Income Tax Expense (Benefit)

9 Months Ended

Sep. 30, 2025

Income Tax Disclosure [Abstract]

Income Tax Expense (Benefit)

Income Tax Expense (Benefit)

The following table provides information regarding the Company's income tax expense (benefit) for the three and nine months ended September 30, 2025 and 2024 (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
	(unaudited)						(unaudited)
Income tax expense (benefit)	$	(12,837)		$	6,446		$	(12,671)		$	12,951
Effective tax rate	22.2		%	14.3		%	26.9		%	18.1		%

Income tax benefit was $12.8 million (22.2% effective tax rate) and $12.7 million (26.9% effective tax rate) for the three and nine months ended September 30, 2025, as compared to an income tax expense of $6.4 million (14.3% effective tax rate) and $13.0 million (18.1% effective tax rate) for the three and nine months ended September 30, 2024. The change in income tax expense (benefit) in both periods was primarily due to decreased pre-tax book income for the three and nine months ended September 30, 2025, and higher forecasted earnings before taxes as compared to the same periods in 2024. The effective income tax rate for the three and nine months ended September 30, 2025 was higher compared to the same period in 2024 primarily due to a benefit for a state tax refund received in 2025 offset by costs related to the Sage Acquisition in July 2025.

The Company's effective income tax rates for the three months ended September 30, 2025 varies from the statutory federal tax rate in the United States (U.S. federal tax rate) of 21% primarily due to state taxes and non-deductible transaction costs, offset by tax benefits related to research and development tax credits. The Company's effective income tax rates for the nine months ended September 30, 2025 varies from the statutory federal tax rate in the United States (U.S. federal tax rate) of 21% primarily due to state taxes and non-deductible transaction costs, offset by tax benefits related to a state tax refund and research and development tax credits. The Company's effective income tax rates for the three and nine months ended September 30, 2024 vary from the statutory U.S. federal tax rate primarily due to state taxes, offset by tax benefits related to research and development tax credits.

The annual forecasted earnings represent the Company's best estimate as of September 30, 2025 and 2024, are subject to change and could have a material impact on the effective tax rate in subsequent periods. ASC 740, Income Taxes (ASC 740), requires the Company to estimate the annual effective income tax rate for the full year and apply it to pre-tax income (loss) for each interim period, taking into account year-to-date amounts and projected results for the full year.

On July 4, 2025, H.R.1, also referred to as the One Big Beautiful Bill Act (OBBBA), was signed into law in the U.S. The OBBBA includes changes to U.S. federal tax law, including extending and modifying certain key Tax Cuts and Jobs Act of 2017 provisions, and provisions allowing accelerated tax deductions for qualified property and research expenditures. The Company is currently planning to continue recovering the unamortized balance of research and development expenditures as of December 31, 2024, over the original five and fifteen year period, and will begin currently expensing research and development in 2025.