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 May 30, 2020 and February 29, 2020, 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 $16,465 and $14,564, 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 week periods ended May 30, 2020 and June 1, 2019:


	Retail		Pharmacy		Intersegment
	Pharmacy		Services		Eliminations(1)		Consolidated
Thirteen Week Period Ended
May 30, 2020:
Revenues	$	4,123,271	$	1,977,246	$	(73,141)	$	6,027,376
Gross Profit		1,081,536		116,783		—		1,198,319
Adjusted EBITDA(2)		62,982		44,410		—		107,392
Additions to property and equipment and intangible assets		36,607		2,567		—		39,174
June 1, 2019:
Revenues	$	3,864,808	$	1,566,292	$	(58,511)	$	5,372,589
Gross Profit		1,030,495		96,228		—		1,126,723
Adjusted EBITDA(2)		84,008		26,339		—		110,347
Additions to property and equipment and intangible assets		44,244		4,947		—		49,191

(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 week periods ended May 30, 2020 and June 1, 2019:


	May 30,		June 1,
	2020		2019
	(13 weeks)		(13 weeks)
Net loss from continuing operations	$	(72,702)	$	(99,339)
Interest expense		50,547		58,270
Income tax (benefit) expense		(8,018)		7,374
Depreciation and amortization		79,103		83,926
LIFO (credit) charge		(12,066)		7,489
Lease termination and impairment charges		3,753		478
Intangible asset impairment charges		29,852		—
Merger and Acquisition-related costs		—		3,085
Stock-based compensation expense		1,874		5,380
Restructuring-related costs		35,735		43,350
Inventory write-downs related to store closings		834		841
Gain on sale of assets, net		(2,260)		(2,712)
Other		740		2,205
Adjusted EBITDA from continuing operations	$	107,392	$	110,347