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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income (loss) before taxes by jurisdiction consisted of the following at December 31, 2024, 2023, and 2022:
(In thousands) |  | 2024 |  | 2023 |  | 2022
U.S. |  | $ | (11,046) |  |  | $ | (57,860) |  |  | $ | 18,081 |
Foreign |  | 842 |  |  | — |  |  | — |
Total |  | $ | (10,204) |  |  | $ | (57,860) |  |  | $ | 18,081 |
The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes. These provisions require a company to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The Company did not have any material unrecognized tax positions as of December 31, 2024 and 2023. The federal returns for tax years 2021 through 2023 remain open to examination, and the tax years 2020 through 2023 remain open to examination by certain other taxing jurisdictions to which the Company is subject. Additional years may be open to the extent attributes are being carried forward to an open year. Deferred income taxes arise from the temporary differences in the recognition of income and expenses for tax purposes. A valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax assets will not be realized. Deferred tax assets and liabilities were comprised of the following at December 31, 2024 and 2023:
(In thousands) | 2024 |  | 2023
Deferred tax assets: |  |  |
Accounts receivable and financing receivables | $ | 1,589 |  |  | $ | 871 |
Stock-based compensation | 1,003 |  |  | 1,275 |
Deferred revenue | 660 |  |  | 367 |
Research expenditures | 26,449 |  |  | 16,496 |
Accrued severance | 236 |  |  | 890 |
Right of use asset | 561 |  |  | 952 |
Capital loss on sale of AHT stock | 3,323 |  |  | — |
Credits | 891 |  |  | — |
Other | 2,893 |  |  | 2,770 |
Net operating loss | 1,835 |  |  | 3,656 |
Deferred tax assets | 39,440 |  |  | 27,277 |
Less: Valuation allowance | 13,280 |  |  | 604 |
Total deferred tax assets | $ | 26,160 |  |  | $ | 26,673 |
Deferred tax liabilities: |  |  |
Intangible assets | $ | 15,118 |  |  | $ | 14,477 |
Accrued liabilities and other | 11,880 |  |  | 12,127 |
Fixed assets | 237 |  |  | 254 |
Right of use liability | 796 |  |  | $ | 1,045 |
Total deferred tax liabilities | $ | 28,031 |  |  | $ | 27,903 |
Total net deferred tax liability | $ | (1,871) |  |  | $ | (1,230) |
Under the Tax Cuts and Jobs Act, Internal Revenue Code ("IRC") Section 174 amended the federal tax treatment of research or experimental expenditures paid or incurred during the tax year, which allowed for expensing of such costs in the year incurred for federal income tax purposes, until 2022 when those costs were required to be capitalized and amortized. Due to significant capitalization pursuant to IRC Section 174, the Company expects to pay current taxes and has recognized current tax expense. However, based on the Company’s assessment of positive and negative evidence regarding the realization of deferred taxes, the related deferred tax asset for these research expenditures is not more likely than not to be realized. Significant components of the income tax (benefit) provision for the years ended December 31, 2024, 2023 and 2022 were as follows:
(In thousands) | 2024 |  | 2023 |  | 2022
Current provision: |  |  |  |  |
Federal | $ | 5,016 |  |  | $ | 1,661 |  |  | $ | 6,482 |
State | 3,099 |  |  | 218 |  |  | 2,420 |
Foreign | 261 |  |  | — |  |  | — |
Deferred provision: |  |  |  |  |
Federal | (2,082) |  |  | (8,884) |  |  | (4,769) |
State | 3,941 |  |  | (2,421) |  |  | (1,919) |
Total income tax (benefit) provision | $ | 10,235 |  |  | $ | (9,426) |  |  | $ | 2,214 |
The difference between income taxes at the U.S. federal statutory income tax rate of 21% for the years ended December 31, 2024, 2023 and 2022, and those reported in the consolidated statements of operations for such years is as follows:
(In thousands) | 2024 |  | 2023 |  | 2022
Income taxes at U.S. federal statutory rate | $ | (2,145) |  |  | $ | (12,151) |  |  | $ | 3,797 |
State income tax, net of federal tax effect | 6,419 |  |  | (2,261) |  |  | 428 |
Foreign rate differential on pretax book income | 75 |  |  | — |  |  | — |
Provision-to-return adjustments | (152) |  |  | (999) |  |  | (539) |
Tax credits | (1,084) |  |  | (2,481) |  |  | (1,254) |
Capital loss on sale of AHT stock | (3,175) |  |  | — |  |  | — |
Contingent consideration | — |  |  | — |  |  | (406) |
Goodwill impairment | — |  |  | 7,542 |  |  | — |
Stock-based compensation | 772 |  |  | 65 |  |  | (112) |
Change in valuation allowance | 9,209 |  |  | — |  |  | — |
Non-deductible compensation - section 162(m) | 97 |  |  | 15 |  |  | 306 |
Other | 219 |  |  | 844 |  |  | (6) |
Total income tax provision (benefit) | $ | 10,235 |  |  | $ | (9,426) |  |  | $ | 2,214 |
We have federal net operating loss carryforwards of $0.8 million and state net operating loss carryforwards of $50.4 million, which relate to the acquisitions of Healthland Holding Inc. ("HHI") and Get Real Health, as well as normal business operations. $0.8 million of the federal net operating losses will be carried forward indefinitely. $20.5 million of the state net operating losses will be carried forward indefinitely. $29.9 million of the state net operating losses will expire on various dates beginning in 2025 through 2044. Our effective tax rates for the years ended December 31, 2024, 2023 and 2022 were (100)%, 16%, and 12%, respectively. The decrease in the 2024 rate as compared to 2023 was primarily driven by the establishment of a federal and state valuation allowance on deferred tax assets. The effective tax rate for 2023 was impacted by the non-deductible nature of our goodwill impairment charges and the changing relationship between net income or loss and research and development tax credits, which accumulate as benefits even in years with loss positions such as 2023. The valuation allowance for deferred tax assets as of December 31, 2024 and 2023 was $13.3 million and $0.6 million, respectively. The net change in the total valuation allowance during the year ended December 31, 2024 was an increase of $12.7 million. The valuation allowance did not change during the year ended December 31, 2023. The valuation allowance as of December 31, 2024 primarily relates to capitalized research and expenditures and capital loss carryforwards that, in the judgment of management, are not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income and capital gains during the periods in which those temporary differences are deductible.

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