Astrana Health, Inc. Income Taxes Disclosure
Provision for income taxes consisted of the following (in thousands):
|
|
Years ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
11,586 |
|
|
$ |
23,695 |
|
|
$ |
35,434 |
|
State |
|
|
8,231 |
|
|
|
11,441 |
|
|
|
8,999 |
|
|
|
|
19,817 |
|
|
|
35,136 |
|
|
|
44,433 |
|
Deferred |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
(817 |
) |
|
|
(2,424 |
) |
|
|
(3,638 |
) |
State |
|
|
(3,470 |
) |
|
|
(1,826 |
) |
|
|
(8,806 |
) |
|
|
|
(4,287 |
) |
|
|
(4,250 |
) |
|
|
(12,444 |
) |
Total provision for income taxes |
|
$ |
15,530 |
|
|
$ |
30,886 |
|
|
$ |
31,989 |
|
The table below provides the updated requirements of ASU 2023-09 for 2025. The provision for income taxes differs from the amount computed by applying the federal statutory income tax rate as follows (in thousands):
|
|
Year ended December 31, 2025 |
|
|||||
|
|
Amount |
|
|
Percentage |
|
||
Provision for income taxes at U.S. federal statutory rate |
|
$ |
8,316 |
|
|
|
21.0 |
% |
State and local income taxes, net of federal benefit |
|
|
3,131 |
|
|
|
7.9 |
|
Tax credits: |
|
|
|
|
|
|
||
Research and development ("R&D") credits |
|
|
(1,238 |
) |
|
|
(3.1 |
) |
Changes in valuation allowance |
|
|
62 |
|
|
|
0.2 |
|
Non-taxable or non-deductible items: |
|
|
|
|
|
|
||
Nondeductible officer's compensation |
|
|
3,955 |
|
|
|
10.0 |
|
Equity compensation |
|
|
3,106 |
|
|
|
7.8 |
|
Transaction cost |
|
|
738 |
|
|
|
1.7 |
|
Other |
|
|
503 |
|
|
|
1.2 |
|
Changes in unrecognized tax benefits |
|
|
577 |
|
|
|
1.5 |
|
Other adjustments: |
|
|
|
|
|
|
||
Variable interest entities |
|
|
(1,388 |
) |
|
|
(3.5 |
) |
Return to provision |
|
|
(691 |
) |
|
|
(1.7 |
) |
Allowance for doubtful account |
|
|
(690 |
) |
|
|
(1.7 |
) |
Other |
|
|
(851 |
) |
|
|
(2.1 |
) |
Total tax provision and effective tax rate |
|
$ |
15,530 |
|
|
|
39.2 |
% |
The following table represents cash paid for income taxes, net of refunds received, by jurisdiction (in thousands):
|
|
Year ended December 31, 2025 |
|
|||||
|
|
Amount |
|
|
Percentage |
|
||
United States |
|
|
|
|
|
|
||
Federal |
|
$ |
12,298 |
|
|
|
139 |
% |
State |
|
|
(3,446 |
) |
|
|
(39 |
)% |
Total |
|
$ |
8,852 |
|
|
|
100 |
% |
|
|
Year ended December 31, 2025 |
|
|||||
|
|
Amount |
|
|
Percentage |
|
||
State |
|
|
|
|
|
|
||
California |
|
$ |
(4,434 |
) |
|
|
129 |
% |
Connecticut |
|
|
193 |
|
|
|
(6 |
)% |
Texas |
|
|
630 |
|
|
|
(18 |
)% |
Other states |
|
|
165 |
|
|
|
(5 |
)% |
Total |
|
$ |
(3,446 |
) |
|
|
100 |
% |
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:
|
|
Years ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Tax provision at U.S. federal statutory rates |
|
|
21.0 |
% |
|
|
21.0 |
% |
State income taxes net of federal benefit |
|
|
9.5 |
|
|
|
11.6 |
|
Non-deductible permanent items |
|
|
3.8 |
|
|
|
2.5 |
|
Variable interest entities |
|
|
1.1 |
|
|
|
(2.1 |
) |
Stock-based compensation |
|
|
3.9 |
|
|
|
2.8 |
|
Change in valuation allowance |
|
|
(0.8 |
) |
|
|
(2.6 |
) |
Gain on sale of investment |
|
|
— |
|
|
|
8.5 |
|
Tax credits |
|
|
(1.3 |
) |
|
|
— |
|
NOL adjustment |
|
|
(0.8 |
) |
|
|
0.2 |
|
Undistributed dividend |
|
|
— |
|
|
|
(11.5 |
) |
Spin-off transaction |
|
|
— |
|
|
|
3 |
|
Uncertain tax position |
|
|
0.8 |
|
|
|
— |
|
Tax rate change |
|
|
(0.3 |
) |
|
|
— |
|
Return-to-provision |
|
|
(0.4 |
) |
|
|
2.4 |
|
Accrual to cash true-up |
|
|
1.3 |
|
|
|
— |
|
Other |
|
|
0.4 |
|
|
|
(0.3 |
) |
Effective income tax rate |
|
|
38.2 |
% |
|
|
35.5 |
% |
The Company’s effective tax rate differs from the Federal statutory rate of 21% primarily due to state taxes, non-deductible permanent items, and stock-based compensation, offset by a change in valuation allowance and R&D credits from increased R&D activities.
Significant components of the Company’s deferred tax assets (liabilities) are shown below (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets |
|
|
|
|
|
|
||
State taxes |
|
$ |
2,125 |
|
|
$ |
2,435 |
|
Accrued expenses |
|
|
638 |
|
|
|
1,110 |
|
Allowance for bad debts |
|
|
7,908 |
|
|
|
3,741 |
|
Net operating loss carryforward |
|
|
7,055 |
|
|
|
6,775 |
|
Lease liability |
|
|
9,348 |
|
|
|
8,644 |
|
Unrealized gain |
|
|
860 |
|
|
|
1,488 |
|
Stock options |
|
|
1,520 |
|
|
|
1,731 |
|
Transaction costs |
|
|
4,870 |
|
|
|
— |
|
Other |
|
|
725 |
|
|
|
— |
|
Deferred tax assets before valuation allowance |
|
|
35,049 |
|
|
|
25,924 |
|
Valuation allowance |
|
|
(5,028 |
) |
|
|
(5,267 |
) |
Net deferred tax assets |
|
|
30,021 |
|
|
|
20,657 |
|
|
|
|
|
|
|
|
||
Deferred tax liabilities |
|
|
|
|
|
|
||
Property and equipment |
|
|
(3,502 |
) |
|
|
(1,031 |
) |
Acquired intangible assets |
|
|
(21,006 |
) |
|
|
(13,493 |
) |
Right-of-use assets |
|
|
(8,405 |
) |
|
|
(7,721 |
) |
Debt issuance cost |
|
|
— |
|
|
|
(375 |
) |
Investment in other entities |
|
|
(2,599 |
) |
|
|
(1,701 |
) |
Other |
|
|
— |
|
|
|
(891 |
) |
Deferred tax liabilities |
|
|
(35,512 |
) |
|
|
(25,212 |
) |
Net deferred tax liabilities |
|
$ |
(5,491 |
) |
|
$ |
(4,555 |
) |
Activity related to the Company’s valuation allowance consisted of the following (in thousands):
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Balance, beginning of year |
|
$ |
5,267 |
|
|
$ |
5,904 |
|
|
$ |
8,292 |
|
Allowance taken or written off |
|
|
(239 |
) |
|
|
(637 |
) |
|
|
(2,388 |
) |
Balance, end of year |
|
$ |
5,028 |
|
|
$ |
5,267 |
|
|
$ |
5,904 |
|
As of December 31, 2025, the Company had federal and California tax net operating loss carryforwards of approximately $14.1 million and $41.1 million, respectively. The federal and California net operating loss carryforwards will expire at various dates from 2027 through 2045; however, $2.3 million of the federal net operating loss carryforwards do not expire and will be carried forward indefinitely. The Company has determined certain net operating losses are limited pursuant to Internal Revenue Code Sections 382 and 383, but does not anticipate these net operating losses will expire before utilization.
The Company determines its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings is more likely than not to be sustained upon examination by the relevant income tax authorities. The following table summarizes the activity related to the Company’s unrecognized tax benefits.
|
|
2025 |
|
|
2024 |
|
||
Gross unrecognized tax benefits at January 1, |
|
$ |
718 |
|
|
$ |
— |
|
Increases for tax positions taken in the current year |
|
|
439 |
|
|
|
359 |
|
Increases for tax positions taken in the prior year |
|
|
79 |
|
|
|
359 |
|
Gross unrecognized tax benefits at December 31, |
|
$ |
1,236 |
|
|
$ |
718 |
|
If recognized, $1.2 million and $0.7 million of the unrecognized tax benefits as of December 31, 2025 and 2024, respectively, would reduce the annual effective tax rate. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit.
The Company is subject to U.S. federal income tax, as well as income tax in several states. The Company and its subsidiaries’ state and federal income tax returns are open to audit under the statute of limitations for the years ended December 31, 2021 through December 31, 2024, and for the years ended December 31, 2022 through December 31, 2024, respectively. The Company is currently under audit by the California Franchise Tax Board for tax years ended December 31, 2019 through December 31, 2022.
Recent Tax Legislation
On July 4, 2025, the reconciliation bill, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), was signed into law in the U.S., which includes a broad range of tax reform provisions. Beginning in 2025, the OBBBA provides an elective deduction for domestic research and development expenses, a reinstatement of elective 100% first-year bonus depreciation and repeal of non-U.S. corporations' fiscal year end. The impact of this legislation was not material to the Company's consolidated financial position and results of operation for the year ended December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Apr 2, 2018 | |
| 2016 | Jun 29, 2016 | |
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.