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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | 5. INCOME TAXES The provision for income taxes consists of the following (in millions):
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 182 |  |  | $ | 149 |  |  | $ | — |
State |  |  | 13 |  |  |  | 7 |  |  |  | 5 |
|  |  | 195 |  |  |  | 156 |  |  |  | 5 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (125 | ) |  |  | (5 | ) |  |  | 166 |
State |  |  | 9 |  |  |  | 40 |  |  |  | (1 | )
|  |  | (116 | ) |  |  | 35 |  |  |  | 165 |
Total provision for income taxes for income |  | $ | 79 |  |  | $ | 191 |  |  | $ | 170 |
The following table reconciles the differences between the statutory federal income tax rate and the effective tax rate (dollars in millions):
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
|  | Amount |  |  | % |  |  | Amount |  |  | % |  |  | Amount |  |  | % |
Provision for income taxes at statutory federal rate |  | $ | (60 | ) |  |  | 21.0 | % |  | $ | 44 |  |  |  | 21.0 | % |  | $ | 73 |  |  |  | 21.0 | %
State income taxes, net of federal income tax benefit |  |  | 17 |  |  |  | (5.9 | ) |  |  | 37 |  |  |  | 17.9 |  |  |  | 3 |  |  |  | 0.8 |
Net income attributable to noncontrolling interests |  |  | (32 | ) |  |  | 11.3 |  |  |  | (31 | ) |  |  | (14.9 | ) |  |  | (28 | ) |  |  | (8.0 | )
Change in valuation allowance |  |  | 144 |  |  |  | (50.9 | ) |  |  | 88 |  |  |  | 42.5 |  |  |  | 122 |  |  |  | 34.9 |
Change in uncertain tax position |  |  | 6 |  |  |  | (2.0 | ) |  |  | 10 |  |  |  | 4.9 |  |  |  | — |  |  |  | — |
Nondeductible goodwill |  |  | 15 |  |  |  | (5.3 | ) |  |  | 29 |  |  |  | 14.1 |  |  |  | — |  |  |  | — |
Amended return adjustments |  |  | — |  |  |  | — |  |  |  | 9 |  |  |  | 4.3 |  |  |  | — |  |  |  | — |
Change in tax refunds |  |  | (11 | ) |  |  | 3.9 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Permanent differences |  |  | 7 |  |  |  | (2.5 | ) |  |  | 4 |  |  |  | 1.9 |  |  |  | 2 |  |  |  | 0.6 |
Provision to return |  |  | (6 | ) |  |  | 2.1 |  |  |  | 1 |  |  |  | 0.6 |  |  |  | (1 | ) |  |  | (0.3 | )
Other |  |  | (1 | ) |  |  | 0.4 |  |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | (0.3 | )
Provision for income taxes and effective tax rate for income |  | $ | 79 |  |  |  | (27.9 | )% |  | $ | 191 |  |  |  | 92.3 | % |  | $ | 170 |  |  |  | 48.7 | %
The Company’s effective tax rates were (27.9)%, 92.3% and 48.7% for the years ended December 31, 2024, 2023 and 2022, respectively. The decrease in the Company’s effective tax rate for the year ended December 31, 2024, when compared to the year ended December 31, 2023, was primarily due to a decrease in non-deductible goodwill related to divested hospitals and a decrease in (loss) income before income taxes in 2024 compared to 2023. The decrease in the Company’s effective tax rate for the year ended December 31, 2023, when compared to the year ended December 31, 2022, was primarily due to non-deductible goodwill related to hospitals divested in 2023 and a decrease in income before taxes. Deferred income taxes are based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities under the provisions of the enacted tax laws. Deferred income taxes at December 31, 2024 and 2023 consist of (in millions):
|  | December 31, |
|  | 2024 |  |  | 2023 |
|  | Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
Net operating loss and credit carryforwards |  | $ | 615 |  |  | $ | — |  |  | $ | 533 |  |  | $ | — |
Property and equipment |  |  | — |  |  |  | 261 |  |  |  | — |  |  |  | 326 |
Self-insurance liabilities |  |  | 34 |  |  |  | — |  |  |  | 16 |  |  |  | — |
Prepaid expenses |  |  | — |  |  |  | 28 |  |  |  | — |  |  |  | 30 |
Intangibles |  |  | — |  |  |  | 142 |  |  |  | — |  |  |  | 163 |
Investments in unconsolidated affiliates |  |  | — |  |  |  | 81 |  |  |  | — |  |  |  | 72 |
Other liabilities |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | 7 |
Long-term debt and interest |  |  | 7 |  |  |  | — |  |  |  | 32 |  |  |  | — |
Accounts receivable |  |  | 54 |  |  |  | — |  |  |  | 16 |  |  |  | — |
IRC Section 163(j) interest limitation |  |  | 682 |  |  |  | — |  |  |  | 582 |  |  |  | — |
Accrued vacation |  |  | 18 |  |  |  | — |  |  |  | 19 |  |  |  | — |
Accrued bonus |  |  | 31 |  |  |  | — |  |  |  | 27 |  |  |  | — |
Other comprehensive income |  |  | 2 |  |  |  | — |  |  |  | 4 |  |  |  | — |
Right-of-use assets |  |  | — |  |  |  | 128 |  |  |  | — |  |  |  | 165 |
Right-of-use liability |  |  | 136 |  |  |  | — |  |  |  | 173 |  |  |  | — |
Stock-based compensation |  |  | 2 |  |  |  | — |  |  |  | 4 |  |  |  | — |
Deferred compensation |  |  | 41 |  |  |  | — |  |  |  | 38 |  |  |  | — |
IRC Section 481(a) adjustments |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 57 |
Other |  |  | 23 |  |  |  | — |  |  |  | 19 |  |  |  | — |
Total |  |  | 1,645 |  |  |  | 645 |  |  |  | 1,463 |  |  |  | 820 |
Valuation allowance |  |  | (1,218 | ) |  |  | — |  |  |  | (983 | ) |  |  | — |
Total deferred income taxes |  | $ | 427 |  |  | $ | 645 |  |  | $ | 480 |  |  | $ | 820 |
The Company believes that the net deferred tax assets will ultimately be realized, except as noted below. Its conclusion is based on its estimate of future taxable income and the expected timing of temporary difference reversal s. The Company has gross federal net operating loss carryforwards of approximately $176 million and state net operating loss carryforwards of approximately $10.8 billion, which expire from 2025 through 2044. The Company’s tax affected federal and state net operating loss and credit carryforwards are approximately $37 million and $578 million, respectively. A valuation allowance of approximately $1.2 billion has been recognized for federal and state net operating loss carryforwards, state credit carryforwards and federal and state deferred tax assets that the Company does not expect to be able to realize. With respect to the deferred tax liability pertaining to intangibles, as included above, goodwi ll purchased in connection with certain of the Company’s business acquisitions is amortizable for income tax reporting purposes. However, for financial reporting purposes, there is no corresponding amortization allowed with respect to such purchased goodwill. The valuation allowance for federal and state jurisdictions where the Company concluded that the associated deferred tax assets would not be realized increased by $144 million and $91 million, respectively, for the year ended December 31, 2024, and increased by $88 million and $66 million, respectively, for the year ended December 31, 2023. The total amount of unrecognized benefit that would affect the effective tax rate, if recognized, was $42 million as of December 31, 2024. A total of $5 million of interest and penalties is included in the amount of the liability for uncertain tax positions at December 31, 2024. It is the Company’s policy to recognize interest and penalties related to unrecognized benefits in its consolidated statements of (loss) income as income tax expense. It is possible the amount of unrecognized tax benefit could change in the next 12 months as a result of a lapse of the statute of limitations and settlements with taxing authorities; however, the Company does not anticipate the change will have a material impact on the Company’s consolidated results of operations or consolidated financial position. The following is a tabular reconciliation of the total amount of unrecognized tax benefit for the years ended December 31, 2024, 2023 and 2022 (in millions):
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Unrecognized tax benefit, beginning of year |  | $ | 58 |  |  | $ | 50 |  |  | $ | 42 |
Gross increases — tax positions in current period |  |  | 3 |  |  |  | 9 |  |  |  | 8 |
Reductions — tax positions in prior period |  |  | — |  |  |  | (1 | ) |  |  | — |
Settlements |  |  | (9 | ) |  |  | — |  |  |  | — |
Unrecognized tax benefit, end of year |  | $ | 52 |  |  | $ | 58 |  |  | $ | 50 |
The Company’s income tax return for the 2018 tax year has been effectively settled with the Internal Revenue Service in 2024. The settlement was not material to the Company’s consolidated results of operations or consolidated financial position. The Company’s income tax return for the 2021 and 2022 tax years are under examination by the Internal Revenue Service. The Company believes the result of this examination will not be material to its consolidated results of operations or consolidated financial position. Cash paid for income taxes, net of refunds received, was $171 million, $91 million and $6 million during the years ended December 31, 2024, 2023 and 2022, respectively.

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