INCOME TAXES

3 Months Ended

Mar. 31, 2024

INCOME TAXES

INCOME TAXES

(12)   INCOME TAXES

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, primarily related to excess tax benefits or expense from stock option exercises, the tax impact of the change in fair value of contingent consideration, and true ups related to the filed tax return. For the three months ended March 31, 2024 discrete items

adjusted were minimal. For the three months ended March 31, 2023 discrete items adjusted were $1.5 million. At March 31, 2024, the Company is estimating an annual effective tax rate of approximately 25%. As of March 31, 2023 the Company estimated an annual effective tax rate of approximately 25%. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to various factors.

The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. The Company’s effective income tax rate was 23% and 2% for the three months ended March 31, 2024 and 2023, respectively.  Discrete items, primarily related to the tax impact of stock option exercises were minimal for the three months ending March 31, 2024. Discrete items related to the tax impact of the change in fair value of contingent consideration and stock option exercises were $0.4 million for the three months ended March 31, 2023, which are recognized as a benefit against income tax expense. For the three months ended March 31, 2024 and 2023, the Company recorded an income tax expense of approximately $3,000 and an income tax expense of $33,000, respectively.

No taxes were paid during the three months ended March 31, 2024 and 2023.