Non-controlling interest

9 Months Ended

Sep. 30, 2022

GSHD is the sole managing member of GF and, as a result, it consolidates the financial results of GF. GSHD reports a non-controlling interest representing the economic interest in GF held by the other members of GF.

Under the amended and restated Goosehead Financial, LLC Agreement, the Pre-IPO LLC Members have the right, from and after the completion of the Offering (subject to the terms of the amended and restated Goosehead Financial, LLC Agreement), to require GSHD to redeem all or a portion of their LLC Units for, at GSHD's election,

newly-issued shares of Class A common stock on a one-for-one basis or a cash payment equal to the volume weighted average market price of one share of GSHD's Class A common stock for each LLC Unit redeemed (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the amended and restated Goosehead Financial, LLC Agreement. Additionally, in the event of a redemption request by a Pre-IPO LLC Member, GSHD may, at its option, effect a direct exchange of cash or Class A common stock for LLC Units in lieu of such a redemption. Shares of Class B common stock will be cancelled on a one-for-one basis if GSHD, at the election of a Pre-IPO LLC Member, redeems or exchanges LLC Units of such Pre-IPO LLC Member pursuant to the terms of the amended and restated Goosehead Financial, LLC Agreement. Except for transfers to GSHD pursuant to the amended and restated Goosehead Financial, LLC Agreement or to certain permitted transferees, the Pre-IPO LLC Members are not permitted to sell, transfer or otherwise dispose of any LLC Units or shares of Class B common stock.

During the three and nine months ended September 30, 2022, an aggregate of 492 thousand and 707 thousand LLC Units were redeemed by the non-controlling interest holders. Pursuant to the GF LLC Agreement, GSHD issued 492 thousand and 707 thousand shares of Class A common stock in connection with these redemptions and received 492 thousand and 707 thousand LLC Interests, increasing GSHD's ownership interest in GF. Simultaneously, and in connection with these redemptions, and 492 thousand and 707 thousand shares of Class B common stock were surrendered and cancelled.

The following table summarizes the ownership interest in GF as of September 30, 2022 (in thousands):


	September 30, 2022
	LLC Units	Ownership %
Number of LLC Units held by GSHD	21,202	56.7%
Number of LLC Units held by non-controlling interest holders	16,201	43.3%
Number of LLC Units outstanding	37,403	100.0%

The weighted average ownership percentages for the applicable reporting periods are used to attribute net income to GSHD and the non-controlling interest holders. The non-controlling interest holders' weighted average ownership percentage for the three and nine months ended September 30, 2022 was 44.8%.

The following table summarizes the effects of changes in ownership in GF on the equity of GSHD for the three and nine months ended September 30, 2022 and 2021 as follows (in thousands):


	Three months ended September 30,			Nine Months Ended September 30,
		2022		2021		2022		2021
Net income attributable to Goosehead Insurance Inc.		$	1,979	$	4,036	$	64	$	5,127
Transfers (to) from non-controlling interests:
Decrease in additional paid-in capital as a result of the redemption of LLC interests		(1,579)		(1,144)		(2,300)		(2,673)
Increase in additional paid-in capital as a result of activity under employee stock purchase plan		165		194		556		613
Total effect of changes in ownership interest on equity attributable to Goosehead Insurance Inc.		$	565	$	3,086	$	(1,680)	$	3,067