ZEVRA THERAPEUTICS, INC.ZVRA
ZEVRA THERAPEUTICS, INC. Income Taxes Disclosure
Income Taxes
For the tax years ended December 31, 2025 and 2024, income from continuing operations before taxes consists of the following:
| Year ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| U.S. operations | $ | 27,140 | $ | (86,269) | |||||||
| Foreign operations | 59,538 | (3,871) | |||||||||
| Total pretax income (loss) | $ | 86,678 | $ | (90,140) | |||||||
Income tax expense (benefit)
Income tax expense (benefit) attributable to income from continuing operations consists of:
| Year ended December 31, 2025 | |||||||||||||||||
| Current | Deferred | Total | |||||||||||||||
| U.S. federal | $ | 2,108 | $ | — | $ | 2,108 | |||||||||||
| Foreign | 11,187 | (9,858) | 1,329 | ||||||||||||||
| State and local | — | 12 | 12 | ||||||||||||||
| $ | 13,295 | $ | (9,846) | $ | 3,449 | ||||||||||||
| Year ended December 31, 2024 | |||||||||||||||||
| Current | Deferred | Total | |||||||||||||||
| U.S. federal | $ | — | $ | — | $ | — | |||||||||||
| Foreign | — | 15,373 | 15,373 | ||||||||||||||
| State and local | — | (2) | (2) | ||||||||||||||
| $ | — | $ | 15,371 | $ | 15,371 | ||||||||||||
Rate reconciliation
Income tax expense attributable to income from continuing operations for the years ended December 31, 2025 and 2024 differed from the amounts computed by applying the statutory U.S. Federal income tax rate of 21 percent to pretax income from continuing operations as a result of the following (in thousands, except amounts pertaining to rate which are shown as a percentage):
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| U.S. Federal Statutory Income Tax Rate | $ | 18,202 | 21.00 | % | $ | (18,929) | 21.00 | % | |||||||||
| Domestic state and local income taxes, net of federal effect(a) | 45 | 0.05 | % | (635) | 0.70 | % | |||||||||||
| Foreign tax | |||||||||||||||||
| Denmark | |||||||||||||||||
| Changes in valuation allowance | 2,390 | 2.76 | % | (3,879) | 4.30 | % | |||||||||||
| Changes to deferred tax asset/liability due to adjustment or true-up | (3,108) | (3.59) | % | 3,989 | (4.42) | % | |||||||||||
| Other | 421 | 0.49 | % | (39) | 0.04 | % | |||||||||||
| Effect of cross-border tax laws | |||||||||||||||||
| Subpart F inclusions | 10,752 | 12.40 | % | — | 0.00 | % | |||||||||||
| Other | — | — | % | 20 | (0.02) | % | |||||||||||
| Tax credits | |||||||||||||||||
| Research credits | 18,212 | 21.01 | % | 1,517 | (1.68) | % | |||||||||||
| Changes in valuation allowance | (51,390) | (59.28) | % | 10,236 | (11.36) | % | |||||||||||
| Nontaxable or nondeductible items | 396 | 0.46 | % | 353 | (0.39) | % | |||||||||||
| Changes in unrecognized tax benefits | (10,659) | (12.30) | % | 16,115 | (17.87) | % | |||||||||||
| Changes to deferred tax asset/liability due to adjustment or true-up | |||||||||||||||||
| Net operating losses | 18,636 | 21.50 | % | 6,783 | (7.53) | % | |||||||||||
| Other | (448) | (0.52) | % | (160) | 0.18 | % | |||||||||||
| Total | $ | 3,449 | 3.98 | % | $ | 15,371 | (17.05) | % | |||||||||
(a)State taxes in Michigan for 2024 and in Michigan and Florida for 2025 made up the majority (greater than 50%) of the tax effect in this category.
Deferred tax asset (liabilities)
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 | 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Allowance for bad debts | $ | 340 | $ | 320 | |||||||
| Accrued expenses | 2,977 | 1,461 | |||||||||
| Reserve expenses | 1,648 | 1,288 | |||||||||
| Stock compensation | 6,352 | 5,711 | |||||||||
| Operating lease liabilities | 339 | 108 | |||||||||
| Section 174 | 14,601 | 33,941 | |||||||||
| Plant and equipment | 34 | 79 | |||||||||
| Intangibles | 1,140 | — | |||||||||
| Net operating loss carryforwards | 63,256 | 100,552 | |||||||||
| Credits | 941 | 19,153 | |||||||||
| Other | 57 | 583 | |||||||||
| Total deferred tax assets | 91,685 | 163,196 | |||||||||
| Less: valuation allowance | (91,498) | (146,359) | |||||||||
| Deferred tax assets, net of valuation allowance | 187 | 16,837 | |||||||||
| Deferred tax liabilities | |||||||||||
| Intangibles | — | (17,859) | |||||||||
| Operating lease assets | (325) | (82) | |||||||||
| Other | (35) | — | |||||||||
| Total deferred tax liabilities | (360) | (17,941) | |||||||||
| Net deferred tax liabilities | $ | (173) | $ | (1,104) | |||||||
The valuation allowance for deferred tax assets as of December 31, 2025 and 2024 was $91.5 million and $146.4 million, respectively. The net change in the total valuation allowance for each of the years ended December 31, 2025 and 2024 was a decrease of $54.9 million and an increase of $11.9 million, respectively. The valuation allowance for both years was primarily related to U.S. domestic, state, and foreign net operating loss carryforwards as well as credit carryforwards that, in the judgment of management, are not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible.
At December 31, 2025, Zevra has $230.4 million in carryforwards for federal income tax purposes, which are available to reduce future federal taxable income. Of the total $230.4 million net operating loss carryforwards, $11.1 million, if not utilized, will begin to expire in 2029 and $219.4 million have no expiration date. The Company also has $312.2 million state net operating loss carryforwards which, if not utilized, will begin to expire in 2029.
Unrecognized tax benefits
A reconciliation of the beginning and ending amounts of total unrecognized tax benefits for the years ended December 31, 2025 and 2024 are as follows (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance, beginning of year | $ | 16,115 | $ | — | |||||||
| Increase related to prior year tax positions | — | — | |||||||||
| Decrease related to prior year tax positions | (9,086) | — | |||||||||
| Increases related to current year tax positions | — | 16,115 | |||||||||
| Settlements | — | — | |||||||||
| Lapse of Statute | — | — | |||||||||
| Balance, end of year | $ | 7,029 | $ | 16,115 | |||||||
Included in the balance of unrecognized tax benefits at December 31, 2025 is a potential benefit of $7.0 million that, if recognized, would affect the effective tax rate on income from continuing operations.
The Company files income tax returns in the United States for federal and various state jurisdictions. Generally, the statute of limitations for income tax examinations is 3 to 4 years. As such, the Company is no longer subject to U.S. federal and state and local income tax examinations for years prior to 2021, although carryforwards that were generated prior to 2021 may still be adjusted upon examination by the Internal Revenue Service or a state tax department. The Company's Denmark subsidiary files a Denmark income tax return. The Denmark statute of limitations is 3 years and, as such, it is no longer subject to Denmark tax examinations for years prior to 2022. The Company is not under income tax examination in any material jurisdiction to date.
Current portion of income tax payable
The current portion of income tax payable of $13.7 million includes approximately $11.1 million attributable to the recognized tax impact of the sale of the PRV, which included transfer pricing considerations. The remainder of the current portion of income tax payable consists of $2.6 million.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 9, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
| 2023 | Apr 1, 2024 | |
| 2022 | Mar 7, 2023 | |
| 2021 | Mar 31, 2022 | |
| 2020 | Mar 12, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 30, 2018 | |
| 2016 | Mar 10, 2017 | |
| 2015 | Mar 16, 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.