Loss Per Share

9 Months Ended

Sep. 30, 2022

Note 15. Loss Per Share

We compute basic earnings (loss) per share by dividing net income (loss) available to common shareholders by the actual weighted average number of common shares outstanding for the reporting period. Elanco has variable common stock equivalents relating to certain equity awards in stock-based compensation arrangements and the TEU prepaid stock purchase contracts (see Note 8: Equity for further discussion). Diluted earnings per share reflects the potential dilution that could occur if holders of the unvested equity awards and unsettled TEUs converted their holdings into common stock. The weighted average number of potentially dilutive shares outstanding is calculated using the treasury stock method. Potential common shares that would have the effect of increasing diluted earnings per share (or reducing loss per share) are considered to be anti-dilutive and as such, these shares are not included in the calculation of diluted earnings (loss) per share.

Basic and diluted loss per share are calculated as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net loss available to common shareholders	$	(49)	$	(104)	$	(23)	$	(375)
Determination of shares:
Weighted average common shares outstanding	488.4		487.3		488.3		487.1
Assumed conversion of dilutive common stock equivalents (1)	—		—		—		—
Diluted weighted average shares outstanding	488.4		487.3		488.3		487.1
Loss per share (2)
Basic	$	(0.10)	$	(0.21)	$	(0.05)	$	(0.77)
Diluted	$	(0.10)	$	(0.21)	$	(0.05)	$	(0.77)

(1)For periods with a reported net loss, dilutive common stock equivalents are not assumed to have been issued since their effect is anti-dilutive. As a result, basic and diluted weighted average shares are the same, causing diluted net loss per share to be equivalent to basic net loss per share. For the three months ended September 30, 2022 and 2021, approximately 4.4 million and 3.7 million, respectively, of potential common shares were excluded from the calculation of diluted loss per share because their effect was anti-dilutive. For the nine months ended September 30, 2022 and 2021, approximately 2.6 million and 3.9 million, respectively, of potential common shares were excluded from the calculation of diluted loss per share because their effect was anti-dilutive.

(2)Due to rounding conventions, loss per share may not recalculate precisely based on the amounts presented within this table.