Select Medical Holdings Corporation Just Filed Its Quarterly Report: Earnings per ShareTh...

Earnings per Share

The Company’s capital structure includes common stock and unvested restricted stock awards. To compute earnings per share (“EPS”), the Company applies the two-class method because the Company’s unvested restricted stock awards are participating securities which are entitled to participate equally with the Company’s common stock in undistributed earnings. Application of the Company’s two-class method is as follows:
(i)Net income attributable to the Company is reduced by the amount of dividends declared and by the contractual amount of dividends that must be paid for the current period for each class of stock. There were no contractual dividends paid for the three and six months ended June 30, 2021 and 2022.
(ii)The remaining undistributed net income of the Company is then equally allocated to its common stock and unvested restricted stock awards, as if all of the earnings for the period had been distributed. The total net income allocated to each security is determined by adding both distributed and undistributed net income for the period.
(iii)The net income allocated to each security is then divided by the weighted average number of outstanding shares for the period to determine the EPS for each security considered in the two-class method.
The following table sets forth the net income attributable to the Company, its common shares outstanding, and its participating securities outstanding.
Basic and Diluted EPSBasic and Diluted EPS
Three Months Ended June 30,Six Months Ended June 30,
2021202220212022
(in thousands)
Net income$196,208 $66,262 $333,422 $122,188 
Less: net income attributable to non-controlling interests31,314 11,055 57,982 17,864 
Net income attributable to the Company164,894 55,207 275,440 104,324 
Less: Distributed and undistributed income attributable to participating securities5,560 1,920 9,250 3,558 
Distributed and undistributed income attributable to common shares$159,334 $53,287 $266,190 $100,766 
The following tables set forth the computation of EPS under the two-class method:
Three Months Ended June 30,
20212022
Net Income Allocation
Shares(1)
Basic and Diluted EPSNet Income Allocation
Shares(1)
Basic and Diluted EPS
(in thousands, except for per share amounts)
Common shares$159,334 130,396 $1.22 $53,287 124,897 $0.43 
Participating securities5,560 4,550 $1.22 1,920 4,500 $0.43 
Total Company$164,894 $55,207 

Six Months Ended June 30,
20212022
Net Income Allocation
Shares(1)
Basic and Diluted EPSNet Income Allocation
Shares(1)
Basic and Diluted EPS
(in thousands, except for per share amounts)
Common shares$266,190 130,362 $2.04 $100,766 126,942 $0.79 
Participating securities9,250 4,530 $2.04 3,558 4,482 $0.79 
Total Company$275,440 $104,324 
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(1)    Represents the weighted average share count outstanding during the period.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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