Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recorded income tax expense of $135 and $278 for the three and nine months ended September 30, 2023, respectively, as compared to income tax benefit of $24 and income tax expense of $124 for the three and nine months ended September 30, 2022, respectively. The increase of $159, in income tax expense for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, is primarily related to the corresponding increase in the valuation allowance for TOI. The Company's effective tax rate decreased to (0.43)% for the nine months ended September 30, 2023, from 1.10% for the nine months ended September 30, 2022.

The Company's effective tax rate for the nine months ended September 30, 2023, was different than the U.S. federal statutory tax rate of 21.00%, primarily due to the increased valuation allowance, partially offset by the tax effect of the change in fair market value of the warrant, earn out, and derivative liabilities, as well as the Section 162(m) limitation on compensation for covered employees and Section 163(l) limitation on interest expense related to the convertible note, which are non-deductible for federal income tax purposes.