XML 25 R16.htm IDEA: XBRL DOCUMENT v3.22.2.2
Earnings (Loss) Per Share
 9 Months Ended
Sep. 30, 2022
Earnings Per Share [Abstract]  
Earnings (Loss) Per Share Earnings (Loss) Per ShareBasic earnings (loss) per share (“basic EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the reporting period. Diluted earnings (loss) per share (“diluted EPS”) gives effect to all dilutive potential shares. As the Company was in a net loss position for the nine months ended September 30, 2022, there were no dilutive potential shares included in the computation of diluted shares outstanding for the nine months ended September 30, 2022.
The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended September 30, 2022Three Months Ended September 30, 2021
 Basic EPSAdjustmentsDiluted EPSBasic EPSAdjustmentsDiluted EPS
Net income$46,150 — $46,150 $14,948 — $14,948 
Weighted average shares outstanding30,473 — 30,473 29,179 — 29,179 
Employee stock compensation— 585 585 — 1,252 1,252 
Warrants— — — — 468 468 
Convertible notes— 45 45 — 1,244 1,244 
30,473 630 31,103 29,179 2,964 32,143 
EPS$1.51 $1.48 $0.51 $0.47 
 
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021
 Basic EPSAdjustmentsDiluted EPSBasic EPSAdjustmentsDiluted EPS
Net income (loss)$(107,166)— $(107,166)$38,098 — $38,098 
Weighted average shares outstanding29,892 — 29,892 29,097 — 29,097 
Employee stock compensation— — — — 1,283 1,283 
Warrants— — — — 427 427 
Convertible notes— — — — 1,213 1,213 
29,892 — 29,892 29,097 2,923 32,020 
EPS$(3.59)$(3.59)$1.31 $1.19 

The shares used in the calculation of diluted EPS exclude employee stock options and stock appreciation rights to purchase shares where the exercise price was greater than the average market price of common shares for the period and the effect of the inclusion would be anti-dilutive. Such shares aggregated approximately 2.0 million for the three months ended September 30, 2022 and 0.7 million and 0.5 million for the three and nine months ended September 30, 2021, respectively. As the Company was in a net loss position for the nine months ended September 30, 2022, there were no anti-dilutive shares.

The 2.625% Notes and 2.250% convertible notes due in 2027 (the "2.250% Notes"), more fully described in Note 11, are convertible under certain circumstances, as defined in the respective indentures for each series of notes, into a combination of cash and CONMED common stock.  The following is intended to describe the impact of the 2.625% Notes and 2.250% Notes and related hedge transactions on the calculation of diluted EPS. Additional shares to be issued pursuant to the terms of the 2.625% Notes, the 2.250% Notes and related hedge transactions, if any, would occur at settlement.
Effective with our adoption of ASU 2020-06 on January 1, 2022 (see Note 3), the Company began using the if-converted method to compute diluted EPS. Under the if-converted method, in the calculation of diluted EPS, the numerator is adjusted for interest expense applicable to the convertible notes (net of tax) and the denominator is adjusted to include additional common shares assuming the principal portion of the notes and the conversion premium are settled in common shares, when permitted or required. Under the if-converted method, when convertible notes require the principal to be paid in cash, then only the conversion premium affects the calculation of diluted EPS.

On June 6, 2022, the Company repurchased and extinguished $275.0 million principal value of 2.625% Notes as further discussed in Note 11. Concurrently, the Company entered into a Supplemental Indenture related to the remaining $70.0 million in 2.625% Notes, pursuant to which the Company irrevocably elected to settle the principal value of the 2.625% Notes in cash. Similarly, the 2.250% Notes, issued on June 6, 2022, require the principal to be paid in cash. As a result, in periods in which the Company has net income, only the conversion premium will affect dilutive share count. Accordingly, for periods prior to adoption of ASU 2020-06 on January 1, 2022 and after June 6, 2022, in periods in which the Company has net income, the calculation of diluted EPS includes potential diluted shares upon conversion of the 2.625% Notes and the 2.250% Notes, only when the average market price per share of our common stock for the period is greater than the conversion price and only for the conversion premium, with the principal portion required to be settled in cash.

We have entered into convertible notes hedge transactions to increase the effective conversion price of the 2.625% Notes from $88.80 to $114.92.  However, our convertible notes hedges are not included when calculating potential dilutive shares since their effect is always anti-dilutive. Concurrent with entering into the hedge transactions, we entered into warrant transactions under which we agreed to sell shares of our common stock at $114.92. In periods in which the Company has net income, the calculation of diluted EPS includes potential diluted shares to be issued under the warrants when the average market price per share of our common stock for the period is greater than $114.92, calculated under the treasury stock method.

On June 6, 2022, we entered into convertible notes hedge transactions to increase the effective conversion price of the 2.250% Notes from $145.33 to $251.53. However, our convertible notes hedges are not included when calculating potential dilutive shares since their effect is always anti-dilutive. Concurrent with entering into the hedge transactions, we entered into warrant transactions under which we agreed to sell shares of our common stock at $251.53. In periods in which the Company has net income, the calculation of diluted EPS includes potential diluted shares to be issued under the warrants when the average market price per share of our common stock for the period is greater than $251.53, calculated under the treasury stock method.