Net Income (Loss) per Common Share

3 Months Ended

Mar. 31, 2020

Net Income (Loss) per Common Share

Net Income (Loss) per Common Share

Note 12.  Net Income (Loss) per Common Share

The Company used the two-class method to compute net income (loss) per common share for the three months ended March 31, 2020 as the Company realized net income and has securities outstanding (redeemable convertible preferred stock) that entitle the holder to participate in dividends and earnings of the Company. Under this method, net income is reduced by the amount of any dividends earned and the accretion of redeemable convertible preferred stock to its redemption value, if any, during the period. The remaining earnings (undistributed earnings) are allocated to common stock and each series of redeemable convertible preferred stock to the extent that each preferred security may share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the redeemable convertible preferred stock have no obligation to fund losses. 

Details in the computation of basic and diluted net income (loss) per common share were as follows:

	Three Months Ended
	March 31,
($ in thousands except per share data)		2020		2019
Net income (loss) per share — Basic:
Net income (loss)	$	8,817	$	(10,974)
Less: Undistributed earnings to preferred stockholders		(639)		—
Net income (loss) attributable to common stockholders - basic	$	8,178	$	(10,974)
Numerator for basic net income (loss) per share	$	8,178	$	(10,974)
Denominator for basic net income (loss) per share		30,300		27,676
Basic net income (loss) per common share	$	0.27	$	(0.40)
Net income (loss) per share — Diluted:
Net income (loss)	$	8,817	$	(10,974)
Less: Warrant revaluation income for dilutive warrants		(1,101)		—
Less: Undistributed earnings to preferred stockholders		(517)		—
Numerator for diluted net income (loss) per share	$	7,199		(10,974)
Denominator for basic net income (loss) per share		30,300		27,676
Plus: Incremental shares underlying “in the money” warrants outstanding		2,710		—
Denominator for diluted net income (loss) per share		33,010		27,676
Diluted net income (loss) per common share	$	0.22	$	(0.40)

Diluted net income (loss) per common share for the periods presented do not reflect the following potential common shares, as the effect would be antidilutive:

	Three Months Ended
	March 31,
(in thousands)		2020	2019
Stock options		4,705	3,738
Restricted stock units		376	194
Common stock warrants		—	2,769
Future tranche rights		49,407	—
Total		54,488	6,701