NET INCOME PER SHARE

12 Months Ended

Dec. 31, 2023

2. NET INCOME PER SHARE

Basic net income per share attributable to Innoviva stockholders is computed by dividing net income attributable to Innoviva stockholders by the weighted-average number of shares of common stock outstanding. Diluted net income per share attributable to Innoviva stockholders is computed by dividing net income attributable to Innoviva stockholders by the weighted-average number of shares of common stock and dilutive potential common stock equivalents then outstanding. Dilutive potential common stock equivalents include the assumed exercise, vesting and issuance of employee stock awards using the treasury stock method, as well as common stock issuable upon assumed conversion of our convertible subordinated notes due 2023 (the “2023 Notes”) up until its maturity date on January 15, 2023, our convertible senior notes due 2025 (the “2025 Notes”), and our convertible senior notes due 2028 (the “2028 Notes”) using the if-converted method.

The 2025 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. Our current intent is to settle the principal amount of the 2025 Notes in cash upon conversion. The impact of the assumed conversion premium to diluted net income per share was historically computed using the treasury stock method until the adoption of ASU 2020-06. As the average market price per share of our common stock as reported on The Nasdaq Global Select Market was lower than the initial conversion price of $17.26 per share, there was no dilutive effect of the assumed conversion premium for the year ended December 31, 2021.

The following table shows the computation of basic and diluted net income per share for the years ended December 31, 2023, 2022 and 2021:


	Year Ended December 31,
(In thousands except per share data)	2023		2022		2021
Numerator:
Net income attributable to Innoviva stockholders, basic	$	179,722	$	213,921	$	265,854
Add: interest expense on 2023 Notes, net of tax effect		89		2,439		4,736
Add: interest expense on 2025 Notes, net of tax effect		5,116		4,583		—
Add: interest expense on 2028 Notes, net of tax effect		6,377		4,626		—
Net income attributable to Innoviva stockholders, diluted	$	191,304	$	225,569	$	270,590
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		65,435		69,644		82,062
Dilutive effect of 2023 Notes		187		6,188		12,189
Dilutive effect of 2025 Notes		11,150		11,150		—
Dilutive effect of 2028 Notes		9,955		8,158		—
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		149		108		59
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		86,876		95,248		94,310
Net income per share attributable to Innoviva stockholders
Basic	$	2.75	$	3.07	$	3.24
Diluted	$	2.20	$	2.37	$	2.87

Anti‑dilutive Securities

The following common stock equivalents were not included in the computation of diluted net income per share because their effect was anti‑dilutive for the periods presented:


	Year Ended December 31,
(In thousands)	2023		2022		2021
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan		1,333		648		979
Outstanding stock warrant		591		282		—
Total		1,924		930		979