Earnings Per Common Share (EPS)

3 Months Ended

Mar. 31, 2026

Earnings Per Common Share (EPS)

Earnings Per Common Share (EPS)

11.   Earnings Per Common Share (EPS). The computation of weighted average shares outstanding and the basic and diluted earnings per common share for the three-month periods ended March 31, 2026 and 2025 consisted of the following (in thousands, except per share amounts):

	Three Months Ended
	March 31,
	2026		2025
Net income	$	40,995	$	30,147
Average common shares outstanding		59,510		58,897
Basic EPS	$	0.69	$	0.51
Average common shares outstanding		59,510		58,897
Effect of dilutive stock awards		503		1,018
Effect of dilutive convertible notes		—		1,363
Total potential shares outstanding		60,013		61,278
Diluted EPS	$	0.68	$	0.49
Equity awards excluded as the impact was anti-dilutive (1)		597		84

(1) Does not reflect the impact of incremental repurchases under the treasury stock method.

Convertible Notes

For our Convertible Notes, the dilutive effect has been calculated using the if-converted method. Upon surrender of the Convertible Notes for conversion, Merit will pay cash up to the aggregate principal amount of the Notes to be converted and pay or deliver, as the case may be, cash, shares of Common Stock or a combination of cash and shares of Common Stock, at Merit’s election, in respect of the remainder, if any, of Merit’s conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted. Under the if-converted method, we include the number of shares required to satisfy the remaining conversion obligation, assuming all the Convertible Notes were converted. The convertible notes only have an impact on diluted earnings per share when the average share price of our Common Stock exceeds the conversion price of $86.83. The average closing price of the Common Stock for the three-month periods ended March 31, 2026 and 2025, respectively, was used as the basis for determining the dilutive effect on EPS.