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				Nine Months Ended
	September 30,				September 30,
	2016		2017		2016		2017
Numerator:
Net income attributable to Magellan	$	25,509	$	32,451	$	42,704	$	55,698
Denominator:
Weighted average number of common shares outstanding—basic		23,052		23,282		23,394		23,135
Common stock equivalents—stock options (1)		226		572		287		485
Common stock equivalents—RSAs (1)		696		483		647		461
Common stock equivalents—RSUs (1)		29		61		28		46
Common stock equivalents—PSUs (1)		2		162		23		111
Common stock equivalents—employee stock purchase plan		4		3		3		3
Weighted average number of common shares outstanding—diluted (1)		24,009		24,563		24,382		24,241
Net income attributable to Magellan per common share—basic	$	1.11	$	1.39	$	1.83	$	2.41
Net income attributable to Magellan per common share—diluted	$	1.06	$	1.32	$	1.75	$	2.30

(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 September 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 nine months ended September 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 nine months ended September 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 1.8 million and 1.2 million options for the three and nine months ended September 30, 2016, respectively, and 0.4 million and 0.6 million for the three and nine months ended September 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.