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Income Taxes | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | 12. Income Taxes The Company’s income tax expense (benefit), deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. The Company is subject to income taxes in both the United States and foreign jurisdictions. Significant judgment and estimates are required in determining the consolidated income tax expense (benefit). During interim periods, the Company generally utilizes the estimated annual effective tax rate (“AETR”) method which involves the use of forecasted information. Under the AETR method, the provision is calculated by applying the estimated AETR for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Jurisdictions with tax assets for which the Company believes a tax benefit cannot be realized are excluded from the computation of its AETR. During the nine months ended September 30, 2024, the Company recorded a pre-tax impairment charge of $76.9 million for finite-lived intangible assets and property and equipment, and another $33.4 million charge to cost of revenue, related to its immersive healthcare asset group. Refer to Note “4. Impairment and Restructuring Costs of Immersive Healthcare Asset Group” for more information. According to ASC 740-270-30-8 guidance for significant unusual or infrequently occurring items that are separately reported, the $26.5 million income tax benefit as a result of the impairment charge was excluded from the calculation of the Company’s estimated annual effective tax rate. The Company’s income tax expense was $6.5 million and $11.1 million for the three and nine months ended September 30, 2025, respectively, which was primarily due to tax expenses attributable to its worldwide profits offset by discrete tax benefits from stock-based compensation attributable to the U.S. jurisdiction. For the three months ended September 30, 2024, the Company’s income tax expense was $10.3 million, primarily due to tax expenses attributable to its worldwide profits. For the nine months ended September 30, 2024, the Company’s income tax benefit was $3.8 million, primarily due to a discrete tax benefit from the impairment charge related to the immersive healthcare asset group, partially offset by tax expenses attributable to its worldwide profits. The Company’s effective tax rate changed from 25.8% for the three months ended September 30, 2024 to 12.4% for the three months ended September 30, 2025. The rate change was primarily due to an increase in excess tax benefits from stock-based compensation attributable to the U.S jurisdiction in 2025. The Company’s effective tax rate changed from 16.2% for the nine months ended September 30, 2024 to 7.9% for the nine months ended September 30, 2025. The rate change was primarily due to a discrete tax benefit from the impairment charge related to the immersive healthcare asset group in 2024 and an increase in excess tax benefits from stock-based compensation attributable to the U.S jurisdiction in 2025. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”) into law, which extends and modifies various domestic and international business tax framework originally enacted under the Tax Cuts and Jobs Act (“TCJA”). The legislation includes multiple effective dates, with certain provisions taking effect in 2025 and others through 2027. During the three and nine months ended September 30, 2025, the enactment of the OBBBA resulted in an immaterial impact to the consolidated financial statements. The Company will continue to assess the full impact of these legislative changes as additional guidance becomes available. The Company evaluates all available positive and negative evidence, objective and subjective in nature, in each reporting period to determine if sufficient taxable income will be generated to realize the benefits of its DTAs and, if not, a valuation allowance to reduce the DTAs is recorded. As of September 30, 2025, the Company maintains a valuation allowance primarily against its California R&D tax credit DTAs for which the Company does not believe a tax benefit is more likely than not to be realized. The Company maintains that all foreign earnings, with the exception of a portion of the earnings of its German subsidiary, are permanently reinvested outside the United States and therefore deferred taxes attributable to such earnings are not provided for in the Company’s condensed consolidated financial statements as of September 30, 2025.

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