CROSS COUNTRY HEALTHCARE INCCCRN
CROSS COUNTRY HEALTHCARE INC Income Taxes Disclosure
Income Taxes
The components of the Company's (loss) income before income taxes are as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (amounts in thousands) | |||||||||||||||||
| United States | $ | (85,353) | $ | (17,435) | $ | 102,200 | |||||||||||
| Foreign | 1,843 | 1,037 | 694 | ||||||||||||||
| (Loss) income before income taxes | $ | (83,510) | $ | (16,398) | $ | 102,894 | |||||||||||
The components of the Company’s income tax expense (benefit) are as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (amounts in thousands) | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 15 | $ | (104) | $ | 19,871 | |||||||||||
| State | 791 | (75) | 8,940 | ||||||||||||||
| Foreign | 466 | 281 | 148 | ||||||||||||||
| Total | 1,272 | 102 | 28,959 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 8,144 | (2,004) | 554 | ||||||||||||||
| State | 1,675 | (105) | 596 | ||||||||||||||
| Foreign | 251 | 165 | 154 | ||||||||||||||
| Total | 10,070 | (1,944) | 1,304 | ||||||||||||||
| Effective tax rate | $ | 11,342 | $ | (1,842) | $ | 30,263 | |||||||||||
Deferred income taxes reflect the Company's net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company’s deferred tax assets and liabilities are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (amounts in thousands) | |||||||||||
| Deferred Tax Assets: | |||||||||||
| Accrued other and prepaid expenses | $ | 1,666 | $ | 432 | |||||||
| Allowance for credit losses | 2,378 | 2,379 | |||||||||
| Intangible assets | 10,438 | 7,784 | |||||||||
| Net operating loss carryforwards | 7,182 | 6,571 | |||||||||
| Accrued professional liability | 2,309 | 1,907 | |||||||||
| Accrued workers’ compensation | 3,057 | 3,215 | |||||||||
| Share-based compensation | 460 | 918 | |||||||||
| Operating lease liabilities | 332 | 659 | |||||||||
| Depreciation | 1,093 | 203 | |||||||||
| Credit carryforwards | 236 | 170 | |||||||||
| Other | 1,333 | 1,127 | |||||||||
| Gross deferred tax assets | 30,484 | 25,365 | |||||||||
| Valuation allowance | (29,741) | (178) | |||||||||
| 743 | 25,187 | ||||||||||
| Deferred Tax Liabilities: | |||||||||||
| Indefinite-lived intangibles | (2,120) | (16,763) | |||||||||
| Operating lease right-of-use assets | (330) | (320) | |||||||||
| Tax on unrepatriated earnings | (815) | (565) | |||||||||
| (3,265) | (17,648) | ||||||||||
| Net deferred taxes | $ | (2,522) | $ | 7,539 | |||||||
As of December 31, 2025, the Company had approximately $31.5 million of federal net operating loss carryforwards, $52.5 million of state net operating loss carryforwards, and an immaterial amount of foreign net operating loss carryforwards. As a result of the Tax Cuts and Jobs Act of 2017 (2017 Tax Act), the federal net operating loss and certain state net operating losses generated in 2024 and 2025 carry forward indefinitely. Those net operating losses that do not carry forward indefinitely expire between 2027 and 2045.
As of December 31, 2025 and 2024, the Company had $29.7 million and $0.2 million of valuation allowances on its deferred tax assets. As of December 31, 2025, management assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of its existing deferred tax assets. On the basis of this evaluation, additional nonrecurring and recurring valuation allowances of $29.5 million were recorded in the fourth quarter of 2025 as income tax expense to reduce the portion of the deferred tax assets that are not more likely than not to be realized. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support its reversal. The December 31, 2025 valuation allowance applied to all domestic deferred tax assets other than certain deferred tax assets expected to be realized, and an immaterial amount of international net operating losses. The December 31, 2024 valuation allowance applied to the uncertainty of the realization of certain state net operating losses, and an immaterial amount of international net operating losses.
Income Taxes Paid
Cash income taxes paid during the years ended December 31, 2025, 2024, and 2023 were disaggregated by jurisdiction as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (amounts in thousands) | |||||||||||||||||
| Federal | $ | (4,500) | $ | 596 | $ | 14,984 | |||||||||||
| State | (1,586) | 1,551 | 6,837 | ||||||||||||||
| Foreign | 399 | 280 | 165 | ||||||||||||||
| Total | $ | (5,687) | $ | 2,427 | $ | 21,986 | |||||||||||
Income taxes paid (net of refunds) exceeded five percent of total income taxes paid (net of refunds) in the following jurisdictions:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (amounts in thousands) | |||||||||||||||||
| State: | |||||||||||||||||
| California | * | $ | 270 | * | |||||||||||||
| Illinois | * | * | * | ||||||||||||||
| Florida | * | * | $ | 1,258 | |||||||||||||
| New York | $ | (375) | $ | 411 | * | ||||||||||||
| New York City | $ | (447) | * | * | |||||||||||||
| Oregon | * | $ | 123 | * | |||||||||||||
| Texas | * | $ | 234 | * | |||||||||||||
| Foreign: | |||||||||||||||||
| India | $ | 399 | $ | 281 | * | ||||||||||||
________________
(*) Jurisdiction below the five percent threshold for the period presented.
The reconciliation of income tax computed at the U.S. federal statutory rate to income tax (benefit) expense is as follows:
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||
| (amounts in thousands) | ||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | (17,537) | 20.97 | % | $ | (3,444) | 21.00 | % | $ | 21,608 | 21.00 | % | ||||||||||||||
State and local income taxes, net of federal income tax effect (a) | 1,501 | (1.79) | % | (653) | 3.98 | % | 6,834 | 6.64 | % | |||||||||||||||||
| Foreign tax effects | 329 | (0.39) | % | 228 | (1.39) | % | 155 | 0.15 | % | |||||||||||||||||
| Effect of cross-border tax laws | 497 | (0.59) | % | — | — | % | — | — | % | |||||||||||||||||
| Tax credits | (66) | 0.08 | % | (38) | 0.23 | % | (895) | (0.87) | % | |||||||||||||||||
| Changes in valuation allowances | 23,660 | (28.29) | % | — | — | % | — | — | % | |||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||
| Meals and incidentals | 534 | (0.64) | % | 832 | (5.07) | % | 473 | 0.46 | % | |||||||||||||||||
| Officers' compensation | 1,002 | (1.21) | % | 313 | (1.91) | % | (275) | (0.27) | % | |||||||||||||||||
| Other | 69 | (0.08) | % | 88 | (0.54) | % | 100 | 0.10 | % | |||||||||||||||||
| Changes in unrecognized tax benefits | 1,332 | (1.59) | % | 867 | (5.28) | % | 2,771 | 2.69 | % | |||||||||||||||||
| Other adjustments | 21 | (0.03) | % | (35) | 0.21 | % | (508) | (0.49) | % | |||||||||||||||||
| Effective tax rate | $ | 11,342 | (13.56) | % | $ | (1,842) | 11.23 | % | $ | 30,263 | 29.41 | % | ||||||||||||||
________________
(a) In 2023, state and local income taxes in California, Florida, Illinois, Maine, and New York comprise the majority of the domestic state and local income taxes, net of federal effect category. In 2024, state and local income taxes in California, Florida, New York, and Pennsylvania comprise the majority of the domestic state and local income taxes, net of federal effect category. In 2025, state and local income taxes in California, Florida, Illinois, New York, Tennessee, and Virginia comprise the majority of the domestic state and local income taxes, net of federal effect category.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (amounts in thousands) | |||||||||||||||||
| Balance at January 1 | $ | 10,862 | $ | 10,377 | $ | 7,581 | |||||||||||
| Additions based on tax positions related to the current year | 1,187 | 1,336 | 2,737 | ||||||||||||||
| Additions (reductions) based on tax positions related to prior years | 15 | (851) | 59 | ||||||||||||||
| Balance at December 31 | $ | 12,064 | $ | 10,862 | $ | 10,377 | |||||||||||
There were no short-term unrecognized tax benefits as of December 31, 2025 and 2024. Long-term unrecognized tax benefits are included in non-current uncertain tax positions in the consolidated balance sheets and were $10.4 million and $10.1 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, the Company had unrecognized tax benefits, which would affect the effective tax rate if recognized, of $12.0 million and $10.7 million, respectively.
The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. During the years ended December 31, 2025, 2024, and 2023, interest and penalties were immaterial. Tax years 2012 through 2025 remain open to examination by certain taxing jurisdictions to which the Company is subject to tax.
An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward if such carryforward would offset the disallowance of the tax position. As a result of the Company’s generation of a net operating loss, the Company reclassified $2.4 million of unrecognized tax benefits from long-term liabilities to deferred tax assets in the year ended December 31, 2025. As a result of the Company’s utilization of its federal net operating loss carryforward and a material amount of state net operating loss carryforwards, the Company reclassified $1.3 million of unrecognized tax benefits from deferred tax assets to long-term liabilities in the year ended December 31, 2024.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 9, 2026 | Showing above |
| 2024 | Mar 5, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Mar 5, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2016 | Mar 3, 2017 | |
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.