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Note 15 - Income Taxes
 3 Months Ended
Mar. 31, 2020
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
15.
Income Taxes
 
In response to the COVID-
19
pandemic, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law in
March 2020. 
The CARES Act includes several provisions that provide economic relief for individuals and businesses. The Company will continue to evaluate the impact of the CARES Act, but does
not
expect it to result in a material impact. 
 
The provision for income taxes was
$1.6
million for the
three
-month period ended
March 31, 2020,
based on an effective tax rate of
21.4%.
 The provision for income taxes was
$1.5
million for the
three
-month period ended
March 31, 2019,
based on effective tax rates of
24.6%.
The net decrease in the effective tax rate for the
three
-month period ended
March 31, 2020,
as compared to the same period in
2019,
was primarily due to the
$1.9
million tax expense on the impairment of non-tax deductible goodwill offset by the
$2.0
million tax benefit on the decrease in the fair value of the contingent consideration, both recognized in the
first
quarter of
2020.
 In addition, the Company recorded a
$0.4
million tax windfall for the
three
-month period ended
March 31, 2020
related to exercises of employee equity awards. The Co
mpany recognized a net deferred tax liability of
$11.2
million primarily due to intangible assets and inventory step up offset by net operating losses and Research & Development tax credits associated with the Arthrosurface acquisition
discussed in Note
3
.
 
The Company files income tax returns in the United States on a federal basis, in certain U.S. states, and in Italy. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate.
 
In connection with the preparation of the financial statements, the Company assesses whether it was more likely than
not
that it would be able to utilize, in future periods, the net deferred tax assets associated with its net operating loss carry-forward. The Company has concluded that the positive evidence outweighs the negative evidence and, thus, the deferred tax assets
not
otherwise subject to a valuation allowance are realizable on a “more likely than
not”
basis. As such, the Company did
not
record a valuation allowance as of
March 31, 2020
or
December 31, 2019.