NEOGENOMICS INCNEO
NEOGENOMICS INC Income Taxes Disclosure
Income Taxes
(Loss) income before income tax expense (benefit) for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | (42,629) | $ | (43,086) | $ | (62,489) | |||||||||||
| Foreign | (67,639) | (37,589) | (34,608) | ||||||||||||||
| Total | $ | (110,268) | $ | (80,675) | $ | (97,097) | |||||||||||
Significant components of the provision for income taxes December 31, 2025, 2024 and 2023 is as follows (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | — | $ | (35) | $ | — | |||||||||||
| State | 866 | 581 | 391 | ||||||||||||||
| Foreign | — | 79 | — | ||||||||||||||
| Total current provision (benefit) | $ | 866 | $ | 625 | $ | 391 | |||||||||||
| Deferred: | |||||||||||||||||
| Federal | $ | 112 | $ | (340) | $ | (373) | |||||||||||
| State | 165 | 9 | 602 | ||||||||||||||
| Foreign | (3,386) | (2,243) | (9,749) | ||||||||||||||
| Total deferred provision (benefit) | $ | (3,109) | $ | (2,574) | $ | (9,520) | |||||||||||
| Income tax expense (benefit) | $ | (2,243) | $ | (1,949) | $ | (9,129) | |||||||||||
A reconciliation of the differences between the effective tax rate and the federal statutory tax rate for the years ended December 31, 2025, 2024 and 2023 is as follows (amounts in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| Federal statutory tax rate | $ | (23,156) | 21.00 | % | $ | (16,942) | 21.00 | % | $ | (20,390) | 21.00 | % | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effect(1)-(3) | 891 | (0.81) | % | 337 | (0.42) | % | 911 | (0.94) | % | ||||||||||||||||||||||||||
| Foreign tax effects: | |||||||||||||||||||||||||||||||||||
| United Kingdom: | |||||||||||||||||||||||||||||||||||
| Statutory tax rate difference | (2,642) | 2.40 | % | (2,300) | 2.85 | % | (1,207) | 1.24 | % | ||||||||||||||||||||||||||
| Change in valuation allowance | 13,179 | (11.95) | % | 12,606 | (15.62) | % | 1,526 | (1.57) | % | ||||||||||||||||||||||||||
| Effects of changes in tax laws or rates enacted in current period | — | — | % | — | — | % | (1,025) | 1.06 | % | ||||||||||||||||||||||||||
| Other | 268 | (0.24) | % | (282) | 0.35 | % | 655 | (0.68) | % | ||||||||||||||||||||||||||
| Switzerland: | |||||||||||||||||||||||||||||||||||
| Statutory tax rate difference | — | — | % | (622) | 0.77 | % | 87 | (0.09) | % | ||||||||||||||||||||||||||
| Change in valuation allowance | (329) | 0.30 | % | (3,693) | 4.58 | % | 919 | (0.95) | % | ||||||||||||||||||||||||||
| Other | 329 | (0.30) | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Other foreign jurisdictions | 13 | (0.01) | % | (436) | 0.54 | % | 302 | (0.31) | % | ||||||||||||||||||||||||||
| Effects of changes in tax laws or rates enacted in current period | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Effects of cross-border tax laws | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Tax credits: | |||||||||||||||||||||||||||||||||||
| R&D credit | (2,735) | 2.48 | % | 467 | (0.58) | % | (444) | 0.46 | % | ||||||||||||||||||||||||||
| Change in valuation allowance | 3,566 | (3.23) | % | 2,662 | (3.30) | % | 4,973 | (5.12) | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||||||||
| Compensation expense | 7,426 | (6.73) | % | 5,252 | (6.51) | % | 4,007 | (4.13) | % | ||||||||||||||||||||||||||
| Other nondeductible items | 1,324 | (1.20) | % | 543 | (0.67) | % | 336 | (0.35) | % | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Other adjustments | (377) | 0.32 | % | 459 | (0.57) | % | 221 | (0.23) | % | ||||||||||||||||||||||||||
| Effective tax rate | $ | (2,243) | 2.03 | % | $ | (1,949) | 2.42 | % | $ | (9,129) | 9.40 | % | |||||||||||||||||||||||
(1) State taxes in Florida and Texas make up the majority (greater than 50 percent) of the effect of this category for the period ended December 31, 2025.
(2) State taxes in Texas make up the majority of the effect of this category for the period ended December 31, 2024.
(3) State taxes in Texas and Florida make up the majority of the effect of this category for the period ended December 31, 2023.
At December 31, 2025 and 2024, deferred income tax assets and liabilities consisted of the following (in thousands):
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Accrued compensation | $ | 8,020 | $ | 9,712 | |||||||
| Net operating loss carry-forwards | 116,019 | 110,887 | |||||||||
| Tax credits | 15,308 | 11,487 | |||||||||
| Stock-based compensation | 4,931 | 3,860 | |||||||||
| Operating lease liabilities | 17,325 | 16,238 | |||||||||
| Convertible debt discount | 2,217 | 3,262 | |||||||||
| Research expenditures | 4,685 | 7,275 | |||||||||
| Other | 3,670 | 2,772 | |||||||||
| Gross deferred tax assets | 172,175 | 165,493 | |||||||||
| Less: valuation allowance | (100,453) | (83,893) | |||||||||
| Total deferred tax assets | $ | 71,722 | $ | 81,600 | |||||||
| Deferred tax liabilities: | |||||||||||
| Operating lease right-of-use assets | $ | (15,436) | $ | (15,166) | |||||||
| Intangible assets | (72,502) | (85,809) | |||||||||
| Property and equipment | (2,003) | (2,135) | |||||||||
| Total deferred tax liabilities | $ | (89,941) | $ | (103,110) | |||||||
| Net deferred income tax liabilities | $ | (18,219) | $ | (21,510) | |||||||
At December 31, 2025, the Company has federal net operating loss carry forwards of approximately $250.8 million, foreign net operating loss carryforwards of approximately $253.6 million, including $250.8 million in the United Kingdom, and state net operating loss carry forwards of approximately $145.4 million. Federal net operating loss (“NOLs”) carry forwards will begin to expire in 2034. Under the Tax Act, as modified by the CARES Act, the Company’s federal NOLs generated in tax years ending after December 31, 2017 may be carried forward indefinitely, however, the deductibility of such federal net NOLs in tax years beginning after December 31, 2020, is limited to 80% of taxable income. State tax NOLs will begin to expire in 2026. The NOLs in the United Kingdom do not expire. As of December 31, 2025, the Company has federal R&D and other credit carryforwards of approximately $11.6 million that begin to expire in 2036 and state research and investment credit carryforwards of approximately $6.9 million that do not expire.
An ownership change of more than 50 percent could result in a limitation of the use of net operating loss carryforwards and credit carryforwards under IRC Section 382, IRC Section 383, and the regulations thereunder. Based on a completed formal study, there were no ownership changes in prior periods that would materially limit the use of the Company’s net operating loss carryforwards and credit carryforwards under IRC Section 382 and IRC Section 383.
Management assesses the recoverability of its deferred tax assets as of the end of each quarter, weighing all positive and negative evidence, and is required to establish and maintain a valuation allowance for these assets if it is more likely than not that some or all of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which the evidence can be objectively verified. If negative evidence exists, positive evidence is necessary to support a conclusion that a valuation allowance is not needed. As of December 31, 2025 and 2024, management determined that sufficient positive evidence did not exist and concluded that it is more likely than not that a valuation allowance is required against deferred tax assets. Accordingly, for 2025, management established a valuation allowance of $72.4 million related to the Company’s domestic operations, a valuation of $27.3 million related to the Company's United Kingdom operations, and a full valuation allowance of $0.7 million related to the Company’s China operations.
The Company files income tax returns in the United States, as well as the United Kingdom and in various immaterial foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment. For U.S. federal purposes, the Company has open tax years ended December 31, 2011 to December 31, 2025. For the United Kingdom the Company has open tax years ended December 31, 2024 to December 31, 2025.
The Company applied the accounting standard for uncertain tax positions and recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax
authority. Increases or decreases to the unrecognized tax benefits could result from management’s belief that a position can or cannot be sustained upon examination based on subsequent information or potential lapse of the applicable statute of limitation for certain tax positions.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. Key elements of the Tax Cuts and Jobs Act changed under the OBBBA, including the restoration of full expensing for domestic research and development cost and the option to elect to accelerate any domestic research costs that were capitalized but still are unamortized. The Company included the enacted effects of the legislation, finding that the legislation did not have a material on its effective tax rate and cash tax position due to the valuation allowance on deferred tax assets as of December 31, 2025.
The following are the unrecognized tax benefits as of December 31, 2025, 2024, and 2023 (in thousands):
| 2025 | 2024 | 2023 | ||||||||||||
| Unrecognized tax benefits - January 1 | $ | 12,394 | $ | 7,953 | $ | 3,159 | ||||||||
| Increases in prior year positions | 498 | — | — | |||||||||||
| Reversals of prior year positions | — | (1,010) | — | |||||||||||
| Increases in tax positions taken in current year | 633 | 5,451 | 4,794 | |||||||||||
| Statute expirations | — | — | — | |||||||||||
| Unrecognized tax benefits - December 31 | $ | 13,525 | $ | 12,394 | $ | 7,953 | ||||||||
Due to the valuation allowance, the majority of unrecognized tax benefits at December 31, 2025, if recognized, would not impact the Company’s effective tax rate. The interest and penalties related to the unrecognized tax benefit are immaterial. Interest and tax penalties related to unrecognized tax benefits are included in income tax expense.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2016 | Mar 14, 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.