Segment Data

In connection with the Separation and the Acquisition, we made significant changes to our organizational management and reporting structure. As a result, we revised our reportable segments to reflect how the chief operating decision maker (the chief executive officer) (the “CODM”) currently reviews financial information and makes operating decisions. This resulted in a change in the operating segments from (i) supply chain, and (ii) technology and value-added services to (i) North America, (ii) Europe, and (iii) APAC & Emerging Markets. While the historical business was focused on driving growth through specific product and service offerings to its customers, the Separation and the Acquisition allowed for the integration of the different products and service offerings, along with prescription management, data analytics, and insights through veterinary practice management software, into one multi-channel veterinary platform. We will focus on delivering the integrated platform of products and services to our customers on a geographical basis.

During the three months ended June 30, 2019, our CODM began evaluating segment profit (loss) solely based on adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). In the prior period, our CODM was using both operating income and Adjusted EBITDA for measurement purposes, thus operating income was presented as it most closely reflected the measurement principle applied to our consolidated and combined financial statements. We do not allocate to our segments certain items managed at the corporate level. All intersegment balances and transactions have been eliminated in consolidation.

The following tables reflects the segment recast for the prior-year period and reconciles Adjusted EBITDA for reportable segments to consolidated net income (loss):



	At and For the Three Months Ended June 30, 2019
(In millions)	North America		Europe		APAC & Emerging Markets		Corporate			Eliminations			Total
Net sales	$	552	$	370	$	90	$	—		$	(3	)	$	1,009
Adjusted EBITDA	$	43	$	19	$	4	$	(13	)	$	—		$	53
Total assets	$	3,265	$	797	$	191	$	872		$	(935	)	$	4,190

Reconciliation of Net Loss Attributable to Covetrus to Adjusted EBITDA:
Net loss attributable to Covetrus													$	(10	)
Plus: Depreciation and amortization													41
Plus: Interest expense, net													14
Plus: Income tax expense													5
Earnings before interest, taxes, depreciation, and amortization													50
Plus: Share-based compensation													10
Plus: Formation of Covetrus													6
Plus: IT infrastructure													2
Plus: Other (income) expense items													(15		)
Adjusted EBITDA													$	53

	At and For the Three Months Ended June 30, 2018
(In millions)	North America		Europe		APAC & Emerging Markets		Corporate			Eliminations			Total
Net sales	$	520	$	390	$	98	$	—		$	(3	)	$	1,005
Adjusted EBITDA	$	45	$	22	$	5	$	(10	)	$	—		$	62
Total assets	$	1,356	$	681	$	199	$	14		$	(4	)	$	2,246

Reconciliation of Net Income Attributable to Covetrus to Adjusted EBITDA:
Net income attributable to Covetrus													$	29
Plus: Depreciation and amortization													16
Plus: Interest expense, net													1
Plus: Income tax expense													8
Earnings before interest, taxes, depreciation, and amortization													54
Plus: Share-based compensation													2
Plus: Restructuring costs													6
Adjusted EBITDA													$	62



	For the Six Months Ended June 30, 2019
(In millions)	North America		Europe		APAC & Emerging Markets		Corporate			Eliminations			Total
Net sales	$	1,049	$	731	$	176	$	—		$	(6	)	$	1,950
Adjusted EBITDA	$	78	$	35	$	8	$	(15	)	$	—		$	106

Reconciliation of Net Loss Attributable to Covetrus to Adjusted EBITDA:
Net loss attributable to Covetrus													$	(23	)
Plus: Depreciation and amortization													71
Plus: Interest expense, net													25
Plus: Income tax expense													1
Earnings before interest, taxes, depreciation, and amortization													74
Plus: Share-based compensation													25
Plus: Formation of Covetrus													15
Plus: Carve-out operating expenses													5
Plus: IT infrastructure													2
Plus: Other (income) expense items													(15		)
Adjusted EBITDA													106

	For the Six Months Ended June 30, 2018
(In millions)	North America		Europe		APAC & Emerging Markets		Corporate			Eliminations			Total
Net sales	$	1,001	$	761	$	196	$	—		$	(6	)	$	1,952
Adjusted EBITDA	$	79	$	39	$	10	$	(18	)	$	—		$	110

Reconciliation of Net Income Attributable to Covetrus to Adjusted EBITDA:
Net income attributable to Covetrus													$	51
Plus: Depreciation and amortization													33
Plus: Interest expense, net													1
Plus: Income tax expense													14
Earnings before interest, taxes, depreciation, and amortization													99
Plus: Share-based compensation													4
Plus: Restructuring costs													7
Adjusted EBITDA													$	110