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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income taxes attributable to continuing operations consist of the following (amounts in millions):
For the Years Ended December 31,
202420232022
Current income tax expense:
Federal$31.0 $21.1 $12.2 
State and local9.7 8.8 7.0 
40.7 29.9 19.2 
Deferred income tax expense:
Federal6.1 17.5 20.4 
State and local1.3 3.2 2.9 
7.4 20.7 23.3 
Income tax expense$48.1 $50.6 $42.5 

Total income tax expense for the years ended December 31, 2024, 2023 and 2022 was allocated as follows (amounts in millions):
For the Years Ended December 31,
202420232022
Income from continuing operations$48.1 $50.6 $42.5 
Interest expense— — (0.7)
Goodwill— (0.3)(2.7)
Tax expense recorded to additional paid-in capital— (0.2)1.5 
Total$48.1 $50.1 $40.6 
A reconciliation of significant differences between the reported amount of income tax expense and the expected amount of income tax expense that would result from applying the U.S. federal statutory income tax rate of 21% to income before income taxes is as follows:
For the Years Ended December 31,
2024(1)
2023(1)
2022
Income tax expense at U.S. federal statutory rate21.0 %21.0 %21.0 %
State and local income taxes, net of federal income tax benefit10.8 26.0 5.6 
Excess tax benefits from share-based compensation1.0 3.4 0.3 
Non-deductible executive compensation3.6 5.5 0.8 
Unrecognized tax benefits(2)
— — (1.7)
Goodwill impairment(3)
7.9 — — 
Merger-related expenses12.3 13.7 — 
Merger termination fee— 56.2 — 
Other items, net(4)
(0.9)1.9 0.5 
Income tax expense55.7 %127.7 %26.5 %
(1)The information provided for the years ended December 31, 2024 and 2023 does not provide a meaningful reconciliation of the effective tax rate and is not comparable to other periods. The effective tax rate for such years is influenced by the relationship of the amount of “effective tax rate drivers” (i.e. non-deductible expenses, non-taxable income, tax credits, valuation allowance, uncertain tax positions, etc.) to income or loss before taxes. The merger-related expenses incurred during 2024 and 2023 and the merger termination fee incurred during 2023 contribute to significant and unusual adjustments to income before taxes distorting the relationship between “effective tax rate drivers” and income before taxes resulting in an unusual effective tax rate.
(2)For the year ended December 31, 2022, the Company recognized $2.7 million of federal uncertain tax positions due to a lapse of the statute of limitations.
(3)For the year ended December 31, 2024, a Component 2 goodwill impairment charge was recorded. The goodwill impairment is not deductible for tax purposes. As a result, the non-deductible expense increased the effective tax rate by 7.9%.
(4)Includes various items such as non-deductible expenses, non-taxable income, tax credits, valuation allowance, uncertain tax positions and return-to-accrual adjustments.
As of December 31, 2024 and 2023, the Company had income taxes receivable of $7.5 million and $8.0 million, respectively, included in other current assets within our consolidated balance sheets.
Deferred tax assets (liabilities) consist of the following components (amounts in millions):
As of December 31,
20242023
Deferred tax assets:
Accrued payroll and employee benefits$19.4 $17.1 
Workers’ compensation10.8 10.9 
Share-based compensation8.9 7.1 
Legal and compliance matters4.1 3.9 
Lease liability23.7 25.6 
Net operating loss carryforwards8.5 8.9 
Tax credit carryforwards2.4 2.7 
Other assets0.2 0.2 
Gross deferred tax assets78.0 76.4 
Less: valuation allowance(5.2)(5.4)
Net deferred tax assets72.8 71.0 
Deferred tax liabilities:
Property and equipment(1)
(12.9)(13.5)
Amortization of intangible assets(74.2)(61.7)
Investment in partnerships(10.3)(10.8)
Right of use asset(22.8)(24.9)
Other liabilities(0.7)(0.7)
Gross deferred tax liabilities(120.9)(111.6)
Deferred income taxes$(48.1)$(40.6)
(1)Effective January 1, 2023, the classification of fleet leases changed from operating leases to finance leases for both GAAP and tax purposes. As a result, for GAAP purposes, the Company recorded the expenses associated with the fleet leases in depreciation expense and interest expense. For tax purposes, the Company accelerated the depreciation expense through bonus depreciation. As a result of accelerated tax depreciation on the fleet vehicles, a deferred tax liability of $8.1 million was recorded for the year ended December 31, 2023.
As of December 31, 2024, we have U.S. net operating loss (“NOL”) carryforwards of $7.2 million that are available to reduce future taxable income and may be carried forward indefinitely. While the NOL carryforwards are not subject to expiration, the annual NOL amount that is available to offset future taxable income is subject to limitation. The NOL carryforwards were acquired as part of the stock purchase of Contessa Health on August 1, 2021. Under Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382"), substantial changes in a Company’s ownership may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income. As a result of the ownership change, the Company determined that there is an annual limitation, pursuant to Section 382, on the amount of NOL carryforwards that may be utilized to offset future taxable income.
As of December 31, 2024, we have state NOL carryforwards of $139.3 million that are available to reduce future taxable income and South Carolina tax credits totaling $3.0 million available to reduce future state income taxes. The state NOL and tax credit carryforwards expire at various times.
As of December 31, 2024 and 2023, the valuation allowance for deferred tax assets, which is related to certain state NOLs, was $5.2 million and $5.4 million, respectively. The net change in the valuation allowance for the years ended December 31, 2024 and 2023 was a decrease of $0.2 million and an increase of $0.2 million, respectively. The $0.2 million net decrease in the valuation allowance for the year ended December 31, 2024 is due to a $0.4 million valuation allowance release on certain state
NOLs, offset by a $0.2 million increase from the creation of state NOL carryforwards in jurisdictions that require separate company reporting and where the Company does not expect to have sufficient separate company future taxable income available to offset the state NOL carryforwards.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those jurisdictions during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax-planning strategies in making this assessment. In order to fully realize the deferred tax assets, the Company will need to generate future taxable income before the expiration of the carryforwards governed by the tax code. Based on the current level of pre-tax earnings, the Company will generate the minimum amount of future taxable income needed to support the realization of the deferred tax assets. As a result, as of December 31, 2024, management believes that it is more likely than not that we will realize the benefits of these deferred tax assets, net of the existing valuation allowances. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.
Uncertain Tax Positions
We account for uncertain tax positions in accordance with the authoritative guidance for uncertain tax positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (amounts in millions):
For the Years Ended December 31,
202420232022
Balance at beginning of period$— $— $2.7 
Additions for tax positions related to current year— — — 
Additions for tax positions related to prior year— — — 
Reductions for tax positions related to prior years— — — 
Lapse of statute of limitations— — (2.7)
Settlements— — — 
Balance at end of period$— $— $— 
During 2022, the statute of limitations lapsed, ultimately removing the uncertainty surrounding the Company's ability to recognize the tax positions, if challenged under audit. As a result, the Company recognized a $2.7 million income tax benefit and corresponding reduction in our effective tax rate for the period ended December 31, 2022. The Company has no uncertain tax positions related to tax years that remain subject to examination by relevant tax authorities. As of December 31, 2024, no liability for unrecognized tax benefits was necessary, and no change in assessment is expected within the next 12 months.
For the period ended December 31, 2022, the Company recorded a $0.7 million benefit as a component of interest expense as a result of the lapse of the statute of limitations and corresponding release of the reserve for uncertain tax positions. No interest expense or benefit was recorded for the period ended December 31, 2024 or December 31, 2023. There was no accrued interest related to uncertain tax positions included in the consolidated balance sheet at December 31, 2024, December 31, 2023 or December 31, 2022.
We are subject to income taxes in the U.S. and in many individual states, with significant operations in Louisiana, South Carolina, Alabama, Georgia, Massachusetts and Tennessee. We are open to examination in the U.S. and in various individual states for the tax years ended December 31, 2017 through December 31, 2024. We are also open to examination in various states for the years ended 2004 through 2024 resulting from NOLs generated and available for carryforward from those years.