SUPERNUS PHARMACEUTICALS, INC.SUPN
SUPERNUS PHARMACEUTICALS, INC. Income Taxes Disclosure
Income Tax Expense (Benefit)
The tables below for the year ended December 31, 2025 provide the updated requirements of ASU 2023-09, which was adopted on a prospective basis. See Note 2, Summary of Significant Accounting Policies, for additional details on the adoption of ASU 2023-09.
The components of income (loss) before income taxes for the year ended December 31, 2025, were attributable to the following regions (dollars in thousands):
Year Ended December 31, | |||||
| 2025 | |||||
Domestic | $ | (48,825) | |||
Foreign | (205) | ||||
| Total income (loss) before income taxes | $ | (49,030) | |||
The summary of the income tax expense (benefit) for the year ended December 31, 2025 is as follows (dollars in thousands):
Year Ended December 31, | |||||
| 2025 | |||||
| Current tax expense (benefit) | |||||
| Federal | $ | (10,622) | |||
| State | (5,064) | ||||
| Foreign | — | ||||
| Total current tax expense (benefit) | $ | (15,686) | |||
| Deferred tax expense (benefit) | |||||
| Federal | $ | 8,086 | |||
| State | (2,831) | ||||
| Foreign | (49) | ||||
| Total deferred tax expense (benefit) | $ | 5,206 | |||
| Income tax expense (benefit) | — | ||||
| Federal | $ | (2,536) | |||
| State | (7,895) | ||||
| Foreign | (49) | ||||
| Total income tax expense (benefit) | $ | (10,480) | |||
As previously disclosed for the years ended December 31, 2024 and December 31, 2023, prior to the adoption of ASU 2023-09, the summary of the income tax expense for the years ended December 31, 2024, and 2023 is as follows:
Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Current tax expense (benefit) | |||||||||||
| Federal | $ | 31,217 | $ | 20,772 | |||||||
| State | 12,925 | 6,395 | |||||||||
| Deferred tax expense (benefit) | |||||||||||
| Federal | (18,920) | (21,351) | |||||||||
| State | (1,217) | (4,363) | |||||||||
| Total income tax expense | $ | 24,005 | $ | 1,453 | |||||||
A reconciliation of income tax benefit at the U.S. federal statutory income tax rate for the year ended December 31, 2025, to annual income tax benefit at the Company's effective tax rate is as follows:
Year Ended December 31, 2025 | ||||||||
Amount | Percent | |||||||
| Income tax benefit computed at U.S. federal statutory income tax rate | $ | (10,296) | 21.0 | % | ||||
State and local income taxes, net of federal income tax effect (1) | (5,146) | 10.5 | % | |||||
Domestic federal | ||||||||
Tax credits | ||||||||
| Research and development credits | (4,294) | 8.8 | % | |||||
| Change in valuation allowance | (438) | 0.9 | % | |||||
| Nontaxable or nondeductible items | ||||||||
| Limitation on officers' compensation | 2,401 | (4.9) | % | |||||
| Stock compensation | (1,914) | 3.9 | % | |||||
| Meals and entertainment | 831 | (1.7) | % | |||||
| Contingent consideration | 5,338 | (10.9) | % | |||||
| Transaction costs | 5,579 | (11.4) | % | |||||
| Other | 154 | (0.3) | % | |||||
| Other | (995) | 2.0 | % | |||||
| Changes in unrecognized tax benefits | (1,695) | 3.5 | % | |||||
| Foreign tax effects | (5) | — | % | |||||
| Income tax expense (benefit) and Effective tax rate | $ | (10,480) | 21.4 | % | ||||
______________________________
(1) In 2025, state and local income taxes in Maryland, Pennsylvania, Tennessee, and Indiana comprise the majority (greater than 50%) of the state and local income taxes category.
The effective income tax rate for 2025 of 21.4% varies from the statutory rate due to the favorable effect of state taxes and the research and development credit, which is offset by the effect of expenses related to current and prior year transactions that are not deductible for tax purposes. Included within transaction costs are payments to former employees of Sage which are not deductible for tax purposes.
As previously disclosed for the years ended December 31, 2024 and December 31, 2023, prior to adoption of ASU 2023-09, 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, | |||||||||||
| 2024 | 2023 | ||||||||||
Income tax expense computed at U.S. federal statutory income tax rate | $ | 20,553 | $ | 581 | |||||||
State income taxes | 5,114 | (330) | |||||||||
| Permanent items | 131 | 3,028 | |||||||||
| Research and development credits | (8,628) | (1,117) | |||||||||
| Loss on investment | (2,147) | — | |||||||||
| Uncertain income tax position | 2,620 | (2,529) | |||||||||
| Change in valuation allowance | 5,859 | 1,267 | |||||||||
Other | 503 | 553 | |||||||||
| Income tax expense | $ | 24,005 | $ | 1,453 | |||||||
The amounts of income taxes paid, net of refunds received, consisted of the following (dollars in thousands):
Year Ended December 31, | |||||
| 2025 | |||||
| Federal | $ | 9,000 | |||
| State | |||||
| Illinois | 940 | ||||
| Maryland | (3,186) | ||||
| New Jersey | 1,281 | ||||
| Pennsylvania | 3,106 | ||||
| All other states | 4,910 | ||||
| Total | $ | 16,051 | |||
In 2025, income taxes paid, net of refunds, exceeded 5% of total income taxes paid, net of refunds, in U.S. Federal jurisdiction, and Illinois, Maryland, New Jersey, and Pennsylvania state jurisdictions.
The significant components of the Company's deferred income tax assets (liabilities) are as follows (dollars in thousands):
Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 571,102 | $ | 93,109 | |||||||
| Accrued product returns and rebates | 18,537 | 20,627 | |||||||||
| Accrued compensation and stock based compensation | 15,478 | 15,912 | |||||||||
| Operating lease liability | 10,198 | 8,608 | |||||||||
| Capitalized research and development | 161,034 | 47,103 | |||||||||
| Other | 13,729 | 14,100 | |||||||||
| Total deferred tax assets | 790,078 | 199,459 | |||||||||
| Less: valuation allowance | (590,223) | (66,725) | |||||||||
| Total deferred tax asset, net of valuation allowance | 199,855 | 132,734 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangibles | (137,425) | (128,188) | |||||||||
| Operating lease assets | (6,659) | (6,159) | |||||||||
| Other | (17,420) | (3,348) | |||||||||
| Total deferred tax liabilities | (161,504) | (137,695) | |||||||||
| Net deferred tax assets (liabilities) | $ | 38,351 | $ | (4,961) | |||||||
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 deferred tax assets are 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 deferred tax assets are available to reduce income taxes payable, management has determined it is not more likely than not the Company will realize certain deferred tax assets related to net operating losses and credit carryforwards.
A reconciliation of the deferred tax asset valuation allowance is as follows (dollars in thousands):
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 66,725 | $ | 60,866 | $ | 59,598 | |||||||||||
Acquisition Accounting(1) | 587,432 | — | — | ||||||||||||||
| Additions | — | 6,785 | 1,268 | ||||||||||||||
| Reductions | (63,934) | (926) | — | ||||||||||||||
| Ending balance | $ | 590,223 | $ | 66,725 | $ | 60,866 | |||||||||||
(1) Amount comprised principally of acquisition and purchase accounting adjustments in connection with the Sage acquisition.
The Company recorded a net valuation allowance addition of $523.5 million for the year ended December 31, 2025. The valuation allowance is primarily related to federal and state net operating loss carryforwards acquired from the Sage Acquisition that are not expected to be realized in the future.
The Company has net operating loss 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 provisions, as well as similar state provisions. In addition, states may also impose other future limitations through state legislation or similar measures. Despite the net operating loss carryforwards, the Company may incur higher state income tax expense in the future.
As of December 31, 2025, the U.S. federal and state net operating loss carryforwards amounted to approximately $2.5 billion and $851.0 million, respectively. $2.4 billion and $90.5 million of the federal and state net operating losses will not expire. The remainder will expire in various years beginning in 2031.
The Company is no longer subject to U.S. Federal income tax examinations for years prior to 2022 with the exception that operating loss or tax credit carryforwards generated prior to 2022 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.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (dollars in thousands):
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance as of January 1 | $ | 5,840 | $ | 2,149 | $ | 4,323 | |||||||||||
| Gross increases related to current year tax positions | 9,370 | 517 | 112 | ||||||||||||||
| Gross increases related to prior year tax positions | 2,109 | 3,829 | 9 | ||||||||||||||
| Gross decreases related to prior year tax positions | (2,996) | — | — | ||||||||||||||
| Lapse of statute of limitations | (332) | $ | (655) | (2,295) | |||||||||||||
| Balance as of December 31 | $ | 13,991 | $ | 5,840 | $ | 2,149 | |||||||||||
Unrecognized tax benefits included in Other liabilities in the consolidated balance sheet was $3.5 million, $1.7 million and $1.6 million as of December 31, 2025, December 31, 2024 and December 31, 2023, respectively.
As of December 31, 2025, $5.1 million of our liabilities for unrecognized tax benefits would impact the effective tax rate, if recognized. As of December 31, 2024 and December 31, 2023, all of our liabilities for unrecognized tax benefits would impact the effective tax rate, if recognized.
Interest and penalties recognized in the consolidated statement of earnings (loss) in 2025, 2024 and 2023, and accrued interest and penalties as of December 31, 2025 and 2024 was negligible.
As of December 31, 2025, and 2024, the Company had an income tax receivable of $38.4 million and $5.0 million, respectively, which is classified as Prepaid expenses and other current assets on the consolidated balance sheets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 9, 2023 | |
| 2021 | Apr 13, 2022 | |
| 2020 | Mar 8, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 16, 2017 | |
| 2015 | Mar 9, 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.