Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the years ended December 31, 2023 and 2022, the Company joined Select in the filing of various consolidated federal, state, and local income tax returns, and is party to an income tax allocation agreement (the “Tax Sharing Agreement”). Under the Tax Sharing Agreement, the Company pays to or receives from Select the amount, if any, by which Select’s income tax liability is affected by virtue of inclusion of the Company in the consolidated tax returns of Select. Adjustments were made for the periods presented in the consolidated financial statements, to reflect the separate return method as if the Company filed income tax returns on a standalone basis.

The following table outlines the components of the Company’s income tax expense for the periods presented:

	For the Year Ended December 31,
	2024		2023		2022
			(in thousands)
Current income tax expense:
Federal	$	49,676	$	50,911	$	47,825
State and local	14,135		13,262		13,467
Total current income tax expense	63,811		64,173		61,292
Deferred income tax expense (benefit)	(4,315)		(6,286)		(8,639)
Total income tax expense	$	59,496	$	57,887	$	52,653

Reconciliations of the federal statutory income tax rate to the effective income tax rate are as follows:

	For the Year Ended December 31,
	2024		2023		2022
Federal income tax at statutory rate	21.0	%	21.0	%	21.0	%
State and local income taxes, less federal income tax benefit	4.6		4.2		4.4
Permanent differences	0.7		0.3		0.2
Deferred income taxes — state income tax rate adjustment	—		(0.3)		(0.4)
Revision to prior years’ estimated taxes	0.3		0.4		(0.4)
Stock-based compensation	(0.0)		(0.5)		(0.5)
Non-controlling interest	(0.6)		(0.5)		(0.6)
Other	(0.3)		(0.7)		(0.5)
Effective income tax rate	25.7	%	23.9	%	23.2	%

The Company’s deferred tax assets and liabilities are as follows:

	December 31,
	2024		2023
	(in thousands)
Deferred tax assets
Implicit discounts and adjustments	$	10,970	$	11,685
Compensation and benefit-related accruals	21,017		17,217
Professional malpractice liability insurance	6,872		7,838
Federal and state net operating loss and state tax credit carryforwards	3,602		3,288
Interest limitation carryforward	2,153		—
Stock awards	142		151
Operating lease liabilities	123,301		106,329
Research and experimental expenditures	9,048		7,929
Other	3,206		2,707
Deferred tax assets	180,311		157,144
Valuation allowance	(2,618)		(2,933)
Deferred tax assets, net of valuation allowance	$	177,693	$	154,211
Deferred tax liabilities
Depreciation and amortization	$	(80,947)	$	(76,776)
Operating lease right-of-use assets	(113,491)		(98,055)
Other	(4,223)		(2,744)
Deferred tax liabilities	(198,661)		(177,575)
Deferred tax liabilities, net of deferred tax assets	$	(20,968)	$	(23,364)

The Company’s deferred tax assets and liabilities are included in the consolidated balance sheet captions as follows:

	December 31,
	2024		2023
	(in thousands)
Other assets	$	4,412	$	—
Non-current deferred tax liability	(25,380)		(23,364)
	$	(20,968)	$	(23,364)

For the years ended December 31, 2024 and 2023, the Company recorded net valuation allowance decreases of $0.3 million and $0.7 million, respectively. The changes resulted from net changes in state net operating losses.

At December 31, 2024 and 2023, the Company’s net deferred tax liabilities of approximately $21.0 million and $23.4 million, respectively, consist of items which have been recognized for tax reporting purposes, but which will increase tax on returns to be filed in the future. The Company has performed an assessment of positive and negative evidence regarding the realization of the net deferred tax assets. This assessment included a review of legal entities with three years of cumulative losses, estimates of projected future taxable income, the effect on future taxable income resulting from the reversal of existing deferred tax liabilities in future periods, and the impact of tax planning strategies that management would and could implement in order to keep deferred tax assets from expiring unused. Although realization is not assured, based on the Company’s assessment, it has concluded that it is more likely than not that such assets, net of the determined valuation allowance, will be realized.

The total state net operating losses are approximately $51.2 million. The Company has U.S. federal net operating loss carryforwards of $2.8 million with indefinite carryforward.

State net operating loss carryforwards expire and are subject to valuation allowances as follows:

	State Net Operating Losses		Gross Valuation Allowance
	(in thousands)
2025	$	1,124	$	1,124
2026	1,253		1,253
2027	829		829
2028	220		220
Thereafter through 2043	47,749		41,771
Total	$	51,175	$	45,197