Earnings Per Share

Basic net income per share is calculated using the weighted average number of shares of the Company’s common stock issued and outstanding during a certain period, and is calculated by dividing net income by the weighted average number of shares of the Company’s common stock issued and outstanding during such period. Diluted net income per share is calculated using the weighted average number of common and potentially dilutive common shares outstanding during the period, using the as-if converted method for preferred stock and the treasury stock method for options and common stock warrants.

Pursuant to the Merger Agreement, ApolloMed held back 10% of the shares of its common stock that were issuable to NMM shareholders (“Holdback Shares”) to secure indemnification of ApolloMed and its affiliates under the Merger Agreement. The Holdback Shares will be held for a period of up to 24 months, with 50% issued on the first anniversary of the merger and the remaining 50% issued on the second anniversary, after the closing of the Merger (to be distributed on a pro-rata basis to former NMM shareholders), during which ApolloMed may seek indemnification for any breach of, or noncompliance with, any provision of the Merger Agreement, by NMM. The Holdback Shares are excluded from the computation of basic earnings per share, but included in diluted earnings per share. As of December 31, 2019, APC held 17,290,317 shares of ApolloMed's common stock and as of December 31, 2018 and 2017, APC held 1,682,110 shares of ApolloMed’s common stock, which are treated as treasury shares for accounting purposes and not included in the number of shares of common stock outstanding used to calculate earnings per share (see Note 12). The noncontrolling interests in APC are allocated their share of ApolloMed’s income from APC’s ownership of ApolloMed common stock and this is included in the net income attributable to noncontrolling interests on the consolidated statements of income. Therefore, none of the shares of ApolloMed held by APC are considered outstanding for the purposes of basic or diluted earnings per share computation.

Below is a summary of the earnings per share computations:



	Years ended December 31,
	2019		2018		2017

Earnings per share – basic	$	0.41	$	0.33	$	1.01
Earnings per share – diluted	$	0.39	$	0.29	$	0.90
Weighted average shares of common stock outstanding – basic	34,708,429		32,893,940		25,525,786
Weighted average shares of common stock outstanding – diluted	36,403,279		37,914,886		28,661,735

Below is a summary of the shares included in the diluted earnings per share computations:



	Years ended December 31,
	2019	2018	2017

Weighted average shares of common stock outstanding – basic	34,708,429	32,893,940	25,525,786
10% shares held back pursuant to indemnification clause	—	2,935,512	3,039,749
Stock options	295,672	459,440	44,716
Warrants	1,384,078	1,625,994	51,484
Restricted stock units	15,100	—	—
Weighted average shares of common stock outstanding – diluted	36,403,279	37,914,886	28,661,735