EARNINGS PER SHARE

Basic earnings per share ("EPS") is computed by dividing net income attributable to the Company by the weighted-average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the numerator is increased to exclude charges that would not have been incurred, and the denominator is increased to include the number of additional common shares that would have been outstanding (using the if-converted and treasury stock methods), if securities containing potentially dilutive common shares such as stock options converting to common shares, and if such assumed conversion is dilutive.

The following is a reconciliation of the weighted-average shares outstanding used in the calculation of basic and diluted EPS for the three months ended March 31, 2020 and 2019 (in thousands, except per share data):



	Three Months Ended March 31,
	2020			2019
Net (loss) income attributable to Heska Corporation	$	(5,288	)	$	814

Basic weighted-average common shares outstanding	7,568			7,459
Assumed exercise of dilutive stock options and restricted shares	—			506
Diluted weighted-average common shares outstanding	$	7,568		$	7,965

Basic (loss) earnings per share attributable to Heska Corporation	$	(0.70	)	$	0.11
Diluted (loss) earnings per share attributable to Heska Corporation	$	(0.70	)	$	0.10

The following potentially outstanding common shares from convertible preferred stock, convertible senior notes, stock options and restricted stock awards were excluded from the computation of diluted EPS because the effect would have been anti-dilutive (in thousands):



	Three Months Ended March 31,
	2020	2019
Convertible preferred stock	1,509	—
Convertible senior notes	43	—
Stock options and restricted stock	135	86
	1,687	86

As more fully described in Note 16, our Notes are convertible under certain circumstances, as defined in the indenture, into a combination of cash and shares of our common stock. The Company intends to settle the principal value of the Notes in cash and issue shares of our common stock to settle the intrinsic value of the conversion feature. The Company will use the treasury stock method when calculating the potential dilutive effect of the conversion feature on earnings per share, if any. Potential dilution upon conversion of the Notes occurs when the market price per share of our common stock is greater than the conversion price of the Notes of $86.63. The average price of our common stock exceeded the conversion price of the Notes during the three months ended March 31, 2020; therefore, under the net share settlement method, the potential shares issuable under the Notes would be included in the calculation of diluted EPS. However, these shares were excluded from the computation of diluted EPS because the effect would have been anti-dilutive.

As discussed in Note 12, the Company issued and sold an aggregate of 122,000 shares of its Preferred Stock to certain investors in a private placement offering. The convertible preferred shares issued are deemed participating securities since these shares contractually participate alongside common stock on any dividends declared. During periods of net income, the calculation of EPS for common stock excludes income attributable to the preferred shares from the numerator and excludes the dilutive impact of those shares from the denominator. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. The potential dilutive effect of the convertible preferred stock is calculated using the if-converted method. For the three months ended March 31, 2020, these shares were excluded from the computation of diluted EPS because the effect would have been anti-dilutive.