Note 8 – Earnings (Loss) per Share

Basic and Diluted (Loss) Earnings per share

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

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

Prior to the IPO, the PetIQ, LLC membership structure included several different types of LLC interests including ownership interests and profits interests. The Company analyzed the calculation of earnings per unit for periods prior to the IPO using the two-class method and determined that it resulted in values that would not be meaningful to the users of these consolidated financial statements. Therefore, earnings (loss) per share information has not been presented for periods prior to the IPO on July 20, 2017. The basic and diluted earnings (loss) per share represent only the period July 20, 2017 to December 31, 2019.

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


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

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

Shares of the Company’s Class B common stock do not share in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented.

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