Net Income per Common Share Attributable to Magellan Health, Inc.

3 Months Ended

Mar. 31, 2017

Net Income per Common Share Attributable to Magellan Health, Inc.

Net Income per Common Share Attributable to Magellan Health, Inc.

NOTE B—Net Income per Common Share Attributable to Magellan Health, Inc.

The following table reconciles income attributable to common shareholders (numerator) and shares (denominator) used in the computations of net income per share attributable to common shareholders (in thousands, except per share data):

	Three Months Ended
	March 31,
	2016		2017
Numerator:
Net income attributable to Magellan Health, Inc.	$	13,237	$	17,747
Denominator:
Weighted average number of common shares outstanding—basic		23,631		23,012
Common stock equivalents—stock options (1)		253		474
Common stock equivalents—RSAs  (1)		563		402
Common stock equivalents—RSUs  (1)		27		81
Common stock equivalents—PSUs  (1)		35		66
Common stock equivalents—employee stock purchase plan		2		3
Weighted average number of common shares outstanding—diluted (1)		24,511		24,038
Net income attributable to Magellan Health, Inc. per common share—basic	$	0.56	$	0.77
Net income attributable to Magellan Health, Inc. per common share—diluted	$	0.54	$	0.74

1) During 2016, the Company early adopted ASU 2016-09. As a result, the common stock equivalents and diluted weighted average common shares outstanding as of March 31, 2016 have been adjusted. There was no impact to net income per common share – diluted.

The weighted average number of common shares outstanding for the three months ended March 31, 2016 and 2017 were calculated using outstanding shares of the Company’s common stock. Common stock equivalents included in the calculation of diluted weighted average common shares outstanding for the three months ended March 31, 2016 and 2017 represent stock options to purchase shares of the Company’s common stock, RSAs, RSUs, PSUs and stock purchased under the Employee Stock Purchase Plan.

The Company had additional potential dilutive securities outstanding representing 1.5 million and 0.6 million options for the three months ended March 31, 2016 and 2017, respectively, that were not included in the computation of dilutive securities because they were anti-dilutive for the period. Had these shares not been anti-dilutive, all of these shares would not have been included in the net income attributable to common shareholder per common share calculation as the Company uses the treasury stock method of calculating diluted shares.