Inogen, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Earnings per Share

Earnings per Share

3 Months Ended

Mar. 31, 2018

5. Earnings per share

Earnings per share (EPS) is computed in accordance with ASC 260—Earnings per Share and is calculated using the weighted-average number of common shares outstanding during each period. Diluted EPS assumes the conversion, exercise or issuance of all potential common stock equivalents (which can include dilution of outstanding stock options, restricted stock units and restricted stock awards) unless the effect is to reduce a loss or increase the income per share. For purposes of this calculation, common stock subject to repurchase by the Company, options are considered to be common stock equivalents and are only included in the calculation of diluted earnings per share when their effect is dilutive.

Basic earnings per share is calculated using the Company’s weighted-average outstanding common shares. Diluted earnings per share is calculated using the Company’s weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method.

The computation of EPS is as follows:

	Three months ended March 31,
	2018		2017
Numerator—basic and diluted:
Net income	$	10,758	$	5,932

Denominator:
Weighted-average common shares - basic common stock ⁽¹⁾		21,026,154		20,489,532
Weighted-average common shares - diluted common stock		22,295,213		21,579,721

Net income per share - basic common stock	$	0.51	$	0.29
Net income per share - diluted common stock	$	0.48	$	0.27

Denominator calculation from basic to diluted:
Weighted-average common shares - basic common stock ⁽¹⁾		21,026,154		20,489,532
Stock options and other dilutive awards		1,269,059		1,090,189
Weighted-average common shares - diluted common stock		22,295,213		21,579,721
Shares excluded from diluted weighted-average shares:
Stock options		—		25,700
Restricted stock units and restricted stock awards		75,926		—
Shares excluded from diluted weighted-average shares		75,926		25,700

(1) Unvested restricted stock units and restricted stock awards are not included as shares outstanding in the calculation of basic earnings per share. Vested restricted stock units and restricted stock awards are included in basic earnings per share if all vesting and performance criteria have been met. Performance-based restricted stock units and restricted stock awards are included in the number of shares used to calculate diluted earnings per share as long as all applicable performance criteria are met, and their effect is dilutive. Restricted stock awards are eligible to receive all dividends declared on the Company’s common shares during the vesting period; however, such dividends are not paid until the restrictions lapse.

The computations of diluted net income attributable to common stockholders exclude common stock options, restricted stock units and restricted stock awards, which were anti-dilutive for the three months ended March 31, 2018 and March 31, 2017, respectively.