v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Bioventus Inc. is the sole managing member of BV LLC, which is treated as a partnership for income tax purposes. As a partnership, BV LLC is not subject to United States federal and certain state and local income taxes. Any taxable income or loss generated by BV LLC is passed through to and included in the taxable income or loss of its members, including the Company, on a pro rata basis. The components of income (loss) before income taxes for the years ended December 31 are as follows:
202520242023
United States$15,344 $(62,664)$(125,676)
International10,365 10,322 4,565 
Income (loss) before income taxes—continuing operations$25,709 $(52,342)$(121,111)
The provision for income taxes on operations consists of the following for the years ended December 31:
202520242023
Current:
United States federal$(4,195)$(1,295)$(734)
United States state and local677 (152)2,085 
International2,862 1,548 1,111 
Total current(656)101 2,462 
Deferred:
United States federal(494)(4,377)(2,881)
United States state and local(320)(1,017)(1,951)
International(95)— 2,455 
Total deferred(909)(5,394)(2,377)
Total income tax (benefit) expense—continuing operations$(1,565)$(5,293)$85 
Cash taxes paid, net of refunds received, consisted of the following for the years ended December 31:
202520242023
U.S. federal:$(479)$442 $(473)
U.S. state and local:
California273 — (146)
Illinois— 110 — 
Michigan— — 88 
Tennessee— 169 825 
Texas215 165 113 
Others(6)71 158 
Foreign:
Netherlands2,546 1,156 569 
Canada141 — 95 
Others70 83 45 
Net cash paid for income taxes$2,760 $2,196 $1,274 
The differences between the effective income tax rate and the federal statutory income tax rates for the years ended December 31 are as follows:
202520242023
U.S. statutory federal corporate income tax rate$5,399 21.0%$(10,992)21.0%$(25,433)21.0%
State and local income taxes, net of
    federal income tax(a)
267 1.0(1,103)2.2(262)0.2
Foreign tax effects
Israel
Adjustment of deferred tax liabilities— —412 (0.8)1,948 (1.6)
Foreign rate differential— —(17)—(55)0.1
Noncontrolling interest— —122 (0.2)211 (0.2)
Other— —(240)0.5— —
Netherlands
Adjustment of deferred tax liabilities— —4,272 (8.2)(1,654)1.4
Advanced Rehabilitation sale— —(175)0.3— —
Change in valuation allowance— —(4,272)8.21,768 (1.5)
Foreign rate differential399 1.6260 (0.5)212 (0.2)
Noncontrolling interest(514)(2.0)(351)0.7(252)0.2
Return to provision688 2.7— —— —
Other68 0.3(634)1.2427 (0.3)
Other foreign jurisdictions(51)(0.2)3 —2 —
Effect of cross-border tax laws
Foreign income inclusions1,347 5.2321 (0.6)322 (0.3)
Tax credits
R&D credits(190)(0.7)261 (0.5)(613)0.5
Foreign Tax Credit(1,012)(3.9)— —— —
Changes in valuation allowances(3,996)(15.5)8,662 (16.6)35,275 (29.1)
Nontaxable or Nondeductible items
LLC flow through structure1,202 4.7(5,828)11.1(19,054)15.7
Advanced Rehabilitation sale— 1.8(907)1.7— —
Disallowed interest expense— (2.1)1,022 (2.0)— —
Meals & entertainment632 2.5344 (0.7)209 (0.2)
Other non-deductible expenses473 1.8260 (0.5)164 (0.1)
Equity-based compensation
(windfall) shortfall		(261)(1.0)343 (0.6)4,805 (4.0)
Noncontrolling interest(972)(3.7)3,858 (7.4)8,061 (6.6)
Other208 0.8184 (0.4)209 (0.2)
Changes in unrecognized tax benefits(4,195)(16.3)(1,528)3.0(1,384)1.1
Other adjustments
Adjustment of deferred tax liabilities(551)(2.1)(32)0.1(4,727)3.9
Return to provision(506)(2.0)462 (0.9)(94)0.1
Effective Tax Rate$(1,565)(6.1%)$(5,293)10.1%$85 (0.1%)
(a)During the years ended December 31, 2025 and 2024, state taxes in Tennessee made up the majority of the tax effect in this category. During the year ended December 31, 2023, state taxes in Tennessee and Pennsylvania made up the majority of the tax effect in this category.
Deferred tax assets and liabilities are determined based on the difference between financial statement and tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of the deferred taxes were as follows for the years ended December 31:
20252024
Deferred tax assets:
Capital loss carryforward$17,566 $18,440 
Interest18,811 18,692 
Net operating losses9,916 9,224 
Tax credits2,515 1,381 
Investment in Bioventus LLC2,879 7,362 
Transaction costs655 711 
Stock-based compensation417 283 
Research & development— 50 
Accrued liabilities— 10 
Other342 467 
Gross deferred tax asset53,101 56,620 
Valuation allowance(47,579)(51,875)
Total deferred tax assets5,522 4,745 
Deferred income tax liabilities:
Intangibles433 564 
Gross deferred income tax liabilities433 564 
Net deferred tax asset$5,089 $4,181 
The Company considered many factors when assessing the likelihood of future realization of these deferred tax assets, including expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors. The net change in the valuation allowance was $4,296. The valuation allowance at December 31, 2025 and 2024 primarily relates to U.S. federal net operating loss (“NOL”) carryforwards, interest carryover and capital loss carryforward.
As of December 31, 2025, the Company had approximately $35,746 in NOL carryforwards and $2,259 in federal tax credits. Under the Tax Cuts and Jobs Act, the U.S. federal NOL carryforwards can be carried forward indefinitely, and can only be used to offset up to 80% of taxable income in any given year. The federal tax credits expire at various dates beginning in 2040.
As of December 31, 2025, the Company held approximately $463 in gross foreign NOL carryforwards, primarily associated with Bioventus Canada ULC, which can be carried forward for up to 20 years. As of December 31, 2025, the Company had approximately $46,594 in state NOL carryforwards and $354 in state tax credits.
The Company evaluated its tax positions and had unrecognized tax benefits of $920 and $3,735 as of December 31, 2025 and 2024, respectively. The Company had $129 and $1,508 accrued for payment of interest and penalties as of December 31, 2025 and 2024, respectively. If the $920 of unrecognized tax benefit is recognized, it would not impact the effective tax rate due to the valuation allowance on the Company's net U.S. deferred tax assets. The Company expects a decrease of approximately $221 in the twelve months following December 31, 2025 in its uncertain tax positions due to various statute expirations during 2026.
The Company files U.S. federal income tax returns as well as income tax returns in many United States and foreign jurisdictions. In general, tax years 2022 through 2025 remain open to examination by the major jurisdictions in which the Company is subject to tax.
A reconciliation of the gross unrecognized tax benefits (excluding interest and penalties) for the years ended December 31:
20252024
Beginning of the period$3,735 $4,725 
Additions for current year tax positions
19 456 
Expiration of statutes(2,834)(1,446)
End of the period$920 $3,735 
Tax Receivable Agreement
The Company expects to obtain an increase in the share of the tax basis of the assets of BV LLC when LLC Interests are redeemed or exchanged by the Continuing LLC Owner and other qualifying transactions. This increase in tax basis may have the effect of reducing the amounts that the Company would otherwise pay in the future to various tax authorities. The increase in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.
On February 16, 2021, the Company entered into a tax receivable agreement (“TRA”) with the Continuing LLC Owner that provides for the payment by the Company to the Continuing LLC Owner of 85% of the amount of tax benefits, if any, that the Company actually realizes as a result of (i) increases in the tax basis of assets of BV LLC resulting from any redemptions or exchanges of LLC Interests or any prior sales of interests in BV LLC; and (ii) certain other tax benefits related to the Company making payments under the TRA.
The Company will maintain a full valuation allowance against deferred tax assets related to the tax attributes generated as a result of redemptions of LLC Interests or exchanges described above until it is determined that the benefits are more-likely-than-not to be realized. As of December 31, 2025, the Continuing LLC Owner had not exchanged LLC Interests for shares of Class A common stock and therefore the Company had not recorded any liabilities under the TRA.