v3.25.4
INCOME TAX BENEFIT
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAX BENEFIT INCOME TAX BENEFIT
The Company, incorporated in the Bailiwick of Jersey migrated its place of residence on October 29, 2024. It was tax resident in the Bailiwick of Jersey prior to this date, resident in the United Kingdom in the period thereafter, and subject to taxation in the U.S. and various states jurisdictions throughout. ASC Topic 740, Income Taxes (“ASC 740”) indicates that the federal statutory income tax rate of a foreign reporting entity be used when preparing the rate reconciliation disclosure. As such, the Company and its wholly-owned subsidiaries use the statutory income tax rate in the Bailiwick of Jersey and the Cayman Islands of 0% through October 29, 2024, and the statutory income tax rate in the United Kingdom for the period thereafter of 25.0%.
The Company’s consolidated pretax (loss) income for the periods presented were generated by domestic and foreign operations as follows:
(In thousands)Year ended December 31, 2025Year ended December 31, 2024Year ended December 31, 2023
(Loss) income before income taxes:
United States$(138,337)$2,684 $(82,868)
Foreign(123,908)(51,222)(30,075)
Total$(262,245)$(48,538)$(112,943)
The provision for income taxes for the periods presented consisted of the following:
(In thousands)Year ended December 31, 2025Year ended December 31, 2024Year ended December 31, 2023
Current:
Federal$3,326 $784 $12 
State and local
(95)268 32 
Foreign24 243 2 
Total current tax expense
3,255 1,295 46 
Deferred:
Federal(13,030)(144)(7,927)
State and local
(4,414)(976)906 
Foreign— (66)— 
Total deferred tax expense:
(17,444)(1,185)(7,021)
Federal(9,703)640 (7,915)
State and local
(4,510)(708)938 
Foreign24 178 2 
Net income tax (benefit) provision$(14,189)$110 $(6,975)
For the year ended December 31, 2025, the income tax provision (benefit) related to continuing operations differs from the amounts computed by applying the statutory income tax rate of 25% to loss before income tax. The reconciliation, presented in accordance with ASU 2023-09, is as follows:
 Year ended December 31, 2025
Income tax benefit of the United Kingdom25.00 %
Change in Valuation Allowance(6.53)%
Nondeductible Items 
Goodwill impairment(1.78)%
Non-deductible loss
(0.52)%
Other 
Tax effect of eliminations(7.86)%
Foreign Tax Effects 
Cayman Islands(0.50)%
United States
(1.29)%
United States withholding tax(1.27)%
Other foreign jurisdictions0.16 %
Total5.41 %
For the years ended December 31, 2024 and December 31, 2023, income taxes differed from the amounts computed by applying the indicated current U.S. federal income tax rate to pretax losses from operations as a result of the following:
Year ended December 31, 2024Year ended December 31, 2023
Income tax benefit at Bailiwick of Jersey/United Kingdom for Successor and Income tax benefit at Cayman Islands for Predecessor statutory rate4.3 %— %
U.S./foreign tax rate differential10.0%15.9%
State income tax benefit, net of federal benefit1.7 %2.1 %
Permanent Items3.5 %(0.1)%
Noncontrolling interest(0.9%)(1.8%)
Change in valuation allowance(5.6%)(10.4%)
True-Ups(12.2)%— %
Equity Compensation0.5 %0.5 %
Withholding tax(1.6)%— %
Goodwill impairment— %— %
Total income tax (benefit) expense (0.2)%6.2 %
As of each reporting date, the Company considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of December 31, 2025, a valuation allowance of $35.1 million has been provided for predominantly on the deferred tax assets related to the Company’s investment in Waldencast Partners LP. If or when recognized, the tax benefits related to any reversal of valuation allowance will be accounted for as a reduction of income tax expense. A valuation allowance of $22.5 million was recorded as of December 31, 2024.
Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.
The tax effects of temporary differences that give rise to portions of the deferred tax assets and deferred tax liabilities as of December 31, 2025 and December 31, 2024 are presented below:
(In thousands)
As of December 31, 2025
As of December 31, 2024
Deferred tax assets:
Inventory reserve$2,428 $3,217 
Net operating losses
34,336 19,016 
Non-deductible interest carryover11,164 3,790 
Accruals and other temporary differences6,102 8,943 
Goodwill
4,334 — 
Investment in Waldencast LP11,673 13,147 
Total deferred tax assets70,037 48,113 
Deferred tax liabilities:
Fixed asset basis(37,289)(37,035)
Other temporary differences(704)(2,651)
Total deferred tax liabilities(37,993)(39,685)
Less: valuation allowance(35,126)(22,471)
Net deferred taxes
$(3,082)$(14,044)
The Company revised the presentation of certain deferred tax assets by aggregating previously separate components within the deferred tax footnote. This reclassification had no impact on total deferred tax assets, the net deferred tax position, income tax expense, or any amounts previously reported.
Net operating losses and tax credit carryforwards as of December 31, 2025 and December 31, 2024 were as follows:
As of December 31, 2025
As of December 31, 2024
(In thousands)AmountExpiration YearAmountExpiration Year
Net operating losses, federal (Post December 31, 2017)
$60,402 Do not expire$42,539 Do not expire
Net operating losses, state33,627 
2039 - 2045
25,383 
2039 - 2045
Tax Credits, federal387 
2039 - 2041
387 
2039 - 2041
Tax Credits, state121 Do not expire88 Do not expire
Pursuant to Sections 382 and 383 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), annual use of the Company’s net operating losses (“NOLs”) and research and development (“R&D”) credit carryforwards may be limited in the event that a cumulative change in ownership of more than 50.0% occurs within a three-year period. The Company has not undergone an analysis to determine whether this limitation would apply to the utilization of the NOL carryforward. However, as the federal NOLs do not expire, the Company does not believe that any potential limitations to federal or state NOLs, or federal credit carryforwards, if applicable, would be material to the financial statements.
The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits, and uncertain income tax positions must meet a more likely than not recognition threshold to be recognized. The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the consolidated statements of operations and comprehensive loss. There were no such unrecognized tax benefits as of December 31, 2025 or December 31, 2024. The Company does not expect material changes to its unrecognized tax benefits for the twelve month period following the reporting date.
As of December 31, 2025, there were no active taxing authority examinations in any of the Company's major tax jurisdictions other than in relation to Obagi Cosmeceuticals LLC for the 2021 tax year. There have been no findings or
adjustments related to this open tax examination. The Company remains subject to examination for federal and state income tax purposes for the tax years ending 2020 through 2025.
On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. While the OBBBA did not have a significant impact on the Company’s total tax provision as of December 2025, the Company is still evaluating the Company’s position on the elective provisions of the law and the potential impacts of those elections on the consolidated financial statements.
The cash paid for income taxes (net of refunds) during the year was as follows:
(In thousands)
Year ended December 31, 2025
United States State and Local Taxes
$174 
Other
26 
Foreign Taxes
Singapore8 
Total$208 
In relation to United States State and Local Taxes, income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions:
(In thousands)Year ended December 31, 2025
California
$25 
Massachusetts38 
New York
30 
New York City
15 
South Carolina
20 
Tennessee
30 
Texas
16 
Total United States State and Local Taxes
$174 
No single jurisdiction or state included in Other represents 5% or more of total cash paid for income taxes (net of refunds) for any period presented. Accordingly, these amounts have been aggregated and presented within their respective categories.