Oncology Institute, Inc.TOI
Oncology Institute, Inc. Income Taxes Disclosure
Income Taxes
The components of the provision (benefit) for income taxes consists of:
| (in thousands) | Current | Deferred | Total | ||||||||||||||
| Year ended December 31, 2025: | |||||||||||||||||
| U.S. federal | $ | (99) | $ | (32) | $ | (131) | |||||||||||
| State and local | — | — | — | ||||||||||||||
| $ | (99) | $ | (32) | $ | (131) | ||||||||||||
| (in thousands) | Current | Deferred | Total | ||||||||||||||
| Year ended December 31, 2024: | |||||||||||||||||
| U.S. federal | $ | — | $ | — | $ | — | |||||||||||
| State and local | 0 | 0 | 0 | ||||||||||||||
| $ | — | $ | — | $ | — | ||||||||||||
As further described in Note 2, Summary of Significant Accounting Policies, the Company has elected to prospectively adopt the guidance in ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures, or ASU 2023-09. The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company's effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09:
| (in thousands) | Year Ended December 31, | |||||||||||||
| 2025 | % | |||||||||||||
| Tax provision at the U.S. federal statutory rate | $ | (12,755) | 21.00 | % | ||||||||||
| State tax, net federal benefit | — | — | % | |||||||||||
| Changes in valuation allowances | 9,053 | (14.90) | % | |||||||||||
| Changes in unrecognized tax benefits | (99) | 0.16 | % | |||||||||||
| Nontaxable or Nondeductible Items: | ||||||||||||||
| DFP derivative expense | 2,563 | (4.22) | % | |||||||||||
| 163(l) Interest expense limitation | 2,523 | (4.15) | % | |||||||||||
| Stock based compensation | 276 | (0.45) | % | |||||||||||
| Section 162(m) limitation | (562) | 0.93 | % | |||||||||||
| Other non-deductible expenses | 94 | (0.16) | % | |||||||||||
| Other Reconciling Items: | ||||||||||||||
| Prior Year Deferred True-Ups | (1,361) | 2.24 | % | |||||||||||
| Other | 137 | (0.22) | % | |||||||||||
| Income tax (benefit) and effective income tax rate | $ | (131) | 0.21 | % | ||||||||||
| (in thousands) | Year Ended December 31, | |||||||
| 2024 | ||||||||
| Income tax at federal statutory rate | $ | (13,579) | ||||||
| Meals and entertainment | 36 | |||||||
| Fines and penalties | 11 | |||||||
| Stock based compensation | 5,095 | |||||||
| Warrant expense | (130) | |||||||
| 162(m) Deferred haircut | (387) | |||||||
| 163(l) Interest expense limitation | 2,264 | |||||||
| DFP derivative expense | (566) | |||||||
| Prior year deferred true-ups | 19 | |||||||
| Change in valuation allowance | 7,232 | |||||||
| Other | 5 | |||||||
| Income tax (benefit) expense | $ | — | ||||||
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024 are presented below.
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Accrued Expenses | $ | 1,490 | $ | 1,190 | |||||||
| Net operating loss carryforwards | 65,743 | 53,419 | |||||||||
| Deferred cap revenue | 660 | 683 | |||||||||
| Stock based compensation | 928 | 1,351 | |||||||||
| Charitable contributions | 5 | 2 | |||||||||
| ROU Lease liability | 7,456 | 8,522 | |||||||||
| Financing lease liability | 170 | 229 | |||||||||
| Unrealized gain/loss | 3 | 1 | |||||||||
| IRC 174 expenditures | 68 | — | |||||||||
| Intangibles | 7,196 | 7,386 | |||||||||
| Total gross deferred tax assets | 83,719 | 72,783 | |||||||||
| Valuation allowance | (75,952) | (63,595) | |||||||||
| Net deferred tax assets | $ | 7,767 | $ | 9,188 | |||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant, and equipment | $ | (1,275) | $ | (1,688) | |||||||
| ROU Asset | (6,324) | (7,290) | |||||||||
| Financial lease asset | (168) | (293) | |||||||||
| IRC 174 expenditures | — | 51 | |||||||||
| Total gross deferred liabilities | $ | (7,767) | $ | (9,220) | |||||||
| Net deferred tax liabilities | $ | — | $ | (32) | |||||||
In 2025, although the Company was in a taxable loss position and recorded no income taxes, the Company made state income tax payments for certain states with minimum tax requirements. The amount is immaterial.
The valuation allowance for deferred tax assets as of December 31, 2025 and 2024, was $75,952 and $63,595, respectively. The net change in the total valuation allowance was an increase of $12,357 in 2025 and an increase of $9,616 in 2024.
The valuation allowance at December 31, 2025 was primarily related to net operating loss carryforwards of TOI, Inc., TOI CA, TOI FL, TOI OR, and TOI TX, that, in the judgment of management, are not more likely than not to be realized. Similar to 2024, TOI Inc., TOI CA, TOI FL, TOI OR, and TOI TX will continue to file a consolidated 2025 federal return and state income tax return. Accordingly, net operating losses of TOI CA, TOI FL, TOI OR, and TOI TX can offset taxable income of TOI Parent for federal and state tax purposes. Deferred tax assets and deferred tax liabilities have been separately determined for all groups, as has the valuation allowance assessment for each. The table above reflects the combined deferred tax assets, deferred tax liabilities, and valuation allowance for TOI Inc., TOI CA, TOI FL, TOI OR, and TOI TX. Of the $75,952 total valuation allowance, $54,789 is attributable to the Federal Group, $4,461 is attributable to TOI Parent, $16,604 is attributable to TOI CA, $93 is attributable to TOI FL, and $5 to TOI OR.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the effect of available carry back and carryforward periods), projected future taxable income, and tax-planning strategies 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 deductible, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences, net of the existing valuation allowances at December 31, 2025.
At December 31, 2025, the Company has net operating loss carryforwards for Federal income tax purposes of $227,511, with $199,935 attributable to the Practice and $27,576 attributable to TOI Parent, which are available to offset future Federal taxable income of the Practice and Parent indefinitely. The Company has net operating loss carryforwards for state income tax purposes of $220,728, of which $185,250 is attributable to the Practice and will begin to expire after 2041, and $35,479 is attributable to Parent and will begin to expire after 2042.
Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change” (very generally defined as a greater than 50% change, by value, in the corporation’s equity ownership by certain stockholders or groups of stockholders over a rolling three-year period), the corporation’s ability to use its pre-ownership change NOLs to offset its post-ownership change income may be limited. In 2022 and 2023, we completed an ownership change analysis pursuant to IRC Section 382 of the Code for the period from September 10, 2018 through taxable year ended December 31, 2021 and from January 1, 2022 through taxable year ended December 31, 2023 in which we determined that the Company did not experience an ownership change. There were no ownership changes filed with the Securities and Exchange Commission during 2024 and 2025 and the Company does not believe there were any ownership changes that would trigger any limitations imposed by Sections 382 or 383 through December 31, 2025. The Company will continue monitoring any future changes in stock ownership. The Company is currently operating in a loss position and has a full valuation allowance. We do not anticipate utilizing the tax attributes in the next year.
A summary of the changes in the amount of unrecognized tax benefits (excluding interest and penalties) for 2025 and 2024 is as follows:
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Beginning balance of unrecognized tax benefits | $ | 99 | $ | 99 | |||||||
| Additions based on tax positions related to the current year | — | — | |||||||||
| Reductions based on tax positions of prior years | (99) | — | |||||||||
| Reductions due to lapse of applicable statute of limitation | — | — | |||||||||
| Settlements | — | — | |||||||||
| Ending balance of unrecognized tax benefits | $ | — | $ | 99 | |||||||
The Company does not anticipate a significant change in the amount of its unrecognized tax within the next 12 months. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. Due to the Company’s NOL position, no interest or penalties have been recognized with respect to unrecognized tax benefits, as such amounts are considered immaterial. The Company includes unrecognized tax benefits within other non-current liabilities on its consolidated balance sheet.
The Company is subject to taxation in the U.S., California, Arizona, Florida, Oregon, and Texas. As of December 31, 2025, the statute of limitations remains open for tax year 2021 through the current year.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 26, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 30, 2021 | |
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.