NET INCOME (LOSS) PER SHARE

9 Months Ended

Sep. 30, 2021

Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Upon consummation of the Zyla Merger in May 2020, the Company inherited outstanding Zyla warrants to purchase Zyla common stock, which were converted into the right to purchase shares of Assertio’s common stock. As these warrants are exercisable at any time at an exercise price of $0.0016 per share, they represent contingently issuable shares and therefore are included in the number of outstanding shares used for the computation of basic income per share. There were 392,095 unexercised shares of common stock issuable upon the exercise of warrants as of September 30, 2021.

Diluted net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding during the period, plus potentially dilutive common shares, consisting of stock options, awards, and equivalents and convertible debt. The Company uses the treasury-stock method to compute diluted earnings per share with respect to its stock options and equivalents. The Company uses the if-converted method to compute diluted earnings per share with respect to its convertible debt. For purposes of this calculation, options to purchase stock are considered to be potential common shares and are only included in the calculation of diluted net income (loss) per share when their effect is dilutive.

The following table reflects the calculation of basic and diluted earnings per common share for the three and nine months ended September 30, 2021 and 2020 (in thousands, except for per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Basic net income (loss) per share
Net income (loss)	$	3,737	$	(10,522)	$	(5,887)	$	(3,791)
Weighted average common shares and warrants outstanding	44,969		29,891		42,550		24,958
Basic net income (loss) per share	$	0.08	$	(0.35)	$	(0.14)	$	(0.15)

Diluted net income (loss) per share
Net income (loss)	$	3,737	$	(10,522)	$	(5,887)	$	(3,791)

Weighted average common shares and share equivalents outstanding	44,969		29,891		42,550		24,958


Add: effect of dilutive stock options, awards, and equivalents	86		—		—		—
Diluted net income (loss) per share	$	0.08	$	(0.35)	$	(0.14)	$	(0.15)

The following table reflects outstanding potentially dilutive common shares that are not included in the computation of diluted net income (loss) per share, because to do so would be anti-dilutive, for the three and nine months ended September 30, 2021 and 2020 (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
2.5% Convertible Notes debt 2021	3	4	4	447
5.0% Convertible Notes debt 2024	—	—	—	2,281

Stock options, awards and equivalents	2,297	3,063	2,725	2,478
Total potentially dilutive common shares	2,300	3,067	2,729	5,206