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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table presents income from continuing operations before provision for income taxes for domestic and international operations.
Year Ended December 31,
(in millions)202420232022
U.S.
$597.5 $409.2 $218.0 
Foreign(111.5)(77.1)(4.1)
Income before provision for income taxes$486.0 $332.1 $213.9 
The following table presents the components of income tax expense for continuing operations.
Year Ended December 31,
(in millions)202420232022
Current:
Federal$215.2 $115.0 $17.1 
State52.5 28.1 20.3 
Current income taxes267.7 143.1 37.4 
Deferred:
Federal(104.9)(45.2)27.5 
State(18.1)(15.5)(5.5)
Deferred income taxes
(123.0)(60.7)22.0 
Provision for income taxes$144.7 $82.4 $59.4 
The provision for income taxes on earnings subject to income taxes differs from the statutory federal rate due to the following:
Year Ended December 31,
(in millions)202420232022
Federal income taxes at 21%
$102.1 $69.7 $44.9 
State income tax, net of federal benefit34.6 17.5 11.8 
Branded prescription drug fee7.5 8.7 6.5 
Loss on extinguishment of convertible senior notes29.1 — 12.0 
Stock-based compensation expense(20.4)(3.9)(2.5)
Officer compensation3.3 9.6 9.2 
Foreign rate differential
7.2 3.4 (0.2)
Change in tax rate(0.6)(5.5)(1.1)
Research credits(49.2)(42.2)(29.9)
Change in valuation allowance23.9 22.0 7.4 
Other7.2 3.1 1.3 
Provision for income taxes$144.7 $82.4 $59.4 
The following table presents the significant components of our deferred tax assets.
 December 31,
(in millions)20242023
Deferred tax assets:
Net operating losses$50.5 $36.5 
Research and development credits62.8 55.3 
Capitalized research and development255.7 178.7 
Stock-based compensation expense61.4 52.7 
Operating lease assets122.7 72.0 
Intangible assets121.4 110.0 
Other51.7 37.2 
Total deferred tax assets726.2 542.4 
Deferred tax liabilities:
Operating lease liabilities(112.8)(66.3)
Other(15.5)(24.6)
Total deferred tax liabilities(128.3)(90.9)
Net of deferred tax assets and liabilities597.9 451.5 
Valuation allowance(112.2)(88.9)
Net deferred tax assets$485.7 $362.6 
As of December 31, 2024 and 2023, we recorded a valuation allowance of $112.2 million and $88.9 million, respectively, against our gross deferred tax asset balance.
As of each reporting date, management considers new evidence, both positive and negative, that could affect its assessment of the future realizability of our deferred tax assets. As of December 31, 2024, management determined there was sufficient positive evidence to conclude that it is more likely than not deferred tax assets of $485.7 million are realizable. The recorded valuation allowance of $112.2 million consisted primarily of state and foreign net operating loss carryforwards and state credit carryforwards for which management cannot conclude it is more likely than not to be realized.
As of December 31, 2024, we had state and foreign income tax net operating loss carryforwards of $279.5 million and $237.5 million, respectively. We had no federal income tax operating loss carryforwards as of December 31, 2024. California net operating losses will begin to expire in 2031 unless previously utilized and the net operating losses related to other states will begin to expire in 2037. Swiss net operating losses will begin to expire in 2030 unless previously utilized. UK net operating losses will carry forward indefinitely.
As of December 31, 2024, we had state R&D tax credit carryforwards of $97.1 million. California R&D tax credits carry forward indefinitely, while R&D tax credits related to other states will begin to expire in 2034 unless previously utilized.
Additionally, the future utilization of our net operating loss and R&D tax credit carryforwards to offset future taxable income may be subject to an annual limitation, pursuant to Internal Revenue Code Sections 382 and 383, as a result of ownership changes that could occur in the future. No ownership changes have occurred through December 31, 2024.
The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.
We recognize interest and penalties related to income tax matters in income tax expense. We had accruals for interest related to income tax matters of $10.9 million as of December 31, 2024 and $3.1 million as of December 31, 2023. We had accruals for penalties related to income tax matters of $2.2 million as of December 31, 2024 and 2023.
We are subject to taxation in the U.S. and various state and foreign jurisdictions. Our tax years for 2002 for federal, 2000 for California, 2015 for other significant state jurisdictions, and 2019 and forward for foreign jurisdictions are subject to examination by tax authorities due to the carryforward of unutilized net operating losses and R&D tax credits.
The following table presents a summary of activity related to unrecognized tax benefits.
Year Ended December 31,
(in millions)202420232022
Balance at January 1$121.0 $84.5 $64.6 
Increase related to prior year tax positions4.0 3.4 4.7 
Increase related to current year tax positions54.8 36.7 15.2 
Decrease related to prior year tax positions
— (3.6)— 
Balance at December 31$179.8 $121.0 $84.5 
As of December 31, 2024, we had $141.9 million of unrecognized tax benefits that, if recognized and realized, would affect the effective tax rate, subject to changes in the valuation allowance. We do not expect a significant change in our unrecognized tax benefits in the next 12 months.