MIMEDX GROUP, INC.MDXG
MIMEDX GROUP, INC. Income Taxes Disclosure
Income Taxes
Income Tax Provision Expense (Benefit)
Current and deferred income tax expense (benefit) is as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 6,417 | $ | 703 | $ | 576 | |||||||||||
| State | 2,534 | 2,121 | 422 | ||||||||||||||
| Foreign | 23 | — | — | ||||||||||||||
| Total current | 8,974 | 2,824 | 998 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 8,165 | 11,626 | (31,633) | ||||||||||||||
| State | 545 | 846 | (9,144) | ||||||||||||||
| Total deferred | 8,710 | 12,472 | (40,777) | ||||||||||||||
| Income tax provision expense (benefit) | $ | 17,684 | $ | 15,296 | $ | (39,779) | |||||||||||
Summary of Deferred Tax Assets and Liabilities
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts 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 (in thousands):
December 31, | |||||||||||
2025 | 2024 | ||||||||||
| Deferred Tax Assets: | |||||||||||
Accrued expenses | $ | 4,364 | $ | 3,038 | |||||||
Share-based compensation | 4,356 | 3,933 | |||||||||
Intangible assets | 3,226 | 580 | |||||||||
Net operating loss | 2,572 | 3,713 | |||||||||
Credit Loss Expense | 2,149 | 778 | |||||||||
Capitalized research and development expenditures | 2,100 | 9,970 | |||||||||
Lease liabilities | 1,128 | 1,456 | |||||||||
Research and development and other tax credits | 998 | 6,752 | |||||||||
| Sales return and allowances | 601 | 494 | |||||||||
Property and equipment | 460 | 295 | |||||||||
Other assets | 815 | 155 | |||||||||
| Deferred Tax Liabilities: | |||||||||||
| Prepaid expenses | (1,638) | (949) | |||||||||
Right of use asset | (1,073) | (1,392) | |||||||||
Other liabilities | (158) | (12) | |||||||||
Net Deferred Tax Assets | 19,900 | 28,811 | |||||||||
Less: Valuation allowance | (304) | (505) | |||||||||
Net Deferred Tax Assets after Valuation Allowance | $ | 19,596 | $ | 28,306 | |||||||
Certain income and expense items are not reported in tax returns and financial statements in the same year. The tax effects of such temporary differences are reported as deferred income tax assets and liabilities. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefit that, based on available evidence, is not expected to be realized. The Company establishes a valuation allowance for deferred tax assets for which realization is not more likely than not. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. A valuation allowance of $0.3 million and $0.5 million was recorded against the deferred tax asset balance as of December 31, 2025 and 2024, respectively. In the event that the weight of the evidence changes in the future, any increase or decrease in the valuation allowance would result in a income tax expense or benefit, respectively.
The Company has no federal income tax net operating loss (“NOL”) carryforward at December 31, 2025. At December 31, 2025, the Company had income tax net operating loss carryforwards for state purposes of $42.0 million.. At December 31, 2024, the Company had NOL carryforwards for federal and state purposes of $0.7 million and $64.2 million, respectively. A portion of the Company’s NOLs and tax credits are subject to annual limitations due to ownership change limitations provided by Internal Revenue Code Section 382. If not utilized, the state tax NOL carryforwards will expire between 2028 and 2038. As of December 31, 2025, the Company recorded a deferred tax asset for state NOL carryforwards of $2.6 million. There was no deferred tax asset for federal NOL carryforwards as of December 31, 2025. As of December 31, 2024, the Company recorded a deferred tax asset for federal and state NOL carryforwards of $0.1 million and $3.6 million, respectively.
Effective Tax Rate Reconciliation
The following table provides a tabular rate reconciliation of the federal statutory income tax rate of 21% to the Company’s effective income tax rate for the year ended December 31, 2025, pursuant to the disclosure requirements of ASU 2023-09 (amounts in thousands, except percentages):
Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
Federal statutory rate | $ | 13,916 | 21.0 | % | |||||||
Domestic federal | |||||||||||
| Tax credits | |||||||||||
| Research and development tax credits | (422) | (0.6) | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Nondeductible compensation | 2,213 | 3.3 | % | ||||||||
| Equity compensation | (577) | (0.9) | % | ||||||||
| Other | 68 | 0.1 | % | ||||||||
Domestic state income taxes, net of federal effect | 2,432 | 3.7 | % | ||||||||
Foreign tax effects | 23 | — | % | ||||||||
Changes in unrecognized tax benefits | 31 | 0.1 | % | ||||||||
Effective Tax Rate | $ | 17,684 | 26.7 | % | |||||||
California, Minnesota, Illinois, Florida and Texas comprise the majority of the Company’s state tax income tax expense.
The reconciliation of the federal statutory income tax rate of 21% to the effective rate is as follows:
2024 | 2023 | ||||||||||
Federal statutory rate | 21.0 | % | 21.0 | % | |||||||
State taxes, net of federal benefit | 4.1 | % | (21.8) | % | |||||||
Deferred tax adjustments | 0.9 | % | 1.3 | % | |||||||
Nondeductible compensation | 1.1 | % | 1.8 | % | |||||||
Meals and entertainment | 0.6 | % | 1.2 | % | |||||||
| Uncertain tax positions | — | % | 0.4 | % | |||||||
Valuation allowance | — | % | (123.5) | % | |||||||
| Share-based compensation | (1.0) | % | 2.8 | % | |||||||
| Tax credits | (0.7) | % | (3.2) | % | |||||||
Other | 0.7 | % | (0.2) | % | |||||||
Effective tax rate | 26.7 | % | (120.2) | % | |||||||
The effective tax rate for the year ended December 31, 2023 was favorably impacted by the reversal of a valuation allowance. During that period, the Company concluded that it was no longer in a cumulative three-year loss on a continuing operations basis, after excluding the effects of permanent book-tax differences. The absence of such negative evidence, combined with the Company’s expectation for future taxable income generation, led to a change in the Company’s assessment of the realizability of its deferred tax assets.
Income Taxes Paid
The following table summarizes income taxes paid net of tax refunds for the year ended December 31, 2025, pursuant to the requirements prescribed by ASU 2023-09 (amounts in thousands):
Year Ended December 31, | |||||
| 2025 | |||||
| Federal | $ | 5,940 | |||
| State | 2,511 | ||||
| Foreign | 57 | ||||
Total | $ | 8,508 | |||
In 2025, the individual jurisdictions with cash taxes paid that equaled or exceeded 5% of total income taxes paid were California and Minnesota.
Unrecognized Tax Benefits
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands) included in the consolidated balance sheets:
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits - January 1 | $ | 831 | $ | 807 | $ | 645 | |||||||||||
| Increases - tax positions in current period | 48 | 53 | 124 | ||||||||||||||
| Increases - tax positions in prior period | — | — | 38 | ||||||||||||||
| Decreases in prior year positions | (17) | (29) | — | ||||||||||||||
| Unrecognized tax benefits - December 31 | $ | 862 | $ | 831 | $ | 807 | |||||||||||
Included in the balance of unrecognized tax benefits are tax benefits of $0.9 million and $0.8 million as of December 31, 2025 and 2024, respectively, that, if recognized, would affect the effective tax rate. Of these amounts, $0.9 million and $0.2 million, respectively, are recorded as other liabilities in the consolidated balance sheets as of those dates. The remaining balance, if any, is reflected as a reduction to the related deferred tax asset.
The Company recognizes accrued interest related to unrecognized tax benefits and penalties as income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued no interest during the years ended December 31, 2025 or 2024.
The Company is subject to taxation in the U.S. and various state jurisdictions. As of December 31, 2025, the Company’s tax returns for 2022 through 2024 generally remain open for exam by taxing jurisdictions. Additional prior years may be open to the extent attributes are being carried forward to an open tax year.
One Big Beautiful Bill Act
On July 4, 2025, the “One Big Beautiful Bill Act” (the “Tax Act”) was enacted into law. The Tax Act includes changes to U.S. tax law that will be applicable to the Company beginning in tax year 2025. These changes include modifications to capitalization of research and development expenses, limitations on deductions for interest expense and accelerated fixed asset depreciation. The impact of these provisions resulted in a current tax benefit resulting from the utilization of deferred tax assets, and did not affect the Company’s effective tax rate in the year ended December 31, 2025. This impact is expected to be temporary.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 8, 2021 | |
| 2019 | Jul 6, 2020 | |
| 2018 | Mar 17, 2020 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 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.