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

6 Months Ended

Jun. 30, 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				Six Months Ended
	June 30,				June 30,
	2016		2017		2016		2017
Numerator:
Net income attributable to Magellan	$	3,958	$	5,500	$	17,195	$	23,247
Denominator:
Weighted average number of common shares outstanding—basic		23,516		23,108		23,570		23,060
Common stock equivalents—stock options (1)		383		399		318		436
Common stock equivalents—RSAs  (1)		681		439		622		421
Common stock equivalents—RSUs  (1)		27		30		27		56
Common stock equivalents—PSUs  (1)		34		61		35		62
Common stock equivalents—employee stock purchase plan		2		1		2		2
Weighted average number of common shares outstanding—diluted (1)		24,643		24,038		24,574		24,037
Net income attributable to Magellan per common share—basic	$	0.17	$	0.24	$	0.73	$	1.01
Net income attributable to Magellan per common share—diluted	$	0.16	$	0.23	$	0.70	$	0.97

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 June 30, 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 six months ended June 30, 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 six months ended June 30, 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 1.2 million and 1.1 million options for the three and six months ended June 30, 2016, respectively, and 0.8 million and 0.7 million for the three and six months ended June 30, 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.