Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of the Company’s income tax expense for the years ended December 31, 2021, 2022, and 2023, are as follows:

	For the Year Ended December 31,
	2021		2022		2023
	(in thousands)
Current income tax expense:
Federal	$	99,254	$	42,000	$	76,878
State and local	25,464		13,032		21,866
Total current income tax expense	124,718		55,032		98,744
Deferred income tax expense (benefit)	5,055		7,521		(16,119)
Total income tax expense	$	129,773	$	62,553	$	82,625

Reconciliations of the statutory federal income tax rate to the effective income tax rate are as follows:

	For the Year Ended December 31,
	2021		2022		2023
Federal income tax at statutory rate	21.0	%	21.0	%	21.0	%
State and local income taxes, less federal income tax benefit	4.2		5.0		4.9
Permanent differences	0.5		0.7		0.7
Deferred income taxes — state income tax rate adjustment	(1.2)		0.6		(1.0)
Valuation allowance	0.2		1.7		(0.7)
Limitation on officers’ compensation	0.9		2.0		2.0
Tax credits	(0.4)		(1.6)		(1.1)
Stock-based compensation	(1.7)		(0.8)		(0.7)
Non-controlling interest	(1.9)		(4.2)		(3.7)
Other	(1.0)		(0.4)		0.2
Effective income tax rate	20.6	%	24.0	%	21.6	%

The Company’s deferred tax assets and liabilities are as follows:

	December 31,
	2022		2023
	(in thousands)
Deferred tax assets
Implicit discounts and adjustments	$	13,345	$	15,794
Compensation and benefit-related accruals	57,669		58,176
Professional malpractice liability insurance	21,885		21,447
Federal and state net operating loss and state tax credit carryforwards	32,940		28,766
Interest limitation carryforward	13,554		17,683
Stock awards	5,608		7,150
Equity investments	5,073		4,724
Operating lease liabilities	251,058		254,972
Research and experimental expenditures	9,022		21,049
Other	2,380		2,995
Deferred tax assets	$	412,534	$	432,756
Valuation allowance	(20,444)		(17,427)
Deferred tax assets, net of valuation allowance	$	392,090	$	415,329
Deferred tax liabilities
Investment in unconsolidated affiliates	$	(16,370)	$	(16,788)
Depreciation and amortization	(260,237)		(264,715)
Deferred financing costs	(2,425)		(1,483)
Operating lease right-of-use assets	(233,188)		(236,243)
Derivatives	(28,739)		(14,151)
Other	(3,936)		(4,167)
Deferred tax liabilities	$	(544,895)	$	(537,547)
Deferred tax liabilities, net of deferred tax assets	$	(152,805)	$	(122,218)

The Company’s deferred tax assets and liabilities are included in the consolidated balance sheet captions as follows:

	December 31,
	2022		2023
	(in thousands)
Other assets	$	16,988	$	21,088
Non-current deferred tax liability	(169,793)		(143,306)
	$	(152,805)	$	(122,218)

As of December 31, 2022 and 2023, the Company’s valuation allowance is primarily attributable to the uncertainty regarding the realization of state net operating losses and other net deferred tax assets of loss entities.

For the year ended December 31, 2022, the Company recorded a net valuation allowance increase of $2.7 million. These changes resulted from net changes in state net operating losses. For the year ended December 31, 2023, the Company recorded a net valuation allowance decrease of $3.0 million. The changes in the Company’s valuation allowance were recognized as a result of management’s reassessment of the amount of its deferred tax assets that are more likely than not to be realized.

At December 31, 2022 and 2023, the Company’s net deferred tax liabilities of approximately $152.8 million and $122.2 million, respectively, consist of items which have been recognized for tax reporting purposes, but which will increase tax on returns to be filed in the future. The Company has performed an assessment of positive and negative evidence regarding the realization of the net deferred tax assets. This assessment included a review of legal entities with three years of cumulative losses, estimates of projected future taxable income, the effect on future taxable income resulting from the reversal of existing deferred tax liabilities in future periods, and the impact of tax planning strategies that management would and could implement in order to keep deferred tax assets from expiring unused. Although realization is not assured, based on the Company’s assessment, it has concluded that it is more likely than not that such assets, net of the determined valuation allowance, will be realized.

The total state net operating losses are approximately $628.3 million. State net operating loss carryforwards expire and are subject to valuation allowances as follows:

	State Net Operating Losses		Gross Valuation Allowance
	(in thousands)
2024	$	32,944	$	30,882
2025	48,074		46,793
2026	26,643		24,809
2027	40,677		39,094
Thereafter through 2042	479,960		336,985