NET INCOME (LOSS) PER SHARE

12 Months Ended

Dec. 31, 2022

NET INCOME (LOSS) PER SHARE

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. Any warrants outstanding under the Warrant Agreements represent contingently issuable shares and therefore are included in the number of outstanding shares used for the computation of basic income (loss) per share. There were no unexercised shares of common stock issuable upon the exercise of warrants as of December 31, 2022, and 392,095 unexercised shares of common stock issuable upon the exercise of warrants as of December 31, 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-based awards and equivalents, and convertible debt. For purposes of this calculation, stock-based awards and convertible debt 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 Company uses the treasury-stock method to compute diluted earnings per share with respect to its stock-based awards and equivalents. The Company uses the if-converted method to compute diluted earnings per share with respect to its convertible debt. Under the if-converted method, the Company assumes any convertible debt outstanding was converted at the beginning of each period presented. As a result, interest expense and the fair value adjustment of the derivative liability associated with the 2027 Convertible Notes, net of tax, is added back to net income (loss) used in the diluted earnings per share calculation. Additionally, the diluted shares used in the diluted earnings per share calculation includes the dilution effect of the convertible debt if converted into the Company’s common stock.

The following table reflects the calculation of basic and diluted earnings per common share for the years ended December 31, 2022 and 2021 (in thousands, except for per share amounts):


	Year ended December 31,
	2022		2021
Basic net income (loss) per share
Net income (loss)	$	109,625	$	(1,281)
Weighted-average common shares and warrants outstanding	47,004		43,169
Basic net income (loss) per share	$	2.33	$	(0.03)

Diluted net income (loss) per share
Net income (loss)	$	109,625	$	(1,281)
Add: Convertible debt interest expense and fair value adjustment, net of tax	1,560		—
Adjusted net income (loss)	111,185		(1,281)
Weighted-average common shares and share equivalents outstanding	47,004		43,169
Add: effect of dilutive stock-based awards and equivalents	1,530		—
Add: effect of dilutive convertible debt under if-converted method	6,135		—
Denominator for diluted income (loss) per share	54,669		43,169
Diluted net income (loss) per share	$	2.03	$	(0.03)

The following table reflects outstanding potentially dilutive common shares that are not included in the computation of diluted net income (loss) per share for the years ended December 31, 2022, and 2021, because to do so would be anti-dilutive (in thousands):


	Year ended December 31,
	2022	2021
Convertible notes	—	3
Stock-based awards and equivalents	836	2,914
Total potentially dilutive common shares	836	2,917