(12) EARNINGS PER SHARE

Basic earnings per share of Premier is computed by dividing net income attributable to stockholders by the weighted average number of shares of common stock outstanding for the period. Net income attributable to stockholders includes the adjustment recorded in the period to reflect redeemable limited partners' capital at the redemption amount, as a result of the exchange benefit obtained by limited partners through the ownership of Class B common units. Except when the effect would be anti-dilutive, the diluted earnings per share calculation, which is calculated using the treasury stock method, includes the impact of non-vested restricted stock units and awards, shares of non-vested performance share awards, shares that could be issued under the outstanding stock options and the effect of the assumed redemption of Class B common shares through the issuance of Class A common shares.

The following table provides a reconciliation of common shares used for basic earnings per share and diluted earnings per share (in thousands, except per share amounts):



	Three months ended September 30,
	2016			2015
Numerator for basic earnings per share:
Net income attributable to stockholders	$	70,302		$	471,154

Numerator for diluted earnings per share:
Net income attributable to stockholders	$	70,302		$	471,154
Adjustment of redeemable limited partners' capital to redemption amount	(61,808		)	(466,801		)
Net income attributable to non-controlling interest in Premier LP	49,601			47,900
Net income	58,095			52,253
Tax effect on Premier Inc. net income ^(a)	(20,951		)	(16,658		)
Adjusted net income	$	37,144		$	35,595

Denominator for basic earnings per share: weighted average shares ^(b)	47,214			37,735

Denominator for diluted earnings per share:
Effect of dilutive securities: ^(c)
Stock options	302			311
Restricted stock	171			508
Performance share awards	466			928
Class B shares outstanding	94,809			106,078
Denominator for diluted earnings per share-adjusted:
Weighted average shares and assumed conversions	142,962			145,560

Basic earnings per share	$	1.49		$	12.49
Diluted earnings per share	$	0.26		$	0.24


(a)	Represents income tax expense related to Premier, Inc. retaining the portion of net income attributable to income from non-controlling interest in Premier, LP for the purpose of diluted earnings per share.


(b)	Weighted average number of common shares used for basic earnings per share excludes weighted average shares of non-vested stock options, non-vested restricted stock, non-vested performance share awards and Class B shares outstanding for the three months ended September 30, 2016 and 2015.


(c)	For the three months ended September 30, 2016 and 2015, the effect of 1,576 and 767 stock options, respectively, were excluded from the diluted weighted average shares outstanding as they have an anti-dilutive effect on the weighted average shares outstanding.

Pursuant to the terms of the Exchange Agreement, on a quarterly basis, Premier has historically settled the exchange of Class B common units of Premier LP by member owners for an equal number of Class A common units. In connection with the exchange of Class B common units by member owners, shares of Premier's Class B common stock are surrendered by member owners and retired (see Note 10 - Redeemable Limited Partners' Capital), and Premier has the option to settle the exchanged Class B common units for cash or shares of Class A common stock. The following table presents certain information regarding the exchange of Class B common units and associated Class B common stock for Premier's Class A common stock in connection with the quarterly exchanges pursuant to the terms of the Exchange Agreement, including activity related to the Class A and Class B common units and Class A and Class B common stock through the date of the applicable quarterly exchange:



Quarterly Exchange by Member Owners	Number of Class B Common Units Exchanged	Number of Class B Common Shares Retired Upon Exchange	Number of Class B Common Units Outstanding After Exchange	Number of Class B Common Shares Outstanding After Exchange	Number of Class A Common Shares Outstanding After Exchange	Percentage of Combined Voting Power Class B/Class A Common Stock
August 1, 2016	1,323,654	1,323,654	94,809,069	94,809,069	47,365,528	67%/33%
October 31, 2016^(a)(b)	5,047,528	5,047,528	89,761,541	89,761,541	50,085,904	64%/36%


(a)	As the quarterly exchange occurred on October 31, 2016, the impact of the exchange is not reflected in the condensed consolidated financial statements for the quarter ended September 30, 2016.


(b)	In connection with the October 31, 2016 exchange, 3,033,041 Class B common units were exchanged for cash and 2,014,487 Class B common units were exchanged for Class A common stock.