The Company has two reportable segments, its retail drug stores (“Retail Pharmacy”), and its pharmacy services (“Pharmacy Services”) segments.

The Retail Pharmacy segment’s primary business is the sale of prescription drugs and related consultation to its customers. Additionally, the Retail Pharmacy segment sells a full selection of health and beauty aids and personal care products, seasonal merchandise and a large private brand product line. The Pharmacy Services segment offers a full range of pharmacy benefit management services including plan design and administration, on both a transparent pass-through model and traditional model, formulary management and claims processing. Additionally, the Pharmacy Services segment offers specialty and mail order services, infertility treatment, and drug benefits to eligible beneficiaries under the federal government’s Medicare Part D program.

The Company’s chief operating decision makers are its Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and the President—Pharmacy Services, (collectively the “CODM”). The CODM has ultimate responsibility for enterprise decisions. The CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, the Retail Pharmacy segment and the Pharmacy Services segment. The Retail Pharmacy and Pharmacy Services segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. The CODM relies on internal management reporting that analyzes enterprise results on certain key performance indicators, namely, revenues, gross profit, and Adjusted EBITDA.

The following is balance sheet information for the Company’s reportable segments:

(1)

As of November 30, 2019 and March 2, 2019, intersegment eliminations include netting of the Pharmacy Services segment long-term deferred tax liability of $0 against the Retail Pharmacy segment long-term deferred tax asset for consolidation purposes in accordance with ASC 740, and intersegment accounts receivable of $15,835 and $14,459, respectively, that represents amounts owed from the Pharmacy Services segment to the Retail Pharmacy segment that are created when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products.

The following table is a reconciliation of the Company’s business segments to the consolidated financial statements for the thirteen and thirty-nine week periods ended November 30, 2019 and December 1, 2018:


	Retail		Pharmacy		Intersegment
	Pharmacy		Services		Eliminations(1)		Consolidated
Thirteen Week Period Ended
November 30, 2019:
Revenues	$	3,909,946	$	1,613,109	$	(60,757)	$	5,462,298
Gross Profit		1,070,852		118,123		—		1,188,975
Adjusted EBITDA(2)		108,579		49,511		—		158,090
Additions to property and equipment and intangible assets		58,546		4,256		—		62,802
December 1, 2018:
Revenues	$	3,976,719	$	1,525,837	$	(52,496)	$	5,450,060
Gross Profit		1,079,584		102,504		—		1,182,088
Adjusted EBITDA(2)		101,225		41,566		—		142,791
Additions to property and equipment and intangible assets		54,337		3,370		—		57,707
Thirty-Nine Week Period Ended
November 30, 2019:
Revenues	$	11,622,858	$	4,758,470	$	(180,177)	$	16,201,151
Gross Profit		3,133,791		326,346		—		3,460,137
Adjusted EBITDA(2)		285,260		117,367		—		402,627
Additions to property and equipment and intangible assets		146,118		16,452		—		162,570
December 1, 2018:
Revenues	$	11,785,996	$	4,630,410	$	(156,494)	$	16,259,912
Gross Profit		3,200,678		311,310		—		3,511,988
Adjusted EBITDA(2)		308,972		120,392		—		429,364
Additions to property and equipment and intangible assets		159,706		11,085		—		170,791

(1)

Intersegment eliminations include intersegment revenues and corresponding cost of revenues that occur when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. When this occurs, both the Retail Pharmacy and Pharmacy Services segments record the revenue on a stand-alone basis.

(2)	See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” in MD&A for additional details.

The following is a reconciliation of net income (loss) to Adjusted EBITDA for the thirteen and thirty-nine week periods ended November 30, 2019 and December 1, 2018:


	November 30,		December 1,		November 30,		December 1,
	2019		2018		2019		2018
	(13 weeks)		(13 weeks)		(39 weeks)		(39 weeks)(a)
Net income (loss) from continuing operations	$	52,286	$	(17,250)	$	(125,758)	$	(411,325)
Interest expense		57,856		56,008		176,228		175,033
Income tax expense (benefit)		876		(1,471)		35,878		(117,527)
Depreciation and amortization		82,007		86,685		248,977		270,957
LIFO (credit) charge		(7,440)		5,987		7,553		19,311
Lease termination and impairment charges		166		2,628		2,115		52,096
Goodwill and intangible asset impairment charges		—		—		—		375,190
(Gain) loss on debt retirements, net		(55,692)		—		(55,692)		554
Merger and Acquisition-related costs		—		4,175		3,599		30,394
Stock-based compensation expense		3,506		1,317		13,598		11,563
Restructuring-related costs		25,275		—		93,770		—
Inventory write-downs related to store closings		93		421		4,083		5,554
Litigation settlement		—		—		—		18,000
Gain on sale of assets, net		(1,371)		(382)		(5,670)		(11,206)
Other		528		4,673		3,946		10,770
Adjusted EBITDA from continuing operations	$	158,090	$	142,791	$	402,627	$	429,364

(a) During fiscal 2019, the Company revised its definition of Adjusted EBITDA to no longer exclude the impact of revenue deferrals related to our customer loyalty program and further revised its disclosure by presenting certain amounts previously included within Other as separate reconciling items. Consequently, the Company revised Adjusted EBITDA for the thirteen and thirty-nine week periods ended December 1, 2018 to conform with the revised definition and present separate reconciling items previously included with Other.