v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes . Income Taxes

Income (loss) from continuing operations before income taxes consists of the following (in thousands):

 

 

For the Years Ended December 31,

 

 

2025

 

 

2024

 

 

2023

 

U.S. operations

 

$

137,723

 

 

$

(95,555

)

 

$

(213,971

)

Foreign operations

 

 

218

 

 

 

237

 

 

 

197

 

Income (loss) before income taxes

 

$

137,941

 

 

$

(95,318

)

 

$

(213,774

)

 

Income tax expense (benefit) attributable to income (loss) from continuing operations before income taxes is summarized as follows (in thousands):

 

 

For the Years Ended December 31,

 

 

2025

 

 

2024

 

 

2023

 

Current provision:

 

 

 

 

 

 

 

 

 

Federal

 

$

19,538

 

 

$

1,296

 

 

$

12,549

 

State

 

 

8,024

 

 

 

1,998

 

 

 

4,175

 

Foreign

 

 

35

 

 

 

50

 

 

 

39

 

Total current provision

 

 

27,597

 

 

 

3,344

 

 

 

16,763

 

Deferred provision:

 

 

 

 

 

 

 

 

 

Federal

 

 

1,524

 

 

 

(25,004

)

 

 

(40,106

)

State

 

 

4,024

 

 

 

(4,727

)

 

 

(8,165

)

Total deferred provision

 

 

5,548

 

 

 

(29,731

)

 

 

(48,271

)

Total income tax provision:

 

 

 

 

 

 

 

 

 

Federal

 

 

21,062

 

 

 

(23,708

)

 

 

(27,557

)

State

 

 

12,048

 

 

 

(2,729

)

 

 

(3,990

)

Foreign

 

 

35

 

 

 

50

 

 

 

39

 

Income tax expense (benefit)

 

$

33,145

 

 

$

(26,387

)

 

$

(31,508

)

 

A reconciliation of the U.S. federal income tax rate of 21.0% to income tax expense (benefit) expressed as a percent of pretax income (loss) is as follows (in thousands):

 

 

 

For the Years Ended December 31,

 

 

2025

 

 

2024

 

 

2023

 

 

Amount

 

Rate

 

 

Amount

 

Rate

 

 

Amount

 

Rate

 

U.S. federal statutory tax rate

 

$

28,968

 

 

21.0

%

 

$

(20,017

)

 

21.0

%

 

$

(44,893

)

 

21.0

%

State and local income taxes, net of federal income
   tax effect (1)

 

 

9,518

 

 

6.9

%

 

 

(719

)

 

0.8

%

 

 

(5,029

)

 

2.4

%

Foreign tax effects

 

 

(11

)

 

0.0

%

 

 

15

 

 

0.0

%

 

 

12

 

 

0.0

%

Tax credits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employment tax credits

 

 

(1,752

)

 

(1.3

)%

 

 

(2,609

)

 

2.7

%

 

 

(2,963

)

 

1.4

%

Other tax credits

 

 

(200

)

 

(0.1

)%

 

 

(300

)

 

0.3

%

 

 

(350

)

 

0.2

%

Nontaxable or nondeductible items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal claims

 

 

130

 

 

0.1

%

 

 

(12,915

)

 

13.5

%

 

 

24,150

 

 

(11.3

)%

Share based compensation

 

 

(12,663

)

 

(9.2

)%

 

 

4,380

 

 

(4.6

)%

 

 

(2,013

)

 

0.9

%

Executive compensation

 

 

8,187

 

 

5.9

%

 

 

1,017

 

 

(1.1

)%

 

 

—

 

 

—

 

Acquisition impacts

 

 

—

 

 

—

 

 

 

1,819

 

 

(1.9

)%

 

 

—

 

 

—

 

Other

 

 

2,290

 

 

1.7

%

 

 

2,950

 

 

(3.1

)%

 

 

(1,436

)

 

0.6

%

Changes in unrecognized tax benefits

 

 

(1,322

)

 

(1.0

)%

 

 

(8

)

 

0.1

%

 

 

1,014

 

 

(0.5

)%

Total

 

$

33,145

 

 

24.0

%

 

$

(26,387

)

 

27.7

%

 

$

(31,508

)

 

14.7

%

 

(1) State/local taxes in California, New York, New York City, Virginia, New Jersey and Florida made up the majority (greater than 50%) of the tax effect in this category.

 

On December 27, 2020, the Consolidated Appropriations Act was signed into law and extended the jobs credit provisions through 2025. Accordingly, jobs credits generated during the year have been recognized in the provision for income taxes for all years presented.

 

Net cash paid for income taxes consisted of the following (in thousands):

 

 

For the Years Ended December 31,

 

 

2025

 

 

2024

 

 

2023

 

Federal

 

$

18,431

 

 

$

19,347

 

 

$

27,297

 

Aggregated state and local jurisdictions

 

 

8,449

 

 

 

4,156

 

 

 

10,202

 

Disaggregated state and local jurisdictions:

 

 

 

 

 

 

 

 

 

Virginia

 

*

 

 

 

1,410

 

 

 

—

 

Foreign

 

90

 

 

 

40

 

 

 

—

 

Net cash paid for income taxes

 

$

26,970

 

 

$

24,953

 

 

$

37,499

 

* The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below (in thousands):

 

 

December 31, 2025

 

 

December 31, 2024

 

Deferred tax assets:

 

 

 

 

 

 

Accrued expenses

 

$

53,538

 

 

$

44,957

 

Allowance for credit losses and contractual allowances

 

 

36,980

 

 

 

22,546

 

Net operating losses

 

 

13,389

 

 

 

18,796

 

Share-based compensation

 

 

22,361

 

 

 

15,799

 

IRC §163(j) interest

 

 

67,438

 

 

 

96,961

 

Operating lease liability

 

 

65,906

 

 

 

62,587

 

Interest rate swaps

 

 

93

 

 

 

—

 

Other

 

 

29,870

 

 

 

21,325

 

Deferred tax assets

 

 

289,575

 

 

 

282,971

 

Valuation allowances

 

 

(7,128

)

 

 

(8,968

)

Deferred tax assets, net

 

 

282,447

 

 

 

274,003

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

Operating lease right-of-use asset

 

 

(74,027

)

 

 

(60,587

)

Property and equipment

 

 

(11,789

)

 

 

(6,575

)

Goodwill and other intangible assets

 

 

(198,377

)

 

 

(190,272

)

Insurance recovery

 

 

(4,432

)

 

 

(8,677

)

Interest rate swaps

 

 

—

 

 

 

(2,604

)

Deferred tax liabilities

 

 

(288,625

)

 

 

(268,715

)

Deferred income taxes, net

 

$

(6,178

)

 

$

5,288

 

 

As of December 31, 2025, the Company has federal net operating loss (“NOL”) carryforwards of $11.3 million ($2.4 million deferred tax asset) that resulted from stock acquisitions the Company completed from 2013 through 2024. These NOLs are subject to limitations under Internal Revenue Code (“IRC”) §382. However, the Company expects that it will more-likely-than-not be able to use the recorded amount which takes into account the limitations of the carryforwards. The deferred tax asset for state NOL carryforwards is $4.3 million, net of the federal tax impact and valuation allowances of $7.1 million. The state NOLs have carryforward periods ranging from 1 to 20 years depending on the taxing jurisdiction.

The Company is subject to the business interest expense limitation under IRC §163(j), which generally caps deductible interest at 30% of adjusted taxable income. The limitation in any given year may be carried forward indefinitely and deducted as interest expense in future periods. The One Big Beautiful Bill Act, enacted July 4, 2025, introduced modifications to the §163(j) framework that may affect the Company’s future utilization of interest expense carryforwards. As of the reporting date, the Company has federal interest expense carryforwards of $259.6 million, resulting in a deferred tax asset of $54.5 million, and state deferred tax assets of $12.9 million available for utilization in future years.

A valuation allowance for deferred tax assets was provided as of December 31, 2025 and 2024 related to state income tax NOL carryforwards. The realization of deferred tax assets is dependent upon generating future taxable income when temporary differences

become deductible. Based upon the historical and projected levels of taxable income, we believe it is more-likely-than-not that we will realize the benefits of the deductible differences after consideration of the valuation allowance.

A reconciliation of the beginning and ending amount of total unrecognized tax benefits is as follows (in thousands):

 

 

December 31, 2025

 

 

December 31, 2024

 

Balance at beginning of year

 

$

1,493

 

 

$

1,502

 

Decrease related to prior year tax positions

 

 

—

 

 

 

(9

)

Payments

 

 

(146

)

 

 

—

 

Lapse of statute of limitations

 

 

(1,322

)

 

 

—

 

Balance at end of year

 

$

25

 

 

$

1,493

 

 

The potential benefits included in the balance of total unrecognized tax benefits at December 31, 2025 and 2024 are immaterial, which if recognized, would have an immaterial effect on the effective tax rate in each respective year. Unrecognized tax benefits that reduce a NOL, similar tax loss or tax credit carryforward are presented as a reduction to deferred income taxes.

We file numerous consolidated and separate income tax returns in the U.S. federal and various state and foreign jurisdictions. With few exceptions, we are no longer subject to income tax examinations by the taxing authorities for years prior to 2020. We believe that we have appropriate support for the income tax positions taken and to be taken on our income tax returns and that our accruals for income tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of the tax laws as applied to the facts of each matter. Total accrued interest and penalties as of December 31, 2025 and 2024 are not material and are included in accrued expenses on the consolidated balance sheets.