Avalo Therapeutics, Inc.AVTX
Avalo Therapeutics, Inc. Earnings Per Share Disclosure
Net Loss Per Share
The Company had two classes of stock outstanding during the year ended December 31, 2025 and December 31, 2024, common stock and preferred stock. The Company computes net loss per share using the two-class method, as the Series C Preferred Stock participates in distributions with the Company’s common stock. The two-class method of computing net loss per share is an earnings allocation formula that determines net loss for common stock and any participating securities according to dividends declared and participation rights in undistributed earnings. As the Company is in a net loss position for the year ended December 31, 2025 and December 31, 2024, the two-class method of calculating net loss per share results in no allocation of undistributed losses to participating securities.
Basic net loss per share for common stock is computed by dividing the sum of distributed and undistributed earnings by the weighted average number of shares outstanding for the period.
Diluted net loss per share includes the potential dilutive effect of common stock equivalents as if such securities were converted or exercised during the period, when the effect is dilutive. Common stock equivalents include: (i) outstanding stock options and restricted stock units, which are included under the “treasury stock method” when dilutive; and (ii) common stock to be issued upon the exercise of outstanding warrants, which are included under the “treasury stock method” when dilutive, and (iii) preferred stock under the if-converted method. While the impact of these items is generally anti-dilutive during periods of net loss, the Company will determine whether the common stock equivalents should be included in diluted loss per share pursuant to sequencing rules.
The following tables set forth the computation of basic and diluted net loss per share of common stock for the years ended December 31, 2025 and December 31, 2024 (in thousands, except per share amounts):
| Year Ended | ||||||||
| December 31, 2025 | ||||||||
| Common stock | ||||||||
| Net loss | $ | (78,259) | ||||||
| Weighted average shares | 13,404,830 | |||||||
| Basic and diluted net loss per share | $ | (5.84) | ||||||
| Year Ended | ||||||||
| December 31, 2024 | ||||||||
| Common stock | ||||||||
| Basic loss per share: | ||||||||
| Net loss | $ | (35,129) | ||||||
| Weighted average shares | 4,426,149 | |||||||
| Basic net loss per share | $ | (7.94) | ||||||
| Diluted loss per share: | ||||||||
| Numerator: | ||||||||
| Net loss - basic | $ | (35,129) | ||||||
| Change in fair value of warrant liability | (121,611) | |||||||
| Net loss - diluted | $ | (156,740) | ||||||
| Denominator: | ||||||||
| Effect of dilutive securities: | ||||||||
| Weighted average shares - basic | 4,426,149 | |||||||
| Common shares issuable for warrants | $ | 3,070,240 | ||||||
| Weighted average shares - diluted | 7,496,389 | |||||||
| Diluted net loss per share | $ | (20.91) | ||||||
The following outstanding securities have been excluded from the computation of diluted weighted shares outstanding for the years ended December 31, 2025 and 2024, as they could have been anti-dilutive:
| December 31, | ||||||||||||||
20252 | 20242 | |||||||||||||
| Stock options | 4,591,257 | 1,999,749 | ||||||||||||
| Warrants on common stock | 148 | 148 | ||||||||||||
Series C Preferred Stock (as-convertible to common stock)1 | 18,792,360 | 24,895,920 | ||||||||||||
| Restricted Stock Units | 387,064 | 632,100 | ||||||||||||
Performance Stock Units3 | 492,500 | — | ||||||||||||
1 Each share of the Company’s Series C Preferred Stock is convertible to 1,000 shares of common stock, subject to certain beneficial ownership limitations.
2 Pursuant to the AlmataBio Transaction, the Company is required to pay potential development milestone payments to the former AlmataBio stockholders in cash or Avalo stock at the election of the former AlmataBio stockholders; refer to Notes 3 and 14 for more information. In the event of share settlement, the number of Avalo shares delivered will vary based on the Company’s stock price. These additional shares are not included in the computation of basic and diluted net loss per share for the year ended December 31, 2025 or 2024 pursuant to the guidance on contingently issuable shares.
3 Calculated assuming 100% achievement of performance metric.
Subsequent to December 31, 2025, an aggregate of approximately 4,542 shares of Series C Preferred Stock were converted to 4,542,396 shares of common stock.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 23, 2026 | Showing above |
| 2024 | Mar 20, 2025 | |
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.