Net Income (Loss) per Common Share

9 Months Ended

Sep. 30, 2022

Net Income (Loss) per Common Share

Net Income (Loss) per Common Share

Note 15. Net Income (Loss) per Common Share

During periods the Company realizes net income, it uses the two-class method to compute net income per common share 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 the nine months ended September 30, 2021, 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 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.

However, during periods the Company realizes net loss, basic and diluted net loss per common share applicable to common stockholders is calculated by dividing net loss applicable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration of common stock equivalents. The Company’s potentially dilutive shares, which include outstanding stock option awards, common stock warrants and convertible preferred stock, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

For the three and nine months ended September 30, 2022, diluted net loss per common share applicable to common stockholders was the same as basic net loss per common share applicable to common stockholders as the effects of the Company’s potential common stock equivalents were antidilutive.

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
($ in thousands except per share data)		2022		2021		2022		2021
Net (loss) income per share — Basic:
Net (loss) income	$	(3,099)	$	(5,965)	$	(12,584)	$	102,210
Less: Undistributed earnings to preferred stockholders		—		—				(1,636)
Net (loss) income applicable to common stockholders - basic	$	(3,099)	$	(5,965)	$	(12,584)	$	100,574
Numerator for basic net (loss) income applicable to common stockholders	$	(3,099)	$	(5,965)	$	(12,584)	$	100,574
Denominator for basic net (loss) income applicable to common stockholders		53,286		52,740		53,052		47,990
Net (loss) income applicable to common stockholders - basic	$	(0.06)	$	(0.11)	$	(0.24)	$	2.10
Net (loss) income per share — Diluted:
Net (loss) income	$	(3,099)	$	(5,965)	$	(12,584)	$	102,210
Less: Warrant revaluation gain applicable to dilutive liability-classified warrants		—		—		—		(6,983)
Less: Future tranche right revaluation gain applicable to dilutive liability-classified future tranche rights		—		—		—		(118,803)
Numerator for diluted net (loss) income applicable to common stockholders	$	(3,099)	$	(5,965)	$	(12,584)	$	(23,576)
Denominator for basic net (loss) income applicable to common stockholders		53,286		52,740		53,052		47,990
Plus: Incremental shares underlying “in the money” liability-classified warrants outstanding		—		—		—		223
Plus: Incremental shares underlying “in the money” liability-classified future tranche rights outstanding		—		—		—		3,400
Denominator for diluted net income (loss) applicable to common stockholders		53,286		52,740		53,052		51,613
Net (loss) income applicable to common stockholders - diluted	$	(0.06)	$	(0.11)	$	(0.24)	$	(0.46)

Total antidilutive securities excluded from the calculation of diluted net loss per share for the three and nine months ended September 30, 2022 and 2021 were as follows:

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
(in thousands)		2022	2021		2022	2021
Stock options		5,783	5,329		5,783	5,329
Restricted stock units		832	576		832	576
Common stock warrants		8,566	8,732		8,566	8,732
Total		15,181	14,637		15,181	14,637