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INCOME TAXES
 12 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES
(16) INCOME TAXES
Significant components of consolidated income tax expense on continuing operations were as follows (in thousands):
Year Ended June 30,
202520242023
Current:
Federal$(1,258)$131,548 $673 
State(503)34,030 3,016 
Total current tax (benefit) expense
(1,761)165,578 3,689 
Deferred:
Federal24,290 (104,194)55,137 
State2,785 (19,082)17,257 
Total deferred tax expense (benefit)
27,076 (123,276)72,394 
Total income tax expense
$25,315 $42,302 $76,083 
Reconciliations between the Company’s income tax expense and taxes computed at the federal statutory tax rate of 21.0% for fiscal years ended June 30, 2025, 2024, and 2023 were as follows (in thousands):
Year Ended June 30,
202520242023
Tax at federal statutory rate$20,682 $32,005 $51,658 
Partnership (income) loss not subject to tax(2,481)3,297 47 
State taxes (net of federal benefit)4,020 7,084 11,212 
Remeasurement adjustments and other permanent items9,755 3,110 4,628 
Change in valuation allowance(3,849)771 52 
Deferred tax remeasurement359 (319)7,720 
Uncertain tax position(1,495)310 1,092 
Research and development credit
(3,743)(4,549)(2,343)
Other2,067 593 2,017 
Total income tax expense
$25,315 $42,302 $76,083 
Effective tax rate25.7 %28.9 %30.2 %
The fiscal year 2025 effective tax rate of 25.7% differs from the statutory income tax rate of 21.0% largely driven by other permanent items, including goodwill impairment and dividends received deductions as a result of dividend from an unconsolidated affiliate in the current year, offset by non-controlling interest portion of the consolidated partnership income not subject to tax by the Company, research and development credits, and the change in valuation allowance.

The fiscal year 2024 effective tax rate of 28.9% differs from the statutory income tax rate of 21.0% largely driven by non-controlling interest portion of the consolidated partnership income not subject to tax by the Company and other permanent items offset by research and development credits. The increase in partnership income not subject to tax is driven by impairment of assets at Contigo Health.

The fiscal year 2023 effective tax rate of 30.2% differs from the statutory income tax rate of 21.0% primarily driven by deferred tax remeasurement due to state tax rate changes.
Deferred Income Taxes
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of June 30, 2025 and 2024 were as follows (in thousands):
June 30,
20252024
Deferred tax assets
Purchased intangible assets and depreciation$446,728 $496,174 
Stock compensation5,508 7,756 
Accrued expenses75,161 55,186 
Net operating losses and credits59,925 30,955 
Sale of member contracts and associated future revenues to OMNIA
161,353 162,992 
Partnership basis differences
20,463 45,447 
Other16,531 7,013 
Total deferred tax assets785,669 805,523 
Valuation allowance for deferred tax assets(711)(5,375)
Deferred tax assets, net of valuation allowance
784,958 800,148 
Deferred tax liabilities
Equity earnings
(15,519)(20,738)
Other liabilities(6,580)(6,408)
Net deferred tax assets
$762,859 $773,002 

As of June 30, 2025 and 2024, the Company had net deferred tax assets of $762.9 million and $773.0 million, respectively. The decrease is largely attributable to a decrease in purchased intangible assets and depreciation and the partnership basis differences offset by an increase in net operating losses and credits and accrued expenses as a result of the change in policy on accrued bonuses. The partnership basis difference decreased as a result of the Contigo Health sale of assets, which had a significant basis difference resulting from the previous impairments.

At June 30, 2025, the Company had federal and state net operating loss carryforwards of $177.4 million and $177.1 million, respectively, primarily attributable to PHSI. The resulting federal and state deferred tax assets were $37.3 million and $9.6 million, respectively. The definite-lived federal and state net operating loss carryforwards, primarily generated prior to fiscal year 2019, expire between the years ended June 30, 2026 through June 30, 2039 while the remaining federal and state net operating losses, primarily generated in fiscal year 2019 and beyond, can be carried forward indefinitely until utilized.
At June 30, 2025, the Company had federal research and development credit carryforwards of $15.1 million. The federal credit carryforwards expire at various times between the years ended June 30, 2033 through June 30, 2045, until utilized. The Company believes it is more likely than not that the majority of federal and state credit carryforwards will be realized in the near future.
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. The Company assessed the future realization of the tax benefit of its existing deferred tax assets and concluded that it is more likely than not that a portion of the deferred tax assets, for which there was previously a valuation allowance recorded, will be realized in the future. As a result, the Company released $3.8 million of the valuation allowance against its deferred tax assets at June 30, 2025.
Unrecognized Tax Benefits
The Company recognizes income tax benefits for those income tax positions determined more likely than not to be sustained upon examination, based on the technical merits of the positions. The reserve for uncertain income tax positions is included in
other liabilities in the Consolidated Balance Sheets. Reconciliations of the beginning and ending gross amounts of the Company’s uncertain tax position reserves for the years ended June 30, 2025, 2024, and 2023 were as follows (in thousands):
Year Ended June 30,
202520242023
Beginning of year balance$16,602 $16,912 $17,124 
Increases in prior period tax positions— 316 189 
Decreases in prior period tax positions(2,174)(1,308)(752)
Reductions on settlements and lapse in statute of limitations— (16)(16)
Increases in current period tax positions1,039 698 367 
End of year balance$15,467 $16,602 $16,912 
If the Company were to recognize the benefits of these uncertain tax positions, the income tax provision would be impacted by $15.7 million, $16.8 million, and $16.3 million, including interest and penalties and net of the federal and state benefit for income taxes, for the years ended June 30, 2025, 2024, and 2023, respectively. The Company recognizes interest and penalties accrued on uncertain income tax positions as part of the income tax provision. The amount of accrued interest and penalties was $5.8 million and $6.1 million at June 30, 2025 and 2024, respectively.
Federal tax returns for tax years June 30, 2021 through 2024 remain open as of June 30, 2025. In July 2025, the Company was informed that the Internal Revenue Service (“IRS”) will be examining the tax year ended June 30, 2023. The Company believes it has recorded adequate taxes for positions taken which may be challenged upon IRS examination. The Company is also subject to ongoing state and local examinations for various periods. Activity related to these examinations did not have a material impact on the Company’s financial position or results of operations.