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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following is a geographical breakdown of income (loss) before the provision for income taxes:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
| (In thousands)
Domestic | $ | 369 |  |  | $ | 67,103 |  |  | $ | 34,714 |
Foreign | (2,822) |  |  | (1,096) |  |  | (5,365) |
Income (loss) before provision for income taxes | $ | (2,453) |  |  | $ | 66,007 |  |  | $ | 29,349 |
The benefit from income taxes consisted of the following:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
| (In thousands)
Current: |  |  |  |  |
Federal | $ | 17,973 |  |  | $ | (7,841) |  |  | $ | 1,874 |
State | 8,024 |  |  | 187 |  |  | 1,733 |
Foreign | 192 |  |  | (234) |  |  | 647 |
Total current income taxes | 26,189 |  |  | (7,888) |  |  | 4,254 |
Deferred: |  |  |  |  |
Federal | (25,753) |  |  | (2,708) |  |  | (3,868) |
State | (7,976) |  |  | (1,217) |  |  | (2,494) |
Foreign | (561) |  |  | (29) |  |  | (737) |
Total deferred income taxes | (34,290) |  |  | (3,954) |  |  | (7,099) |
Total benefit from income taxes | $ | (8,101) |  |  | $ | (11,842) |  |  | $ | (2,845) |
The benefit from income taxes differs from the amount computed by applying the statutory federal tax rate as follows:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
| (In thousands)
U.S. federal tax provision at statutory rate | $ | (515) |  |  | $ | 13,861 |  |  | $ | 6,163 |
State taxes | 38 |  |  | (814) |  |  | (601) |
Section 162(m) limitation | 3,071 |  |  | 6,382 |  |  | 2,550 |
Non-deductible expenses | 102 |  |  | 363 |  |  | 325 |
Uncertain tax positions | (776) |  |  | (835) |  |  | (394) |
Share-based compensation tax benefit | (3,264) |  |  | (20,717) |  |  | (6,929) |
Research tax credits | (6,948) |  |  | (5,170) |  |  | (4,038) |
Restructuring impact | — |  |  | (6,116) |  |  | — |
Foreign derived intangible income deduction | (753) |  |  | (68) |  |  | (204) |
Global intangible low-taxed income inclusion | 960 |  |  | 195 |  |  | 157 |
Foreign rate differential | 186 |  |  | 17 |  |  | (102) |
Foreign branch taxes | (51) |  |  | (9) |  |  | 288 |
Transaction cost | 68 |  |  | 1,097 |  |  | 422 |
Other | (219) |  |  | (28) |  |  | (482) |
Total benefit from income taxes | $ | (8,101) |  |  | $ | (11,842) |  |  | $ | (2,845) |
The Company has executed various global operational centralization activities and legal entity rationalization in recent years. During the year ended December 31, 2022, the Company underwent legal entity rationalization through tax free reorganizations. During the year ended December 31, 2021, the Company recognized a benefit on the release of previously recorded uncertain tax positions related to the sale of certain intellectual property rights by Aesynt B.V. to Omnicell, Inc. and a gain on the transfer of certain assets to Omnicell Pty Ltd, which resulted in a tax benefit, net of tax expense, of $6.1 million. On August 16, 2022, the Inflation Reduction Act of 2022, (the “IRA”), was signed into law. Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. The Company is in the process of analyzing the potential impacts of the IRA’s provisions on its business. However, these provisions are not currently expected to have a material impact on the Company’s results of operations or financial position. On March 11, 2021, the President of the United States signed into law the “American Rescue Plan Act of 2021” (the “ARP Act”), which provides additional economic stimulus and tax credits, including the expansion and modification of the employee retention tax credit enacted by the Coronavirus Aid, Relief and Economic Security Act and the refundable tax credits for COVID-related paid sick and family leave enacted by the Family First Act. The ARP Act further expands the “covered employees” definition for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, used in determining the limitation on the deduction for excessive employee remuneration rules to be applicable for taxable years beginning after December 31, 2026. The provisions of the ARP Act did not have a material impact on the Company’s income taxes. Significant components of the Company’s deferred tax assets (liabilities) were as follows:
| December 31,
| 2022 |  | 2021
| (In thousands)
Deferred tax assets (liabilities): |  |  |
Deferred revenues | $ | 13,514 |  |  | $ | 6,892 |
Share-based compensation | 12,064 |  |  | 9,265 |
Inventory-related items | 4,567 |  |  | 4,834 |
Tax credit carryforwards | 12,173 |  |  | 15,311 |
Reserves and accruals | 6,244 |  |  | 8,699 |
Loss carryforwards | 10,255 |  |  | 14,451 |
Lease liability | 12,884 |  |  | 13,179 |
Convertible debt | 15,037 |  |  | 543 |
Capitalized research and development | 30,881 |  |  | — |
Other, net | 1,557 |  |  | 1,281 |
Gross deferred tax assets | 119,176 |  |  | 74,455 |
Valuation allowance | — |  |  | — |
Total net deferred tax assets | 119,176 |  |  | 74,455 |
Intangibles | (36,357) |  |  | (41,158) |
Depreciation and amortization | (37,286) |  |  | (38,924) |
Prepaid expenses | (15,574) |  |  | (17,775) |
Right-of-use assets | (9,725) |  |  | (12,039) |
Other, net | — |  |  | (381) |
Total deferred tax liabilities | (98,942) |  |  | (110,277) |
Net deferred tax assets (liabilities) | $ | 20,234 |  |  | $ | (35,822) |
Deferred income tax assets (liabilities) are provided for temporary differences that will result in future tax deductions or future taxable income, as well as the future benefit of tax credit carryforwards. The Company recognizes deferred tax assets to the extent that it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. As of December 31, 2022 and 2021, the Company does not have a valuation allowance against any of its deferred tax assets. As of December 31, 2022, the Company had $10.9 million of federal net operating losses and $15.0 million of state net operating loss carryforwards expiring at various dates beginning in 2024, and $22.2 million of foreign net operating losses carried forward indefinitely. For income tax purposes, the Company has no federal research tax credit carryforward and a California research tax credit carryforward of $20.0 million. California credits are carried forward indefinitely to reduce cash taxes payable. It is the Company’s practice and intention to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of December 31, 2022, the Company has not made a provision for U.S. federal income, withholding, and state income taxes on the outside basis difference related to certain foreign subsidiaries because earnings are intended to be indefinitely reinvested in operations outside the U.S. The Company files income tax returns in the United States and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examinations by taxing authorities, including major jurisdictions such as the United States, Germany, Italy, France, and the United Kingdom. With few exceptions, as of December 31, 2022, the Company was no longer subject to U.S., state, and foreign tax examinations for years before 2019, 2018, and 2018, respectively. The aggregate change in the balance of gross unrecognized tax benefit, which excludes interest and penalties, for the years ended December 31, 2022, 2021, and 2020:
| (In thousands)
Balance as of December 31, 2019 | $ | 16,775 |
Increases related to tax positions taken during a prior period | 88 |
Decreases related to tax positions taken during the prior period | — |
Increases related to tax positions taken during the current period | 2,294 |
Decreases related to settlements | — |
Decreases related to expiration of statute of limitations | (911) |
Balance as of December 31, 2020 | 18,246 |
Increases related to tax positions taken during a prior period | 40 |
Decreases related to tax positions taken during the prior period | (8,908) |
Increases related to tax positions taken during the current period | 1,219 |
Decreases related to settlements | — |
Decreases related to expiration of statute of limitations | (1,636) |
Balance as of December 31, 2021 | 8,961 |
Increases related to tax positions taken during a prior period | 3 |
Decreases related to tax positions taken during the prior period | (59) |
Increases related to tax positions taken during the current period | 1,629 |
Decreases related to settlements | — |
Decreases related to expiration of statute of limitations | (1,238) |
Balance as of December 31, 2022 | $ | 9,296 |
The total amount of gross unrecognized tax benefit that, if realized, would favorably affect the Company’s effective income tax rate in future periods, was $9.3 million and $9.0 million as of December 31, 2022 and 2021, respectively. The Company recognizes interest and penalties related to uncertain tax positions in interest and other income (expense), net in the Consolidated Statements of Operations, accruing $0.2 million, $0.3 million, and $0.4 million for the years ended December 31, 2022, 2021, and 2020, respectively. Accrued interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets. The combined amount of cumulative accrued interest and penalties was approximately $0.2 million, $0.6 million, and $1.4 million for the years ended December 31, 2022, 2021, and 2020, respectively. The Company does not believe there will be any significant changes in its unrecognized tax positions over the next twelve months.

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