EARNINGS (LOSS) PER SHARE

3 Months Ended

Mar. 31, 2020

A net loss cannot be diluted. Therefore, when the Company is in a net loss position, basic and diluted loss per common share are the same. If the Company achieves profitability, the denominator of a diluted earnings per common share calculation includes both the weighted-average number of shares outstanding and the number of common stock equivalents, if the inclusion of such common stock equivalents would be dilutive. Dilutive common stock equivalents potentially include warrants, stock options and non-vested restricted stock awards and units using the treasury stock method, along with the effect, if any, from outstanding convertible securities. The majority of the Company’s outstanding warrants to purchase common stock have participation rights to any dividends that may be declared in the future and are therefore considered to be participating securities. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods of loss, no loss is allocated to the participating securities since the holders have no contractual obligation to share in the losses of the Company.

For periods with net income, diluted net earnings per share is calculated by either (i) adjusting the weighted-average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period as determined using the treasury stock method or (ii) the two-class method considering common stock equivalents, whichever is more dilutive. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders.

Accordingly, the Company applied the two-class method to calculate basic and diluted net earnings per share of common stock for the three months ended March 31, 2020. The two-class method was not applied for the three months ended March 31, 2019 as the Company’s participating securities do not have any obligation to absorb net losses.

For purposes of the diluted net loss per share calculation, common stock equivalents are excluded from the calculation if their effect would be anti-dilutive.

The following table illustrates the determination of earnings (loss) per share for each period presented:


	March 31,
	2020		2019
	(in thousands, except per share amounts)
Basic Earnings (Loss) Per Share:
Numerator:
Net income (loss)	$	41,564	$	(6,480)
Income attributable to participating securities - basic	$	7,157	$	—
Net income (loss) attributable to common stockholders - basic	$	34,407	$	(6,480)

Denominator:
Weighted average common shares outstanding - basic	109,808		77,458
Net income (loss) per share applicable to common stockholders - basic	$	0.31	$	(0.08)

Dilutive Earnings (Loss) Per Share:
Numerator:
Net income (loss)	$	41,564	$	(6,480)
Income attributable to participating securities - diluted	$	7,156	$	—
Net income (loss) attributable to common stockholders - diluted	$	34,408	$	(6,480)

Denominator:
Weighted average shares outstanding	109,808		77,458

Dilutive impact from:
Stock options and employee stock purchase plan	15		—
Weighted average common shares outstanding for diluted	109,823		77,458
Net income (loss) per share applicable to common stockholders - diluted	$	0.31	$	(0.08)

The following potentially dilutive securities outstanding as of March 31, 2020 and 2019 have been excluded from the denominator of the diluted loss per share of common stock outstanding calculation as their effect is anti-dilutive (in thousands):


	March 31,
	2020	2019
Warrants	55	9,258
Stock options	9,703	5,689
	9,758	14,947