INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of expense (benefit) for income taxes

The expense (benefit) for income taxes consists of:


	December 31,
(In thousands)	2019		2018		2017
Current expense (benefit):
Federal	$	—	$	—	$	—
State	314		92		106
Foreign	(63)		—		—

Deferred tax expense (benefit):
Federal	(169,727)		—		(290)
State	(15,397)		—		(3)
Foreign	15		—		—
Total income tax expense (benefit)	$	(184,858)	$	92	$	(187)

Schedule of components of the net deferred tax asset

The components of the net deferred tax asset with the approximate income tax effect of each type of carryforward, credit and temporary differences are as follows:


	December 31,
(In thousands)	2019		2018
Deferred tax assets:
Operating loss carryforwards	$	369,695	$	226,276
Tax credit carryforwards	51,030		21,417
Compensation related differences	33,378		18,265
Lease assets	30,782		—
Other temporary differences	7,049		6,103
Tax assets before valuation allowance	491,934		272,061
Less - Valuation allowance	(120,679)		(209,868)
Total deferred tax assets	$	371,255	$	62,193
Deferred tax liabilities
Convertible notes	$	(83,163)	$	(55,698)
Amortization	(270,421)		(2,182)
Property, plant and equipment	(5,913)		(3,966)
Lease liabilities	(29,586)		—
Other temporary differences	(2,607)		(347)
Total deferred tax liabilities	(391,690)		(62,193)
Net deferred tax liabilities	$	(20,435)	$	—

Schedule of differences between the effective income tax rate and the statutory tax rate

The effective tax rate differs from the statutory tax rate due to the following:


	December 31,
	2019		2018		2017
U.S. Federal statutory rate	21.0	%	21.0	%	35.0	%
State taxes	5.8		3.4		2.4
Federal and state tax rate changes	(0.4)		—		(99.2)
Foreign tax rate differential	0.6		—		0.1
Research and development tax credits	1.1		1.9		(1.9)
Stock-based compensation expense	22.1		9.1		16.7
Non-deductible executive compensation	(4.1)		(4.9)		(10.7)
Transaction costs	(0.7)		—		—
Other adjustments	(0.6)		1.1		(2.6)
Valuation allowance	24.0		(31.7)		60.4
Effective tax rate	68.8	%	(0.1)	%	0.2	%

As of December 31, 2019, the Company had a total of $10.3 million of unrecognized tax benefits related to federal and state research and development tax credits. These amounts have been recorded as a reduction to our deferred tax asset. Included in this amount is $6.2 million of unrecognized tax benefits related to research and development tax credits acquired as a result of the Genomic Health combination. The balance of unrecognized tax benefits as of December 31, 2019 and 2018 of $10.3 million and $1.9 million respectively, if recognized, would affect the effective tax rate.

Schedule of unrecognized tax benefits

The following is a tabular reconciliation of the amounts of unrecognized tax benefits:


	December 31,
(In thousands)	2019		2018
January 1,	$	1,926	$	—
Increase due to current year tax positions	2,142		392
Increase due to prior year tax positions	6,208		1,534
Decrease due to prior year tax positions	—		—
Settlements	—		—
December 31,	$	10,276	$	1,926