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Segment Data
 12 Months Ended
Dec. 31, 2021
Segment Reporting [Abstract]  
Segment Data
2. SEGMENT DATA

We are organized based upon geographic region and focus on delivering our platform of products and services to our customers on a geographical basis which reflect how the CODM reviews financial information and makes operating decisions. We have three reportable segments are (i) North America, (ii) Europe, and (iii) APAC & Emerging Markets. Our major product groups that we disaggregate within our reportable segments are (i) supply chain services, (ii) software services, and (iii) prescription management. See Note 3 - Revenue from Contracts with Customers for our revenue disaggregated by major product category and reportable segment. 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 table reflects Net sales based on geographic location:
(In millions)Years Ended
Net SalesDecember 31, 2021December 31, 2020December 31, 2019
North America$2,719 $2,377 $2,111 
Europe1,412 1,571 1,509 
APAC & Emerging Markets461 402 368 
Eliminations(17)(11)(12)
Total net sales$4,575 $4,339 $3,976 

The following tables reflect depreciation and amortization expense, expenditures, and total assets by geographic location and Corporate:
(In millions)Years Ended
Depreciation and amortizationDecember 31, 2021December 31, 2020December 31, 2019
North America$148 $144 $131 
Europe19 17 18 
APAC & Emerging Markets3 6 5 
Corporate1 — — 
Eliminations— — — 
Total depreciation and amortization expense$171 $167 $154 
(In millions)Years Ended
Expenditures for long-lived assetsDecember 31, 2021December 31, 2020December 31, 2019
North America$49 $41 $23 
Europe8 11 10 
APAC & Emerging Markets2 3 1 
Corporate1 3 5 
Eliminations— — — 
Total expenditures for long-lived assets$60 $58 $39 
(In millions)
AssetsDecember 31, 2021December 31, 2020
North America$3,095 $3,077 
Europe576 713 
APAC & Emerging Markets195 188 
Corporate1,432 1,415 
Eliminations(1,888)(1,897)
Total assets$3,410 $3,496 

The following tables reflect Adjusted EBITDA by geographic location and a reconciliation of Net Income (Loss) Attributable to Covetrus to Non-GAAP Adjusted EBITDA:
(In millions)Years Ended
Adjusted EBITDADecember 31, 2021December 31, 2020December 31, 2019
North America$223 $187 $153 
Europe71 72 68 
APAC & Emerging Markets40 28 18 
Corporate(90)(61)(39)
Eliminations— — — 
Total Adjusted EBITDA$244 $226 $200 

Years Ended
(In millions)December 31, 2021December 31, 2020December 31, 2019
Reconciliation of Net Income (Loss) Attributable to Covetrus to Non-GAAP Adjusted EBITDA
Net income (loss) attributable to Covetrus$(54)$(19)$(980)
Plus: Depreciation and amortization171167154
Plus: Interest expense, net324654
Less: Income tax (benefit) expense—(7)(46)
Earnings (loss) before interest, taxes, depreciation, and amortization149187(818)
Plus: Share-based compensation464046
Plus: Strategic consulting20202
Plus: Transaction costs382
Plus: Formation of Covetrus21931
Plus: Separation programs and executive severance141711
Plus: Equity method investments and non-consolidated affiliates32(4)
Plus: IT infrastructure—46
Plus: Carve-out operating expenses——5
Plus: Goodwill impairment——938
Plus: Capital structure—2—
Plus: Other impairments78—
Plus: Other items, net—(81)(19)
Non-GAAP Adjusted EBITDA$244$226$200

Below is a listing of adjustments to EBITDA included in the reconciliation above:
Share-based compensation - Stock-based compensation is a non-cash expense.

Strategic consulting - Related to third-party consulting services. Included within this line item are variable performance fees earned for services rendered under a third-party consulting agreement. This agreement was amended in April 2021 and, in connection with such amendment, the services were completed and fees were fully accrued for as of June 30, 2021.

Transaction costs - Includes legal, accounting, tax, and other professional fees incurred in connection with contemplated and completed acquisitions and divestitures. The completion of acquisitions and divestitures is often dependent on factors that may be outside of our control and unrelated to us or to the continuing operations of the acquired or divested business. In addition, the amount of acquisition-related cost is generally driven by the complexity inherent in the transaction and may not necessarily indicate the future costs of the acquired business. Excluding transaction costs allows for a better comparison of our historical performance.
Formation of Covetrus - Includes professional and consulting fees, duplicative costs associated with TSAs, and other costs incurred in connection with the separation from Former Parent and establishing Covetrus as an independent public company.

Separation programs and executive severance -
•2021: Includes $8 million related to our organizational rationalization in Germany and the U.K., as well as other separation and executive severance programs
•2020: Includes $6 million related to our France managed exit of our distribution business specializing in medicines, pet food, equipment, and services for veterinary clinics beginning in the third quarter of 2020 as well as executive severance
•2019: $11 million of executive severance

IT infrastructure - Includes certain IT infrastructure expenses necessary to establish ourselves as a newly public. These IT costs are distinct from recurring IT infrastructure costs which are included within our Adjusted EBITDA.

Equity method investment and non-consolidated affiliates - Includes the proportionate share of the adjustments to EBITDA of consolidated and non-consolidated affiliates where Covetrus ownership is less than 100%.

Goodwill impairment - In 2019, we experienced a sustained decline in our share price and a resulting decrease in our market capitalization. These events triggered an interim impairment review as of August 31, 2019. We tested for goodwill impairment by quantitatively comparing the fair values of our reporting units to their carrying amounts and determined that the carrying value of our reporting units exceeded their fair values resulting in an impairment charge of $938 million.

Other impairments -
•2021: Includes $6 million related to customer relationships intangible impairments as the asset groups were not recoverable due a significant reduction in cash flows
•2020: $8 million related to an operating lease right-of-use asset impairment in our North America segment as the asset group was not recoverable based on COVID-19's effect on the subleasing market as well as other asset group specific factors

Capital Structure - Includes investment banking, legal, underwriting, and other fees incurred in connection with private investment and public equity offerings as well as debt issuance fees or debt modification fees to the extent they are not capitalized.

Carve-out operating expense - Related to Corporate overhead allocation from Former Parent at the time of the merger.

Other items, net -
•2020: Includes a pre-tax gain of $73 million gain on the divestiture of scil, a $6 million mark-to-market adjustment for immaterial put and call options, and a $1 million gain on the deconsolidation of SAHS. See Note 5 - Divestitures and Equity Method Investments
•2019: Includes $15 million of gains associated with acquisitions in France and Romania, $2 million gain on legacy investment, and a $1 million government grant income