UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2017March 31, 2024

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from     to
Commission File Number: 001-35060
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PACIRA PHARMACEUTICALS,BIOSCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware51-0619477
Delaware51-0619477
(State or Other Jurisdiction of

Incorporation or Organization)
(I.R.S. Employer

 Identification No.)
5 Sylvan Way, Suite 300
Parsippany, New Jersey, 07054
(Address and Zip Code of Principal Executive Offices)
(973) 254-3560
(Registrant’s Telephone Number, Including Area Code)


5401 West Kennedy Boulevard, Suite 890
Tampa, Florida 33609
(Address and Zip Code of Principal Executive Offices)
(813) 553-6680
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, par value $0.001 per sharePCRXNasdaq Global Select Market


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes  o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) x Yes  o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”filer”, “accelerated filer,”filer”, “smaller reporting company,”company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerx
Accelerated filero
Non-accelerated filero
Smaller reporting companyo
(Do not check if a smaller reporting company)
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes  x No

As of November 5, 2017, 40,570,002May 6, 2024, 46,546,148 shares of the registrant’s common stock, $0.001 par value per share, were outstanding.


PACIRA PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2017

PACIRA BIOSCIENCES, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2024

TABLE OF CONTENTS

Page #


Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 3

Table of Contents
PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (Unaudited)
PACIRA BIOSCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
March 31,
2024
December 31,
2023
ASSETS
Current assets:  
     Cash and cash equivalents$184,052 $153,298 
     Short-term available-for-sale investments141,838 125,283 
     Accounts receivable, net101,639 105,556 
     Inventories, net96,782 104,353 
     Prepaid expenses and other current assets18,802 21,504 
          Total current assets543,113 509,994 
Noncurrent available-for-sale investments— 2,410 
Fixed assets, net171,804 173,927 
Right-of-use assets, net58,626 61,020 
Goodwill163,243 163,243 
Intangible assets, net468,936 483,258 
Deferred tax assets141,057 144,485 
Investments and other assets36,542 36,049 
          Total assets$1,583,321 $1,574,386 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
     Accounts payable$8,982 $15,698 
     Accrued expenses66,818 64,243 
     Lease liabilities9,003 8,801 
     Current portion of convertible senior notes, net8,641 8,641 
          Total current liabilities93,444 97,383 
Convertible senior notes, net399,210 398,594 
Long-term debt, net112,477 115,202 
Lease liabilities52,446 54,806 
Contingent consideration20,892 24,698 
Other liabilities12,690 13,573 
          Total liabilities691,159 704,256 
Commitments and contingencies (Note 15)
Stockholders’ equity:  
Preferred stock, par value $0.001; 5,000,000 shares authorized; none issued and outstanding at March 31, 2024 and December 31, 2023— — 
Common stock, par value $0.001; 250,000,000 shares authorized; 46,517,410 and 46,481,174 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively47 46 
     Additional paid-in capital989,780 976,633 
     Accumulated deficit(97,817)(106,796)
     Accumulated other comprehensive income152 247 
          Total stockholders’ equity892,162 870,130 
          Total liabilities and stockholders’ equity$1,583,321 $1,574,386 
See accompanying notes to condensed consolidated financial statements.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 4
PACIRA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)
(Unaudited)
 September 30,
2017
 December 31,
2016
   (Note 2)
ASSETS 
  
Current assets: 
  
     Cash and cash equivalents$26,216
 $35,944
     Short-term investments267,864
 136,653
     Accounts receivable, net27,021
 29,937
     Inventories, net39,112
 31,278
     Prepaid expenses and other current assets5,622
 9,277
          Total current assets365,835
 243,089
Long-term investments80,807
 
Fixed assets, net105,947
 101,016
Goodwill52,956
 46,737
Other assets545
 624
          Total assets$606,090
 $391,466
    
LIABILITIES AND STOCKHOLDERS’ EQUITY 
  
Current liabilities: 
  
     Accounts payable$12,278
 $7,511
     Accrued expenses39,701
 37,261
     Convertible senior notes320
 
     Income taxes payable38
 66
          Total current liabilities52,337
 44,838
Convertible senior notes272,721
 108,738
Other liabilities16,232
 18,914
          Total liabilities341,290
 172,490
Commitments and contingencies (Note 12)

 

Stockholders’ equity: 
  
     Preferred stock, par value $0.001; 5,000,000 shares authorized; none issued and outstanding at
September 30, 2017 and December 31, 2016

 
     Common stock, par value $0.001, 250,000,000 shares authorized; 40,564,766 shares issued and
outstanding at September 30, 2017; 37,480,952 shares issued and outstanding at December 31, 2016
41
 37
     Additional paid-in capital658,557
 565,207
     Accumulated deficit(393,731) (346,238)
     Accumulated other comprehensive loss(67) (30)
          Total stockholders’ equity264,800
 218,976
          Total liabilities and stockholders’ equity$606,090
 $391,466

Table of Contents
PACIRA BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
 20242023
Revenues:  
Net product sales$165,824 $159,431 
Royalty revenue1,293 910 
          Total revenues167,117 160,341 
Operating expenses:  
Cost of goods sold47,416 49,020 
Research and development18,238 17,140 
Selling, general and administrative72,026 70,843 
Amortization of acquired intangible assets14,322 14,322 
Contingent consideration (gains) charges, restructuring charges and other1,903 12,107 
          Total operating expenses153,905 163,432 
Income (loss) from operations13,212 (3,091)
Other income (expense):  
Interest income3,903 3,142 
Interest expense(3,316)(9,589)
Loss on early extinguishment of debt— (16,926)
Other, net(159)(10)
          Total other income (expense), net428 (23,383)
Income (loss) before income taxes13,640 (26,474)
Income tax (expense) benefit(4,661)6,938 
Net income (loss)$8,979 $(19,536)
Net income (loss) per share:  
Basic and diluted net income (loss) per common share$0.19 $(0.43)
Weighted average common shares outstanding:
     Basic46,499 45,949 
     Diluted52,193 45,949 
 
See accompanying condensed notes to condensed consolidated financial statements.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 5
PACIRA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)
(Unaudited)
 Three Months Ended 
 September 30,
 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Revenues: 
  
  
  
     Net product sales$66,951
 $66,119
 $205,515
 $198,309
     Collaborative licensing and milestone revenue26
 1,357
 361
 3,069
     Royalty revenue358
 879
 1,676
 2,091
          Total revenues67,335
 68,355
 207,552
 203,469
Operating expenses: 
  
  
  
     Cost of goods sold18,228
 43,152
 66,621
 86,483
     Research and development11,775
 9,754
 47,262
 28,609
     Selling, general and administrative40,644
 36,314
 122,316
 117,940
     Product discontinuation260
 
 4,754
 
          Total operating expenses70,907
 89,220
 240,953
 233,032
Loss from operations(3,572) (20,865) (33,401) (29,563)
Other (expense) income: 
  
  
  
     Interest income1,068
 346
 2,805
 923
     Interest expense(5,127) (1,601) (12,942) (5,203)
     Loss on early extinguishment of debt
 
 (3,732) 
     Other, net79
 (8) 169
 (8)
          Total other expense, net(3,980) (1,263) (13,700) (4,288)
Loss before income taxes(7,552) (22,128) (47,101) (33,851)
     Income tax expense(45) (36) (105) (126)
Net loss$(7,597) $(22,164) $(47,206) $(33,977)
        
Net loss per share: 
  
  
  
     Basic and diluted net loss per common share$(0.19) $(0.59) $(1.19) $(0.91)
Weighted average common shares outstanding: 
  
    
     Basic and diluted40,463
 37,312
 39,540
 37,171

Table of Contents
PACIRA BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
Three Months Ended
March 31,
 20242023
Net income (loss)$8,979 $(19,536)
Other comprehensive income (loss):  
Net unrealized (loss) gain on investments, net of tax(108)251 
Foreign currency translation adjustments13 (8)
Total other comprehensive (loss) income(95)243 
Comprehensive income (loss)$8,884 $(19,293)
 
See accompanying condensed notes to condensed consolidated financial statements.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 6
PACIRA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)
(Unaudited)
 Three Months Ended 
 September 30,
 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Net loss$(7,597) $(22,164) $(47,206) $(33,977)
Other comprehensive income (loss):

  
  
  
Net unrealized gain (loss) on investments(3) (166) (37) 24
Total other comprehensive income (loss)(3) (166) (37) 24
Comprehensive loss$(7,600) $(22,330) $(47,243) $(33,953)

Table of Contents
PACIRA BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(In thousands)
(Unaudited)

 Common StockAdditional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income
 
 SharesAmountTotal
Balance at December 31, 202346,481 $46 $976,633 $(106,796)$247 $870,130 
Vested restricted stock units36 — — — 
Common stock withheld for employee withholding tax liabilities on vested restricted stock units— — (4)— — (4)
Stock-based compensation— — 13,151 — — 13,151 
Other comprehensive loss (Note 10)— — — — (95)(95)
Net income— — — 8,979 — 8,979 
Balance at March 31, 202446,517 $47 $989,780 $(97,817)$152 $892,162 
Common StockAdditional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
SharesAmountTotal
Balance at December 31, 202245,928 $46 $924,095 $(148,751)$(380)$775,010 
Exercise of stock options12 — 334 — — 334 
Vested restricted stock units30 — — — — — 
Stock-based compensation— — 11,990 — — 11,990 
Other comprehensive income (Note 10)— — — — 243 243 
Net loss— — — (19,536)— (19,536)
Balance at March 31, 202345,970 $46 $936,419 $(168,287)$(137)$768,041 
See accompanying condensed notes to condensed consolidated financial statements.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 7
PACIRA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(In thousands)
(Unaudited)
 Common Stock Additional
Paid-In
Capital
 Accumulated
Deficit
 Accumulated
Other
Comprehensive
Loss
  
 Shares Amount    Total
Balance at December 31, 201637,481
 $37
 $565,207
 $(346,238) $(30) $218,976
Cumulative effect adjustment of the adoption
of Accounting Standards Update 2016-09
(Note 2)

 
 287
 (287) 
 
Exercise of stock options459
 1
 5,303
 
 
 5,304
Vested restricted stock units99
 
 
 
 
 
Shares issued under employee stock
purchase plan
36
 
 1,056
 
 
 1,056
Stock-based compensation
 
 23,407
 
 
 23,407
Issuance of common stock upon
conversion of 2019 convertible senior notes
2,490
 3
 120,957
 
 
 120,960
Retirement of equity component
of 2019 convertible senior notes

 
 (126,328) 
 
 (126,328)
Equity component of 2022 convertible
senior notes issued, net

 
 68,668
 
 
 68,668
Net unrealized loss on investments
 
 
 
 (37) (37)
Net loss
 
 
 (47,206) 
 (47,206)
Balance at September 30, 201740,565
 $41
 $658,557
 $(393,731) $(67) $264,800

Table of Contents
PACIRA BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
 20242023
Operating activities:  
Net income (loss)$8,979 $(19,536)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Deferred taxes3,463 (7,342)
Depreciation of fixed assets and amortization of intangible assets18,426 19,602 
Amortization of debt issuance costs681 937 
Amortization of debt discount24 675 
Loss on early extinguishment of debt— 16,926 
Stock-based compensation13,151 11,990 
Changes in contingent consideration(3,806)11,618 
Other net losses (gains)73 (23)
Changes in operating assets and liabilities:  
Accounts receivable, net3,917 5,192 
Inventories, net7,572 3,086 
Prepaid expenses and other assets897 (1,926)
Accounts payable(6,976)2,628 
Accrued expenses and income taxes payable3,471 (25,120)
Other liabilities(771)421 
Net cash provided by operating activities49,101 19,128 
Investing activities:  
Purchases of fixed assets(2,836)(6,565)
Purchases of available-for-sale investments(56,055)(49,497)
Sales of available-for-sale investments43,361 126,245 
Purchases of debt investments— (4,000)
Net cash (used in) provided by investing activities(15,530)66,183 
Financing activities:  
Proceeds from exercises of stock options— 333 
Payment of employee withholding taxes on restricted stock unit vests(4)— 
Proceeds from Term loan A facility— 149,550 
Repayment of Term loan B facility— (296,875)
Repayment of Term loan A facility(2,813)— 
Debt extinguishment costs— (5,750)
Payment of debt issuance and financing costs— (1,163)
Net cash used in financing activities(2,817)(153,905)
Net increase (decrease) in cash and cash equivalents30,754 (68,594)
Cash and cash equivalents, beginning of period153,298 104,139 
Cash and cash equivalents, end of period$184,052 $35,545 
Supplemental cash flow information: 
Cash paid for interest$3,969 $17,634 
Net cash (received) paid for income taxes$(245)$201 
Non-cash investing and financing activities:  
Fixed assets included in accounts payable and accrued liabilities$607 $2,252 
See accompanying condensed notes to condensed consolidated financial statements.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 8
PACIRA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 (In thousands)
(Unaudited)
 Nine Months Ended 
 September 30,
 2017 2016
   (Note 2)
Operating activities: 
  
Net loss$(47,206) $(33,977)
Adjustments to reconcile net loss to net cash provided by operating activities: 
  
     Depreciation of fixed assets and amortization of intangibles10,174
 9,659
     Amortization of unfavorable lease obligation and debt issuance costs884
 359
     Amortization of debt discount7,365
 3,066
     Loss on early extinguishment of debt3,732
 
     Loss on disposal of fixed assets2,139
 
     Stock-based compensation23,407
 23,516
Changes in operating assets and liabilities: 
  
     Accounts receivable, net2,916
 (910)
     Inventories, net(7,834) 24,169
     Prepaid expenses and other assets3,734
 (4,202)
     Accounts payable, accrued expenses and income taxes payable4,542
 (5,691)
     Other liabilities(2,999) 115
          Net cash provided by operating activities854
 16,104
Investing activities: 
  
     Purchases of fixed assets(14,190) (19,827)
     Purchases of investments(436,017) (158,390)
     Sales of investments223,962
 137,170
     Payment of contingent consideration(6,219) (13,790)
          Net cash used in investing activities(232,464) (54,837)
Financing activities: 
  
     Proceeds from exercise of stock options5,304
 5,200
     Proceeds from shares issued under employee stock purchase plan1,056
 995
     Proceeds from 2022 convertible senior notes345,000
 
     Repayment of 2019 convertible senior notes(118,193) (4)
     Payment of debt issuance and financing costs(11,000) 
     Costs for conversion of convertible senior notes(285) 
          Net cash provided by financing activities221,882
 6,191
Net decrease in cash and cash equivalents(9,728) (32,542)
Cash and cash equivalents, beginning of period35,944
 56,984
Cash and cash equivalents, end of period$26,216
 $24,442
Supplemental cash flow information: 
  
     Cash paid for interest$6,896
 $3,852
     Cash paid for income taxes, net of refunds$133
 $253
Non-cash investing and financing activities:   
     Issuance of common stock from conversion of 2019 convertible senior notes$120,960
 $
     Retirement of equity component of 2019 convertible senior notes$(126,328) $
     Net increase (decrease) in accrued fixed assets$3,054
 $(185)

See accompanying condensed notes to consolidated financial statements.
Table of Contents

PACIRA PHARMACEUTICALS,BIOSCIENCES, INC.
CONDENSED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
NOTE 1—DESCRIPTION OF BUSINESS
Business Overview
Pacira Pharmaceuticals,BioSciences, Inc. and its subsidiaries (collectively, the “Company” or “Pacira”) is a specialty pharmaceutical company focused on the development, manufacture and commercialization of pharmaceutical products, based on its proprietary DepoFoam® extended release drug delivery technology, for use primarilytherapeutic area leader in hospitals and ambulatory surgery centers. Pacira is committed to driving innovation in postsurgicalnon-opioid pain management with opioid-sparing strategies.

a stated corporate mission of providing non-opioid pain management options to as many patients as possible and redefining the role of opioids for rescue therapy only. The Company’s lead product,long-acting, local analgesic, EXPAREL® (bupivacaine liposome injectable suspension), which consists of bupivacaine encapsulatedwas commercially launched in DepoFoam, was approved by the United States, Food and Drug Administration, or FDA, on October 28, 2011 and launched commerciallyU.S., in April 2012. DepoFoam2012 and approved in select European countries and the United Kingdom, or U.K., in November 2021. EXPAREL utilizes the Company’s proprietary multivesicular liposome, or pMVL, drug delivery technology that encapsulates drugs without altering their molecular structure and releases them over a desired period of time. In November 2021, the Company acquired Flexion Therapeutics, Inc., or Flexion (the “Flexion Acquisition”), and added ZILRETTA® (triamcinolone acetonide extended-release injectable suspension) to its product portfolio. ZILRETTA is also the basisfirst and only extended-release, intra-articular (meaning in the joint) injection indicated for the Company’s other FDA-approved product, DepoCyt(e), whichmanagement of osteoarthritis, or OA, knee pain. In April 2019, the Company had manufactured foradded iovera°® to its commercial partners.offering with the acquisition of MyoScience, Inc., or MyoScience (the “MyoScience Acquisition”). The Company also sells its bupivacaine liposome injectable suspension productiovera° system is a handheld cryoanalgesia device used to deliver a commercial partnerprecise, controlled application of cold temperature to serve animal health indications.targeted nerves.
Pacira is subject to risks common to companies in similar industries and stages, of development, including, but not limited to, competition from larger companies, reliance on revenue from one product,three products, reliance on a singlelimited number of wholesalers, reliance on a limited number of manufacturing site,sites, new technological innovations, dependence on key personnel, reliance on third-party service providers and sole source suppliers, protection of proprietary technology, and compliance with government regulations.regulations and risks related to cybersecurity.
The Company is managed and operated as a single business focused on the development, manufacture, marketing, distribution and sale of non-opioid pain management and regenerative health solutions. The Company is managed by a single management team, and consistent with its organizational structure, the Chief Executive Officer—who is the Company’s chief operating decision maker—manages and allocates resources at a consolidated level. Effective January 2, 2024, the Company appointed a new Chief Executive Officer. Consistent with the Company’s predecessor chief operating decision maker, the Company views its business as one reportable operating segment to evaluate its performance, allocate resources, set operational targets and forecast its future financial results.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”), for interim reporting. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in complete annual financial statements have been condensed or omitted. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
2023 (the “2023 Annual Report”).
The condensed consolidated financial statements at September 30, 2017,March 31, 2024, and for the three and nine monththree-month periods ended September 30, 2017March 31, 2024 and 2016,2023, are unaudited, but include all adjustments (consisting of only normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial information set forth herein in accordance with GAAP. The condensed consolidated balance sheet at December 31, 20162023 is derived from the audited consolidated financial statements included in the Company’s 2023 Annual Report on Form 10-K forReport. The condensed consolidated financial statements as presented reflect certain reclassifications from previously issued financial statements to conform to the current year ended December 31, 2016.presentation. The accounts of wholly-owned subsidiaries are included in the condensed consolidated financial statements. Intercompany accounts and transactions have been eliminated in consolidation.
The results of operations for thethese interim periods are not necessarily indicative of results that may be expected for any other interim periods or for the full year.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 9

Table of Contents
Concentration of Major Customers
The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers (including AmerisourceBergen Health Corporation, Cardinal Health, Inc. and McKesson Drug Company), but shipments of the product are sent directly to individual accounts, such as hospitals, ambulatory surgery centers and individual doctors.physicians. The table below includes the percentage of sales processedrevenues comprised by the Company’s three largest wholesalers in each period presented:

Three Months Ended 
 September 30,
 Nine Months Ended 
 September 30,
2017 2016 2017 2016
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
202420242023
Largest wholesaler34% 31% 35% 32% Largest wholesaler36%32%
Second largest wholesaler30% 27% 29% 27% Second largest wholesaler23%24%
Third largest wholesaler26% 27% 26% 27% Third largest wholesaler20%23%

90% 85% 90% 86%
Total Total79%79%
Recent Accounting Pronouncements Not Adopted as of March 31, 2024

Recently Adopted

In March 2016,November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-09, Compensation—Stock Compensation2023-07, Segment Reporting (Topic 718):280), Improvements to Employee Share-Based Payment Accounting. This update includes multiple provisions intended to simplify various aspects of the accountingReportable Segment Disclosures. The ASU amendment improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an interim and annual basis. The new segment disclosure requirements apply for share-based payment transactions including accounting for excess tax benefits and tax deficiencies, classification of excess tax benefits and tax deficiencies in the statement of cash flows and accounting for award forfeitures.entities with a single reportable segment. The update also removes the requirement to delay recognition of an excess tax benefit until it reduces current taxes payable, instead, it is required to be recognized at the time of settlement, subject to normal valuation allowance considerations. This update becameASU’s amendments are effective for the Company beginning January 1, 2017. The Company elected an accounting policy change to record forfeitures as they occur rather than estimating forfeitures during each period and recorded a charge of $0.3 million to retained earnings as of January 1, 2017 related to the reversal of cumulative forfeiture estimates. The adoption of this standard also resulted in the recognition of $29.3 million of previously unrecognized excess tax benefits in deferred tax assets, fully offset by a valuation allowance. The changes have been applied prospectively in accordance with the update and prior periods have not been adjusted. All tax-related cash flows resulting from stock-based compensation, including the excess tax benefits related to the settlement of stock-based awards, will be classified as cash flows from operating activities in the Company’s consolidated statements of cash flows.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The standard requires entities to measure most inventory “at the lower of cost and net realizable value,” thereby simplifying the previous guidance under which an entity must measure inventory at the lower of cost or market (market in this context is defined as one of three different measures, one of which is net realizable value). The standard became effective for the Company prospectively beginning January 1, 2017. The adoption of ASU 2015-11 did not have a material impact on the Company’s consolidated financial statements.

Not Adopted as of September 30, 2017

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires that an entity recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to its customers. In order to achieve this core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. During the fiscal third quarter of 2015, the FASB approved a one year deferral to the effective date to be adopted by all public companies for all annual periods and interim reporting periodsyears beginning after December 15, 2017. During 2016, the FASB issued additional guidance and clarification relating to identifying performance obligations, licensing, principal versus agent considerations, assessing collectability, presentation of sales taxes, noncash consideration and contract modifications and completed contracts at transition. These updates will replace existing revenue recognition guidance under GAAP when it becomes effective for the Company beginning January 1, 2018, and permits two methods of adoption: the full retrospective method, which requires the standard to be applied to each prior period presented, or the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. While the Company is continuing to evaluate the impact of these updates on its consolidated financial statements, it does not expect that the implementation of ASU 2014-09 and the subsequently issued related guidance will have a material impact on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 becomes effective for the Company beginning January 1,

2018. Early adoption is not permitted except for certain provisions. The Company currently does not expect that the pending adoption of ASU 2016-01 will have a material effect on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842). This update requires lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment for items such as initial direct costs. For income statement purposes, the new standard retains a dual model similar to Accounting Standards Codification, or ASC, 840, requiring leases to be classified as either operating or financing. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while financing leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). This update also introduces new disclosure requirements for leasing arrangements. The standard is effective for annual reporting periods beginning after December 15, 20182023 and interim periods within those annual periods. Earlythereafter, with early adoption is permitted. The ASU amendment will require adoption on a retrospective basis. The Company is currently evaluating the impact of adopting ASU 2016-022023-07 on its consolidated financial statements. Refer to Note 12, Commitments and Contingencies, for further discussion on the Company’s leases.

In June 2016,December 2023, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses2023-09, Income Taxes (Topic 326)740), which requires entitiesImprovements to measure all expected credit lossesIncome Tax Disclosures. The ASU amendment addresses investor requests for financial assets held atmore transparency about income tax information through improvements to income tax disclosures primarily related to the reporting date based on historical experience, current conditionsrate reconciliation and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. This update also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. This ASU isincome taxes paid information. The ASU’s amendments are effective for annual reporting periodsfiscal years beginning after December 15, 2019, with early adoption permitted.2024 and may be adopted on a prospective or retrospective basis. The Company is currently evaluating the impact of adopting ASU 2016-132023-09 on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, StatementNOTE 3—REVENUE
Revenue from Contracts with Customers
The Company’s net product sales consist of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies existing guidance on how companies present and classify certain cash receipts and cash payments(i) EXPAREL in the statementU.S., the European Union, or E.U., and the U.K.; (ii) ZILRETTA in the U.S.; (iii) iovera° in the U.S., Canada and Europe and (iv) sales of cash flowsits bupivacaine liposome injectable suspension for veterinary use. Royalty revenues are related to a collaborative licensing agreement from the sale of its bupivacaine liposome injectable suspension for veterinary use. The Company does not consider revenue from sources other than sales of EXPAREL and ZILRETTA to be material sources of its consolidated revenue. As such, the following disclosure is limited to revenue associated with net product sales of EXPAREL and ZILRETTA.
Net Product Sales
The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers based on orders of the product placed by addressing specific cash flow issuesend-users, namely hospitals, ambulatory surgery centers and healthcare provider offices. EXPAREL is delivered directly to the end-user without the wholesaler ever taking physical possession of the product. The Company primarily sells ZILRETTA to specialty distributors and specialty pharmacies, who then subsequently resell ZILRETTA to physicians, clinics and certain medical centers or hospitals. The Company also contracts directly with healthcare providers and intermediaries such as group purchasing organizations, or GPOs. Product revenue is recognized when control of the promised goods are transferred to the customer, in an effortamount that reflects the consideration the Company expects to reduce diversitybe entitled to in practice, including guidanceexchange for transferring those goods. EXPAREL and ZILRETTA revenue is recorded at the time the products are transferred to the customer.
Revenues from sales of products are recorded net of returns allowances, prompt payment discounts, service fees, government rebates, volume rebates and chargebacks. These reserves are based on debt prepaymentestimates of the amounts earned or extinguishment coststo be claimed on the related sales. These amounts are treated as variable consideration, estimated and contingent consideration payments made afterrecognized as a business combination. This updatereduction of the transaction price at the time of the sale, using the most likely amount method, except for returns, which is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted.based on the expected
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 10

value method. The Company is currently evaluatingincludes these estimated amounts in the impact of ASU 2016-15 on its consolidated financial statements.

Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or not significanttransaction price to the consolidated financial statementsextent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved.
Chargebacks for fees and discounts to qualified government healthcare providers represent the estimated obligations resulting from contractual commitments to sell products to qualified Department of Veteran Affairs hospitals, participating GPO members and 340B entities at prices lower than the list prices charged to other customers. The 340B Drug Discount Program is a U.S. federal government program that requires participating drug manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at reduced prices. Customers charge the Company for the difference between the product payment and the statutory selling price to the qualified entity. Reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and trade receivables, net. Chargeback amounts are generally determined at the time of sale to the qualified government healthcare provider by customers, and the Company generally issues credits for such amounts within weeks of the Company.customer’s notification to the Company of the sale. Reserves for chargebacks consist of credits that the Company expects to issue for units that the Company expects will be sold to qualified healthcare providers, and chargebacks that customers have claimed, but for which the Company has not yet issued a credit.

The calculation for some of these items requires management to make estimates based on sales data, historical return data, contracts, statutory requirements and other related information that may become known in the future. The adequacy of these provisions is reviewed on a quarterly basis.
Accounts Receivable
The majority of accounts receivable arise from product sales and represent amounts due from wholesalers, hospitals, ambulatory surgery centers, specialty distributors, specialty pharmacies and individual physicians. Payment terms generally range from zero to four months from the date of the transaction, and accordingly, there is no significant financing component.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification, or ASC, 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
At contract inception, the Company assesses the goods promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good that is distinct. When identifying individual performance obligations, the Company considers all goods promised in the contract regardless of whether explicitly stated in the customer contract or implied by customary business practices. The Company’s contracts with customers require it to transfer an individual distinct product, which represents a single performance obligation. The Company’s performance obligation with respect to its product sales is satisfied at a point in time, which transfers control upon delivery of EXPAREL and ZILRETTA to its customers. The Company considers control to have transferred upon delivery because the customer has legal title to the asset, physical possession of the asset has been transferred, the customer has significant risks and rewards of ownership of the asset and the Company has a present right to payment at that time.
Disaggregated Revenue
The following table represents disaggregated net product sales in the periods presented as follows (in thousands):
Three Months Ended
March 31,
20242023
Net product sales:
   EXPAREL$132,430 $130,408 
   ZILRETTA25,839 24,334 
   iovera°5,030 4,001 
   Bupivacaine liposome injectable suspension2,525 688 
      Total net product sales$165,824 $159,431 
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NOTE 3—4—INVENTORIES
The components of inventories, net are as follows (in thousands):
March 31,December 31,
20242023
Raw materials$51,608 $54,099 
Work-in-process18,764 31,215 
Finished goods26,410 19,039 
     Total$96,782 $104,353 
 September 30, December 31,
 2017 2016
Raw materials$14,113
 $11,742
Work-in-process9,013
 11,621
Finished goods15,986
 7,915
     Total$39,112
 $31,278

The Company is required to perform ongoing stability testing on select lots of EXPAREL at various time intervals. In October 2016, as part of its ongoing stability testing, the Company identified that a single batch of EXPAREL, which was manufactured in early 2016, did not meet the required specification. An internal investigation tied this unexpected result to a modification in the manufacturing process that existed when this product was made, which has subsequently been corrected. The Company reserved all impacted inventory on hand as of September 30, 2016. As a result, in the third quarter of 2016, the Company recorded a $21.9 million charge to cost of goods sold related to this matter.


NOTE 4—5—FIXED ASSETS

Fixed assets, net, summarized by major category, consist of the following (in thousands):
March 31,December 31,
20242023
Machinery and equipment (1)
$106,670 $121,773 
Leasehold improvements58,835 61,826 
Computer equipment and software17,223 17,186 
Office furniture and equipment2,543 2,543 
Construction in progress106,987 105,905 
        Total292,258 309,233 
Less: accumulated depreciation (1)
(120,454)(135,306)
        Fixed assets, net$171,804 $173,927 
 September 30, December 31,
 2017 2016
Machinery and laboratory equipment$35,496
 $34,309
Leasehold improvements34,723
 33,787
Computer equipment and software6,985
 5,623
Office furniture and equipment1,603
 1,606
Construction in progress72,690
 63,201
        Total151,497
 138,526
Less: accumulated depreciation(45,550) (37,510)
        Fixed assets, net$105,947
 $101,016

(1) During the three months ended March 31, 2024, the Company disposed of $19.0 million of fully depreciated machinery and equipment associated with its 45-liter EXPAREL manufacturing process at the Thermo Fisher Scientific Pharma Services facility located in Swindon, England. The Company continues to operate its 200-liter EXPAREL manufacturing process at the same facility.
For the three months ended September 30, 2017March 31, 2024 and 2016,2023, depreciation expense was $3.4$4.1 million and $3.3$5.3 million, respectively. For the three months ended September 30, 2017March 31, 2024 and 2016,2023, there was $0.7 million and $1.4 million of capitalized interest on the construction of manufacturing sites, was $0.3 million and $0.5 million, respectively.

For the nine months ended September 30, 2017 and 2016, depreciation expense was $10.2 million and $9.6 million, respectively. For the nine months ended September 30, 2017 and 2016, capitalized interest on the construction of manufacturing sites was $0.7 million and $1.2 million, respectively.

At September 30, 2017March 31, 2024 and December 31, 2016,2023, total fixed assets, net, includes leasehold improvements and manufacturing process equipment and leasehold improvements located in EnglandEurope in the amount of $57.2$34.3 million and $33.7$36.8 million, respectively.

As of March 31, 2024 and December 31, 2023, the Company had asset retirement obligations of $3.9 million and $4.3 million, respectively, included in accrued expenses and other liabilities on its condensed consolidated balance sheets, for costs associated with returning leased spaces to their original condition upon the termination of certain of its lease agreements.
NOTE 5—GOODWILL6—LEASES

The Company leases all of its facilities, including its EXPAREL and iovera° handpiece manufacturing facility at its Science Center Campus in San Diego, California. The Company also has two embedded leases with Thermo Fisher Scientific Pharma Services for the use of their manufacturing facility in Swindon, England for the production of EXPAREL and ZILRETTA. A portion of the associated monthly base fees has been allocated to the lease components based on a relative fair value basis.
In March 2007,Since July 2022 and February 2023, the Company acquiredhas been recognizing sublease income for laboratory space leased in Woburn, Massachusetts and a portion of office space leased in Burlington, Massachusetts, respectively, from leases that were assumed as part of the Flexion Acquisition. In February 2024, the lease and sublease term concluded for the laboratory space in Woburn, Massachusetts.
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The operating lease costs for the facilities include lease and non-lease components, such as common area maintenance and other common operating expenses, along with executory costs such as insurance and real estate taxes. Total operating lease expense, net is as follows (in thousands):
Three Months Ended
March 31,
20242023
Fixed lease costs$3,497 $3,628 
Variable lease costs494 567 
Sublease income(131)(153)
Total$3,860 $4,042 
Supplemental cash flow information related to operating leases is as follows (in thousands):
Three Months Ended
March 31,
20242023
Cash paid for operating lease liabilities, net of lease incentives$3,219 $3,763 
The Company has elected to net the amortization of the right-of-use asset and the reduction of the lease liability principal in other liabilities in the condensed consolidated statements of cash flows.
The Company has measured its operating lease liabilities at an estimated discount rate at which it could borrow on a collateralized basis over the remaining term for each operating lease. The weighted average remaining lease terms and the weighted average discount rates are summarized as follows:
March 31,
20242023
Weighted average remaining lease term5.81 years6.61 years
Weighted average discount rate7.01 %7.03 %
Maturities of the Company’s operating lease liabilities are as follows (in thousands):
YearAggregate Minimum
Payments Due
2024 (remaining nine months)$9,777 
202512,775 
202612,814 
202712,587 
202810,925 
Thereafter16,426 
   Total future lease payments75,304 
   Less: imputed interest(13,855)
   Total operating lease liabilities$61,449 
NOTE 7—GOODWILL AND INTANGIBLE ASSETS
Goodwill
The Company’s goodwill results from the acquisition of Pacira Pharmaceuticals, Inc. (the Company’s California operating subsidiary) from SkyePharma Holding, Inc., or Skyepharma, its California operating (now Vectura Group Limited, a subsidiary referred to herein asof Philip Morris International, Inc.) in 2007, the Acquisition.MyoScience Acquisition in 2019 and the Flexion Acquisition in 2021. The Company’s goodwill arose in April 2012 from a contingent milestone payment to Skyepharma in connection with the Acquisition. The Acquisitionbalance at each of March 31, 2024 and December 31, 2023 was accounted for under Statement$163.2 million.
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Table of Financial Accounting Standards 141, Accounting for Business Combinations, which was the effective GAAP standard at the Acquisition date. In connection with the Acquisition, the Company agreed to certain earn-out payments based on a percentage ofContents
Intangible Assets
Intangible assets, net, sales of DepoBupivacaine products collected, including EXPAREL, and certain other yet-to-be-developed products, as well as milestone payments for DepoBupivacaine products, including EXPAREL, as follows:
(i)$10.0 million upon the first commercial sale in the United States (met April 2012);
(ii)$4.0 million upon the first commercial sale in a major E.U. country (United Kingdom, France, Germany, Italy and Spain);
(iii)$8.0 million when annual net sales collected reach $100.0 million (met September 2014);
(iv)$8.0 million when annual net sales collected reach $250.0 million (met June 2016); and
(v)$32.0 million when annual net sales collected reach $500.0 million.

The first milestone was met in April 2012, resulting in a $10.0 million payment to Skyepharma. The Company recorded this payment net of a $2.0 million contingent consideration liability recognized at the timeconsists of the Acquisition, resulting in $8.0 million recorded as goodwill. In September 2014,in-process research and development, or IPR&D, and developed technology from the Company recorded an $8.0 million milestone in connection with achieving $100.0 million of annual EXPAREL net sales collected, and in June 2016, the Company recorded another $8.0 million milestone for achieving $250.0 million of annual EXPAREL net sales collected. For purposes of meeting future potential milestone payments, annual net sales are measured on a rolling quarterly basis. Cumulatively through September 30, 2017, the Company has recorded an additional $29.0 million as goodwill for earn-out payments that are based on a percentage of net sales of DepoBupivacaine products collected, including EXPAREL. Any remaining earn-out payments will also be treated as additional costs of theFlexion Acquisition and therefore, recordeddeveloped technology and customer relationships from the MyoScience Acquisition and are summarized as goodwill iffollows (dollar amounts in thousands):
March 31, 2024Gross Carrying ValueAccumulated AmortizationIntangible Assets, NetWeighted-Average Useful Lives
Developed technologies$590,000 $(155,975)$434,025 10 years, 5 months
Customer relationships90 (45)45 10 years
     Total finite-lived intangible assets, net590,090 (156,020)434,070 
Acquired IPR&D34,866 — 34,866 
     Total intangible assets, net$624,956 $(156,020)$468,936 
December 31, 2023Gross Carrying ValueAccumulated AmortizationIntangible Assets, NetWeighted-Average Useful Lives
Developed technologies$590,000 $(141,655)$448,345 10 years, 5 months
Customer relationships90 (43)47 10 years
     Total finite-lived intangible assets, net590,090 (141,698)448,392 
Acquired IPR&D34,866 — 34,866 
     Total intangible assets, net$624,956 $(141,698)$483,258 
Amortization expense on intangible assets was $14.3 million for both the three months ended March 31, 2024 and when2023.
Assuming no changes in the gross carrying amount of these intangible assets, the future estimated amortization expense on the finite-lived intangible assets will be $43.0 million for the remaining nine months of 2024, $57.3 million each contingency is resolved.year from 2025 to 2030, $37.4 million in 2031, $7.9 million in 2032 and $2.2 million in 2033.


NOTE 8—DEBT
The change in the carrying value of goodwillthe Company’s outstanding debt is summarized as follows (in thousands):
March 31,December 31,
20242023
Term loan A facility maturing March 2028$112,477 $115,202 
0.750% Convertible senior notes due August 2025399,210 398,594 
3.375% Convertible senior notes due May 2024 (1)
8,641 8,641 
     Total$520,328 $522,437 
(1) The 3.375% convertible senior notes due May 2024 matured and were repaid on May 1, 2024.
2028 Term Loan A Facility
On March 31, 2023, the Company entered into a credit agreement (the “TLA Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and certain lenders, to refinance the indebtedness outstanding under the Company’s then-existing TLB Credit Agreement (as defined and discussed below). The term loan issued under the TLA Credit Agreement (the “TLA Term Loan”) was issued at a 0.30% discount and provides for a single-advance term loan A facility in the principal amount of $150.0 million, which is secured by substantially all of the Company’s and any subsidiary guarantor’s assets. Subject to certain conditions, the Company may, at any time, on one or more occasion, add one or more new classes of term facilities and/or increase the principal amount of the loans of any existing class by requesting one or more incremental term facilities. The net proceeds of the TLA Term Loan were approximately $149.6 million after deducting an original issue discount of $0.4 million.

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 Carrying Value
Balance at December 31, 2016$46,737
Percentage payments on collections of net sales of DepoBupivacaine products6,219
Balance at September 30, 2017$52,956
The total debt composition of the TLA Term Loan is as follows (in thousands):
March 31,December 31,
20242023
Term loan A facility maturing March 2028$113,750 $116,563 
Deferred financing costs(924)(988)
Discount on debt(349)(373)
     Total debt, net of debt discount and deferred financing costs$112,477 $115,202 
The TLA Term Loan matures on March 31, 2028 and the TLA Credit Agreement requires quarterly repayments of principal in the amount of $2.8 million which commenced on June 30, 2023, increasing to $3.8 million commencing March 31, 2025, with a remaining balloon payment of approximately $85.3 million due at maturity. Due to voluntary principal prepayments made, the Company is not required to make further principal payments until March 2026, although the Company retains the option to do so.
NOTE 6—DEBTThe TLA Credit Agreement requires the Company to, among other things, maintain (i) a Senior Secured Net Leverage Ratio (as defined in the TLA Credit Agreement), determined as of the last day of each fiscal quarter, of no greater than 3.00 to 1.00 and (ii) a Fixed Charge Coverage Ratio (as defined in the Credit Agreement), determined as of the last day of each fiscal quarter, of no less than 1.50 to 1.00. The TLA Credit Agreement requires the Company to maintain an unrestricted cash and cash equivalents balance of at least $500.0 million less any prepayments of the 2025 Notes (as defined below) at any time from 91 days prior to the maturity date through the earlier of (i) the latest maturity date of the 2025 Notes and (ii) the date on which there is no outstanding principal amount of the 2025 Notes. The TLA Credit Agreement also contains customary affirmative and negative covenants, financial covenants, representations and warranties, events of default and other provisions. As of March 31, 2024, the Company was in compliance with all financial covenants under the TLA Credit Agreement.

The Company may elect to borrow either (i) alternate base rate borrowings or (ii) term benchmark borrowings or daily simple SOFR (as defined in the TLA Credit Agreement) borrowings. Each term loan borrowing that is an alternate base rate borrowing bears interest at a rate per annum equal to (i) the Alternate Base Rate (as defined in the TLA Credit Agreement), plus (ii) a spread based on the Company’s Senior Secured Net Leverage Ratio ranging from 2.00% to 2.75%. Each term loan borrowing that is a term benchmark borrowing or daily simple SOFR borrowing bears interest at a rate per annum equal to (i) the Adjusted Term SOFR Rate or Adjusted Daily Simple SOFR (as each is defined in the Credit Agreement), plus (ii) a spread based on the Company’s Senior Secured Net Leverage Ratio ranging from 3.00% to 3.75%. During the three months ended March 31, 2024, the Company made a $2.8 million voluntary principal prepayment. During the year ended December 31, 2023, the Company made a scheduled principal payment of $2.8 million as well as $30.6 million of voluntary principal prepayments. As of March 31, 2024, borrowings under the TLA Term Loan consisted entirely of term benchmark borrowings at a rate of 8.41%.
2026 Term Loan B Facility
In December 2021, the Company entered into a term loan credit agreement (the “TLB Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent and the initial lender. The term loan issued under the TLB Credit Agreement (the “TLB Term Loan”) was issued at a 3.00% discount and allowed for a single-advance term loan B facility in the principal amount of $375.0 million, which was secured by substantially all of the Company’s and each subsidiary guarantor’s assets. The net proceeds of the TLB Term Loan were approximately $363.8 million after deducting an original issue discount of $11.2 million.
During the three months ended March 31, 2023, the Company repaid the outstanding $296.9 million principal on the TLB Term Loan, which resulted in a $16.9 million loss on early extinguishment of debt.
On March 31, 2023, the Company used the $149.6 million of net borrowings under the TLA Credit Agreement and cash on hand to repay the indebtedness outstanding under the TLB Credit Agreement and concurrently terminated the TLB Credit Agreement. The Company incurred a prepayment fee of 2.00% of the outstanding principal balance of the TLB Term Loan in connection with the termination.

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Convertible Senior Notes Due 20222025

On March 13, 2017,In July 2020, the Company completed a private placement of $345.0$402.5 million in aggregate principal amount of 2.375%its 0.750% convertible senior notes due 2022,2025, or 20222025 Notes, and entered into an indenture agreement,with Computershare Corporate Trust, N.A. (formerly Wells Fargo Bank, N.A.), or 20222025 Indenture, with respect to the 20222025 Notes. The 20222025 Notes accrue interest at a fixed rate of 2.375%0.750% per year, payable semiannually in arrears on AprilFebruary 1st and OctoberAugust 1st of each year. The 20222025 Notes mature on AprilAugust 1, 2022.2025.

The total debt composition of the 20222025 Notes is as follows (in thousands):
 September 30, December 31,
 2017 2016
2.375% convertible senior notes due 2022$345,000
 $
Deferred financing costs(7,880) 
Discount on debt(64,399) 
     Total debt, net of debt discount and deferred financing costs$272,721
 $

The net proceeds from the issuance of the 2022 Notes were $334.0 million, after deducting commissions and the offering expenses paid by the Company. A portion of the net proceeds from the 2022 Notes were used by the Company to repurchase the majority of its then-outstanding convertible senior notes due 2019 in privately-negotiated transactions.

March 31,December 31,
20242023
0.750% convertible senior notes due August 2025$402,500 $402,500 
Deferred financing costs(3,290)(3,906)
     Total debt, net of deferred financing costs$399,210 $398,594 
Holders may convert the 20222025 Notes at any time prior to the close of business on the business day immediately preceding October 1, 2021,February 3, 2025, only underif certain circumstances are met, including if during the following circumstances:
(i) during anyprevious calendar quarter, commencing after the calendar quarter ended June 30, 2017 (and only during such calendar quarter), if the last reported salesales price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter iswas greater than 130% of the conversion price on eachthen applicable trading day;
(ii) during the five business-day period immediately after any five consecutive trading-day period (the ‘‘measurement period’’) in which the trading price (as defined in the 2022 Indenture) per $1,000 principal amount of the 2022 Notes for each trading day of the measurement period was less than 98% of the productat least 20 out of the last reported sale price30 consecutive trading days of the Company’s common stock andquarter. During the quarter ended March 31, 2024, the conditions for conversion rate on each such trading day;
(iii) upon the occurrence of specified corporate events, including a merger or a sale of all or substantially all of the Company’s assets; or
(iv) if the Company calls the 2022 Notes for redemption, until the close of business on the business day immediately preceding the redemption date.

were not met.
On or after October 1, 2021,February 3, 2025, until the close of business on the second scheduled trading day immediately preceding AprilAugust 1, 2022,2025, holders may convert their 20222025 Notes at any time.

Upon conversion, holders will receive the principal amount of their 20222025 Notes and any excess conversion value, calculated based on the per share volume-weighted average price for each of the 40 consecutive trading days during the observation period (as more fully described in the 20222025 Indenture). For both the principal and excess conversion value, holders may receive cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s option. The initial conversion rate for the 20222025 Notes is 14.949113.9324 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of $66.89$71.78 per share of the Company’s common stock. The

conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. The initial conversion price of the 20222025 Notes represents a premium of approximately 37.5%32.5% to the closing sale price of $48.65$54.17 per share of the Company’s common stock on the NASDAQNasdaq Global Select Market on MarchJuly 7, 2017,2020, the date that the Company priced the private offering of the 20222025 Notes.

As of September 30, 2017,March 31, 2024, the 20222025 Notes had a market price of $973 perof $953 per $1,000 principal amount. In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of further stock price appreciation. Upon the receipt of conversion requests, the settlement of the 20222025 Notes will be paid pursuant to the terms of the 20222025 Indenture. In the event that all of the 20222025 Notes are converted, the Company would be required to repay the $345.0$402.5 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the Company’s option).

Prior to AprilSince August 1, 2020,2023 (but, in the Company may not redeemcase of a redemption of less than all of the 2022 Notes. On or after April 1, 2020,outstanding 2025 Notes, no later than the 40th scheduled trading day immediately before the maturity date), the Company may redeem for cash all or part of the 20222025 Notes if the last reported sale price (as defined in the 20222025 Indenture) of the Company’s common stock has been at least 130% of the conversion price then in effect for (i) each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending within five trading days prior toending on, and including, the trading day immediately before the date on which the Company providessends the related notice of redemption.redemption and (ii) the trading day immediately before the date the Company sends such notice. The redemption price will equal the sum of (i) 100% of the principal amount of the 20222025 Notes being redeemed, plus (ii) accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date. In addition, calling the 20222025 Notes for redemption will constitute a “make whole“make-whole fundamental change ”change” (as defined in the 20222025 Indenture) and will, in certain circumstances, increase the conversion rate applicable to the conversion of such notes if it is converted in connection with the redemption. No sinking fund is provided for the 20222025 Notes.
If the Company undergoes a fundamental change, as defined in the 2022 Indenture, subject to certain conditions, holders of the 2022 Notes may require the Company to repurchase for cash all or part of their 2022 Notes at a repurchase price equal to 100% of the principal amount of the 2022 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a ‘‘make-whole fundamental change’’ (as defined in the 2022 Indenture) occurs prior to April 1, 2022, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with the make-whole fundamental change.

The 2022 Notes are the Company’s general unsecured obligations that rank senior in right of payment to all of its indebtedness that is expressly subordinated in right of payment to the 2022 Notes, and equal in right of payment to the Company’s unsecured indebtedness. The 2022 Notes are also effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and are structurally subordinated to any debt or other liabilities (including trade payables) of the Company’s subsidiaries.

While the 20222025 Notes are currently classified on the Company’s condensed consolidated balance sheet at September 30, 2017March 31, 2024 as long-term debt, the future convertibility and resulting balance sheet classification of this liability will beis monitored at each quarterly reporting date and will beis analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods. In the event that the holders of the 20222025 Notes have the election to convert the 20222025 Notes at any time during the prescribed measurement period, the 20222025 Notes would then be considered a current obligation and classified as such.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 16

Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options, an entity must separately account for the liability and equity components
Table of convertible debt instruments (such as the 2022 Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The liability component of the instrument is valued in a manner that reflects the market interest rate for a similar nonconvertible instrument at the date of issuance. The initial carrying value of the liability component of $274.1 million was calculated using a 7.45% assumed borrowing rate. The equity component of $70.9 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2022 Notes and is recorded in additional paid-in capital on the consolidated balance sheet at the issuance date. That equity component is treated as a discount on the liability component of the 2022 Notes, which is amortized over the five year term of the 2022 Notes using the effective interest rate method. The equity component is not re-measured as long as it continues to meet the conditions for equity classification.Contents
The Company allocated the total transaction costs of $11.0 million related to the issuance of the 2022 Notes to the liability and equity components of the 2022 Notes based on their relative values. Transaction costs attributable to the liability component are amortized to interest expense over the five-year term of the 2022 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity.


The 2022 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company. The 2022 Indenture contains customary events of default with respect to the 2022 Notes, including that upon certain events of default, 100% of the principal and accrued and unpaid interest on the 2022 Notes will automatically become due and payable.

Convertible Senior Notes Due 20192024 Assumed from the Flexion Acquisition
On January 23, 2013,Prior to the Company completed a private placementFlexion Acquisition, in May 2017, Flexion issued an aggregate of $120.0$201.3 million in aggregate principal amount of 3.25%3.375% convertible senior notes due 2019, or 2019 Notes, and entered into an indenture agreement, or 2019 Indenture, with respect2024 (the “Flexion 2024 Notes”), pursuant to the 2019 Notes.indenture, dated as of May 2, 2017 (the “Original Flexion Indenture”), between Flexion and Computershare Corporate Trust, N.A. (formerly Wells Fargo Bank, N.A.), as trustee (the “Flexion Trustee”), as supplemented by the First Supplemental Indenture, dated as of November 19, 2021, between Flexion and the Flexion Trustee (the “First Supplemental Flexion Indenture” and, together with the Original Flexion Indenture, the “Flexion Indenture”). The 2019Flexion 2024 Notes accruehad a maturity date of May 1, 2024, were unsecured, and accrued interest at a fixed rate of 3.25%3.375% per year,annum, payable semiannually in arrearssemi-annually on FebruaryMay 1st and AugustNovember 1st of each year. The 2019 Notes mature on February 1, 2019.Upon the Flexion Acquisition, the principal was assumed and recorded at fair value by the Company.

The total debt compositionAs a result of the 2019Flexion Acquisition, and in connection with a Fundamental Change Company Notice and Offer to Purchase (the “Notice”) to the holders of the Flexion 2024 Notes isin accordance with the Flexion Indenture, holders of the Flexion 2024 Notes became entitled to certain Flexion Acquisition-related conversion and repurchase rights. On December 6, 2021, as follows (in thousands):
 September 30, December 31,
 2017 2016
3.25% convertible senior notes due 2019$338
 $118,531
Deferred financing costs(2) (1,276)
Discount on debt(16) (8,517)
     Total debt, net of debt discount and deferred financing costs$320
 $108,738

In March 2017,a result of the Flexion Acquisition and in accordance with the Flexion Indenture, the Company used partoffered to repurchase for cash all of the net proceeds from the issuance of the 2022outstanding Flexion 2024 Notes, discussed above toat a repurchase $117.7 million aggregate principal of the 2019 Notes in privately-negotiated transactions for an aggregate of approximately $118.2 millionprice in cash and the issuanceequal to 100% of an aggregate of approximately 2.5 million shares of common stock. The partial repurchase of the 2019 Notes resulted in a $3.7 million loss on early debt extinguishment. In May 2017, the Company repurchased $0.5 million aggregate principal of the 2019 Notes in a privately-negotiated transaction for an aggregate of approximately $0.5 million in cash and the issuance of an aggregate of approximately 10 thousand shares of common stock. At September 30, 2017, approximately $0.3 million of principal remains outstanding on the 2019 Notes.

On or after August 1, 2018, until the close of business on the second scheduled trading day immediately preceding February 1, 2019, holders may convert their 2019 Notes at any time. Upon conversion, holders will receive cash up to the principal amount of the 2019Flexion 2024 Notes and, with respect to any excess conversion value, may receive cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s option. The initial conversion rate for the 2019 Notes was 40.2945 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of $24.82 per share of the Company’s common stock. The conversion rate will be subject to adjustment in some events but will not be adjusted for anybeing repurchased, plus accrued and unpaid interest.

Holders may convert their 2019 Notes priorinterest thereon to, August 1, 2018 only if certain circumstances are met, including if duringbut excluding, January 7, 2022, subject to the previous calendar quarter,terms and conditions set forth therein. Any holder that did not exercise its repurchase right in accordance with the sales priceterms of the Company’s common stock was greater than 130% ofNotice retained the conversion price then applicable for at least 20 out ofrights associated with such holder’s Flexion 2024 Notes under the last 30 consecutive trading days of the quarter. During the quarter ended September 30, 2017, this condition for conversion was met. As a result, the 2019 Notes are classifiedFlexion Indenture as a current obligation and will be convertible until December 31, 2017. As of September 30, 2017, the 2019 Notes had a market price of $1,505 per $1,000 principal amount, compared to an estimated conversion value of $1,513 per $1,000 principal amount. In the event that the remaining 2019 Notes are converted, the Company would be required to repay the $0.3 million of principal value in cash and settle approximately $0.2 million of the conversion premium in cash, common stock or a combination of cash and shares of its common stock at the Company’s optionwell as of September 30, 2017.

As of February 1, 2017, the Company may redeem for cash all or part of the 2019 Notes if the last reported sale price (as defined in the Indenture) of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period, ending within five trading days prior to the date on which the Company provides notice of redemption. If the 2019 Notes are called for redemption, the holder has the right to submit these notes for conversion at any time priorreceive interest payments on the Flexion 2024 Notes.
On January 7, 2022, following the expiration of the offer to the redemption date, andpurchase, the Company will,accepted the $192.6 million aggregate principal amount of Flexion 2024 Notes that were validly tendered (and not validly withdrawn). No Flexion 2024 Notes were converted in addition to payingconnection with the principal and conversion premium, pay a make-whole premium equal to the sum of the present value ofNotice. At March 31, 2024, the remaining scheduled payments of interest that would have been madeprincipal outstanding was $8.6 million, which was repaid upon its maturity on the Notes to be converted had such notes remained outstanding from the applicable conversion date to the maturity date.


May 1, 2024.
Interest Expense

The following table sets forth the total interest expense recognized in the periods presented (in(dollar amounts in thousands):
Three Months Ended
March 31,
20242023
Contractual interest expense$3,311 $9,350 
Amortization of debt issuance costs681 937 
Amortization of debt discount24 675 
Capitalized interest (Note 5)(700)(1,373)
        Total$3,316 $9,589 
Effective interest rate on total debt2.96 %5.36 %
 Three Months Ended 
 September 30,
 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Contractual interest expense$2,051
 $963
 $5,293
 $2,890
Amortization of debt issuance costs393
 153
 984
 459
Amortization of debt discount3,003
 1,022
 7,365
 3,066
Capitalized interest and other (Note 4)(320) (537) (700) (1,212)
        Total$5,127
 $1,601
 $12,942
 $5,203
        
Effective interest rate on convertible senior notes7.81% 7.22% 7.75% 7.22%

NOTE 7—9—FINANCIAL INSTRUMENTS
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in the principal or most advantageous market in an orderly transaction. To increase consistency and comparability in fair value measurements, the FASB established a three-level hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of fair value measurements are:
Level 1—1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2—2:Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3—3:Unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these items. The fair value of the Company’s convertible
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 17

senior notes at September 30, 2017and its TLA Term Loan are calculated utilizing market quotations from an over-the-counter trading market for these instrumentsnotes (Level 2). The carrying amount and fair value of the 2019 NotesCompany’s acquisition-related contingent consideration is reported at fair value on a recurring basis (Level 3). The carrying amounts of equity investments and 2022 Notes areconvertible notes receivable without readily determinable fair values have not been adjusted for either an impairment or upward or downward adjustments based on observable transactions.
At March 31, 2024, the carrying values and fair values of the following financial assets and liabilities were as follows (in thousands):
Financial Liabilities Carried at Historical Cost Carrying Value Fair Value Measurements Using
September 30, 2017  Level 1 Level 2 Level 3
2.375% convertible senior notes due 2022 (1)
 $272,721
 $
 $335,513
 $
3.25% convertible senior notes due 2019 (2)
 $320
 $
 $509
 $

Carrying ValueFair Value Measurements Using
Level 1Level 2Level 3
Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis:
Financial Assets:
Equity investments$15,877 $— $— $15,877 
Convertible notes receivable$12,030 $— $— $12,030 
Financial Liabilities:
   Acquisition-related contingent consideration$20,892 $— $— $20,892 
Financial Liabilities Measured at Amortized Cost:
Term loan A facility due March 2028$112,477 $— $113,181 $— 
   0.750% convertible senior notes due 2025 (1)
$399,210 $— $383,381 $— 
   3.375% convertible senior notes due 2024 (2)
$8,641 $— $8,641 $— 
(1) The closing price of the Company’s common stock as reported on the Nasdaq Global Select Market was $37.55$29.22 per share at September 30, 2017March 31, 2024 compared to a conversion price of $66.89$71.78 per share. Currently,At March 31, 2024, as the conversion price iswas above the stock price.price, the requirements for conversion have not been met. The maximum conversion premium that can becould have been due on the 20222025 Notes is approximately 5.25.6 million shares of the Company’s common stock, which assumes no increasesincrease in the conversion rate for certain corporate events.

(2) The closing3.375% convertible senior notes due May 2024 matured and were repaid on May 1, 2024.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Equity and Convertible Note Investments
The Company holds strategic investments in clinical and preclinical stage privately-held biotechnology companies in the form of equity and convertible note investments. The following investments have no readily determinable fair value and are recorded at cost minus impairment, if any, plus or minus observable price changes of identical or similar investments (in thousands):
Equity InvestmentsConvertible Notes ReceivableTotal
Balance at December 31, 2022$15,877 $5,315 $21,192 
   Purchases— 6,758 6,758 
   Foreign currency adjustments— 61 61 
Balance at December 31, 202315,877 12,134 28,011 
   Foreign currency adjustments— (104)(104)
Balance at March 31, 2024$15,877 $12,030 $27,907 
Acquisition-Related Contingent Consideration
The Company has recognized contingent consideration related to the Flexion Acquisition in the amount of $20.9 million and $24.7 million as of March 31, 2024 and December 31, 2023, respectively. The Company’s contingent consideration obligations are recorded at their estimated fair values and are revalued each reporting period if and until the related contingencies are resolved. The Company has measured the fair value of its contingent consideration using a probability-weighted discounted cash flow approach that is based on unobservable inputs and a Monte Carlo simulation. These inputs include, as applicable, estimated probabilities and the timing of achieving specified commercial and regulatory milestones, estimated forecasts of revenue and costs and the discount rates used to calculate the present value of estimated future payments.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 18

Significant changes may increase or decrease the probabilities of achieving the related commercial and regulatory events, shorten or lengthen the time required to achieve such events, or increase or decrease estimated forecasts.
In November 2021, the Company completed the Flexion Acquisition, which provided for contingent consideration related to contingent value rights that were issued to Flexion shareholders and certain equity award holders which could aggregate up to a total of $372.3 million if certain regulatory and commercial milestones are met. The aggregate amount was initially $425.5 million prior to the Company’s September 2022 decision to formally discontinue further development of Flexion’s product candidate, PCRX-301. The Company’s obligation to make milestone payments is limited to those milestones achieved through December 31, 2030, and are to be paid within 60 days of the end of the fiscal quarter of achievement. During the three months ended March 31, 2024, the Company recorded a gain of $3.8 million primarily due to an adjustment reflecting the probability of achieving the remaining regulatory milestone by December 31, 2030, the expiration date. During the three months ended March 31, 2023, the Company recorded a charge of $11.6 million, which was due to a decrease to the assumed discount rate based on a significant improvement in the Company’s incremental borrowing rate resulting from the TLA Credit Agreement entered into in March 2023. These adjustments were recorded within contingent consideration (gains) charges, restructuring charges and other in the condensed consolidated statements of operations. At March 31, 2024, the weighted average discount rate was 8.6%.
The following table includes the key assumptions used in the valuation of the Company’s common stock was $37.55 per share at September 30, 2017 compared to a conversion price of $24.82 per share which, if converted, would resultcontingent consideration:
Assumption
Ranges
Utilized as of
March 31, 2024
Discount rates8.0% to 9.3%
Probability of payment for remaining regulatory milestone0%
The change in a conversion premium of less than ten thousand shares of the Company’s common stock or $0.2 million of cash. The maximum conversion premium that can be due on the 2019 Notescontingent consideration recorded at fair value using Level 3 measurements is approximately ten thousand shares of the Company’s common stock, which assumes no increases in the conversion rate for certain corporate events.as follows (in thousands):
Contingent Consideration
Fair Value
Balance at December 31, 2022$28,122 
Fair value adjustments and accretion(3,424)
Balance at December 31, 202324,698 
   Fair value adjustments and accretion(3,806)
Balance at March 31, 2024$20,892 

Available-for-Sale Investments
Short-term investments consist of asset-backed securities collateralized by credit card receivables, investment grade commercial paper and corporate, federal agency and government bonds with maturities greater than three months, but less than one year. Long-termNoncurrent investments consist of asset-backed securities collateralized by credit card receivables and corporate bonds withcontain maturities greater than one year. The netyear but less than three years. Net unrealized gains and losses (excluding credit losses, if any) from the Company’s short-term and long-term investments are reported in other comprehensive income (loss). At September 30, 2017,March 31, 2024 and December 31, 2023, all of the Company’s short-term and long-termnoncurrent investments are classified as available for saleavailable-for-sale investments and are determined to be Level 2 instruments, with the exception of U.S. government bonds, which are measured at fair value using standard industry models with observable inputs. The fair value of the commercial paper is measured based on a standard industry model that uses the

three-month U.S. Treasury bill rate as an observable input. The fair value of the asset-backed securities and corporate bonds is principally measured or corroborated by trade data for identical issues in which related trading activity is not sufficiently frequent to be considered a Level 1 input or that of comparable securities. The fair value of U.S. government bonds is based on level 1 trading activity. At September 30, 2017, the Company’s short-term and long-termtime of purchase, all available-for-sale investments were rated Ahad an “A” or better rating by Standard & Poor’s.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 19

The following summarizes the Company’s short-term and noncurrent available-for-sale investments at September 30, 2017March 31, 2024 and December 31, 20162023 (in thousands):
March 31, 2024 InvestmentsCostGross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(Level 1)
Fair Value
(Level 2)
Current:
Asset-backed securities$25,345 $— $(38)$— $25,307 
Commercial paper94,138 28 (51)— 94,115 
Corporate bonds7,984 — (6)— 7,978 
U.S. federal agency bonds9,479 — (10)— 9,469 
U.S. government bonds4,974 — (5)4,969 — 
          Total$141,920 $28 $(110)$4,969 $136,869 
December 31, 2023 InvestmentsDecember 31, 2023 InvestmentsCostGross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(Level 1)
Fair Value
(Level 2)
Current:
Asset-backed securities
Asset-backed securities
Asset-backed securities
Commercial paper
U.S. federal agency bonds
U.S. federal agency bonds
U.S. federal agency bonds
U.S. government bonds
Subtotal
Noncurrent:
Asset-backed securities
Asset-backed securities
Asset-backed securities
September 30, 2017 Debt Securities Cost Gross
Unrealized
Gains
 Gross
Unrealized
Losses
 Fair Value
(Level 2)
Short-term:        
Asset-backed securities $35,281
 $
 $(4) $35,277
Commercial paper 34,350
 5
 (1) 34,354
Corporate bonds 198,222
 35
 (24) 198,233
Subtotal 267,853
 40
 (29) 267,864
Long-term:        
Asset-backed securities 24,192
 
 (16) 24,176
Corporate bonds 56,693
 
 (62) 56,631
Subtotal
Subtotal 80,885
 
 (78) 80,807
Total $348,738
 $40
 $(107) $348,671
December 31, 2016 Debt Securities Cost Gross
Unrealized
Gains
 Gross
Unrealized
Losses
 Fair Value
(Level 2)
Short-term:        
   Asset-backed securities $9,012
 $
 $(2) $9,010
   Commercial paper 39,530
 8
 (15) 39,523
   Corporate bonds 88,141
 11
 (32) 88,120
      Total $136,683
 $19
 $(49) $136,653

Certain assets and liabilities are measured at fair value on a nonrecurring basis, including assets and liabilities acquired in a business combination and long-lived assets, which would be recognized at fair value if deemed to be impaired or if reclassified as assets heldAt March 31, 2024, there were no investments available for sale. The fair value in these instances would be determined using Level 3 inputs. At September 30, 2017, the Company had no financial instrumentssale that were measured using Level 3 inputs.materially less than their amortized cost.

The Company elects to recognize its interest receivable separate from its available-for-sale investments. At March 31, 2024 and December 31, 2023, the interest receivable from its available-for-sale investments recognized in prepaid expenses and other current assets was $0.1 million and $0.4 million, respectively.
Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments,and long-term available-for-sale investments and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. Such amounts may exceed federally-insured limits.
As of September 30, 2017,March 31, 2024, three wholesalers each accounted for over 10% of the Company’s accounts receivable, at 33%39%, 31%19% and 28%, respectively.16%. At December 31, 2016,2023, three wholesalers each accounted for over 10% of the Company’s accounts receivable, at 36%37%, 29%19% and 25%, respectively (for16%. For additional information regarding the Company’s wholesalers, see Note 2, Summary of Significant Accounting Policies). RevenuesEXPAREL and ZILRETTA revenues are primarily derived from major wholesalers and pharmaceutical companiesspecialty distributors that generally have significant cash resources. The Company performs ongoing credit evaluations of its customers as warranted and generally does not require collateral. Allowances for doubtfulcredit losses on the Company’s accounts receivable are maintained based on historical payment patterns, current and estimated future economic conditions, aging of accounts receivable and the Company’s actualits write-off history. As of September 30, 2017 andMarch 31, 2024, there were $0.1 million of allowances for credit losses on its accounts receivable associated with iovera°. As of December 31, 2016, no2023, the Company did not deem any allowances for doubtfulcredit losses on its accounts were deemed necessaryreceivable necessary.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 20

NOTE 10—STOCKHOLDERS’ EQUITY
Accumulated Other Comprehensive Income (Loss)
The following tables illustrate the changes in the balances of the Company’s accumulated other comprehensive income (loss) for the periods presented (in thousands):
Net Unrealized Gain (Loss) From Available-For-Sale InvestmentsUnrealized Foreign Currency TranslationAccumulated Other Comprehensive Income
Balance at December 31, 2023$124 $123 $247 
   Net unrealized loss on investments, net of tax(1)
(108)— (108)
   Foreign currency translation adjustments— 13 13 
Balance at March 31, 2024$16 $136 $152 
Net Unrealized Gain (Loss) From Available-For-Sale InvestmentsUnrealized Foreign Currency TranslationAccumulated Other Comprehensive Loss
Balance at December 31, 2022$(523)$143 $(380)
   Net unrealized gain on investments, net of tax (1)
251 — 251 
   Foreign currency translation adjustments— (8)(8)
Balance at March 31, 2023$(272)$135 $(137)
(1) Net of a nominal tax benefit and $0.2 million tax expense for the three months ended March 31, 2024 and 2023, respectively.
Share Repurchase Program
On May 7, 2024, the Company announced that its Board of Directors has approved a new share repurchase program, effective immediately, which authorizes the Company to purchase up to an aggregate of $150.0 million of the Company’s outstanding common stock. Repurchases under this program may be made at management’s discretion on the open market or through privately negotiated transactions. The share repurchase program may be suspended or discontinued at any time by the Company on its accounts receivable.and has an expiration date of December 31, 2026.








NOTE 8—11—STOCK PLANS
Stock-Based Compensation
The Company recognized stock-based compensation expense in the periods presented as follows (in thousands):
Three Months Ended
March 31,
20242023
Cost of goods sold$1,128 $1,724 
Research and development1,803 1,875 
Selling, general and administrative7,985 8,391 
Contingent consideration (gains) charges, restructuring charges and other2,235 — 
        Total$13,151 $11,990 
Stock-based compensation from:
    Stock options$6,729 $6,464 
    Restricted stock units6,210 5,250 
    Employee stock purchase plan212 276 
        Total$13,151 $11,990 
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 21

Table of Contents
  Three Months Ended 
 September 30,
 Nine Months Ended 
 September 30,
  2017 2016 2017 2016
Cost of goods sold $1,502
 $1,627
 $4,272
 $4,786
Research and development 824
 690
 2,128
 2,598
Selling, general and administrative 6,337
 5,044
 17,007
 16,132
        Total $8,663
 $7,361
 $23,407
 $23,516
         
Stock-based compensation from:        
    Stock options (employee awards) $6,310
 $5,684
 $17,968
 $18,318
    Stock options (consultant awards) 36
 150
 118
 872
    Restricted stock units (employee awards) 2,161
 1,425
 4,772
 3,650
    Employee stock purchase plan 156
 102
 549
 676
        Total $8,663
 $7,361
 $23,407
 $23,516
Equity Awards

The following tables contain information about the Company’s stock option and restricted stock unit, or RSU, activity for the three months ended March 31, 2024:
Stock Options Number of
Stock Options
 Weighted Average Exercise Price (Per Share)
 Outstanding at December 31, 20237,079,748 $49.40 
     Granted900,995 31.95 
     Forfeited(155,397)46.84 
     Expired(245,082)50.23 
 Outstanding at March 31, 20247,580,264 47.35 
Restricted Stock Units Number of
Restricted
Stock Units
 Weighted Average Grant Date Fair Value (Per Share)
Unvested at December 31, 20231,364,618 $47.66 
     Granted196,974 31.53 
     Vested(36,395)53.97 
     Forfeited(102,206)47.71 
Unvested at March 31, 20241,422,991 45.26 
The weighted average fair value of stock options granted during the three months ended March 31, 2024 was $13.65 per share. The fair values of stock options granted were estimated using the Black-Scholes option valuation model with the following weighted average assumptions:
Black-Scholes Weighted Average AssumptionThree Months Ended March 31, 2024
Expected dividend yieldNone
Risk-free interest rate3.92%
Expected volatility40.94%
Expected term of options5.28 years
Employee Stock Purchase Plan

The Company’s Amended and Restated 2014 Employee Stock Purchase Plan, or ESPP, features two six-month offering periods per year, running from January 1to June 30 and July 1 to December 31. Under the ESPP, employees may elect to contribute after-tax earnings to purchase shares at 85% of the closing fair market value of the Company’s common stock on either the offering date or the purchase date, whichever is less.lesser. During the ninethree months ended September 30, 2017, 35,745March 31, 2024, no shares were purchased and issued underthrough the ESPP.

Equity Awards

The following tables contain information about the Company’s stock option and restricted stock unit, or RSU, activity for the nine months ended September 30, 2017:
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 22
Stock Options  Number of Options  Weighted Average Exercise Price
 Outstanding at December 31, 2016 5,207,743
 $42.16
     Granted 1,009,650
 44.29
     Exercised (458,535) 11.57
     Forfeited (389,720) 49.76
     Expired (198,038) 75.49
 Outstanding at September 30, 2017 5,171,100
 43.43

Restricted Stock Units  Number of Units  Weighted Average Grant Date Fair Value
Unvested at December 31, 2016 364,403
 $52.85
     Granted 338,583
 44.22
     Vested (99,504) 54.15
     Forfeited (63,731) 51.17
Unvested at September 30, 2017 539,751
 47.38


The weighted average fair valueTable of stock options granted during the nine months ended September 30, 2017 was $20.89 per share. The fair values of stock options granted were estimated using the Black-Scholes option valuation model with the following weighted average assumptions:Contents
Nine Months Ended September 30, 2017
Expected dividend yieldNone
Risk free interest rate1.80%
Expected volatility51.4%
Expected term of options5.32 years

NOTE 9—STOCKHOLDERS’ EQUITY

Accumulated Other Comprehensive Income (Loss)
The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive income (loss) for the periods presented (in thousands):
  Nine Months Ended 
 September 30,
Net unrealized gains (losses) from available for sale investments: 2017 2016
Balance at beginning of period $(30) $(52)
Other comprehensive income (loss) before reclassifications (37) 24
Amounts reclassified from accumulated other comprehensive income (loss) 
 
Balance at end of period $(67) $(28)

NOTE 10—12—NET INCOME (LOSS) PER SHARE

Basic and diluted net income (loss) per common share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding plus dilutive potential common shares outstanding during the period.
Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options, and warrants, the vesting of RSUs and the purchase of shares from the ESPP (using the treasury stock method) as well as, if applicable. Potential common shares associated with convertible notes are treated under the conversion ofif-converted method, adjustments are made to the excess conversion value on the 2019 Notes and 2022 Notes. As discussed in Note 6, Debt, the Company has either the obligation or the option to pay cash for the aggregate principal amount due upon the conversion of its convertible senior notes. Since it is the Company’s intent to settle the principal amount of its convertible senior notes in cash, the potentially dilutive effect of such notes ondiluted net income (loss) per common share is computed undercalculation as if the treasury stock method.Company had converted the convertible debt on the first day of each period presented. Adjustments to the numerator are made to add back the interest expense associated with the convertible debt on a post-tax basis. Adjustments to the denominator reflect the number of shares assumed to be convertible at the beginning of the period.
Potential common shares are excluded from the diluted net lossincome (loss) per common share computation to the extent they would be antidilutive. Because the Company reported a net loss for the three and nine months ended September 30, 2017 and 2016, no potentially dilutive securities have been included in the computation of diluted net loss per share for those periods.
The following table sets forth the computation of basic and diluted net income (loss) per common share for the three months ended March 31, 2024 and nine months ended September 30, 2017 and 20162023 (in thousands, except per share amounts):
Three Months Ended
March 31,
20242023
Numerator:
   Net income (loss)—basic$8,979 $(19,536)
ASU 2020-06 convertible notes if-converted method adjustment1,029 — 
   Adjusted net income (loss)—diluted$10,008 $(19,536)
Denominator:
   Weighted average common shares outstanding—basic46,499 45,949 
Computation of diluted securities:
ASU 2020-06 convertible notes if-converted method adjustment5,608 — 
   Dilutive effect of stock options— 
   Dilutive effect of RSUs85 — 
   Weighted average common shares outstanding—diluted52,193 45,949 
Net income (loss) per share:
   Basic and diluted net income (loss) per common share$0.19 $(0.43)
 Three Months Ended 
 September 30,
 Nine Months Ended 
 September 30,
2017 2016 2017 2016
Numerator:       
   Net loss$(7,597) $(22,164) $(47,206) $(33,977)
Denominator:       
   Weighted average common shares outstanding40,463
 37,312
 39,540
 37,171
Net loss per share:       
   Basic and diluted net loss per common share$(0.19) $(0.59) $(1.19) $(0.91)

The following table summarizes the outstanding stock options, RSUs, conversion premiums on the Company’sESPP purchase options and convertible senior notes warrants and ESPP purchase options arethat were excluded from the diluted net income (loss) per common share calculation because the effects of including these potential shares were antidilutive in the periods presented (in thousands):
Three Months Ended
March 31,
20242023
Weighted average number of stock options7,662 6,362 
Convertible senior notes (1)
— 5,608 
Weighted average number of RSUs1,230 1,137 
Weighted average ESPP purchase options52 55 
      Total8,944 13,162 
(1) The convertible senior notes were antidilutive for the three months ended March 31, 2023, in conjunction with a $1.0 million if-converted method adjustment to the numerator that adds back the interest expense associated with the convertible senior notes on a post-tax basis.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 23
 Three Months Ended 
 September 30,
 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Weighted average number of stock options5,405
 4,632
 5,203
 4,403
Weighted average number of RSUs549
 372
 426
 265
Conversion premium on the 2019 Notes5
 1,750
 546
 2,288
Weighted average number of warrants
 
 
 1
Weighted average ESPP purchase options22
 20
 32
 22
      Total5,981
 6,774
 6,207
 6,979


Table of Contents
NOTE 11—13—INCOME TAXES

Income (loss) before income taxes is as follows (in thousands):
 Three Months Ended 
 September 30,
 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Loss before income taxes:       
   Domestic$(6,867) $(21,780) $(45,136) $(32,806)
   Foreign(685) (348) (1,965) (1,045)
      Total loss before income taxes$(7,552) $(22,128) $(47,101) $(33,851)

The Company recordedand income tax expense of less than $0.1 million(benefit) are as follows (dollar amounts in thousands):
Three Months Ended
March 31,
20242023
Income (loss) before income taxes:
   Domestic$13,657 $(27,773)
   Foreign(17)1,299 
Total income (loss) before income taxes$13,640 $(26,474)
Income tax expense (benefit)$4,661 $(6,938)
Effective tax rate34 %26 %
The Company’s income tax expense (benefit) represents the estimated annual effective tax rate applied to the year-to-date domestic operating results adjusted for certain discrete tax items.
The Company’s effective tax rate for the three months ended September 30, 2017March 31, 2024 include costs related to non-deductible stock-based compensation and 2016.non-deductible executive compensation, partially offset by tax credits and a fair value adjustment for Flexion contingent consideration. The Company recorded incomeCompany’s effective tax expense of $0.1 million inrate for the ninethree months ended September 30, 2017March 31, 2023 includes costs for a fair value adjustment to Flexion contingent consideration and 2016. The tax provisions reflect current state income taxes. Due to net losses in both periods presented, no current federal income tax expense was recorded. Due to the fact that the Company’s deferred tax assets are fully offset by a valuation allowance therecorded against non-U.S. results, partially offset by tax provisions do not reflect deferred tax expenses.credits and stock-based compensation benefits.

During the nine months ended September 30, 2017, the Company established a deferred tax liabilityAs of $26.5 million with an offset to additional paid-in capital resulting from the conversion feature of the 2022 Notes. The initial difference between the book value of convertible debt issued with a beneficial conversion featureMarch 31, 2024 and its tax basis is a temporary difference. The net effect of the deferred tax liability recorded to additional paid-in capital was zero becauseDecember 31, 2023, the Company has a full valuation allowance against its net deferredan income tax assets.payable balance of $1.0 million that is included in other liabilities within the condensed consolidated balance sheets.

NOTE 12—14—CONTINGENT CONSIDERATION (GAINS) CHARGES, RESTRUCTURING CHARGES AND OTHER
Contingent consideration (gains) charges, restructuring charges and other for the three months ended March 31, 2024 and 2023 summarized below (in thousands):
Three Months Ended
March 31,
20242023
Flexion contingent consideration$(3,806)$11,618 
Restructuring charges5,535 — 
Acquisition-related fees174 489 
Total contingent consideration (gains) charges, restructuring charges and other$1,903 $12,107 
Flexion Acquisition Contingent Consideration
During the three months endedMarch 31, 2024, the Company recognized a $3.8 million contingent consideration gain. During the three months ended March 31, 2023, the Company recorded a $11.6 million contingent consideration charge. See Note 9, Financial Instruments, for information regarding the method and key assumptions used in the fair value measurements of contingent consideration and more information regarding the changes in fair value.
Restructuring Charges
In February 2024, the Company initiated a restructuring plan to ensure it is well positioned for long-term growth. The restructuring plan includes: (i) reshaping the Company’s executive team, (ii) reallocating efforts and resources from the Company’s ex-U.S. and certain early-stage development programs to its commercial portfolio in the U.S. market and (iii) reprioritizing investments to focus on commercial readiness for the implementation of separate Medicare reimbursement for EXPAREL at average sales price plus 6 percent in outpatient settings beginning in January 2025 and broader commercial initiatives in key areas, such as strategic national accounts, marketing and market access and reimbursement. The Company recognized $5.5 million of restructuring charges for the three months ended March 31, 2024 related to employee termination benefits, such as the acceleration of share-based compensation, severance, and, to a lesser extent, other employment-related
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 24

termination costs, as well as contract termination costs. The Company’s restructuring charges as of March 31, 2024, including the beginning and ending liability balances, are summarized below (in thousands):
Employee Termination Benefits (1)
Contract Termination CostsTotal
Balance at December 31, 2023$— $— $— 
Charges incurred2,567 733 3,300 
Cash payments made / settled(386)— (386)
Balance at March 31, 2024$2,181 $733 $2,914 
(1) During the three months ended March 31, 2024, there was $2.2 million of employee termination benefits related to share-based compensation excluded from the table above as they are non-cash and recorded against additional paid-in capital.
Acquisition-Related Fees
The Company recognized acquisition-related costs of $0.2 million and $0.5 million during the three months endedMarch 31, 2024 and 2023, respectively, primarily related to vacant and underutilized Flexion leases that were assumed from the Flexion Acquisition.
NOTE 15—COMMITMENTS AND CONTINGENCIES
Leases
The Company’s leases for its research and development, manufacturing and warehouse facilities in San Diego, California expire in August 2020 and its lease for its corporate headquarters in Parsippany, New Jersey expires in March 2028.

As of September 30, 2017, aggregate annual minimum payments due under the Company’s lease obligations are as follows (in thousands): 

Year Aggregate Minimum Payments
2017 (remaining three months) $2,004
2018 8,063
2019 8,272
2020 6,389
2021 1,207
2022 through 2028 7,545
    Total $33,480

Litigation

From time to time, the Company has been and may again become involved in legal proceedings arising in the ordinary course of its business, including those related to its patents and intellectual property, product liability and government investigations. Except as described below, the Company is not presently a party to any litigation whichlegal proceedings that it believes to be material, and is not aware of any pending or threatened litigation against the Company which it believes could have a material adverse effect on its business, operating results, financial condition or cash flows.

MyoScience Milestone Litigation
In April 2015,August 2020, the Company and its subsidiary, Pacira CryoTech, Inc. (“Pacira CryoTech”), filed a lawsuit in the Court of Chancery of the State of Delaware against Fortis Advisors LLC (“Fortis”), solely in its capacity as representative for the former securityholders of MyoScience, and certain other defendants, seeking declaratory judgment with respect to certain terms of the merger agreement for the MyoScience Acquisition (the “MyoScience Merger Agreement”), specifically related to the achievement of certain milestone payments under the MyoScience Merger Agreement. In addition, the Company and Pacira CryoTech sought general, special and compensatory damages against the other defendants related to breach of fiduciary duties in connection with the purported achievement of milestone payments under the MyoScience Merger Agreement, and breach of the MyoScience Merger Agreement and certain other agreements with the defendants. In October 2020, Fortis filed an answer and counterclaim against the Company and Pacira CryoTech seeking to recover certain milestone payments under the MyoScience Merger Agreement. The total remaining value of these milestones is $30.0 million, plus attorneys’ fees.
A trial was conducted in September 2023, and a decision is expected in the coming months. The Company is unable to predict the outcome of this action at this time.
eVenus Pharmaceutical Laboratories Litigations
In October 2021, the Company received a subpoena fromNotice Letter advising that eVenus Pharmaceutical Laboratories, Inc., or eVenus, of Princeton, New Jersey, submitted to the FDA an Abbreviated New Drug Application, or ANDA with a Paragraph IV certification seeking authorization for the manufacturing and marketing of a generic version of EXPAREL (266 mg/20 mL) in the U.S. Departmentprior to the expiration of Justice, U.S. Attorney’s OfficePatent No. 11,033,495 (the ‘495 patent).
In November 2021, the Company filed a patent infringement suit against eVenus and its parent company in the U.S. District Court for the District of New Jersey requiring(21-cv-19829) asserting infringement of the production‘495 patent. This triggered an automatic 30-month stay of final approval of the eVenus ANDA which expires on July 1, 2024. On January 6, 2022, eVenus filed an Answer with counterclaims to the Complaint, alleging the ‘495 patent is invalid and/or not infringed through the manufacture, sale, or offer for sale of the product described in eVenus’s ANDA submission.
In December 2021, the Company received a second Notice Letter advising that eVenus submitted to the FDA an amendment to its ANDA with a Paragraph IV Certification seeking authorization for the manufacturing and marketing of a broad rangegeneric version of documents pertainingEXPAREL (133 mg/10 mL) in the U.S. prior to the expiration of the ‘495 patent. In the second Notice Letter, eVenus also advised that it submitted a Paragraph IV Certification to the FDA seeking authorization for the manufacturing and marketing of a generic version of EXPAREL (266 mg/20 mL and promotional practices related133 mg/10 mL) in the U.S. prior to EXPAREL. the expiration of U.S.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 25

Patent No. 11,179,336 (the ‘336 patent). eVenus further alleges in the Notice Letter that both the ‘495 patent and the ‘336 patent are invalid and/or not infringed.
In February 2022, the Company filed a second patent infringement suit against eVenus and its parent company in the U.S. District Court for the District of New Jersey (22-cv-00718) asserting that the 133 mg/10 mL ANDA product will infringe the ‘495 and ‘336 patents and that the 266 mg/20 mL ANDA product will infringe the ‘336 patent. This filing triggered a second automatic 30-month stay of final approval for the 133 mg/10 mL ANDA product which expires on July 1, 2024. The first and second patent infringement suits were consolidated.
In February 2023, eVenus filed its first amended answer to the first amended complaint, alleging patent invalidity, non-infringement and inequitable conduct. The Company has denied the allegations in eVenus’s first amended answer. The Company has subsequently voluntarily dismissed its claims with respect to the ‘336 Patent. The trial on the remaining claim was conducted in February 2024 with a decision expected in the coming months.
In April 2023, the Company filed a third patent infringement suit against eVenus, its parent company, and Fresenius Kabi USA, LLC, in the U.S. District Court for the District of New Jersey (23-cv-2367) asserting that the 133 mg/10 mL and 266 mg/20 mL ANDA products will infringe U.S. Patent No. 11,426,348 (the ‘348 patent). In July 2023, eVenus filed its answer with claims for declaratory judgment, alleging patent invalidity, non-infringement and inequitable conduct with respect to the ‘348 patent as well as the Company’s other patents, U.S. Patent Nos. 11,278,494; 11,304,904; 11,311,486; 11,357,727 and 11,452,691. The parties have subsequently dismissed all patents other than the ‘348 patent from this litigation.
The Company is cooperatingunable to predict the outcome of these litigations at this time.
Research Development Foundation
Pursuant to an agreement with the government’s inquiry.Research Development Foundation, or RDF, the Company was required to pay RDF a low single-digit royalty on the collection of revenues from certain products, for as long as certain patents assigned to the Company under the agreement remain valid. RDF has the right to terminate the agreement for an uncured material breach by the Company, in connection with its bankruptcy or insolvency or if it directly or indirectly opposes or disputes the validity of the assigned patent rights. The Company’s ‘495 patent was issued on June 15, 2021. Thereafter, RDF asserted that the issuance of that patent extends the Company’s royalty obligations under the agreement until 2041. The Company can makebelieves that the royalty period under the agreement ended on December 24, 2021 with the expiration of its U.S. Patent No. 9,585,838. Because of the disagreement over the interpretation of the agreement, in December 2021, the Company filed a declaratory judgment lawsuit in the U.S. District Court for the District of Nevada (21-cv-02241). The lawsuit seeks a declaration from the court that the Company owes no assurances asroyalties to RDF with respect to its EXPAREL product after December 24, 2021.
On August 8, 2023, the time or resources that will need to be devoted to this inquiry or its final outcome, or the impact, if any,U.S. District Court, District of this inquiry or any proceedings on its business, financial condition, results of operations and cash flows.

NOTE 13—COMMERCIAL PARTNERS AND OTHER AGREEMENTS

DepoCyt(e) Discontinuation

In June 2017,Nevada, granted the Company’s board of directors approved a decision to discontinue all future production of DepoCyt® (U.S. and Canada) and DepoCyte® (European Union) due to persistent technical issues specific to the DepoCyt(e) manufacturing process. DepoCyt(e) accountedmotion for 2.6% of the Company’s 2016 total full-year revenues of $276.4 million. As of June 30, 2017, the Company had ceased all production of DepoCyt(e).

In the three months ended September 30, 2017, the Company recorded a non-recurring charge of $0.3 million related to the discontinuation of its DepoCyt(e) manufacturing activities, including $0.1 million for DepoCyt(e) related inventory, which is recordedpartial summary judgment in cost of goods sold, and $0.2 million for asset retirement obligations and other estimated exit costs.

In the nine months ended September 30, 2017, the Company recorded a non-recurring charge of $5.3 million related to the discontinuation of its DepoCyt(e) manufacturing activities, including $0.6 million for DepoCyt(e) related inventory, which is recorded in cost of goods sold, and $4.7 million for the remaining lease costs less an estimate of potential sublease income for the facility where DepoCyt(e) was manufactured, the write-off of property, plant and equipment, employee severance, asset retirement obligations and other estimated exit costs.

As of September 30, 2017, a summary of the Company’s costs and reserves related to the DepoCyt(e) discontinuation are as follows (in thousands):

 Severance and Related Costs Lease Costs Write-Off of Property, Plant & Equipment and Inventory Asset Retirement Obligations and Other Discontinuation Costs Total
Balance at December 31, 2016$
 $
 $
 $
 $
Charges incurred309
 1,902
 2,470
 653
 5,334
Cash payments made(178) (437) 
 (330) (945)
Disposal of property, plant &
equipment and inventory

 
 (2,470) 
 (2,470)
Adjustments
 
 
 
 
Balance at September 30, 2017$131
 $1,465
 $
 $323
 $1,919

The Company may be required to make additional payments or incur additional costs relating to the DepoCyt(e) discontinuation which could be materialrespect to the Company’s resultsclaim for a declaration that it no longer owes royalties for EXPAREL made under the 45-liter manufacturing process as of operations and/or cash flows inDecember 24, 2021. As a given period.
DePuy Synthes Sales, Inc.
In January 2017,result, the Company announcedexpects to receive $14.5 million from RDF, representing the initiation of a Co-Promotion Agreement, or the Agreement, with DePuy Synthes Sales, Inc., or DePuy Synthes, part of the Johnson & Johnson family of companies, to market and promote the use of EXPAREL for orthopedic procedures in the United States. DePuy Synthes field representatives, specializing in joint reconstruction, spine, sports medicine and trauma, will collaborate with, and supplement, the Company’s field teams by expanding the reach and frequency of EXPAREL education in the hospital surgical suite and ambulatory surgery center settings.
Under the five-year arrangement, DePuy Synthes will be the exclusive third-party distributor during the term of the Agreement to promote and sell EXPAREL for operating room use for orthopedic and spine surgeries (including knee, hip, shoulder, sports and trauma surgeries) in the United States. DePuy Synthes is entitled to a tiered commission ranging from low single-digits to double-digits on sales of EXPAREL under the Agreement, subject to conditions, limitations and adjustments. The initial term of the Agreement commenced on January 24, 2017 and ends on December 31, 2021, with the option to extend the Agreement in additional 12 month increments upon mutual agreement of the parties, subject to certain conditions.
The Company and DePuy Synthes have mutual termination rights under the Agreement, subject to certain terms, conditions and advance notice requirements, providedroyalties that the Company or DePuy Synthes generally may not terminatepaid to RDF under protest after December 24, 2021 for EXPAREL made from the Agreement, without cause, within three years of45-liter manufacturing process. Once it becomes probable that the effective date of the Agreement. The Company also has additional unilateral termination rights under certain circumstances. The Agreement contains customary representations, warranties, covenants and confidentiality provisions, and also contains mutual indemnification obligations. DePuy Synthes is also subject to certain obligations and restrictions, including required compliance with certain laws and regulations and the Company’s policies, in connection with fulfilling their obligations under the Agreement.

CrossLink BioScience, LLC

In October 2013,settlement amount will be received, the Company and CrossLink BioScience, LLC, or CrossLink, commencedwill record a five-year arrangement for the promotion and sale of EXPAREL, pursuant to the terms of a Master Distributor Agreement (as amended, the “CrossLink Agreement”). On June 30, 2016, the Company provided notice to CrossLink electing to terminate the CrossLink Agreement effective as of September 30, 2016. In connection with the termination of the CrossLink Agreement, a termination fee based on a percentage of earned performance-based fees is due to CrossLink. This fee of $7.1 million is payable to CrossLink quarterly over two years beginning in the fourth quarter of 2016, and was recorded in selling, general and administrative expensesettlement gain within other operating income (expense), net in the condensed consolidated statementsstatement of operationsoperations. In November 2023, the U.S. District Court, District of Nevada conducted a mediation that did not result in a settlement. During the pendency of the remaining lawsuit, the Company will continue to pay royalties associated with the 200-liter EXPAREL manufacturing process to RDF under protest. A trial is currently scheduled for September 2024. The Company is unable to predict the outcome of this action at this time.
Other Commitments and Contingencies
Pediatric Trial Commitments
The FDA, as a condition of EXPAREL approval, has required the Company to study EXPAREL for infiltration and as a brachial plexus block in pediatric patients. The Company was granted deferrals for the three and nine month periods ended September 30, 2016. At September 30, 2017, $2.4 million is classifiedrequired pediatric trials until after the indications were approved in accrued expenses.

NOTE 14—SUBSEQUENT EVENTS

TELA Bio

In October 2017,adults. Similarly, in Europe, the Company made an initial cash investment of $15 millionagreed with the European Medicines Agency, or EMA, on a Pediatric Investigation Plan as a prerequisite for submitting a Marketing Authorization Application (MAA) in TELA Bio, Inc.the E.U. Despite the U.K.’s withdrawal from the E.U., or TELA Bio, a privately-held surgical reconstruction company that markets its proprietary OviTexTM portfolio of products for ventral hernia repair and abdominal wall reconstruction. the agreed pediatric plan is applicable in the U.K.
The Company may be requiredreceived notification from the FDA in October 2023 that its pediatric studies requirement had been waived for the indication of brachial plexus interscalene nerve block to investproduce postsurgical regional analgesia in pediatric patients. The Company is still working with the FDA, EMA and Medicines and Healthcare Regulatory Agency (MHRA) to finalize the regulatory pathways for its remaining pediatric commitments.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 26

Contingent Milestone Payments
Refer to Note 9, Financial Instruments, for information on potential contingent milestone payments related to the Flexion Acquisition.
PCRX-201
PCRX-201, a novel, intra-articular gene therapy product candidate that produces the anti-inflammatory protein interleukin-1 receptor antagonist (IL-1Ra) treating OA pain in the knee, was added to the Company’s portfolio as part of the Flexion Acquisition in November 2021. Prior to the Flexion Acquisition, in February 2017, Flexion entered into an agreement with GQ Bio Therapeutics GmbH to acquire the global rights to PCRX-201, a gene therapy product candidate. As part of the agreement, up to an aggregate of $56.0 million of payments could become due upon the achievement of certain development and regulatory milestones, including up to $4.5 million through initiation of a Phase 2 proof of concept clinical trial and, following successful proof of concept, up to an additional $10$51.5 million in TELA Bio under certain performance scenarios or upon its own election.development and global regulatory approval milestone payments.

In February 2024, the FDA granted a Regenerative Medicine Advanced Therapy (RMAT) designation to PCRX-201 for the treatment of OA pain of the knee.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 27

Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and in accordance with the rules and regulations of the United States Securities and Exchange Commission, or SEC.
This Quarterly Report on Form 10-Q and certain other communications made by us contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended or(the “Exchange Act”), and the ExchangePrivate Securities Litigation Reform Act of 1995, including, without limitation, statements aboutrelated to: our growth and future operating results discovery and trends, our strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential, including our plans with respect to the repayment of our indebtedness, anticipated product portfolio, development programs, patent terms, development of products, strategic alliances and intellectual property.property and any other statements that are not historical facts. For this purpose, any statement that is not a statement of historical fact should be considered a forward-looking statement. We often use the words “anticipate,” “believe,” “anticipate,“can,“plan,“could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,” “will,” “would” and similar expressions to help identify forward-looking statements. We cannot assure you that our estimates, assumptions and expectations will prove to have been correct. TheseActual results may differ materially from these indicated by such forward-looking statements include,as a result of various important factors, including risks relating to, among others, statements about:others: the integration of our new chief executive officer; risks associated with acquisitions, such as the risk that the businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the transaction will not occur; our manufacturing and supply chain, global and United States, or U.S., economic conditions (including inflation and rising interest rates), and our business, including our revenues, financial condition, cash flows and results of operations; the success of our sales and manufacturing efforts in support of the commercialization of EXPAREL®(bupivacaine (bupivacaine liposome injectable suspension), ZILRETTA® (triamcinolone acetonide extended-release injectable suspension) and our other products;iovera°®; the rate and degree of market acceptance of EXPAREL;EXPAREL, ZILRETTA and iovera°; the size and growth of the potential markets for EXPAREL, ZILRETTA and iovera° and our ability to serve those markets; our plans to expand the use of EXPAREL, ZILRETTA and iovera° to additional indications and opportunities, and the timing and success of any related clinical trials;trials for EXPAREL, ZILRETTA and iovera°; the commercial success of EXPAREL, ZILRETTA and iovera°; the related timing and success of United States Food and Drug Administration, or FDA, supplemental New Drug Applications, or sNDA;sNDAs, and premarket notification 510(k)s; the outcomerelated timing and success of the U.S. Department of Justice,European Medicines Agency, or DOJ, inquiry; the Company’sEMA, Marketing Authorization Applications, or MAAs; our plans to evaluate, develop and pursue additional DepoFoam®-based product candidates;candidates utilizing our proprietary multivesicular liposome, or pMVL, drug delivery technology; the approval of the commercialization of our products in other jurisdictions; clinical trials in support of an existing or potential DepoFoam-basedpMVL-based product; our commercialization and marketing capabilitiescapabilities; our ability to successfully complete capital projects; the outcome of any litigation; the ability to successfully integrate any future acquisitions into our existing business; the recoverability of our deferred tax assets; assumptions associated with contingent consideration payments; and the abilityanticipated funding or benefits of the Company and Patheon UK Limited, or Patheon, to successfully and timely construct dedicated EXPAREL manufacturing suites. our share repurchase program.

Important factors could cause our actual results to differ materially from those indicated or implied by forward-looking statements. Westatements, and as such we anticipate that subsequent events and developments will cause our views to change. Except as required by applicable law, we undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and readers should not rely on the forward-looking statements as representing our views as of any date subsequent to the date of the filing of this Quarterly Report on Form 10-Q.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements. These factors include items mentioned herein and the matters discussed and referenced in Part I-Item 1A. “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 20162023 (the “2023 Annual Report”) and in other reports as filed with the Securities and Exchange Commission, or SEC.

Unless the context requires otherwise, references to “Pacira,” “we,” the “Company,” “our,” “us” and “our”“we” in this Quarterly Report on Form 10-Q refer to Pacira Pharmaceuticals,BioSciences, Inc. and its subsidiaries. In addition, references in this Quarterly Report on
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q to DepoCyt(e) mean DepoCyt® when discussed in the context| Page 28

Table of the United States and Canada and DepoCyte® when discussed in the context of the European Union, or E.U.Contents

Overview
We are a specialty pharmaceutical company committed to driving innovationPacira is the therapeutic area leader in postsurgicalnon-opioid pain management with opioid-sparing strategies.a stated corporate mission of providing non-opioid pain management options to as many patients as possible and redefining the role of opioids for rescue therapy only. Our product pipeline is based onlong-acting, local analgesic EXPAREL® (bupivacaine liposome injectable suspension) utilizes our proprietary DepoFoam extended releaseunique pMVL drug delivery technology for use primarily in hospitalsthat encapsulates drugs without altering their molecular structure and ambulatory surgery centers. We are currently commercializingreleases them over a desired period of time. In the U.S., EXPAREL an amide-type local anestheticis a long-acting, non-opioid option proven to manage postsurgical pain. EXPAREL is the only product indicated for single-dose administration intolocal analgesia via infiltration in patients aged six years and older and regional analgesia via interscalene brachial plexus nerve block, sciatic nerve block in the popliteal fossa and adductor canal block in adults. In Europe, EXPAREL is approved as a brachial plexus block or femoral nerve block for treatment of post-operative pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical site to produce postsurgical analgesia. EXPAREL was approved by the FDAwounds in Octoberadults and children aged six years and older. Since its initial approval in 2011, and commercially launched in April 2012.more than 14 million patients have been treated with EXPAREL. We drop-ship EXPAREL directly to the end-userend-users based on orders placed to wholesalers or directly to us, and we havethere is no product held by wholesalers. Our earlier-stage pipeline includes two DepoFoam-based product candidates, DepoTranexamic AcidWith the acquisition of Flexion Therapeutics, Inc., or Flexion, in November 2021 (the “Flexion Acquisition”), we acquired ZILRETTA® (triamcinolone acetonide extended-release injectable suspension), the first and DepoMeloxicam.only extended-release, intra-articular, or IA, therapy that can provide major relief for osteoarthritis, or OA, knee pain for three months and has the potential to become an alternative to hyaluronic acid, platelet rich plasma injections or other early intervention treatments. With the acquisition of MyoScience, Inc., or MyoScience, in April 2019 (the “MyoScience Acquisition”), we acquired iovera°®, a handheld cryoanalgesia device used to deliver a precise, controlled application of cold temperature to targeted nerves, which we sell directly to end users. EXPAREL, ZILRETTA and iovera° are highly complementary products as long-acting, non-opioid therapies that alleviate pain.
We expect to continue to incur significant expenses as we pursue the expanded use of EXPAREL, ZILRETTA and iovera° in additional indications and opportunities; advanceprocedures; progress our earlier-stage product candidate pipeline; seek FDA approvalsadvance regulatory activities for EXPAREL, ZILRETTA, iovera°, PCRX-201 and our other product candidates; develop ourinvest in sales and marketing capabilities to prepareresources for their commercial launch;EXPAREL, ZILRETTA and iovera°; expand and enhance our manufacturing capacity for EXPAREL, ZILRETTA and iovera°; invest in products, businesses and technologies; and support regulatory and legal matters.
Global Economic Conditions
Direct and indirect effects of global economic conditions have in the past, and may continue to, negatively impact our business, financial condition and results of operations. Such impacts may include the effect of prolonged periods of inflation which could, among other things, result in higher costs for labor, raw materials and services; cause patients to defer or cancel medical procedures, thereby adversely impacting our revenues; and negatively impact our suppliers which could result in longer lead-times or the inability to secure a sufficient supply of materials. The current macroeconomic environment remains dynamic and subject to rapid and possibly material changes. Additional negative impacts may also arise that we are unable to foresee. The nature and extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted.

Recent Highlights

In February 2024, the FDA approved our sNDA for a 200-liter EXPAREL manufacturing suite at our Science Center Campus in San Diego, California. We expect to start selling commercial product manufactured in this 200-liter suite later this year, which could help drive a more favorable cost of commercial product sold and Developmentsbenefit EXPAREL gross margins over time.
In October 2017, we made an initial cash investment of $15 million in TELA Bio, Inc., or TELA Bio, a privately-held surgical reconstruction company that markets its proprietary OviTexTM portfolio of products for ventral hernia repair and abdominal wall reconstruction. OviTex Reinforced BioScaffolds (RBSs) are intended for use as a surgical mesh to reinforce and/or repair soft tissue where weakness exists. We may be required to invest up to an additional $10 million in TELA Bio under certain performance scenarios or at our own election.
In October 2017,February 2024, the FDA granted a Regenerative Medicine Advanced Therapy, or RMAT, designation to PCRX-201 (enekinragene inzadenovec), our novel IA helper-dependent adenovirus (HDAd) gene therapy product candidate that codes for interleukin-1 receptor antagonist (IL-1Ra) for the treatment of OA pain of the knee. The RMAT application was supported by the preliminary safety and efficacy findings from a Phase 1 open-label, proof-of-concept, single ascending dose trial that enrolled 72 patients in two three-dose cohorts: a co-administered IA steroid cohort and a cohort that did not receive a steroid. PCRX-201 was well tolerated, with efficacy observed through at least 52 weeks at all doses and cohorts. Established under the 21st Century Cures Act, RMAT designation is a dedicated program designed to expedite the development and review processes for promising therapies—including genetic therapies—that are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition, and for which preliminary clinical evidence indicates that the drug or therapy has the potential to address an unmet medical need.
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In March 2024, the United States Patent and Trademark Office issued Patent No. 11,925,706 (the ‘706 patent) claiming composition of matter, Patent No. 11,918,565 (the ‘565 patent) claiming method of use as a sciatic nerve block in the popliteal fossa and Patent No. 11,931,459 (the ‘459 patent) claiming method of use in pediatric patients. Each of these EXPAREL patents are listed in the FDA’s “Approved Drug Products with Therapeutic Equivalence Evaluations” (the “Orange Book”). The ‘706 patent has an expiration date of January 22, 2041 and the ‘459 and ‘565 patents have expiration dates of March 17, 2042 and February 2, 2043, respectively.
In April 2024, investigators presented encouraging preliminary results from a 72-patient study of PCRX-201 data at the Osteoarthritis Research Society International, or OARSI, 2024 World Congress in Vienna, Austria. The data showed that a single IA injection of PCRX-201 demonstrated sustained clinical effect as assessed by patient-reported outcomes at all dose levels for at least one-year post-injection. Importantly, PCRX-201 was shown to be well-tolerated with a favorable safety profile. We expect to submit updated data demonstrating PCRX-201’s effectiveness through two years for presentation at a medical meeting in the second half of 2024.
On May 7, 2024, we announced that the FDA accepted the resubmissionBoard of Directors has approved a new share repurchase program—effective immediately—which authorizes us to purchase up to an aggregate of $150.0 million of our sNDA seekingoutstanding common stock. Repurchases under this program may be made at management’s discretion on the open market or through privately negotiated transactions. The share repurchase program may be suspended or discontinued at any time by the Company and has an expiration date of December 31, 2026. We expect to fund the share repurchase program using a combination of existing cash reserves and future cash flows.

EXPAREL

In the U.S., EXPAREL is currently indicated for local analgesia via infiltration in patients aged six years and older and regional analgesia via interscalene brachial plexus nerve block, sciatic nerve block in the popliteal fossa, and adductor canal block in adults. Safety and efficacy have not been established in other nerve blocks. In Europe, EXPAREL is approved as a brachial plexus block or femoral nerve block for treatment of post-operative pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds in adults and children aged six years and older.

EXPAREL Label Activities

Launching EXPAREL in two new lower extremity nerve block indications. In February 2024, we launched EXPAREL in two key lower extremity nerve blocks—namely an adductor canal block and a sciatic nerve block in the popliteal fossa. We believe these two key nerve blocks provide the opportunity to significantly expand EXPAREL utilization within surgeries of the knee, lower leg, and foot and ankle procedures. The launch is supported by two successful head-to-head Phase 3 studies in which EXPAREL demonstrated four days of superiority to bupivacaine.

Pediatrics. We are launching a Phase 1 pharmacokinetic study of EXPAREL as a single-dose post-surgical infiltration administration in patients under six years of age. If successful, we expect this study, followed by a Phase 3 registration study, will support expansion of the EXPAREL label to include administration vialabels in the U.S. and E.U. We are also discussing with the FDA, EMA and Medicines and Healthcare Products Regulatory Agency (MHRA) our regulatory strategy for EXPAREL administered as a nerve block for prolonged regional analgesia. The expected action

date byin the pediatric setting. We received notification from the FDA underin October 2023 that our pediatric studies requirement had been waived for the Prescription Drug User Fee Act, or PDUFA,indication of brachial plexus interscalene nerve block to produce postsurgical regional analgesia in pediatric patients.

Stellate ganglion block. Planning is April 6, 2018. The sNDA is based on the positive data fromunderway for a multicenter EXPAREL Phase 3 registration program as a stellate ganglion block for preventing postoperative atrial fibrillation after cardiothoracic surgery. We worked with a steering committee of Key Opinion Leaders, or KOLs, in regional anesthesia and stellate ganglion blocks to design our program and we are awaiting FDA feedback on study design. We believe a stellate ganglion block utilizing EXPAREL will be critical in an unmet need with post-operative atrial fibrillation, or POAF. POAF is a common and costly complication after cardiothoracic surgery, occurring after up to 40% of EXPARELcardiac procedures and 20% of thoracic procedures, and often results in femoralan extended intensive care unit and/or hospital stay, as well as higher long-term risk. A stellate ganglion block is a sympathetic nerve block for total knee arthroplasty, or TKA, (lower extremity) andwhich can stabilize the heart. Since POAF typically occurs around the third day after surgery, a Phase 3 studylong-acting block with EXPAREL provided at the time of surgery may enhance current prophylactic measures.

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EXPAREL in brachial plexus block for shoulder surgeries (upper extremity). It also includes safety and pharmacokinetic data through 120 hours.Clinical Benefits
In September 2017, we announced a collaboration with Aetna, one of
We believe EXPAREL can replace the nation’s leading diversified health care benefits companies, with the support of the American Association of Oral and Maxillofacial Surgeons, on a national program aimed at reducing the number of opioid tablets dispensed to patients undergoing impacted third molar (wisdom tooth) extractions by at least 50 percent through the utilization of EXPAREL to provide prolonged non-opioid postsurgical pain control. Aetna will reimburse oral surgeons enrolled in the program for their use of EXPAREL in impacted third molar extraction cases performed once the surgeons have completed training on use of the product.
EXPAREL
Expanded Indication

The FDA is currently reviewing our sNDA seeking an expansion of the EXPAREL label to include administrationbupivacaine delivered via nerve block for prolonged regional analgesia. We believe that this new indication would a) present an alternative long-term method of pain control with a single injection, replacing the costly and cumbersome standard of care requiring a perineural catheter, drug reservoir and pump needed to continuously deliver bupivacaine and b) allow us to further leverage our manufacturing and commercial infrastructure. The expected action date by the FDA is April 6, 2018.
The sNDA is based on the positive data from a Phase 3 study of EXPAREL in femoral nerve block for TKA (lower extremity) and a Phase 3 study of EXPAREL in brachial plexus block for shoulder surgeries (upper extremity). It also includes safety and pharmacokinetic data through 120 hours. Eight Pacira-sponsored studies support this expanded indication. In total, 570 subjects received a dose of EXPAREL ranging from 2 mg to 310 mg. In addition, the sNDA includes data from two investigator-initiated studies that provide additional experience in smaller, peripheral nerve block settings.
Phase 4 Trials

We are investing in a series of blinded, randomized Phase 4 trials in key surgical procedures with EXPARELelastomeric pumps as the foundation of a multimodal analgesic regimen. Our Phase 4 trials are also designedregimen for long-acting postsurgical pain management. Based on our clinical data, EXPAREL:
provides long-lasting local or regional analgesia;
is a ready-to-use formulation;
expands easily with saline or lactated Ringer’s solution to support clinician educationreach a desired volume;
can be administered for local analgesia via infiltration and for regional analgesia via field block, as well as brachial plexus nerve block, sciatic nerve block in the popliteal fossa and adductor canal block; and
facilitates treatment of a variety of surgical sites.
We believe EXPAREL is a key component of long-acting postsurgical pain management regimens that reduce the need for opioids. Based on procedure-specific best-practice care.
In July 2017, resultsthe clinical data from our Phase 3 and Phase 4 clinical studies as well as data from retrospective health outcomes studies, EXPAREL significantly reduces opioid usage while improving postsurgical pain management.
ZILRETTA

ZILRETTA is the first and only extended-release, intra-articular therapy for OA knee pain. ZILRETTA employs a proprietary microsphere technology combining triamcinolone acetonide, or TA, a commonly administered, immediate-release corticosteroid, with a poly lactic-co-glycolic acid, or PLGA, matrix to provide extended pain relief. PLGA is a proven extended-release delivery vehicle that is metabolized to carbon dioxide and water as it releases drug in the intra-articular space and is used in other approved drug products and surgical devices. The ZILRETTA microspheres slowly and continuously release triamcinolone acetonide into the knee to provide significant pain relief for 12 weeks, with some people experiencing pain relief through 16 weeks. ZILRETTA was approved by the FDA in October 2017 and launched in the U.S. shortly thereafter.

We believe ZILRETTA’s extended-release profile may also provide effective treatment for OA pain of the shoulder.

ZILRETTA Clinical Benefits

ZILRETTA combines TA, a commonly administered steroid, with a proprietary, extended-release microsphere technology to administer extended therapeutic concentrations in the joint and persistent analgesic effect.

Based on the strength of its pivotal and other clinical trials, we believe that ZILRETTA represents an important treatment option for the millions of patients in the U.S. in need of safe and effective extended relief from OA knee pain. The pivotal Phase 3 trial showed that ZILRETTA significantly reduced OA knee pain for 12 weeks, with some people experiencing pain relief through 16 weeks. We believe that ZILRETTA holds the potential to become the corticosteroid of choice given its safety and efficacy profile, and the fact that it is the first and only extended-release corticosteroid on the market. In September 2021, the American Association of Orthopaedic Surgeons, or AAOS, updated its evidence-based clinical practice guidelines, finding ZILRETTA can improve patient outcomes over traditional immediate-release corticosteroids.

In 2024, we launched a Phase 3 registration study to evaluate the safety and efficacy of ZILRETTA for the management of OA pain of the shoulder. If the study is successful, we plan to seek approval to expand the ZILRETTA label to include OA pain of the shoulder.

iovera°

The iovera° system is a non-opioid handheld cryoanalgesia device used to produce precise, controlled doses of cold temperature to targeted nerves. It is FDA 510(k) cleared in the U.S., has a CE mark in the E.U. and is cleared for marketing in Canada for the blocking of pain. We believe the iovera° system is highly complementary to EXPAREL and ZILRETTA as a non-opioid therapy that alleviates pain using a non-pharmacological nerve block to disrupt pain signals being transmitted to the brain from the site of injury or surgery. It is also indicated for the relief of pain and symptoms associated with arthritis of the knee for up to 90 days.
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iovera° Clinical Benefits

There is a growing body of clinical data demonstrating success with iovera° treatment for a wide range of chronic pain conditions. Some of our strongest data relates directly to the improvement of OA pain of the knee. Surgical intervention is typically a last resort for patients suffering from OA pain of the knee. In one study, the majority of the patients suffering from OA pain of the knee experienced pain relief up to 150 days after being treated with iovera°.
Preliminary findings demonstrated reductions in opioids, including:
The daily morphine equivalent consumption in the per protocol group analysis was significantly lower at 72 hours (p<0.05), 6 weeks (p<0.05) and 12 weeks (p<0.05).
Patients who were administered iovera° were far less likely to take opioids six weeks after surgery. The number of patients undergoingtaking opioids six weeks after total knee replacement were publishedarthroplasty, or TKA, in The Journalthe control group was three times the number of Arthroplastypatients taking opioids in the cryoanalgesia group (14 percent vs. 44 percent, p<0.01). The study compared EXPAREL admixed with bupivacaine HCl versus bupivacaine HCl alone. EXPAREL achieved statistical significance for its co-primary endpoints of opioid reduction and postsurgical pain. The EXPAREL
Patients in the iovera° group demonstrated a 78 percent reduction in opioid consumption from zero to 48 hours after surgery and astatistically significant reduction in pain scores from their baseline pain scores at 72 hours (p<0.05) and at 12 weeks (p<0.05).
We believe these data validate iovera° as a clinically meaningful non-opioid alternative for patients undergoing TKA, and that iovera° offers the opportunity to 48 hoursprovide patients with non-opioid pain control well in advance of any necessary surgical intervention through a number of key product attributes:
iovera° is safe and effective with immediate pain relief that can last for months as the nerve regenerates over time;
iovera° is repeatable, with no diminishing effectiveness over time and repeat use;
The iovera° technology does not risk damage to the surrounding tissue;
iovera° is a convenient handheld device with a single-use procedure-specific Smart Tip; and
iovera° can be delivered precisely using ultrasound guidance or an anatomical landmark.
A study published in 2021 that included 267 patients (169 who underwent cryoneurolysis with iovera° compared to 98 patients who did not receive iovera° treatment) showed that patients who were treated with iovera° had 51% lower daily morphine milligram equivalents during their hospital stay and a 22% lower mean pain score versus those who were not. In addition, the iovera° group had greater function at discharge, a shorter length of hospital stay and received significantly fewer opioids, including discharge prescriptions at week 2 and week 6 after surgery. EXPAREL
In September 2021, the AAOS updated its evidence-based clinical practice guidelines, reporting that denervation therapy—including cryoneurolysis—may reduce knee pain and improve function in patients with symptomatic OA of the knee.

The Osteoarthritis Market

OA is the most common form of arthritis. It is also achieved statistical significance for the study’s key secondary endpoints related to opioid reduction. Patientscalled degenerative joint disease and occurs most frequently in the EXPAREL arm required 77.6 percent fewer opioids through 72 hours than thosehands, hips and knees. With OA, the cartilage within a joint begins to break down and the underlying bone begins to change. These changes usually develop slowly and worsen over time. OA can cause pain, stiffness and swelling. In some cases, it also causes reduced function and disability—some people are no longer able to do daily tasks or work. According to the Centers for Disease Control and Prevention (CDC), OA affects over 32.5 million adults in the bupivacaine arm with 10U.S.

The lifetime risk of developing symptomatic knee OA is 45 percent remaining opioid-free through 48 and 72 hours (compared to zero patients in the bupivacaine arm; P<0.01). Time to first opioid rescue was analyzed using logistic regression and Kaplan-Meier methods, with a significant difference between the EXPAREL group versus the bupivacaine group; P=0.0230.
Product Pipeline

DepoFoam is used to extend the release of active drug substances. With this technology, we are currently developing two new DepoFoam-based product candidates—DepoTranexamic Acid, or DepoTXA, an antifibrinolytic, and DepoMeloxicam, or DepoMLX, a non-steroidal anti-inflammatory drug, or NSAID. Completion of clinical trials may take several years or more. The length of time generally varies according to the type, complexity, noveltyArthritis Foundation. The prevalence of symptomatic knee OA increases with each decade of life, with the annual incidence of knee OA being highest between age 55 and intended use64 years old. There are 14 million individuals in the U.S. who have symptomatic knee OA, and nearly two million are under the age of 45. Surgical intervention is typically a last resort for patients suffering from OA of the knee.

With ZILRETTA, we now offer clinicians the flexibility to individualize OA knee pain treatment with either ZILRETTA or a drug-free nerve block with iovera° based on patient factors and preference, physician training, site of care and reimbursement considerations.


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Clinical Development Programs

PCRX-201

PCRX-201 was added to our product candidate.development portfolio as part of the Flexion Acquisition. PCRX-201 is a novel, helper-dependent adenoviral vector expressing interleukin-1 receptor antagonist (IL-1Ra). After injection, the vector enters joint cells and turns them into factories to produce sustained therapeutic levels of IL-1Ra and inhibit the IL-1 pathway to manage pain and mitigate OA-related joint damage while remaining localized to the joint space. In a Phase 1 proof-of-concept study of patients with moderate to severe OA of the knee, PCRX-201 was well tolerated with improvements in knee pain observed across all doses. In February 2024, the FDA granted PCRX-201 an RMAT designation. Our RMAT application was supported by the preliminary safety and efficacy findings from a Phase 1 open-label, proof-of-concept, single ascending dose trial that enrolled 72 patients in two three-dose cohorts: a co-administered IA steroid cohort and a cohort that did not receive a steroid. PCRX-201 was well tolerated, with efficacy observed through at least 52 weeks at all doses and cohorts. The highest level of efficacy was achieved in the co-administered steroid group, which showed a greater percentage of patients with at least a 50% improvement in Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) pain and stiffness scores, as well as a meaningful improvement in (Knee Injury and Osteoarthritis Outcomes Score) KOOS functional assessment. The 52-week data were presented at the Osteoarthritis Research Society International (OARSI) 2024 World Congress in April 2024 and we expect to submit the 104-week efficacy and safety data for presentation at a medical meeting later this year.

pMVL-Based Clinical Program

Given the proven safety, flexibility and customizability of our pMVL drug delivery technology platform for acute, sub-acute and chronic pain applications, we have another pMVL-based product in clinical development. Following data readouts from preclinical and feasibility studies, we initiated a second Phase 1 study of EXPAREL for intrathecal analgesia in June 2023.

External Innovation

In parallel to our internal clinical programs, we are pursuing innovative acquisition targets that are complementary to EXPAREL, ZILRETTA and iovera° and are of great interest to the surgical and anesthesia audiences we are already calling on today. We are also evaluating other potential DepoFoam compoundsusing a combination of strategic investments, in-licensing and formulation work is underway foracquisition transactions to buildout a numberpipeline of innovation to improve patients’ journeys along the neural pain pathway. The strategic investments we have made to support promising early-stage platforms are summarized below:

CompanyDevelopment StageDescription of Platform TechnologyPotential Therapeutic Areas
CarthroniX, Inc.Phase 1-ReadyCX-011, a small molecule modulator of gp130 formulated as an IA injection designed to slow joint degeneration by mediating IL-6 cytokinesKnee OA
Genascence CorporationPhase 1bAdeno-associated virus (AAV) based gene therapy engineered to deliver Interleukin-1 Receptor Antagonist (IL-1Ra) to target cells in joint(s)Knee OA
GQ Bio Therapeutics GmbHPreclinicalHigh-capacity adenovirus (HCAd) based gene therapy engineered to deliver DNA to target cells in joint(s) and intervertebral disc(s)Knee OA and degenerative disc disease (DDD)
Spine BioPharma, LLCPhase 3SB-01, a 7-amino acid chain peptide that binds to and induces down regulation of transforming growth factor, beta 1 (TGFβ1)Degenerative disc disease (DDD)

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Product Portfolio and Internal Pipeline

Our current product portfolio and internal product candidate pipeline, candidates.

DepoTranexamic Acid

Tranexamic Acid, or TXA, is currently used off-label as a systemic injection or as a topical application, and is usedalong with anticipated milestones over the next 12 to treat or prevent excessive blood loss during surgery by preventing the breakdown of a clot. However, the current formulation of TXA has a short-lived effect consisting of only a few hours, while the risk of bleeding continues for two to three days after surgery. We believe DepoTXA, a long-acting local antifibrinolytic agent combining immediate and extended release TXA, could address the unmet, increasing need for rapid ambulation and discharge18 months, are summarized in the ambulatory surgery environment for jointtable below:


surgery (primarily orthopedic surgery, including spineProduct Pipeline Q1 2024.jpg

Pacira Training Facilities

We maintain and trauma proceduresoperate two Pacira Innovation and cardiothoracic surgery). Designed for single-dose local administration into the surgical site, DepoTXA could provide enhanced hemostabilizationTraining, or PIT, facilities—one in Tampa, Florida and improved safety and tolerability for patients over the systemic use of TXA byone in Houston, Texas. These sites were constructed with a singular goal in mind: to advance education on best practice techniques to effectively manage acute pain while reducing bleeding,or eliminating the need for blood transfusions, swelling, soft tissue hematomasopioids. These facilities provide clinicians with flexible, state-of-the-art environments for interactive, hands-on instruction on the latest and the needmost innovative local, regional and field block approaches for post-operative drains, thereby increasing vigor in patients while decreasing overall costsmanaging pain, improving patient care and enabling patient migration to the hospital system.23-hour stay environment. Each of our PIT facilities feature distinct training spaces, including simulation labs equipped with ultrasound scanning stations; lecture halls that feature liquid crystal display video walls to support live, virtual and global presentations; and green-screen broadcast studios to livestream content with single or multiple hosts. The PIT of Houston has both wet and dry lab space for cadaver and other interactive workshops. The PIT of Tampa also houses our principal executive offices and corporate headquarters.

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DepoTXA is currently in Phase 2 clinical development.


DepoMeloxicam

We expect to submit an Investigational New Drug application for DepoMLX in 2017 and subsequently initiate a Phase 1 clinical trial.
Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2017March 31, 2024 and 2016
2023
Revenues

Our netNet product sales includeconsist of sales of (i) EXPAREL in the United StatesU.S., E.U., and DepoCyt(e)U.K.; (ii) ZILRETTA in the United StatesU.S.; (iii) iovera° in the U.S., Canada and Europe through June 2017. We also earn royalties onand (iv) sales by commercial partners of our bupivacaine liposome injectable suspension product for use in animal health indications and DepoCyt(e) and license fees and milestone paymentsveterinary use. Royalty revenues are related to a collaborative licensing agreement from third parties.
the sale of our bupivacaine liposome injectable suspension for veterinary use.
The following table provides information regarding our revenues during the periods indicated, including percent changes (dollars(dollar amounts in thousands):
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
% Increase / (Decrease)
Three Months Ended 
 September 30,
   % Increase / (Decrease) Nine Months Ended 
 September 30,
   % Increase / (Decrease)
 
2017 2016 2017 2016 
2024
2024
2024
Net product sales:
Net product sales:
Net product sales:          
EXPAREL$66,780
 $64,869
 3% $204,254
 $194,374
 5%
DepoCyt(e) and other product sales171
 1,250
 (86)% 1,261
 3,935
 (68)%
EXPAREL
EXPAREL$132,430 $130,408 2%
ZILRETTAZILRETTA25,839 24,334 6%
iovera°iovera°5,030 4,001 26%
Bupivacaine liposome injectable suspensionBupivacaine liposome injectable suspension2,525 688 100% +
Total net product sales66,951
 66,119
 1% 205,515
 198,309
 4%Total net product sales165,824 159,431 159,431 4%4%
Collaborative licensing and milestone revenue26
 1,357
 (98)% 361
 3,069
 (88)%
Royalty revenue358
 879
 (59)% 1,676
 2,091
 (20)%Royalty revenue1,293 910 910 42%42%
Total revenues$67,335
 $68,355
 (1)% $207,552
 $203,469
 2%
Total revenues
Total revenues$167,117 $160,341 4%
EXPAREL revenue grew 3% and 5%increased 2% in the three and nine months ended September 30, 2017, respectively, comparedMarch 31, 2024 versus 2023. Components of the increase included a 3% increase in gross vial volume, which was offset by a shift in product mix. EXPAREL revenue was also impacted by a 2% increase in selling price per unit related to the same periods in 2016, primarily due to respective increased sales volumes of 4% and 6%,a January 2024 price increase, which was partially offset by an increase in volume rebates and chargebacks of 1%. The demand for EXPAREL has continued to increasesales related allowances as a result of new accountsgroup purchasing organization contracting.
ZILRETTA revenue increased 6% in the three months ended March 31, 2024 versus 2023 primarily due to a 7% increase in net selling price per unit related to increases of gross selling price per unit and growth within existing accountsfavorable sales related allowances, partially offset by a 1% decrease in kit volume.
Net product sales of iovera° increased 26% in the three months ended March 31, 2024 versus 2023 primarily due to an increase of 34% in Smart Tip volume, partially offset by a 2% decrease in selling price per Smart Tip due to increased sales to clinics.
Bupivacaine liposome injectable suspension revenue increased more than 100% in the three months ended March 31, 2024 versus 2023 and its related royalties increased 42% primarily due to the continued adoptionsales mix of vial sizes and the timing of orders placed for veterinary use.
The following tables provide a summary of activity with respect to our sales related allowances and accruals related to EXPAREL in soft tissue and orthopedic procedures.ZILRETTA for the three months ended March 31, 2024 and 2023 (in thousands):

March 31, 2024Returns
Allowances
Prompt
Payment
Discounts
Service
Fees
Volume
Rebates and
Chargebacks
Government
Rebates
Total
Balance at December 31, 2023$1,868 $1,308 $3,697 $5,870 $1,175 $13,918 
Provision76 3,057 4,771 25,800 636 34,340 
Payments / Adjustments(175)(3,087)(5,064)(26,320)(333)(34,979)
Balance at March 31, 2024$1,769 $1,278 $3,404 $5,350 $1,478 $13,279 
DepoCyt(e) and other
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 35

March 31, 2023Returns
Allowances
Prompt
Payment
Discounts
Service
Fees
Volume
Rebates and
Chargebacks
Government
Rebates
Total
Balance at December 31, 2022$1,691 $1,187 $3,193 $5,452 $786 $12,309 
Provision465 2,938 4,277 22,549 412 30,641 
Payments / Adjustments(328)(2,921)(4,162)(22,689)(396)(30,496)
Balance at March 31, 2023$1,828 $1,204 $3,308 $5,312 $802 $12,454 
Total reductions of gross product sales decreased 86%from sales-related allowances and 68% inaccruals were $34.3 million and $30.6 million, or 17.1% and 16.2% of gross product sales, for the three and nine months ended September 30, 2017, respectively, compared to the same periodsMarch 31, 2024 and 2023, respectively. The overall 0.9% increase in 2016. The decrease in both periodssales-related allowances and accruals as a percentage of gross product sales was primarily duerelated to fewer DepoCyt(e) lots sold to our commercial partnersaccruals as a result of persistent technical issues specifically related to the DepoCyt(e) manufacturing process and the discontinuation of our DepoCyt(e) manufacturing activities in June 2017.higher chargeback-related allowances from expanded contracting efforts.

Collaborative licensing and milestone revenue decreased 98% and 88% in the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016, primarily due to milestones earned in 2016 under our agreement with Aratana Therapeutics, Inc. for the development and commercialization of our products in animal health indications in the three and nine months ended September 30, 2016.

Royalty revenue primarily reflects royalties earned on collections of end-user sales of DepoCyt(e) by our commercial partners. Royalty revenue decreased 59% and 20% in the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016, due to the discontinuation of our DepoCyt(e) manufacturing activities in June 2017.

Cost of Goods Sold

Cost of goods sold primarily relates to the costs to produce, package and deliver our products to customers. These expenses include labor, raw materials, manufacturing overhead and occupancy costs, depreciation of facilities, royalty payments, quality control and engineering.
The following table provides information regarding our cost of goods sold and gross margin during the periods indicated, including percent changes (dollar amounts in thousands):
Three Months Ended
March 31,
% Increase / (Decrease)
20242023
 Cost of goods sold$47,416$49,020(3)%
 Gross margin72 %69 %
 Three Months Ended 
 September 30,
   % Increase / (Decrease) Nine Months Ended 
 September 30,
   % Increase / (Decrease)
    
 2017 2016  2017 2016 
 Cost of goods sold$18,228
 $43,152
 (58)% $66,621
 $86,483
 (23)%
 Gross margin73% 37%   68% 57%  

The decreases in cost of goods sold and the corresponding 36 and 11 percentage-point improvements in gross margins for theGross margin increased three and nine months ended September 30, 2017 versus 2016, respectively, were largely due to a $21.9 million charge for inventory and related reserves in the third quarter of 2016 related to a single stability batch for EXPAREL which had fallen out of specification for one of 21 acceptance criteria. The manufacturing issue that existed when this batch was made was subsequently corrected. Gross margins improved by 32 and 11 percentage-points for the three and nine months ended September 30, 2017, respectively, as a result of this 2016 event. In addition, gross margins increased by 2 and 3 percentage-points as a result of lower unplanned manufacturing shutdown and other charges in the three and nine months ended September 30, 2017, respectively. There were no scrapped lots related to DepoCyt(e) in the three months ended September 30, 2017, improving gross marginsMarch 31, 2024 versus 2023 primarily due to lower EXPAREL product cost and lower royalty expense as discussed below, partially offset by 2 percentage points versushigher inventory reserves.
On August 8, 2023, the same period in 2016. The nine months ended September 30, 2017 versus 2016U.S. District Court, District of Nevada, concluded we were no longer obligated to pay royalties to the Research and Development Foundation for EXPAREL made under the 45-liter manufacturing process. For more information, see Note 15, Commitments and Contingencies, to our condensed consolidated financial statements included scrapped lots for DepoCyt(e) in the first half of 2017 before the manufacture of the product was discontinued, decreasing gross margins by 3 percentage points.herein.
Research and Development Expenses
Research and development expenses primarily consist primarily of costs related to clinical trials and related outside services, product development and other research and development costs, including trials that we are conducting to generate new data for EXPAREL, ZILRETTA and iovera° and stock-based compensation expenses.expense. Clinical and preclinical development expenses include costs for clinical personnel, clinical trials performed by third-party contract research organizations,third-parties, toxicology studies, materials and supplies, database management and other third-party fees. Product development and other research and developmentmanufacturing capacity expansion expenses include development costs for our products, and medical information expenses, which include personnel, research equipment, materials and contractor costs for process development and product candidates, toxicology studies, expensesdevelopment costs related to a significant scale-upscale-ups of our manufacturing capacity and facility costs for our research space. Regulatory and other expenses include regulatory activities related to unapproved products and indications, medical information expenses, registry expenses and related personnel. Stock-based compensation expense relates to the costs of stock option grants, to employees and non-employees, awards of restricted stock units, or RSUs, and our employee stock purchase plan, or ESPP.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 36

The following table provides information regardinga breakout of our research and development expenses during the periods indicated, including percent changes (dollar amounts in thousands):
Three Months Ended
March 31,
% Increase / (Decrease)
20242023
Clinical and preclinical development$6,346$5,26121%
Product development and manufacturing capacity expansion7,3957,672(4)%
Regulatory and other2,6942,33216%
Stock-based compensation1,8031,875(4)%
Total research and development expense$18,238$17,1406%
 % of total revenues11 %11 %
 Three Months Ended 
 September 30,
   % Increase / (Decrease) Nine Months Ended 
 September 30,
   % Increase / (Decrease)
    
 2017 2016  2017 2016 
Clinical development$6,301
 $5,665
 11% $29,738
 $14,576
 104%
Product development and other4,650
 3,399
 37% 15,396
 11,435
 35%
Stock-based compensation824
 690
 19% 2,128
 2,598
 (18)%
     Total research and development expense$11,775
 $9,754
 21% $47,262
 $28,609
 65%
 % of total revenues17% 14%   23% 14%  

ResearchTotal research and development expense increased 21% and 65% in the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016.

The increase in clinical development expense6% in the three months ended September 30, 2017 reflects costs for our ongoing Phase 4March 31, 2024 versus 2023.
Clinical and preclinical development expense increased 21% in the three months ended March 31, 2024 versus 2023 due to the start-up and enrollment in a ZILRETTA shoulder trial and an EXPAREL infiltration trialspediatric trial, and increased research grants.start-up activities in an iovera° spasticity trial. These increases were partially offset by the completionwinding down of our twoa PCRX-201 Phase 3 trials evaluating EXPAREL1 study for knee OA as a single-dose nerve block for prolonged regional analgesia. Enrollmentfollow-up visits of subjects were completed in these studies began in the second quarter of 2016November 2023, and concluded in June 2017.

In the nine months ended September 30, 2017, the increase in clinical development expense includes costs for our two Phase 3 EXPAREL nerve block trials which concluded in June 2017, as well as our ongoing Phase 4 EXPAREL infiltration trials and increased research grants. These increases were partially offset by the completion of our Phase 4 EXPAREL infiltration trial in TKA, which concluded enrollment in January 2017.

toxicology studies for product candidates.
Product development and other expenses increased in both the three and nine months ended September 30, 2017 versus 2016, respectively, primarily due to expenses related to a significant scale-up of our manufacturing capacity in Swindon, England, in partnership with Patheon, running test batches for DepoMLX and developing a new EXPAREL DepoFoam spray manufacturing process. These increases were partially offset by a reduction in spend for preclinical DepoFoam toxicology trials.

In the nine months ended September 30, 2017 versus 2016, stock-based compensationexpansion expense decreased 18% as expenses from new awards were more than offset by the decreased expense on mark-to-market non-employee awards that became fully vested in mid-2016. The 19% increase4% in the three months ended September 30, 2017March 31, 2024 versus 20162023, primarily attributable to the near-completion of pre-commercial scale-up activities of our EXPAREL manufacturing capacity at our Science Center Campus in San Diego, California. The FDA approved an sNDA for our 200-liter EXPAREL manufacturing suite in February 2024. This decrease is partially offset by ongoing product development costs related to PCRX-201 and an iovera° medial branch Smart Tip.
Regulatory and other expense increased 16% in the three months ended March 31, 2024 versus 2023 due to new awards grantedincreased enrollment and additional sites related to an observational registry study which tracks patients’ symptoms and experience with pain management related to OA of the knee.
Stock-based compensation decreased 4% in mid- to-late 2016the three months ended March 31, 2024 versus 2023 primarily due to the impact of a February 2024 restructuring program which resulted in accelerated stock-based compensation for those impacted being recorded in contingent consideration (gains) charges, restructuring charges and 2017.other.

Selling, General and Administrative Expenses

Sales and marketing expenses primarily consist of compensation and benefits for our sales force and personnel that support our sales, marketing, and medical and scientific affairs operations, commission payments to our commercial partners for the promotion and sale of EXPAREL, expenses related to communicating the health outcome benefits of EXPARELour products, investments in provider-level market access and patient reimbursement support and educational programs for our customers. General and administrative expenses consist of compensation and benefits for legal, finance, regulatory activities related to approved products and indications, compliance, information technology, human resources, business development, executive management and other supporting personnel. It also includes professional fees for legal, audit, tax and consulting services. Stock-based compensation expense relates to the costs of stock option grants, RSU awards and our ESPP.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 37

The following table provides information regarding our selling, general and administrative expenses during the periods indicated, including percent changes (dollar amounts in thousands):
Three Months Ended
March 31,
% Increase / (Decrease)
20242023
 Sales and marketing$39,435$41,579(5)%
 General and administrative24,60620,87318%
 Stock-based compensation7,9858,391(5)%
Total selling, general and administrative expense$72,026$70,8432%
 % of total revenues43 %44 %
 Three Months Ended 
 September 30,
   % Increase / (Decrease) Nine Months Ended 
 September 30,
   % Increase / (Decrease)
    
 2017 2016  2017 2016 
 Sales and marketing$24,557
 $21,490
 14% $72,344
 $69,437
 4%
 General and administrative9,750
 9,780
 0% 32,965
 32,371
 2%
 Stock-based compensation6,337
 5,044
 26% 17,007
 16,132
 5%
    Total selling, general and administrative
expenses
$40,644
 $36,314
 12% $122,316
 $117,940
 4%
 % of total revenues60% 53%   59% 58%  
Selling,Total selling, general and administrative expensesexpense increased 12%2% in the three months ended March 31, 2024 versus 2023.
Sales and marketing expense decreased 5% in the three months ended March 31, 2024 versus 2023, which is attributable to the impact of a February 2024 restructuring program. These measures involved reallocating resources and prioritizing investing in programs to drive awareness and education for our customers and enhance our marketing, market access and reimbursement teams and value creation for the implementation of separate Medicare reimbursement for EXPAREL at average sales price plus 6 percent in outpatient settings beginning in January 2025. We expect investments in these programs to increase in the remaining nine months of 2024.
General and administrative expense increased 18% in the three months ended March 31, 2024 versus 2023 primarily driven by legal fees primarily attributable to ongoing litigation. We also incurred compensatory costs associated with the transition to our new Chief Executive Officer effective January 2, 2024, which include compensation related to the current Chief Executive Officer and to the former Chief Executive Officer who remains employed by the Company in an advisory role, and, to a lesser extent, third-party consulting. For more information on our ongoing litigation, see Note 15, Commitments and Contingencies, to our condensed consolidated financial statements included herein.
Stock-based compensation decreased 5% for the three months ended September 30, 2017 and 4% for the nine months ended September 30, 2017, compared to the same periods in 2016.

Sales and marketing expenses increased by 14% for the three months ended September 30, 2017 and 4% in the nine months ended September 30, 2017March 31, 2024 versus the same periods in 2016. Increases in these respective periods were driven by higher costs for salaries, benefits and other personnel related costs resulting from an increase in the number of field-based medical and sales professionals to better support and educate our customers. We spent more money on marketing for EXPAREL in both the three and nine month periods ended September 30, 2017 versus 2016 on educational initiatives and programs to create product awareness within key surgical markets. This spending increase also included other selling and promotional activities to the support the growth of EXPAREL, including initiatives related to our co-promotion agreement with DePuy Synthes Sales, Inc.,

or DePuy Synthes. We also supported multiple educational programs related2023 primarily due to the impact of opioids and postsurgical pain management along with our “Choices Matter” campaign,from the February 2024 restructuring program which educates patients on non-opioid treatment options.

General and administrative expenses remained consistentresulted in the three months and increased 2% in the nine months ended September 30, 2017, respectively, versus the same periods in 2016. In the three months ended September 2017 versus 2016, legal expenditures increased, offset by a decrease in compliance related activities. In the nine months ended September 30, 2017 versus 2016, there was an increase in regulatory expenses in preparation for a European Medicines Agency Marketing Authorization Application for EXPAREL commercialization in the E.U. We also increased spending to support our investor relations and information technology functions. These increases were partially offset by lower legal and compliance expenses, primarily related to a DOJ subpoena received in April 2015.

Stock-based compensation increased $1.3 million in the three month period ended September 30, 2017, compared to the same period in 2016, primarily due to new awards granted in mid-to-late 2016 and 2017 and accelerated stock-based compensation expense. In the nine months ended September 30, 2017 versus 2016, there was a $0.9 million increase in stock-based compensation primarily due to new awards granted in mid-to-late 2016 and 2017.

Product Discontinuation Expenses

In June 2017, we discontinued all future production of DepoCyt(e) due to persistent technical issues specific to the DepoCyt(e) manufacturing process. In the three months ended September 30, 2017, we recorded a charge of $0.3 million related to the discontinuation of our DepoCyt(e) manufacturing activities, including $0.1 million for related inventory which wasthose impacted being recorded in costcontingent consideration (gains) charges, restructuring charges and other.
Amortization of goods sold. The remaining $0.2 million related to asset retirement obligations and other estimated exit costs.
In the nine months ended September 30, 2017, the total charge was $5.3 million, of which $0.6 million was for related inventory recorded in cost of goods sold, $1.9 million for lease costs less an estimate of potential sub-lease income, $1.9 million for the write-off of fixed assets and $0.9 million relating to employee severance, asset retirement obligations and other product discontinuation costs.
Other Income (Expense)Acquired Intangible Assets
The following table provides a summary of the componentsamortization of other income (expense)acquired intangible assets during the periods indicated, including percent changes (dollar amounts in thousands):
Three Months Ended
March 31,
% Increase / (Decrease)
20242023
Amortization of acquired intangible assets$14,322 $14,322 —%
 Three Months Ended 
 September 30,
   % Increase / (Decrease) Nine Months Ended 
 September 30,
   % Increase / (Decrease)
    
 2017 2016  2017 2016 
 Interest income$1,068
 $346
 209% $2,805
 $923
 204%
 Interest expense(5,127) (1,601) 220% (12,942) (5,203) 149%
 Loss on early extinguishment of debt
 
 N/A (3,732) 
 N/A
 Other, net79
 (8) N/A 169
 (8) N/A
      Total other expense, net$(3,980) $(1,263) 215% $(13,700) $(4,288) 219%

Total other expense, net increased by 215% and 219% inAs part of the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016, almost entirely due to the March 2017 issuance of $345.0 million of 2.375% convertible senior notes due 2022, or 2022 Notes,Flexion Acquisition and the repurchaseMyoScience Acquisition, we acquired intangible assets consisting of $118.2 milliondeveloped technology intangible assets and customer relationships, with estimated useful lives between 9 and 14 years. For more information, see Note 7, Goodwill and Intangible Assets, to our condensed consolidated financial statements included herein.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 38

Contingent Consideration Charges (Gains), Restructuring Charges and an increase in interest expense of $3.5 million and $7.7 million in the three and nine months ended September 30, 2017 versus 2016, respectively. There was also an increase in interest income of $0.7 million and $1.9 million in the same respective periods as a result of additional investments from the net proceeds of the 2022 Notes.

Income Tax Expense
Other
The following table provides information regarding our income tax expensea summary of the costs related to the contingent consideration, acquisition-related charges and restructuring charges during the periods indicated, including percent changes (dollar amounts in thousands):

Three Months Ended
March 31,
% Increase / (Decrease)
20242023
Flexion contingent consideration$(3,806)$11,618 N/A
Restructuring charges5,535 — N/A
Acquisition-related fees174 489 (64)%
Total contingent consideration (gains) charges, restructuring charges and other$1,903 $12,107 (84)%
Total contingent consideration (gains) charges, restructuring charges and other decreased 84% in the three months ended March 31, 2024 versus 2023.
 Three Months Ended 
 September 30,
   % Increase / (Decrease) Nine Months Ended 
 September 30,
   % Increase / (Decrease)
    
 2017 2016  2017 2016 
 Income tax expense$45
 $36
 25% $105
 $126
 (17)%
 Effective tax rate0% 0%   0% 0%  
During the three months ended March 31, 2024, we recognized a contingent consideration gain of $3.8 million primarily due to an adjustment reflecting the probability of achieving the remaining Flexion regulatory milestone by December 31, 2030, the expiration date.

During the three months ended March 31, 2023, we recognized a contingent consideration charge of $11.6 million, which was due to a decrease to the assumed discount rate based on a significant improvement in our incremental borrowing rate resulting from the TLA Credit Agreement (as defined below) entered into in March 2023.
During the three months ended March 31, 2024, we recognized restructuring charges of $5.5 million related to employee termination benefits, such as the acceleration of share-based compensation, severance, and, to a lesser extent, other employment-related termination costs, as well as contract termination costs.
For more information, see Note 9, Financial Instruments and Note 14, Contingent Consideration Charges (Gains), Restructuring Charges and Other, to our condensed consolidated financial statements included herein.
Other Income tax expense(Expense), Net
The following table provides information regarding other income (expense), net during the periods indicated, including percent changes (dollar amounts in thousands):
Three Months Ended
March 31,
% Increase / (Decrease)
20242023
 Interest income$3,903 $3,142 24%
 Interest expense(3,316)(9,589)(65)%
 Loss on early extinguishment of debt— (16,926)(100)%
 Other, net(159)(10)100% +
Total other income (expense), net$428 $(23,383)N/A
Total other income, net was less than $0.1$0.4 million in the three months ended September 30, 2017March 31, 2024. Total other expense, net was $23.4 million in the three months ended March 31, 2023.
The 24% increase in interest income in the three months ended March 31, 2024 versus 2023 was due to higher interest rates and 2016.overall investment balances.
The 65% decrease in interest expense during the three months ended March 31, 2024 versus 2023 was primarily driven by lower principal outstanding associated with the TLA Term Loan (as defined below) that was entered into on March 31, 2023 which replaced our then-outstanding TLB Term Loan (as defined below) that had a higher principal balance and interest rates.
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 39

In conjunction with the entry into the TLA Credit Agreement, we incurred a $16.9 million loss on early extinguishment of debt recognized as a result of the retirement of $287.5 million aggregate principal of our TLB Term Loan (as defined below) in the three months ended March 31, 2023. For more information, see Note 8, Debt, to our condensed consolidated financial statements included herein.
Income Tax Expense (Benefit)
The following table provides information regarding our income tax expense (benefit) during the periods indicated, including percent changes (dollar amounts in thousands):
Three Months Ended
March 31,
% Increase / (Decrease)
20242023
 Income tax expense (benefit)$4,661 $(6,938)N/A
 Effective tax rate34 %26 %
The effective tax rates were 34% and 26% for the three months ended March 31, 2024 and 2023, respectively. Income tax expense was $0.1 million inrepresents the nineestimated annual effective tax rate applied to the year-to-date domestic operating results adjusted for certain discrete tax items.
The effective tax rate for the three months ended September 30, 2017March 31, 2024 include costs related to non-deductible stock-based compensation and 2016.non-deductible executive compensation, partially offset by tax credits and a fair value adjustment for the Flexion contingent consideration. The effective tax expense reflects current state income taxes. Duerate for the three months ended March 31, 2023 includes costs for a fair value adjustment to net losses in both periods, no current federal income tax expense was recorded. Since our deferred tax assets are fully offset byFlexion contingent consideration, and a valuation allowance incomerecorded against non-U.S. results, offset by tax expense does not reflect deferred tax expenses.credits and stock-based compensation benefits.

Liquidity and Capital Resources
Since our inception in December 2006, we have devoted most of our cash resources to manufacturing, research and development and selling, general and administrative activities related to the development and commercialization of EXPAREL. In addition, we acquired ZILRETTA as part of the Flexion Acquisition in November 2021 and iovera° as part of the MyoScience Acquisition in April 2019. We are highlyprimarily dependent on the commercial success of EXPAREL which we launched in April 2012.and ZILRETTA. We have financed our operations primarily with cash generated from product sales, the proceeds from the sale of equityconvertible senior notes and other debt, securities, borrowings under debt facilitiescommon stock, product sales and collaborative licensing and milestone revenue. As of September 30, 2017,March 31, 2024, we had an accumulated deficit of $393.7$97.8 million, cash and cash equivalents short-term investments and long-termavailable-for-sale investments of $374.9$325.9 million and working capital of $313.5$449.7 million.

We expect that our cash and cash equivalents and available-for-sale investments on hand will be adequate to cover our short-term liquidity needs, and that we would be able to access other sources of financing should the need arise.
Summary of Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated (in thousands):
  Nine Months Ended 
 September 30,
Condensed Consolidated Statement of Cash Flows Data: 2017 2016
 Net cash provided by (used in):    
 Operating activities $854
 $16,104
 Investing activities (232,464) (54,837)
 Financing activities 221,882
 6,191
    Net decrease in cash and cash equivalents $(9,728) $(32,542)
Three Months Ended
March 31,
Condensed Consolidated Statements of Cash Flows Data:20242023
 Net cash provided by (used in):
 Operating activities$49,101 $19,128 
 Investing activities(15,530)66,183 
 Financing activities(2,817)(153,905)
Net increase (decrease) in cash and cash equivalents$30,754 $(68,594)
Operating Activities
During the ninethree months ended September 30, 2017, ourMarch 31, 2024, net cash provided by operating activities was $0.9$49.1 million, compared to $16.1$19.1 million during the ninethree months ended September 30, 2016.March 31, 2023. The decreaseincrease of $15.3$30.0 million was driven by an increaseattributable to increased revenue, lower interest paid and a $13.0 million payment made in our net loss, primarily from higher clinical trial expenses related to our two Phase 3 EXPAREL nerve block trials, our Phase 4 EXPAREL infiltration trials, payments related tothe prior year for a termination fee relatedrelating to a master distribution agreement with CrossLink BioScience, LLC and additional investments in inventory, partially offset by higher collections from EXPAREL net product sales.licensing agreement.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 40

Investing Activities
During the ninethree months ended September 30, 2017, ourMarch 31, 2024, net cash used in investing activities was $232.5$15.5 million, which reflected $212.1$12.7 million of short-term and long-termoutflows from available-for-sale investment purchases (net of maturities) primarily from the net proceedssales), as well as $2.8 million of the 2022 Notes, purchases of fixed assets of $14.2 million and contingent consideration payments of $6.2 million related to the March 2007 acquisition of Skyepharma Holding, Inc., or Skyepharma. Major fixed asset purchases included continuingcapital expenditures for expanding ourmanufacturing product fill lines and for an EXPAREL manufacturing capacity in Swindon, England in partnership with Patheon and facility upgradesexpansion project at our Science Center Campus in San Diego, California.
During the ninethree months ended September 30, 2016, ourMarch 31, 2023, net cash used inprovided by investing activities was $54.8$66.2 million, which reflected $21.2proceeds from $76.7 million of short-termavailable-for-sale investment purchasessales (net of maturities)purchases), partially offset by purchases of fixed assets of $19.8$6.6 million for fill lines for our products and contingent consideration paymentsequipment for an EXPAREL capacity expansion project at our Science Center Campus in San Diego, California and purchases of $13.8 million related to the March 2007 acquisitionequity and debt investments of Skyepharma, including an $8.0 million milestone payment in connection with achieving $250.0 million of EXPAREL net sales collected on an annual basis.

Major fixed asset purchases included continuing expenditures for expanding our manufacturing capacity in Swindon, England in partnership with Patheon.

$4.0 million.
Financing Activities
During the ninethree months ended September 30, 2017, ourMarch 31, 2024, net cash provided byused in financing activities was $221.9$2.8 million which consistedfor a voluntary prepayment of proceeds from the issuance of the 2022 Notes of $345.0 million, partially offset by $11.0 million of debt issuance and financing costs. In addition, a portion of the net proceeds from the 2022 Notes was used to retire $118.2 million in principal of the 2019 Notes and for $0.3 million in related costs. Proceeds from the exercise of stock options were $5.3 million and proceeds from the issuance of shares under our ESPP were $1.1 million.

In the nine months ended September 30, 2016, net cash provided by financing activities consisted of proceeds from the exercise of stock options of $5.2 million and $1.0 million from the issuance of shares under our ESPP.

2022 Convertible Senior Notes

On March 13, 2017, we completed a private placement of $345.0 million in aggregate principal amount of our 2022 Notes, and entered into an indenture agreement, or 2022 Indenture, with respect to the 2022 Notes. The 2022 Notes accrue interest at a fixed rate of 2.375% per annum, payable semiannually in arrears on April 1 and October 1 of each year. The 2022 Notes mature on April 1, 2022. At September 30, 2017, the outstanding principal on the 2022 Notes was $345.0 million.

On or after October 1, 2021, until the close of business on the second scheduled trading day immediately preceding April 1, 2022, holders may convert their 2022 Notes at any time. Upon conversion, holders will receive the principal amount of their 2022 Notes and any excess conversion value. For both the principal and excess conversion value, holders may receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our option. The initial conversion rate for the 2022 Notes is 14.9491 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $66.89 per share of our common stock. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

Prior to the close of business on the business day immediately preceding October 1, 2021, holders may convert the 2022 Notes under certain circumstances, including if during any given calendar quarter, our stock price closes at or above 130% of the conversion price then applicable during a period of at least 20 out of the last 30 consecutive trading days of the previous quarter.

While the 2022 Notes are currently classified on our consolidated balance sheet at September 30, 2017 as long-term debt, the future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of our common stock during the prescribed measurement periods. In the event that the holders of the 2022 Notes have the election to convert the 2022 Notes at any time during the prescribed measurement period, the 2022 Notes would then be considered a current obligation and classified as such.

Prior to April 1, 2020, we may not redeem the 2022 Notes. On or after April 1, 2020, we may redeem for cash all or part of the 2022 Notes if the last reported sale price (as defined in the 2022 Indenture) of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending within five trading days prior to the date on which we provide notice of redemption.

TLA Term Loan principal. See Note 6, 8, Debt, to our condensed consolidated financial statements included herein for further discussion on the TLA Term Loan.
During the three months ended March 31, 2023, net cash used in financing activities was $153.9 million, which primarily consisted of a $296.9 million repayment of TLB Term Loan principal as well as a $5.8 million prepayment penalty, partially offset by the 2022 Notes.net proceeds from the TLA Term Loan of $149.6 million.

Debt
2019 Convertible Senior Notes

2028 Term Loan A Facility
On January 23, 2013,March 31, 2023, we completed a private offering of $120.0 million in aggregate principal of 3.25% convertible senior notes due 2019, or 2019 Notes, and entered into a credit agreement (the “TLA Credit Agreement”) to refinance the indebtedness outstanding under our TLB Credit Agreement (as defined and discussed below). The term loan issued under the TLA Credit Agreement (the “TLA Term Loan”) was issued at a 0.30% discount and provides for a single-advance term loan A facility in the principal amount of $150.0 million, which is secured by substantially all of our and any subsidiary guarantor’s assets and matures on March 31, 2028. We may elect to borrow either (i) alternate base rate borrowings or (ii) term benchmark borrowings or daily simple SOFR (as defined in the TLA Credit Agreement) borrowings. Each term loan borrowing which is an indenture agreement, or 2019 Indenture, with respect to the 2019 Notes. The 2019 Notes accruealternate base rate borrowing bears interest at a rate of 3.25% per annum payable semiannuallyequal to (i) the Alternate Base Rate (as defined in arrearsthe TLA Credit Agreement), plus (ii) a spread based on February 1 and August 1our Senior Secured Net Leverage Ratio ranging from 2.00% to 2.75%. Each term loan borrowing which is a term benchmark borrowing or daily simple SOFR borrowing bears interest at a rate per annum equal to (i) the Adjusted Term SOFR Rate or Adjusted Daily Simple SOFR (as each is defined in the TLA Credit Agreement), plus (ii) a spread based on our Senior Secured Net Leverage Ratio ranging from 3.00% to 3.75%. During the three months ended March 31, 2024, we made a voluntary principal prepayment of $2.8 million. Due to voluntary principal prepayments made, we are not required to make further principal payments for the year ended December 31, 2024, although we retain the option to do so. As of March 31, 2024, borrowings under the TLA Term Loan consisted entirely of term benchmark borrowings at a rate of 8.41%.
The TLA Credit Agreement requires us to, among other things, maintain (i) a Senior Secured Net Leverage Ratio (as defined in the Credit Agreement), determined as of the last day of each year,fiscal quarter, of no greater than 3.00 to 1.00 and mature(ii) a Fixed Charge Coverage Ratio (as defined in the TLA Credit Agreement), determined as of the last day of each fiscal quarter, of no less than 1.50 to 1.00. The TLA Credit Agreement requires us to maintain an unrestricted cash and cash equivalents balance of at least $500.0 million less any prepayments of the 2025 Notes (as defined below) at any time from 91 days prior to the maturity date through the earlier of (i) the latest maturity date of the 2025 Notes and (ii) the date on February 1, 2019.which there is no outstanding principal amount of the 2025 Notes, which we expect to accomplish. The TLA Credit Agreement also contains customary affirmative and negative covenants, financial covenants, representations and warranties, events of default and other provisions. As of September 30, 2017,March 31, 2024, we were in compliance with all financial covenants under the outstanding principal on the 2019 Notes was approximately $0.3 million.

TLA Credit Agreement. See Note 6, 8, Debt, to our condensed consolidated financial statements included herein for further discussiondiscussion.
2025 Convertible Senior Notes
In July 2020, we completed a private placement of $402.5 million in aggregate principal amount of our 0.750% convertible senior notes due 2025, or 2025 Notes, and entered into an indenture with respect to the 20192025 Notes. The 2025 Notes accrue interest at a fixed rate of 0.750% per annum, payable semiannually in arrears on February 1st and August 1st of each year. The 2025 Notes mature on August 1, 2025. At March 31, 2024, the outstanding principal on the 2025 Notes was $402.5 million. See Note 8, Debt, to our condensed consolidated financial statements included herein for further discussion.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 41

Future Capital Requirements
We believe that our existing cash and cash equivalents, short-term investments, long-termavailable-for-sale investments and cash received from product sales will be sufficient to enable us to fund our operating expenses, capital expenditure requirements and payment of the interest and principal on any conversions of our outstanding convertible senior notesTLA Term Loan and to service our indebtedness2025 Notes through at least November 8, 2018.the next 12 months. Our future use of operating cash and capital requirements will depend on many forward-looking factors, including, but not limited to, the following:to:
our ability to successfully continue to expand the commercialization of EXPAREL;
the cost and timing of expandingthe potential milestone payments to former Flexion stockholders, which could be up to an aggregate of $372.3 million if certain regulatory and commercial milestones are met. See Note 9, Financial Instruments, to our manufacturing facilitiescondensed consolidated financial statements included herein for EXPARELmore information;
the impact of global economic conditions—including the impact of inflation—on our product, material and labor costs, supply chain, longer lead-times, an inability to secure a sufficient supply of materials, our operating expenses and our other product candidates, including costs associated with certain technical transfer activities and the construction of manufacturing suites at Patheon’s Swindon, England facility;business strategy;
the timing of and extent to which the holders of our 20222025 Notes elect to convert their notes;2025 Notes, the timing of principal and interest payments on our TLA Term Loan and the timing and impact of increases to the variable interest rate on our TLA Term Loan borrowings in accordance with the terms of the TLA Credit Agreement;
the costs and our ability to successfully continue to expand the commercialization of EXPAREL, ZILRETTA and iovera°;
the cost and timing of potential milestone payments to Skyepharma, which could be up to an aggregateexpanding and maintaining our manufacturing facilities;
the cost and timing of $36.0 million if certain milestones pertaining to net sales of DepoBupivacaine products,additional strategic investments, including EXPAREL, are met;additional investments under existing agreements;
the costs related to legal and regulatory issues;matters;
the costs of performing additional clinical trials for EXPAREL,our products, including the additional pediatric trials required by the FDA and EMA as a condition of approval;the approval of EXPAREL;
the costs for the development and commercialization of other product candidates;
the costs and timing of future payments under our employee benefit plans, including but not limited to our cash long-term incentive plan and non-qualified deferred compensation plan; and
the extent to which we acquire or invest in products, businesses and technologies.
We may require additional debt or equity financing to meet our future operating and capital requirements. We have no committed external sources of funds, and additional equity or debt financing may not be available on acceptable terms, if at all. In particular, capital market disruptions or negative economic conditions may hinder our access to capital.

Off-Balance Sheet Arrangements
We do not have any material off-balance sheet arrangements as of September 30, 2017, except for operating leases, nor do we have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities. None of our operating leases have, or are reasonably likely to have, a current or future material effect on our financial condition or changes in financial condition.
Critical Accounting Policies and Use of Estimates
See Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements included herein for a discussion of recently issued accounting pronouncements and their impact or future potential impact on our financial results, if determinable. For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our consolidated financial statements, refer to our most recent2023 Annual Report. There have been no significant changes to our critical accounting policies nor any recently issued accounting pronouncements that are expected to have a material impact on Form 10-K for the year endedour financial results since December 31, 2016.2023.
Revenue Recognition
Our principal sources of revenue include (i) sales of EXPAREL in the United States, (ii) sales of DepoCyt(e) to our commercial partners within the United States and Europe and sales of our bupivacaine liposome injectable suspension product for use in animal health indications in the United States, (iii) royalties based on sales by commercial partners of DepoCyt(e) and sales of our bupivacaine liposome injectable suspension product for use in animal health indications and (iv) license fees and milestone payments. We recognize revenue when there is persuasive evidence that an arrangement exists, title has passed, collection is reasonably assured and the price is fixed or determinable.
Net Product Sales
We sell EXPAREL through a drop-ship program under which orders are processed through wholesalers based on orders of the product placed by end-users which include hospitals, ambulatory surgery centers and doctors. EXPAREL is delivered directly to the end-user without the wholesaler ever taking physical possession of the product. We record revenue at the time the product is delivered to the end-user. We also recognize revenue from products manufactured and supplied to commercial partners, such as DepoCyt(e), upon shipment. Prior to the shipment of manufactured products, we conduct initial product release and stability testing in accordance with the FDA’s current Good Manufacturing Practices.

Revenues from sales of products are recorded net of returns allowances, prompt payment discounts, wholesaler service fees and volume rebates and chargebacks. The calculation of some of these items requires management to make estimates based on sales data, contracts, inventory data and other related information that may become known in the future. We review the adequacy of our provisions on a quarterly basis.
Returns Allowances
We allow customers to return product that is damaged or received in error. In addition, we allow EXPAREL to be returned beginning six months prior to, and twelve months following, product expiration. We estimate our sales returns reserve based on our historical return rates, which we believe is the best estimate of the anticipated product to be returned. The returns reserve is recorded at the time of sale as a reduction to gross product sales and an increase in accrued expenses.

Our commercial partners can return DepoCyt(e) within contractually specified timeframes if the product does not meet the applicable inspection tests. We estimate our returns reserves based on our experience with historical return rates. Historically, our DepoCyt(e) returns have not been material.
Prompt Payment Discounts
The prompt payment reserve is based upon discounts offered to wholesalers as an incentive to meet certain payment terms. We accrue discounts to wholesalers based on contractual terms of agreements and historical experience. We account for these discounts at the time of sale as a reduction to gross product sales and a reduction to accounts receivable.
Wholesaler Service Fees
Our customers include major and regional wholesalers with whom we have contracted a fee for service based on a percentage of gross product sales. This fee for service is recorded as a reduction to gross product sales and an increase to accrued expenses at the time of sale, and is recorded based on the contracted percentage.
Volume Rebates and Chargebacks
Volume rebates and chargeback reserves are based upon contracted discounts and promotional offers we provide to certain end-users such as members of group purchasing organizations, hospitals and hospital systems. Volume rebates are recorded at the time of sale as a reduction to gross product sales and an increase in accrued expenses. Chargeback reserves are recorded at the time of sale as a reduction to gross product sales and a reduction to accounts receivable.
The following tables provide a summary of activity with respect to our sales related allowances and accruals for the nine months ended September 30, 2017 and 2016 (in thousands):
September 30, 2017 Returns Allowances Prompt Payment Discounts Wholesaler Service Fees Volume
Rebates and
Chargebacks
 Total
Balance at December 31, 2016 $1,346
 $595
 $735
 $1,124
 $3,800
Provision 536
 4,200
 3,182
 3,015
 10,933
Payments/Credits (923) (4,229) (3,314) (3,265) (11,731)
Balance at September 30, 2017 $959
 $566
 $603
 $874
 $3,002
September 30, 2016 Returns Allowances Prompt Payment Discounts Wholesaler Service Fees Volume
Rebates and
Chargebacks
 Total
Balance at December 31, 2015 $1,733
 $625
 $745
 $797
 $3,900
Provision 506
 3,978
 3,016
 1,587
 9,087
Payments/Credits (1,022) (4,073) (3,202) (1,657) (9,954)
Balance at September 30, 2016 $1,217
 $530
 $559
 $727
 $3,033
Total reductions of gross product sales from sales-related allowances and accruals were $10.9 million and $9.1 million, or 5.1% and 4.4% of gross product sales for the nine months ended September 30, 2017 and 2016, respectively. The overall increase in sales-related allowances and accruals as a percentage of gross product sales was directly related to the increase in EXPAREL sales and an increase in volume related rebates and chargebacks.



Contractual Obligations
In April 2014, we and Patheon entered into a Strategic Co-Production Agreement and Technical Transfer and Service Agreement to collaborateThere have been no material changes in the manufacture of EXPAREL. Under the terms of the Technical Transfer and Service Agreement, Patheon has agreed to undertake certain technical transfer activities and construction services needed to prepare its Swindon, England facility for the manufacture of EXPAREL in two dedicated manufacturing suites. Upon an early termination of this agreement (other than termination by us in the event that Patheon does not meet the construction and manufacturing milestones or for a breach by Patheon), we will pay for the make good costs occasioned by the removal of our manufacturing equipment and for Patheon’s termination costs.
In January 2017, we announced the initiation of a Co-Promotion Agreement with DePuy Synthes to market and promote the use of EXPAREL for orthopedic procedures in the United States. Under the five-year arrangement, DePuy Synthes will be the exclusive third-party distributor to promote and sell EXPAREL for operating room use for orthopedic and spine surgeries (including knee, hip, shoulder, sports and trauma surgeries) in the United States. DePuy Synthes is entitled to a tiered commission ranging from low single-digits to double-digits on sales of EXPAREL, subject to conditions, limitations and adjustments. The initial term of the agreement ends on December 31, 2021, with the option to extend the agreement an additional 12 month increments upon mutual agreement of the parties, subject to certain conditions. We and DePuy Synthes have mutual termination rights under the agreement, subject to certain terms, conditions and advance notice requirements; provided that we or DePuy Synthes generally may not terminate the agreement, without cause, within three years of the effective date of the agreement. We also have additional unilateral termination rights under certain circumstances.
Potential future milestone payments to Skyepharma could be up to an aggregate of $36.0 million if certain milestones pertaining to net sales of DepoBupivacaine products collected, including EXPAREL, are met, including $32.0 million when annual net sales collected reach $500.0 million (measured on a rolling quarterly basis) and $4.0 million upon the first commercial sale in a major E.U. country. This contingency is described further in Note 5, Goodwill,contractual obligations relating to our condensed consolidated financial statements included herein.indebtedness, lease obligations and purchase obligations from those reported in our 2023 Annual Report. For more information on our contractual obligations and commercial commitments, see Part II, Item 7 in our 2023 Annual Report.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 42
In October 2017, we made an initial cash investment

Table of $15 million in TELA Bio, a privately-held surgical reconstruction company that markets its proprietary OviTexTM portfolio of products for ventral hernia repair and abdominal wall reconstruction. We may be required to invest up to an additional $10 million in TELA Bio under certain performance scenarios or upon our own election.Contents

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary objective of our cash cash equivalentequivalents and investment activities is to preserve principal while at the same time maximizing the income that we receive from our investments without significantly increasing risk. We invest in corporate bonds, commercial paper, and asset-backed securities and U.S. Treasury and other government agency notes for purposes other than trading which are reported at fair value. These securities are subject to interest rate risk and credit risk. This means that a change in prevailing interest rates may cause the principal amountfair value of the investment to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the interest rate later rises, we expect that the fair value of our investment will decline. A hypothetical 100 basis point increase in interest rates would have reduced the fair value of our available-for-sale securities at September 30, 2017March 31, 2024 by approximately $1.9$0.6 million.

In January 2013, we issued $120.0 million in aggregate principal amount of 3.25% convertible senior notes, which mature in February 2019. Holders may convert their 2019 Notes prior to maturity under certain circumstances. Upon conversion, holders will receive cash up to the principal amount of the 2019 Notes and, with respect to any excess conversion value, cash, shares of our common stock or a combination of cash and shares, at our option. The fair value of the 2019our 2025 Notes is impacted by both the fair value of our common stock and interest rate fluctuations. As of September 30, 2017,March 31, 2024, the estimated fair value of the 20192025 Notes was $1,505$953 per $1,000 principal amount. See Note 6, 8, Debt, to our condensed consolidated financial statements included herein for further discussion of the 2019 Notes.our 2025 Notes, which bear interest at a fixed rate. At September 30, 2017, approximately $0.3March 31, 2024, all $402.5 million of principal remains outstanding on the 2019 Notes.2025 Notes and $8.6 million of principal remained outstanding on the Flexion 2024 Notes, which was subsequently repaid at maturity on May 1, 2024.

In March 2017, we issued $345.0 millionThe TLA Term Loan provides for a single-advance term loan in aggregate principal amount of 2.375% convertible senior notes, which mature in April 2022. Holders may convert their 2022 Notes prior to maturity under certain circumstances. Upon conversion, holders will receive the principal amount of $150.0 million and is scheduled to mature on March 31, 2028. Each term loan borrowing that is a term benchmark borrowing or daily simple SOFR borrowing bears interest at a rate per annum equal to (i) the 2022 Notes and any excess conversion valueAdjusted Term SOFR Rate or Adjusted Daily Simple SOFR (as each is defined in cash, shares ofthe TLA Credit Agreement), plus (ii) a spread based on our common stock or a combination of cash and shares, at our option. The fair value ofSenior Secured Net Leverage Ratio ranging from 3.00% to 3.75%. At March 31, 2024, the 2022 Notes is impacted by bothoutstanding principal on the fair value of our common stock and interest rate fluctuations.TLA Term Loan was $113.8 million. As of September 30, 2017,March 31, 2024, borrowings under the estimated fair valueTLA Term Loan consisted entirely of term benchmark borrowings at a rate of 8.41%. A hypothetical 100 basis point increase in interest rates would increase interest expense over the 2022 Notes was $973 per $1,000 principal amount. See Note 6, Debt, to our condensed consolidated financial statements included herein for further discussion of the 2022 Notes. At September 30, 2017, $345.0next 12 months by approximately $1.1 million, of principal remains outstandingbased on the 2022 Notes.balance outstanding for these borrowings as of March 31, 2024.

Most of ourWe have agreements with certain vendors and partners that operate in foreign jurisdictions. The more significant transactions are conducted in United States dollars. We do have certain agreements with commercial partners located outside the United States which have transactions conducted in Euros. As of September 30, 2017, we did not have any receivables from customersprimarily denominated in Euros. A hypothetical 10% decreasethe U.S. Dollar, subject to an annual adjustment based on changes in the value of the Euro relative to the United States dollar would have decreased our revenue by approximately $10 thousand for the quarter ended September 30, 2017.

currency exchange rates.
Additionally, our accounts receivable are primarily concentrated with threefour large regional wholesalers of pharmaceutical products. In the event of non-performance or non-payment, there may be a material adverse impact on our financial condition, results of operations or net cash flows.flow.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, our management, including our Chief Executive Officer and Chairman and our Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. As defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, disclosure controls and procedures are controls and other procedures which are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chairman and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on that evaluation, our Chief Executive Officer and Chairman and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2017.March 31, 2024.
Changes in Internal Control Overover Financial Reporting
There hashave been no changechanges in our internal control over financial reporting that occurred during the quarter ended September 30, 2017March 31, 2024 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls

Our management, including the Chief Executive Officer and Chairman and our Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control
Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 43

system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errorerrors or mistake.mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.



PART II — OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS


From time to time, we have been and may again become involved in legal proceedings arising in the ordinary course of our business. Except as described below, we are not presently a party to any litigation or legal proceedings that we believe to be material and we are not aware of any pending or threatened litigation against us that we believe could have a material adverse effect on our business, operating results, financial condition or cash flows.
In April 2015, we received a subpoena from the U.S. Department of Justice, U.S. Attorney’s Office for the District of New Jersey, requiring the production of a broad range of documents pertaining to marketing and promotional practicesFor information related to EXPAREL. We are cooperating with the government’s inquiry. We can make no assurances asItem 1. Legal Proceedings, refer to the time or resources that will needNote 15, Commitments and Contingencies, to be devoted to this inquiry or its final outcome, or the impact, if any, of this inquiry or any proceedings on our business,
condensed consolidated financial condition, results of operations and cash flows.statements included herein.


Item 1A. RISK FACTORS


You should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our 2023 Annual Report on Form 10-K for the year ended December 31, 2016,, which could materially affect our business, financial condition, cash flows or future results. There have been no material changes in our risk factors included in our 2023 Annual Report on Form 10-K for the year ended December 31, 2016.Report. The risks described in our 2023 Annual Report on Form 10-K for the year ended December 31, 2016 are not the only risks facing our company.Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.


Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


None.


Item 3. DEFAULTS UPON SENIOR SECURITIES


None.


Item 4. MINE SAFETY DISCLOSURES


Not applicable.


Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 44

Item 5. OTHER INFORMATION


Rule 10b5-1 Trading Plans

The following table shows the “Rule 10b5-1 trading arrangements” and “non-Rule 10b5-1 trading arrangements” (as each term is defined in Item 408(a) of Regulation S-K) adopted by our directors and executive officers during the quarter ended March 31, 2024. No trading arrangements were terminated by our directors and executive officers during the quarter ended March 31, 2024.
Trading Arrangement
Name and PositionActionDateRule 10b5-1*Non-Rule
10b5-1**
Total Number of
Shares to be Sold
Expiration
Date
Lauren Riker
Principal Accounting Officer
Adopt3/5/2024x
To Be Determined (1)
12/31/2024
Kristen Williams
Chief Administrative Officer and Secretary
Adopt3/8/2024x
To Be Determined (1)
6/28/2024
Jonathan Slonin
Chief Medical Officer
Adopt3/8/2024x
To Be Determined (1)
1/31/2025
Paul Hastings
Director
Adopt3/12/2024x1,77512/31/2024
Daryl Gaugler
Chief Operating Officer
Adopt3/12/2024x2,5003/7/2025
* Intended to satisfy the affirmative defense of Rule 10b5-1(c).
** Not applicable.intended to satisfy the affirmative defense of Rule 10b5-1(c).


(1) The aggregate number of shares to be sold pursuant to each trading arrangement listed above is dependent on the amount of tax withholding required upon the vesting of restricted stock units, and, therefore, is indeterminable at this time.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 45

Item 6. EXHIBITS

The exhibits listed below are filed or furnished as part of this report.

Exhibit NumberDescription
Executive Employment Agreement, dated May 4, 2020, between the Registrant and Jonathan Slonin.(1) ***
Exhibit No.Description
31.1
32.2
101The following materials from the Quarterly Report on Form 10-Q of Pacira Pharmaceuticals,BioSciences, Inc. for the quarter ended September 30, 2017,March 31, 2024, formatted in XBRL (eXtensibleiXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Loss;Income (Loss); (iv) the Condensed Consolidated StatementStatements of Stockholders’ Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) the Condensed Notes to Consolidated Financial Statements.*
104Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101).


*Filed herewith.
*Filed herewith.
**Furnished herewith.
***Denotes management contract or compensatory plan or arrangement.
(1)Incorporated by reference to the Company’s Quarterly Report on Form 10-Q, filed on May 4, 2022.

Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 46
**Furnished herewith.


SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PACIRA BIOSCIENCES, INC.
(REGISTRANT)
Date:May 7, 2024By:/s/ FRANK D. LEE
PACIRA PHARMACEUTICALS, INC.
(REGISTRANT)
Frank D. Lee
Dated:November 8, 2017/s/ DAVID STACK
David Stack
Chief Executive Officer and ChairmanDirector
(Principal Executive Officer)
Dated:Date:November 8, 2017May 7, 2024By:/s/ CHARLES A. REINHART, III
Charles A. Reinhart, III
Chief Financial Officer
(Principal Financial Officer)



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Pacira BioSciences, Inc. | Q1 2024 Form 10-Q | Page 47