Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2014, 2013 and 2012.



	Years Ended December 31,
	2014			2013		2012
	(In thousands, except per share amounts)
Basic and diluted
Net income attributable to The Medicines Company	$	(32,210	)	$	15,512	$	51,254

Net weighted average common shares outstanding, basic	64,473			58,096		53,545
Plus: net effect of dilutive stock options, warrants, restricted common shares and shares issuable upon conversion of Notes	—			4,556		1,801
Weighted average common shares outstanding, diluted	64,473			62,652		55,346
Income per common share attributable to The Medicines Company, basic	$	(0.50	)	$	0.27	$	0.96
Income per common share attributable to The Medicines Company, diluted	$	(0.50	)	$	0.25	$	0.93

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 years ended December 31, 2014, 2013 and 2012, options to purchase 3,910,115 shares, 1,335,570 shares, and 3,171,163 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 year ended December 31, 2014, there were 5,791 shares of unvested restricted stock excluded from the calculation of diluted earnings per common share as their effect would have been anti-dilutive. For the years ended December 2013 no shares of unvested restricted stock were excluded from the calculation of diluted earnings per common share. For the years ended December 2012, 77,235 shares, of unvested restricted stock that could potentially dilute basic earnings per share in the future were excluded from the calculation of diluted earnings per common share as their effect would have been anti-dilutive.

In June 2012, the Company issued the 2017 notes. As the Company is required to pay cash for the principal amount of the 2017 notes upon conversion, there is no impact to earnings per share. At December 31, 2014, 383,844 shares for the excess premium calculation on these notes were not included in the diluted shares for the purposes of calculating the total shares outstanding under the basic and diluted net loss per share as the effect would be anti-dilutive as the Company recorded a loss during for the year ended December 31, 2014.

In connection with the issuance of the 2017 notes, the Company entered into the 2017 Note Hedges with several of the initial purchasers of the Notes, their affiliates and other financial institutions (the Hedge Counterparties). The 2017 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 2017 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 2017 notes in the event that the market price per share of the Company's common stock, as measured under the terms of the 2017 Note Hedges, is greater than the strike price of the 2017 Note Hedges, which initially corresponded to the conversion price of the 2017 notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2017 notes.

In addition, in connection with the 2017 Note Hedges, the Company entered into warrant transactions with the Hedge Counterparties, pursuant to which the Company sold 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 year ended December 31, 2014 and December 31, 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 shares of common stock issuable upon the exercise of the warrants included in diluted shares for the December 2013, were 107,263 shares. 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.