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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The reconciliation of income tax expense recorded in the consolidated statement of operations and amounts computed at the statutory federal income tax rate for the years ended December 31, 2024, 2023 and 2022, were as follows:
 December 31,
2024		December 31,
2023		December 31,
2022
 
Amount
Percentage
Amount
Percentage
Amount
Percentage
Loss before tax at statutory federal rate$(26,891)21.0 %$(31,121)21.0 %$(31,353)21.0 %
Valuation allowance25,677 (20.1)29,426 (19.9)82,922 (55.5)
State income tax - net of federal tax benefit(5,771)4.5 (5,173)3.4 (58,286)39.0 
Nondeductible expenses180 (0.1)169 (0.1)334 (0.2)
Equity-based compensation— — — — — — 
Cumulative deferred adjustment and other844 (0.7)(947)0.6 (1,510)1.1 
Provision to return adjustment(2,721)2.1 908 (0.6)231 (0.2)
Nondeductible executive compensation8,703 (6.8)6,716 (4.5)8,001 (5.4)
Net income tax expense (benefit)$21 (0.1)%$(22)0.1 %$339 (0.2)%
The components of deferred income taxes as of December 31, 2024 and 2023, were as follows:
 December 31,
2024		December 31,
2023
Deferred tax assets:
Federal and state net operating loss carryforwards$169,044 $151,052 
Employee benefits56,693 49,650 
Interest deduction limitation11,661 12,019 
Other5,777 3,560 
Gross deferred tax assets243,175 216,281 
Deferred tax liabilities:
Intangibles(1,404)(476)
Depreciation(214)(1,052)
Lease liabilities(2,105)(2,755)
Other(31)(56)
Gross deferred tax liabilities(3,754)(4,339)
Net deferred tax assets239,421 211,942 
Valuation allowance(239,421)(211,942)
Net deferred taxes$— $— 
Valuation allowances are provided when it is considered more likely than not that deferred tax assets will not be realized. The valuation allowances primarily relate to future tax benefits on certain federal and state net operating loss (“NOL”) carryforwards. For the years ended December 31, 2024 and 2023, federal NOL carryforwards were $565,838 and $504,097, respectively. For the years ended December 31, 2024 and 2023, state NOL carryforwards were $543,513 and $498,933, respectively, and $374,188 of the total federal net operating loss carryforwards have an indefinite life while the remaining federal and state net operating loss carryforwards begin to expire in 2033 if not utilized.
Of the total NOL carryforwards, approximately $19,031 of federal and $13,221 of California NOL carryforwards relate to Alignment Health Plan, Inc. for which the utilization of the federal NOL carryforward is subject to a federal Section 382 limitation of $870 per year, and the utilization of the California NOL carryforwards is subject to a similar California annual limitation. In June 2020, California’s Governor signed into law Assembly Bill (“AB”) 85 suspending California NOL utilization for taxpayers with more than $1 million of taxable income, effective for tax years 2021, 2022, and 2023. AB 85 includes an extended carryover period for the suspended NOLs with an additional year carryforward for each year of suspension. Subsequently, on February 9, 2022, the California governor signed Senate Bill 113 (S.B. 113), which restores the NOL deduction and eliminates the $5 million annual cap on business incentive tax credits, effective for tax years beginning on or after January 1, 2022. In June 2024, California’s Governor signed into law AB 167 suspending California NOL utilization for taxpayers with more than $1 million of taxable income, effective for tax years 2024, 2025, and 2026. AB 167 includes an extended carryover period for suspended NOLs that would have been utilized if not for AB 167.
We have cumulative NOLs as of December 31, 2024 and 2023. Given the history of losses, and after consideration for the risk associated with estimates of future taxable income, we established a full valuation allowance against net deferred tax assets at December 31, 2024 and 2023. Under the Tax Cuts and Jobs Act (“TCJA”), federal NOLs generated after 2017 will be carried forward indefinitely but are limited to an 80% deduction of taxable income. NOLs generated prior to 2018 have a 20-year carryforward period and can be used to offset 100% of taxable income. An exception to the TCJA federal NOL rule applies to certain of our subsidiaries and requires all NOLs generated from those entities to have a 20-year carryforward period and offset 100% of taxable income.
Additionally, an “ownership change” as defined under Section 382 of the Internal Revenue Code, could potentially limit the ability to utilize certain tax attributes including the Company’s substantial NOLs. Ownership change is generally defined as any significant change in ownership of more than 50% of its stock over a three-year testing period. If, as a result of current or future transactions involving our common stock, we undergo cumulative ownership changes which exceed 50% over the testing period, our ability to utilize our NOL carryforwards would be subject to additional limitations under IRC Section 382. We continue to monitor changes in ownership with respect to these income tax provisions.
As of December 31, 2024 and 2023, there were no liabilities for unrecognized tax benefits.