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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

17. INCOME TAXES

The Company’s provision (benefit) for income taxes from continuing operations consists of the following:

 

 

 

Year Ended December 31,

 

(In thousands)

 

2024

 

 

2023

 

 

2022 (1)

 

Current income tax provision (benefit):

 

 

 

 

 

 

 

 

 

U.S. federal

 

$

25,640

 

 

$

(981

)

 

$

11,169

 

U.S. state

 

 

4,259

 

 

 

722

 

 

 

4,401

 

Ireland

 

 

1,192

 

 

 

—

 

 

 

—

 

Deferred income tax provision (benefit):

 

 

 

 

 

 

 

 

 

U.S. federal

 

 

(19,870

)

 

 

10,192

 

 

 

(10,536

)

U.S. state

 

 

(1,392

)

 

 

(507

)

 

 

(3,010

)

Ireland

 

 

61,783

 

 

 

(107,064

)

 

 

—

 

Total tax provision (benefit)

 

$

71,612

 

 

$

(97,638

)

 

$

2,024

 

 

(1)
Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.

The income tax provision in 2024 was primarily due to taxes on income earned in Ireland. The income tax benefit in 2023 was primarily due to the partial release of the valuation allowance maintained against certain Irish deferred tax assets, partially offset by taxes on income earned in the U.S. and Ireland. The income tax expense in 2022 was primarily due to taxes on income earned in the U.S.

In December 2022, the EU implemented a new corporate minimum tax rate of 15% on companies with consolidated annual revenue of at least €750.0 million, which was transposed into Irish law effective as of January 1, 2024. The Company has determined that this new minimum tax had no material impact for the year ended December 31, 2024.

The income tax benefit associated with the Company’s former oncology business, and the tax impact of the Separation, are discussed in further detail in Note 3, Discontinued Operations, in these “Notes to Consolidated Financial Statements” in this Annual Report. The tax benefits included within discontinued operations were $0.7 million, $1.4 million, and $11.1 million for the years ended December 31, 2024, 2023, and 2022, respectively.

No provision for income tax has been provided on undistributed earnings of the Company’s foreign subsidiaries because such earnings are indefinitely reinvested in the foreign operations. Cumulative unremitted earnings of U.S. subsidiaries totaled approximately $933.5 million at December 31, 2024. In the event of a repatriation of those earnings in the form of dividends or otherwise, the Company may be liable for income taxes, subject to adjustment, if any, for foreign tax credits and foreign withholding taxes payable to foreign tax authorities. The Company estimates that approximately $72.0 million of income taxes would be payable on the repatriation of the unremitted earnings to Ireland.

The distribution of the Company’s income (loss) before the provision (benefit) for income taxes by geographical area consists of the following:

 

 

 

Year Ended December 31,

 

(In thousands)

 

2024

 

 

2023

 

 

2022 (1)

 

Ireland

 

$

440,674

 

 

$

411,767

 

 

$

(32,198

)

U.S.

 

 

3,076

 

 

 

9,752

 

 

 

1,070

 

Income (loss) from continuing operations before provision (benefit) for income taxes

 

$

443,750

 

 

$

421,519

 

 

$

(31,128

)

 

(1)
Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.

 

The components of the Company’s net deferred tax assets consist of the following:

 

 

 

December 31,

 

 

December 31,

 

(In thousands)

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryforwards

 

$

80,209

 

 

$

195,658

 

Research and development expenses

 

 

71,167

 

 

 

49,206

 

Accrued expenses and reserves

 

 

41,189

 

 

 

37,367

 

Operating lease liabilities

 

 

17,537

 

 

 

18,716

 

Share-based compensation

 

 

33,773

 

 

 

37,727

 

Tax credits

 

 

26,882

 

 

 

27,116

 

Other

 

 

3,695

 

 

 

5,582

 

Less: valuation allowance

 

 

(79,727

)

 

 

(129,296

)

Total deferred tax assets

 

 

194,725

 

 

 

242,076

 

Deferred tax liabilities:

 

 

 

 

 

 

Property, plant and equipment

 

 

(21,917

)

 

 

(26,271

)

Right-of-use assets

 

 

(16,337

)

 

 

(17,748

)

Other

 

 

(1,940

)

 

 

(2,716

)

Total deferred tax liabilities

 

 

(40,194

)

 

 

(46,735

)

Net deferred tax assets

 

$

154,531

 

 

$

195,341

 

 

The activity in the valuation allowance associated with deferred taxes consists of the following:

 

(In thousands)

 

Balance at Beginning of Period (1)

 

 

(Additions) / Reductions (2)

 

 

Balance at End of Period (1)

 

Deferred tax asset valuation allowance for the year ended December 31, 2022

 

$

(249,112

)

 

$

(22,405

)

 

$

(271,517

)

Deferred tax asset valuation allowance for the year ended December 31, 2023

 

$

(271,517

)

 

$

142,221

 

 

$

(129,296

)

Deferred tax asset valuation allowance for the year ended December 31, 2024

 

$

(129,296

)

 

$

49,569

 

 

$

(79,727

)

 

(1)
Inclusive of continuing and discontinued operations for the periods prior to the Separation in November 2023.
(2)
(Additions) reductions represent continuing and discontinued operations for the periods prior to the Separation in November 2023. The reductions during the year ended December 31, 2024 primarily relate to the abandonment of certain Irish NOLs following the sale of the Athlone Facility to Novo. These NOLs were transferred from Elan Corporation, plc as part of the combination of the drug technology business of Elan Corporation, plc with the business of Alkermes, Inc. A number of restrictions applied to these NOLs thereby restricting the Company’s ability to utilize such NOLs. Following the sale of the Athlone Facility, the Company believes that its ability to utilize these NOLs is remote. The reduction during the year ended December 31, 2023 primarily relates to the partial release of the valuation allowance maintained by the Company against certain Irish net deferred tax assets. The additions in 2022 relate primarily to Irish NOLs.

The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making such assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. At December 31, 2024, the Company maintained a valuation allowance of $29.6 million against certain U.S. state deferred tax assets and $50.1 million against certain Irish deferred tax assets, as the Company has determined that it is more-likely-than-not that these deferred tax assets will not be realized and some may be abandoned.

If the Company incurs losses in the U.S. or in Ireland in the future, or fails to achieve sufficient profitability in a timely manner, the evaluation of the recoverability of the deferred tax assets could change and a valuation allowance against such deferred tax assets may be required in part or in whole. The Company will continue to monitor the need for a valuation allowance against its deferred tax assets on a quarterly basis.

As of December 31, 2024, the Company had $393.9 million of Irish NOL carryforwards, $14.1 million of U.S. federal NOL carryforwards, $43.2 million of state NOL carryforwards and $34.0 million of state tax credits which will either expire on various dates through 2039 or can be carried forward indefinitely. These loss and credit carryforwards are available to reduce certain future Irish and foreign taxable income and tax. These loss and credit carryforwards are subject to review and possible adjustment by the appropriate taxing authorities and may be subject to limitations based upon changes in the ownership of the Company’s ordinary shares. Included within these loss and credit carryforwards are $14.1 million of U.S. federal NOL carryforwards and $5.8 million of state NOL carryforwards, acquired as part of the acquisition of Rodin Therapeutics, Inc. in November 2019, each of which are subject to a $0.5 million annual limitation.

A reconciliation of the Company’s statutory tax rate to its effective tax rate is as follows:

 

 

 

Year Ended December 31,

 

 

(In thousands, except percentage amounts)

 

2024

 

 

 

2023

 

 

 

2022 (1)

 

 

Statutory tax rate

 

 

12.5

 

%

 

 

12.5

 

%

 

 

12.5

 

%

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes at statutory rate

 

$

55,469

 

 

 

$

52,690

 

 

 

$

(3,891

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

5,607

 

 

 

 

4,177

 

 

 

 

4,347

 

 

Foreign rate differential(2)

 

 

4,844

 

 

 

 

4,701

 

 

 

 

521

 

 

Change in valuation allowance

 

 

(49,517

)

 

 

 

(142,424

)

 

 

 

1,102

 

 

Intercompany amounts(3)

 

 

708

 

 

 

 

(16,551

)

 

 

 

(1,694

)

 

Irish rate differential(4)

 

 

5,798

 

 

 

 

235

 

 

 

 

4,926

 

 

Uncertain tax positions

 

 

(667

)

 

 

 

(234

)

 

 

 

602

 

 

Non-deductible lobbying expenses

 

 

767

 

 

 

 

705

 

 

 

 

775

 

 

U.S. state income taxes, net of U.S. federal benefit

 

 

2,802

 

 

 

 

347

 

 

 

 

1,272

 

 

Foreign derived intangible income

 

 

(281

)

 

 

 

—

 

 

 

 

(4,530

)

 

R&D credit

 

 

(7,815

)

 

 

 

(2,823

)

 

 

 

(2,531

)

 

Abandonment of NOLs(5)

 

 

49,897

 

 

 

 

—

 

 

 

 

—

 

 

Other permanent items(6)

 

 

4,000

 

 

 

 

1,539

 

 

 

 

1,125

 

 

Income tax provision (benefit)

 

$

71,612

 

 

 

$

(97,638

)

 

 

$

2,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate

 

 

16.1

 

%

 

 

(23.2

)

%

 

 

(6.5

)

%

 

(1)
Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.
(2)
Represents income or losses of U.S. subsidiaries, subject to tax at a rate other than the Irish statutory rate.
(3)
Intercompany amounts include cross-territory eliminations, the pre-tax effect of which has been eliminated in arriving at the Company's consolidated income (loss) before taxes from continuing operations. In 2023, this included a tax benefit of $15.7 million related to the intercompany transfer of inventory that was owned by the Company at December 31, 2023.
(4)
Represents income or losses of Irish companies subject to tax at a rate other than the Irish statutory rate.
(5)
Represents the tax effect of the abandonment of Irish NOLs following the sale of the Athlone Facility to Novo.
(6)
Other permanent items include, but are not limited to, non-deductible meals and entertainment expenses and non-deductible compensation of senior officers of the Company. For the year ended December 31, 2024, permanent items also included amounts relating to the sale of the Athlone Facility.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 

 

 

Unrecognized

 

(In thousands)

Tax Benefits

 

Balance, December 31, 2021

 

$

8,372

 

Reductions based on the lapse of applicable statutes of limitations

 

 

(438

)

Additions based on tax positions related to prior periods

 

 

449

 

Additions based on tax positions related to the current period

 

 

590

 

Balance, December 31, 2022

 

$

8,973

 

Reductions based on the lapse of applicable statutes of limitations

 

 

(1,073

)

Additions based on tax positions related to the prior period

 

 

281

 

Additions based on tax positions related to the current period

 

 

558

 

Balance, December 31, 2023

 

$

8,739

 

Reductions based on the lapse of applicable statutes of limitations

 

 

(1,306

)

Additions based on tax positions related to the prior period

 

 

59

 

Additions based on tax positions related to the current period

 

 

581

 

Balance, December 31, 2024

 

$

8,073

 

 

The unrecognized tax benefits at December 31, 2024, if recognized, would affect the Company’s effective tax rate. The Company does not anticipate that the amount of existing unrecognized tax benefits will materially increase or decrease within the next 12 months. The Company has elected to include interest and penalties related to uncertain tax positions as a component of its provision for taxes. For the years ended December 31, 2024, 2023 and 2022, the Company’s accrued interest and penalties related to uncertain tax positions were not material.

The Company’s major taxing jurisdictions include Ireland and the U.S. (federal and state). These jurisdictions have varying statutes of limitations. In the U.S., the 2021 through 2024 fiscal years remain subject to examination by the respective tax authorities, however, some states have longer statutes of limitations and additional fiscal years remain subject to examination. In Ireland, the 2020 through 2024 fiscal years remain subject to examination by the Irish tax authorities. Additionally, because of the Company’s Irish and U.S. loss carryforwards and credit carryforwards, certain tax returns from fiscal years 2002 onward may also be examined. These years generally remain open for three to four years after the loss carryforwards and credit carryforwards have been utilized.