Income Taxes

3 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 6. Income Taxes

The Company recorded income tax expense of approximately $0.1 million for the three months ended June 30, 2023 compared to an income tax benefit of approximately $0.6 million for the three months ended June 30, 2022. The Company’s effective tax rate decreased to 8.4% for the three months ended June 30, 2023 from 26.1% for the three months ended June 30, 2022. The lower effective tax rate for the three months ended June 30, 2023 primarily attributable to the establishment of a valuation allowance subsequent to June 30, 2022.

During the quarter ended December 31, 2022, the Company determined there was not sufficient positive evidence of future earnings to support a position that it will be able to realize its net deferred tax asset. The Company has significant negative evidence to overcome in the form of cumulative pre-tax losses from continuing operations. Therefore, it will continue to maintain a full valuation allowance on its U.S. federal and state net deferred tax asset. The Company does not have any material unrecognized tax benefits as of June 30, 2023.