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INCOME TAXES

12 Months Ended

Dec. 31, 2022

INCOME TAXES

INCOME TAXES

17. INCOME TAXES

​

The (benefit from) provision for income taxes contained the following components:

​

​	​	​	​	​	​	​	​	​	​
​	​	Years Ended December 31,
​	​	2022		​	2021		​	2020
Current provision:	​	​		​	​		​	​
Federal	​	$	166	​	$	—	​	$	—
State	​	​	4,540	​	​	3,142	​	​	830
​	​	​	4,706	​	​	3,142	​	​	830
Deferred benefit:	​	​	​	​	​	​	​	​	​
Federal	​	$	(4,631)	​	$	(61,445)	​	$	—
State	​	​	(3,920)	​	​	(16,588)	​	​	—
​	​	​	(8,551)	​	​	(78,033)	​	​	—
(Benefit from) provision for income taxes	​	$	(3,845)	​	$	(74,891)	​	$	830

​

A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the consolidated financial statements is as follows:

​

​	​	​	​	​	​	​	​
​		Years Ended December 31,					​
​		2022		2021		2020
Federal income tax expense at statutory rate		21.0	%	21.0	%	21.0	%
(Increase) decrease income tax (benefit) resulting from:	​	​	​	​	​	​	​
State income tax, net of federal benefit	​	5.0	​	2.9	​	5.1	​
Permanent differences	​	(1.9)	​	(3.9)	​	1.1	​
Stock compensation	​	(5.1)	​	(18.8)	​	(3.0)	​
Research and development credit		0.7	​	16.3	​	(1.1)	​
Transaction costs		(4.4)	​	—	​	—	​
Change in tax rates and other		(2.0)	​	—	​	—	​
Change in valuation allowance		—	​	2,202.5	​	(20.1)	​
Effective income tax rate		13.3	%	2,220.0	%	3.0	%

​

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are comprised of the following:

​

​	​	​	​	​	​	​
​	​	Years Ended December 31,
​	​	2022			2021
Deferred tax assets:		​			​
U.S. and state net operating loss carryforwards	​	$	56,982	​	$	31,400
Research and development credits	​		5,036	​		5,470
Operating lease liabilities	​	​	2,131	​	​	2,321
Returns and discounts	​	​	19,423	​	​	23,072
Stock-based compensation	​	​	6,776	​	​	7,838
Accruals and other	​	​	5,228	​	​	2,210
163(j) Carryforward	​	​	3,647	​	​	—
Capitalized R&D	​	​	929	​	​	—
Intangible assets	​	​	23,592	​	​	12,699
Gross deferred tax assets:	​		123,744	​		85,010
Valuation allowance	​		(5,254)	​		(1,966)
Total deferred tax assets:	​		118,490	​		83,044
Deferred tax liabilities:	​	​	​	​	​	​
Debt discount	​	​	(406)	​	​	—
Operating lease assets	​	​	(1,778)	​	​	(2,024)
Inventory	​	​	(3,918)	​	​	—
Intangible assets	​	​	(84,167)	​	​	—
Property and equipment	​	​	(4,271)	​	​	(2,978)
Total deferred tax liabilities:	​	​	(94,540)	​	​	(5,002)
Net deferred tax assets	​	$	23,950	​	$	78,042

​

The Company provides a valuation allowance when it is more-likely-than-not that deferred tax assets will not be realized. In determining the extent to which a valuation allowance for deferred tax assets is required, the Company evaluates all available evidence including projections of future taxable income, carryback opportunities, reversal of certain deferred tax liabilities, and other tax planning strategies. The Company maintains a partial valuation against its federal and state operating losses and federal R&D credits as of December 31, 2022. The valuation allowance was $5,254 and $1,966 as of December 31, 2022 and 2021, respectively. The change in the valuation allowance did not impact the tax provision for the year ended December 31, 2022. As a result of sustained positive earnings history through cumulative earnings over the prior three years, as of June 30, during the year ended December 31, 2021, the Company began using projections of future taxable income as a source of realizing its deferred tax assets. Accordingly, the Company recognized a deferred tax benefit of $78,042 for the year ended December 31, 2021 related to the reversal of valuation allowances.

As of December 31, 2022, 2021, and 2020, the Company had gross U.S. federal net operating loss carryforwards of $229,797, $119,280, and $226,824, respectively, which may be available to offset future income tax liabilities. The Tax Cuts and Jobs Act of 2017 (“TCJA”) will generally allow losses incurred after 2017 to be carried over indefinitely but will generally limit the NOL deduction to the lesser of the NOL carryover or 80% of a corporation’s taxable income (subject to Internal Revenue Code Sections 382 and 383). Also, there will be no carryback for losses incurred after 2017. Losses incurred prior to 2018 will generally be deductible to the extent of the lesser of a corporation’s NOL carryover or 100% of a corporation’s taxable income (subject to Internal Revenue Code Section 382 and 383) and be available for twenty years from the period the loss was generated.

As of December 31, 2022, 2021, and 2020, the Company also had gross U.S. state net operating loss carryforwards of $252,597, $103,044, and $170,280, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2037.

As of December 31, 2022, 2021 and 2020, the Company had federal research and development tax credit carryforwards of approximately $4,231, $4,503, and $4,623, respectively, available to reduce future tax liabilities which expire at

various dates through 2037 and some are indefinite lived. As of December 31, 2022, 2021 and 2020 the Company had state research and development tax credit carryforwards of approximately $832, $955, and $1,150, respectively, available to reduce future tax liabilities which expire at various dates through 2037.

Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. The net operating losses acquired in the BDSI acquisition, totaling $234,675 are subject to limitation.

The Company has completed studies to assess the impact of ownership changes, if any, on the Company’s ability to use its NOL and tax credit carryovers as defined under Section 382 of the Internal Revenue Code (“IRC 382”). The Company concluded that there were ownership changes that occurred during the years 2006, 2012 and 2015 that would be subject to IRC 382 limitations. In addition, the Company concluded that there were ownership changes for BDSI that occurred during the years 2006 and 2022 that would be subject to IRC 382 limitations. These IRC 382 annual limitations may limit the Company’s ability to use pre-ownership change federal NOL carryovers and pre-ownership change federal tax credit carryovers.

The Company files income tax returns in the United States and in several states. The federal and state income tax returns are generally subject to tax examinations for the tax years ended December 31, 2019 through December 31, 2022. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period.

The Company has not recognized deferred tax assets for certain federal and state research and development credits related to uncertain tax positions, and that is included in the tabular rollforward of uncertain tax positions. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) is as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	Years Ended December 31,
​	​	2022			2021		​	2020
Gross UTB Balance at January 1		$	654		$	586	​	$	578
Additions based on tax positions related to the current year	​	​	—	​	​	67	​	​	36
Additions for tax positions related to acquisitions	​		10,930	​		—	​		—
(Reductions) additions for tax positions of prior years	​	​	(184)	​	​	1	​	​	(28)
Gross UTB Balance at December 31	​	$	11,400	​	$	654	​	$	586
​	​		​	​		​	​		​
Net UTB impacting the effective tax rate at December 31 excluding valuation allowance impacts, if any	​	$	11,368	​	$	500	​	$	560

​

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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

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