Segment Data

In connection with the Separation, Distribution, and Acquisition, we revised our reportable segments to reflect how the chief operating decision maker (the chief executive officer) (the “CODM”) 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, Distribution, and 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 second quarter of 2019, our CODM began evaluating segment profit (loss) solely based on 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 expenses managed at the corporate level to our segments, such as corporate wages and related benefits, corporate occupancy costs, professional services utilized at the corporate level, and non-recurring expenses. All intersegment balances and transactions have been eliminated in consolidation.

The following tables reflect our segment information and Corporate, the segment recast for the prior years, and reconciles Adjusted EBITDA for reportable segments to consolidated net (loss) income attributable to Covetrus:



	At and For the Year Ended December 31, 2019
	North America		Europe			APAC & Emerging Markets			Corporate			Eliminations			Total
Net sales	$	2,111	$	1,509		$	368		$	—		$	(12	)	$	3,976
Adjusted EBITDA	$	154	$	68		$	19		$	(39	)	$	—		$	202
Depreciation and amortization	$	131	$	18		$	6		$	—		$	—		$	155
Income tax benefit (expense)	$	8	$	(3	)	$	(4	)	$	6		$	—		$	7
Total assets	$	2,941	$	726		$	137		$	783		$	(1,226	)	$	3,361
Expenditures for long-lived assets	$	23	$	10		$	1		$	5		$	—		$	39

Reconciliation of Net Loss Attributable to Covetrus to Adjusted EBITDA:
Net loss attributable to Covetrus															$	(1,019	)
Plus: Depreciation and amortization															155
Plus: Interest expense, net															53
Less: Income tax benefit															(7		)
Earnings before interest, taxes, depreciation, and amortization															(818		)
Plus: Share-based compensation															46
Plus: Transaction costs															2
Plus: Formation of Covetrus															34
Plus: Separation programs and executive severance															11
Plus: Carve-out operating expenses															5
Plus: IT infrastructure															6
Plus: Goodwill impairment															938
Less: Minority interest in goodwill impairment															(3		)
Less: Other (income) expense items, net															(19		)
Adjusted EBITDA															$	202



	At and For the Year Ended December 29, 2018
	North America			Europe			APAC & Emerging Markets			Corporate			Eliminations			Total
Net sales	$	1,939		$	1,463		$	387		$	—		$	(11	)	$	3,778
Adjusted EBITDA	$	157		$	75		$	20		$	(32	)	$	—		$	220
Depreciation and amortization	$	41		$	17		$	6		$	—		$	—		$	64
Income tax expense	$	(18	)	$	(15	)	$	(3	)	$	(1	)	$	—		$	(37	)
Total assets	$	1,343		$	702		$	182		$	10		$	(4	)	$	2,233
Expenditures for long-lived assets	$	14		$	7		$	1		$	—		$	—		$	22

Reconciliation of Net Income Attributable to Covetrus to Adjusted EBITDA:
Net income attributable to Covetrus																$	101
Plus: Depreciation and amortization																64
Plus: Interest expense, net																2
Plus: Income tax expense																37
Earnings before interest, taxes, depreciation, and amortization																204
Plus: Share-based compensation																7
Plus: Separation programs and executive severance																9
Adjusted EBITDA																$	220



	At and For the Year Ended December 30, 2017
	North America			Europe			APAC & Emerging Markets			Corporate			Eliminations			Total
Net sales	$	1,876		$	1,373		$	349		$	—		$	(18	)	$	3,580
Adjusted EBITDA	$	136		$	62		$	16		$	(37	)	$	—		$	177
Depreciation and amortization	$	38		$	16		$	5		$	—		$	—		$	59
Income tax expense	$	(34	)	$	(11	)	$	(2	)	$	(1	)	$	—		$	(48	)
Total assets	$	1,301		$	735		$	174		$	11		$	(4	)	$	2,217
Expenditures for long-lived assets	$	13		$	7		$	1		$	—		$	—		$	21

Reconciliation of Net Income Attributable to Covetrus to Adjusted EBITDA:
Net income attributable to Covetrus																$	64
Plus: Depreciation and amortization																59
Plus: Interest expense, net																2
Plus: Income tax expense																48
Earnings before interest, taxes, depreciation, and amortization																173
Plus: Share-based compensation																4
Adjusted EBITDA																$	177

See Note 4 - Revenue from Contracts with Customers for our revenue disaggregated by major product category and reportable segment.