Net Income per Common Share

3 Months Ended

Mar. 31, 2021

Net Income per Common Share

Net Income per Common Share

Note 12. Net Income per Common Share

The Company uses the two-class method to compute net income per common share during periods the Company realizes net income and has securities outstanding (redeemable convertible preferred stock) that entitle the holder to participate in dividends and earnings of the Company. In addition, the Company analyzes the potential dilutive effect of outstanding redeemable convertible preferred stock under the "if-converted" method when calculating diluted earnings per share and reports the more dilutive of the approaches (two class or "if-converted"). 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.

The Company also analyzes the potential dilutive effect of stock options, restricted stock units, warrants and shares underlying future tranche rights under the treasury stock method (as applicable), during periods of income, or during periods in which income is recognized related to changes in fair value of its liability-classified securities.

For each of the three months ended March 31, 2021 and 2020, the Company used the two-class method to compute net income per common share. 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.

Note 12. Net Income per Common Share (Continued)

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

	Three Months Ended
	March 31,
($ in thousands except per share data)		2021		2020
Net income per share — Basic:
Net income	$	115,738	$	8,817
Less: Undistributed earnings to preferred stockholders		(6,132)		(639)
Net income applicable to common stockholders - basic	$	109,606	$	8,178
Net income applicable to common stockholders	$	109,606	$	8,178
Denominator for basic net income per share		41,193		30,300
Basic net income per common share	$	2.66	$	0.27
Net (loss) income per share — Diluted:
Net income	$	115,738	$	8,817
Less: Warrant revaluation gain applicable to dilutive warrants		(6,983)		(1,101)
Less: Future tranche right revaluation gain applicable to dilutive future tranche rights		(118,803)		—
Less: Undistributed earnings to preferred stockholders		—		(517)
Numerator for diluted net (loss) income per share	$	(10,048)	$	7,199
Denominator for basic net income per share		41,193		30,300
Plus: Incremental shares underlying “in the money” warrants outstanding		1,449		2,710
Plus: Incremental shares underlying “in the money” future tranche rights outstanding		28,338		—
Denominator for diluted net (loss) income per share		70,980		33,010
Diluted net (loss) income per common share	$	(0.14)	$	0.22

Total antidilutive securities excluded from the calculation of diluted net income per share for the three months ended March 31, 2021 and 2020 were as follows:

(in thousands)	2021	2020
Stock options	5,008	4,705
Restricted stock units	618	376
Common stock warrants	11,247	—
Convertible preferred stock	954	—
Future tranche rights	—	49,407
Total	17,827	54,488