(2) EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during the period. For periods in which the Company reports net income, diluted net earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period, unless the effect is antidilutive.

The shares used to compute loss per share were as follows (in thousands):

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Options to purchase the Company’s common stock and unvested restricted and performance-based stock units aggregating 14.7 million and 6.8 million shares were excluded from the computation of diluted loss per share for the three months ended March 31, 2026 and 2025, respectively, because their effect would have been antidilutive.

In connection with a private placement completed in March 2023, the Company issued warrants that remain outstanding following the June 2024 redemption of the related preferred stock. No warrant exercises occurred during the three months ended March 31, 2026. In the three months ended March 31, 2025, holders exercised 0.2 million warrants, and the remaining warrants continue to be outstanding without modification (See Note 11).

The potential number of dilutive shares from the warrants outstanding totaled 4.7 million shares as of March 31, 2026 and 2025, respectively. There was no impact on weighted average shares outstanding from these warrants for the three months ended March 31, 2026 as the average market price of the Company’s common stock was below the exercise price of $3.77 per share and their effect would have been antidilutive. For the three months ended March 31, 2025, 0.5 million warrants would have been included in the calculation of diluted loss per share but had no impact due to the Company’s net loss position.