Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

The components of the pretax income (loss) are presented in the following table (in thousands):

	Year Ended December 31,
	2022			2021			2020
U.S. Domestic	$	(146,627	)	$	(127,943	)	$	(78,849	)
Foreign		(5,382	)		(16,219	)		—
Net loss before taxes	$	(152,009	)	$	(144,162	)	$	(78,849	)

The components of the provision for income taxes are presented in the following table (in thousands):

	Year Ended December 31,
	2022			2021			2020
Current income tax provision:
Federal	$	(764	)	$	123		$	—
State		(140	)		166			100
Foreign		301			66			35
Total current		(603	)		355			135
Deferred income tax provision:
Federal		583			(159	)		(2	)
State		160			(32	)		12
Total deferred		743			(191	)		10
Total income tax provision	$	140		$	164		$	145

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax loss as a result of the following differences:

	December 31,
	2022			2021			2020
Federal statutory rate		21.00	%		21.00	%		21.00	%
Adjustments for tax effects of:
State taxes, net		0.03			(0.07	)		(0.11	)
Stock-based compensation		(1.79	)		(0.48	)		(0.93	)
Rate differential		0.43			0.43			0.00
Foreign taxes		(0.05	)		(0.05	)		(0.04	)
Other permanent adjustments		0.21			0.08			(1.70	)
Federal uncertain tax positions		0.03			(0.08	)		0.00
Expiration of tax attribute		(1.60	)		0.00			0.00
Other		0.59			(0.13	)		(0.15	)
Valuation allowance		(18.94	)		(20.81	)		(18.25	)
Effective income tax rate		(0.09	)%		(0.11	)%		(0.18	)%

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows (in thousands):

	December 31,
	2022			2021
Deferred tax assets:
Net operating losses	$	146,464		$	131,734
Interest		12,979			11,095
Capitalized research and development expenses		12,062			—
Inventory		11,298			8,784
Lease liability		7,975			6,216
Stock-based compensation		5,786			4,318
Accruals and reserves		4,292			7,145
Legal settlement		2,302			1,998
Income tax credit carryforwards		1,566			1,574
Total deferred tax assets		204,724			172,864
Valuation allowance		(162,314	)		(127,209	)
Total deferred tax assets, net of valuation allowance		42,410			45,655
Deferred tax liabilities:
Property and equipment		(19,610	)		(18,404	)
Goodwill and intangibles		(15,518	)		(18,439	)
Right-of-use assets		(7,250	)		(6,256	)
Total deferred tax liabilities		(42,378	)		(43,099	)
Net deferred tax assets	$	32		$	2,556

The realization of deferred tax assets is dependent on the Company’s ability to generate sufficient taxable income in future years in the associated jurisdiction to which the deferred tax assets relate. As of December 31, 2022, a valuation allowance of $162.3 million has been established against the deferred tax assets, as the Company has determined that it is currently not likely that these assets will be realized. During the years ended December 31, 2022, 2021 and 2020, the valuation allowance increased by $35.1 million, $39.7 million and $14.4 million, respectively.

In determining the need for a valuation allowance, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based on the review of all positive and negative evidence, including a three-year cumulative pretax loss, the Company determined that a full valuation allowance should be recorded against its deferred tax assets, with the exception of the Company’s Texas Temporary Credit for Business Loss Carryforwards.

The following table summarizes the changes to unrecognized tax benefits (in thousands):

	Year ended December 31,
	2022			2021		2020
Unrecognized tax benefit at the beginning of the year	$	15,165		$	2,452	$	2,452
Increases in tax positions for current year relating to    acquisitions		—			12,713		—
Decreases in tax positions for prior years		(8,929	)		—		—
Increases in tax positions for current year relating to ongoing operations		173			—		—
Decreases in tax positions as a result of a lapse of statute of limitations		(330	)		—		—
Unrecognized tax benefits at the end of the year	$	6,079		$	15,165	$	2,452

At December 31, 2022, 2021 and 2020, $5.6 million, $14.5 million and $2.0 million, respectively, of the Company’s total unrecognized tax benefits, if recognized, would impact the effective income tax rate.

In accordance with the disclosure requirements as described in ASC Topic 740, Income Taxes, the Company classifies uncertain tax positions as non-current income tax liabilities unless they are expected to be paid within one

year. The Company recognizes interest and penalties related to income tax matters as a component of the income tax provision. As of December 31, 2022 and 2021, there were $0.04 million and $0.2 million in accrued interest and penalties, respectively. There were no accrued interest and penalties as of December 31, 2020.

The Company and its subsidiaries are subject to federal income tax as well as income tax of multiple state and foreign jurisdictions. With few exceptions, the Company is no longer subject to income tax examination by tax authorities in major jurisdictions for years prior to 2017. However, to the extent allowed by law, the taxing authorities may have the right to examine prior periods where net operating losses and tax credits were generated and carried forward and make adjustments up to the amount of the carryforwards. The Company is not currently under examination by the Internal Revenue Service, foreign or state and local tax authorities.

At December 31, 2022, the Company had federal, state, and foreign net operating loss carryforwards of $487.9 million, $375.5 million and $112.9 million, respectively. Federal and state net operating losses generated after December 31, 2017 of $358.7 million and $74.9 million, respectively, can be carried forward indefinitely. The remaining federal and state net operating losses begin expiring at various dates beginning in 2022 through 2042, while foreign net operating losses in France carryforward indefinitely. At December 31, 2022, the Company had state research and development tax credit carryforwards of $3.2 million. The state research and development tax credits do not have an expiration date and may be carried forward indefinitely. Utilization of the net operating loss and tax credit carryforwards may become subject to annual limitations due to ownership change limitations that could occur in the future as provided by Section 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), as well as similar state provisions. These ownership changes may limit the amount of the net operating loss and tax credit carryforwards that can be utilized annually to offset future taxable income if the Company experiences a cumulative change in ownership of more than 50% within a three-year testing period. The Company completed formal study through the year ended December 31, 2018 and determined ownership changes within the meaning of IRC Section 382 had occurred. The Company adjusted federal tax attribute carry forwards and deferred tax assets accordingly. The Company will make adjustments to the fully reserved attributes as further studies are completed.