Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2022

Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is calculated by dividing the adjusted net income (loss) by the weighted average number of common shares outstanding combined with dilutive common share equivalents outstanding, if the effect is dilutive. Potentially dilutive common share equivalents consist of incremental shares of common stock issuable upon exercise of stock options and convertible notes payable and settlement of restricted stock units. The dilutive effect of non-vested stock issued under share‑based compensation plans, shares issuable under the Employee Stock Purchase Plan (ESPP), employee stock options outstanding, and the prefunded stock warrants are computed using the treasury stock method. The dilutive effect of the Convertible Notes is computed using the if‑converted method in accordance with ASU 2020-06, which was adopted by the Company on January 1, 2022 (see Note 2, “Summary of Significant Accounting Policies”).

The calculation of the basic and diluted EPS is as follows (in thousands):


	Three months ended June 30,		Six months ended June 30,
	2022			2022
Numerator:
Net income (loss) for basic earnings per share	$	6,240		$	(4,484)
Paid-in-Kind interest expense on convertible notes payable, net of tax	1,028			1,402
Change in fair value of contract consideration convertible notes payable , net of tax	(13,229)			(10,228)
Adjusted net (loss) for dilutive earnings per share	$	(5,961)		$	(13,310)

Denominator:
Basic weighted average shares outstanding	74,861			73,476
Dilutive effect of convertible notes payable	49,474			33,610
Diluted weighted average shares outstanding	124,335			107,086

Basic earnings (loss) per share	0.08			(0.06)
Diluted loss per share	(0.05)			(0.12)

The adjustments to net income (loss) in the numerator are net of estimated tax at 22.9%. For the three and six months ended June 30, 2022 weighted average shares for employee stock awards of 692,494 and 662,230, respectively, and weighted average shares for the prefunded stock warrants of 976,177 and 490,785, respectively, were not included in the dilution calculation since including them would have an anti-dilutive effect.

For the three and six months ended June 30, 2021 weighted average shares for employee stock awards of 1,127,080 and 1,344,233, respectively. were not included in the calculation of diluted loss per share since including them would have an anti-dilutive effect on the loss per share due to the net loss incurred during the periods.