Vericel CorpVCEL
Vericel Corp Income Taxes Disclosure
Income Taxes
The components of income (loss) before income taxes are summarized as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| U.S. | $ | 17,471 | $ | 10,580 | $ | (2,381) | ||||||||||||||
| Foreign | (94) | (70) | 13 | |||||||||||||||||
| Income (loss) before income taxes | $ | 17,377 | $ | 10,510 | $ | (2,368) | ||||||||||||||
Provision for income taxes consisted of the following:
| Year Ended December 31, | ||||||||
| (In thousands) | 2025 | |||||||
| Federal | $ | — | ||||||
| State | 859 | |||||||
| International | — | |||||||
| Total | $ | 859 | ||||||
During the year ended December 31, 2025, the Company adopted ASU 2023-09 to enhance income taxes disclosures regarding incomes taxes paid and the rate reconciliation disclosures.
Income taxes paid, net of refunds, consisted of the following:
| Year Ended December 31, | ||||||||
| (In thousands) | 2025 | |||||||
| Federal | $ | — | ||||||
| State | 580 | |||||||
| Foreign | — | |||||||
| Total income taxes paid, net of refunds | $ | 580 | ||||||
Income taxes paid, net of refunds, exceeded 5 percent of the total income taxes paid in the following jurisdictions:
| Year Ended December 31, | ||||||||
| (In thousands) | 2025 | |||||||
| State | ||||||||
| California | $ | 136 | ||||||
| New York | 135 | |||||||
| Massachusetts | 84 | |||||||
| Tennessee | 76 | |||||||
| Louisiana | 45 | |||||||
| Georgia | 37 | |||||||
| Other | 67 | |||||||
| Total | $ | 580 | ||||||
A reconciliation of income taxes computed using the U.S. federal statutory rate to the taxes reported in the consolidated statements of operations is as follows:
| December 31, 2025 | ||||||||||||||
| (In thousands) | Amount | Percent | ||||||||||||
| Income before income taxes | $ | 17,377 | ||||||||||||
| U.S. Federal Statutory Tax Rate | 3,649 | 21.0 | % | |||||||||||
State and Local Income taxes, Net of Federal Income Tax Effect (a) | 859 | 4.9 | % | |||||||||||
| Effect of change in tax laws or rates enacted in the current period | — | — | % | |||||||||||
| Tax Credits | ||||||||||||||
| Research and development tax credits | (2,310) | (13.3) | % | |||||||||||
| Changes in Valuation Allowances | (2,175) | (12.5) | % | |||||||||||
| Nontaxable or Nondeductible items | ||||||||||||||
| Stock Compensation | (2,856) | (16.4) | % | |||||||||||
| Officers Compensation - 162(m) | 3,510 | 20.2 | % | |||||||||||
| Other | 182 | 1.0 | % | |||||||||||
| Effective Tax Rate | $ | 859 | 4.9 | % | ||||||||||
(a) State taxes in California, New York and Massachusetts make up the majority (greater than 50%) of the tax effect in this category.
| Year Ended December 31, | ||||||||||||||
| (In thousands) | 2024 | 2023 | ||||||||||||
| Income (loss) before income taxes | $ | 10,510 | $ | (2,368) | ||||||||||
| Federal statutory rate | 21 | % | 21 | % | ||||||||||
| Taxes computed at federal statutory rate | 2,207 | (497) | ||||||||||||
| State and local income taxes | 381 | (389) | ||||||||||||
| Nondeductible stock-based compensation | (6,547) | (586) | ||||||||||||
| Federal and state rate change | 1,090 | (704) | ||||||||||||
| Research and orphan drug credits | (156) | 362 | ||||||||||||
| Other | 402 | 162 | ||||||||||||
| Deferred tax adjustment | 7,374 | — | ||||||||||||
| Change in valuation allowance | (4,603) | 2,466 | ||||||||||||
| Reported income taxes | $ | 148 | $ | 814 | ||||||||||
Deferred tax assets (liabilities) consist of the following:
| Year Ended December 31, | ||||||||||||||
| (In thousands) | 2025 | 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Net operating loss carryforwards | $ | 9,462 | $ | 15,481 | ||||||||||
| Employee benefits and stock-based compensation | 20,050 | 18,606 | ||||||||||||
| Research and development costs | — | 4,778 | ||||||||||||
| Intangible assets | 327 | 786 | ||||||||||||
| Operating lease liabilities | 22,887 | 20,664 | ||||||||||||
| Inventory reserve | 5,093 | 2,540 | ||||||||||||
| Tax credit carryforward | 13,222 | 10,937 | ||||||||||||
| Other, net | 5 | 3 | ||||||||||||
| Total deferred tax assets | 71,046 | 73,795 | ||||||||||||
| Less: valuation allowance | (41,195) | (45,153) | ||||||||||||
| Total net deferred tax assets | 29,851 | 28,642 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Right-of-use assets | (16,742) | (18,056) | ||||||||||||
| Property and equipment, net | (13,109) | (10,586) | ||||||||||||
| Total net deferred tax liabilities | (29,851) | (28,642) | ||||||||||||
| Net deferred tax assets and liabilities | $ | — | $ | — | ||||||||||
As of December 31, 2025, the Company had U.S. federal net operating loss carryforwards of $36.3 million, of which $6.2 million begin to expire in 2033 and the remainder do not expire but are subject to 80% limitation. As of December 31, 2025, the Company had state net operating loss carryforwards of $15.2 million that begin to expire in 2030. The projected annual limitation on the use of the net operating losses that existed prior to September 17, 2014, resulting from the Company’s change in control in 2014 per Section 382 of the Internal Revenue Code is $0.8 million. As a result, a portion of the net operating losses and tax credit carryforwards may expire prior to their utilization. As of December 31, 2025, the Company’s U.S. federal tax credit carryforwards available to offset future profits are $13.2 million. These credit carryforwards expire between 2026 and 2044.
In accordance with the accounting guidance for income taxes, the Company estimates whether recoverability of its deferred tax assets is “more likely than not”, based on forecasts of taxable income in the related tax jurisdictions. In this estimate, the Company uses historical results, projected future operating results based upon approved business plans, eligible carry forward periods, tax planning opportunities and other relevant considerations. Based on these factors, including historical losses incurred by the Company, a full valuation allowance for the deferred tax assets, including the deferred tax assets for the aforementioned net operating losses and credits has been provided, since they are not more likely than not to be realized. If sufficient positive evidence exists in future periods to support a release of some or all of the valuation allowance, such a release would likely have a material impact on the Company’s results of operations. The change in the valuation allowance was a decrease of $4.0 million and $4.6 million for the years ended December 31, 2025 and 2024, respectively.
The Company assesses uncertain tax positions in accordance with the guidance for accounting for uncertain tax positions. This pronouncement prescribes a recognition threshold and measurement methodology for recording within the consolidated financial statements uncertain tax positions taken, or expected to be taken, in the Company’s income tax returns. To the extent the uncertain tax positions do not meet the “more likely than not” threshold, the Company derecognizes such positions. To the extent the uncertain tax positions meet the “more likely than not” threshold, the Company measures and records the highest probable benefit, and establishes appropriate reserves for benefits that exceed the amount likely to be sustained upon examination. The Company currently has not recorded any uncertain tax positions and does not anticipate that unrecognized tax benefits will significantly increase or decrease within the next twelve months.
The Company files U.S. federal and state income tax returns with varying statutes of limitations. During the year ended December 31, 2020, examinations by U.S. tax authorities were completed for 2017 and 2018. During the year ended December 31, 2025, examinations by U.S. tax authorities were completed for 2021. Due to the Company’s net operating loss
carryforwards, federal income tax returns from incorporation are still subject to examination. The Company files in several state tax jurisdictions and is subject to examination in years ranging from incorporation to 2025.
On July 4, 2025, the One Big Beautiful Act (“OBBBA”), was signed into law. Included in this legislation are provisions that allow for the immediate expensing of domestic U.S. research and development expenses, a general requirement to reduce the deduction for research and development expense by any research credit taken, and reinstates 100% bonus depreciation on qualified property placed in service after January 19, 2025. The company has incorporated the impact of the enacted legislation and has determined there is no material impact to the company’s consolidated financial statements.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Mar 5, 2018 | |
| 2016 | Mar 13, 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.