Income Taxes

The components of the Company's (loss) income before income taxes are as follows:



	Year Ended December 31,
	2019			2018			2017
	(amounts in thousands)
United States	$	(24,783	)	$	(18,619	)	$	3,826
Foreign	572			424			475
(Loss) income before income taxes	$	(24,211	)	$	(18,195	)	$	4,301

The components of the Company’s income tax expense (benefit) are as follows:



	Year Ended December 31,
	2019			2018			2017
	(amounts in thousands)
Current:
Federal	$	(35	)	$	43		$	(555	)
State	499			620			(273		)
Foreign	109			269			139
Total	573			932			(689		)
Deferred:
Federal	17,406			(2,137		)	(23,245		)
State	13,799			(1,277		)	(10,684		)
Foreign	(46		)	4			117
Total	31,159			(3,410		)	(33,812		)
Income tax expense (benefit)	$	31,732		$	(2,478	)	$	(34,501	)

Deferred income taxes reflect the Company's net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities are as follows:



	December 31,
	2019			2018
	(amounts in thousands)
Deferred Tax Assets:
Accrued other and prepaid expenses	$	1,557		$	2,734
Allowance for doubtful accounts	624			607
Intangible assets (a)	28,889			11,300
Net operating loss carryforwards	19,796			15,717
Accrued professional liability claims	1,794			1,952
Accrued workers’ compensation claims	2,839			2,729
Share-based compensation	381			646
Operating lease liabilities	6,108			—
Credit carryforwards	188			188
Other	128			542
Gross deferred tax assets	62,304			36,415
Valuation allowance	(37,345		)	(1,189		)
	24,959			35,226
Deferred Tax Liabilities:
Depreciation	(224		)	(52		)
Indefinite intangibles (a)	(27,609		)	(11,136		)
Operating lease right-of-use assets	(4,312		)	—
Tax on unrepatriated earnings	(337		)	(383		)
	(32,482		)	(11,571		)
Net deferred taxes	$	(7,523	)	$	23,655

________________

(a) As a result of the valuation allowance recorded in 2019, the Company changed its presentation of deferred tax assets and liabilities related to indefinite-lived intangibles to conform with the methodology used in calculating the valuation allowance.

As of June 30, 2019, the Company assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit realization of its existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended June 30, 2019. On the basis of all evidence evaluated as of June 30, 2019, the Company recorded an additional valuation allowance of $36.0 million ($35.8 million of which was recorded as income tax expense and $0.2 million as a reduction of other comprehensive income) to reduce the portion of the deferred tax asset that is not more likely than not to be realized. As of December 31, 2019, the Company maintained a valuation allowance of $37.3 million.

For the year ended December 31, 2018, the Company maintained a valuation allowance of $1.2 million on a portion of state net operating losses not more likely than not realizable.

For the year ended December 31, 2017, predominantly on the basis of a reassessment of the amount of its deferred tax assets that are more likely than not to be realized, the Company reduced its valuation allowance by $45.4 million (comprised of $15.7 million related to U.S. net operating losses, $4.4 million related to state net operating losses, and $25.3 million related to other net deferred tax assets). The Company maintained a valuation allowance on a portion of state net operating losses not more likely than not realizable.

On December 22, 2017, the 2017 Tax Act was signed into legislation which, among other changes, reduced the corporate federal income tax rate from 35% to 21% effective for the Company's year ended December 31, 2018. The Company recorded income tax expense of $8.0 million, primarily due to a re-measurement of its deferred tax assets and liabilities in the fourth

quarter of 2017. The impact of the Global Intangible Low-Taxed Income provision, the transition tax on the deemed repatriation of deferred foreign income, and any future tax impact associated with basis differences on foreign subsidiaries were immaterial.

As of December 31, 2019, the Company had approximately $80.7 million and $132.8 million of federal and state net operating loss carryforwards, respectively, and an immaterial amount of foreign net operating loss carryforwards. The net operating losses expire as follows: federal between 2032 and 2039, state between 2020 and 2039, and foreign between 2020 and 2024. As a result of the 2017 Tax Act, federal and certain state net operating losses generated in 2019 and 2018 carry forward indefinitely.

The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense (benefit) is as follows:



	Year Ended December 31,
	2019			2018			2017
	(amounts in thousands)
Tax at U.S. statutory rate	$	(5,084	)	$	(3,821	)	$	1,506
State taxes, net of federal benefit	(554		)	(543		)	(1,374		)
Noncontrolling interest	(372		)	(252		)	(455		)
Non-deductible items (a)	759			625			2,676
Foreign tax (benefit) expense	(58		)	180			175
Valuation allowances	36,224			—			(45,354		)
Uncertain tax positions	400			1,629			1,145
Return to provision	—			(458		)	—
Federal rate change	—			—			8,011
Other	417			162			(831		)
Income tax expense (benefit)	$	31,732		$	(2,478	)	$	(34,501	)

________________

(a) Includes non-deductible meals and incidentals, miscellaneous non-deductible items, and beginning in 2018, non-deductible stock-based compensation.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:



	Year Ended December 31,
	2019			2018		2017
	(amounts in thousands)
Balance at January 1	$	5,412		$	3,807	$	5,180
Additions based on tax positions related to the current year	1,283			1,401		1,145
(Reductions) additions based on tax positions related to prior years	(498		)	204		—
Reductions based on settlements of tax positions related to prior years	—			—		(439		)
Reductions as a result of a lapse of applicable statute of limitations	(405		)	—		—
2017 Tax Act federal tax rate change	—			—		(1,859		)
Other	—			—		(220		)
Balance at December 31	$	5,792		$	5,412	$	3,807

Short-term unrecognized tax benefits are included in other current liabilities in the consolidated balance sheets and were $0.1 million as of December 31, 2018 and 2017. There were no short-term unrecognized tax benefits as of December 31, 2019. Long-term unrecognized tax benefits are included in other long-term liabilities in the consolidated balance sheets and were $0.7 million, $0.6 million, and $0.5 million as of December 31, 2019, 2018, and 2017, respectively. See Note 7 - Balance Sheet Details. As of December 31, 2019, 2018, and 2017, the Company had unrecognized tax benefits, which would affect the effective tax rate if recognized, of $6.0 million, $5.6 million, and $4.0 million, respectively.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. During the years ended December 31, 2019 and 2018, interest and penalties were immaterial. During the year ended December 31, 2017, the Company recognized a decrease in interest and penalties of $0.2 million, related to statute expirations. The Company has accrued $0.3 million for the payment of interest and penalties at December 31, 2019 and 2018, and $0.2 million at December 31, 2017.

Tax years 2012 through 2018 remain open to examination by certain taxing jurisdictions to which the Company is subject to tax.