NET LOSS PER SHARE

9 Months Ended

Sep. 30, 2016

NOTE 3. NET LOSS PER SHARE

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, plus potentially dilutive common shares, consisting of unexercised stock options, unvested restricted stock awards, outstanding shares under the employee stock purchase plan and convertible debt. As we had net losses for the three and nine months ended September 30, 2016 and September 30, 2015, all potentially dilutive common shares were determined to be anti-dilutive. Basic and diluted earnings per common share are calculated as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except for per share amounts)	2016		2015		2016		2015
Basic and diluted net loss per share
Net loss	$	(12,894)	$	(11,785)	$	(44,352)	$	(45,070)
Denominator		61,422		60,320		61,163		59,961
Basic and diluted net loss per share	$	(0.21)	$	(0.20)	$	(0.73)	$	(0.75)

The following table sets forth outstanding potentially dilutive common shares that are not included in the computation of diluted net loss per share because to do so would be anti-dilutive:


	September 30,	September 30,
(in thousands)	2016	2015
Convertible debt	17,931	17,931
Stock options and restricted stock units	9,482	8,366
Total potentially dilutive common shares	27,413	26,297

Change in estimate

Net sales for NUCYNTA for the three months ended September 30, 2016 were adversely effected by rebates relating to the first and second quarter of 2016 that were received during the three months ended September 30, 2016 and exceeded our estimate for such periods by approximately $2.3 million. These differences were recognized in the quarter ended September 30, 2016. During the three months ended September 30, 2016, the Company reduced its estimate for the amount of expected future returns for Lazanda by approximately $1.4 million, based on recent historical returns experience. This reduction in reserves increased reported net sales of Lazanda in the three months ended September 30, 2016 by approximately $1.4 million. The net impact of the increased rebates for NUCYNTA and the reduced expected returns estimate for Lazanda during the three months ended September 30, 2016 decreased net sales for the three and nine months ended September 30, 2016 by approximately $0.9 million. The net $0.9 million reduction in net sales increased net loss for the three and nine months ended September 30, 2016 by $0.9 million, or $0.01 per share.