Segments

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segments

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. 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 their respective Segment Adjusted EBITDA performance. Beginning in the fourth quarter of 2022, we allocate to our segments capital expenditures and certain costs and expenses, such as accounting, legal, human resources, information technology and corporate headquarters expenses, on a pro rata basis based on net sales to better align with the discrete financial information reviewed by our CODM. Such expenses previously were not allocated to segments. The Company has recast prior periods to give effect to this change. This change in presentation had no impact on the Consolidated Statements of Operations.

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

$'s in 000's	Products		Services
December 31, 2022
Net Sales	$	800,305	$	121,208
Segment Adjusted EBITDA	90,333		3,781
Depreciation expense	7,443		7,077
Capital expenditures	8,432		3,541

$'s in 000's	Products		Services
December 31, 2021
Net Sales	$	825,395	$	107,133
Segment Adjusted EBITDA	88,982		3,910
Depreciation expense	7,397		6,969
Capital expenditures	18,568		12,702

$'s in 000's	Products		Services
December 31, 2020
Net Sales	$	725,705	$	54,346
Segment Adjusted EBITDA	68,084		(292)
Depreciation expense	8,063		4,019
Capital expenditures	14,906		7,486

The following table reconciles Segment EBITDA to Net Loss for the periods presented.

	Year Ended December 31
$'s in 000's	2022		2021		2020
Segment Adjusted EBITDA:
Product(1)	$	90,333	$	88,982	68,084
Services(1)	3,781		3,910		(292)
Total	94,114		92,892		67,792
Adjustments:
Depreciation	(14,520)		(14,366)		(12,082)
Amortization	(18,079)		(22,336)		(12,815)
Interest	(27,374)		(24,696)		(22,807)
Loss on debt extinguishment and related costs(2)	—		(6,438)		—
Acquisition costs(3)	(1,464)		(92)		(2,620)
Stock based compensation expense	(11,363)		(9,428)		(9,170)
Non same-store adjustment(4)	(16,423)		(23,159)		(16,354)
Integration costs(5)	(1,171)		142		(9,776)
Litigation expenses	(3,862)		(4,105)		(1,006)
COVID-19 related costs(6)	—		—		(6,476)
CFO Transition	—		(928)		—
Goodwill impairment(7)	(47,264)		—		—
Pretax net loss	$	(47,406)	$	(12,514)	$	(25,314)
Income tax expense	(1,214)		(3,869)		(60,413)
Net loss	$	(48,620)	$	(16,383)	$	(85,727)

(1)Beginning in the fourth quarter of 2022, the Company is allocating corporate expenses to each segment pro rata based on net sales for each segment. The presentation of Product Adjusted EBITDA and Segment Adjusted EBITDA for the years ended December 31, 2021 and 2020 have been recast for comparability. For the years ended December 31, 2022, 2021 and 2020, total corporate expenses were $75.5 million (of which $65.6 million was allocated to Products and $9.9 million was allocated to Services), $68.2 million (of which $60.4 million was allocated to Products and $7.8 million was allocated to Services) and $52.8 million (of which $49.1 million was allocated to Products and $3.7 million was allocated to Services), respectively.

(2) Loss on debt extinguishment and related costs are related to our entering into two new credit facilities, including the write off of deferred financing costs and related costs.

(3) Acquisition costs include legal, accounting, banking, consulting, diligence, and other costs related to completed and contemplated acquisitions.

(4) Non same-store revenue and costs relate to our Services segment and are from wellness centers with less than six full quarters of operating results. This includes clinic launch expenses.

(5) Integration costs represent costs related to integrating the acquired businesses including personnel costs such as severance and signing bonuses, consulting costs, contract termination, and IT conversion costs. The costs are primarily within the Products segment.

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

(7) Non-cash goodwill impairment due to a significant decline in the Company’s market capitalization, driven primarily by rising interest rates and macroeconomic conditions. Additionally, the Company made the strategic decision to slow expansion plans for the Services business.

Supplemental geographic disclosures are below.

	Year ended December 31, 2022
$'s in 000's	U.S.		Foreign		Total
Product sales	$	793,427	$	6,878	$	800,305
Service revenue	121,208		—		121,208
Total net sales	$	914,635	$	6,878	$	921,513

	Year ended December 31, 2021
$'s in 000's	U.S.		Foreign		Total
Product sales	$	818,593	$	6,802	$	825,395
Service revenue	107,133		—		107,133
Total net sales	$	925,726	$	6,802	$	932,528

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

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

	December 31, 2022		December 31, 2021
United States	$	69,376	$	75,315
Europe	4,019		1,298
Total	$	73,395	$	76,613