Employee Benefit Plans

12 Months Ended

Dec. 31, 2024

Retirement Benefits [Abstract]

Employee Benefit Plans

Note 15. Employee Benefit Plans

Defined Contribution Plans

We have a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code covering all U.S. employees and defined contribution plans for other Incyte employees in Europe and Japan. Employees may contribute a portion of their compensation, which is then matched by us, subject to certain limitations. Defined contribution expense was $20.6 million, $18.9 million and $18.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Defined Benefit Pension Plans

We have defined benefit pension plans for our employees in Europe which provide benefits to employees upon retirement, death or disability. The assets of the pension plans are held in collective investment accounts represented by the cash surrender value of an insurance policy and are classified as Level 2 within the fair value hierarchy.

The pension plans assumptions reflect the expected investment return and discount rate on plan assets and disability rate probabilities. The benefit obligation at December 31, 2024 for the plans was determined using a discount rate of 0.90% and rate of compensation increase of 2.25%. The 2024 net periodic benefit cost for the plans was determined using discount rates of 1.30%, rates of compensation increase of 2.25% and long term expected return on plan assets of 5.50%. The benefit obligation at December 31, 2023 for the plans was determined using a discount rate of 1.30% and rate of compensation increase of 2.25%. The 2023 net periodic benefit cost for the plans was determined using discount rates of 2.20%, rates of compensation increase of 2.25% and long term expected return on plan assets of 5.80%.

Summarized information regarding changes in the obligations and plan assets, the funded status and the amounts recorded were as follows (in thousands):

	Year Ended December 31,
	2024		2023
Benefit obligation, beginning of year	$	169,667	$	113,705
Employer service cost	12,121		7,711
Interest cost	2,010		2,280
Plan participants' contributions	5,067		4,534
Actuarial loss	17,443		26,682
Transfer of benefits net of payments from fund	1,382		1,866
Expenses paid from assets	(101)		(118)
Translation (gain) loss	(12,102)		13,007
Benefit obligation, end of year	195,487		169,667
Fair value of plan assets, beginning of year	128,482		102,023
Actual return on plan assets	13,562		140
Employer contributions	10,278		9,955
Plan participants' contributions	5,067		4,534
Transfer of benefits net of payments from fund	1,382		1,866
Expenses paid from assets	(101)		(118)
Translation (loss) gain	(9,034)		10,082
Fair value of plan assets, end of year	149,636		128,482
Unfunded liability, end of year	$	45,851	$	41,185

The unfunded liability is reported in other liabilities on the consolidated balance sheets as of December 31, 2024 and 2023. The accumulated benefit obligation is $182.4 million and $157.9 million as of December 31, 2024 and 2023, respectively.

The net periodic benefit cost was as follows (in thousands):

	Year Ended December 31,
	2024		2023		2022
Service cost	$	12,121	$	7,711	$	9,855
Interest cost	2,010		2,280		251
Expected return on plan assets	(6,764)		(5,688)		(4,184)
Amortization of prior service cost	801		771		773
Amortization of actuarial losses	673		—		356
Net periodic benefit cost	$	8,841	$	5,074	$	7,051

The components of net periodic benefit cost other than the service cost component are included in interest income and other, net on the consolidated statements of operations.

Other changes in the plans assets and the benefit obligation that is recognized in accumulated other comprehensive (loss) income were as follows, net of tax (in thousands):

	Year Ended December 31,
	2024		2023		2022
Pension liability (asset), beginning of year	$	30,924	$	(1,699)	$	23,677
Net prior service costs	(1,474)		(771)		(773)
Net loss (gain)	$	10,473	$	33,394	$	(24,603)
Pension liability (asset), end of year	$	39,923	$	30,924	$	(1,699)

We expect to contribute a total of $10.1 million to the pension plans in 2025. The following payments are expected to be paid from the fund (in thousands):

2025	$	6,956
2026	7,249
2027	8,139
2028	8,617
2029	11,123
2030-2034	56,544
Total	$	98,628