Earnings (Loss) Per Share

9 Months Ended

Oct. 02, 2020

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the applicable period. Diluted earnings per share is computed based on the weighted average number of common shares outstanding plus the effect of dilutive potential shares outstanding during the period using the treasury stock method. Dilutive potential common shares include employee equity options, non-vested shares and similar instruments granted by the Company and the assumed conversion impact of the Notes. The Company’s current intent and policy is to settle all Notes conversions through a combination settlement by satisfying the principal amount outstanding with cash and any Notes conversion value in excess of the principal amount in shares of the Company’s common stock. As such, the Company uses the treasury stock method for the assumed conversion of the Notes to compute the weighted average shares of common stock outstanding for diluted earnings per share. As the Company intends and has the ability to settle the principal amount of the Notes in cash upon conversion, the Notes will not have an impact on the Company's diluted earnings per share until the average share price of the Company’s common stock exceeds the conversion price of $21.01 per share.

In connection with the offering of the Notes, the Company entered into Capped Calls (see further discussion in Note 13), which are intended to reduce or offset the potential dilution from shares of common stock issued upon conversion of the Notes. However, this impact is not included when calculating potentially dilutive shares since their effect is anti-dilutive. Until the average market price of the Company's common stock exceeds the cap price of $23.79 per share, exercise of the Capped Calls will mitigate dilution from the Notes.

The Company’s issuance of shares of its common stock to Danaher as partial consideration for the transfer of the Dental business by Danaher to the Company on September 17, 2019, together with the 100 shares of the Company’s common stock previously held by Danaher, resulted in 127.9 million shares of the Company’s common stock being held by Danaher. In connection with the IPO, an additional 30.8 million shares were issued on September 20, 2019.

For periods prior to the Separation, the Company’s stock-based compensation expense includes expense for Danaher equity awards granted to certain of the Company’s employees. As these equity awards related to Danaher common stock, rather than common stock of the Company, the calculation of diluted earnings per share does not include the potential dilutive impact of these equity awards for periods prior to the Split-Off. At the time of the Split-Off, the equity awards held by certain employees to purchase Danaher shares were converted into equity awards to purchase the Company’s shares and the converted equity awards are included in the Company’s calculation of diluted earnings per share in periods where the Company has net income.

The table below presents the computation of basic and diluted earnings (loss) per share (in millions, except per share amounts):


	Three Months Ended				Nine Months Ended
	October 2, 2020		September 27, 2019		October 2, 2020		September 27, 2019
Numerator:
Net income (loss)	$	35.6	$	62.1	$	(75.1)	$	161.5

Denominator:

Weighted-average common shares outstanding used in basic earnings (loss) per share:	159.7		130.6		159.4		128.8
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive restricted stock units	2.0		—		—		—
Assumed conversion impact of the Notes	2.2		—		—		—
Weighted average common shares outstanding used in diluted earnings (loss) per share	163.9		130.6		159.4		128.8

Earnings (loss) per share:
Basic	$	0.22	$	0.48	$	(0.47)	$	1.25
Diluted	$	0.22	$	0.48	$	(0.47)	$	1.25

Since the Company was in a net loss position for the nine months ended October 2, 2020, no shares reserved for issuance upon exercise of stock options, vesting of restricted stock units or assumed conversion of the Notes were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

The following table presents the number of outstanding securities not included in the computation of diluted income (loss) per share, because their effect was anti-dilutive (in millions):


	Three Months Ended		Nine Months Ended
	October 2, 2020	September 27, 2019	October 2, 2020	September 27, 2019
Stock-based awards	4.2	—	1.9	—
Notes	—	—	0.8	—
Total	4.2	—	2.7	—