COMPUTATION OF NET INCOME PER COMMON SHARE

6 Months Ended

Jun. 30, 2021

Computation of net income per common share

COMPUTATION OF NET INCOME PER COMMON SHAREBasic net income per share is computed by dividing net income attributable to stockholders of the Company by the weighted average number of outstanding common shares for the period. The computation of diluted net income per share is similar to the computation of basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued.

The following table sets forth the computation of basic and diluted net income per share for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Numerator:
Net income	$	2,469	$	4,337	$	3,382	$	7,317
Add: net loss attributable to noncontrolling interests	(181)		—		(218)		—
Net income attributable to The Pennant Group, Inc.	$	2,650	$	4,337	$	3,600	$	7,317

Denominator:
Weighted average shares outstanding for basic net income per share	28,356		27,952		28,324		27,922
Plus: assumed incremental shares from exercise of options and assumed conversion or vesting of restricted stock(a)	2,291		1,710		2,461		1,858
Adjusted weighted average common shares outstanding for diluted income per share	30,647		29,662		30,785		29,780

Earnings Per Share:
Basic net income per common share	$	0.09	$	0.16	$	0.13	$	0.26
Diluted net income per common share	$	0.09	$	0.15	$	0.12	$	0.25


(a)						The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market price of our common shares for the period) because their inclusion would have been antidilutive. Options outstanding which are anti-dilutive and therefore not factored into the weighted average common shares amount above were 484 and 380 for the three and six months ended June 30, 2021 and 240 and 102 for the three and six months ended June 30, 2020.