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”) using the if-converted method.

Our convertible senior notes due 2025 (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 is computed using the treasury stock method. As the average market price per share of our common stock as reported on The Nasdaq Global Select Market during the relevant periods was lower than the initial conversion price of $17.26 per share, there was no dilutive effect of the assumed conversion premium for the three and six months ended June 30, 2018.

The following table shows the computation of basic and diluted net income per share for the three and six months ended June 30, 2018 and 2017:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands except per share data)	2018		2017		2018		2017
Numerator:
Net income attributable to Innoviva stockholders, basic	$	54,626	$	35,146	$	84,207	$	51,991
Add: interest expense on 2023 Notes		1,417		1,414		2,829		2,821
Net income attributable to Innoviva stockholders, diluted	$	56,043	$	36,560	$	87,036	$	54,812

Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		100,873		107,614		100,739		107,468
Dilutive effect of 2023 Notes		12,189		12,189		12,189		12,189
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		337		660		555		660
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		113,399		120,463		113,483		120,317

Net income per share attributable to Innoviva stockholders
Basic	$	0.54	$	0.33	$	0.84	$	0.48
Diluted	$	0.49	$	0.30	$	0.77	$	0.46

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:



	Three Months Ended June 30,		Six Months Ended June 30,
(In thousands)	2018	2017	2018	2017
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan	1,633	2,019	1,562	2,541