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Revenue Recognition
 6 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
In accordance with ASC Topic 606 ("Revenue from Contracts with Customers"), the Company generates revenue by selling prescription and non-prescription pet medication products, pet food, supplements, supplies, membership fees, and veterinary services. Certain pet supplies offered on the Company’s websites are drop shipped to customers. The Company considers itself the principal in the arrangement because the Company controls the specified good before it is transferred to the customer. Revenue contracts contain one performance obligation, which is delivery of the product. Customer care and support is deemed not to be a material right to the contract. The transaction price is adjusted at the date of sale for any applicable sales discounts and an estimate of product returns, which are based on historical patterns, however this is not considered a key judgment. Revenue is recognized when control transfers to the customer at the point in time at which the
shipment of the product occurs. This key judgment is determined as the shipping point, which represents the point in time when the Company has a present right to payment, title has transferred to the customer, and the customer has assumed the risks and rewards of ownership. Virtually all the Company’s sales are paid by credit cards and the Company usually receives the cash settlement in two to three banking days. Credit card sales minimize the accounts receivable balances relative to sales.
Outbound shipping and handling fees are an accounting policy election and are included in sales as the Company considers itself the principal in the arrangement given its responsibility for supplier selection and discretion over pricing. Shipping costs associated with outbound freight after control over a product has transferred to a customer are an accounting policy election and are accounted for as fulfillment costs and are included in cost of sales.
Membership fees represent the amounts recognized from two membership models. The first is the PetPlus membership for PetCareRx customers, the second is a partner membership, which allows employees in-network to join PetPlus membership program through their employers. These memberships provide discounted pricing, free standard shipping, veterinary telehealth services and local Caremark Pharmacy prescription pickup which represent a single stand-ready performance obligation to provide these benefits. The PetPlus membership fee is an upfront annual charge and automatically renews one year from the initial enrollment date. The Company recognizes the revenue ratably over the term of the PetPlus membership which is generally one year. As shown in the following table, under the PetPlus program, the Company recognized $1.2 million and $2.7 million of previously deferred annual membership fees in the three and six months ended September 30, 2024, and had $1.6 million of deferred revenue as of the quarter ended September 30, 2024.

(amounts in millions)
Deferred revenue, March 31, 2024
$2.6 
Deferred memberships fees and others received
1.1 
Deferred membership fee revenue and others recognized
(1.5)
Deferred revenue, June 30, 2024
2.1 
Deferred memberships fees and others received
0.7 
Deferred membership fee revenue and others recognized
(1.2)
Deferred revenue, September 30, 2024
$1.6 
In addition to annual membership fees earned under the PetPlus program, the Company also earns membership fees on a month-to-month basis under its PetCareRx partner membership program. For the three and six months ended September 30, 2024, membership fees earned under the partner program were $0.9 million and $1.8 million, respectively. For the three and six months ended September 30, 2023, membership fees earned under the partner program were $0.7 million and $1.3 million, respectively.
The Company has no material contract asset or liability balances at September 30, 2024 and March 31, 2024, respectively.
The Company disaggregates sales in the following categories: reorder sales vs new order sales vs membership fees. The following table illustrates sales in those categories:
Three Months Ended September 30,Increase (Decrease)
Revenue (in thousands)
2024%2023%
$
%
Reorder sales$50,052 84.0 %$58,017 81.7 %$(7,965)(13.7)%
New order sales7,449 12.5 %10,558 14.9 %(3,109)(29.4)%
Membership fees2,069 3.5 %2,424 3.4 %(355)(14.6)%
Total net sales$59,570 100.0 %$70,999 100.0 %$(11,429)(16.1)%
Six Months Ended September 30,
Increase (Decrease)
Revenue (in thousands)
2024%2023%
$
%
Reorder sales$104,291 81.8 %$120,182 80.6 %$(15,891)(13.2)%
New order sales18,838 14.8 %24,251 16.2 %(5,413)(22.3)%
Membership fees4,393 3.4 %4,810 3.2 %(417)(8.7)%
Total net sales$127,522 100.0 %$149,243 100.0 %$(21,721)(14.6)%
The Company changed the definition of a new order sale on July 1, 2024, to include sales from customers who have not previously ordered from the Company over the past twelve months compared to the prior definition which was thirty-six months. The reorder and new order sales amounts for the three and six months ended September 30, 2024, and the reorder and new order sales amounts for the three and six months ended September 30, 2023 reflect this new customer definition change.
Under the previous definition of a new customer, reorder and new order sales were $62.4 million and $6.2 million, respectively, for the three months ended September 30, 2023. Under the previous definition of a new customer, reorder and new order sales were $130.4 million and $14.0 million, respectively, for the six months ended September 30, 2023.