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Income Taxes | 9 Months Ended
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Sep. 30, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Note 13. Income Taxes For the three and nine months ended September 30, 2024 and 2023, we recorded the following provisions for income taxes and effective tax rates as compared to our income before provision for income taxes (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
(Loss) income before provision for income taxes | $ | 156,524 |  |  | $ | 233,799 |  |  | $ | 2,906 |  |  | $ | 563,259 |
Provision for income taxes | 50,068 |  |  | 62,530 |  |  | 171,503 |  |  | 166,739 |
Effective tax rate | 32.0% |  | 26.7% |  | 5901.7% |  | 29.6%
Our effective tax rate for the three months ended September 30, 2024 was higher than the U.S. statutory rate primarily due to foreign losses with no associated tax benefit (i.e., full valuation allowance) and an increase in our valuation allowance against certain U.S. federal and state deferred tax assets. This was partially offset by tax rate benefits associated with research and development and orphan drug tax credit generations and the foreign derived intangible income deduction. Our effective tax rate for the nine months ended September 30, 2024 was higher than the U.S. statutory rate primarily due to non-deductible charges of $710.9 million associated with the Escient acquisition. Our effective tax rate for the three and nine months ended September 30, 2023 was higher than the U.S. statutory rate primarily due to foreign losses with no associated tax benefit and an increase in our valuation allowance against certain U.S. federal and state deferred tax assets. This was partially offset by tax rate benefits associated with research and development and orphan drug tax credit generations and the foreign derived intangible income deduction. The effective tax rate for the three months ended September 30, 2024 was unfavorable as compared to the prior year period primarily due to an increase in our valuation allowance against certain U.S. federal and state deferred tax assets, partially offset by a decrease in foreign losses with no associated tax benefit. The effective tax rate for the nine months ended September 30, 2024 was unfavorable as compared to the prior year period primarily due to the non-deductible charges associated with the Escient acquisition. As described in Note 6, as part of the Escient acquisition, we recorded $44.8 million of deferred tax assets predominately related to net operating losses and capitalized researched and development costs. The balance of our unrecognized tax benefits (including penalties and interest) increased by $22.5 million during the nine months ended September 30, 2024. This movement was primarily driven by net increases related to prior period tax positions of $6.1 million, increases related to current period tax positions of $2.8 million, increases related to acquired reserves of $9.1 million, and $4.7 million of interest and penalties. We accrue interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. We do not expect any significant decreases in unrecognized tax benefits within the next 12 months. One or more of our legal entities file income tax returns in the U.S. and in certain foreign jurisdictions. Our income tax returns may be examined by tax authorities in those jurisdictions. Significant disputes may arise with tax authorities involving issues such as the timing and amount of deductions, the use of tax credits and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws and regulations and relevant facts. In the U.S., the statute of limitations remains open beginning with tax year 2020. We are currently under U.S. federal audit for tax year 2021. The Organization for Economic Cooperation and Development Pillar 2 guidelines, which were supported by over 130 countries worldwide, are designed to impose a 15% global minimum tax on adjusted financial results. Certain aspects of Pillar 2 took effect on January 1, 2024, while other aspects go into effect on January 1, 2025. We are evaluating the potential impact of Pillar 2 on our business, as many of the countries in which we operate are enacting legislation implementing Pillar 2. Although many aspects of Pillar 2 remain to be clarified, at this time there are no material impacts on our effective tax rate

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