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

14. Income Taxes:

 

The components of the income tax (benefit) provision are as follows (in thousands):

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Federal:

 

 

 

 

 

 

 

 

 

Current

 

$

(1,286

)

 

$

8,040

 

 

$

38,877

 

Deferred

 

 

(880

)

 

 

1,467

 

 

 

(19,679

)

 

 

(2,166

)

 

 

9,507

 

 

 

19,198

 

State:

 

 

 

 

 

 

 

 

 

Current

 

 

1,144

 

 

 

770

 

 

 

2,700

 

Deferred

 

 

(1,250

)

 

 

1,772

 

 

 

(3,092

)

 

 

(106

)

 

 

2,542

 

 

 

(392

)

Total

 

$

(2,272

)

 

$

12,049

 

 

$

18,806

 

 

The Company files its tax return on a consolidated basis with its subsidiaries, and its affiliated professional contractors file tax returns on an individual basis.

 

The effective tax rate for continuing operations was 2.2%, (24.9)% and 23.1% for the years ended December 31, 2024, 2023 and 2022, respectively. The effective tax rate for the year ended December 31, 2024 includes $12.5 million of expense related to non-cash impairment charges related to goodwill. The effective tax rate for the year ended December 31, 2023 includes $17.8 million of expense related to non-cash impairment charges related to goodwill and a cost-method investment.

 

The differences between the effective rate and the United States federal income tax statutory rate are as follows:

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Tax at statutory rate

 

 

21.00

%

 

 

21.00

%

 

 

21.00

%

State income tax, net of federal benefit

 

 

3.26

 

 

 

2.79

 

 

 

1.53

 

Non-deductible expenses

 

 

(1.39

)

 

 

(4.43

)

 

 

1.48

 

Equity compensation adjustments

 

 

(1.80

)

 

 

(3.98

)

 

 

1.35

 

Change in accrual estimates relating to
   uncertain tax positions

 

 

(0.22

)

 

 

0.67

 

 

 

(3.28

)

Change in valuation allowance

 

 

(6.35

)

 

 

(13.82

)

 

 

1.72

 

Goodwill impairment

 

 

(12.38

)

 

 

(26.67

)

 

─

 

Other, net

 

 

0.12

 

 

 

(0.48

)

 

 

(0.69

)

Effective tax rate

 

 

2.24

%

 

 

(24.92

)%

 

 

23.11

%

 

All of the Company’s deferred tax assets and liabilities are classified as long-term. The significant components of deferred income tax assets and liabilities are as follows (in thousands):

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Allowance for uncollectible accounts

 

$

122,742

 

 

$

139,998

 

Reserves and accruals

 

 

68,128

 

 

 

59,218

 

Stock-based compensation

 

 

1,691

 

 

 

3,022

 

Operating loss and other carryforwards

 

 

47,869

 

 

 

34,739

 

Capital loss carryforwards

 

 

412,392

 

 

 

422,809

 

Operating lease assets

 

 

12,332

 

 

 

19,133

 

Property and equipment

 

 

2,734

 

 

 

2,056

 

Other

 

 

914

 

 

 

5,520

 

Deferred tax assets before valuation
   allowance

 

 

668,802

 

 

 

686,495

 

Less: Valuation allowance

 

 

(425,395

)

 

 

(435,940

)

Deferred tax assets, net of valuation
   allowance

 

 

243,407

 

 

 

250,555

 

Gross deferred tax liabilities:

 

 

 

 

 

 

Amortization

 

 

(161,983

)

 

 

(162,538

)

Operating lease liabilities

 

 

(9,687

)

 

 

(17,342

)

Other

 

 

(2,128

)

 

 

(2,131

)

Total deferred tax liabilities

 

 

(173,798

)

 

 

(182,011

)

Net deferred tax assets

 

$

69,609

 

 

$

68,544

 

 

The Company’s net deferred tax assets were $69.6 million as of December 31, 2024, as compared to $68.5 million at December 31, 2023. The increase in net deferred tax assets of $1.1 million during the year ended December 31, 2024 was primarily related to increases in deferred tax assets for reserves and accruals of $8.9 million, operating loss and other carryforwards of $13.1 million and valuation allowance of $10.5 million, partially offset by decreases for allowance for uncollectible accounts of $17.3 million, capital loss carryforwards of $10.4 million and other of $4.6 million. The decrease in valuation allowance of $10.5 million primarily related to the effect of expiring capital loss carryforwards of $16.9 million, partially offset by a current year increase of $6.4 million.

 

For the years ended December 31, 2024, 2023 and 2022, income tax expense of $1.8 million, $1.9 million and $1.1 million, respectively, was recognized for excess tax deficiencies associated with stock-based compensation.

 

The Company has $1.67 billion of capital loss carryforwards as of December 31, 2024 which were generated from the disposal of its former anesthesiology and radiology services medical groups, of which the majority expire in 2025. As of December 31, 2024, management has determined that it is more likely than not that the tax benefits related to these carryforwards will not be realized and has recorded a full valuation allowance against the related deferred tax

assets. Additionally, the Company had net operating loss carryforwards for federal and state tax purposes totaling $72.3 million, $56.4 million and $46.7 million at December 31, 2024, 2023 and 2022, respectively. With respect to the December 31, 2024 balance, $13.5 million expires at various times from 2033 through 2042, and $58.8 million does not expire.

 

As of December 31, 2024, 2023 and 2022, the Company’s liability for uncertain tax positions, excluding accrued interest and penalties, was $2.4 million, $2.4 million and $2.8 million, respectively. As of December 31, 2024, the Company had $2.4 million of uncertain tax positions that, if recognized, would favorably impact its effective tax rate.

 

The following table summarizes the activity related to the Company’s liability for uncertain tax positions for the years ended December 31, 2024, 2023 and 2022 (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Balance at beginning of year

 

$

2,449

 

 

$

2,838

 

 

$

4,928

 

(Decreases) increases related to prior year tax positions

 

 

(47

)

 

 

70

 

 

 

379

 

Increases related to current year tax
   positions

 

 

—

 

 

 

200

 

 

 

800

 

Decreases related to lapse of statutes
   of limitation

 

 

—

 

 

 

(659

)

 

 

(3,269

)

Balance at end of year

 

$

2,402

 

 

$

2,449

 

 

$

2,838

 

 

During the year ended December 31, 2023, the Company decreased its liability for uncertain tax positions by $0.4 million, primarily related to expiration of statutes of limitation, partially offset by additional taxes on current year positions. In addition, the Company anticipates that its liability for uncertain tax positions will decrease by $0.6 million over the next 12 months.

 

The Company includes interest and penalties related to income tax liabilities in income tax expense. During the year ended December 31, 2024, 2023 and 2022, the Company included $0.3 million, $0.2 million and $0.3 million, respectively, of interest and penalties in income tax expense. At December 31, 2024 and 2023, the Company's accrued liability for interest and penalties related to income tax liabilities totaled $0.5 million and $0.3 million, respectively.

 

The Company is currently subject to U.S. Federal and various state income tax examinations for the tax years 2021 through 2023.