Travere Therapeutics, Inc.TVTX
Travere Therapeutics, Inc. Income Taxes Disclosure
INCOME TAXES
For financial reporting purposes, net loss from continuing operations before income taxes includes the following components (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (2,713) | $ | (152,356) | $ | (293,283) | |||||||||||
| Foreign | (46,560) | (168,154) | (82,827) | ||||||||||||||
| Total | $ | (49,273) | $ | (320,510) | $ | (376,110) | |||||||||||
The components of the provision for income taxes, in the Consolidated Statements of Operations are as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | — | $ | — | $ | — | |||||||||||
| State | 988 | 120 | 223 | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
| Total current | 988 | 120 | 223 | ||||||||||||||
| Deferred | |||||||||||||||||
| Federal | — | — | — | ||||||||||||||
| State | — | — | — | ||||||||||||||
| Total deferred | — | — | — | ||||||||||||||
| Total tax provision | $ | 988 | $ | 120 | $ | 223 | |||||||||||
In July 2025 the One Big Beautiful Bill Act was signed into law, which enacts significant changes to U.S. tax and related laws. The legislation did not have a material impact on the Company's income tax expense for the year ended December 31, 2025, nor did it materially change the Company's effective income tax rate for 2025.
The effective income tax rate for the year ended December 31, 2025 differs from the statutory federal income tax rate as follows (in thousands, except percentages):
| 2025 | |||||||||||
| Amount | Percentage | ||||||||||
| Statutory rate - federal | $ | (10,347) | (21.00) | % | |||||||
| State taxes, net of federal benefit* | 701 | 1.42 | % | ||||||||
| Foreign tax effects | |||||||||||
| Switzerland | |||||||||||
| Statutory tax rate differences | 5,831 | 11.83 | % | ||||||||
| Changes in valuation allowances | 3,758 | 7.63 | % | ||||||||
| Other | 207 | 0.42 | % | ||||||||
| Other foreign jurisdictions | |||||||||||
| Other | (18) | (0.04) | % | ||||||||
| Tax credits | |||||||||||
| Orphan drug credits | (16,224) | (32.93) | % | ||||||||
| Return to provision adjustments | (2,517) | (5.10) | % | ||||||||
| Changes in valuation allowances | 16,275 | 33.03 | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Executive compensation | 1,710 | 3.47 | % | ||||||||
| Share-based awards | 1,246 | 2.53 | % | ||||||||
| Other | 442 | 0.90 | % | ||||||||
| Change in unrecognized tax benefits | (1,456) | (2.96) | % | ||||||||
| Other adjustments | |||||||||||
| Return to provision adjustments and other true-ups | 1,380 | 2.80 | % | ||||||||
| Effective tax rate | $ | 988 | 2.00 | % | |||||||
| * State taxes in California, Michigan and New Jersey for 2025 made up the majority (greater than 50%) of the tax effect in this category. | |||||||||||
The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate expressed as a percentage of loss before income taxes for the years ended December 31, 2024 and 2023:
| 2024 | 2023 | ||||||||||
| Statutory rate - federal | (21.00) | % | (21.00) | % | |||||||
| State taxes, net of federal benefit | (1.55) | % | (3.19) | % | |||||||
| Foreign rate differential | 2.15 | % | 1.29 | % | |||||||
| IPR&D | 4.27 | % | — | % | |||||||
| Nondeductible executive compensation | 0.44 | % | 1.50 | % | |||||||
| Excess tax benefits associated with share-based awards | 2.92 | % | 0.68 | % | |||||||
| Other permanent differences | 0.23 | % | 0.37 | % | |||||||
| Tax credits | (4.24) | % | (1.13) | % | |||||||
| Return to provision adjustments and other true-ups | (0.80) | % | 4.19 | % | |||||||
| Other | 0.93 | % | 0.57 | % | |||||||
| Change in valuation allowance | 16.69 | % | 16.78 | % | |||||||
| Income tax provision | 0.04 | % | 0.06 | % | |||||||
The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows (in thousands):
| 2025 | 2024 | ||||||||||
| Deferred Tax Assets: | |||||||||||
| Net operating loss | $ | 130,051 | $ | 113,303 | |||||||
| Research and development and other tax credits | 112,093 | 91,760 | |||||||||
| Intangible assets | 56,052 | 53,919 | |||||||||
| Capitalized research and development | 27,170 | 47,880 | |||||||||
| Stock based compensation | 13,971 | 15,680 | |||||||||
| Other accrued expenses | 21,727 | 14,266 | |||||||||
| Charitable contributions | 5,699 | 5,797 | |||||||||
| Operating lease liabilities | 4,164 | 5,421 | |||||||||
| 174A state only difference | 2,397 | — | |||||||||
| Depreciation | 602 | 435 | |||||||||
| Loan costs | 117 | 153 | |||||||||
| Total deferred tax assets | 374,043 | 348,614 | |||||||||
| Deferred Tax Liabilities: | |||||||||||
| Operating lease right of use assets | (3,211) | (4,259) | |||||||||
| Prepaid assets | (184) | (178) | |||||||||
| Total deferred tax liabilities | (3,395) | (4,437) | |||||||||
| Net deferred tax assets before valuation allowance | 370,648 | 344,177 | |||||||||
| Valuation allowance | (370,648) | (344,177) | |||||||||
| Total deferred tax assets | $ | — | $ | — | |||||||
The Company has established a full valuation allowance against its U.S. federal, state, and foreign deferred tax assets due to the uncertainty surrounding the realization of such assets in future periods. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the scheduled reversal of deferred liabilities and tax planning strategies in making this assessment and evaluates the recoverability of the deferred tax assets as of each reporting date. At such time as it is determined that it is more likely than not that deferred assets are realizable, the valuation allowance will be reduced accordingly and recorded as a tax benefit.
The Company has recorded a valuation allowance of $370.6 million as of December 31, 2025 to reflect the estimated amount of deferred tax assets that may not be realized. The Company increased its valuation allowance by $26.5 million for the year ended December 31, 2025, compared to a $53.5 million increase for the year ended December 31, 2024.
As of December 31, 2025, the Company had available unused U.S. federal and state net operating loss (“NOL”) carryforwards of $232.6 million and $214.0 million, respectively, all of which are fully offset by a valuation allowance. The federal NOL has an indefinite life. The state NOL carryforwards will begin to expire in 2026 unless previously utilized, except for $41.1 million of the state net operating losses that have an indefinite carryforward period. In addition, at December 31, 2025, the Company had federal orphan drug tax credit carryforwards of $122.8 million that begin to expire in 2035 unless utilized, federal research and development tax credit carryforwards of $4.9 million that begin to expire in 2033 unless utilized, state research and development tax credit carryforwards of $1.3 million that begin to expire in 2030 unless utilized and $11.0 million that have an indefinite carryforward period, and California Competes tax credit carryforwards of $0.8 million that begin to expire in 2026. Pursuant to Internal Revenue Code Sections 382 and 383, use of the Company’s federal net operating loss and credit carryforwards may be limited upon a cumulative change in ownership of more than 50% within a three-year period. The Company continues to monitor potential historical ownership changes.
As of December 31, 2025, the Company had Irish NOL carryforwards of $15.9 million which are fully offset by a valuation allowance and have an indefinite life. The Company also had Swiss NOL carryforwards of $475.2 million which are fully offset by a valuation allowance and begin to expire in 2026, as well as Federal Act on Tax Reform and AHV Financing cantonal tax benefits of $526.2 million which expire in 2029.
The Company accounts for uncertain tax benefits in accordance with the provisions of ASC 740-10 of the Accounting for Uncertainty in Income Taxes. As of December 31, 2025, the Company had $26.0 million in unrecognized tax benefits, which were recorded as a reduction to the deferred tax assets with a corresponding reduction in the Company’s valuation allowance of $26.0 million. To the extent unrecognized tax benefits are recognized at a time when a valuation allowance does not exist, the recognition of the $26.0 million tax benefit would reduce the effective tax rate.
A reconciliation of the Company's unrecognized tax benefits for the years 2025, 2024 and 2023 is provided in the following table (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance as of January 1: | $ | 27,404 | $ | 22,906 | $ | 11,490 | |||||||||||
| Increase in current period positions | 3,343 | 4,248 | 4,871 | ||||||||||||||
| Increase in prior period positions | — | 250 | 7,383 | ||||||||||||||
| Decrease in prior period positions | (4,716) | — | (838) | ||||||||||||||
| Balance as of December 31: | $ | 26,031 | $ | 27,404 | $ | 22,906 | |||||||||||
The Company files income tax returns in the U.S. federal jurisdiction, various state and local, and foreign jurisdictions. With few exceptions, the Company’s income tax returns are open to examination by federal and state authorities for the years ended December 31, 2013 and forward, due to the carryforward of unutilized tax attributes. The Company's Swiss income tax returns are open to examination for the years ended December 31, 2020 and forward, and the Company's Irish tax returns are open to examination for the years ended December 31, 2021 and forward.
The Company recognizes interest and penalties as a component of income tax expense. The Company did not recognize any interest or penalties for the year ended December 31, 2025, 2024 and 2023.
The cash taxes paid by the Company for the years ended December 31, 2025, 2024 and 2023 were immaterial.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 26, 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.