Assertio Holdings, Inc.ASRT
Assertio Holdings, Inc. Income Taxes Disclosure
INCOME TAXES
The following table reflects Net loss before income taxes by source for the years ended December 31, 2025 and 2024 (in thousands):
| Year ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| U.S. | $ | (29,940) | $ | (21,529) | |||||||
| Outside the U.S. | — | — | |||||||||
| Net loss before income taxes | $ | (29,940) | $ | (21,529) | |||||||
The following table reflects income tax expense for the years ended December 31, 2025 and 2024 (in thousands):
| Year ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Current: | |||||||||||
| Federal | $ | (24) | $ | (981) | |||||||
| State | 459 | 1,033 | |||||||||
| Total current taxes | $ | 435 | $ | 52 | |||||||
| Deferred: | |||||||||||
| Federal | $ | — | $ | — | |||||||
| State | — | — | |||||||||
| Total deferred taxes | $ | — | $ | — | |||||||
| Total income tax expense | $ | 435 | $ | 52 | |||||||
As discussed in Note 1. Organization and Summary of Significant Accounting Policies, the Company elected to prospectively adopt the guidance in ASU 2023-09. The following table reflects a reconciliation of income taxes at the statutory federal income tax rate to the actual tax rate included in the Consolidated Statements of Comprehensive Loss in accordance with the guidance in ASU 2023-09 for the year ended December 31, 2025 (in thousands):
Year ended December 31, 2025 | |||||||||||
| Amount | Percent | ||||||||||
| U.S. federal statutory income tax rate | $ | (6,259) | 21.0 | % | |||||||
| State and local taxes, net of federal benefit | 363 | (1.2) | % | ||||||||
| Other tax credits | 159 | (0.5) | % | ||||||||
| Change in valuation allowance | 9,261 | (31.1) | % | ||||||||
| Other nontaxable and nondeductible items | 179 | (0.6) | % | ||||||||
| Change in prior year unrecognized tax benefits | (24) | 0.1 | % | ||||||||
| Other adjustments: | |||||||||||
| Sale of Assertio Therapeutics | (3,531) | 11.8 | % | ||||||||
| Deferred taxes | 287 | (1.0) | % | ||||||||
| Effective Tax Rate | $ | 435 | (1.5) | % | |||||||
During the year ended December 31, 2025, the Company recorded an income tax expense of $0.4 million, primarily due to state tax expense, losses from the sale of Assertio Therapeutics, and a benefit related to the release of an unrecognized tax benefit, offset by changes in the valuation allowance. Due to the sale of Assertio Therapeutics in May 2025, the Company recorded a capital loss and the net operating loss ("NOL") carryforwards were eliminated, as the tax basis is reflected in the loss from sale and the NOLs are no longer available for future use. The deferred tax impact related to the sale of Assertio Therapeutics is zero due to the full valuation allowance. Therefore, the offsetting deferred taxes and valuation allowance impacts are netted within the sale of Assertio Therapeutics for the effective tax rate rather than presented separately.
The states comprising a majority (more than 50 percent) of the State and local taxes, net of federal benefit for the year ended December 31, 2025 in the table above are North Carolina, Tennessee, and Texas.
On July 4, 2025, the President of the United States signed House Resolution 1 (“H.R. 1”), which made a number of changes to tax law in the Internal Revenue Code, including the reinstatement of immediate expensing for domestic research and development expenditures and modifications to the business interest expense limitation. The changes to tax law promulgated under H.R. 1 did not have a material impact on the Company’s income tax expense or income tax account balances for the year ended December 31, 2025.
The following table reflects a reconciliation of income taxes at the statutory federal income tax rate to the actual tax rate included in the Consolidated Statements of Comprehensive Loss for the year ended December 31, 2024 (in thousands):
Year Ended December 31, 2024 | |||||
| Tax at federal statutory rate | $ | (4,522) | |||
| State tax, net of federal benefit | (232) | ||||
| Disallowed officers' compensation | 9 | ||||
| Deferred tax adjustments | (19,436) | ||||
| Uncertain tax provisions | (2,216) | ||||
| Other | 610 | ||||
| Change in valuation allowance | 25,839 | ||||
| Total income tax expense | $ | 52 | |||
During the year ended December 31, 2024, the Company recorded an income tax expense of $0.1 million, principally comprised of a benefit related to the release of an unrecognized tax benefit, offset by incurred federal and state current tax expense. As part of the release of the unrecognized tax benefit, certain deferred tax assets (“DTAs”) related to the uncertain tax position were released, as shown in the Deferred tax adjustment line in the table above. Offsetting these DTAs in the Deferred tax adjustment line were adjustments to certain state deferred tax NOLs. As part of its valuation allowance assessment as of December 31, 2024, the Company was not able to rely on its projected availability of future taxable income from pre-tax income forecasts. As such, the Company primarily relied on its reversing taxable temporary differences to assess its valuation allowance, which resulted in recording of the full valuation allowance for the year ended December 31, 2024.
Deferred income taxes reflect the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table reflects significant components of the Company’s deferred income taxes as of December 31, 2025 and 2024 (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating losses | $ | 229,830 | $ | 269,779 | |||||||
| Tax credit carryforwards | 18,731 | 18,884 | |||||||||
| Intangible assets | 10,434 | 5,846 | |||||||||
| Stock-based compensation | 2,866 | 2,162 | |||||||||
| Operating lease liabilities | 278 | 354 | |||||||||
| Capital loss carryforwards | 2,663 | — | |||||||||
| Reserves and other accruals not currently deductible | 25,665 | 24,545 | |||||||||
| Section 174 R&D capitalization | 8,064 | 11,180 | |||||||||
| Disallowed interest carryforward | 7,029 | 9,163 | |||||||||
| Other assets | 762 | 705 | |||||||||
| Total deferred tax assets | 306,322 | 342,618 | |||||||||
| Valuation allowance for deferred tax assets | (306,042) | (342,281) | |||||||||
| $ | 280 | $ | 337 | ||||||||
| Deferred tax liabilities: | |||||||||||
| Fixed assets | (42) | (66) | |||||||||
| Operating lease right-of-use assets | (238) | (271) | |||||||||
| Net deferred tax asset | $ | — | $ | — | |||||||
During the years ended December 31, 2025 and 2024, the Company maintained a full valuation allowance to offset, in full, the benefit related to its net deferred tax assets as of December 31, 2025 and 2024 because the realization of future benefit is uncertain. The Company examined both positive evidence such as, but not limited to, the projected availability of future taxable income and negative evidence such as the history of cumulative losses in recent years. As part of its valuation allowance
assessment as of December 31, 2025 and 2024, the Company was not able to rely on its projected availability of future taxable income from pre-tax income forecasts. As such, the Company primarily relied on its reversing taxable temporary differences to assess its valuation allowance, which resulted in maintaining the full valuation allowance for the years ended December 31, 2025 and 2024. No indefinite deferred tax liabilities (“DTL”) were identified as part of the valuation allowance assessment, nor are there years in which DTL reversals are expected to exceed DTA reversals that might suggest a net DTL is required after a valuation allowance is recorded. The Company will continue to assess the realizability of its deferred tax assets on a quarterly basis and assess whether an additional reserve or a release of the valuation allowance is required in future periods.
The valuation allowance decreased $36.2 million to $306.0 million during the year ended December 31, 2025, and increased $25.8 million to $342.3 million during the year ended December 31, 2024.
As of December 31, 2025, the Company had federal NOLs of $690.5 million with no expiration, and $256.1 million expiring between 2029 and 2037. As of December 31, 2025, state NOL carryforwards are $554.6 million, which begin to expire in 2026. The Company also had federal and state credit carryforwards of $21.1 million, which begin to expire in 2032. Utilization of the Company’s NOL and credit carryforwards are subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.
The Company does not have any significant federal or state tax examinations in process as of December 31, 2025. The federal and state statute of limitations remains open primarily for the 2022 through 2024 tax years. The California statute of limitations is open for the 2007 through 2024 tax years.
The following table reflects cash income taxes paid, net of refunds received, in accordance with ASU 2023-09 for the year ended December 31, 2025 (in thousands):
Year Ended December 31, 2025 | |||||
| U.S. federal tax | $ | (300) | |||
| State | |||||
| California | 22 | ||||
| Georgia | (44) | ||||
| Minnesota | 15 | ||||
| Texas | 150 | ||||
| Other states | 15 | ||||
| Total state | $ | 158 | |||
| Total income taxes paid | $ | (142) | |||
Cash income taxes paid, net of refunds received, for the year ended December 31, 2024 were $1.6 million.
The following table reflects activity related to the Company’s unrecognized tax benefits for the years ended December 31, 2025 and 2024 (in thousands):
| Unrecognized tax benefits—December 31, 2023 | $ | 7,742 | |||
| Decreases related to lapse of statutes | (2,020) | ||||
| Unrecognized tax benefits—December 31, 2024 | $ | 5,722 | |||
| Decreases related to lapse of statutes | (72) | ||||
| Unrecognized tax benefits—December 31, 2025 | $ | 5,650 | |||
Of the unrecognized tax benefits in the table above, the total amount of unrecognized tax benefit that would affect the effective tax rate is $2.4 million and $2.3 million as of December 31, 2025 and 2024, respectively. The remaining amount of unrecognized tax benefit of $3.2 million and $3.4 million have corresponding amounts included as deferred tax assets in the deferred income tax table above, and would not impact the effective tax rate.
The Company does not expect a significant change to its unrecognized tax benefits over the next 12 months. The unrecognized tax benefits may increase or change during the next year for items that arise in the ordinary course of business.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
| 2023 | Mar 11, 2024 | |
| 2022 | Mar 8, 2023 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.