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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of (loss) income before income taxes for the years ended twelve months ended December 31, are as follows:
(Loss) Income Before Income Taxes: |  | 2020 |  | 2019 |  | 2018
Ireland |  | $ | (27,205) |  |  | $ | (50,134) |  |  | $ | (42,604) |
U.S. |  | 22,335 |  |  | 10,401 |  |  | (70,340) |
France |  | (212) |  |  | 1,151 |  |  | (253) |
Total loss before income taxes |  | $ | (5,082) |  |  | $ | (38,582) |  |  | $ | (113,197) |
The income tax (benefit) provision consists of the following for the years ended December 31:
Income Tax (Benefit) Provision: |  | 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |  |
U.S. - Federal |  | $ | (12,810) |  |  | $ | — |  |  | $ | — |
U.S. - State |  | 20 |  |  | 97 |  |  | 330 |
Total current |  | (12,790) |  |  | 97 |  |  | 330 |
Deferred: |  |  |  |  |  |
Ireland |  | — |  |  | (1,256) |  |  | — |
U.S. - Federal |  | 680 |  |  | (4,093) |  |  | (19,503) |
U.S. - State |  | — |  |  | (104) |  |  | 1,280 |
Total deferred |  | 680 |  |  | (5,453) |  |  | (18,223) |
Income tax benefit |  | $ | (12,110) |  |  | $ | (5,356) |  |  | $ | (17,893) |
The reconciliation between income taxes at the statutory rate and the Company’s benefit for income taxes is as follows for the years ended December 31:
Reconciliation to Effective Income Tax Rate: |  | 2020 |  | 2019 |  | 2018
Statutory tax rate |  | 12.5 | % |  | 12.5 | % |  | 12.5 | %
Differences in international tax rates |  | (34.5) | % |  | 3.2 | % |  | 8.0 | %
Nondeductible changes in fair value of contingent consideration |  | (19.4) | % |  | (0.3) | % |  | 4.0 | %
Intercompany asset transfer |  | — | % |  | 21.2 | % |  | — | %
Change in valuation allowances |  | (83.3) | % |  | (19.1) | % |  | (5.3) | %
Nondeductible stock-based compensation |  | (20.9) | % |  | (2.7) | % |  | (1.3) | %
Hospital Products sale |  | 183.5 | % |  | — | % |  | — | %
Unrealized tax benefits |  | 5.4 | % |  | 0.7 | % |  | (1.3) | %
State and local taxes (net of federal) |  | (0.4) | % |  | — | % |  | (0.3) | %
Change in U.S. tax law |  | 179.5 | % |  | — | % |  | (0.2) | %
Nondeductible interest expense |  | (34.0) | % |  | (2.5) | % |  | (1.1) | %
Orphan drug and R&D tax credit |  | 55.0 | % |  | — | % |  | — | %
Other |  | (5.1) | % |  | 0.9 | % |  | 0.7 | %
Effective income tax rate |  | 238.3 | % |  | 13.9 | % |  | 15.7 | %
Income tax benefit - at statutory tax rate |  | $ | (636) |  |  | $ | (4,823) |  |  | $ | (14,149) |
Differences in international tax rates |  | 1,755 |  |  | (1,218) |  |  | (9,039) |
Nondeductible changes in fair value of contingent consideration |  | 988 |  |  | 121 |  |  | (4,559) |
Intercompany asset transfer |  | — |  |  | (8,190) |  |  | — |
Change in valuation allowances |  | 4,231 |  |  | 7,379 |  |  | 5,998 |
Nondeductible stock-based compensation |  | 1,060 |  |  | 1,039 |  |  | 1,499 |
Hospital Products sale |  | (9,328) |  |  | — |  |  | — |
Unrecognized tax benefits |  | (274) |  |  | (261) |  |  | 1,440 |
State and local taxes (net of federal) |  | 20 |  |  | (7) |  |  | 299 |
Change in U.S. tax law |  | (9,124) |  |  | — |  |  | 274 |
Nondeductible interest expense |  | 1,728 |  |  | 982 |  |  | 1,269 |
Orphan drug and R&D tax credit |  | (2,793) |  |  | — |  |  | — |
Other |  | 263 |  |  | (378) |  |  | (925) |
Income tax benefit - at effective income tax rate |  | $ | (12,110) |  |  | $ | (5,356) |  |  | $ | (17,893) |
In 2020, the income tax benefit increased by $6,754 when compared to the same period in 2019. The increase in the income tax benefit in 2020 was primarily driven by the tax benefits from the sale of our hospital products and passage of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) in the U.S. The Company recorded additional tax benefit in 2020 from the Orphan Drug and R&D tax credit in the U.S. Tax benefit from the intercompany asset transfer recorded in 2019 did not recur, resulting in a partial offset of tax benefits described above. In 2019, the income tax benefit decreased by $12,537 when compared to the same period in 2018. The decrease in the income tax benefit in 2019 was primarily driven by the impairment of the Noctiva intangible asset in 2018, which did not recur in 2019. In addition to the non-recurring impairment, an increase in the valuation allowance in 2019, when compared to the same period in 2018 also contributed to the decrease in tax benefit recorded in 2019. As a part of a corporate reorganization, the Company entered into an internal sale transaction in December 2019. The internal sale transaction included transfer of intangible assets from an Irish entity to a U.S. entity. The internal sale transaction resulted in a decrease of $5,536 to Irish deferred tax asset with corresponding decrease of $5,536 to valuation allowance, an increase of $8,190 to U.S. deferred tax asset associated with amortization of intangible assets, and a $8,190 deferred tax benefit. Unrecognized Tax Benefits The Company or one of its subsidiaries files income tax returns in Ireland, France, U.S. and various states. The Company is no longer subject to Irish, French, U.S. Federal, and state and local examinations for years before 2016. During 2020, the Company completed the 2015 through 2017 U.S. Federal Tax Audit. Completion of the audit resulted in an assessment of $1,937 for the 2015 through 2017 U.S. Federal Tax Returns compared to the IRS Claims of $50,695 made on July 2, 2019 and the updated IRS Claims of $9,302 on October 2, 2019 made as part of the Specialty Pharma bankruptcy proceedings, which at this time does not include interest and penalties. The Company settled the $1,937 assessment. The French tax authority completed an examination of the Company's French tax returns for 2017 and 2018 during 2020, noting no change. The following table summarizes the activity related to the Company’s unrecognized tax benefits for the twelve months ended December 31:
Unrecognized Tax Benefit Activity |  | 2020 |  | 2019 |  | 2018
Balance at January 1: |  | $ | 6,465 |  |  | $ | 5,315 |  |  | $ | 3,954 |
Additions based on tax positions related to the current year |  | — |  |  | — |  |  | 1,087 |
Increases for tax positions of prior years |  | — |  |  | 2,416 |  |  | 274 |
Statute of limitations expiration |  | — |  |  | (1,266) |  |  | — |
Settlements |  | (3,322) |  |  | — |  |  | — |
Balance at December 31: |  | $ | 3,143 |  |  | $ | 6,465 |  |  | $ | 5,315 |
The Company expects that within the next twelve months the unrecognized tax benefits could decrease by an immaterial amount and the interest could increase by an immaterial amount. At December 31, 2020, 2019 and 2018, there are $2,483, $3,806 and $4,597 of unrecognized tax benefits that if recognized would affect the annual effective tax rate. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the years ended December 31, 2020, 2019 and 2018, the Company recognized approximately $203, $555 and $725 in interest and penalties. The Company had approximately $1,475 and $1,612 for the payment of interest and penalties accrued at December 31, 2020 and 2019, respectively. Deferred Tax Assets (Liabilities) Deferred income tax provisions reflect the effect of temporary differences between consolidated financial statement and tax reporting of income and expense items. The net deferred tax assets (liabilities) at December 31, 2020 and 2019 resulted from the following temporary differences:
Net Deferred Tax Assets and Liabilities: |  | 2020 |  | 2019
Deferred tax assets: |  |  |  |
Net operating loss carryforwards |  | $ | 31,302 |  |  | $ | 30,275 |
Amortization |  | 3,701 |  |  | 11,602 |
Stock based compensation |  | 2,626 |  |  | 3,577 |
Accounts receivable |  | — |  |  | 53 |
Fair value contingent consideration |  | — |  |  | 264 |
Orphan drug and R&D tax credit |  | 2,793 |  |  | — |
Other |  | 423 |  |  | 901 |
Gross deferred tax assets |  | 40,845 |  |  | 46,672 |
Deferred tax liabilities: |  |  |  |
Amortization |  | — |  |  | (172) |
Prepaid expenses |  | (75) |  |  | (35) |
Other |  | (890) |  |  | — |
Gross deferred tax liabilities |  | (965) |  |  | (207) |
Less: valuation allowances |  | (21,624) |  |  | (17,038) |
Net deferred tax assets |  | $ | 18,256 |  |  | $ | 29,427 |
At December 31, 2020, the Company had $118,070 of net operating losses in Ireland that do not have an expiration date and $46,003 of net operating losses in the U.S. Of the $46,003 of net operating losses in the U.S., $10,365 were acquired due to the acquisition of FSC and $35,638 are due to the losses at US Holdings. The portion due to the acquisition of FSC will expire in 2034 through 2035. The Company also has $2,793 of U.S. tax credits available to reduce future income tax payable that have no expiration date. A valuation allowance is recorded if, based on the weight of available evidence, it is more likely than not that a deferred tax asset will not be realized. This assessment is based on an evaluation of the level of historical taxable income and projections for future taxable income. For the year ended December 31, 2020, the Company recorded $4,171 of valuation allowances related to Irish net operating losses and $60 of valuation allowances related French net operating losses. The U.S. net operating losses are subject to an annual limitation as a result of the FSC acquisition under Internal Revenue Code Section 382 and will not be fully utilized before they expire. We recorded a valuation allowance against all of our net operating losses in Ireland and France as of December 31, 2020, and all of our net operating losses in Ireland as of December 31, 2019. We intend to continue maintaining a full valuation allowance on the Irish net operating losses until there is sufficient evidence to support the reversal of all or some portion of these allowances. In 2019, the Company removed $3,259 of French net operating losses and the corresponding valuation allowance as a result of the 2019 restructuring activities in France. See Note 19: Restructuring Cost s. While the Company believes it is more likely than not that it will be able to realize the deferred tax assets in the U.S., the Company continues to monitor any unfavorable changes that could ultimately impact our assessment of the realizability of our U.S. deferred tax assets. If the Company experiences an ownership change under Internal Revenue Code Section 382, the U.S. net operating losses could also be limited in their utilization. At December 31, 2020, the Company has unremitted earnings of $3,725 outside of Ireland as measured on a U.S. GAAP basis. Whereas the measure of earnings for purposes of taxation of a distribution may be different for tax purposes, these earnings, which are considered to be invested indefinitely, would become subject to income tax if they were remitted as dividends or if we were to sell our stock in the subsidiaries, net of any prior income taxes paid. It is not practicable to estimate the amount of deferred tax liability on such earnings, if any. R&D Tax Credits Receivable The French and Irish governments provide tax credits to companies for spending on innovative R&D. These credits are recorded as an offset of R&D expenses and are credited against income taxes payable in years after being incurred or, if not so utilized, are recoverable in cash after a specified period of time, which may differ depending on the tax credit regime. As of December 31, 2020, our net research tax credit receivable amounts to $6,771 and represents a French gross research tax credit of $6,396 and an Irish gross research tax credit of $375. As of December 31, 2019, our net Research tax credit receivable amounts to $8,429 and represents a French gross research tax credit of $7,608 and an Irish gross research tax credit of $821. In 2020, the Company recorded $2,793 for the U.S. Orphan Drug Tax Credit and the U.S. Research & Development Tax Credit. These credits are recorded as an income tax benefit in the year and are currently recorded as deferred tax assets because the credits are not recoverable in cash. 2020 CARES Act The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), enacted on March 27, 2020, includes significant business tax provisions. In particular, the CARES Act modified the rules associated with net operating losses (“NOLs”). Under the temporary provisions of the CARES Act, NOL carryforwards and carrybacks may offset 100% of taxable income for taxable years beginning before 2021. In addition, NOLs arising in 2018, 2019 and 2020 taxable years may be carried back to each of the preceding five years to generate a refund. During the twelve months ended December 31, 2020, the income tax benefit includes a discrete tax benefit of $9,124 as a result of our ability under the CARES Act to carry back NOLs incurred to periods when the statutory U.S. Federal tax rate was 35% versus our current U.S. Federal tax rate of 21%. During the twelve months ended December 31, 2020, the Company received $3,351 in cash tax refunds from carryback claims related to the CARES Act from the carryback of 2018 tax losses. The Company filed refund claims for $18,753 associated with the carryback of 2019 tax losses and estimates it will file refund claims associated with the carryback of 2020 tax losses. 2017 Tax Cuts and Jobs Act On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes significant changes to the U.S. corporate income tax system including: a federal corporate rate reduction from 35% to 21%; limitations on the deductibility of interest expense and executive compensation; creation of the base erosion anti-abuse tax (“BEAT”) and a new minimum tax. As a result of the Tax Act being signed into law, we recognized a provisional charge of $274 in 2018 related to the re-measurement of its U.S. net deferred tax assets and certain unrecognized tax benefits at the lower enacted corporate tax rates. A majority of the provisions in the Tax Act were effective January 1, 2018.

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- 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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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