Earnings Per Common Share

Basic income (loss) per common share is computed based upon the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed based upon the weighted average number of common shares outstanding plus the common shares issuable from the assumed conversion of DownREIT units, stock options, certain performance restricted stock units and unvested restricted stock units. Only those instruments having a dilutive impact on our basic income (loss) per share are included in diluted income (loss) per share during the periods presented.

Restricted stock and certain performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, and require use of the two-class method when computing basic and diluted earnings per share.

In December 2018, the Company entered into forward equity sales agreement to sell up to an aggregate of 15.25 million shares of its common stock (see Note 12) by no later than December 13, 2019. The Company expects to settle this agreement with shares of common stock prior to expiration.

The Company considered the potential dilution resulting from the forward equity sales agreement to the calculation of earnings per share. At inception, the agreement does not have an effect on the computation of basic EPS as no shares are delivered until settlement. However, the Company uses the treasury stock method to determine the dilution resulting from the forward equity sales agreement during the period of time prior to settlement. As the issuance price under the forward equity sales agreement was greater than the average market price at December 31, 2018, the agreement was anti-dilutive.

The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share data):



	Year Ended December 31,
	2018			2017			2016
Numerator
Net income (loss) from continuing operations	$	1,073,474		$	422,634		$	374,171
Noncontrolling interests' share in earnings	(12,381		)	(8,465		)	(12,179		)
Net income (loss) attributable to HCP, Inc.	1,061,093			414,169			361,992
Less: Participating securities' share in earnings	(2,669		)	(1,156		)	(1,198		)
Income (loss) from continuing operations applicable to common shares	1,058,424			413,013			360,794
Discontinued operations	—			—			265,755
Net income (loss) applicable to common shares	$	1,058,424		$	413,013		$	626,549

Numerator - Dilutive
Net income (loss) applicable to common shares	$	1,058,424		$	413,013		$	626,549
Add: distributions on dilutive convertible units and other	6,919			—			—
Dilutive net income (loss) available to common shares	$	1,065,343		$	413,013		$	626,549
Denominator
Basic weighted average shares outstanding	470,551			468,759			467,195
Dilutive potential common shares - equity awards	168			176			208
Dilutive potential common shares - DownREIT conversions	4,668			—			—
Diluted weighted average common shares	475,387			468,935			467,403
Basic earnings per common share
Continuing operations	$	2.25		$	0.88		$	0.77
Discontinued operations	—			—			0.57
Net income (loss) applicable to common shares	$	2.25		$	0.88		$	1.34
Diluted earnings per common share
Continuing operations	$	2.24		$	0.88		$	0.77
Discontinued operations	—			—			0.57
Net income (loss) applicable to common shares	$	2.24		$	0.88		$	1.34

For all periods presented in the above table, approximately 1 million equity awards (restricted stock units and stock options) and all shares of common stock issuable pursuant to the settlement of forward equity sales agreement (see discussion above) were not included because they are anti-dilutive. For the years ended December 31, 2018, 2017 and 2016, 2 million, 7 million and 7 million shares, respectively, issuable upon conversion of DownREIT units were not included because they are anti-dilutive.