Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 05, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Entity File Number | 001-38163 | |
Entity Registrant Name | PetIQ, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 35-2554312 | |
Entity Address, Address Line One | 230 E. Riverside Dr. | |
Entity Address, City or Town | Eagle | |
Entity Address, State or Province | ID | |
Entity Address, Postal Zip Code | 83616 | |
City Area Code | 208 | |
Local Phone Number | 939-8900 | |
Title of 12(b) Security | Class A Common Stock, $0.001 par value | |
Trading Symbol | PETQ | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001668673 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 28,919,941 | |
Class B common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 415,829 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 27,163 | $ 33,456 |
Accounts receivable, net | 159,800 | 102,755 |
Inventories | 118,389 | 97,773 |
Other current assets | 11,893 | 8,312 |
Total current assets | 317,245 | 242,296 |
Property, plant and equipment, net | 72,225 | 63,146 |
Operating lease right of use assets | 20,231 | 20,122 |
Other non-current assets | 2,181 | 1,870 |
Intangible assets, net | 200,006 | 213,000 |
Goodwill | 231,367 | 231,158 |
Total assets | 843,255 | 771,592 |
Current liabilities | ||
Accounts payable | 61,653 | 68,131 |
Accrued wages payable | 10,045 | 10,540 |
Accrued interest payable | 3,798 | 903 |
Other accrued expenses | 9,105 | 8,815 |
Current portion of operating leases | 5,431 | 4,915 |
Current portion of long-term debt and finance leases | 9,143 | 7,763 |
Total current liabilities | 99,175 | 101,067 |
Operating leases, less current installments | 15,595 | 15,789 |
Long-term debt, less current installments | 454,588 | 403,591 |
Finance leases, less current installments | 2,555 | 3,338 |
Other non-current liabilities | 1,718 | 1,397 |
Total non-current liabilities | 474,456 | 424,115 |
Commitments and contingencies (Note 13) | ||
Equity | ||
Additional paid-in capital | 358,506 | 319,642 |
Accumulated deficit | (92,499) | (98,558) |
Accumulated other comprehensive loss | (126) | (686) |
Total stockholders' equity | 265,910 | 220,427 |
Non-controlling interest | 3,714 | 25,983 |
Total equity | 269,624 | 246,410 |
Total liabilities and equity | 843,255 | 771,592 |
Class A common stock | ||
Equity | ||
Common stock value | $ 29 | 26 |
Class B common stock | ||
Equity | ||
Common stock value | $ 3 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Common stock, shares outstanding | 28,909 | 25,711 | 23,554 |
Class A common stock | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Common stock authorized | 125,000 | 125,000 | |
Common Stock, Shares, Issued | 28,909 | 25,711 | |
Common stock, shares outstanding | 28,909 | 25,711 | |
Class B common stock | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Common stock authorized | 100,000 | 100,000 | |
Common Stock, Shares, Issued | 425 | 3,040 | |
Common stock, shares outstanding | 425 | 3,040 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Total net sales | $ 271,011 | $ 266,982 | $ 525,358 | $ 453,760 |
Total cost of sales | 211,383 | 224,798 | 417,931 | 379,422 |
Gross profit | 59,628 | 42,184 | 107,427 | 74,338 |
Operating expenses | ||||
General and administrative expenses | 43,142 | 38,492 | 83,814 | 70,182 |
Operating income | 16,486 | 3,692 | 23,613 | 4,156 |
Interest expense, net | (7,655) | (5,329) | (12,525) | (10,033) |
Foreign currency (loss) income, net | 9 | 52 | (104) | 125 |
Loss on debt extinguishment | (5,453) | (5,453) | ||
Other income, net | 442 | 324 | 759 | 689 |
Total other expense, net | (12,657) | (4,953) | (17,323) | (9,219) |
Pretax net income (loss) | 3,829 | (1,261) | 6,290 | (5,063) |
Income tax (expense) benefit | 205 | (188) | 130 | 981 |
Net income (loss) | 4,034 | (1,449) | 6,420 | (4,082) |
Net income (loss) attributable to non-controlling interest | 8 | 27 | 361 | (503) |
Net income (loss) attributable to PetIQ, Inc. | $ 4,026 | $ (1,476) | $ 6,059 | $ (3,579) |
Net income (loss) per share attributable to PetIQ, Inc. Class A common stock | ||||
Basic | $ 0.14 | $ (0.06) | $ 0.22 | $ (0.15) |
Diluted | $ 0.14 | $ (0.06) | $ 0.22 | $ (0.15) |
Weighted Average shares of Class A common stock outstanding | ||||
Basic | 28,491 | 24,425 | 27,444 | 24,077 |
Diluted | 29,156 | 24,425 | 28,059 | 24,077 |
Product | ||||
Total net sales | $ 242,857 | $ 264,307 | $ 472,891 | $ 430,587 |
Total cost of sales | 185,837 | 217,469 | 368,664 | 352,248 |
Services | ||||
Total net sales | 28,154 | 2,675 | 52,467 | 23,173 |
Total cost of sales | $ 25,546 | $ 7,329 | $ 49,267 | $ 27,174 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Comprehensive Income | ||||
Net income (loss) | $ 4,034 | $ (1,449) | $ 6,420 | $ (4,082) |
Foreign currency translation adjustment | 363 | (104) | 504 | (678) |
Comprehensive income (loss) | 4,397 | (1,553) | 6,924 | (4,760) |
Comprehensive income (loss) attributable to non-controlling interest | 10 | 25 | 368 | (598) |
Comprehensive income (loss) attributable to PetIQ | $ 4,387 | $ (1,578) | $ 6,556 | $ (4,162) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities | ||
Net income (loss) | $ 6,420 | $ (4,082) |
Adjustments to reconcile net income (loss) to net cash used in operating activities | ||
Depreciation and amortization of intangible assets and loan fees | 20,405 | 11,159 |
Loss on debt extinguishment | 5,453 | |
Loss (gain) on disposition of property, plant, and equipment | 167 | (369) |
Stock based compensation expense | 4,561 | 4,402 |
Deferred tax adjustment | (982) | |
Other non-cash activity | 176 | 65 |
Changes in assets and liabilities | ||
Accounts receivable | (57,011) | (74,138) |
Inventories | (20,580) | (31,627) |
Other assets | (2,166) | (1,073) |
Accounts payable | (6,632) | 39,528 |
Accrued wages payable | (482) | 1,847 |
Other accrued expenses | 3,493 | 12,766 |
Net cash used in operating activities | (46,196) | (42,504) |
Cash flows from investing activities | ||
Proceeds from disposition of property, plant, and equipment | 350 | 429 |
Purchase of property, plant, and equipment | (18,302) | (10,425) |
Net cash used in investing activities | (17,952) | (9,996) |
Cash flows from financing activities | ||
Proceeds from issuance of convertible notes | 143,750 | |
Payment for Capped Call options | (14,821) | |
Proceeds from issuance of long-term debt | 630,568 | 457,200 |
Principal payments on long-term debt | (576,843) | (438,874) |
Payment of financing fees on Convertible Notes | (5,819) | |
Tax distributions to LLC Owners | (72) | (46) |
Principal payments on finance lease obligations | (1,226) | (761) |
Payment of deferred financing fees and debt discount | (6,360) | (275) |
Tax withholding payments on Restricted Stock Units | (852) | (186) |
Exercise of options to purchase class A common stock | 12,588 | 2,171 |
Net cash provided by financing activities | 57,803 | 142,339 |
Net change in cash and cash equivalents | (6,345) | 89,839 |
Effect of exchange rate changes on cash and cash equivalents | 52 | (88) |
Cash and cash equivalents, beginning of period | 33,456 | 27,272 |
Cash and cash equivalents, end of period | 27,163 | 117,023 |
Supplemental cash flow information | ||
Interest paid | 8,051 | 8,106 |
Net change in property, plant, and equipment acquired through accounts payable | (358) | (160) |
Finance lease additions | 141 | 381 |
Finance lease additions | 141 | |
Net change of deferred tax asset from step-up in basis | 5,786 | |
Income taxes paid, net of refunds | 214 | (46) |
Accrued tax distribution | $ 7 | $ 310 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Class A common stockCommon Stock | Class B common stockCommon Stock | Accumulated Deficit | Accumulated Other Comprehensive Loss | Additional Paid-In Capital | Non-controlling Interest | Total |
Beginning Balance at Dec. 31, 2019 | $ 23 | $ 5 | $ (15,903) | $ (1,131) | $ 300,120 | $ 45,196 | $ 328,310 |
Beginning Balance (in shares) at Dec. 31, 2019 | 23,554 | 4,752 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Exchange of LLC Interests held by LLC Owners | $ 1 | $ (1) | (60) | 8,732 | (8,672) | ||
Exchange of LLC Interests held by LLC Owners (in shares) | 982 | (982) | |||||
Net increase in deferred tax asset from LLC Interest transactions | 5,786 | 5,786 | |||||
Accrued tax distributions | (310) | (310) | |||||
Other comprehensive income (loss) | (583) | (95) | (678) | ||||
Stock based compensation expense | 3,736 | 666 | 4,402 | ||||
Payment for capped call share options | (12,580) | (2,241) | (14,821) | ||||
Exercise of Options to purchase Common Stock | 2,171 | 2,171 | |||||
Exercise of Options to purchase Common Stock (in shares) | 100 | ||||||
Issuance of stock for vesting of RSU's, net of tax with holdings | (292) | (292) | |||||
Issuance of stock for vesting of RSU's, net of tax with holdings (in shares) | 22 | ||||||
Net income (loss) | (3,579) | (503) | (4,082) | ||||
Ending Balance at Jun. 30, 2020 | $ 24 | $ 4 | (19,482) | (1,774) | 307,672 | 34,041 | 320,484 |
Ending Balance (in shares) at Jun. 30, 2020 | 24,658 | 3,770 | |||||
Beginning Balance at Dec. 31, 2019 | $ 23 | $ 5 | (15,903) | (1,131) | 300,120 | 45,196 | $ 328,310 |
Beginning Balance (in shares) at Dec. 31, 2019 | 23,554 | 4,752 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Exercise of Options to purchase Common Stock (in shares) | 395 | ||||||
Ending Balance at Dec. 31, 2020 | $ 26 | $ 3 | (98,558) | (686) | 319,642 | 25,983 | $ 246,410 |
Ending Balance (in shares) at Dec. 31, 2020 | 25,711 | 3,040 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Exchange of LLC Interests held by LLC Owners | $ 3 | $ (3) | 63 | 22,824 | (22,887) | ||
Exchange of LLC Interests held by LLC Owners (in shares) | 2,615 | (2,615) | |||||
Accrued tax distributions | (7) | (7) | |||||
Other comprehensive income (loss) | 497 | 7 | 504 | ||||
Stock based compensation expense | 4,304 | 257 | 4,561 | ||||
Exercise of Options to purchase Common Stock | 12,588 | $ 12,588 | |||||
Exercise of Options to purchase Common Stock (in shares) | 531 | 531 | |||||
Issuance of stock for vesting of RSU's, net of tax with holdings | (852) | $ (852) | |||||
Issuance of stock for vesting of RSU's, net of tax with holdings (in shares) | 52 | ||||||
Net income (loss) | 6,059 | 361 | 6,420 | ||||
Ending Balance at Jun. 30, 2021 | $ 29 | (92,499) | (126) | 358,506 | 3,714 | 269,624 | |
Ending Balance (in shares) at Jun. 30, 2021 | 28,909 | 425 | |||||
Beginning Balance at Mar. 31, 2021 | $ 28 | $ 1 | (96,525) | (500) | 345,386 | 8,298 | 256,688 |
Beginning Balance (in shares) at Mar. 31, 2021 | 28,102 | 941 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Exchange of LLC Interests held by LLC Owners | $ 1 | $ (1) | 13 | 4,793 | (4,806) | ||
Exchange of LLC Interests held by LLC Owners (in shares) | 516 | (516) | |||||
Accrued tax distributions | 141 | 141 | |||||
Other comprehensive income (loss) | 361 | 2 | 363 | ||||
Stock based compensation expense | 2,369 | 70 | 2,439 | ||||
Exercise of Options to purchase Common Stock | 6,008 | 6,008 | |||||
Exercise of Options to purchase Common Stock (in shares) | 289 | ||||||
Issuance of stock for vesting of RSU's, net of tax with holdings | (50) | (50) | |||||
Issuance of stock for vesting of RSU's, net of tax with holdings (in shares) | 2 | ||||||
Net income (loss) | 4,026 | 8 | 4,034 | ||||
Ending Balance at Jun. 30, 2021 | $ 29 | $ (92,499) | $ (126) | $ 358,506 | $ 3,714 | $ 269,624 | |
Ending Balance (in shares) at Jun. 30, 2021 | 28,909 | 425 |
Principal Business Activity and
Principal Business Activity and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Principal Business Activity and Significant Accounting Policies | |
Principal Business Activity and Significant Accounting Policies | PetIQ Inc. Notes to the Condensed Consolidated Financial Statements (unaudited) Note 1 – Principal Business Activity and Significant Accounting Policies Principal Business Activity and Principles of Consolidation PetIQ, Inc. (“PetIQ,” the “Company,” “we” or “us”) is a leading pet medication and wellness company delivering a smarter way for pet parents to help their pets live their best lives through convenient access to affordable veterinary products and services. We engage with customers through more than 60,000 points of distribution across retail, including veterinary, channels with our branded distributed medications, which is further supported by our own world-class medication manufacturing facility in Omaha, Nebraska. Our national service platform, VIP Petcare (“VIP”), operates in over 2,900 retail partner locations in 41 states, providing cost effective and convenient veterinary wellness services. PetIQ believes that pets are an important part of the family and deserve the best products and care we can give them. We have two reporting segments: (i) Products; and (ii) Services. The Products segment consists of our manufacturing and distribution business. The Services segment consists of veterinary services and related product sales provided by the Company directly to consumers. We are the sole 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 of the business and affairs of Opco. The condensed consolidated financial statements as of June 30, 2021 and December 31, 20 and for the Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the 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. 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. 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 other receivable from business partners. Accounts receivable consists of the following as of: $'s in 000's June 30, 2021 December 31, 2020 Trade receivables $ 148,906 $ 96,381 Other receivables 11,284 7,094 160,190 103,475 Less: Allowance for doubtful accounts (390) (720) Total accounts receivable, net $ 159,800 $ 102,755 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 June 30, 2021 December 31, 2020 Raw materials $ 13,408 $ 15,761 Work in progress 1,482 2,273 Finished goods 103,499 79,739 Total inventories $ 118,389 $ 97,773 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 condensed 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 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.” Simultaneously, with the issuance of the Notes, we bought capped call options from certain financial institutions to minimize the impact of potential dilution of our Class A common stock upon conversion of the Notes. The premium for the capped call options was recorded as additional paid-in capital in our condensed consolidated balance sheets as the options are settleable in our Class A common stock. Effective January 1, 2021, we adopted ASU 2020-06 using the full retrospective approach. As a result of this adoption, we have de-recognized the debt discount on the Notes and therefore no longer recognize any amortization of debt discount on the Notes as interest expense (see below, Adopted Accounting Standard Update). 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 June 30, 2021. Variable Consideration In addition to fixed contract consideration, most contracts include some form of variable consideration. The most common forms of variable consideration include discounts, rebates, and sales returns and allowances. Variable consideration is treated as a reduction in revenue when product revenue is recognized. Depending on the specific type of variable consideration, we use either the expected value or most likely amount method to determine the variable consideration. We believe there will not be significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. The Company reviews and updates its estimates and related accruals of variable consideration each period based on the terms of the agreements, historical experience, and any recent changes in the market. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration. Trade marketing expense, consisting primarily of customer pricing allowances and merchandising funds are offered through various programs to customers and are designed to promote our products. They include the cost of in-store product displays, feature pricing in retailers' advertisements and other temporary price reductions. These programs are offered to our customers both in fixed and variable (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 condensed 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 June 30, 2021 and 2020 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 $0.9 million and $0.9 million for the three months ended June 30, 2021 and 2020, respectively, and $2.0 million and $1.9 million for the six months ended June 30, 2021 and 2020, respectively. Advertising costs were $5.1 million and $3.3 million for the three months ended June 30, 2021 and 2020, respectively, and $7.5 million and $5.8 million for the six months ended June 30, 2021 and 2020, respectively. Collaboration Agreements Through our acquisition of Perrigo Animal Health, we entered into a product development and asset purchase agreement with a third party for certain product formulations in development by the third party. During the six months ended June 30, 2021, the Company opted out of the arrangement for two of the product formulations, which reduced the amount of any potential payments under the agreement. The Company may make up to $5.8 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 condensed consolidated statements of operations. There were no expenses incurred under the agreement for the six months ended June 30, 2021 or 2020. 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. Non-controlling interest The non-controlling interests on the condensed 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 condensed consolidated balance sheet represents the portion of net assets of the Company attributable to the non-controlling holders of Class B common stock and Limited Liability Company interests in Holdco. As of June 30, 2021 and December 31, 2020 the non-controlling interest was approximately 1.5% and 10.6%, respectively of ownership of LLC Interests. 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. Adopted Accounting Standard Updates 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, 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 ASU made amendments to the EPS guidance in Topic 260 for convertible debt instruments, the most significant of which is requiring the use of the if-converted method for diluted EPS calculation. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the ASU can either be on a modified retrospective or full retrospective basis. On January 1, 2021, we adopted the ASU using the full retrospective method. Under the full retrospective method, the prior period condensed consolidated financial statements have been retrospectively adjusted to reflect the adoption of the accounting standard in those periods The following tables show the impact of the adoption on our condensed consolidated balance sheet and condensed consolidated statement of operations. December 31, 2020 ASU 2020-06 December 31, 2020 As reported Adjustment As adjusted Liabilities Long-term debt, less current installments $ 355,979 $ 47,612 $ 403,591 Stockholders' Equity Additional Paid-in Capital 356,442 (36,800) 319,642 Non-controlling Interest 31,614 (5,631) 25,983 Accumulated Deficit (93,377) (5,181) (98,558) For the Three Months Ended June 30, 2020 ASU 2020-06 June 30, 2020 As reported Adjustment As adjusted Interest expense, net $ (5,967) $ 638 $ (5,329) Tax (expense) benefit (61) (127) (188) Net Income (Loss) (1,960) 511 (1,449) For the Six Months Ended June 30, 2020 ASU 2020-06 June 30, 2020 As reported Adjustment As adjusted Interest expense, net $ (10,671) $ 638 $ (10,033) Tax (expense) benefit 1,108 (127) 981 Net Income (Loss) (4,593) 511 (4,082) |
Asset Acquisitions
Asset Acquisitions | 6 Months Ended |
Jun. 30, 2021 | |
Asset Acquisitions | |
Asset Acquisitions | Note 2 –Asset Acquisitions Capstar 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 $1.1 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 relationships 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. $'s in 000's Fair Value Amortizable intangibles Customer relationships $ 70,901 Patents and processes 9,895 Total amortizable intangibles 80,796 Non-amortizable intangibles Trademarks and other 15,276 Total purchased intangible assets $ 96,072 The weighted average amortization period of the amortizable intangible assets is approximately 11.8 years. Supplier Termination, Settlement and Asset Purchase Agreement: During July 2020, the Company entered into a Termination, Settlement and Asset Purchase Agreement (the “Agreement”) with a supplier who alleged PetIQ had breached its supply agreement due to the acquisition of Perrigo Animal Health. The Agreement called for PetIQ to pay $20.6 million, $2.6 million at signing and $1.0 million per quarter thereafter. The Agreement terminated the supply agreement that was previously in place, settled all outstanding claims and operations, and allowed PetIQ to purchase certain intellectual property related assets. The Company 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 are amortized over 10 years. The assets were valued using the relief from royalty method. The remainder of the obligation was 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 condensed consolidated statement of operations for the three months ended June 30, 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
Property, Plant, and Equipment | 6 Months Ended |
Jun. 30, 2021 | |
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 June 30, 2021 December 31, 2020 Leasehold improvements $ 22,844 $ 19,709 Equipment 25,943 25,664 Vehicles and accessories 6,978 7,110 Computer equipment and software 10,994 10,858 Buildings 8,653 10,168 Furniture and fixtures 2,396 2,347 Land 6,407 7,067 Construction in progress 22,510 11,331 106,725 94,254 Less accumulated depreciation (34,500) (31,108) Total property, plant, and equipment $ 72,225 $ 63,146 Depreciation expense related to these assets was $3.1 million and $6.3 million for the three and six months ended June 30, 2021 and $3.0 million and $5.9 million for the three and six months ended June 30, 2020, respectively. During the three months ended June 30, 2021, the Company entered into an agreement to sell its previous headquarters property. The related assets with a carrying value of million have been reclassified to other current assets as held for sale. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 6 Months Ended |
Jun. 30, 2021 | |
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 June 30, 2021 December 31, 2020 Amortizable intangibles Certification 7 years $ 350 $ 350 Customer relationships 12 - 20 years 160,228 160,178 Patents and processes 5 - 10 years 14,993 14,905 Brand names 5 - 15 years 24,778 24,740 Total amortizable intangibles 200,349 200,173 Less accumulated amortization (35,352) (25,984) Total net amortizable intangibles 164,997 174,189 Non-amortizable intangibles Trademarks and other 33,341 33,341 In-process research and development 1,668 5,470 Intangible assets, net of accumulated amortization $ 200,006 $ 213,000 Certain intangible assets are denominated in currencies other than the U.S. Dollar; therefore, their gross and net carrying values are subject to foreign currency movements. Amortization expense for the three months ended June 30, 2021 and 2020 was $4.6 million and $2.3 million, respectively, and $13.1 million and $4.5 million for the six months ended June 30, 2021 and 2020, 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. During the six months ended June 30, 2021, the Company opted out of two of the acquired projects, effectively abandoning the associated research and development efforts. Accordingly, the Company wrote off the associated IPRD assets of $3.8 million, the expense for which is included as amortization expense in General and administrative expenses on the condensed consolidated statement of operations for the six months ended June 30, 2021. Estimated future amortization expense for each of the following years is as follows: Years ending December 31, ($'s in 000's) Remainder of 2021 $ 9,261 2022 17,984 2023 16,933 2024 14,562 2025 13,899 Thereafter 92,358 The following is a summary of the changes in the carrying value of goodwill for the period from January 1, 2020 to June 30, 2021: Reporting Unit ($'s in 000's) Products Services Total Goodwill as of January 1, 2020 183,781 47,264 231,045 Foreign currency translation 113 — 113 Goodwill as of December 31, 2020 183,894 47,264 231,158 Foreign currency translation 209 — 209 Goodwill as of June 30, 2021 $ 184,103 $ 47,264 $ 231,367 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2021 | |
Debt | |
Debt | Note 5 – Debt On April 13, 2021, the Company entered into a new $300 million term loan (“Term Loan B”) and a $125 million new asset-based revolving line of credit (“ABL”), collectively referred to as the (“credit facilities”). The credit facilities replace both the Amended Revolving Credit Agreement and A&R Term Loan Agreement as well as fully repay $27.5 million of the unsecured VIP Seller Notes. As part of the termination of the Amended Revolving Credit Agreement, the A&R Term Loan Credit agreement, and the VIP Notes, the Company wrote off $5.5 million in deferred financing fees to loss on debt extinguishment and incurred an additional $0.9 million in costs related to the transaction which are included in General and Administrative expenses Senior Secured Asset-Based Revolving Credit Facility On April 13, 2021, Opco entered into an asset-based credit agreement with KeyBank National Association, as administrative agent and collateral agent, and the lenders’ party thereto, that provides senior secured financing of $125.0 million (which may be increased by up to $50.0 million in certain circumstances), subject to a borrowing base limitation. The borrowing base for the ABL Facility at any time equals the sum of: (i) 90% of eligible investment-grade accounts; plus (ii) 85% of eligible other accounts; plus, (iii) 85% of the net orderly liquidation value of the cost of certain eligible on-hand and in-transit inventory; plus, (iv) at the option of Opco, 100% of qualified cash; minus (v) reserves. The ABL Facility bears interest at a variable rate plus a margin, with the variable rate being based on a base rate or LIBOR at the option of the Company. The rate at June 30, 2021 was 1.59%. The Company also pays a commitment fee on unused borrowings at a rate of 0.35%. The ABL is secured by the assets of the Company including a first-priority security interest in personal property consisting of accounts receivable, inventory, cash, and deposit accounts. The ABL contains certain negative covenants that restrict the Company’s ability to incur additional indebtedness, pay dividends, make investments, loans, and acquisitions, among other restrictions. Senior Secured Term Loan Facility On April 13, 2021, Opco entered into a term credit and guaranty agreement with Jefferies Finance LLC, as administrative agent and collateral agent, and the lenders’ party thereto, that provides senior secured term loans of $300.0 million (which may be increased in certain circumstances). The Term Loan B bears interest at a variable rate of either prime, federal funds effective rate or LIBOR, plus an applicable margin of between 3.25% and 4.25% depending on the underlying base rate. LIBOR rates are subject to a 0.50% floor. The interest rate at June 30, 2021 was 4.75%. The Term Loan B requires quarterly payments of 0.25% of the original principal amount, with the balance due on the seventh anniversary of the closing date. The credit agreement governing the Term Loan B does not require Opco to comply with any financial maintenance covenants but additionally contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default. Convertible Notes On May 19, 2020, the Company issued $143.8 million in aggregate principal amount of 4.00% Convertible Senior Notes due 2026 (the “Notes”) pursuant to the indenture (the “Indenture”), dated as of May 19, 2020. The total net proceeds from the Notes offering, after deducting debt issuance costs paid or payable by us, was $137.9 million. The Notes accrue interest at a rate of 4.00% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020. The Notes will mature on June 1, 2026, unless earlier repurchased, redeemed or converted. Before January 15, 2026, holders will have the right to convert their Notes only upon the occurrence of certain events. From and after January 15, 2026, holders may convert their Notes at any time at their election until the close of business on the scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of its Class A common stock, or a combination of cash and shares of its Class A common stock, at its election. The initial conversion rate is 33.7268 shares of Class A common stock per $1,000 principal amount of Notes. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. The Notes are redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after June 1, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s Class A common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (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. The fair value of the Notes was $2 17.1 million as of June 30, 2021. The estimated fair value of the Notes is based on market rates and the closing trading price of the Convertible Notes as of June 30, 2021 and is classified as Level 2 in the fair value hierarchy. Amended & Restated Credit Agreement 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. As of June 30, 2021 Amended Revolving Credit Agreement was fully repaid and terminated. Amended & Restated Term Loan Credit Agreement OpCo entered into an Amended and Restated Term Loan Credit Agreement on July 8, 2019 (the “A&R Term Loan Credit Agreement”). The $220.0 million A&R Term Loan Credit Agreement 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. As of June 30, 2021 the A&R Term Loan Credit Agreement was fully repaid and terminated. General Other Debt The Company entered into a mortgage with a local bank to finance a commercial building in Eagle, Idaho, in July 2017. The mortgage bears interest at a fixed rate of 4.35% and utilizes a 25 year amortization schedule with a 10 year balloon payment of the balance due at that time. As described in Note 3, the Company entered into an agreement to sell the commercial building in Eagle, Idaho, which closed in the third quarter of 2021. The Company used the proceeds from the sale to repay the mortgage on August 2, 2021, and has reclassified the mortgage to current maturities of long-term debt as of June 30, 2021. In July 2020, the Company entered into the Agreement. See Note 2 – “Asset Acquisitions”. The Agreement called for PetIQ to pay $20.6 million, $2.6 million at signing and $1.0 million per quarter thereafter with no interest. The Company discounted the payment stream using a market interest rate of 8.3%, resulting in an obligation of $17.5 million at the time it was entered into. In connection with the acquisition of Community Veterinary Clinics, LLC d/b/a, VIP Petcare (the “VIP Acquisition”), the Company entered into a guarantee note of $10.0 million and contingent Notes that were subsequently earned. As of December 31, 2020 $7.5 million was payable pursuant to the 2018 Contingent Note and $10.0 million was payable pursuant to the 2019 Contingent Note. The guarantee note and the Contingent Notes, collectively, “Notes Payable – VIP Acquisition” of $27.5 million required quarterly interest payments of 6.75% with the balance payable July 17, 2023. These Notes Payable – VIP Acquisition were fully repaid in April 2021. The following represents the Company’s long-term debt as of: $'s in 000's June 30, 2021 December 31, 2020 Convertible Notes $ 143,750 $ 143,750 Term loans 300,000 217,250 Revolving credit facility 15,000 15,000 Notes Payable - VIP Acquisition — 27,500 Other Debt 14,761 16,257 Net discount on debt and deferred financing fees (1) (11,091) (9,947) $ 462,420 $ 409,810 Less current maturities of long-term debt (7,832) (6,219) Total long-term debt $ 454,588 $ 403,591 (1) – The net discount on debt and deferred financing fees were adjusted retrospectively for the adoption of ASU 2020-06 as discussed further in Note 1. Future maturities of long-term debt, excluding the discount on debt and deferred financing fees, as of June 30, 2021, are as follows: ($'s in 000's) Remainder of 2021 $ 5,665 2022 6,246 2023 6,524 2024 6,827 2025 3,000 Thereafter 445,249 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
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 The components of lease expense consists of the following: For the Three Months Ended For the Six Months Ended $'s in 000's June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Finance lease cost Amortization of right-of-use assets $ 803 $ 391 $ 1,369 $ 782 Interest on lease liabilities 123 77 214 159 Operating lease cost 1,332 1,279 2,624 3,110 Variable lease cost (1) 309 78 615 253 Short-term lease cost 2 14 6 19 Sublease income (65) (226) (108) (452) Total lease cost $ 2,504 $ 1,613 $ 4,720 $ 3,871 (1) Variable lease cost primarily relates to percentage rent, common area maintenance, property taxes and insurance on leased real estate. Other information related to leases was as follows as of: June 30, 2021 June 30, 2020 Weighted-average remaining lease term (years) Operating leases 4.13 4.65 Finance leases 2.62 2.59 Weighted-average discount rate Operating leases 5.2% 5.3% Finance leases 4.8% 5.8% Annual future commitments under non-cancelable leases as of June 30, 2021, consist of the following: Lease Obligations $'s in 000's Operating Leases Finance Leases Remainder of 2021 $ 3,221 $ 807 2022 6,336 1,528 2023 5,535 1,321 2024 3,981 445 2025 3,031 51 Thereafter 1,639 — Total minimum future obligations $ 23,743 $ 4,152 Less interest (2,717) (286) Present value of net future minimum obligations 21,026 3,866 Less current lease obligations (5,431) (1,311) Long-term lease obligations $ 15,595 $ 2,555 Supplemental cash flow information: Six Months Ended Six Months Ended $'s in 000's June 30, 2021 June 30, 2020 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 214 $ 159 Operating cash flows from operating leases 2,525 3,058 Financing cash flows from finance leases 1,226 761 (Noncash) right-of-use assets obtained in exchange for lease obligations Operating leases 2,810 2,106 Finance leases 141 381 |
Income Tax
Income Tax | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax | |
Income Tax | Note 7 – Income Tax As a result of the Company’s initial public offering and related reorganization transactions completed in July 2017, the Company held a majority of the economic interest in Holdco and consolidates the financial position and results of Holdco. The remaining ownership of Holdco not held by the Company is considered a non-controlling interest. Holdco is treated as a partnership for income tax reporting. Holdco’s members, including the Company, are liable for federal, state, and local income taxes based on their share of Holdco’s taxable income. Our effective tax rate (ETR) from continuing operations was (5.4)% and (2.1)% for the three and six months ended June 30, 2021, respectively, and (14.9)% and 19.4% for the three and six months ended June 30, 2020, respectively, including discrete items. Income tax expense for three and six months ended June 30, 2021 and 2020 was different than the U.S federal statutory income tax rate of 21% primarily due to the effects of a change in valuation allowance, state taxes, foreign rate changes and foreign GILTI income inclusion. The Company has assessed the realizability of the net deferred tax assets as of June 30, 2021 and in that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income to realize its deferred tax assets. The Company believes it is more likely than not that the benefit from recorded deferred tax assets will not be realized. The Company has recorded a valuation allowance for deferred tax assets of $94.0 million and $71.2 million as of June 30, 2021 and December 31, 2020, 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. HoldCo makes cash distributions to members to pay taxes attributable to their allocable share of income earned. Additionally, HoldCo accrues for distributions required to be made related to estimated income taxes. Tax distributions and accruals were immaterial for the periods presented. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2021 | |
Earnings per Share | |
Earnings per Share | Note 8 – Earnings per Share Basic and Diluted Earnings (Loss) per Share Basic earnings (loss) per share of Class A common stock is computed by dividing net income (loss) available to PetIQ, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income (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. On January 1, 2021, we adopted ASU 2020-06 using the full retrospective method. Following this adoption, we utilize the if-converted method for the diluted net income (loss) per share calculation of our convertible Notes (see Note 1 for more information on the adoption of ASU 2020-06). 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: Three months ended June 30, Six months ended June 30, (in 000's, except for per share amounts) 2021 2020 2021 2020 Numerator: Net income (loss) $ 4,034 $ (1,449) $ 6,420 $ (4,082) Less: net income (loss) attributable to non-controlling interests 8 27 361 (503) Net income (loss) attributable to PetIQ, Inc. — basic and diluted 4,026 (1,476) 6,059 (3,579) Denominator: Weighted-average shares of Class A common stock outstanding -- basic 28,491 24,425 27,444 24,077 Dilutive effects of stock options that are convertible into Class A common stock 518 — 470 — Dilutive effect of RSUs 147 — 145 — Dilutive effect for conversion of Notes — — — — Weighted-average shares of Class A common stock outstanding -- diluted 29,156 24,425 28,059 24,077 Earnings (loss) per share of Class A common stock — basic $ 0.14 $ (0.06) $ 0.22 $ (0.15) Earnings (loss) per share of Class A common stock — diluted $ 0.14 $ (0.06) $ 0.22 $ (0.15) 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. The computation of dilutive effect of other potential common shares excludes stock options of 480 thousand shares and 88 thousand restricted stock units for the three months ended June 30, 2021, as the inclusion under the treasury stock method would have been antidilutive. The computation of dilutive effect of other potential common shares excludes stock options of 652 thousand shares and 88 thousand restricted stock units for the six months ended June 30, 2021, as the inclusion under the treasury stock method would have been antidilutive. The dilutive impact of the Notes have not been included in the dilutive earnings per share calculation for the three and six months ended June 30, 2021 as they would be antidilutive. Additionally, all stock options and restricted stock units and convertible Notes have not been included in the diluted earnings per share calculation for the three and six months ended June 30, 2020, as they would have been anti-dilutive. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2021 | |
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 June 30, 2021 and 2020, 698 thousand and 1,294 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 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, which totaled $1.4 million and $2.7 million for the three and six months ended June 30, 2021, respectively, and $1.3 million and $3.5 million for the three and six months ended June 30, 2020, 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 June 30, 2021 and 2020: June 30, 2021 June 30, 2020 Expected term (years) (1) 6.25 6.25 Expected volatility (2) 33.91 % 33.91 % Risk-free interest rate (3) 0.90 % 0.72 % 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 June 30, 2021 was $12.39 per option. At June 30, 2021, total unrecognized compensation cost related to unvested stock options was $9.8 million and is expected to be recognized over a weighted-average period of 2.3 years. Weighted Average Weighted Aggregate Remaining Stock Average Intrinsic Contractual Options Exercise Value Life (in 000's) Price (in 000's) (years) Outstanding at January 1, 2020 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 Granted 354 35.66 Exercised (531) 23.72 $ 8,025 Forfeited (24) 22.61 Cancelled (1) 27.73 Outstanding at June 30, 2021 1,884 $ 26.21 $ 23,369 7.8 Options exercisable at June 30, 2021 646 Restricted Stock Units The Company awards RSUs to certain employees and directors under the Plan, which are subject to time-based vesting conditions. Upon a termination of service relationship by the Company, all unvested RSUs will be forfeited and the shares of common stock underlying such awards will become available for issuance under the Plan. The fair value of RSUs are measured based on the closing fair market value of the Company’s common stock on the date of grant. At June 30, 2021, total unrecognized compensation cost related to unvested RSUs was $13.9 million and is expected to vest over a weighted average 3.2 years. The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $1.0 million and $1.8 million for the three and six months ended June 30, 2021, respectively, and $0.5 million and $0.9 million for the three and six months ended June 30, 2020, 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 June 30, 2021. Weighted Number of Average Shares Grant Date (in 000's) Fair Value Outstanding at January 1, 2020 133 $ 28.85 Granted 271 20.73 Settled (70) 25.65 Forfeited (17) 23.34 Outstanding at December 31, 2020 317 $ 22.91 Granted 268 37.92 Settled (75) 21.87 Forfeited (9) 23.09 Nonvested RSUs at June 30, 2021 501 $ 31.08 |
Stockholder's Equity
Stockholder's Equity | 6 Months Ended |
Jun. 30, 2021 | |
Stockholder's Equity | |
Stockholder's Equity | Note 10 – Stockholders’ Equity Exchanges During the six months ended June 30, 2021 holders of Class B common stock and LLC Interests exercised exchange rights and exchanged 2,615 thousand Class B common shares and corresponding LLC Interests for newly issued Class A Common Stock. The LLC Agreement generally allows for exchanges on the last day of each calendar month. |
Non-Controlling Interests
Non-Controlling Interests | 6 Months Ended |
Jun. 30, 2021 | |
Non-Controlling Interests | |
Non-Controlling Interests | Note 11 – Non-Controlling Interests The following table presents the outstanding LLC Interests and changes in LLC Interests for the periods presented. LLC Interests held % of Total LLC LLC $'s in 000's Owners PetIQ, Inc. Total Owners PetIQ, Inc. As of January 1, 2020 4,752 23,554 28,306 16.8% 83.2% Stock based compensation transactions — 445 445 Exchange transactions (1,712) 1,712 — As of December 31, 2020 3,040 25,711 28,751 10.6% 89.4% Stock based compensation transactions 583 583 Exchange transactions (2,615) 2,615 — As of June 30, 2021 425 28,909 29,334 1.5% 98.5% Note that certain figures shown in the table above may not recalculate due to rounding. For the three and six months ended June 30, 2021 the Company owned a weighted average of 97.5% and 94.4%, respectively, and 86.0% and 84.9% for the three and six months ended June 30, 2020, respectively, of Holdco. |
Customer Concentration
Customer Concentration | 6 Months Ended |
Jun. 30, 2021 | |
Customer Concentration | |
Customer Concentration | Note 12 – Customer Concentration The Company has significant exposure to customer concentration. During the three and six months ended June 30, 2021, two and one customers individually accounted for more than 10% of sales, comprising 33% and 26% of net sales, respectively for such periods. During the three and six months ended June 30, 2020 three customers individually accounted for more than 10% of sales, comprising 54% and 51% of net sales in both such periods. At June 30, 2021 one Products segment customer individually accounted for more than 10% of outstanding trade receivables, and accounted for 38% of outstanding trade receivables, net. At December 31, 2020 one Products segment customers individually accounted for more than 10% of outstanding trade receivables, and of outstanding trade receivables, net. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 13 – Commitments and Contingencies Litigation Contingencies The Company records a liability when a particular contingency is probable and estimable and provides disclosure for contingencies that are at least reasonably possible of resulting in a loss including an estimate which we currently cannot make. The Company has not accrued for any contingency at June 30, 2021 and 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 condensed 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
Segments | 6 Months Ended |
Jun. 30, 2021 | |
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 three months ended: $'s in 000's Unallocated June 30, 2021 Products Services Corporate Consolidated Net Sales $ 242,857 $ 28,154 $ — $ 271,011 Adjusted EBITDA 48,187 3,028 (16,856) 34,359 Depreciation expense 991 1,288 864 3,143 Capital expenditures 685 4,254 5,038 9,977 $'s in 000's Unallocated June 30, 2020 Products Services Corporate Consolidated Net Sales $ 264,307 $ 2,675 $ — $ 266,982 Adjusted EBITDA 41,851 1,112 (14,657) 28,306 Depreciation expense 1,167 890 926 2,983 Capital expenditures 3,593 940 817 5,350 Financial information relating to the Company’s operating segments for the six months ended: $'s in 000's Unallocated June 30, 2021 Products Services Corporate Consolidated Net Sales $ 472,891 $ 52,467 $ — $ 525,358 Adjusted EBITDA 86,979 5,124 (30,883) 61,220 Depreciation expense 1,931 2,470 1,873 6,274 Capital expenditures 955 6,633 10,714 18,302 $'s in 000's Unallocated June 30, 2020 Products Services Corporate Consolidated Net Sales $ 430,587 $ 23,173 $ — $ 453,760 Adjusted EBITDA 66,130 3,101 (26,467) 42,764 Depreciation expense 2,484 1,737 1,635 5,856 Capital expenditures 5,266 3,773 1,386 10,425 The following table reconciles Segment Adjusted EBITDA to Net income (loss) for the periods presented. For the three months ended For the six months ended $'s in 000's June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Adjusted EBITDA: Product $ 48,187 $ 41,851 $ 86,979 $ 66,130 Services 3,028 1,112 5,124 3,101 Unallocated Corporate (16,856) (14,657) (30,883) (26,467) Total Consolidated 34,359 28,306 61,220 42,764 Adjustments: Depreciation (3,143) (2,983) (6,274) (5,856) Amortization (4,627) (2,250) (13,055) (4,492) Interest (7,655) (5,329) (12,525) (10,033) Acquisition costs (1) (86) (146) (92) (732) Stock based compensation expense (2,439) (1,844) (4,561) (4,402) Integration costs and costs of discontinued clinics (2) (735) (8,850) (687) (9,304) Non same-store revenue (3) 5,982 953 10,377 3,235 Non same-store costs (3) (10,493) (3,698) (19,832) (10,098) Clinic launch expenses (4) (576) (603) (1,280) (1,279) Loss on extinguishment and related costs (6,438) — (6,438) — Litigation expenses (320) (384) (563) (433) COVID-19 related costs (5) — (4,433) — (4,433) Pretax net income (loss) $ 3,829 $ (1,261) $ 6,290 $ (5,063) Income tax benefit (expense) 205 (188) 130 981 Net loss $ 4,034 $ (1,449) $ 6,420 $ (4,082) (1) Acquisition costs include legal, accounting, banking, consulting, diligence, and other out-of-pocket costs related to completed and contemplated acquisitions. (2) 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. (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) 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. (5) Costs related to maintaining service segment infrastructure, staffing, and overhead related 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. Six months ended June 30, 2021 $'s in 000's U.S. Foreign Total Product sales $ 469,473 $ 3,418 $ 472,891 Service revenue 52,467 — 52,467 Total net sales $ 521,940 $ 3,418 $ 525,358 Six months ended June 30, 2020 $'s in 000's U.S. Foreign Total Product sales $ 428,332 $ 2,255 $ 430,587 Service revenue 23,173 — 23,173 Total net sales $ 451,505 $ 2,255 $ 453,760 Three months ended June 30, 2021 $'s in 000's U.S. Foreign Total Product sales $ 240,897 $ 1,960 $ 242,857 Service revenue 28,154 — 28,154 Total net sales $ 269,051 $ 1,960 $ 271,011 Three months ended June 30, 2020 $'s in 000's U.S. Foreign Total Product sales $ 263,260 $ 1,047 $ 264,307 Service revenue 2,675 — 2,675 Total net sales $ 265,935 $ 1,047 $ 266,982 Property, plant, and equipment by geographic location is below. June 30, 2021 December 31, 2020 United States $ 70,942 $ 61,807 Europe 1,283 1,339 Total $ 72,225 $ 63,146 |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2021 | |
Related Parties | |
Related Parties | Note 15 – Related Parties Chris Christensen, the brother of CEO, McCord Christensen, acts as the Company’s agent at Moreton Insurance (“Moreton”), which acts as a broker for a number of the Company’s insurance policies. The Company’s premium expense, paid to Moreton and subsequently transferred to insurance providers, was $0.3 million for the three and six months ended June 30, 2021, and $0 million and $0.3 million for the three and six months ended June 30, 2020, respectively. Mr. Chris Christensen was paid a commission of approximately $15 thousand for the three and six months ended June 30, 2021, and $0 thousand and $18 thousand for the three and six months ended June 30, 2020, respectively, for the sale of such insurance policies to the Company. Katie Turner, the spouse of CEO, McCord Christensen, is the owner of Acadia Investor Relations LLC, (“Acadia”) which acts as the Company’s investor relations consultant. Acadia has been paid $0.06 million and $0.1 million for the three and six months ended June 30, 2021. |
Principal Business Activity a_2
Principal Business Activity and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Principal Business Activity and Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property, plant, and equipment and intangible assets; the valuation of property, plant, and equipment, intangible assets and goodwill, the valuation of assets and liabilities in connection with acquisitions, the valuation of deferred tax assets, the valuation of inventories, and reserves for legal contingencies. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, are at cost, which approximates fair value due to their relatively short maturities. 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the date of acquisition. All credit card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash equivalents. The Company maintains its cash accounts in various deposit accounts, the balances of which at times exceeded federal deposit insurance limits during the periods presented. |
Receivables and Credit Policy | Receivables and Credit Policy Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 45 days from the invoice date. Accounts receivable are stated at the amount billed to the customer, net of discounts and estimated deductions. The Company does not have a policy for charging interest on overdue customer account balances. The Company provides an allowance for credit losses equal to expected losses. The Company’s estimate is based on historical collection experience, a review of the current status of trade accounts receivable and known current economic conditions 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 other receivable from business partners. Accounts receivable consists of the following as of: $'s in 000's June 30, 2021 December 31, 2020 Trade receivables $ 148,906 $ 96,381 Other receivables 11,284 7,094 160,190 103,475 Less: Allowance for doubtful accounts (390) (720) Total accounts receivable, net $ 159,800 $ 102,755 |
Inventories | 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 June 30, 2021 December 31, 2020 Raw materials $ 13,408 $ 15,761 Work in progress 1,482 2,273 Finished goods 103,499 79,739 Total inventories $ 118,389 $ 97,773 |
Property, Plant, and Equipment | Property, Plant, and Equipment Property, plant, and equipment are recorded at cost. Expenditures for improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. 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 condensed 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 |
Convertible debt | 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.” Simultaneously, with the issuance of the Notes, we bought capped call options from certain financial institutions to minimize the impact of potential dilution of our Class A common stock upon conversion of the Notes. The premium for the capped call options was recorded as additional paid-in capital in our condensed consolidated balance sheets as the options are settleable in our Class A common stock. Effective January 1, 2021, we adopted ASU 2020-06 using the full retrospective approach. As a result of this adoption, we have de-recognized the debt discount on the Notes and therefore no longer recognize any amortization of debt discount on the Notes as interest expense (see below, Adopted Accounting Standard Update). |
Revenue Recognition | Revenue Recognition When Performance Obligations Are Satisfied A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s performance obligations are product sales and the delivery of veterinary services. Revenue is generally recognized for product sales on a point in time basis when product control is transferred to the customer. In general, control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms, as the customer can direct the use and obtain substantially all of the remaining benefits from the asset at this point in time. The Company determined that certain products manufactured to a customer’s specifications do not have an alternative future use at a reasonable profit margin due to costs associated with reworking, transporting and repackaging these products. These products are produced subject to purchase orders that include an enforceable right to payment. Therefore, the Company determined that revenue on these products would be recognized over time, as the products are produced. This represents a minor subset of the products the Company manufactures. Revenue for services is recognized over time as the service is delivered, typically over a single day. Payment is typically rendered at the time of service. Customer contracts generally do not include more than one performance obligation. When a contract does contain more than one performance obligation, we allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The standalone selling price for each distinct good is generally determined by directly observable data. The 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 June 30, 2021. Variable Consideration In addition to fixed contract consideration, most contracts include some form of variable consideration. The most common forms of variable consideration include discounts, rebates, and sales returns and allowances. Variable consideration is treated as a reduction in revenue when product revenue is recognized. Depending on the specific type of variable consideration, we use either the expected value or most likely amount method to determine the variable consideration. We believe there will not be significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. The Company reviews and updates its estimates and related accruals of variable consideration each period based on the terms of the agreements, historical experience, and any recent changes in the market. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration. Trade marketing expense, consisting primarily of customer pricing allowances and merchandising funds are offered through various programs to customers and are designed to promote our products. They include the cost of in-store product displays, feature pricing in retailers' advertisements and other temporary price reductions. These programs are offered to our customers both in fixed and variable (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 condensed 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 June 30, 2021 and 2020 are immaterial. The Company does not have significant deferred revenue or unbilled receivable balances. |
Cost of Services | Cost of Services Cost of Services are comprised of all service and product costs related to the delivery of veterinary services, including but not limited to, salaries and contract costs of veterinarians, technicians and other clinic based personnel, transportation and delivery costs, rent, occupancy costs, supply costs, depreciation and amortization of clinic assets, certain marketing and promotional expenses and costs of goods sold. |
Research and Development and Advertising Costs | Research and Development and Advertising 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 $0.9 million and $0.9 million for the three months ended June 30, 2021 and 2020, respectively, and $2.0 million and $1.9 million for the six months ended June 30, 2021 and 2020, respectively. Advertising costs were $5.1 million and $3.3 million for the three months ended June 30, 2021 and 2020, respectively, and $7.5 million and $5.8 million for the six months ended June 30, 2021 and 2020, respectively. |
Collaboration Agreements | Collaboration Agreements Through our acquisition of Perrigo Animal Health, we entered into a product development and asset purchase agreement with a third party for certain product formulations in development by the third party. During the six months ended June 30, 2021, the Company opted out of the arrangement for two of the product formulations, which reduced the amount of any potential payments under the agreement. The Company may make up to $5.8 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 condensed consolidated statements of operations. There were no expenses incurred under the agreement for the six months ended June 30, 2021 or 2020. |
Accounting for Income taxes | Accounting for Income Taxes The Company uses the asset and liability approach for financial accounting and reporting of income taxes. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred taxes are measured using rates expected to apply to taxable income in years in which those temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company uses a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken in a tax return. The first step is a determination of whether the tax position should be recognized in the consolidated financial statements. The second step determines the measurement of the tax position. The Company records potential interest and penalties on uncertain tax positions as a component of income tax expense. |
Non-controlling interest | Non-controlling interest The non-controlling interests on the condensed 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 condensed consolidated balance sheet represents the portion of net assets of the Company attributable to the non-controlling holders of Class B common stock and Limited Liability Company interests in Holdco. As of June 30, 2021 and December 31, 2020 the non-controlling interest was approximately 1.5% and 10.6%, respectively of ownership of LLC Interests. |
Litigation | Litigation The Company is subject to various legal proceedings, claims, litigation, investigations and contingencies arising out of the ordinary course of business. If the likelihood of an adverse legal outcome is determined to be probable and the amount of loss is estimable, then a liability is accrued in accordance with accounting guidance for Contingencies. If the assessment indicates a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. The Company consults with both internal and external legal counsel related to litigation. |
Adopted Accounting Standard Updates | Adopted Accounting Standard Updates 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, 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 ASU made amendments to the EPS guidance in Topic 260 for convertible debt instruments, the most significant of which is requiring the use of the if-converted method for diluted EPS calculation. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the ASU can either be on a modified retrospective or full retrospective basis. On January 1, 2021, we adopted the ASU using the full retrospective method. Under the full retrospective method, the prior period condensed consolidated financial statements have been retrospectively adjusted to reflect the adoption of the accounting standard in those periods The following tables show the impact of the adoption on our condensed consolidated balance sheet and condensed consolidated statement of operations. December 31, 2020 ASU 2020-06 December 31, 2020 As reported Adjustment As adjusted Liabilities Long-term debt, less current installments $ 355,979 $ 47,612 $ 403,591 Stockholders' Equity Additional Paid-in Capital 356,442 (36,800) 319,642 Non-controlling Interest 31,614 (5,631) 25,983 Accumulated Deficit (93,377) (5,181) (98,558) For the Three Months Ended June 30, 2020 ASU 2020-06 June 30, 2020 As reported Adjustment As adjusted Interest expense, net $ (5,967) $ 638 $ (5,329) Tax (expense) benefit (61) (127) (188) Net Income (Loss) (1,960) 511 (1,449) For the Six Months Ended June 30, 2020 ASU 2020-06 June 30, 2020 As reported Adjustment As adjusted Interest expense, net $ (10,671) $ 638 $ (10,033) Tax (expense) benefit 1,108 (127) 981 Net Income (Loss) (4,593) 511 (4,082) |
Principal Business Activity a_3
Principal Business Activity and Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Schedule of accounts receivable | $'s in 000's June 30, 2021 December 31, 2020 Trade receivables $ 148,906 $ 96,381 Other receivables 11,284 7,094 160,190 103,475 Less: Allowance for doubtful accounts (390) (720) Total accounts receivable, net $ 159,800 $ 102,755 |
Schedule of components of inventories | $'s in 000's June 30, 2021 December 31, 2020 Raw materials $ 13,408 $ 15,761 Work in progress 1,482 2,273 Finished goods 103,499 79,739 Total inventories $ 118,389 $ 97,773 |
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 |
ASU 2020-06 | |
Schedule of impact of the adoption | December 31, 2020 ASU 2020-06 December 31, 2020 As reported Adjustment As adjusted Liabilities Long-term debt, less current installments $ 355,979 $ 47,612 $ 403,591 Stockholders' Equity Additional Paid-in Capital 356,442 (36,800) 319,642 Non-controlling Interest 31,614 (5,631) 25,983 Accumulated Deficit (93,377) (5,181) (98,558) For the Three Months Ended June 30, 2020 ASU 2020-06 June 30, 2020 As reported Adjustment As adjusted Interest expense, net $ (5,967) $ 638 $ (5,329) Tax (expense) benefit (61) (127) (188) Net Income (Loss) (1,960) 511 (1,449) For the Six Months Ended June 30, 2020 ASU 2020-06 June 30, 2020 As reported Adjustment As adjusted Interest expense, net $ (10,671) $ 638 $ (10,033) Tax (expense) benefit 1,108 (127) 981 Net Income (Loss) (4,593) 511 (4,082) |
Asset Acquisitions (Tables)
Asset Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant, and Equipment | |
Property, Plant, and Equipment | $'s in 000's June 30, 2021 December 31, 2020 Leasehold improvements $ 22,844 $ 19,709 Equipment 25,943 25,664 Vehicles and accessories 6,978 7,110 Computer equipment and software 10,994 10,858 Buildings 8,653 10,168 Furniture and fixtures 2,396 2,347 Land 6,407 7,067 Construction in progress 22,510 11,331 106,725 94,254 Less accumulated depreciation (34,500) (31,108) Total property, plant, and equipment $ 72,225 $ 63,146 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Intangible Assets and Goodwill | |
Schedule of intangible assets | $'s in 000's Useful Lives June 30, 2021 December 31, 2020 Amortizable intangibles Certification 7 years $ 350 $ 350 Customer relationships 12 - 20 years 160,228 160,178 Patents and processes 5 - 10 years 14,993 14,905 Brand names 5 - 15 years 24,778 24,740 Total amortizable intangibles 200,349 200,173 Less accumulated amortization (35,352) (25,984) Total net amortizable intangibles 164,997 174,189 Non-amortizable intangibles Trademarks and other 33,341 33,341 In-process research and development 1,668 5,470 Intangible assets, net of accumulated amortization $ 200,006 $ 213,000 |
Estimated future amortization expense | Years ending December 31, ($'s in 000's) Remainder of 2021 $ 9,261 2022 17,984 2023 16,933 2024 14,562 2025 13,899 Thereafter 92,358 |
Schedule of Goodwill | Reporting Unit ($'s in 000's) Products Services Total Goodwill as of January 1, 2020 183,781 47,264 231,045 Foreign currency translation 113 — 113 Goodwill as of December 31, 2020 183,894 47,264 231,158 Foreign currency translation 209 — 209 Goodwill as of June 30, 2021 $ 184,103 $ 47,264 $ 231,367 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt | |
Schedule of components of long term debt | $'s in 000's June 30, 2021 December 31, 2020 Convertible Notes $ 143,750 $ 143,750 Term loans 300,000 217,250 Revolving credit facility 15,000 15,000 Notes Payable - VIP Acquisition — 27,500 Other Debt 14,761 16,257 Net discount on debt and deferred financing fees (1) (11,091) (9,947) $ 462,420 $ 409,810 Less current maturities of long-term debt (7,832) (6,219) Total long-term debt $ 454,588 $ 403,591 |
Future maturities of long-term debt, excluding the net discount on debt, deferred financing fees and contingent notes | ($'s in 000's) Remainder of 2021 $ 5,665 2022 6,246 2023 6,524 2024 6,827 2025 3,000 Thereafter 445,249 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Schedule of components of lease expense | For the Three Months Ended For the Six Months Ended $'s in 000's June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Finance lease cost Amortization of right-of-use assets $ 803 $ 391 $ 1,369 $ 782 Interest on lease liabilities 123 77 214 159 Operating lease cost 1,332 1,279 2,624 3,110 Variable lease cost (1) 309 78 615 253 Short-term lease cost 2 14 6 19 Sublease income (65) (226) (108) (452) Total lease cost $ 2,504 $ 1,613 $ 4,720 $ 3,871 (1) Variable lease cost primarily relates to percentage rent, common area maintenance, property taxes and insurance on leased real estate. |
Schedule of other information related to leases | June 30, 2021 June 30, 2020 Weighted-average remaining lease term (years) Operating leases 4.13 4.65 Finance leases 2.62 2.59 Weighted-average discount rate Operating leases 5.2% 5.3% Finance leases 4.8% 5.8% |
Summary of annual future commitments under non-cancelable leases | Lease Obligations $'s in 000's Operating Leases Finance Leases Remainder of 2021 $ 3,221 $ 807 2022 6,336 1,528 2023 5,535 1,321 2024 3,981 445 2025 3,031 51 Thereafter 1,639 — Total minimum future obligations $ 23,743 $ 4,152 Less interest (2,717) (286) Present value of net future minimum obligations 21,026 3,866 Less current lease obligations (5,431) (1,311) Long-term lease obligations $ 15,595 $ 2,555 |
Supplemental cash flow information | Six Months Ended Six Months Ended $'s in 000's June 30, 2021 June 30, 2020 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 214 $ 159 Operating cash flows from operating leases 2,525 3,058 Financing cash flows from finance leases 1,226 761 (Noncash) right-of-use assets obtained in exchange for lease obligations Operating leases 2,810 2,106 Finance leases 141 381 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Earnings per Share | |
Reconciliations of the numerators and denominators used to compute basic and diluted earnings (loss) per share of Class A common stock | Three months ended June 30, Six months ended June 30, (in 000's, except for per share amounts) 2021 2020 2021 2020 Numerator: Net income (loss) $ 4,034 $ (1,449) $ 6,420 $ (4,082) Less: net income (loss) attributable to non-controlling interests 8 27 361 (503) Net income (loss) attributable to PetIQ, Inc. — basic and diluted 4,026 (1,476) 6,059 (3,579) Denominator: Weighted-average shares of Class A common stock outstanding -- basic 28,491 24,425 27,444 24,077 Dilutive effects of stock options that are convertible into Class A common stock 518 — 470 — Dilutive effect of RSUs 147 — 145 — Dilutive effect for conversion of Notes — — — — Weighted-average shares of Class A common stock outstanding -- diluted 29,156 24,425 28,059 24,077 Earnings (loss) per share of Class A common stock — basic $ 0.14 $ (0.06) $ 0.22 $ (0.15) Earnings (loss) per share of Class A common stock — diluted $ 0.14 $ (0.06) $ 0.22 $ (0.15) |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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 | June 30, 2021 June 30, 2020 Expected term (years) (1) 6.25 6.25 Expected volatility (2) 33.91 % 33.91 % Risk-free interest rate (3) 0.90 % 0.72 % 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 January 1, 2020 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 Granted 354 35.66 Exercised (531) 23.72 $ 8,025 Forfeited (24) 22.61 Cancelled (1) 27.73 Outstanding at June 30, 2021 1,884 $ 26.21 $ 23,369 7.8 Options exercisable at June 30, 2021 646 |
Summary of RSU activity | Weighted Number of Average Shares Grant Date (in 000's) Fair Value Outstanding at January 1, 2020 133 $ 28.85 Granted 271 20.73 Settled (70) 25.65 Forfeited (17) 23.34 Outstanding at December 31, 2020 317 $ 22.91 Granted 268 37.92 Settled (75) 21.87 Forfeited (9) 23.09 Nonvested RSUs at June 30, 2021 501 $ 31.08 |
Non-Controlling Interests (Tabl
Non-Controlling Interests (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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, 2020 4,752 23,554 28,306 16.8% 83.2% Stock based compensation transactions — 445 445 Exchange transactions (1,712) 1,712 — As of December 31, 2020 3,040 25,711 28,751 10.6% 89.4% Stock based compensation transactions 583 583 Exchange transactions (2,615) 2,615 — As of June 30, 2021 425 28,909 29,334 1.5% 98.5% |
Segments (Tables)
Segments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segments | |
Summary of financial information relating to the Company's operating segments | Financial information relating to the Company’s operating segments for the three months ended: $'s in 000's Unallocated June 30, 2021 Products Services Corporate Consolidated Net Sales $ 242,857 $ 28,154 $ — $ 271,011 Adjusted EBITDA 48,187 3,028 (16,856) 34,359 Depreciation expense 991 1,288 864 3,143 Capital expenditures 685 4,254 5,038 9,977 $'s in 000's Unallocated June 30, 2020 Products Services Corporate Consolidated Net Sales $ 264,307 $ 2,675 $ — $ 266,982 Adjusted EBITDA 41,851 1,112 (14,657) 28,306 Depreciation expense 1,167 890 926 2,983 Capital expenditures 3,593 940 817 5,350 Financial information relating to the Company’s operating segments for the six months ended: $'s in 000's Unallocated June 30, 2021 Products Services Corporate Consolidated Net Sales $ 472,891 $ 52,467 $ — $ 525,358 Adjusted EBITDA 86,979 5,124 (30,883) 61,220 Depreciation expense 1,931 2,470 1,873 6,274 Capital expenditures 955 6,633 10,714 18,302 $'s in 000's Unallocated June 30, 2020 Products Services Corporate Consolidated Net Sales $ 430,587 $ 23,173 $ — $ 453,760 Adjusted EBITDA 66,130 3,101 (26,467) 42,764 Depreciation expense 2,484 1,737 1,635 5,856 Capital expenditures 5,266 3,773 1,386 10,425 |
Summary of reconciles segment adjusted ebitda to pretax net income | For the three months ended For the six months ended $'s in 000's June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Adjusted EBITDA: Product $ 48,187 $ 41,851 $ 86,979 $ 66,130 Services 3,028 1,112 5,124 3,101 Unallocated Corporate (16,856) (14,657) (30,883) (26,467) Total Consolidated 34,359 28,306 61,220 42,764 Adjustments: Depreciation (3,143) (2,983) (6,274) (5,856) Amortization (4,627) (2,250) (13,055) (4,492) Interest (7,655) (5,329) (12,525) (10,033) Acquisition costs (1) (86) (146) (92) (732) Stock based compensation expense (2,439) (1,844) (4,561) (4,402) Integration costs and costs of discontinued clinics (2) (735) (8,850) (687) (9,304) Non same-store revenue (3) 5,982 953 10,377 3,235 Non same-store costs (3) (10,493) (3,698) (19,832) (10,098) Clinic launch expenses (4) (576) (603) (1,280) (1,279) Loss on extinguishment and related costs (6,438) — (6,438) — Litigation expenses (320) (384) (563) (433) COVID-19 related costs (5) — (4,433) — (4,433) Pretax net income (loss) $ 3,829 $ (1,261) $ 6,290 $ (5,063) Income tax benefit (expense) 205 (188) 130 981 Net loss $ 4,034 $ (1,449) $ 6,420 $ (4,082) (1) Acquisition costs include legal, accounting, banking, consulting, diligence, and other out-of-pocket costs related to completed and contemplated acquisitions. (2) 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. (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) 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. (5) Costs related to maintaining service segment infrastructure, staffing, and overhead related 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. |
Summary of net book value of property plant and equipment, net by location | Six months ended June 30, 2021 $'s in 000's U.S. Foreign Total Product sales $ 469,473 $ 3,418 $ 472,891 Service revenue 52,467 — 52,467 Total net sales $ 521,940 $ 3,418 $ 525,358 Six months ended June 30, 2020 $'s in 000's U.S. Foreign Total Product sales $ 428,332 $ 2,255 $ 430,587 Service revenue 23,173 — 23,173 Total net sales $ 451,505 $ 2,255 $ 453,760 Three months ended June 30, 2021 $'s in 000's U.S. Foreign Total Product sales $ 240,897 $ 1,960 $ 242,857 Service revenue 28,154 — 28,154 Total net sales $ 269,051 $ 1,960 $ 271,011 Three months ended June 30, 2020 $'s in 000's U.S. Foreign Total Product sales $ 263,260 $ 1,047 $ 264,307 Service revenue 2,675 — 2,675 Total net sales $ 265,935 $ 1,047 $ 266,982 Property, plant, and equipment by geographic location is below. June 30, 2021 December 31, 2020 United States $ 70,942 $ 61,807 Europe 1,283 1,339 Total $ 72,225 $ 63,146 |
Principal Business Activity a_4
Principal Business Activity and Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2021segmentlocationitemstate | |
Principal Business Activity and Significant Accounting Policies | |
Number of points of distribution | item | 60,000 |
Number of retail pharmacy locations | location | 2,900 |
Number of states in which the entity provides veterinary services to pet owners | state | 41 |
Number of reportable segments | segment | 2 |
Principal Business Activity a_5
Principal Business Activity and Significant Accounting Policies - Receivables and Credit Policy (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Receivables and Credit Policy | ||
Accounts receivable, gross | $ 160,190 | $ 103,475 |
Less: Allowance for doubtful accounts | (390) | (720) |
Total accounts receivable, net | 159,800 | 102,755 |
Trade receivables | ||
Receivables and Credit Policy | ||
Accounts receivable, gross | 148,906 | 96,381 |
Other receivables | ||
Receivables and Credit Policy | ||
Accounts receivable, gross | $ 11,284 | $ 7,094 |
Principal Business Activity a_6
Principal Business Activity and Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Inventories | ||
Raw materials | $ 13,408 | $ 15,761 |
Work in progress | 1,482 | 2,273 |
Finished goods | 103,499 | 79,739 |
Total inventories | $ 118,389 | $ 97,773 |
Principal Business Activity a_7
Principal Business Activity and Significant Accounting Policies - Property, Plant, and Equipment (Details) | 6 Months Ended |
Jun. 30, 2021 | |
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 a_8
Principal Business Activity and Significant Accounting Policies - Convertible Debt (Details) $ in Millions | May 19, 2020USD ($) |
Convertible Notes | |
Debt Instrument [Line Items] | |
Aggregate principal amount | $ 143.8 |
Principal Business Activity a_9
Principal Business Activity and Significant Accounting Policies - Disaggregation of revenue (Details) | Jun. 30, 2021 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-09-30 | |
Disaggregation of revenue | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Principal Business Activity _10
Principal Business Activity and Significant Accounting Policies - Research and Development and Advertising Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Research and Development and Advertising Costs | ||||
Research and development costs | $ 0.9 | $ 0.9 | $ 2 | $ 1.9 |
Advertising costs | $ 5.1 | $ 3.3 | $ 7.5 | $ 5.8 |
Principal Business Activity _11
Principal Business Activity and Significant Accounting Policies - Collaboration Agreements (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($)product | |
Collaboration Agreements | |
Number of product opted out | product | 2 |
Collaboration agreements, contingent payments to be made | $ | $ 5.8 |
Principal Business Activity _12
Principal Business Activity and Significant Accounting Policies - Non-controlling interest (Details) | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Continuing LLC Owners | |||
Noncontrolling Interest [Line Items] | |||
Interest held by non-controlling owners | 1.50% | 10.60% | 16.80% |
Principal Business Activity _13
Principal Business Activity and Significant Accounting Policies - Adopted Accounting Standard Updates (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Liabilities | |||||
Long-term debt, less current installments | $ 454,588 | $ 454,588 | $ 403,591 | ||
Stockholder's Equity | |||||
Additional Paid in Capital | 358,506 | 358,506 | 319,642 | ||
Non-controlling Interest | 3,714 | 3,714 | 25,983 | ||
Accumulated deficit | (92,499) | (92,499) | (98,558) | ||
Condensed Consolidated Statements of Operations | |||||
Interest expense, net | (7,655) | $ (5,329) | (12,525) | $ (10,033) | |
Income tax (expense) benefit | 205 | (188) | 130 | 981 | |
Net income (loss) | $ 4,034 | (1,449) | $ 6,420 | (4,082) | |
As reported | ASU 2020-06 | |||||
Liabilities | |||||
Long-term debt, less current installments | 355,979 | ||||
Stockholder's Equity | |||||
Additional Paid in Capital | 356,442 | ||||
Non-controlling Interest | 31,614 | ||||
Accumulated deficit | (93,377) | ||||
Condensed Consolidated Statements of Operations | |||||
Interest expense, net | (5,967) | (10,671) | |||
Income tax (expense) benefit | (61) | 1,108 | |||
Net income (loss) | (1,960) | (4,593) | |||
Adjustment | ASU 2020-06 | |||||
Liabilities | |||||
Long-term debt, less current installments | 47,612 | ||||
Stockholder's Equity | |||||
Additional Paid in Capital | (36,800) | ||||
Non-controlling Interest | (5,631) | ||||
Accumulated deficit | $ (5,181) | ||||
Condensed Consolidated Statements of Operations | |||||
Interest expense, net | 638 | 638 | |||
Income tax (expense) benefit | (127) | (127) | |||
Net income (loss) | $ 511 | $ 511 |
Asset Acquisitions - Capstar Ac
Asset Acquisitions - Capstar Acquisition (Details) $ in Thousands | Jul. 31, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) |
Business Acquisition [Line Items] | |||
Acquisition Price | $ 18,302 | $ 10,425 | |
Capitalized asset acquisition cost | $ 1,100 | ||
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 |
Asset Acquisitions - Supplier T
Asset Acquisitions - Supplier Termination, Settlement and Asset Purchase Agreement (Details) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended |
Jul. 31, 2020 | Jun. 30, 2021 | |
Business Acquisition [Line Items] | ||
Amount required to pay pursuant to settlement agreement | $ 20.6 | |
Payment on signing | 2.6 | |
Payment per quarter | 1 | |
Estimated fair value of the payment obligation | 17.5 | |
Fair value of assets acquired | $ 9.7 | |
Patents and processes | ||
Business Acquisition [Line Items] | ||
Amortizable Intangibles, useful lives | 10 years |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Property, Plant, and Equipment | |||||
Property, plant and equipment, gross | $ 106,725 | $ 106,725 | $ 94,254 | ||
Less accumulated depreciation | (34,500) | (34,500) | (31,108) | ||
Total property, plant, and equipment | 72,225 | 72,225 | 63,146 | ||
Depreciation and amortization expense | 3,143 | $ 2,983 | 6,274 | $ 5,856 | |
Other current assets held for sale | 3,200 | 3,200 | |||
Leasehold improvements | |||||
Property, Plant, and Equipment | |||||
Property, plant and equipment, gross | 22,844 | 22,844 | 19,709 | ||
Equipment | |||||
Property, Plant, and Equipment | |||||
Property, plant and equipment, gross | 25,943 | 25,943 | 25,664 | ||
Vehicles and accessories | |||||
Property, Plant, and Equipment | |||||
Property, plant and equipment, gross | 6,978 | 6,978 | 7,110 | ||
Computer equipment and software | |||||
Property, Plant, and Equipment | |||||
Property, plant and equipment, gross | 10,994 | 10,994 | 10,858 | ||
Buildings | |||||
Property, Plant, and Equipment | |||||
Property, plant and equipment, gross | 8,653 | 8,653 | 10,168 | ||
Furniture and fixtures | |||||
Property, Plant, and Equipment | |||||
Property, plant and equipment, gross | 2,396 | 2,396 | 2,347 | ||
Land | |||||
Property, Plant, and Equipment | |||||
Property, plant and equipment, gross | 6,407 | 6,407 | 7,067 | ||
Construction in Progress | |||||
Property, Plant, and Equipment | |||||
Property, plant and equipment, gross | $ 22,510 | $ 22,510 | $ 11,331 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Intangible Assets (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)project | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Intangible Assets and Goodwill | |||||
Amortizable Intangibles, gross | $ 200,349 | $ 200,349 | $ 200,173 | ||
Less accumulated amortization | (35,352) | (35,352) | (25,984) | ||
Total net amortizable intangibles | 164,997 | 164,997 | 174,189 | ||
Intangible assets, net of accumulated amortization | 200,006 | 200,006 | 213,000 | ||
Amortization expense | 4,600 | $ 2,300 | $ 13,100 | $ 4,500 | |
Number of acquired R&D projects | project | 2 | ||||
General and Administrative Expense | 43,142 | $ 38,492 | $ 83,814 | $ 70,182 | |
Trademarks and other | |||||
Intangible Assets and Goodwill | |||||
Non-amortizable intangibles | 33,341 | 33,341 | 33,341 | ||
IPRD | |||||
Intangible Assets and Goodwill | |||||
Non-amortizable intangibles | 1,668 | $ 1,668 | 5,470 | ||
Number of acquired R&D projects | project | 3 | ||||
General and Administrative Expense | $ 3,800 | ||||
Certification | |||||
Intangible Assets and Goodwill | |||||
Amortizable Intangibles, useful lives | 7 years | ||||
Amortizable Intangibles, gross | 350 | $ 350 | 350 | ||
Customer relationships | |||||
Intangible Assets and Goodwill | |||||
Amortizable Intangibles, gross | 160,228 | $ 160,228 | 160,178 | ||
Patents and processes | |||||
Intangible Assets and Goodwill | |||||
Amortizable Intangibles, useful lives | 10 years | ||||
Amortizable Intangibles, gross | 14,993 | $ 14,993 | 14,905 | ||
Brand names | |||||
Intangible Assets and Goodwill | |||||
Amortizable Intangibles, gross | $ 24,778 | $ 24,778 | $ 24,740 | ||
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 Goodwil_3
Intangible Assets and Goodwill - Estimated future amortization expense (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Intangible Assets and Goodwill | |
Remainder of 2021 | $ 9,261 |
2022 | 17,984 |
2023 | 16,933 |
2024 | 14,562 |
2025 | 13,899 |
Thereafter | $ 92,358 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Goodwill, Beginning Balance | $ 231,158 | $ 231,045 |
Foreign currency translation | 209 | 113 |
Goodwill, Ending Balance | 231,367 | 231,158 |
Product | ||
Goodwill, Beginning Balance | 183,894 | 183,781 |
Foreign currency translation | 209 | 113 |
Goodwill, Ending Balance | 184,103 | 183,894 |
Services | ||
Goodwill, Beginning Balance | 47,264 | 47,264 |
Foreign currency translation | ||
Goodwill, Ending Balance | $ 47,264 | $ 47,264 |
Debt - Narative (Details)
Debt - Narative (Details) - USD ($) $ in Millions | May 13, 2021 | Apr. 13, 2021 | Jun. 30, 2021 |
Debt Instrument [Line Items] | |||
Wrote off deferred financing fees to loss on debt extinguishment | $ 5.5 | ||
Transaction cost on termination of debt instrument | $ 0.9 | ||
Debt instrument, frequency of periodic payment | quarterly | ||
Term loan B | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 300 | ||
Asset-based revolving line of credit | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | 125 | ||
VIP seller notes | |||
Debt Instrument [Line Items] | |||
Repayment of debt | 27.5 | ||
Senior Secured Asset-Based Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 125 | ||
Line of credit facility contingent increase, additional borrowing capacity | $ 50 | ||
Eligible investment - grade accounts | 90.00% | ||
Percentage of eligible investment other accounts | 85.00% | ||
Percentage of net orderly liquidation value of cost of certain eligible on hand and in transit inventory | 85.00% | ||
Percentage of qualified cash | 100.00% | ||
Line of credit facility, interest rate at period end | 1.59% | ||
Unused facility fee (as a percent) | 0.35% | ||
Senior Secured Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 300 | ||
Line of credit facility, interest rate at period end | 4.75% | ||
Floor rate | 0.50% | ||
Percentage of periodic payment, principal | 0.25% | ||
Senior Secured Term Loan Facility | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Variable interest rate, basis points spread over variable reference rate (as a percent) | 3.25% | ||
Senior Secured Term Loan Facility | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Variable interest rate, basis points spread over variable reference rate (as a percent) | 4.25% |
Debt - Convertible Notes (Detai
Debt - Convertible Notes (Details) $ / shares in Units, $ in Thousands | May 19, 2020USD ($)D | Jun. 30, 2021USD ($)$ / shares | Dec. 31, 2020$ / shares | Jul. 31, 2017 |
Debt Instrument [Line Items] | ||||
Interest rate | 4.35% | |||
Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 143,800 | |||
Interest rate | 4.00% | |||
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 | 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 | $ 1,000 | |||
Premium percentage on conversion price | 130.00% | |||
Threshold trading days | D | 20 | |||
Threshold consecutive trading days | D | 30 | |||
Fair value of our convertible notes | $ 2,000 |
Debt - A&R (Details)
Debt - A&R (Details) - USD ($) $ in Thousands | May 14, 2020 | Jul. 08, 2019 | Jul. 31, 2020 | Jul. 31, 2017 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2019 | Jul. 31, 2021 | Dec. 31, 2020 |
Debt | |||||||||
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 | ||||||||
Payment on signing | 2,600 | ||||||||
Payment per quarter | $ 1,000 | ||||||||
Market interest rate | 8.30% | ||||||||
Estimated fair value of the payment obligation | $ 17,500 | ||||||||
Balloon payment | 10 years | ||||||||
Other Debt | $ 14,761 | $ 16,257 | |||||||
Net discount on debt and deferred financing fees | (11,091) | (9,947) | |||||||
Long-term Debt, Total | 462,420 | 409,810 | |||||||
Less current maturities of long-term debt | (7,832) | (6,219) | |||||||
Long-term debt, less current installments | 454,588 | 403,591 | |||||||
Future maturities of long-term debt | |||||||||
Remainder of 2021 | $ 5,665 | ||||||||
2022 | 6,246 | ||||||||
2023 | 6,524 | ||||||||
2024 | 6,827 | ||||||||
2025 | 3,000 | ||||||||
Thereafter | 445,249 | ||||||||
Debt issuance costs | 6,360 | $ 275 | |||||||
Convertible Notes [Member] | |||||||||
Debt | |||||||||
Outstanding balance | 143,750 | 143,750 | |||||||
Revolving credit facility | |||||||||
Debt | |||||||||
Maximum borrowing capacity | $ 125,000 | ||||||||
Outstanding balance | 15,000 | 15,000 | |||||||
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 | $ 300,000 | 217,250 | |||||||
A&R Term Loan Credit Agreement | |||||||||
Debt | |||||||||
Maximum borrowing capacity | $ 220,000 | ||||||||
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 | ||||||||
Guaranteed note | |||||||||
Debt | |||||||||
Long-term Debt, Total | $ 10,000 |
Leases - Narrative (Details)
Leases - Narrative (Details) | Jun. 30, 2021 |
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 ex
Leases - Components of lease expense and other information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Lease cost | |||||
Amortization of right-of-use assets | $ 803 | $ 391 | $ 1,369 | $ 782 | |
Interest on lease liabilities | 123 | 77 | 214 | 159 | |
Operating lease cost | 1,332 | 1,279 | 2,624 | 3,110 | |
Variable lease cost | 309 | 78 | 615 | 253 | |
Short-term lease cost | 2 | 14 | 6 | 19 | |
Sublease income | (65) | (226) | (108) | (452) | |
Total lease cost | $ 2,504 | $ 1,613 | $ 4,720 | $ 3,871 | |
Weighted-average remaining lease term (years), Operating leases | 4 years 1 month 17 days | 4 years 7 months 24 days | 4 years 1 month 17 days | 4 years 7 months 24 days | |
Weighted-average remaining lease term (years), Finance leases | 2 years 7 months 13 days | 2 years 7 months 2 days | 2 years 7 months 13 days | 2 years 7 months 2 days | |
Weighted-average discount rate, Operating leases | 5.20% | 5.20% | 5.30% | ||
Weighted-average discount rate, Finance leases | 4.80% | 4.80% | 5.80% |
Leases - Annual future commitme
Leases - Annual future commitments under non-cancelable leases (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Lease Obligations, Operating Leases | ||
Remainder of 2021 | $ 3,221 | |
2022 | 6,336 | |
2023 | 5,535 | |
2024 | 3,981 | |
2025 | 3,031 | |
Thereafter | 1,639 | |
Total minimum future obligations | 23,743 | |
Less interest | (2,717) | |
Present value of net future minimum obligations | 21,026 | |
Less current lease obligations | (5,431) | $ (4,915) |
Long-term lease obligations | 15,595 | 15,789 |
Lease Obligations, Finance Leases | ||
Remainder of 2021 | 807 | |
2022 | 1,528 | |
2023 | 1,321 | |
2024 | 445 | |
2025 | 51 | |
Total minimum future obligations | 4,152 | |
Less interest | (286) | |
Present value of net future minimum obligations | 3,866 | |
Less current lease obligations | (1,311) | |
Long-term lease obligations | $ 2,555 | $ 3,338 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2021 | |
Leases | ||
Operating cash flows from finance leases | $ 159 | $ 214 |
Operating cash flows from operating leases | 3,058 | 2,525 |
Financing cash flows from finance leases | 761 | 1,226 |
Operating leases | 2,106 | 2,810 |
Finance lease additions | $ 381 | $ 141 |
Income Tax (Details)
Income Tax (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income tax expense (benefit) | (5.40%) | (14.90%) | (2.10%) | 19.40% | ||
Income tax expense (benefit) at federal statutory rate | 21.00% | 21.00% | 21.00% | 21.00% | ||
Deferred Tax Assets, Valuation Allowance | $ 94 | $ 94 | $ 71.2 | |||
Continuing LLC Owners | ||||||
Interest held by non-controlling owners | 1.50% | 1.50% | 10.60% | 16.80% | ||
PetIQ | ||||||
Interest held by parent | 98.50% | 98.50% | 89.40% | 83.20% |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Numerator: | ||||
Net income (loss) | $ 4,034 | $ (1,449) | $ 6,420 | $ (4,082) |
Less: net (loss) income attributable to non-controlling interests | 8 | 27 | 361 | (503) |
Net income (loss) attributable to PetIQ, Inc. | $ 4,026 | $ (1,476) | $ 6,059 | $ (3,579) |
Denominator: | ||||
Weighted-average shares of Class A common stock outstanding -- basic | 28,491 | 24,425 | 27,444 | 24,077 |
Weighted-average shares of Class A common stock outstanding - diluted (in shares) | 29,156 | 24,425 | 28,059 | 24,077 |
Loss per share of Class A common stock - basic | $ 0.14 | $ (0.06) | $ 0.22 | $ (0.15) |
Loss per share of Class A common stock - diluted | $ 0.14 | $ (0.06) | $ 0.22 | $ (0.15) |
Stock options | ||||
Denominator: | ||||
Dilutive effects of stocks | 518 | 470 | ||
Anti dilutive shares excluded from computation of diluted earnings per share | 480 | 652 | ||
RSU | ||||
Denominator: | ||||
Dilutive effects of stocks | 147 | 145 | ||
Anti dilutive shares excluded from computation of diluted earnings per share | 88 | 88 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Stock Based Compensation | |||||
Stock based compensation expense | $ 2,439 | $ 1,844 | $ 4,561 | $ 4,402 | |
Stock Options Granted (in shares) | 354,000 | 505,000 | |||
Vesting percentage on each anniversary of the grant date | 25.00% | ||||
Maximum term for stock options | 6 years 3 months | 6 years 3 months | |||
Weighted average grant date fair value of stock options granted | $ 12.39 | ||||
Unrecognized compensation cost related to unvested stock options | $ 9,800 | $ 9,800 | |||
Unrecognized compensation cost related to unvested options, recognized weighted-average period | 2 years 3 months 18 days | ||||
Omnibus Plan | |||||
Stock Based Compensation | |||||
Share available for issuance | 0 | 0 | |||
Class A common stock | |||||
Stock Based Compensation | |||||
Number of shares reserved | 800,000 | 800,000 | |||
Class A common stock | Omnibus Plan | |||||
Stock Based Compensation | |||||
Shares reserved for future issuance | 3,914 | 3,914 | |||
Share available for issuance | 698,000 | 1,294,000 | 698,000 | 1,294,000 | |
Maximum | |||||
Stock Based Compensation | |||||
Maximum term for stock options | 10 years | ||||
Stock options | |||||
Stock Based Compensation | |||||
Stock based compensation expense | $ 1,400 | $ 1,300 | $ 2,700 | $ 3,500 |
Stock Based Compensation - Weig
Stock Based Compensation - Weighted Average Assumptions (Details) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Stock Based Compensation | ||
Expected term (years) | 6 years 3 months | 6 years 3 months |
Expected volatility | 33.91% | 33.91% |
Risk-free interest rate | 0.90% | 0.72% |
Dividend yield | 0.00% | 0.00% |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Unvested Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Stock Based Compensation | |||
Stock Options Outstanding - Beginning Balance | 2,086 | 2,072 | |
Stock Options Granted (in shares) | 354 | 505 | |
Stock option Exercised (in shares) | (531) | (395) | |
Stock Options Forfeited (in shares) | (24) | (96) | |
Stock Options Cancelled (in shares) | (1) | ||
Stock Options Outstanding - Ending Balance | 1,884 | 2,086 | 2,072 |
Options exercisable - Ending Balance | 646 | ||
Weighted Average Exercise Price Outstanding - Beginning Balance | $ 23.93 | $ 24.63 | |
Weighted Average Exercise Price - Granted | 35.66 | 20.22 | |
Weighted Average Exercise Price - Exercised | 23.72 | 23.48 | |
Weighted Average Exercise Price - Forfeited | 22.61 | 21.42 | |
Weighted Average Exercise Price - Cancelled | 27.73 | ||
Weighted Average Exercise Price Outstanding - Ending Balance | $ 26.21 | $ 23.93 | $ 24.63 |
Aggregate Intrinsic Value | $ 23,369 | $ 30,302 | $ 6,266 |
Aggregate Intrinsic Value - Exercised | $ 8,025 | $ 4,468 | |
Weighted Average Remaining Contractual Life (years) | 7 years 9 months 18 days | 7 years 2 months 12 days | 8 years |
Stock Based Compensation - Rest
Stock Based Compensation - Restricted Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Unrecognized compensation cost related to unvested stock options | $ 9,800 | $ 9,800 | |||
Share-based Compensation | 2,439 | $ 1,844 | 4,561 | $ 4,402 | |
Income Tax Expense (Benefit) | (205) | 188 | (130) | (981) | |
RSU | |||||
Unrecognized compensation cost related to unvested stock options | 13,900 | $ 13,900 | |||
Vesting period | 3 years 2 months 12 days | ||||
Share-based Compensation | $ 1,000 | $ 500 | $ 1,800 | $ 900 | |
Number of Shares | |||||
Beginning Balance | 317 | 133 | 133 | ||
Granted (in shares) | 268 | 271 | |||
Settled (in shares) | (75) | (70) | |||
Forfeited (in shares) | (9) | (17) | |||
Ending balance | 501 | 501 | 317 | ||
Weighted Average Grant Date Fair Value | |||||
Beginning Balance | $ 22.91 | $ 28.85 | $ 28.85 | ||
Granted (per share) | 37.92 | 20.73 | |||
Settled (per share) | 21.87 | 25.65 | |||
Forfeited (per share) | 23.09 | 23.34 | |||
Ending balance | $ 31.08 | $ 31.08 | $ 22.91 |
Stockholder's Equity (Details)
Stockholder's Equity (Details) - $ / shares shares in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Class of Stock [Line Items] | |||
Common stock, shares outstanding | 28,909 | 25,711 | 23,554 |
Exchange of common shares | 2,615 | 1,712 | |
Class A common stock | |||
Class of Stock [Line Items] | |||
Common stock authorized | 125,000 | 125,000 | |
Common stock, par value | $ 0.001 | $ 0.001 | |
Common Stock, Shares, Issued | 28,909 | 25,711 | |
Common stock, shares outstanding | 28,909 | 25,711 | |
Class B common stock | |||
Class of Stock [Line Items] | |||
Common stock authorized | 100,000 | 100,000 | |
Common stock, par value | $ 0.001 | $ 0.001 | |
Common Stock, Shares, Issued | 425 | 3,040 | |
Common stock, shares outstanding | 425 | 3,040 | |
Amended Holdco LLC Agreement | |||
Class of Stock [Line Items] | |||
Common stock, shares outstanding | 29,334 | 28,751 | 28,306 |
Stockholder's Equity - Capped C
Stockholder's Equity - Capped Call Transactions (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Stockholder's Equity | |
Payment for Capped Call Options | $ 14,821 |
Non-Controlling Interests (Deta
Non-Controlling Interests (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Common Stock, Shares, Outstanding, Beginning Balance | 25,711 | 23,554 | 23,554 | |||
Stock based compensation adjustments | 583 | 445 | ||||
Exchange transactions | 2,615 | 1,712 | ||||
Common Stock, Shares, Outstanding, Ending Balance | 28,909 | 28,909 | 25,711 | |||
Continuing LLC Owners | ||||||
Common Stock, Shares, Outstanding, Beginning Balance | 3,040 | 4,752 | 4,752 | |||
Exchange transactions | (2,615) | (1,712) | ||||
Common Stock, Shares, Outstanding, Ending Balance | 425 | 425 | 3,040 | |||
Amended Holdco LLC Agreement | ||||||
Common Stock, Shares, Outstanding, Beginning Balance | 28,751 | 28,306 | 28,306 | |||
Stock based compensation adjustments | 583 | 445 | ||||
Common Stock, Shares, Outstanding, Ending Balance | 29,334 | 29,334 | 28,751 | |||
Holdco | ||||||
Weighted average ownership percentage in Holdco | 97.50% | 86.00% | 94.40% | 84.90% | ||
Continuing LLC Owners | ||||||
Ownership interest by continuing LLC owners | 1.50% | 1.50% | 10.60% | 16.80% | ||
PetIQ | ||||||
Ownership interest in Holdco | 98.50% | 98.50% | 89.40% | 83.20% |
Customer Concentration (Details
Customer Concentration (Details) - customer | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Customer concentrations | Sales | |||||
Customer Concentration | |||||
Number of customers accounted for more than 10% of sales individually | 2 | 3 | 1 | 3 | |
Customer concentrations | Sales | One Customer | |||||
Customer Concentration | |||||
Concentration risk | 26.00% | ||||
Customer concentrations | Sales | Two Customers | |||||
Customer Concentration | |||||
Concentration risk | 33.00% | ||||
Customer concentrations | Sales | Three Customers | |||||
Customer Concentration | |||||
Concentration risk | 54.00% | 51.00% | |||
Customer concentrations | Accounts receivable | |||||
Customer Concentration | |||||
Number of customers accounted for more than 10% of sales individually | 1 | 1 | |||
Credit concentrations | Accounts receivable | One Customer | |||||
Customer Concentration | |||||
Concentration risk | 38.00% | 52.00% |
Segments (Details)
Segments (Details) $ in Thousands | Jan. 17, 2018segment | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)segment | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Segments | ||||||
Number of operating segments | segment | 2 | |||||
Number of reportable segments | segment | 2 | |||||
Financial information relating to the Company's operating segments | ||||||
Net Sales | $ 271,011 | $ 266,982 | $ 525,358 | $ 453,760 | ||
Adjusted EBITDA | 34,359 | 28,306 | 61,220 | 42,764 | ||
Property, plant and equipment, net | 72,225 | 72,225 | $ 63,146 | |||
Depreciation expense | 3,143 | 2,983 | 6,274 | 5,856 | ||
Capital expenditures | 9,977 | 5,350 | 18,302 | 10,425 | ||
United States | ||||||
Financial information relating to the Company's operating segments | ||||||
Net Sales | 269,051 | 265,935 | 521,940 | 451,505 | ||
Property, plant and equipment, net | 70,942 | 70,942 | 61,807 | |||
Foreign | ||||||
Financial information relating to the Company's operating segments | ||||||
Net Sales | 1,960 | 1,047 | 3,418 | 2,255 | ||
Europe | ||||||
Financial information relating to the Company's operating segments | ||||||
Property, plant and equipment, net | 1,283 | 1,283 | $ 1,339 | |||
Products | ||||||
Financial information relating to the Company's operating segments | ||||||
Net Sales | 242,857 | 264,307 | 472,891 | 430,587 | ||
Products | United States | ||||||
Financial information relating to the Company's operating segments | ||||||
Net Sales | 240,897 | 263,260 | 469,473 | 428,332 | ||
Products | Foreign | ||||||
Financial information relating to the Company's operating segments | ||||||
Net Sales | 1,960 | 1,047 | 3,418 | 2,255 | ||
Services | ||||||
Financial information relating to the Company's operating segments | ||||||
Net Sales | 28,154 | 2,675 | 52,467 | 23,173 | ||
Services | United States | ||||||
Financial information relating to the Company's operating segments | ||||||
Net Sales | 28,154 | 2,675 | 52,467 | 23,173 | ||
Operating Segments | Products | ||||||
Financial information relating to the Company's operating segments | ||||||
Net Sales | 242,857 | 264,307 | 472,891 | 430,587 | ||
Adjusted EBITDA | 48,187 | 41,851 | 86,979 | 66,130 | ||
Depreciation expense | 991 | 1,167 | 1,931 | 2,484 | ||
Capital expenditures | 685 | 3,593 | 955 | 5,266 | ||
Operating Segments | Services | ||||||
Financial information relating to the Company's operating segments | ||||||
Net Sales | 28,154 | 2,675 | 52,467 | 23,173 | ||
Adjusted EBITDA | 3,028 | 1,112 | 5,124 | 3,101 | ||
Depreciation expense | 1,288 | 890 | 2,470 | 1,737 | ||
Capital expenditures | 4,254 | 940 | 6,633 | 3,773 | ||
Corporate, Non-Segment | Unallocated Corporate | ||||||
Financial information relating to the Company's operating segments | ||||||
Adjusted EBITDA | (16,856) | (14,657) | (30,883) | (26,467) | ||
Depreciation expense | 864 | 926 | 1,873 | 1,635 | ||
Capital expenditures | $ 5,038 | $ 817 | $ 10,714 | $ 1,386 |
Segments - Reconciliation (Deta
Segments - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Adjusted EBITDA | $ 34,359 | $ 28,306 | $ 61,220 | $ 42,764 |
Depreciation | (3,143) | (2,983) | (6,274) | (5,856) |
Amortization | (4,627) | (2,250) | (13,055) | (4,492) |
Interest | (7,655) | (5,329) | (12,525) | (10,033) |
Acquisition costs | (86) | (146) | (92) | (732) |
Stock based compensation expense | (2,439) | (1,844) | (4,561) | (4,402) |
Non same-store revenue | 5,982 | 953 | 10,377 | 3,235 |
Non same-store costs | (10,493) | (3,698) | (19,832) | (10,098) |
Integration costs and costs of discontinued clinics | (735) | (8,850) | (687) | (9,304) |
Clinic launch expenses | (576) | (603) | (1,280) | (1,279) |
Loss on extinguishment and related costs | (6,438) | (6,438) | ||
Litigation expenses | (320) | (384) | (563) | (433) |
COVID-19 related costs | (4,433) | (4,433) | ||
Pretax net income (loss) | 3,829 | (1,261) | 6,290 | (5,063) |
Income tax (expense) benefit | 205 | (188) | 130 | 981 |
Net income (loss) | 4,034 | (1,449) | 6,420 | (4,082) |
Products | Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Adjusted EBITDA | 48,187 | 41,851 | 86,979 | 66,130 |
Services | Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Adjusted EBITDA | 3,028 | 1,112 | 5,124 | 3,101 |
Unallocated Corporate | Corporate, Non-Segment | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Adjusted EBITDA | $ (16,856) | $ (14,657) | $ (30,883) | $ (26,467) |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Chris Christensen | ||||
Related Parties | ||||
Payment of premium expenses | $ 300 | $ 0 | $ 300 | $ 300 |
Commission paid | 15 | $ 0 | 15 | $ 18 |
Acadia Investor Relations L LC | ||||
Related Parties | ||||
Related party transaction, expenses from transactions with Related Party | $ 60 | $ 100 |
Uncategorized Items - petq-2021
Label | Element | Value |
Adjustments to Additional Paid in Capital, Net Increase In Deferred Tax Asset | petq_AdjustmentsToAdditionalPaidInCapitalNetIncreaseInDeferredTaxAsset | $ 2,585,000 |
Other Comprehensive Income (Loss), Net of Tax | us-gaap_OtherComprehensiveIncomeLossNetOfTax | (104,000) |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 1,169,000 |
Adjustments To Additional Paid In Capital, Payment For Capped Call Share Options | petq_AdjustmentsToAdditionalPaidInCapitalPaymentForCappedCallShareOptions | (14,821,000) |
Stock Issued During Period, Value, Restricted Stock Award, Gross | us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardGross | (37,000) |
APIC, Share-based Payment Arrangement, Increase for Cost Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 1,844,000 |
Accrued Tax Distributions | petq_AccruedTaxDistributions | 206,000 |
Retained Earnings [Member] | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | us-gaap_ProfitLoss | (1,476,000) |
Noncontrolling Interest [Member] | ||
Other Comprehensive Income (Loss), Net of Tax | us-gaap_OtherComprehensiveIncomeLossNetOfTax | (2,000) |
Adjustments To Additional Paid In Capital, Payment For Capped Call Share Options | petq_AdjustmentsToAdditionalPaidInCapitalPaymentForCappedCallShareOptions | (2,241,000) |
Exchange of LLC Interest Held | petq_ExchangeOfLlcInterestHeld | 2,050,000 |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | us-gaap_ProfitLoss | 27,000 |
APIC, Share-based Payment Arrangement, Increase for Cost Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 250,000 |
Accrued Tax Distributions | petq_AccruedTaxDistributions | 206,000 |
Accumulated Distributions In Excess Of Net Income [Member] | ||
Other Comprehensive Income (Loss), Net of Tax | us-gaap_OtherComprehensiveIncomeLossNetOfTax | (102,000) |
Exchange of LLC Interest Held | petq_ExchangeOfLlcInterestHeld | 17,000 |
Additional Paid In Capital [Member] | ||
Adjustments to Additional Paid in Capital, Net Increase In Deferred Tax Asset | petq_AdjustmentsToAdditionalPaidInCapitalNetIncreaseInDeferredTaxAsset | 2,585,000 |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 1,169,000 |
Adjustments To Additional Paid In Capital, Payment For Capped Call Share Options | petq_AdjustmentsToAdditionalPaidInCapitalPaymentForCappedCallShareOptions | (12,580,000) |
Exchange of LLC Interest Held | petq_ExchangeOfLlcInterestHeld | (2,067,000) |
Stock Issued During Period, Value, Restricted Stock Award, Gross | us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardGross | (37,000) |
APIC, Share-based Payment Arrangement, Increase for Cost Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | $ 1,594,000 |
Common Class A [Member] | Common Stock [Member] | ||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | us-gaap_StockIssuedDuringPeriodSharesRestrictedStockAwardGross | 7,000 |
Exchange Of LLC Interest Held, Shares | petq_ExchangeOfLlcInterestHeldShares | 279,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | us-gaap_StockIssuedDuringPeriodSharesStockOptionsExercised | 54,000 |
Common Class B [Member] | Common Stock [Member] | ||
Exchange Of LLC Interest Held, Shares | petq_ExchangeOfLlcInterestHeldShares | (279,000) |