(Loss) Earnings per Share

The following table sets forth the computation of basic and diluted (loss) earnings per share for the three and six months ended June 30, 2014 and 2013:



	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
	(in thousands, except per share amounts)
Basic and diluted
Net (loss) income attributable to The Medicines Company	$	(5,157	)	$	18,094	$	(10,153	)	$	6,521

Weighted average common shares outstanding, basic	64,400			55,553		64,277			54,804
Plus: net effect of dilutive stock options, restricted common shares and shares issuable upon conversion of Notes	—			4,708		—			4,350
Weighted average common shares outstanding, diluted	64,400			60,261		64,277			59,154

(Loss) income per share attributable to The Medicines Company, basic	$	(0.08	)	$	0.33	$	(0.16	)	$	0.12
(Loss) income per share attributable to The Medicines Company, diluted	$	(0.08	)	$	0.30	$	(0.16	)	$	0.11

Basic earnings per share is computed using the weighted average number of shares of common stock outstanding during the period, reduced where applicable for outstanding yet unvested shares of restricted common stock. The number of dilutive common stock equivalents was calculated using the treasury stock method. For the three months ended June 30, 2014 and 2013, options to purchase 1,426,987 shares and 2,707,156 shares, respectively, of common stock that could potentially dilute basic earnings per share in the future were excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive. For the six months ended June 30, 2014 and 2013, options to purchase 1,777,605 shares and 2,706,534 shares, respectively, of common stock that could potentially dilute basic earnings per share in the future were excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive.

For the three and six months ended June 30, 2014, there were 233,761 and 303,829 shares, respectively, of unvested restricted stock excluded from the calculation of diluted earnings per common share. For the three and six months ended June 30, 2013 , there were no shares of unvested restricted stock excluded from the calculation of diluted earnings per common share.

In June 2012, the Company issued, at par value, $275.0 million aggregate principal amount of 1.375% convertible senior notes due June 1, 2017 (the Notes) (see note 10, Convertible Senior Notes). As the Company is required to pay cash for the principal amount of the notes upon conversion, there is no impact to earnings per share.

For the three months ended June 30, 2014, no shares for the excess premium calculation on the Notes were included in the diluted shares for purposes of calculating the total shares outstanding under the basic and diluted net loss per share because the average market price during the period was below the conversion price of the Notes. For the six months ended June 30, 2014, 767,688 shares, for the excess premium calculation on the Notes were not included in the diluted shares for purposes of calculating the total shares outstanding under the basic and diluted net loss per share as the effect would be anti-dilutive. For the three and six months ended June 30, 2013, respectively, 1,626,162 shares and 1,251,775 shares, for the excess premium calculation on the Notes were included in the diluted shares for purposes of calculating the total shares outstanding under the basic and diluted net income per share.

In connection with the issuance of the Notes, the Company entered into note hedge transactions with respect to its common stock (the Note Hedges) with several of the initial purchasers of the Notes, their affiliates and other financial institutions (the Hedge Counterparties). The Note Hedges are not considered for purposes of calculating the total shares outstanding under the basic and diluted net income per share, as their effect would be anti-dilutive. The Note Hedges are expected generally to reduce the potential dilution with respect to shares of the Company's common stock upon any conversion of the Notes in the event that the market price per share of the Company's common stock, as measured under the terms of the Note Hedges, is greater than the strike price of the Note Hedges, which initially corresponded to the conversion price of the Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes.

In addition, in connection with the Note Hedges, the Company entered into warrant transactions with the Hedge Counterparties, pursuant to which the Company sold warrants (the Warrants) to the Hedge Counterparties to purchase, subject to customary anti-dilution adjustments, up to 9.8 million shares of the Company's common stock at a strike price of $34.20 per share. For the three and six months ended June 30, 2014 and June 30, 2013, the warrants did not have a dilutive effect on earnings per share because the average market price during the periods presented was below the strike price. The Warrants will have a dilutive effect with respect to the Company's common stock to the extent that the market price per share of the Company's common stock, as measured under the terms of the Warrants, exceeds the applicable strike price of the Warrants. However, subject to certain conditions, the Company may elect to settle all of the Warrants in cash.