Earnings Per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share ("EPS") is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period on a basic and diluted basis. The Company computes diluted net (loss) income per share using the more dilutive of the treasury stock method and the two-class method after giving effect to all potential dilutive Common Stock.

The Company’s potentially dilutive securities include potential common shares related to outstanding warrants, unvested restricted stock, outstanding stock options and outstanding preferred stock. Refer to Note 10, Stockholders' Equity, for additional discussion of these potential dilutive securities.

Diluted net (loss) income per share considers the impact of potentially dilutive securities except when the potential common shares have an antidilutive effect. The Company’s outstanding preferred stock are considered participating securities, thus requiring the two-class method of computing diluted net (loss) income per share. Computation of diluted net (loss) income per share under the two-class method excludes from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator.

Computations of basic and diluted net income per share were as follows (in thousands, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator
Net (loss) income attributable to AdaptHealth Corp.	$	(454,076)	$	16,122	$	(424,392)	$	71,904
Less: Earnings allocated to participating securities (1)	—		1,360		—		6,079
Net (loss) income for basic EPS	$	(454,076)	$	14,762	$	(424,392)	$	65,825
Change in fair value of warrant liability (2)	(9,160)		—		(31,886)		(17,145)
Net (loss) income for diluted EPS	$	(463,236)	$	14,762	$	(456,278)	$	48,680

Denominator (1) (2)
Basic weighted-average common shares outstanding	134,825		134,227		134,549		134,186
Add: Warrants (2)	157		—		653		1,436
Add: Stock options	—		2,903		—		2,669
Add: Unvested restricted stock	—		453		—		308
Diluted weighted-average common shares outstanding	134,982		137,583		135,202		138,599

Basic net (loss) income per share	$	(3.37)	$	0.11	$	(3.15)	$	0.49
Diluted net (loss) income per share	$	(3.43)	$	0.11	$	(3.37)	$	0.35

(1)The Company’s preferred stock are considered participating securities. Computation of EPS under the two-class method excludes from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator. There was no amount allocated to the participating securities during the three and nine months ended September 30, 2023 due to the net loss reported in those periods.

(2)For the nine months ended September 30, 2023 and 2022, and the three months ended September 30, 2023, the impact to earnings from the change in fair value of the Company’s warrant liability is excluded from the numerator, and the corresponding security is included in the denominator, for purposes of computing diluted net (loss) income per share. This adjustment is included as the effect of the numerator and denominator adjustment for this derivative

instrument is dilutive as a result of the non-cash gains recorded for the change in fair value of this instrument during the periods. For the three months ended September 30, 2022, this adjustment is excluded from the computation of diluted net (loss) income per share under the treasury stock method since its inclusion would have been anti-dilutive.

The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in the Company’s computation of diluted net (loss) income per share for the three and nine months ended September 30, 2023 and 2022 because to do so would be antidilutive (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Preferred Stock	12,406	12,406	12,406	12,406
Warrants	—	1,706	—	—
Stock options	3,420	468	3,420	468
Unvested restricted stock	2,057	108	2,057	221
Total	17,883	14,688	17,883	13,095