3,309)	$	(661)

Schedule of reconciliation between effective tax rate and statutory tax rate


	Years Ended December 31
		2020		2019		2018
Income tax expense (benefit) at federal statutory rate		21.0	%	21.0	%	21.0	%
State and local income taxes net of federal tax benefit		2.4		1.3		(5.7)
Non-controlling interest and nontaxable income		(2.9)		(4.0)		54.7
Deferred tax rate changes		(1.3)		(0.4)		37.2
Share-based compensation		0.6		0.1		18.3
Tax Cuts and Jobs Act of 2017		-		-		(13.1)
Return-to-Provision		(2.0)		0.8		13.4
Valuation Allowance		(198.4)		0.4		0.7
Other		(0.7)		(0.4)		(11.3)
Effective income tax rate		(181.3)	%	18.8	%	115.2	%

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


$'s in 000's	2020		2019
Deferred tax assets
Investment in partnership	$	53,294	$	53,303
Fixed assets		32		29
Net operating loss carryforwards and tax credits		18,001		6,775
Other accruals and reversals		9		5
Subtotal		71,336		60,112
Less: valuation allowance		(71,161)		(143)
Net deferred tax assets		175		59,969

Deferred tax liabilities
Intangible assets	$	(447)	$	(293)
Other		(6)		(5)
Net deferred tax liabilities	$	(453)	$	(298)

Loss per Share (Tables)

12 Months Ended

Dec. 31, 2020

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)		2020	2019		2018
Numerator:
Net (loss) income	$	(81,022)	$	(14,302)	$	87
Less: net (loss) income attributable to non-controlling interests		(3,548)		(2,849)		869
Net loss attributable to PetIQ, Inc. — basic and diluted		(77,474)		(11,453)		(782)
Denominator:
Weighted-average shares of Class A common stock outstanding -- basic		24,629		22,652		17,216
Dilutive effects of stock options that are convertible into Class A common stock		—		—		—
Dilutive effect of RSUs		—		—		—
Dilutive effect for conversion of Notes		—		—		—
Weighted-average shares of Class A common stock outstanding -- diluted		24,629		22,652		17,216

Loss per share of Class A common stock — basic	$	(3.15)	$	(0.51)	$	(0.05)
Loss per share of Class A common stock — diluted	$	(3.15)	$	(0.51)	$	(0.05)

Stock Based Compensation (Tables)

12 Months Ended

Dec. 31, 2020

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, 2020			December 31, 2019
Expected term (years) ⁽¹⁾		6.25			6.25
Expected volatility ⁽²⁾		33.91	%		35.00	%
Risk-free interest rate ⁽³⁾		0.37	%		2.37	%
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.

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, 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
Granted		505		20.22
Exercised		(395)		23.48	$	4,468
Forfeited		(96)		21.42
Outstanding at December 31, 2020		2,086	$	23.93	$	30,302		7.2
Options exercisable at December 31, 2020		831			$	11,778		5.9

Summary of RSU activity


			Weighted
	Number of		Average
	Shares		Grant Date
	(in 000's)		Fair Value
Outstanding at December 31, 2018		51	$	33.16
Granted		123		27.61
Settled		(25)		30.43
Forfeited		(15)		30.58
Outstanding at December 31, 2019		133	$	28.85
Granted		271		20.73
Settled		(70)		25.65
Forfeited		(17)		23.34
Nonvested RSUs at December 31, 2020		317	$	22.91

Non-Controlling Interests (Tables)

12 Months Ended

Dec. 31, 2020

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 January 1, 2019		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%
Stock based compensation adjustments		—		445	445
Exchange transactions		(1,712)		1,712	—
As of December 31, 2020		3,040		25,711	28,751	10.6%	89.4%

Segments (Tables)

12 Months Ended

Dec. 31, 2020

Segments

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


$'s in 000's					Unallocated
December 31, 2020	Products		Services		Corporate		Consolidated
Net Sales	$	725,705	$	54,346	$	—	$	780,051
Adjusted EBITDA		117,216		3,387		(52,811)		67,792
Depreciation expense		4,810		3,775		3,497		12,082
Capital expenditures		13,394		7,373		1,625		22,392


$'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
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
Depreciation expense		2,343		2,326		1,988		6,657
Capital expenditures		1,339		3,440		2,399		7,178

Summary of reconciles segment adjusted ebitda to pretax net income

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


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


		Year ended December 31, 2019
$'s in 000's		U.S.		Foreign		Total
Product sales	$	610,986	$	6,132	$	617,118
Service 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
Product sales	$	444,364	$	5,865	$	450,229
Service revenue		78,385		—		78,385
Total net sales	$	522,749	$	5,865	$	528,614

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


	December 31, 2020		December 31, 2019
United States	$	61,807	$	51,397
Europe		1,339		1,128
Total	$	63,146	$	52,525

Principal Business Activity and Significant Accounting Policies - (Details) $ in Millions	12 Months Ended
	Dec. 31, 2020 segment	May 19, 2020 USD ($)
Principal Business Activity and Significant Accounting Policies
Number of reportable segments \| segment	2
Debt Instrument, Face Amount \| $		$ 143.8

Principal Business Activity and Significant Accounting Policies - Fair value on a recurring basis (Details)	Dec. 31, 2020	Jul. 31, 2017
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 $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Business Acquisition, Contingent Consideration [Line Items]
Balance at beginning of the period	$ 2,680
Change in fair value of contingent consideration	7,320
Transfer out of level 3	$ (10,000)

Principal Business Activity and Significant Accounting Policies - Receivables and Credit Policy (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Receivables and Credit Policy
Accounts receivable, gross	$ 103,475	$ 71,808
Less: Allowance for credit losses	(720)	(431)
Total accounts receivable, net	102,755	71,377
Trade receivables
Receivables and Credit Policy
Accounts receivable, gross	96,381	67,551
Other receivables
Receivables and Credit Policy
Accounts receivable, gross	$ 7,094	$ 4,257

Principal Business Activity and Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Inventories
Raw materials	$ 15,761	$ 10,675
Work in progress	2,273	1,717
Finished goods	79,739	67,311
Total inventories	$ 97,773	$ 79,703

Principal Business Activity and Significant Accounting Policies - Property, Plant, and Equipment (Details)	12 Months Ended
	Dec. 31, 2020
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	2 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 ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Impairment charge	$ 0	$ 0	$ 0

Principal Business Activity and Significant Accounting Policies - Convertible Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2020	May 19, 2020
Debt Instrument [Line Items]
Debt Instrument, Face Amount		$ 143,800
Convertible Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 143,750

Principal Business Activity and Significant Accounting Policies - Disaggregation of revenue (Details)	Dec. 31, 2020
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Disaggregation of revenue
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year

Principal Business Activity and Significant Accounting Policies - Research and Development and Advertising Costs (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Research and Development and Advertising Costs
Research and development costs	$ 2.3	$ 1.3	$ 0.2
Advertising costs	$ 10.1	$ 4.5	$ 2.9

Principal Business Activity and Significant Accounting Policies - Collaboration Agreements (Details) $ in Millions	Dec. 31, 2020 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 Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Interest expense, net
Interest expense	$ 26.3	$ 14.9	$ 8.3
Interest and other income	$ 0.0	$ 0.4	$ 0.3

Principal Business Activity and Significant Accounting Policies - Non-controlling interest (Details)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Continuing LLC Owners
Noncontrolling Interest [Line Items]
Interest held by non-controlling owners	10.60%	16.80%	23.20%

Principal Business Activity and Significant Accounting Policies - Recent accounting pronouncements (Details) - ASU 2020-06 $ in Millions	12 Months Ended
	Dec. 31, 2020 USD ($)
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Increase Decrease To Interest Expense	$ 4.0
Stockholders' Equity, Period Increase (Decrease)	$ 51.4

Business Combination - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Business Combination
Intangible assets, net of accumulated amortization	$ 174,189	$ 96,471
Acquisition costs	2,620	6,147	$ 3,787
Goodwill not deductible for tax purposes	105,800
Perrigo Animal Health Acquisition
Business Combination
Intangible assets, net of accumulated amortization	$ 14,600
Acquisition costs		$ 6,100

Business Combination - Total consideration (Details) - USD ($) $ in Thousands		12 Months Ended
	Jul. 08, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Preliminary estimated fair value of the consideration
Goodwill		$ 231,158	$ 231,045	$ 125,029
Cash paid, net of cash acquired			$ 185,090	$ 93,052
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
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
Finite-Lived Intangible Asset, Useful Life		13 years

Business Combination - Capstar Acquisition (Details) $ in Thousands	1 Months Ended	12 Months Ended
	Jul. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Business Acquisition [Line Items]
Acquisition Price		$ 22,392	$ 10,276	$ 7,178
Capitalized asset acquisition cost		$ 1,000
Fair value measurement input		15
Amortizable Intangibles		$ 80,796
Total purchased intangible assets		$ 96,072
Weighted average amortization period		11 years 9 months 18 days
Trademarks and other
Business Acquisition [Line Items]
Non-Amortizable Intangibles		$ 15,276
Customer relationships
Business Acquisition [Line Items]
Amortizable Intangibles		70,901
Patents and processes
Business Acquisition [Line Items]
Amortizable Intangibles		$ 9,895
Capstar Acquisition
Business Acquisition [Line Items]
Acquisition Price	$ 95,000

Business Combination - Supplier Termination, Settlement and Asset Purchase Agreement (Details) - USD ($) $ in Thousands	1 Months Ended		12 Months Ended
	Jul. 31, 2020	Jul. 31, 2017	Dec. 31, 2020
Business Acquisition [Line Items]
Amount required to pay pursuant to settlement agreement	$ 20,600	$ 20,600
Payment on signing	2,600	2,600
Payment per quarter	1,000	1,000
Estimated fair value of the payment obligation	17,500	$ 17,500
Fair value of assets acquired	$ 9,700		$ 9,686
Patents and processes
Business Acquisition [Line Items]
Amortizable Intangibles, useful lives			10 years

Property, Plant, and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Property, Plant, and Equipment
Property, plant and equipment, gross	$ 94,254	$ 72,567
Less accumulated depreciation	(31,108)	(20,042)
Property, Plant and Equipment, Net, Total	63,146	52,525
Depreciation and amortization expense	12,082	9,139	$ 6,657
Leasehold improvements
Property, Plant, and Equipment
Property, plant and equipment, gross	19,709	15,517
Equipment
Property, Plant, and Equipment
Property, plant and equipment, gross	25,664	23,138
Vehicles and accessories
Property, Plant, and Equipment
Property, plant and equipment, gross	7,110	6,007
Computer equipment and software
Property, Plant, and Equipment
Property, plant and equipment, gross	10,858	8,070
Buildings
Property, Plant, and Equipment
Property, plant and equipment, gross	10,168	10,050
Furniture and fixtures
Property, Plant, and Equipment
Property, plant and equipment, gross	2,347	1,836
Land
Property, Plant, and Equipment
Property, plant and equipment, gross	7,067	4,557
Construction in Progress
Property, Plant, and Equipment
Property, plant and equipment, gross	$ 11,331	$ 3,392

Intangible Assets and Goodwill - Intangible Assets (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) project	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Intangible Assets and Goodwill
Amortizable Intangibles, gross	$ 200,173	$ 109,529
Less accumulated amortization	(25,984)	(13,058)
Total net amortizable intangibles	174,189	96,471
Intangible assets, net of accumulated amortization	213,000	119,956
Amortization expense	12,800	6,000	$ 5,200
Trademarks and other
Intangible Assets and Goodwill
Non-amortizable intangibles	33,341	18,016
IPRD
Intangible Assets and Goodwill
Non-amortizable intangibles	$ 5,470	5,469
Number of acquired R&D projects \| project	3
Certification
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	7 years
Amortizable Intangibles, gross	$ 350	350
Customer relationships
Intangible Assets and Goodwill
Amortizable Intangibles, gross	$ 160,178	89,232
Patents and processes
Intangible Assets and Goodwill
Amortizable Intangibles, useful lives	10 years
Amortizable Intangibles, gross	$ 14,905	4,928
Brand names
Intangible Assets and Goodwill
Amortizable Intangibles, gross	$ 24,740	$ 15,019
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 \| 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, 2020 USD ($)
Intangible Assets and Goodwill
2021	$ 18,504
2022	18,310
2023	17,481
2024	15,078
2025	14,369
Thereafter	$ 90,447

Intangible Assets and Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Goodwill, Beginning Balance	$ 231,045	$ 125,029
Foreign currency translation	113	178
Acquisition		105,838
Goodwill, Ending Balance	231,158	231,045
Product
Goodwill, Beginning Balance	183,781	77,765
Foreign currency translation	113	178
Acquisition		105,838
Goodwill, Ending Balance	183,894	183,781
Services
Goodwill, Beginning Balance	47,264	47,264
Goodwill, Ending Balance	$ 47,264	$ 47,264

Debt - Convertible Notes (Details) $ / shares in Units, $ in Thousands	May 19, 2020 USD ($) D	Dec. 31, 2020 USD ($) $ / shares	Dec. 31, 2019 $ / shares	Jul. 31, 2017
Debt Instrument [Line Items]
Aggregate principal amount	$ 143,800
Interest rate				4.35%
Convertible Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount		$ 143,750
Amount issued		90,783
Interest rate	4.00%
Carrying amount of the equity component representing the conversion option		$ 42,907
Class A common stock
Debt Instrument [Line Items]
Common stock par value (in dollars per share) \| $ / shares		$ 0.001	$ 0.001
Class A common stock \| Convertible Notes [Member] \| Maximum
Debt Instrument [Line Items]
Aggregate principal amount	$ 143,800
Net proceeds from the debt	$ 137,900
Interest rate	4.00%
Conversion ratio	33.7268
Denomination for conversion of debt	$ 1
Premium percentage on conversion price	130.00%
Threshold trading days \| D	20
Threshold consecutive trading days \| D	30
Discount rate (as a percent)	13.00%
Carrying amount of the equity component representing the conversion option	$ 53,300
Fair value of our convertible notes		$ 218,100

Debt - Convertible Notes - Summary (Details) - USD ($) $ in Thousands	Dec. 31, 2020	May 19, 2020
Debt Instrument [Line Items]
Par value of the Convertible Notes		$ 143,800
Convertible Notes [Member]
Debt Instrument [Line Items]
Par value of the Convertible Notes	$ 143,750
Unamortized debt discounts	(49,526)
Unamortized debt issuance costs	(3,441)
Net Carrying value of Convertible Notes	$ 90,783

Debt - Convertible Notes - Net Carrying Amount (Details) - Convertible Notes [Member] $ in Thousands	Dec. 31, 2020 USD ($)
Debt Instrument [Line Items]
Proceeds allocated to the Conversion Option	$ 53,285
Deferred tax affect	(8,197)
Less: Issuance Costs	(2,181)
Carrying amount of the equity component	$ 42,907

Debt - Convertible Notes - Interest Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Jul. 31, 2017
Debt
Contractual interest expense	$ 3,546
Amortization of Debt Issuance Costs	3,759
Amortization of debt discount	261
Interest Expense, Debt, Total	$ 7,566
Debt Instrument, Interest Rate, Effective Percentage	13.00%	8.30%

Debt - Capped Call Transactions (Details) $ / shares in Units, $ in Thousands		12 Months Ended
	May 14, 2020 USD ($) item	Dec. 31, 2020 USD ($) $ / shares
Debt Instrument [Line Items]
Number of option counterparties \| item	2
Derivative Cap Price Per Share \| $ / shares		$ 41.51
Payment for Capped Call Options		$ 14,821
Tax effect on the equity component of the Convertible Notes		42,907
Capped Call Transactions
Debt Instrument [Line Items]
Deferred tax liability		$ 8,200
Class A common stock \| Capped Call Transactions
Debt Instrument [Line Items]
Payment for Capped Call Options	$ 14,800
Tax effect on the equity component of the Convertible Notes	$ 8,200

Debt - A&R (Details) - USD ($) $ in Thousands			1 Months Ended			12 Months Ended
Debt - A&R (Details) - USD ($) $ in Thousands	May 14, 2020	Jul. 08, 2019	Jul. 31, 2020	May 31, 2020	Jul. 31, 2017	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	May 19, 2020
Debt
Aggregate principal amount									$ 143,800
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
Amount required to pay pursuant to settlement agreement			$ 20,600		$ 20,600
Payment on signing			2,600		2,600
Payment per quarter			1,000		$ 1,000
Market interest rate					8.30%	13.00%
Estimated fair value of the payment obligation			$ 17,500		$ 17,500
Balloon payment					10 years
Other Debt						$ 16,257	1,812
Net discount on debt and deferred financing fees						(57,559)	(5,688)
Long-term Debt, Total						362,198	253,624
Less current maturities of long-term debt						(6,219)	(2,248)
Long-term debt, less current installments						355,979	251,376
Future maturities of long-term debt
2021						6,219
2022						5,476
2023						33,255
2024						6,057
2025						2,259
Thereafter						366,491
Debt issuance costs				$ 5,900		550	5,790	$ 2,750
Debt Issuance Costs Recorded To Additional Paid In Capital				2,200
Net Debt Issuance Costs Net Carrying Value				$ 3,700
Convertible Notes
Debt
Outstanding balance						143,750
Revolving credit facility
Debt
Maximum borrowing capacity		$ 125,000
Outstanding balance						15,000	10,000
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						217,250	220,000
A&R Term Loan Credit Agreement
Debt
Maximum borrowing capacity		$ 220,000
Outstanding balance						$ 217,300
Future maturities of long-term debt
Debt issuance costs							5,100
A&R Term Loan Credit Agreement \| Euro dollar
Debt
Unused facility fee (as a percent)	1.00%
Variable interest rate, basis points spread over variable reference rate (as a percent)		5.00%
Earned Contingent Note
Debt
Fixed interest rate						6.75%
Contingent notes						$ 27,500
Long-term Debt, Total						27,500	27,500
Guaranteed note
Debt
Long-term Debt, Total						10,000
Amended Credit Agreement
Debt
Outstanding balance						$ 15,000
Weighted average interest rate						2.30%
Future maturities of long-term debt
Debt issuance costs						$ 600	$ 700

Debt - Amortization (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Debt Discounts
2021	$ 6,761
2022	7,684
2023	8,733
2024	9,925
2025	11,280
Thereafter	5,143
Debt issuance costs
2021	470
2022	534
2023	607
2024	690
2025	784
Thereafter	$ 356

Leases - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
Leases - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2020
Lessee, Lease, Description [Line Items]
Total operating lease expense	$ 6.0
Maximum
Lessee, Lease, Description [Line Items]
Renewal options term		10 years
Minimum
Lessee, Lease, Description [Line Items]
Renewal options term		1 year

Leases - Components of lease expense and other information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Lease cost
Amortization of right-of-use assets	$ 1,681	$ 1,441
Interest on lease liabilities	315	308
Operating lease cost	5,831	4,833
Variable lease cost	1,130	629
Short-term lease cost	34	41
Sublease income	(528)	(452)
Total lease cost	$ 8,463	$ 6,800
Weighted-average remaining lease term (years), Operating leases	4 years 4 months 28 days	5 years 1 month 24 days
Weighted-average remaining lease term (years), Finance leases	2 years 4 months 17 days	2 years 8 months 23 days
Weighted-average discount rate, Operating leases	5.30%	5.30%
Weighted-average discount rate, Finance leases	5.70%	5.70%

Leases - Annual future commitments under non-cancelable leases (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Lease Obligations, Operating Leases
2021	$ 5,861
2022	5,591
2023	4,789
2024	3,280
2025	2,357
Thereafter	1,365
Total minimum future obligations	23,243
Less interest	(2,539)
Present value of net future minimum obligations	20,704
Less current lease obligations	(4,915)	$ (4,619)
Long-term lease obligations	15,789	16,580
Lease Obligations, Finance Leases
2021	1,757
2022	1,584
2023	1,580
2024	330
2025	20
Total minimum future obligations	5,271
Less interest	(367)
Present value of net future minimum obligations	4,904
Less current lease obligations	(1,566)
Long-term lease obligations	$ 3,338	$ 3,331

Leases - Supplemental Cash Flow (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Leases
Operating cash flows from finance leases	$ 315	$ 308
Operating cash flows from operating leases	5,668	4,568
Financing cash flows from finance leases	1,965	1,547
Operating leases	5,105	5,368
Finance lease additions	$ 2,019	$ (3,006)	$ 656

Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets	$ 67,600
Deferred Tax Assets, Valuation Allowance	$ 71,161	$ 143
Continuing LLC Owners
Interest held by non-controlling owners	10.60%	16.80%	23.20%
Interest held by parent	11.00%
PetIQ
Interest held by parent	89.40%	83.20%	76.80%
Holdco
Cash distributions	$ 50	$ 1,700
Accrued estimated income tax	$ (400)	$ 800

Income Taxes - Components of earnings before income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Components of earnings before income taxes
United States	$ (29,239)	$ (17,953)	$ (1,116)
Foreign	433	342	542
Pretax net (loss) income	$ (28,806)	$ (17,611)	$ (574)

Income Taxes - Provision for income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Current:
State	$ 327	$ 317	$ 148
Foreign	137	17
Total current	464	334	148
Deferred and other:
Federal	40,598	(2,146)	(751)
State	11,175	(1,336)	(135)
Foreign	(21)	(161)	77
Total deferred and other	51,752	(3,643)	(809)
Total tax expense (benefit)	$ 52,216	$ (3,309)	$ (661)

Income Taxes - Effective Income Tax Rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Reconciliation:
Income tax expense (benefit) at federal statutory rate	21.00%	21.00%	21.00%
State and local income taxes net of federal tax benefit	2.40%	1.30%	(5.70%)
Noncontrolling interest and nontaxable income	(2.90%)	(4.00%)	54.70%
Deferred tax rate changes	(1.30%)	(0.40%)	37.20%
Share-based compensation	0.60%	0.10%	18.30%
Tax Cuts and Jobs Act of 2017			(13.10%)
Return-to-Provision	(2.00%)	0.80%	13.40%
Valuation Allowance	(198.40%)	0.40%	0.70%
Other	(0.70%)	(0.40%)	(11.30%)
Income tax expense (benefit)	(181.30%)	18.80%	115.20%

Income Taxes - Deferred Tax Assets Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Tax effects of temporary differences:
Investment in partnership	$ 53,294	$ 53,303
Fixed Assets	32	29
Net operating loss carryforwards and tax credits	18,001	6,775
Other accruals and reversals	9	5
Subtotal	71,336	60,112
Less: valuation allowance	(71,161)	(143)
Total net deferred tax assets	175	59,969
Intangible assets	(447)	(293)
Other	(6)	(5)
Total deferred tax liabilities	$ (453)	$ (298)

Income Taxes - Valuation allowance and NOL (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
Income Taxes
Unrecognized tax benefit would impact the effective tax rate	$ 0
Federal net operating loss carryforwards	66,000
Federal net operating loss carryforwards that will expire in 2037	1,900
Federal net operating loss carryforwards indefinite carryforward period	$ 64,100
Percentage of taxable income offset against net operating carryforward	80.00%
Federal interest expense carryover	$ 6,100
Charitable contribution carryforwards	1,000
State net operating loss carryforwards	384,700
State NOL, tax effected	2,800
Foreign net operating loss carryforwards indefinite carryforward period	$ 800

Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Numerator:
Net (loss) income	$ (81,022)	$ (14,302)	$ 87
Less: net (loss) income attributable to non-controlling interests	(3,548)	(2,849)	869
Net loss attributable to PetIQ, Inc	$ (77,474)	$ (11,453)	$ (782)
Denominator:
Basic weighted average shares (in shares)	24,629	22,652	17,216
Weighted-average shares of Class A common stock outstanding - diluted (in shares)	24,629	22,652	17,216
Basic net income (loss) per common share	$ (3.15)	$ (0.51)	$ (0.05)
Diluted net income (loss) per common share	$ (3.15)	$ (0.51)	$ (0.05)

- Definition

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

+ References

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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, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Stock Based Compensation
Share-based Compensation	$ 9,170	$ 7,355	$ 3,812
Stock Options Granted (in shares)	505	423	1,617
Vesting percentage on each anniversary of the grant date	25.00%
Maximum term for stock options	6 years 3 months	6 years 3 months
Grant date fair value of stock options granted	$ 11.88	$ 10.63
Unrecognized compensation cost related to unvested stock options	$ 8,400
Unrecognized compensation cost related to unvested options, recognized weighted-average period	2 years 2 months 12 days
Omnibus Plan
Stock Based Compensation
Share available for issuance	0
Class A common stock
Stock Based Compensation
Number of shares reserved	800
Class A common stock \| Omnibus Plan
Stock Based Compensation
Shares reserved for future issuance	3,914
Share available for issuance	1,293	2,017
Maximum
Stock Based Compensation
Maximum term for stock options	10 years
Stock options
Stock Based Compensation
Share-based Compensation	$ 6,500	$ 6,200

Stock Based Compensation - Weighted Average Assumptions (Details)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Stock Based Compensation
Expected term (years)	6 years 3 months	6 years 3 months
Expected volatility	33.91%	35.00%
Risk-free interest rate	0.37%	2.37%
Dividend yield	0.00%	0.00%

Stock Based Compensation - Summary of Unvested Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Stock Based Compensation
Stock Options Outstanding - Beginning Balance	2,072	1,945	599
Stock Options Granted (in shares)	505	423	1,617
Stock option Exercised (in shares)	(395)	(119)	(76)
Stock Options Forfeited (in shares)	(96)	(168)	(195)
Stock Options Cancelled (in shares)		(9)
Stock Options Outstanding - Ending Balance	2,086	2,072	1,945	599
Options exercisable - Ending Balance	831
Weighted Average Exercise Price Outstanding - Beginning Balance	$ 24.63	$ 23.45	$ 16.00
Weighted Average Exercise Price - Granted	20.22	27.54	25.74
Weighted Average Exercise Price - Exercised	23.48	19.51	18.83
Weighted Average Exercise Price - Forfeited	21.42	21.92	21.37
Weighted Average Exercise Price - Expired		25.70
Weighted Average Exercise Price Outstanding - Ending Balance	$ 23.93	$ 24.63	$ 23.45	$ 16.00
Aggregate Intrinsic Value	$ 30,302	$ 6,266	$ 5,527	$ 3,496
Weighted Average Remaining Contractual Life (years)	7 years 2 months 12 days	8 years	9 years 1 month 6 days	9 years 6 months
Aggregate Intrinsic Value - Exercised	$ 4,468
Options Exercisable, Aggregate Intrinsic Value	$ 11,778
Options Exercisable, Weighted Average Remaining Contractual Life (years)	5 years 10 months 24 days

Stock Based Compensation - Restricted Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Unrecognized compensation cost related to unvested stock options	$ 8,400
Share-based Compensation	9,170	$ 7,355	$ 3,812
Income Tax Expense (Benefit)	52,216	(3,309)	(661)
RSU
Unrecognized compensation cost related to unvested stock options	$ 5,800
Vesting period	2 years 9 months 18 days
Share-based Compensation	$ 2,600	1,100
Income Tax Expense (Benefit)	$ 0	$ 1,400	$ 500
Number of Shares
Beginning Balance	133	51
Granted (in shares)	271	123
Settled (in shares)	(70)	(25)
Forfeited (in shares)	(17)	(15)
Ending balance	317	133	51
Weighted Average Grant Date Fair Value
Beginning Balance	$ 28.85	$ 33.16
Granted (per share)	20.73	27.61
Settled (per share)	25.65	30.43
Forfeited (per share)	23.34	30.58
Ending balance	$ 22.91	$ 28.85	$ 33.16

Stockholder's Equity (Details) $ / shares in Units, $ in Thousands		12 Months Ended
	Oct. 01, 2018 USD ($) shares	Dec. 31, 2020 Vote $ / shares shares	Dec. 31, 2019 $ / shares shares	Dec. 31, 2018 USD ($) shares
Class of Stock [Line Items]
Common stock authorized		100,000,000
Blank check preferred stock, authorized		12,500,000
Staggered term (in years)		3 years
Number of votes per share \| Vote		1
Proceeds from Public Offering of Class A Shares, net of underwriting discounts and offering costs \| $				$ 73,914
Common stock, shares outstanding		25,711,000	23,554,000	21,620,000
Exchange of common shares		1,712,000	1,794,000
Class A common stock
Class of Stock [Line Items]
Common stock authorized		125,000,000	125,000,000
Common stock, par value \| $ / shares		$ 0.001	$ 0.001
Common Stock, Shares, Issued	5,750,000	25,711,000	23,554,000
Common stock, shares outstanding		25,711,000	23,554,000
Class A common stock \| IPO
Class of Stock [Line Items]
Issuance of Class A Shares (in shares)	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]
Issuance of Class A Shares (in shares)	3,750
Class B common stock
Class of Stock [Line Items]
Common stock authorized		100,000,000	100,000,000
Common stock, par value \| $ / shares		$ 0.001	$ 0.001
Share ratio		1
Common Stock, Shares, Issued		3,040,000	4,752,000
Common stock, shares outstanding		3,040,000	4,752,000
Amended Holdco LLC Agreement
Class of Stock [Line Items]
Common stock, shares outstanding		28,751,000	28,306,000	28,167,000

Non-Controlling Interests (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Common Stock, Shares, Outstanding, Beginning Balance	23,554	21,620
Stock based compensation adjustments	445	140
Exchange transactions	1,712	1,794
Common Stock, Shares, Outstanding, Ending Balance	25,711	23,554	21,620
Continuing LLC Owners
Common Stock, Shares, Outstanding, Beginning Balance	4,752	6,547
Exchange transactions	(1,712)	(1,794)
Common Stock, Shares, Outstanding, Ending Balance	3,040	4,752	6,547
Amended Holdco LLC Agreement
Common Stock, Shares, Outstanding, Beginning Balance	28,306	28,167
Stock based compensation adjustments	445	140
Common Stock, Shares, Outstanding, Ending Balance	28,751	28,306	28,167
Holdco
Weighted average ownership percentage in Holdco	86.40%	80.20%
Continuing LLC Owners
Ownership interest by continuing LLC owners	10.60%	16.80%	23.20%
Ownership interest in Holdco	11.00%
PetIQ
Ownership interest in Holdco	89.40%	83.20%	76.80%

Customer Concentration (Details) - customer	12 Months Ended
Customer Concentration (Details) - customer	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Customer concentrations \| Sales
Customer Concentration
Number of customers accounted for more than 10% of sales individually	2	2	1
Concentration risk	42.00%	35.00%	18.00%
Customer concentrations \| Accounts receivable
Customer Concentration
Number of customers accounted for more than 10% of sales individually	1	2
Credit concentrations \| Accounts receivable
Customer Concentration
Concentration risk	52.00%	61.00%

Commitments and Contingencies (Details) - Med Vets, Inc. and Bay Medical Solutions Inc - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019
Litigation Contingencies
Liability recorded	$ 7.8	$ 1.0
Litigation reserve accrued	$ 0.0

Segments (Details) $ in Thousands	12 Months Ended
Segments (Details) $ in Thousands	Dec. 31, 2020 USD ($) segment	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Segments
Number of operating segments \| segment	2
Number of reportable segments \| segment	2
Financial information relating to the Company's operating segments
Net Sales	$ 780,051	$ 709,431	$ 528,614
Adjusted EBITDA	67,792	60,675	41,539
Property, plant and equipment, net	63,146	52,525
Depreciation expense	12,082	9,139	6,657
Capital Expenditures	22,392	10,276	7,178
United States
Financial information relating to the Company's operating segments
Net Sales	773,628	703,299	522,749
Property, plant and equipment, net	61,807	51,397
Foreign
Financial information relating to the Company's operating segments
Net Sales	6,423	6,132	5,865
Europe
Financial information relating to the Company's operating segments
Property, plant and equipment, net	1,339	1,128
Products
Financial information relating to the Company's operating segments
Net Sales	725,705	617,118	450,229
Products \| United States
Financial information relating to the Company's operating segments
Net Sales	719,282	610,986	444,364
Products \| Foreign
Financial information relating to the Company's operating segments
Net Sales	6,423	6,132	5,865
Services
Financial information relating to the Company's operating segments
Net Sales	54,346	92,313	78,385
Services \| United States
Financial information relating to the Company's operating segments
Net Sales	54,346	92,313	78,385
Operating Segments \| Products
Financial information relating to the Company's operating segments
Net Sales	725,705	617,118	450,229
Adjusted EBITDA	117,216	73,537	52,185
Depreciation expense	4,810	3,552	2,343
Capital Expenditures	13,394	1,297	1,339
Operating Segments \| Services
Financial information relating to the Company's operating segments
Net Sales	54,346	92,313	78,385
Adjusted EBITDA	3,387	20,045	15,246
Depreciation expense	3,775	3,170	2,326
Capital Expenditures	7,373	6,409	3,440
Corporate, Non-Segment \| Unallocated Corporate
Financial information relating to the Company's operating segments
Adjusted EBITDA	(52,811)	(32,907)	(25,892)
Depreciation expense	3,497	2,417	1,988
Capital Expenditures	$ 1,625	$ 2,570	$ 2,399

Segments - Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Adjusted EBITDA	$ 67,792	$ 60,675	$ 41,539
Depreciation	(12,082)	(9,139)	(6,657)
Amortization	(12,815)	(5,994)	(5,210)
Interest expense, net	(26,299)	(14,495)	(8,022)
Acquisition costs	(2,620)	(6,147)	(3,787)
Stock based compensation expense	(9,170)	(7,355)	(3,812)
Purchase accounting adjustment to inventory		(4,805)	(2,149)
Non same-store revenue	8,987	8,088	3,967
Non same-store costs	(22,256)	(19,553)	(10,345)
Fair value adjustment of contingent note		(7,320)	(3,280)
Integration costs and costs of discontinued clinics	(9,776)	(3,788)	(998)
Clinic launch expenses	(3,085)	(767)	(1,380)
Non-recurring royalty settlement			(440)
SKU Rationalization		(6,482)
Litigation expenses	(1,006)	(529)
COVID-19 related costs	(6,476)
Pretax net (loss) income	(28,806)	(17,611)	(574)
Income tax benefit (expense)	(52,216)	3,309	661
Net (loss) income	(81,022)	(14,302)	87
Products \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Adjusted EBITDA	117,216	73,537	52,185
Services \| Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Adjusted EBITDA	3,387	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	$ (52,811)	$ (32,907)	$ (25,892)

Related Parties (Details) - USD ($)	1 Months Ended	12 Months Ended
Related Parties (Details) - USD ($)	Apr. 30, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Related Parties
Advance paid on required tax distributions		$ 30,000.00
Accrued estimated tax distributions			$ 400,000
Notes payable to Seller's of VIP		27,500,000
Accrued interest		500,000	300,000
Payment of interest		1,700,000	1,300,000	$ 0
Rent expense		400,000	400,000	400,000
Colliers International
Related Parties
Payment of Broker's Commission	$ 75,000
Chris Christensen
Related Parties
Payment of premium expenses		2,800,000	2,300,000	1,500,000
Commission paid		$ 100,000	$ 100,000	$ 100,000
Mike Christensen \| Colliers International
Related Parties
Payments to acquire land	$ 2,500,000

Employee Benefit Plans (Details) - USD ($) $ in Millions	12 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Millions	Dec. 31, 2020	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	$ 0.9	$ 0.6	$ 0.3