Income Taxes

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2024 and 2023 was (14.1)% and (0.4)%, respectively. The Company's effective tax rate was a result of estimated tax losses for the fiscal year to date offset by the increase in the valuation allowance in the net operating loss carryforwards. Tax expense includes current tax expense for estimated state income taxes and noncurrent federal and state taxes related to non-deductibility of goodwill in the future and other book to tax differences.

For the three months ended March 31, 2024, the Company has utilized the discrete effective tax rate method, as allowed by ASC 740-270-30-18, Income Taxes—Interim Reporting, to calculate its interim income tax provision. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis. The Company believes that, at this time, the use of this discrete method is more appropriate than the annual effective tax rate method as its full-year forecasted pre-tax income, relative to its forecasted permanent differences, has the potential to distort its estimated annual effective tax rate.