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

9 Months Ended

Sep. 30, 2014

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 tables reconcile 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 September 30,				Nine Months Ended September 30,
	2013		2014		2013		2014
Numerator:
Net income attributable to Magellan Health, Inc.	$	47,232	$	27,133	$	106,770	$	57,839
Denominator:
Weighted average number of common shares outstanding—basic		26,990		26,703		26,976		27,070
Common stock equivalents—stock options		655		404		539		517
Common stock equivalents—restricted stock		4		133		11		77
Common stock equivalents—restricted stock units		54		—		35		18
Common stock equivalents—employee stock purchase plan		1		2		2		2
Weighted average number of common shares outstanding—diluted		27,704		27,242		27,563		27,684
Net income attributable to Magellan Health, Inc. per common share—basic	$	1.75	$	1.02	$	3.96	$	2.14
Net income attributable to Magellan Health, Inc. per common share—diluted	$	1.70	$	1.00	$	3.87	$	2.09

        The weighted average number of common shares outstanding for the three and nine months ended September 30, 2013 and 2014 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 and nine months ended September 30, 2013 and 2014 represent stock options to purchase shares of the Company's common stock, restricted stock awards and restricted stock units, and stock purchased under the Employee Stock Purchase Plan.

        The Company had additional potential dilutive securities outstanding representing 0.9 million and 0.9 million options for the three and nine months ended September 30, 2013, respectively, and 0.7 million and 0.6 million for the three and nine months ended September 30, 2014, 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.