Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the Q1 2023 Pacira BioSciences Inc Earnings Conference Call. All participants are in a listen-only mode. After the speakers presentation there will be question and answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Mesco, conference Head like speaker to now Susan today, of would hand over the your I Investor Relations. ahead. go please Susan,

Susan Mesco

Thank first morning, call good you, to Grace, conference today's everyone. to XXXX quarter Welcome our financial results. discuss and

session. Dave Winston, call Officer; Chief is will here Chief . and Medical on Officer; and Chief Reinhart, be Ellis, Chairman for and are Officer, me Chief Stack, joining today's Joining Financial Strategy Charlie today's Executive Ron Officer. question-and-answer us Roy also

let statements begin, that today call judgment we and you Before me on this risks of will remind based uncertainties. statements current as and involve include represent forward-looking may expectations. Such our

which website. affect For company, filings to please are information the refer SEC, company's available or SEC risk concerning from that our could the the the factors with

that, now will to the over call I With Dave Stack. turn

David Stack

and market morning, start a for Susan. markets surgery elective continues everyone, us. you, of EXPAREL utilization expand and to as thank Thank off sites year positive key care. across The recovery we you target as the is outpace Good joining to

three improving objectives portfolio a We to on and Act advancing specific mid-to on margins in range procedure market, major recovering our focusing for further gross revenues XXXX, the XX% the NOPAIN high a reimbursement are across slowly and growing surgical focus with TRICARE. .

than was historical businesses. I'd $XX first with that volumes XXXB exceeding trends. continues $XXX expand also was growth ZILRETTA sales naive both million, rollout a QX solid quarter unseasonably within EXPAREL These revenues quarter of existing the the highlighted our for include $XXX of the and note volumes stronger contributor sales program First in results by of quarter EXPAREL of million key are XXXX as also million. to

flows us $XX Loan leverage our flexible that retiring highly Our line self-fund cash This expense interest by opportunities million XXXX. and significantly term and improve ratio debt a reduce Term in lower loan B and least new hand is driving to A using debt rate significantly growth allow new on projected at carries cash significant recently durable interest top facility. strong our to a by

are XXth of consecutive positive our million. EBITDA significantly adjusted $XX We to pleased quarter also report of

improving As organizational gross top priority. said, is have margins a we

different We issues the last margins addressed supply chain have negatively impacted manufacturing quarters. that and four for

excellence As a commitment as Chris testament Young to Officer. we -- new Manufacturing to excited Chief our we manufacturing, to are recently in our welcome

Pacira, overseeing Chris brings and more locations to than manufacturing for all years XX and responsible across activities experience of portfolio. product is our

assay our front support and EXPAREL. property new manufacturing The progress for to benefit reviewing application protection. FDA intellectual additional our release we product the Additional test, on margins is enhanced gross this includes which expect for

to a This later San parallel, towards be critical supplemental year. submit remain milestone facility In another we this on application XXX-liter Diego margins. new in EXPAREL our improving gross for track drug will

site this, Turning by now points surgery performance with further our IQVIA from October care some To relative data our of We're illustrate to year-over-year. increasing to volumes X% recent highlight elective and more specifics on from broader of with pleased EXPAREL our market let data EXPAREL most key the me XXXX. franchise. procedural

EXPAREL breast up growth health procedure general These market decreased sorry, and surgery In X%. show procedures causing -- XX% EXPAREL with tissue with inflationary showed and growth XX%, and orthopedic I'm costs. hip procedures to soft patients procedures settings, the data procedures, outpatient while up for other year-over-year procedures X.X% year-over-year delay up pressures while due while knee up shoulder and was care XX%, gynecologic procedures XX% joint XX% up EXPAREL showed to

and year-over-year growth markets with with increase, up XX% C-section with X% a continued EXPAREL, versus XX% such as increase. was X%, increase a XX% down The hospital inpatient market key shoulder with spine in a was which

are points investor available data deck, these our which summarized reference, on your is in website. our For

to Turning market access.

continue quarter. accounts first during to added the and first-time base purchasing EXPAREL our user XXX expand We

rollout believe volume and this with program in procedures. representing will EXPAREL procedures pricing volumes of naive program drive In and We addition, existing our expansion for relevant the XXXB XXXB an XX market outpatient increased significant accounts. XXXB accounts nearly these million both non-XXXB

resulting at XX%. existing we a gross take expected, slightly new seeing remains XXXB at net, our business. As are place a This lower highly than level growth XXXB for greater to more in at accounts than which pace industry a is favorable in

beginning pain will settings NOPAIN This XXXB us for mandates way for XXXX. in the legislation pave Act. treatments postsurgical to the Importantly, leverage reimbursement non-opioid in outpatient currently CMS

efforts this about summer. and We to to monitoring are implementation XXXX when CMS the rules preliminary more accelerate actively this should know issue

urgency improving We EXPAREL. XX% self-funded a for EXPAREL-relevant for will Reimbursement of the to in addressable provide expected outpatient total believe cover procedures million Washington the NOPAIN the options. with current nearly non-opioid reimbursement surgery CMS. XX as and access payers to pathway follow appreciate market ambulatory in market for commercial hospital of the will centers lead as the than more well policymakers

and There enrolled the NOPAIN. In also the million government We are in this their to October non-opioids in our In to implementation parallel, Act. employees this EXPAREL seeing XX expect of access families of coverage. and reimbursement providing begin separate year, will setting. or in ambulatory TRICARE secondary through the and methodology mirror we NOPAIN outpatient CMS expanding efforts for would military reimbursement surgery for adopt hospital are members for similar roughly with to CMS for TRICARE setting TRICARE primary

in pain control programs a non-opioid outpatient and opportunity meaningful especially will settings. NOPAIN, advance mission our soft to to provide for solution to these patients as management as offer assist Importantly, XXXB TRICARE affording the to migration lower-margin care to non-opioid the of and are procedures systems possible. pain tissue many eligible health These procedures hospital

in we educational second capacity year, doubles programming. more our host which Earlier to and innovation previous center opened than our this training Houston, meaningful

to who Our and stay training at nerve block clinicians, the both centers field are management, procedures. physician blocks pain want opioid-sparing community-based core forefront champions to of especially for developing and

first We need immense training In well programs growth with safe educational provided for at opioid-sparing portfolio our our and X,XXX become training than more our of their around health this bodes quarter providers incorporate practice. the care to familiar and practice believe best for to more pain in-field as on unique products future management XX on-site how alone, physicians events. commercial into

the to Outside make continue we progress. States, United steady

EXPAREL the Union Our team access key for European United approval has secured across centers the and in Kingdom.

for form for who EXPAREL are EXPAREL on our regional focusing now iovera°. leaders with analgesia advocating we are partnerships We thought and attention and

partner, months. process Brazil, for several the advancing submissions in Latin other in are and is on approval EXPAREL In will have and track scientific South at meetings. and regulatory we society key in the meetings We a also America, presence countries our coming South for American EuroPharma,

front, the our more procedures. XX, you, date to label making PDUFA into EXPAREL annual media that is our nerve expansion XXXX. the review On reach surgeries include than indications application expect remind of we're two of and the seeking knee, now new significantly important extremity lower extend block X FDA lower of To we drug will action representing ankle, supplemental for November EXPAREL million progress. foot this key leg, regulatory with a underway of is application

birth the grow forward patients and on to later to as to label to In year from regulatory X study this our pediatrics, expansion EXPAREL initiating continues building new to support this are We include interest years. of generated. data look the

of continues intrathecal completion EXPAREL is this I Phase for our Finally, administration on study and year. later for track

osteoarthritis ZILRETTA and Switching our non-opioid managing iovera°, awareness customers XXX-person solutions gears and team first where customers. the and monitoring stand-alone field-based purchasing and broadening and first-time to for around new the XX team quarter, ZILRETTA pain. iovera° XXX complementary full new education is added these In

Several are both current and next on new value-creating track indications year milestones for the for products. and

expansion This safety initiate study shoulder includes a expect new knee two study. we ZILRETTA, in and diabetes Phase a studies. osteoarthritis Phase label For to osteoarthritis III IV

become successful, the claim shoulder our specifically the versus if approved will and superiority triamcinolone label. goal Both first a the corticosteroid shoulder osteoarthritis. of ZILRETTA study for adding Importantly, ZILRETTA to only is evaluate could studies with ZILRETTA

in cash For seeing and recently a utilization iovera°, program we expanded applications. launched knee pay are

to for offering management. iovera° an using pain are patients Clinicians as additional

to we success historically regenerative In of specialists, new are technology. in the orthopedic early adopters addition practices, seeing medicine

iovera° spasticity treatment for this of option is clinical KOLs education on the population. Our for team in patient working provide new pain a treatment control pain to with closely

recently with announced Tour the Tour celebrity tournaments. Champions, option multiple of with taking partnership a with iovera° iovera° that management tournaments, champion appearance presence recently pain the several non-opioid invited partnership PGA at PGA raise year-long at XXXX official We awareness as product the naming will will pain as a This Classic. place control the have first the drug-free around

tour's the also Championship, recently LPGA and of which the season. hosted trailer initiatives awareness various fitness Chevron the during the in We major first is educational

has In approximately million game launch a to later the we be the potential the clinical United spasticity. of in patients a currently receiving to year. XX.X study front, preparing the currently received iovera° X.X treatment spasticity are States diagnosed have spasticity There this treatment are one On registration for spasticity, patients have them XX% and XXX,XXX treatment million are toxin. least of but moderate-to-severe of a at with only modality, changer. with those

phenol. market This toxins like underscores inadequate dissatisfied treatment highly a and options with

branch have a market to expect in for tip also back for on an medial which smart have block we iovera° XXXX. low the We pain,

candidate a portfolio, earlier-stage that new include therapy IL-XRa product gene development our osteoarthritis. portfolio novel opportunities exciting of we PCRX-XXX, Beyond have an proud that for produces commercial intra-articular

safety I Research findings knee efficacy Denver. groups. presented with and well Osteoarthritis in across all Society improvements were Phase recently dose tolerated PCRX-XXX the World Our International observed was preliminary in Congress at pain

development the Importantly, the observed second we the of share planning Ron to of encouraging in more greatest was at Phase PCRX-XXX efficacy around data, dose. on level details shortly. PCRX-XXX of Ellis will the some Based study I lowest osteoarthritis launch are knee. these program a

advance to becoming or pain pain readiness and include activities pain around multivesicular multivesicular at back liposome to for chronic nerve which a liposome dexamethasome their also risk formulation our as a for a where internal of block We multivesicular patients field pipeline medications. bupivacaine Phase most a formulation longer-lasting addictive block low a are liposome X

the over our investments provide PCRX-XXX. in details With and Ron? to GQ like I'd turn more that, Ron to call to on Bio some

Ron Ellis

good to potential And the PCRX-XXX, on held efficient believe to headquartered Bio's joining GQ to biopharmaceutical Dave. we to us share has Thanks, a cells be by The clinical excited in we discovered highlights important candidates some all I'm vehicles. transfer gene morning company Bio, which benefit. vectors product disease-modifying privately are in entering was progress gene osteoarthritis. gene an product therapy made Germany. Hamburg, for are have confer today. therapy for These multiyear candidate next-generation joint GQ the highly

to in presence osteoarthritis. IL-X role central a progression cycle remaining manage essential which mitigate is many in is In gene inflammation express turns the adenoviral of OA-related PCRX-XXX, catabolic injection, likely these progression. IL-XRa and IL-XRa damage that joint of enters Interrupting a therapy vectors to while into the plays slowing sustained associated when in localized inhibitor join therapeutic cells capacities and levels produce processes, Vector them intra-articular to high After inflammation. this with disease in are space. joint factories cytokine the disease to of pain

ascending single cohort co-administered I in Phase a two not a did a that receive cohorts, enrolled Our and XX dose steroid. steroid cohort trial patients

unexpected all of As at But will level The efficacy observed decline steroid exceeded Dave duration group, by the XXX alone. with mentioned, was of an the compelling percentage was a of response of the was level showed efficacy steroids of pain achieved that well which be from and significantly what particularly XX%. greater scores with co-administered efficacy finding tolerated WOMAC patients doses.

find it regimen a initiating will outcomes I development. on currently patent study administration filed these that We next help pending. best data, The so stage around second to patent and the for are Based protection a take the to into Phase were we us unique. have of

study to process year. Phase we expect our will study, launch We parallel activity. this begin later the to I advancing In this development

our expanding Exothera, in development, viral process GMP services and Bio relationship a and technology. manufacturing proven include record process for new to we're GQ customized Belgium-based forming end, a with organization, collaboration with that a vector manufacturing development clinical track To optimization with

a with competitive commercially goods. activities ensure process cost with we a that amenable These forward will move of

additional million Lastly, Bio X.X investment a EUR April, form the an GQ convertible of note. in made of we in in

the upon milestones. We an additional prespecified on you PCRX-XXX million of and future look development will scale-based up updates additional to X.X certain calls. with providing on make investment of EUR to We forward achievement

to Charlie turn financial Charlie? call With that, review. the for I'll his

Charles Reinhart

on discussing sales I'll these we Thank everyone. non-GAAP morning. you, found can update news with an of good will measures metrics, morning. A you, release Ron, this be and reconciliation this with start remind along our morning, to To and I GAAP, margin in issued description financial the be trends.

quarter coming Starting for We first at had the net million sales $XXX.X EXPAREL. with a quarter. with solid EXPAREL in

X%, average revenue daily average contracting growth of primarily quarter volume First X% of due daily activities. growth yielded

believe With to growth health ongoing a with volume growth the given representing ongoing that first to XX% XXXB we're in year European XXXX, in to off care to new XX% full customers, year in several especially our progresses. include we rehabilitation we the quarter kick sales, from historically initiatives existing These expect start and expansion positive both markets. outpatient, sports OMFS, new and and plastics, management and pain management providers as initiatives

and For ZILRETTA, year force $XX.X now growth and million. we education first progresses, will were field team as the awareness, ZILRETTA quarter With XXX-person sales promoting accelerate traction. expect our gains the

already are seeing encouraging mentioned, first-time uptick an Dave customers. As in new ZILRETTA we

$X at For iovera°, million. came first in quarter sales

with and expect and full team advantages field-based of sales momentum block are generating base awareness with we gain growth a nerve demand Here, strong iovera°. too, will around in drug-free the our a customer seeing

to We initiatives. from benefit also expect commercial new

Alumni, Our off strong and LPGA with with to health orthopedic pay market real start cash initiatives traction sports a NFL the PGA the is gaining providers. care and were

consolidated first non-GAAP for of total XX%. for iovera°. for our margin gross margins quarter of is basis, non-GAAP Turning percentage XX% margins. On comprised gross XX% XX% was to gross EXPAREL, and ZILRETTA This a

fourth As our late the call first tail end February, manufacturing seen our XXXX challenges operations. of in quarter experienced on XXXX quarter discussed the were in in

and sustaining over quarterly that sequential upon for on range of taking, the and the our achieving remainder are of year reaching that in goal the mid-XX% improvements Chris are team the margins Based in to expect we we to the action path report margins time.

Turning of studies expenses. as we clinical million, new more expense clinical R&D reflecting underway. in year expect expenditures programs. to half Non-GAAP the weighted second to $XX.X was ongoing be investments to R&D heavily our get several the

at came expense million. SG&A in $XX.X Non-GAAP

half more weighted the initiatives. be We new to expect will that the of SG&A commercial heavily with launch expenses year first of the

was $X.X First quarter expense interest million.

Term Importantly, benefit the of will the and A million our savings $XX expense B on March year on using Loan new or loan with more remainder from of the cash XXXX a of interest XX, term hand. retirement

loan term lower needs. an of is has delivered we B several rate positive XXX and another than that points loan basis the of challenges, $XX.X that carries our new And operational debt A quarter adjusted enhanced significantly interest The despite meets term flexibility previous lastly, EBITDA million.

million; EXPAREL we are full of million sales As to year net margins guidance to and million million sales $XXX to to SG&A stock-based $XX non-GAAP for our $XX sales net to million, XX% to XX%, ZILRETTA million. of million guidance, follows: of $XXX $XXX of $XXX $XX today, $XX gross million; $XX million, to of $XXX XXXX million as net reiterating million. expenses iovera° non-GAAP of non-GAAP million expense $XX R&D of $XXX compensation

improving, returning surgery Gross to year-over-year margins modest on bullish the XX%. remain and normalizes. line we once and in growth operating that exceed eases expenses inflation adjusted top elective margins summary, plan In the EBITDA our market X-year year-over-year teens increases

prepared now turn like over Q&A to to That call -- I'll I'd concludes session. our remarks. Operator? begin to operator the the our

Operator

David comes live. [Operator line the Instructions] Our Sandler. question David, Amsellem of you’re first from Piper of

David Amsellem

just Just spend. manufacturing the EXPAREL to in questions I margin on I pricing, know Can more provide on problematic had had to some issues terms extent has and wanted last on you just which periodically the down year. of margins the talked drill up? but you think gross you getting some been about color margins headwinds,

gross year can about talk that. to progresses? margins cadence about think the how as So of you And

over And You lastly, timing then you your there time, you'll how generally? know secondly, over getting the the spend, on then think number thinking what's that should we mean but growing term? model. a that And think you I the about of we as about think Should there's I when longer things listed time, of leverage in in some to R&D said on get AVs? slides. flat, kind do

Just help that. us understand

David Stack

that, gross hands with APIs, over I but we've behind margin we our now us. four this, had that's had around that is filters for think mean, some got issues about we've we us. we've totally the last quarters, some believe with And On and some of not sterile behind issues our and talked margins, quality we've manufacturing

gross we've we've we we've folks a can of been and had before. very a working the we're sure that in manner that And margin everybody make place handle so problems. our think with that things, solve that XX% remind got in can we these aggressive suppliers I -- those to

be trying to one another can we're kinds So so to these in back numbers. appear to we territory way related those of not of issues fix get break some here. trying that mostly COVID just new We're into that or to

And you this for XX% just heard Charlie reaffirm year. XX% to

we're of in I on well way us So front are think a mean couple get I there inflection there. points of our right to here.

for third as Diego We into San will submit sNDA the in quarter. the XXX-liter we facility get the

We facility of the expect material making beginning XXXX. commercial will that, that be in

another we're And So out Flexion the of improved ZILRETTA yield fill year. be yield that on to manufacturer. important and product for needs line bought we term, our last the relative the a the contract short fill from the building at from because line that's

of the forward. better So with to as -- margin a we a profile and for moved much contract smart the iovera° manufacturer tips we've production go

that with the So XX, really, do XX XXX-liter we need we'll get to We plus facility. think to back percent. that

X the for or smaller America. one is other Latin into XX-liter get David, XXs the should allow least for of That's the next back Just South over and in to as skids, us X that important, and plan. save opportunity the we the some Europe countries the here And the will that, decommission years. at of

there uses got for to in got XX, done to X in adults. R&D now with isn't really We've again. do. we're all EXPAREL. infiltration much nearly the infiltration all more indications I mean for spend, On peds, We've

go what We FDA Xs. clinical with the from the neonates have trial like to to agreement on looks

approval extremity indication yet. the to study nerve for that comes lower EXPAREL there's unless really there's we to light the with of anticipated block, that specific So some nothing else really haven't

move the see pipeline go over You'll to the products.

to as highlighted which and this use relates trial year. and in a start There's will population, a of couple it the to we've ZILRETTA that lot be times done with diabetic safety

real think our doctor which the have is for study. And should we ZILRETTA more can versus develop we of hips, have triamcinolone a but We in be that group. discussion, will protocol we that a a actually our a this some and for a I superiority advantage. on world procedure for especially proof claim have ZILRETTA And shoulder eye acetonide, there PM impact on for not and much revenue principle showing long-term marketing

things lot working we're have the go for on that do iovera°, here. ZILRETTA now us from And of label use local So the clinics of a is they then in question, David, pain. would say, can iovera° them we the direct can to I sports. with pay there's if a pain as for R&D name in of the peripheral forward we folks answer your well currently markets, marketplace spasticity as this around as that broad cash several for country, not but asking trade have especially we we the

as met on sight results have we the clinical are We've to an iovera° lot we'll year. as the opportunity for do think with there start a a from from of that had see of revenue a I've you We this in a trial as perspective, so and later my And -- as care line FDA. career. well And perspective big is expect later a patient dramatic. spasticity traction probably we

the of changer Pacira. spasticity up be in And the as game pain has populations. are population the as the really many those to a And KOLs apparent spasticity using spasticity, training then certain spasticity where potential for patient so in we're of well both by for

heard Ron just about You XXX. talk

had the discussions going think These but past, need pretty protocols from with Phase expensive. I to FDA trials at only look a what forward. get study, our the be we another not in look propensity the like have, the to I

partner. ourselves the whether portfolio we of to will want to a will longer And do whether a or So got product but by bupivacaine we higher that have want and then take last we've of time. for decide this on to mimic period potency a we EXPAREL dexamethasone

EXPAREL those is So look being bupivacaine. all time the Phase mean, for moderating other together, I of studies should plan and with and that next commercial things work backwards the dexamethasone relatively intrathecal we when with you XXX R&D with and be the years two at front consistent the our of expense while EXPAREL over center products I with through couple

there's don't a done you're spikes. I be think here, going to see to any lot So David.

think patient other in forward with the take I things a a move them care we're things some got from then in liposome we of position and QS the and revenue we've important where can multivesicular pipeline. perspective the that most and that

So that's plan. the

Operator

[Operator from of next Santangelo question Instructions] comes Glen, you’re Jefferies. Our Glen live.

Glen Santangelo

did expected on But at you're seems almost look new that up, sort ZILRETTA, a talk Dave, revenues the the EXPAREL expected be to you sales basis. I better you a declined to conversely, happy full think of clearly in last accounts there. about and the XX% year, it signed sequential wanted little revenue like you said I in mid-teens you roughly you you but quarter quarter, because XQ with bit if to than

and at So the yet And ZILRETTA, maintained what's intuitively, what them. relative we lower better would you raised were one have other. both but of little you for a maybe thinking might EXPAREL, to you interesting guidance did is the bit you in worse think

wondering expectations. relative I'm what sort you XQ happened of so And your just could in if reconcile to

David Stack

couple than would with did of historical the slightly start I'll EXPAREL. mean suggest. things. I trends better A we

We also have XXXX quarters. the when quarter first one the was of outlier strongest the of

smallest entirely the us been have in prudent what we the of of number of progression off it's data another increasing quarterly to before think couple wait quarters start for for the And of year. so I would

bit So of happy little there. a to have we're cushion

but back couple to from the we think see until of And I we to don't of quarters going that, years, over the to in come that's happen raise to we think procedures and next it's where that time start couple before start fold. revenue we let's guidance happen raise the let the yet are.

front, ZILRETTA of there's a the On things. couple

only force the January. the started field and strategy frequency half wider on promoting the back ZILRETTA base the First, reach to in of

talking sampling here of very mature. about you're terms a small So that letting in opportunity

a were straighten come that of There's that purchasers with until of users were that inappropriately came high And were it and ZILRETTA significant while discounts. they had that also the what -- February, over all issue, middle thought Flexion. couple Glen, agreement that we was that The from of were issue a the facing are they giving we out in took buying large to to ZILRETTA. we were to now able those we

marketplace, add in the So got story patients you and these that the of January spikes. back again, to we've range didn't to the keeping safety that half when eliminating in relative until start glycemic the

that is a Charlie but reiterated. ZILRETTA the of get annual just number back light us that to we levers on think little will think I basis, an with number that a

we're don't either uncomfortable one. So think I with

lower it think a to of or them. either raise one little I would early be

Glen Santangelo

Maybe quick I years. like it like kind it follow-up But comments three seems XQ result to couple low your you get the to and the if XXs for the need of want of XX% margin I side. wanted if one could you With to to the on next the that look needs to XX.X% seems -- over watermark you gross quarters, to heard the a margin, your at the get hope I next just pretty of to with respect in And midpoint year. match gross the guidance it last almost sizable ramp. I XX% almost margin, ask

SG&A, to your you're seem respect And relative more clear suggest could with I'll half. if And the year lastly, in full in so first that. on And there. you just heavily wondering I weighted And hot XQ. like it why. certainly comment it stop I wasn't you seems then to running was guidance was to

David Stack

Sure.

to the relates So into on as margin, was QX depress QX call the was from that to QX we QX some margins. it going that there overlap noted the gross

was running Some we've of related and I'll again, We first both in we and XX% some remind of of that the of that related were EXPAREL to to quarter that was that you, believe ZILRETTA. cured Glen, those, last year. at

some changes a we've personnel So made . perspective. structural from

planned. now, Center is as And right Science running

guidance $XXX So reassuring of to we're is $XXX got million not with what the guide. the we've to noting uncomfortable $XXX million XX% XX%, that of million

of business us for front majority the the is year the in of at margin. higher So the

the it's exactly a quarter that year gone. work So the math of that's doesn't

As work a all. matter it of fact, doesn't at

now we're uncomfortable with with the ways have we both manufacturing made where personnel that of with some been the of and with XXX-liter the So especially some not that changes are goal, working the we're in places.

the of not to used from QX somebody as utilization. -- direct users. grow for that that, SG&A, expand get put the product it's has have out a getting ZILRETTA. the started idea were this using they with national way the both is that's when we And We their there the their product at we compounds reconfigured think the terms meeting and sales the going we reach new the force they On iovera° will year. in and And folks to X using working times comparison these to frequency and

plan, previous according years guys added on to force an expense. out small just in focused PM&R folks little the call SG&A a for but marketplace added So because there peds. is now we've pattern, in We've with. and And and still separate to a higher that It's the portfolio OMFS a than also sales but we've are got X-product same it's got the that is folks. added working quarter these some we've

determine of got think we've the is that carefully, comment and right the right We in all of So look at course. SG&A. made those that there's growth watch is structural quarter, where some we the the But in. And growth I right the we folks same now, that where support place. changes year, territories every for to the

Operator

Instructions] next RBC from question live. comes Our of [Operator you’re Gregory Gregory, Renza Capital Markets.

Gregory Renza

to us maybe maybe a I you wanted just bit XXXB you pricing on commentary. naive to that of are little businesses thus you've where to perhaps respect a just of where Dave, that that ask you mix now, the with on with your or going? has and give certainly, represented really And just and you've far see expand existing discussed that and your expectations how the program. the Maybe state fared

David Stack

what Greg. thanks, was supposed it doing No, do. to Yes. It's

we up was modify being reiterate, used, be users those that additional the there benefit to from of going to wasn't to wanted that. procedures open current was that where purchases understanding to going some Just EXPAREL

going QX increase a are understand exactly flat but yet we're XXXX, this week-to-week, year's where price the we will Greg, than take little generally, of think the when were customers, for basically projected in we to we thought in this about not that any July. The talked we increase, that we've bit see what that we effect I higher be. seen and of in the XXXB price that call, numbers in

pricing will So any there's over the XXXB customers. to that in action fall a X-month lag

to So as where X.X% impact were that out what take that year. majority and we we we right we on guided will that back it going expect come came be to to of the will thought and the have we an XXXB of

were probably we It's would going point a disappointed. So to than higher we're thought running, we're Greg, be. not we say, I

users week, are than thought slightly XX, continue new to we So new which the to we use, their also are But might XX see positives. we users all it X that be. increasing higher it's have every and

discount have the term you you want that and care and yet the at makes provide we're think I patients if this want to pain according maybe train for talking NOPAIN, calculations thing patients, and if the opportunity the the alternative the right offer to while And the in for control were and non-opioid to health doing so providers product exactly you give short to we which not just we to us about that work another way XXXB TRICARE on these sense. will look

Gregory Renza

and you And the nice about pipeline, on maybe to hopper. XXX broadly. perhaps just in It's a question others more talk the see

see the certainly upon investment capabilities certainly little coming I comes the in Phase to with think proceeding those approaches I. therapy a decisions stage some it you the development alluded you're of of you a bit maybe of gene and early taking you as bear, just when touch to just or to novel forward. stage Could where differentiation what at the

R&D how Just curious of forward this should the with and approach to complexion about changing your really you you're want move approach? capabilities thinking

David Stack

for different thing I about, the is Ron you forward go think right, well, the as as process process, is the mean sure. first is product talked approach and -- here. The the is the know just we product I that guys

whether it's additional where or really look are of the timing to at So that best going around prepare right timing injectable, how to type It's the Greg, of some steroid and now, I oral for we're what and a work. steroid, is, Phase we protocol. ourselves

some We actual interest. had process XXX will for We've some have a inbound get potential as we had determined the to trials, -- closer the doing have when we from in partners. pivotal interest we've already

have on don't joined I And our to radical organization. any the we're fortunate that Pacira. to XXX Flexion, think R&D been We've see at you'll changes working people enough bring us make

and see topic. be therapy there. have So of we'll the I now next It us agreed with with that experts eventuates discussions in our we're gene that's really we driven the organization a have And a the FDA think trials the on cadre over will how the protocol by this X.X lot with and helped years. to, that

the to projected in addition the costs then clinical versus that's commercial costs. And cost the

take. that is looking of not probably to approach our organization size early turns the Greg, day. your a would we'll know an out -- And R&D value. be the I got with us, in as us, as double being we share don't can of this our we've able lot should be would we as interest works would of to on -- and asset the for We're expense on if and therapy value here to that's I to that it a sure He that, Ron, if ask nature keep we there's gene more be desire add question. do a of Ron company can at every him. partner can with we this think create that much least then So

Ron Ellis

you the Greg, Yes, for thank question.

add look process, really where can Just of a at milestone up Dave a from take opens we what dose away the years we're and to defined and to next said, couple a opportunities that partnership. having

Operator

Fraser Truist Greg [Operator next Instructions] live. of Securities. comes you’re question Our from Greg,

Greg Fraser

you now? additional to like second is Or comment grows? coming you stable would the offset sounds Can XXXB . on the net the the It volume gross hospitals some as from net in in in anticipate quarter quarters pressure half. some export have the you price the increase

And think do had question to what you the opportunity? by in And inning think do pediatric pediatric you're use? a respect you with much being on is then How driven demand I pediatrics.

David Stack

we to is expect at you points several enjoy percentage against we current action XXXB the as price the beginning do the year said, of And It the stable use. of by account. benefit as the

are back our very So process the we increase. is thought and point we were I or we without get price low to and to initially increase, that we any thought going with the at price be will near probably think where

from much And so to think week is at stable it it I move and all now. doesn't week

can stable I more in of here And outside we're accounts purchasing non-stored from from XXXB. with so and XXXB improve a think the position

a think as that purchases, here are to And Greg, a there's also whole folks the the for of in seriously. there's have activity, arena. taking they I XXXB -- shadow I use idea very activity XXXB also, XXXB bit significant more customers think

a I inappropriate of risk think going out program any don't So XXXB there's any additional that use in -- in an XXXB forward.

pretty good feel that. we about So

adopted EXPAREL innings. though, it significant is tell drug short mean is get is time. just period third, yet if significant of slower have the to a of in move purchasers people with growth making quite I lady you, I early sung and their the impedes to I and good explosive with sure. is a Roy that us, the it's still very short of see, It's they baby. Roy's this said be that the period the a time. mean in in is to terms of it for probably would was Peds -- in hasn't adopt I a group

would Roy ask to for I'll So to he see say if that pediatrics. there's anything additional

Ron Ellis

always Yes. adults. good The And the in very lags see thing a you pediatrics, question. I it's behind about what think it

with out years of to is peds it pretty And with we from So go today. have to to it's still investigator collaboratives that's that, get curve get probably on and data some much from X initiated. EXPAREL a to where about come lot to from the

So you painful for example, as the an really pediatrics. scoliosis, procedures instance, which in see is one big, of

large would something we with out data, studies it should places and within will One I next have from And We the doing have people be on two Clinic two is the to. Shriner’s think scoliosis months. that's Cleveland really I and EXPAREL, can one latch now in X hope, and there that big that, centers. is system once objective that like

pediatric have to started. calls with centers get dealing looking We every day

But all just any again, protocols. threshold strict They because like you time to kids, higher with is longer details. the do is want very they process the want And adoption. the always

-- don't that I So hopefully, helps.

Operator

Instructions] question comes from Barclays. [Operator next [Makela of Francheskina] Our

live. You’re

Unidentified Analyst

is Prasad. This [Makela] Balaji on for

Just margins just can and up on quarter? volumes Could this more margins color this index? provide detail gross really bit following operating provide XXXB. on any just you Or on a on the you further impact

David Stack

or that because of get participant. purchased we was fact XXXB down started the either a that get XXXB, mediated really it we to had out ZILRETTA in When by the we was road

our expected product clinicians especially to same get we hand using saw anticipated as time, outside the NOPAIN and gross decrease was a the XXXB coming. as to way the in the we forced at level. so And additional Act some the But hospital, the to net

to to that would enjoy. currently there that, of cause that net. would understanding is gross XX% and of October roughly XXXB the reduction a now roughly the in So This 'XX business that business X%, move we of that a likely X.X% clear that was XX%

And we greatest that. are price purchases more we increase, very benefit Now -- of of far that was without modestly Interestingly, because has it's just the actually accounts. the benefit so XXXB active been ahead so right? of the

And participating business is and accounts, both so the of non- actually fastest-growing XXXB. section our the XXXB

So level. it has worked some to

would into thought. than anticipated non-XXXB both has accounts Our been growth who order not and who -- we would non-XXXB slightly XXXB slower

And that's to what back us this XX.X%, brings XX%. so

the the in XXXB X-month then then of the January is And price delay the X. focus on reflecting increase pricing

our of of the on we government net-net of CPI was for So top has that all that when rest and the X.X%. of with too. the this you business, through all about lay that calculations, go The

of X%, price net enjoy the So July be calculating the we increase. start that X full improvement X.X%, the a on we're to enjoy X.X% but in that there benefit as not will would gross we to the

to thought right we XX% get -- us the brings were first we that place. in that So going the XX%, to XX% back that

we of be. especially coming things thought did have thing, reimbursement we populations. the outpatient NOPAIN in given So it where the the to it's going down to opportunity some think on I right pretty are was will open pike that progress that other much and the these up And the same

Operator

Rohit [Operator & Needham Our Bhasin question Instructions] comes next live. you’re from from Co. Rohit,

Rohit Bhasin

indication expectations Rohit do trends? label then having extremity [indiscernible] on nerve for of remainder is you the talk Serge. XXXX for secondly, lower surgery This block And opportunity. you for how the your about Can for think EXPAREL changes

David Stack

Thank you, Rohit. Yes.

reverse. in start me Let

will two look X million and this specifically we foot remind to procedures data everybody, and and block extremity about when nerve knee at So be ankle. Those lower just for encompass knee that the in already of additional used I about procedures. are necessarily block the adductor an but we being always for same not procedures. canal in caution XXX,XXX everyone procedure. It's

about million clearly is meaningful. So procedures, the delta X.X

get with package in linear be think we'll just We of those younger of being that of the and relatively knees is because more Foot a a matter especially a some ankle number it quickly will not insert, approach. anesthesiologists. the

bit so have of opportunity. don't will be interest the that yet, and a I a of experience many lot they a of ankle think in longer-term surgeons, but foot and with EXPAREL there's

we of clearly, one quickly. that But should take take advantage should -- pretty

an doing this be would start a immediate to clear, in for more of will we type targeting XXXX. at of we national some January some -- expect will which on launch be big approval, Rohit, Just the approval, likely we not early there's unless than meeting but do

this of year, whole bunch there's For a the going of rest on. stuff

that's so complex you question, I'll we a what but give And very think.

procedure XXXX of labor the big in saw the that peak volume April. the we we first, second the thought was issue in So in the well, XXXX until -- week that was

meet was peaks in that because those QX. then if we true, early, labor couldn't very have been early enough So had to it labor

went by X% and of Knee But So knee, were and grew down XXXX the and second into at hip knee QX. just by the procedures X -- and and time. the knee as way, you in got month the all know, and knee same XXXX, only normalized procedures, X%. except knee by that hip as and hip hip we over the

tissue 'XX. And soft The actually orthopedic down procedures orthopedics down the actually, just over like was procedures. other 'XX were overall

how we into that's this year. got So

happen we what so this year, is clearly through Inflation to there's here. impacts And of is going go a the number major think driver. of that we is rest as the

food look we food over as at now year. we prices, X% As last you see was year. family's into get that X% a It's of budget this

elective as expect surgeries that also inflation moderates, So will moderate. we

on talk in that to co-insurances to are the really getting the something be that understood cash socioeconomic a they to and returns of the I'm not we their before, income lot sure refund. not and it's been appears having that hear really about delaying co-pays refund refunds correlation able when able investigating to strata but depends folks get we've we some to There's the something the that we they the especially be that marketplace, procedures. a are free ever there heavily their is but new year. between that -- tax in with this that we thought it patients before, the pay and associated late get until smaller that And

was they're us. helping of as the be, they are it refund to that thought isn't And many in those as cases, neither surprised much going

like side things procedure with of the replace the taken marketplace been pandemic other here of we there and procedures. for bottom kinds to pandemic. debridements procedures would market the as especially back of is that are the they away associated didn't coin, And has who and result have some to really the folks if those mortality know evidence On the a starting the those come that the pass the of out,

procedures surgery, will possibility third will they we think go outpatient quarter do And do the recession to the this fourth with the and this outpatient, expect which, favor that and procedure. will who what that we of again ability scenario get to the XX%, is and elective in move the XX% HOPD patients be outpatient in are to in the lay procedures for TAM. mid-XXs, our reimbursement the expect down TRICARE these procedures shines covered reimbursement We the to matter continue end we of year, we So our by If environment. marketplace, we continue -- the moving nearly ambulatory can that the moving is would through year. where range XX% that reimbursement and achieve overall, NOPAIN have for inflation our in that of and are of the to as no a modestly

roadway, CMS for payers or with in you CMS reimbursement. get how generally the with then paradigm the of terms following commercial And

We'll I and you're know but modestly where it. But on get. next sometime working any new we've possibility is in we'll we direction. right hockey of in probably think out, see going quarters, the we're survived over trending sticks XXXX. the of hard very everything the -- comes don't worst the July see think rule couple the to that So I when

Operator

would I Chairman Stack, turn it Dave now for to like back and CEO, closing to remarks.

David Stack

energized and patients we're we of around that country call need the year, positive of pain thanks in and about the play balance to which is a throughout transform for world. ahead the and lives you, today. of ongoing non-opioid to the opportunities to on the an work and management, all continue time of to questions Thank is off XXXX Throughout us. lie start, the the

us the Jefferies and RBC Next conferences for New up is in York.

well. soon. all Bye-bye. We'll you Stay see Thanks.

Operator

in you for your the This conference. Thank participation does conclude program. today's

You may now disconnect.

Pacira BioSciences (PCRX) 3 May 232023 Q1 Earnings call transcript