Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income before incomes taxes consisted of the following:

	Year Ended December 31,
	2023		2022
Foreign	$	623	$	104
Domestic	(177,316)		(598,136)
Loss before income tax provision (benefit)	(176,693)		(598,032)

	Year Ended December 31,
	2023		2022
Current
Federal	$	—	$	—
State and Local	—		—
Foreign	164		72
Total Current	$	164	$	72
Deferred
Federal	$	942	$	(40,828)
State and Local	(2,032)		(8,296)
Foreign	—		—
Total Deferred	(1,090)		(49,124)
Total income tax provision (benefit)	$	(926)	$	(49,052)

For the years ended December 31, 2023 and 2022, the Company recorded a total income tax benefit of $0.9 million and $49.1 million, respectively. Accordingly, the effective tax rate for the Company for the years ended December 31, 2023 and 2022 was 0.5% and 8.2%, respectively. A reconciliation of the anticipated income tax expense/(benefit) computed by applying the

statutory federal income tax rate of 21% to loss before income taxes to the amount reported in the statement of operations and comprehensive loss is as follows:

	Year Ended December 31,
	2023	2022
U.S. federal taxes at statutory rate	21.0%	21.0%
State taxes (net of federal benefit)	1.1	1.4
Research and development tax credits	(0.8)	0.3
Non-deductible stock-based compensation	(2.4)	(1.0)
162(m) Limitation	(0.1)	—
Permanent Items	(0.1)	0.5
Unrealized fair market value gain on warrants	0.1	1.7
Goodwill Impairment	(0.1)	(6.1)
Change in valuation allowance	(18.4)	(9.6)
Other	0.2	—
Effective tax rate	0.5%	8.2%

The tax effects of temporary differences and carryforwards that give rise to significant portions of the net deferred tax assets and liabilities were as follows:

	As of December 31,
	2023		2022
Deferred tax assets:
Net operating loss carryforwards	$	257,960	$	199,426
Stock-based compensation	7,690		13,379
Accrued compensation	1,269		2,233
Accrued expenses	3,470		—
Research and development credits	6,374		8,600
Leases	14,054		12,971
Property and equipment	—		4,039
Obsolete inventory reserve	136		5,889
Third party liability	7,514		10,142
Section 174 amortization	25,993		23,193
Capitalized software	1,211		—
Other	814		1,091
Total deferred tax assets	326,485		280,963
Valuation allowance	(271,567)		(226,644)
Deferred tax assets, net of valuation allowance	54,918		54,319
Deferred tax liabilities:
Property and equipment	(1,279)		—
ROU asset	(7,353)		(8,589)
Capitalized software	—		(141)
Intangible amortization	(47,846)		(48,248)
Total deferred tax liabilities	(56,478)		(56,978)
Net deferred tax liability after valuation allowance	$	(1,560)	$	(2,659)

As of December 31, 2023, the Company had the following tax net operating loss carryforwards available to reduce future federal and state taxable income, and tax credit carryforwards available to offset future federal and Connecticut income taxes:

	Amount		Expiration period
Tax net operating loss carryforwards:
Federal (pre-2018 net operating losses)	$	33,056	2036-2037
Federal (post-2017 net operating losses)	$	853,531	No expiration
State and Local	$	1,278,549	2028-2042
State and Local	$	97,727	No expiration
Tax credit carryforwards:
Federal research and development	$	5,460	2038-2040
Connecticut research and experimental	$	777	2035-2036
Connecticut research and development	$	381	No expiration

The Company had the following deferred tax valuation allowance balances:

Year	Balance at the Beginning of Period		Additions	Balance at the End of Period
2023	$	226,644	44,923	$	271,567
2022	$	155,668	70,976	$	226,644

Future realization of the tax benefits of existing temporary differences and carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of December 31, 2023 and 2022 the Company performed an evaluation to determine whether a valuation allowance was needed. Based on the Company’s analysis, which considered all available evidence, both positive and negative, the Company determined that it is more likely than not that a significant portion of its deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of December 31, 2023 and 2022. The valuation allowance increased by $44.9 million in 2023 and $71.0 million in 2022, primarily due to the increase in net operating loss carryforwards.

Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. Generally, an ownership change occurs when certain shareholders increase their aggregated ownership by more than 50 percentage points over their lowest ownership percentage in a testing period (typically three years). Future changes in stock ownership, which may be outside of the Company’s control, may trigger an ownership change. In addition, future equity offerings or acquisitions that have an equity component of the purchase price could result in an ownership change. If an ownership change has occurred or does occur in the future, utilization of the NOL carryforwards or other tax attributes may be limited.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the years ended December 31, 2023 and 2022 is as follows:

	As of December 31,
	2023		2022
Unrecognized tax benefits – January 1	$	718	$	537
Gross increases – tax positions in current period	—		181
Unrecognized tax benefits – December 31	$	718	$	718

To the extent penalties and interest would be assessed on any underpayment of income tax, the Company’s policy is that such amounts would be accrued and classified as a component of income tax expense in the financial statements. The Company had a nominal amount of accrued interest or penalties related to uncertain tax positions as of December 31, 2023 and 2022.

The Company files income tax returns for U.S federal jurisdiction, various state jurisdictions, and various foreign countries. In the normal course of business, the Company is subject to examination by federal, state and foreign jurisdictions, where applicable. There are currently no pending federal, state or foreign income tax examinations. As a result of the Company’s

net operating loss carryforwards, the Company’s federal and state statutes of limitations remain open from 2016 and forward until the net operating loss carryforwards are utilized or expire prior to utilization.