Earnings (Loss) per Share

9 Months Ended

Sep. 30, 2021

For the three and nine months ended September 30, 2021, and for the three months ended September 30, 2020 we recorded net income attributable to Penn National. As such, we used diluted weighted-average common shares outstanding when calculating diluted income per share for the three and nine months ended September 30, 2021 and the three months ended September 30, 2020. Stock options, RSAs, convertible preferred shares and convertible debt that could potentially dilute basic EPS in the future are included in the computation of diluted income per share.

For the nine months ended September 30, 2020, we recorded a net loss attributable to Penn National. As such, because the dilution from potential common shares was antidilutive, we used basic weighted-average common shares outstanding, rather than diluted weighted-average common shares outstanding when calculating diluted loss per share for the nine months ended September 30, 2020. Stock options, RSAs, convertible preferred shares and convertible debt that could potentially dilute basic EPS in the future that were not included in the computation of diluted loss per share were as follows:


									For the nine months ended September 30,
(in millions)									2020
Assumed conversion of dilutive stock options									2.5
Assumed conversion of dilutive RSAs									0.4
Assumed conversion of convertible preferred shares									0.7
Assumed conversion of convertible debt									7.4

The following table sets forth the allocation of net income for the three and nine months ended September 30, 2021 and the three months ended September 30, 2020 under the two-class method. For the nine months ended September 30, 2020 we did not utilize the two-class method due to incurring a net loss for the period.


	For the three months ended September 30,				For the nine months ended September 30,
(in millions)	2021		2020		2021		2020
Net income (loss) attributable to Penn National	$	86.1	$	141.9	$	375.8	$	(680.6)
Net income applicable to preferred stock	0.4		0.8		1.9		—
Net income (loss) applicable to common stock	$	85.7	$	141.1	$	373.9	$	(680.6)

The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the three and nine months ended September 30, 2021 and 2020:


	For the three months ended September 30,		For the nine months ended September 30,
(in millions)	2021	2020	2021	2020
Weighted-average common shares outstanding	156.1	138.2	155.9	126.9
Assumed conversion of:
Dilutive stock options	2.1	2.8	2.3	—
Dilutive RSAs	0.4	0.4	0.4	—
Convertible debt	14.1	14.1	14.1	—
Weighted-average common shares outstanding - Diluted	172.7	155.5	172.7	126.9

RSAs with performance and market based vesting conditions that have not been met as of September 30, 2021 were excluded from the computation of diluted earning per share for the three and nine months ended September 30, 2021.

In addition, 0.8 million shares from the assumed conversion of convertible preferred shares were excluded from the computation of diluted income per share for the three and nine months ended September 30, 2021 because including them would have been anti-dilutive.

Options to purchase 0.2 million shares were outstanding during the three and nine months ended September 30, 2021, respectively, compared to zero and 0.9 million during the three and nine months ended September 30, 2020, respectively, but were not included in the computation of diluted earnings (loss) per share because they were anti-dilutive.

The following table presents the calculation of basic and diluted earnings (loss) per share for the Company’s common stock for the three and nine months ended September 30, 2021 and 2020:


	For the three months ended September 30,				For the nine months ended September 30,
(in millions, except per share data)	2021		2020		2021		2020
Calculation of basic earnings (loss) per share:
Net income (loss) applicable to common stock	$	85.7	$	141.1	$	373.9	$	(680.6)
Weighted-average common shares outstanding - basic	156.1		138.2		155.9		126.9
Basic earnings (loss) per share	$	0.55	$	1.02	$	2.40	$	(5.36)

Calculation of diluted earnings (loss) per share:
Net income (loss) applicable to common stock	$	85.7	$	141.1	$	373.9	$	(680.6)
Interest expense, net of tax (1):
Convertible Notes	4.4		4.2		13.0		—
Diluted income (loss) applicable to common stock	$	90.1	$	145.3	$	386.9	$	(680.6)
Weighted-average common shares outstanding - diluted	172.7		155.5		172.7		126.9
Diluted earnings (loss) per share	$	0.52	$	0.93	$	2.24	$	(5.36)

(1)The three and nine months ended September 30, 2021 were tax-affected at a rate of 20%.