Earnings Per Share

Basic earnings per share is calculated using the weighted average number of shares of the Company’s common stock issued and outstanding during a certain period, and is calculated by dividing net income attributable to Apollo Medical Holdings, Inc. by the weighted average number of shares of the Company’s common stock issued and outstanding during such period. Diluted earnings per share is calculated using the weighted average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period, using the as-if converted method for secured convertible notes, preferred stock, and the treasury stock method for options and common stock warrants.

Pursuant to the Merger Agreement, ApolloMed held back 10% of the shares of its common stock that were issuable to NMM shareholders (“Holdback Shares”) to secure indemnification of ApolloMed and its affiliates under the Merger Agreement. The Holdback Shares will be held for a period of up to 24 months, with 50% issued on the first anniversary of the merger and the remaining 50% issued on the second anniversary, after the closing of the Merger (to be distributed on a pro-rata basis to former NMM shareholders), during which ApolloMed may seek indemnification for any breach of, or noncompliance with, any provision of the Merger Agreement, by NMM. These Holdback Shares are excluded from the computation of basic earnings per share, but included in diluted earnings per share. As of September 30, 2019 and December 31, 2018 APC held 16,790,576 and 1,682,110 shares of ApolloMed’s common stock, respectively, which are treated as treasury shares for accounting purposes and not included in the number of shares of common stock outstanding used to calculate earnings per share.

Below is a summary of the earnings per share computations:



Three Months Ended September 30,	2019		2018
Earnings per share – basic	$	0.11	$	0.28
Earnings per share – diluted	$	0.10	$	0.24
Weighted average shares of common stock outstanding – basic	34,643,754		32,917,007
Weighted average shares of common stock outstanding – diluted	37,792,266		38,387,700



Nine Months Ended September 30,	2019		2018
Earnings per share – basic	$	0.21	$	0.43
Earnings per share – diluted	$	0.20	$	0.37
Weighted average shares of common stock outstanding – basic	34,555,124		32,672,793
Weighted average shares of common stock outstanding – diluted	37,816,698		38,010,838

Below is a summary of the shares included in the diluted earnings per share computations:



Three Months Ended September 30,	2019	2018
Weighted average shares of common stock outstanding – basic	34,643,754	32,917,007
10% shares held back pursuant to indemnification clause	1,511,332	3,039,609
Stock options	299,536	648,724
Warrants	1,337,644	1,782,360
Weighted average shares of common stock outstanding – diluted	37,792,266	38,387,700



Nine Months Ended September 30,	2019	2018
Weighted average shares of common stock outstanding – basic	34,555,124	32,672,793
10% shares held back pursuant to indemnification clause	1,511,332	3,039,609
Stock options	307,665	633,131
Warrants	1,442,577	1,665,305
Weighted average shares of common stock outstanding – diluted	37,816,698	38,010,838