Pediatrix Medical Group, Inc. Income Taxes Disclosure
13. Income Taxes:
The components of the income tax provision (benefit) are as follows (in thousands):
|
|
December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Federal: |
|
|
|
|
|
|
|
|
|
|||
Current |
|
$ |
1,597 |
|
|
$ |
(1,286 |
) |
|
$ |
8,040 |
|
Deferred |
|
|
39,835 |
|
|
|
(880 |
) |
|
|
1,467 |
|
|
|
|
41,432 |
|
|
|
(2,166 |
) |
|
|
9,507 |
|
State: |
|
|
|
|
|
|
|
|
|
|||
Current |
|
|
(2,739 |
) |
|
|
1,144 |
|
|
|
770 |
|
Deferred |
|
|
12,351 |
|
|
|
(1,250 |
) |
|
|
1,772 |
|
|
|
|
9,612 |
|
|
|
(106 |
) |
|
|
2,542 |
|
Total |
|
$ |
51,044 |
|
|
$ |
(2,272 |
) |
|
$ |
12,049 |
|
The Company files its tax return on a consolidated basis with its subsidiaries, and its affiliated professional contractors file tax returns on an individual basis.
The effective tax rate was 23.6%, 2.2%, and (24.9)% for the years ended December 31, 2025, 2024 and 2023, respectively. The effective tax rate for the year ended December 31, 2024 includes $12.5 million of expense related to non-cash impairment charges related to goodwill. The effective tax rate for the year ended December 31, 2023 includes $17.8 million of expense related to non-cash impairment charges related to goodwill and a cost-method investment.
The differences between the effective rate and the United States federal income tax statutory rate are as follows:
|
|
December 31, 2025(1) |
|
||||
|
|
Amount |
|
Percent |
|
||
Tax at statutory rate |
|
$ |
45,451 |
|
|
21.00 |
% |
State income tax, net of federal benefit(2) |
|
|
9,208 |
|
|
4.25 |
|
Non-deductible expenses |
|
|
|
|
|
||
Executive compensation |
|
|
3,317 |
|
|
1.53 |
|
Equity compensation adjustments |
|
|
(662 |
) |
|
(0.31 |
) |
Other non-deductible expenses |
|
|
451 |
|
|
0.21 |
|
Change in accrual estimates relating to |
|
|
(1,614 |
) |
|
(0.75 |
) |
Change in valuation allowance |
|
|
(1,289 |
) |
|
(0.60 |
) |
Tax benefit related to divested operations |
|
|
(3,969 |
) |
|
(1.83 |
) |
Other, net |
|
|
151 |
|
|
0.08 |
|
Income tax provision and effective tax rate |
|
$ |
51,044 |
|
|
23.58 |
% |
(1) This table has been presented in conformity with new accounting guidance for income tax disclosures. See Note 2 - Summary of Significant Accounting Policies for more information.
(2) State taxes in Tennessee, California and Colorado made up the majority (greater than 50 percent) of the tax effect in this category.
|
|
December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Tax at statutory rate |
|
|
21.00 |
% |
|
|
21.00 |
% |
State income tax, net of federal benefit |
|
|
3.26 |
|
|
|
2.79 |
|
Non-deductible expenses |
|
|
(1.39 |
) |
|
|
(4.43 |
) |
Equity compensation adjustments |
|
|
(1.80 |
) |
|
|
(3.98 |
) |
Change in accrual estimates relating to |
|
|
(0.22 |
) |
|
|
0.67 |
|
Change in valuation allowance |
|
|
(6.35 |
) |
|
|
(13.82 |
) |
Goodwill impairment |
|
|
(12.38 |
) |
|
|
(26.67 |
) |
Other, net |
|
|
0.12 |
|
|
|
(0.48 |
) |
Effective tax rate |
|
|
2.24 |
% |
|
|
(24.92 |
)% |
During the year ended December 31, 2025, the Company paid income taxes for all jurisdictions as follows:
|
|
December 31, |
|
|
|
|
2025 |
|
|
Federal |
|
321 |
|
|
|
|
|
|
|
State: |
|
|
|
|
Texas |
|
|
1,207 |
|
Other |
|
|
187 |
|
State total |
|
|
1,394 |
|
|
|
|
|
|
Total |
|
$ |
1,715 |
|
During the years ended December 31, 2024 and 2023, the Company paid income taxes for all jurisdictions of $4.7 million and $30.8 million, respectively.
All of the Company’s deferred tax assets and liabilities are classified as long-term. The significant components of deferred income tax assets and liabilities are as follows (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Allowance for uncollectible accounts |
|
$ |
6,512 |
|
|
$ |
122,742 |
|
Reserves and accruals |
|
|
62,699 |
|
|
|
68,128 |
|
Stock-based compensation |
|
|
2,567 |
|
|
|
1,691 |
|
Operating loss and other carryforwards |
|
|
118,405 |
|
|
|
47,869 |
|
Capital loss carryforwards |
|
|
14,146 |
|
|
|
412,392 |
|
Operating lease assets |
|
|
9,694 |
|
|
|
12,332 |
|
Property and equipment |
|
|
1,686 |
|
|
|
2,734 |
|
Other |
|
|
1,232 |
|
|
|
914 |
|
Deferred tax assets before valuation |
|
|
216,941 |
|
|
|
668,802 |
|
Less: Valuation allowance |
|
|
(29,654 |
) |
|
|
(425,395 |
) |
Deferred tax assets, net of valuation |
|
|
187,287 |
|
|
|
243,407 |
|
Gross deferred tax liabilities: |
|
|
|
|
|
|
||
Amortization |
|
|
(162,181 |
) |
|
|
(161,983 |
) |
Operating lease liabilities |
|
|
(8,184 |
) |
|
|
(9,687 |
) |
Other |
|
|
(24 |
) |
|
|
(2,128 |
) |
Total deferred tax liabilities |
|
|
(170,389 |
) |
|
|
(173,798 |
) |
Net deferred tax assets |
|
$ |
16,898 |
|
|
$ |
69,609 |
|
The Company’s net deferred tax assets were $16.9 million as of December 31, 2025, as compared to $69.6 million at December 31, 2024. The decrease in net deferred tax assets of $52.7 million during the year ended December 31, 2025 was primarily related to decreases for capital loss carryforwards of $398.2 million and allowance for uncollectible accounts of $116.2 million, partially offset by increases for changes in the valuation allowance of $395.7 million and operating loss carryforwards of $70.5 million. The changes in the valuation allowance of $395.7 million and capital loss carryforwards of $398.2 million both primarily related to the effect of expiring capital loss carryforwards.
For the year ended December 31, 2025, an income tax benefit of $0.8 million was recognized for windfalls associated with stock-based compensation. For the years ended December 31, 2024 and 2023, income tax expense of $1.8 million and $1.9 million, respectively, was recognized for excess tax deficiencies associated with stock-based compensation.
The Company has $59.3 million of capital loss carryforwards as of December 31, 2025, which expire in 2026 through 2029. As of December 31, 2025, management has determined that it is more likely than not that the tax benefits related to these carryforwards will not be realized and has recorded a full valuation allowance against the related deferred tax assets. Additionally, the Company had net operating loss carryforwards for federal and state tax purposes totaling $355.6 million, $72.3 million and $56.4 million at December 31, 2025, 2024 and 2023, respectively. With respect to the December 31, 2025 balance, $23.1 million expires at various times from 2033 through 2045, and $332.5 million does not expire.
As of December 31, 2025, 2024 and 2023, the Company’s liability for uncertain tax positions, excluding accrued interest and penalties, was $1.0 million, $2.4 million and $2.4 million, respectively. As of December 31, 2025, the Company had $1.0 million of uncertain tax positions that, if recognized, would favorably impact its effective tax rate.
The following table summarizes the activity related to the Company’s liability for uncertain tax positions for the years ended December 31, 2025, 2024 and 2023 (in thousands):
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Balance at beginning of year |
|
$ |
2,402 |
|
|
$ |
2,449 |
|
|
$ |
2,838 |
|
(Decreases) increases related to prior year tax positions |
|
|
— |
|
|
|
(47 |
) |
|
|
70 |
|
Increases related to current year tax |
|
|
— |
|
|
|
— |
|
|
|
200 |
|
Decreases related to lapse of statutes |
|
|
(1,379 |
) |
|
|
— |
|
|
|
(659 |
) |
Balance at end of year |
|
$ |
1,023 |
|
|
$ |
2,402 |
|
|
$ |
2,449 |
|
The Company includes interest and penalties related to income tax liabilities in income tax expense. During the year ended December 31, 2025, 2024 and 2023, the Company included $0.2 million, $0.3 million and $0.2 million, respectively, of interest and penalties in income tax expense. At December 31, 2025 and 2024, the Company's accrued liability for interest and penalties related to income tax liabilities totaled $0.3 million and $0.5 million, respectively.
The Company is currently subject to U.S. Federal and various state income tax examinations for the tax years 2022 through 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 14, 2019 | |
| 2017 | Feb 14, 2018 | |
| 2016 | Feb 10, 2017 | |
| 2015 | Feb 11, 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.