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INCOME TAXES
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income (loss) before income taxes and income tax expense are as follows (dollar amounts in thousands):
Three Months Ended
June 30,		Six Months Ended
June 30,
2026202520262025
Income (loss) before income taxes:
   Domestic$5,946 $(4,214)$10,113 $6,459 
   Foreign(3,391)2,287 (2,560)320 
Total income (loss) before income taxes$2,555 $(1,927)$7,553 $6,779 
Income tax benefit (expense)$2,098 $(2,920)$16 $(6,814)
Effective tax rate(82)%(152)%— %101 %
The Company’s income tax expense represents the estimated annual effective tax rate applied to the year-to-date operating results, adjusted for certain discrete tax items.
The Company’s effective tax rate for the three and six months ended June 30, 2026 was primarily impacted by the reversal of its U.K. operating subsidiary’s valuation allowance, partially offset by costs related to non-deductible stock-based compensation and non-deductible executive compensation.
The Company’s effective tax rate for the three and six months ended June 30, 2025 was primarily impacted by costs related to non-deductible stock-based compensation, non-deductible executive compensation and a non-U.S. valuation allowance.
During the second quarter of 2026, the Company recorded a discrete benefit of $6.4 million resulting from a change in judgment regarding future-year realizability of deferred tax assets in its U.K. operations, primarily related to fixed asset temporary differences. The reduction reflects management’s conclusion, based on all available positive and negative evidence, that realization of the U.K. deferred tax assets is more likely than not. As a result, the discrete benefit significantly reduced the Company’s effective tax rate for the three and six months ending June 30, 2026.
In June 2026, the Company entered into the Purchase Agreement with Zimmer to divest the Company’s iovera° business. The Transaction closed on July 31, 2026. The parties agreed to treat the transaction as a deemed asset sale for U.S. federal income tax purposes through an election under Section 338(h)(10) of the Internal Revenue Code. As the Transaction closed subsequent to June 30, 2026, the income tax effects of the transaction, including changes in the valuation allowance for capital-loss carryforwards, were not recognized in the income tax provisions for the three and six months ending June 30, 2026. For more information on the divestiture of iovera°, see Note 3, Assets and Liabilities Held for Sale.
As of both June 30, 2026 and December 31, 2025, the Company had an income taxes payable balance of $6.1 million that was included in other liabilities within the condensed consolidated balance sheet, related to unrecognized tax benefits. As of both June 30, 2026 and December 31, 2025, the Company had less than $0.1 million of current income taxes payable that was included in accrued expenses within the condensed consolidated balance sheet.
As of June 30, 2026 and December 31, 2025, the Company had income taxes receivable and prepaid income taxes of $8.4 million and $8.2 million, respectively, which were included in prepaid expenses and other current assets within the condensed consolidated balance sheet. The balances include a $4.6 million tax refund claim for estimated federal taxes made prior to the July 2025 enactment of federal legislation known as the One Big Beautiful Bill Act (the “OBBBA”).
U.S. Tax Reform
The OBBBA resulted in changes to U.S. federal income tax law. Significant provisions of the OBBBA include the permanent extension of certain provisions of the 2017 Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. In accordance with ASC 740, Income Taxes, the Company was required to recognize the effect of the tax law changes in the period of enactment, such as remeasuring its estimated U.S. deferred tax assets and liabilities. The Company had $124.6 million of a gross deferred tax asset attributed to unamortized U.S. capitalized research and development costs as of December 31, 2024, of which $62.3 million will be deductible on both its 2025 and 2026 income tax returns. There are no other material impacts to the Company related to the enactment of the OBBBA.