XML 32 R18.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income Taxes The Company uses the asset and liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any change in tax rates that could impact deferred tax assets or liabilities are recognized in the same period the change occurs. If a net operating loss ("NOL") and/or interest limitation ("163(j)") carryforward exists, the Company makes a determination as to whether that NOL and/or 163(j) carryforward will be utilized in the future. A valuation allowance is established for certain net operating loss and interest limitation carryforwards when their recoverability is deemed to be uncertain. The carrying value of the net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Company may be required to adjust its deferred tax valuation allowances. The Company, or one or more of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations for years prior to 2018 or state income tax examinations for years prior to 2017. The Company and certain of its subsidiaries file a consolidated federal income tax return. The partnerships, limited liability companies, and certain non-consolidated physician practice corporations also file separate income tax returns. The Company's allocable portion of each partnership's and limited liability company's income or loss is included in taxable income of the Company. The remaining income or loss of each partnership and limited liability company is allocated to the other owners. The Company made income tax payments of $1.5 million, $1.7 million and $1.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. Income tax expense (benefit) is comprised of the following (in millions):
|  | Year Ended December 31,
|  | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | (0.2) |  |  | $ | (0.2) |
State |  | 1.5 |  |  | 1.9 |  |  | 1.7 |
Deferred: |  |  |  |  |  |
Federal |  | 7.9 |  |  | (22.2) |  |  | 3.2 |
State |  | 1.1 |  |  | 0.4 |  |  | 4.8 |
Total income tax expense (benefit) |  | $ | 10.5 |  |  | $ | (20.1) |  |  | $ | 9.5 |
A reconciliation of the provision for income taxes as reported in the consolidated statements of operations and the amount of income tax expense (benefit) computed by multiplying consolidated income (loss) in each year by the U.S. federal statutory rate of 21% (2021, 2020 and 2019) follows (in millions):
|  | Year Ended December 31,
|  | 2021 |  | 2020 |  | 2019
Tax expense (benefit) at U.S.federal statutory rate |  | $ | 17.1 |  |  | $ | (4.0) |  |  | $ | 11.5 |
State income tax, net of U.S. federal tax benefit |  | 2.3 |  |  | 2.4 |  |  | 5.7 |
Change in valuation allowance |  | 20.9 |  |  | 4.1 |  |  | 13.6 |
Net income attributable to non-controlling interests |  | (29.9) |  |  | (24.8) |  |  | (25.2) |
Changes in measurement of uncertain tax positions |  | — |  |  | — |  |  | (0.1) |
Stock option compensation |  | (1.7) |  |  | 1.2 |  |  | 1.3 |
Differences related to divested facilities |  | (2.6) |  |  | (0.7) |  |  | 0.1 |
Tax return reconciling differences |  | 1.3 |  |  | — |  |  | 1.1 |
Change in effective tax rate |  | — |  |  | (0.8) |  |  | 0.3 |
Tax Receivable Agreement liability |  | 0.7 |  |  | 0.9 |  |  | 1.6 |
Goodwill impairment |  | — |  |  | 4.3 |  |  | 0.5 |
Litigation settlement |  | — |  |  | (3.7) |  |  | — |
Adjustments to unrealized attributes |  | 2.3 |  |  | — |  |  | — |
Other |  | 0.1 |  |  | 1.0 |  |  | (0.9) |
Total income tax expense (benefit) |  | $ | 10.5 |  |  | $ | (20.1) |  |  | $ | 9.5 |
The components of temporary differences and the approximate tax effects that give rise to the Company’s net deferred tax asset are as follows (in millions):
|  | December 31,
|  | 2021 |  | 2020
Deferred tax assets: |  |  |  |
Medical malpractice liability |  | $ | 3.6 |  |  | $ | 4.0 |
Accrued vacation and incentive compensation |  | 3.0 |  |  | 3.2 |
Net operating loss carryforwards |  | 152.1 |  |  | 164.7 |
Allowance for bad debts |  | 3.0 |  |  | 2.5 |
Capital loss carryforwards |  | — |  |  | 1.7 |
Amortization of intangible assets |  | 1.2 |  |  | 2.2 |
Deferred financing costs |  | 8.3 |  |  | 7.9 |
Section 163(j) interest |  | 99.4 |  |  | 69.8 |
Interest rate swap liability |  | 15.0 |  |  | 15.8 |
TRA liability |  | 0.6 |  |  | 1.0 |
Right of use |  | 51.1 |  |  | 50.6 |
Other deferred assets |  | 11.1 |  |  | 16.4 |
Total gross deferred tax assets |  | 348.4 |  |  | 339.8 |
Less: Valuation allowance |  | (113.0) |  |  | (91.1) |
Total deferred tax assets |  | 235.4 |  |  | 248.7 |
Deferred tax liabilities: |  |  |  |
Depreciation on property and equipment |  | (2.6) |  |  | (1.8) |
Basis differences of partnerships and joint ventures |  | (73.0) |  |  | (73.6) |
Right of use |  | (44.2) |  |  | (47.5) |
Other deferred liabilities |  | (1.2) |  |  | (1.0) |
Total deferred tax liabilities |  | (121.0) |  |  | (123.9) |
Net deferred tax assets |  | $ | 114.4 |  |  | $ | 124.8 |
The Company had federal NOL carryforwards of $573.0 million as of December 31, 2021, of which $478.3 million expire between 2029 and 2037. The remaining federal NOL carryforwards, which were generated after 2017, do not expire. The Company had state NOL carryforwards of $594.9 million as of December 31, 2021, which expire between 2022 and 2041. The Company had Section 163(j) interest limitation carryforwards of $397.5 million as of December 31, 2021, which do not expire. The Company has recorded a valuation allowance against deferred tax assets at December 31, 2021 and 2020 totaling $113.0 million and $91.1 million, respectively, which represents an increase of $21.9 million. The valuation allowance continues to be provided for certain deferred tax assets for which the Company believes it is more likely than not that the tax benefits will not be realized, which are primarily Section 163(j) interest carryforwards, certain state NOLs and state credit carryforwards. Approximately $14.4 million of the valuation allowance as of December 31, 2021 is recorded against deferred tax assets attributable to interest rate swap liabilities that, if subsequently recognized, will be credits directly to contributed capital. The Company has evaluated the realizability of its deferred tax assets based on sources of positive and negative evidence, and determined that it is more likely than not that the NOL carryforwards will be realized. The determination was made based upon projections of future book and taxable income. If the Company's expectations for future operating results on a consolidated basis or at the state jurisdiction level vary from actual results due to changes in health care regulations, general economic conditions, or other factors, the Company may need to adjust the valuation allowance, for all or a portion of its deferred tax assets. The Company's income tax expense in future periods will be reduced or increased to the extent of offsetting decreases or increases, respectively, in its valuation allowance in the period when the change in circumstances occurs. These changes could have a significant impact on the Company's future earnings. A reconciliation of the beginning and ending liability for gross unrecognized tax benefits for the years ended December 31, 2021 and 2020 is as follows (in millions):
|  | December 31,
|  | 2021 |  | 2020
Unrecognized tax benefits at beginning of year |  | $ | 0.1 |  |  | $ | 0.1 |
Reductions for tax positions of prior year |  | — |  |  | — |
Unrecognized tax benefits at end of year |  | $ | 0.1 |  |  | $ | 0.1 |
The Company recognizes interest and penalties related to uncertain tax positions in its provision for income taxes in the consolidated statements of operations. For the years ended December 31, 2021 and 2020, the Company had approximately $0.1 million of accrued interest and penalties related to uncertain tax positions. The total amount of accrued liabilities related to uncertain tax positions that would affect the Company's effective tax rate, if recognized, is $0.1 million as of December 31, 2021 and 2020. The reserves are included in long-term taxes payable in the consolidated balance sheet as of December 31, 2021.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration