SUPERNUS PHARMACEUTICALS, INC.SUPN

SUPERNUS PHARMACEUTICALS, INC. Income Taxes Disclosure

10-KFiled Feb 25, 20254 min read
Income Tax Expense
The summary of the income tax expense for the years ended December 31, 2024, 2023, and 2022 is as follows (dollars in thousands):
Year Ended December 31,
202420232022
Current
Federal$31,217 $20,772 $17,515 
State12,925 6,395 8,846 
Deferred
Federal(18,920)(21,351)(6,802)
State(1,217)(4,363)(19,527)
Total income tax expense$24,005 $1,453 $32 
A reconciliation of income tax expense at the U.S. federal statutory income tax rate to annual income tax expense at the Company's effective tax rate is as follows (dollars in thousands):
Year Ended December 31,
202420232022
Income tax expense computed at U.S. federal statutory income tax rate$20,553 $581 $12,756 
State income taxes5,114 (330)(3,198)
Permanent items131 3,028 399 
Research and development credits(8,628)(1,117)237 
Loss on investment(2,147)— — 
Uncertain income tax position2,620 (2,529)(1,992)
Change in valuation allowance5,859 1,267 (8,626)
Other503 553 456 
Income tax expense$24,005 $1,453 $32 
The significant components of the Company's deferred income tax assets (liabilities) are as follows (dollars in thousands):
As of December 31,
20242023
Deferred tax assets:
Net operating loss carryforwards$93,109 $101,325 
Accrued product returns and rebates20,627 22,150 
Accrued compensation and stock based compensation15,912 15,613 
Operating lease liability8,608 10,374 
Capitalized research and development47,103 29,953 
Other14,100 12,755 
Total deferred tax assets199,459 192,170 
Less: valuation allowance(66,725)(60,866)
Total deferred tax asset, net of valuation allowance132,734 131,304 
Deferred tax liabilities:
Intangibles(128,188)(144,327)
Operating lease assets(6,159)(7,251)
Other(3,348)(4,689)
Total deferred tax liabilities(137,695)(156,267)
Net deferred tax liabilities$(4,961)$(24,963)
In assessing the realizability of deferred income tax assets, the Company considers whether it is more-likely-than-not that some or all of the deferred income tax assets will not be realized. The ultimate realization of the deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the net operating loss (NOL) is available. The Company considers projected future taxable income, the scheduled reversal of deferred income tax liabilities, and available tax planning strategies that can be implemented by the Company in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the NOL and credit carryforwards are available to reduce income taxes payable, management had determined it is not more-likely-than-not to realize all such net deferred tax assets.
A reconciliation of the deferred tax asset valuation allowance is as follows (dollars in thousands):
Year Ended December 31,
202420232022
Beginning balance$60,866 $59,598 $70,529 
Acquisition Accounting(1)
— — (2,305)
Additions6,785 1,268 435 
Deductions(926)— (9,061)
Ending balance$66,725 $60,866 $59,598 
(1) Amount comprised principally of acquisitions and purchase accounting adjustments in connect with acquisitions
The Company recorded a net valuation allowance addition of $5.9 million for the year ended December 31, 2024. The valuation allowance is primarily related to federal and state net operating losses carryforwards acquired from the Adamas Acquisition that are not expected to be realizable in the future.
The Company has NOL carryforwards in several jurisdictions. Due to changes in the Company's ownership, the utilization of net operating loss carryforwards that can be used to offset future taxable income are subject to annual limits in
accordance with Internal Revenue Code (IRC) provisions, as well as similar state provisions. In addition, states may also impose other future limitations through state legislation or similar measures. Despite the NOL carryforwards, the Company may incur higher state income tax expense in the future.
As of December 31, 2024, the U.S. federal and state NOL carryforwards amounted to approximately $340.6 million and $467.0 million, respectively, which will expire in various years beginning in 2031. For the year ended December 31, 2024, the Company utilized federal NOLs of approximately $33.5 million and state NOLs of approximately $17.1 million.
The Company is no longer subject to U.S. Federal income tax examinations for years prior to 2021 with the exception that operating loss or tax credit carryforwards generated prior to 2021 may be subject to tax audit adjustment.
The Company accounts for uncertain income tax positions pursuant to the guidance in ASC Topic 740, Income Taxes. The Company recognizes interest and penalties related to uncertain tax positions, if any, in Income Tax Expense. Some uncertain income tax position liabilities have been recorded against the Company's deferred income tax assets to offset such tax attribute carryforwards and other positions that cannot be offset by tax attributes until liability has been booked.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (dollars in thousands):
Year Ended December 31,
202420232022
Balance as of January 1$2,149 $4,323 $6,100 
Gross increases related to current year tax positions517 112 32 
Gross increases related to prior year tax positions3,829 9 — 
Gross decreases related to prior year tax positions— — (39)
Lapse of statute of limitations(655)$(2,295)(1,770)
Balance as of December 31$5,840 $2,149 $4,323 
The Company does not anticipate a material impact to the financial statements in the next twelve months as a result of a change in liabilities for uncertain tax positions.
As of December 31, 2024, $3.5 million of the balance of unrecognized tax benefits was classified as Accounts payable and accrued liabilities. At December 31, 2023 and 2022, respectively the balance of unrecognized tax benefits was classified as other long term liabilities.
All of our liabilities for unrecognized tax benefits would impact the effective tax rate, if recognized.
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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.

Other Available Disclosures

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