Earnings Per Common Share

3 Months Ended

Mar. 31, 2016

NOTE 14. Earnings Per Common Share

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


	Three Months Ended March 31,
	2016		2015
Numerator
Net income (loss)	$	119,745	$	(237,503)
Noncontrolling interests’ share in earnings		(3,626)		(3,111)
Net income (loss) attributable to HCP, Inc.		116,119		(240,614)
Participating securities’ share in earnings		(357)		(335)
Net income (loss) applicable to common shares	$	115,762	$	(240,949)

Denominator
Basic weighted average common shares		466,074		460,880
Dilutive potential common shares		188		—
Diluted weighted average common shares		466,262		460,880

Earnings per common share
Basic	$	0.25	$	(0.52)
Diluted	$	0.25	$	(0.52)

Restricted stock and certain of the Company’s performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, which requires the use of the two-class method when computing basic and diluted earnings per share. Options to purchase approximately 1.4 million shares of common stock that had an exercise price (including deferred compensation expense) in excess of the average closing market price of the Company’s common stock during the three months ended March 31, 2016 were not included in the Company’s earnings per share calculations because they are anti-dilutive. Restricted stock and performance restricted stock units representing 0.7 million shares of common stock during the three months ended March 31, 2016 were not included because they are anti-dilutive. Additionally, 6 million shares issuable upon conversion of 4 million DownREIT units during the three months ended March 31, 2016 were not included because they are anti-dilutive. For the three months ended March 31, 2015, the Company generated a net loss. The weighted-average basic shares outstanding was used in calculating diluted loss per share from continuing operations, as using diluted shares would be anti-dilutive to loss per share.