Covetrus (CVET) 10-Q 5 Aug 21 2021 Q2 Quarterly report Financial data

Cover

Cover - shares	6 Months Ended
	Jun. 30, 2021	Jul. 30, 2021
Entity [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	001-38794
Entity Registrant Name	COVETRUS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-1448706
Entity Address, Address Line One	7 Custom House Street
Entity Address, City or Town	Portland
Entity Address, State or Province	ME
Entity Address, Postal Zip Code	04101
City Area Code	888
Local Phone Number	280-2221
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	CVET
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		137,616,602
Amendment Flag	false
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Entity Central Index Key	0001752836
Current Fiscal Year End Date	--12-31

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 230	$ 290
Accounts receivable, net of allowance of $5 and $5	517	507
Inventories, net	557	530
Other receivables	79	67
Prepaid expenses and other	36	26
Total current assets	1,419	1,420
Non-current assets:
Property and equipment, net of accumulated depreciation of $120 and $106	122	116
Operating lease right-of-use assets, net	107	117
Goodwill	1,187	1,187
Other intangibles, net of accumulated amortization of $531 and $470	484	555
Investments and other	95	101
Total assets	3,414	3,496
Current liabilities:
Accounts payable	427	411
Current maturities of long-term debt and other borrowings	31	1
Accrued payroll and related liabilities	55	67
Accrued taxes	43	37
Other current liabilities	153	175
Total current liabilities	709	691
Non-current liabilities:
Long-term debt and other borrowings, net	1,040	1,068
Deferred income taxes	16	28
Other liabilities	124	136
Total liabilities	1,889	1,923
Commitments and Contingencies
Mezzanine equity:
Redeemable non-controlling interest	23	36
Shareholders' equity:
Common stock, $0.01 par value per share, 675,000,000 shares authorized; 137,359,704 shares issued and outstanding as of June 30, 2021; 136,017,964 shares issued and outstanding as of December 31, 2020	1	1
Accumulated other comprehensive loss	(66)	(66)
Additional paid-in capital	2,641	2,629
Accumulated deficit	(1,074)	(1,027)
Total shareholders’ equity	1,502	1,537
Total liabilities, mezzanine equity, and shareholders’ equity	$ 3,414	$ 3,496

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - Parenthetical - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Accounts receivable, reserves	$ 5	$ 5
Property and equipment, accumulated depreciation	120	106
Other intangibles, accumulated amortization	$ 531	$ 470
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	675,000,000	675,000,000
Common stock, shares issued (in shares)	137,359,704	136,017,964
Common stock, shares outstanding (in shares)	137,359,704	136,017,964

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Net sales	$ 1,189	$ 1,026	$ 2,291	$ 2,091
Cost of sales	969	834	1,861	1,696
Gross profit	220	192	430	395
Operating expenses:
Selling, general and administrative	229	196	442	419
Operating income (loss)	(9)	(4)	(12)	(24)
Other income (expense):
Interest income	0	1	0	1
Interest expense	(9)	(14)	(18)	(28)
Other, net	0	76	0	75
Income (loss) before taxes and equity in earnings of affiliates	(18)	59	(30)	24
Income tax benefit (expense)	(13)	(6)	(17)	(4)
Equity in net earnings of affiliates	0	1	0	1
Net income (loss)	(31)	54	(47)	21
Net (income) loss attributable to redeemable non-controlling interests	0	0	0	(1)
Net income (loss) attributable to Covetrus	$ (31)	$ 54	$ (47)	$ 20
Earnings (loss) per share: (Note 4)
Basic (in usd per share)	$ (0.23)	$ 0.40	$ (0.34)	$ 0.15
Diluted (in usd per share)	$ (0.23)	$ 0.40	$ (0.34)	$ 0.15
Weighted-average common shares outstanding:
Basic (in shares)	137	112	137	112
Diluted (in shares)	137	113	137	113

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (31)	$ 54	$ (47)	$ 21
Other comprehensive income (loss), net of tax:
Foreign currency translation gain (loss)	7	6	(4)	(16)
Gain (loss) on derivative instruments	2	1	4	(7)
Total other comprehensive income (loss)	9	7	0	(23)
Comprehensive income (loss)	(22)	61	(47)	(2)
Comprehensive (income) loss attributable to redeemable non-controlling interests:
Net (income) loss	0	0	0	(1)
Foreign currency translation (gain) loss	1	0	0	(2)
Comprehensive (income) loss attributable to redeemable non-controlling interests	1	0	0	(3)
Comprehensive income (loss) attributable to Covetrus	$ (21)	$ 61	$ (47)	$ (5)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Millions	Total	Common Stock	Accumulated Other Comprehensive Income (Loss)	Additional Paid-in Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2019		111,620,507
Beginning balance at Dec. 31, 2019	$ 1,253	$ 1	$ (86)	$ 2,339	$ (1,001)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to Covetrus	20				20
Issuance of shares in connection with share-based compensation plans, net of shares withheld for taxes (in shares)		1,054,150
Issuance of shares in connection with share-based compensation plans, net of shares withheld for taxes	4			4
Share-based compensation	19			19
Series A preferred stock cash dividend	(2)				(2)
Other comprehensive income (loss)	(21)		(21)
Ending balance (in shares) at Jun. 30, 2020		112,674,657
Ending balance at Jun. 30, 2020	1,273	$ 1	(107)	2,362	(983)
Beginning balance (in shares) at Mar. 31, 2020		111,854,439
Beginning balance at Mar. 31, 2020	1,199	$ 1	(116)	2,348	(1,034)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to Covetrus	54				54
Issuance of shares in connection with share-based compensation plans, net of shares withheld for taxes (in shares)		820,218
Issuance of shares in connection with share-based compensation plans, net of shares withheld for taxes	4			4
Share-based compensation	10			10
Series A preferred stock cash dividend	(2)				(2)
Other comprehensive income (loss)	9		9
Other	(1)				(1)
Ending balance (in shares) at Jun. 30, 2020		112,674,657
Ending balance at Jun. 30, 2020	$ 1,273	$ 1	(107)	2,362	(983)
Beginning balance (in shares) at Dec. 31, 2020	136,017,964	136,017,964
Beginning balance at Dec. 31, 2020	$ 1,537	$ 1	(66)	2,629	(1,027)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to Covetrus	(47)				(47)
Issuance of shares in connection with share-based compensation plans, net of shares withheld for taxes (in shares)		1,341,740
Issuance of shares in connection with share-based compensation plans, net of shares withheld for taxes	(11)			(11)
Redeemable non-controlling interest redemption value adjustment	(2)			(2)
Share-based compensation	25			25
Series A preferred stock cash dividend	0
Other comprehensive income (loss)	$ 0		0
Ending balance (in shares) at Jun. 30, 2021	137,359,704	137,359,704
Ending balance at Jun. 30, 2021	$ 1,502	$ 1	(66)	2,641	(1,074)
Beginning balance (in shares) at Mar. 31, 2021		136,342,036
Beginning balance at Mar. 31, 2021	1,520	$ 1	(75)	2,637	(1,043)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to Covetrus	(31)				(31)
Issuance of shares in connection with share-based compensation plans, net of shares withheld for taxes (in shares)		1,017,668
Issuance of shares in connection with share-based compensation plans, net of shares withheld for taxes	(8)			(8)
Redeemable non-controlling interest redemption value adjustment	(2)			(2)
Share-based compensation	14			14
Series A preferred stock cash dividend	0
Other comprehensive income (loss)	$ 9		9
Ending balance (in shares) at Jun. 30, 2021	137,359,704	137,359,704
Ending balance at Jun. 30, 2021	$ 1,502	$ 1	$ (66)	$ 2,641	$ (1,074)

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities:
Net income (loss)	$ (47)	$ 21
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization	86	82
Amortization of right-of-use assets	14	12
Gain on divestiture of a business	0	(73)
Share-based compensation expense	25	19
Benefit for deferred income taxes	(11)	(2)
Amortization of debt issuance costs	3	3
Other	3	(2)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net	(12)	(56)
Inventories, net	(30)	130
Other assets and liabilities	(37)	(14)
Accounts payable and accrued expenses	5	(66)
Net cash provided by (used for) operating activities	(1)	54
Cash flows from investing activities:
Purchases of property and equipment	(24)	(24)
Payments related to equity investments and business acquisitions, net of cash acquired	0	(13)
Proceeds from divestiture of a business, net	0	104
Proceeds from sale of property and equipment	0	4
Net cash provided by (used for) investing activities	(24)	71
Cash flows from financing activities:
Proceeds from revolving credit facility	0	190
Repayments of Lines of Credit	0	190
Principal payments of debt	0	(62)
Debt issuance and amendment costs	0	(5)
Share-based compensation-related proceeds, net of taxes paid on withholding shares	(10)	4
Proceeds from issuance of Series A preferred stock	0	250
Series A preferred stock issuance costs	0	(6)
Series A preferred stock dividend	0	(2)
Distributions to non-controlling shareholders	(1)	0
Deferred payments related to equity investments and business acquisitions	(13)	(17)
Payments related to the buy-out of non-controlling interests in subsidiaries of Covetrus	(10)	0
Net cash provided by (used for) financing activities	(34)	162
Effect of exchange rate changes on cash and cash equivalents	(1)	(3)
Net change in cash and cash equivalents	(60)	284
Cash and cash equivalents, beginning of period	290	130
Cash and cash equivalents, end of period	230	414
Supplemental disclosures of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities	5	57
Deconsolidation of a subsidiary	$ 0	$ 15

Business Overview and Significa

Business Overview and Significant Accounting Policies	6 Months Ended
	Jun. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business Overview and Significant Accounting Policies	1. BUSINESS OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES Business We are a global animal-health technology and services company dedicated to supporting the companion, equine, and large-animal veterinary markets. Basis of Presentation and Principles of Consolidation The accompanying balance sheet as of December 31, 2020, which was derived from audited financial statements, and the unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2021, have been prepared in accordance with applicable rules and regulations of the SEC for interim financial reporting. Pursuant to those rules and regulations, we omitted certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP. In our opinion, the accompanying condensed consolidated financial statements reflect all recurring adjustments and transactions necessary for a fair statement of our financial position, results of operations, and cash flows for the interim periods presented. Such operating results are not necessarily indicative of annual or future results. These condensed consolidated financial statements and notes should be read in conjunction with the Form 10-K filed with the SEC on March 1, 2021. The accompanying unaudited condensed consolidated financial statements include the operations of the Company, as well as those of our wholly-owned and majority-owned subsidiaries from their respective dates of inception or acquisition. All significant intercompany transactions and balances were eliminated in consolidation. Investments in unconsolidated affiliates, which are 20% to 50.01% owned, or investments of less than 20% in which we could influence the operating or financial decisions, are accounted for under the equity method. Certain prior period amounts were reclassified or rounded to conform to the presentation of the current period. Accounting Pronouncements • As of January 1, 2021, we adopted ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which removes specific technical exceptions to general principles found in Topic 740, items that often produce information that investors have difficulty understanding, and simplifies the accounting for income taxes. The adoption of this ASU did not have a material impact on the results of our condensed consolidated financial statements. • ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting for contracts, hedging relationships, and other transactions that reference LIBOR. The standard is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022. Our debt agreements and interest rate swaps that utilize LIBOR have not yet discontinued the use of LIBOR and, therefore, this ASU is not yet effective for us. Because our interest rate swaps matured on July 31, 2021, we do not expect an accounting burden, or the relief provided by this ASU for hedging relationships, to impact the results of our condensed consolidated financial statements. The banking syndicate associated with our Credit Facilities intends to cease using the 1-week and 2-month USD LIBOR at the end of 2021, with the other USD Tenors to cease June 30, 2023. We will continue to monitor, and, to the extent our Credit Facilities require amendment to reflect a replacement rate prior to December 31, 2022, we will evaluate the benefits of adopting this ASU.

Segment Data

Segment Data	6 Months Ended
	Jun. 30, 2021
Segment Reporting [Abstract]
Segment Data	2. SEGMENT DATA The following tables reflect our segment and Corporate information and reconciles non-GAAP Adjusted EBITDA for reportable segments to consolidated Net income (loss) attributable to Covetrus: Three Months Ended June 30, 2021 North America Europe APAC & Emerging Markets Corporate Eliminations Total Net sales $ 713 $ 366 $ 114 $ — $ (4) $ 1,189 Adjusted EBITDA $ 59 $ 20 $ 9 $ (22) $ — $ 66 Reconciliation of Net income (loss) attributable to Covetrus to Non-GAAP Adjusted EBITDA: Net income (loss) attributable to Covetrus $ (31) Plus: Depreciation and amortization 43 Plus: Interest expense, net 9 Plus: Income tax (benefit) expense 13 Earnings (loss) before interest, taxes, depreciation, and amortization 34 Plus: Share-based compensation 14 Plus: Strategic consulting 12 Plus: Transaction costs (a) 1 Plus: Separation programs and executive severance 2 Plus: Other items, net 3 Non-GAAP Adjusted EBITDA $ 66 (a) Includes legal, accounting, tax, and other professional fees incurred in connection with acquisitions and divestitures Three Months Ended June 30, 2020 North America Europe APAC & Emerging Markets Corporate Eliminations Total Net sales $ 602 $ 342 $ 85 $ — $ (3) $ 1,026 Adjusted EBITDA $ 55 $ 16 $ 5 $ (13) $ — $ 63 Reconciliation of Net income (loss) attributable to Covetrus to Non-GAAP Adjusted EBITDA: Net income (loss) attributable to Covetrus $ 54 Plus: Depreciation and amortization 41 Plus: Interest expense, net 13 Plus: Income tax (benefit) expense 6 Earnings (loss) before interest, taxes, depreciation, and amortization 114 Plus: Share-based compensation 10 Plus: Strategic consulting 5 Plus: Formation of Covetrus (a) 7 Plus: Separation programs and executive severance 1 Plus: Capital structure 1 Less: Other items, net (b) (75) Non-GAAP Adjusted EBITDA $ 63 (a) Includes professional and consulting fees, duplicative costs associated with transition service agreements, and other costs incurred in connection with the separation from Former Parent and establishing Covetrus as an independent public company (b) Includes a $73 million gain on the divestiture of scil and a $1 million gain on the deconsolidation of SAHS Six Months Ended June 30, 2021 North America Europe APAC & Emerging Markets Corporate Eliminations Total Net sales $ 1,348 $ 727 $ 226 $ — $ (10) $ 2,291 Adjusted EBITDA $ 111 $ 41 $ 19 $ (48) $ — $ 123 Reconciliation of Net income (loss) attributable to Covetrus to Non-GAAP Adjusted EBITDA: Net income (loss) attributable to Covetrus $ (47) Plus: Depreciation and amortization 86 Plus: Interest expense, net 18 Plus: Income tax (benefit) expense 17 Earnings (loss) before interest, taxes, depreciation, and amortization 74 Plus: Share-based compensation 25 Plus: Strategic consulting 14 Plus: Transaction costs (a) 2 Plus: Formation of Covetrus (b) 2 Plus: Separation programs and executive severance 2 Plus: Equity method investments and non-consolidated affiliates (c) 1 Plus: Other items, net 3 Non-GAAP Adjusted EBITDA $ 123 (a) Includes legal, accounting, tax, and other professional fees incurred in connection with acquisitions and divestitures (b) Includes professional and consulting fees, and other costs incurred in connection with the separation from Former Parent and establishing Covetrus as an independent public company (c) Includes the proportionate share of the adjustments to EBITDA of consolidated and non-consolidated affiliates where Covetrus ownership is less than 100% Six Months Ended June 30, 2020 North America Europe APAC & Emerging Markets Corporate Eliminations Total Net sales $ 1,152 $ 764 $ 180 $ — $ (5) $ 2,091 Adjusted EBITDA $ 96 $ 34 $ 12 $ (31) $ — $ 111 Reconciliation of Net income (loss) attributable to Covetrus to Non-GAAP Adjusted EBITDA: Net income (loss) attributable to Covetrus $ 20 Plus: Depreciation and amortization 82 Plus: Interest expense, net 27 Plus: Income tax (benefit) expense 4 Earnings (loss) before interest, taxes, depreciation, and amortization 133 Plus: Share-based compensation 19 Plus: Strategic consulting 9 Plus: Transaction costs (a) 6 Plus: Formation of Covetrus (b) 14 Plus: Separation programs and executive severance 2 Plus: IT infrastructure 2 Plus: Capital structure 1 Less: Other items, net (c) (75) Non-GAAP Adjusted EBITDA $ 111 (a) Includes legal, accounting, tax, and other professional fees incurred in connection with acquisitions and divestitures (b) Includes professional and consulting fees, duplicative costs associated with transition service agreements, and other costs incurred in connection with the separation from Former Parent and establishing Covetrus as an independent public company (c) Includes a $73 million gain on the divestiture of scil and a $1 million gain on the deconsolidation of SAHS See Note 3 - Revenue from Contracts with Customers for our revenue disaggregated by major product category and reportable segment.

Revenue from Contracts with Cus

Revenue from Contracts with Customers	6 Months Ended
	Jun. 30, 2021
Revenue from Contract with Customer [Abstract]
Revenue from Contracts with Customers	3. REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue The tables below present our revenue disaggregated by major product category and reportable segment. Three Months Ended June 30, 2021 Supply Chain Services Software Services Prescription Management Eliminations Total North America $ 587 $ 20 $ 131 $ (25) $ 713 Europe 368 2 — (4) 366 APAC & Emerging Markets 112 2 — — 114 Eliminations (4) — — — (4) Total Net sales $ 1,063 $ 24 $ 131 $ (29) $ 1,189 Three Months Ended June 30, 2020 Supply Chain Services Software Services Prescription Management Eliminations Total North America $ 495 $ 19 $ 110 $ (22) $ 602 Europe 342 2 — (2) 342 APAC & Emerging Markets 83 2 — — 85 Eliminations (3) — — — (3) Total Net sales $ 917 $ 23 $ 110 $ (24) $ 1,026 Six Months Ended June 30, 2021 Supply Chain Services Software Services Prescription Management Eliminations Total North America $ 1,112 $ 40 $ 243 $ (47) $ 1,348 Europe 732 5 — (10) 727 APAC & Emerging Markets 221 5 — — 226 Eliminations (10) — — — (10) Total Net sales $ 2,055 $ 50 $ 243 $ (57) $ 2,291 Six Months Ended June 30, 2020 Supply Chain Services Software Services Prescription Management Eliminations Total North America $ 956 $ 40 $ 195 $ (39) $ 1,152 Europe 766 4 — (6) 764 APAC & Emerging Markets 176 4 — — 180 Eliminations (5) — — — (5) Total Net sales $ 1,893 $ 48 $ 195 $ (45) $ 2,091 Contract Assets and Contract Liabilities Contract asset balances as of June 30, 2021 and December 31, 2020 were not material. There have been no material changes in our current portion of contract liabilities since the end of fiscal year 2020, and the amounts related to non-current contract liabilities were not material as of June 30, 2021 and December 31, 2020. See Note 1 - Business Overview and Significant Accounting Policies and Note 5 - Revenue from Contracts with Customers of our Form 10-K. Performance Obligations Estimated future revenues expected to be generated from our long-term contracts with unsatisfied performance obligations as of June 30, 2021 were not material.

Earnings (Loss) Per Share

Earnings (Loss) Per Share	6 Months Ended
	Jun. 30, 2021
Earnings Per Share [Abstract]
Earnings (Loss) Per Share	4. EARNINGS (LOSS) PER SHARE EPS is computed by dividing Net income (loss) available to common shareholders by the weighted-average common shares outstanding during the period. In addition, the shares of common stock issuable pursuant to restricted stock awards, restricted stock units, performance stock units, and stock options outstanding under our 2019 Omnibus Incentive Compensation Plan and shares issuable under our Employee Stock Purchase Plan are included in the diluted EPS calculation to the extent they are dilutive. The following is a reconciliation of the numerator and denominator of the basic and diluted EPS computation for earnings (loss) per share: Three Months Ended June 30, Six Months Ended June 30, (In millions, except per share amounts) 2021 2020 2021 2020 Numerator: Net income (loss) attributable to Covetrus $ (31) $ 54 $ (47) $ 20 Adjustment for: Dividends declared on Series A preferred stock — (2) — (2) Allocation of earnings to participating securities — (6) — (1) Net income (loss) available to common shareholders $ (31) $ 46 $ (47) $ 17 Denominator: Basic Weighted-average common shares outstanding 137 112 137 112 Diluted Effect of dilutive shares — 1 — 1 Weighted-average common shares outstanding 137 113 137 113 Earnings (loss) per share: Basic $ (0.23) $ 0.40 $ (0.34) $ 0.15 Diluted $ (0.23) $ 0.40 $ (0.34) $ 0.15 Potentially dilutive securities (a) 5 19 5 12 (a) Potentially dilutive securities for 2021 and 2020 include stock options, restricted stock units, restricted stock awards, and performance stock units and were excluded from the computation of diluted earnings per share because the securities would have had an antidilutive effect. During 2020, until converted, the outstanding Series A preferred stock was dilutive and excluded from the computation of diluted earnings per share because the stock would have had an antidilutive effect.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	5. COMMITMENTS AND CONTINGENCIES We are involved in various legal proceedings that arise in the ordinary course of business. Substantial judgment is required in predicting the outcome of these legal proceedings, many of which take years to adjudicate. We accrue estimated costs for a contingency when we believe that a loss is probable and can be reasonably estimated. Legal fees are expensed as incurred. No material loss contingencies were accrued as of June 30, 2021. Securities Litigation Matter On September 30, 2019, the City of Hollywood (Florida) Police Officers' Retirement System filed a putative securities class action lawsuit in the United States District Court for the Eastern District of New York, purportedly on behalf of purchasers of Covetrus common stock from February 8, 2019 through August 12, 2019, against the Defendants. The complaint alleges that the Defendants violated Sections 10(b) and 20(a) of the Exchange Act, by making allegedly false and misleading statements and omissions, primarily regarding the Company’s financial prospects and the integration costs relating to the business combination involving the Animal Health Business and Vets First Choice. The suit seeks unspecified damages, fees, interest, and costs. On August 3, 2021, the Court issued an order granting in part and denying in part Defendants’ motions to dismiss. In particular, the Court dismissed, with prejudice, all claims asserted against our Former Chief Financial Officer, a director, and our Former Parent, as well as certain claims based on alleged misrepresentations attributed to the Company and our Former Chief Executive Officer. We intend to continue to defend the remaining claims vigorously. Given the uncertainty of litigation, the preliminary stage of the case, and the legal standards that must be met for, among other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from this action. Purchase Obligations We are party to an exclusive supply agreement with an aggregate unconditional commitment to purchase $32 million for certain products within the U.S. market until 2025. Our unconditional purchase obligation for 2021 is $8 million. For the three and six months ended June 30, 2021, we purchased products totaling $2 million and $4 million, respectively. Our forecasted sales exceed our purchase obligations under this agreement. In 2019, we engaged a third party for services over a three-year period ending December 31, 2022. We considered the contract to be of a “take-or-pay” nature due to the termination fees embedded in the contract: fixed termination fees of $12 million until mid-November 2020 and $14 million thereafter, plus any variable performance fees through termination. The fixed portion of the contract was capped at $14 million while the variable portion of the contract was capped at $39 million over the term of the engagement. In April 2021, we amended this contract with the third-party service provider such that the terms of the original agreement were deemed fully satisfied by both parties. This amendment resulted in a decrease of $18 million from the remaining commitments under the original terms of the agreement. In connection with the contract amendment, we agreed to pay the third party $10 million for specific services, which were completed and fully accrued for as of June 30, 2021.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2021
Income Tax Disclosure [Abstract]
Income Taxes	6. INCOME TAXES Income tax expense for the three months ended June 30, 2021 was $13 million on a loss before taxes and equity in earnings of affiliates of $18 million. The difference between our tax expense and the tax expense using the statutory tax rates for the jurisdictions in which we operate , for this period, primarily related to valuation allowances due to uncertainty regarding the realization of future tax benefits from certain U.S. deferred tax assets and certain expenses not deductible in the U.S . Income tax expense for the six months ended June 30, 2021 was $17 million on a loss before taxes and equity in earnings of affiliates of $30 million. The difference between our tax expense and the tax expense using the statutory tax rates for the jurisdictions in which we operate , for this period, primarily related to valuation allowances due to uncertainty regarding the realization of future tax benefits from certain U.S. deferred tax assets and certain expenses not deductible in the U.S . Income tax expense for the three months ended June 30, 2020 was $6 million on income before taxes and equity in earnings of affiliates of $59 million. The difference between our tax expense and the tax expense using the statutory tax rates for the jurisdictions in which we operate, for this period, primarily related to valuation allowances due to uncertainty regarding the realization of future tax benefits from deferred tax assets and the sale of our scil business. Income tax expense for the six months ended June 30, 2020 was $4 million on income before taxes and equity in earnings of affiliates of $24 million. The difference between our effective tax rate and the federal statutory tax rates for the jurisdictions in which we operate, for this period, primarily related to non-deductible share-based compensation expenses, the sale of our scil business, valuation allowances due to uncertainty regarding the realization of future tax benefits from deferred tax assets, and the federal tax impact of international operations included as GILTI.

Fair Value

Fair Value	6 Months Ended
	Jun. 30, 2021
Fair Value Disclosures [Abstract]
Fair Value	7. FAIR VALUE GAAP defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We have certain financial assets and liabilities that are measured at fair value on a recurring basis, certain nonfinancial assets and liabilities that may be measured at fair value on a non-recurring basis, and certain financial assets and liabilities that are not measured at fair value in our condensed consolidated balance sheets, but the fair value is disclosed. The fair value disclosures of these assets and liabilities are based on a three-level hierarchy, which is defined as follows: • Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities • Level 2 - Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability • Level 3 - Unobservable inputs for the asset or liability There were no changes in valuation approaches or techniques during the three and six months ended June 30, 2021. See Note 11 - Fair Value in our Form 10-K for a description of our valuation techniques. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents our financial instruments measured at fair value on a recurring basis and indicates the level within the fair value hierarchy: Assets Level June 30, 2021 December 31, 2020 Distrivet call option 3 $ 1 $ 2 Total assets $ 1 $ 2 Liabilities Level June 30, 2021 December 31, 2020 Interest rate swap contracts 2 $ 1 $ 5 Distrivet put option 3 2 1 Total liabilities $ 3 $ 6 Interest Rate Swap Contracts Our derivatives at June 30, 2021 consisted of five interest rate swap contracts which are over-the-counter and not traded through an exchange. The fair values of our swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. These interest rate swap contracts matured on July 31, 2021. See Note 8 - Derivatives . Distrivet Options The Distrivet options fair value was derived from a Monte Carlo simulation methodology. The significant unobservable inputs utilized in this Level 3 fair value measurement includes the enterprise value of Distrivet ($130 million), volatility (35%), and cost of capital, which considered market participant inputs regarding capital structure and risk premiums, (15%). We regularly evaluate each of the assumptions used in establishing the asset and liability. Significant changes in assumptions could result in significantly lower or higher fair value measurements. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Assets that are measured at fair value on a nonrecurring basis primarily relate to Property and equipment, net, Operating lease right-of-use assets, net, Goodwill, and Other intangibles, net. We do not periodically adjust carrying value to fair value for these assets; rather, the carrying value of the asset is reduced to its fair value when we determine that impairment has occurred. We did not have any assets or liabilities measured at fair value on a nonrecurring basis during the six months ending June 30, 2021. Assets and Liabilities Not Measured at Fair Value Financial Assets and Liabilities The carrying amounts reported on the condensed consolidated balance sheets for Cash and cash equivalents, Accounts receivable, net, Other receivables, Accounts payable, and accrued expenses approximate their fair value due to the short maturity of those instruments. Long-term Debt Our long-term debt is classified as a level 2 instrument. The carrying amount of the term loan approximates fair value given the underlying interest rate applied to such amounts outstanding is currently reset to the prevailing monthly market rate.

Derivatives

Derivatives	6 Months Ended
	Jun. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivatives	8. DERIVATIVES We are exposed to the impact of changes in interest rates in the normal course of business. Our financial risk management program is designed to manage the exposure arising from this cash flow risk and may use derivative financial instruments to minimize this risk. We do not enter into derivative financial instruments for trading or speculative purposes. In July and August 2019, we executed interest rate swap contracts with notional amounts aggregating $500 million that are designated as cash flow hedges to manage interest rate risk on our floating rate debt. These interest rate swap contracts effectively fixed the borrowing rates on a portion of our floating rate debt. The base notional amounts matured on July 31, 2021. On the interest rate swap inception dates, we designated the swaps as a hedge of the variability in cash flows we pay on our variable rate borrowings. Our interest rate swap agreements exchanged payment streams based on the notional principal amount. These agreements fixed our future interest rates ranging from 1.63% to 1.70% plus the applicable margin as provided in our debt agreement on an amount of our debt principal equal to the then-outstanding swap notional amount. The following table discloses the fair value and balance sheet location of our derivative instruments: Liability Derivatives Cash Flow Hedging Instruments Balance Sheet Location June 30, 2021 December 31, 2020 Interest rate swap contracts Other current liabilities $ 1 $ 5 At inception of the hedging contract, we used statistical regression to assess the effectiveness of the interest rate hedges. The hedging contracts were deemed highly effective and are expected to be highly effective throughout the hedge period. Therefore, we performed a qualitative assessment of the hedge effectiveness at each subsequent quarterly reporting date. As of June 30, 2021, derivative gains and losses were reported as a component of Other comprehensive income (loss) and will subsequently be recorded in the condensed consolidated statements of operations when the hedged transaction is recognized in earnings. The effect of cash flow hedges on Other comprehensive income (loss) was as follows: Three Months Ended June 30, Six Months Ended June 30, Cash Flow Hedging Instruments Location 2021 2020 2021 2020 Interest rate swap contracts Interest (income) expense $ 2 $ 1 $ 4 $ 1

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income (Loss)	6 Months Ended
	Jun. 30, 2021
Equity [Abstract]
Accumulated Other Comprehensive Income (Loss)	9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table presents the changes in Accumulated other comprehensive loss, net of applicable taxes, by component: Three Months Ended June 30, 2021 Derivative Gain (Loss) Foreign Currency Translation Gain (Loss) Total Balance at March 31, 2021 $ (1) $ (74) $ (75) Other comprehensive loss before reclassifications — 7 7 Reclassified from Accumulated other comprehensive loss to earnings 2 — 2 Period Change 2 7 9 Balance at June 30, 2021 $ 1 $ (67) $ (66) Three Months Ended June 30, 2020 Balance at March 31, 2020 $ (8) $ (108) $ (116) Other comprehensive loss before reclassifications — 6 6 Reclassified from Accumulated other comprehensive loss to earnings 1 2 3 Period Change 1 8 9 Balance at June 30, 2020 $ (7) $ (100) $ (107) Six Months Ended June 30, 2021 Derivative Gain (Loss) Foreign Currency Translation Gain (Loss) Total Balance at December 31, 2020 $ (3) $ (63) $ (66) Other comprehensive loss before reclassifications — (4) (4) Reclassified from Accumulated other comprehensive loss to earnings 4 — 4 Period Change 4 (4) — Balance at June 30, 2021 $ 1 $ (67) $ (66) Six Months Ended June 30, 2020 Balance at December 31, 2019 $ — $ (86) $ (86) Other comprehensive loss before reclassifications (7) (16) (23) Reclassified from Accumulated other comprehensive loss to earnings — 2 2 Period Change (7) (14) (21) Balance at June 30, 2020 $ (7) $ (100) $ (107) Comprehensive income (loss) includes certain gains and losses that are excluded from Net income (loss) under GAAP as these amounts are recorded directly as an adjustment to total equity. We recognize foreign currency translation losses as a component of comprehensive income (loss) due to changes in foreign exchange rates from the beginning of the period to the end of the period. The condensed consolidated financial statements are denominated in USD. Fluctuations in the value of foreign currencies as compared to USD may have a significant impact on Comprehensive income (loss). The tax effect on accumulated unrealized losses on derivative instruments was not material for the periods presented. See Note 8 - Derivatives .

Redeemable Non-controlling Inte

Redeemable Non-controlling Interests	6 Months Ended
	Jun. 30, 2021
Noncontrolling Interest [Abstract]
Redeemable Non-controlling Interests	10. REDEEMABLE NON-CONTROLLING INTERESTS Some minority equity owners in certain of our subsidiaries have the right, at certain times, to require us to acquire their ownership interest in those entities. We initially record our Redeemable non-controlling interests at fair value on the date of acquisition and subsequently adjust to redemption value. During the three months ended June 30, 2021, we acquired the remaining minority interest held by our former partners in certain of our Brazilian entities. The following table presents the components of change and balances of Redeemable non-controlling interests within the condensed consolidated balance sheets as follows: Six Months Ended June 30, 2021 Year Ended Balance at beginning of period $ 36 $ 10 Decrease due to redemptions (13) (4) Increase due to business acquisitions — 24 Net income (loss) attributable to redeemable non-controlling interests — 2 Dividends declared (2) — Effect of foreign currency translation (gain) loss attributable to redeemable non-controlling interests — (2) Change in redemption value 2 6 Balance at end of period $ 23 $ 36

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2021
Subsequent Events [Abstract]
Subsequent Events	11. SUBSEQUENT EVENTOn July 9, 2021, we acquired 100% of VCP, in a cash and stock transaction, for $65 million. VCP is a wellness plan administration platform providing veterinary practices proprietary software along with business services to enable them to launch, manage, and grow care programs for their clients. Our acquisition of VCP broadens our overall value proposition for our Customers and their Animal Owner clients and offers opportunity to deliver an integrated experience with our practice management software and prescription management platform.

Business Overview and Signifi_2

Business Overview and Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation and Principles of Consolidation The accompanying balance sheet as of December 31, 2020, which was derived from audited financial statements, and the unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2021, have been prepared in accordance with applicable rules and regulations of the SEC for interim financial reporting. Pursuant to those rules and regulations, we omitted certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP. In our opinion, the accompanying condensed consolidated financial statements reflect all recurring adjustments and transactions necessary for a fair statement of our financial position, results of operations, and cash flows for the interim periods presented. Such operating results are not necessarily indicative of annual or future results. These condensed consolidated financial statements and notes should be read in conjunction with the Form 10-K filed with the SEC on March 1, 2021.
Principles of Consolidation	The accompanying unaudited condensed consolidated financial statements include the operations of the Company, as well as those of our wholly-owned and majority-owned subsidiaries from their respective dates of inception or acquisition. All significant intercompany transactions and balances were eliminated in consolidation. Investments in unconsolidated affiliates, which are 20% to 50.01% owned, or investments of less than 20% in which we could influence the operating or financial decisions, are accounted for under the equity method.
Accounting Pronouncements	Accounting Pronouncements • As of January 1, 2021, we adopted ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which removes specific technical exceptions to general principles found in Topic 740, items that often produce information that investors have difficulty understanding, and simplifies the accounting for income taxes. The adoption of this ASU did not have a material impact on the results of our condensed consolidated financial statements. • ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting for contracts, hedging relationships, and other transactions that reference LIBOR. The standard is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022. Our debt agreements and interest rate swaps that utilize LIBOR have not yet discontinued the use of LIBOR and, therefore, this ASU is not yet effective for us. Because our interest rate swaps matured on July 31, 2021, we do not expect an accounting burden, or the relief provided by this ASU for hedging relationships, to impact the results of our condensed consolidated financial statements. The banking syndicate associated with our Credit Facilities intends to cease using the 1-week and 2-month USD LIBOR at the end of 2021, with the other USD Tenors to cease June 30, 2023. We will continue to monitor, and, to the extent our Credit Facilities require amendment to reflect a replacement rate prior to December 31, 2022, we will evaluate the benefits of adopting this ASU.
Fair Value	GAAP defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We have certain financial assets and liabilities that are measured at fair value on a recurring basis, certain nonfinancial assets and liabilities that may be measured at fair value on a non-recurring basis, and certain financial assets and liabilities that are not measured at fair value in our condensed consolidated balance sheets, but the fair value is disclosed. The fair value disclosures of these assets and liabilities are based on a three-level hierarchy, which is defined as follows: • Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities • Level 2 - Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability • Level 3 - Unobservable inputs for the asset or liability

Segment Data (Tables)

Segment Data (Tables)	6 Months Ended
	Jun. 30, 2021
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment	The following tables reflect our segment and Corporate information and reconciles non-GAAP Adjusted EBITDA for reportable segments to consolidated Net income (loss) attributable to Covetrus: Three Months Ended June 30, 2021 North America Europe APAC & Emerging Markets Corporate Eliminations Total Net sales $ 713 $ 366 $ 114 $ — $ (4) $ 1,189 Adjusted EBITDA $ 59 $ 20 $ 9 $ (22) $ — $ 66 Reconciliation of Net income (loss) attributable to Covetrus to Non-GAAP Adjusted EBITDA: Net income (loss) attributable to Covetrus $ (31) Plus: Depreciation and amortization 43 Plus: Interest expense, net 9 Plus: Income tax (benefit) expense 13 Earnings (loss) before interest, taxes, depreciation, and amortization 34 Plus: Share-based compensation 14 Plus: Strategic consulting 12 Plus: Transaction costs (a) 1 Plus: Separation programs and executive severance 2 Plus: Other items, net 3 Non-GAAP Adjusted EBITDA $ 66 (a) Includes legal, accounting, tax, and other professional fees incurred in connection with acquisitions and divestitures Three Months Ended June 30, 2020 North America Europe APAC & Emerging Markets Corporate Eliminations Total Net sales $ 602 $ 342 $ 85 $ — $ (3) $ 1,026 Adjusted EBITDA $ 55 $ 16 $ 5 $ (13) $ — $ 63 Reconciliation of Net income (loss) attributable to Covetrus to Non-GAAP Adjusted EBITDA: Net income (loss) attributable to Covetrus $ 54 Plus: Depreciation and amortization 41 Plus: Interest expense, net 13 Plus: Income tax (benefit) expense 6 Earnings (loss) before interest, taxes, depreciation, and amortization 114 Plus: Share-based compensation 10 Plus: Strategic consulting 5 Plus: Formation of Covetrus (a) 7 Plus: Separation programs and executive severance 1 Plus: Capital structure 1 Less: Other items, net (b) (75) Non-GAAP Adjusted EBITDA $ 63 (a) Includes professional and consulting fees, duplicative costs associated with transition service agreements, and other costs incurred in connection with the separation from Former Parent and establishing Covetrus as an independent public company (b) Includes a $73 million gain on the divestiture of scil and a $1 million gain on the deconsolidation of SAHS Six Months Ended June 30, 2021 North America Europe APAC & Emerging Markets Corporate Eliminations Total Net sales $ 1,348 $ 727 $ 226 $ — $ (10) $ 2,291 Adjusted EBITDA $ 111 $ 41 $ 19 $ (48) $ — $ 123 Reconciliation of Net income (loss) attributable to Covetrus to Non-GAAP Adjusted EBITDA: Net income (loss) attributable to Covetrus $ (47) Plus: Depreciation and amortization 86 Plus: Interest expense, net 18 Plus: Income tax (benefit) expense 17 Earnings (loss) before interest, taxes, depreciation, and amortization 74 Plus: Share-based compensation 25 Plus: Strategic consulting 14 Plus: Transaction costs (a) 2 Plus: Formation of Covetrus (b) 2 Plus: Separation programs and executive severance 2 Plus: Equity method investments and non-consolidated affiliates (c) 1 Plus: Other items, net 3 Non-GAAP Adjusted EBITDA $ 123 (a) Includes legal, accounting, tax, and other professional fees incurred in connection with acquisitions and divestitures (b) Includes professional and consulting fees, and other costs incurred in connection with the separation from Former Parent and establishing Covetrus as an independent public company (c) Includes the proportionate share of the adjustments to EBITDA of consolidated and non-consolidated affiliates where Covetrus ownership is less than 100% Six Months Ended June 30, 2020 North America Europe APAC & Emerging Markets Corporate Eliminations Total Net sales $ 1,152 $ 764 $ 180 $ — $ (5) $ 2,091 Adjusted EBITDA $ 96 $ 34 $ 12 $ (31) $ — $ 111 Reconciliation of Net income (loss) attributable to Covetrus to Non-GAAP Adjusted EBITDA: Net income (loss) attributable to Covetrus $ 20 Plus: Depreciation and amortization 82 Plus: Interest expense, net 27 Plus: Income tax (benefit) expense 4 Earnings (loss) before interest, taxes, depreciation, and amortization 133 Plus: Share-based compensation 19 Plus: Strategic consulting 9 Plus: Transaction costs (a) 6 Plus: Formation of Covetrus (b) 14 Plus: Separation programs and executive severance 2 Plus: IT infrastructure 2 Plus: Capital structure 1 Less: Other items, net (c) (75) Non-GAAP Adjusted EBITDA $ 111 (a) Includes legal, accounting, tax, and other professional fees incurred in connection with acquisitions and divestitures (b) Includes professional and consulting fees, duplicative costs associated with transition service agreements, and other costs incurred in connection with the separation from Former Parent and establishing Covetrus as an independent public company (c) Includes a $73 million gain on the divestiture of scil and a $1 million gain on the deconsolidation of SAHS

Revenue from Contracts with C_2

Revenue from Contracts with Customers (Tables)	6 Months Ended
	Jun. 30, 2021
Revenue from Contract with Customer [Abstract]
Disaggregation of Revenue	The tables below present our revenue disaggregated by major product category and reportable segment. Three Months Ended June 30, 2021 Supply Chain Services Software Services Prescription Management Eliminations Total North America $ 587 $ 20 $ 131 $ (25) $ 713 Europe 368 2 — (4) 366 APAC & Emerging Markets 112 2 — — 114 Eliminations (4) — — — (4) Total Net sales $ 1,063 $ 24 $ 131 $ (29) $ 1,189 Three Months Ended June 30, 2020 Supply Chain Services Software Services Prescription Management Eliminations Total North America $ 495 $ 19 $ 110 $ (22) $ 602 Europe 342 2 — (2) 342 APAC & Emerging Markets 83 2 — — 85 Eliminations (3) — — — (3) Total Net sales $ 917 $ 23 $ 110 $ (24) $ 1,026 Six Months Ended June 30, 2021 Supply Chain Services Software Services Prescription Management Eliminations Total North America $ 1,112 $ 40 $ 243 $ (47) $ 1,348 Europe 732 5 — (10) 727 APAC & Emerging Markets 221 5 — — 226 Eliminations (10) — — — (10) Total Net sales $ 2,055 $ 50 $ 243 $ (57) $ 2,291 Six Months Ended June 30, 2020 Supply Chain Services Software Services Prescription Management Eliminations Total North America $ 956 $ 40 $ 195 $ (39) $ 1,152 Europe 766 4 — (6) 764 APAC & Emerging Markets 176 4 — — 180 Eliminations (5) — — — (5) Total Net sales $ 1,893 $ 48 $ 195 $ (45) $ 2,091

Earnings (Loss) Per Share (Tabl

Earnings (Loss) Per Share (Tables)	6 Months Ended
	Jun. 30, 2021
Earnings Per Share [Abstract]
Reconciliation of Basic Shares to Diluted Shares	The following is a reconciliation of the numerator and denominator of the basic and diluted EPS computation for earnings (loss) per share: Three Months Ended June 30, Six Months Ended June 30, (In millions, except per share amounts) 2021 2020 2021 2020 Numerator: Net income (loss) attributable to Covetrus $ (31) $ 54 $ (47) $ 20 Adjustment for: Dividends declared on Series A preferred stock — (2) — (2) Allocation of earnings to participating securities — (6) — (1) Net income (loss) available to common shareholders $ (31) $ 46 $ (47) $ 17 Denominator: Basic Weighted-average common shares outstanding 137 112 137 112 Diluted Effect of dilutive shares — 1 — 1 Weighted-average common shares outstanding 137 113 137 113 Earnings (loss) per share: Basic $ (0.23) $ 0.40 $ (0.34) $ 0.15 Diluted $ (0.23) $ 0.40 $ (0.34) $ 0.15 Potentially dilutive securities (a) 5 19 5 12 (a) Potentially dilutive securities for 2021 and 2020 include stock options, restricted stock units, restricted stock awards, and performance stock units and were excluded from the computation of diluted earnings per share because the securities would have had an antidilutive effect. During 2020, until converted, the outstanding Series A preferred stock was dilutive and excluded from the computation of diluted earnings per share because the stock would have had an antidilutive effect.

Fair Value (Tables)

Fair Value (Tables)	6 Months Ended
	Jun. 30, 2021
Fair Value Disclosures [Abstract]
Schedule Financial Instruments Measured at Fair Value on a Recurring Basis	The following table presents our financial instruments measured at fair value on a recurring basis and indicates the level within the fair value hierarchy: Assets Level June 30, 2021 December 31, 2020 Distrivet call option 3 $ 1 $ 2 Total assets $ 1 $ 2 Liabilities Level June 30, 2021 December 31, 2020 Interest rate swap contracts 2 $ 1 $ 5 Distrivet put option 3 2 1 Total liabilities $ 3 $ 6

Derivatives (Tables)

Derivatives (Tables)	6 Months Ended
	Jun. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value	The following table discloses the fair value and balance sheet location of our derivative instruments: Liability Derivatives Cash Flow Hedging Instruments Balance Sheet Location June 30, 2021 December 31, 2020 Interest rate swap contracts Other current liabilities $ 1 $ 5
Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location	The effect of cash flow hedges on Other comprehensive income (loss) was as follows: Three Months Ended June 30, Six Months Ended June 30, Cash Flow Hedging Instruments Location 2021 2020 2021 2020 Interest rate swap contracts Interest (income) expense $ 2 $ 1 $ 4 $ 1

Accumulated Other Comprehensi_2

Accumulated Other Comprehensive Income (Loss) (Tables)	6 Months Ended
	Jun. 30, 2021
Equity [Abstract]
Schedule of Accumulated Other Comprehensive Loss	The following table presents the changes in Accumulated other comprehensive loss, net of applicable taxes, by component: Three Months Ended June 30, 2021 Derivative Gain (Loss) Foreign Currency Translation Gain (Loss) Total Balance at March 31, 2021 $ (1) $ (74) $ (75) Other comprehensive loss before reclassifications — 7 7 Reclassified from Accumulated other comprehensive loss to earnings 2 — 2 Period Change 2 7 9 Balance at June 30, 2021 $ 1 $ (67) $ (66) Three Months Ended June 30, 2020 Balance at March 31, 2020 $ (8) $ (108) $ (116) Other comprehensive loss before reclassifications — 6 6 Reclassified from Accumulated other comprehensive loss to earnings 1 2 3 Period Change 1 8 9 Balance at June 30, 2020 $ (7) $ (100) $ (107) Six Months Ended June 30, 2021 Derivative Gain (Loss) Foreign Currency Translation Gain (Loss) Total Balance at December 31, 2020 $ (3) $ (63) $ (66) Other comprehensive loss before reclassifications — (4) (4) Reclassified from Accumulated other comprehensive loss to earnings 4 — 4 Period Change 4 (4) — Balance at June 30, 2021 $ 1 $ (67) $ (66) Six Months Ended June 30, 2020 Balance at December 31, 2019 $ — $ (86) $ (86) Other comprehensive loss before reclassifications (7) (16) (23) Reclassified from Accumulated other comprehensive loss to earnings — 2 2 Period Change (7) (14) (21) Balance at June 30, 2020 $ (7) $ (100) $ (107)

Redeemable Non-controlling In_2

Redeemable Non-controlling Interests (Tables)	6 Months Ended
	Jun. 30, 2021
Noncontrolling Interest [Abstract]
Redeemable Non-controlling Interests	The following table presents the components of change and balances of Redeemable non-controlling interests within the condensed consolidated balance sheets as follows: Six Months Ended June 30, 2021 Year Ended Balance at beginning of period $ 36 $ 10 Decrease due to redemptions (13) (4) Increase due to business acquisitions — 24 Net income (loss) attributable to redeemable non-controlling interests — 2 Dividends declared (2) — Effect of foreign currency translation (gain) loss attributable to redeemable non-controlling interests — (2) Change in redemption value 2 6 Balance at end of period $ 23 $ 36

Segment Data - Operating Result

Segment Data - Operating Results by Segment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Segment Reporting Information [Line Items]
Net sales	$ 1,189	$ 1,026	$ 2,291	$ 2,091
Adjusted EBITDA	66	63	123	111
Net income (loss) attributable to Covetrus	(31)	54	(47)	20
Plus: Depreciation and amortization	43	41	86	82
Plus: Interest expense, net	9	13	18	27
Plus: Income tax (benefit) expense	13	6	17	4
Earnings (loss) before interest, taxes, depreciation, and amortization	34	114	74	133
Plus: Share-based compensation	14	10	25	19
Plus: Strategic consulting	12	5	14	9
Plus: Transaction costs	1		2	6
Plus: Separation programs and executive severance	2	1	2	2
IT infrastructure expenses				2
Plus: Formation of Covetrus		7	2	14
Plus: Capital structure		1		1
Plus: Equity method investment and non-consolidated affiliates			1
Less: Other items, net	3	(75)	3	(75)
Non-GAAP Adjusted EBITDA	66	63	123	111
Disposal Group, Held-for-sale, Not Discontinued Operations | Animal Care Business
Segment Reporting Information [Line Items]
Gain on divestiture		73		73
Foreign exchange adjustment		1		1
Corporate
Segment Reporting Information [Line Items]
Net sales	0	0	0	0
Adjusted EBITDA	(22)	(13)	(48)	(31)
Non-GAAP Adjusted EBITDA	(22)	(13)	(48)	(31)
Eliminations
Segment Reporting Information [Line Items]
Net sales	(4)	(3)	(10)	(5)
Adjusted EBITDA	0	0	0	0
Non-GAAP Adjusted EBITDA	0	0	0	0
North America
Segment Reporting Information [Line Items]
Net sales	713	602	1,348	1,152
North America | Operating Segments
Segment Reporting Information [Line Items]
Net sales	713	602	1,348	1,152
Adjusted EBITDA	59	55	111	96
Non-GAAP Adjusted EBITDA	59	55	111	96
Europe
Segment Reporting Information [Line Items]
Net sales	366	342	727	764
Europe | Operating Segments
Segment Reporting Information [Line Items]
Net sales	366	342	727	764
Adjusted EBITDA	20	16	41	34
Non-GAAP Adjusted EBITDA	20	16	41	34
APAC & Emerging Markets
Segment Reporting Information [Line Items]
Net sales	114	85	226	180
APAC & Emerging Markets | Operating Segments
Segment Reporting Information [Line Items]
Net sales	114	85	226	180
Adjusted EBITDA	9	5	19	12
Non-GAAP Adjusted EBITDA	$ 9	$ 5	$ 19	$ 12

Revenue from Contracts with C_3

Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation of Revenue [Line Items]
Net sales	$ 1,189	$ 1,026	$ 2,291	$ 2,091
North America
Disaggregation of Revenue [Line Items]
Net sales	713	602	1,348	1,152
Europe
Disaggregation of Revenue [Line Items]
Net sales	366	342	727	764
APAC & Emerging Markets
Disaggregation of Revenue [Line Items]
Net sales	114	85	226	180
Operating Segments | North America
Disaggregation of Revenue [Line Items]
Net sales	713	602	1,348	1,152
Operating Segments | Europe
Disaggregation of Revenue [Line Items]
Net sales	366	342	727	764
Operating Segments | APAC & Emerging Markets
Disaggregation of Revenue [Line Items]
Net sales	114	85	226	180
Operating Segments | Supply Chain Services
Disaggregation of Revenue [Line Items]
Net sales	1,063	917	2,055	1,893
Operating Segments | Supply Chain Services | North America
Disaggregation of Revenue [Line Items]
Net sales	587	495	1,112	956
Operating Segments | Supply Chain Services | Europe
Disaggregation of Revenue [Line Items]
Net sales	368	342	732	766
Operating Segments | Supply Chain Services | APAC & Emerging Markets
Disaggregation of Revenue [Line Items]
Net sales	112	83	221	176
Operating Segments | Software Services
Disaggregation of Revenue [Line Items]
Net sales	24	23	50	48
Operating Segments | Software Services | North America
Disaggregation of Revenue [Line Items]
Net sales	20	19	40	40
Operating Segments | Software Services | Europe
Disaggregation of Revenue [Line Items]
Net sales	2	2	5	4
Operating Segments | Software Services | APAC & Emerging Markets
Disaggregation of Revenue [Line Items]
Net sales	2	2	5	4
Operating Segments | Prescription Management
Disaggregation of Revenue [Line Items]
Net sales	131	110	243	195
Operating Segments | Prescription Management | North America
Disaggregation of Revenue [Line Items]
Net sales	131	110	243	195
Operating Segments | Prescription Management | Europe
Disaggregation of Revenue [Line Items]
Net sales	0	0	0	0
Operating Segments | Prescription Management | APAC & Emerging Markets
Disaggregation of Revenue [Line Items]
Net sales	0	0	0	0
Eliminations
Disaggregation of Revenue [Line Items]
Net sales	(29)	(24)	(57)	(45)
Eliminations | North America
Disaggregation of Revenue [Line Items]
Net sales	(25)	(22)	(47)	(39)
Eliminations | Europe
Disaggregation of Revenue [Line Items]
Net sales	(4)	(2)	(10)	(6)
Eliminations | APAC & Emerging Markets
Disaggregation of Revenue [Line Items]
Net sales	0	0	0	0
Eliminations
Disaggregation of Revenue [Line Items]
Net sales	(4)	(3)	(10)	(5)
Eliminations | Supply Chain Services
Disaggregation of Revenue [Line Items]
Net sales	(4)	(3)	(10)	(5)
Eliminations | Software Services
Disaggregation of Revenue [Line Items]
Net sales	0	0	0	0
Eliminations | Prescription Management
Disaggregation of Revenue [Line Items]
Net sales	$ 0	$ 0	$ 0	$ 0

Earnings (Loss) Per Share - Rec

Earnings (Loss) Per Share - Reconciliation of Basic Shares to Diluted Shares (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Numerator:
Net income (loss) attributable to Covetrus	$ (31)	$ 54	$ (47)	$ 20
Series A preferred stock cash dividend	0	(2)	0	(2)
Allocation of earnings to participating securities	0	(6)	0	(1)
Net income (loss) available to common shareholders	$ (31)	$ 46	$ (47)	$ 17
Basic
Basic shares (in shares)	137	112	137	112
Earnings Per Share, Diluted [Abstract]
Effect of dilutive shares (in shares)	0	1	0	1
Diluted shares (in shares)	137	113	137	113
Earnings (loss) per share:
Basic (in usd per share)	$ (0.23)	$ 0.40	$ (0.34)	$ 0.15
Diluted (in usd per share)	$ (0.23)	$ 0.40	$ (0.34)	$ 0.15
Potential dilutive securities (in shares)	5	19	5	12

Commitments and Contingencies (

Commitments and Contingencies (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Jun. 30, 2021	Dec. 31, 2019	Dec. 31, 2021	Apr. 30, 2021
Long-term Purchase Commitment [Line Items]
Purchases in the period	$ 2	$ 4
Unconditional purchase obligation, term			3 years
Future contingent termination fees, period two			$ 12
Future contingent termination fees, period three			14
Purchase obligation, fixed fee cap			14
Purchase obligation, variable fee cap			$ 39
Remaining commitment					$ 10
Amendment decrease in remaining commitments under original termination provisions					$ 18
Customer Concentration Risk
Long-term Purchase Commitment [Line Items]
Unrecorded unconditional purchase obligation	$ 32	$ 32
Forecast
Long-term Purchase Commitment [Line Items]
Unconditional purchase obligation for 2021				$ 8

Income Taxes - Narrative (Detai

Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Income tax expense	$ (13)	$ (6)	$ (17)	$ (4)
Income (loss) before taxes and equity in earnings of affiliates	$ (18)	$ 59	$ (30)	$ 24

Fair Value - Narrative and Sche

Fair Value - Narrative and Schedule Financial Instruments Measured at Fair Value on a Recurring Basis (Details) $ in Millions	Jun. 30, 2021USD ($)interestRateSwap	Dec. 31, 2020USD ($)
Liabilities
Number of interest rate swap contracts | interestRateSwap	5
Volatility
Liabilities
Equity securities, measurement input	0.35
Cost Of Capital
Liabilities
Equity securities, measurement input	0.15
Fair Value, Recurring
Assets
Total assets	$ 1	$ 2
Fair Value, Recurring | Level 2
Liabilities
Total liabilities	3	6
Distrivet call option | Fair Value, Recurring | Level 3
Assets
Total assets	1	2
Interest rate swap contracts | Fair Value, Recurring | Level 2
Liabilities
Total liabilities	1	5
Distrivet put option | Fair Value, Recurring | Level 3
Liabilities
Total liabilities	2	$ 1
Enterprise value of Distrivet	$ 130

Derivatives - Narrative (Detail

Derivatives - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2021	Aug. 31, 2019
Derivative [Line Items]
Net amount of deferred losses on cash flow hedges that are expected to be reclassified from Accumulated other comprehensive income (loss) into Interest expense within the next 12 months	$ 1
Cash Flow Hedging | Designated as Hedging Instrument | Interest rate swap contracts
Derivative [Line Items]
Notional amount		$ 500
Cash Flow Hedging | Designated as Hedging Instrument | Interest rate swap contracts | Minimum
Derivative [Line Items]
Forward interest rate	1.63%
Cash Flow Hedging | Designated as Hedging Instrument | Interest rate swap contracts | Maximum
Derivative [Line Items]
Forward interest rate	1.70%

Derivatives - Balance Sheet Loc

Derivatives - Balance Sheet Location (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Fair Value, Recurring | Cash Flow Hedging | Interest rate swap contracts | Other Current Liabilities
Derivative [Line Items]
Interest rate swap contracts	$ 1	$ 5

Derivatives - Income Statement

Derivatives - Income Statement Location (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Designated as Hedging Instrument | Cash Flow Hedging | Interest (income) expense | Interest rate swap contracts
Derivative [Line Items]
Interest rate swap contracts	$ 2	$ 1	$ 4	$ 1

Accumulated Other Comprehensi_3

Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ 1,520	$ 1,199	$ 1,537	$ 1,253
Other comprehensive loss before reclassifications	7	6	(4)	(23)
Reclassified from Accumulated other comprehensive loss to earnings	2	3	4	2
Period Change	9	9	0	(21)
Ending balance	1,502	1,273	1,502	1,273
Derivative Gain (Loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(1)	(8)	(3)	0
Other comprehensive loss before reclassifications	0	0	0	(7)
Reclassified from Accumulated other comprehensive loss to earnings	2	1	4	0
Period Change	2	1	4	(7)
Ending balance	1	(7)	1	(7)
Foreign Currency Translation Gain (Loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(74)	(108)	(63)	(86)
Other comprehensive loss before reclassifications	7	6	(4)	(16)
Reclassified from Accumulated other comprehensive loss to earnings	0	2	0	2
Period Change	7	8	(4)	(14)
Ending balance	(67)	(100)	(67)	(100)
Accumulated Other Comprehensive Income (Loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(75)	(116)	(66)	(86)
Ending balance	$ (66)	$ (107)	$ (66)	$ (107)

Redeemable Non-controlling In_3

Redeemable Non-controlling Interests - Summary of Redeemable Non-controlling Interests (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Increase (Decrease) in Temporary Equity [Roll Forward]
Balance at beginning of period	$ 36	$ 10
Increase due to business acquisitions	0	24
Net income (loss) attributable to redeemable non-controlling interests	0	2
Dividends declared	(2)	0
Effect of foreign currency translation (gain) loss attributable to redeemable non-controlling interests	0	(2)
Change in redemption value	2	6
Balance at end of period	23	36
Temporary Equity, Other Changes	$ 13	$ 4

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Event - VCP $ in Millions	Jul. 09, 2021USD ($)
Subsequent Event [Line Items]
Percentage of voting interests acquired	100.00%
Consideration transferred	$ 65