Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Significant components of the Company’s net deferred tax assets (liabilities) are as follows (in thousands):

	Years Ended December 31,
	2024		2023
Deferred tax assets:
Patient accounts receivable, net	$	19,430	$	20,404
Accrued liabilities	5,253		5,880
Deferred compensation	17,751		17,976
Self-insurance reserves	31,252		32,791
Financing costs	16,082		19,345
Lease liability	278,369		284,826
Other	4,697		6,177
Federal tax credits	89		113
Federal net operating loss carryforward	2,369		7,500
State net operating loss carryforward	8,560		8,688
Total deferred tax assets	383,852		403,700
Deferred tax liabilities:
Prepaid expenses	(7,971)		(5,300)
Right of use assets	(278,369)		(284,826)
Depreciation and amortization	(61,423)		(64,696)
Partnership basis differences	(13,897)		(3,461)
Change in value of derivatives	(3,440)		(6,558)
Total deferred tax liabilities	(365,100)		(364,841)
Valuation allowance for deferred tax assets	(6,431)		(6,368)
Net deferred tax assets	$	12,321	$	32,491

At December 31, 2024 and 2023, the Company had federal net operating loss carryforwards for income tax purposes totaling $11.3 million and $14.8 million, respectively. Federal net operating losses totaling $7.1 million expire between 2034 and 2037. Federal net operating losses totaling $4.2 million generated in years beginning after December 31, 2017 may be carried forward indefinitely. Certain amounts of the federal net operating losses are subject to limitations on use. The Company expects $4.9 million of the carryforwards to expire unused and has recorded a valuation allowance for those amounts. At December 31, 2024 and 2023, the Company had no capital loss carryforwards. At December 31, 2024 and 2023, the Company had state net operating loss carryforwards of $210.1 million and $212.7 million, respectively. State net operating losses of $110.7 million expire between 2037 and 2043, and state net operating losses of $99.4 million may be carried forward indefinitely.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the positive and negative evidence from all sources including net operating loss carryback opportunities, historical operating results, prudent and feasible tax planning strategies and projections of future taxable income. Based on the analysis of positive and negative evidence, the Company recorded a valuation allowance of $6.4 million and $6.4 million at December 31, 2024 and 2023, respectively, for the uncertainty regarding the ability to utilize certain deferred tax assets.

The Company recognized no federal tax benefits for the years ended December 31, 2024 and 2023, respectively, and state tax expense of $0.1 million and $0.4 million for the years ended December 31, 2024 and 2023, respectively, associated with the change in valuation allowances.

Significant components of the provision for income taxes are as follows (in thousands):

	Years Ended December 31,
	2024		2023		2022
Current:
Federal	$	30,560	$	11,190	$	(3,209)
State	9,511		6,693		3,201
Total current	40,071		17,883		(8)
Deferred:
Federal	21,965		5,814		43,394
State	1,316		(1,060)		2,721
Total deferred	23,281		4,754		46,115
Total provision	$	63,352	$	22,637	$	46,107

The Company’s consolidated effective tax rate from continuing operations differed from the amounts computed using the federal statutory rate as set forth below (amounts in thousands):

	Years Ended December 31,
	2024				2023				2022
	Amount		Percent		Amount		Percent		Amount		Percent
Tax at federal statutory rate	$	76,243	21.0	%	$	31,839	21.0	%	$	65,410	21.0	%
State taxes, net of federal benefits	9,671		2.7		3,832		2.5		5,806		1.9
Permanent differences	1,534		0.4		2,116		1.4		2,127		0.7
Equity-based and employee compensation limitations	3,545		1.0		—		—		—		—
Noncontrolling Interests	(18,120)		(5.0)		(15,253)		(10.1)		(13,913)		(4.5)
Change in valuation allowance	62		—		386		0.3		(13,197)		(4.2)
Change in unrecognized tax benefit	(9,210)		(2.5)		—		—		—		—
Other, net	(373)		(0.1)		(283)		(0.2)		(126)		(0.1)
	$	63,352	17.5	%	$	22,637	14.9	%	$	46,107	14.8	%

The Company follows the provisions of ASC 740, Income Taxes, regarding unrecognized tax benefits. At December 31, 2023, the Company had a liability for unrecognized tax benefits of $12.1 million and accrued interest expense of $1.5 million. During the year ended December 31, 2024, the Company released its liability for unrecognized tax benefits, as well as the accrued interest expense related to the unrecognized tax benefits, due to the expiration of its statute of limitations. At December 31, 2024, the Company had no accrual for unrecognized tax benefits.

As of December 31, 2024, the Company has no ongoing or pending federal examinations for prior years. The Company has outstanding federal income tax refund claims for the 2016 and 2018 tax years. Since the total amount of the refund claims is equal to $10.0 million, which was classified within other current assets on the Company's consolidated balance sheet at December 31, 2024, the refund claims are subject to ongoing Joint Committee on Taxation reviews. As of December 31, 2024, the Company has accrued $0.8 million of interest income related to the refund claim, which has been included as part of the Company's income tax expense. The Company's tax years from 2021 through 2023 remain open to examination by federal and state taxing authorities.