Income Taxes

12 Months Ended

Dec. 31, 2025

Income Taxes

Income Taxes

14.    Income Taxes

The Company’s loss before income taxes is substantially all within the United States. The following table presents a reconciliation of the income tax expense computed at the statutory federal rate and the Company's income tax expense for the year ended December 31, 2025 in accordance with the new guidance in ASU No. 2023-09:

	December 31,
	2025
	(in thousands, except percentages)
Tax benefit at the U.S. federal statutory rate	$	(56,299)	21.00	%
State and local income taxes, net of federal benefit (1)		(8,053)	3.00	%
Foreign tax effects		334	(0.12)	%
Tax credits:
Research and development credits		(2,020)	0.75	%
Changes in valuation allowance		101,513	(37.87)	%
Nontaxable or nondeductible Items:
Stock-based compensation		(133,410)	49.76	%
Nondeductible officers' compensation		33,202	(12.38)	%
Meals & entertainment		3,646	(1.36)	%
Other		961	(0.36)	%
Other adjustments:
Other		196	(0.07)	%
Benefit for income taxes	$	(59,929)	22.35	%

(1) State taxes in California, Illinois, New York, and New Jersey made up the majority (greater than 50%) of the tax effect in this category.

The following table presents a reconciliation of the income tax expense computed at the statutory federal rate and the Company's income tax expense for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU No. 2023-09:

	December 31,
	2024				2023
	(in thousands, except percentages)
U.S. federal taxes (benefit) at statutory rate	$	(39,844)	21.00	%	$	(91,251)	21.00	%
State and local income taxes, net of federal benefit		(21,613)	11.39	%		(13,492)	3.10	%
Research and development credits		(17,621)	9.29	%		(10,837)	2.49	%
Stock-based compensation		(62,969)	33.19	%		(6,422)	1.48	%
Foreign tax		(25)	0.01	%		(106)	0.02	%
Nondeductible officers' compensation		31,718	(16.72)	%		8,651	(1.99)	%
Acquisition costs		—	—	%		563	(0.13)	%
Nondeductible meals and other		2,870	(1.51)	%		(3,397)	0.79	%
Change in valuation allowance		108,179	(57.02)	%		116,562	(26.82)	%
Provision for income taxes	$	695	(0.37)	%	$	271	(0.05)	%

During the year ended December 31, 2025, the Company recorded a tax benefit of $59.9 million primarily from a partial release of the valuation allowance in connection with the acquisition of Foresight Diagnostics (See Note 3 Business Combination). The net deferred tax liability from the acquisition provided a source of additional income to support the realizability of the Company’s pre-existing deferred tax assets and as a result, the Company released a portion of its valuation allowance. The federal deferred tax benefit of $51.7 million and state deferred tax benefit of $9.0 million was reduced by foreign withholding of $0.2 million and state tax income tax expense of $0.6 million. During the years ended December 31, 2024, and 2023, the Company recorded total income tax expense of $0.7 million and $0.3 million, respectively, for foreign withholding and state income tax expense.

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes as well as net operating loss and tax credit carryforwards. The components of the net deferred income tax assets are as follows:

	December 31,
	2025		2024
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	504,968	$	395,139
Research and development tax credit carryforwards		93,942		90,759
Capitalized research costs		247,223		173,991
Reserves and accruals		35,180		23,928
Lease liabilities		33,124		26,649
Stock-based compensation		56,734		47,864
Intangible assets		—		8,846
Other		6,498		5,583
Total deferred tax assets before valuation allowance		977,669		772,759
Less: valuation allowance		(867,976)		(747,090)
Total deferred tax assets after valuation allowance		109,693		25,669
Deferred tax liabilities:
Fixed assets		(11,464)		(4,164)
Right-of-use lease assets		(26,820)		(21,505)
Developed technology		(72,110)		—
Total deferred tax liabilities		(110,394)		(25,669)
Net deferred tax liabilities	$	(701)	$	—

The Company established a valuation allowance against its deferred tax assets in 2025 and 2024 due to the uncertainty surrounding realization of these assets. The valuation allowance increased to $868.0 million as of 2025 from $747.1 million as of 2024 due to current year losses and credits claimed.

As of December 31, 2025, the Company had federal, state, and foreign net operating loss (“NOLs”) carryforwards of approximately $2.0 billion, $1.4 billion, and $4.5 million, respectively, which begin to expire in 2030, 2026, and 2027, respectively, if not utilized. Approximately $1.7 billion of federal net operating loss included above can be carried forward indefinitely.

The Company also had federal research and development credit carryforwards of approximately $83.6 million, which begin to expire in 2027, and state research and development credit carryforwards of approximately $48.9 million, which begin to expire in 2031. Realization is dependent on generating sufficient taxable income prior to expiration of the loss and credit carryforwards.

Federal, state and foreign tax laws impose substantial restrictions on the utilization of NOLs and credit carryforwards in the event of an "ownership change" for tax purpose, as defined in Section 382 of the Internal Revenue Code. Accordingly, the Company's ability to utilize these carryforwards may be limited as the result of such ownership change. Such a limitation could result in limitation in the use of the NOLs in future years and possibly a reduction of the NOLs available.

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

	December 31,
	2025		2024		2023
	(in thousands)
Balance at beginning of year	$	34,940	$	30,912	$	23,844
Additions based on tax positions related to the current year		5,862		13,648		7,034
Additions (reductions) for tax positions of prior years		(10,006)		(9,620)		34
Balance at end of year	$	30,796	$	34,940	$	30,912

During the years ended December 31, 2025, 2024, and 2023, the amount of unrecognized tax benefits (decreased) increased by ($4.1) million, $4.0 million, and $7.1 million, respectively, due to additional research and development credits generated during the year offset by adjustments to prior periods resulting from the completion of R&D studies. As of December 31, 2025, 2024, and 2023, the total amount of unrecognized tax benefits was $30.8 million, $34.9 million, and $30.9 million, respectively.

The Company is subject to U.S. federal, state, and foreign income taxes. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations, and require significant judgment to apply. The Company is subject to U.S. federal, state and local tax examinations by tax authorities for all prior tax years since incorporation.

The Company recognizes any interest and/or penalties related to income tax matters as a component of income tax expense. As of December 31, 2025, there were no material accrued interest and penalties related to uncertain tax positions.

In 2021, the Organization for Economic Cooperation and Development (the “OECD”) announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax. These rules broadly call for the taxation of large multinational corporations at a minimum rate of 15%. We continue to evaluate the enacted and pending legislation to implement these rules in the non-U.S. tax jurisdictions we operate in but do not currently believe the impact to be material.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act ("OB3"), which includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act (“TCJA”), which were set to expire. The OB3 permanently

eliminates the requirement to capitalize and amortize U.S.-based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred. The Company expects to make a Sec. 59( e) election and capitalize and amortize the current year domestic R&D expense over 10 years. The Company continues to amortize previously capitalized US Sec. 174 expenses over the remaining amortization periods.