XML 47 R29.htm IDEA: XBRL DOCUMENT v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company files separate, de-consolidated US federal income tax returns beginning on the spin-off date. For tax years ended November 25, 2024 and December 31, 2023, 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 Company accounts for income taxes in accordance with ASC 740, Income Taxes, or “ASC 740” and has applied ASU 2023-09 on a prospective basis.
The following table outlines the components of the Company’s income tax expense from continuing operations for the periods presented:
For the Year Ended December 31,
2025
(in thousands)
Current income tax expense:
Federal
$34,270 
State and local
8,752 
Total current income tax expense
43,022 
Deferred income tax expense (benefit)
Federal
10,340 
State and local
(2,384)
Total deferred income tax expense
7,956 
Total income tax expense
$50,978 
 For the Year Ended December 31,
 20242023
 (in thousands)
Current income tax expense:  
Federal$49,676 $50,911 
State and local14,135 13,262 
Total current income tax expense63,811 64,173 
Deferred income tax benefit
(4,315)(6,286)
Total income tax expense$59,496 $57,887 
Reconciliations of the federal statutory income tax rate to the effective income tax rate are as follows:
 For the Year Ended December 31,
 2025
AmountRate
Federal income tax at statutory rate$47,004 21.0 %
State and local income taxes, less federal income tax benefit(1)
4,533 2.0 
Tax credits
(1,854)(0.8)
Nontaxable or nondeductible items
Limitation on officer’s compensation
1,822 0.8 
Stock based compensation
169 0.1 
Other permanent differences
702 0.3 
Non-controlling interest
(1,351)(0.6)
Other
(47)(0.0)
Effective income tax rate$50,978 22.8 %
____________________________________________
(1)    State taxes in California and New Jersey made up the majority (greater than 50%) of the tax effect in this category.
For the Year Ended December 31,
20242023
Federal income tax at statutory rate
21.0 %21.0 %
State and local income taxes, less federal income tax benefit
4.6 4.2 
Permanent differences
0.7 0.3 
Deferred income taxes — state income tax rate adjustment
0.0 (0.3)
Revision to prior years’ estimated taxes
0.3 0.4 
Stock-based compensation
(0.0)(0.5)
Non-controlling interest
(0.6)(0.5)
Other
(0.3)(0.7)
Effective income tax rate
25.7 %23.9 %
The following table outlines the income taxes paid by the Company:
For the Year Ended December 31,
2025
(in thousands)
Federal
$34,788 
State
11,122 
Total
$45,910 

Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions:
For the Year Ended December 31
2025
(in thousands)
State
California
$5,077 
The Company’s deferred tax assets and liabilities are as follows:
December 31,
 20252024
 (in thousands)
Deferred tax assets  
Implicit discounts and adjustments$12,447 $10,970 
Compensation and benefit-related accruals21,420 21,017 
Professional malpractice liability insurance7,135 6,872 
Federal and state net operating loss and state tax credit carryforwards7,398 3,602 
Interest limitation carryforward1,964 2,153 
Stock awards522 142 
Operating lease liabilities127,878 123,301 
Research and experimental expenditures829 9,048 
Other2,873 3,206 
Deferred tax assets182,466 180,311 
Valuation allowance(2,693)(2,618)
Deferred tax assets, net of valuation allowance$179,773 $177,693 
Deferred tax liabilities  
Depreciation and amortization$(81,738)$(80,947)
Operating lease right-of-use assets(116,949)(113,491)
Other(5,872)(4,223)
Deferred tax liabilities(204,559)(198,661)
Deferred tax liabilities, net of deferred tax assets$(24,786)$(20,968)
The Company’s deferred tax assets and liabilities are included in the consolidated balance sheet captions as follows:
December 31,
 20252024
 (in thousands)
Non-current deferred tax asset
$24,120 $4,412 
Non-current deferred tax liability(48,906)(25,380)
Net deferred tax liability
$(24,786)$(20,968)
For the years ended December 31, 2025 and 2024, the Company recorded net valuation allowance increase of $0.1 million and decrease of $0.3 million, respectively. The changes resulted from net changes in state net operating losses.
At December 31, 2025 and 2024, the Company’s net deferred tax liabilities of approximately $24.8 million and $21.0 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 $55.5 million. The Company has U.S. federal net operating loss carryforwards of $20.1 million with indefinite carryforward.
State net operating loss carryforwards expire and are subject to valuation allowances as follows:
State Net Operating LossesGross Valuation Allowance
 (in thousands)
2026$1,262 $707 
2027831 541 
2028220 220 
2029983 672 
Thereafter through 2045
52,189 43,707 
Total
$55,485 $45,847