CATALYST PHARMACEUTICALS, INC. Income Taxes Disclosure
Net income before income taxes for the years ended December 31, 2025, 2024 and 2023 consists of (in thousands):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
United States |
|
$ |
283,515 |
|
|
$ |
216,263 |
|
|
$ |
94,511 |
|
|
|
$ |
283,515 |
|
|
$ |
216,263 |
|
|
$ |
94,511 |
|
The Company is subject to income taxes in the U.S. federal jurisdiction and various states jurisdictions.
The income tax expense for the years ended December 31, 2025, 2024 and 2023 consists of (in thousands):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current tax expense: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
62,479 |
|
|
$ |
52,876 |
|
|
$ |
34,975 |
|
State |
|
|
13,475 |
|
|
|
8,951 |
|
|
|
5,931 |
|
Total current tax expense |
|
|
75,954 |
|
|
|
61,827 |
|
|
|
40,906 |
|
Deferred tax expense: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
(4,903 |
) |
|
|
(8,442 |
) |
|
|
(16,093 |
) |
State |
|
|
(1,862 |
) |
|
|
(1,011 |
) |
|
|
(1,712 |
) |
Total deferred tax expense |
|
|
(6,765 |
) |
|
|
(9,453 |
) |
|
|
(17,805 |
) |
|
|
$ |
69,189 |
|
|
$ |
52,374 |
|
|
$ |
23,101 |
|
The reconciliation of income tax expense is computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 as follows (dollar amounts in thousands):
|
|
2025 |
|
|||||
U.S. federal statutory tax rate |
|
$ |
59,538 |
|
|
|
21.0 |
% |
Domestic federal: |
|
|
|
|
|
|
||
Tax credits |
|
$ |
(546 |
) |
|
|
(0.2 |
)% |
Nontaxable or nondeductible items: |
|
|
|
|
|
|
||
Executive compensation limitation |
|
$ |
7,507 |
|
|
|
2.6 |
% |
Other |
|
$ |
1,270 |
|
|
|
0.5 |
% |
Excess tax benefits on share-based compensation |
|
$ |
(7,373 |
) |
|
|
(2.6 |
)% |
Other |
|
$ |
10 |
|
|
|
0.0 |
% |
Domestic state and local income taxes, net of federal income |
|
$ |
8,783 |
|
|
|
3.1 |
% |
|
|
$ |
69,189 |
|
|
|
24.4 |
% |
During the year ended December 31, 2025, state and local income taxes in California, Florida, and New York comprise the majority of the state and local income taxes, net of the federal income tax effect in this category.
The reconciliation of income tax expense computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:
|
|
2024 |
|
|
2023 |
|
||
Statutory rate |
|
|
21.0 |
% |
|
|
21.0 |
% |
State tax |
|
|
2.8 |
% |
|
|
3.1 |
% |
Executive compensation limitation |
|
|
4.1 |
% |
|
|
2.6 |
% |
Tax credit |
|
|
(0.1 |
)% |
|
|
— |
|
Excess tax benefits on share-based compensation |
|
|
(4.1 |
)% |
|
|
(4.4 |
)% |
Other |
|
|
0.5 |
% |
|
|
2.1 |
% |
|
|
|
24.2 |
% |
|
|
24.4 |
% |
Deferred tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryovers and the temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets/(liabilities) as of December 31, 2025 and 2024 are as follows (in thousands):
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Deferred compensation |
|
$ |
9,371 |
|
|
$ |
7,950 |
|
Inventory |
|
|
1,972 |
|
|
|
561 |
|
Intangible assets |
|
|
34,038 |
|
|
|
29,167 |
|
Accrued expenses |
|
|
7,993 |
|
|
|
4,863 |
|
Operating lease liability |
|
|
675 |
|
|
|
762 |
|
Capitalized research |
|
|
1,550 |
|
|
|
5,755 |
|
Total deferred tax assets |
|
|
55,599 |
|
|
|
49,058 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
(828 |
) |
|
|
(1,096 |
) |
Right-of use asset |
|
|
(584 |
) |
|
|
(668 |
) |
Other |
|
|
(1,420 |
) |
|
|
(1,312 |
) |
Total deferred tax liabilities |
|
|
(2,832 |
) |
|
|
(3,076 |
) |
Deferred tax assets, net |
|
$ |
52,767 |
|
|
$ |
45,982 |
|
The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. As of December 31, 2025, the Company determined that there is sufficient positive evidence to conclude that it is more likely than not that the above deferred taxes are realizable.
The Company has received several orphan drug designations by the FDA. The orphan drug designations allow the Company to claim increased federal tax credits for certain research and development activities.
On July 4, 2025, the U.S. Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill Act (OBBBA). The OBBBA contains several changes to corporate taxation including modifications to capitalization of research and development expenses and accelerated fixed asset depreciation. The Company has reflected the effects of the legislation on its annual effective tax rate and cash tax position, and determined that the legislation does not have a material impact on its effective tax rate.
An immaterial amount of interest and penalties were accrued through December 31, 2025 and 2024. The Company’s policy is to recognize any related interest or penalties in income tax expense. The Company is not currently under income tax examinations by any tax authorities.
Income taxes paid by jurisdiction during the year ended December 31, 2025 consisted of the following (in thousands):
|
|
2025 |
|
|
U.S. federal |
|
$ |
59,550 |
|
U.S. state and local: |
|
|
|
|
Florida |
|
|
4,230 |
|
Other |
|
|
8,206 |
|
Foreign |
|
|
— |
|
|
|
$ |
71,986 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 15, 2023 | |
| 2021 | Mar 16, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Mar 14, 2018 | |
| 2016 | Mar 15, 2017 | |
| 2015 | Mar 15, 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.