Earnings Per Common Share

Restricted stock and certain performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, and require use of the two-class method when computing basic and diluted earnings per share.

For the three months ended September 30, 2017, diluted loss per share from continuing operations is calculated using the weighted-average common shares outstanding during the period, as the effect of shares issuable under employee compensation plans and upon DownREIT unit conversions would have been anti-dilutive. All DownREIT units and approximately 1 million stock options were anti-dilutive for all periods presented.

Additionally, during the three months ended September 30, 2016, 6 million shares, issuable upon conversion of 4 million DownREIT units, were not included because they are anti-dilutive. For the nine months ended September 30, 2017 and 2016, 7 million and 6 million shares, respectively, issuable upon conversion of 4 million and 4 million DownREIT units, were not included because they are anti-dilutive.

The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Numerator
Net income (loss) from continuing operations	$	(5,720	)	$	45,826		$	480,558		$	294,630
Noncontrolling interests' share in earnings	(1,937		)	(2,789		)	(7,687		)	(9,540		)
Net income (loss) attributable to HCP, Inc.	(7,657		)	43,037			472,871			285,090
Less: Participating securities' share in earnings	(131		)	(326		)	(560		)	(977		)
Income (loss) from continuing operations applicable to common shares	(7,788		)	42,711			472,311			284,113
Discontinued operations	—			108,213			—			283,996
Net income (loss) applicable to common shares	$	(7,788	)	$	150,924		$	472,311		$	568,109

Denominator
Basic weighted average shares outstanding	468,975			467,628			468,642			466,931
Dilutive potential common shares - equity awards	—			207			186			201
Diluted weighted average common shares	468,975			467,835			468,828			467,132
Basic earnings per common share
Continuing operations	$	(0.02	)	$	0.09		$	1.01		$	0.61
Discontinued operations	—			0.23			—			0.61
Net income (loss) applicable to common shares	$	(0.02	)	$	0.32		$	1.01		$	1.22
Diluted earnings per common share
Continuing operations	$	(0.02	)	$	0.09		$	1.01		$	0.61
Discontinued operations	—			0.23			—			0.61
Net income (loss) applicable to common shares	$	(0.02	)	$	0.32		$	1.01		$	1.22