Segments

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Segments

Note 11 — 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 Condensed Consolidated Statements of Operations.

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

$'s in 000's	Products		Services
March 31, 2023
Net sales	$	258,993	$	31,478
Segment Adjusted EBITDA	32,196		850
Depreciation expense	1,816		1,705
Capital expenditures	1,565		345

$'s in 000's	Products		Services
March 31, 2022
Net sales	$	247,750	$	27,945
Segment Adjusted EBITDA	30,477		1,118
Depreciation expense	1,928		1,754
Capital expenditures	3,929		1,749

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

	For the three months ended
$'s in 000's	March 31, 2023		March 31, 2022
Segment Adjusted EBITDA:
Products(1)	$	32,196	$	30,477
Services(1)	850		1,118
Total	33,046		31,595
Adjustments:
Depreciation	(3,521)		(3,682)
Amortization	(4,262)		(4,523)
Interest	(8,732)		(6,121)
Acquisition costs(2)	(538)		—
Stock based compensation expense	(2,466)		(3,823)
Non same-store adjustment(3)	(2,322)		(7,165)
Integration costs(4)	(976)		(339)
Litigation expenses	—		(2,661)
Pretax net income	$	10,229	$	3,281
Income tax expense	(448)		(121)
Net income	$	9,781	$	3,160

(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 Products Segment Adjusted EBITDA and Services Segment Adjusted EBITDA for the three months ended March 31, 2022 has been recast for comparability. For the three months ended March 31, 2022, total corporate expenses were $19.4 million, of which $17.4 million was allocated to Products and $2.0 million was allocated to Services.

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

(3) Non same-store adjustment includes revenue and costs, and associated gross profit, related to our Services segment wellness centers and host partners with less than six full quarters of operating results, and also include pre-opening expenses.

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

Supplemental geographic disclosures are below.

	Three Months Ended March 31, 2023
$'s in 000's	U.S.		Foreign		Total
Product sales	$	257,977	$	1,016	$	258,993
Service revenue	31,478		—		31,478
Total net sales	$	289,455	$	1,016	$	290,471

	Three Months Ended March 31, 2022
$'s in 000's	U.S.		Foreign		Total
Product sales	$	245,572	$	2,178	$	247,750
Service revenue	27,945		—		27,945
Total net sales	$	273,517	$	2,178	$	275,695

Property, plant, and equipment by geographic location is below.

	March 31, 2023		December 31, 2022
United States	$	67,707	$	69,376
Europe	3,960		4,019
Total	$	71,667	$	73,395