v3.25.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

8. Income Taxes

Loss before income taxes consists of the following (in thousands):

 

 

2024

 

 

2023

 

 

2022

 

U.S. Operations

 

$

(95,555

)

 

$

(213,971

)

 

$

(81,049

)

Foreign Operations

 

 

237

 

 

 

197

 

 

 

98

 

Loss before income taxes

 

$

(95,318

)

 

$

(213,774

)

 

$

(80,951

)

 

Income tax benefit attributable to loss before income taxes is summarized as follows (in thousands):

 

 

For the Years Ended December 31,

 

 

2024

 

 

2023

 

 

2022

 

Current provision:

 

 

 

 

 

 

 

 

 

Federal

 

$

1,296

 

 

$

12,549

 

 

$

18,635

 

State

 

 

1,998

 

 

 

4,175

 

 

 

7,278

 

Foreign

 

 

50

 

 

 

39

 

 

 

43

 

Total current provision

 

 

3,344

 

 

 

16,763

 

 

 

25,956

 

Deferred provision:

 

 

 

 

 

 

 

 

 

Federal

 

 

(25,004

)

 

 

(40,106

)

 

 

(19,872

)

State

 

 

(4,727

)

 

 

(8,165

)

 

 

(6,474

)

Total deferred provision

 

 

(29,731

)

 

 

(48,271

)

 

 

(26,346

)

Income tax benefit

 

$

(26,387

)

 

$

(31,508

)

 

$

(390

)

 

 

A reconciliation of the U.S. Federal income tax rate of 21.0% to income tax benefit expressed as a percent of pretax loss is as follows:

 

 

For the Years Ended December 31,

 

 

2024

 

 

2023

 

 

2022

 

Federal income tax at the statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

(Decrease) increase in income tax benefit:

 

 

 

 

 

 

 

 

 

State and foreign income taxes, net of federal benefits

 

 

(1.6

)

 

 

0.8

 

 

 

(0.7

)

Jobs tax credits, net

 

 

2.2

 

 

 

1.1

 

 

 

3.9

 

State deferred rate change

 

 

(1.2

)

 

 

1.6

 

 

 

(0.3

)

Legal claims

 

 

(2.0

)

 

 

(11.3

)

 

 

—

 

Non-deductible expenses

 

 

(1.4

)

 

 

(0.2

)

 

 

0.1

 

Share-based compensation

 

 

(4.6

)

 

 

0.9

 

 

 

0.1

 

Executive compensation

 

 

(1.1

)

 

 

—

 

 

 

—

 

Non-deductible goodwill

 

 

—

 

 

 

—

 

 

 

(22.4

)

Uncertain tax positions

 

 

0.0

 

 

 

(0.5

)

 

 

0.1

 

Adjustments associated with prior year provision

 

 

19.0

 

 

 

0.7

 

 

 

(0.8

)

Acquisition impacts

 

 

(1.9

)

 

 

—

 

 

 

—

 

Minority interest

 

 

(0.5

)

 

 

(0.2

)

 

 

—

 

Lobbying and political contributions

 

 

(0.3

)

 

 

(0.1

)

 

 

—

 

Other

 

 

0.1

 

 

 

0.9

 

 

 

(0.5

)

Total

 

 

27.7

%

 

 

14.7

%

 

 

0.5

%

 

The increase in adjustments associated with prior year provision for 2024 is primarily attributable to finalization of the settlement agreement for the Silver matter, including partial deductibility for tax purposes, as well as the reduction in pre-tax loss.

 

On December 27, 2020, the Consolidated Appropriations Act was signed into law and extended the jobs credit provisions through 2025. Accordingly, jobs credits generated during the year have been recognized in the provision for income taxes for all years presented.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below (in thousands):

 

 

December 31, 2024

 

 

December 31, 2023

 

Deferred tax assets:

 

 

 

 

 

 

Accrued expenses

 

$

44,957

 

 

$

48,866

 

Allowance for credit losses and contractual allowances

 

 

22,546

 

 

 

23,986

 

Net operating losses

 

 

18,796

 

 

 

18,846

 

Share-based compensation

 

 

15,799

 

 

 

4,628

 

IRC §163(j) interest

 

 

96,961

 

 

 

84,696

 

Operating lease liability

 

 

62,587

 

 

 

66,769

 

Other

 

 

21,325

 

 

 

18,238

 

Deferred tax assets

 

 

282,971

 

 

 

266,029

 

Valuation allowances

 

 

(8,968

)

 

 

(9,866

)

Deferred tax assets, net

 

 

274,003

 

 

 

256,163

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

Operating lease right-of-use asset

 

 

(60,587

)

 

 

(65,391

)

Property and equipment

 

 

(6,575

)

 

 

(14,084

)

Goodwill and other intangible assets

 

 

(190,272

)

 

 

(178,570

)

Insurance recovery

 

 

(8,677

)

 

 

(15,048

)

Interest rate swaps

 

 

(2,604

)

 

 

(6,101

)

Deferred tax liabilities

 

 

(268,715

)

 

 

(279,194

)

Deferred income taxes, net

 

$

5,288

 

 

$

(23,031

)

 

As of December 31, 2024, the Company has federal net operating loss (“NOL”) carryforwards of $11.0 million ($2.3 million deferred tax asset) that resulted from stock acquisitions the Company completed from 2013 through 2019. These NOLs are subject to limitations under Internal Revenue Code (“IRC”) §382. However, the Company expects that it will more-likely-than-not be able to use the recorded amount which takes into account the limitations of the carryforwards. The deferred tax asset for state NOL carryforwards is $7.2 million, net of the federal tax impact and valuation allowances of $9.0 million. The state NOLs have carryforward periods ranging from 1 to 20 years depending on the taxing jurisdiction.

With the enactment of the Tax Cuts and Jobs Act of 2019 on December 22, 2017, as of January 1, 2018 and as adjusted by the enactment of the CARES Act on March 25, 2020, the Company is subject to a limitation on interest expense in excess of 30% (50% for 2019 and 2020 pursuant to the CARES Act) of adjusted taxable income calculated for purposes of IRC §163(j). The limitation in any given year may be carried forward indefinitely and deducted as interest expense in future periods. The Company has federal interest expense carryforwards of $386.2 million ($81.1 million deferred tax asset) available for utilization in future years. The deferred tax asset for state interest expense carryforwards is $15.9 million.

A valuation allowance for deferred tax assets was provided as of December 31, 2024 and 2023 related to state income tax NOL carryforwards. The realization of deferred tax assets is dependent upon generating future taxable income when temporary differences become deductible. Based upon the historical and projected levels of taxable income, we believe it is more-likely-than-not that we will realize the benefits of the deductible differences after consideration of the valuation allowance.

A reconciliation of the beginning and ending amount of total unrecognized tax benefits is as follows (in thousands):

 

 

December 31, 2024

 

 

December 31, 2023

 

Balance at beginning of year

 

$

1,502

 

 

$

505

 

(Decrease) increase related to prior year tax positions

 

 

(9

)

 

 

1,502

 

Decrease related to current year tax positions

 

 

—

 

 

 

(42

)

Lapse of statue of limitations

 

 

—

 

 

 

(463

)

Balance at end of year

 

$

1,493

 

 

$

1,502

 

 

Included in the balance of total unrecognized tax benefits at December 31, 2024 are potential benefits of $0.0 million, which if recognized, would affect the effective tax rate for the year ending December 31, 2025. Unrecognized tax benefits that reduce a NOL, similar tax loss or tax credit carryforward are presented as a reduction to deferred income taxes.

We file numerous consolidated and separate income tax returns in the U.S. federal and various state and foreign jurisdictions. With few exceptions, we are no longer subject to income tax examinations by the taxing authorities for years prior to 2019. We believe that we have appropriate support for the income tax positions taken and to be taken on our income tax returns and that our accruals for income tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of the tax laws as applied to the facts of each matter. We expect that the amounts of unrecognized tax benefits will be reduced by $1.5 million within the next twelve months. Total accrued interest and penalties was $0.0 million and $0.1 million as of December 31, 2024 and 2023, respectively, and are included in accrued expenses on the consolidated balance sheets.