Note 9 – Earnings (Loss) Per Share

Earnings (loss) per share is computed using the two-class method. For periods in which the Company reports net income, diluted earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period, unless the effect is antidilutive. Due to the loss from continuing operations attributable to CVS Health in the nine months ended September 30, 2018, 2 million of potentially dilutive common equivalent shares were excluded from the calculation of diluted earnings per share, as the impact of these shares was antidilutive. In addition, options to purchase 12.3 million and 13.6 million shares of common stock were outstanding, but were not included in the calculation of diluted earnings per share, for the three and nine months ended September 30, 2018, respectively, because the exercise prices of the options were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. For the same reason, options to purchase 10.9 million and 9.9 million shares of common stock were outstanding, but were not included in the calculation of diluted earnings per share, for the three and nine months ended September 30, 2017, respectively.

The following is a reconciliation of basic and diluted earnings (loss) per share from continuing operations for the respective periods:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
In millions, except per share amounts	2018		2017		2018		2017
Numerator for earnings (loss) per share calculation:
Income (loss) from continuing operations	$	1,390	$	1,285	$	(174)	$	3,344
Income from continuing operations allocated to participating securities		(1)		(3)		(3)		(12)
Income from continuing operations attributable to noncontrolling interests		—		—		—		(1)
Income (loss) from continuing operations attributable to CVS Health	$	1,389	$	1,282	$	(177)	$	3,331

Denominator for earnings (loss) per share calculation:
Weighted average shares, basic		1,020		1,016		1,018		1,022
Effect of dilutive securities		2		4		—		4
Weighted average shares, diluted		1,022		1,020		1,018		1,026

Earnings (loss) per share from continuing operations:
Basic	$	1.36	$	1.26	$	(0.17)	$	3.26
Diluted	$	1.36	$	1.26	$	(0.17)	$	3.25