Earnings Per Share

12 Months Ended

Dec. 31, 2020

EARNINGS PER SHARE

Basic earnings per share (“EPS”) is calculated by dividing net income by the weighted average number of shares of common stock outstanding for the applicable period. Diluted EPS 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 do 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 any applicable period. See the computation of basic and diluted EPS below for the dilutive impact of the Notes for the year ended December 31, 2020.

In connection with the offering of the Notes, the Company entered into Capped Calls (see further discussion in Note 15), 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. The Capped Calls will mitigate dilution from the conversion of the Notes up to the Company’s common stock price of $23.79. If the Notes are converted at a price higher than $23.79 per share, the Capped Calls will no longer mitigate dilution from the conversion of 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, which are being utilized for the calculation of both basic and diluted EPS for the year ended December 31, 2018. 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 EPS 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 have been included in the Company’s calculation of diluted EPS. Refer to Note 16 for additional information.

The table below presents the computation of basic and diluted EPS:


	Year Ended
	December 31, 2020		December 31, 2019		December 31, 2018
Numerator:
Net income	$	33.3	$	217.6	$	230.7

Denominator:
Weighted-average common shares outstanding used in basic EPS	159.6		136.2		127.9
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive restricted stock units	2.2		0.2		—
Assumed conversion of the Notes	2.3		—		—
Weighted average common shares outstanding used in diluted EPS	164.1		136.4		127.9

Earnings per share:
Basic	$	0.21	$	1.60	$	1.80
Diluted	$	0.20	$	1.60	$	1.80

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


	Year Ended
	December 31, 2020	December 31, 2019	December 31, 2018
Stock-based awards	4.1	0.3	—

Total	4.1	0.3	—